GUR ASSOCIATES LLC v. CONVENIENCE ON EIGHT CORPORATION AM PM XYZ (2024)

On September 12, 2023, petitioner Gur Associates LLC commenced this summary proceeding against respondents Convenience on Eight Corporation d/b/a AM PM Market (tenant), Bing Bong Candy Shop Inc. (undertenant), “XYZ Corp.”, “John Doe”, and “Jane Doe”, seeking to recover possession of the commercial premises described as “All rooms, divisions, and parts of the rooms of the North Store on the ground floor located at the premises commonly known as 584 Eighth [Avenue], New York, New York 10018” (petition ¶ 3).

By a decision and order dated December 21, 2023 and entered December 22, 2023, this court denied tenant's pre-answer motion to dismiss and to vacate its default in answering (NYSCEF Doc. No. 31). As relevant to this inquest, this court ruled, among other things, that tenant's submissions were insufficient to overcome the presumption of the validity of service based on the process server's affidavit (id. at 3-4). This court directed the parties to appear for an inquest before this court on January 11, 2024.

On January 11, 2024, this court held an inquest on the stenographic record (Antonia Gianiks, court reporter) in courtroom 419 at 111 Centre Street, New York, New York. Petitioner appeared in person and tenant's counsel appeared virtually via MS Teams. Undertenant did not appear.

On behalf of petitioner, Shmaya Glick was sworn and testified at the inquest. The parties stipulated that the exhibits which petitioner had submitted in opposition to tenant's prior motion to dismiss (where were previously marked as petitioner's Exhibits A-I [NYSCEF Doc. Nos 17-25]) would be accepted into evidence at the inquest (Tr. at 9, lines 21-25). Petitioner also submitted, without objection, an additional exhibit at the inquest, marked as Petitioner's Exhibit J (Tr. at 15, lines 7-16), which was subsequently e-filed (NYSCEF Doc. No. 32). Thus, petitioner submitted 10 exhibits that were accepted into evidence, marked as Petitioner's Exhibits A-J. Without objection, this court also took judicial notice of all documents e-filed in this proceeding (NYSCEF Doc. Nos. 1-31) (Tr. at 26, lines 19-21).

Tenant did not call any witnesses (Tr. at 10, lines 2-4). Neither did tenant submit any exhibits into evidence.

At the inquest, petitioner's counsel voluntarily discontinued the petition as against the fictitiously named respondents XYZ Corp., John Doe, and Jane Doe (Tr. at 39, lines 6-15).

This court questioned whether petitioner could meet its prima facie burden at the inquest that the unlicensed retail of sale of cannabis occurred at the premises, without proof of any actual testing of the substances which Glick purchased (Tr. at 39, lines 24-25; id. at 40, lines 1-14). At petitioner's request, this court permitted petitioner and tenant to submit post-inquest memoranda of law on that issue (Tr. at 47, lines 20-23; id. at 48, lines 5-6), which were e-filed on January 25, 2024.

The matter was then marked fully submitted and decision was reserved.

FINDINGS OF FACT

Recitation, as required by CPLR 4213 (b), of the findings of essential facts relied upon by the court:

Pursuant to a written lease made February 2, 2022, petitioner Gur Associates, LLC leased to tenant the ground floor store in the building located at 584 Eighth Avenue, New York, New York, 10018, for a period of 120 months, for use as “a first-class convenience shop doing business as “AM PM Market” (see Petitioner's Exhibit J [NYSCEF Doc. No. 32], lease, Articles 41 [A] and 42 [D]).

The court found Shmaya Glick credible.

Glick testified that he has been the property manager of the building located at 584 Eighth Avenue since 2010 (Tr., at 16, lines 2-5). Glick stated that the store leased to tenant is approximately 12,000 square feet of retail space, and that the building contains three tenants, which are all commercial tenants (Tr., at 17, lines 24-25; at 18, lines 1-7).

