Landlord-Tenant—Unlawful Eviction—Stipulation Entitling a Landlord to Evict Residential Tenant for Nonpayment of Rent Exceeding the Amount of Rent Sought in a Petition Is Unenforceable—Violation of Public Policy—Landlord and Attorney Appeared to Have Intentionally Engaged in Unlawful and Sanctionable Conduct

A landlord commenced a summary nonpayment proceeding against two married rent stabilized tenants of record (“A” and “B”). The court found that the tenants’ eviction on July 16, 2012 was an unlawful eviction.

The landlord had issued a rent demand, seeking $2,196 for a period through and including April 2012. The monthly rent sued for was $678. Most of the arrears sought were based on an alleged default in the payment of $25 per month (late fees) for a period going back to December 2010. A rider annexed to the demand and petition (ledger) only went back to July 2011 and started with an opening balance of $4,383. The amount sought also appeared to include legal fees. The ledger contained a write off of rent in April 2012 totaling $2,863, which covers a period of October 2011 through February 2012, but was otherwise not explained.

The petition sought $3,224. Tenant “A” filed an answer which asserted that part of the rent demanded had already been paid and repairs were needed in the premises. “A” entered into a stipulation of settlement that was so-ordered by the court. The stipulation provided for entry of a judgment in the amount of $2,713, for rent due through June 2012 and that execution of a warrant is “stayed for Respondent(s) to pay petitioner as reflected hereunder. Upon default of any payment hereunder, warrant shall execute on marshal’s notice.” Execution of the warrant under the stipulation was stayed through July 30, 2012, for payment of $2,713. The stipulation also provided that the “[c]urrent rent is payable when due,” “[a]ll monies received shall first be applied to current rent/use and occupancy and then to arrears,” the landlord “may accept partial payments at anytime without prejudice” and “[u]pon default of any payment…all sums shall accelerate and become due immediately.”

B never appeared, never signed the stipulation and no default was ever sought against her. No judgment was ever entered against “B” and no warrant was issued against “B.” The court had entered a judgment against “A” in the amount of $2,713. The request for a warrant crossed B’s name out from the caption. A marshal submitted a warrant requisition seeking a warrant only against A and a warrant was issued on June 12, 2012.

On July 16, 2012, both tenants were evicted. They then sought “a post eviction order to show cause, seeking to be restored to possession.” A alleged that he had been evicted at 8 a.m., “without any prior notice, and…the eviction was unlawful because the stipulation stayed execution of the warrant through July 30, 2012, for payment.” On the return date, the landlord submitted a ledger, which bore no resemblance to the ledger annexed to the petition. The only default asserted by the landlord as justification for execution of the warrant was the tenants’ failure to timely pay July rent. The landlord’s affirmation did not assert when July rent was due, nor was any lease annexed which set forth such information. The tenants alleged that after the eviction, they had gone to the landlord’s office with July rent, had been kept in the office for hours and while they were in the landlord’s office, all of their belongings had been removed.

The respondents, long-term tenants, had been evicted at approximately 8 a.m. on July 16, 2012, and had, on that morning, gone to the landlord’s office with a money order for $678 for July rent. The tenants claimed that they had waited in the office from approximately 9:30 a.m. to approximately 1:30 p.m. and the landlord had intentionally kept them there so that a full eviction could be accomplished. The landlord claimed that the wait had been no longer than 30 minutes. In the afternoon of July 16, 2012, the tenants obtained a post eviction order to show cause with a stay. The order was served on July 17, 2012. However, the landlord had already demolished the kitchen and bathroom in the apartment.

The court held that the eviction of B, destruction of her home and removal of all of her belongings was unlawful. The landlord had “neither sought, nor obtained, a judgment or a warrant as to ['B'], and had no basis in law to evict her or remove her belongings or demolish her home of twenty years.” Further, the court had advised the landlord’s counsel on the record on July 18, 2012, that “there appeared to be no judgment nor any warrant pertaining to ['B'],” yet the landlord and its counsel refused to agree to restore “B” to possession.

The court also found that assuming arguendo, the landlord could legally evict “A”, without terminating the lease of “B”, the eviction of “A” was nevertheless also unlawful. The landlord could not execute on the warrant for any sum beyond what was included in the judgment amount pursuant to which the warrant issued and had no right to execute on the warrant prior to the expiration of the stipulated stay on July 30, 2012.

