Scott E. Mollen
Scott E. Mollen ()

Landlord-Tenant—Abuse of Process—Tenant Abused the Judicial System to Aggravate the Plaintiffs— Tenant Enjoined From Commencing Further Claims, Without Counsel, Absent Consent From An Administrative Judge Or Commissioner of An Agency

THE PLAINTIFFS HAD MOVED for summary judgment as to liability against the defendant on the plaintiffs’ claim for abuse of process. They also sought a permanent injunction enjoining the defendant from “filing any action, proceeding, motion or submission in any court, agency, commission, or tribunal within the city or state of New York against any one or more of the movants and/or their affiliates and employees relating directly or indirectly to the [subject property] without prior approval of the administrative judge of the court or of the commissioner of the agency, commission, or tribunal in which the filing is to be made, unless [the defendant] is represented by an attorney.” The court granted the plaintiffs’ motion.

The defendant is a permanent resident of a hotel. In 2009, the defendant filed, pro se, “the first of what would become a series of over 20 lawsuits against [the movants], asserting violations of the implied warranty of habitability, harassment, and numerous other causes of action.” Each of the actions had been dismissed “for lack of merit or on default.” The defendant “continued to file lawsuit after lawsuit against [the plaintiffs].” As a result, the plaintiffs sought a preliminary injunction, barring the defendant from filing any further lawsuits against the plaintiffs “without prior approval of the administrative judge of the court or of the commissioner of the agency, commission, or tribunal in which the filing is to be made, unless [the defendant] is represented by an attorney.” A prior court decision granted the motion for a preliminary injunction. The plaintiffs now sought to permanently enjoin the defendant from filing further lawsuits unless the aforementioned conditions were met.

The court noted that the defendant had “filed multiple meritless lawsuits against plaintiffs” and was “merely seeking to inconvenience and badger the plaintiffs.” The plaintiffs’ exhibits included communications between the parties which illustrated an attempt by the defendant “to extract money from the plaintiff,” defendant’s attempt to provoke a plaintiff “by inquiring about his personal life and insulting him to his rabbi” and the defendant’s threat to sue “while using explicit terms.”

Although the defendant submitted more than 150 exhibits in opposition to the motion, the court found that such exhibits did not set forth “a triable issue of fact” and merely details the overwhelming evidence that “he has used the judicial system to aggravate the plaintiffs.”

The court explained that:

While public policy generally mandates free access to the courts, the court “will not tolerate the use of the legal system as a tool of harassment”…and courts have awarded permanent injunctions as a result of the misuse of the judicial system or for malicious prosecution. … Sassower v. Signorelli, 99 AD2d 358, 359 (2d Dept. 1984) (“a litigious plaintiff pressing a frivolous claim can be extremely costly to the defendant and can waste an inordinate amount of court time. … Thus, when, as here, a litigant is abusing the judicial process by hagriding individuals solely out of ill will or spite, equity may enjoin such vexatious litigation.”).

A plaintiff asserting a claim for abuse of process must demonstrate that the defendant “regularly issued process, either civil or criminal, …[with] an intent to do harm without excuse or justification,” and “use of the process [was] in a perverted manner to obtain a collateral objective.” The court found that the plaintiffs had demonstrated each element. The defendant filed more than 20 lawsuits against the plaintiffs during “the last 10 years and has yet to prevail on a single one.” Further, the defendant’s communications demonstrated that “the lawsuits were meant to badger the plaintiffs.” Additionally, the defendant had, on numerous occasions, “accosted and threatened the plaintiffs regarding the various lawsuits.” The court concluded that the defendant had “not used the judicial system in the manner intended and the plaintiffs have been forced to spend tens of thousands of dollars defending themselves against unsubstantiated claims.”

Accordingly, the court granted the plaintiffs’ motion for summary judgment and the requested permanent injunction against the defendant. Since the plaintiffs’ claim for malicious prosecution sought the same injunctive relief which the court was granting, the court sua sponte dismissed the malicious prosecution claim.

Metro Sixteen Hotel v. Davis, 159720/2013, NYLJ 1202773325007, at *1 (Sup., NY, Decided Nov. 1, 2016), O’Neill Levy, J.

Tax—IRS Disallowed Charitable Donation of Preservation Easement for the Façade of Building Located in Historic District—Easement Did Not Preserve the Entire Building Exterior—Donor Reserved Right to Add Floors and Extend Ground Floor

THE DEFENDANT, the United States of America (defendant) moved for partial summary judgment in a case involving “a charitable donation of a preservation easement in the façade of [a] building located in a historic district.” The plaintiff had claimed a charitable deduction of $4,186,000 on its federal tax return.

