Opinion
091058/16
02-05-2019
Robert BRAVO and Fred Daniels, Petitioner, v. Yeddy MARTE, John Doe 1, John Doe 2, and Jane Doe 1 and Jane Doe 2, Respondent(s). Robert Bravo and Fred Daniels, Petitioner, v. Gloria Aquino, C. Ramirez, John Doe 1, John Doe 2, and Jane Doe 1 and Jane Doe 2. Robert Bravo and Fred Daniels, Petitioner, v. Florida Roboseno, John Doe 1, John Doe 2, and Jane Doe 1 and Jane Doe 2. Robert Bravo and Fred Daniels, Petitioner, v. Pedro Garcia, John Doe 1, John Doe 2, and Jane Doe 1 and Jane Doe 2. Robert Bravo and Fred Daniels, Petitioner, v. Gloria Aquino, C. Ramirez, John Doe 1, John Doe 2, and Jane Doe 1 and Jane Doe 2. Robert Bravo and Fred Daniels, Petitioner, v. Florida Roboseno, John Doe 1, John Doe 2, and Jane Doe 1 and Jane Doe 2. Robert Bravo and Fred Daniels, Petitioner, v. Pedro Garcia, John Doe 1, John Doe 2, and Jane Doe 1 and Jane Doe 2.
This matter was tried on various dates following petitioners' service upon respondents of termination notices seeking to terminate their monthly tenancies. Respondents answered and following the conclusion of motion practice the matter was tried. The main thrust of respondents' defense is that the property acquired de facto rent stabilization status because it was used in contravention of its certificate of occupancy. The certificate of occupancy indicates that the property contains four residential and two units that are commercial/stores. Petitioner concedes that one of the commercial units was converted to residential usage (store 2/1R). The usage of the second commercial unit is disputed (store 1).
The testimony commenced with that of Fred Daniels, currently a ten-percent owner of the property located at the corner of Myrtle and Kent Avenues in Brooklyn, New York. He described the configuration of the property and indicated that store 1 is currently vacant, fronts Myrtle Avenue and has one room with a closet-sized toilet towards the right rear side of the store. The most recent tenant was Juan Carlos Alarcon (hereafter "Alarcon"), who did business as Tony AC & Refrigeration. His tenancy was terminated due to his frequent rental delinquencies. Daniels acknowledged that store 2 was divided by the superintendent of the building into two spaces and that the super had informed him of this division. The super has been in this position for 28 years. The converted store (hereinafter "1R") was occupied as a residence for a lengthy period of time by Janet Flores who vacated in December 2016.
Daniels testified that store 1 was not used residentially. He testified to multiple visits to the building over the years (he performed legal work for Bravo prior to acquiring an ownership interest in the property) and to the store due to frequent rental delinquencies. In the course of these visits he observed the basement. He described the basement's connection to the store as being through a trapdoor in the rear left of the store, through which there were stairs to the basement. He also testified that the main door to store 1 is a covered metal rolling gate.
Since 1999, store 1 has been a used appliance sales and repair store. Daniels, and virtually every other witness, described the interior of the store as a long and narrow place with what is essentially a path or an aisle through the merchandise leading towards a rear section that the use to which it was put is the crux of the dispute in this proceeding. According to Daniels the path ended at an area at the back of the store that was either about 4 x 4 feet wide or 5 x 5 feet wide at most. In that space, he described a large leather couch, a cabinet against the back wall that had no top and a bathroom that consisted simply of a toilet. This was what he observed when he visited, most recently in April and July 2016. He observed no plates, no signs of cooking, saw a hose that was a "gas testing line" in the basement and, also, observed that the basement was filled with parts, garbage, hoses, and other parts used for the business (other than those in inventory) of the store. There was neither a refrigerator nor a stove anywhere in the store or the basement. There was, however, a hose and a utility sink.
In 2007 the store changed hands and became Tony AC and Refrigeration. Daniels was in the store to execute the lease with the new tenant, but was not in the basement and did not recall the trapdoor. He testified that in April 2016, the store was the same as when he was there in August 2007. The store after Tony AC was Carlos Refrigeration whose lease commenced in but was terminated in 2016 due to the previously mentioned chronic rental delinquencies. To effectuate the surrender from Alarcon, Daniels was again in the store on June 30, 2016. At this time he noted that the bathroom had been built out and now contained a shower base and a fixed hose was attached to the wall with a shower head. He observed this when he used this bathroom in 2016. No permission was ever sought to do this, nor given. Daniels was the prima facie witness for petitioner and his testimony laid the foundation for the remaining elements of petitioners' case including the introduction into evidence of the deed, MDR, and the certificate of occupancy.
Respondents' case commenced with the testimony of Florida Roboseno, who has resided at apartment 2R since 1991. She testified that although the building originally had four residential apartments and two stores, starting in about 2000 to 2003 unit 1R, previously a store, came to be occupied as a residence by Janet Flores and her family. She further testified that unit 1F was a store that sold and repaired used appliances, but was used as a residence starting in 1997 or 1998 by Casimir Castillo (hereafter "Castillo"), the commercial tenant, until about 2006. From 2013 through 2016, a later tenant, Juan Carlos Alarcon, rented the store but also occupied it residentially, in the same manner as had Castillo.
