ERAP AND STAYS IN HOLDOVER - ANOTHER DECISION

Barton v. Bixler, 2022 NY Slip Op 50228 - NY: Dist. Court, Suffolk County, 3rd Dist. March 30, 2022:

"The petitioner landlord Joseph Barton (hereafter "landlord") commenced this summary eviction proceeding pursuant to petition dated September 29, 2020. The tenant, Kelly Bixler (hereafter "the tenant") previously filed a COVID hardship tenant's declaration and received an automatic stay of this eviction proceeding. The Court notes that the COVID Moratorium stay statutorily vitiated on January 15, 2022. Of relevant significance, the tenant has also interposed the affirmative defense that this matter is stayed pursuant to the provisions of New York State's "Emergency Rental Assistance Program" law (Chapter 417(A)(B3)) of Chapter 56 of the laws of 2021, (hereafter "ERAP"), as a result of the filing of an ERAP application on June 22, 2021. The status of same as detailed by the New York State Office of Temporary and Disability Assistance (hereafter "the Administering Agency") on the date of the first hearing on this application was "under review". By application dated February 7, 2022 the landlord moved to vacate the ERAP automatic stay.

February Hearing

During the initial stage of the hearing on this application, the landlord advanced two arguments. The first was that the tenant is not eligible for ERAP and the second is that the ERAP program is presently "in an unfunded condition". The landlord argues that it is well known that the Administrating Agency has exhausted its funding and is not in a position to finalize a decision on ERAP eligibility. It is argued that as such, the prospect of an administrative decision which could potentially vacate the ERAP stay is at best "illusory", and at worst an "indeterminate impossibility".

As to the first issue posited; this Court has previously opined that it has the inherent concurrent authority to conduct a "good faith" hearing to assess eligibility when a tenant has invoked a self initiated automatic stay by filing an application under the ERAP statute. See, Abuelafiya v. Orena, 73 Misc 3d 576 (Suff. Co. Dist. Ct. 2021). See also, Hudson Ave. Housing Associates v. Howard, 2022 WL 829785 (Civ. Ct. Warren Co., J. Hobbs). The guiding premise of said opinion was the United States Supreme Court's striking down New York's companion eviction moratorium law; wherein it was determined that "due process" prohibits a statute from "precluding a landlord from contesting. .. certification (of eligibility) and denies the landlord a hearing" to challenge the automatic stay. The problem found with a self certification is that "no man can be a judge in his own case". See, Chrysafia et al v. Marks, 141 S. Ct. 2482 (U.S. 2021); citing to In re Murchison, 349 U.S. 133 (U.S. 1955).

The Court laid out the ERAP eligibility requirements in its Abuelafiya decision and incorporates them by reference herein. The record presented in the hearing the Court conducted in February evidences that the tenant is eligible. The second thornier issue was the landlord's contention that the exhaustion of ERAP funding makes the statutory "alternative remedy" scheme an unconstitutional sham.^[1] Fortunately, the Court need not delve into the constitutionality of the ERAP statute as during a briefing adjournment ERAP distributed $15,000.00 representing a fifteen (15) month maximum distribution which was deposited by the landlord "under protest".

Such a payment belies any contention of an illusory sham funding program. The only remaining issues as framed by the parties during the March hearing are whether the deposit of said funds "under protest" is "participation" with ERAP. Secondly, whether the tender and acceptance of the maximum ERAP benefit establishes a waiver of the approximately nine (9) months ($9,000.00) presently due, over and above the fifteen (15) months which were paid by ERAP.

March 2022 hearing "Under Protest"

The Court will summarily deal with the landlord's threshold argument that if a landlord declines to participate in ERAP: that he is not bound by the statute's stays and/or declared waivers. See, Actie v. Gregory, 74 Misc 3d 1213(A), (NY Civ. Kings County 2022) in support of this contention. See also, Carousel Properties v. Valle, 74 Misc 3d 1217(A) (Suff. Co. Dist. Ct. 2022) for the finding that even acceptance of ERAP funds doesn't re-instate a tenancy. While this may be correct; the facts in the present case indicate that the landlord did in fact complete his component of the ERAP application and as such the deposit of a maximum benefit (even under a last minute protest) is participation.

