Scott E. Mollen
Scott E. Mollen ()

Nuisance Holdover Proceeding Dismissed—Tenant Burned Clothes In Bathtub, Gas Oven and Stove Were Both on—Tenant Had Been Charged With Reckless Endangerment, a Class D Felony—Only One Incident, Even a Fire, Is Not Ground for Eviction, Pursuant to 9 NYCRR §2524.3(b)

A landlord commenced a nuisance holdover proceeding against a tenant, pursuant to 9 NYCRR §2524.3(b), on the grounds that a fire had occurred in the tenant’s apartment. The tenant moved to dismiss the petition, arguing that even if the allegations were true, “only one incident of alleged nuisance (even a fire) is not sustainable pursuant to 9 NYCRR §2524.3(b).”

The holdover petition stated that on a certain date, at 3:55 a.m., “the tenant intentionally damaged his apartment…by starting a fire thereby evidencing a depraved indifference to human life, and engaged in conduct which created a grave risk of death to other tenants and/or occupants of the building….” The termination notice stated that the police had visited the apartment and “observed the tenant alone and a pile of clothes burning in the bathtub….” The police found that the gas oven and gas stove were both turned on, releasing gas into the apartment. The tenant was charged with reckless endangerment in the first degree—a class D felony. “The criminal statute applied when a defendant “evinces a depraved indifference to human life,” by “recklessly” engaging in conduct “which creates a grave risk of harm to another person.” The criminal case was still pending. The landlord alleged that other tenants in the building had complained that “they are in fear of their physical safety.”

The tenant is a 52-year-old disabled man who lived in the rent-stabilized apartment for more than 20 years. The tenant’s motion to dismiss disputed certain factual allegations and contended that a nuisance holdover proceeding cannot be sustained when it is “based on only one incident of alleged nuisance (the fire).” The tenant noted that nuisance cases have been dismissed where the landlord was unable “to allege and prove a continuing or recurring condition of objectionable conduct….” The landlord contended otherwise, but had failed “to cite a single case on the point.”

The court dismissed the proceeding since 9 NYCRR §2524.3(b) “requires on-going recurrences of objectionable conduct to constitute a nuisance.” The court also opined that although a “single incident of a fire is not actionable pursuant to 2524.3(b) there is another remedy or basis for an eviction in law.” The court noted that tenants have “an implied obligation…to refrain from affirmative acts of waste” and that “[t]he obligation not to commit waste is a substantial obligation of the tenancy which, if violated, can form the basis for an eviction proceeding….” Decisional precedent has defined “waste,” as “a tenant’s wrongful act which results in damage to the landlord’s reversion.” Thus, the alleged fire “might support a claim that the tenant is violating a substantial obligation of the lease (See 9 NYCRR §2524.3[a]).” The court noted, however, that “under this sub-section, a notice to cure from the landlord would be required.”

Kwai & Wong v. Hodges, 69373/16, NYLJ 1202777492044, at *1 (Civ., NY, Decided Jan. 9, 2017), P. Saxe, J.

Landlord-Tenant—Rent Stabilization—Housing Accommodations That Are in a Building That Was Converted From a Commercial Building to a Residential Building After Jan. 1, 1974, Are Exempt From Rent Stabilization—Landlords Not Not Required to Provide Stoves

This decision involved an appeal by “plaintiffs in a putative class action [inter alia] for a judgment declaring that their apartments are subject to rent stabilization.” A trial court order denied plaintiffs’ motion for summary judgment declaring that the apartments are rent stabilized and “granted the defendant’s cross motion for summary judgment, in effect, declaring that the plaintiffs’ apartments are not subject to rent stabilization….”

Section 5(a)(5) of the Emergency Tenant Protection Act of 1974 (ETPA), provides that “‘housing accommodations’ in buildings completed or ‘substantially rehabilitated as family units’ on or after Jan. 1, 1974, are exempt from rent stabilization rules.” The Appellate Division (court), held that the “housing accommodations in a building that was converted from a completely commercial building to a completely residential building after Jan. 1, 1974, are exempt” from stabilization.

The subject building had been used as a commercial warehouse between 1924 and 1999. The defendant purchaser bought the building in 1999 and spent approximately “$3.5 million ‘constructing and/or rehabilitating’” the building in order to convert it from commercial to residential use. During the first phase of redevelopment, the defendant created 40 1,000-square-foot commercial loft units. The defendant asserted that it had built “interior walls that separated the individual units, installed new interior doors and intercoms for each of the 40 units, and installed windows, bathrooms, kitchens, and a refrigerator in each of the units, although stoves were not provided.” The defendant had also provided “new plumbing, heating, electrical, ventilation, gas supply, and sprinkler systems.” Beginning in July 2000, the defendant rented those 40 units out to tenants pursuant to commercial leases. Most, if not all, of the units were initially utilized as “artist workplaces.”

In April 2000, the defendant applied to the NYC Planning Commission to rezone the property from an M1-1, which permits light industrial uses, to R6, which permits residential apartment buildings. In 2002, the planning commission rezoned the land to an R6. Thereafter, the defendant began offering “residential leases instead of commercial leases to new and renewing tenants.”

During the second phase of redevelopment, the defendant built an additional 60 1,000-square-foot loft units. The defendant explained that it had “replaced all of the systems…except for the interior stairways and the sewer waste line that led from the complex to the street.” In January 2005, the defendant obtained a temporary certificate of occupancy (TCO) for 98 dwelling units and in December 2005, the defendant obtained the final certificate of occupancy (FC of O) for 100 dwelling units.

