498 W. End Ave. LLC v. Reynolds

• Decision Date: 23 July 2018
• Docket Number: Index No. 70878/2016
• Citation: 2018 NY Slip Op 31708 (U)
• Parties: 498 WEST END AVENUE LLC, Petitioner, v. JAN REYNOLDS and ARIEL ELIAZ, Respondents.
• Court: New York Civil Court

2018 NY Slip Op 31708(U)

498 WEST END AVENUE LLC, Petitioner, v. JAN REYNOLDS and ARIEL ELIAZ, Respondents.

Index No. 70878/2016

CIVIL COURT OF THE CITY OF NEW YORK COUNTY OF NEW YORK: HOUSING PART C

July 23, 2018

DECISION/ORDER

Present: Hon. Jack Stoller Judge, Housing Court

Recitation, as required by CPLR §2219(a), of the papers considered in the review of this motion.

Papers

Numbered

Notice of Motion and Supplemental Affidavits Annexed

1, 2, 3

Affirmation and: Affidavit In Opposition

4, 5

Reply Affirmation

6

Upon the foregoing cited papers, the Decision and Order On this Motion are as follows:

498 West End Avenue LLC, the petitioner in this proceeding ("Petitioner"), commenced this holdover proceeding against Jan Reynolds ("Respondent"), a respondent in this proceeding, and Ariel Eliaz ("Co-Respondent"), another respondent in this proceeding (collectively, "Respondents"), seeking possession of 498 West End Avenue, Apt. 10A, New York, New York ("the subject premises") on the ground that Respondent incurably breached a substantial obligation of her tenancy by renting the subject premises out as if the subject premises was a hotel room. Respondent interposed an answer. Petitioner now moves for summary judgment in its favor.

There is no dispute of material fact that Petitioner is the proper party to commence this proceeding, that Respondent and Petitioner have been in a landlord/tenant relationship with one another, that the subject premises is subject to the Rent Stabilization Law, that Respondent had a lease that commenced on January 1, 2013 and expired on December 31, 2014 with a legal regulated rent of $4,475.21, or $147.13 per day, and a preferential rent of $3,698.39, or $121.59 a day, and that Respondent had a subsequent lease commencing January 1, 2015 and expiring on December 31, 2016 with a legal regulated rent of $4,500.00, or $150.77 per day and a preferential rent of $3,800.00, or $124.76 per day.¹ The record on this motion practice shows no dispute of fact that, from September 10, 2014 through June 30, 2016, Respondent rented the subject premises out on Airbnb² to eighteen people, thirteen of whom for less than 30 days. There is no dispute that Petitioner effectuated service of a predicate notice on Respondent pursuant to the Rent Stabilization Code prior to the commencement of this proceeding, but did not serve a notice to cure.

The availability of a cure for Respondent comprises the central dispute between the parties. Rent-regulated tenants who rent out their apartments to transient individuals at rates higher than allowed by applicable regulations are engaged in conduct in the nature of subletting rather than taking in roommates, and engaged in conduct in the nature of profiteering, which is an incurable violation, for which no notice to cure is required. Aurora Assocs. LLC v. Hennen, 157A.D.3d 608 (1^st Dept. 2018).

The Court can determine whether a rent-regulated tenant has profiteered by totaling the income the tenant generated from subletting and comparing that sum with the aggregate of the tenant's daily rent for the same number of days that the tenant sublet. Goldstein v. Lipetz, 150 A.D.3d 562, 565 (1^st Dept.), appeal dismissed sub nom. Pearce v. Lipetz, 30 N.Y.3d 1009 (2017) (finding that a tenant had Airbnb guests for 338 days, that the tenant gained $33,592.00 over the course of those 338 days, and that the tenant's rent liability, based on the tenant's daily rent, was only $19,536.40 for those 338 days, thus showing profiteering, as the tenant collected 172% in sublet income of the tenant's rent liability for that period).³ Tenants may not cure when they collect more from subletting then they owe in rent. Id., 230 E. 48^th St. LLC v. Campisi, 59 Misc.3d 148(A)(App. Term 1^st Dept. 2018)(the tenant collected 400% of her aggregate rent liability), Brookford, LLC v. Penraat, 47 Misc. 3d 723, 725-26 (S. Ct. N.Y. Co. 2014) (Edmead, J.)(the tenant collected 212% of her aggregate rent liability), 335-7 LLC v. Steele, 2015 N.Y. Misc. LEXIS 4315, at *1-2 (Civ. Ct. N.Y. Co. 2015), aff'd, 53 Misc.3d 150(A)(App. Term 1^st Dept. 2016), Cont'l Towers Ltd. P'ship v. Freuman, 128 Misc.2d 680, 680-81 (App. Term 1^st Dept. 1985)(the tenants collected more than 200% of their aggregate: rent liability), W. 148 LLC v. Yonke, 11 Misc.3d 40, 41 (App. Term 1^st Dept. 2006)(the tenant collected 200% of her aggregate rent liability), Goldstein, supra, 150 A.D.3d at 565 (the tenant collected 172% of heraggregate rent liability).

