Celli Brinckerhoff & Abady LLP, New York (Richard D.
Emery of counsel), for appellants-respondents.
& Rose, New York (Paul Coppe of counsel), for
Friedman, J.P., Kahn, Gesmer, Kern, Moulton, JJ.
Supreme Court, New York County (Paul Wooten, J.), entered
October 18, 2016, which, to the extent appealed from as
limited by the briefs, denied defendants' motion for
summary judgment declaring that the subject apartment was
deregulated by the 2008 lease renewal, granted
plaintiffs' motion for summary judgment declaring in
their favor, and declared that the apartment is subject to
rent stabilization, denied plaintiffs' motion as to the
application of the default formula for determining the
regulated rent and calculating overcharge damages, granted
defendants' motion for a declaration that the default
formula for determining the regulated rent is not applicable,
and set the base rent for calculating overcharge damages as
the market rate rent being charged in May 2010, denied
plaintiffs' motion as to attorneys' fees, and sub
silentio denied plaintiffs' motion as to treble damages,
reversed, on the law, without costs, as to the declaration
that the apartment was not deregulated in 2008, and it is
declared that the apartment was deregulated in 2008, and the
appeal therefrom otherwise dismissed, as academic.
1975, plaintiff Barry Fox leased a rent-stabilized penthouse
apartment from defendant Nostra Realty Corp. In 1996, when
the neighboring rent-stabilized penthouse apartment became
vacant, Fox agreed with Nostra to combine the two units, at
his expense, and to enter into a market rate lease.
Unbeknownst to Fox, Nostra was receiving J-51 tax benefits in
connection with the building at the time the units were
combined and purportedly deregulated (see Roberts v
Tishman Speyer Props., L.P., 13 N.Y.3d 270');">13 N.Y.3d 270');">13 N.Y.3d 270');">13 N.Y.3d 270');">13 N.Y.3d 270');">13 N.Y.3d 270');">13 N.Y.3d 270');">13 N.Y.3d 270 ).
2008, at Fox's suggestion, a renewal lease was entered
into by plaintiff MBE Ltd., an entity wholly owned by Fox,
with the understanding that Fox would continue to occupy the
apartment; MBE executed renewal leases for the apartment in
2010 and 2012. Fox has continued to live in the apartment
since MBE became the tenant of record. In 2014, defendant 12
East 88th LLC purchased the building and informed Fox that
the lease would not be renewed.
the 2008 lease, and the subsequent lease renewals, named MBE
as the sole tenant and did not identify as the occupant of
the apartment a particular individual with a right to demand
a renewal lease, Fox is not entitled to the renewal of the
lease (see Manocherian v Lenox Hill Hosp., 229
A.D.2d 197, 205 [1st Dept 1997], lv denied 90 N.Y.2d
835 ; accord 501 E. 87th St. Realty Co. v Ole Pa
Enters., 304 A.D.2d 310');">304 A.D.2d 310');">304 A.D.2d 310');">304 A.D.2d 310');">304 A.D.2d 310');">304 A.D.2d 310');">304 A.D.2d 310');">304 A.D.2d 310 [1st Dept 2003]; Avon Bard
Co. v Aquarian Found., 260 A.D.2d 207');">260 A.D.2d 207');">260 A.D.2d 207');">260 A.D.2d 207');">260 A.D.2d 207');">260 A.D.2d 207');">260 A.D.2d 207');">260 A.D.2d 207 [1st Dept 1999],
appeal dismissed 93 N.Y.2d 998');">93 N.Y.2d 998');">93 N.Y.2d 998');">93 N.Y.2d 998 ).
Manocherian, this Court established that "a
corporation is entitled to a renewal lease where the lease
specifies a particular individual as the occupant
and no perpetual tenancy is possible"
(Manocherian v Lenox Hill Hosp., 229 A.D.2d at 205).
Our subsequent cases have construed the first requirement
strictly, denying rent stabilization protections to
individual occupants who are not actually identified in an
entity's rent stabilized lease (see Avon
Bard Co. v Aquarian Found., 260 A.D.2d at 211 [even
where a corporation's rent stabilized lease is
"manifestly for the benefit of" an individual
occupant, the individual is not protected by the Rent
Stabilization Law if her or she is not designated in the
lease [internal quotation marks omitted]; 501 E. 87th St.
