LC APARTMENTS LLC, Plaintiff, v. Anthony TROVATO and Samantha Trovato, Defendants.
In this plenary action plaintiff LC Apartments LC (“LC Apartments”) seeks unpaid rent and other damages arising from the breach of an apartment lease agreement between LC Apartments, as landlord, and its tenants, the defendants Anthony Trovato and Samantha Trovato (father and daughter) (“the Trovatos”). The defendants have moved to dismiss on multiple grounds, but the main point of contention is whether a warrant of eviction issued by a town court cuts off any right of LC Apartments to unpaid rent that accrued after the date of the warrant.
The court has reviewed the filings in the NYSCEF system numbered one through ninety-seven (97).
The undisputed facts, and the relevant procedural history, are as follows.
The Trovatos agreed to lease an apartment from LC Apartments for a term running from October 2017 through December 2018. They vacated the premises in June 2018, informing LC Apartments that they could no longer afford the rent.
LC Apartments brought a summary proceeding in the Town of Gates for eviction and for a judgment under Article 7 of the Real Property Actions and Proceedings Law. The Town of Gates granted the warrant of eviction and awarded LC Apartments a judgment for the months of June and July 2018, but none for the remainder of the lease term. The Trovatos paid that judgment. The warrant of eviction was dated July 10, 2018.
LC Apartments then brought a plenary action in New York supreme court in March 2019 which sought a judgment for rents from August through December 2018 as well as for damage done to the apartment. The defendants did not appear, and LC Apartments requested and received an entry of judgment in the amount of $7,072.95 from the Monroe County Clerk pursuant to CPLR 3215(a).
LC Apartments then moved in this court pursuant to CPLR 2308 for a finding of contempt against Samantha Trovato for failure to respond to an information subpoena, and “confining (her) to jail if she persists in disobeying the subpoena.”
The court, upon review of the entire record, sua sponte vacated the judgment, having concluded that the proof presented to the Monroe County Clerk was not the “requisite” proof (CPLR 3215[a]) and did not justify the entry of a default judgment (see LC Apartments LLC v. Trovato, ––– Misc. 3d ––––, ––– N.Y.S.3d ––––, 2020 N.Y. Slip Op. 20369 [Sup. Ct., Monroe County 2020]; CPLR 3215[f]). The court also denied the motion for contempt and jail.
LC Apartments then filed a Stipulation of Discontinuance of that supreme court action by serving on the defendants, six months after the court had vacated the judgment, a “Notice of Discontinuance” pursuant to CPLR Rule 3217 (a)(1).
LC Apartments then commenced in January of 2021 the instant action by filing and service of a summons and complaint, which pled the “bare bones” factual allegations as in the prior supreme court action.
The Trovatos filed an Answer, denying the allegations and interposing several affirmative defenses, including that the plaintiff's voluntary discontinuance of the prior supreme court action was with prejudice. They also pled counterclaims, including return of the security deposit of $980.00 and return of $564.54 seized from an income execution pursuant to the subsequently vacated supreme court judgment.
Following service of the Answer, the Trovatos moved to dismiss pursuant to various provisions of CPLR 3211(a), including CPLR 3211(a)(7), arguing that the bare pleadings, previously having been ruled inadequate to support a default judgment, failed to state a cause of action; and CPLR 3211(a)(5), that the relief requested is “barred by the doctrines of Payment, Res Judicata, Collateral Estoppel, Statute of Frauds, Laches and by RPAPL § 749.”
LC Apartments then filed an amended complaint which fleshed out the allegations regarding the lease. It stated that the defendants vacated early the premises leased to them by LC Apartments, made no payments thereafter and did not leave the apartment in its original condition, resulting in damages of “$5,509.73, with interest from July 1, 2018.” The amended complaint also included causes of action for account stated and unjust enrichment. LC Apartments followed that with a motion pursuant to CPLR 3211(a)(1) and (7) dismissing the counterclaims.
The Trovatos filed an amended answer, then moved for a “default judgment” on the ground that LC Apartments never filed an “amended Reply” in response to their “Amended Answer with counterclaims.”
LC Apartments responded by filing a motion for leave to file an amended verified reply “nunc pro tunc.”
