56-11 94TH ST. CO. L.L.C., Petitioner-Landlord, v. Yadira JARA, Respondent-Tenant.
Recitation, as required by CPLR § 2219(a), of the papers considered in the review of Respondent's motion to dismiss pursuant to CPLR § 3211(a)(2) and/or (a)(7), or in the alternative, for leave to file an amended answer pursuant to CPLR § 3025(b):
Notice of Motion & Affirmations Annexed 1
Answering Affirmations 2
Replying Affirmations 3
Upon the foregoing cited papers, the decision and order on Respondent's motion is as follows:
The immediate nonpayment proceeding was commenced by Notice of Petition and Petition dated February 8, 2019. Prior to the commencement of the proceeding, Petitioner purportedly served Respondent with a Three (3) Day Notice (hereinafter “Rent Demand”) dated December 31, 2018. The Rent Demand required that Respondent pay $2135.43, comprised of $907.40 for November 2018 rent, $907.40 for December 2018 rent, and a late fee of $320.63. On February 28, 2019, Respondent, pro se, filed an Answer. At the initial court date on March 7, 2019, the proceeding was adjourned to April 24, 2019 for Respondent to meet with counsel through the Universal Access program. Prior to the April 24th adjournment date, Queens Legal Services, appearing for Respondent, made the instant motion to dismiss and Petitioner served opposition papers. On April 24, 2019, the matter was again adjourned to May 15, 2019, for the service of a reply. On May 15, 2019, the Court heard argument on Respondent's motion and reserved decision.
Respondent's motion seeks dismissal pursuant to CPLR § 3211(a)(2) and/or (a)(7) on the basis that the Rent Demand is defective as a result of the inclusion of an allegedly disproportionate and unenforceable late fee. In the alternative, Respondent seeks leave to interpose an amended answer pursuant to CPLR § 3025(b), and annexes a proposed amended answer as an exhibit. Petitioner opposes Respondent's motion to dismiss, arguing that the Rent Demand sets forth an approximate good faith sum of the amounts due, and that the late fee included therein does not render the Rent Demand defective. Petitioner does not oppose the amendment of Respondent's answer, except to the extent of requesting that the First Objection in in Law and First Affirmative Defense should be stricken (although without offering a basis).
The Appellate Term, Second Department has consistently held that “[a] proper rent demand is a statutory prerequisite to a nonpayment proceeding (RPAPL 711(2)) and an element of a landlord's prima facie case.” EOM 106-15 217th Corp. v. Severine, 2019 NY Slip Op 50068(U) (App. Term 2d, 11th & 13th Jud. Dists. 2019). See also 125 Court St., LLC v. Sher, 2018 NY Slip Op 50092(U) (App. Term 2d, 11th & 13th Jud. Dists. 2018); Rochdale Village, Inc. v. Goode, 2007 NY Slip Op 27249 (App. Term 2d Dep't 2007). A proper rent demand “must ‘set forth the approximate good faith amount of rent owed’ and ‘fairly apprise the tenant of the periods for which rent is allegedly due and in what amounts.’ ” EOM 106-15 217th Corp., 2019 NY Slip Op 50068(U) (citing Dendy v. McAlpine, 2010 NY Slip Op 50890(U) (App. Term 2d, 11th & 13th Jud. Dists. 2010) and Pantigo Professional Ctr., LLC v. Stankevich, 2018 NY Slip Op 51039(U) (App. Term, 9th & 10th Jud. Dists. 2018)).
Here, Respondent argues that the late fee of $320.63 included in the Rent Demand renders the notice defective since it does not apprise Respondent of the accurate amount owed. As an initial matter, it is unclear whether the late fee sought in the Rent Demand is for one month, the two months (November 2018 and December 2018) otherwise sought in the notice, or some additional amount from prior months. Since no time period is referenced other than November 2018 and December 2018 (the months of rent sought), the Court assesses the late fee as covering those months only. See Pantigo Professional Ctr., LLC, 2018 NY Slip Op 51039(U) (Rent demand must “fairly apprise the tenant of the periods for which rent is allegedly due and in what amounts.”) (Emphasis added).
Of the $1,814.80 in rent sought for two months, the $320.63 late fee represents a $17.7% portion of the total rent demanded.1 Two recent Appellate Term, Second Department decisions have held that late fees with percentages less than $17.7% of the rent to be unenforceable. In Wilsdorf v. Fairfield Northport Harbor, LLC, 34 Misc 3d 146(A), 950 N.Y.S.3d 494 (App. Term 9th & 10th Jud. Dists. 2012), the Appellate Term for the 9th and 10th Judicial Districts held (in a small claims action seeking to recover a security deposit and late fee payments) that “the provision in the lease charging plaintiff late fees of 10% of the monthly rent [is] unenforceable as a penalty, since it clearly disproportionate to any loss that defendant may incur.” Similarly, in Diversified Equities, LLC v. Russell, 50 Misc 3d 140(A), 31 N.Y.S.3d 920 (App. Term 2d, 11th & 13th Jud. Dists. 2016), the Appellate Term for the 2nd, 11th, and 13th Judicial Districts held that a “late monthly charge of 13% [is] excessive and grossly disproportionate to any damages that could be sustained as a result of tenant's failure to pay rent on time.” See also Park Haven, LLC v. Robinson, 45 Misc 3d 129(A), 3 N.Y.S.3d 286 (App. Term 2d, 11th & 13th Jud. Dists. 2014); Sandra's Jewel Box Inc. v. 401 Hotel, L.P., 273 AD2d 1 (1st Dep't 2000).
