Landlord & Tenant

'Good Guy' Clause Requisites

71 Spring LLC v. Ontrend International, Inc.

NYLJ 3/11/11

Supreme Ct., N.Y. Cty.

(Gische, J)

In landlord's action for damages accrued under a commercial lease agreement, landlord moved for summary judgment. The court granted landlord's motion on the issue of liability, holding that landlord had established default by both the tenant and the guarantor.

In 2007, landlord entered into a commercial lease with tenant for a four-year term. Guarantor signed a personal guaranty of the lease. The guarantee included a “good guy” clause that excused the guarantor from liability if tenant surrendered the premises free of tenants, occupants and violations, delivered keys to the landlord, and paid all accrued rent until the date of surrender. The clause also provided that if the guarantor were to violate any prong of the “good guy” clause terms, guarantor would be personally liable for all outstanding arrears. The good guy clause explicitly provided that “any security deposit shall not be computed as a deduction from any amount payable” under the terms of the guarantee.

Tenant relinquished the premises in July 2009 by mailing keys to landlord. The latter contends that at that point, tenant had failed to make payments of rent due on Sept. 1, 2008, May 1, 2009, and every month thereafter. Tenant contended that landlord had issued a final statement indicating that only $3,726 was outstanding as of the time tenant vacated (after crediting tenant for the security deposit); landlord contends that its counsel sent guarantor a reminder that $20,428.76 was outstanding. Landlord contends that currently, tenant and guarantor owe more than $55,000.

In granting landlord's summary judgment motion on the issue of liability, the court emphasized that neither tenant nor guarantor had submitted any evidence to establish that even the arrears of $3,726 had been paid. As a result, guarantor did not satisfy one of the requisites of the “good guy” clause ' payment of the accrued rent until the date of surrender. Guarantor, therefore, remained liable on the guarantee. The court, however, denied summary judgment on the issue of damages, noting that contradictory affidavits and invoices precluded summary judgment on that issue.

Seller's Malpractice Action

Eighth Ave. Garage Corp. v. Kaye Scholer LLP

NYLJ 3/10/11

Supreme Ct., N.Y. Cty.

(Fried, J.)

In an action by seller of leasehold interests for legal malpractice, defendant law firm moved to dismiss. The court dismissed the complaint for seller's failure to prove that it was actually damaged by any of the defendant law firm's actions.

In 1994, Eighth Avenue leased a parking lot from landlord for a 15-year term. The lease required landlord's consent to most assignments, provided that consent would not be unreasonably withheld, and provided further than landlord would receive a 5% increase in rent when landlord gave consent to an assignment. The lease also included two exemptions from the consent requirement: 1) transfers of shares to members of the immediate family of Eighth Avenue's principal; and 2) any assignment in conjunction with the sale of ten or more parking facilities controlled by tenant's principal. In 1998, Eighth Avenue assigned the lease to a related entity. The 1998 assignment did not fall within either of the exemptions, but Eighth Avenue did not seek consent. Defendant law firm did not represent any of the parties in that transaction. In 2004, Eighth Avenue's principal reached an agreement to sell its interests in a number of parking facilities. The agreement itself would fall within the second exemption, and would not have required landlord's consent. The buyer, however, requested an estoppel certificate from the landlord stating that the lease was still in effect and that tenant was not in default. Defendant law firm represented Eighth Avenue's principal in this transaction, and requested a certificate from landlord. The latter objected to the documentation the law firm provided to demonstrate that there had been no default under the lease, and landlord contended that tenant had violated the lease by not obtaining consent to the 1998 assignment. Ultimately, landlord did not provide the estoppel certificate, buyer removed this lease from the sale transaction and reduced its price by $1 million, and Eighth Avenue's principal, represented by defendant law firm, brought an action against landlord for damages suffered as a result of landlord's alleged breach. The court granted summary judgment to landlord. Eighth Avenue's principal, now represented by new counsel, appealed, but the judgment was affirmed.

Eighth Avenue's principal and various related entities then brought this action for legal malpractice, contending that defendant law firm had failed to advice them that the 1998 assignment was a violation of the lease. Plaintiffs also contend that the law firm's legal strategy in the action against landlord constituted malpractice because the firm knew or should have known that plaintiffs were in default of the lease as a result of the failure to obtain consent to the 1998 assignment. Plaintiffs contended that if they had been properly advised, they would have obtained consent and paid the 5% increase to landlord in order to avoid loss of $1 million in the sale of its parking facilities.

