59 Maiden Lane Associates, LLC, Petitioner-Landlord, v. Maiden Farm, Inc., Respondent-Tenant.
BACKGROUND FACTS AND PROCEDURAL HISTORY
Petitioner-Landlord 59 Maiden Lane Associates, LLC commenced this commercial summary nonpayment proceeding seeking a judgment of possession for 59 Maiden Lane, Ground Floor, Lower, and Mezzanine Levels, New York, New York 10038 (the "Premises") and a monetary judgment against Respondent-Tenant Maiden Farm, Inc. (Landlord Exh D [the "Petition"] ).
On July 20, 2000, Landlord leased the Premises to Tenant's predecessor-in-interest for a 25-year term ending July 31, 2025 (Landlord Exh B [the "Lease"] ). The Lease contains, among other things, a provision obligating Tenant to pay rent comprising "Fixed Rent"—most recently $58,873.91 monthly from July 1, 2018 through June 30, 2019—together with "Additional Charges" consisting of "Tax Payments," defined as Tenant's 2.27% share of taxes billed to Landlord by the New York City Department of Finance (Lease ¶¶ 1.04[a][xvii], [b], 3.01[e], [f] ). After service of an October 17, 2018 rent demand/three-day notice alleging $172,533.75 in rent and additional rent arrears (Landlord Exh D [the "Rent Demand"] ), Landlord, on January 9, 2019 filed this Petition alleging $74,659.84 in arrears (Landlord Exh D).
Landlord now moves by order to show cause (sequence 002): (1) pursuant to CPLR 2307, for the Court to so-order a subpoena to the New York City Department of Finance to support the Petition's non-payment allegations regarding taxes; and (2) pursuant to CPLR 3025(b), for leave to amend the Petition to, among other things, allege additional Fixed Rent and Additional Charges owed to date (Landlord Exhs D, F-G). Tenant cross-moves to dismiss.1 For the reasons below, the Court grants Landlord's motion in part and denies Tenant's cross-motion.
I. Tenant's cross-motion to dismiss
As an initial matter, Tenant's motion does not cite any specific grounds for dismissal, which itself justifies denial of the cross-motion (CPLR 2214[a]; see Abizadeh v Abizadeh, 159 AD3d 856, 857 [2d Dept 2018] [affirming denial of cross motion where the notice of cross-motion was deficient because the notice "failed to sufficiently specify the relief sought, against whom it was sought, and the grounds therefor. [A] court is not required to comb through a litigant's papers to find information that is required to be set forth in the notice of motion" [emphasis added]] ). In any event, the Court discusses independent grounds for denial below.
Tenant also argues that the Lease is unsigned (Tenant/Dankberg Affirm ¶¶ 46-50). This is incorrect; though the Lease has unsigned pages—for example, model forms—the material portions of the Lease and assignment of the Lease to Landlord from Landlord's predecessor-in-interest, attached to Landlord's papers, are signed.
A. Service of rent demand
In support of its motion to dismiss, Tenant argues that the Petition erroneously asserts that Landlord "demanded [rent] personally and in writing" from Tenant prior to commencing this proceeding (Dankberg Affirm ¶ 6, citing Petition ¶ 7). Tenant acknowledges three different affidavits of service of the Rent Demand, but argues that "nowhere in any of the three affidavits does it claim the rent was demand was personally served [sic]" (Tenant/Dankberg Affirm ¶ 10). Notably, as Landlord argues in reply, Tenant's submission contains only the arguments of counsel, not any submission from Tenant itself, or any other individual with personal knowledge, providing details which might specifically rebut service, either mailed or personally delivered.2 Accordingly, on that basis alone, that branch of Tenant's argument is denied (Colebrooke Theat. LLP v Bibeau, 155 AD3d 581 [1st Dept 2017] [" conclusory denials that service did not occur are insufficient to rebut the presumption of service as detailed in the affidavit of service"] ).
But the affidavits themselves also substantively contradict Tenant's contentions. For example, as noted in Landlord's opposition, the affidavit of Landlord Managing Agent AmTrust Realty Corp.'s ("Amtrust") General Manager James A. Campbell Jr., which accompanies the Petition, asserts personal service of the Rent Demand on Tenant's managing agent Grace Hahn on October 18, 2018 at "the Store Premises, 59 Maiden Lane, New York, New York 10038," and the presence of an additional witness (Landlord Exh D). To the extent that Tenant challenges the location of service as insufficiently particular because the Lease defines the Premises as "a portion of the ground floor, lower and mezzanine levels," (Tenant/Dankberg Affirm ¶ 14), the Court agrees with Landlord's response: RPAPL § 735 contains no requirement that an affidavit of service identify the specific location within the Premises where service occurred, only that service occur, in relevant part, "at the property sought to be recovered." Tenant provides no support for its argument that an affidavit of service must detail the precise service location within the Premises.
