Opinion
059647/07.
Decided March 11, 2010.
Law Offices of Fischman Fischman, New York City (Doreen J. Fischman of counsel), for petitioner.
Respondent pro se.
On September 23, 1998, respondent, Gwen Goodwin, entered into a two-year lease agreement for 152 East 100th Street, Apt. 5E, in New York County with William Castro, the landlord. The lease included a rider stating that the "landlord will rent at a preferred tenant rate of $600. monthly in lieu of rehab to be done by tenant." (Affidavit of Declan Hennessy, Mar. 30, 2007, Exhibit B, Petitioner's Record on Appeal at 69.) The rider does not allude to the duration of the preferential rate. Castro and respondent renewed the lease using a preferential rate three times: October 14, 2000, for $600; January 15, 2003, for $600; and January 15, 2005, for $624.
Sometime during the third renewal period, petitioner assumed the lease from Castro. (Paragraph 35 of lease in question provides that the lease is binding on the landlord's successors.) On a renewal form dated January 15, 2007, the landlord was listed as James Purcell, treasurer for petitioner. Respondent received two letters from Purcell, on October 10, 2006, and November 14, 2006, informing her that "[ n]o preferential rent will be given." (Affidavit of Declan Hennessy, Mar. 30, 2007, Exhibit G, Petitioner's Record on Appeal at 99 [emphasis in original].) Instead, petitioner demanded $773.79, the alleged legal maximum rent for the apartment. Respondent sent a check, dated January 25, 2007, to petitioner in the amount of $669.24, the amount listed on the renewal form Purcell sent as the new rent amount. Respondent wrote on the check that the rent was paid in full from January 15 to February 15, 2007. In a letter dated February 6, 2007, petitioner rejected respondent's counteroffer to renew the lease at the preferential rate and returned respondent's check. Respondent also issued a check dated February 16, 2007, for $669.24 and a March 15, 2007, check in the same amount, noting on both checks that the rent was intended as full payment for the respective months. Petitioner later cashed the checks, without prejudice.
Petitioner commenced this summary holdover proceeding alleging that respondent failed to sign a renewal lease. Respondent argued that she need not sign a renewal lease with an incorrect rent — that her correct rent should reflect a lifetime preferential rent. On July 9, 2007, the Honorable Gary Marton granted summary judgment in respondent's favor dismissing the proceeding. Judge Marton explained that under Rent Stabilization Code (9 NYCRR) § 2522.5 (g), "tenants of rent-stabilized apartments are entitled to renewal leases on same terms and conditions as their expiring leases." ( E. Side Managers Assocs., Inc. v Goodwin, Civ Ct, NY County, July 9, 2007, Marton, J., Index No. L T 59647/2006, at 3 [" East Side I"].) Judge Marton found the rider ambiguous with respect to the duration of the preferential rent but that the ambiguity should be resolved against petitioner's predecessor, the rider's drafter. ( Id. at 3, citing 151 W. Assocs. v Printsiples Fabric Corp, 61 NY2d 732.)
Petitioner moved under CPLR 2221 for leave to reargue Judge Marton's July 2007 order. On November 29, 2007, Judge Marton granted petitioner's motion to reargue but adhered to his July 2007 decision. ( E. Side Managers Assocs., Inc. v Goodwin, Civ Ct, NY County, Nov. 29, 2007, Marton, J., Index No. L T 59647/2006 [" East Side II"].)
Petitioner then appealed to the Appellate Term, First Department. Petitioner argued that it was entitled to discontinue the preferential rent from the initial 1998 lease rider and charge the maximum legal rent. Petitioner raised two grounds. First, petitioner contended under Matter of Missionary Sisters of Sacred Heart, III v NY St. Div. of Hous. Community Renewal ( 283 AD2d 284 [1st Dept 2001]) that it "w[as] entitle[d] to end a preferential rent at the end of the lease term." (Petitioner-Appellant's Reply Brief at 7.) Second, petitioner contended under Chapter 82 of the Rent Stabilization Law of 2003 that as long as a landlord-owner "files the legal rent on the rent registration forms with the DHCR for four years, then the Owner at the Owner's sole discretion may terminate the preferential rent." (Petitioner-Appellant's Reply Brief at 7.)
Respondent argued that Missionary Sisters allows a landlord to terminate a preferential rent only if the lease terms expressly provide that a preferential rent is for a limited duration. (Respondent's Brief at 8.) Additionally, respondent argued that Chapter 82 does not apply retroactively to preferential-rent agreements made before its enactment in 2003. (Respondent's Brief at 12.)
