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Pultz v. Economakis

Court of Appeals of the State of New York
Jun 3, 2008
890 N.E.2d 880 (N.Y. 2008)

Summary

In Pultz v Economakis, 10 NY3d 542, cited by the attorney for plaintiffs, a couple sought to evict the tenants in 15 rent-stabilized apartments from an East Village tenement in order to convert the 60-room tenement into their own single-family home containing a gym, a playroom, a library, five bedrooms and six bathrooms.

Summary of this case from Drasser v. STP Assoc., LLC

Opinion

No. 80.

Argued April 17, 2008.

decided June 3, 2008.

APPEAL, by permission of the Court of Appeals, from an order of the Appellate Division of the Supreme Court in the First Judicial Department, entered February 15, 2007. The Appellate Division (1) reversed, on the law, an order of the Supreme Court, New York County (Faviola A. Soto, J.; op 2006 NY Slip Op 30040[U]), which, among other things, had denied defendants' motion for summary judgment and granted plaintiffs' cross motion for summary judgment to the extent of declaring that defendants violated the Rent Stabilization Law and the Rent Stabilization Code by unilaterally attempting to withdraw an entire building from the rental market without the approval of the Division of Housing and Community Renewal (DHCR) and for a permanent injunction restraining defendants from taking any action to cancel or terminate plaintiffs' leases unless and until DHCR approval was obtained; (2) granted defendants' motion for summary judgment; (3) vacated the injunctive relief; (4) denied plaintiffs' cross motion; and (5) declared that defendants' plan to recover the six remaining stabilized units for owner-occupancy purposes was governed by Rent Stabilization Code (9 NYCRR) § 2524.4 (a) (1), which does not require preapproval by DHCR.

Pultz v Economakis, 40 AD3d 24, affirmed.

Collins Dobkin Miller, LLP, New York City ( Stephen Dobkin, Seth A. Miller and W. Miller Hall of counsel), for appellants. I. The owner use provisions of the Rent Stabilization Law and Rent Stabilization Code are not designed to permit the withdrawal of apartments from the stabilized rental market. ( Nestor v Britt, 213 AD2d 255; Raffo v McIntosh, 3 Misc 3d 127[A], 2004 NY Slip Op 50323[U] ;Salazar v Li, 4 Misc 3d 142[A], 2004 NY Slip Op 51058[U]; Matter of Rosenbluth v Finkelstein, 300 NY 402; Matter of Volpicelli v Leventhal, 48 AD2d 660; State of New York v Patricia II., 6 NY3d 160; Matter of Devlin v New York State Div. of Hous. Community Renewal, 309 AD2d 191; Matter of Reichman v New York City Conciliation Appeals Bd., 117 AD2d 517; Beer v Walters, 118 Misc 2d 630; Matter of Chatlos v McGoldrick, 302 NY 380.) II. Owner-occupied apartments are not exempted from rent stabilization. ( Thornton v Baron, 5 NY3d 175; Federal Home Loan Mtge. Corp. v New York State Div. of Hous. Community Renewal, 87 NY2d 325; Matter of Salvati v Eimicke, 72 NY2d 784; Morales v County of Nassau, 94 NY2d 218; Matter of Legra v Division of Hous. Community Renewal of State of N.Y., 194 AD2d 677; Matter of 300 W. 49th St. Assoc. v New York State Div. of Hous. Community Renewal, Off. of Rent Admin., 212 AD2d 250; Matter of Devlin v New York State Div. of Hous. Community Renewal, 309 AD2d 191.) III. The elimination of rent-stabilized housing accommodations requires compliance with Rent Stabilization Code (9 NYCRR) § 2524.5 (a) (1) and the approval of the Division of Housing and Community Renewal. ( Matter of Bliss v Bliss, 66 NY2d 382; Golden v Koch, 49 NY2d 690; Matter of Robbins v Herman, 11 NY2d 670; Friedman v Ontario Holding Corp., 279 App Div 23, 304 NY 625; Matter of Mahoney v Altman, 63 Misc 2d 1062; Sohn v Calderon, 78 NY2d 755; Capital Tel. Co. v Pattersonville Tel. Co., 56 NY2d 11; Davis v Waterside Hous. Co., 274 AD2d 318; Matter of Ziman v New York State Div. of Hous. Community Renewal, 153 AD2d 489, 76 NY2d 727.)