According to Glick, he learned in April or May 2023 that someone else was in possession of the premises leased to tenant, a company called “Bing Bong” (Tr. at 16, lines 14-23). Glick testified that, in July or August 2023, he took a photograph of the storefront with his iPhone (Tr., at 19, lines 1-9). Plaintiff's Exhibit C [NYSCEF Doc. No. 19]). Petitioner had received checks from “Bing Bong Candy Shop Inc.” with the memo lines indicating that the checks were for April rent and May Rent at 590 8th Ave (Tr. at 16, lines 24-25; at 17, line 1; Plaintiff's Exhibit A). Glick stated that he entered the store and purchased a marijuana cigarette with cash, which he photographed (Tr. at 19, lines 20-25; id. at 20, lines 1-3; see also Plaintiff's Exhibit D [NYSCEF Doc. No. 20]).

Glick testified that he purchased another marijuana cigarette at the store in July or August 2022 (Tr. at 20, lines 22-25; id. at 21, lines 1-5; Tr. at 26, lines 24-25; id. at 27, lines 1-4), and that he took of picture of it (Plaintiff's Exhibit F [NYSCEF Doc. No. 22]).

Glick stated that, around Halloween 2023, he went to the store again and took pictures of the interior with his iPhone on the same day (Tr., at 20, lines 10-21; Plaintiff's Exhibits E and G [NYSCEF Doc. Nos. 21 & 23]). According to Glick, Plaintiff's Exhibit G depicted a cabinet he observed that contained glass vials filled with marijuana cigarettes soaked with hashish oil, as labeled on the bottles (Tr. at 21, lines 22-25; id. at 22, lines 1-6). Glick stated that he asked a salesperson for one of the strongest cigarettes there soaked in hashish oil, and the salesperson offered him various types (Tr., at 22, lines 8-10).

Glick testified that he has been to the store between 10-12 times (Tr. at 22, lines 24-25). According to Glick, Bing Bong was still in possession when he last visited the premises on January 9, 2024 (Tr. at 23, lines 1-4). According to Glick, he went into the store and asked to buy a regular pre-rolled cigarette and a hashish oil-infused cigarette (Tr. at 23, lines 12-14).

Glick stated that he never personally smoked or tried any of the cigarettes he purchased (Tr. at 27, lines 8-10). On cross examination, Glick testified that he did not have any testing performed on the marijuana cigarettes that he purchased to confirm that they contained marijuana or THC (Tr. at 31, lines 3-6).

According to Glick, he received a letter from the Manhattan District Attorneys’ Office requesting petitioner to commence a holdover proceeding against tenant (Tr. at 23, lines 14-16; see also NYSCEF Doc. No. 4).

Over tenant's objection, this court took judicial notice of the list of dispensary licensed by the New York State Office of Cannabis Management as of January 11, 2024 (Tr. at 41, line 25; id. at 42, lines 1-16), which was publicly available online (https://cannabis.ny.gov/dispensary-location-verification [last accessed January 11, 2024]).¹ As of January 11, 2024, there were 47 adult-use cannabis dispensaries across New York State; neither tenant nor Bing Bong Candy Shop. Inc. was listed among the licensed dispensaries.

CONCLUSIONS OF LAW

As a preliminary matter, upon the court's own motion, the description of the premises in the petition, which described the address of the premises as “584 Eighth, New York, New York 10018” is amended to “584 Eighth Avenue, New York, New York, 10018,” to conform to proof at the inquest, pursuant to CPLR 3025 (c). The address of the premises was fully stated in the lease, which was introduced at the inquest as Plaintiff's Exhibit J.

At an inquest, tenant, as a defaulting party, is not permitted to introduce evidence tending to defeat the petitioner's cause of action (Rokina Opt. Co., Inc. v. Camera King, Inc., 63 N.Y.2d 728, 730, 480 N.Y.S.2d 197, 469 N.E.2d 518 [1984]). However, tenant may cross-examine witnesses, and offer testimony and proof in mitigation of damages (id.). Here, there is no claim for monetary damages. Petitioner's counsel stated that only a judgment of possession was being sought (Tr. at 10, lines 22-25).

