Realty Law Digest
Scott E. Mollen, a partner at Herrick, Feinstein and an adjunct professor at St. John's University School of Law discusses “884 Madison Street LLC v. Aurello and Tsivicos,” where the court found the subject premises were not subject to rent stabilization because the petitioner established by a preponderance of the evidence that a substantial rehabilitation of the building had been performed, and “Matter of O'Connor and Sons Home Improvement v. Acevedo,” where a Zoning Board of Appeals' denial of variances was annulled.
March 27, 2018 at 03:11 PM
16 minute read
Landlord-Tenant—Holdover Proceeding—Vacant Building Was in Hazardous Condition—“Substantial” Renovation Done on or After Jan. 1, 1974—Gut Renovation Was Documented—Building Not Subject to Stabilization—Sanctions Motion for Using Perjured Affidavits and Scheme to Allegedly Impair Administration of Justice Denied
A petitioner commenced a “'no grounds' holdover proceeding,” alleging that the parties' lease had expired and was not renewed. The petition asserted that the premises were “not subject to rent stabilization or the ETPA of 1974, because the building has been substantially rehabilitated as family units on or after Jan. 1, 1974.” The respondent asserted “the petition incorrectly states the rent regulatory status of the apartment, rent overcharge, and breach of the warranty of habitability.” A subtenant appeared by counsel, but did not file an answer. She submitted an affidavit stating that she was not “a resident, lessee, or occupant of the subject apartment.” She alleged that “she has spent evenings in the apartment with the tenant, and she resides at another apartment….” She claims that “she is not responsible for rent or use and occupancy” for the subject apartment.
The petitioner moved for summary judgment and for sanctions against the respondent tenants “for suborning and using perjured affidavits together with a scheme designed to impair the administration of justice.” One respondent cross-moved for “an order dismissing the petition for failure to adequately describe the premises.”
The petitioner argued that it was undisputed that the parties' lease had expired on May 31, 2017, and had not been renewed. A respondent challenged “the building's exemption from rent regulation by reason of its having been substantially rehabilitated after 1974.”
The petitioner submitted an affidavit of its employee (employee), which stated that the building was “more than dilapidated prior to the renovations.” The employee attached “'before' photographs taken prior to the renovation.” He asserted that the building had been “in a hazardous condition and was 100 percent vacant.” He further stated that “the building systems: furnace, boilers, plumbing, wiring, water and sewage lines, and basement slab were obsolete and useless” and that “the building was on the edge of collapse,” “[a]ll the steel rusted beyond repair, and the floors were tilting between 3-5 degrees out of plumb due to rotting wood.”
The employee further stated that “100 percent” of all the building systems had been “completely replaced including plumbing, heating, gas, electrical wiring, intercoms, windows, roof, interior stairways, kitchens, bathrooms, floors, ceilings and wall surfaces” and “doors…including replacing non-fire rated items with fire rated ones. The fire escapes were 100 percent repaired, and the pointing was done as needed, but everything else was 100 percent replaced.” Additionally, “all ceilings, flooring and plasterboard or wall surfaces in the common areas, as well as the ceiling, wall and floor surfaces in the apartments were 100 percent replaced.” He submitted photographs “depicting the apartment gutted down to the brick walls and cement flooring.” There were “no interior walls, ceilings, or flooring in the apartment.” Another photograph showed workers “framing new interior walls, and…the new flooring…being installed.”
The petitioner submitted, inter alia, copies of numerous building permits issued for “the gut renovation…, the contract for the general contractor [GC],” and “the bills and proof of payment” showing costs of $678,976.13, which had been paid to the GC. That number did not include the cost of “masonry, steelwork subs, or materials.”
The petitioner cited RSC 2520.11(e), which provides that “if a specified percentage of 75 percent of listed building wide and individual housing accommodation systems have been replaced and this work commenced in a building that was in a substandard or seriously deteriorated conditions, the requirements are met,” in support of its argument that the premises are not stabilized. Although the code requires 75 percent of the building systems be replaced for “substantial rehabilitation,” here, “the petitioner replaced 100 percent of the systems.”
