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CLASS CERTIFICATION SHOULD NOT HAVE DENIED THE TENANTS IN THIS RENT-OVERCHARGE ACTION (FIRST DEPT).

The First Department, reversing Supreme Court, determined class certification in this rent overcharge action should not have been denied. The tenants alleged the landlord unlawfully deregulated apartments while receiving J-51 tax benefits:

Class certification was improperly denied. The determination of whether plaintiffs have a cause that may be asserted as a class action turns on the application of CPLR 901. That section provides that “[o]ne or more members of a class may sue or be sued as representative parties on behalf of all” where five factors — sometimes characterized “as numerosity, commonality, typicality, adequacy of representation and superiority” … . The party seeking class certification has the burden of establishing the prerequisites of CPLR 901(a) and thus establishing entitlement to certification … .

Here, plaintiffs met their burden of demonstrating the prerequisites for class action certification under CPLR 901 and 902. Contrary to the motion court’s determination, plaintiffs established numerosity and typicality in their initial motion for class certification. The allegations in the amended complaint taken with the DOF tax bills showed that by June 2017, only 8 of 100 apartments were registered as rent-stabilized. … [T]his Court [has] held that similar bills were sufficient to establish numerosity, i.e., the number of deregulated units. As to typicality, the predominant legal question involves one that applies to the entire class—whether defendant unlawfully deregulated rent-stabilized apartments while receiving J-51 real estate tax abatement benefits. Cupka v Remik Holdings LLC, 2022 NY Slip Op 00812, First Dept 2-8-22

 

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THE TOWN CODE PROVISION WHICH REQUIRES A PROPERTY INSPECTION BEFORE ISSUANCE OF A RENTAL PERMIT DOES NOT VIOLATE THE CONSTITUTIONAL PROTECTION AGAINST UNREASONABLE SEARCHES AND SEIZURES BECAUSE THE PROVISION ALLOWS THE LANDLORD TO HAVE THE INSPECTION DONE BY A STATE-LICENSED ENGINEER, AS OPPOSED TO THE TOWN BUILDING INSPECTOR (SECOND DEPT). ​

The Second Department, reversing Supreme Court, determined the town code provision which required a property inspection before issuance of a rental permit is not unconstitutional. Although the provision would be unconstitutional if an inspection by the town building inspector was required (a mandatory warrantless search), the provision also allows the landlord to have the property inspected by a state-licensed engineer:

It is well-settled that “the imposition of a penalty upon a landlord for renting his [or her] premises without first consenting to a warrantless search violates the property owner’s Fourth Amendment rights” … . Here, however, the Town’s rental permit law does not “expressly require . . . an inspection before the issuance or renewal of a permit” … , since a property owner who is applying for a rental permit has the option of obtaining a certification from a state-licensed professional engineer in lieu of submitting to an inspection by a Town building inspector … . Accordingly, the provisions did not violate constitutional provisions against unreasonable searches and seizures … . Infinite Green, Inc. v Town of Babylon, 2022 NY Slip Op 00407, Second Dept 1-26-22

 

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THE LANDLORD’S SUMMARY PROCEEDING WAS PROPERLY BROUGHT IN SUPREME COURT BECAUSE COVID EXECUTIVE ORDERS PROHIBITED BRINGING THE ACTION IN CIVIL COURT; ALTHOUGH SUA SPONTE ORDERS ARE NOT APPEALABLE, THE NOTICE OF APPEAL WAS DEEMED A MOTION FOR LEAVE TO APPEAL (FIRST DEPT).

The First Department, reversing Supreme Court, determined Supreme Court should not have dismissed the landlord’s summary proceeding on the ground that it should have been brought in Civil Court, not Supreme Court. COVID-related Executive Orders prohibited actions for nonpayment of rent in Civil Court. The First Department noted that a sua sponte order is not appealable as of right, but deemed the notice of appeal to be a request for leave to appeal which was granted:

The motion court erred in sua sponte dismissing the complaint on the ground that this action was a landlord-tenant dispute that should have been brought as a summary proceeding in Civil Court. Supreme Court has unlimited general jurisdiction over all real property actions, including those commenced by a landlord against a tenant (NY Const, art VI, § 7[a] …). Supreme Court, however, has the discretion to decline to entertain such an action on the ground that a pending action in Civil Court was the proper forum … .

