COLLECTING RENT IN A MULTIPLE DWELLING WITH SERIOUS VIOLATIONS

Here, the violations were not on tenant's apartment yet they were serious violations in the building.

936 TYH RM BRONX LLC v. Brujan, 2022 NY Slip Op 33642 - NY: County Court, Civil Court 2022:

"Respondent's argument is simple. From January 1, 2020 through March 1, 2022, a violation existed for "occupancy contrary to that allowed by" the certificate of occupancy. (see NYSCEF Doc. 13 at p. 10, referencing OATH/ECB Violation #35465505N; see also NYSCEF Doc. 18). According to the respondent, this non-conforming use means petitioner was not in compliance with Multiple Dwelling Law (MDL) § 301. MDL § 301(1) states, in relevant part,

No multiple dwelling shall be occupied in whole or in part until the issuance of a certificate by the department that said dwelling conforms in all respects to the requirements of this chapter, to the building code and rules and to all other applicable law, except that no such certificate shall be required in the case of: (a). Any class B multiple dwelling existing on April, eighteenth, nineteen hundred twenty-nine, for which a certificate occupancy was not required before such date and which no changes or alterations have been made except in compliance with this chapter...

MDL § 302, in turn, states that in a "dwelling or structure... occupied in whole or in part for human habitation in violation of" § 301, "[n]o rent shall be recovered by the owner...for said period, and no action or special proceeding shall be maintained therefor, or for possession of said premises for nonpayment of such rent."

Respondent argues dismissal is required because the rent demand seeks rent petitioner cannot collect in this proceeding.

Petitioner counters that respondent's argument is entirely incorrect because she relies on a misfiled certificate of occupancy to conclude the premises were somehow converted from (2) stories to the current (6) stories. Critically, however, petitioner's opposition concedes the OATH/ECB violation issued on January 3, 2020. (see NYSCEF Doc. 25 at par. 4). Petitioner argues that respondent misinterprets the MDL provisions. Petitioner states the violation is not for respondents' unit, and that the violation [which was in the cellar] did not affect any other legal unit. (id. at par. 6). Indeed, the summons indicates, and the parties agree, that the violation is for an illegal unit in the cellar.^[2]

On a motion to dismiss the complaint pursuant to CPLR § 3211(a)(7) for failure to state a cause of action, the court must afford the pleading a liberal construction, accept all facts as alleged in the pleading to be true, accord the plaintiff the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory. (Leon v Martinez, 84 NY2d 83, 87 [1994]; Breytman v Olinville Realty, LLC, 54 AD3d 703, 703-704, 864 NYS2d 70 [2nd Dept 2008]). However, where evidentiary material is submitted and considered on a motion to dismiss a pleading pursuant to CPLR § 3211(a)(7), the question becomes whether the proponent of the pleading has a cause of action, not whether the proponent has stated one. (see Guggenheimer v Ginzburg, 43 NY2d 268, 275, 401 NYS2d 182 [1977]). Dismissal is inappropriate unless the movant can show that a purported fact is no fact at all. (see Cajigas v Clean Rite Centers, LLC, 187 AD3d 700, 701, 132 NYS3d 428 [2nd Dept 2020]).

The undisputed OATH/ECB violation requires dismissal of this case.^[3]

When a violation exists for occupancy at odds with the certificate of occupancy, the building, essentially, lacks a certificate of occupancy. (see 12 East 88th LLC v Fox, 72 Misc. 3d 1221(A), *4, 2021 NY Slip Op 50815(U) [Sup Ct, New York County 2021]). No rent may be collected during any period the dwelling's occupancy is at odds with the certificate of occupancy. (see MDL § 302; GVS Properties LLC v Vargas, 172 AD3d 466, 466, 100 NYS3d 230 [1st Dept 2019]; 742 Realty LLC v Zimmer, 46 Misc. 3d 1204(A), *1, 2014 NY Slip Op 51845(U) [Civ Ct, Kings County 2014]).