The “failure to pay future rent in a non-payment proceeding cannot form the basis for an eviction of a tenant…” “A stipulation allowing a landlord to evict for rent that is not yet due is void as a matter of public policy.” Such a stipulation to coerce payments of rent not yet due “would impede the tenant’s ability to assert against the landlord future defenses such as a breach of the warranty of habitability which, by statute, has been declared to be the public policy of this State.” The landlord could only execute on the warrant “if the judgment amount remained outstanding at the time the agreed upon stay on execution had expired.” Absent a direction as to their application, payments are made to the oldest account. Thus, payments must “first [be] credited to prevent an eviction and not to the current rent owed (unless agreed otherwise).”

The stipulation provided that “[c]urrent rent is payable when due.” Such provision was intended to allow the landlord to collect both July rent and the judgment amount as of July 30, 2012. It did not give the landlord “the right to evict prior to the agreed upon stay of execution…, for rent which had not yet become due at the time the stipulation was entered and the judgment agreed upon.” Therefore, “A”‘s eviction was also unlawful, the tenants had to “be restored to possession forthwith,” the landlord had to return the tenants’ possessions and restore the bathroom and kitchen. The court also vacated the judgment, warrant and underlying stipulation of settlement.

Moreover, review of a prior landlord-tenant action between the parties indicated that all rent due through February 2012 had been paid. The landlord had no right to sue for arrears for any period before February 2012 in the subject proceeding. The most the landlord could have claimed due was $1,356. Further, the landlord had previously stipulated that the monthly rent would be $643 through September 2012, the landlord had attempted to prematurely execute a warrant in the prior 2010 proceeding and had been reprimanded by the court and after the landlord stipulated that the rent would be $643 per month through September 2012, the landlord had charged a higher rent.

Accordingly, the court found that the landlord and its attorney “appear[ed] to have intentionally engaged in unlawful and sanctionable conduct” and they were ordered to demonstrate why sanctions should not be imposed. Counsel was experienced and should have known that the subject eviction was “entirely unlawful, yet refused to restore Respondents to possession.” Moreover, counsel had previously been “cautioned for attempting to evict a tenant for failure to pay current rent, both in the 2010 proceeding and a prior proceeding…” Additionally, “the immediate full eviction and demolition of the kitchen and bathroom … in less than 24 hours, appears to have been an intentional act … to prevent Respondents restoration after the unlawful eviction.” Finally, the landlord and counsel were directed to address “why they sued twice for the same rent for the same period, what the legal rent is, the discrepancy in the various [ledgers] provided, the multiple attempts to evict ['B'] without ever obtaining a judgment or warrant against her, and the legality and ethics of their conduct in this proceeding.”

201 W 136 St Realty Management v. Roman, L&T 65723/2012, NYLJ 1202564397568, at *1 (Civ., NY, decided July 19, 2012), Kraus, J.

Condemnation—State Permanently Enjoined From Acquiring Drainage Easement by Eminent Domain—State Acted in Bad Faith—Failed to Take a Hard Look at Relevant Criteria Under SEQRA—Bad Faith Is Separate and Distinguishable From Pretextual Condemnations—Proper Public Purpose

More than a decade ago, the plaintiff homeowners commenced the first of several actions and proceedings to bar the State of New York from draining storm water over their property. The plaintiffs had prevailed “in all previous litigation, collecting damages for trespass and obtaining injunctive relief.” Notwithstanding the foregoing, in 2010, the state sought to condemn part of the plaintiff’s property for a drainage easement. The plaintiffs then commenced the subject proceeding review and enjoin the condemnation and to obtain declaratory and permanent injunctive relief. The trial court had, in essence, granted the petition and permanent injunctive relief, finding, inter alia, “that the State had acted in bad faith.” The appellate division affirmed and addressed the difference between “the concepts of bad faith and lack of a proper public purpose in the context of condemnation proceedings.”

