BOP MW RESIDENTIAL MARKET LLC v. LIN (2023)

Recitation, as required by CPLR 2219 (a) of the papers considered in review of this motion by NYSCEF Doc Nos: 18-40.

PROCEDURAL HISTORY AND BACKGROUND

This is a holdover summary proceeding brought against respondent in an unregulated apartment based upon a 90-day notice to respondent that the lease would not be renewed. The premises sought to be recovered is apartment PH3D in the building located at 435 West 31st Street, New York, New York. The proceeding was commenced in October 2020. (NYSCEF Doc No. 1, petition.)

Respondent has moved to dismiss the proceeding on two grounds. First, respondent argues that the proceeding must be dismissed because petitioner accepted Emergency Rental Arrears Program (“ERAP”) in the September 2022 after ERAP application number A5NYH was approved. Citing to L 2021, c 417, part C, subpart A, § 9 (2) (iii) and § 9 (2) (d) (iv), respondent contends that the proceeding must be dismissed because the notice of termination which expired on August 31, 2020 has been vitiated by petitioner's intent to reinstate her tenancy. Second, respondent posits that because petitioner failed to inform the court of a pending ERAP application as required by Administrative Order (“AO”) 244/21, the proceeding must be dismissed. (See Admin Order of Chief Admin Judge of Cts AO 244/21.)¹

Petitioner opposes the motion on the basis that respondent's tenancy was not reinstated and no new tenancy was created. Petitioner argues that respondent misapprehends the holdings in the decisions she cites, or, alternatively, that those cases should not be followed. Petitioner notes that this is not a holdover based on nuisance, so the so-called “nuisance exception” which requires dismissal of a proceeding if a petitioner cannot prove an ongoing nuisance does not apply.

In reply, respondent argues that her argument is unique and, therefore, distinguishable from the arguments made in decisions that have held that acceptance of ERAP funds does not vitiate a notice of nonrenewal in a holdover proceeding based on the natural expiration of a lease. Respondent contends, in essence, that she cannot be evicted based on the prior termination of her lease because she is the beneficiary of an intervening event which created a statutory tenancy of one year for a defined monthly rent.

DISCUSSION

Respondent's Motion to Dismiss Based on Acceptance of ERAP Funds 2

The consequences to a landlord when it accepts ERAP monies as set forth in L 2021, c 56, part BB, § 9 (2) (d), as amended by L 2021, c 427, part C, subpart A, § 5 are, in relevant part, as follows:

“Acceptance of payment for rent or rental arrears from this program ․ shall constitute agreement by the recipient landlord or property owner ․ to not increase the monthly rent due for the dwelling unit such that it shall not be greater than the amount that was due at the time of application to the program for any and all months for which rental assistance is received and for one year after the first rental assistance payment is received (emphasis added)[.]” (Id. at [iii].)

“Acceptance of payment for rent or rental arrears from this program ․ shall constitute agreement by the recipient landlord or property owner ․ not to evict for reason of expired lease or holdover tenancy any household on behalf of whom rental assistance is received for 12 months after the first rental assistance payment is received (emphasis added)[.]” (Id. at [iv].)

If a holdover based on nuisance or objectionable behavior is pending against a respondent whose landlord has accepted ERAP monies, L 2021, c 417, part C, subpart A, § 9-a (5) (ii) provides:

“If the petitioner fails to establish that the tenant intentionally caused significant damage to the property or persistently and unreasonably engaged in such behavior ․ [and] if the landlord has accepted payment of rental arrears and agreed not to evict the tenant pursuant to paragraph (d) of subdivision two of section nine of this act, the court shall dismiss the proceeding with prejudice (emphasis added).” (L 2021, c 417, part C, subpart A, § 9-a [5] [ii].)

