Landlord-Tenant—Court Rejects Defense That Repair of Building Would Be Economically Infeasible—Owners’ Valuation Expert Lacked Knowledge of Actual Building Expenses and Used Capitalization Rates That Seemed Arbitrary and Speculative and Failed to Address Whether Anticipated Tenant Turnover Would Lead to Higher Rents

Tenants brought an order to show cause, seeking a temporary restraining order and a preliminary injunction against the owners of their eight-unit building. The tenants sought an order requiring that the owners “make…repairs required by the [NYC Department of Buildings] and eliminate hazardous conditions that led to the issuance of a Peremptory Vacate Order (‘vacate order’) against the subject property.” They also sought an order directing that the tenants “be restored to their…apartments after the vacate order has been removed.” The owners countered that repair of the building “would be economically infeasible.”

A hearing was held. The owners had purchased the building in April 2011, at a time when the building required repairs. The Buildings Department had inspected the building in November 2010 and found that repairs were needed. A predecessor owner had arranged for “architectural plans to be prepared” for “joist replacement” and “masonry repairs.” The plans were approved in March 2011, just prior to the current owners’ (owners) purchase of the property. The owners had requested that the tenants voluntarily vacate their apartments for 30 days “to allow for the joists to be repaired and/or replaced.” The owner had offered the tenants $500 each for expenses related to the temporary move. The tenants had declined the offer.

The Buildings Department had inspected the building prior to the issuance of a vacate order on Dec. 28, 2012. The department found that there was a failure to maintain the building “in compliant manner… Defective brick work through entire building. Brickwork is loose and in danger of failing at exposure #4, Chimney at rooftop is defective and falling apart. There are cracks in the ceiling and walls in some of the apartments throughout entire building. Repair and replace. Make all necessary repairs….” A Dec. 17, 2012 Buildings Department report noted “masonry defects and recommended shoring of…wood joists….” The tenants included low income elderly individuals who had testified that they could not pay a “market” rent and could not find stable housing accommodations since being displaced. The rents at the subject building “were all low rents ranging from $193 to $600.”

The tenants’ engineer projected that $177,200 would cover replacement of every joist and allow for the necessary brickwork to be replaced. The engineer testified that the scope of necessary repairs was much more extensive than that described by the tenants’ expert. The owners’ structural engineer testified that “there were significant structural issues involving the main beam of the building and the structural integrity of the staircase….” The owners’ general contractor estimated the total cost, including “fees, permits, construction costs, demolition expenses, finishes, appliances) sprinkler systems and electrical systems for which he estimated a projected cost of $1.4 million dollars….”

The tenants’ appraiser had estimated that “a ‘functional renovation’ of the building would lead to the building having a value of $1.4 million dollars” even with the low rent roll. The tenants’ appraiser used a comparable sales methodology which reflected the “strong real estate market in the area.” The owners’ valuation expert testified that the proper analysis was an income-based approach and based upon the low rent roll, the property would be valued at $500,000-$600,000.

The owners further argued that the vacate order had been issued “without any culpability on their part” and the cost of restoration may “far outweigh any profit or gain that might be generated by the building.”

The court found that an injunction was needed “to preserve the status quo and prevent [the tenants] from becoming permanently displaced.” In attempting to establish the economic infeasibility defense, the owners had “adopted an all-out approach in claiming that the required renovation…involves a total reconstruction.” The building, as envisioned by the owners’ experts, would be “a completely new and modernized apartment building.” The owners, in essence, claimed that the vacate order required that “the entire building be rebuilt.”

An owners’ expert had testified that “the building was in such poor condition that the cost of the renovation would trigger compliance with the 1968 Building Code,” i.e., the renovation would require “installation of completely new systems and finishes and fire rated enclosures.” The owners’ expert asserted that the necessary work would require “the filing of an ‘Alt 1′ permit due to the projected costs of the renovation exceeding 60 percent of the appraised value. This filing would necessitate completely new electrical systems, sprinkler systems, handicap accessibility, plumbing systems as well as the architectural and engineering costs and other sundry costs.” The costs were projected to reach $1.4 million.

The court noted that under Admin. Code §27-120, “less arduous renovations are permitted as long as the ‘general safety and public welfare are not compromised.’” Moreover, the owner was required by the Buildings Department “to stabilize the building and not required to perform a complete rehabilitation….” In essence, the owners were choosing to do a gut renovation which was “much more extensive” than “was legally required by the [Buildings Department]” and the owners “ did so for their own elective purposes.”