Rosenberg Estis, P.C., New York City ( Jeffrey Turkel of counsel), and Rose Rose ( Todd A. Rose of counsel) for respondents. I. This Court should declare that the owners are free to proceed in Civil Court under Rent Stabilization Law (Administrative Code of City of NY) § 26-511 (c) (9) (b) and Rent Stabilization Code (9 NYCRR) § 2524.4 (a) to attempt to recover the remaining stabilized units at issue for the owners' personal use. ( Nestor v Britt, 213 AD2d 255; Matter of Rosenbluth v Finkelstein, 300 NY 402; Chan v Adossa, 195 Misc 2d 590; Smilow v Ulrich, 11 Misc 3d 179; State of New York v Patricia II., 6 NY3d 160; Patrolmen's Benevolent Assn. of City of NY v City of New York, 41 NY2d 205; Matter of Malta Town Ctr. I, Ltd. v Town of Malta Bd. of Assessment Review, 3 NY3d 563; Matter of Polan v State of NY Ins. Dept., 3 NY3d 54; Matter of Garzilli v Mills, 250 AD2d 131; Matter of Schmidt v Roberts, 74 NY2d 513.) II. Owner-occupied apartments are not rent stabilized and need not remain rent stabilized. III. The owners are not seeking to withdraw the subject units from the rental market or demolish the building, as the Division of Housing and Community Renewal has defined these terms. ( Rent Stabilization Assn. of NY City v Higgins, 83 NY2d 156; Matter of Versailles Realty Co. v New York State Div. of Hous. Community Renewal, 76 NY2d 325; Matter of Salvati v Eimicke, 72 NY2d 784, 73 NY2d 995; Matter of Gaines v New York State Div. of Hous. Community Renewal, 90 NY2d 545; Raffellini v State Farm Mut. Auto. Ins. Co., 9 NY3d 196; Malta v Brown, 12 Misc 3d 1164[A], 2006 NY Slip Op 51028[U]; Matter of Ziman v New York State Div. of Hous. Community Renewal, 153 AD2d 489, 76 NY2d 727.)

Legal Services for New York City, New York City ( Raun J. Rasmussen and David Robinson of counsel), and South Brooklyn Legal Services, Brooklyn ( John C. Gray and Jennifer Levy of counsel), for City-Wide Task Force on Housing Court and others, amici curiae. The Appellate Division's decision, which permits the owner's use exemption to be used as a means to deregulate an entire building without Division of Housing and Community Renewal approval, is inconsistent with the purpose of the Rent Stabilization Law and the intentions of the Legislature. ( Matter of Ansonia Residents Assn. v New York State Div. of Hous. Community Renewal, 75 NY2d 206; 8200 Realty Corp. v Lindsay, 27 NY2d 124; Bedford v De Rosa, 128 Misc 2d 181; Wai Chan v Gao Xiao Ying, 10 Misc 3d 1065[A], 2005 NY Slip Op 52166[U]; Matter of 12th Co. v New York State Div. of Hous. Community Renewal, 303 AD2d 328.)

Borah Goldstein Altschuler Nahins Goidel, P.C., New York City ( Jeffrey R. Metz of counsel), for Community Housing Improvement Program, Inc. and another, amici curiae. The evidence does not lie: owner occupancy proceedings do not contribute to the wholesale loss of regulated housing stock. ( Blum v Graceton Estates, 228 AD2d 274, 88 NY2d 815.)

Belkin Burden Wenig Goldman, LLP, New York City ( Sherwin Belkin and Magda L. Cruz of counsel), for Rent Stabilization Association of New York City, Inc., amicus curiae. I. Appellants seek to deprive owners of fundamental private property rights. ( Seawall Assoc. v City of New York, 74 NY2d 92; 8200 Realty Corp. v Lindsay, 27 NY2d 124; Ullmann Realty Co. v Tamur, 113 Misc 538; 520 E. 81st St. Assoc. v Lenox Hill Hosp., 157 AD2d 138, 77 NY2d 944; Alden v Callahan, 65 Misc 2d 183.) II. Appellants seek to disrupt the statutory and regulatory owner occupancy framework. ( Matter of Malta Town Ctr. I, Ltd. v Town of Malta Bd. of Assessment Review, 3 NY3d 563; Matter of Tall Trees Constr. Corp. v Zoning Bd. of Appeals of Town of Huntington, 97 NY2d 86; Majewski v Broadalbin-Perth Cent. School Dist., 91 NY2d 577; Nestor v Britt, 213 AD2d 255; Matter of Rosenbluth v Finkelstein, 300 NY 402; Smilow v Ulrich, 11 Misc 3d 179.)