The plaintiffs’ complaint sought, inter alia, a declaratory judgment that the apartments were subject to stabilization, damages based on “promissory estoppel,” (alleging that the plaintiffs had not asserted “their rights under the rent stabilization rules because of the defendant’s ‘promises’…that the units they rented were not subject to rent regulation”), damages and equitable relief based upon theories of “illegality” and “mistake of contract” arising from the fact that “the plaintiffs’ leases contained ‘illegal, false and/or mistaken’ provisions stating that the plaintiffs’ units were not subject to rent regulation,” damages pursuant to General Business Law §349, based on misleading advertising of the apartments “as unregulated,” damages for breach of the implied warranty of habitability, citing “fail[ure] to provide basic services including proper heat, mold amelioration, elevator service, water penetration abatement, garbage disposal, plumbing, and ventilation,” damages for violation of General Obligations Law Article 7, based on alleged commingling of security deposits, and recovery of attorney fees, costs, and disbursements.

The plaintiffs had moved for summary judgment in the court below, arguing that they were entitled to stabilization status, because the building had been constructed before 1974, had been issued a residential FC of O and contained more than six units. The plaintiffs further argued that the building did not qualify for “the substantial rehabilitation exemption provided by EPTA §5(a)(5) because 75 percent of its building-wide and apartment systems had not been replaced as required by Rent Stabilization Code [RSC] §2520.11.”

The plaintiffs provided an architect’s affidavit, which was based on an inspection in 2013. The architect concluded that “only 2 of 17 listed building-wide and individual housing accommodation systems had been rehabilitated or replaced in accordance with relevant building codes.” The plaintiffs also submitted, inter alia, a temporary C of O, dated Jan. 31, 2005 and an FC of O, effective Dec. 30, 2005.

Citing judicial and administrative agency precedent, the defendant argued that “the requirement that 75 percent of building-wide and apartment systems be replaced” in order to qualify as a substantial rehabilitation was inapplicable where, a building complex had been “converted from purely commercial space to residential use,” and that the work performed had satisfied the 75 percent requirement.

The court reviewed Section 5(a)(5) of the ETPA and its underlying public purpose, as well as RSC Section 2520.11. DHCR operational bulletin clarified procedures that DHCR would use to determine issues of exemption from rent regulation due to substantial rehabilitation. That bulletin provided, inter alia:

for good cause shown, on a case-by-case basis, limited exceptions to the stated criteria regarding the extent of the rehabilitation work to be effectuated building-wide or as to individual housing accommodations may be granted where the owner demonstrates that a particular component of the building or system has recently been installed or upgraded so that it is structurally sound and does not require replacement, or that the preservation of a particular component is desirable or required by law due to its aesthetic or historic merit….

The court found that the defendant had made a prima facie showing that the apartments were “exempt from…stabilization pursuant to Section 5(a)(5) of the ETPA” in that the apartments are “‘housing accommodations in buildings completed or buildings substantially rehabilitated as family units’ on or after Jan. 1, 1974.” The court held that the plaintiffs had not “raised a triable issue of fact as to whether the defendant failed to replace 75 percent of the systems listed” in the DHCR operational bulletin in accordance with Section 2520.11(e)(1). The court also opined that “[t]he most natural reading of the DHCR’s 75 percent requirement” is that it applies “where an owner purports to substantially rehabilitate an existing residential building, and not in situations where a commercial building is converted to residential use.”

The court reasoned that a requirement for “‘a specified percentage…of listed building-wide and individual housing systems’ be ‘replaced’…makes little sense where the existing building is a purely commercial building that has no existing ‘individual housing systems.’” If a building is converted from residential use to commercial use, then “many residential-specific building-wide systems, would…be created, not ‘replaced.’” The court stated that such “concern is not present where residential units are created where none had existed before.” The court reasoned that “[f]or the purposes of the rent stabilization laws, the conversion of a commercial building to a residential building is akin to the construction of a new residential building.”

The court further held that plaintiffs had not raised an issue of fact as to whether the defendant complied with Section 2520.11(e)(5) of the RSC. The plaintiffs’ architect’s affidavit, dated eight years after the conversion, did not establish that building systems had not complied with legal requirements at the time of the conversion. Here, there was a FC of O that certified the premises conformed substantially with the approved plans and specifications and complied with “all applicable laws, rules and regulations.”

Additionally, the court held that there was no issue of fact as to whether the tenants had paid for “the costs of the subject rehabilitation.” The defendant presented evidence that it spent $3.5 million in order to convert the premises to residential use. Although certain plaintiffs submitted affidavits stating that they paid for improvements to their units, the alleged improvements had been “made after the building had already been converted from a commercial building to a residential building.”

The court further explained that although the NYC Administrative Code requires “owners of multiple dwelling buildings to provide every kitchen or kitchenette with a sink and gas or electricity for cooking, it does not require” that owners “provide stoves or other cooking equipment….” Accordingly, the court affirmed the trial court’s denial of the plaintiffs’ motion for summary judgment and the granting of the defendant’s cross-motion for summary judgment, with respect to the apartments not being subject to rent stabilization.

Since “the plaintiffs’ arguments with respect to commonality and typicality relate solely to their” claims based on their argument that the apartments were subject to stabilization, claims that have been dismissed and the remaining claims did not involve questions of fact or law that were common to the class and which predominated over questions affecting only individual members, the court also affirmed the trial court’s denial of the motion for class certification.

Bartis v. Harbor Tech, 501635/13, NYLJ 1202776226985, at *1 (App. Div., 2d, Decided Dec. 28, 2016), Decision by Dickerson, J. Mastro, J.P., Chambers and Connolly, JJ. concur.