The City of New York v. Lacroix
| Docket Number | Index 452107/2021 |
| Decision Date | 28 February 2022 |
| Citation | 2022 NY Slip Op 30626 (U) |
| Parties | THE CITY OF NEW YORK, Plaintiff, v. MARTINE JOWELLE LACROIX; THE DINOSAURHAUS LLC; HOLIDAY RENTALS NYC LLC; MJL HOSPITALITY INC.; and "JOHN DOE" and "JANE DOE," numbers 1 through 10, fictitiously named parties, true names unknown, the parties intended being the managers or operators of the business being carried on by defendants MARTINE JOWELLE LACROIX; THE DINOSAURHAUS LLC; HOLIDAY RENTALS NYC LLC; MJL HOSPITALITY INC., Defendants. |
| Court | New York Supreme Court |
DECISION + ORDER ON MOTION
The following e-filed documents, listed by NYSCEF document number (Motion 001) 2-111, 118-119, 120, 122, 123, 124, 125, 126 127, 128, 129, 130, 131, 132, 133, 134, 135, 136 were read on this motion for PREL INJUNCTION/TEMP REST ORDR
In this action, plaintiff the City of New York (the "City") seeks a monetary judgment and, as relevant here, a permanent injunction banning defendants Martine Jowelle Lacroix ("Lacroix"), and the Dinosaurhuas LLC, Holiday Rentals NYC LLC, and MJL Hospitality Group Inc. (collectively, the "Entity Defendants") from operating short-term rentals in New York City. In motion sequence number 001, the City moves for a preliminary injunction against all defendants. Lacroix, the only defendant who has answered the complaint, opposes the motion. In motion sequence number 002, the City moves for a default judgment and permanent relief, including a money judgment against Entity Defendants. The Court consolidates the motions for disposition and grants both motions to the extent set forth below.
The City alleges that Lacroix commenced a short-term apartment rental business in 2010 through Airbnb (See NYSCEF Doc. No. 1 [Complaint at ¶ 57]). The City maintains that Lacroix organized 1, 087 illegal short-term rentals through Airbnb by creating 38 different listings using 10 different host accounts and 104 illegal short-term rental reservations on Flipkey (Li at ¶¶ 13-14, 16). The City asserts that during the period of its investigation, 2016-2020, Lacroix and her LLCs illegally converted residential apartment units into short-term rental apartments in at least eighteen residential multiple dwellings (Id. at ¶ 6; see also NYSCEF Doc. No. 3 [Hendrix Affirm, in Supp. at ¶10]). In addition to rentals under her own name, Lacroix rented apartments through her LLCs, the Entity Defendants[1]. The City cites to one of Lacroix's Instagram posts alleging that she had grossed around $5 million from her listings on that site (Li at ¶58).
The City further alleges that Airbnb removed Lacroix's account in December 2020, but that this account was reactivated "as recently as April 27, 2021 ... [and] remain[ed] active" at least through June 24, 2021, the date of the complaint (NYSCEF Doc. No. 1 [Complaint at ¶ 20]). The City contends that Lacroix "consistently takes pains to evade detection and thwart enforcement through a variety of tactics" (Id. at ¶ 79). Among other things, a number of her apartment listings included the incorrect apartment building address or unit number so that it was harder for the City to find the apartments that she illegally rented (Id. at ¶ 80).
Plaintiffs verified complaint sets forth causes of action for: (1) deceptive trade practices in violation of the Consumer Protection Law (Administrative Code §§20-700, et seq.); (2) illegal occupancy and advertising of illegal occupancies in multiple dwellings in violation of Multiple Dwelling Law ("MDL") §4.8(a); (3) a permanent injunction enjoining defendants and all agents from continuing to advertise, offer, and maintain the use or occupancy multiple dwellings for other than permanent residence purposes; and (4) an injunction for common law public nuisances premised upon violations of various New York City codes.
The complaint also seeks monetary penalties of $350.00 for each violation of the Consumer Protection Law (or $500.00 per violation if that violation was knowing), pursuant to Administrative Code §20-703.
In motion sequence 001, the City moves for a preliminary injunction barring defendants: (1) from advertising operating, or otherwise permitting illegal transient rentals anywhere in New York City; (2) from disposing of, modifying or in any other manner interfering with digital or paper records connected to their rental businesses; and (3) from refusing or interfering with the City's Fire Department and Department of Buildings' access to the apartments for inspection purposes. The City asserts that it has issued violation notices and summonses to defendants in order to stop them from renting out apartments illegally but to no avail and that a preliminary injunction is therefore necessary.
