Scott E. Mollen

Second Hand Smoke—Tenant Did Not Commit Nuisance by Smoking in the Apartment—Neither House Rules Nor Lease Barred Smoking in the Apartment and There Was No Evidence That Tenant Smoked in the Common Areas—Landlord Failed to Prove That Second Hand Smoke Flowed Through Gaps in “Baseboards, Floors and the Front Door Into the Adjacent Apartment”—Neighbors May Have Remedy Under “Warranty of Habitability” Statute

A landlord had served a predicate notice which stated that a tenant had violated §2524.3(b) of the Rent Stabilization Code (Code), by committing or permitting a nuisance in their apartment. The notice further stated that the landlord reasonably believed that the tenant permitted “excessive cigarette smoke [to] flow through gaps in and around the base boards, floors, closets, wall sockets, and front door of the premises” and into an adjacent apartment. The notice also stated that on numerous occasions, the tenant or guests or invitees permitted smoke to be exhausted out of their open windows and that such smoke penetrated an adjacent apartment, causing their neighbor to have to keep their windows closed at all times and thereby, lose the ability to enjoy fresh air or utilize their balcony.

Additionally, the notice asserted that the neighbors were required to purchase and operate “three high-end air purifiers on a 24/7 basis,” “a filter on the inside bottom of the front door,” seal “the baseboards along the bedroom and living room walls,” cover “unused portions of electrical outlets in the bedroom and living room,” tape “over gaps between, above, and below the panels of the sectional mirror that forms [an] entryway wall,” tape “over gaps in the walls and floor in the entryway and bedroom closets,” and set up “multiple air fresheners and charcoal filters around the apartment which conditions you have allowed to exist unabated….”

The notice further claimed that the second hand smoke aggravated the asthma condition of an adjacent tenant, the respondent tenant had permitted excessive smoke to emanate into the common hallway and the second hand smoke had caused the neighbors to threaten “to break their lease causing economic harm [to] the landlord.”

The respondent tenant (respondent) asserted that he has lived in the apartment for 40 years, that smoking was not prohibited inside the apartment since he moved in and that neither he nor his wife, nor any guests have smoked in the common areas of the public hallways. The landlord did not dispute such facts.

The respondent argued that he and his wife only smoke within the confines of their apartment, there is no lease violation and smoking within a rent stabilized apartment is not a nuisance as a matter of law. The respondent cited Jovic v. Blue, 56 Misc3d 136[A] (App Term, 2nd & 11th Jud Dist, 2017) in support of his argument.

The landlord countered that Jovic was inapplicable, since the respondents were not disabled, they could afford to relocate and they would not be rendered homeless if evicted. The landlord also submitted an affidavit from a neighbor who attested to the landlord's allegations.

The court found that although the tenant smoked inside her apartment, there was no house rule or lease provision which barred such conduct and there was no evidence that the tenant had smoked in the common areas and it held that under those circumstances, “as a matter of law, tenant's smoking did not constitute a nuisance.” However, the court explained that the neighbors may “have remedies including a claim for breach of the warranty of habitability” pursuant to Real Property Law §235-b.

Priceman Family LLC v. Kerrigan, Civ. Ct., Kings Co., Index No. 061738/2017, decided May 7, 2018, Sikowitz, J.

Foreclosures—Court Granted Defendants' Motion to Dismiss Art. 15 RPAPL Cause of Action to Cancel and Strike a Mortgage Based on Statute of Limitations— A Loan Modification Agreement Restarted the Statute of Limitations—Plaintiff Had Recognized the Existing Mortgage Debt and Promised to Pay It—Telephone Consumer Protection Act of 1991—Fair Debt Collection Practices Act—GBL §349—Slander of Credit—Intentional Infliction of Emotional Distress

A plaintiff commenced an action against a lender and other defendants, asserting a claim pursuant to Art. 15 of Real Property Actions and Proceedings Law (RPAPL) “to cancel and strike a mortgage recorded on or [about] May 24, 2006.” The plaintiff also sought to recover damages based on alleged violations of the Telephone Consumer Protection Act of 1991 (TCPA), the Fair Debt Collection Practices Act (FDCPA), New York General Business Law, Section 349, “TILA, RESPA, and the Frank Dodd Act, and for common law Slander of Credit and Intentional Infliction of Emotional Distress.” The defendants moved to dismiss pursuant to FRCP 12(b)(6) and the plaintiff cross-moved to amend the complaint.