Roboseno testified that during her years in the building, while Castillo was there, she saw him leaving from the Myrtle Avenue door at 7 AM. She saw him also at about 6 PM, when she came home from work, and observed that the gate was open. In the late evenings, coming home at 9 or 10 PM, Roboseno also observed the open gate and saw lights and heard the sounds of television coming from this space. Based upon her observations, she concluded that Castillo lived there, as well as having his business there.
This changed when Castillo left and Fernando took over and started a business in 1F in about 2006 which he maintained until 2013. When Fernando was there the business and gates were closed at 6 PM. The gates were not open on Sundays. Roboseno did not believe that Fernando resided in the store. In 2013 Alarcon took over the space and according to Roboseno's observations the gate once again remained open after 6 PM. Roboseno observed Alarcon remaining outside of the store in the evening with his friends, and based on this and other observations she concluded that he utilized the space in the same residential manner as had Castillo. Roboseno indicated that Pedro Garcia was the super for about 14 years.
On cross-examination Roboseno acknowledged that she had not seen a bed, a shower or a stove in 1F. Other than having seen Castillo early in the morning and late in the evening she acknowledged that she had no further testimony to offer in support of her belief that he lived there. She knew nothing of 908 Kent Avenue, where petitioner alleges he lived (see petitioner's exhibit 18, application for a lease, in evidence) and acknowledged that she had never seen Castillo open or close the gate when she came home.
Bartolo Ortega also testified. He was not a party witness but lived at the building for about 8 to 10 years, commencing in 2000, and is the brother-in-law of Yeddy Marte, who currently lives at the property and is a party to this proceeding. When he lived at the building he rented a room in apartment 3R. Ortega testified that he believed Castillo lived in the store at 1F. During Ortega's years at the building he developed a friendship with Castillo through a church they both attended. He never visited Castillo other than at the store. Over the years he saw Castillo prepare his meals and eat at the store. He visited on different days and at different times. Ortega left when the store closed, at around 6 or 7 PM, and when he left he locked the door with a key and he would then bring down the gate, closing it from inside, and Castillo would remain inside after the gate had closed.
While in the store he observed the same appliances as had everyone who testified and, towards the rear of the store, he observed pans, oil, eggs, chiles, and that there was a chair or object to lay in as well as a cover, sheet and pillow.
On cross-examination Ortega acknowledged that he offered his testimony based upon the request of his family. He testified to having lived at 881 Kent Avenue for eight years, commencing in 2006. Upon being pressed as to the dates that conflicted with those given on direct examination he acknowledged he did not remember exactly. He acknowledged he never used or went into the bathroom at the store, he was solely where they ate and he mainly visited on Saturdays. He never visited in the morning and testified that he did not know if Castillo had an apartment elsewhere. On re-direct he stated that the gate was closed from inside by using a button, an assertion not made by any of the other witnesses.
The next witness to testify did so with hostility and pursuant to respondents' subpoena. Casimiro Castillo's request to be excused from providing testimony was denied and his testimony, such as it was, was both grudgingly given and defiant. He stated he did not remember his current address, when shown his prior affidavit did not remember that, although he did not deny the signature was his. He asserted he did not live inside the store but did not recall any address of where he lived subsequent to having the business at Kent Avenue. When an audio recording (Respondents' exhibit I) of an interview conducted of him by one of respondents' attorneys was played for him he agreed that it was his voice on the recording.
Castillo affirmatively testified that while he had the store at 908 Kent Avenue he rented a room in 3F from Betty Bettina. When asked if he recalled another apartment at the rear of the store he replied "everything in life is possible." He stated he did not recall a conversation with Genesis Miranda, one of the attorneys representing respondents, but indicated that he did know petitioner, Robert Bravo, who was the sole owner of the building when he had his business there.
Castillo testified that there were stoves and washing machines in the basement. When he repaired them, he took them through the Kent Avenue side to a little room he had in the basement where he kept electronics, tools and compressors.
Castillo testified that there were two gates that he had to pull manually. He had to pull the larger of the two with a chain. When asked if he worked late at night he answered that "when one is poor there are no hours." He stated he was at the store from 8 AM until midnight in the summer because he stayed to make repairs. He was asked if he ever told Bravo he lived in the store and he answered that "[he] was asked that twenty times and said no."
Following Castillo, Maria Flores of apartment 2F testified. She has lived at the building since 2002. To her knowledge there were five residential units and Castillo was living in the store the year she moved in. She saw lights on at the store beginning at 4 to 4:30 AM in 1999 when she was in the building to visit her then-boyfriend, now her husband. Her work at a bakery required such early hours. During this time she visited the building about three times a week and each time observed the lights on at the store owned by Castillo. She moved into the building in 2002 and later "shared" her cable account with Castillo. In 2005 she purchased a stove from Castillo and while in the store observed the aisles and inventory described by others and, towards the back of the store, she observed a television, a chair like a love seat, spoons, plates, oil and salt. At about 11 PM or midnight she testified that everything was quiet. Once she moved in with her husband in 2002 she was certain that Castillo lived there.
