Scott E. Mollen

Landlord-Tenant—Housing Stability and Tenant Protection Act of 2019 (HSTPA) Did Not Re-Regulate Apartments Which Were Lawfully Deregulated Before the HSTPA Effective Date

A landlord appealed from a Civil Court order which granted a tenant's motion for summary judgment dismissing the petition and denied, as moot, the landlord's cross motion to amend its petition, for summary judgment and to dismiss the tenant's affirmative defenses, in a nonpayment summary proceeding. The Appellate Term (court) denied the tenant's motion for summary judgment, reinstated the petition and remanded the matter to the Civil Court for further proceedings in accordance with its decision.

The nonpayment proceeding, predicated on allegations that the apartment was "exempt from rent stabilization due to high rent vacancy, should not have been dismissed on tenant's summary judgment motion." The "tenant's predecessors occupied the apartment as rent stabilized tenants from August 2013 through August 2014." The "legal rent at the time of their vacancy, $2,330.55 per month, plus 18.25 percent vacancy increase allowance…, brought the legal rent above the $2,500 luxury decontrol threshold then in effect…."

The court rejected the tenant's argument that the HSTPA, which "repealed high rent vacancy deregulation, effectively re-regulated units that had been legally deregulated under previous rent laws." It explained that the New York State Legislature had passed a "so-called 'cleanup' bill that clarified … that HSTPA did not re-regulate any units lawfully deregulated before HSTPA's June 14, 2019 effective date…." Accordingly, the court remanded the matter to determine the merits of the landlord's claim to recover rent arrears and the habitability of the apartment, issues which had not been addressed below.

191 Realty Assocs. v. Tejeda, Appellate Term, 1st Dept., Case No. 570227/19, decided Nov. 22, 2019, Shulman, P.J., Edmead, J., All Concur.

Brokerage—Broker Commenced Action for Breach of Contract, Quantum Meruit, Unjust Enrichment and Fraud

A broker commenced an action to recover brokerage fees. In April 2014, the defendant purchasers and the broker entered into an offer to purchase agreement (OTPA), pursuant to which the broker was to be paid a brokerage fee. The OTPA provided that "unless stated otherwise, the brokerage commission is to be paid by the sellers." The defendant sellers moved to "dismiss the lawsuit on the grounds that there was no valid brokerage agreement between them and in any event the broker did not procure the sale." The broker also sued the purchaser's attorney.

The complaint alleged that the sellers had advised the broker that they would no longer sell the property for the "agreed upon price and that they wanted more money for the subject premises." The complaint had also alleged that the defendants "colluded to fraudulently represent to plaintiff that (a purchaser) no longer wished to purchase the subject premises."

The OTPA provided that it did not "constitute a contract or memorandum thereof." The broker claimed that the OTPA is an enforceable contract between the broker and the purchaser defendants. The broker argued that the forgoing language only meant that the OTPA was an offer from the purchasers to the sellers, "instead of a contract between them."

The court found that the OTPA was not a contract and dismissed the breach of contact claim. With respect to the claim for quantum meruit, the broker had to establish the "performance of services in good faith," "acceptance of services by the person or persons to whom they are rendered," "the expectation of compensation therefor," and "the reasonable value of the services rendered…."

The court found that there was an "expectation of compensation by the plaintiff from the moving defendants." The defendants contended that the broker was not the procuring cause of the sale. The court found that were questions of fact with regard to whether the broker was the procuring cause. Since on a motion to dismiss, the court had to presume the truthfulness of the allegations. It denied the moving defendants' motion to dismiss the quantum meruit claim.

The court also denied the defendants' motion to dismiss the unjust enrichment claim. However, the court dismissed the tortious interference claim since absent a contract, there can be no tortious interference. Additionally, it dismissed the fraud and conspiracy to commit fraud claims since the broker failed to demonstrate that there was "a material misrepresentation of fact, made with knowledge of the falsity, the intent to induce reliance upon the misrepresentation, reliance upon the misrepresentation and damages."

The court further noted that those elements must be supported by "factual allegations containing details constituting the wrong alleged," i.e., fraud must be pled with specificity. Here, the complaint failed to set forth "material misrepresentations made by the defendants upon which the plaintiff relied."

Thus, the only claims that survived the motion to dismiss, were the claims for quantum meruit and unjust enrichment.

Bay Sun Realty v. Li, Supreme Court, Kings Co., Case No. 508685/19, decided November 7, 2019, Ruchelsman, J.