A second affidavit also alleges personal service of the Rent Demand to "Maiden Farm, Inc. c/o Zeytuna" on October 18, 2018 at the Premises by licensed process server Eric Goldklank (Landlord Exh D). To the extent that Tenant challenges the affidavit's caption incorrectly identifying Amtrust as the petitioner, Amtrust was not a stranger to Tenant; the former's name appeared on Tenant's regular rent statements (Landlord Exh D).3 Moreover, misidentification of Landlord in the caption does not invalidate the affidavit's substantive allegations (CPLR 2001; see Reem Contr. v Altschul & Altschul, 117 AD3d 583, 584 [1st Dept 2014] ["Any purported defects in the form of the affidavit of service, including the sufficiency of the signature, are mere irregularities, not jurisdictional defects that would warrant dismissal "]; 1644 Broadway LLC v Jimenez, 51 Misc 3d 887 [Civ Ct Kings County 2016] [Slight misspelling of commercial tenant's name on affidavit of service and foreclosure was ministerial error that did not invalidate post-foreclosure eviction proceeding] ). For the same reason, a third affidavit by Ann Marie Frank asserting mailing of the three-day notice on October 17, 2018 to "Maiden Farm, Inc., c/o Zeytuna" is not defective, as Tenant alleges, for its unexplained inclusion of "Zeytuna" (Landlord Exh D). Tenant does not—either through counsel or any individual with personal knowledge—explain the impropriety of Zeytuna's inclusion.
To the extent that Tenant also argues that proof of mailing of the Rent Demand is insufficient—for example, because the customer receipts lack postmarks—this argument is also unavailing, as numerous affidavits contain both an allegation of mailing, together with tracking numbers which could have been independently verified by Tenant (European American Bank v Abramoff, 201 AD2d 611, 612 [2d Dept 1994] citing 14 Second Ave, Realty Corp. v Szalay, 16 AD2d 919 [1st Dept 1962] ["service by mail is complete, regardless of its delivery, where the mailing itself is proper."] ).
B. Accuracy of the rent demand
Tenant also argues that the Rent Demand and Petition seek inconsistent amounts ($172,533.75 and $74,659.84, respectively), thus justifying dismissal. Because the former amount was a good faith estimate at the time and the latter credited payments made after the rent demand, the Court disagrees.
The rent demand requirement "ensures that tenants receive sufficient notice of the nature of the alleged default to permit timely cure and avoid unnecessary litigation" (Kulok v Riddim Co., L.L.C., 185 Misc 2d 195, 196 [Civ Ct NY County 2000] [Billings, J.] ). "The rent demand must fairly afford the tenant, at least, actual notice of the alleged amount due and of the period for which such claim is made. At a minimum, the landlord or his agent should clearly inform the tenant of the particular period for which a rent payment is allegedly in default and of the approximate good faith sum of rent assertedly due for each such period" (id.).
As set forth in the affirmation of Controller Robert Bloom in response to Tenant's assertion, the Rent Demand represented the arrears owed at the time (Bloom Reply Affirm ¶ 4). The lower amount demanded in the Petition reflected five payments from Tenant to Landlord in the period between the Rent Demand and Petition (id. ¶ 5). As Landlord argues, it was empowered to accept rent without prejudice (see RPAPL 711 ["The landlord may waive his right to proceed upon [non-payment grounds] only by an express consent in writing to permit the tenant to continue in possession, which consent shall be revocable at will, in which event the landlord shall be deemed to have waived his right to summary dispossess for nonpayment of rent accruing during the time said consent remains unrevoked."] ).
To the extent that Tenant cites Wasservogel v Becker, (191 Misc 599 [Mun Ct Bronx County 1948]), that case—which discussed laches in a residential context—is inapplicable to this commercial summary nonpayment proceeding (Ambrogio & Caterina Giannone Family Ltd. Partnership v 7th Heaven USA Inc., 36 Misc 3d 1204(A) [NY Dist Ct 2012]; UBO Realty Corp. v. Fulton, NYLJ, Sept. 8, 1993, at 21, col. 2 [App Term 1st Dept] [laches "finds application only in the context of residential nonpayments"] ). Accordingly, whereas the Rent Demand sought $172,533.75 comprising real estate taxes for January and July 2018 and base rent for October 2018, the Petition sought only a portion of the January 2018 real estate taxes and the same July 2018 real estate taxes, properly placing Tenant on notice of an itemized, good-faith approximation of the amounts due. Accordingly, Tenant's cross-motion to dismiss is denied.