When she and her neighbors received termination notices she proposed to her neighbors that they seek help. She later looked for Castillo to obtain his help. She thereafter saw Castillo in the offices of Make the Road at 301 Grove Street and saw him speak with Genesis Miranda. She testified that Castillo wanted $3,000.00 from them to provide "help."
After Castillo vacated the store it was run by Tony AC for about four years. Following Tony AC the store was run by Alarcon. Under Tony AC the store closed at about 6 or 7 PM and when it did the gate was shut, and the store was closed on Sundays. When Alarcon operated the store it was again utilized as it was when occupied by Castillo. Flores heard noise from the television up until 10 or 10:30 PM. She saw a sofa and kitchen utensils at the rear of the store and a lady and a little kid were "always there."
On cross-examination Flores stated she did not work after 2005 when she began having children. She did not know if Pedro Garcia, the super, lived in apartment 2F with his brother. She did not ever actually observe Castillo open or close the gates to the store. And she did not know if Castillo rented a room from "Bettina," who was not called as a witness.
Constantino Ramirez lived at the building commencing in 1993 or 1994. There were four units when he moved in and two stores. The one on Myrtle Avenue was occupied by Castillo and the one on Kent Avenue by Jeanette Flores. He worked at 609 Myrtle Avenue from 1993-1996 and, when he walked his dog, saw the gate halfway open. He was in the store twice and observed a sofa that was about 4 feet and, in front, a stove. He saw oil, pans, eggs, beans, spoons hanging and a television.
Yeddy Marte of apartment 3R testified. She has lived at the building for 19 years and in 1998 there were five residential units. According to her, then there were six. From 2000 to 2003 she "came to acknowledge that [Castillo] lived there." She visited two or three times and observed that the store was always open on Saturdays. She did not know if there was a shower as she was never in the basement, and thinks Juan Carlos lived at the store from about 2013 through 2016. When Jose Luis was there the gate was completely closed.
Pedro Garcia testified. He currently lives in Coney Island and has worked for Bravo for 28 years. He was the super from 1994 and lived on Kent Avenue until 2008. As a super his hours start after two PM. In the early 1990s he worked at the building for a store owner. In those days he helped by doing deliveries, unloading and loading. He would then, for about three years, help Castillo in the afternoons, finishing at 6:30 to 7 PM. When he was done he stayed in front of the building and would then go rest.
He described the interior as had almost everyone else, that it had little space and appliances throughout the store. He specifically asserted there was no apartment in the store and that there was a toilet and nothing else in the bathroom, which was very small. There were washing facilities outside of the bathroom, but neither tub nor shower. At that time there was a steel gate and a wooden door, which was not very secure. Having lived at various apartments in the building he vacated entirely in 2008.
Garcia testified that he unilaterally built an apartment in store number two when it was operated as a fruit stand and lived there for about six years. He asserted that Castillo did not live in the other store as there was no hot water, no tub and no shower. Currently, he states there is no chain to the gate and that it will not stay up.
On cross-examination Garcia stated that Bravo was aware of his conversion of the store at 1R to residential use and that it was "normal" to do this. He acknowledged currently living at a building owned by Bravo and also acknowledged that while the rent is $1000.00 he pays half, stating that the balance is not required to be paid as compensation for his work. Garcia was also questioned about Bravo's assistance with his purchase of a car. The testimony was that Bravo "aided" him by helping Garcia negotiate and understand terms, but that there was no monetary assistance given to effectuate the purchase.
Bravo testified that he has owned the building since about 1983 or 1984 when his close friend recommended its purchase. It was then vacant. He described Garcia setting up an apartment for himself in about 2001 and noted that at that time, the store owner was having a hard time with the rent. He described the 1F store as others had, with little room to walk. He was at the building 8-12 times a month and the time of day varied. On Sunday evenings the gates were always closed all the way and this was done by a chain that operated from the outside. He indicated that the chain to the gate broke in 2014 when the store was rented to Alarcon and has not since been repaired, requiring that the gate be lifted by hand. Old stoves were kept in the basement and to access them, one had to go outside, pull up a bar and walk down to the basement. Again, he testified there was no hot water and a toilet only. He never saw anything related to living in the store. Over the course of time, Bravo purchased appliances from Castillo and would occasionally talk with him for a while.
Bravo testified that his assistance to Garcia relating to the car purchase extended to helping him with the choice of car and in negotiating the terms of the purchase, as Garcia lacked experience in this area. He denied assisting with payment or otherwise giving him any pecuniary assistance to obtain the car.
When Tony Refrigeration had the store it was cleaner. There were new floors, two aisles and the store was really full. In the back there was an area where there was a couch and a sink where parts were washed. Petitioner's Exhibit 23 depicts the store after Alarcon vacated in July 2016 and according to Bravo, it currently looks the same. The bathroom was added after 2016. A trapdoor to access the basement from the interior was added after 2007. He reiterated that no one ever lived in the store.
