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City of New York v. 330 Continental LLC

January 29, 2009

THE CITY OF NEW YORK, ET AL., PLAINTIFFS-RESPONDENTS,
v.
330 CONTINENTAL LLC, ET AL., DEFENDANTS-APPELLANTS.



Defendants appeal from an order of the Supreme Court, New York County (Michael D. Stallman, J.), entered November 1, 2007, which, insofar as appealed from, as limited by the briefs, granted plaintiffs' motion for a preliminary injunction to the extent of enjoining defendants, pending final determination of this action, (1) from making any new reservations for transient occupancy of units in the three buildings located in Manhattan and (2) as of January 8, 2008, from using or occupying or permitting the use or occupancy of any of the units of such buildings for transient use and/or as transient hotels and hostels, other than units so occupied on that date, and denied defendants' cross motion to dismiss the first, second and fourth causes of action in the verified complaint.

The opinion of the court was delivered by: Friedman, J.

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

This opinion is uncorrected and subject to revision before publication in the Official Reports.

Richard T. Andrias, J.P., David Friedman, John T. Buckley, James M. Catterson, Rolando T. Acosta, JJ.

Ind. 406350/07

For the better part of a century, some of the units in three single room occupancy apartment hotels on the Upper West Side of Manhattan have been rented out as short-term accommodations for tourists and others temporarily staying in the City of New York. This appeal requires us to consider how this practice is affected by the complex web of rules formed by the City's zoning resolutions dating back to 1916, the Multiple Dwelling Law, and the City's Administrative Code. The City is seeking to put an end to the rental of rooms in the subject buildings for short-term occupancy, arguing that the use of any portion of the buildings for this purpose violates current zoning restrictions and the buildings' certificates of occupancy. We conclude that the City has not demonstrated an entitlement to a preliminary injunction stopping this activity.

The three subject buildings are seven-story single room occupancy (SRO) apartment hotels (see Multiple Dwelling Law [MDL] § 4[16] [defining "single room occupancy"]). The Continental, located at 330 West 95th Street, has 207 SRO units; the Montroyal, located at 315 West 94th Street, has 200 SRO units; and the Pennington, located at 316 West 95th Street, has 184 SRO units. The record reflects that, in each of the three buildings, certain SRO units are rented to tenants for permanent occupancy, and other SRO units are rented to tourists on a short-term basis. Defendants, the owners and managers of the buildings, advertise the buildings as offering short-term accommodations to tourists on travel-oriented Web sites such as Orbitz.com, Expedia.com, Hotels.com and Yahoo Travel.

The record establishes that the rental of units within the buildings for short-term, nonpermanent occupancy is a practice with a long history, dating back to the 1940s, if not earlier. The longstanding practice of renting rooms in the buildings for short-term occupancy, including to overnight lodgers, is documented by such contemporaneous evidence in the record as the daily registers that were maintained for the buildings for the years 1941, 1945, 1948 and 1950, and by the buildings' listings and advertisements in the Manhattan "Yellow Pages" during the same time period.

The buildings are situated in an area designated by the City's Zoning Resolution of 1961, as amended (the ZR), as an R8 general residence district (see City of New York Zoning Map 5d, incorporated by ZR § 11-14). Each building's certificate of occupancy provides, either expressly or by implication, that the building is a class A multiple dwelling*fn1. A class A multiple dwelling is defined by the MDL as "a multiple dwelling which is occupied, as a rule, for permanent residence purposes" (MDL § 4[8][a]; see also MDL § 4[16] ["When a class A multiple dwelling is used wholly or in part for single room occupancy, it remains a class A multiple dwelling"]; compare MDL § 4[9] [defining a class B multiple dwelling as one "which is occupied, as a rule transiently, as the more or less temporary abode of individuals or families who are lodged with or without meals"]).

Plaintiffs (the City, its Department of Buildings and its Department of Housing Preservation and Development [collectively, the City]) brought this action seeking, inter alia, to enjoin defendants from renting any units within the buildings for periods of less than 30 days. The City refers to occupancies of less than 30 days as "transient occupancy," a phrase that apparently is not defined in any statute, ordinance, resolution, regulation, advisory opinion or administrative notice. The City argues that the rental of units within the buildings for "transient occupancy" (i.e., occupancy of less than 30 days) violates the ZR. Under the ZR, "apartment hotels" (defined as buildings in which "the dwelling units or rooming units are used primarily for permanent occupancy" [ZR § 12-10]) are permitted within a general residence district, but "transient hotels" (defined as buildings in which "living or sleeping accommodations are used primarily for transient occupancy, and may be rented on a daily basis" [id.]) are not*fn2. The City also argues that the rental of units within each of the buildings for "transient occupancy" (again, as defined by the City) violates that building's status as a class A multiple dwelling under its certificate of occupancy, in that, as previously noted, a class A multiple dwelling is defined by statute as "a multiple dwelling which is occupied, as a rule, for permanent residence purposes" (MDL § 4[8][a]).