In awarding summary judgment to defendant law firm, the court noted that plaintiffs had not established that any malpractice by the law firm led to any loss by plaintiffs, because if the law firm had informed plaintiffs of the need to obtain consent to the 1998 lease, buyers might not have been willing to close on the transaction at a rent that was 5% higher than initially represented. As a result, plaintiffs had failed to establish any loss as a result of any failure by the law firm. Similarly, with respect to the litigation, plaintiffs could not establish that it would have prevailed in the litigation but for the actions of the law firm. Therefore, the court held the law firm entitled to dismissal of the complaint.

COMMENT

Courts will deem damages too speculative as a matter of law when plaintiffs seek lost profits for transactions they claim would have taken place but for their attorney's negligence, but cannot prove that any such transaction would, in fact, ever have taken place. In Brown v. Samalin & Bock, P.C., 168 A.D.2d 531, for example, the Second Department found the plaintiff's lost-profits claim too speculative where the plaintiff claimed that his attorney's negligence prevented him from purchasing property that he planned to subdivide for a profit. Id. at 531. The plaintiff, however, had no experience in real estate development, questionable financing, and no evidence that he would have been able to obtain permission to subdivide the property. Id. at 532. Therefore, as a matter of law, plaintiff's claims were too speculative to allow recovery. Id. at 532. See also Pirro & Monsell, P.C. v. Freddolino, 204 A.D.2d 613 (affirming lower court's grant of summary judgment to an attorney where, even assuming attorney negligently failed to send out revised contracts, there was no evidence in the record that real estate transaction would otherwise have been consummated). Because plaintiff in Eighth Avenue would not have been able to produce evidence that plaintiff would have been able to consummate the transaction even if the attorney had persuaded the landlord to issue an estoppel certificate, the plaintiff's claims were likewise too speculative to allow recovery.

By contrast, where a client does enter into an actual transaction, but claims that, due to the attorney's negligence, the terms of the transaction were unfavorable or even harmful, courts will find genuine issues of fact as to whether the attorney's negligence proximately caused damage to the plaintiff. In Paros, Inc. v. Vogt, 156 A.D.2d 928, for example, the Fourth Department found that plaintiffs raised a triable issue of fact as to whether their attorney's failure to explain the significance of a particular clause proximately caused their damages. 156 A.D.2d at 928-29. The plaintiffs alleged that their attorney, who prepared documents for the sale of their business, failed to explain that an addendum assigning their commercial lease was unconditional and irrevocable, even if the plaintiffs were to exercise their option to cancel the sale of the business. 156 A.D.2d at 928. When plaintiffs did exercise that option, they brought an action claiming that, because of the attorney's negligence, they lost a valuable business asset and were forced to sell their business for less than half of the original contract price. Id. The Fourth Department reversed the lower court's entry of summary judgment for the attorney, holding that because the plaintiffs testified that they would not have signed the sales contract had they understood the effect of the lease assignment, it could not be decided as a matter of law that the attorney's negligence did not cause the plaintiffs' loss. Id. at 928-29. Similarly, in Wittich v. Wallach, 201 A.D.2d 558, the Second Department affirmed the lower court's denial of an attorney's motion for summary judgment where the plaintiffs claimed that the attorney's failure to include non-disturbance clause in lease resulted in their being unable to sublet the premises. 201 A.D.2d at 559.

Warrant of Eviction Vacated

Cox v. Linden Lefferts, LLC

NYLJ 3/30/11

App Term, 2nd, 11th, and 13th Districts

(memorandum opinion; dissenting memorandum by Golia, J.)

In landlord's residential holdover proceeding, occupant appealed from Civil Court's order denying his motion seeking leave to appear, and seeking to vacate the court's judgment, which had been based on a stipulation of settlement. A divided Appellate Division modified to grant his motion to the extent of vacating the warrant of eviction and granting the occupant leave to appear.

