Pages Numbered Notice of Motion/Order to Show Cause/Petition/Cross Motion and Affidavits (Affirmations) Annexed 1-2 Opposing Affidavits (Affirmations) 3-4 Reply Affidavits (Affirmations) 5 Affidavit (Affirmation) Other Papers Upon the foregoing papers, it is ORDERED that the motion by the defendant for an order, pursuant to CPLR 3211(a)(1), (3) and (7), dismissing the plaintiff’s complaint and for sanctions is determined as follows. In 2009, the defendant commenced an action against the plaintiff in Supreme Court, New York County seeking to recover the proceeds of a loan. The defendant obtained a default judgment and the plaintiff subsequently moved to vacate the judgment on the grounds of, inter alia, fraud, misrepresentation or concealment by the defendant. A hearing was held to determine whether certain payments made by the plaintiff were for the loan agreement or rental payments for real property owned by the defendant in the Town of Southampton. Following the hearing, the Court (Hagler, J.) held that the payments made by the plaintiff were for rent not the loan and thus denied the motion to vacate the judgment. The plaintiff then commenced this action seeking to recover the rental payments made from 2008 through 2021 on the grounds that the property lacked a rental permit. The complaint asserts a private right of action for violations of section 270 of the Southampton Town Code. The defendant moves, pursuant to CPLR 3211, to dismiss the complaint on the grounds that the plaintiff may not recover past rent and lacks standing to maintain the action. The defendant also moves for sanctions. In considering a motion to dismiss a complaint for failure to state a cause of action pursuant to CPLR 3211(a)(7), the court must afford the pleading a liberal construction, accept the facts as alleged in the pleading as 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 (see Leon v. Martinez, 84 NY2d 83, 87; Sasidharan v. Piverger, 145 AD3d 814; T. Mina Supply Inc v. Clemente Bros. Contr. Corp., 139 AD3d 1040; Clarke v. Laidlaw Transit, 125 AD3d 920). However, bare legal conclusions are not presumed to be true and are not accorded every favorable inference (see Grant v. DiFeo, 165 AD3d 897; Kupersmith v. Winged Foot Golf Club, 38 AD3d 847). The Appellate Division, Second Department has held that chapter 270 of the Southampton Town Code affords an implied private right of action for violations of the statute (see Ader v. Guzman, 135 AD3d 671). In Ader, the plaintiffs sought to rescind a lease and recover payments made to the defendant after learning that the property lacked a rental permit. The Court found that summary judgment was properly granted to the plaintiffs and specifically noted that the defendant failed to submit any evidence that the plaintiffs were raising the argument of illegality for personal gain. In that regard, the plaintiffs made a prima facie showing that they surrendered possession of the premises shortly after the lease commenced and the defendant failed to raise a triable issue of fact demonstrating that the plaintiffs remained on the premises for the entire term of the lease or for any additional time thereafter. In this case, the plaintiff is seeking to recover past rental payments over a period of more than 12 years after retaining possession of the property. The complaint does not allege that the plaintiff or a corporation, which actually made the rental payments, surrendered possession of the premises at any time during the term of the lease. The plaintiff, having used the premises, may not rely on the provisions of the Town Code “as a sword for personal gain rather than a shield for the public good” to avoid the payment of rent (see 1424 Millstone Rd LLC v. James B. Fairchild LLC, 136 AD3d 556). In addition, Justice Hagler found in the prior action that the plaintiff, who is a real estate broker, was aware of the lack of a rental permit and never raised the issue as he apparently used the property to house employees of a car wash business that he owned. Under these circumstances, the plaintiff’s allegations are insufficient to support a private right of action under the Town Code. Moreover, even if a cause of action were stated, the plaintiff attached copies of checks to the complaint which demonstrate that the rental payments were made by a corporation and not by the plaintiff individually. Therefore, the plaintiff lacks standing to maintain an action to recover funds paid by the corporation (see CI Enterprises Inc v. Rumbalski, 125 AD3d 715). Accordingly, the motion to dismiss is granted and the complaint is dismissed. The branch of the motion for sanctions is denied. Dated: April 5, 2023
