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Civil Court, City of New York.

STAHL ASSOCIATES LLC, Petitioner-Landlord, v. Bert ALEXANDERSSON, Respondent-Tenant, Karen Murphy, “John Doe” and “Jane Doe,” Respondents-Undertenants.

L & T 80665/18

Decided: February 24, 2020

For Petitioner: Ingram Yuzek Gainen Carroll & Bertolotti, LLP, Shari S. Laskowitz, Esq., 150 E. 42nd St., 19th Floor, New York, NY 10017, (212) 907-9696 For Respondent: Housing Conservation Coordinators, Inc., Hiram J. López-Rodriguez, Esq., Lynn Horowitz, Esq., 777 10th Ave., New York, NY 10019, (212) 541-5996, ext. 17

Recitation as required by CPLR 2219(a), of the papers considered in the review of the respondent's motion to dismiss and petitioner's cross-motion for summary judgment and/or to dismiss respondent's affirmative defenses and counterclaims.

Papers Numbered

Notice of Motion & Affirmation in Support 1

Notice of Cross-Motion, Affirmation in Support, Affidavits & Memorandum of Law 2

Affirmation in Opposition to Cross-Motion and Reply 3

Affirmation in Further Support of Cross-Motion 4

Respondent's Sur-Reply Affirmation in Further Opposition to Cross-Motion 5

Sur-Sur-Reply Affirmation of Shari S. Laskowitz 6

Upon the foregoing cited papers, the Decision/Order of this Court on these consolidated motions is as follows:

Petitioner Stahl Associates LLC brings this holdover petition seeking to evict respondent Bert Alexandersson from the rent-stabilized subject premises due to alleged illegal subletting and profiteering. The petition and the incorporated notice of termination allege that respondent sublet his apartment for approximately ten years and charged the subtenant, Barbo Ehnborn, more rent than is allowed under the Rent Stabilization Code. Petitioner's pleadings go on to allege that respondent is currently overcharging a separate subtenant, Karen Murphy, now that Ms. Ehnborn has vacated the subject premises and that respondent failed to request written consent of the landlord for either of these sublets.

Respondent now moves the court to dismiss this petition on two grounds. First, respondent argues that the petition fails to state a cause of action because petitioner failed to serve a notice to cure prior to terminating the tenancy. Second, respondent moves to dismiss the petition because the predicate notice fails to allege facts necessary to establish a ground for eviction. Petitioner cross-moves for summary judgment on its illegal sublet cause of action and/or to dismiss respondent's affirmative defenses and counterclaims.

Respondent's Motion to Dismiss: Failure to Serve a Notice to Cure

The court will first consider the branch of respondent's motion seeking to dismiss the petition because petitioner did not serve a notice to cure prior to terminating the tenancy. Petitioner's “Seven (7) Day Notice of Termination” enumerates four different grounds that it alleges allow it to terminate respondent's tenancy. Petitioner specifically alleges that respondent violated § 226-b of the Real Property Law, and §§ 2525.6 (a), (b), and (c) of the Rent Stabilization Code.

RPL § 226-b and RSC § 2525.6 (a) are easiest understood when considered together. RPL § 226-b only allows a tenant to sublease an apartment when it has either obtained the written consent of the landlord or attempted to obtain the landlord's written consent as proscribed. RSC § 2525.6 (a) extends RPL § 226-b's conditional allowance of subletting to rent stabilized apartments, but adds that a sublettor of a rent stabilized apartment must maintain the subject unit as his or her primary residence during the course of the sublet and must intend to occupy the unit as such at the end of the sublease. Landlords seeking to evict tenants for violations of these statutes are required to serve a notice to cure before terminating the tenancy. RSC § 2524.3(a), see also Tribeca Equity Partners, L.P. v. Jacobson, 45 Misc 3d 132[A] (AT 1st Dep't, 2014); Hudson Assoc. v. Benoit, 226 AD2d 196 (1st Dep't 1996). As petitioner failed to serve the requisite notice to cure prior to initiating these proceedings, petitioner is foreclosed from maintaining this holdover proceeding insofar as it alleges a violation of RPL § 226-b and RSC § 2525.6 (a).