As noted above, the Trovatos have moved to dismiss under various theories, but the one that has the most currency is that when LC Apartments brought its eviction action, the landlord-tenant relationship terminated, and it could no longer seek future rents.
It is well-settled law that a warrant of eviction terminates the relationship and bars the landlord from pursuing a judgment for unpaid rents after the date of the eviction (see Lazy Acres Park, LLC v. Ferretti, 118 A.D.3d 1406, 988 N.Y.S.2d 364 [4th Dept. 2014], lv denied 120 A.D.3d 1612, 993 N.Y.S.2d 523 (4th Dept. 2014), lv dismissed 25 N.Y.3d 965, 8 N.Y.S.3d 262, 30 N.E.3d 906 ; First Citizens National Bank v. Koronowski, 46 A.D.3d 1474, 1475, 848 N.Y.S.2d 494 [4th Dept. 2007]; Weichert v. O'Neill, 245 A.D.2d 1121, 667 N.Y.S.2d 527 [4th Dept. 1997]; see further RPAPL 749).
An exception to the rule is where the landlord can recover future rents if the tenants have so agreed in their lease (see West Flatt Associates v. Maggiulli, 66 A.D.3d 1450, 886 N.Y.S.2d 300 [4th Dept. 2009], citing Holy Properties Ltd., L.P. v. Cole Productions, Inc., 87 N.Y.2d 130, 637 N.Y.S.2d 964, 661 N.E.2d 694 ).
In Holy Properties, which involved a commercial lease, the Court of Appeals held that “Although an eviction terminates the landlord-tenant relationship, the parties to a lease are not foreclosed from contracting as they please ․ If the lease provides that the tenant shall be liable for rent after eviction, the provision is enforceable” (Holy Properties Ltd., L.P. v. Kenneth Cole Productions, Inc., 87 N.Y.2d 130, 134, 637 N.Y.S.2d 964, 661 N.E.2d 694 ).
Although there is less than unanimity across courts as to whether the holding in Holy Properties applies to residential leases (see generally 29 Holding Corp. v. Diaz, 3 Misc. 3d 808, 810, 775 N.Y.S.2d 807 [Sup. Ct., Bronx County 2004]), the Appellate Division, Fourth Department has held that under the holding in Holy Properties, a residential landlord can collect future rents and has no duty to mitigate damages by re-letting the tenancy (Clearview Farms LLC v. Fannon, 145 A.D.3d 1556, 1557, 43 N.Y.S.3d 840 [4th Dept. 2016]), even where there has been an eviction.
Nonetheless, the court affirmed the lower court's determination awarding no damages despite the tenant's eviction on the ground that the rent acceleration clause at issue, which the plaintiff Clearview Farms sought to enforce, “constituted an unenforceable penalty” and limited damages to “actual damages proven” (Clearview Farms LLC v. Fannon, 145 A.D.3d 1556, 1556-57, 43 N.Y.S.3d 840 [4th Dept. 2016]), citing (172 Van Duzer Realty Corp. v. Globe Alumni Student Assistance Assn., Inc., 24 N.Y.3d 528, 536, 2 N.Y.S.3d 39, 25 N.E.3d 952  [internal quotation marks omitted]).
The “unenforceable penalty” at issue was not typical in any way. It did not, for example, “award the landlord liquidated damages that are disproportionate to the actual damages incurred. (see e.g. 172 Van Duzer Realty Corp. v. Globe Alumni Student Assistance Assn., Inc., 24 N.Y.3d 528, 536, 2 N.Y.S.3d 39, 25 N.E.3d 952 ).” Nor did it provide for the acceleration for rents for a breach of a “trivial or inconsequential” which is prohibited (see 172 Van Duzer Realty Corp. v. Globe Alumni Student Assistance Assn., Inc., 24 N.Y.3d 528, 535, 2 N.Y.S.3d 39, 25 N.E.3d 952 ). What it did purport to do was allow the landlord to collect a liquidated damages amount — the amount of unpaid rent — and collect rents from a new tenant for the same period. This, the court ruled, was a form of “double dipping,” and to allow it would violate “commons sense, reasonable expectations of public policy, and notions of justice an equity” (Bench verdict of Judge Odorisi, dated July 8, 2015), and thus the landlord needs to prove “damages.”