Contending that a violation of the ZR or of a building's certificate of occupancy constitutes a public nuisance (see Administrative Code of City of NY [hereinafter, Administrative Code] § 7-703[d], [k]; see also City of New York v Bilynn Realty Corp., 118 AD2d 511, 513 [1986]), the City moved for a preliminary injunction (see Administrative Code § 7-707) against, inter alia, rental of any units in the subject buildings for periods of less than 30 days, and for appointment of a temporary receiver. Defendants opposed the City's motion and cross moved to dismiss the first, second and fourth causes of action pleaded in the City's complaint, which are predicated on the contention that it is unlawful to rent any unit within the buildings for a period of less than 30 days. The motion court granted the City the requested preliminary injunction, denied the motion for appointment of a temporary receiver, and denied defendants' cross motion to dismiss (18 Misc 3d 381 [2007]). On defendants' appeal, we modify the motion court's order (enforcement of which was stayed pending appeal by order of this Court entered December 6, 2007) to deny the preliminary injunctive relief challenged by defendants.*fn3

To be entitled to a preliminary injunction, the City was required to demonstrate a likelihood of ultimate success on the merits, irreparable injury in the absence of provisional relief, and a balancing of the equities in its favor (see City of New York v Love Shack, 286 AD2d 240, 242 [2001], citing W.T. Grant Co. v Srogi, 52 NY2d 496 [1981]). Although, as the motion court correctly observed, irreparable injury is presumed from the continuing existence of an unremedied public nuisance (see Love Shack, 286 AD2d at 242 ["the irreparable injury is based upon the harm to the general public if the nuisance is not immediately abated"]; see also Bilynn Realty, 118 AD2d at 512-513), here the City failed to demonstrate a likelihood that it will ultimately succeed in proving that defendants' rental of some units within each of the buildings for periods of less than 30 days constitutes a violation either of the ZR or of the certificate of occupancy and, as such, a public nuisance*fn4. This is because, even if it is assumed that an occupancy of less than 30 days is "transient" for purposes of the MDL and the ZR, the City failed to demonstrate that most of the units in any of the buildings are rented for such short-term occupancy. As explained below, the rental of a minority of a building's units for nonpermanent occupancy would violate neither the ZR nor the certificate of occupancy.

There is no requirement under either the ZR or the certificates of occupancy that the subject buildings be used exclusively for permanent occupancy. To reiterate, the ZR permits "apartment hotels" (such as the buildings in question) in general residential districts, and the ZR defines an "apartment hotel" as a building whose units "are used primarily for permanent occupancy" (ZR § 12-10 [emphasis added])*fn5. The use of the word "primarily" in the ZR's definition of "apartment hotel" indicates that a secondary use of a building, other than "permanent occupancy," is consistent with the status of an "apartment hotel."*fn6 As to the certificates of occupancy, which designate the buildings as class A multiple dwellings, MDL § 4(8)(a) requires that a class A multiple dwelling be "occupied, as a rule, for permanent residence purposes" (emphasis added). Here again, the statute's use of the phrase "as a rule" indicates that a secondary use of the building, different from the specified primary use, is permitted*fn7. Thus, when the relevant provisions of the MDL and the ZR are interpreted in accordance with "the obvious and fundamental rule of construction that words of common usage are to be given their ordinary meaning" (Matter of Manhattan Pizza Hut v New York State Human Rights Appeal Bd., 51 NY2d 506, 511 [1980]; see also McKinney's Cons Laws of NY, Book 1, Statutes §§ 94, 232), it follows that no violation either of the ZR or of the certificate of occupancy would result from the use of a minority of the units in one of the buildings for nonpermanent or transient occupancy.*fn8

While the City's evidence demonstrates - indeed, defendants readily admit - that a significant number of units in each building are (and have been for many decades) rented to tourists for periods of less than 30 days, the City made no showing that most of the units in any of the buildings are rented for such short-term occupancy. In fact, the City made no effort at all to quantify the proportion of each building's units that defendants rent for short-term occupancy*fn9. As the party moving for a preliminary injunction, the City, not defendants, had the burden of showing that the buildings were not being "used primarily for permanent occupancy" (ZR ยง 12-10) or were not "occupied, as a rule, for permanent ...


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