CHILI VENTURE LLC v. STAHL

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CHILI VENTURE LLC, Plaintiff, v. Debra STAHL, Defendant.

No. CV–3065–16.

Decided: October 24, 2016

Boylan Code, Attorneys at Law (Jamie Michelle Cain, Esq., of counsel), for plaintiff. No appearance by defendant.

Plaintiff Chili Venture LLC has sued defendant Debra Stahl for $7,974.22 in money damages and legal fees associated with defendant's rental of a unit in plaintiff's apartment complex in Chili, New York. The Summons and Complaint were served personally on defendant on April 27, 2016. Defendant has not answered the Summons and Complaint.

Plaintiff has now submitted an ex parte motion for entry of a default judgment against defendant that raises various claims for damages. Because defendant has failed to respond to plaintiff's Complaint, the factual allegations regarding defendant's liability are presumed to be true. Nonetheless, the Court must analyze plaintiff's various claims under applicable law.

To obtain a judgment against a defaulting defendant, a plaintiff must submit “the requisite proof” that it is entitled to the requested judgment. C.P.L.R. § 3215(a). Such proof must include proof of “the facts constituting the claim, the default, and the amount due.” C.P.L.R. § 3215(f). To satisfy the factual proof requirements of C.P.L.R. § 3215, a plaintiff must submit documentation demonstrating that “a viable cause of action exists.” Woodson v. Mendon Leasing Corp., 100 N.Y.2d 62, 72, 760 N.Y.S.2d 727, 790 N.E.2d 1156 (2003). See Walley v. Leatherstocking Healthcare, LLC, 79 A.D.3d 1236, 1238, 913 N.Y.S.2d 380 (3rd Dep't 2010). The Court's legal analysis with respect to plaintiff's various claims is discussed below.

Factual Background

According to plaintiff's Complaint and supporting documents, plaintiff and defendant signed a written lease for the rental of an apartment in plaintiff's apartment complex on April 15, 2010. At that time, defendant gave plaintiff a security deposit of $1,400.00. On February 21, 2014, plaintiff and defendant signed a lease renewal agreement for a one-year term from March 31, 2014 through March 31, 2015.

Plaintiff commenced a summary eviction proceeding in Chili Town Court against defendant for alleged nonpayment of rent on October 1, 2014. On October 16, 2014, the court granted plaintiff's petition to recover possession of the premises and issued a warrant of eviction against defendant, but did not award money damages because defendant was not personally served with the petition.1 Plaintiff now seeks entry of a default judgment against defendant in the amount of $7,149.22 for back rent, late fees, accelerated rent, gas and electric charges, and attorney's fees.

October 2014 Rent and Late Fees

Pursuant to the parties' February 21, 2014 lease renewal, defendant was required to pay $845.00 in monthly rent, plus a $40.00 pet fee by the first of every month. Plaintiff alleges that defendant failed to pay all but $ .34 of her October 2014 rent and pet fee. Accordingly, plaintiff is entitled to recover $884.66 for October 2014's rent and pet fee from defendant.

Plaintiff seeks $106.00 for late fees related to defendant's failure to pay October 2014 rent. The parties' lease provides that the landlord is entitled to a late fee of $50.00 for monthly rent that is not paid by the 3rd of the month, plus an additional $2.00 per day that the rent remains unpaid. The Court finds that a monthly fee of more than $50.00 for late rent is unconscionable as a matter of law. See Real Property Law § 235–c(1); Spring Valley Gardens Associates v. Earle, 112 Misc.2d 786, 787, 447 N.Y.S.2d 629 (Rockland County Ct.1982); Rock v. Klepper, 23 Misc.3d 1103(A), 2009 WL865514, *6 (Plattsburgh City Ct.2009); VP Village Park, LLC v. Victor, 40 Misc.3d 1233(A), 2013 WL 4565918, *3–*4 (Pleasant Valley Just. Ct.2013). Accordingly, plaintiff is entitled to recover $50.00 for October 2014's late fee.