Turning now to the acceleration clause at issue here, the lease entered into by the
Trovatos reads as follows:
Payment of rent in monthly installments is for Tenant's convenience (emphasis added) only. If tenant defaults, Landlord may give notice to Tenant that the Tenant may no longer pay rent in installments. The entire rent for the remaining part of the Term will then be due and payable.
This treatment of monthly rent payments as a “convenience” is unenforceable because it violates RPAPL § 702 (Added L. 2019, ch. 36).
RPAPL § 702, added effective June 14, 2019, provides that in a proceeding relating to a residential dwelling or housing accommodation, the term “rent shall mean the monthly or weekly amount charged in consideration for the use and occupation of a dwelling pursuant to a written or oral rental agreement.”
Thus, LC Apartment's definition of rent as a lump sum due and payable at the inception of the lease and its provison that it is allowing the tenant to pay monthly as a “convenience,” is void as a matter of law as violative of RPAPL § 702.
Plaintiff argues that RPAPL § 702 does not apply to the lease at issue here, because it ran and expired prior to the effective date of § 702, which was June 14, 2019. However, this action was not commenced until 2021. Nothing in the statute limits its applicability to tenancies created (and terminated) prior to the effective date of the lease. Even so, RPAPL § 702 appears to be a codification of the common law's understanding of rent (“Rent is a normal incident of the relationship of landlord and tenant. The term implies a fixed sum to be paid at certain times for the use of property,”) (74 NY Jur. 2d Landlord and Tenant § 342) so that the offending clause here would be void as violative of due process, as it is inherently contradictory, vague and misleading.
Besides finding that the offending clause here violates RPAPL § 702 and fails as well for vagueness, the court also holds that the clause renders the contract one of “adhesion,” and is therefore “unconscionable and against public policy” and unenforceable (Chili Venture LLC v. Stahl, 54 Misc. 3d 461, 466, 39 N.Y.S.3d 735 [Rochester City Ct. 2016], citing (Molino v. Sagamore, 105 A.D.3d 922, 923, 963 N.Y.S.2d 355 [2d Dept. 2013], quoting Matter of Love'M Sheltering, Inc. v. County of Suffolk, 33 A.D.3d 923, 924, 824 N.Y.S.2d 98 [2d Dept. 2006]); see further 15–79 Corbin on Contracts § 79.1 [“The law has a long history of recognizing the general rule that certain contracts, though properly entered into in all other respects, will not be enforced, or at least will not be enforced fully, if found to be contrary to public policy”]).
While it is true that leases, in particular, are known for the rights that tenants often waive within the four corners of the documents (see 159 MP Corp. v. Redbridge Bedford, LLC, 160 A.D.3d 176, 188, 71 N.Y.S.3d 87 [2d Dept. 2018], overturned due to legislative action, affd, 33 N.Y.3d 353, 104 N.Y.S.3d 1, 128 N.E.3d 128 ), here the parties were not equally “sophisticated entities that negotiated at arm's length,” (id.) but rather, were grossly disproportionate in their relative bargaining power. LC Apartments is an arm or subsidiary of Mark IV Enterprises, well-known to be one of the area's largest developer, manager and owner of multi-unit apartments.
Additionally, the moratorium in New York on evictions (New York Laws of 2020 S. 9114/A. 11181), and the executive orders issued by the Governor of New York that followed extending those protections, reflect a public policy that implicitly recognizes the fundamental right to shelter and sees a societal benefit to protecting the ability of tenants to acquire housing (see e.g. President Franklin Roosevelt, State of the Union Address on Tuesday January 11, 1944, in which he proposed a “Second Bill of Rights,” which included the recognition of a “right of every family to a decent home”) (see also United Nations Declaration of Human Rights, Article 25).
New York, for at least the foreseeable future, has substantially tipped the legal playing field in favor of tenants, and implicitly rejects the view of tenants as merely equal players in a world of freely contracting parties (see e.g. Baltimore & Ohio Southwestern R. Co. v. Voigt, 176 U.S. 498, 505–506, 20 S.Ct. 385, 44 L.Ed. 560 (1900)), and rather, lays substantial emphasis, in any proceeding involving the rights of residential tenants vis a vis landlords, on the relevance of a fundamental human right.