In general, to establish its entitlement to a preliminary injunction, a movant must establish: (1) a likelihood of success on the merits; (2) irreparable injury absent the granting of a preliminary injunction; and (3) that a balancing of the equities that favors the movant (See City of New York v Smart Apartments LLC, 39 Misc.3d 221, 233 [Sup Ct, NY County 2013]). "However ... where a municipality seeks injunctive relief in nuisance abatement proceedings, such as in this action,' [t]he three-pronged test for injunctive relief does not apply; no special damage or injury to the public need be alleged; and commission of the prohibited act is sufficient to sustain the injunction'" (The City of New York v Pavlenok, 2019 NY Slip Op. 31938[U], 8 [Sup Ct, New York County 20191 quoting City of New York v. Bilynn Realty Corp., 118 A.D.2d 511, 512 [1st Dept. 1986]; see also City of New York v Smart Apartments LLC, 39 Misc.3d 221, 233 [Sup Ct, NY County 2013]). Ultimately, the City has met its burden under either standard.
The City has established a high likelihood that it will succeed in establishing Lacroix's violation of MDL §4.8 and the Consumer Protection Law.
Multiple Dwelling Law §4(8)(a) provides that:
A "class A" multiple dwelling is a multiple dwelling that is occupied for permanent residence purposes. This class shall include tenements, flat houses, maisonette apartments, apartment houses, apartment hotels, bachelor apartments, studio apartments, duplex apartments, kitchenette apartments, garden-type maisonette dwelling projects, and all other multiple dwellings except class B multiple dwellings. A class A multiple dwelling shall only be used for permanent residence purposes.
Administrative Code §28-210.3 provides that "[i]t shall be unlawful for any person or entity who owns or occupies a multiple dwelling or dwelling unit classified for permanent residence purposes to use or occupy, offer or permit the use or occupancy or to convert for use or occupancy such multiple dwelling or dwelling unit for other than permanent residence purposes" (Administrative Code §28-210.3) and Administrative Code §20-700 states that "[n]o person shall engage in any deceptive or unconscionable trade practice in the sale, lease, rental or loan or in the offering for sale, lease, rental, or loan of any consumer goods or services, or in the collection of consumer debts" (Administrative Code §20-700).
(Administrative Code §20-701 [a]). Both the MDL and Consumer Protection Law prohibit advertising the apartments in Class A multiple dwellings for non-permanent rentals (MDL §121[1]; see also Administrative Code §27.287.1).
Finally, a public nuisance is defined at common law as "conduct or omissions which offend, interfere with or cause damage to the public in the exercise of rights common to all, in a manner such as to offend public morals, interfere with the use by the public of a public place or endanger or injure the property, health, safety or comfort of a considerable number of persons" (City of New York v Smokes-Spirits.Com, 12NY3d 616, 626 [2009] quoting Copart Industries v Consolidated Edison, Co., 41 N.Y.2d 564, 568 [1977]).
In connection with its motion, the City submits the affidavit of Department of Buildings ("DOB") investigator Michael R. Pasternack attesting to Lacroix's control of the subject apartments and ownership of Airbnb host accounts (NYSCEF Doc. No. 13 [Pasternack Aff. at ¶¶ 7-8, 10 11, 36-39). The City also submits Certificates of Occupancy demonstrating that these rentals were Class A units (See NYSCEF Doc. Nos. 76, 86, 91, 102). Finally, the City also submits affidavits from DOB inspectors who collectively made seven inspections at the five Subject Buildings in which short-term guests were discovered and interviewed and took photographs of the apartments and of images of the renters' reservations (See NYSCEF Doc. No. 70 [Botticelli Aff. at ¶¶ 36-39, 43-44, 49]; see also NYSCEF Doc. No. 108 [Pugach Aff. at ¶¶ 6-7]; NYSCEF Doc. No. 109 [Cautela Aff. at ¶¶ 24-25]; NYSCEF Doc. No. 110 [Henlon Aff. at ¶¶ 24-25]). During these inspections, the DOB's inspectors found immediately hazardous (class 1) building violations and, as a result, issued a total of 30 Notices of Violation or summonses related to short-term rentals (NYSCEF Doc. Nos. 94, 98, 105 [Notices of Violation]). The foregoing establishes a high likelihood of success that plaintiff will substantiate the allegations of its complaint (City of New York v Big Apple...
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