CAMBRIDGE DEVELOPMENT LLC v. STAYSNA (2008)

Order (Marc Finkelstein, J.), dated November 13, 2006, modified by permanently staying execution of the warrant of eviction, and as modified, affirmed, without costs.

The isolated, short-term sublet here at issue did not constitute the type of profiteering or commercial exploitation of the rent-stabilized apartment as to warrant termination of the tenancy without giving tenant an opportunity to cure.   The subtenant's undisputed deposition testimony established that the sublease was intended at its inception to last only for “several months” while the tenant was “temporarily” staying in Minnesota and that the sublease term ultimately spanned less than five months, ending in May 2005.   Although the monthly rent initially collected by the tenant was well beyond the lawful rent reserved in his own main lease with the building owner, the overcharge was (amicably) resolved between the tenant and subtenant in the first month of the subtenancy, and no additional payments were made by the subtenant for the balance of his brief tenure in the apartment.   Indeed, it appears that tenant himself took the lead in reaching this resolution upon learning that the rental arrangements initially agreed to by the subtenant were not authorized under rent stabilization.   Applying the rent credits agreed to by the tenant and subtenant, a relatively insubstantial overcharge ultimately was collected, one never pursued by the subtenant.   While we do not condone the tenant's initial lapse in judgment, the ultimate penalty of eviction is neither required nor appropriate on this fact pattern (see Ariel Assoc. LLC v. Brown, 271 A.D.2d 369, 706 N.Y.S.2d 116 [2000], lv. dismissed 95 N.Y.2d 844, 713 N.Y.S.2d 517, 735 N.E.2d 1282 [2000];  Central Park W. Realty, LLC v. Stocker, 1 Misc.3d 137(A), 2004 N.Y. Slip Op. 50058(U), 2004 WL 314623 [2004];  Chelsea Nineteenth Assoc. v. Smith, N.Y.L.J., March 22, 2000, at 26, col. 1 [App. Term, 1st Dept. 2000] ).

While we are all in agreement that petitioner-landlord showed entitlement to a possessory judgment, I cannot abide the majority's decision to bestow upon this tenant the unwarranted largesse of permanently staying enforcement of the judgment in the face of the tenant's demonstrated commercial exploitation of the regulated tenancy.   I thus respectfully dissent in part and would affirm the order here under review in its entirety, essentially for reasons stated by Marc Finkelstein, J. at Civil Court.   The record conclusively demonstrated that the rent-stabilized tenant engaged in unlawful commercial profiteering, initially charging his subtenant a monthly rental of $1,625 and collecting a security deposit in the same amount, at a time when tenant was paying the main landlord the legal regulated rent of $425.   Such rent gouging against a subtenant undermines the integrity of the rent stabilization system and constitutes an incurable ground for eviction (see Matter of 151-155 Atl. Ave., Inc. v. Pendry, 308 A.D.2d 543, 764 N.Y.S.2d 852 [2003];  Continental Towers Ltd. Partnership v. Freuman, 128 Misc.2d 680, 494 N.Y.S.2d 595 [1985] ).

That the exploitive sublease arrangement was, in the majority's view, of a relatively “short-term” duration does not warrant their grant of a permanent injunction enjoining the tenant's eviction, at least on this record which indicates that the subtenant prematurely vacated the apartment in response to the landlord's commencement of the within summary eviction proceeding (compare Ariel Assoc., LLC v. Brown, 271 A.D.2d 369, 706 N.Y.S.2d 116 [2000], lv. dismissed 95 N.Y.2d 844, 713 N.Y.S.2d 517, 735 N.E.2d 1282 [2000] ).   Further, even assuming that tenant's conduct was curable, tenant failed to effectively cure, since he did not refund any portion of the substantial surcharge, but merely credited most, but not the entire amount of the surcharge against the subtenant's future rent, a scheme devised, as the motion court put it, “at the point that he was caught surcharging the subtenant 382% above the legal rent.”  “The conduct of a profiteering rent-stabilized tenant ‘is not to be condoned by permitting the tenant to remain after the fraud has been found out’ ” (Matter of 151-155 Atl. Ave., Inc. v. Pendry, 308 A.D.2d at 544, 764 N.Y.S.2d 852, quoting Continental Towers Ltd. Partnership v. Freuman, 128 Misc.2d at 682, 494 N.Y.S.2d 595).

THIS CONSTITUTES THE DECISION AND ORDER OF THE COURT.

PER CURIAM.