Before: Chief Judge KAYE and Judges CIPARICK, GRAFFEO, READ, SMITH and PIGOTT concur.


OPINION OF THE COURT


Defendants are a married couple who own a five-story, 15-unit apartment building in Manhattan. Six of these units are rent stabilized and each plaintiff is a tenant of a rent-stabilized apartment within the building.

In June and September 2004, defendants served two plaintiffs with notices of "non-renewal of lease," stating their intention to recover possession of all of the remaining rent-stabilized apartments on the ground of owner-occupancy pursuant to Rent Stabilization Code (9 NYCRR) § 2524.2 (c) (3) and § 2524.4 (a). The notices included a statement by defendants that they "intend[], in good faith, to recover possession of all of the apartments located on the First, Second, Third, Fourth and Fifth Floors" of the subject building for the husband owner's personal use as a primary residence. The notices also detailed defendants' plan for converting the floors in question into their own single-family dwelling.

In October 2004, plaintiffs commenced the instant action, seeking: (1) a declaration that defendants' plan violated the Rent Stabilization Law and Rent Stabilization Code; (2) an injunction tolling the notices and enjoining defendants from instituting any holdover proceedings in Civil Court based on the notices during the pendency of this action; and (3) attorneys' fees based on defendants' breach of the residential leases with two of the plaintiffs. Plaintiffs alleged that, consistent with the legislative intent to preserve rent-stabilized housing for persons and families that occupy such housing ( see Rent Stabilization Law [Administrative Code of City of NY] § 26-501), "the [Rent Stabilization Law and Code] are designed to strictly limit those situations in which an owner is permitted to remove an entire building or all of its units from the stabilized housing stock." Plaintiffs further alleged that "removal of an entire residential building" or all of its rent-stabilized units requires authorization from the New York State Division of Housing and Community Renewal (DHCR) "and compliance with the requirements for demolition or withdrawal from the housing market." In June 2005, Supreme Court granted plaintiffs' motion for a preliminary injunction, barring defendants from taking any action to cancel or terminate plaintiffs' leases.

Plaintiffs rely on 9 NYCRR 2524.5 (a) (1) (i), which permits an owner to commence an action or proceeding in a court of competent jurisdiction to recover possession of rent-stabilized apartments where

"[t]he owner has established to the satisfaction of the DHCR after a hearing, that he or she seeks in good faith to withdraw any or all housing accommodations from both the housing and non-housing rental market without any intent to rent or sell all or any part of the land or structure and . . .
"that he or she requires all or part of the housing accommodations or the land for his or her own use in connection with a business which he or she owns and operates" (emphasis added).

Subsequently, defendants, relying on 9 NYCRR 2524.4 (a), moved for summary judgment to dismiss the complaint, arguing that the plain language of the Rent Stabilization Law and Code unambiguously permits an owner to recover "one or more dwelling units" for personal use, without limitation or DHCR approval, as long as the owner demonstrates a good faith intention to use the units as his or her primary residence ( 9 NYCRR 2524.4 [a]). Plaintiffs cross-moved for summary judgment on their first two causes of action.

By order entered April 14, 2006, Supreme Court granted plaintiffs' cross motion solely to the extent of entering a judgment that defendants violated the Rent Stabilization Law and Code by failing to obtain DHCR approval before attempting to regain possession of the entire building. The court determined that because defendants sought to recover all of the building units, 9 NYCRR 2524.4 (a) was inapplicable, and that permitting defendants to recover all of the rent-stabilized apartments would conflict with the intent and purpose underlying the Rent Stabilization Code. The court also rejected defendants' arguments that plaintiffs' second and third causes of action should be dismissed.

