Cobra Resources, Inc. v. Dumpl, Inc.

• Decision Date: 16 December 1987
• Citation: 138 Misc.2d 91,522 N.Y.S.2d 433
• Parties: COBRA RESOURCES, INC., Petitioner, v. DUMPL, INC., Randal Levenson, and Rustin Levenson, Respondents.
• Court: New York City Court

Page 433

522 N.Y.S.2d 433

138 Misc.2d 91

COBRA RESOURCES, INC., Petitioner, v. DUMPL, INC., Randal Levenson, and Rustin Levenson, Respondents.

Civil Court of the City of New York,

New York County, Part 52.

Dec. 16, 1987.

Leonard Seiser, New York City, for petitioner.

Hal Brodie, Hartman, Ule, Rose & Ratner, New York City, for respondents.

LEWIS R. FRIEDMAN, Judge.

This non-payment proceeding involves premises which are registered as an Interim Multiple Dwelling pursuant to the Loft Law, MDL Article 7-C. Article 7-C was enacted in 1982 (L.1982, ch 349), inter alia, to bring order to the chaotic rules governing lofts, to remove uncertainty in the status of loft tenants, and to regulate landlord tenant relationships while the premises were brought into compliance with code and zoning requirements. (MDL 280; Loft Realty Co. v. Aky Hat Corp., 123 Misc.2d 440, 474 N.Y.S.2d 204 [1984] ). The statute, a compromise effort to deal with "interim multiple dwellings" (MDL 281[1] ), provides a timetable for conversion and legalization (MDL 284[1] ) and protections for both tenants (MDL 286) and owners (MDL 285). Section 285[1] provides, in pertinent part:

Notwithstanding the provisions of section three hundred two or three hundred twenty-five of this chapter, the owner of an interim multiple dwelling may recover rent payable from residential occupants qualified for the protection of this article * * * and maintain an action or proceeding for possession of such premises for non-payment of rent, provided that he is in compliance with this article.

The underlined phrase has not been explained in the reported cases. Must the owner merely register the interim multiple dwelling with the loft board or must it allege compliance with the substantive legalization provisions as well?

Respondents here move for summary judgment, asserting, inter alia, that there is a jurisdictional defect in the petition in that it fails adequately to allege compliance with the Loft Law. Petitioner cross moves for leave to amend.

A brief review of the Loft Law puts the issue into context. Prior to 1982 the Multiple Dwelling Law had two impediments to a landlord's commencement of summary proceeding for non-payment of rent loft cases: sections 302 and 325. Section 302[1][b] prohibits non-payment proceedings in multiple dwellings where there is no valid certificate of occupancy; section 325 similarly requires a valid multiple dwelling registration statement. Residential use by three or more families makes a building a multiple dwelling (MDL 4[7] ). In the typical loft setting, the residential use violates the certificate of occupancy; the owner is, therefore, barred by MDL 302 from bringing a proceeding to recover rent. Also, since the residential use is "illegal", the building cannot be registered as a multiple dwelling with the Department of Housing Preservation and Development; a proceeding to recover rent is barred by MDL 325[2] and Administrative Code of the City of New York 27-2107[b] (formerly D26-41.21[b] ). (See Mandel v. Pitkowsky, 102 Misc.2d 478, 425 N.Y.S.2d 926 [App Term, 1st Dept., 1979].)

The loft board, the administrative agency which regulates lofts and the conversion process (MDL 282), in January 1983 adopted a regulation holding that registration alone was sufficient to meet the Article 7-C "compliance" requirement of MDL 285[1] and to allow a proceeding to collect rent. That regulation was invalidated. "Section 285(1) of Article 7-C creates an exception to the barriers of 302 and 325 where the owner is in full compliance with Article 7-C. In so far as the regulations at issue waive the statutory prerequisites of section 285(1), it [sic ] is contrary to law and invalid." (Lower Manhattan Loft Tenants v. New York City Loft Bd., NYLJ Aug 15, 1984, p. 11, col. 1 [Sup.Ct. NY Co].) No appeal was taken by the Loft Board.

To the contrary, the Appellate Term, First Department, has held that only registration is required. In 291 7th Realty Assocs v. Shattuck (NYLJ March 5, 1986, p. 6, col 1) the court found that an affirmative defense that pleaded a failure "to allege with adequate particularity that it is in compliance with Article 7C of the MDL" should be stricken since registration with the Loft Board was alleged.

The issue was recently considered by the Court of Appeals in Matter of Blackgold Realty Corp. v. Milne, 69 N.Y.2d 719, 512 N.Y.S.2d 25, 504 N.E.2d 392 [1987]. That decision, however, leaves open as many questions as it answers. The court held the non-payment petitions "jurisdictionally defective". "Inasmuch as the landlord failed to allege compliance with the Loft Law's 'owner obligations' (see, Multiple Dwelling Law 284[2] ), it is not entitled to rely on the Loft Law's statutory exemption from the jurisdictional predicate of multiple dwelling registration (see, Multiple Dwelling Law 285[1] )." A review of the record on appeal in Blackgold shows that the petitioner had properly pleaded registration with the Loft Board. ¹ The decision can, therefore, be read to require complete compliance with MDL Article 7-C. The reference to "owner obligations" is apparently to the title of MDL 284 which contains subsections on both legalization and registration. On the other hand, the court cites only MDL 284[2], which relates to registration. Further, the court referred to sections requiring multip dwelling registration and pleading of that registration. The ambiguity of the holding may well be the result of the court's sua sponte decision of an issue which was neither briefed nor argued. Yet, this court must apply the holding to the case at bar.

The petition here is essentially identical to that in Blackgold. See note 1 supra. The court concludes that...