On cross-examination Bravo was questioned about whether there was confusion related to the occupancy dates of Tony Refrigeration and whether Castillo lived in a building owned by Seymour Kramer, the previously mentioned friend of Bravo. Bravo acknowledged that he had not known that Garcia moved from the first floor and for ten years had no idea that he did not live at the premises. He indicated he has lived for 27 years in Florida and commutes to New York for about fifteen days a month, and has done this throughout the years.
Fred Daniels testified on rebuttal that the bathroom did not exist prior to 2016 and offered before and after photographs to illustrate the differences.
The Court of Appeals has addressed the question of when and whether a property's usage that fails to conform to its certificate of occupancy will bring it within the confines of residential rent regulatory schemes, typically, rent stabilization or coverage under the Loft Laws. In Wolinsky v. Kee Yip Realty , 2 NY3d 487 (2004) the Court considered whether tenants of illegally converted commercial space living in a commercially zoned area were eligible for coverage under the ETPA when they did not qualify for Loft Law coverage. In Wolinsky , the landlord argued that the building could not be legally converted to residential usage and thus, the tenants were ineligible for Loft Law protection. At trial the lower court dismissed the tenant's complaint finding they were not covered by the Loft Law and that the ETPA did not "provide a mechanism for converting commercially zoned property to residential use and thus tenants could not legalize their conversions." Wolinsky at 491. The Appellate Division agreed stating that the "Act does not extend to tenancies that are illegal and incapable of becoming legal." Id.
On appeal, the Court preliminarily noted the interplay between the Loft Law and the ETPA and, addressing the public housing crisis the ETPA was enacted to protect against, stated, "[w]here a locality has declared a housing emergency, the Act applies to regulate residential rents ‘of all housing accommodations which it does not expressly except, including previously unregulated accommodations’ " (Matter of Salvati v. Eimicke , 72 NY2d 784, 791, 537 NYS2d 16, 533 NE2d 1045 (1988) ; see Matter of Gracecor Realty Co. V. Hargrove , 90 NY2d 350, 355, 660 NYS2d 704, 683 NE2d 326 (1997)". Id.
The Court then noted the legislature had to reconcile the competing interests of the Loft Law occupants living in illegally converted units with the legislative goals protected by the creation of commercial zones designed to spur economic growth and employment. The Court then had to reconcile these goals with the equally important goals of preserving housing pursuant to the mandates of the ETPA. In creating the Loft Law the Court noted that the legislature created a relatively narrow group of properties to be afforded protection and established a specific framework for determining whether and when coverage applies. In holding that Wolinsky was ineligible for Loft Law protection, the Court turned to the question of whether protection was available under the ETPA.
The Court held, "The statute [Loft Law] was not intended to foster future illegal conversions or to undermine legitimate municipal zoning prerogatives. If the prior-enacted ETPA already protected illegal residential conversions of manufacturing space, significant portions of the Loft Law would have been unnecessary...Thus, although such illegal conversions are not expressly exempted from ETPA coverage, it is evident that the legislature did not view the ETPA as safeguarding the interests of the ‘loft pioneers.’ " Id. at 493 (internal citations omitted). The Court then observed that "the City has not acted to amend the Zoning Resolution to include purely residential use of M1-5B space or to re-zone tenants' neighborhood. Similarly, the Legislature has not adopted a new eligibility period that would confer Loft Law protections on later conversions. Such steps could make residential loft units like tenants' legal or capable of being legalized, if such a change were deemed necessary or desirable. We therefore conclude that the ETPA cannot be extended to these illegally converted lofts." Id.
The issue of whether a property has become de facto stabilized and will be afforded ETPA protections has been addressed by numerous courts at all levels for many years. In Gracecor Realty Co. v. Hargrove , 90 NY2d 350 (1997) the Court determined that a room in the Palace Hotel was subject to rent stabilization in a building with units designated class B multiple dwellings. The Court here noted that "[t]he ETPA provides for ‘the regulation of all housing accommodations which it does not expressly except, including previously unregulated accommodations’...The ETPA does not contain any exemptions applicable to respondent's living space." Gracecor at 355 (internal citations omitted). The Court recited the rent stabilization's definition of "housing accommodation" which is "[t]hat part of any building or structure, occupied or intended to be occupied by one or more individuals as a residence, home, dwelling unit or apartment, and all services, privileges, furnishings, furniture and facilities supplied in connection with the occupations thereof." 9 NYCRR § 2520.6(a). The Court then stated that "[t]his functional definition is not limited by any physical or structural requirements, such as square footage." Gracecor at 355.
The Gracecor Court further noted, "[w]hether a period of occupancy is accompanied by sufficient indicia of ‘permanency’ such that the space may be occupied as a home, residence or dwelling unit for rent-stabilization purposes is a fact-intensive question substantially turning on the intent and behavior of the parties. One factor to consider in reaching an appropriate determination is the length of time a landlord permits a person to continuously occupy the same space...Other factors which may be considered include whether the occupant has any other residence, and any other limitations relating to an occupant's use and control of the premises which have been imposed or enforced by a landlord. The Code itself identifies the intent of the occupant as a relevant consideration". Id. at 355-56.
