Opinion
161569/2019
06-16-2020
EASTGATE WHITEHOUSE LLC, Plaintiff, v. Laurie CAGNASSOLA, Defendant.
Rosenberg & Estis, P.C., New York, NY (Howard W. Kingsley of counsel), for plaintiff. Himmelstein, McConnell, Gribben, Donoghue & Joseph LLP, New York, NY (Ronald S. Languedoc ), for defendant.
Rosenberg & Estis, P.C., New York, NY (Howard W. Kingsley of counsel), for plaintiff.
Himmelstein, McConnell, Gribben, Donoghue & Joseph LLP, New York, NY (Ronald S. Languedoc ), for defendant.
Gerald Lebovits, J.
The following e-filed documents, listed by NYSCEF document number (Motion 001) 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20 were read on this motion to DISMISS.
Plaintiff Eastgate Whitehouse LLC owns an apartment building in Manhattan in which defendant Laurie Cagnassola rents an apartment. Eastgate and defendant have long disputed the amount of rent that defendant must pay for her apartment. Eastgate brings this action to force defendant to pay several years of back use & occupancy (U & O). But whether defendant owes an obligation to pay Eastgate U & O, and if so, how much, is the subject of a prior, pending action involving the same parties. Eastgate's complaint therefore is subject to dismissal under CPLR 3211 (a) (4). Further, Eastgate's claims in this action are squarely foreclosed by the terms of an order entered by this court in the prior action, rendering the complaint independently subject to dismissal under CPLR 3211 (a) (1).
BACKGROUND
I. The Procedural History of the Prior Casey Action
Understanding the current action—and why it must be dismissed—requires understanding the history of the prior landlord-tenant action. In 2011, defendant here and a number of other tenants in her building sued Whitehouse Estates (Eastgate's predecessor as landlord) and a number of individuals and entities associated with Whitehouse. The tenants' complaint alleged that Whitehouse had charged them more than the lawful regulated rent. (See Casey v Whitehouse Estates, Inc. , Index No. 111723/2011 [Sup Ct., NY County].)
This court (Singh, J.) certified the lawsuit as class action on behalf of all tenants in the building who had been charged market-rate rents by Whitehouse during the relevant period. (See Casey v Whitehouse Estates, Inc. , 2012 NY Slip Op 51471 [U] [Sup Ct, NY County Aug. 6, 2012].)
A. Justice Singh's 2014 Order
In 2014, while the Casey action regarding the lawful regulated rent remained ongoing before Justice Singh, Whitehouse offered its tenants renewal leases at a monthly rental it chose. Whitehouse told tenants that if they did not accept the lease at the offered rent, Whitehouse would go into Housing Court and get them evicted. The tenants sought a preliminary injunction. Justice Singh granted the injunction, noting that Whitehouse's conduct in effect sought improperly to bypass the pending litigation. (See Casey , Index No. 111723/2011, NYSCEF No. 194, at 12-18 [transcript of ruling on the record].) Instead, Justice Singh held, the proper remedy was for Whitehouse to seek an order requiring its tenants to pay U & O while the litigation was ongoing. (See id. at 19-20.) Should Whitehouse decide that bringing such a motion to fix U & O as against every member of the class (i.e. , dozens of tenants) would be too onerous, Justice Singh said, "the tenants are directed to pay use and occupancy in whatever their last expired lease was" when the Casey action began, and to do so "prospectively until the completion of this case." (Id. at 20.) Should the tenants fail to pay that U & O, "then the landlord has the right to go into housing court to commence a nonpayment proceeding against those tenants who are in arrears based on the rents in their last lease." (Id. )
B. This Court's 2017 Order
In 2016, the existing class of plaintiffs in Casey moved for partial summary judgment on their rent-overcharge claims. Whitehouse cross-moved for an order fixing U & O, arguing that notwithstanding Justice Singh's 2014 order, it had been unable in practice either to collect U & O from many of its tenants or to obtain judgments of possession. And two other tenants—who were not part of the original class in Casey because they had moved into the building more recently—moved to intervene. The prospective intervenors also sought a preliminary injunction staying a holdover proceeding brought against them by Whitehouse in Housing Court. (See Casey v Whitehouse Estates, Inc. , 2017 WL 1151744, at *1-*5 [Sup Ct NY County, March 23, 2017].)
This court issued a decision and order resolving these motions in early 2017. (See id. )
The action had since been transferred to the undersigned.
This court granted the motion to intervene. (Id. at *6-*7.) The court also granted plaintiff-intervenors' request for a preliminary injunction—conditioned on intervenors' paying U & O, as they had indicated they would be willing to do. (See id. at *5-*6, *23.)
On the tenants' motion for partial summary judgment, this court held that tenants' apartments were subject to rent stabilization and that defendants were required to offer them renewal leases at legal regulated rents. (See id. at *8-*9.) This court further held that Whitehouse's existing rental records were inadequate to determine the legal regulated rent and referred the issue of the legal rents to a special referee to hear and report, using the default formula for calculating lawful regulated rents. (See id. at *10-*15.)