In April 2006, the plaintiff allegedly executed and delivered a mortgage on the subject property (property) in the amount of $2.3 million. The mortgage was recorded in Nassau County and thereafter assigned to “A.” The assignment was recorded on Nov. 9, 2009. The mortgage was modified by a modification agreement recorded on Nov. 18, 2009. The plaintiff had not received notification of the transfer in ownership and/or of the transfer involving the loan servicer.

On Oct. 6, 2009, “A” filed a summons and complaint to commence a foreclosure action against the plaintiff and accelerated the entire amount due on the mortgage. In August 2013, a state Supreme Court dismissed the foreclosure action and cancelled a notice of pendency. No other foreclosure action had been commenced by the lender following that dismissal. The plaintiff asserts that since “more than six years have passed since the acceleration of the note on October 6, 2009, the six-year statute of limitations [SOL] to enforce the mortgage expired on October 6, 2015.”

The plaintiff alleged that after the SOL expired, a defendant “began contacting Plaintiffs [sic] by mail and by telephone in an effort to collect the time-barred debt” and began reporting the debt to “credit reporting agencies.” The plaintiff further claimed that he had received approximately 600 calls to his home. The plaintiff further asserted that the calls “were placed using an 'automated telephone dialing system' or 'autodialer'” and that these calls were made “to annoy, abuse or harass plaintiffs….” Additionally, the plaintiff alleged that a defendant sent “threatening collection letters asserting false and misleading information” and that “from October 2015 to present [that defendant] sent letters to plaintiff, up to four times per month, regarding a variety of mortgage payment and home owner related issues.” The plaintiff alleged that the foregoing actions took place, notwithstanding the defendant's knowledge that the mortgage debt had been time barred.

A proposed amended complaint alleged that the plaintiff had been given a Loan and Mortgage Modification Agreement dated Aug. 19, 2013 (LMMA). The plaintiff asserted that he had signed the LMMA, but had never received an executed copy back from the lender and it was never recorded. The plaintiff allegedly “attempted to make the first three payments under the [LMMA],” but the payments “were 'never negotiated' and when he called to inquire about their status,” he was advised that “his loan was in default, that there was no record of a modification agreement and that any partial payments would be rejected.” The plaintiff allegedly continued to receive documentation from the lender, which claimed that “the loan was due for the original default.”

The defendants argued that the debt was not time barred, because (a) it had been accelerated by a different entity, (b) the loan was de-accelerated by execution of the LMMA and/or the lender's voluntary discontinuance of the foreclosure action and/or the LMMA revived the SOL. They also argued that each of plaintiff's claims failed because the plaintiff had not pled facts sufficient to state a cause of action.

The plaintiff argued that the defendants did not establish that the loan was accelerated and there was a question of fact as to whether or not a voluntary discontinuance of a foreclosure action constitutes a deacceleration of the loan and the loan had been accelerated by a notice. The plaintiff further noted that the LMMA had not been recorded and he had never received a copy of it back from the lender. The plaintiff also argued that the bank's actions after the plaintiff signed the LMMA were inconsistent with the de-acceleration. Finally, the plaintiff contended that the proposed amendment complaint cured any deficiencies with the original pleading and therefore, the motion to amend should be granted and that certain documents submitted by the defendants should be disregarded.

The court explained that New York RPAPL, Article 15 had been “largely replaced the equitable action to quiet title” and that an RPAPL action “'has been described as a hybrid one in which the relief awarded is in large measure equitable in nature.'” The court further stated, inter alia, that “[t]he filing of a lis pendens and summons and complaint commencing a foreclosure action constitutes an acceleration.”

The court further noted that “[t]o stop the [SOL], a mortgagee who has elected to accelerate, may revoke its decision to accelerate a mortgage debt by an 'affirmative act or revocation' taken within the six-year limitations period subsequent to the election to accelerate.” Further, the SOL “may be restarted if there is a written acknowledgement of the debt.”

The court observed that the New York Court of Appeals had “not addressed whether the voluntary discontinuance of a foreclosure action constitutes an affirmative act revoking a prior acceleration. Intermediate appellate courts in New York have held that when a mortgagee moves for and is granted an order of discontinuance, it raises a question of fact as to there was an affirmative act to revoke its election to accelerate…. However, where the prior foreclosure action is not withdrawn by the lender, but rather dismissed by the court, '[i]t cannot be said that [the] dismissal by the court constituted an affirmative act by the lender to revoke it election to accelerate.'”