Petitioner's arguments must fail because rent is barred even if the tenant's unit is not the illegal unit. (see West 47th Holdings LLC v Eliyahu, 64 Misc. 3d 133(A), *1-2, 2019 NY Slip Op 51066(U) [App Term, 1st Dept 2019]; 49 Bleecker, Inc. v Gatien, 157 AD3d 619, 620, 69 NYS3d 863 [1st Dept 2018] ("The owner of a `dwelling or structure ... occupied in whole or in part for human habitation in violation of [§ 301]' may not recover rent for the period during which there is no certificate of occupancy for `such premises'); see also 1165 Fulton Ave. HDFC v Goings, 65 Misc. 3d 1210(A), 2019 NY Slip Op 51567(U) [Civ Ct, Bronx County 2019] (noting the change in how courts in this department apply MDL 302 after the Court of Appeals holding in Chazon LLC v Maugenest (19 NY3d 410, 948 NYS2d 571 [2012]). In Goings, the petitioner argued that the violation for use contrary to the certificate of occupancy involved a room in the basement that had no impact on the tenant's unit. (see 65 Misc. 3d 1210(A), *2). Dismissal was still required. Petitioner here makes the same argument, and the same outcome is required.

The rent demand in this proceeding is clearly defective because it seeks rent petitioner is barred from collecting. A rent demand, of course, must fairly afford the tenant actual notice of the alleged amount due and of the period for which such claim is made. (542 Holding Corp. v Prince Fashions Inc., 46 AD3d 309, 311, 848 NYS2d 37 [1st Dept 2007] citing Schwartz v Weiss—Newell, 87 Misc. 2d 558, 561, 386 NYS2d 191 [Civ Ct, New York County 1976]). A proper rent demand is a prerequisite to maintain a non-payment proceeding. (RPAPL § 711(2); see Vartarian v Brady, 184 Misc. 2d 333, 707 NYS2d 285 [Civ Ct, New York County 1999]; EOM 106-15 217th Corp. v Severine, 62 Misc. 3d 141(A) [App Term, 2nd Dept 2019]).

The rent demand seeks rent portions for twenty (20) different months. Petitioner may only collect rent for one (1) of those months (March 2022). Under these circumstances, the case must be dismissed. (see 3463 Third Avenue Realty LLC v Vasquez, 59 Misc. 3d 1224(A), *2, 2018 NY Slip Op 50674(U) [Civ Ct, Bronx County 2018]; see also CPLR 409(b) (requiring summary determination at any stage of the proceeding when no issues of fact are raised)).

CONCLUSION

Based on the foregoing, it is Ordered, judgment shall enter in respondents' favor dismissing the petition.^[4] This constitutes the Decision and Order of the court. It will be posted on NYSCEF.

SO ORDERED.

[1] On information and belief, the matter was not calendared due to a pending ERAP application.

[2] The summons speaks for itself. (see NYSCEF Doc. 25). It is not disputed. Petitioner acknowledges it had to correct the condition and pay a fine. Petitioner may not relitigate the summons/violation here.

[3] The violation is a "Class 1" violation. Class 1 violations are "immediately hazardous": "those where the violating condition(s) poses a threat that severely affects life, health, safety, property, the public interest, or a significant number of persons so as to warrant immediate corrective action..." (see What is an OATH Summons? — Buildings (nyc.gov) [last accessed on October 23, 2022]).

[4] Petitioner's motion is denied as moot."

DEALING WITH RENT IMPAIRING VIOLATIONS UNDER THE MULTIPLE DWELLING LAW

FOOD FIRST HDFC INC. v. Turner, 2020 NY Slip Op 51155 - NY: City Court, Civil Court October 5, 2020:

"......If HPD's official records show that an owner of a multiple dwelling does not remove a rent-impairing violation within six months after the notice of the violation, and if a tenant of "any premises in such multiple dwelling" pleads such a defense in a nonpayment proceeding and deposits with the clerk of the Court the amount of rent the owner demands in its petition, then the owner may not recover any rent after the expiration of the six months so long as the violation remains uncorrected. MDL §§302-a(3)(a), 302-a(3)(c). As Respondent has fulfilled every condition to the letter of the statute, Respondent proves, as a prima facie matter, that Petitioner may not collect rent from her from six months after the notice of the first violation until Petitioner corrects the Violations. 50 Manhattan Ave. LLC v. Powell, 2018 N.Y.L.J. LEXIS 777, *5-6 (Civ. Ct. NY Co.), Worley v. 151 W. Realty Co., 1995 N.Y.L.J. LEXIS 9783, *4 (Civ. Ct. NY Co.).