In Gracecor , the landlord had the right to limit the duration of respondent's stay to a period of less than a month. The failure to timely exercise this right triggered certain possessory and rent stabilization rights for an occupant in possession pursuant to statute. Here, the landlord had not elected to exercise these rights and sought instead to dispossess the occupant. Respondent had been permitted to reside in his room for two years without interruption and indicated that he considered the room to be his home. His possessions were there and this was his sole residence. Under these circumstances the Court determined that the occupant's possessory interest had ripened into a protected tenancy. Implicit in the Court's decision is the idea that the hotel had a right to prevent tenancy rights from ripening had it timely or affirmatively acted on these rights.
In Mesiti v. Upam Realty Corp. , 185 AD2d 336 (2d Dep't. 1992), a tenant with a commercial lease argued that the premises were subject to rent control. With sparse elaboration, the court declined ruling in tenant's favor stating, "[t]he lease, as well as a subsequent extension agreement entered into by the parties, unambiguously stated that the premises were to be used solely for commercial purposes. Assuming that the plaintiff resided in a portion of the premises, this did not mean that the plaintiff leased a ‘housing accommodation’ subject to rent control." Mesiti at 307.
In Sheila Props., Inc. v. A Real Good Plumber, Inc. , 59 AD3d 424 (2d Dep't 2009) the owner of a commercial property sought to eject the respondent from premises which respondent asserted was used illegally as a multiple dwelling without a residential certificate of occupancy and argued that the unit should consequently be subject to rent stabilization coverage. The units at the property were commercial and, at least in this unit, utilized residentially. In observing that the Loft Law did not apply the court stated that a requested amendment to plead rent stabilization coverage was also properly denied because "[i]n order to obtain the protection offered by the Rent Stabilization Law for illegally converted commercial premises, a tenant must demonstrate that the owner acquiesced in the unlawful conversion undertaken at the expense of the occupants, the premises were eligible for residential use by reason of the applicable zoning, and the owner, during the pendency of the proceeding in which the tenants sought Rent Stabilization Law protection, actually sought to legalize the residential use." A Real Good Plumber at 426. The court held that these factors were not present and ruled accordingly.
In Caldwell v. American Package Co., Inc. , 57 AD3d 15 (2d Dep't 2008) the Appellate Division again considered the rights of commercial tenants in a commercial property to residential protections via the ETPA. That court determined that where a space was converted to residential use it was not covered unless the owner acquiesced in the unlawful conversion, the conversion was undertaken at the expense of the occupant, that zoning did not preclude residential usage and the owner sought to legalize the residential usage.
In Caldwell the landlord sought to eject the tenants who responded by seeking an injunction prohibiting the owner from terminating their tenancies. In an exhaustive discussion the court looked to the issues raised in deciding the Loft Law cases and, determining that they were not dispositive of the issues before it, turned elsewhere. The court specifically discussed the holdings in Gloveman Realty Corp. v. Jefferys , 18 AD3d 812 (2d Dep't 2005) and Matter of 315 Berry St. Corp. v. Hanson Fine Arts , 39 AD3d 657 (2d Dep't 2007) and, viewing these decisions through the "prism" of Wolinsky, id., concluded, "[t]he broader exception the tenants seek here, which would recognize ETPA protection whenever a building owner has acquiesced in an illegal conversion that is merely ‘capable of being legalized,’ would be inconsistent with Wolinsky's declaration that ETPA protection is inapplicable to illegal conversions." Caldwell at 23.
In its discussion of whether or not to grant use and occupancy the court noted that the legislature explicitly "adopt[ed] the provision that the ‘establishment and maintenance of proper housing standards requir[es] sufficient light, air, sanitation, and protection from fire hazards...essential to the public welfare.’ " Id. at 25. Additionally, the court noted in this regard that the legislature specifically placed the onus of compliance on the owner by prohibiting the collection of use and occupancy when such factors are not present. As this standard was not met, the court declined awarding use and occupancy and remanded the matter on this issue, inter alia .
The Appellate Term, Second Department has visited and revisited this issue over the years. In Commer. Hotel v. White , 194 Misc 2d 26 (App. Term, 2d Dep't 2002) the court unambiguously stated that "plaintiff's addition of a sixth unit (allegedly in 1992) brought all the units in the building under rent stabilization...and defendants-appellants can be evicted only upon one or more of the grounds set forth in section 2524.3 of the Rent Stabilization Code." Commer. Hotel at 27. The facts giving rise to this holding are not stated in the decision and while the petitioner presumably is a hotel, it is unclear whether this is a class B multiple dwelling, and consequently fully analogous to Gracecor .
In Rashid v. Cancel , 9 Misc 3d 130(A) (App. Term, 2d Dep't 2005) the court determined that the use of basement apartment over many years afforded the tenants ETPA protections. Despite the landlord's claim that he was unaware of the usage when he purchased the building the court stated that "landlord's alleged lack of knowledge does not give rise to an exemption from rent stabilization since landlord acquired the building ‘subject to those rights and protections enjoyed by the building's tenants at the time of acquisition.’ " Rashid at 130(A).
