Levy v. Carol Mgt. Corp.

• Decision Date: 23 November 1999
• Citation: 698 N.Y.S.2d 226,260 A.D.2d 27
• Parties: STUART LEVY et al., Appellants-Respondents,<BR>v.<BR>CAROL MANAGEMENT CORPORATION, Defendant, and SUSAN TEEMAN, Respondent-Appellant.
• Court: New York Supreme Court — Appellate Division

260 A.D.2d 27

698 N.Y.S.2d 226

STUART LEVY et al., Appellants-Respondents,

v.CAROL MANAGEMENT CORPORATION, Defendant, and SUSAN TEEMAN, Respondent-Appellant.

November 23, 1999.

No appearances for appellants-respondents or respondent-appellant.

SULLIVAN, J. P., TOM, LERNER and RUBIN, JJ., concur.

OPINION OF THE COURT

Per Curiam.

This case has been characterized by plaintiffs' vexatious and dilatory conduct in this extended frivolous litigation concluding with this frivolous appeal. It has generated enormous legal fees and wasted significant and valuable judicial resources. We presently focus on the frivolous appeal as to the issue of sanctions.

This landlord-tenant dispute has lasted close to a decade and a half and has occupied numerous courts. The prevailing prime tenant most recently sought to recover attorneys' fees, pursuant to Real Property Law § 234, from the husband and wife subtenants. The subtenants appealed the grant of attorneys' fees. That aspect of the case was settled just prior to the issuance of our decision on the appeal. The decision had been prepared after more than three months of work on the extensive file by this Court. Although we allowed withdrawal of the appeal, we invited the parties' submissions on the issue of sua sponte sanctions in connection with the appeal and to that extent retained jurisdiction (see, Gruen v Krellenstein, 244 AD2d 234, lv denied 92 NY2d 803).

Our review of the proceedings persuades us to impose sanctions. As appropriately characterized by the IAS Court, this was a "relatively uncomplicated piece of landlord-tenant litigation." The facts are simple and straightforward, but the procedural route, relentlessly prolonged by the subtenants, has been tortuous. A narrative of how this case developed is necessary to explain our action.

The tenant of record of apartment A-806 in 370 East 76th Street in Manhattan was defendant Susan Teeman, who commenced her tenancy in 1968. In 1977, she made the mistake of subleasing the premises to plaintiffs-appellants Levys. Teeman had to attend to her infirm parents in Chicago until she could arrange suitable nursing home care for them, but intended to return to her apartment once that matter was attended to. The landlord was defendant Carol Management Corporation (CMC). Plaintiff Stuart Levy drafted the sublease agreement for himself and his wife, Susan Levy. Although she did not sign the sublease, Susan Levy conceded in deposition testimony that in doing so her husband also acted on her behalf, and that she had this entered into the sublease. Teeman agreed to secure the landlord's approval for the sublease and, in fact, sent a letter dated October 3, 1977 to CMC notifying it of the sublease. The subtenants paid Teeman, the primary tenant, with checks drawn on their joint account, some of which Susan Levy signed, evidencing her acknowledgment of her rental obligations. The sublease apparently was renewed in 1980 upon mutually agreeable terms. Teeman also accepted and executed renewal leases with the landlord then and subsequently.

During the early 1980's, the Levys made the acquaintance of a CMC vice-president who vacationed in the same location as them. That acquaintanceship apparently bore fruit for the Levys. The Levys learned from their acquaintance that the landlord had been considering a conversion to cooperative ownership for the building during a time period characterized by a sharply escalating cooperative market in New York City.

By notice dated March 28, 1985, Teeman terminated the sublease effective April 30, 1985. The Levys refused to vacate. Rather, the Levys had seized the opportunity to try to wrest the apartment away from the tenant of record by commencing an action by order to show cause against Teeman for declaratory and injunctive relief seeking a declaration that the Levys (i.e., both of them) were the prime tenants, staying any ejectment action and enjoining CMC from accepting a subscription offer for the apartment other than from the Levys. The Levys also sought attorneys' fees. The Levys, in a novel application of landlord-tenant law, alleged that the written sublease, timed to expire when the prime lease term expired, somehow was really tantamount to an assignment, somehow extinguishing the prime tenant's rights to the rent-stabilized apartment. The initial action had been dismissed when the Levys failed to serve a necessary party, unsurprisingly, Teeman, but was then refiled and served. Teeman counterclaimed for a judgment of possession and attorneys' fees.