II. Landlord's motion
A. Subpoena to N.Y.C. Department of Finance
To the extent that Tenant does not oppose the branch of Landlord's motion seeking to subpoena records from the New York City Department of Finance, and to the extent that the documents are clearly relevant and material to an issue in this action—nonpayment of taxes—Landlord's motion is granted and the Court has signed a copy of the subpoenas, which is attached to this decision with minor amendments (Prudential Sec. Inc. v Samansky, 281 AD2d 483 [2d Dept 2001]).
B. Petition amendment
Landlord moves to amend the Petition to, in relevant part, add additional months of unpaid rent (see Landlord Exhs F, G). Generally, leave to amend pleadings is freely given absent prejudice or surprise resulting directly from the delay (McCaskey, Davies & Assoc. v New York City Health & Hosps. Corp., 59 NY2d 755, 757 ; CPLR 3025 [b]; see also Jackson v New York City Hous. Auth., 88 Misc 2d 121, 122, 387 NYS2d 38 [App Term 1st Dept 1976] ["A petition in a summary proceeding is no different than a pleading in any other type of civil case."] ). However, in opposition, Tenant argues that any amended allegations of unpaid rent must be preceded by a proper rent demand pursuant to RPAPL 711(2). Landlord argues that the primary case relied upon by Tenant, Walsam Fifth Ave. Dev. Co. v Lions Gate Capital Corp., (163 Misc 2d 1071, 1074 [Civ Ct NY County 1995] [Braun, J.] ), relies on outdated precedent, 1587 Broadway Rest. Corp. v Magic Pyramid, Inc., (1979 NY Misc. LEXIS 2993 [App Term 1st Dept Dec. 19, 1979]). Because, however, 1587 Broadway remains good law, the Court denies amendment without prejudice.
The entirety of the relevant passage of 1587 Broadway reads as follows:
The Court below did not improperly deny landlord's application to amend its petition to include a claim for September and October rent, insofar as the record does not establish the requisite demand by the landlord for such additional rent. The landlord is, however, granted leave to renew its motion to so amend the petition at the time of trial, upon a proper showing of demand for the September and October 1979 rent (emphasis added).
Two subsequent Appellate Term decisions do not provide clarification. In the first, the Appellate Term affirmed the lower court's amendment of the petition to include all rent due to date, which "accords with the established practice in landlord-tenant court" (CF Monroe v Nemeth [1994 NY App Div Lexis 13742, N.Y.L.J. Oct 25, 1994 p 25 col 1] ). A second, citing Nemeth, affirmed a trial court's amendment of all rent due to date, holding that "there is no good reason why all claims for arrears arising out of this lengthy 'rent strike' should not be determined in a single proceeding against each tenant" (GSL Enterprises, Inc. v Newlinger, 1996 NY Misc LEXIS 630, N.Y.L.J. May 24, 1996, p 25, col 6] ). Neither decision, as one appellate tribunal recently recognized, contemplates any requirement for an additional rent demand (36 Main Realty Corp. v Wang Law Off., PLLC, 49 Misc 3d 51, 54 [App Term 2d Dept 2015] [holding that, after an initial rent demand is served, " the legislature does not currently contemplate that a new demand be required for the recovery of after-accruing rent"] ). Nor, however, does either case disclaim such a requirement.
Trial court interpretations of 1587 Broadway have been inconsistent. In 2002, for example, one court denied amendment without prejudice to "renew upon service of the proper papers or at trial" (501 Seventh Ave. Assoc. v 501 Seventh Ave. Bake Corp., 2002 NY Slip Op 50362[U], *13 [Civ Ct NY County, Kern, J.] ). In 2011, another court—citing 501 Seventh Ave., Walsam, and 1587 Broadway—reached the same conclusion (RCPI Landmark v Chasm Lake Mgt. Servs., LLC, 32 Misc 3d 405, 408 [Civ Ct NY County, Bluth, J.] ). At least one court has continued to follow 1587 Broadway as recently as 2018 (Edper Realty Corp. v Nike's Pizzeria, 2018 NYLJ LEXIS 2702, *6 [Civ Ct Bronx County, Perez, J.] ).
In contrast, other cases have not required subsequent rent demands for amendment. For example, in JDM Washington St., LLC v 90 Washington Rest. Assoc., LLC, (36 Misc 3d 769, 772 [Civ Ct NY County 2012, Moulton, J.]), the court, though acknowledging that the Appellate Term in 1587 Broadway "did not limit its holding to the procedural frame before it, a pretrial motion," nevertheless permitted amendment. The JDM court noted that 1587 Broadway's holding "is contrary to common practice in the Civil Court, [where] a landlord never submits an additional rent demand in a commercial nonpayment proceeding," that requiring an additional demand would "graft another element onto a petitioner's prima facie case" rather than strictly follow RPAPL 711(2)'s requirement for " 'a demand of the rent'—not plural demands for rent" (id. at 772-73), and that continuing to follow 1587 Broadway would "introduce [a] host of new disputed issues for example: Is the updated demand sufficiently detailed? Was the updated demand properly served? How many days after the updated demand was served may a petitioner seek to amend the petition?" (id. at 773).