Real Property Law § 231 (1) states, in relevant part:

“Whenever the lessee or occupant other than the owner of any building or premises, shall use or occupy the same, or any part thereof, for any illegal trade, manufacture or other business, the lease or agreement for the letting or occupancy of such building or premises, or any part thereof shall thereupon become void, and the landlord of such lessee or occupant may enter upon the premises so let or occupied.”

RPAPL 711 (5) permits a landlord to commence a holdover proceeding where “[t]he premises, or any part thereof, are used or occupied as a bawdy-house, or house or place of assignation for lewd persons, or for purposes of prostitution, or for any illegal trade or manufacture, or other illegal business.”

“To warrant eviction based on use of premises for illegal activity, use ‘implies doing of something customarily or habitually upon the premises’ ” (855-79 LLC v. Salas, 40 A.D.3d 553, 555, 837 N.Y.S.2d 631 [1st Dept. 2007] [citations omitted]).

“To say that a building is ‘used’ for a specified purpose means in substance that it is kept or maintained for such a purpose. There must be a showing that the tenant has departed from the legitimate or legal use for which the premises were hired, by some measurable degree of continuity of acts of vice related to the occupancy of the premises or to the method of conducting the business therein”

(Solow Bldg. Co., II, L.L.C. v. Banc of Am. Sec., LLC, 13 Misc.3d 55, 56-57, 823 N.Y.S.2d 815 [App. Term, 1st Dept. 2006] [internal citation, quotation marks and emendation omitted]). “[P]etitioner must show that the premises it seeks to recover has been used not just once or twice but ‘customarily or habitually’ for an illegal trade” (36170 Realty Ltd. v. Boyd, 73 Misc.3d 920, 933-34, 143 N.Y.S.3d 773 [Civ. Ct., Kings County 2021]; 554 W. 148th St. Assoc. LLC v. Thomas, 8 Misc.3d 132[A], 2005 N.Y. Slip Op. 51139[U], 2005 WL 1704426 [App. Term, 1st Dept. 2005]). However, “proof sufficient to support a criminal conviction ․ [i]s not a sine qua non of the landlord's right to recover possession” in an illegal use holdover proceeding (Midcenter Equities Assocs. v. Nghiem My Quack Tran, 10 Misc 3d 141[A], 2006 N.Y. Slip Op. 50040[U], 2006 WL 83514 [App. Term, 1st Dept. 2006]).

Additionally, the landlord must prove that the tenant knew or should have known of the activities and acquiesced in such illegal activity on the premises (WHGA Renaissance Apts., L.P. v. Jackson, 53 Misc.3d 11, 12, 37 N.Y.S.3d 809 [App. Term, 1st Dept. 2016]). “It is not necessary that the tenant actually participate in the illegal activity; it is sufficient that ‘the acts and conduct complained of warrant the inference of acquiescence’ ” (Matter of 88-09 Realty, LLC v. Hill, 305 A.D.2d 409, 410, 757 N.Y.S.2d 904 [2d Dept. 2003] [citations omitted]).

Notwithstanding the above, RPAPL 715-a (4), effective May 3, 2023, states that “[t]he use or occupancy of premises solely or primarily for the unlicensed retail sale of cannabis shall constitute an illegal trade, manufacture, or other business for the purposes of section two hundred thirty-one of the real property law.”

Plaintiff submitted ample evidence that Bing Bong occupied the premises, and that it marketed itself as a store for the purchase of cannabis products. In the picture of the awning for the name of the store, an anthropomorphic marijuana leaf appears between the words “Bing Bong” (Petitioner's Exhibit C [NYSCEF Doc. No. 19]). To the left of those words appears a gorilla resembling King Kong, wearing a marijuana leaf with the word “cannabis” directly under the leaf (id.). On the other side of the awning is the face of a bear wearing what appears to be a ranger hat—perhaps an allusion to Smokey the Bear—and the bear is smoking a convex-shaped cigarette with the word “Exotics” below him (id.). Meanwhile, the word “THC” appears in neon lights surrounded by two marijuana leaves on the storefront glass (id.).