Realty Co. v Ole Pa Enters., 304 A.D.2d at 310-311 [same
holding, despite individual tenant's residence in the
subject apartment for more than 20 years]). Here, Fox is
neither a party to nor identified as a tenant in the 2008
lease, and thus ceased to be a tenant under Rent
Stabilization Code (RSC) (9 NYCCR) § 2520.6(d) at that
time. Further, he was not identified as an individual
occupant in the 2010 or 2012 lease, as required under
Manocherian, and is therefore barred from rent
stabilization protection under their terms, as well.
dissenting colleague's reliance on our decision in
Herald Towers LLC v Sun Lord Int. (302 A.D.2d 306');">302 A.D.2d 306');">302 A.D.2d 306');">302 A.D.2d 306
[1st Dept 2003]) and similar cases (see e.g. WM
Wellington, LLC v Grafstein Diamond, Inc. 22
Misc.3d 1123 [A], 2009 NY Slip Op 50255[U] [Civ Ct, NY County
2009]) to support an examination of extrinsic evidence
showing that the individual tenant not named in the corporate
entity's lease was the actual and intended occupant of
the apartment, is misplaced. In such cases, summary judgment
was denied because there was record evidence that it had been
the landlord, and not the individual tenant, who had
initiated the change to tenancy by the corporate tenant.
Here, however, it is uncontroverted that the substitution of
MBE as tenant of record was undertaken at Fox's own
respect to the second Manocherian requirement,
plaintiffs urge that there is no risk of perpetual tenancy
because the 2008 tenant information sheet identifies Fox as
the "tenant" of the apartment, Fox submitted pet
forms to the owner in conjunction with the 2010 and 2012
lease renewals, and it is undisputed that Fox never vacated
the apartment. Whether or not these facts are sufficient to
satisfy Manocherian 's second requirement
(cf. 501 East 87th St. Realty Co., 304 A.D.2d 310');">304 A.D.2d 310');">304 A.D.2d 310');">304 A.D.2d 310');">304 A.D.2d 310');">304 A.D.2d 310');">304 A.D.2d 310');">304 A.D.2d 310
[fact that individual was president of corporate tenant and
had occupied apartment for two decades held insufficient];
Avon Bard Co., 260 A.D.2d 207');">260 A.D.2d 207');">260 A.D.2d 207');">260 A.D.2d 207');">260 A.D.2d 207');">260 A.D.2d 207');">260 A.D.2d 207');">260 A.D.2d 207 [fact that individual
was pastor of the church listed as tenant held
insufficient]), the fact remains that under our settled
precedent, the corporate tenant is only entitled to the
protections of rent stabilization if an individual tenant is
named in the lease and no perpetual tenancy is
created. Thus, the apartment was deregulated in 2008, and
plaintiffs have no right to renew the lease.
are not aided by their reliance on Roberts v Tishman
Speyer Props L.P. (13 N.Y.3d 270');">13 N.Y.3d 270');">13 N.Y.3d 270');">13 N.Y.3d 270');">13 N.Y.3d 270');">13 N.Y.3d 270');">13 N.Y.3d 270');">13 N.Y.3d 270 ,
supra). Although a tenant cannot waive rent
stabilization coverage where, as here, a building is
receiving J-51 tax abatement benefits (id.; RSC
§ 2520.13), the apartment was no longer subject to rent
stabilization protections upon the signing of the 2008 lease.
As we explained in Gersten v 56 7th Ave. LLC (88
A.D.3d 189 [1st Dept 2011], appeal withdrawn 18
N.Y.3d 954 ), "[t]he rent-regulated status of an
apartment is a continuous circumstance that remains until
different facts or events occur that change the status of the
apartment " (id. at 199 [emphasis added]).
Here, precisely such an event occurred to change the status
of the apartment, in accordance with Manocherian: a
high-rent vacancy deregulation occurred when, on May 19,
2008, at Fox's request, a market rate renewal lease was
entered into by MBE at $25, 000 per month, without Fox being
a signatory to the lease. Fox was thereby deemed to have
vacated the apartment (see 501 E. 87th St. Realty
Co., 304 A.D.2d at 310-311). From that time onward, Fox
ceased being a tenant and no longer had any of the rights to
which a rent-stabilized tenant is entitled, and therefore
could not have waived them. Thus, the dissent's position
that Fox, an attorney, effected an unknowing, and
impermissible, waiver of such rights is without basis.
same reason, Fox is not entitled to pursue his overcharge
claim in this action (see Taylor v 72A Realty
Assoc., L.P.) (151 A.D.3d 95, 102 [1st Dept 2017]
["challenges to the level of rent charged must be made
within [the] four-year limitations period... immediately
preceding the filing of a complaint"].
concur except Gesmer, J. who dissents in a ...