RSC § 2525.6 (c) forbids the sublet of a rent-stabilized apartment for more than two years in a four-year period. Here, again, the landlord is required to serve a notice to cure prior to terminating the tenancy, and the mere allegation that the sublet exceeded two years does not excuse the service of a notice to cure. Graham Court Owners Corp. v. Taylor, 49 Misc 3d 7 (AT 1st Dep't 2015). As such, Petitioner is also foreclosed from pursuing this holdover proceeding based on alleged violations of RSC § 2525.6 (c).

Holdovers brought for alleged violations of RSC § 2525.6(b) allege that the tenant has sublet the apartment and has charged more than the legal regulated rent to the subtenant (plus 10% if the apartment is furnished.) Because the Rent Stabilization Code was enacted, in part, to forestall profiteering of the limited housing available in New York City, and because rent gouging defrauds both the landlord and the subtenant, a violation of violations of RSC § 2525.6 (b) is not capable of cure. Continental Towers Ltd. Partnership v. Freuman, 128 Misc 2d 680, 681 (AT 1st Dep't, 1985). Petitioners seeking to evict under RSC § 2525.6 (b) are therefore not required to serve a notice to cure prior to terminating the tenancy. Goldstein v. Lipetz, 150 AD3d 562, 563 (1st Dep't 2017), Graham Court Owners Corp. v. Taylor, supra. Petitioner is therefore allowed to proceed with this claim despite not serving a notice to cure.

Accordingly, the court grants one branch of respondent's motion to dismiss and denies the other branch of the motion to dismiss. Petitioner may maintain its claim that respondent sublet the subject unit and profiteered from the sublet, but petitioner's claimed violations of RPL § 226-b and RSC §§ 2525.6 (a) and (c) must be dismissed as petitioner did not serve a notice to cure related to those claims.

Respondent's Motion to Dismiss: Inadequate Termination Notice

Respondent also moves to dismiss the petition because he argues that the termination notice fails to state particularized facts to support its illegal sublet cause of action. Rent Stabilization Code § 2524.2 (b) provides in pertinent part that “[e]very notice to a tenant to vacate or surrender possession of a housing accommodation shall state the ground under section 2524.3 ․ upon which the owner relies for removal or eviction of the tenant, the facts necessary to establish the existence of such ground, and the date when the tenant is required to surrender possession.” Therefore, a notice of termination that only states the legal grounds for an eviction without setting forth particular facts on which the proceeding is based is insufficient as a matter of law and cannot serve as a predicate for an eviction proceeding. United Hay LLC v. Heeg, 65 Misc 3d 150[A] (AT 1st Dep't, 2019); see also Hirsh v. Stewart, 63 AD3d 74, 77 (1st Dep't 2009); Kaycee W. 113th Street Corp. v. Diakoff, 160 AD2d 573, 574 (1st Dep't 1990). The requirement of alleging “facts necessary to establish the existence” (RSC § 2524.2 [b]) of the ground for eviction is important because it “.ensures that a tenant will be informed of the factual and legal claims that he or she will have to meet and enables the tenant to interpose whatever defenses are available.” MSG Pomp Corporation v. Jane Doe, 185 AD2d 798 (1st Dep't 1992). Because a valid notice to cure and notice of termination (i.e., one which sets forth sufficient facts) is a condition precedent to the commencement of an eviction proceeding, dismissal of the petition upon which the notice is predicated is required where the notice is deficient. Chinatown Apts. v. Chu Cho Lam, 51 NY2d 786, 788 (1980).