In Benroal Realty Assoc., LP v. Lowe, 9 Misc 3d 4 (App. Term, 2d Dep't 2005) the tenants were in possession of commercial space in a lobby pursuant to a commercial lease. Following expiration of the tenant's lease the landlord sought possession. The tenants argued that they were covered by the ETPA as the landlord knew of and acquiesced in their residential use of the space. The court held "notwithstanding the commercial nature of a lease, where a landlord ‘knew of or acquiesced in...tenant's residential use of [a premises]’...said premises ‘must be deemed’ subject to the relevant rent regulatory scheme." Benroal at 6 (citing A Real Good Plumber, supra, amongst others). The court went on to assert "[t]hus, a landlord cannot rent premises under a commercial lease with full knowledge that the tenant intends to convert the premises to solely residential use as his primary residence...and thereafter avoid the protections afforded to residential tenants under the...[ETPA]." Id.
The court further stated, "[w]hile not dispositive of the issue, the instant lease's restrictions on the premises' use to an exclusively commercial purpose is a ‘factor to be considered in determining [such] issue[ ]’ ". Id. In noting that the building manager in this matter testified that he never consented to the unit's usage for residential purposes, and had not been aware that the premises were used in contravention of the commercial lease, and where the tenants acknowledged that the premises were not equipped for residential usage the court stated, "where a lease ‘unambiguously stated that the premises were to be used solely for commercial purposes...[even if] the [tenant] resided in a portion of the premises, this did not mean that the plaintiff leased a ‘housing accommodation’ subject to rent control’ ". Id.
In Benroal the court cited Mesiti , supra ., and observed that the landlord had not consented to the residential use of the property, noting that the space was not equipped for residential usage and observed that it did not appear that the tenants actually lived at the premises for a variety of reasons, although this does not appear to have been a significant component of the court's reasoning or determinative of the outcome.
In Robrish v. Watson , 48 Misc 3d 143(A) (App. Term, 2d Dep't 2015) the landlord sought possession of a top floor apartment of what was acknowledged to have long been a rooming house containing ten separate rooms. Despite the fact that the respondent was the only occupant in possession at the time of trial the court held that the ten separate tenancies subjected the building to rent stabilization coverage as it was a "housing accommodation ...built before January 1, 1974 containing more than six units..." and went on to reiterate that "[t]he RSC defines a housing accommodation as ‘[t]hat part of any building or structure, occupied or intended to be occupied by one or more individuals as a residence, home, dwelling unit or apartment." Robrish at 143(A). Under these circumstances, the court determined that it was an error to dismiss the petition as the governing definition of a rent stabilized dwelling unit included the subject premises. The court additionally noted that it was of no legal consequence that the illegal usage was discontinued.
Following Robrish, the court decided 124 Meserole, LLC v. Recko , 55 Misc 3d 146(A) (App. Term, 2d Dep't 2017) where the building contained four residential units and had once contained a fifth unit within one of the stores. The sixth unit existed "behind the store on the right side of the first floor of the building, which area was used as a residence by the former proprietor of that store (store proprietor)." 124 Meserole at 146(A). The court noted that it is petitioner's burden to demonstrate that the property is exempt from rent stabilization.
The court framed the issue as "whether, as tenants allege, two rooms behind a store in the ground-floor right side of the building were used by the store's proprietor as a residence with the knowledge of the prior landlords in 1974 or at any time thereafter...and whether these rooms constituted a ‘housing accommodation’ within the meaning of RSC § 2520.6." Id. The testimony of various tenants and the introduction into evidence of documentary evidence by the tenants established the usage of the premises as tenants alleged. The store proprietor had a living room and a kitchen behind the store. There was a "full array of furniture, kitchen appliances and decorations, including fresh produce and toiletries." Id. Additionally, the tenants demonstrated that the store proprietor listed her address with the Board of Elections and with the Department of Motor vehicles. No alternate address was offered.
The lower court determined that the space was not a housing accommodation because the two rooms were not a separate space, were separated only by a curtain and that there were neither gas nor water connections in the area. The Appellate Term, citing to Gracecor and Joe Lebnan , infra , reiterated and emphasized the portion of the definition of housing accommodation that states "that part of any building, structure" and held that "the weight of the evidence established that the store proprietor had occupied the rooms as her home over a period of years with the knowledge of the prior landlords." Id. Thus, the rear two rooms constituted a housing accommodation and knowledge of this usage was charged or imputed to the former owner and, consequently, the current owner's lack of knowledge is imputed as well and any professed lack of actual knowledge is an irrelevant component of the inquiry.
In Joe Lebnan, LLC v. Oliva , 39 Misc 3d 31 (App. Term, 2d Dep't 2013) the owner commenced holdover proceedings to recover possession of two apartments in the same building. The building certificate of occupancy contained five residential units and a dentist's office. At trial respondents asserted that the building actually contained eight residential units. Numerous witnesses testified to this illegal usage. Moreover, photographic, documentary evidence and a building department violation report supporting the tenants' assertions as to the number of residential units were introduced. The housing court dismissed the petitions finding that the apartments were rent stabilized.