A photograph that Glick took inside the premises shows a sign which reads:

“HAPPY HALLOWEEN:

• $15 8ths

• 3 PreRolls for $25”

(Petitioner's Exhibit E [NYSCEF Doc. No. 21]). Glick credibly testified that he asked a salesperson for a hashish oil-infused cigarette, and that the salesperson gave a him such a cigarette.

However, petitioner did not submit any evidence of testing of the cigarettes to establish that the cigarettes contained, in fact, cannabis.

Petitioner nevertheless argues that the evidence was sufficient to meet its burden. Tenant argues that, without testing, petitioner cannot meet its burden that the retail sale of cannabis occurred at the premises.

Were this a criminal proceeding, the evidence would be insufficient to support a criminal conviction beyond a reasonable doubt.

“A witness may be qualified to speak from actual experience, from observation or from study and must be shown to be qualified as an expert on the particular subject concerning which he is called upon to testify” (People v. Lynch, 85 A.D.2d 126, 128-29, 447 N.Y.S.2d 549 [4th Dept. 1982]). “If users can demonstrate a knowledge of the narcotic, they are competent to testify. The weight to be given the testimony is for the [trier of fact] to determine” (People v. Jewsbury, 115 A.D.2d 341, 342, 496 N.Y.S.2d 164 [4th Dept. 1985]). However, as Glick did not personally smoke any of the cigarettes, and there was no testimony that Glick had personal experience with marijuana substances, he was not qualified to identify the cigarettes as marijuana (see People v. Kenny, 30 N.Y.2d 154, 157, 331 N.Y.S.2d 392, 282 N.E.2d 295 [1972] [holding that criminal narcotics conviction could not rest on non-expert identification of substance at issue because the familiarity with narcotics was not yet “a matter of common knowledge” like alcohol, the latter being a substance that “up to now the world is much more experienced with”]).

“But prima facie evidence of the presence of a controlled substance need not be based on expert testimony. All that is required is a ‘reliable basis’ for inferring such presence” (People v. Swamp, 84 N.Y.2d 725, 733, 622 N.Y.S.2d 472, 646 N.E.2d 774 [1995] [citation omitted]). Thus, the uncontradicted results of a field test may provide legally sufficient evidence of presence of a controlled substance to support a felony indictment, even if a subsequent formal laboratory analysis might yield a different result (id. at 732, 622 N.Y.S.2d 472, 646 N.E.2d 774; see also Matter of Angel A., 92 N.Y.2d 430, 434, 681 N.Y.S.2d 787, 704 N.E.2d 554 [1998] [undercover officer's supporting deposition in this case, and his reliance on a field test to establish the existence of a controlled substance, constituted legally sufficient evidence]). Such legally sufficient evidence would meet the burden of establishing the identity of the substance by a preponderance of the evidence, if credited by the trier of fact.

But, again, “proof sufficient to support a criminal conviction ․ [i]s not a sine qua non of the landlord's right to recover possession” in an illegal use holdover proceeding (Midcenter Equities Assocs., 10 Misc.3d 141[A], 2006 N.Y. Slip Op. 50040[U]). At trial, the landlord “need meet only the civil burden of proving its case by a preponderance of the credible evidence rather than the criminal burden of proving its case beyond a reasonable doubt” (410 Lenox Ave. Apts., Inc. v. Community II Supermarket, Inc., 135 Misc.2d 628, 629, 516 N.Y.S.2d 432 [Civ. Ct., N.Y. County 1987]).

Additionally, tenant defaulted in answering the petition, and this matter is in the procedural posture of an inquest. Having failed to answer the petition, tenant is deemed “to have admitted all factual allegations contained in the complaint and all reasonable inferences that flow from them” (Woodson v. Mendon Leasing Corp., 100 N.Y.2d 62, 71, 760 N.Y.S.2d 727, 790 N.E.2d 1156 [2003]), including basic allegations of liability (Brown v. Rosedale Nurseries, Inc., 259 A.D.2d 256, 257, 686 N.Y.S.2d 22 [1st Dept. 1999]). Thus, “[t]he standard of proof is not stringent, amounting only to some firsthand confirmation of the facts” (Feffer v. Malpeso, 210 A.D.2d 60, 61, 619 N.Y.S.2d 46 [1st Dept. 1994]).