After the plaintiffs purchased their home in April 2000, their property was damaged “by stormwater discharged from a culvert …; the water had been directed into the culvert by a drainage system of catch basins and pipes.” The property was damaged again by stormwater from the culvert. After the State Department of Transportation (DOT) advised the plaintiffs that the state “would not undertake remedial or corrective measures,” the plaintiffs filed a claim against the state in the Court of Claims for trespass and nuisance. The state argued that it had “a prescriptive easement based upon the installation in 1984 of the drainage system of catch basins and underground pipes, and the existence of the culvert … since, at the latest, 1928.” The Court of Claims rejected the prescriptive easement defense and held that the drainage constituted a continuing trespass. The Court of Claims found that “‘the State [had] altered drainage conditions …, thus increasing the velocity of any water collected, and increasing the erosion potential of any water discharged,’ while failing to improve the culvert, abate the flow, maintain the channel emanating from the culvert, or control potential damage.” The Court of Claims awarded a $3,000 judgment to the plaintiffs. The state appealed and the trial court decision was affirmed.

Prior to the entry of the final judgment in the foregoing litigation, the plaintiffs had asked the state to take “measures to ameliorate the continuing trespass…” The state failed to respond. The plaintiffs then commenced another action seeking injunctive relief and damages for inverse condemnation. The state again asserted the defense of prescriptive easement. A plaintiffs’ expert had proposed that the state “run additional subsurface piping for approximately 250 ft. within its right-of-way … to divert the stormwater to a natural stream north of [the plaintiffs'] property.”

The trial court had granted the plaintiffs a permanent injunction and directed that the state implement the plaintiffs’ stormwater diversion plan (plan). The trial court noted that the state had “known of the condition and resulting damage to [the plaintiffs'] property for many years and had done nothing to prevent the continuing trespass.” The state appealed. During the pendency of the appeal, the plaintiffs commenced another action in the Court of Claims to recover damages from another storm. The state again asserted a defense of prescriptive easement. The Court of Claims characterized such defense as “puzzling” given the prior adverse decision on such issue. The Court of Claims granted the plaintiffs’ motion for summary judgment and found that the state had “done nothing to stop the continuing trespass….” and nothing to comply with the permanent injunction.

The state thereafter issued “a notice of condemnation to the [plaintiffs] for a ‘permanent easement’ over their property.” The notice stated that the DOT had determined that reconfiguration of the drainage ditch remained “the safest, most efficient, most cost-effective, and least disruptive means” to address the public need.

The state asserted that a public hearing was not necessary and that “the only ‘planned public involvement’ was ‘coordination with [the plaintiffs].” Thestate opined that its proposal “was ‘exempt’ from any environmental review … not deemed even to be a Type II action, which presumptively [did] not require the preparation of an environmental impact statement [EIS], let alone a Type I action which presumptively requires .. an EIS, or an unlisted action, to which no presumption attaches.” The state acknowledged, inter alia, that the location was in “a coastal zone and a scenic area of statewide significance …. and the presence of a ‘class B’ stream … and farmland of statewide importance. …” The DOT asserted that the easement was sought to meet the requirements of the prior injunction decision.

The plaintiffs had commenced a proceeding pursuant to Eminent Domain Procedure Law (EDPL) §207, “seeking to temporarily restrain … condemnation during the pendency of the appeal” from the prior litigation, or alternatively, to permanently enjoin the condemnation.

The DOT considered three alternatives, i.e., a) acquiring a permanent easement across the plaintiffs’ property, b) diverting the stormwater to the north of the plaintiffs’ property and c) acquiring an easement across that property or removing the closed drainage system and restoring it to its pre-1984 condition. Alternative “a” was preferred because it was allegedly the least expensive and posed minimal environmental impacts or risk of flooding and accidents.” The state concluded that alternative “a” was the only reasonable approach, such approach was “‘de minimis,’ and the public interest would not be prejudiced by the construction.” The state argued that the project was a Type II action which presumptively did not require an EIS since “it involved merely the reconstruction of an existing structure or expansion of an existing waterway maintenance site by less than 50 percent, with no significant effect on the environment.”

The appellate division had previously affirmed the plaintiffs’ entitlement to a permanent injunction against the state and the trial court’s direction that the state implement the plaintiffs’ suggested stormwater diversion plan. Now, the plaintiffs sought, inter alia, to review the DOT’s condemnation determination and injunctive relief barring the DOT from pursuing the proposed condemnation. The trial court had “preliminarily enjoined the DOT from pursuing the condemnation during the pendency of this proceeding and action.”