With regard to the sole remaining claim of profiteering through sublet in violation of RSC § 2525.6 (b), the court finds that petitioner has clearly stated facts sufficient to enable him to interpose the defenses available. The notice of termination states the names of the subtenants allegedly sublet to, the amount of rent charged to the first subtenant, Barbo Ehnbom, the period of time during which the sublet allegedly occurred, and that petitioner's agents have not seen the respondent in or around the premises. Moreover, respondent fails to set forth any material allegations within landlord's knowledge that it failed to include in the notice. United Hay LLC v. Heeg, supra. As such, this branch of respondent's motion to dismiss is denied.

Petitioner's Summary Judgment Motion

Petitioner moves for summary judgment as a matter of law. Summary judgment is appropriate where the movant establishes the claim by tender of evidentiary proof in admissible form sufficiently to warrant the court as a matter of law to direct judgment in its favor. Rodriguez v. City of New York, 31 NY3d 312, 317 (2018); Friends of Animals, Inc. v. Associated Fur Manufacturers, Inc., 46 NY2d 1065 (1979). The failure to make such a prima facie showing requires denial of the motion regardless of the sufficiency of the opposing papers. Alvarez v. Prospect Hospital, 68 NY2d 320 (1986).

Part of petitioner's prima facie burden of proof in the context of summary judgment is standing to maintain the proceeding. In support for the claim, paragraph one (1) of the petition states that, “Stahl Associates LLC ․ is the landlord of the subject premises ․” Petitioner attaches to the motion a copy of a lease dated April 28, 1975 between 360 East 55th Corporation and the respondent. (Exhibit 1). In opposition to the petitioner's cross-motion, respondent attaches the last deed filed with the New York City, Department of Finance, Office of City Register for the subject building showing that the subject building ownership was transferred from petitioner Stahl Associates to 360 East 55th Street Corporation on January 12, 2014. (Exhibit A).

Petitioner therefore claims to be the landlord of the subject premises but cannot show that it entered into a lease with the respondent or that it is listed as owner on the last deed filed for the subject premises. The term “landlord” is understood in the context of a summary proceeding to mean one who has the authority or right to transfer an interest in real property and also has transferred an interest in that real property via a lease. Redhead v. Henry, 160 Misc 2d 546, 547 (Civ. Ct., Kings County 1994). Here, petitioner cannot show privity of estate with the tenant or privity of contract, and its motion for summary judgment must be denied because petitioner failed to prove its prima facie case.

Petitioner argues that the court should look past the last deed of record and find that a previous deed dated July 1, 1975 is the true deed of record. This deed conveyed the property to petitioner. Under New York law, courts of limited jurisdiction do not have the authority to resolve questions of title. Doris W. Ray Irrevocable Tr. v. Ray, 2018 WL 704385, at *3 (N.D.NY Feb. 2, 2018), appeal dismissed (2d Cir. Ct., Mar. 30, 2018). The question of title cannot be raised in a summary proceeding which involves a court of limited jurisdiction. Mahshie v. Dooley, 48 Misc 2d 1098 (Sup. Ct., Onondaga Cty 1965). Summary proceedings never determine the question of title. They only involve the question of possession. Courts of limited jurisdiction like the housing court have authority to award possession of property to litigants, but the court must be assured that the party asking for possession is legally entitled to such possession. Any attempt to quiet the title, however, would be outside of the court's jurisdiction. In sum, the housing court does not have subject matter jurisdiction to determine title of property. Drake v. Cunningham, 127 A.D. 79 (2nd Dep't 1908).

Therefore, it is commonly and correctly said that in summary proceedings the question of title is not involved, but that the question is whether the conventional relation of landlord and tenant exists, and who has the right of possession under that relationship. Drake v. Cunningham, supra. The rule is clear that in such a proceeding an adjudication is limited to right of possession, not a determination as to title of the property in question. Porter v. Newton, 141 Misc. 760 (Sup. Ct., Oswego Cty 1931). In order to determine whether a petitioner has the right to possession, the court will look to the last deed of record in order to establish privity of estate, but it cannot do as petitioner asks and find the last title of record is null and void. Petitioner must avail itself of a court of general jurisdiction in order to quiet title, and it will very likely be foreclosed from obtaining possession of the subject property until it has done so. Accordingly, petitioner's motion for summary judgment is denied, as it has failed on the papers to establish its prima facie burden in this holdover proceeding.