Here, even without proof of laboratory tests of field tests of the cigarettes, there was ample circumstantial evidence that the retail sale of cannabis occurred at the premises to meet petitioner's prima facie burden at the inquest.² The reasonable inference to be drawn from the unrebutted evidence of a store which holds itself out as a seller of cannabis and cannabis products is that the products sold are, more likely than not, what the seller and its salespersons purport them to be.³ Judicial notice of the records of the New York State Office of Cannabis Management established that such retail sale was unlicensed.

Tenant's remaining arguments are unavailing. Tenant's argument that the petition failed to plead the statutory basis and authority under which petitioner brought the proceeding was raised in tenant's motion to dismiss, which was denied (see NYSCEF Doc. No. 31, at 7). Contrary to tenant's argument, petitioner was not required to prove the elements of illegal use under the law which existed prior to legalization of cannabis in New York State. Once petitioner met its burden that the unlicensed retail sale of cannabis occurred at the premises, such activity constituted illegal use of the premises per se by virtue of RPAPL 715-a (4).

In sum, petitioner's evidence at the inquest established that the premises were solely or primarily for the unlicensed retail sale of cannabis, which constitutes, by statute, “illegal trade, manufacture, or other business” of the premises per se under Real Property Law § 231 (RPAPL 715-a [4]). Consequently, the lease has become void, and petitioner is therefore entitled to enter the premises and entitled to removal of the tenant and undertenant from the premises due to the illegal use of the premises (Real Property Law § 231 [1]; see generally RPAPL 715).

Petitioner is also awarded costs and disbursements against tenant, in the total amount of $50.00 (RPAPL 747; see also NY City Civ Ct Act § 1906-a).

VERDICT

The court finds in favor of petitioner. Petitioner is granted a judgment of possession for the premises, i.e., “All rooms, divisions, and parts of the rooms of the North Store on the ground floor located at the premises commonly known as 584 Eighth Avenue, New York, New York 10018” against tenant and undertenant.

ORDER

Accordingly, it is hereby ORDERED that petitioner's application for voluntary discontinuance of the petition as against respondents XYZ Corp., John Doe, and Jane Doe is granted, and the petition is severed and discontinued as against these respondents; and it is further

ORDERED that, after inquest, the Clerk is directed to enter a final judgment granting the holdover petition and awarding possession of the premises—i.e., “All rooms, divisions, and parts of the rooms of the North Store on the ground floor located at the premises commonly known as 584 Eighth Avenue, New York, New York 10018”—to petitioner Gur Associates LLC against respondents Convenience On Eight Corporation d/b/a AM PM Market and Bing Bong Candy Shop Inc., with costs and disbursements in the amount of $50.00; and it is further

ORDERED that, upon the court's own motion, the address for the description premises listed in the petition (NYSCEF Doc. No. 1, ¶ 3) is amended as stated in the preceding paragraph—“All rooms, divisions, and parts of the rooms of the North Store on the ground floor located at the premises commonly known as 584 Eighth Avenue, New York, New York 10018”—to conform to the evidence presented at the inquest; and it is further

ORDERED that a warrant of eviction shall be issued forthwith, without stay. The earliest execution date of the warrant is February 5, 2024; and it is further

ORDERED that petitioner is directed to e-file the court transcript of the inquest.

This constitutes the decision, verdict, and order of the court.

FOOTNOTES

1.   The court has discretion to take judicial notice of material derived from official government web sites (LaSonde v. Seabrook, 89 A.D.3d 132, 137 n 8, 933 N.Y.S.2d 195 [1st Dept. 2011]).

2.   To be clear, this court does not decide the issue of whether proof of testing would be required to meet the prima facie burden in a contested trial, which is an issue left open for another day.

3.   To illustrate, it is more likely than not that a Coach or Gucci store is selling genuine merchandise, not counterfeit handbags.

Richard Tsai, J.