Here, Supreme Court was the appropriate forum for this action to recover rental arrears because the Executive Orders implemented in response to the pandemic precluded the landlord from commencing a nonpayment proceeding in Civil Court during the relevant period, compelling the landlord to commence this action. A&L 1664 LLC v Jaspar Hospitality LLC, 2022 NY Slip Op 00264, First Dept 1-18-22

 

RECENT CHANGES TO THE STATUTES: (1) REQUIRING A LANDLORD TO MITIGATE DAMAGES WHEN A TENANT ABANDONS A RESIDENTIAL APARTMENT BEFORE THE END OF THE LEASE; AND (2), APPLYNG A SECURITY DEPOSIT TO REPAIRS, INTERPRETED AND APPLIED (FIRST DEPT).

The First Department, in a full-fledged opinion by Justice Gische, interpreted recent changes to Real Property Law 227-e and General Obligations law 7-108 regarding the landlord’s duty to mitigate damages (when a tenant abandons an apartment before the end of the lease), and the landlord’s use of a security deposit to make repairs:

Real Property Law § 227-e now clearly holds that the duty to mitigate damages applies to all residential leases in New York State. It also clarifies that the doctrine of mitigation of damages is not an affirmative defense to be asserted by a tenant, but rather the burden is on landlord to establish it took reasonable and customary actions to “render the injury as light as possible” … . * * *

Under General Obligations Law § 7-103(1), it is black letter law that money deposited or advanced by a tenant on a lease agreement “shall continue” to be tenant’s money and “shall” be held in trust for the benefit of tenant until the lease is terminated and it is repaid or applied. The deposit is meant to cover the costs of repairing damages to the apartment. …

General Obligations Law § 7-108 (1-a)(d) also newly added, provides a requirement that landlord provide tenant with written notice of a right to have and be present at an inspection of the premises upon moving out. * * *

The penalty of [a landlord’s] forfeiture [of the security deposit] is only mandated when landlord fails to provide an itemized statement of the repairs that it claims are required and justify retention of part or all of the security deposit … . 14 E. 4th St. Unit 509 LLC v Toporek, 2022 NY Slip Op 00002, First Dept 1-4-22

 

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THERE WAS A QUESTION OF FACT WHETHER THE FORKLIFT ACCIDENT RESULTED FROM A HOLE OR CRACK IN THE SIDEWALK ADJACENT TO THE OUT-OF-POSSESSION LANDLORD’S BUILDING; EVEN OUT-OF-POSSESSION LANDLORDS ARE RESPONSIBLE FOR MAINTAINING THE ADJACENT SIDEWALK IN A REASONABLY SAFE CONDITION (FIRST DEPT).

The First Department, reversing Supreme Court, determined defendant out-of-possession landlord’s motion for summary judgment in this forklift accident case should not have been granted. There was a question of fact whether the forklift struck a hole or a crack in the sidewalk. Under the NYC Administrative Code, an out-of-possession landlord is responsible for maintaining the adjacent sidewalk in a reasonably safe condition:

… [T]he Administrative Code requires owners of real property abutting any public sidewalk to maintain that sidewalk in a reasonably safe condition (Administrative Code § 7-210 …). This duty, on in- and out-of-possession landlords alike, is nondelegable … . The statute does not impose strict liability, and thus a plaintiff must still prove the elements of negligence in order to hold an owner liable … . Administrative Code § 19-101(d) defines “sidewalk” as “that portion of a street between the curb lines, or the lateral lines of a roadway, and the adjacent property lines” … . If the area where plaintiff’s accident occurred was either inside the premises or at an entrance that was within defendant’s property, the Administrative Code does not apply … . Vargas v Weishaus, 2021 NY Slip Op 06663, First Dept 11-30-21

 

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THE OUT-OF-POSSESSION LANDLORD IN THIS SLIP AND FALL CASE DEMONSTRATED (1) THE LEASE DID NOT REQUIRE IT TO MAINTAIN A DRAIN WHICH PERIODICALLY BECAME CLOGGED CAUSING GARBAGE TO FLOAT TO THE SIDEWALK, AND (2) IT DID NOT HAVE ACTUAL OR CONSTRUCTIVE NOTICE OF THE PRESENCE OF THE GARBAGE ON THE SIDEWALK WHICH ALLEGEDLY CAUSED PLAINTIFF’S SLIP AND FALL (FIRST DEPT). ​

The First Department, reversing (modifying) Supreme Court, determined the out-of-possession landlord, SMHS, was not responsible for the fish skin on the sidewalk which allegedly caused plaintiff to slip and fall. The tenant, Lobster, a wholesale seafood company, had contracted with defendant Sanitation to remove garbage, including fish parts, from the tenant’s premises. There was a question of fact whether Sanitation was liable under a contract-based Espinal theory for launching an instrument of harm. But SMHS demonstrated the lease did not require SMHS to maintain the sidewalk or the drains which at times became clogged with garbage and that it did not have actual or constructive knowledge of the dangerous condition:

