Wilson v. One Ten Duane Street Realty Co.

• Decision Date: 20 January 1987
• Citation: 510 N.Y.S.2d 603,123 A.D.2d 198
• Parties: James WILSON, Donald Perlis, Annette Kuhn, David Lewis, Helene Broska and Sean Scully, Plaintiffs-Respondents-Appellants, v. ONE TEN DUANE STREET REALTY CO., Defendant-Appellant-Respondent.
• Court: New York Supreme Court — Appellate Division

Page 603

510 N.Y.S.2d 603

123 A.D.2d 198

James WILSON, Donald Perlis, Annette Kuhn, David Lewis, Helene Broska and Sean Scully, Plaintiffs-Respondents-Appellants, v. ONE TEN DUANE STREET REALTY CO., Defendant-Appellant-Respondent.

Supreme Court, Appellate Division,

First Department.

Jan. 20, 1987.

Joseph Burden, of counsel (Gary M. Rosenberg and Susan R. Lipp, with him on the brief; Rosenberg & Estis, P.C., New York City, attorneys), for defendant-appellant-respondent.

Paul M. Gulielmetti, of counsel (Elise Berkower, with him on the brief; Paul M. Gulielmetti, P.C., New York City, attorney), for plaintiffs-respondents-appellants.

Before MURPHY, P.J., and SULLIVAN, ASCH, LYNCH and WALLACH, JJ.

PER CURIAM:

In 1979, the defendant purchased a five-story building having a certificate of commercial occupancy and used solely for such purposes. The defendant itself ran a shoe business on the ground floor. Between March and May of that year it leased each of the upper floors to artists for renovation to residential units. The five-year standard loft leases called for annual rent of about three dollars a square foot, the tenants to pay also their proportionate share of heating costs and any tax increases. The tenants were to renovate their areas, the landlord the common areas, all in compliance with code requirements, the goal being the obtaining of a residential certificate of occupancy. The leases gave the tenants the right to sell their fixtures and improvements to subsequent tenants. Each lease provided that an "option for renewal of the lease shall be discussed 30 days prior to the termination of this lease".

The tenants renovated the four upper floors into seven apartments, with two subleased with the knowledge of the landlord. The residential certificate of occupancy was obtained in February, 1982.

The third, fourth, and fifth floor leases expired in early 1984. The landlord offered new leases at approximately seven dollars a square foot, with no rights to the tenants to sell their fixtures or improvements. Each tenant but one refused the offer and eviction proceedings were commenced in Civil Court. Ultimately they were consolidated with this action.

Five tenants and a subtenant commenced this action alleging that, when they had entered into their leases, the landlord represented that, if they rehabilitated at their own expense and a residential certificate were obtained, they would be entitled to rent stabilization and the ownership of their fixtures. They alleged that the landlord never intended to abide by these representations upon which they had relied. The first cause of action sought a declaration that their units were protected by the Loft Law (Article 7-C, Multiple Dwelling Law). The second cause of action sought a declaration of the tenants' right to the rent stabilization protection embodied in the Emergency Tenant Protective Act of 1974 (Unconsolidated Laws, § 8621 et seq. [L.1974, ch. 576, § 4] ). The third cause of action sought an injunction against dispossess proceedings by the landlord, and the fourth, attorneys' fees under section 234, Real Property Law.

The landlord counterclaimed for: a declaration that the building was exempt from the Loft Law and the Emergency Tenant Protective Act (ETPA); use and occupancy as to those tenants whose leases had expired; attorneys' fees under the leases; and ejectment of some of the tenants. The plaintiff-tenants' reply alleged, inter alia, that the landlord was equitably estopped from asserting its defense of exemption under the Loft Law.

The landlord moved for summary judgment; the tenants cross-moved for the same relief. Special Term granted the landlord's motion, except that it failed to rule on the application for attorneys' fees. The cross-motion was denied, the court declaring that the building was subject neither to the Loft Law nor the ETPA. Both sides have appealed.

Special Term correctly found the building was not covered by the Loft Law. Section 281 of the Multiple Dwelling Law was enacted on June 21, 1982 and makes the article applicable to "interim multiple dwellings" which are defined as de facto residential buildings lacking a residential certificate of occupancy. Since this building had had such a certificate since February 1982, the law is inapplicable. The tenants contend, however, that the landlord should, in equity, be estopped from preventing the enforcement of their rights. The contention has no merit. The lack of a residential certificate on the enactment date is not, in substance, a defense for the landlord. Rather, it is a prerequisite to the tenant's coverage under the Loft Law. "Equitable estoppel does not operate to create rights otherwise nonexistent; it operates merely to preclude the denial of a right claimed otherwise to have arisen." (57 N.Y.Jur.2d, Estoppel, Ratification, and Waiver, § 15 [with citations] ). Thus, the first cause of action was properly dismissed.

The ETPA exempts from its regulation "housing accommodations in a building containing fewer than six dwelling units" (Unconsolidated Laws, § 8625, subd. a[4][a] ). Special Term held this exemption applicable for the stated reason that, while there were seven dwelling units from 1979 onward, there were less than six (in fact, none) when the statute was enacted in 1974. This establishment of 1974...