On appeal, the owner argued that the apartments should not be subject to rent stabilization because the owner neither knew of nor acquiesced in the unlawful conversion, and argued analogously to the laws that govern Loft Law conversions, indicating that the owner had not sought to legalize the units for residential usage. The Appellate Term affirmed the housing court, finding that the rules governing lofts were inapplicable in this context and limited to illegally converted lofts, citing Gracecor, supra. The court revisited the "intent" component of the rent stabilization's definition of a housing accommodation. The Joe Lebnan court elaborated upon the principles espoused by the Court of Appeals in Wolinsky , supra , where it stated that the ETPA "applies to regulate residential rents of all housing accommodations which it does not expressly except, including previously unregulated accommodations." Joe Lebnan at 33 (quoting Wolinsky ). The court further opined that the Wolinsky court "would not have cited Matter of Gracecor with approval if the Court was, in effect, overruling it." Id. The court further observed that a number of trial courts correctly determined that Wolinsky is only applicable to illegally converted lofts." Id.
In contrast with A Real Good Plumber and Caldwell where the owner had sought legalization and the court considered this factor in its reasoning.
The court noted that in the landlord's reply it had cited to A Real Good Plumber for support of its position that the Appellate Division applied Wolinsky in cases that do not involve lofts. In this court's reading the Appellate Division initially referred to the property as "...a building containing 100 commercial/residential units" (A Real Good Plumber at 425) and later states, "[i]n order to obtain the protection offered by the Rent Stabilization Law for illegally converted commercial premises, a tenant must..." (Id. at 426). Thus, while it appears implicit that the Appellate Division was addressing a purely commercial property, it is not unambiguous.
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The cases that have considered this issue have looked at various factors in rendering their decisions. The Wolinsky Court does not specifically address a specific building or a case specific set of facts, but addresses instead two broad statutory schemes in apparent conflict with one another. When the Wolinsky Court articulates the principle that all housing accommodations not expressly excepted by the ETPA are included it expounds a general principal and does not in fact rule on the nuances of each potential set of facts that may be addressed by a lower court.
First, the Court noted that, as it relates to the Loft Law, the inclusion of one implies the exclusion of the other. In other words, the legislature knew what it was doing and by narrowly defining which buildings are afforded coverage the exclusion of everything else is construed to be intentional. The second is to construe statutes so that they do not conflict with one another. Wolinsky has been construed as limited to Loft Law coverage cases yet it includes language that has been the subject of varying interpretations for over two decades as to whether it applies, or not, to non-Loft Law units.
In Gracecor, the Court addressed the occupants of a Class B hotel room. The space in Gracecor has been characterized as a cell but, as that Court noted, the factors that should have been considered were the length of time the landlord permitted the occupant to remain in the same space, whether the occupant had an alternate residence, whether there were limitations on the occupants' access imposed and enforced by the owner. In this regard and with these facts before it the Gracecor court looked to whether there was "sufficient indicia of permanency" in the occupancy and recited the Code provision as it relates to the intent of the occupant as to whether this is or was a home or dwelling unit with the appurtenant privileges and facilities and, again, noted that the functional definition was not limited by physical or structural requirements. In Gracecor the owner had a right to interrupt and limit the occupant's stay to less than one month but had not done so for two years before seeking possession.
Many of the decisions cited have involved a balancing of various factors in light of an explicit public policy that seeks to preserve affordable residential housing. Courts have considered the intent of the parties, the language of their lease, the usage to which a space is primarily put, the knowledge of the parties or their predecessors and, implicitly, whether knowledge should be imputed. Also, courts may look at the acquiescence of an owner, patently improper usage of a space in violation of its certificate of occupancy, and the configuration of the space. Each scenario has some aspects of a sui generis investigation and there is no formula that has or can be applied in any particular instance and there are various factors, some quantifiable and some nuanced, that courts have looked at to discern whether a space is a housing accommodation within the meaning of rent stabilization.
In the matter currently pending before this court the question is whether the unit consistently rented over the course of two decades as a used appliance sales and refrigeration store was used as a housing accommodation within the meaning of RSC § 2520.6(a) and as construed by the various courts that have considered this issue. Here, the space was unquestionably used consistently as a commercial space by each of the various tenants. The question then is whether, if the space was also used in a residential manner, that is enough to change the nature of the tenancy and trigger the entry of the building into the rent regulatory scheme.
The consistent testimony was that there was some type of chair or small settee in the rear of the commercial space, as well as some kitchen utensil and food items. A few small cooking items were kept as well such as oil, salt, peppers, and chiles. The testimony was that two of the three store owners were at the store after hours, with the lights on and a cable wire was shared with one of the store owners by a tenant above, and that the security gate to the store was consistently opened past the store's closing hours and before opening hours. The testimony was that the gate could only be secured from without, so if secured no one was in the store. A few small cooking items were kept as well: oil, salt, pepper, and chiles. These are potential indicia of residential usage past business hours, but are not conclusive and must be viewed in light of all attendant circumstances. What did not exist and the absence of which is troublesome, is a fully functioning bathroom. It appears virtually uncontested that no meaningful bathroom facilities existed at the premises other than a toilet, and, at most, a hose in the basement. Nor was there a distinction between the space that was consistently described as containing the inventory of the store, ironically appliances, and the space allegedly used as living quarters. Moreover, while this was an appliance store, there was nominal testimony whatsoever concerning the use of either a refrigerator or stove in the space for personal use.