Here, the complaint alleged that “[i]n August 2013, the court dismissed the foreclosure action and vacated the notice of pendency.” Thus, to the extent that the defendants sought dismissal of the first cause of action on the basis that “the dismissal of the foreclosure action was an election to revoke acceleration of the debt,” the motion was denied.

As to whether “the LMMA constituted a revocation of the acceleration of the debt,” the defendants cited a lower state court decision in support of its position. The subject court agreed with that decision, which held that “if a lender enters into a modification agreement subsequent to its acceleration of a debt that would constitute an affirmative act for purposes of revocation of that acceleration.” However, here the plaintiff alleged that the lender's conduct after the LMMA amendment was “inconsistent with revocation.” Accordingly, the court denied, “at this juncture,” the motion to dismiss the RPAPL claim on the basis that the acceleration was revoked.

The defendants had also argued that the LMMA revived the SOL. The LMMA contained the plaintiff's agreement that the debt was owed and that the plaintiff promised to pay such debt. The LMMA further stated that contemporaneously with the execution of the LMMA, the parties would sign “stipulations cancelling the Notice of Pendency and discontinuing the…foreclosure action . . ., including a withdrawal of the borrower's…counterclaims.”

The court found that the LMMA “restarted the [SOL] on the mortgage debt,” since “[b]y its express terms, plaintiff recognized the…debt and promised to pay it.” The only contingency contained in the agreement was “the dismissal of the lis pendens and foreclosure action,” and the amended complaint alleged that “the foreclosure action was dismissed and the notice of pendency cancelled.” Moreover, the LMMA did not embody a requirement that it be signed by the lender and a copy returned to the plaintiff. Accordingly, the court granted the defendants' motion to dismiss based on the SOL.

With respect to the TCPA claims, the defendants argued that the plaintiff, in his loan application, “gave his express consent, in writing, to call his cell phone.” The court found that it was not clear that the consent contained in the loan application “covers the telephone calls of which Plaintiff complains” and it was not clear whether “the number provided on the application was Plaintiff's home or cell phone number.” Accordingly, the court denied the motion to dismiss the TCPA claim.

However, the court dismissed the New York General Business Law, §349 claims on the grounds that the plaintiff failed to plead specific facts to support its claim and failed to allege that the plaintiff's conduct had “a broader impact on consumers at large.”

The court then explained that the FDCPA bars debt collectors from “falsely representing the character, amount, or status of a debt,” “communicating or threatening to communicate to any person credit information which is known to be false” and “using false representations or deceptive means to collect or attempt to collect the debt.” The defendants argued that the FDCPA claim should be dismissed because the mortgage debt was not time-barred. Since the FDCPA claim was based on the mortgage debt being time barred and the RPAPL claim has been dismissed, the court granted the motion to dismiss the FDCPA claim. The court also dismissed the slander of credit claim, since that claim was preempted by the Fair Credit Reporting Act (FCRA). It was also dismissed based on the dismissal of the RPAPL claim and the plaintiff's abandonment of the claim by failing to address the defendants' arguments.

The intentional infliction of emotional distress claims were also dismissed. The court viewed such claims as “nothing more than a formalistic recitation of these elements without any supporting fact….” Moreover, the claim was based on “the same conduct as the FCRA claim,” which it dismissed as preempted. Additionally, the court dismissed the TILA, RESPA and Dodd-Frank claims on the grounds that the plaintiff failed to identify which provisions of those statutes, if any, were violated and did not specify which conduct by defendants constituted the purported violations. Moreover, no class had been properly pled and the plaintiff did not address the argument for dismissal of those claims and therefore, abandoned them.

Comment: The court noted that “[t]here is an apparent dispute among the courts as to whether it is the filing of the summons and foreclosure complaint or the service of that summons and complaint that constitutes the election to accelerate.” In the subject case, it was “immaterial.” There was no allegation in the complaint or amended complaint that the “loan was accelerated via notification.”

Zucker v. HSBC Bank USA, U.S.D.C., Eastern Dist. of New York, Case No. 17-CV-2192, decided May 2, 2018, Hurley, J.

Scott E. Mollen is a partner at Herrick, Feinstein.