On July 30, 2009, the Appellate Term held that
"[t]enant's lease was periodically renewed with increases based upon the preferential rate. Inasmuch as the terms of the preferential lease rider appear to be open-ended concerning the duration of the preferential rent,' and the contracting parties' intent cannot be unequivocally ascertained from the four corners of that agreement,' a hearing on the issue of intent is warranted." ( E. Side Managers Assocs., Inc. v Goodwin, 24 Misc 3d 128[A], 2009 NY Slip Op 51320 [U], * 1 [App. Term, 1st Dept, July 30, 2009] [quoting Matter of Pastreich v NY St. Div. of Hous. Community Renewal , 50 AD3d 384 , 387 [1st Dept 2008].)
In accordance with the Appellate Term's order, this court conducted an evidentiary hearing on December 11, 2009, January 19, 2010, and February 17, 2010. The goal of the hearing was to ascertain the issue of intent between the original landlord and respondent. Two witnesses testified: James Purcell, petitioner's treasurer, and respondent. No one called Mr. Castro, the original landlord, or Nelly Castro, his wife, who, according to respondent, had negotiated the original lease and three lease renewals with respondent. Because petitioner gained control of the building well after the 1998 lease was entered into, Purcell's testimony was irrelevant. He testified credibly, but he had no personal knowledge about what the parties intended when they executed the original lease and the lease renewals.
Respondent testified over the course of three afternoons. On December 11, 2009, on her first day of testimony, respondent gave her impressions about the duration of her preferential rent lease agreement, but she did not recall word for word the conversations she had with Ms. Castro. Respondent testified, as allowed under the parole evidence rule, that Ms. Castro, negotiating the lease on her husband's behalf, gave her a lifetime preferential rent in return for work respondent would do to the premises. Respondent's second day of testimony, on January 19, 2010, included detailed information about specific conversations she allegedly had with Ms. Castro. Respondent recalled word for word that Ms. Castro told her that if respondent renovated the apartment, she will have lifetime preferential rent. Respondent's third day of testimony, on February 17, 2010, contradicted her earlier testimony; respondent supposedly could not even remember that she testified during the first hearing date in December 2009 that she did not recall the specifics of her discussions with Ms. Castro. If this court were to accept respondent's testimony from the second and third afternoons, respondent would prevail. It is for that reason, this court believes, that respondent altered her testimony on her second and third afternoons to add the specifics about her initial discussions with Ms. Castro.
Respondent's testimony is suspect because she changed her testimony dramatically and because she did not recall her original testimony when she testified on February 17, 2010, her third afternoon. Respondent's testimony is further suspect because despite numerous and pointed admonitions from the court, respondent repeatedly refused to answer questions put to her, repeatedly embellished answers, repeatedly added her inadmissible opinions to her answers, and was repeatedly hostile to opposing counsel.
A question in terms of respondent's credibility is whether this court should reject her entire testimony or strike only that part of her testimony, offered during the second and third afternoons, in which she claims to have recalled in detail the specific conversations in which Ms. Castro gave her a lifetime preferential rent. Under the maxim of falsus in uno, falsus in omnibus,
"[i]f a witness has testified falsely as to any material fact, the entire testimony of that witness may be disregarded upon the principle that one who testifies falsely about one material fact is likely to testify falsely about everything. However, such a witness need not be found totally unworthy of belief. A factfinder may accept so much of the such testimony as believed to be true, and disregard what is believed to be false." ( United States v Gilkeson, 431 F Supp 2d 270, 277 [ND NY 2006].)
The maxim is permissive, not mandatory, and it is for this court to determine how much, if anything, to believe from a witness. ( See e.g. People v Becker, 215 NY 126, 144 [1915].)
Although this court rejects respondent's testimony from the second and third afternoons as to her supposed specific recollection about what Ms. Castro said to her, this court accepts respondent's testimony from the first day regarding the parties' intent of the lease agreement when they entered into it. Respondent stated that Ms. Castro offered her preferential rent, which she understood to be for a lifetime duration, in return for renovations to the apartment that respondent would undertake and pay for herself. Respondent's first day of testimony provided a credible explanation of what she believed to be the preferential-rent arrangement.
