The BOARD OF MANAGERS OF 2 DAG HAARSKJOLD PLAZA CONDOMINIUM, Petitioner-Landlord, v. ALI BABA'S TERRACE, INC., Respondent-Tenant, “John Doe” and “Jane Doe,” Respondents-Undertenants.
BACKGROUND
Petitioner commenced this commercial summary nonpayment proceeding seeking to recover possession of the ground floor and basement of 862 Second Avenue New York, New York (Subject Premises), based on the allegation that respondent has failed to pay rent due pursuant to the parties' lease agreement.
PROCEDURAL HISTORY
Petitioner issued a fourteen day rent demand dated October 25, 2019, seeking $145,718.13 in rent and additional rent alleged due through October 2019. The amount included base rent for September and October 2019 at $27,802.34 per month, in addition to water charges alleged due through October 2018, in the amount of $82,133.66 and water charges due through July 2019 of $7,979.79.
The petition was filed on November 21, 2019. The notice of petition with proof of service was filed on November 25, 2019.
Respondent appeared by counsel and filed an answer on December 5, 2019. The answer asserts eleven affirmative defenses including: improper service of the pleadings; and that the rent has been paid in full or in part; and estoppel; and that petitioner's overlease was terminated thereby terminating the sublease agreement between the parties; and lack of standing; and that petitioner failed to install a water meter as required by the lease and is thus barred from collection of water charges; and that the amount sought of water charges is not accurate; and that the rent demand is not a good faith statement of the amounts actually due.
An initial court date was set for December 12, 2019. On that date, the proceeding was adjourned on respondent's application for motion practice to January 22, 2020.
THE PENDING MOTION
On January 22, 2020, respondent moved for summary judgment and dismissal of the proceeding. Both parties submitted their papers, the court heard brief oral argument and reserved decision.
ALLEGED FACTS
Petitioner is the overtenant of the Subject Premises pursuant to a lease dated July 1, 1968, subsequently assigned to 862 Second Avenue LLC (862). Respondent took occupancy pursuant to a sublease between the parties for a term from May 1, 2007 through April 30, 2022, with an option to renew (Ex A to the moving papers).
In August 2016, 862 served petitioner with a notice to cure alleging that petitioner had breached its lease by failing to pay monthly rent due at the rate of $31,625.00 for March through August 2016, and requiring payment of $224,081.76 on or before August 10, 2016 (Ex C to moving papers).
862 issued a notice of termination dated August 11, 2016, alleging that petitioner had failed to cure the default, and terminating the overlease effective August 16, 2016 (Ex D to moving papers). 862 commenced an action against petitioner and respondent in New York County Supreme Court under Index Number 655408/16 seeking ejectment and related relief.
In that action, Judge Lebovits issued an order directing petitioner to pay use and occupancy and held in pertinent part:
Dag's argument that it has abandoned the premises has no merit. Ali Baba continues to occupy the one-story development, and Dag's tenants still occupy the condominium. Dag argues that although it has not paid rent for over two years, it has abandoned the premises and is therefore no longer obligated to pay rent. But the lease was terminated on August 16, 2016, and Dag continues to occupy the premises.
Dag's argument that it no longer holds a landlord-tenant relationship with Ali Baba is unpersuasive. Dag has not surrendered the premises, and its tenants continue to occupy the condominium. Dag argues that Second Avenue's acceptance of use and occupancy from Ali Baba created a new landlord-tenant relationship. But Article 24 of the lease provides that Second Avenue may collect rent from Ali Baba in the event of Dag's default. Second Avenue is fulfilling the lease obligations by collecting partial payments of use and occupancy while Dag continues to withhold payment
862 Second Ave. v 2 Dag Hammarskjold Plaza Condominium & Ali Baba's Terrace Inc., No. 655408/16, 2018 WL 3126502, at 2 (NY Sup. Ct. June 26, 2018)
Judicial Estoppel Does Not Apply Based on the Supreme Court Action as Petitioner received no relief in that action based on its position
Respondent argues that petitioner is judicially estopped from now claiming that there is a landlord tenant relationship between the parties, pursuant to which rent is due, based on the contrary position taken by petitioner in the Supreme Court action. Petitioner argues that judicial estoppel does not apply, as Judge Lebovits did not accept their argument and in fact ruled that petitioner is still in possession by virtue of the occupancy of its subtenant. The court agrees with petitioner that judicial estoppel does not apply as petitioner obtained no relief based on its arguments in the Supreme Court Action.
