KING ENTERPRISES LTD v. CONNELL (1997)

Petitioner King Enterprises, Ltd. (“King” or “petitioner”) moves for an order as follows:

1) striking respondent Laura O'Connell's (“O'Connell” or “respondent”) jury demand;

2) granting petitioner leave to conduct an examination before trial (EBT) of O'Connell;  and

3) directing O'Connell to pay King “all due, current and future use and occupancy pendente lite. ”

O'Connell opposes the motion and cross-moves for sanctions against King for seeking use and occupancy in this proceeding especially when respondent has not been dilatory (See, RPAPL § 745).   Both the motion and cross-motion are consolidated herein for disposition.

Background

King commenced this proceeding to recover possession of a rent stabilized apartment (# 2E) located at 441 West 51st Street, New York, New York (“subject premises”).   Specifically, petitioner alleges that O'Connell is not maintaining the subject premises as her primary residence as she actually resides at 38 Joval Court, Brooklyn, New York.

O'Connell interposed an answer containing seven (7) affirmative defenses and one (1) setoff/counterclaim.

Motion to Strike the Jury Demand

O'Connell apparently gained legal possession of the subject premises in 1985 (O'Connell Aff. at ¶ 2).   Respondent's affidavit is glaringly deficient as to the particulars of her relationship with George O'Connell, the prior record tenant who executed the January 31, 1974 vacancy lease (“vacancy lease”) (Exhibit “B” to motion).   Nonetheless, O'Connell does not claim to have executed her own vacancy lease at any time and evidently took possession pursuant to a successive renewal lease, which incorporated by reference the terms and conditions of the vacancy lease.

Paragraph 25 of the vacancy lease states that the record tenant voluntarily waived a right to a jury trial in:

“․ any action, proceeding or counterclaim brought by either of the parties ․ on any matters whatsoever arising out of ․ this lease ․ Tenant's use of or occupancy of said premises, and any emergency statutory or other statutory remedy ․” (emphasis added)

O'Connell claims petitioner's right to commence a non-primary residency, holdover proceeding “ ․ [did not exist and] was not a judicial cause of action at the time the [vacancy] lease was entered into (January 1994) [ (sic) ].  [Therefore,] the signatory could not have knowingly waived the right to a trial by jury in a nonprimary residence holdover proceeding ․” (Kletter Opp. Aff. at ¶ 12).

 As an alternative argument, respondent claims the vacancy lease containing the jury waiver clause is inadmissible and unenforceable because the printed provisions of the vacancy lease do not comport with CPLR § 4544 (i.e., the print in the lease is purportedly less than eight-point type).

This Court will preliminarily address the alternative argument.   No one questions the fact that the vacancy lease was executed prior to the July 1, 1975 effective date of CPLR § 4544.   Said CPLR provision required that for a lease agreement to be received in evidence in any trial, said print must be “clear and legible” or at least “eight points in depth.”  CPLR § 4544 further states, in relevant part, that “[t]he provisions of this section shall not apply to [lease] agreements or contracts entered into prior to the effective date of this section.”

Jossel v. Filicori, 145 Misc.2d 779, 547 N.Y.S.2d 1005 (Sup.Ct., N.Y.Co., 1989, Cahn, J.) held that the afore-cited portion of this statute expressly precludes retroactivity.   Thus, this Court finds Jossel controlling in the case at bar and the alternative argument challenging the vacancy lease print must fail.

 As a corollary point, this Court further concludes that respondent waived her CPLR § 4544 defense by asserting a counterclaim for attorneys' fees.   In its petition, King seeks attorneys' fees relying on ¶ 19 of the vacancy lease.¹  Respondent's counterclaim for attorneys' fees implicitly rests on Real Property Law § 234 which provides that where a landlord has a right to obtain attorneys' fees pursuant to an extant lease agreement, the tenant is given an implied reciprocal right to also recover such fees under the same lease agreement.   Since respondent's counsel relies on the vacancy lease's attorneys' fees provision, vis-a-vis, the counterclaim and had no reason to question the legibility and type-size of ¶ 19 (which is identical to the print-type used in ¶ 25 containing the jury waiver clause), respondent has no cause to complain about the latter's print size.

