Brookford, LLC v. Penraat

• Decision Date: 19 December 2014
• Docket Number: 159605/14
• Citation: 2014 N.Y. Slip Op. 24399,8 N.Y.S.3d 859,47 Misc.3d 723
• Parties: BROOKFORD, LLC, Plaintiff, v. Noelle PENRAAT, Defendant.
• Court: New York Supreme Court

47 Misc.3d 723

8 N.Y.S.3d 859

2014 N.Y. Slip Op. 24399

BROOKFORD, LLC, Plaintiff

v.Noelle PENRAAT, Defendant.

159605/14

Supreme Court, New York County, New York.

Dec. 19, 2014.

Rosenberg & Estis, P.C., New York City, for plaintiff.

Alterman & Boop, LLP, New York City, for defendant.

Opinion

CAROL R. EDMEAD, J.

Defendant Noelle Penraat (“defendant”), resides in four-bedroom, rent-controlled duplex apartment on Central Park West¹ (the “ Apartment”). Over the past two years,² defendant has had 135 short-term rentals, some as short as for three nights, but none exceeding 21 days, facilitated by the use of the website Airbnb (www.Airbnb.com).

Defendant's landlord, Brookfield, LLC (“plaintiff” or “Building Owner”), now moves by order to show cause for a preliminary injunction enjoining defendant from, inter alia, advertising and renting the Apartment to tourists and other visitors for stays of less than 30 days, in violation of Rent Control Law (“RCL”) § 26 –408(a)(1) ; 9 NYCRR § 2204.2(a)(1) of the regulations implementing the RCL; Multiple Dwelling Law (“MDL”) § 4.8a; New York Housing Maintenance Code (“HMC” or “Housing Maintenance Code”) § 27–2004.a.8(a); New York City Building Code (“Building Code”) § 310.1.2; and Building certificate of occupancy (“COO”).³

Factual Background

According to the plaintiff's Treasurer, Jacob Haberman, the Building contains 43 apartments occupied by long-term residential tenants and their families. The Building also contains a pre-school, the Twin Parks Montessori School, Park West (the “School”), on the ground floor, which enrolls approximately 175 children, whose ages range from 3 months through 5 years.

The Department of Housing Preservation and Development registration (“HPD”) (see Motion, Exh. B and CO, Exh. C), classifies the Apartment as “Class A, and the permissible use is as a residential apartment only. The legal rent controlled rent for the Apartment is $4,477.47 per month, of which defendant is responsible for paying $4,193.28; defendant has a Senior Citizen Rent Increase Exemption (“SCRIE”), which freezes her rent and exempts her from rent increases (see SCRIE Owner Approval form for the Premises, dated June 16, 2014, Motion, Exh. D). Plaintiff asserts that a person eligible for SCRIE must, inter alia, rent a rent controlled or rent stabilized apartment and have a combined household income that is $50,000 or less.

Plaintiff contends that since at least February of 2012, defendant has been renting three of the four bedrooms on a continuous basis to tourists and other transient visitors (collectively, “Guests”) for stays of less than 30 days. Defendant advertises her bedrooms on Airbnb, in which she designates the three bedrooms as: (a) “Lovely Small Bedroom in Huge Apartment” (the “Small Bedroom”) (which includes a full size bed); (b) “Sunny Bedroom, Central Park View” (the “Sunny Bedroom”) (which includes a queen size bed and two large closets); and (c) “Gorgeous master bed/bath on park” (the “Master Bedroom”) (which includes a king size bed and private en suite bath).

According to the advertisements, defendant provides fresh linens and towels, toiletries, a hair-dryer, ironing facilities, kitchen, television, air conditioning, heat, ceiling fan, and Wi–Fi Internet. Guests must check-in with defendant at the beginning of their stay at 2:00 p.m. and check-out at the end of their stay by 10:00 a.m. Guests are provided with a key to the Apartment and unfettered access to, from, and within the Building. Defendant also provides Guests with: (a) reservation of the subject room and payment by credit card via Airbnb; (b) a confirmation number for the reservation; (c) a map of New York City; (d) a dolly for luggage; (e) magazines; (f) instructions on locking and unlocking the front door of the Apartment; and (g) listings of websites for discount Broadway tickets.

In exchange, defendant charges a nightly or weekly rate for lodging as follows: $75 per night or $450 per week for the Small Bedroom (and $15 per person per night for any additional person); $100 per night or $600 per week for the Sunny Bedroom (and $25 per additional person per night); and $150 per night or $1,000 per week, for the Master Bedroom. Each bedroom requires a $200.00 security deposit. Plaintiff contends that in the past year, defendant has rented the Apartment to no less than 110 different Guests-complete strangers to both herself and the lawful tenants of the Building. Thus, according to plaintiff, when defendant is successful in renting all three rooms on a weekly basis she collects approximately $8,883.33 per month, far in excess of her rent controlled rent, or approximately $106,599.96 a year. If successful in renting the Apartment year round on a nightly basis, defendant's income totals approximately $118,300 a year.