Landlord originally brought this proceeding against the Coxes, tenants of record in the apartment, against subtenant Jenna Saveur, and against “John/Jane Doe.” The Coxes and Saveur entered into a so-ordered stipulation which provided that the Coxes would surrender their interest, and that Saveur would vacate the apartment by a specified date. The stipulation provided that insofar as the proceeding was against John Doe, the proceeding was discontinued. A final judgment was entered pursuant to the stipulation, and a warrant of eviction issued. After the judgment was entered, occupant Ferdinand ' Saveur's husband ' moved for leave to appear, and sought to vacate the judgment. Civil Court denied occupant's motion, and occupant appealed.

In modifying, the Appellate Term majority relied on RPAPL 743, which gives any person claiming possession of the premises a right to answer in a summary proceeding. The majority noted that the occupant was making such a claim, and had raised a triable issue of fact about whether he is entitled to tenancy rights on the ground that landlord and/or its predecessors had recognized those rights. As a result, the court granted him leave to answer and vacated the warrant, but held that the final judgment should not yet be vacated, but that occupant could, in his answer raise a claim for vacating the judgment. Justice Golia, dissenting, argued that Ferdinand had plenty of opportunity to answer, as he was initially served in the
proceeding. Moreover, as Saveur's husband, he took advantage of the benefits of the court-ordered stipulation. As a result, Justice Golia would have affirmed Civil Court's order.

COMMENT

If a landlord does not know the name of a party occupying the premises, a fictitious name, such as “John or Jane Doe,” may be used to designate the unknown party in a summary holdover proceeding. CPLR ' 1024. However, reasonable efforts should be made to ascertain a litigant's true name prior to resorting to the use of a pseudonym. Id.

When the landlord knows the party's actual identity prior to the proceeding's commencement, use of a fictitious name may trigger a dismissal of the litigation as against that party. See Triborough Bridge and Tunnel Authority v. Wimpfheimer, 633 N.Y.S.2d 695. In a commercial summary holdover proceeding, the court dismissed the petition as to the subtenants because landlord improperly designated subtenants as “John Doe” and “Jane Doe,” even though he knew their identities, but did not dismiss the proceeding as it related to the tenants. The landlord could then apply for joinder of the subtenants as additional named parties, so that any warrant obtained in the proceeding against the tenant would be effective against the subtenants.

The children of a tenant may be removed from the premises under a warrant of eviction even though they were not made parties to the summary holdover proceeding. See Loira v. Anagnastopolous, 612 N.Y.S.2d 189. In Loira, after a tenant was evicted pursuant to a holdover proceeding, tenant's daughter sought an injunction staying the daughter's eviction. The court denied the daughter's motion and held that she could be removed from the premises even though she was not a party to the holdover proceeding, since the warrant of eviction issued against the respondent would ultimately have the effect of evicting her daughter as well.

Delay in Obtaining Certificate of Occupancy

Arnav Industries, Inc. v. Pitari

NYLJ 3/21/11

p. 19, col. 4

AppDiv, First Dept.

(memorandum opinion)

In landlord's action for rent, landlord appealed from Supreme Court's denial of its motion to dismiss tenant's defense and counterclaim based on Multiple Dwelling Law ' 302. The Appellate Division modified to grant landlord's motion, holding that the delay in obtaining a certificate of occupancy for the building did not excuse tenant from payment of rent.

Tenant began withholding rent on the ground that the subject residential building has no certificate of occupancy and tenant's apartment has no second means of fire egress. When landlord brought this action to collect rent, tenant invoked Multiple Dwelling Law ' 302 to establish that landlord was not entitled to collect rent for the building. In response, landlord submitted an affidavit from its architect indicating that there was no permanent certificate of occupancy for the building because the Department of Buildings will not issue a new permanent C of O so long as work is being done in the building. The affidavit also asserted that the work being done in the building is unrelated to tenant's apartment. Despite the affidavit, Supreme Court denied landlord's motion to dismiss tenant's defense and counterclaim based on ' 302.

In modifying, the Appellate Division emphasized that tenant had failed to present evidence in admissible form that would refute landlord's evidence. The unsworn report from an architect stating that an investigation revealed numerous defects in landlord's application to subdivide tenant's apartment and other 14th-floor apartments was insufficient to avoid grant of landlord's motion. However, the court agreed with Supreme Court that the statute of limitations precluded landlord from recovering rent payments that had become due more than six years before landlord commenced the action.

