I.S.J. Management Corp. v. Delancy Clothing Inc.

• Decision Date: 18 December 1990
• Parties: I.S.J. MANAGEMENT CORP., Petitioner, v. DELANCY CLOTHING INC., Respondent. I.S.J. MANAGEMENT CORP., Petitioner, v. Abraham SILBERSTEIN, Respondent. I.S.J. MANAGEMENT CORP., Petitioner, v. NEPTUNE APPETIZING CORP., Respondent.
• Court: New York City Court

Page 612

574 N.Y.S.2d 612

152 Misc.2d 13

I.S.J. MANAGEMENT CORP., Petitioner, v. DELANCY CLOTHING INC., Respondent.

I.S.J. MANAGEMENT CORP., Petitioner, v. Abraham SILBERSTEIN, Respondent.

I.S.J. MANAGEMENT CORP., Petitioner, v. NEPTUNE APPETIZING CORP., Respondent.

Civil Court of the City of New York,

New York County.

Dec. 18, 1990.

Bruce Feldman, Karsch & Meyer, New York City, for petitioner I.S.J. Management Co.

William Gribben, Himmelstein & McConnell, New York City, for respondent Delancy Clothing, Inc.

PAULA J. OMANSKY, Judge.

These summary hold-over proceedings are consolidated for purposes of disposition. Petitioner in all cases is the net lessee under a long-term lease with New York City for the premises known as the Essex Street Market, a public market containing food and retail stores. Respondents are currently month-to-month tenants in the Essex Street Market, their permits from the City having expired in 1986. Respondent Delancy Clothing, Inc. (hereinafter Delancy) has been a tenant in the market for about 13 years, engaged in the business of selling men's and boys' clothing. Respondent Silberstein has been a pickle seller in the market for approximately 51 years. Respondent Neptune Appetizing Corp. (hereinafter Neptune) has been a smoked fish seller in the market for about 12 years.

By Resolution dated December 21, 1989, the former Board of Estimate authorized the City, acting through the Commissioner of the Department of Ports and Trade, to enter into a lease with I.S.J. Management Corp. for the renovation and operation of the Essex Street market as a food and retail market. The selection of I.S.J. Management Corp. was the result of a competitive bidding process. An alternative proposal submitted by the Merchants Association of the Essex Street Market, which would have prevented the eviction of merchants such as these respondents, was rejected.

On or about April 1, 1990, petitioner signed a 30 year lease with the City of New York, acting by and through the Commissioner of its Department of Ports and Trade, for the entire premises. Pursuant to the net lease, petitioner was assigned all the various leases to the stalls, stores and other portions of the Essex Street Market operated by the merchants.

In March, 1990, the City notified respondents of the assignment of their leases to the petitioner, and directed them to send rental payments to petitioner as of April 1, 1990. On or about April 17, 1990, petitioner notified respondents that it was terminating their tenancies. No reason other than the expiration of the lease term was given.

The substantive issue in this case is whether petitioner has the right to evict merchants in a public market solely on the ground that their leases have expired or, put another way, whether respondents have the right to continue their tenancies except for good cause shown, on proper notice.

At the outset, we agree with respondents that State action is involved. Petitioner, a private corporation, is a net lessee under a long-term lease with the City for operation of a public market, the Essex Street Market. The City is so "entwined" with the operation of the market as to constitute significant and meaningful governmental participation, triggering constitutional due process guarantees. Sharrock v. Dell Buick-Cadillac, 45 N.Y.2d 152, 158, 408 N.Y.S.2d 39, 379 N.E.2d 1169 (1978); 157 West 123rd Street Tenants Assn. v. Hickson, 142 Misc.2d 984, 985, 542 N.Y.S.2d 900 (App.Term, 1st Dept.1989). Petitioner here stands in the shoes of a government entity, in this case the City of New York. Farmer v. Moses, 232 F.Supp. 154, 159 (S.D.N.Y.1964).

The City, and therefore petitioner, would normally be entitled to terminate at any time the tenancies of month-to-month tenants renting produce stalls in a public market. Arol Development Corp. v. Goodie Brand Packing Corp., 84 Misc.2d 493, 495, 378 N.Y.S.2d 231 (App.Term, 1st Dept.1975). Moreover, as a general rule there is no way for a tenant to compel a renewal of the lease and to remain in the premises, 1 Rasch, New York Landlord & Tenant--Summary Proceedings, 3d Ed., Section 11:1.

"The rights arising out of real property law have ancient bases; any change in these rights is customarily achieved by legislative or constitutional enactment. Under ordinary circumstances, a landlord is not obligated to renew a lease (Robinson v. Jewett, 116 N.Y. 40, 51 ; Thayer v. Leggett, 229 N.Y. 152, 158 , even though the tenant may have invested capital and energy in the expectation of renewal. Nor, in the absence of statute, may one contracting party be compelled to deal with the other beyond the contract term (citation omitted)." Mobil Oil Corp. v. Rubenfeld, 48 A.D.2d 428, 431, 370 N.Y.S.2d 943 (2d Dept.1975) aff'd 40 N.Y.2d 936, 390 N.Y.S.2d 57, 358 N.E.2d 882 (1976).

Respondents claim that developments in constitutional law have altered their status as month-to-month tenants in city-owned premises, terminable at will. They claim that they have the same constitutionally protected property interest in continuing their tenancies as residential tenants in public housing, citing Joy v. Daniels, 479 F.2d 1236 (4th Cir.1973); 157 West 123rd Street Tenants Association v. Hickson, 142 Misc.2d 984, 542 N.Y.S.2d 900 (App.Term, 1st Dept.1989); Hudsonview Terrace, Inc. v. Maury, 100 Misc.2d 331, 419 N.Y.S.2d 409 (App.Term, 1st Dept.1979).

In Joy v. Daniels, 479 F.2d 1236, 1241 (4th Cir.1973), a framework of interlocking policy, laws, regulations, and customs supported the finding that tenants in a public housing project had a property right entitling them to continued tenancy except for cause shown:

"In view of the congressional policies of providing a decent home (with stability and security) for every American family, and of prohibiting arbitrary and discriminatory action, bolstered by the FHA regulations and custom, we find in the scheme of the National Housing Act and the Housing and Urban Development Act of 1965 a property right or entitlement to continue occupancy until there exists a cause to evict other than the mere expiration of the lease."

Similarly, in New York, residential tenants in public housing and in private housing in which the City is actively involved were found to have a constitutionally protected property interest entitling them to continued tenancy except for good cause shown on proper notice. Hudsonview Terrace, Inc. v. Maury, 100 Misc.2d 331, 419 N.Y.S.2d 409 (App.Term, 1st Dept.1979); 157 West 123rd Street Tenants Assoc. v. Hickson, 142 Misc.2d 984, 542 N.Y.S.2d 900 (App.Term, 1st Dept.1989). Commercial tenants, however, have no analogous right entitling them to the protection of constitutional safeguards. Henry Modell & Co., Inc. v. City of New York, 159 A.D.2d 354, 552 N.Y.S.2d 632 (1st Dept.1990); Brody v. Moan, 551 F.Supp. 443 (S.D.N.Y.1982); see, Sidberry v. Koch, 539 F.Supp. 413, 418 (S.D.N.Y.1982). The requirements of procedural due process apply only to the deprivation of...