The Internal Revenue Service (IRS) had denied the deduction and assessed a 40 percent “accuracy-related penalty” (penalty) against the plaintiff “for claiming the deduction.” The plaintiff had commenced the subject action “pursuant to 26 U.S.C. §6226(b), which governs partnership petitions for tax adjustments.” The defendant moved for summary judgment only as to whether the deduction “satisfied statutory requirements, with the separate issue of the…penalty to be decided in a non-jury trial.”

The court found that the plaintiff’s deduction was “not authorized under the express statutory language governing the deduction because the easement does not ‘preserve[ ] the entire exterior of the building….,’” citing 16 U.S.C. §170(h)(4)(B) (§170). Thus, the court granted the [defendant's] motion for partial summary judgment.

The plaintiff had purchased a four-story walk up building that had been built in 1871-72 and was located in a historic district. The plaintiff’s managing member (manager) had met with “the non-party Trust for Architectural Easements (TAE) to discuss donating an easement in the building’s façade to the TAE.” Thereafter, the manager “signed a ‘Trust for Architectural Easements 2008 Donation Agreement,’ a ‘Donation Agreement Addendum: Development Rights’ and a ‘Trust for Architectural Easements 2008 Disclosure Notice.’” The manager also signed a “Historic Preservation Deed of Easement” (deed of easement). The easement specified that 2,700 square feet of the building’s development rights “shall be reserved for the future expansion of the property in accordance with the terms of this easement.”

The deed of easement permitted the plaintiff “to undertake additional construction on the property, conditioned on the TAE’s approval.” The plaintiff had reserved development rights so that it could “add two or three floors on the roof” and “potentially extend the ground floor of the structure.”

The plaintiff argued that “under the deed of easement, it covenanted” that further development of the building “including any alteration, construction, remodeling or exterior extension,” would require the express written consent of TAE.

Section 170 provided that a contribution of a qualified real property interest “shall not be considered to be exclusively for conservation purposes unless” such interest “[i]ncludes a restriction which preserves the entire exterior of the building (including the front, sides, rear, and height of the building),” and “prohibits any change in the exterior of the building which is inconsistent with the historical character of such exterior….” The court noted that §170′s restrictive language is “unqualified.” The restriction does not provide that it is permissible to have “construction above the roof.”

The court opined that the statute’s description of the exterior as “including the front, sides, rear, and height of the building,” did not mean that the exterior is limited “solely to those features,” notwithstanding the use of the word “including,” The Internal Revenue Code’s [IRC] “definitional provision” specifies that “[t]he terms ‘includes’ and ‘including’ when used in a definition contained in this title shall not be deemed to exclude other things otherwise within the meaning of the term defined.” 26 U.S.C. §7701(c).

Moreover, the TAE had advised the plaintiff of such limitation in its disclosure notice, which specified that “the easement ‘must preserve the entire building exterior, including the space above the building, the sides and the rear of the building—as opposed to just those sections of the historic building that are visible to the public.”

The plaintiff contended that the statute should be construed to allow a deduction if additional construction “does not exceed the height of the bulkhead that currently exists on the roof.” However, the court found that the statutory text did not support that argument. The court noted that if a building’s exterior included “an arched roof or a steeple, the plain text of the statute would not allow a deduction if the restriction permitted additional rooftop construction that does not surpass the highest existing point of the building. Such a construction would be inconsistent with preserving the entire exterior of the building.”

Although the plaintiff had emphasized that “any construction or improvements would require the approval of the TAE, and therefore would be unlikely to alter the existing exterior,” the court observed that the statute requires “a restriction which preserves the entire exterior of the building, and not a conditional restriction that delegates to the grantee future decisions on development of the exterior.”

The plaintiff also asserted that the exact scope of the subject IRC provision had “not been addressed by Treasury Department regulations.” However, the court explained that “the relevant statutory language was adopted by Congress in 2006 as part of the Pension Protection Act of 2006″ and that “[t]he absence of an interpretative or implementing regulation does not preclude the court from applying the statute’s express terms.”

Although the court predicated its decision “solely on the plain language of the statute,” it also noted that “the statute’s 2006 amendments were informed in part by a concern that taxpayers were claiming ‘a substantial tax deduction’ when they ‘cede very little of value to the exempt organization.’” A congressional report noted that TAE’s predecessor has been “actively involved in promoting overvaluation of facade easement donations, and that the founders of [the predecessor] profited handsomely from the activities….” Here, the plaintiff sought the deduction while retaining the option to change the existing exterior by adding 2,700 feet of additional development. The court held that such action is impermissible under the statute’s express terms and would be inconsistent with “at least some of the stated rationale behind the 2006 amendments.”

Thus, the court held that the plaintiff was not entitled to its claimed deduction, since the deed of easement failed to preserve “the entire exterior of the building” and granted the defendant’s motion for partial summary judgment.

Partita Partners v. USA, 15-cv-2561, NYLJ 1202770998532, at *1 (SDNY, Decided Oct. 25, 2016), Castel, J.