Regarding the decisions cited by respondent, the court distinguishes them as follows:³ In Gurevitch, unlike here, the landlord had evicted a tenant post-judgment during the pendency of an ERAP appeal; in Rubenstein, unlike here, the landlord defaulted on the tenant's cross-motion to dismiss the proceeding on the basis of acceptance of ERAP funds and the motion was granted on the landlord's default; in Gilkes, the judge dismissed the proceeding on the basis that the ERAP statute “precludes a landlord who has received ERAP funds from evicting the tenant in a holdover based upon an expired lease or termination of a month to month tenancy for twelve (12) months after receipt of the first rental assistance payment.” Citing to L 2021, c 56, part BB, § 9 (2) (d), as amended by L 2021, c 427, part C, subpart A, § 5 (d) (iv), but with scant other explanation or analysis, the court concluded that the notice of termination was vitiated. This court notes that the Gilkes decision was issued from the bench, and no opposition had been filed by the respondent. Thus, the court cannot determine the relevance or persuasive value of the Gilkes decision vis-à-vis respondent's argument in the instant motion.

Previously this court has rejected the argument that acceptance of ERAP funds during the pendency of an end-of-lease holdover vitiates the notice of termination. (See Feuerman v Hugo, 77 Misc 3d 171 [Civ Ct, New York County 2022].) In Hugo, the tenant did not argue that a new tenancy had been created, rather the tenant proffered the common argument that a notice of termination is vitiated by the acceptance of rent during the “window period” between expiration of a notice of termination and commencement of the proceeding.⁴ The tenant's attorney in Hugo cited to Gurevitch, Rubenstein, and Gilkes all of which, as here, the court distinguished.

In Hugo, this court found that a landlord is entitled to accept funds for use and occupancy after commencement of a holdover proceeding pursuant to RPAPL 711 (1). Further, the argument failed because, like here, none of the earmarked ERAP funds represented rent for any of the months that fell within the window period. Further, it was determined that had the legislature intended acceptance of ERAP funds during litigation to require dismissal, or had intended that an end-of-lease holdover proceeding must be dismissed if a landlord accepts ERAP funds, the legislature could have so specified. Instead, the only instance where the legislature explicitly requires dismissal after acceptance of ERAP funds is when the landlord does not sustain its burden in the context of a holdover proceeding based on nuisance. (L 2021, c 417, part C, subpart A, § 9-a [5] [ii]; see also Park Cent. I LLC v Price, 2022 NY Slip Op 31909 [U] [Civ Ct, Bronx County 2022] [“If the Legislature had intended for non-nuisance proceedings to be dismissed if a petitioner accepts the ERAP funds, it would have explicitly stated so as it did in § 9-a. It did not”].)

However, respondent here makes a more interesting and nuanced argument. The court is asked to look past the plain language of the statute and find that respondent's tenancy has been reinstated or created anew. Respondent's reasoning is that, while concededly the ERAP statute does not explicitly so state, the requirement that a landlord not evict a tenant for 12 months after acceptance of ERAP funds, when read together with the requirement that the landlord charge only a set sum of rent for that year, either creates a landlord-tenant relationship, or re-establishes tenancies that were previously terminated. Respondent suggests that 178 Broadway Realty Corp. v Charles, 75 Misc 3d 937 (Civ Ct, Kings County) holds that acceptance of ERAP funds imposes a tenancy upon petitioner. However, the Charles court did not reach that “speculative hypothesis” because the “sole issue [before the court was] whether the ERAP stay must be continued,” and no ERAP monies had been accepted either before or during the course of that litigation.