SMHS, an out-of-possession landlord, was not contractually obligated to maintain the premises … .Although its lease with Lobster did not demise to Lobster “the pipes, ducts, conduits, wires, fixtures and equipment, the structural elements which serve the Demised Premises,” SMHS and Lobster’s course of conduct establishes that Lobster was responsible for maintaining and repairing the trench drain … . Moreover, although the lease afforded SMHS a contractual right of reentry to make needed repairs, liability would not be predicated on “‘a significant structural or design defect that is contrary to a specific statutory provision'” … .

Nor can SMHS be held liable for plaintiff’s injuries under Administrative Code of City of NY § 7-210, which imposes a nondelegable duty on land owners to maintain their sidewalks in a reasonably safe condition … . SMHS established … that it neither created the hazardous condition nor had actual notice of it or constructive notice of its existence for a sufficient length of time to discover and remedy it … . Arias v Sanitation Salvage Corp., 2021 NY Slip Op 06534, First Dept 11-23-21

 

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WHERE (1) THE DISPUTE IS ABOUT WHETHER THE TENANT IS OBLIGATED TO REMOVE PROPERTY FROM THE PREMISES, (2) THE TENANT TIMELY SURRENDERS THE PREMISES, AND (3), THE LEASE IS SILENT ABOUT THE PAYMENT OF RENT AFTER THE TERM OF THE LEASE, USE AND OCCUPANCY DAMAGES ARE NOT AVAILABLE TO THE LANDLORD (FIRST DEPT).

The First Department, reversing (modifying) Supreme Court, determined “use and occupancy” is not an available measure of damages where the tenant timely surrendered the premises and there was nothing in the lease about additional rent after the term of the lease. The dispute here was whether the lease obligated the tenant to remove property from the premises:

… [U]se and occupancy is not an available measure of damages on plaintiff landlord’s claims. “[T]he measure of damages for a tenant’s breach of a covenant to surrender leased premises in a stipulated condition is limited to the reasonable costs of restoring the premises to that condition” … , absent a stipulation to such damages in the lease itself. Here, nothing in the relevant lease provisions provided for additional rent beyond the term of the lease as part of the damages for restoring the premises to the agreed upon condition. Nor is there a dispute that defendant tenant timely vacated the premises, and surrendered same to plaintiff landlord and that there were no rent arrears outstanding at the time of surrender. Thus, defendants would not be liable for use and occupancy, even if it were ultimately determined that tenant failed to comply with any removal obligations. 44-45 Broadway Leasing Co., LLC v 45th St. Hospitality Partners LLC, 2021 NY Slip Op 05452, First Dept 10-12-21

 

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DEFENDANT TENANT CLOSED ITS BUSINESS AND ABANDONED THE LEASED PROPERTY DUE TO THE COVID PANDEMIC; PLAINTIFF LANDLORD TOOK POSSESSION OF THE PROPERTY AND CHANGED THE LOCKS; DEFENDANT WAS ENTITLED TO DISCOVERY TO DETERMINE WHETHER PLAINTIFF ACCEPTED SURRENDER OF THE PREMISES AND THE APPROPRIATE AMOUNT OF DAMAGES (FOURTH DEPT). ​

The Fourth Department, reversing Supreme Court, determined defendant was entitled to discovery in this action on a commercial lease. Defendant closed its furniture business due to the COVID pandemic and abandoned the leased property. Plaintiff took possession of the property and changed the locks. Therefore questions remained concerning whether plaintiff accepted surrender of the property and whether the accelerated rent amounted to a penalty:

Generally, a tenant is relieved of its obligation to pay full rent due under a lease where it surrenders the premises before expiration of the term and the landlord accepts its surrender … . A surrender by operation of law may be inferred from the conduct of the parties where “the parties to a lease both do some act so inconsistent with the landlord-tenant relationship that it indicates their intent to deem their lease terminated” … . “Such a surrender and acceptance severs the relationship between the parties upon the creation of an estate inconsistent with the prior tenant’s rights under the lease” … . Further, “conduct by the landlord which [falls] short of an actual reletting but which indicate[s] the landlord’s intent to terminate the lease and use the premises for his [or her] own benefit” may evince an intent to accept a tenant’s surrender of the premises … .

