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BOARD OF RESIDENTIAL COOPERATIVE CORPORATION UNREASONABLY WITHHELD CONSENT TO TRANSFER SHARES AND PROPRIETARY LEASE TO TWO SONS OF THE DECEASED APARTMENT RESIDENTS.

The First Department, over a two-justice dissent, determined the board of defendant residential cooperative corporation unreasonably withheld consent for the shares and proprietary lease to be transferred to the two sons of the deceased holders of the shares and proprietary lease. The case turned on the language of the proprietary lease. The application was made by the two sons, only one of whom was to live in the apartment. The dissent emphasized the term “a family member,” arguing the proprietary lease did not allow a transfer to more than one family member. Estate of Del Terzo v 33 Fifth Ave. Owners Corp., 2016 NY Slip Op 01039. 1st Dept 2-11-16

CORPORATION LAW (RESIDENTIAL COOPERATIVE, BOARD UNREASONABLY WITHHELD CONSENT TO TRANSFER OF SHARES AND PROPRIETARY LEASE)/RESIDENTIAL COOPERATIVE (BOARD UNREASONABLY WITHHELD CONSENT TO TRANSFER OF SHARES AND PROPRIETARY LEASE)/PROPRIETARY LEASE (RESIDENTIAL COOPERATIVE, BOARD UNREASONABLY WITHHELD CONSENT TO TRANSFER OF SHARES AND PROPRIETARY LEASE)

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QUESTION OF FACT WHETHER TENANT ENTITLED TO COMPENSATION FOR TRADE FIXTURES ON PROPERTY TO WHICH VILLAGE ACQUIRED TITLE BY EMINENT DOMAIN.

The Second Department, reversing Supreme Court, determined there was a question of fact whether tenant was entitled to compensation for trade fixtures in property to which the village acquired title by eminent domain.  The court explained the relevant law:

 

Providing compensation to a trade fixture owner is in derogation of the common-law rule that government taking of real property encompasses the land and everything annexed thereto, including trade fixtures … . Under the trade fixture rule, a tenant who owns the trade fixture, but not the property to which the fixture is annexed, may seek compensation for trade fixtures it had a right to remove, but elected not to remove, and thus remained annexed to the property at the time of the taking … . A tenant’s right to compensation for fixtures installed on the leasehold exists despite provisions in the lease which terminate the lease in the event of a condemnation. Such provisions have been interpreted as ” an agreement between landlord and tenant that the tenant shall receive out of the award no compensation for his leasehold interest. Even so, the tenant retains the right to compensation for his interest in any annexation to the real property which but for the fact that the real property has been taken, he would have had the right to remove at the end of his lease'” … . Matter of Village of Spring Val., N.Y.. (Sport Club Intl., Inc.), 2016 NY Slip Op 00985, 2nd Dept 2-10-16

 

NEGLIGENCE (QUESTION OF FACT WHETHER EMPLOYEE WAS ACTING WITHIN THE SCOPE OF EMPLOYMENT AT THE TIME OF THE CAR ACCIDENT)/EMPLOYMENT LAW (QUESTION OF FACT WHETHER EMPLOYEE WAS ACTING WITHIN THE SCOPE OF EMPLOYMENT AT THE TIME OF THE CAR ACCIDENT)/RESPONDEAT SUPERIOR  (QUESTION OF FACT WHETHER EMPLOYEE WAS ACTING WITHIN THE SCOPE OF EMPLOYMENT AT THE TIME OF THE CAR ACCIDENT)

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DEFENDANT-LANDLORD SHOULD NOT HAVE BEEN GRANTED SUMMARY JUDGMENT IN THIS LEAD-PAINT-INJURY CASE, DEFENDANT FAILED TO AFFIRMATIVELY DEMONSTRATE, INTER ALIA, LACK OF ACTUAL OR CONSTRUCTIVE NOTICE.

The Fourth Department determined defendant landlord should not have been granted summary judgment in this lead-paint-injury action.  [The case presents another example of a defendant’s failure to affirmatively address all possible theories of recovery in summary-judgment-motion papers.] Defendant failed to demonstrate, inter alia, the absence of a hazardous condition and her lack of actual or constructive notice of the condition. On the issue of constructive notice, the court wrote:

In Chapman, the Court of Appeals [92 NY2d 9] addressed constructive notice, writing that “a triable issue of fact [on notice] is raised when [the evidence] shows that the landlord (1) retained a right of entry to the premises and assumed a duty to make repairs, (2) knew that the apartment was constructed at a time before lead-based interior paint was banned, (3) was aware that paint was peeling on the premises, (4) knew of the hazards of lead-based paint to young children and (5) knew that a young child lived in the apartment” (id. at 15). Here, it is undisputed that defendant retained a right of entry and assumed a duty to make repairs; that she knew that the residence was constructed before lead-based paint was banned; and that she knew that young children lived in the apartment. Rodrigues v Lesser, 2016 NY Slip Op 00836, 4th Dept 2-5-16

 

LANDLORD ACCEPTED TENANT’S SURRENDER OF THE PREMISES BY OPERATION OF LAW, CRITERIA EXPLAINED.