.....

Accordingly, Respondent is entitled to summary judgment on her defense pursuant to MDL §302-a. According to the facts Respondent has demonstrated by this motion, the statute precludes Petitioner from recovery of rent "for the period that such violation remains uncorrected after the expiration of said six months." MDL §302-a(3)(a). Words mean the same thing even when used in different statutes if the statutes concern the same subject matter. Benesowitz v. Metro. Life Ins. Co., 8 NY3d 661, 668 (2007). The statutory use of the word "period" in relation to landlord/tenant relationships speaks of the relevant time interval for payment of rent in terms of months. RPL §232-c ("if the landlord shall accept rent for any period subsequent to the expiration of such term the tenancy created shall be a tenancy from month to month commencing on the first day after the expiration of such term")(emphasis added). If a landlord does not correct a rent-impairing violation within six months of its issuance, then, the "period after the expiration of said six months" referred to in MDL §302-a(3)(a) means the month following the expiration of the six-month period. Similarly, if the "period" that a rent-impairing violation "remains uncorrected" ends in the middle of a month, the "period" in which a landlord may not recover rent includes the entirety of that month.

Six months after the issuance of the Violations in this matter fell in December of 2019. Petitioner therefore may not recover rent starting in January of 2020. The Violations remained uncorrected until July of 2020, so the first month that Petitioner may therefore receive rent is August of 2020. Respondent's rent for January of 2020 was $1,048.29 and from February through July of 2020 was $1,074.46. Respondent's aggregate rent liability from January through July of 2020 was $7,495.05. Respondent is entitled to a credit of this amount which, when set off against the amount demanded in the petition of $4,193.16, leaves a credit of $3,301.89. As the credit is greater than the judgment amount demanded in the petition, the Court dismisses the petition.

After dismissal of the petition, what remains of the proceeding is Respondent's counterclaims. At oral argument of this motion, Respondent indicated that it made sense to revisit the question of the course of this proceeding in the event the Court dismissed the petition. The Court therefore holds in abeyance the balance of Respondent's motion pending a conference of this matter which the Court will calendar virtually with the parties.

The Court further directs the clerk of the Court to release to Respondent the $4,193.16 that Respondent had deposited with the Court on December 19, 2019, which was memorialized as transaction No. 3490."

MULTIPLE DWELLING LAW AND ILLEGAL APARTMENTS

New York Multiple Dwelling Law § 302 provides in part:

"1. a. If any dwelling or structure be occupied in whole or in part for human habitation in violation of section three hundred one , during such unlawful occupation any bond or note secured by a mortgage upon said dwelling or structure, or the lot upon which it stands, may be declared due at the option of the mortgagee.

b. No rent shall be recovered by the owner of such premises for said period, and no action or special proceeding shall be maintained therefor, or for possession of said premises for nonpayment of such rent. "

In Lispenard Studio Corp. v. Loeb, 2016 NY Slip Op 30945 - NY: City Court, Civil Court 2016, this was addressed by the court:

"A substantial body of law supports the proposition that MDL §302 rent forfeiture provisions do not apply if the tenant was complicit in the existence and maintenance of an illegal apartment, Zane v. Kellner, 240 A.D.2d 208, 209 (1st Dept. 1997), 58 E. 130th St. LLC v. Mouton, 25 Misc. 3d 509, 511 (Civ. Ct. N.Y. Co. 2009), citing, Zafra v. Sawchuk, N.Y.L.J., Jan. 9, 1995, at 27:2 (App. Term 1st Dept), if the tenants knew that their occupancy was illegal, Zane, supra, 240 A.D.2d at 209, Eli Haddad Corp. v. Cal Redmond Studio, 102 A.D.2d 730 (1st Dept. 1984), Lipkis v. Pikus, 99 Misc.2d 518, 520 (App. Term 1st Dept. 1979), aff'd, 72 A.D.2d 697 (1st Dept 1979), appeal dismissed, 51 N.Y.2d 874 (1980), Dodds v. 1926 Third Ave. Realty Corp., 2011 N.Y. Misc. LEXIS 3921 (S. Ct. N.Y. Co. 2011), if the tenants somehow prevented the legalization, Chatsworth 72nd Street Corp. v. Rigai, 71 Misc. 2d 647, 651 (Civ. Ct. N.Y. Co. 1972), aff'd, 74 Misc.2d 298 (App. Term 1st Dept.), aff'd, 43 A.D.2d 685 (1st Dept. 1973), aff'd on the opinion of the Civil Court of the City of New York, 35 N.Y.2d 984, 895 (1975), First Edition Composite, Inc. v. Wilkson, 177 A.D.2d 297, 299 (1st Dept. 1991), Hornfeld v. Gaare, 130 A.D.2d 398, 400 (1st Dept. 1987), Amdar v. Armenti, N.Y.L.J. June 23, 1994 at 28:4 (App. Term 1st Dept.), or if the subject premises do not pose a threat to the tenant's health and safety. Zane, supra, 240 A.D.2d at 209, Dogwood Residential, LLC v. Stable 49, Ltd., 2016 N.Y. Misc. LEXIS 1362 (S. Ct. N.Y. Co. 2016), citing Beneficial Cap. Corp. v. Richardson, No. 92 Civ. 3785, 1995 US Dist LEXIS 7354 (S.D.N.Y. 1995).

This authority relies upon an "abandon[ment of] a literal application of MDL §302 in favor of allowing equity to control in order to avoid a tenant's unjust enrichment," as one Court put it. B.S.L. One Owners Corp. v. Rubenstein, 159 Misc.2d 903, 908 (Civ. Ct. Richmond Co. 1994). However, a recent Court of Appeals case rejects the abandonment of a literal application of MDL §302. Chazon, LLC v. Maugenest, 19 N.Y.3d 410, 415-16 (2012)("[i]n the absence of compliance, the law's command is quite clear . . . [judicially-carved-out exceptions to MDL §302] may make sense from a practical point of view. But we find nothing . . . to explain how they can be reconciled with the text of the statute. They simply cannot. . . . If that is an undesirable result, the problem is one to be addressed by the Legislature"). The Court's strict application of MDL §302 appears to render the rest of the authority standing for a different result without effect. Accord, 742 Realty LLC v. Zimmer, 46 Misc.3d 1204(A) (Civ. Ct. N.Y. Co. 2014), citing Caldwell v. American Package Company, Inc., 57 AD3d 15, 26, 866 N.Y.S.2d 275 (2nd Dept. 2008).

Petitioner argues that Phillips & Huyler Assocs. v. Flynn, 225 A.D.2d 475 (1st Dept. 1996) compels a different result, insofar as it holds that application of MDL §302 could unjustly enrich a tenant. However, not only does this ruling pre-date Chazon, LLC, supra, 19 N.Y.3d at 410, not only does this ruling come from a Court lower than the Court in Chazon, LLC, supra, 19 N.Y.3d at 410, but this ruling favors the position of a commercial landlord, not a residential landlord. MDL §302 evinces a limited application to residential tenants. 455 Second Ave. LLC v. NY Sch. of Dog Grooming, Inc., 37 Misc.3d 933, 936 (Civ. Ct. N.Y. Co. 2012).