While more apropos factually, the court declines to follow JSB Props. LLC v Yershov, 77 Misc 3d 235, 2022 NY Slip Op 22294 (Civ Ct, New York County 2022). Yershov was an unregulated tenant whose lease had expired. He applied for ERAP, was approved, and the landlord accepted the funds. Later, when the landlord sued Yershov for nonpayment of rent, Yershov moved to dismiss the case after trial on the basis that he was a holdover tenant who was not in possession pursuant to a lease. The court found that while “[n]ormally, if a tenant remains in possession after a lease expires with no new agreement as to a rental amount, a landlord's remedy is to obtain possession via a holdover proceeding․ [However,] a successful ERAP application precludes that remedy.” (Id. *4-5.) Yershov stands for the proposition that a landlord who is required to house the beneficiary of ERAP funds for one year cannot be expected to allow a person “to live in their apartments for free for a year without ․ having a remedy.” (Id. *5.) The Yershov court found that the legislature could not have intended that the acceptance of ERAP funds and the attendant restrictions on eviction would “deprive a landlord of a remedy if a tenant without a written lease does not pay rent in the year after a landlord's acceptance of ERAP benefits.” (Id.) For the foregoing reasons, the Yershov court found that the landlord had a cause of action for nonpayment of rent.

In Yershov, when the landlord accepted ERAP funds, it had not already terminated Yershov's tenancy. After the acceptance of ERAP funds, Yershov paid no rent. Because Yershov applied for ERAP, and the landlord accepted the ERAP money, the court imputed a desire and intention on the part of both parties to enter into a one-year landlord-tenant-like relationship; as such, the court found that the landlord must have a remedy for nonpayment of rent during the mandatory one-year period of the tenant's occupation. Here, petitioner avers that it did not intend to abandon litigation of the pending holdover proceeding, nor did it intend to reinstate or create a tenancy. Petitioner simply sought reimbursement for use and occupancy owed which it is entitled to under RPAPL 711 (1) once a proceeding is commenced.⁵

For the following reasons, the court does not interpret the statute as broadly as respondent urges. Respondent herein received the full benefit of a diminution of use and occupancy that petitioner may seek in another forum, and a stay of her eviction for one year which has now expired. Respondent has no lease, and, as the Yershov court noted, petitioner would be relegated to the very kind of proceeding already pending before this court. That petitioner received a benefit as well should not be read to impose another restriction on a landlord's use and possession of their property. The purpose of the statute was to prevent as many evictions as possible during the maelstrom at the height of the pandemic. The purpose of ERAP was not to reinstate expired tenancies or create new tenancies.

Finally, petitioner is correct that failure to comply with AO 244/21 carries no penalties, and certainly does not provide for dismissal of a proceeding if petitioner fails to comply with the order.

CONCLUSION

Accordingly, for the foregoing reasons, it is

ORDERED that respondent's motion to dismiss is DENIED; and it is further

ORDERED that the parties are to appear in Part F, Room 523 of the New York County Civil Courthouse on March 3, 2023 at 10 a.m. for trial, settlement, or issuance of a briefing order on any anticipated motion practice.

This constitutes the decision and order of this court.

FOOTNOTES

1.   AO 244-21 requires a landlord to file a statement in pending proceedings if it has been notified of a pending ERAP application, has applied for ERAP on behalf of a tenant, or accepted ERAP funds on behalf of a tenant.

3.   Gurevitch v Robinson, Civ Ct, Kings County, February 28, 2022, Stoller J., index no 72639/18; Pacheco v Gilkes, Civ Ct, Kings County, March 10, 2022, Sheckowitz, J., index no 300063/20, and AAMP Holding v Rubenstein et al., Civ Ct, Richmond County, May 12, 2022, Ofshtein, J., index no 052684/19.

4.   The general rule is that acceptance or retention of rent during the period between the termination of the tenancy and the commencement of the proceeding vitiates the notice of termination and reinstates the tenancy, requiring dismissal of the petition. 205 East 78th St. Assocs. v Cassidy, NYLJ, Sept. 27, 1991 at 21, col 4 (App Term, 1st Dept 1991), affd 192 AD2d 479 (1st Dept 1993); Esplanade Gardens, Inc. v Simms, 51 Misc 3d 1228 (A) (Civ Ct, New York County 2016).

5.   No use and occupancy has been paid since ERAP issue $100,021.28 to petitioner in September 2022, leaving a balance due of approximately $140,000.00 from which late, electric, and legal fees must be deducted. (RPAPL 702 (1).

Karen May Bacdayan, J.