The Third Department, affirming Supreme Court, found plaintiffs-landlord had accepted defendant-tenant’s surrender of the premises by operation of law. The tenant, upon sufficient notice to the landlord, had moved most of its operation to a new location but continued to pay rent. The landlord then rented parts of the premises to two new tenants and changed the locks so defendant could not access the premises. At that point the tenant stopped paying rent and the landlord sued for the rent for the remaining portion of the lease. The court explained the elements of “surrender by operation of law:”

 

“A surrender by operation of law occurs when the parties to a lease both do some act so inconsistent with the landlord-tenant relationship that it indicates their intent to deem the lease terminated” … . A surrender by operation of law is inferred from the conduct of the parties, namely, the tenant’s abandonment of the demised premises and the landlord’s acceptance thereof; whether a surrender by operation of law has occurred in a particular case is generally a factual determination … .

Here, defendant established that plaintiffs relet parts of the premises without notice to defendant and refused to provide defendant with a key to the remaining premises, after having changed the locks. Plaintiffs also placed all the utility accounts in their own names. Plaintiffs’ assertion that a question of fact was raised as to whether there was construction in the leased premises precluding defendant’s use is unavailing. By their own account, plaintiffs refused to provide defendant with new keys and access to the “area in question” due to “ongoing construction” and liability concerns. Whether or not plaintiffs were simply replacing a generator outside the leased premises does not alter their refusal to allow defendant access to the premises. Nor do we overlook the fact that, in their complaint, plaintiffs seek to recover the full rent payable under the lease, without offset for rent received from the two new tenants … . Fragomeni v Aim Servs., Inc., 2016 NY Slip Op 00563, 3rd Dept 1-28-16

 

LANDLORD-TENANT (SURRENDER BY OPERATION OF LAW)/SURRENDER BY OPERATION OF LAW (LANDLORD-TENANT)

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DEFENDANT DID NOT DEMONSTRATE NON-PARTY SUBLESSEE WAS RESPONSIBLE FOR MAINTAINING THE PREMISES; DEFENDANT’S SUMMARY JUDGMENT MOTION IN THIS SLIP AND FALL CASE SHOULD HAVE BEEN DENIED.

The Second Department, reversing Supreme Court, determined defendant was not entitled to summary judgment in a slip and fall case because defendant did not demonstrate the non-party sublessee was responsible for maintaining the premises:

 

“[A]n out-of-possession landlord may be liable for injuries occurring on the premises if it has retained control of the premises, is contractually obligated to perform maintenance and repairs, or is obligated by statute to perform such maintenance and repairs'” … . However, “where the premises have been leased and subleased and the subtenant assumes the exclusive obligation to maintain the premises, both the out-of-possession landlord and the out-of-possession lessee/sublessor will be free from liability for injuries to a third party caused by the negligence of the subtenant in possession” … .

Here, viewing the evidence in the light most favorable to the plaintiff, the defendant failed to establish, prima facie, that the nonparty sublessee assumed the exclusive obligation to maintain the premises, and that the defendant, as the lessee/sublessor, had no duty to maintain the premises … . Since the defendant failed to meet its initial burden as the movant, it is not necessary to review the sufficiency of the plaintiff’s opposition papers … . Iturrino v Brisbane S. Setauket, LLC, 2016 NY Slip Op 00480, 2nd Dept 1-27-16

 

NEGLIGENCE (SLIP AND FALL, DEFENDANT DID NOT DEMONSTRATE SUBLESSEE WAS RESPONSIBLE FOR MAINTAINING THE PREMISES)/LANDLORD-TENANT (SLIP AND FALL, DEFENDANT DID NOT DEMONSTRATE SUBLESSEE WAS RESPONSIBLE FOR MAINTAINING THE PREMISES)/SLIP AND FALL (LANDLORD-TENANT, DEFENDANT DID NOT DEMONSTRATE SUBLESSEE WAS RESPONSIBLE FOR MAINTAINING THE PREMISES)

MOTION TO VACATE THE EXECUTED WARRANT OF EVICTION PROPERLY GRANTED.