The plaintiffs asserted that the state refused to comply with the prior injunction, “failed to conduct a public hearing as required by EDPL 201 or any environmental impact review as required by SEQRA, improperly classified the proposed condemnation as de minimis under EDPL 206 and as a Type II action under SEQRA, and had acted in ‘bad faith’ for a ‘retaliatory’ purpose.” Citing an acquisition map and the proposed design plan, the plaintiffs argued that the taking is not de minimis. The state sought to condemn a 30-foot-wide easement through the heart of their property, requiring the destruction of footbridges, walkways, stone walls, extensive landscaping, the stone-lined ditch they had installed, and at least nine mature trees. The plaintiffs also argued that the condemnation is “unreasonable” and “unnecessary” given the prior litigation decision, which directed the State to implement the plaintiffs’ feasible and cost-effective plan.

The state argued that it had not acted in bad faith, it had acted rationally to fulfill a public purpose, its assertion of a prescriptive easement had not been finally rejected until earlier litigation had been affirmed on appeal, no injunction had been issued in the subject litigation when the state had taken the relevant action, it had complied with the EDPL and SEQRA and the plaintiffs’ loss was “purely economic and compensable with damages” and thus, they were not entitled to a permanent injunction.

The court held that given the lengthy procedural history between the parties, the state’s reliance on the exemption pursuant to EDPL 206(D) was “an abuse of discretion.” The state had “sidestepped numerous opportunities to negotiate the matter … or to ameliorate the trespass.” The plaintiffs had previously been awarded damages. The state had asserted a “prescriptive easement despite an explicit prior court decision” and had planned the proposed condemnation “without including the public, the [plaintiffs], or their engineer.”

The court found that the state had “contravened the spirit and purpose of EDPL article 2,” the proposed taking was not “de minimis” under EDPL 206(D) and such determination was an abuse of discretion. The proposed condemnation covered over 15,000 square feet and would have, inter alia, cut a 30-foot swath down the middle of the plaintiffs’ lot. The state had also failed to submit an expert affidavit to refute the plaintiffs’ expert’s opinion.

The court held that, under the circumstances, the state had acted in “bad faith” and in violation of the EDPL and SEQRA. There had been “no ‘reasoned elaboration of the basis for [the State's] determination” and the state had “failed to take a ‘hard look’ at any of these criteria or to give any ‘reasoned elaboration of the basis for its determination’ that the project, as proposed, [would] not have a significant impact on these environmental resources.” Only after the plaintiffs had commenced their proceeding, did the state “hastily prepare its final design report with an appended ‘environmental checklist.’” Thus, the court annulled the state’s determination that the proposed project is a Type II action.

The court then noted that “[t]he concept of bad faith is frequently discussed but rarely, if ever, found to exist in appeals from administrative determinations.” Additionally, the concept of bad faith is also “frequently stated in the formulation of the arbitrary and capricious standard governing review of administrative determinations pursuant to CPLR article 78…” In condemnation proceedings, “an allegation of bad faith is often … the same as a contention that the condemnor is acting without an appropriate public purpose or pretextually to benefit a private individual or entity.” However, when the allegations of bad faith and lack of public purpose are “separate and distinct,” courts will review them independently. The court explained that “‘[b]ad faith is a concept separate and distinguishable from pretextual condemnations.’”

Here, the state had failed to implement the plaintiffs’ expert’s drainage plan as it had been ordered to do so and had proffered “no evidence or expert affidavit to refute the feasibility, cost-effectiveness, and engineering soundness of the [plaintiffs'] plan, which requires no condemnation of any private lands, and poses no adverse environmental impacts.” The state had also unreasonably advanced the theory of prescriptive easement in two litigations subsequent to a determination against it on that issue.

The state had also “violated the spirit and letter of the EDPL in making an unfounded determination of a de minimis taking, thereby avoiding the required public hearing…” and failed to conduct any SEQRA review. Accordingly, the court found that the state had acted in bad faith and that the plaintiffs were entitled to injunctive relief annulling the DOT’s determination.

Matter of William Zutt v. State of New York, 2010-10561, NYLJ 1202564196638 at *1 (App. Div., 2nd, Decided July 18, 2012), before Angiolillo, J.P., Dickerson, Leventhal, Hall, JJ. Decision by Angiolillo, J.P., All concur.

Scott E. Mollen is a partner at Herrick, Feinstein and an adjunct professor at St. John’s University School of Law.