Scott E. Mollen
Scott E. Mollen ()

Co-ops—Alterations—Apartment Had Been Subdivided—Alteration Allegedly Done 18 Years Ago—Petitioner Failed to Prove That Alterations Had Been Done Without Board Approval—Claim Also Barred by Doctrines of Laches and Waiver

The petitioner had commenced a holdover proceeding involving a cooperative apartment that was occupied by the respondent, pursuant to a proprietary lease agreement.

The petitioner had served the respondent with a notice to cure (notice), which alleged that the apartment had been subdivided from a one-bedroom to a one-bedroom with a separate guest room and that “constituted an ‘unauthorized alteration’ in violation of” the lease. The notice noted that the respondent was “obligated to comply with all laws,…and regulations with respect to the occupancy and use” of the apartment and that “the addition of the free standing wall without a permit issued by the New York City Department of Buildings [DOB] was a violation of the New York City Administrative Code [Admin. Code] regardless if the wall was installed by a prior lessee.” The petitioner asserted that it was entitled to terminate the lease five days after the occurrence of a default, provided that the alleged default continued for 30 days after written notice.

After receipt of the notice, the respondent sought permission to “legalize the alteration” from the cooperative’s board of directors (board). However, the petitioner thereafter served the respondent with a second notice. The second notice cited the board’s denial of the respondent’s proposal to legalize the alteration. The second notice also extended the respondent’s time to remove the alteration. The respondent failed to remove the alteration and the petitioner then served a notice of termination. After the respondent failed “to vacate or surrender possession of the premises,” the petitioner commenced the subject proceeding.

The respondent asserted several affirmative defenses, including that the respondent had not made the alteration and had not received a notice of violation from the DOB. The respondent had purchased the apartment in 2007. The respondent claimed that the petitioner knew of the alteration and had not raised the issue at that time, or during prior sales, and that the petitioner’s claim was barred by “waiver.” The respondent further alleged that “the alteration had been in place for at least 18 years with petitioner’s knowledge and petitioner only raised the issue in April 2015″ and such late assertion was barred by the doctrine of laches.

The respondent also argued that it had “offered to legalize the alteration but petitioner unreasonably refused” such offer. The respondent contended that the petitioner’s claim was barred by the doctrine of “unclean hands,” based on “petitioner’s unreasonable refusal to legalize the alteration.” The respondent had submitted “an alteration form and paid the fee to remove the wall but petitioner failed to give consent.” The respondent also counterclaimed for “legal fees, costs and disbursements pursuant to RPAPL §234.”

The court conducted a trial.

The petitioner’s managing agent admitted that he only possessed part of the file relating to the apartment and that the original file had been misplaced. The agent lacked any “personal knowledge as to whether the prior management company turned over, to petitioner, a file for the…premises.” The agent “did not know who made the alteration” and could not determine “if authorization was given to construct the alteration by the petitioner or the prior owner and/or whether the alteration violated the New York City [Admin. Code].” The agent further testified that, after commencement of the litigation, the board had granted the respondent permission to remove the alteration. However, the agent conceded that the petitioner’s architect had stated that “the alteration could be legalized and filed with the DOB…, subject to possible fines and penalties.”

A neighbor testified that the apartment had been altered before the respondent had purchased his apartment. The respondent’s architect testified that the alteration could be legalized if the respondent “installed smoke alarms and a kitchenette soffit, completed a survey of the premises, prepared permit applications” and “approval was received from the co-op” and the appropriate “applications were filed with the city.” The architect acknowledged that “the alteration could also be legalized by removal of the alteration and restoring the premises to its original condition.”

A real estate broker testified on the respondent’s behalf, that prior to the respondent’s purchase of the premises, she and the respondent had attended an open house at the apartment and were given plans of the apartment. The broker testified that the alteration had been done prior to the purchase and that if the alteration were removed, the respondent would lose approximately $150,000 in the value of his apartment. The respondent testified that the alteration had existed when he purchased the apartment and that building staff had visited the apartment for ongoing repairs over the years, had seen the alteration and had never objected to the alteration.

The respondent also testified that the president of the cooperative had visited the premises while campaigning for a board seat and had seen the alteration. Additionally, the respondent asserted that the board’s refusal “to allow him to legalize the alteration” was “in retaliation for his run for [the] board.”