COMMENT

Multiple Dwelling Law (MDL) ' 302 explicitly provides that a tenant residing in a multiple dwelling unit may withhold rent from a landlord who fails to obtain a certificate of occupancy for the multiple dwelling. MDL ' 302 further provides that a landlord may not commence an action or special proceeding to recover rent for the premises accrued while the dwelling lacked a certificate. However, the statute does not void the lease and after obtaining a certificate, landlord may sue for subsequently accruing rent. Thus, in Ying Lung Corp. v. Medrano, 123 Misc.2d 1074, 475 N.Y.S.2d 772, landlord sued tenant for rent accrued during period when tenant's apartment lacked a certificate of occupancy and for rent accrued after certificate was obtained. The court held that ' 302 precluded landlord from claiming rent due before the certificate was issued but that landlord could sue for rent accruing after obtaining the certificate.

Despite the statutory language, courts refuse to permit tenants to withhold rent when the reason for the absence of a certificate adversely affects neither the structural integrity of the building, nor the safety of occupying tenant's own unit. In Stanley Associates v. Marrero, 87 Misc. 2d 1011, the court awarded landlord judgment in a nonpayment proceeding despite tenant's substantiated allegation that the building was in violation because landlord was renting one unit without a certificate of occupancy. The court noted that tenant had not alleged any health or safety hazards, and concluded that the rent withholding sanction should not be “available to a tenant who is merely using the violation to unjustly enrich himself.” Id.

Courts also refuse to permit a tenant to withhold rent when tenant blocks issuance of the certificate of occupancy. See Chatsworth 72nd St. Corp. v. Rigai, 71 Misc. 2d 647, 336 N.Y.S.2d 604 (City Civ. Ct. 1972), judgment aff'd, 74 Misc. 2d 298, 345 N.Y.S.2d 355 (App. Term 1973), order aff'd, 43 A.D.2d 685, 351 N.Y.S.2d 636 (1st Dep't 1973), order aff'd, 35 N.Y.2d 984, 365 N.Y.S.2d 531 (1975). In Chatsworth 72nd St. Corp, landlord brought an action for nonpayment of rent, after tenants successfully fought eviction proceedings and established that they were subject to rent control. Tenants argued that under MDL ' 302 they were excused from paying rent as long as landlord did not have a certificate of occupancy for the apartment building. Landlord was unable to obtain a certificate of occupancy because he could not evict rent controlled tenants in order to update apartments to comply with building code. The court held that tenants were required to pay rent, reasoning that under the MDL, tenants should not be allowed to capitalize on their own interference with landlord's bona fide attempt to extricate himself from having an apartment without a valid certificate of occupancy.

Failure to Qualify Housing for Section 8

Riccardo v. Cassidy

NYLJ 3/22/11

U.S.Dist. Ct., N.D.N.Y.

(Mordue, J.).

In an action by a disabled tenant alleging that his landlord had violated the Fair Housing Act, landlord moved to dismiss the complaint. The court granted landlord's motion, holding that failure to qualify the premises for Section 8 housing did not violate the Fair Housing Act.

Tenant's complaint alleges that he is disabled, and works part-time at Walmart as a “people greeter.” He lived in a two-story property owned by landlord and rented to tenant and his wife. The wife's income paid the rent until the wife left him and moved out of state. Tenant alleges that landlord offered tenant a lease for the first floor of the property only. He contends that he could not afford the rent on the first floor without Section 8 funds, and alleges that landlord orally represented to him that he understood that the floor would have to pass inspections for tenant to receive Section 8 assistance. Subsequently, however, landlord informed tenant in writing that he wanted tenant to vacate because tenant had paid no rent. Tenant then brought this action alleging a violation of the Fair Housing Act.

In dismissing the complaint, the court noted that the essence of tenant's complaint, which had been filed pro se, was that landlord had failed to make a reasonable accommodation by failing to complete the work necessary to pass the inspection required for disbursement of Section 8 funds. The court held, however, that because economic discrimination ' such as the refusal to accept Section 8 tenants ' is not cognizable as a claim for failure to make reasonable accommodation, tenant's claim failed to state a plausible claim for relief.

