Scott E. Mollen

Landlord-Tenant—Illegal Lockout Proceeding Dismissed Based On Doctrine of Lache—Statute of Limitations

A petitioner commenced an illegal lockout proceeding (proceeding) against a landlord, seeking possession of the subject apartment (apartment) and to relocate the current occupant to another apartment. The petitioner had “successfully appealed the Civil Court’s post-trial decision which led to his eviction.” The landlord argued that the petitioner’s proceeding was barred by, inter alia, the statute of limitations (SOL) and the doctrine of laches.

Real Property Actions and Proceedings Law (RPAPL) §853, permits “an unlawfully evicted individual to recover treble damages from the wrong doer. RPAPL §853 is subject to the one year [SOL] applicable to causes of actions for damages resulting from an intentional tort.” However, a cause of action seeking restoration pursuant to RPAPL §713(1), which provides “a cause of action to an individual seeking to be restored after being forcibly or unlawfully dispossessed,” “does not begin to run until ‘such time that it is reasonably certain that the tenant has been unequivocally removed with at least the implicit denial of any right to return.’” Based on the subject facts, the court held that the petitioner’s claim was not barred by the SOL.

However, the court found that the petitioner was “precluded from restoration by laches.” The Appellate Term had reversed the aforementioned trial court by order dated Aug. 18, 2014. On Jun. 10, 2015, the petitioner filed an order to show cause seeking to be restored to possession. The court “granted the order to show solely to the extent of dismissing the proceeding pursuant to the Appellate Term order.” The petitioner then commenced the subject proceeding on Feb. 24, 2016. He argued that he had delayed initiating the proceeding, because the landlord had made “two unsuccessful motions for leave to appeal the appellate court decision.”

The court noted that the petitioner had not obtained a stay pending disposition of his appeal. Appellate precedent provides that the petitioner’s “cause of action accrued when he was evicted on June 26, 2012.” Here, the petitioner “sought restoration three years and eight months after being evicted.” During such time, the current occupant and her family had made the apartment their home. Accordingly, the court denied the petition on the ground of laches.

Kesoglides v. Marine Terrace Associates, [Index Number Redacted by court], NYLJ 1202801183799, at *1 (Civ., QU, Decided Oct. 13, 2017), Nembhard, J.


Landlord-TenantLoft LawHoldover ProceedingIllusory Tenancy Defense FailsProceeding Dismissed

The petitioner sought possession of the premises (apartment) in a holdover proceeding, alleging that the apartment was subject to the Loft Law, the prime tenant (“A”), did not maintain the apartment as her primary residence and subtenant (“B’s”) “occupancy was derivative of [‘A’’s] occupancy.” “B” asserted “an illusory tenancy defense,” i.e., that the “prime tenancy was a sham as the prime tenant did not occupy the premises, but subleased it for profit, or deprived subtenant of rights under the Rent Stabilization Law” (RSL). “B” had occupied the apartment for approximately 10 1/2 years. Following a trial, the court explained:

A prime tenancy is an illusory tenancy when it is a sham in that the prime tenant does not occupy the apartment but instead subleases the apartment for profit and/or deprives the subtenant of rights under the [RSL]…. The length of time for which a tenant has relinquished occupancy of the premises, the intent of the asserted tenant to resume occupancy, and the question of whether the landlord or the prime tenant exercises dominion and control over the subject premises are salient considerations…. Thus, the length of respondent’s occupancy of the subject premises, the ten-and-a-half years from the end of 2002 through the commencement this proceeding, on July 25, 2013, militates in favor of his illusory tenancy defense….

Profiteering is a sine qua non of an illusory tenancy…. While the evidence shows that co-respondent did indeed profiteer off of respondent, the evidence also shows that co-respondent refunded overpayments to respondent. In other contexts, a rent-regulated tenant who profiteers off of a subtenant may cure the breach in the lease by refunding the overcharged amounts….While co-respondent undeniably profiteered at respondent’s expense at lease at some point, co-respondent’s refund at the very least compromises this element of Respondent’s illusory tenancy defense.

Involvement and/or knowledge of Petitioner with regard to co-respondent’s sublet to respondent comprises another element of an illusory tenancy defense. While there is no absolute requirement that there be evidence of collusion on the part of the landlord before an illusory tenancy will be found, “there should be a showing of at least constructive knowledge on the part of the landlord of the subleasing arrangement”….When a landlord deals directly with a subtenant for a decade or more,…or when a former super of a building “clearly” knew of a tenant’s subterfuge, a landlord has the requisite constructive knowledge of a sublet….

Conversely, no illusory tenancy will be found when the subtenant participates in a scheme to hide a sublet from a landlord by, for example, inducing a landlord to settle an illegal sublet holdover proceeding by representing that the subtenant is a roommate of a tenant,…by failing to notify a landlord that a tenant had vacated,…, and by paying rent to a landlord from a joint account of the tenant and subtenant….

In an attempt to establish that the petitioner had knowledge of the respondent’s sublet, the respondent cited “terse, noncommittal exchanges between respondent and the managing member and communications between respondent and workers in the building about the work they were doing in the Building, mostly concerning access to the subject premises.” The respondent did not prove “what the connection was between the workers he communicated with and petitioner.” In essence, the respondent asked the court “to infer that his communications with these workers was tantamount to notice to petitioner and furthermore that such communications gave petitioner notice of co-respondent’s sublet to respondent.” The court opined that such communications were not comparable to “a landlord who bills a subtenant directly or designates a subtenant as a fire marshal,…, or a landlord who accepts ‘dozens of checks’ from a subtenant and who deals with the subtenant in court proceedings.”

Thus, the court held that the aforementioned communications were “not tantamount to notice to petitioner of co-respondent’s sublet to Respondent.” The court further found that a settlement stipulation which was entered into on the date of trial did not amount to collusion. The court stated that such settlement did “not prove collusion pre-dating the commencement of said litigation more than four years prior.” The court reasoned that the co-respondent’s refund of the overcharges and the respondent’s inability to prove the petitioner’s constructive knowledge of the co-respondent’s sublet, outweighed the longevity of the co-respondent’s subletting the premises and the respondent’s occupancy therein. Accordingly, the court dismissed the illusory tenancy defense and awarded the petitioner a final judgment of possession.

388 Broadway LLC v. Salaway, Civ. Ct., N.Y. Co., Index No. 71312/2013, decided Oct. 16, 2017, Stoller, J.

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