Notwithstanding that respondent was a difficult witness, the court believes respondent when she argues that her original understanding of the lease agreement was that she had a lifetime preferential rent. Respondent credibly testified that she and Ms. Castro sat around a table at Castro's apartment. Ms. Castro wrote the lease and rider provision. Mr. Castro was present in the apartment but in another room watching television. Respondent offered into evidence receipts showing the work she did to the premises in accordance with her understanding that she would be entitled to lifetime preferential rent in exchange for making improvements to the apartment. Respondent's receipts total several thousand dollars in payments made to renovate the apartment. It would make no sense for respondent to have spent thousands of dollars to renovate the apartment unless she expected to continue to reside there at a lifetime preferential rent. Respondent's intention that the preferential rent was to continue for the lifetime of her tenancy is evident from the amount she paid to renovate the apartment. She would not have spent so much time, money, and effort to have a preferential rent for only two years.
Additionally, Ms. Castro's generosity in granting a lifetime preferential rent is corroborated by the fact that she opted in three renewal leases not to raise respondent's rent even when she could have. Respondent had a reasonable belief that the parties had intended that respondent benefit from a lifetime preferential-rent agreement.
Petitioner argues that because the rider containing the preferential-rent provision does not expressly give the tenant lifetime preferential rent, petitioner is entitled to discontinue, in any subsequent lease renewal, offering any preferential rent to respondent. Respondent contends that because the rider does not limit the duration of the preferential rent, it must be construed as continuing for the life of respondent's tenancy. The rider's failure to provide whether the preferential rent was for a limited or indefinite duration is ambiguous, but "ambiguities in a contractual instrument will be resolved contra proferentem, against the party who prepared or presented it." ( 151 W. Assocs. v Printsiples Fabric Corp., 61 NY2d 732, 734.) Ms. Castro, petitioner's predecessor's wife, drafted the rider provision into the original lease. Because Ms. Castro drafted the original rider provision, "where there is an ambiguity as to the meaning of a provision of a lease, prepared by the landlord, the ambiguity should be resolved in favor of the tenant." ( Id. at 733.)
Petitioner contends that it was entitled to terminate the preferential rent under Missionary Sisters ( 283 AD2d 284 [1st Dept 2001].) In Missionary Sisters, the preferential rent rider was "granted to the tenant because of the present economically depressed market." ( Id. at 285.) The rider granting preferential rent in Missionary "was specifically tied to economic conditions prevailing at the time the lease was executed, and was to apply for that particular lease term." ( Id. at 289.) Unlike the case at bar, the preferential rent in Missionary Sisters was conditioned for a limited duration, and there was no ambiguity about the rider's duration. ( Id. at 288.) Here, the duration of the preferential rent is ambiguous, and any ambiguity is resolved against the drafter, petitioner's predecessor. Contrary to Missionary Sisters, therefore, the duration of the preferential rent in this proceeding is for the lifetime of respondent's tenancy under her reasonable interpretation of the ambiguous rider provision.
Petitioner also argues that the 2003 amendment allows it to discontinue respondent's preferential rent. The amendment, Rent Stabilization Law (Administrative Code of City of NY) (RSL) § 26-511 [c] [14]), provides that "where the amount of rent charged to and paid by the tenant is less than the legal regulated rent for the housing accommodation, the amount of rent for such housing accommodation which may be charged upon renewal or upon vacancy thereof may, at the option of the owner, be based upon such previously established legal regulated rent, as adjusted by the most recent applicable guidelines increases and any other increases authorized by law."
The original lease rider contains an implied provision, as this court sees it, by which the parties agree that the tenant is entitled to renewal leases at the preferential rent for the full length of the tenancy. The above-recited 1983 amendment does not negate that agreement. In Mohammed Aijaz v Hillside Place, LLC ( 37 AD3d 501 , 502 [2d Dept 2007]), the court found that when "renewal leases were entered into, and expired, well before the Legislature amended the RSL . . . it is clear that the amendment, which the Legislature indicated was to take effect immediately' (L. 2003, ch 82, § 13), applies prospectively, that is, to renewal leases that were entered into after its date of enactment." Respondent's lease and rider were entered into and expired before the 2003 amendment entered into force. Accordingly, the 2003 amendment, which allows a landlord to discontinue a tenant's preferential rent in leases executed after the enactment of the amendment, does not apply to respondent's lease, which predates the 2003 amendment.
This court finds that respondent is entitled to lifetime preferential rent.
This failure-to-renew holdover proceeding is based on petitioner's argument that respondent should be evicted because she failed to sign a lease renewal. Given this court's finding that respondent decided, for legitimate reasons, not to sign a renewal lease that contained no preferential rent, this failure-to-renew holdover proceeding must be dismissed.
This opinion is the court's decision and order.