 This Court will now address respondent's principal argument for rendering the jury waiver clause inapplicable to this case.   To preserve her right to a jury trial in the face of a jury waiver clause, O'Connell principally relies on Cromwell Associates v. Kuehnrich, N.Y.L.J. March 14, 1990, p. 24, col. 5 (Civ.Ct., N.Y.Co.) which concluded:

․ [P]etitioner's ‘cause of action,’ is nonprimary residence ․ [and] did not become a ground for eviction, or nonrenewal in a lease case, until 1984 with passage of the 1983 Omnibus Housing Act.   The jury waiver lease clause upon which petitioner is relying predates that cause of action by seventeen years.   Under such circumstances it has been held that jury waiver clauses are ineffective since such rights of the landlord and waiver of a jury in determining these rights could not have been contemplated by the parties at the time the lease was executed.  Klipack v. Rayman [Raymar] Novelties, 273 App.Div. 54 [75 N.Y.S.2d 418], Rasch, Landlord & Tenant, Third Edition, Section 10:15.

Similar rulings were made in Odette Realty Co. v. Carisi, N.Y.L.J., February 2, 1994, p. 22, col. 5, (Civ.Ct., N.Y.Co.) Snow v. DeLaurentis, N.Y.L.J., November 15, 1995, p. 26, col 4 (Civ.Ct.N.Y.Co.) and Nostra Realty Corp. v. Ferstenberg et al., N.Y.L.J., November 27, 1996, p. 29, col. 3 (Civ.Ct.N.Y.Co.).

In addressing the issue of whether or not to strike the jury demand, this Court must balance King's expectation that O'Connell be bound by the terms of the expired vacancy lease which was extended and incorporated into respondent's lease renewal, viz., the jury waiver clause, against respondent's important constitutional right to a trial by jury.

The Appellate Division, First Department in Klipack v. Raymar Novelties, Inc., 273 App.Div. 54, 57, 75 N.Y.S.2d 418 (1st Dept., 1947) citing to Schultz v. Wietchner, 271 App.Div. 971, 69 N.Y.S.2d 327 (1st Dept., 1947) sets forth the parameters for the application of jury waiver clauses in future litigation:

It is not our province to determine whether as a matter of policy landlord and tenant proceedings to which the emergency rent laws apply should be tried before a jury rather than before a judge.   It suffices for us to hold that the right of trial by jury is an important right;  that while it may be waived by agreement covering future litigation between the parties, the extent of the waiver is one of intention, expressed intention to be sure, but intention nevertheless to be determined in the light of all the circumstances.   It is one thing to say that the waiver of trial by jury applies to all the terms and conditions of the expired lease which are carried over into the new statutory tenancy.   It is altogether different to maintain that such a waiver applies to terms and conditions which do not find their origin in the written lease, which could not have been within the contemplation of the parties when the waiver agreement was made but which were later brought into being by statutory enactment.   It may well be that the distinction between Schultz v. Wietchner (supra) and the present case is one of degree only, but the difference of degree is so substantial as to constitute a difference of kind.   The rule of Schultz v. Wietchner should not be extended to cover causes of action such as are here involved.  (Emphasis added)

Significantly, the Appellate Division in Klipack and Schultz addressed the validity of an identically worded jury waiver clause in respective leases executed prior to the enactment of the Emergency Commercial Space Rent Control Law (L.1945, ch. 3).   In explaining why the Appellate Division upheld the same jury waiver clause in Schultz, the aforementioned Court said:

․ [A]lthough the Commercial Rent Law attached a new condition to the right of a landlord to evict a tenant at the expiration of his term, namely, the requirement of good faith in demanding immediate possession for the landlord's personal use, the waiver of trial by jury nevertheless applied.   In that case, however, the proceeding was one directly relating to the occupancy of the tenant and to the right of the landlord to recover possession after termination of the written lease.   In the present case the causes of action are those created entirely by statute.   They in no way affect the conventional relationship of landlord and tenant.   They exist not by virtue of such relationship but solely because of the statute itself.  (Emphasis Added)  Id., at 56, 75 N.Y.S.2d 418.

This Court finds that the lower court decisions such as Kuehnrich, supra, and the related line of cases failed to consider the precedential weight of both the Klipack and Schultz holdings and overlooked the Appellate Division's reasoning in Schultz which is dispositive of the disputed issue herein.   These lower court decisions also overlooked the historic statutory scheme requiring occupants of rent stabilized apartments to maintain such apartments as their primary residence.

