Sohn v. Calderon
Decision Date | 15 October 1991 |
Citation | 587 N.E.2d 807,78 N.Y.2d 755,579 N.Y.S.2d 940 |
Parties | , 587 N.E.2d 807 Pinky SOHN, Respondent, v. Lucretia CALDERON et al., Appellants, and State of New York Division of Housing and Community Renewal, Intervenor-Appellant. In the Matter of Pinky SOHN et al., Respondents, v. STATE DIVISION OF HOUSING AND COMMUNITY RENEWAL, Appellant, and Lucretia Calderon et al., Intervenors-Appellants. |
Court | New York Court of Appeals Court of Appeals |
Herbert Semmel and David A. Weinraub, New York City, for Lucretia Calderon et al. appellants.
Victor A. Kovner, Corp. Counsel (Alan G. Krams and Fay Leoussis, New York City, of counsel), for New York City Dept. of Housing Preservation and Development, appellant.
Lawrence Alexander and Dennis B. Hasher, New York City, for New York State Div. of Housing and Community Renewal, intervenor-appellant.
Jeffrey R. Metz, Paul N. Gruber, Myron I. Altschuler and Steven L. Schultz, New York City, for respondent.
Donald Rosenthal, New York City, for Legal Services for New York City et al., amici curiae.
Paris R. Baldacci, Kathleen A. Masters, Kalman Finkel and Jane Booth, New York City, for the Legal Aid Soc. of New York City, amicus curiae.
In this action and proceeding, the Supreme Court, New York County, granted plaintiff landlord judgment declaring that he is entitled under the New York City Rent and Eviction Regulations and the Rent Stabilization Code to demolish his building, to evict his rent-control tenants and to refrain from offering renewal leases to his rent-stabilization tenants. The primary question presented by this appeal is whether the Supreme Court had concurrent authority to entertain the dispute in light of the various sections of the Regulations and the Code that specifically provide for the resolution of such disputes, at least in the first instance, by the Division of Housing and Community Renewal (DHCR), the administrative agency charged with implementing those statutes. We hold that DHCR had exclusive original jurisdiction in this situation and, accordingly, that plaintiff's complaint and petition should have been dismissed.
This landlord-tenant dispute has its origins in a three-alarm fire that occurred on March 8, 1986 in a 39-unit apartment building located at 306-310 West 51st Street in Manhattan. Most of the apartment units in the building, which was severely damaged in the fire, are subject to either rent-control or rent-stabilization laws.
As a result of the fire damage, the New York City Department of Housing Preservation and Development (HPD) issued notices that the building contained violations of the Housing Maintenance Code. Additionally, the tenants, who had lived in the building from 8 to 45 years, brought an action in Civil Court to compel plaintiff, the building's owner, to make the repairs necessary to render their units habitable.
In response, plaintiff commenced an action in Supreme Court against the tenants and HPD for a declaration that under the applicable rent-control and rent-stabilization regulations he was entitled either to demolish the building or to remove the housing accommodations from the market because the cost to render them safely habitable was equal to or exceeded the building's assessed value (see, Administrative Code of City of New York § 26-408[b][3], [4], [5][a]; 9 NYCRR 2204.8[a][1]; 2524.5[a][2]. In addition, plaintiff sought a declaration that he was entitled to be issued "certificates of eviction," which the law requires as a condition precedent to an owner's regaining possession of rent-controlled premises in these circumstances (see, Administrative Code § 26-408[a]. Finally, plaintiff sought permanent injunctive relief precluding HPD and the tenants from pursuing their efforts to force him to correct outstanding violations through administrative or Civil Court proceedings.
Proceeding initially by order to show cause, plaintiff moved for a preliminary injunction against HPD's enforcement efforts and, alternatively, for an order consolidating his Supreme Court action with the pending Civil Court action brought by the tenants. Defendants opposed the motion and asserted, among other things, that the court lacked subject matter jurisdiction of the controversy. The court denied plaintiff's requests for provisional relief and consolidation, but it did temporarily stay the Civil Court proceedings and set the controversy down for an immediate trial, thereby implicitly rejecting defendants' subject matter jurisdiction arguments. The Appellate Division revised the Supreme Court order in one minor respect and, as modified, affirmed without mention of the jurisdictional issue (125 A.D.2d 227, 126 A.D.2d 503, 509 N.Y.S.2d 32).