Accelerated Rent

According to the parties' lease, the tenant is required to pay all future rent due under the lease if the “Lease is canceled, or Landlord takes back the Apartment.” Whether defendant, an evicted tenant, is liable for future rent under the lease's accelerated rent clause in her residential lease is the issue presented by plaintiff's motion.

R.P.A.P.L., § 749(3) provides that the issuance of a warrant of eviction “cancels the agreement under which the person removed held the premises, and annuls the relationship between the landlord and tenant.” Stated differently, a judgment of eviction terminates a lease between a landlord and tenant as a matter of law. See Lazy Acres Park, LLC v. Ferretti, 118 A.D.3d 1406, 988 N.Y.S.2d 364, lv. to appeal denied 120 A.D.3d 1612, 993 N.Y.S.2d 523 (4th Dep't 2014), lv. to appeal dismissed 25 N.Y.3d 965, 8 N.Y.S.3d 262, 30 N.E.3d 906 (2015); First Citizens National Bank v. Koronowski, 46 A.D.3d 1474, 1475, 848 N.Y.S.2d 494 (4th Dep't 2007); Weichert v. O'Neill, 245 A.D.2d 1121, 667 N.Y.S.2d 527 (4th Dep't 1997). For this reason, an evicted tenant is generally not liable for rent that would have been owed for the remainder of the lease's term.

Plaintiff claims that it is nevertheless entitled to accelerated rent from defendant because the lease's accelerated rent provision supersedes R.P.A.P.L § 749(3). In 1995, the Court of Appeals examined the enforceability of a commercial lease's rent acceleration clause in the context of a commercial tenant that voluntarily abandoned the premises. In Holy Prop. Ltd., L.P. v. Kenneth Cole Productions, Inc., 87 N.Y.2d 130, 637 N.Y.S.2d 964, 661 N.E.2d 694 (1995), the Court held that under these circumstances, a landlord has no duty to mitigate damages under a commercial lease's rent acceleration clause.

In Rios v. Carrillo, 53 A.D.3d 111, 861 N.Y.S.2d 129 (2nd Dep't 2008), the Second Department clarified that the Holy Properties ruling extends in similar circumstances to rent acceleration clauses in residential leases. Specifically, in a case involving a residential tenant who voluntarily abandoned the premises, the Rios Court held that unless a surrender of the lease by operation of law had occurred, the landlord was entitled to enforce the lease's rent acceleration clause without attempting to mitigate damages. See Rios v. Carrillo, 53 A.D.3d at 114, 861 N.Y.S.2d 129. However, because the lower court had not considered whether a surrender of the lease by operation of law, which would have terminated the parties' lease obligations to each other, had taken place, the Rios Court remanded the case for the lower court to do so.

A surrender of a lease by operation of law occurs “ “when the parties to a lease both do some act so inconsistent with the landlord-tenant relationship that it indicates their intent to deem the lease terminated.” Riverside Research Inst. v. KMGA, Inc., 68 N.Y.2d 689, 691–92, 506 N.Y.S.2d 302, 497 N.E.2d 669 (1986). In this case, both parties manifestly acted inconsistently with their landlord-tenant relationship. Defendant failed to pay her rent. Plaintiff sought and obtained a court-ordered warrant of eviction against defendant. Under these circumstances, as the Second Department has held, “[t]he issuance of the warrant of eviction terminated any existing tenancy and annulled the landlord-tenant relationship by operation of law.” Frey v. Rose, 51 A.D.3d 859, 861, 859 N.Y.S.2d 219 (2nd Dep't 2008), citing Rocar Realty Northeast, Inc. v. Jefferson Valley Mall Ltd. Partnership, 38 A.D.3d 744, 747, 833 N.Y.S.2d 522 (2nd Dep't 2007). See R.P.A.P.L. § 749(3).