The First Department, over an extensive concurrence by Justice Saxe, determined Civil Court properly granted tenant’s post-eviction motion to vacate the warrant of eviction and restore the tenant to possession. The tenant was disabled and had trouble securing the emergency rental assistance to cover the arrears. Eventually the landlord was paid in full and the costs of the eviction were reimbursed. The concurrence expressed concern over the validity of the relevant precedent and the need for landlords to essentially lend money at no interest to low-income tenants “who rely on the slow process of obtaining grants and supplemental payments to cover their rent.” With respect to the authority to vacate an executed warrant of eviction, the court wrote:

We reject the landlord’s contention, premised on RPAPL 749(3), that the Civil Court lacked the authority to grant the tenant’s post-eviction motion … . “[T]he Civil Court may, in appropriate circumstances, vacate the warrant of eviction and restore the tenant to possession even after the warrant has been executed” … . Here, the Civil Court providently exercised its discretion, as the record shows that the long-term, disabled tenant “did not sit idly by[,]” but instead made appreciable payments towards his rental arrears and “engaged in good faith efforts to secure emergency rental assistance to cover the arrears” … . Moreover, the tenant has paid the rental arrears for the unit and the landlord’s costs for the underlying proceeding …, and the record shows that the delays in payment were, to a certain extent, attributable to others, including the landlord … . Matter of Lafayette Boynton Hsg. Corp. v Pickett, 2016 NY Slip Op 00253, 1st Dept 1-14-16

 

LANDLORD-TENANT (MOTION TO VACATE EXECUTED WARRANT OF EVICTION PROPERLY GRANTED)/EVICTION (MOTION TO VACATE EXECUTED WARRANT OF EVICTION PROPERLY GRANTED)

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RENTAL PERMIT REQUIRED BY TOWN CODE WAS A CONDITION PRECEDENT TO THE LEASE; CODE PROVISION CREATED A PRIVATE RIGHT OF ACTION TO SEEK RESCISSION OF THE LEASE AND RETURN OF RENT PAID.

The Second Department determined plaintiffs-lessees were entitled to bring a private action (pursuant to a provision of the town code) to rescind a lease, and were entitled to rescission and return of the paid rent. After paying $216,000 to lease defendant’s residential property for approximately 3 1/2 months, the plaintiffs learned defendant did not have a rental permit required by section 270 of the town code. The code provision was enacted to address overcrowding in properties rented for the summer. The Second Department held the code provision created a private right of action and the rental permit was a condition precedent to any lease. With respect to the private right of action, the court wrote:

 

Where, as here, a statute “does not explicitly provide for a private cause of action, recovery may be had under the statute only if a legislative intent to create such a right of action is fairly implied’ in the statutory provisions and their legislative history” … . This inquiry involves three factors: ” (1) whether the plaintiff is one of the class for whose particular benefit the statute was enacted; (2) whether recognition of a private right of action would promote the legislative purpose; and (3) whether creation of such a right would be consistent with the legislative scheme'” … . The third factor is often noted to be the “most important” … . Where, as here, the legislature clearly contemplated administrative enforcement of the statute, ” [t]he question then becomes whether, in addition to administrative enforcement, an implied private right of action would be consistent with the legislative scheme'”… .

The plaintiffs satisfied the first and second factors here. Town Code § 270 is intended to benefit the occupants of rental properties in the Town of Southampton by requiring owners to obtain a valid rental permit as a condition precedent to the collection of rent (see Town Code § 270-13). Moreover, the legislative purpose is promoted by preventing owners from profiting from the rental of properties that are overcrowded, substandard, or otherwise violate State and Town laws.

The third factor, requiring that a private cause of action under a statute be consistent with the legislative scheme, has also been satisfied. As the Supreme Court correctly observed, Town Code § 270 is directed toward protecting the health, safety, and well-being of persons renting homes in the Town of Southampton. In that regard, Town Code § 270-6 requires that prior to the issuance of a rental permit, the enforcement authority must “make an on-site inspection of the proposed rental property” to ensure that the property “complies with the New York State Uniform Fire Prevention and Building Code and the Code of the Town of Southampton” (Town Code § 270-6). Although Town Code § 270 is intended to be enforced by designated Town officials and provides for penalties and fines, “without the threat of recoupment of rent, aside from the possibility of administrative enforcement, there is no incentive for a landlord to obtain a license, which is an overriding concern of the Town” … . Ader v Guzman, 2016 NY Slip Op 00137, 2nd Dept 1-13-16

 

NEGLIGENCE (QUESTION OF FACT WHETHER HOTEL DEFENDANT VICARIOUSLY LIABLE FOR NEGLIGENCE OF SNOWMOBILE TOUR GUIDE UNDER APPARENT AGENCY THEORY)/AGENCY (QUESTION OF FACT WHETHER HOTEL DEFENDANT VICARIOUSLY LIABLE FOR NEGLIGENCE OF SNOWMOBILE TOUR GUIDE UNDER APPARENT AGENCY THEORY)