Landlord-Tenant—Assisted Living Facility Failed To Evict Resident—Social Services Law §461-h—Resident's Behavior, Including Smoking in Non-Smoking Areas, Breaking a Lock and Making a Threat Did Not Rise to the Level of Posing an "Imminent Risk of Death to Others Nor Directly Impaired Other's Well-Being or Interfered With the Orderly Operation of the Facility"

This decision involved a special proceeding commenced pursuant to Social Services Law (SSL) §461-h. The petitioner sought to terminate an admission agreement and have a resident removed from the premises. The resident had successfully moved to dismiss certain allegations in a termination notice. However, the allegations that remained involve the resident smoking in a non-smoking area of the facility eight times during a nine year period; using a hammer, screwdriver and force to break into a facility administrator's office after a flood in the premises; and the resident telling a staff member "go ahead and piss me off, you will be next."

The trial court had to determine whether the resident's behavior "rises to the level of a violation of the (SSL) because the conduct either poses an imminent risk of death, or imminent risk of serious physical harm to such resident or any such person, or directly impairs the well-being of others." The court found that the evidence did not meet that standard.

Video evidence indicated that the resident had been angry and had broken into the facility's office. However, the court found that the resident did not "pose a risk to others." The resident had "stayed well clear of any contact with others." With respect to violating the smoking rules, the evidence did not show that such conduct "posed an imminent risk of death to others and does not directly impair the well-being of others or directly interfere with the orderly operation of the facility." Accordingly, the trial court dismissed the petition.

The Appellate Term (court) affirmed the trial court decision. Although a witness testified that the resident had smoked in his room "two or three times, no witness testified that these two or three incidents occurred during the period specified in the termination notice…." Furthermore, none of the petitioner's witnesses established that any of the petitioner's "staff, policies, or procedures changed as a result of the occupant's oral threat to petitioner's employee, or that there was otherwise an interference with the orderly operation of the facility due to the occupant's threat." The court concluded that the petitioner had failed to make a "prima facie showing of repeated behavior rising to the level warranting the termination of the admission agreement under the (SSL)."

The court further explained that it did not "countenance" the resident's "abhorrent behavior," nor should the court's decision be "taken as any indication that such behavior could not, in another case, present a basis for a finding in favor a petitioner." In this particular case, it was the "failure of proof at trial, as opposed to a finding that the alleged conduct on the part of the occupant is not sufficiently objectionable to result in eviction, that has led to our conclusion that the petitioner has not made a prima facie showing of entitlement to judgment."

Thus, the court affirmed the trial court judgment.

Oceanview Manor Home for Adults v. Vargas, Appellate Term, 2nd Dept., 11th & 13th Judicial Districts, Case No. 2018-1081KC, decided November 22, 2019, Aliotta, J.P., Pesce, Elliot, JJ, All concur.

Landlord-Tenant—Sanctions Imposed Against New York City Housing Authority (NYCHA) For Frivolous Conduct in Discontinued Case

This decision involved a non-payment petition. A Notice of Eviction had been served even though a judgment and warrant had been previously vacated.

A NYCHA witness had testified that after the judgment and warrant was vacated, the case was "closed." However, the Marshal was "not asked to return the warrant to the court." "Nor was the Marshal notified that the warrant [was] vacated. There is no protocol regarding warrants that are vacated."

The court found that there was "little or poor record keeping when it comes to disposition of a non-payment proceeding." Notwithstanding that a judgment and warrant had been vacated and the case was discontinued, NYCHA's employee "was able to simply call the Marshal to issue a Notice of Eviction." The court explained that this "practice is of concern, because the Marshal did not know that the warrant was vacated and appears to have relied on a telephone call from the housing assistant."

The "manager did not understand the legal consequences of requesting a Notice of Eviction after the warrant is vacated." There is "no legal basis to issue a Notice of Eviction once the warrant is vacated and the case is discontinued." Here, the manager and the Housing Assistant "knew that the case was discontinued." Notwithstanding that, NYCHA's "agent directed the Marshal to issue the Notice of Eviction."

The court found such conduct to be egregious "because it could lead to an illegal eviction." Under the Housing Stability and Tenant Protection Act of 2019, illegal evictions are punishable by a Class A misdemeanor.

The court found that NYCHA's conduct in this case constituted frivolous conduct. At a sanctions hearing, NYCHA had failed to present "any excuse or mitigating circumstances as to why this Notice of Eviction was issued." The court did not view this conduct as "harmless error," "since this is not an isolated occurrence."

The court observed that "disregard of the law regarding evictions is especially troubling due to the volume of cases filed by petitioner. This disregard of the law can lead to numerous illegal evictions, causing harm to residents who may be forced to enter the shelter system and burdening the court with post-eviction motions." Accordingly, the court sanctioned NYCHA for sum of $50 for every day that NYCHA had not notified the Marshal that the warrant was vacated. The amount totaled $8,000 ($50 per day for 160 days). Since NYCHA is part of a public housing authority, the court exercised its discretion and in the interest of justice modified the sanctioned to $4,000. The court ordered that NYCHA credit the tenant's rental account with $4,000.

N.Y.C. Hous. Auth. v. Scott, Civil Court, Bronx Co., Case No. 810861/18, decided Nov. 22, 2019, Sanchez, J.

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