The Rocar Realty Court held that a lease provision requiring the landlord to pay the tenant for improvements to the premises was nullified because the tenant's eviction annulled the landlord-tenant relationship by operation of law. See Rocar Realty, 38 A.D.3d at 747, 833 N.Y.S.2d 522. Similarly, the Frey v. Rose Court held that a lease provision requiring the landlord to extend the assignee's rental term was nullified because the tenant's eviction annulled the landlord-tenant relationship by operation of law. See Frey v. Rose, 51 A.D.3d at 861, 859 N.Y.S.2d 219. See also Chestnut Realty Corp. v. Kaminsky, 132 A.D.3d 797, 798, 18 N.Y.S.3d 650 (2nd Dep't 2015) (because “there was a surrender of the parties' lease by operation of law ․ the defendants are not liable for the rental arrears at issue”); Benderson v. Poss, 142 A.D.2d 937, 530 N.Y.S.2d 362 (4th Dep't 1988) (landlord who locked tenant out of premises not entitled to future rent).

As in Rocar Realty and Frey v. Rose, the issuance of the warrant of eviction in this case annulled the landlord-tenant relationship by operation of law. Consequently, as in Rocar Realty and Frey v. Rose, the lease's accelerated rent provision was nullified upon the issuance of the warrant of eviction, and is therefore unenforceable. But cf. H.L. Realty, LLC v. Edwards, 131 A.D.3d 573, 575, 15 N.Y.S.3d 413 (2nd Dep't 2015) (commercial lease's accelerated rent clause enforceable following tenant's eviction).

Regardless of whether the lease in this action was surrendered by operation of law, the acceleration clause in the parties' residential lease in this action is also unenforceable because it is unconscionable. Under Real Property Law § 235–c(1), when a court finds, as a matter of law, that a lease provision is unconscionable, a court may decline to enforce the unconscionable clause or limit its application to avoid an unconscionable result.

The Court of Appeals has emphasized that an accelerated rent clause is enforceable only if “ ‘the clause is neither unconscionable nor contrary to public policy.’ “ 172 Van Duzer Realty Corp. v. Globe Alumni Student Assistance Ass'n, Inc., 24 N.Y.3d 528, 536, 2 N.Y.S.3d 39, 25 N.E.3d 952 (2014), quoting JMD Holding Corp. v. Congress Fin. Corp., 4 N.Y.3d 373, 379, 795 N.Y.S.2d 502, 828 N.E.2d 604 (2005). Whether a lease provision is unconscionable “is a question of law, giving due consideration to the nature of the contract and the circumstances.” 172 Van Duzer Realty Corp., 24 N.Y.3d at 536, 2 N.Y.S.3d 39, 25 N.E.3d 952.

This Court finds, as a matter of law, that the accelerated rent clause in the parties' residential lease is unconscionable because it abrogates a residential tenant's statutory right in a contract of adhesion. An agreement between two parties is a contract of adhesion when:

[it] contains terms that are unfair and nonnegotiable and arises from a disparity of bargaining power or oppressive tactics.

Molino v. Sagamore, 105 A.D.3d 922, 923, 963 N.Y.S.2d 355 (2nd Dep't 2013), quoting Love'M Sheltering, Inc. v. County of Suffolk, 33 A, D, 3d 923, 924 (2nd Dep't 2006). See VP Village Park, LLC v. Victor, 40 Misc.3d 1233(A), 2013 WL 4565918 at *3. In evaluating whether a contract is one of adhesion, a court must consider the following factors: (1) whether the contract involves a necessity of life; (2) whether the contract terms excessively benefit the offeror; (3) whether the contract provision provides an economic or other advantage to the offeror; and (4) whether the proposed contract is offered on a take it or leave it basis. See Spring Valley Gardens Associates v. Earle, 112 Misc.2d 786, 787, 447 N.Y.S.2d 629 (Rockland County Ct.1982); Weidman v. Tomaselli, 81 Misc.2d 328, 365 N.Y.S.2d 681 (Rockland County Ct.), aff'd 84 Misc.2d 782, 386 N.Y.S.2d 276 (App. Term, 9th & 10th Jud. Dists.1975).