The jurisdictional problem was again addressed when DHCR moved to intervene in the Supreme Court action for the limited purpose of raising that threshold issue. This time, the Supreme Court explicitly ruled on the issue, concluding that, as a court of unlimited equitable jurisdiction, it had concurrent authority to determine the dispute. The court also held that this was a proper case for it to exercise its concurrent authority because "[f]rom past experience * * * if this matter was referred to DHCR, it would not be afforded the expeditious treatment necessary to protect the rights of the litigants." Accordingly, DHCR's motion was denied in an order that was subsequently affirmed (133 A.D.2d 1021, 520 N.Y.S.2d 293).
While these preliminary matters were sub judice, DHCR was conducting a related investigation into the tenants' charges of landlord harassment (see, Administrative Code § 26-413[b][2]; § 26-412[d]; § 26-516[c]; see also, 9 NYCRR 2526.2[c][2]; id., part 2206). To forestall administrative disposition of these charges, plaintiff moved within the declaratory judgment action for an order staying the agency's harassment proceeding. Plaintiff also commenced a separate CPLR article 78 proceeding against DHCR by order to show cause, seeking similar relief. The trial court granted the stay and also signed the order to show cause, which included an interim stay of the harassment proceeding. 1 The court based its determination on its conclusion that the issues in the administrative harassment proceeding were factually related to those in the declaratory judgment action and that the waste of resources, coupled with the risk of inconsistent results, warranted the interim relief.
Following a plenary trial of the factual and economic claims underlying the declaratory judgment action, Supreme Court found that plaintiff had satisfied the requirements of the rent-control and rent-stabilization provisions that permit an owner to recover possession of the housing accommodations where he has a good-faith intention promptly to demolish the building and construct a new one (Administrative Code § 26-408[b][4], [5]; 9 NYCRR 2524.5[a][2]. Specifically, plaintiff proved, to the court's satisfaction, that he had the "financial capabilit[y] to accomplish his expressed * * * purpose of demolishing the building and constructing a new [one]," that the mortgagee had no objection to plaintiff's plans, that plaintiff had provided the notifications required by local zoning regulations, that plaintiff's stated willingness to offer relocation allowances to evicted tenants appeared to comply with "all applicable legal requirements," that the cost of removing existing violations would exceed or be substantially equal to the building's assessed value and that plaintiff's architect had prepared plans for submission to the Building Department for a new structure containing 40 apartment units, one more than the existing structure contained. Finally, the court found that plaintiff had satisfied the requirements of the Sound Housing Law (L.1974, ch. 1022, L.1975, ch. 360, codified at Administrative Code § 26-408[b][5] by demonstrating that there was no "reasonable possibility that [he could] make a net annual return of [8 1/2%] of the assessed value of the subject property" and that he had not intentionally mismanaged the property in order to impair its ability to earn such a return.
Accordingly, the court held that, subject to his obtaining the necessary Building Department approvals (see, Administrative Code § 26-408[b][4][d]; § 26-511[c][9] and his formal offer of suitable relocation stipends to the tenants (see, 9 NYCRR 2524.5[c], plaintiff was entitled (1) to be relieved of his statutory duty to give renewal leases to the rent-stabilization tenants, (2) to be issued certificates of eviction for the existing rent-control tenants, (3) to be issued no-harassment certificates by HPD under local zoning regulations for the Clinton Hill District and (4) to "take any and all appropriate steps" to evict the rent-control and rent-stabilization tenants. The court also granted plaintiff relief in the article 78 proceeding by permanently enjoining DHCR from taking further action against him in connection with the pending harassment charges. After consolidating the declaratory judgment action with the article 78 proceeding for the purpose of argument alone and after granting DHCR permission to intervene in the action, the Appellate Division affirmed each of these rulings. 162 A.D.2d 331, 557 N.Y.S.2d 15. The court subsequently granted the unsuccessful appellants leave to take a further appeal, certifying the following question of law: "Were the order and judgment of the Supreme Court, as affirmed by this Court, properly made?" We now reverse.
A building owner's right to evict tenants protected by the New York City rent control laws is governed by section 26-408 of the Administrative Code of the City of New York. Section 26-408(a) lists seven grounds for evicting rent-control tenants "for cause" (Administrative Code § 26-408[a][1]-[7], and section 26-408(b) delineates the other circumstances in which owners of rent-controlled apartment units may regain possession, including situations where...
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