When § 41 of Chapter 403 of the Laws of 1983 was enacted, the Omnibus Housing Act amended New York City Adm.Code ¶ 26-504(a)(1) [formerly § YY51-3.0[a] (1) ] by, inter alia, adding subparagraph (f) to the list of “exempt” housing accommodations.   This section reads, in relevant part, as follows:

[E]xcept dwelling units ․ not occupied by the tenant ․ as his primary residence, as determined by a court of competent jurisdiction ․

The amendment did not create a new cause of action, but simply granted a landlord the remedy of proceeding directly to court to recover possession of a rent stabilized apartment occupied by a non-primary resident.   Prior to this statutory change, landlords could refuse to offer a renewal lease to the stabilized tenant not occupying the apartment as his/her primary residence and apply to the former New York City Conciliation and Appeals Board for a certification order.   In other words, landlords had to take the circuitous, time-consuming route of exhausting its administrative remedies by obtaining an order certifying that the tenant is a non-primary resident and then relying on said predicate order to pursue either a summary holdover proceeding or an ejectment action.  (See, Rent Stabilization Code former § 54(e) et seq. [eff. March 1, 1972] ).   The serious public emergency that served as the impetus for City rent stabilization pre-supposed that New York City tenants requiring protection actually reside in their apartments as their primary residences.   In other words, primary residency is the sine qua non for retaining that statutory tenancy in “perpetuity.”

When the Rent Stabilization Law was enacted in 1969 (Administrative Code, tit. 26, ch. 4), Rent Stabilization Code former § 54(e) et seq. was adopted, the substance of which was in pari materia with the rent control statutory scheme reflecting a “zero” tolerance for the non-primary resident possessing the regulated apartment.  (See, Local Emergency Housing Rent Control Act [L.1962, ch. 21, McKinney's Uncons.Laws of N.Y., § 8605] [eff. February 17, 1962] and former § 18 of the New York City Rent and Eviction Regulations.)   Under rent control, the landlord could obtain an Order of Decontrol from the Administrator/Commissioner and, thereafter, rely on this predicate administrative order to prosecute a summary proceeding or ejectment action to recover possession.

In 1983, the Legislature evidently determined the predicate requirement of obtaining an administrative order to be unduly burdensome and eliminated that requirement under both systems of rent regulation.   That is, the 1983 amendment presumably granted a landlord a more cost-effective remedy of proceeding directly to court to recover possession of a regulated apartment not occupied by the tenant as his/her primary residence.

The foregoing analysis also reveals three marked differences that distinguish Klipack, supra, from the case at bar.   First, the statutory scheme that afforded the landlord the right to seek an order certifying non-primary residence status as a condition precedent to recovering possession of the rent stabilized apartment existed prior to the execution of the 1974 vacancy lease.²  Second, the jury waiver clause anticipated “any [future] matters ․ arising out of ․ any emergency statutory or other statutory remedy ․” (See, ¶ 25 to vacancy lease as Exhibit “B” to motion).   There is no question that the 1983 Amendment furnished petitioner the statutory remedy of proceeding directly to court.   Third, unlike Klipack, supra, the instant proceeding “․ directly relate[s] to the occupancy of the tenant [i.e., O'Connell] and to the right of the landlord [i.e., King] to recover possession after termination of the written lease ․” Klipack, supra, at 56, 75 N.Y.S.2d 418.   The holding of Schultz, supra, would, therefore, be controlling.

Finally, this Court observes that in the high volume business of renting residential and/or commercial premises, it is rare to discover that parties to the lease agreement have, in fact, read every single provision and contemplated every ramification such clauses may have on the newly-established relationship.   Even rarer will one expect landlords and tenants at lease signings to have contemplated potential litigation or disputes that might arise between them.

If one were to analogize a landlord/tenant relationship to a marriage, there would be uniform agreement that it would be atypical for couples to contemplate divorce or other potential disputes, foreseen or unforeseen, at the celebration of their marriage.   Yet, based upon the case law determining the validity of asserting the jury waiver clause in future litigation, this is precisely what landlords and tenants are expected to do at the lease signing.   Moreover, as astutely noted by a Landlord-Tenant legal commentator:

․ [L]ease clauses tend to waive jury trial for “any” cause of action, not a specific list.   Just as when parties sign a general release they understand that the release stands as a bar both to the foreseen and the unforeseen, so does such a clause stand as a bar to any cause of action, even one not yet defined by the law.   Were this not the case, then the common law could not continue to develop new causes of action because parties would forever be released from their contracts anticipating “all” causes of action.