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INCONSISTENCIES IN TWO FINAL RENT-ADJUSTMENT ORDERS ALLOWED RECONSIDERATION OF THE NATURE OF THE MAJOR CAPITAL IMPROVEMENTS [MCI’S] DESCRIBED IN THE ORDERS

In a rent-increase matter which was before the NYS Division of Housing and Community Renewal (DHCR), the First Department, over an extensive two-justice dissent, determined a discrepancy between two prior rent-adjustment orders constituted “an irregularity in a vital matter” which allowed the DHRC, on remand, to reconsider the two (final) orders. The discrepancy related to the nature of the “major capital improvement [MCI]” (purportedly justifying a rent increase) to which each order referred. The dissent argued that the two orders were final orders and collateral estoppel prohibited further reexamination of them. Matter of 60 E. 12th St. Tenants’ Assn. v New York State Div. of Hous. & Community Renewal, 2015 NY Slip Op 09599, 1st Dept 12-29-15

 

ADMINISTRATIVE LAW (RECONSIDERATION OF INCONSISTENT FINAL ORDERS BY NYS DIVISION OF HOUSING AND COMMUNITY RENEWAL)/DIVISION OF HOUSING AND COMMUNITY RENEWAL [DHCR] (RECONSIDERATION OF INCONSISTENT FINAL RENT-ADJUSTMENT ORDERS) ADMINISTRATIVE LAW; LANDLORD-TENANT. .

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INCONSISTENCIES IN TWO FINAL RENT-ADJUSTMENT ORDERS ALLOWED RECONSIDERATION OF THE NATURE OF THE MAJOR CAPITAL IMPROVEMENTS [MCI’S] DESCRIBED IN THE ORDERS.

In a rent-increase matter which was before the NYS Division of Housing and Community Renewal (DHCR), the First Department, over an extensive two-justice dissent, determined a discrepancy between two prior rent-adjustment orders constituted “an irregularity in a vital matter” which allowed the DHRC, on remand, to reconsider the two (final) orders. The discrepancy related to the nature of the “major capital improvement [MCI]” (purportedly justifying a rent increase) to which each order referred. The dissent argued that the two orders were final orders and collateral estoppel prohibited further reexamination of them. Matter of 60 E. 12th St. Tenants’ Assn. v New York State Div. of Hous. & Community Renewal, 2015 NY Slip Op 09599, 1st Dept 12-29-15

ADMINISTRATIVE LAW (RECONSIDERATION OF INCONSISTENT FINAL ORDERS BY NYS DIVISION OF HOUSING AND COMMUNITY RENEWAL)/DIVISION OF HOUSING AND COMMUNITY RENEWAL [DHCR] (RECONSIDERATION OF INCONSISTENT FINAL RENT-ADJUSTMENT ORDERS)

SECURITY DEPOSIT CANNOT BE USED BY THE LANDLORD AS AN OFFSET AGAINST UNPAID RENT, BUT CAN BE USED BY THE TENANT TO REDUCE AMOUNT OWED TO THE LANDLORD.

In finding the special referee exceeded the scope of the reference from Supreme Court, the First Department explained the consequences of a landlord’s failure to place a security deposit in a separate account pursuant to General Obligations Law 7-103:

Section 7-103 prohibits landlords from commingling security deposits with their own funds. Violation of the statute gives rise to an action in conversion and the right to immediate return of the funds … . A landlord who violates Section 7-103 of the General Obligations Law cannot use the security as an offset against unpaid rents. This is so because a landlord is considered to be a trustee with respect to those funds deposited as security. To allow the landlord to set off the rent against the deposit would be to treat the deposit as a debt and the landlord as a debtor, the situation the statute was enacted to change … .The same logic does not pertain where a tenant seeks to apply the security deposit to reduce amounts found owing to the landlord.  23 E. 39th St. Mgt. Corp. v 23 E. 39th St. Dev., LLC, 2015 NY Slip Op 09605, 1st Dept 12-29-15

LANDLORD-TENANT (SECURITY DEPOSIT CANNOT BE USED AS OFFSET AGAINST UNPAID RENT)/LANDLORD-TENANT (SECURITY DEPOSIT CAN BE USED TO REDUCE AMOUNT TENANT OWES LANDLORD)/SECURITY DEPOSIT (LANDLORD CANNOT USE AS OFFSET AGAINST UNPAID RENT)/SECURITY DEPOSIT (CAN BE USED TO REDUCE AMOUNT OWED LANDLORD BY TENANT)

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