Landlord-Tenant—Abuse of Process—Tenant Abused the Judicial System to Aggravate the Plaintiffs— Tenant Enjoined From Commencing Further Claims, Without Counsel, Absent Consent From An Administrative Judge Or Commissioner of An Agency

THE PLAINTIFFS HAD MOVED for summary judgment as to liability against the defendant on the plaintiffs’ claim for abuse of process. They also sought a permanent injunction enjoining the defendant from “filing any action, proceeding, motion or submission in any court, agency, commission, or tribunal within the city or state of New York against any one or more of the movants and/or their affiliates and employees relating directly or indirectly to the [subject property] without prior approval of the administrative judge of the court or of the commissioner of the agency, commission, or tribunal in which the filing is to be made, unless [the defendant] is represented by an attorney.” The court granted the plaintiffs’ motion.

The defendant is a permanent resident of a hotel. In 2009, the defendant filed, pro se, “the first of what would become a series of over 20 lawsuits against [the movants], asserting violations of the implied warranty of habitability, harassment, and numerous other causes of action.” Each of the actions had been dismissed “for lack of merit or on default.” The defendant “continued to file lawsuit after lawsuit against [the plaintiffs].” As a result, the plaintiffs sought a preliminary injunction, barring the defendant from filing any further lawsuits against the plaintiffs “without prior approval of the administrative judge of the court or of the commissioner of the agency, commission, or tribunal in which the filing is to be made, unless [the defendant] is represented by an attorney.” A prior court decision granted the motion for a preliminary injunction. The plaintiffs now sought to permanently enjoin the defendant from filing further lawsuits unless the aforementioned conditions were met.

The court noted that the defendant had “filed multiple meritless lawsuits against plaintiffs” and was “merely seeking to inconvenience and badger the plaintiffs.” The plaintiffs’ exhibits included communications between the parties which illustrated an attempt by the defendant “to extract money from the plaintiff,” defendant’s attempt to provoke a plaintiff “by inquiring about his personal life and insulting him to his rabbi” and the defendant’s threat to sue “while using explicit terms.”

Although the defendant submitted more than 150 exhibits in opposition to the motion, the court found that such exhibits did not set forth “a triable issue of fact” and merely details the overwhelming evidence that “he has used the judicial system to aggravate the plaintiffs.”

The court explained that:

While public policy generally mandates free access to the courts, the court “will not tolerate the use of the legal system as a tool of harassment”…and courts have awarded permanent injunctions as a result of the misuse of the judicial system or for malicious prosecution. … Sassower v. Signorelli , 99 AD2d 358, 359 ( 2d Dept. 1984 ) (“a litigious plaintiff pressing a frivolous claim can be extremely costly to the defendant and can waste an inordinate amount of court time. … Thus, when, as here, a litigant is abusing the judicial process by hagriding individuals solely out of ill will or spite, equity may enjoin such vexatious litigation.”).

A plaintiff asserting a claim for abuse of process must demonstrate that the defendant “regularly issued process, either civil or criminal, …[with] an intent to do harm without excuse or justification,” and “use of the process [was] in a perverted manner to obtain a collateral objective.” The court found that the plaintiffs had demonstrated each element. The defendant filed more than 20 lawsuits against the plaintiffs during “the last 10 years and has yet to prevail on a single one.” Further, the defendant’s communications demonstrated that “the lawsuits were meant to badger the plaintiffs.” Additionally, the defendant had, on numerous occasions, “accosted and threatened the plaintiffs regarding the various lawsuits.” The court concluded that the defendant had “not used the judicial system in the manner intended and the plaintiffs have been forced to spend tens of thousands of dollars defending themselves against unsubstantiated claims.”

Accordingly, the court granted the plaintiffs’ motion for summary judgment and the requested permanent injunction against the defendant. Since the plaintiffs’ claim for malicious prosecution sought the same injunctive relief which the court was granting, the court sua sponte dismissed the malicious prosecution claim.

Metro Sixteen Hotel v. Davis, 159720/2013, NYLJ 1202773325007, at *1 (Sup., NY, Decided Nov. 1, 2016), O’Neill Levy, J.

Tax—IRS Disallowed Charitable Donation of Preservation Easement for the Façade of Building Located in Historic District—Easement Did Not Preserve the Entire Building Exterior—Donor Reserved Right to Add Floors and Extend Ground Floor

THE DEFENDANT, the United States of America (defendant) moved for partial summary judgment in a case involving “a charitable donation of a preservation easement in the façade of [a] building located in a historic district.” The plaintiff had claimed a charitable deduction of $4,186,000 on its federal tax return.