By contrast, a rent stabilized tenant who overcharges a subtenant is not subject to eviction where her conduct does not rise to the level of profiteering and she has cured. 230 E. 48^th St. LLC, supra, 59 Misc.3d at 148(A), 54 Greene St. Realty Corp. v. Shook, 8 A.D.3d 168 (1^st Dept. 2004), appeal denied, 4 N.Y.3d 704 (2005)(an overcharge on a sublet was "small" and the record did not contain evidence of bad faith or intent to profiteer), Ariel Assocs., L.L.C. v. Brown, 271 A.D.2d 369, 369-70 (1^st Dept. 2000). Cf. Roxborough Apartments Corp. v. Becker, 11 Misc.3d 99, 100 (App. Term 1^st Dept. 2006)(a total overcharge of roommates totaling 107.4%, collectively, of the rent did not rise to a level of profiteering requiring eviction of the long-term tenant without giving him an opportunity to cure).⁴

The evidence Petitioner presents on its motion shows that the total Respondent collected in sublet income over the course of 303 days is $28,992.00. However, the aggregate amount Respondent paid in rent over the course of those 303 days was $38,232.15,⁵ more than the amount Respondent collected in sublet income. To be precise, the sublet income Respondent collected was 76% of her rent liability for the days on Which she sublet the subject premises. Nodiscernible apposite authority finds that a tenant who collected less sublet income than her rent liability profiteered to the point of precluding a cure.

Petitioner argues that the 76% of Respondent's rent that Respondent collected from her subtenants still precludes a cure as a matter of law by citing the proposition that rent-stabilized tenants may only charge roommates their proportionate share of the legal regulated rent, 9 N.Y.C.R.R. §2525.7(b) meaning, in essence, a pro rata share of the rent. 156-158 Second Ave., LLC v. Delfino, 18 Misc.3d 1144(A)(Civ. Ct. N.Y. Co. 2008). Petitioner cites authority in support of its position, to wit, a footnote from Goldstein, supra, that quotes the tenant therein characterizing her guests as "roommates" and concludes that the lawful charge would have been based on half of the tenant's rent, not the full rent. Goldstein, supra, 150 A.D.3d at 565 n.3.

Assuming arguendo that Respondent could have only charged her guests half of her rent, and as Respondent's aggregate rent liability for the 303 days that she sublet the subject premises was $38,232.15, Respondent would have only been able to charge her subtenants $19,116.08 in order to preserve an opportunity to cure. Respondent instead charged her subtenants $28,992.00, an aggregate overcharge (by this logic) of $9,875.92 ("the aggregate overcharge").

Respondent offers evidence in opposition to the motion that she refunded at least a portion of the aggregate overcharge to a number of her prior subtenants, a factual distinction between this proceeding and the authority depriving like tenants of an opportunity to cure. See Goldstein, supra, 150 A.D.3d at 571 ("not only does [the tenant] not allege that she has cured by refunding the overcharges to any of her 93 former subtenants, she has never offered, either before the motion court or upon this appeal, to refund the overcharges to the subtenants. This is notsurprising. Given that [the tenant] hosted 93 different subtenants, with whom she had no direct financial dealings, it appears that the overcharges that [the tenant] collected could not practicably be refunded.") In contrast, Respondent shows in her opposition to the motion that she has already refunded $4,701.00 to her various of her subtenants, which reduces the aggregate overcharge from $9,875.92 to $5,174.92.

Petitioner's evidence shows that five people stayed at the subject premises for at least 30 days each. Respondent has not made a showing that she offered refunds those five individuals. However, an occupant of at least 30 days may not be considered "transient" for purposes of permitting a cure. It is the sublet of a rent-regulated apartment to "transient" individuals that constitutes an incurable violation. Aurora Assocs. LLC, supra, 157 A.D.3d at 608. The Multiple Dwelling Law defines "permanent residence purposes" as occupancy of a dwelling unit by the same natural person for 30 consecutive days or more, MDL §4(8)(a), compelling the conclusion that "transient occupancy" is defined as less than 30 days. City of N.Y. v. Smart Apartments LLC, 39 Misc.3d 221, 233 (S. Ct. N.Y. Co. 2013). See Also Brookford, LLC, supra, 47 Misc.3d at 745 ("[t]he apartment loses its 'permanent' residential character by hosting transient occupancies for less than 30 days").

Of the five people who stayed in the subject premises for at least 30 days, two of those stayed at the subject premises for exactly 30 days, and one for 32 days. Given the borderline time frame of their occupancy, for the sake of argument, the Court gives Petitioner the benefit of the doubt and assumes that those three occupants are also "transient." Of the remaining two occupants ("the two longer-term occupants"), Petitioner's evidence shows that one stayed at thesubject premises for 53 days, paying Respondent a total of $1,948.00, and the other stayed at the subject premises for 80 days, paying Respondent a total of $5,017.00, both time frames comfortably greater than the 30-day time frame deemed to be "transient."

Summary judgment is a drastic remedy. O'Brien v. Port Auth. of N.Y. & N J., 29 N.Y.3d 27, 37 (2017). On a motion for summary judgment, all of the evidence must be viewed in the light...