The opposition did not submit an affidavit from anyone with personal knowledge or from an expert witness. Although DHCR can opine as to whether a contemplated project would “qualify for substantial rehabilitation,…application to the DHCR is not mandatory and the civil court can adjudicate these issues.”
The respondents countered that there were material issues of fact as to whether the alleged work constituted substantial rehabilitation and that the “affirmative defenses of breach of the warranty of habitability and harassment,” bar a finding of summary judgment for the petitioner. The respondent also questioned whether the petitioner had appropriate permits for the alleged gut rehabilitation.
A respondent cited a Trulia.com description of the building, which advertised the building for sale in April 2012. The advertisement stated that the building had been renovated within the last two years. The petitioner countered that “any marketing materials from the prior owner which 'puffed' the condition of the building in order to sell it,” did “not create an issue of fact that the building was not substandard.”
The court found that it was undisputed that the building was 100 percent vacant and 100 percent of the systems had been replaced. Thus, the court held that the petitioner established by “a preponderance of the credible evidence that a substantial rehabilitation of the entire building was performed after 1974.” Since the respondent failed to raise any issues of fact, the court granted the petitioner's motion for summary judgment and awarded the petitioner a final judgment of possession. The court severed a respondent's counterclaim for harassment.
With respect to the sanctions motion, the petitioner had attached photographs showing a respondent on vacation in various locations around the world between July 30, 2016 and Sept. 22, 2017. The petitioner alleged, inter alia, that the respondent did not qualify for free legal services, based on his vacation history and that the respondents fraudulently represented to HPD and the Housing Part that the building was an SRO, and that a respondent was responsible only for the rent of one room, rather than the entire apartment. The respondent's counsel stated that his office had examined the respondent's information and determined that he is, in fact, eligible for free legal services. The court, inter alia, denied the motion for sanctions, but awarded the petitioner a final judgment of possession.
Comment: Adam Leitman Bailey of Adam Leitman Bailey, P.C., attorney for the petitioners, noted that it is often difficult for a new owner to establish the condition of a building on a past date. Here, he “embedded photographic evidence directly into his written argument, making the pictures say a thousand words.” The pictures showed “the 'dilapidated' condition of the building” and demonstrated the significant renovations done by his client.
Michael Watson, of Brooklyn Legal Services, counsel for a respondent, preferred not to comment beyond noting that the case is being appealed.
884 Madison Street LLC v. Aurello and Tsivicos, Civ. Ct., Kings Co., Housing Pt., L&T Index No. 70844/2017, Sikowitz, J.
Land Use—Zoning Board of Appeals Denial of Variances Annulled—Generalized Community Pressure—Lack of Evidence—Rank Speculation—Self-Created Hardship Is Relevant but Not Determinative—Alleged Economic Resurgence in Long Beach Is Not a Proper Basis to Deny a Variance
The petitioners commenced an Article 78 proceeding, seeking a judgment annulling a determination of the Zoning Board of Appeals (ZBA) of the City of Long Beach (city), which denied their application for several variances (variances).
The petitioners own a 120' x 57' corner lot. There is currently one “dilapidated” house on the property (house), which was there when the petitioner purchased the property. The subject zoning district requires a minimum lot size of 80' x 57.' The petitioners seek to demolish the house and build two new houses on the property. Since the new lots would each be 60' x 57,' the petitioners need variances.
The petitioners' real estate expert testified at a public hearing, that they could “build one structure up to 95 feet wide on the property,” but a structure that size “would be out of character for the neighborhood.” The petitioners argued that two smaller houses “would be more consistent with the majority of the homes in the neighborhood.” “Of the 850 homes in the zoning district, only 14 of them, or 1.5 percent, have dimensions similar to the subject plot of 120' x 57.'” They also explained that renovating the house was not possible, since the city had determined that the house must be “razed.” The petitioners also argued that the variances are “modest,” i.e., they did “not seek variances for the front, side or rear setbacks” and “each home would have off street parking for four cars, lessening the impact on street parking,” “one single structure would have a footprint of 3800 square feet, while two separate structures would only take up 2400 square feet, total” and “the hardship is not self-created.”
