Dawson v. Higgins

• Decision Date: 05 April 1994
• Citation: 197 A.D.2d 127,610 N.Y.S.2d 200
• Parties: Joan DAWSON, Paul Dawson and Tandra Dawson, Plaintiffs-Appellants, v. Richard L. HIGGINS, Commissioner of the New York Division of Housing and Community Renewal and The City of New York, Defendants-Respondents.
• Court: New York Supreme Court — Appellate Division

Page 200

610 N.Y.S.2d 200

197 A.D.2d 127

Joan DAWSON, Paul Dawson and Tandra Dawson, Plaintiffs-Appellants, v. Richard L. HIGGINS, Commissioner of the New York Division of Housing and Community Renewal and The City of New York, Defendants-Respondents.

Supreme Court, Appellate Division First Department.

April 5, 1994.

Sam Kazman, of counsel, Washington, D.C. (Ronald D. Hariri, with him on the brief, Hariri & Wotman, P.C., New York City, attorneys) for plaintiffs-appellants.

June Duffy, of counsel, New York City (Ellen J. Fried, with her on the brief, G. Oliver Koppell, Atty. Gen.) for defendant-respondent Com'r.

Anthony M. Dilloff, of counsel, New York City (Stephen J. McGrath, with him on the brief, Paul A. Crotty, attorney) for defendant-respondent City of New York.

Before SULLIVAN, J.P., and ELLERIN, ASCH and TOM, JJ.

SULLIVAN, Justice Presiding.

This is an appeal from the rejection of a challenge to the constitutionality of section 26-408(b)(1) of the New York City Administrative Code and section 2204.5(a) of the New York City Rent and Eviction Regulations of the New York State Division of Housing and Community Renewal (9 NYCRR § 2204.5[a], which, insofar as relevant, prohibit a landlord's recovery of a rent-controlled housing accommodation for his or her family's use where a member of the household lawfully occupying the accommodation has been a tenant in the building for twenty years or more, on the ground that the enforcement of said provisions subjects the landlord to a compelled tenancy constituting a physical and regulatory taking of property and a violation of due process and the prohibition against involuntary servitude.

The facts, while sparse, are undisputed. In November 1983, plaintiff Joan Dawson, aware that the building housed two rent-controlled tenants, purchased the premises in question, a five-story brownstone at 240 Lenox Avenue in Manhattan. Joan Dawson resides in the building, as do her two adult children, plaintiffs Paul and Tandra Dawson, who live on separate floors. Tandra's daughter and Joan Dawson's two foster children also reside in the building. The Lenox Avenue brownstone is Joan Dawson's only real property.

The two tenants, neither a party to this action, have lived in the premises since 1970. The record is silent as to whether they are disabled or elderly, the precise duration of their tenancy, their expected or likely continued occupancy in the building, the amount of rent they pay or the effect eviction might have on them. Under New York law in effect at the time of purchase, these tenants could have been evicted, assuming that the other statutory prerequisites for such eviction could have been met, so that Joan Dawson and her family could occupy the units for themselves. (See, Administrative Code, former § Y51-6.0[b][1], recodified in 1986 as § 26-408[b][1].)

Rent-controlled residential units in New York City are simultaneously governed by local and state law and regulations. On the state level, the Legislature, in 1962, enacted the Local Emergency Housing Rent Control Act (L.1962, ch. 21, § 1; McKinney's Unconsol. Laws §§ 8601-8617), authorizing New York City to enact and administer its own rent control program. Pursuant to this enabling legislation, the City Council enacted Local Laws, 1962, No. 20 of the City of New York, the New York City Rent and Rehabilitation Law (originally Administrative Code §§ Y41-1.0 et seq., now §§ 26-401 et seq.). In 1983, the Legislature enacted the Omnibus Housing Act (L.1983, ch. 403), which transferred the administration of all rent-controlled housing to the New York State Division of Housing and Community Renewal (DHCR). New York City's then existing rent and eviction regulations became DHCR's regulations (Omnibus Housing Act § 28), which are set forth in 9 NYCRR Part 2200 et seq., incorporated in McKinney's Unconsolidated Laws of NY §§ 8581 et seq.

The Rent and Rehabilitation Law and DHCR regulations permit a landlord to seek a tenant's eviction and the recovery of a rent-controlled housing accommodation in a number of circumstances, including, inter alia, a tenant's violation of a substantial obligation of the tenancy; a subtenant's occupancy of the accommodation after the lease expiration; where, subject to certain conditions, possession is sought for the purpose of demolishing or substantially altering the premises; and, where the landlord wants to withdraw the premises from the market on the ground that its continued operation would impose undue hardship, and the rent regulatory agency finds there is no reasonable possibility that the landlord could realize a net annual return of 8 1/2% of the property's assessed value and there has not been any intentional or willful management of the property to impair the ability to realize such a return. (Administrative Code § 26-408; 9 NYCRR Part 2204.) The Rent and Rehabilitation Law and DHCR regulations also authorize the eviction of tenants where the landlord seeks to recover possession of the housing accommodation for his or her personal use or the personal use of his or her family and the landlord can show a good faith, immediate and compelling need. (Administrative Code § 26-408[b][1]; 9 NYCRR Part 2204.5[a].)