The building had needed structural repairs and was in poor condition when the owners’ predecessor had filed building plans to replace the floor joists. As prospective purchasers, the owners were “made aware of the condition of the building and assumed the responsibility to provide suitable habitable apartments when they became the owner….” The building had been “long neglected.” However, evidence did not indicate that the owners had “engaged in unscrupulous conduct or otherwise intentionally caused the building to deteriorate.”

Although the owners had not acted “maliciously,” they were “sophisticated real estate investors and were aware of repairs that were needed from the date they purchased the property.” Furthermore, the owners had owned the building for approximately 20 months before the vacate order had been issued. Thus, the owners “had actual knowledge of the need for imminent replacement of the floor joists and would have been expected, as sophisticated investors, to remedy the repairs immediately.” The court believed that the owners had “anticipated expending money to stabilize the building” and that it was “somewhat disingenuous,” to now claim that it is an economic hardship to make such repairs. The court explained that “[w]hen the need for repairs should have been anticipated, courts have rejected a defense based on economic hardship….”

The court granted the motion for a preliminary injunction which required the owners to spend money “which may not have been fully anticipated when, the building was purchased.” The court found that the owners had been apprised of the need for repairs, chose to purchase notwithstanding the building’s condition, had the resources and ability to repair the building with the tenants in possession and thereby avoid the “drastic circumstance” of having the Buildings Department issue a vacate order.

The court then rejected the economic infeasibility defense. The court found that it was “implausible to conclude that the value of the building, which defendants paid $595,000 in 2011, would be worth less in the current market.” The court also observed that the owners’ valuation expert had testified without knowledge of “the actual building costs and did not even have the real estate tax information.” The court found that “his use of various capitalization rates seemed arbitrary and speculative.” Moreover, he was “not an appraiser” and his analysis “was performed without specific cost data and he was unable to use comparable sales to support his opinion.” The court opined that “[h]is reliance on an income approach seem[ed] simplistic and inappropriate given the location of the…building in a vibrant residential area.” The court also explained that it would be “reasonable to expect” that there would be “some turnover among…residents leading to higher rents,” yet such fact was not discussed by the owners’ expert.

Finally, the court warned that the “economic viability” of a building “may not be used as a device, nor raised as a standard by which a landlord is permitted to escape his non-waivable duty….” Given the owners’ prior knowledge of the building’s poor physical condition, the court believed “it would be against the interests of justice to deny the preliminary injunction.” It believed that absent an injunction, these tenants would never return to the building and would most likely become homeless.

Finally, the court opined that “to deny the injunction would create an unjustified windfall to the owners and serve as a reward for failing to maintain the property….” Based on the economic status of the tenants, the court exercised its discretion to set a nominal amount for the required bond, i.e., one dollar.

Lamberty v. Papamichael, 1819/2013, NYLJ 1202620313200, at *1 (Sup., KI, Decided Sept. 13, 2013), Graham, J.

Landlord-Tenant—Based on the Evidence in the Record, the Tenant’s Sporadic Yelling Did Not Constitute a Nuisance

A landlord had commenced a holdover proceeding, alleging that the tenant had breached a stipulation of settlement (stipulation). The stipulation provided that during a five-year probationary period, the tenant would not engage in “shouting, screaming, yelling in his apartment and/or the public areas of the building and/or jumping up and down in his apartment or other similar conduct.” The landlord alleged that the tenant “yells, shouts and screams, both in his apartment and in public areas of the building, disturbing other tenants.” The salient issue was whether the tenant had engaged in prohibited conduct after the stipulation and if so, whether the tenant’s conduct constitutes a nuisance.

A neighbor testified that he had lived next door to the tenant since 1990 and that he hears the tenant “through the wall, loud enough to distinguish particular words, on a regular basis.” The neighbor kept a log for a one-month period and had testified that the entries in the log were typical of his experience with the tenant. The log recorded incidents on 22 out of 31 days. Most incidents occurred during normal working hours, a few were in the evening, and a very small number were late at night or very early in the morning. The log mostly indicated that the tenant was “shouting at himself, criticizing himself, calling himself names, and, on a few occasions, saying that he will kill himself.”