'Good Guy' Clause Requisites

71 Spring LLC v. Ontrend International, Inc.

NYLJ 3/11/11

Supreme Ct., N.Y. Cty.

(Gische, J)

In landlord's action for damages accrued under a commercial lease agreement, landlord moved for summary judgment. The court granted landlord's motion on the issue of liability, holding that landlord had established default by both the tenant and the guarantor.

In 2007, landlord entered into a commercial lease with tenant for a four-year term. Guarantor signed a personal guaranty of the lease. The guarantee included a “good guy” clause that excused the guarantor from liability if tenant surrendered the premises free of tenants, occupants and violations, delivered keys to the landlord, and paid all accrued rent until the date of surrender. The clause also provided that if the guarantor were to violate any prong of the “good guy” clause terms, guarantor would be personally liable for all outstanding arrears. The good guy clause explicitly provided that “any security deposit shall not be computed as a deduction from any amount payable” under the terms of the guarantee.

Tenant relinquished the premises in July 2009 by mailing keys to landlord. The latter contends that at that point, tenant had failed to make payments of rent due on Sept. 1, 2008, May 1, 2009, and every month thereafter. Tenant contended that landlord had issued a final statement indicating that only $3,726 was outstanding as of the time tenant vacated (after crediting tenant for the security deposit); landlord contends that its counsel sent guarantor a reminder that $20,428.76 was outstanding. Landlord contends that currently, tenant and guarantor owe more than $55,000.

In granting landlord's summary judgment motion on the issue of liability, the court emphasized that neither tenant nor guarantor had submitted any evidence to establish that even the arrears of $3,726 had been paid. As a result, guarantor did not satisfy one of the requisites of the “good guy” clause ' payment of the accrued rent until the date of surrender. Guarantor, therefore, remained liable on the guarantee. The court, however, denied summary judgment on the issue of damages, noting that contradictory affidavits and invoices precluded summary judgment on that issue.

Seller's Malpractice Action

Eighth Ave. Garage Corp. v. Kaye Scholer LLP

NYLJ 3/10/11

Supreme Ct., N.Y. Cty.

(Fried, J.)

In an action by seller of leasehold interests for legal malpractice, defendant law firm moved to dismiss. The court dismissed the complaint for seller's failure to prove that it was actually damaged by any of the defendant law firm's actions.

In 1994, Eighth Avenue leased a parking lot from landlord for a 15-year term. The lease required landlord's consent to most assignments, provided that consent would not be unreasonably withheld, and provided further than landlord would receive a 5% increase in rent when landlord gave consent to an assignment. The lease also included two exemptions from the consent requirement: 1) transfers of shares to members of the immediate family of Eighth Avenue's principal; and 2) any assignment in conjunction with the sale of ten or more parking facilities controlled by tenant's principal. In 1998, Eighth Avenue assigned the lease to a related entity. The 1998 assignment did not fall within either of the exemptions, but Eighth Avenue did not seek consent. Defendant law firm did not represent any of the parties in that transaction. In 2004, Eighth Avenue's principal reached an agreement to sell its interests in a number of parking facilities. The agreement itself would fall within the second exemption, and would not have required landlord's consent. The buyer, however, requested an estoppel certificate from the landlord stating that the lease was still in effect and that tenant was not in default. Defendant law firm represented Eighth Avenue's principal in this transaction, and requested a certificate from landlord. The latter objected to the documentation the law firm provided to demonstrate that there had been no default under the lease, and landlord contended that tenant had violated the lease by not obtaining consent to the 1998 assignment. Ultimately, landlord did not provide the estoppel certificate, buyer removed this lease from the sale transaction and reduced its price by $1 million, and Eighth Avenue's principal, represented by defendant law firm, brought an action against landlord for damages suffered as a result of landlord's alleged breach. The court granted summary judgment to landlord. Eighth Avenue's principal, now represented by new counsel, appealed, but the judgment was affirmed.

Eighth Avenue's principal and various related entities then brought this action for legal malpractice, contending that defendant law firm had failed to advice them that the 1998 assignment was a violation of the lease. Plaintiffs also contend that the law firm's legal strategy in the action against landlord constituted malpractice because the firm knew or should have known that plaintiffs were in default of the lease as a result of the failure to obtain consent to the 1998 assignment. Plaintiffs contended that if they had been properly advised, they would have obtained consent and paid the 5% increase to landlord in order to avoid loss of $1 million in the sale of its parking facilities.

