JEROME AVENUE TENANTS HOUSING DEVELOPMENT FUND CORPORATION, Petitioner/Landlord, v. Quilina PACA, Respondent/Tenant, John and Jane Doe, Respondent/Undertenant.
BACKGROUND AND PROCEDURAL HISTORY
This is a holdover proceeding commenced by Petitioner Jerome Avenue Tenants Housing Development Fund Corporation (“HDFC”), a cooperative housing development corporation, against Respondent Aquilina Paca, who is described in the Petition as “the occupant” of Apartment 5F at 941 Jerome Avenue in the Bronx. The Petition also names “John and Jane Doe” as “possible undertenants” of Aquilina Paca. The Petition, dated March 19, 2019, is predicated upon a “Thirty Day Notice to Terminate” dated October 30, 2018 which states that “the stock certificate and proprietary lease appurtenant to the Premises has been sold at foreclosure auction”. The termination notice, a copy of which is attached to the Petition, goes on to state that Petitioner was terminating “any alleged tenancy” held by Respondents “under a monthly or Month to Month Tenancy”. Also attached to the Petition are certified copies of (1) a stock certificate dated June 26, 2017 in Petitioner's name for 250 shares of the Petitioner corporation, with a reference to “Apt 5F” in the upper right corner of the stock certificate, and (2) a proprietary lease for Apartment 5F, also dated June 26, 2017, between Petitioner and itself as both Lessor and Lessee. Petitioner seeks a final judgment of possession, a warrant of eviction and judgement for past and ongoing use and occupancy.
The proceeding was initially calendared for April 5, 2019 and then adjourned to May 2 when The Legal Aid Society filed a notice of appearance on behalf of Respondent Aquilina Paca. After two more adjournments in a Resolution Part the case was transferred to a Trial Part with a notation on the court file jacket that “answer is deemed a general denial”. After a pre-trial conference on July 25, The Legal Aid Society filed an Answer with the court on October 18, 2019 on behalf of both Respondent Aquilina Paca and Mari Y. Paca, apparently one of the Respondent/ Undertenants named in the caption as “John and Jane Doe”. In addition to denying (or denying knowledge or information sufficient to form a belief of) all the Petition's allegations except for the statement in paragraph 4 that “Respondents/Undertenants John and Jane Doe are possible undertenants of the Respondent Aquilina Paca,” the answer raises four affirmative defenses and two counterclaims:
• 1st affirmative defense — allegations in petition as to “prior proceedings commenced in the last three years are not sufficient to constitute a violation of a substantial obligation of tenancy pursuant to Rent Stabilization Code”;
• 2nd affirmative defense & 1st counterclaim — breach of the warranty of habitability;
• 3rd affirmative defense & 2nd second counterclaim — attorney's fees;
• 4th affirmative defense — Petitioner lacks standing as “Respondent was entitled to the shares of the subject apartment upon the death of her mother. Petitioner improperly conducted an extra-judicial foreclosure and acquired the shares to the apartment when it should not have. Petitioner is not entitled to the shares it claims to own.”
The matter was tried on October 23 and post-trial briefs were submitted by December 4, 2019.
Petitioner presented its prima facie case through documents and the testimony of one witness, Billy Lopez, who works as a property manager for Petitioner's managing agent Total Realty Associates. Certified copies of Petitioner's deed for 941 Jerome Avenue dated December 9, 1985 and multiple dwelling registration filed with the New York City Department of Housing Preservation and Development (HPD) were admitted into evidence without objection. The original stock certificate and proprietary lease dated June 26, 2017 for Apartment 5F at 941 Jerome Avenue were admitted into evidence over objection.
A ledger showing use and occupancy arrears for the period of July 2017 through October 2019 that was admitted into evidence without objection reflects:
• monthly maintenance charge of $702.20 due for each month from July 2017 through February 2018 which increased to $742.20 beginning March 2018;
• late fee of $25 charged in 20 of 28 months for a total of $500;
• subtotal due, after subtracting various payments made, of $12,975.29; and
• total due, including $4842.84 in legal fees, of $17,818.13.
The court took judicial notice of the Notice of Petition, Petition, Thirty-Day Notice to Terminate and affidavits of service in the court file.
