AERO MANAGEMENT CO., Petitioner, v. Mansour MOGHADASIAN, “John Doe” and “Jane Doe”, Respondents.
Upon the foregoing cited papers, the Decision/Order on this motion is as follows:
PROCEDURAL HISTORY
In this summary holdover proceeding, Petitioner seeks to recover possession of the subject cooperative unit, apartment 3F at 105-25 64th Avenue, Forrest Hills, NY 11375, from Respondent Mansour Moghadasian (“Respondent”) based upon expiration of the lease term.
Petitioner alleges that, on February 26, 2019, Respondent was served with a “Thirty Day Notice to Terminate” requesting surrender of possession by March 31, 2019, after Respondent refused to sign a renewal lease offered to him on January 14, 2019.
The petition describes the subject premises as, “not subject to rent control or the Rent Stabilization Law․[since] respondents are subtenants of the proprietary lessee and entered into possession subsequent to the conversion of the building to cooperative ownership”. The petition also alleges that outstanding use and occupancy in the amount of $16,175.00, plus attorneys' fees, is due and owing.
This proceeding first appeared on the Part A calendar on April 16, 2019, at which time Respondent appeared by his former counsel (The Law Offices of Ari Mor, Esq. P.C.). On that date, the proceeding was adjourned to May 20, 2019 and then to June 25, 2019. In the interim, Respondent, by his former counsel, filed an answer alleging several affirmative defenses, including that: (1) the petition fails to state a cause of action, in that the predicate notice was not properly served; (2) service of the petition was improper; therefore, the court lacks personal jurisdiction over Respondent; (3) the action is retaliatory in nature pursuant to RPL § 223-b; (4) Petitioner waived the right to initiate the proceeding; and (5) Petitioner failed to offer a proper renewal lease under General Business Law § 352-eeee known as “the Martin Act”, which is a condition precedent. In addition, the answer includes counterclaims for legal fees, rent overcharge, harassment and declaratory relief regarding whether Respondent is protected by the Rent Stabilization Law or, alternatively, entitled to a proper renewal lease under the Martin Act.
On June 25, 2019, the proceeding was adjourned to August 13, 2019, and then to September 20, 2019, for a Traverse hearing on the predicate notice. On September 20, 2019, the proceeding was again adjourned to October 16, 2019 for The Law Offices of Ari Mor, Esq. P.C.'s motion to withdraw as Respondent's counsel. The motion was granted, and the proceeding was adjourned to November 19, 2019 for “Traverse, Trial, Inquest”. Said counsel was directed to serve Respondent with a copy of the Order granting the motion; and the court file contains counsel's affirmation of service of the Order.
On November 19, 2019, an Inquest was conducted, and a Final Judgment of possession was issued (Guthrie, J.) against all respondents. Execution of the warrant of eviction was stayed ten days. On January 15, 2020, Respondent filed a pro-se Order to Show Cause requesting a stay of eviction. That motion was denied on January 24, 2020 for lack of proof of service upon Petitioner. When denying the motion, the court directed that Adult Protective Services (“APS”) be notified prior to eviction. On the same day, Respondent's new counsel (Singh & Rani, LLP) filed a notice of appearance and the instant Order to Show Cause seeking vacatur of the default judgment resulting from the Inquest on November 19, 2019, pursuant to CPLR § 5015(a).
In the instant Order to Show Cause, Respondent, who is in his 70s, argues that the default judgment should be dismissed, since he has a justifiable excuse for failing to appear at the Inquest, in that he did not know that his first attorney was relieved or that there was a future court date. Alternatively, he avers that any confusion as to dates should be excused due to his age. Additionally, Respondent contends that he has a meritorious defense to this proceeding, in that he argues that the petition must be dismissed based upon Petitioner's failure to allege that the apartment is subject to the Martin Act, which affords certain rights to cooperative non-purchasing free market tenants that rent from a sponsor or their assignees.
Upon vacatur of the default judgment, Respondent seeks dismissal of the petition on the basis that the petition is defective for failing to allege his protected tenancy status under the Martin's Act. Respondent asserts that he properly declined the lease renewal offered by Petitioner as obligated under the Martin's Act, since the rent increase from $2,000.00 to $2,700.00 per month (a 35% increase) is so dramatic as to “shock the conscious”, thereby rendering the increase unconscionable, since Social Security benefits is the sole source of income for both he and his wife, who is also a senior citizen. Respondent also renews his argument that he was never served with the predicate notice and, as such, the petition fails to state a cause of action.
In opposition, Petitioner argues that Respondent was served with the predicate notice. As proof, Petitioner attaches the “Thirty Day Notice to Terminate” served on Respondent. Petitioner further argues that a renewal lease was offered to Respondent in accordance with the Martin Act. Petitioner asserts that a prior matter (L & T Index# 69774/18) was discontinued by them specifically so they could offer the renewal lease. However, Petitioner did not submit a copy of the stipulation of discontinuance in the prior matter or state the impact that the prior matter had on Respondent's rights under the Martin Act, if any. Notably, Petitioner also did not submit an affidavit from someone with personal knowledge of the facts or provide a copy of the renewal lease offered. Moreover, no evidence was submitted with respect to the conversion date of the cooperative apartment, the status of Petitioner as a shareholder/owner or any terms of the renewal lease offered.