The parties' lease in this action reflects all the elements of a contract of adhesion. The lease involves housing for defendant, a basic necessity of life. The lease includes many provisions that overwhelmingly benefit plaintiff to the detriment of defendant, and demonstrate a grossly inequitable bargain between the parties.2 Many of the lease provisions, including its accelerated rent clause, provide a considerable economic advantage to the plaintiff. Finally, the parties' lease was unmistakably not the product of arm's length negotiations between equally sophisticated parties. See Medlock Crossing Shopping Center Duluth, Ga., Ltd. Partnership v. Kitchen & Bath Studio, Inc., 126 A.D.3d 1463, 1464, 6 N.Y.S.3d 834 (4th Dep't 2015); Wagner v. Ploch, 85 A.D.3d 1547, 1548, 925 N.Y.S.2d 273 (4th Dep't 2011). To the contrary, it is evident that the lease was drafted exclusively by plaintiff, and that if defendant wanted to lease the apartment, she had no choice but to consent to it in its entirety.

The existence of the fourth element of an adhesion contract in this case is underscored by the fact that the parties did not sign the lease until April 15, 2010, almost a month after the lease's March 10, 2010 start date. Apparently, defendant had already moved into the apartment before she was given a copy of the lease to read and sign. Clearly, if she had raised any concerns about any particular clause, she would have been forced to move out of her apartment less than a month after she moved in.

Plainly, then, the lease in this action is a contract of adhesion. As noted above, the lease's accelerated rent clause contradicts the public policy considerations incorporated in R.P.A.P.L. § 749(3), which provides that issuance of a warrant of eviction cancels each party's lease obligations to each other. When a provision in an adhesion lease abrogates public policy as reflected in a person's statutory rights, New York State courts have not hesitated to nullify the lease provision as unconscionable and unenforceable as a matter of law. See, e.g., Wagner v. Waterman Estates, LLC, 128 A.D.3d 1504, 1507, 9 N.Y.S.3d 500 (4th Dep't 2015); Wagner v. Ploch, 85 A.D.3d at 1548, 925 N.Y.S.2d 273; Extell Belnord LLC v. Uppman, 113 A.D.3d 1, 10, 976 N.Y.S.2d 22 (1st Dep't 2013); Drucker v. Mauro, 30 A.D.3d 37, 39, 814 N.Y.S.2d 43 (1st Dep't), appeal dismissed 7 N.Y.3d 844, 823 N.Y.S.2d 772, 857 N.E.2d 67 (2006); Blecher v. Colletti, 154 Misc.2d 760, 761, 595 N.Y.S.2d 662 (App. Term, 2nd & 11th Jud. Dists.1993); Spring Valley Gardens Associates v. Earle, 112 Misc.2d at 788–89, 447 N.Y.S.2d 629; Cooper v. Back on Track Group, Inc., 45 Misc.3d 623, 630, 994 N.Y.S.2d 251 (Kings Cty. Civil Ct.2014); McCormick v. Resurrection Homes, 38 Misc.3d 847, 850–51, 956 N.Y.S.2d 844 (Kings Cty. Civil Ct.2012); Ross v. Genova, 52 Misc.3d 1205(A), 2016 WL 3677217, *3 (Kings Cty. Civ.Ct.2016).

For reasons similar to those underlying the decisions cited above, at least two New York State courts have held that a residential lease's rent acceleration clause in an adhesion lease is unconscionable and therefore unenforceable. See Knudsen v. Lax, 17 Misc.3d 350, 842 N.Y.S.2d 341 (Jefferson County Ct.2007); Jonassen v. Kirtland, 24 Misc.3d 1241(A), 2009 WL 2619235 (Ithaca City Ct.2009). This Court concurs with the legal analyses and conclusions of these courts, and declines to enforce the residential lease's rent acceleration clause following defendant's eviction in this action as unconscionable.3

Cleaning and Repair Costs

Plaintiff asserts that defendant is liable for damages associated with her former apartment. Specifically, plaintiff seeks $400.00 for priming and painting the unit; $54.00 for cleaning the unit; $100.00 for repairing holes in the living room wall; $108.00 for removing garbage; and $108.00 for exterminating fleas.