Petitioner's Motion to Strike Affirmative Defenses and Counterclaims

Petitioner also moves to dismiss respondent's first, second and third affirmative defenses and the first, second and third counterclaims in respondent's answer.

Petitioner's moves to strike respondent's first affirmative defense of “denial.” However, petitioner's arguments for striking this defense are unavailing. Respondents may deny the claim asserted against him and if a court were to strike such a denial, that court would effectively deprive the respondent of his right to lodge a defense at trial. Indeed, if the court were to grant petitioner's motion to strike respondent's general denial, the court would in effect be forcing the respondent to accept the accusations of the petition as true. As such, respondent's general denial defense remains and petitioner's motion to strike the first affirmative defense is denied.

Petitioner also seeks to strike respondent's second affirmative defense asserting a cure. Appellate courts have held that an illegal sublet with profiteering cannot be cured. Continental Towers Ltd. Partnership v. Freuman, supra. The court is aware of a line of cases wherein tenants were allowed to cure alleged profiteering sublets (see e.g. Cambridge Dev., LLC v. Staysna, 68 AD3d 614, 615 (1st Dep't 2009); 261/271 Seaman Ave. LLC v. Jordaan, 65 Misc 3d 141(A) (AT 1st Dep't 2019); Roxborough Apartments Corp. v. Becker, 11 Misc 3d 99, 100 (AT 1st Dep't 2006)), but those cases are properly understood as allowing tenants to cure when the trial court has found that the alleged behavior did not rise to the level of profiteering. Accordingly, petitioner's request to strike the respondent's second affirmative defense of cure must at this procedural procedure be granted subject to the trial court's ultimate determination on whether or not profiteering occurred.

Another request by petitioner is that the court strike respondent's third affirmative defense and first and second counterclaims related to petitioner's alleged breach of the warranty of habitability and order to correct. While the affirmative defense of breach of the warranty of habitability does not serve as a defense to a summary holdover proceeding (See, e.g., Blumenthal v. Chwast, 2003 NY Slip Op. 50029(U) (AT 1st Dep't 2003)) it does serve as a defense to claims for use and occupancy. 1691 Fulton Ave. Assoc. L.P. v. Watson, 55 Misc 3d 1221(A) (Civ. Ct. Bronx Cty. 2017); Ruradan Corp v. Natiello, 21 Misc 3d 1129[A] (Civ Ct NY Cty. 2008); 47 Thames Realty, LLC v. Robinson, 16 Misc 3d 1105[A], (Sup Ct Kings Co 2007); King Enterprises v. Mastro, 2001 NY Slip Op 40162[U] (Civ Ct NY Cty 2001). As petitioner raises a claim for use and occupancy in the petition, respondent is entitled to maintain his warranty of habitability defense and counterclaim. Accordingly, the request to strike the third affirmative defense and first and second counterclaims is denied.

Lastly, petitioner moves to strike the third counterclaim for attorney's fees. Petitioner acknowledges that RPL § 234 would entitle respondent to reciprocal rights to collect attorney's fees, under an attorney's fees lease provision, if he prevailed. However, petitioner seeks to strike such attorney's fees counterclaim, under the presumption that it will prevail with its summary judgment motion. Since this court has denied petitioner's motion for summary judgment, its motion to strike the third counterclaim for attorney's fees is denied.

The matter is restored to the Part F calendar, Room 830 at 9:30 a.m. on April 2, 2020 for all purposes including trial.

ORDERED that respondent's motion to dismiss is granted in part and denied in part.

ORDERED that petitioner's cross-motion for summary judgment is denied.

ORDERED that petitioner's cross-motion to strike affirmative defenses and counterclaims is granted in part and denied in part.

This is the decision and order of the Court, copies of which are being emailed and mailed to those indicated below.

Frances A. Ortiz, J.

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