Another court reached a similar conclusion several years apart in both Bldg Mgt. Co., Inc. v Benmen, (36 Misc 3d 1225[A], 1225A, 2012 NY Slip Op 51476[U] [Civ Ct NY County 2012, Kraus, J.]), and 576 E 187TH St. Bronx, LLC v Hizam Deli Grocery Corp., (59 Misc 3d 1215[A], 2018 NY Slip Op 50554[U] [Civ Ct Bronx County 2018, Kraus, J.]). In those decisions, the judge examined 187 Broadway and the subsequent Appellate Term decisions, Nemeth and Newlinger, and found, based on those holdings and RPAPL 711 and 741, that
a rent demand is a jurisdictional prerequisite to the maintenance of a summary nonpayment proceeding. Once that jurisdictional requirement has been satisfied, there is no reason to treat a motion to amend the pleadings to include all rent due through the date of the trial any differently than any other motion to amend the pleadings. Absent prejudice or surprise the motion should be liberally granted (Hizam Deli, 59 Misc 3d 1215[A] at *3-4).
Finally, another court recently concluded that 1587 Broadway's requirement of an additional rent demand for amendment reflects neither modern practice nor the purpose of RPAPL 711's initial rent demand requirement (FAV 45 LLC v McBain, 42 Misc 3d 1231[A] [Civ Ct NY County 2014, Stoller, J.]). As the McBain court noted,
An important purpose of a rent demand is to give a tenant an opportunity to avoid litigation by paying accrued rent arrears prior to the commencement of a nonpayment proceeding, [which] has the potential to conserve judicial resources, reduce costs for landlords and tenants alike, and relieve tenants from adverse incidental consequences that may accrue to them upon the mere occurrence of being sued in a summary proceeding (id.).
However, even considering that "appellate case law on this issue is scant [because,] if a landlord's nonpayment petition is dismissed at the trial level, it is much more efficient for her to start a new proceeding than to take an appeal," (RCPI Landmark, 32 Misc 3d at 408) the fact nevertheless remains that no appellate tribunal whose decisions bind this Court have revisited 1587 Broadway's holding that amendment of the petition—at trial or otherwise—requires a new rent demand. Thus, although the requirement appears contrary to modern practice, this Court is nevertheless constrained to find that amendment without an additional rent demand remains impermissible under binding law. In any event, Landlord will suffer no prejudice here because the denial of amendment is without prejudice as to Landlord's right to seek amendment, at a later date, upon service of another rent demand pursuant to 1587 Broadway.
CONCLUSION AND ORDER
For the above reasons, it is hereby
ORDERED that Petitioner's motion is GRANTED solely to the extent that the Court has signed and attached Petition's proposed subpoena, as amended; and it is further
ORDERED that the branch of Petitioner's motion seeking to amend the Petition is DENIED without prejudice; and it is further
ORDERED that Respondent's cross-motion to dismiss is DENIED in its entirety; and it is further
ORDERED that the parties shall appear for trial on August 5, 2019 at 111 Centre St., Room 775, New York, NY.4
This constitutes the decision and order of the Court.
Dated: June 27, 2019
New York, NY
Dakota D. Ramseur, J.C.C.
CPLR 2219(a) Recitation
Motion/Affidavits, Exhibits 1
Cross-Motion, Exhibits 2
Reply, Exhibits 3-5
1. Tenant's cross-motion was not assigned its own motion sequence number.
2. Prior to final submission of this motion on May 31, 2019, Tenant had nearly one month since the May 6, 2019 filing of Landlord's order to show cause to obtain specific information or an affidavit from his client, including an adjournment on May 9, 2019 upon Tenant's request and again on May 23, 2019 upon Landlord's request for additional time to respond to Tenant's cross-motion and opposition. Despite this—and, indeed, despite Tenant having filed its most recent answer on April 3, 2019—Tenant submits only an attorney's affirmation that itself does not provide any specific rebuttal of personal or mailed service.
3. The statements were attached to the Petition and Landlord's initial moving papers.
4. To the extent that documents in the court file indicate that Respondent's principal(s) primarily speak Korean, a Korean interpreter has been requested for that date.
Dakota D. Ramseur, J.