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LLC v. Manheim

Supreme Court of New York, First Department

January 19, 2017

204 Columbia Heights, LLC, Plaintiff-Appellant-Respondent,
Anthony Manheim, Defendant-Respondent-Appellant.

         Cross appeals from the order of the Supreme Court, New York County (Nancy M. Bannon, J.), entered November 6, 2014, which, to the extent appealed from as limited by the briefs, denied plaintiff's motion for summary judgment on its first cause of action and defendant's cross motion for summary judgment dismissing the first, second, and fourth causes of action. Defendant appeals from the order, same court and Justice, entered on or about February 24, 2016, which denied his motion to renew.

          Belkin Burden Wenig & Goldman, LLP, New York (Magda L. Cruz, Sherwin Belkin, Robert A. Jacobs and Matthew Brett of counsel), for appellant-respondent.

          Savona, D'Erasmo & Hyer, LLC, New York (Joseph F. X. Savona and Raymond M. D'Erasmo of counsel), for respondent-appellant.

          Peter Tom, J.P., Dianne T. Renwick, Sallie Manzanet-Daniels, Judith J. Gische, Troy K. Webber, JJ.

          TOM, J.P.

         The central issue in these appeals concerns the validity of a 1975 lease agreement for three combined apartments that provided, inter alia, that the rent-regulated status of the combined unit would be changed from rent-controlled to rent stabilized. While we do not depart from longstanding precedent holding that leases that attempt to circumvent the rent laws or remove an apartment from rent regulation are void as against public policy, statute, and code (see Drucker v Mauro, 30 A.D.3d 37');">30 A.D.3d 37 [1st Dept 2006], appeal dismissed 7 N.Y.3d 844');">7 N.Y.3d 844 [2006]); 390 W. End Assoc. v Harel, 298 A.D.2d 11');">298 A.D.2d 11');">298 A.D.2d 11');">298 A.D.2d 11 [1st Dept 2002]; Rent Stabilization Code [9 NYCRR] 2520.13; Rent Control Law [Administrative Code of City of NY] § 26-412), we find the lease in this case, which explicitly contemplated the possibility that the apartment would not be decontrolled and expressly stated that the status of the apartment would be determined by the appropriate authority, which will bind the parties, to be valid.

         In or about 1963, defendant moved into apartment 4B at 204 Columbia Heights, Brooklyn, as a rent-controlled tenant. In 1966, he also rented apartment 4C. He obtained permission from his then-landlord, nonparty Columbia Terrace, Inc., to combine apartments 4B and 4C and make certain improvements, such as installing a shower/sauna in place of one of the bathrooms.

         When apartment 4A became vacant, defendant desired to rent it so that he could eventually combine it with apartments 4B-C. However, because the landlord had a couple ready to rent the apartment, it was agreed that defendant would be the prime tenant for that apartment and the couple would sublet the unit and actually live in it.

         Although defendant continued to have subtenants in apartment 4A through 1975, at that point he was ready to combine all three apartments. Accordingly, by a lease dated as of September 1, 1975 but not executed until July 19, 1977, Columbia Terrace agreed to rent apartments 4A-C to defendant from September 1, 1975 to August 31, 1977 for $650 per month, with an option to renew for an additional three years. The printed (form) part of the lease says the following about repairs:

         "Tenant shall take good care of the demised premises... [A]t Tenant's own cost and expense, Tenant shall make all repairs thereto and to any other part of the building which are necessitated by the misuse, negligence, carelessness, neglect or improper conduct of Tenant [or] Tenant's family.... If Tenant fails to proceed to make such repairs... within 7 days after notice from Landlord, ... the same may be made by Landlord at the expense of Tenant and the cost thereof shall be collectible as additional rent."

         The printed part of the lease also contains the following attorneys' fee provision:

"If tenant shall default in the observation or performance of any term or covenant on tenant's part to be observed or performed..., landlord may... perform the obligation of tenant.... [I]f landlord, in connection therewith..., makes any expenditures or incurs any obligations for the payment of money, including... attorney's fees, in instituting, prosecuting or defending any action or proceeding, such sums so paid or obligations incurred... shall be deemed to be additional rent hereunder."

         A typewritten rider to the lease shows that it was contemplated that apartments 4A-C would move from rent control to rent stabilization:

"[T]he provisions of this lease respecting length of term, renewal options and amount of rent, have been agreed upon... on the express understanding that the former three apartments comprising the area which is being leased to the Tenant... will be recognized by the appropriate authority having jurisdiction to be free of the restraints and limitations of the provisions of the Rent Control Laws... and to be subject only to the Rent Stabilization Act."

         However, the parties also recognized that the entire apartment might not be decontrolled. After two paragraphs (30[i] and [ii]) setting forth the rent for the renewal period if the premises were decontrolled, paragraph 30(iii) states:

"[I]f... the parties are prohibited or precluded from following the procedure described under (i) or (ii)... the rent will be determined by treating the unit as though (a) the separate decontrolled rent for former apartment 4A [1]... for the Basic Term [i.e., Sept. 1, 1975 - Aug. 31, 1977] is $270.00 per month and (b) the monthly rent for the Renewal Term for that former apartment 4A would be $270.00 plus the maximum allowable increase under Rent Stabilization... and (c) the rents for the former apartments 4B and 4C shall be equal to the maximum collectible rents that would be permitted... under the... rent control laws."

         Paragraph 31 of the rider, titled "Tenant Improvements" explicitly provides defendant with permission to perform certain renovation and alteration work in the combined apartment, with the costs to be borne by defendant. That paragraph also says, "Landlord shall be under no obligation, of any kind, to make any repairs to any equipment, fixtures, furnishings, or facilities constructed, altered, [or] erected by the Tenant or installed by [him]... or any repairs made necessary by reason of [his] acts or omissions." Similarly, paragraph 33 says that after May 1975, "Tenant will... maintain all of [his] own installations without any obligation on ...

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