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130 Remsen LLC v. Commercial Investigations LLC

City Court of Cohoes

August 25, 2017

130 Remsen LLC, Petitioner-Landlord,
v.
Commercial Investigations LLC, Respondent-Tenant.

          Thomas Gabriels Albany, for Petitioner-Landlord.

          Stephanie Ferradino Esq. Saratoga Springs, NY, for Respondent-Tenant.

          THOMAS MARCELLE, J.

         130 Remsen LLC ("Remsen") brought a non-payment proceeding under RPAPL § 711(2) against its tenant Commercial Investigation LLC ("Commercial"). With the consent of the parties, a trial was held on May 15, 2017. After the trial, the parties submitted summations and legal arguments, and the case was fully briefed on June 5, 2017. Based upon the credible evidence, the court finds the facts as follows.

         In July 2011, Commercial entered into a written agreement with R & B Properties ("R & B") to lease office space at 130 Remsen St., 2nd floor. The lease ran six years until June 30, 2017. At the time the lease was executed, Commercial paid R & B $2, 250 as a security deposit.

         R & B suffered financial difficulties. Sometime in April 2016, Commercial became aware of a looming foreclosure proceeding. Given R & B's pending calamity, Commercial was hesitant to pay May's rent to an entity on the brink of going under. Ultimately, the office building was foreclosed upon. Indeed, a referee foreclosure sale was held in April 2016, where Remsen won the auction. Shortly thereafter, on May 1, 2016, R & B assigned its right to collect rents to Remsen. After the assignment, on May 16, 2016, Remsen closed on the property and acquired legal possession and title to the office building.

         Remsen never informed Commercial of the rent assignment. Yet the evidence established three facts - first, sometime in May 2016, apparently after the closing on May 16, Commercial knew that Remsen was now the owner of the building and Commercial's new landlord; second, Commercial never paid May 2016's rent to either R & B or Remsen; and third Commercial faithfully paid its rent to Remsen from June 2016 through March 2017.

         What makes this case a case is what happened between the parties from June 2016 to April 2017. Remsen wanted Commercial to agree to a new longer lease. Commercial had reservations - Remsen planned to renovate and to convert the two floors above its office into residential apartments and the noise and other negative externalities from the renovation might have interfered with Commercial's business operations. To assuage Commercial's concerns, Remsen offered terms where if Commercial found the renovations disruptive of its business, Commercial could break the lease and vacate without penalty.

         In any event, new lease or no new lease, Remsen wanted Commercial to make a new security deposit because R & B had not transferred Commercial's previous security deposit to Remsen. Commercial took the position that it had already paid a security deposit and no new security deposit would be forth coming. Remsen countered that when it took possession of the building, Commercial became a month to month tenant and if a new lease was not executed together with payment of the security deposit, Remsen would serve Commercial with a 30 day notice to vacate - in other words Remsen told Commercial to pay the security deposit or get out. These communications were made verbally and in voicemails but never in writing.

         Discussions of new leases and security deposits ended in January 2017, when Commercial informed Remsen, by written notice, that it would be vacating the office space at the end of March 2017. Commercial did leave the office as promised at the end of March. Remsen had its management company move into the space at the end of April. Remsen demanded May 2016's and April 2017's rent. Commercial declined to pay the rent arguing that it had become a month to month tenant and under such a tenancy, it had given Remsen sufficient notice to quit and thus owed no rent. Remsen then instituted this proceeding to collect the rental arrears.

         Before addressing the rent issue, the court must ensure it possesses jurisdiction. This case is a non-payment proceeding brought under RPAPL § 711(2). RPAPL § 711(2)'s primary purpose is to return control of a landlord's property to him where a tenant has not paid his rent. While a landlord may seek back rent under RPAPL § 711(2), it may not use the statute to collect an overdue debt (Poulakas v. Ortiz, 25 Misc.3d 717, 724-25 [Kings County Civ. Ct. 2009]). Consequently, "[i]t is a basic premise of landlord-tenant summary proceedings [that] the person against whom the action is brought be in physical possession of the subject premises at the time the action is commenced in order for the Court to obtain jurisdiction" (Torres v Torres, 13 Misc.3d 1167, 1170 [Kings County Civ. Ct. 2006]).

         Remsen has an issue with timing. Commercial had vacated the office at the end of March and returned the keys no later than April 7. Remsen commenced this summary proceeding on April 18, 2017 - after the date that Commercial had already surrendered possession of the office. Thus, the RPAPL does not provide the court with subject matter jurisdiction.

         The jurisdictional inquiry does not cease here. While the court cannot hear the case as pleaded, the question becomes whether the court has jurisdiction of this type of claim -a breach of contract (see Matter of Rougeron, 17 N.Y.2d 264, 271 [1966] [explaining that subject matter turns not on the case as plead but th[e] "kind of case" in fact]).

         This court has "all of the powers that the supreme court would have in like actions and proceedings" (Uniform City Court Act § 212). One power possessed by supreme court is the power to ...


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