Mr. Lopez testified that Respondent Aquilina Paca is the current occupant of Apartment 5F, that she was never a shareholder and that he believes she is the daughter of the former shareholder, Eladia Paca. Mr. Lopez testified that Eladia Paca's lease and stock certificate were “terminated due to illegal sublet and failure to pay maintenance” in 2016, after which Petitioner instructed its lawyers to commence a “nonjudicial foreclosure proceeding under the UCC” against Eladia Paca. Petitioner was the successful bidder at an auction on February 23, 2017 after which the stock certificate and proprietary lease were transferred into its name.
On cross-examination, regarding the ledger and request for use and occupancy Mr. Lopez acknowledged that Respondent had no agreement with Petitioner to make payments and testified that the ledger reflects an increase in the monthly maintenance effective March 2018. Regarding Eladia Paca Mr. Lopez acknowledged that she had died, although he did not know on what date or in what year, and that she had owned the shares of stock for her apartment at the time of her death. Mr. Lopez acknowledged that Petitioner had brought several cases against Eladia Paca, including for illegal sublet and nonpayment of maintenance. Mr. Lopez testified that he learned that Eladia Paca had died in 2016 during one of the court cases. After learning that Eladia Paca had died Petitioner started the nonjudicial foreclosure.
On redirect Mr. Lopez testified that the maintenance amounts listed on the ledger are what Eladia Paca would have been required to pay if her lease had not been terminated.
The only witness called by Respondents was Respondent Aquilina Paca, who testified that she has lived at the premises since her mother Eladia Paca passed away on September 29, 2015. Her mother had lived in the apartment for approximately 40 years, first as a renter and then as a shareholder. After the death of her mother Respondent became the administrator of her estate by letters issued to her by the Bronx County Surrogate's Court on July 2, 2019. Respondent testified that she did not transfer or give permission for her mother's shares in the cooperative apartment to be transferred out of her mother's estate.
Respondent testified that in 2016, after her mother had died, and after learning of the foreclosure, she was brought to housing court based upon the claim that she was an illegal tenant. That proceeding did not result in Respondent's eviction and after it was over she received a notice of “the foreclosure of the apartment, not of the shares”. Respondent testified that after learning there would be a foreclosure sale she came to the courthouse on the day of the auction but did not participate because, “I was told to come here, I came but I didn't see anyone here. Not inside the building; it was outside that they were doing the foreclosure.”
On cross examination Respondent testified that she moved into the apartment to care for her mother in August 2015, a month before her mother died. Respondent did not notify Petitioner that she was there and the only permission she received to reside in the apartment was from her mother. Respondent acknowledged that the stock certificate for the apartment had never been transferred to her.
Petitioner proved its prima facie case through the testimony of its managing agent, Mr. Lopez and the documents admitted into evidence, specifically the deed to the building and the stock certificate and proprietary lease for Apartment 5F, which are all in Petitioner's name. While the proprietary lease is signed by Petitioner's agents only on the “Lessor” signature lines and not also on the “Lessee” signature line, this omission is of no moment given that Petitioner is named as both Lessor and Lessee in the lease.
The only claim upon which Respondents seek relief - in the form of dismissal of the Petition - is found in their fourth affirmative defense that Petitioner lacks standing to commence this proceeding because it failed to prove it is a proper party under Section 721 of the Real Property Actions and Proceedings Law (RPAPL). While the Petition does not specify under which subsection of RPAPL § 721 it was brought, after reviewing the evidence presented at trial the court finds that Petitioner does have standing to bring this proceeding under one or more subsections of that statute:
• Under RPAPL § 721(1), “the landlord or lessor” may maintain a summary eviction proceeding; Petitioner is clearly the landlord of Apartment 5F at 941 Jerome Avenue as it owns a fee interest, see, e.g., Metropolitan Realty Group v. McSwain (27 Misc 3d 1216[A], 910 NYS2d 763 [Civ. Ct NY Co 2010]), evidenced by the shares of stock and proprietary lease interest appurtenant to this cooperative apartment,Towbin v. Towbin (117 AD3d 607, 986 NYS2d 119 [1st Dep't 2014]).
• Under RPAPL § 721(3), Petitioner also has standing to commence this proceeding as “the purchaser upon the execution or foreclosure sale”, based on the unrefuted proof that it purchased the stock appurtenant to Apartment 5F at a foreclosure sale, after which it was issued a stock certificate and proprietary lease.
