Loft Realty Co. v. Aky Hat Corp.

Citation474 N.Y.S.2d 204,123 Misc.2d 440
PartiesLOFT REALTY CO., Petitioner, v. AKY HAT CORP., Respondent.
Decision Date09 March 1984
CourtNew York City Court

Demov, Morris, Levin & Hammerling, New York City, for petitioner.

Hartman, Ule & Rose, New York City, for respondent.

EDWARD H. LEHNER, Judge:

The issue presented here is whether the residential occupancy by a shareholder of a corporation that operates a hat factory results in covered occupancy under Article 7-C of the Multiple Dwelling Law (the "Loft Law") where the space used for residential purposes is less than two per cent of the floor space rented by the corporation.

This is a holdover proceeding instituted against Aky Hat Corp. ("Aky") to recover possession of the entire tenth floor at 49 West 27th Street. Aky had entered into possession under a lease for a 5 year term commencing July 1, 1978. The lease provided that the premises may be used only for the "import and manufacture of hats." At the expiration of the term Aky held over and was subsequently served with a 30 day notice calling for it to vacate by September 30, 1983. When it failed to vacate this proceeding was commenced. An answer was interposed only by C.S. Chou ("Chou") and his brother, Paul Chou, who claimed the right to possession pursuant to the Loft Law. At trial the answer of Paul Chou was withdrawn and Aky was deemed to have joined in the answer. However, it was conceded by respondents' counsel that any right to possession of Aky was based solely on the right of Chou to remain under the Loft Law.

Aky, which is in the business of manufacturing hats, also occupies space on the ninth floor of the subject building. A separate holdover proceeding with respect to that floor (L & T 90730/83) was stayed by the undersigned by order dated November 4, 1983 because coverage under the Loft Law had been claimed by Paul Chou with respect to that floor and a hearing at the Loft Board (the "Board") was imminent with respect to the claim. The application to stay this proceeding was denied as Paul Chou's application to the Board showed that the tenth floor was used for commercial purposes. At trial respondents introduced a letter sent to the Board by counsel in which that application was amended to claim that "Paul Chou and his family occupy a residential loft on the 9th and 10th floors."

Although the Appellate Term, in a decision published after the conclusion of the trial (Korn v. Meislin, N.Y.L.J. February 17, 1984, p. 6, c. 3), has strongly suggested that where a determination of interim multiple dwelling ("IMD") status involves "complex questions of mixed law and fact" the primary determination should be made by the Board, here there is no dispute that the building is in fact an IMD, and the issue of coverage is a matter of statutory interpretation from an essentially undisputed state of facts.

The testimony showed that the dimensions of the building plot are 100' by 98'. Although there was a conflict as to the usable space on the floor, the court concludes that such space totaled approximately 7,500 square feet. The room which has been occupied by Chou since 1978 for living purposes was stated by petitioner's witness to be 9' by 8'. No contrary testimony was offered by respondents with respect to size. Said room, which is partitioned but has no door, contains a single bed, a sofa and a desk.

Mr. Chou testified that; he came to the United States in October 1977 for a visit, but has remained here since, working in the Aky hat factory as a supervisor; his wife and children reside in Taiwan; he is a vice president of Aky and although his brother owns most of the shares, he also owned some shares, but could not state how many. However, the 1981 federal income tax return of Aky did not show Chou as an officer, nor a shareholder owning more than 5% of the outstanding shares.

In addition to the room where he sleeps, Chou claimed he also uses, as part of his residential space, the bathroom adjacent to the bedroom (which is of the same size as the bedroom) and a kitchen. However, the testimony of a salesman called by respondents showed that the space that Chou claimed as his kitchen consists of a large table (immediately adjacent to the work area) where the employees ate lunch, an "oversized refrigerator" used by them, and a stove.

The testimony indicated that: there are approximately eight to ten full time employees working on the floor engaged in the manufacture of hats; there are numerous machines located throughout; space is partitioned for Aky's offices; and that hats are stored in piles in all areas, including that immediately adjacent to the so-called kitchen. Chou's name is not listed on the door, the only name thereon being that of Aky, and he pays no rent. To reach Chou's bedroom one must walk through the factory, there being no separate entrance.

Factually it thus appears that Chou moved into and lives in a hat factory. The kitchen, being the area used during the workday by the factory employees (as well as Chou) to eat their meals, may not be considered as part of a residence. If such area were included, it would seem that the space where the cutting tables are located would also have to be counted if Chou used the tables for reading or writing purposes. Although Chou has complete use of the factory at night and during weekends when it is not in operation, such space cannot be deemed residentially occupied. The only space that is truly residential and contains the type of furniture and equipment generally associated with residential living is the bedroom containing 72 square feet, and a bathroom of equal size. Thus, the total space that is used for residential purposes is 144 square feet, which is slightly less than 2% of the total usable floor area rented to Aky.

Respondents maintain that the amount of space used for residential purposes is irrelevant as the Loft Law does not require...

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11 cases
  • Enki Properties, N.V. v. Loft Bd. of City of New York
    • United States
    • New York Supreme Court
    • May 23, 1985
    ...the statute's espoused purpose is to rectify a public residential housing emergency (MDL Sec. 280) and see Loft Realty Corp. v. Aky Hat Corp, 123 Misc.2d 440, 474 N.Y.S.2d 204 (1984). The loft law permits a unit which is used for commercial purposes to be regulated as long as some portion o......
  • Oelbermann Associates Ltd. Partnership v. Borov
    • United States
    • New York City Court
    • November 15, 1988
    ...with code and zoning requirements (see, Cobra Resources Inc. v. Dumpl, Inc., 138 Misc.2d 91, 522 N.Y.S.2d 433; Loft Realty Co. v. Aky Hat Corp., 123 Misc.2d 440, 474 N.Y.S.2d 204). "[I]n a city of more than one million persons" (MDL 281[1]), "interim multiple dwellings" ("IMD's") (the legis......
  • Association of Commercial Property Owners v. New York City Loft Bd.
    • United States
    • New York Supreme Court
    • May 30, 1985
    ...Article 7-B of the Multiple Dwelling Law within specified time limits (Multiple Dwelling Law, § 284; see also Loft Realty Co. v. Aky Hat Corp., 123 Misc.2d 440, 474 N.Y.S.2d 204. The additional cost to owners is an item to be factored into appropriate rent adjustments after legalization (Mu......
  • Lower Manhattan Loft Tenants v. New York City Loft Bd.
    • United States
    • New York Court of Appeals Court of Appeals
    • November 19, 1985
    ...statute, where it does not express the statute's manifest intent and purpose, need not be adhered to" (see, Loft Realty Co. v. Aky Hat Corp., 123 Misc.2d 440, 474 N.Y.S.2d 204). What petitioners seek by their construction is protection of commercial tenants who have separate residential spa......
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