The Appellate Division reversed, holding that defendants' plan to recover rent-stabilized apartment units was governed by 9 NYCRR 2524.4 (a) ("owner occupancy" provision), not 9 NYCRR 2524.5 (a) (1) ("market withdrawal" provision). We granted plaintiffs leave to appeal and now affirm.

"It is fundamental that a court, in interpreting a statute, should attempt to effectuate the intent of the Legislature. The starting point is always to look to the language itself and where the language of a statute is clear and unambiguous, courts must give effect to its plain meaning" ( State of New York v Patricia II., 6 NY3d 160, 162 [internal quotation marks, brackets and citations omitted]; see also Majewski v Broadalbin-Perth Cent. School Dist., 91 NY2d 577, 583).

Read together, the plain language of the Rent Stabilization Law ( see Administrative Code of City of NY § 26-511 [c] [9] [b]) and the Rent Stabilization Code ( see 9 NYCRR 2524.4 [a] [1], [3]) permits an owner to refuse renewal leases to rent-stabilized tenants and to recover possession of "one or more" stabilized dwelling units for his or her personal use and occupancy as his or her primary residence, or as the primary residence of a member of the owner's immediate family, without first obtaining DHCR approval. If there is more than one owner, only one of the individual owners may recover the units for his or her personal use and occupancy.

Plaintiffs maintain that 9 NYCRR 2524.5 (a) (1) (i) and the legislative intent underlying the Rent Stabilization Law and Code mandate reversal of the Appellate Division order. These arguments are unavailing.

Section 2524.5 (a) (1), by its plain terms, is triggered only when there is an attempt to withdraw any or all housing accommodations from the rental market and where the owner requires the units for use in connection with a business he or she owns or operates, or because the cost of removing violations filed by government agencies is equal to or exceeds the value of the property. Where, as here, withdrawal from the rental market is not for one of the above-stated purposes, section 2524.5 (a) (1) does not apply.

Plaintiffs' legislative intent argument presumes an ambiguity in the Rent Stabilization Code's owner-occupancy provisions with respect to defendants' actions. Of course the Legislature intended to make more rental housing available, but it also intended to allow owners to live in their own buildings if they choose to do so. The unambiguous language of 9 NYCRR 2524.4 (a) was chosen by the Legislature to reconcile these conflicting policies, and we give effect to the plain meaning of that language.

Based on the foregoing, the Appellate Division correctly granted summary judgment to, and vacated the permanent injunction against, defendants. In so ruling, we underscore that defendants may not recover the stabilized apartment units unless and until they establish in Civil Court (at holdover proceedings against plaintiffs) their good faith intention to recover possession of the subject apartments for the husband owner's personal use as the primary residence.

Accordingly, the order of the Appellate Division should be affirmed, with costs.

Order affirmed, with costs.


Summaries of

Pultz v. Economakis

Court of Appeals of the State of New York
Jun 3, 2008
890 N.E.2d 880 (N.Y. 2008)

In Pultz v Economakis, 10 NY3d 542, cited by the attorney for plaintiffs, a couple sought to evict the tenants in 15 rent-stabilized apartments from an East Village tenement in order to convert the 60-room tenement into their own single-family home containing a gym, a playroom, a library, five bedrooms and six bathrooms.

Summary of this case from Drasser v. STP Assoc., LLC

In Pultz, there was a concern that once the tenement was emptied of the tenants, the couple would subdivide the building into renovated apartments no longer subject to rent control rather than use the tenement as their residence.

Summary of this case from Drasser v. STP Assoc., LLC

In Pultz v Economakis (10 NY3d 542, 548), the Court of Appeals interpreted New York City Rent Stabilization Code (RSC) (9 NYCRR) § 2524.4 (a) to allow owners to recover entire buildings in owner's-use holdover proceedings if they can prove, at trial, their good faith intention to recover the units for their personal use as their primary residence.

Summary of this case from Rudd v. Sharff
Case details for

Pultz v. Economakis

Case Details

Full title:DAVID S. Pultz et al., Appellants, v. CATHERINE ECONOMAKIS et al.…

Court:Court of Appeals of the State of New York

Date published: Jun 3, 2008

Citations

890 N.E.2d 880 (N.Y. 2008)
890 N.E.2d 880
860 N.Y.S.2d 765
2008 N.Y. Slip Op. 4900

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