Treiman's Housing Court Reporter, 1995, 23 HCR Commentary at p. 74 (emphasis added).

Based upon the foregoing, this Court grants the branch of petitioner's motion striking the jury demand based upon the applicability of the jury waiver clause to this non-primary residency claim.

Discovery

 King seeks leave to conduct O'Connell's EBT.   In exercising discretion to permit discovery, courts have required that the party seeking discovery demonstrate “ample need” for the disclosure.   However, such discovery must be carefully and narrowly tailored.   See, New York University v. Farkas, 121 Misc.2d 643, 468 N.Y.S.2d 808 (Civ.Ct., N.Y.Co., 1983, Saxe, J.).

In this non-primary residency case, petitioner has demonstrated “ample need” to conduct O'Connell's EBT.   However, no proposed Notice to Take Deposition with a companion Document Request has been furnished for the Court's review to determine whether the Farkas parameters have been fully met.

Accordingly, this Court denies the branch of petitioner's motion for discovery, without prejudice.

Use and Occupancy

 The Court, in its discretion, is empowered to direct payment of use and occupancy during a summary proceeding where there is a showing of delay on the part of a respondent pursuant to RPAPL § 745(2)(a).  RPAPL § 745(2)(a) states:

“2. In the city of New York:

(a) In a summary proceeding upon the second request by the tenant for an adjournment, the court shall direct that the tenant post all sums as they become due for future rent and use and occupancy, which may be established without the use of expert testimony, unless waived by the court for good cause shown.   Two adjournments shall not include an adjournment requested by a tenant unrepresented by counsel for the purpose of securing counsel made on the initial return date of the proceeding.   Such future rent and use and occupancy sums shall be deposited with the clerk of the court or paid to such other person or entity, including the petitioner, as the court shall direct or shall be expended for such emergency repairs as the court shall approve.”  (Emphasis Added).

Since petitioner failed to demonstrate that O'Connell has engaged in the dilatory tactics mentioned above, this Court has no reason to award prospective use and occupancy during the pendency of this proceeding at this time.   In fact, the resultant delay of this proceeding is due to the petitioner having generated the instant round of motion practice, inter alia, for discovery discussed above.   See, Hung-Thanh, Inc. v. Doktori, N.Y.L.J., October 28, 1993, p. 27, col. 3 (A.T., 1st Dept.).   Nor is King entitled to retroactive use and occupancy at this stage of the proceeding.

Accordingly, this Court denies the remaining branch of petitioner's motion for use and occupancy, pendente lite, at this time.

Notwithstanding the foregoing, the Court finds it was not unreasonable for petitioner to rely on Eichenbaum v. Mulbery, N.Y.L.J., March 10, 1994, p. 24, col. 4 (A.T. 1st Dept.), to request use and occupancy.   Said reliance is, however, misplaced as Eichenbaum involved an appeal of an order dismissing the petition.   Implicit in the Appellate Court's decision was the purported fact that the tenant had not been paying any rent and/or use and occupancy for almost two (2) years.   This proceeding is a little over two (2) months old.   In any event, there is clearly no basis to impose any sanctions against petitioner.   The respondent's cross-motion is, therefore, denied in its entirety.

FOOTNOTES

1.   A party may not recover attorneys' fees unless such an award is authorized by agreement (i.e., a lease) between the parties or by statute.   See, Hooper Associates v. AGS Computers Inc., 74 N.Y.2d 487, 549 N.Y.S.2d 365, 548 N.E.2d 903 (1989);  Friends of Yelverton Inc. v. 163rd Street Improvement Council Inc., N.Y.L.J., January 3, 1991, p. 21, col. 2 (A.T., 1st Dept.).

2.   When the vacancy lease was executed, the subject premises had been either vacancy decontrolled or vacancy destabilized (see, generally, Chapter 371 of the Laws of 1971) and, therefore, the rent regulations were not applicable to the record tenant.   When the Emergency Tenant Protection Act of 1974 was enacted (Chapter 576, § 4 of the Laws of 1974 repealing vacancy decontrol), and just five months later, the record tenant who executed the vacancy lease assumed the rights and obligations that had been in effect since 1969 for apartments occupied by rent stabilized tenants continuously since said date.

MARTIN SHULMAN, Judge.