In May 1985, CMC distributed a cooperative conversion plan for the building. However, the offering plan was provided to Teeman for informational purposes only. Curiously, on December 18, 1985, the Levys received a purchase agreement, which they immediately executed and for which they remitted a $1,000 down payment. However, by this time, litigation had been commenced, and the check was returned in January 1986. In the meantime, Teeman apparently had managed to secure, execute and return a subscription agreement, also with a down payment, which was accepted.

By order entered on or about November 3, 1986, Supreme Court, New York County (Edwards, J.), as affirmed by this Court (138 AD2d 987), denied the Levys' motion for declaratory relief, remanding for trial contested issues whether there was a rent overcharge and whether the primary lease was illusory, and, as between Teeman and CMC, whether the sublease was authorized, and enjoined the sale of shares to either party pending outcome of trial. Subsequently, both sides moved for summary judgment, and the matter was assigned to Justice Carol Arber. That court, by decision and order entered August 13, 1992, found that notice had been given by Teeman and acquiesced in by CMC. The court then granted Teeman summary judgment declaring her to be the valid prime tenant, and found no abandonment by CMC of any right to challenge the Levys' continuing occupancy. We affirmed to that extent, but severed the causes of action for ejectment and attorneys' fees (199 AD2d 140). The epic of an occupancy that, by then, was 15 years old, seven years after termination of the sublease, of course did not end here.

The ejectment and attorneys' fees branch of the action was assigned to Justice Walter Schackman. By decision and order entered November 28, 1995, the Levys were directed to vacate the apartment, but the attorneys' fees application was severed and referred to a Special Referee to hear and report. This Justice noted his frustration in trying to settle the action and his consternation that they refused to leave, despite our order effectively declaring the Levys' occupancy to be illegal. Meanwhile, attorneys' fees were still escalating. Justice Schackman observed the Levys' claim to be "frivolous * * * [and] completely without merit in law and fact and cannot be supported by reasonable argument" and imposed a sanction of $250.

Special Referee Julius Birnbaum next left his mark on this case. The Special Referee's report recommended an award of fees to Teeman on the basis of the sublease itself as well as the reciprocal provisions of Real Property Law § 234. The Referee specifically rejected Susan Levy's contention that, as a nonsignatory to the sublease, she was not liable for any award of legal fees. The matter was then set down for a determination of the amount of the award. The Levys separately moved to vacate the report, and Stuart Levy cross-moved in the main action to vacate Teeman's counterclaim for attorneys' fees and for the imposition of sanctions.

The late Justice Lewis Friedman was the next jurist to render a decision in this proceeding. By decision and order entered October 14, 1997, Justice Friedman confirmed the Referee's report, and denied the Levys all relief. Justice Friedman, aside from granting the motion to confirm the report of the Special Referee and denying the Levys' motion to dismiss the counterclaim for counsel fees, awarded fees in connection with the "frivolous" motion to dismiss the counterclaim.

Justice Friedman, characterizing his decision as "the last gasp" of this 1985 litigation, which "should be brought to a prompt end," directed that there be no further delay. Justice Friedman was overly optimistic that his decision would end this litigation. Susan Levy requested that we stay the hearing to fix fees, which we denied. Plaintiffs also turned Justice Friedman's untimely death into an opportunity, seeking relief, by order to show cause, before Justice Barry Cozier to, in effect, vacate the deceased Justice Friedman's ruling, at that time already on appeal, and to dismiss the counterclaim for attorneys' fees. Justice Cozier, finding the motion to actually constitute a motion to renew and reargue, and finding the ploy to be "amazing," noted that all of the claims presented to him, in a 35-page affidavit consisting of 106 paragraphs "replete with repetition," had already been adjudicated. Yet another Justice of the Supreme Court now directed that there be an end to this frivolous litigation. The Levys were precluded from filing any further motions without leave of court, and were warned that further motions would open the door to "maximum sanctions."

The Levys' present appeal sought to reverse Justice Friedman's order confirming the report of the Special Referee awarding Teeman legal fees and denying the Levys' motion to dismiss the counterclaim for attorneys' fees.

The Levys, who had been merely subtenants with no legal rights to the subject rent-stabilized apartment, have spent approximately the last 14 years in an attempt to wrest the premises from the tenant of record, so that they could purchase the unit of the cooperative conversion as insiders. Of course, that opportunity has now passed, and this litigation took on a life of its own. The abject nonsense couched as legal argument that had been imposed on court after court was again presented for our review on appeal. Consistent...