DISCUSSION
Default Vacatur
The longstanding policy of the courts has been to decide cases on their merits, absent significant prejudice to Petitioner. Moran v. Rynar, 39 AD2d 718 (2nd Dept. 1972) and Chevalier v. 368 E. 148th St. Assoc., LLC, 80 AD3d 411 (1st Dept. 2011).
CPLR § 5105(a)(1) allows the court to vacate judgments granted on default, where there is shown to be a reasonable excuse for the default and a meritorious defense to the underlying action. Gray v. B.R. Trucking Co., 59 NY2d 649 (1983); Belesi v. Gifford, 269 AD2d 552 (2nd Dept. 2000); Revlom Associates LLC v. Raymond, 2019 NY Slip Op. 51872U (App. Term 1st Dept. 2019).
Herein, Respondent argues that he has a reasonable excuse for his default. In his supporting affidavit, Respondent states that he is seventy years old, has lived in the subject apartment with his wife, who is also a senior citizen, for approximately thirty years and receives a sole income fixed by the U.S. Social Security Administration. Respondent further claims that he was unaware of the court dates scheduled in this matter — or that he was required to appear for them -- claiming he did not receive the information from his previous attorney. (Notably, it appears that when he appeared prose in court, Respondent may have presented some indicia of an inability to adequately propound a defense or understand the nature of the proceedings, since the Court felt additional support services were warranted to assist Respondent in this proceeding by ordering Adult Protective Services (“APS”) to be notified prior to eviction in the January 24, 2020 (Guthrie, J) Order stemming from Respondent's pro-se Order to Show Cause).
Respondent also argues that he has a meritorious defense to this action, in that the petition fails to allege that the apartment is subject to the Martin Act. General Business Law § 352-eeee, known as “The Martin Act”, was enacted to afford protection to non-purchasing free market renters and maintain affordable rental units. It was designed to protect free-market non-purchasing tenants from “unconscionable increases beyond ordinary rentals for comparable apartments during the period of their occupancy”, thereby effectively “forcing out” the renting tenant. In Paikoff v. Harris, 185 Misc 2d 372 (App Term 2nd Dept. 1999), the Appellate Term held that landlords are prohibited from demanding above-market rents from non-purchasing tenants. That is not to say that rent increases are not allowed — even in large scale; however, the increases must be consistent with the market rates in the area. While the General Business Law specifically allows for evictions based upon “non-payment of rent, illegal use or occupancy of the premises, refusal of reasonable access to the owner, or a similar breach by the tenant of his obligations”, tenants are protected from unconscionable rent increases. General Business Law § 352-eeee(2)(c). Rights under the Martin Act are significant and promote the public interest in protecting a certain class of tenants, who are not otherwise covered by rent regulation. Its purpose is akin to those in rent regulatory schemes. Although “a [non-purchasing] tenant's failure or refusal to sign a renewal lease constitutes a ground for eviction under the Martin Act because it constitutes a “breach by the non-purchasing tenant of his obligations to the owner of the dwelling unit [under] General Business Law § 352-eeee(2)(c)(ii)” [MMB Apartments, LLC v. Guerra, 45 Misc 3d 132A (App. Term 2nd Dept. 2014) ], such tenants are entitled to cure a refusal to renew a lease based upon a challenge of unfairness, if the renewal lease rent rate is ultimately determined to be fair, and not unconscionable, and in keeping with market rates given the Martin Act's primary purpose of affording non-purchasing tenants with the right to a proper lease renewal. In light of the foregoing, and since Petitioner has not shown any significant prejudice, this Court finds that Respondent has demonstrated both an excusable default and a meritorious defense sufficient to satisfy the requirements of CPLR § 5015(a). As such, the default judgment of possession and warrant of eviction entered against Respondent are hereby vacated.
Failure to Comply with RPAPL § 741
RPAPL § 741(2) requires that a petition “state the respondent's interest in the premises and his relationship to petitioner with regard thereto.”
In its opposition papers, Petitioner impliedly concedes that it offered Respondent a renewal lease in keeping with the Martin Act. However, the petition fails to plead that status of the subject premises, to wit: that the Martin Act applies to the subject premises.
In Kew Gardens Hills Apt. Assoc., L.P. v. Jeffers, 2003 NY Slip OP 51132U (App. Term 2nd Dept. 2003), the Appellate Term reversed the lower court and vacated the improvidently entered into stipulation by Respondent because the failure of the petition to allege, in violation of RPAPL § 741, that the Martin Act applied resulted in an unknowing waiver of rights to assert this defense. See also, Matter of Volunteers of Am. of Greater NY, Inc. v. Almonte, 17 Misc 3d 57 (App. Term 2nd Dept. 2007); PCMH Crotona, L.P. v Taylor, 57 Misc 3d 1212A (Civ. Bronx 2017).
Herein, although the petition states that the subject premises are not governed by the Rent Stabilization Law, it does not state that the premises are, instead, governed by the Martin Act. Petitioner has neither explained why the petition omits any reference to the applicable Martin Act nor cross-moved to amend the pleadings. Therefore, the petition must be dismissed.
CONCLUSION
Accordingly, Respondent's Order to Show Cause is granted to the extent that the default judgment and warrant are vacated; and, upon vacatur, the petition is dismissed based upon Petitioner's failure to properly allege the applicability of the protections of the Martin Act as required by RPAPL § 741(2).
This constitutes the Decision and Order of the Court.
Kimon C. Thermos, J.
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