In awarding summary judgment to defendant law firm, the court noted that plaintiffs had not established that any malpractice by the law firm led to any loss by plaintiffs, because if the law firm had informed plaintiffs of the need to obtain consent to the 1998 lease, buyers might not have been willing to close on the transaction at a rent that was 5% higher than initially represented. As a result, plaintiffs had failed to establish any loss as a result of any failure by the law firm. Similarly, with respect to the litigation, plaintiffs could not establish that it would have prevailed in the litigation but for the actions of the law firm. Therefore, the court held the law firm entitled to dismissal of the complaint.

COMMENT

Courts will deem damages too speculative as a matter of law when plaintiffs seek lost profits for transactions they claim would have taken place but for their attorney's negligence, but cannot prove that any such transaction would, in fact, ever have taken place. In Brown v. Samalin & Bock, P.C., 168 A.D.2d 531, for example, the Second Department found the plaintiff's lost-profits claim too speculative where the plaintiff claimed that his attorney's negligence prevented him from purchasing property that he planned to subdivide for a profit. Id. at 531. The plaintiff, however, had no experience in real estate development, questionable financing, and no evidence that he would have been able to obtain permission to subdivide the property. Id. at 532. Therefore, as a matter of law, plaintiff's claims were too speculative to allow recovery. Id. at 532. See also Pirro & Monsell, P.C. v. Freddolino, 204 A.D.2d 613 (affirming lower court's grant of summary judgment to an attorney where, even assuming attorney negligently failed to send out revised contracts, there was no evidence in the record that real estate transaction would otherwise have been consummated). Because plaintiff in Eighth Avenue would not have been able to produce evidence that plaintiff would have been able to consummate the transaction even if the attorney had persuaded the landlord to issue an estoppel certificate, the plaintiff's claims were likewise too speculative to allow recovery.

By contrast, where a client does enter into an actual transaction, but claims that, due to the attorney's negligence, the terms of the transaction were unfavorable or even harmful, courts will find genuine issues of fact as to whether the attorney's negligence proximately caused damage to the plaintiff. In Paros, Inc. v. Vogt, 156 A.D.2d 928, for example, the Fourth Department found that plaintiffs raised a triable issue of fact as to whether their attorney's failure to explain the significance of a particular clause proximately caused their damages. 156 A.D.2d at 928-29. The plaintiffs alleged that their attorney, who prepared documents for the sale of their business, failed to explain that an addendum assigning their commercial lease was unconditional and irrevocable, even if the plaintiffs were to exercise their option to cancel the sale of the business. 156 A.D.2d at 928. When plaintiffs did exercise that option, they brought an action claiming that, because of the attorney's negligence, they lost a valuable business asset and were forced to sell their business for less than half of the original contract price. Id. The Fourth Department reversed the lower court's entry of summary judgment for the attorney, holding that because the plaintiffs testified that they would not have signed the sales contract had they understood the effect of the lease assignment, it could not be decided as a matter of law that the attorney's negligence did not cause the plaintiffs' loss. Id. at 928-29. Similarly, in Wittich v. Wallach, 201 A.D.2d 558, the Second Department affirmed the lower court's denial of an attorney's motion for summary judgment where the plaintiffs claimed that the attorney's failure to include non-disturbance clause in lease resulted in their being unable to sublet the premises. 201 A.D.2d at 559.

Warrant of Eviction Vacated

Cox v. Linden Lefferts, LLC

NYLJ 3/30/11

App Term, 2nd, 11th, and 13th Districts

(memorandum opinion; dissenting memorandum by Golia, J.)

In landlord's residential holdover proceeding, occupant appealed from Civil Court's order denying his motion seeking leave to appear, and seeking to vacate the court's judgment, which had been based on a stipulation of settlement. A divided Appellate Division modified to grant his motion to the extent of vacating the warrant of eviction and granting the occupant leave to appear.