The Internal Revenue Service (IRS) had denied the deduction and assessed a 40 percent “accuracy-related penalty” (penalty) against the plaintiff “for claiming the deduction.” The plaintiff had commenced the subject action “pursuant to 26 U.S.C. §6226(b) , which governs partnership petitions for tax adjustments.” The defendant moved for summary judgment only as to whether the deduction “satisfied statutory requirements, with the separate issue of the…penalty to be decided in a non-jury trial.”

The court found that the plaintiff’s deduction was “not authorized under the express statutory language governing the deduction because the easement does not ‘preserve[ ] the entire exterior of the building….,’” citing 16 U.S.C. §170(h)(4)(B) ( §170 ) . Thus, the court granted the [defendant's] motion for partial summary judgment.

The plaintiff had purchased a four-story walk up building that had been built in 1871-72 and was located in a historic district. The plaintiff’s managing member (manager) had met with “the non-party Trust for Architectural Easements (TAE) to discuss donating an easement in the building’s façade to the TAE.” Thereafter, the manager “signed a ‘Trust for Architectural Easements 2008 Donation Agreement,’ a ‘Donation Agreement Addendum: Development Rights’ and a ‘Trust for Architectural Easements 2008 Disclosure Notice.’” The manager also signed a “Historic Preservation Deed of Easement” (deed of easement). The easement specified that 2,700 square feet of the building’s development rights “shall be reserved for the future expansion of the property in accordance with the terms of this easement.”

The deed of easement permitted the plaintiff “to undertake additional construction on the property, conditioned on the TAE’s approval.” The plaintiff had reserved development rights so that it could “add two or three floors on the roof” and “potentially extend the ground floor of the structure.”

The plaintiff argued that “under the deed of easement, it covenanted” that further development of the building “including any alteration, construction, remodeling or exterior extension,” would require the express written consent of TAE.

Section 170 provided that a contribution of a qualified real property interest “shall not be considered to be exclusively for conservation purposes unless” such interest “[i]ncludes a restriction which preserves the entire exterior of the building (including the front, sides, rear, and height of the building),” and “prohibits any change in the exterior of the building which is inconsistent with the historical character of such exterior….” The court noted that §170′s restrictive language is “unqualified.” The restriction does not provide that it is permissible to have “construction above the roof.”

The court opined that the statute’s description of the exterior as “including the front, sides, rear, and height of the building,” did not mean that the exterior is limited “solely to those features,” notwithstanding the use of the word “including,” The Internal Revenue Code’s [IRC] “definitional provision” specifies that “[t]he terms ‘includes’ and ‘including’ when used in a definition contained in this title shall not be deemed to exclude other things otherwise within the meaning of the term defined.” 26 U.S.C. §7701(c) .

Moreover, the TAE had advised the plaintiff of such limitation in its disclosure notice, which specified that “the easement ‘must preserve the entire building exterior, including the space above the building, the sides and the rear of the building—as opposed to just those sections of the historic building that are visible to the public.”

The plaintiff contended that the statute should be construed to allow a deduction if additional construction “does not exceed the height of the bulkhead that currently exists on the roof.” However, the court found that the statutory text did not support that argument. The court noted that if a building’s exterior included “an arched roof or a steeple, the plain text of the statute would not allow a deduction if the restriction permitted additional rooftop construction that does not surpass the highest existing point of the building. Such a construction would be inconsistent with preserving the entire exterior of the building.”

Although the plaintiff had emphasized that “any construction or improvements would require the approval of the TAE, and therefore would be unlikely to alter the existing exterior,” the court observed that the statute requires “a restriction which preserves the entire exterior of the building, and not a conditional restriction that delegates to the grantee future decisions on development of the exterior.”

The plaintiff also asserted that the exact scope of the subject IRC provision had “not been addressed by Treasury Department regulations.” However, the court explained that “the relevant statutory language was adopted by Congress in 2006 as part of the Pension Protection Act of 2006″ and that “[t]he absence of an interpretative or implementing regulation does not preclude the court from applying the statute’s express terms.”

Although the court predicated its decision “solely on the plain language of the statute,” it also noted that “the statute’s 2006 amendments were informed in part by a concern that taxpayers were claiming ‘a substantial tax deduction’ when they ‘cede very little of value to the exempt organization.’” A congressional report noted that TAE’s predecessor has been “actively involved in promoting overvaluation of facade easement donations, and that the founders of [the predecessor] profited handsomely from the activities….” Here, the plaintiff sought the deduction while retaining the option to change the existing exterior by adding 2,700 feet of additional development. The court held that such action is impermissible under the statute’s express terms and would be inconsistent with “at least some of the stated rationale behind the 2006 amendments.”

Thus, the court held that the plaintiff was not entitled to its claimed deduction, since the deed of easement failed to preserve “the entire exterior of the building” and granted the defendant’s motion for partial summary judgment.

Partita Partners v. USA, 15-cv-2561, NYLJ 1202770998532, at *1 (SDNY, Decided Oct. 25, 2016), Castel, J.