Acceleration clauses such as the one at issue herein, which treats the rent as due and payable in one lump sum but allowed to be in monthly installments for the “convenience” of the tenant, are then void as against public.
Accordingly, the motion to dismiss is GRANTED 1
Defendants have brought two counterclaims that merit attention. One is for recovery of amounts that were collected pursuant to an income execution before the supreme court judgment was vacated by this court. LC Apartments claims that the money is an offset against sums owed to it for unpaid rent. Since the plaintiff's action has been dismissed, the application by the Trovatos for recovery of that money is GRANTED. Even aside from the dismissal, LC Apartments had no right to continue to hold that money after its judgment had been vacated and its action on which the judgment was predicated had been dismissed.
The defendants’ second counterclaim is for the recovery of their security deposit. LC Apartments claims it never collected a security deposit from the Trovatos, and to prove the point, counsel for LC Apartments affirms that he knows from “personal knowledge” that LC Apartments stopped collecting security deposits from its tenants in 2014. He also presents other leases from other tenants as a way of proving that LC Apartments no longer accepts security deposits. Thus, it says, that the lack of a security deposit has been proven “beyond a reasonable doubt,” and that the claim by the Trovatos that they paid a security deposit in the amount of $905.00 “is rapidly approaching frivolity.” He directs the Court to the definition of frivolous in Part 130-1 of the Rules of the Chief Administrative Judge.
Actually, it is the plaintiff's claim that borders on frivolity, and in particular, its argument that evidence of other leases entered into by LC Apartments somehow proves its point “beyond a reasonable doubt.” The assertion by the Trovatos that they in fact paid a security deposit, which is set forth in an affidavit and thus admissible, is not frivolous and merely creates an issue of fact to be determined at a trial.
Finally, the Trovatos moved for dismissal of the Complaint on the ground that the Town of Gates court proceeding and judgment barred any further plenary action. The court rejects that argument as a basis for dismissal (see 172 Van Duzer Realty Corp. v. Globe Alumni Student Assistance Ass'n, Inc., 24 N.Y.3d 528, 534, 2 N.Y.S.3d 39, 25 N.E.3d 952 : “As an initial matter, we reject defendants’ res judicata argument because the Civil Court was without authority to address a claim for the balance of rent due under the acceleration clause in Van Duzer's holdover proceeding,” citing Ross Realty v. V & A Fabricators, Inc., 42 A.D.3d 246, 836 N.Y.S.2d 242 [2d Dept. 2007]; Marketplace v. Smith, 181 Misc. 2d 440, 442-443, 694 N.Y.S.2d 893 [Henrietta Just. Ct., Monroe County 1999]).
Accordingly, the motion (number 1) to dismiss the complaint is GRANTED.
The motion (number 2) to dismiss the first counterclaim for return of the security deposit and double damages and attorney fees is DENIED.
The motion (number 2) to dismiss the second counterclaim in the Complaint, which is to recover the money seized from an income execution that was later vacated, is DENIED.
The motion (number 3) by the defendant Trovatos for a default judgment for plaintiff's failure to serve a Reply to the counterclaims is DENIED, and the motion (number 4) by the plaintiff LC Apartments for leave to serve and file an amended Reply is GRANTED. The Plaintiff shall serve its Amended Reply within 20 days of the date of entry of this Order.
The alternative relief in the same motion for summary judgment as to each of the counter claims is DENIED WITH LEAVE TO RENEW with respect to the claim for a security deposit, upon LC Apartments serving an amended Reply.
With respect to the claim for money wrongfully retained, the plaintiff LC Apartments is directed to return the money immediately, and the defendants’ motion for summary judgment on that issue is GRANTED.
1. LC Apartments has also included in its demand for damages not only the future rents but alleged damage to the apartment. The damage having occurred before the Trovatos left the apartment, that sum should have been made a part of the proceeding in the town court, and in failing to do so, LC Apartments elected their remedy and are prevented from bringing it in the plenary action.
Christopher S. Ciaccio, J.