• Under RPAPL § 721(7), also based on its stock certificate and proprietary lease, under which it is both lessor and lessee. Petitioner has shown it is “entitled to possession of the property occupied by a licensee” and Respondents failed to prove they are anything other than licensees of the former shareholder.
• Under RPAPL § 721(10), Petitioner has standing as “the lessee of the premises, entitled to possession” as evidenced by the stock certificate and proprietary lease.
None of the four cases cited in Respondents' post-trial brief in support of its claim that Petitioner lacks standing to bring this proceeding are on point or warrant dismissal. In Newell Funding LLC v. Tatum (24 Misc 3d 597, 884 NYS2d 577 [Civ. Ct Bx Co 2009]), where the petitioner was a lender who had foreclosed on a cooperative apartment owner's mortgage and then purchased the shares at auction, the court dismissed the proceeding for lack of standing, noting that “there is no stock certificate which reflects that petitioner owns the shares appurtenant to the subject apartment”. Here, Petitioner does have a stock certificate which reflects that it owns the shares formerly owned by Eladia Paca.
The three cases of Charles v. Walker (48 Misc 3d 1208[A], 18 NYS23d 577 [Civ. Ct NY Co 2015] ), Kroll v. James (2013 NY Misc LEXIS 3620, 2013 NY Slip Op 31905[U] [Civ. Ct NY Co 2013]) and Williams v. Williams (46 Misc 3d 1201[A], 7 NYS3d 245 [Civ. Ct NY Co 2014]), are similar to the case now before this court in that they all were holdover proceedings against occupants of cooperative apartments in HDFC buildings. However, there was no evidence presented at trial herein comparable to that which warranted the dismissal of each of those cases due to the petitioners' failure to prove they had standing.
In Charles v. Walker the court noted that the transfer to petitioners of the deceased prior owner's interest in the subject HDFC apartment “was never approved by the Board and there is no corresponding assignment of the proprietary lease by the Board.” Further, the petitioners in that case owned and lived in another apartment in the building and the court found that their actions “in unilaterally assigning themselves a second cooperative apartment in this HDFC to rent out for their own personal profit are contrary to underlying objective of HDFCs”. Id.
In dismissing the petition in Kroll v. James the court noted that petitioner had appeared at trial by his agent under a power of attorney who offered into evidence only the first and last pages of petitioner's lease on which petitioner's signature bore no resemblance to that on his power of attorney; further, the evidence at trial established circumstances that included “shareholders in an HDFC who don't reside at apartments appurtenant to their shares” and “officers of the HDFC also purchasing shares in the HDFC as agents for their distant relatives” which circumstances undermine the goal of providing housing to low-income families.
In Williams v. Williams, the evidence established that the petitioner did not have a stock certificate in her name and while her name was on the proprietary lease, she had added it herself to her father's lease.
Here, Petitioner is the corporate HDFC itself, not an individual - board member or otherwise - which proved at trial that it is the owner of a valid stock certificate and that it maintains a proprietary lease in its own name for the subject apartment. None of the underlying concerns evident in Charles v. Walker, Kroll v. James and Williams v. Williams were shown to be an issue here. To the extent Respondents find suspect the transfer of Eladia Paca's ownership and tenancy rights to Petitioner via a nonjudicial foreclosure proceeding after her death, or seek to secure those rights for themselves, no evidence at trial was presented to support such claims and, in any event, “The Housing Court does not have jurisdiction to entertain matters concerning title or ownership of stock.” Kroll v. James, supra.
Based on the unrefuted evidence at trial, Petitioner is entitled to a judgment of possession and a money judgment for $21,946, representing use and occupancy at the monthly rates requested, as to which no evidence was proffered to show they are not reasonable and appropriate for this HDFC building, of $702.20 for the 8 months of July 2017 through February 2018 and $742.20 for the 22 months of March 2018 through December 2019.1 The warrant of eviction shall issue forthwith, with execution stayed through March 31, 2020, conditioned upon Respondent's payment to Petitioner of monthly use and occupancy of $742.20 by the fifteenth day of each of the three months of January, February and March 2020. This constitutes the Decision and Order of this Court, copies of which will be mailed to the parties' counsel unless picked up from the Part forthwith.
1. As no evidence was presented to support either the alleged late fees of $25 per month for 20 months, or legal fees of $4842.84, the court has not included those sums in the total due.
Diane E. Lutwak, J.