A prior shareholder testified that she had sold her apartment to the respondent with the alteration and building staff had visited the apartment several times for maintenance and “the alteration was visible upon entry to the premises.” She further testified that a board member had visited the apartment, had never raised an issue about the alteration and when she was selling the apartment, her marketing material was left with the doorman, and such material included the lay out of the premises.

Another tenant and board member testified that he had visited the apartment “approximately nine years ago and noticed something ‘different’” about the apartment. However, he had never expressed any concern until April 2015 and he was not sure if the respondent or his predecessors were granted permission for the alteration. Finally, a former superintendent of the building from 1988 to 1999 testified that “it was impossible for a tenant to perform this alteration without his knowledge or knowledge of the building,” given the need to bring in building materials. However, he admitted that “there are eight entrances to the building” and the materials could have been brought in through a side entrance.

The salient issue was “whether the alleged unauthorized alteration constitutes a default” under the lease which permits the petitioner to terminate the lease. The petitioner contended that “even if [the respondent] did not make the alteration, [the respondent] ‘stands in the shoes’ of the original lessee and is therefore responsible for the pre-existing breaches of the lease.”

The court found that the petitioner failed to state a cause of action based on a violation of the lease and had failed to prove that authorization had not been provided to the prior owner. The court noted that the agent lacked a complete file for the premises, was not sure whether the prior owner had turned over a file for the apartment and could not determine if authorization had been provided to the respondent or any other shareholder for the alteration. Thus, the petitioner could not prove that the alteration was not performed without authorization in violation of the lease.

In order to assert the doctrine of laches, the respondent had to show that the petitioner had a valid claim, the petitioner delayed asserting his claim without good cause, there was a lack of notice that the petitioner would assert such claim and the respondent would be prejudiced if the petitioner were permitted to pursue the claim. “The two most essential elements of laches are undue delay and prejudice caused to the opposing party by such a delay.” The court found that the respondent had the requisite elements to establish laches and the “petitioner ha[d] failed to offer valid proof as to why it timely failed to asset its claim.”

The respondent argued that he had not received a violation. The petitioner and the respondent’s architects both verified that “the alteration could be legalized as a storage room/office….” However, “there appear[ed] to be no permit.” The court found that the petitioner had a valid cause of action. However, the court further stated that although the petitioner alleged that “it took immediate action upon learning of the alteration through its observation of the premises on an Airbnb website in April 2015, the overwhelming trial testimony does not support such a finding.” The “building staff and board members viewed the alteration numerous times since the 1990′s and failed to take issue and/or action until after [the respondent's] alleged Airbnb activity.” The court opined that “the testimony overwhelmingly proved that petitioner knew or should have known of the alteration since the 1990′s, more than 20 years ago.”

The court also found that there would be severe prejudice to the respondent if he was required to now have to “dig up evidence, which may or may no longer be in possession of a tenant who resided in the premises over 20 years ago.” The respondent would also be prejudiced if he was required to remove the alteration, since the apartment had been “marketed as a junior four, he was approved by the board with the existing alteration submitted to the board” and if he now had to remove the alteration, the value of the premises would be reduced by approximately $150,000. Thus, the court dismissed the petition based on the doctrine of laches.

The petitioner had argued that the respondent could not invoke the equitable doctrine of laches, since the respondent had “unclean hands.” However, the respondent “bought the [apartment] with the existing alteration, purchased the [apartment] three years prior to the establishment of Airbnb, and did not construct the alteration for the purpose of subletting through Airbnb.”

The court further held that the petitioner’s claim was barred by the doctrine of waiver. A waiver involves a “voluntary abandonment or relinquishment of a known right” and occurs when there is “such conduct or failure to act to evince an intent not to claim the purported advantage.” Although “a waiver may be inferred from the acceptance of rent in some circumstances, it may not be inferred, and certainly not as a matter of law, to frustrate the reasonable expectations of the parties embodied in a lease when they have expressly agreed otherwise.”