Each of the three commercial tenants took possession pursuant to a commercial lease. Each store was unquestionably used for its intended business purpose. Other than Castillo, no other former store proprietor testified and Castillo's testimony, while insistent that he had not lived in the store, is of virtually no probative value. The food preparation items and the use of them in the store does not necessitate a finding of residential usage. There is also an absence of a meaningful bathroom facility. The fact that Castillo and others remained physically at their place of business beyond working hours does not reveal an intent on the part of the occupants of the store that the space in the back of the store be considered their home. While it appears unarguable that non-commercial use of the space occurred it also appears that that usage was secondary, subordinate or appurtenant to the primary use as a store so the question then becomes one of impact. Furthermore, the leases entered into by the commercial tenants were commercial leases. Moreover, in the rental application forms, residential addresses were provided by the commercial tenants.
The components of intent and acquiescence are frequently mentioned in the many of the cases addressing this issue and the idea is frequently, implicitly present. The question of intent is viewed through the tenant's perspective and acquiescence through the landlord or owner's and to some extent is a laches analysis. In this case there is no showing that the petitioner acquiesced in the use of the subject unit for residential purposes, or was aware of the allegation that such usage was alleged. The owner does acknowledge this as to the second commercial unit which was physically converted for residential purposes by the super who created the residential unit. In this case there is likewise only the testimony of others who live in the building as to their observations from which to construe intent.
The facts and evidence elicited in the trial of this proceeding do not demonstrate conclusively usage of the rear, undivided portion of the store as a dwelling unit within the meaning of RSC § 2520.6(a). The primary purpose was commercial and respondents' affirmative burden is not met in a manner that sufficiently demonstrates usage of this store as a dwelling unit in a manner that subjects it to rent stabilization. The space was a functional business. There is no division of space between what would be the residence and the store. There is no meaningful bathroom beyond a toilet. The items that constituted a "kitchen" are not incompatible with a store proprietor's preparation of simple meal preparation at the business. There was no bed, but either a settee or a chair. The owner is not shown to have either been aware of this usage or to have acquiesced in it had it been shown. The intent component of the commercial tenants of the store is not demonstrated through ample direct proof and under the facts of this case are not imputed.
For the foregoing reasons petitioner is awarded a final judgment of possession. A warrant may issue forthwith. Execution of the warrant is stayed for six months from service of a notice of entry upon respondents' counsel so long as respondents continue to remain current with ongoing use and occupancy.
This constitutes the decision and order of the court.
Attachment
Below are the exhibits the court relied on in rendering this decision:
PETITIONER'S EXHIBITS
1) Deed
2) MDR
3) Certificate of Occupancy
4) Lease between Petitioner and Curiel for Store 2 (5/4/11 - 4/30/14)
5) Lease between Petitioner and Casimiro for Store 1 (8/1/99 - 7/31/04)
6) Lease between Petitioner and Casimiro for Store 1 (8/1/99 - 7/31/04)
7) Lease between Petitioner and Casimiro for Store 1 (8/1/04 - 7/31/09)
8) Lease between Petitioner and Pedro Garcia for Apt. 2F (4/1/11 - 3/31/12)
9) Lease between Petitioner and Florida Roboseno for Apt. 2R (8/1/03 - 7/31/04)
10) Lease between Petitioner and Rutilo Ortego for Apt. 3R (8/1/03 - 7/31/04)
11) Lease between Petitioner and Constantino Ramirez for Apt. 3F (6/1/02 - 5/31/03)
12) Judicial notice of termination notice
13)a) Photo of Store 1
b) Photo of Store 1
14) Lease between Petitioner and Alarcon for Store 1 (9/1/14 - 8/31/19)
15) Store lease between Petitioner and Carlos Refrigeration (9/1/14 - 8/31/19)
16) Surrender agreement dated April 30, 2016
17) Picture of man pouring wine
18) Lease application
19) Certificate of occupancy
20) Rental application
21) Pictures (A - F)
22)a) Receipt
b) Email
23) Picture of toilet
24)a) Picture
b) Picture
c) Picture
25) Pictures (A - I)
26) Video of rolling gate (on flashdrive)
RESPONDENTS' EXHIBITS
A) ACRIS Deed for 622 Myrtle Ave
B) Property registration for 622 Myrtle
C) Google Image of 881 Kent
D) Google Image of 620 Myrtle
E)1) Photo of door and stair for Apt. 1R
2) Photo of door for Apt. 1R
F) Video of birthday (on flashdrive)
G) Video of moving day (on flashdrive)
H) Lease between Petitioner and Florida for 2R (10/1/97 - 9/30/02)
I) Voice recording (notice in evidence) — marked for ID
J) Lease between Petitioner and Pedro Garcia for Apt. 2F (7/1/14 - 6/31/16)
K) Attorney certification for MDR of 908 Kent
L) Check ledger (not in evidence) — marked for ID
M) Picture of 620 Myrtle