The city's determination that the house had to be demolished was made after the petitioners had purchased the property. Additionally, “in the immediate vicinity there are two lots that are smaller (40') and one that is equal (60') to the two lots [petitioner]” sought to create and the “two new homes would be FEMA compliant….” Moreover, property owners immediately adjacent to the house supported the application.
When the petitioners' attorney began to address legal arguments at the ZBA hearing, the attorney was “first met with immediate hostility and opposition from the chairman and other members of the ZBA.” Although the chairman stated “he had some questions,” he instead “attacked…[petitioners'] submissions without ever asking a question.” Other board members “accused [petitioners] of 'negligence' for not having an engineer inspect the property” before the purchase and/or asserted that “the hardship was self-created.” Petitioners' attorney was permitted to continue his presentation.
The petitioners then cited a nearby property “with a similar sized lot for which the ZBA granted variances to split into…two lots” and noted that apart from “not being a corner lot,” such other property was “similar to the subject property” (similar property). They also noted that of the 58 homes on the subject street, more than half had “frontages of less than 60,'” meaning that the proposed two houses “would not change the character of the neighborhood or street.”
Community opponents cited “the current paucity of on-street parking spaces” and concern that home values would decrease. They noted that the similar property “remains an unfinished construction site,” which “collects garbage.” They also argued that when the similar property was granted a variance, “it was soon after Sandy and no one was sure if people would return to Long Beach.” They contended that given the concern as to whether people would return to Long Beach, “construction of any kind was encouraged” and the requested variances would “change the character of the neighborhood.” Some opponents also claimed that the petitioners had “nefarious intentions,” were “only interested in profit” and that one opponent “was a felon.”
Following the public hearing, the petitioners submitted a real estate expert's report which indicated “[i]n…six blocks studied, 20 houses were 60' or less and 26 of them were less than 80.'” The expert opined that the proposed subdivision, would not “alter or change the essential character or pattern of development….” in the zoning district. The ZBA issued a one-sentence denial of the application and stated “the board may issue Findings of Fact and Conclusions of Law at a later date.” The petitioners then commenced the subject Article 78 proceeding.
The court explained:
Local zoning boards have broad discretion in considering…area variances…. a…court should refrain from substituting its own judgment for the judgment of the zoning board…. “Courts may set aside a zoning board determination only where…the board acted illegally or arbitrarily, or abused its discretion”…. “'or succumbed to generalized community opposition'”…. “The determinations will be sustained if they have a rational basis in the record.”
“…a zoning board is required to engage in a balancing test 'weigh[ing] the benefit of the grant to the applicant against the detriment to the health, safety and welfare of the neighborhood…if the variance is granted….'” “…, the zoning board must consider: '(1) whether an undesirable change will be produced in the character of the neighborhood or a detriment to nearby properties will be created by the granting of the area variance; (2) whether the benefit sought…can be achieved by some method,…other than an area variance; (3) whether the requested area variance is substantial; (4) whether the…variance will have an adverse effect or impact on the physical or environmental conditions in the neighborhood or district; and (5) whether the alleged difficulty was self-created, which consideration shall be relevant…, but shall not necessarily preclude the granting of the area variances'”….
“'Conclusory findings of fact are insufficient to support a determination by a zoning board of appeals, which is required to clearly set forth 'how' and 'in what manner' the granting of a variance would be improper….'” “…, a determination will not be deemed rational if it rests entirely on subjective considerations, such as general community opposition, and lacks an objective factual basis”…. Accordingly, “[c]ourts may set aside a zoning board determination where…the 'board acted illegally or arbitrarily, or abused its discretion, or that it merely succumbed to generalized community pressure'”…. Substantiality alone should not be allowed to control….