Generally, a tenant is financially liable for the cost of repairs to an apartment if the tenant “caused damage beyond that attributable to ordinary wear and tear.” Strafaci v. Meadowbrook Pointe Dev. Corp., 33 Misc.3d 142(A), 2011 WL 6142767, *1 (App. Term 9th & 10th Jud. Dists.2011). See Kamara v. Pavia, 11 Misc.3d 1051(A), 2006 WL 304894, *4 (Rochester City Ct.2006); McCormick v. Moran, 182 Misc.2d 568, 569, 699 N.Y.S.2d 273 (Watertown City Ct.1999). In this case, plaintiff's documents demonstrate that defendant's apartment “was a disaster” after she was evicted. Although the priming and painting charges appear to be excessive, additional work was necessary “due to nicotine.”

Plaintiff adequately demonstrates that the charges assessed to defendant are for damages to the unit that were beyond ordinary wear and tear. For this reason, defendant is liable to plaintiff for $770 .00 for property damages.

Gas and Electricity Charges

Plaintiff seeks $633.56 from defendant for gas and electric charges from November 2014 through March 2015, well after she was evicted on October 16, 2014. To recover such damages from defendant, plaintiff relies on a lease clause that provides:

Tenant agrees to remain, at all times, financially responsible for the Gas & Electric service in the apartment while actively on a Lease agreement.

After she was evicted, however, defendant was no longer “actively on a Lease agreement.” See R.P.A.P.L. § 749(3). For this reason, this lease provision does not entitle plaintiff to recover from defendant the cost of gas or electric services for November 2014 through March 2015.4

Legal Fees

Plaintiff seeks legal fees related to both defendant's October 2014 eviction proceeding and this action. Under the lease, defendant is liable for reasonable attorney's fees incurred by plaintiff to enforce defendant's lease obligations. The Court finds that plaintiff is entitled to a reasonable attorney's fee of $350.00 for the eviction proceeding and $250.00 for this action, for a total of $600.00. See Fiberglass Fabricators, Inc. v. C.O. Falter Const. Corp., 117 A.D.3d 1540, 1541, 985 N.Y.S.2d 804 (4th Dep't 2014).

Conclusion

For the reasons discussed above, plaintiff is entitled to damages related to its various claims in the amount of $1,704.66, plus $600.00 in attorney's fees, for a total of $2,304.66. As previously noted, though, defendant gave plaintiff a $1,400.00 security deposit when she rented the apartment in the spring of 2010. There is no indication in plaintiff's motion papers that plaintiff returned defendant's security deposit to defendant. Accordingly, plaintiff is entitled to entry of a default judgment against defendant for damages and attorney's fees in the amount of $904.66, plus statutory interest and costs.

SO ORDERED.

FOOTNOTES

1.  Paragraph 7 of plaintiff's attorney's March 28, 2016 Affirmation in Support of plaintiff's Motion states, “Defendant(s) vacated the Premises on or about October 20, 2014.” Her Affirmation fails to explain that defendant's vacatur was the result of the issuance of a court-ordered warrant of eviction.

2.  For example, under the parties' lease, an evicted tenant “must continue to pay rent, damages, loss and expenses without offset” even if the landlord relets the apartment and collects rent from the new tenant.

3.  LC Apartments, LLC v. Guzman, 50 Misc.3d 1205(A), 2015 WL 9594361 (Monroe County Ct.2015) is not to the contrary. Unlike the evicted defendant in this action, the residential defendant in that action voluntarily abandoned the premises. The Monroe County Court ruled that under those circumstances, a surrender by operation of law had not occurred, and therefore upheld the lease's accelerated rent clause. Notably, the court did not consider whether the accelerated rent clause in that action was unconscionable.

4.  To the extent this lease provision is ambiguous, any ambiguity must be construed against plaintiff as the drafter of the lease. See Guardian Life Ins. Co. of America v. Schaefer, 70 N.Y.2d 888, 890, 524 N.Y.S.2d 377, 519 N.E.2d 288 (1987); Agostinelli v. Stein, 17 A.D.3d 982, 985, 794 N.Y.S.2d 759 (4th Dep't 2005). See also LC Apartments, LLC v. Guzman, 50 Misc.3d 1205(A), 2015 WL 9594361 at *3 (unreasonable to charge tenant who had vacated property for subsequent utility services).

ELLEN M. YACKNIN, J.