Seven months after Joan Dawson bought the brownstone, on June 19, 1984, the owner-occupancy eviction provisions of the rent control laws (Administrative Code former § Y51-6.0[b][1] were amended. (L.1984, ch. 234, § 1.) Under the amendment, effective immediately, tenants 62 years of age or older, or disabled, or who had resided in the building for 20 years or more could no longer be evicted for reasons of owner occupancy. The amendment applied to "any tenant in possession at or after the time it takes effect...." (Id., § 4.) Since the two tenants in the Lenox Avenue brownstone came under the amendment's 20-year tenancy provision, they were no longer subject to eviction on owner-occupancy grounds.

On August 29, 1990 Joan Dawson and her two children commenced this action against both the City and DHCR, challenging the 20-year residency bar to eviction as a physical as well as regulatory taking and a due process violation under both the federal and state constitutions and as constituting involuntary servitude under the federal constitution. After both defendants answered, each asserting the failure to state a cause of action, plaintiffs moved for summary judgment seeking a declaration of unconstitutionality. Both defendants separately cross-moved for summary judgment declaring the challenged statute and regulations constitutional.

In a well reasoned and comprehensive decision essentially distinguishing the major cases invalidating housing regulations on takings grounds, such as Seawall Assocs. v. City of New York, 74 N.Y.2d 92, 544 N.Y.S.2d 542, 542 N.E.2d 1059, cert. den. sub nom. Wilkerson v. Seawall Assocs., 493 U.S. 976, 110 S.Ct. 500, 107 L.Ed.2d 503 and Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 102 S.Ct. 3164, 73 L.Ed.2d 868, on the ground that these cases did not involve, as here, pre-existing relationships voluntarily assumed by the property owner, the IAS court rejected all of plaintiffs' claims and declared the challenged provisions to be constitutional, 154 Misc.2d 811, 588 N.Y.S.2d 93. Plaintiffs filed a direct appeal to the Court of Appeals pursuant to CPLR 5601(b)(2) on the ground that the only issue presented involved the constitutionality of state legislation. The Court of Appeals transferred the appeal to this court. ( [80 N.Y.2d 969, 591 N.Y.S.2d 135, 605 N.E.2d 871] see, N.Y. Const. Art. 6, §§ 3[b][2], 5[b]; CPLR 5601[b][2].) We affirm.

Two provisions of the United States Constitution, the 14th Amendment's due process clause and the 5th Amendment's takings clause, ¹ protect property interests against governmental interference. In addition, under the New York State Constitution, no person may be deprived of his or her property without due process of law (Art. 1, § 6) and private property may not be taken for public use without just compensation (Art. 1, § 7[a]. Despite these constitutional protections, property rights are not, however, absolute. They have long been subject to restrictions, for which there is no compensation, through the state's exercise of its police power in prescribing regulations "to promote the health, peace, morals, education, and good order of the people." (Barbier v. Connolly, 113 U.S. 27, 31, 5 S.Ct. 357, 359, 28 L.Ed. 923.) "Under our system of government, one of the State's primary ways of preserving the public weal is restricting the uses individuals can make of their property. * * * These restrictions are 'properly treated as part of the burden of common citizenship'." (Keystone Bituminous Coal Assn. v. DeBenedictis, 480 U.S. 470, 491, 107 S.Ct. 1232, 1245, 94 L.Ed.2d 472, quoting Kimball Laundry Co. v. United States, 338 U.S. 1, 5, 69 S.Ct. 1434, 1437, 93 L.Ed. 1765.)

In the context of a landlord-tenant relationship the Supreme Court has noted that the states have " 'broad power to regulate housing conditions in general and the landlord-tenant relationship in particular without paying compensation for all economic injuries that such regulation entails.' " (Pennell v. City of San Jose, 485 U.S. 1, 12 n. 6, 108 S.Ct. 849, 857 n. 6, 99 L.Ed.2d 1, quoting Loretto v. Teleprompter Manhattan CATV Corp., supra, 458 U.S. at 440, 102 S.Ct. at 3178.) Similarly, in Seawall Assocs. v. City of New York, supra, 74 N.Y.2d at 112 n. 11, 544 N.Y.S.2d 542, 542 N.E.2d 1059, the Court of Appeals noted that "government has considerable latitude in regulating landlord-tenant relationships to preclude eviction in hardship, emergency and rent-control cases." Over the years, the government, at the federal, state and local level, has, in response to housing shortages, enacted legislation declaring the existence of a serious public emergency and restricting a landlord's right to raise rents and evict tenants. The courts...