The petitioner argued that the respondent, as the assignee of the lease, “stands in the shoes of the assignor” and may “not assert waiver since there was a clear and unambiguous waiver clause in the assigned lease.” However, the court explained that “there appears to be no hard and fast rule that an assignee always stands in the shoes of the assignor.” Here, the respondent purchased the apartment with the alteration, “was approved by the board with the floor plan submitted, there were prior sales of the [apartment] with the alteration and building staff and board members were present at the [apartment] with the visible alteration for years.” Under such circumstances, the court held that the petitioner “waived its right to maintain this proceeding.”

Additionally, the petitioner had asserted that under the business judgment rule, the board had discretion to refuse to permit the respondent “to legalize the unauthorized alteration so as to eliminate and/or reduce the possibility of further illegal Airbnb activity by [respondent].” The respondent countered that the board had “acted in bad faith which did not legitimately further its corporate purpose and solely in retaliation for [respondent's] running for board and Airbnb activity.” The court did not reach the issue of whether the board was “entitled to demand the removal of the alteration based upon the business judgment rule or whether petitioner’s refusal to…consent” to the alteration, was “unreasonable,” since the proceeding was dismissed based upon a “failure to state a cause of action, laches and waiver.”

Coliseum Tenants Corp. v. Benmark, 75911/2015, NYLJ 1202786328576, at *1 (Civ., NY, Decided April 19, 2017), Katz, J.

Landlord-Tenant—Nuisance—Tenant Harassed Other Tenants—Conduct Included Intrusive Use of Cell Phone Camera, Yelling, Blocking Access, Threatening, Cursing and Racial Slurs—Post Judgment Cure Not Available Since Proceeding Was Not Based on a Breach of Lease

This decision involved a holdover proceeding, where the petitioner sought to recover possession of a rent-stabilized apartment, on the grounds that the tenant had “engaged in a course of conduct that constitutes nuisance behavior.” A notice of termination alleged that during the period of June 2015 through June 2016, the tenant “harassed and/or threatened at least thirteen other tenants, as well as the super, in the subject building.” The notice stated that the tenant had taken “unauthorized video footage of tenants in the building, shouted obscenities and threats, blocked entry to the building, banged on the floor and ceiling of her apartment, and created other disturbances.” Seventeen witness testified at trial.

The court explained that the “[t]he Rent Stabilization Code (RSC) defines nuisance behavior” as “where a tenant ‘engages in a persistent and continuing course of conduct evidencing an unwarrantable, unreasonable or unlawful use of the property to the annoyance, inconvenience, discomfort or damage of others” and where the primary purpose of such conduct “is intended to harass the owner or other tenants or occupants of the same…building…by interfering substantially with their comfort or safety.” RSC §2524.3(b).

Based upon the witnesses’ credible testimony, the court found that the tenant had “harassed other tenants…by constantly following them and their children with a camera phone, yelling at them, threatening them, cursing and shouting racial slurs at them.” Additionally, credible witnesses testified that the tenant had prevented them “from entering and leaving the building” and “entering and exiting the elevator.” Witnesses had testified that the tenant’s behavior “frightens them and their children and prevents them from feeling secure in the building.” Some witnesses testified that “they purposefully avoid [tenant] in the building, and one witness moved out of the building because of [tenant's] behavior.” Video evidence introduced at trial supported the trial testimonies. Moreover, the tenant’s “own recordings from her mobile device, which she introduced into evidence, demonstrated that she engaged in a continuous course of conduct that constitutes a nuisance.”

The court explained that “[o]ne of these issues on its own may not have been sufficient for this court to make a finding of nuisance. However, the totality of the circumstances shows a pattern of conduct which interferes with the comfort and safety of other residents in the building….” The court emphasized that credible testimony indicated that “the behavior occurred during the time frame alleged in the notice and is ongoing.”

Accordingly, the court awarded the landlord a final judgment of possession against the tenant.

The court further explained that it would not provide the tenant with a “post-judgment cure of the objectionable conduct, pursuant to RPAPL §753(4).” The court explained that “since the proceeding was not premised upon a breach of lease and given the objectionable nature of [the tenant's] conduct, [the tenant] was not entitled to the remedy of a post-judgment cure.”

364 93rd Street LLC v. Clementine, L&T 74872/16, NYLJ 1202787696637, at *1 (Civ., KI, Decided April 21, 2017), Scheckowitz, J.