Landlord originally brought this proceeding against the Coxes, tenants of record in the apartment, against subtenant Jenna Saveur, and against “John/Jane Doe.” The Coxes and Saveur entered into a so-ordered stipulation which provided that the Coxes would surrender their interest, and that Saveur would vacate the apartment by a specified date. The stipulation provided that insofar as the proceeding was against John Doe, the proceeding was discontinued. A final judgment was entered pursuant to the stipulation, and a warrant of eviction issued. After the judgment was entered, occupant Ferdinand ' Saveur's husband ' moved for leave to appear, and sought to vacate the judgment. Civil Court denied occupant's motion, and occupant appealed.

In modifying, the Appellate Term majority relied on RPAPL 743, which gives any person claiming possession of the premises a right to answer in a summary proceeding. The majority noted that the occupant was making such a claim, and had raised a triable issue of fact about whether he is entitled to tenancy rights on the ground that landlord and/or its predecessors had recognized those rights. As a result, the court granted him leave to answer and vacated the warrant, but held that the final judgment should not yet be vacated, but that occupant could, in his answer raise a claim for vacating the judgment. Justice Golia, dissenting, argued that Ferdinand had plenty of opportunity to answer, as he was initially served in the
proceeding. Moreover, as Saveur's husband, he took advantage of the benefits of the court-ordered stipulation. As a result, Justice Golia would have affirmed Civil Court's order.

COMMENT

If a landlord does not know the name of a party occupying the premises, a fictitious name, such as “John or Jane Doe,” may be used to designate the unknown party in a summary holdover proceeding. CPLR ' 1024. However, reasonable efforts should be made to ascertain a litigant's true name prior to resorting to the use of a pseudonym. Id.

When the landlord knows the party's actual identity prior to the proceeding's commencement, use of a fictitious name may trigger a dismissal of the litigation as against that party. See Triborough Bridge and Tunnel Authority v. Wimpfheimer, 633 N.Y.S.2d 695. In a commercial summary holdover proceeding, the court dismissed the petition as to the subtenants because landlord improperly designated subtenants as “John Doe” and “Jane Doe,” even though he knew their identities, but did not dismiss the proceeding as it related to the tenants. The landlord could then apply for joinder of the subtenants as additional named parties, so that any warrant obtained in the proceeding against the tenant would be effective against the subtenants.

The children of a tenant may be removed from the premises under a warrant of eviction even though they were not made parties to the summary holdover proceeding. See Loira v. Anagnastopolous, 612 N.Y.S.2d 189. In Loira, after a tenant was evicted pursuant to a holdover proceeding, tenant's daughter sought an injunction staying the daughter's eviction. The court denied the daughter's motion and held that she could be removed from the premises even though she was not a party to the holdover proceeding, since the warrant of eviction issued against the respondent would ultimately have the effect of evicting her daughter as well.

Delay in Obtaining Certificate of Occupancy

Arnav Industries, Inc. v. Pitari

NYLJ 3/21/11

p. 19, col. 4

AppDiv, First Dept.

(memorandum opinion)

In landlord's action for rent, landlord appealed from Supreme Court's denial of its motion to dismiss tenant's defense and counterclaim based on Multiple Dwelling Law ' 302. The Appellate Division modified to grant landlord's motion, holding that the delay in obtaining a certificate of occupancy for the building did not excuse tenant from payment of rent.

Tenant began withholding rent on the ground that the subject residential building has no certificate of occupancy and tenant's apartment has no second means of fire egress. When landlord brought this action to collect rent, tenant invoked Multiple Dwelling Law ' 302 to establish that landlord was not entitled to collect rent for the building. In response, landlord submitted an affidavit from its architect indicating that there was no permanent certificate of occupancy for the building because the Department of Buildings will not issue a new permanent C of O so long as work is being done in the building. The affidavit also asserted that the work being done in the building is unrelated to tenant's apartment. Despite the affidavit, Supreme Court denied landlord's motion to dismiss tenant's defense and counterclaim based on ' 302.

In modifying, the Appellate Division emphasized that tenant had failed to present evidence in admissible form that would refute landlord's evidence. The unsworn report from an architect stating that an investigation revealed numerous defects in landlord's application to subdivide tenant's apartment and other 14th-floor apartments was insufficient to avoid grant of landlord's motion. However, the court agreed with Supreme Court that the statute of limitations precluded landlord from recovering rent payments that had become due more than six years before landlord commenced the action.