Defendant also has a cancellation policy, in which Guests who cancel their reservation more than a week in advance will be penalized 50% of the cost, plus any fees incurred. Guests who cancel less than a week in advance forfeit their entire deposit.

Plaintiff asserts that it has never given defendant permission to operate a commercial enterprise out of the Apartment, and such operation significantly compromises the use, safety, and security of children.

Notably, the persons who make up the Landlord live in the Building and are directly affected by defendant's actions.

On July 21, 2014, plaintiff served defendant with a Thirty (30) Day Notice of Termination (the “Notice of Termination”) which stated, inter alia, that defendant has violated substantial obligations of her tenancy in that she is operating an illegal hotel and/or bed and breakfast in violation of the aforementioned rules and regulations. The Notice of Termination requires defendant to vacate the Apartment on or before August 31, 2014.

In support of injunctive relief, plaintiff argues that it is likely to succeed on the merits of its claim that defendant has substantially violated the obligations of her tenancy by utilizing her residential apartment for business purposes, and commercializing and profiteering from her operation of an illegal hotel and/or bed and breakfast out of the Apartment over a period of years in violation of RCL § 26 –408(a)(1) and 9 NYCRR § 2204.2(a)(1).⁴ Plaintiff argues that defendant's use of her Apartment undermines the very purpose of these rules, and constitutes a substantial and incurable violation of her obligations as a rent controlled tenant of the Premises. Defendant's guests are not roommates or subletters, but clients who are part of her highly organized and apparently successful hotel business. And, by renting to transient occupants for stays of less than 30 days, defendant's use violates MDL § 4.8a, HMC § 27–2004.a.8(a), Building Code § 310.1.2 (Group R–2), and the COO for the Building.

It is also argued that defendant's actions materially change the character of the residential Building and unnecessarily compromises the safety and security of the Building's tenants and their children. The Building Owner's 13 family members, ranging in ages from under 6 years old to over 80 years old (grandchildren, children and grandparents) all live in the Building and are faced with the constant threat to their life and safety from the Guests. Michael Whitman (“Whitman”), the tenant in Apartment 3S (directly below defendant's Apartment), attests that his family (which includes his wife and two minor children) is “confronted at time with elevators with groups of tourists and transients who are not residents of the building on a constant basis....The [tourists and transients] can be noisy and disturb the otherwise quiet and safe environment within this family Building.” (Affidavit, ¶ 3) Whitman “live[s] in fear for the safety of” his family, “who are forced to interact with a stream of strangers in our Building” (Affidavit, ¶ 4). Plaintiff's doorman, Maurice Sedacey (the “Doorman”) states that the Guests would “check-in with [him] at the front door of the Building at or near 2:00 p.m. as they would at any hotel” (Affidavit, ¶ 5). He logs their names in order to “track the comings and goings of visitors to the Building” (Affidavit, ¶ 5). The Doorman attests that defendant “instructed” him to allow the Guests, whose stays are “always less than 30 days,” “unfettered access to the Building after they check-in and during their stay with Defendant.” (Affidavit, ¶¶ 8–9). Plaintiff argues that the tenants of the Building should not be subjected to a steady stream of strangers coming and going throughout the Building.

Further, as a Class A dwelling, the Apartment is not properly equipped with the proper fire safety protections required of hotels in the City of New York, and presents a danger to the public health, safety, and welfare. In July 2010, MDL 4.8 was amended to prohibit the rental of any unit in Class A multiple dwellings for less than 30 days, prevent tenants looking to rent out residential units “from circumventing the strict fire and safety standards applicable to hotels,” and to protect the rights of permanent occupants who “must endure the inconvenience of hotel occupancy in their buildings.” Class A multiple dwellings are not required to and do not meet the strict safety requirements of hotels and, when illegally used as transient hotels, create a safety issue for transients who are likely unaware that they are staying in rooms offered in violation of the law.

Thus, a preliminary injunction is warranted in order to restrain defendant from operating her illegal hotel, by which defendant continuously invites a steady stream of strangers into the Building and endangers the lives and safety of both the Guests and tenants of the Building.

And, plaintiff argues, the balance of the equities weigh in its favor. The only purported injury that defendant may suffer is the suspension of operation of her illegal hotel and/or bed and breakfast, which can be compensated by money damages. If a preliminary injunction is not granted, plai...