In accordance with this unambiguous appellate authority, the Court finds that the late fee sought in the Rent Demand herein (at a rate of 17.7% of the total monthly rent per month) is excessive and unenforceable as a matter of law. The remaining issue to be determined is whether the unenforceability of the late fee renders the entire Rent Demand defective. Petitioner argues that the decision in Brusco v. Miller, 167 Misc 2d 54, 639 N.Y.S.2d 246 (App. Term 1st Dep't 1995) permits it to proceed with its Rent Demand, notwithstanding the fact that the late fee is not collectible. In Brusco, the Appellate Term, First Department reversed the granting of a motion to dismiss based on an improper rent demand that impermissibly included legal fees and late charges that could not be collected in a summary proceeding (against a rent stabilized tenant). The Appellate Term held that “[t]he itemization of ancillary charges for attorney's fees and late fees does not represent a demand for ‘illegal’ rent in excess of the stabilized maximum, but permissibly gives notice of landlords' additional claim for contractual damages provided for in the parties' lease.” Brusco, 167 Misc 2d at 55, 639 N.Y.S.2d at 246. Moreover, the court noted that the fees “are a proper subject of recovery in a summary proceeding, albeit they may only be the source of a money judgment in the case of a regulated tenancy.” Id.
In contrast to the more relaxed standard for rent demands endorsed by Brusco v. Miller in the First Department, however, the Appellate Term, Second Department has developed a stricter standard for what constitutes an “approximate good faith amount” of rent that must be included in a rent demand in order for it to be upheld. In Inland Diversified Real Estate Serv., LLC v. Keiko NY, Inc., 51 Misc 3d 139(A), 36 N.Y.S.3d 407 (App. Term 9th & 10th Jud. Dists. 2016), the court dismissed a commercial nonpayment proceeding where “exorbitant” utility charges were sought and where “in light of the magnitude of the discrepancy between the amount of rent upon which [the] proceeding may properly be maintained and the amounts actually asserted ․ tenant may have been prejudiced in its ‘ability to respond to the demand, formulate defenses, and avoid litigation or eviction.’ ” (Citing 10 Midwood LLC v. Hyacinth, 2003 NY Slip Op 50789(U) (App. Term 2d, 11th & 13th Jud Dists.)). Similarly, in Pantigo Professional Ctr., LLC, the court held that a rent demand was defective and “not sufficiently specific” where it sought common charges and undefined utility charges in a commercial nonpayment proceeding. Pantigo Professional Ctr., LLC, 2018 NY Slip Op 51039(U). Most recently, in EOM 106-15 217th Corp., the court held a rent demand was defective where “the magnitude of the inaccuracies in the amounts sought” (including the improper failure to properly credit earmarked payments) may have “prejudiced [the tenant] in his ability to respond to the demand, formulate defenses, and avoid litigation or eviction.” EOM 106-15 217th Corp., 2019 NY Slip Op 50068(U) (citing Inland Diversified Real Estate Serv., LLC, supra, and 10 Midwood LLC, supra).
In line with this Second Department authority, the Court finds that the amounts sought in Petitioner's Rent Demand are not an “approximate good faith amount” of rent owed by Respondent. The Court has already determined that the late fee in Petitioner's Rent Demand is unenforceable as a matter of law and constituted a significant portion of the total rent otherwise sought (17.7%), so it follows that the demand itself “did not fairly apprise” Respondent of the amounts actually due and “prejudiced [Respondent's] ability to respond to the demand, formulate defenses, and avoid litigation or eviction.” EOM 106-15 217th Corp., 2019 NY Slip Op 50068(U).2 Moreover, it is not the Court's role to prune unenforceable portions of a rent demand in order to create a proper notice. Since a defective rent demand may not be amended, Respondent's motion to dismiss is granted and the proceeding is dismissed, without prejudice. See, e.g., Chinatown Apts. v. Chu Cho Lam, 51 NY2d 786 (1980); 125 Court St., LLC, 2018 NY Slip Op 50092(U). Respondent's motion to amend the answer is denied as moot.
THIS CONSTITUTES THE DECISION AND ORDER OF THE COURT.
1. If the $320.63 is halved and applied equally to each month demanded, it remains 17.7% of each discrete month's rent amount.
2. The Court notes that under the newly-enacted Housing Stability and Tenant Protection Act of 2019, no “fees, charges, or penalties” may be sought in a summary residential proceeding pursuant to the amended RPAPL § 702. However, since this provision only applies to proceedings commenced on or after the effective date of the law (June 14, 2019), it has no applicability to the immediate proceeding.
Clinton J. Guthrie, J.
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