… [W]hile plaintiff had no duty to mitigate damages …, any actions it may have taken to offset the rent owed by defendants are relevant to determining the amount of damages … . Thus … the discovery sought by defendants is relevant to the issues presented in plaintiff’s motion for summary judgment … . … [B]ecause plaintiff seeks accelerated rent constituting liquidated damages … , defendants should have been afforded an opportunity to obtain information regarding whether the undiscounted accelerated rent amount was disproportionate to plaintiff’s actual losses and thus an enforceable penalty … . University Sq. San Antonio, Tx. LLC v Mega Furniture Dezavala, LLC, 2021 NY Slip Op 05192, Fourth Dept 10-1-21

 

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THE “BUILDING” DEFENDANTS AND THE COMPANY WHICH INSTALLED AND MAINTAINED THE AIR CONDITIONING UNIT WHICH ALLEGEDLY LEAKED WATER ON THE FLOOR WERE NOT ENTITLED TO SUMMARY JUDGMENT IN THIS SLIP AND FALL CASE; THE LANDLORD DID NOT DEMONSTRATE IT WAS AN OUT-OF-POSSESSION LANDLORD; THE “BUILDING” DEFENDANTS DID NOT DEMONSTRATE THEY DID NOT HAVE ACTUAL OR CONSTRUCTIVE KNOWLEDGE OF THE CONDITION; AND THE COMPANY WHICH INSTALLED AND MAINTAINED THE AIR CONDITIONER DID NOT SHOW IT DID NOT LAUNCH AND INSTRUMENT OF HARM (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the summary judgment motions by several defendants in this slip and fall case should not have been granted in this slip and fall case. Plaintiff alleged she slipped on water dripping from and air conditioning unit in the break room. The landlord did not demonstrate it was an out-of-possession landlord. The defendants failed to show they did not have actual of constructive notice of the condition. Superior, the company which installed the air conditioner (HVAC system], did not show that it did not launch an instrument of harm:

An out-of-possession landlord and its agent may be liable for injuries occurring on its premises if it has “retained control over the premises and has a duty imposed by statute or assumed by contract or a course of conduct” to perform maintenance and repairs … . … [The defendants] failed to establish … that they were out-of-possession landlords, that they did not assume a duty by course of conduct to maintain the area of the building at issue, including the HVAC system, and that they relinquished control over the premises to such a degree so as to extinguish their duty to maintain the premises … . * * *

… Superior’s submissions demonstrated that it entered into a contract with the … defendants’ general contractor to install the HVAC system, that the installation was completed approximately eight months before the plaintiff’s alleged slip and fall, and that, subsequently, it entered into a contract … to service and maintain at least a part of that HVAC system, and this contract was in effect at the time of the accident. Superior failed to establish … that the source of the leak at issue was not the HVAC system. Superior also failed to eliminate all triable issues of fact as to whether it launched an instrument of harm by creating the alleged recurring condition through its negligent installation or maintenance of the HVAC system … . Taliana v Hines REIT Three Huntington Quadrangle, LLC, 2021 NY Slip Op 05138, Second Dept 9-29-21

 

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THE MOTION FOR A JUDGMENT AS A MATTER OF LAW (CPLR 4401) FINDING THE NYC HOUSING AUTHORITY LIABLE FOR A BEDBUG INFESTATION SHOULD NOT HAVE BEEN GRANTED (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the motion for a judgment as a matter law (CPLR 4401), finding the NYC Housing Authority (NYCHA) liable for a bedbug infestation of plaintiffs’ apartments, should not have been granted:

A motion pursuant to CPLR 4401 should not be granted unless, affording the party opposing the motion every inference which may properly be drawn from the facts presented, and viewing the evidence in the light most favorable to the nonmovant, there is no rational process by which the jury could find for the nonmovant against the moving party … . A court considering a motion for a directed verdict “must not ‘engage in a weighing of the evidence,’ nor may it direct a verdict where ‘the facts are in dispute, or where different inferences may be drawn or the credibility of witnesses is in question'” … .

… [T]he evidence adduced at trial, viewed in the light most favorable to NYCHA, did not establish that there is no rational process by which the jury could find in favor of NYCHA … . The evidence included the plaintiffs’ testimony, as well as the parties’ competing expert testimony regarding the appropriate protocols for the treatment of a bedbug infestation and competing conclusions by the expert witnesses as to whether NYCHA’s bedbug eradication efforts were appropriate. Although a landlord’s violation of a municipal ordinance, including, as relevant here, Administrative Code of the City of New York §§ 27-2017 and 27-2018, may constitute some evidence of negligence for the jury to take into account, it does not constitute negligence per se … . Aponte v New York City Hous. Auth., 2021 NY Slip Op 05114, Second Dept 9-29-21

 

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