Is Acceptance of Partial Payment A Waiver of All Outstanding Arrears?

However, it is quite a more compelling argument to assert that ERAP cannot compel a waiver of the nine (9) months of outstanding rent due after receipt of the fifteen (15) maximum payments. How can a tenant be "eligible" for an ERAP payment after having already received the maximum benefit. Inherently, the applicant is no longer eligible. A review of the exact statutory language in ERAP discloses on page 4, Sec. 5(d) at line 46 as follows:

Acceptance of payment for rent or rental arrears from this program or any local program administering federal emergency rental assistance program funds shall constitute agreement by the recipient landlord or property owner: (i) that the arrears covered by this payment are satisfied and will not be used as the basis for a non-payment eviction. Emphasis added.

The fundamental purpose of ERAP is to provide a stay of eviction pending a determination that the tenant is eligible to receive up to fifteen (15) months of rental arrears. Upon acceptance of same, the landlord waives any late fees or other minor discrepancies of the amount due for the covered fifteen (15) month period. However, should the statute seek to compel waiver of sums due for months not "in the covered arrears", which are in excess of the fifteen (15) month maximum benefit, the statute again runs into constitutional peril as violative of Article I, Sec. 10 of the U.S. Constitution involving the prohibition against governmental "impairment of private contracts".

The Court is required to construe statutes in a manner to avoid constitutional violations. See New York Statutes, Sec 150. The only manner for the court to avoid the aforestated constitutional issue is to read the statute as it is plainly written and determine that the legislature only intended to cure fifteen (15) months of arrears and to leave any excess arrears to the tenant to cure. See generally, Abuelafiya v. Orena cite infra citing to People v. Liberta, 64 NY2d 152, 485 N.Y.S. 2d 207, 474 N.E. 2d 567 (NY 1984), United States v. Rumely, 345 U.S. 41, 73 S.Ct. 543, 97 L.Ed. 770 (1953), Collado v. Boklari, 27 Misc 3d 161, 892 N.Y.S. 2d 731 (Suf. Co. Dist. Ct. 2009).

As the automatic stay ceased upon the ERAP determination of payment approval, no stay exists. As no waiver for the remaining uncovered nine (9) months occurred the tenant is responsible to pay same ($9,000.00) on or before May 1, 20022 to cure her rent arrears. If payment is made, this petition will be dismissed. If not, the landlord may submit judgment for $9,000.00 plus judgment of possession and a warrant of eviction.

[1] As in the Chrysafia case, new York's automatic stay ERAP statute allows for self certification. The difference in the case at bar is that the ERAP statute creates an administrative process wherein eligibility is determined by an Administrating Agency, and that the stay is indeterminate except for the fact that the ERAP program sunsets in 2025. Other trial Courts in New York has sought to distinguish ERAP from the companion "moratorium" statutes by asserting that the due process clause of the 5th and 14th amendments of the U.S. constitution are not violated because ERAP is a "diversion" program which merely transfers litigation to an alternative regulatory forum. See, Harbor Tech, LLC v. Correa, 73 Misc 3d 1211 (A) (NY Civ. Ct. 2021); Montgomery v. Daniels, 38 NY2d 41(NY 1975). The Montgomery case involves a statutorily created limit to Court access as a consequence of an "alternative remedy" for recovery. In the nature of dicta, the issue of whether an unfunded ERAP Administrative Agency is constitutionally sustainable is now temporarily moot. However, the Court does opine that any alternative remedy program must still comport with the seminal case defining due process as requiring "an opportunity to be heard" wherein an adverse litigant must receive a hearing before a neutral tribunal "in a meaningful time" and in a "meaningful manner". See, Bodie v. The State of Connecticut, 461 U.S. 371 (U.S. 1971), citing to Armstrong v. Manzo, 380 U.S. 545 (U.S. 1965)."