Another argument against application of MDL §302 to this proceeding is that the parties have contracted that Respondents were the parties responsible for legalizing their occupancy of the subject premises. Contracts between cooperatives and shareholders valid, Kenneth D. Laub & Co. v. Bear Stearns Cos., 262 A.D.2d 36 (1st Dept. 1999), and indeed, include elements of self-determination not found in leases for apartments in privately-owned buildings, as shareholders devise by policy themselves through a board of directors elected by them. 930 Fifth Corp. v. King, 71 Misc.2d 359, 364 (App. Term 1st 1972).^[3] However, the default proposition is that a cooperative, rather than an individual shareholder, bears responsibility for obtaining a residential certificate of occupancy. O'Flaherty v. Schwimmer, 158 Misc.2d 420, 424-425 (S. Ct. N.Y. Co. 1993)(Tom, J.), unanimously affirmed for the reasons stated, 208 A.D.2d 425 (1st Dept. 1994). The proposition that the parties can shift this responsibility rests upon the premise that a tenant's rights as defined by MDL §302 are waivable when, in fact, authority holds that they are not waivable. Dawkins v. Ruff, 10 Misc.3d 88, 89 (App. Term 2nd Dept. 2005), BFN Realty Assocs. v. Cora, 8 Misc.3d 139(A) (App. Term 2nd Dept. 2005), Willoughby Assocs. v. Dance-Lonesome, 2003 N.Y. Misc. LEXIS 822 (App. Term 2nd Dept. 2003).

Petitioner argues that Respondents' hands are "unclean" such as to preclude the relief Respondents seek, relief that Petitioner characterizes as equitable. Petitioner's reasoning is backwards. It is Petitioner that is seeking an equitable relief from the dictates of MDL §302. See B.S.L. One Owners Corp., supra, 159 Misc.2d at 903. The Court of Appeals rejected an "equitable" approach to MDL §302 insofar as it found the statute inconsistent with concerns of unjust enrichment. Chazon, LLC, supra, 19 N.Y.3d at 416.

Chazon, LLC, supra, 19 N.Y.3d at 410, applies MDL §302 to a landlord who has not complied with the legalization schedules set pursuant to MDL §281 et seq., commonly known as the Loft Law. A broad remedial purpose of the Loft Law was to confer rent-stabilized status on legalized interim multiple dwellings. Tan Holding Corp. v. Wallace, 187 Misc.2d 687, 688 (App. Term 1st Dept. 2001), Walsh v. Salva Realty Corp., 2009 N.Y. Misc. LEXIS 6056, 7-8 (S. Ct. N.Y. Co. 2009). As cooperatives cannot be subject to the Rent Stabilization Law, 9 N.Y.C.R.R. §2520.11(1), Loft Law coverage does not apply to owner-occupied cooperatives such as the subject premises, Tri-Land Properties, Inc. v. 115 West 28th St. Corp., 267 A.D.2d 142 (1st Dept. 1999), raising a question about the factual distinction between this matter and the facts of Chazon, LLC, supra, 19 N.Y.3d at 410. However, the Court in Chazon, LLC, supra, 19 N.Y.3d at 410 interpreted MDL §302 on its plain language, employing a canon of interpretation that does not depend on the particular facts of the case. Nothing in the text of MDL §302 restricts such an interpretation solely to a landlord of a property subject to the Loft Law and, indeed, MDL §302 pre-dates the Loft Law.

Petitioner argues that Respondents are still commercial tenants in part and that Petitioner still has a cause of action against them for commercial rent, an argument that does not effectively address Respondents' motion, as Housing Court does not have subject matter jurisdiction over disputes over commercial premises. 54-56 Mgt. Corp. v. Birmingham, 13 Misc.3d 1207(A)(Civ. Ct. N.Y. Co. 2006).^[4]

Whatever iniquity an application of MDL §302 visits upon Petitioner, the record on this motion practice suggests that Respondents fulfilled their obligations by the end of 2012 and yet a temporary certificate of occupancy did not expire until November of 2014, raising the possibility that Petitioner may be the party responsible for the current status of the certificate of occupancy after all. For what it's worth, Petitioner's secretary avers in support of Petitioner's motion that Respondents "continued in their failure to remedy the violative conditions, up to and including the date of this affidavit," which was February 24, 2016. Petitioner's secretary's averment indicates a dispute between the parties as to which party is culpable for the lack of a fire protection plan, a requirement that DOB may have imposed as a result of delays, maybe incurred by Respondents, in completing the work otherwise necessary to obtain a certificate of occupancy. Given the applicability of MDL §302 to this matter, the Court does not reach this issue and makes no findings herein except to note that a dismissal of a cause of action for maintenance/rent does not preclude or prejudice other causes of action and/or defenses the parties may have against one another in a plenary action."