The doctrine of judicial estoppel or the doctrine of inconsistent positions ‘precludes a party who assumed a certain position in a prior legal proceeding and who secured a judgment in his or her favor from assuming a contrary position in another action simply because his or her interests have changed’ ” (Jones Lang Wootton USA v LeBoeuf, Lamb, Greene & MacRae, 243 AD2d 168, 176 [1998], lv dismissed 92 NY2d 962 [1998], quoting Ford Motor Credit Co. v Colonial Funding Corp., 215 AD2d 435, 436 [1995]). Because (petitioner) did not secure any formal grant of relief based upon (its) prior statement, it does not implicate the doctrine of inconsistent positions (Lowinger v Lowinger, 303 AD2d 723, 724 [2003]; cf. All Terrain Props. v Hoy, 265 AD2d 87, 93 [2000]); Maas v Cornell Univ., 253 AD2d 1, 5 [1999], affd 94 NY2d 87 [1999]). Rather, the statement constitutes an informal judicial admission that is not conclusive but “is merely evidence of the fact or facts admitted” (Prince, Richardson on Evidence § 8-219, supra), “the circumstances of which may be explained at trial” (Bogoni v Friedlander, 197 AD2d 281, 293 [1994], lv denied 84 NY2d 803 [1994]).Baje Realty Corp. v. Cutler, 32 AD3d 307, 310 (2006).
Petitioner's Position That the Lease Has Been Terminated And That Respondent Is a Month to Month Tenant Mandates Dismissal of this Proceeding
As noted above, respondent's sixth affirmative defense is that upon termination of petitioner's overlease between the parties the sublease was terminated by operation of law. Respondent moves for summary judgment based in part on this defense. Petitioner in its opposition papers conceded this defense.
The petition purports to seek rent pursuant to an extant lease. However, petitioner in its motion papers takes a position contrary to that of the pleadings filed in this proceeding, and now alleges that the lease between petitioner and respondent was terminated by operation of law, and that respondent is in occupancy as a month to month tenant.
It is well settled that absent a lease, petitioner may not maintain a nonpayment proceeding. RPAPL § 711(2) allows a party to maintain a summary nonpayment proceeding where “(t)he tenant has defaulted in the payment of rent, pursuant to the agreement under which the premises are held ․”
Ira Meister, a managing agent for petitioner asserts in his affidavit in opposition that the lease between the parties has terminated and respondent is a month to month tenant. This argument is also put forward by his attorneys in the opposition papers. Petitioner also acknowledges that respondent has not paid petitioner rent since at least September 2019. So it is clear that, absent the lease, there is no agreement between the parties for ongoing payment of rent.
In a month to month tenancy there is no agreed upon rental, and no basis for holding respondent liable for rent reserved in the terminated lease (Krantz & Phillips, LLP v Sedaghati 2003 NY Slip Op 50032(U); see also 1400 Broadway Associates v Henry Lee & Co. 161 Misc 2d 497).
If it is petitioner's position that there is no valid lease agreement between the parties, then petitioner's remedy is to commence a holdover proceeding and seek fair value use and occupancy.
As noted by respondent in its reply papers, this new theory also requires dismissal pursuant to RPAPL § 741, which requires that the petition set forth the facts upon which the proceeding is based. Nowhere in its pleading does petitioner assert that respondent is a month to month tenant, or that the lease between the parties was terminated by operation of law.
While the motion by respondent was not made on this basis as petitioner took this
position for the first time in this proceeding in its opposition papers a court must search the record on a motion for summary judgment and grant relief where appropriate (99 Realty Co. v. Eikenberry, 242 AD2d 215, 217), particularly within the context of a summary proceeding (CPLR § 409(b)).
CONCLUSION
Based on the foregoing, respondent's motion for summary judgment is granted and the proceeding is dismissed without prejudice.
This constitutes the decision and order of this Court.
Sabrina B. Kraus, J.
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