The petitioners had not been given “the reasons for the denial” and the ZBA had not published “its findings for two months after the hearing, and one month after it was served with the subject petition.” The ZBA acknowledged that the applicant intended to provide off street parking for the two proposed homes. However, the findings cited “the negative impact of the proposed curb cut on [the subject street], as that curb cut will take away currently existing on-street parking spaces on that street.” The court found such reasoning to be “arbitrary,” since the ZBA failed to consider that one large structure that could be built as of right “could house…four or five or more…drivers, some of whom would have to park on the street, which would add to the 'dire' parking situation.” Moreover, “the two smaller proposed…structures could conceivably house one, or no licensed drivers in each, adding no additional stress to the parking issues.” “Assuming that one large structure would cause less parking problems than two smaller ones, is rank speculation.” The court also characterized “increased traffic” concerns as “rank speculation.”
Although several properties had “frontages less than the currently-required 80,'” the ZBA had not explained “how two more would change the character of the neighborhood.” Moreover, the ZBA's conclusion that the two proposed homes “would cut down on 'green spaces and view corridors,'” was arbitrary. There was no support for such assertion and “two smaller structures, taking up less overall square footage,” may “create greater green space and greater view corridors.”
The court opined that the assertion that “the Zoning Code was changed 'on or about 1986 or 1987' with the intent of preserving the larger lots,” might have merit. However, there was no support in the record, “other than statements by the public and board members” and it did not explain why a variance was granted for the similar property.
Additionally, the court was concerned about the ZBA's attempt to distinguish the previously granted variance from the current application, by noting the past concerns that people would not return to Long Beach after Superstorm Sandy. The ZBA stated that “Long Beach no longer has such concerns,” “is currently vibrant and has no further need for such incentives.”
The court criticized the ZBA's “proclamations” that were made without “proof in the record, to support them.” The “only support, in the record, for these assertions are the opinions” of ZBA members and public opponents of the application. Moreover, the court stated that it was “not certain where the reported vibrancy of modern-day Long Beach fits into the factors that the ZBA was supposed to weigh….” “Instead, the ZBA seems to be saying that since [the city] as a whole is currently so healthy, applications such as the current one are not 'needed.' The court believes this is the wrong standard to apply.”
The court found that the ZBA's reasoning was arbitrary, since the ZBA's conclusions that granting the variances would generate “an undesirable change in the character of the neighborhood or a detriment to nearby properties,” were based only on “generalized complaints of community members.” The two proposed homes would be “similar in size and nature to many of the existing homes on the same street and near-by streets” and whether the variances could be achieved by some other method other than an area variance, appeared not to have been addressed at all. The ZBA's assertion that “the requested area variance would be 'substantial,'” was only supported by “the opinion of the ZBA and the generalized community opposition.” The record lacked “support for the conclusion that the proposed variance” would adversely “effect or impact on the physical or environmental conditions in the neighborhood….” Additionally, there was no evidence as to alleged “environmental impacts and potential sewer issues.”
Finally, the court noted that the city's determination that the house “needed to be razed was made after [the petitioners] purchased it.” Although the petitioners include a sophisticated “Home Improvement” company and could have known that “the current structure was unsound,” “the 'self-created' factor is not determinative…and is to be considered with all the other factors.” Even if “the petitioners' difficulty arguably was self-created, there [is] no evidence that the grant of the requested…variance will have an undesirable effect on the character of the neighborhood, adversely impact on physical and environmental conditions, or otherwise result in a detriment to the health, safety and welfare of the neighborhood or community.” Accordingly, the court granted the petition and directed the ZBA to issue the requested variance.
Disclosure—Although my firm was not counsel in the subject litigation, it is counsel to clients who currently have litigation against and/or involving the City of Long Beach relating to land use issues.
In the Matter of the Application of O'Connor and Sons Home Improvement v. Acevedo, Sup. Ct., Nassau Co., Index No. 8019/16, decided Dec. 18, 2017, McCormack, J.
Scott E. Mollen is a partner at Herrick, Feinstein and an adjunct professor at St. John's University School of Law.