COMMENT

Multiple Dwelling Law (MDL) ' 302 explicitly provides that a tenant residing in a multiple dwelling unit may withhold rent from a landlord who fails to obtain a certificate of occupancy for the multiple dwelling. MDL ' 302 further provides that a landlord may not commence an action or special proceeding to recover rent for the premises accrued while the dwelling lacked a certificate. However, the statute does not void the lease and after obtaining a certificate, landlord may sue for subsequently accruing rent. Thus, in Ying Lung Corp. v. Medrano, 123 Misc.2d 1074, 475 N.Y.S.2d 772, landlord sued tenant for rent accrued during period when tenant's apartment lacked a certificate of occupancy and for rent accrued after certificate was obtained. The court held that ' 302 precluded landlord from claiming rent due before the certificate was issued but that landlord could sue for rent accruing after obtaining the certificate.

Despite the statutory language, courts refuse to permit tenants to withhold rent when the reason for the absence of a certificate adversely affects neither the structural integrity of the building, nor the safety of occupying tenant's own unit. In Stanley Associates v. Marrero, 87 Misc. 2d 1011, the court awarded landlord judgment in a nonpayment proceeding despite tenant's substantiated allegation that the building was in violation because landlord was renting one unit without a certificate of occupancy. The court noted that tenant had not alleged any health or safety hazards, and concluded that the rent withholding sanction should not be “available to a tenant who is merely using the violation to unjustly enrich himself.” Id.

Courts also refuse to permit a tenant to withhold rent when tenant blocks issuance of the certificate of occupancy. See Chatsworth 72nd St. Corp. v. Rigai, 71 Misc. 2d 647, 336 N.Y.S.2d 604 (City Civ. Ct. 1972), judgment aff'd, 74 Misc. 2d 298, 345 N.Y.S.2d 355 (App. Term 1973), order aff'd, 43 A.D.2d 685, 351 N.Y.S.2d 636 (1st Dep't 1973), order aff'd, 35 N.Y.2d 984, 365 N.Y.S.2d 531 (1975). In Chatsworth 72nd St. Corp, landlord brought an action for nonpayment of rent, after tenants successfully fought eviction proceedings and established that they were subject to rent control. Tenants argued that under MDL ' 302 they were excused from paying rent as long as landlord did not have a certificate of occupancy for the apartment building. Landlord was unable to obtain a certificate of occupancy because he could not evict rent controlled tenants in order to update apartments to comply with building code. The court held that tenants were required to pay rent, reasoning that under the MDL, tenants should not be allowed to capitalize on their own interference with landlord's bona fide attempt to extricate himself from having an apartment without a valid certificate of occupancy.

Failure to Qualify Housing for Section 8

Riccardo v. Cassidy

NYLJ 3/22/11

U.S.Dist. Ct., N.D.N.Y.

(Mordue, J.).

In an action by a disabled tenant alleging that his landlord had violated the Fair Housing Act, landlord moved to dismiss the complaint. The court granted landlord's motion, holding that failure to qualify the premises for Section 8 housing did not violate the Fair Housing Act.

Tenant's complaint alleges that he is disabled, and works part-time at Walmart as a “people greeter.” He lived in a two-story property owned by landlord and rented to tenant and his wife. The wife's income paid the rent until the wife left him and moved out of state. Tenant alleges that landlord offered tenant a lease for the first floor of the property only. He contends that he could not afford the rent on the first floor without Section 8 funds, and alleges that landlord orally represented to him that he understood that the floor would have to pass inspections for tenant to receive Section 8 assistance. Subsequently, however, landlord informed tenant in writing that he wanted tenant to vacate because tenant had paid no rent. Tenant then brought this action alleging a violation of the Fair Housing Act.

In dismissing the complaint, the court noted that the essence of tenant's complaint, which had been filed pro se, was that landlord had failed to make a reasonable accommodation by failing to complete the work necessary to pass the inspection required for disbursement of Section 8 funds. The court held, however, that because economic discrimination ' such as the refusal to accept Section 8 tenants ' is not cognizable as a claim for failure to make reasonable accommodation, tenant's claim failed to state a plausible claim for relief.