The building superintendent testified that he heard the tenant “shouting at himself inside his apartment 15 or 20 times between the date of the stipulation and the date of the hearing.” The superintendent stated that he heard the shouting while “he was standing in the hallway outside of the tenant’s apartment door.” The building manager testified that he heard shouting once, also when the tenant “was inside his apartment and the manager was in the hallway.”

The tenant testified that he had lived in the apartment for 42 years, he lives alone and works two or three days a week as a freelance editor. He uses Internet access at a local library. The tenant further testified that “he is not suicidal but that he sometimes says he is going to kill himself when he is frustrated.” The tenant asserted that he had “no desire to disturb his neighbors and has made an effort to comply with the stipulation.” The tenant also testified that it was “hard for him to judge how loud his voice is when he is alone.”

The tenant is a client of Adult Protective Services (APS), a part of the NYC Human Resources Administration. An APS psychiatrist diagnosed the tenant as having “Asperger’s Disorder.”

In order to establish that the tenant’s conduct constitutes a nuisance, the landlord had to demonstrate that the tenant had “engaged in a persistent and continuing course of conduct evincing an unreasonable use of the property that substantially damages others.” The court observed that “[n]ot every annoyance is a nuisance. A nuisance is a continuous invasion of rights, a pattern of continuity or recurrence of objectionable conduct.” The court further noted that “courts have recognized that New York City apartment living is not, by its very nature, a silent experience, and that apartment dwellers must expect to put up with a certain amount of noise.”

The subject court found that there was no evidence that “any disturbing behavior has occurred outside of the [tenant's] apartment. He does not confront others, nor does he berate himself in public spaces. The only complaint made…is that he berates himself, in the privacy of his own apartment, at a volume that can be heard through a common wall in one other apartment. It is clear that [the tenant] means no one any harm.”

The court stated that there is “no way to know, on this record, what the volume of [the tenant's] statements” actually was. The court did not know “how sound-proof the wall is, or how loud one has to speak to be heard through it.” The court considered the fact that the tenant “is a man with certain challenges” who lives “a simple existence and is able to take care of his own needs.” Moreover, the tenant “has lived in the same apartment since 1970″ and although some of his behavior is “unorthodox,” “he does his best to control it, and he means no harm to anyone.” The court further stated that the tenant “is not someone who needs additional care or cannot successfully live on his own, and he has to live somewhere.” The court concluded that the tenant’s behavior did not rise to the level of nuisance and dismissed the petition.

Comment: As the court noted, New York City apartment living is generally not a “silent experience” and apartment dwellers “must expect to put up with a certain amount of noise.” Most apartment dwellers would agree with such statement. However, there are cases where the amount of noise is truly excessive. Some complaining neighbors feel that if a judge, landlord, or members of their condo board or co-op board lived next door to the offending tenant, they would better understand that the alleged conduct does in fact rise to the level of a nuisance. The challenge is one of “proof.” These cases typically involve neighbors who are operating a business out of their apartment, are playing musical instruments, have barking dogs or have loud parties.

As the court noted, the subject record lacked information as to how soundproof the wall was or the actual volume level of the respondent tenant’s noise. Although the petition indicated that the tenant was disturbing other tenants, the decision cited the testimony of only one neighbor. The decision did not indicate which room in the neighbor’s apartment was adjacent to the tenant’s apartment, e.g., was the subject wall adjacent to a bedroom and was the neighbor deprived of sleep? There apparently was no evidence as to the thickness and/or condition of the wall. Additionally, there are situations where noise travels through vents to apartments above, below or adjacent to “noisy” apartments. Buildings often require that contractors seal vents to prevent dust from renovation work from traveling between apartments.

This case illustrates, inter alia, the difficulty of proving that noise has risen to the level of a nuisance. This is especially so, when the noise involves “sporadic yelling.” Some experts have advised using noise monitoring equipment.

Moreover, this tenant had resided in the apartment for 42 years. When courts in New York City see efforts to evict a long-term tenant in a neighborhood that has become desirable (the subject apartment is in Manhattan’s Chelsea neighborhood), they sometimes become concerned that the landlord may be partly motivated by a desire to recapture a rent controlled or rent stabilized apartment that, if vacant, would become a more valuable apartment.

This case turned on the specific evidence and does not stand for the proposition that “sporadic noise” can never constitute a nuisance.

JSB Properties v. Cohen, 58678/11, NYLJ 1202619904667, at *1 (Civ., NY, Decided Aug. 26, 2013), Schneider, J.

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