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
NOT FOR REPRINT
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
You Might Like
View AllThe Unraveling of Sean Combs: How Legislation from the #MeToo Movement Brought Diddy Down
When It Comes to Local Law 97 Compliance, You’ve Gotta Have (Good) Faith
8 minute readTrending Stories
- 1Call for Nominations: The Recorder and Law.com's California Legal Awards 2025
- 2The Week in Data Dec. 13: A Look at Legal Industry Trends by the Numbers
- 3Antitrust Class Actions Against CVS, Other Pharmacy Benefit Managers Are Piling Up
- 4Judge Grinds NY's Cannabis Licensing Regime to a Halt Again
- 5On the Move and After Hours: Barclay Damon; VLJ; Barnes & Thornburg
Who Got The Work
Michael G. Bongiorno, Andrew Scott Dulberg and Elizabeth E. Driscoll from Wilmer Cutler Pickering Hale and Dorr have stepped in to represent Symbotic Inc., an A.I.-enabled technology platform that focuses on increasing supply chain efficiency, and other defendants in a pending shareholder derivative lawsuit. The case, filed Oct. 2 in Massachusetts District Court by the Brown Law Firm on behalf of Stephen Austen, accuses certain officers and directors of misleading investors in regard to Symbotic's potential for margin growth by failing to disclose that the company was not equipped to timely deploy its systems or manage expenses through project delays. The case, assigned to U.S. District Judge Nathaniel M. Gorton, is 1:24-cv-12522, Austen v. Cohen et al.
Who Got The Work
Edmund Polubinski and Marie Killmond of Davis Polk & Wardwell have entered appearances for data platform software development company MongoDB and other defendants in a pending shareholder derivative lawsuit. The action, filed Oct. 7 in New York Southern District Court by the Brown Law Firm, accuses the company's directors and/or officers of falsely expressing confidence in the company’s restructuring of its sales incentive plan and downplaying the severity of decreases in its upfront commitments. The case is 1:24-cv-07594, Roy v. Ittycheria et al.
Who Got The Work
Amy O. Bruchs and Kurt F. Ellison of Michael Best & Friedrich have entered appearances for Epic Systems Corp. in a pending employment discrimination lawsuit. The suit was filed Sept. 7 in Wisconsin Western District Court by Levine Eisberner LLC and Siri & Glimstad on behalf of a project manager who claims that he was wrongfully terminated after applying for a religious exemption to the defendant's COVID-19 vaccine mandate. The case, assigned to U.S. Magistrate Judge Anita Marie Boor, is 3:24-cv-00630, Secker, Nathan v. Epic Systems Corporation.
Who Got The Work
David X. Sullivan, Thomas J. Finn and Gregory A. Hall from McCarter & English have entered appearances for Sunrun Installation Services in a pending civil rights lawsuit. The complaint was filed Sept. 4 in Connecticut District Court by attorney Robert M. Berke on behalf of former employee George Edward Steins, who was arrested and charged with employing an unregistered home improvement salesperson. The complaint alleges that had Sunrun informed the Connecticut Department of Consumer Protection that the plaintiff's employment had ended in 2017 and that he no longer held Sunrun's home improvement contractor license, he would not have been hit with charges, which were dismissed in May 2024. The case, assigned to U.S. District Judge Jeffrey A. Meyer, is 3:24-cv-01423, Steins v. Sunrun, Inc. et al.
Who Got The Work
Greenberg Traurig shareholder Joshua L. Raskin has entered an appearance for boohoo.com UK Ltd. in a pending patent infringement lawsuit. The suit, filed Sept. 3 in Texas Eastern District Court by Rozier Hardt McDonough on behalf of Alto Dynamics, asserts five patents related to an online shopping platform. The case, assigned to U.S. District Judge Rodney Gilstrap, is 2:24-cv-00719, Alto Dynamics, LLC v. boohoo.com UK Limited.
Featured Firms
Law Offices of Gary Martin Hays & Associates, P.C.
(470) 294-1674
Law Offices of Mark E. Salomone
(857) 444-6468
Smith & Hassler
(713) 739-1250