On Whitehouse's cross-motion for payment of U & O, this court agreed that as an equitable matter, "a dispute concerning the amount of rent owed is no reason to allow a tenant to occupy the landlord's property gratis." (Id. at *17 [internal quotation marks omitted].) But this court recognized that the state of the record was such that "there is currently no way for the court to make a complete calculation of the U & O that is due for each apartment from the inception of this action." (Id. ) The court therefore directed that the special referee calculate appropriate amounts of U & O as to each tenant, as well. Tenants who had not been paying U & O as directed by Justice Singh would be required to post a bond equal to their U & O obligation as determined based upon the special referee's report. (Id. at *18.)
As a procedural matter, this court directed defendants, when "submit[ting] their motion to confirm or deny the Special Referee's report," to "include a request that the court issue an order requiring those plaintiffs who have not paid any use and occupancy to post a bond, equal to the amount of use and occupancy specified in Justice Singh's May 21, 2014 order," following this court's decision on the motion to confirm. Defendants could "thereafter commence an action for ejectment against any plaintiff who fails to post such a bond and request that action be referred to this court." (Id. at *21.)
Following this court's order, the special referee's hearing on the issue of the legal rent was repeatedly adjourned for a variety of reasons, including settlement negotiations, appellate motion practice, and discovery disputes between the parties. And in 2018, before the matter had been heard by a referee, defendant William Koeppel (the principal of both Whitehouse and Eastgate) filed for bankruptcy. The bankruptcy automatically stayed proceedings against him—including proceedings before a special referee.
The Bankruptcy Court only lifted the stay as to the Casey action earlier this year, at the request of the parties. (See Index No. 111723/2011, NYSCEF No. 388.)
C. This Court's 2019 Order
In 2019, Eastgate moved to modify the terms of the preliminary injunction granted in favor of the intervenor plaintiffs by this court in 2017. Eastgate asserted that the intervenors had failed to pay any U & O since the 2017 order; and it argued that given the delays in the special-referee proceeding, the court should alter the injunction to require the intervenors to pay some amount of U & O immediately, rather than waiting until after the special referee had issued a report and recommendation. (See Index No. 111723/2011, NYSCEF No. 314.) This court agreed. The court noted that the issue of legal rent and U & O still awaited calendaring before a special referee, and that the intervenors had represented in their original motion that they were willing to continue to pay U & O prospectively.
This court therefore directed intervenors in March 2019 to pay $70,000 in back U & O, and to pay all U & O going forward. (See Index No. 111723/2011, NYSCEF No. 334.) The intervenors did not comply with this order. As a result, in June 2019, this court issued an order removing intervenors from the Casey class, and awarding Eastgate a money judgment for $75,000 in U & O owed through April 2019. (See Index No. 111723/2011, NYSCEF No. 374.)
II. This Action
Eastgate brought this action against defendant in November 2019. Eastgate's complaint relied chiefly on Justice Singh's original 2014 U & O order. Eastgate alleged that under the terms of that order, defendant owed $126,000 in U & O that she had failed to pay. Eastgate therefore sought a money judgment for that sum (plus interest). Eastgate further claimed that "[s]ince defendant has breached the [2014] U & O Order," Eastgate was "entitled to an order of ejectment and to recover possession of the premises." (Eastgate , Index No. 161569/2019, NYSCEF No. 1 at 2.) Eastgate's complaint did not mention the court's 2017 order or that order's U & O ruling.
Defendant now moves to dismiss under CPLR 3211 (a) (1) and (4). Defendant argues that this action should be dismissed in favor of the pending Casey action; and that Eastgate must seek modification of this court's 2017 order in Casey , rather than just bringing a separate plenary action for a money judgment and order of possession.
The motion to dismiss is granted.
DISCUSSION
CPLR 3211 (a) (4) authorizes a court to dismiss an action if "there is another action pending between the same parties for the same cause of action." For this provision to apply, there must be "substantial" identity, in both the parties and the relief sought, between the action in which the motion is brought and a prior pending proceeding. ( White Light Prods., Inc. v On the Scene Prods., Inc. , 231 AD2d 90, 93-94 [1st Dept 1997].)
In assessing a motion to dismiss under CPLR 3211 (a) (1), the motion may be granted "only where the documentary evidence utterly refutes [the non-moving party's] factual allegations, conclusively establishing a defense as a matter of law." ( Goshen v Mutual Life Ins. Co. of New York , 98 NY2d 314, 326 [2002].)
I. The Branch of Defendant's Motion Seeking Dismissal under CPLR 3211 (a) (4)
Defendant contends that this action should be dismissed because Casey is a prior, pending action between the same parties involving the same cause of action. This court agrees.
With respect to the identity-of-parties requirement of CPLR 3211 (a) (4), both Eastgate and the tenant defendant here are parties to the Casey action. Eastgate argues that the tenant "cannot satisfy this element because there are many parties in the Casey class action whereas there are only two parties in this ejectment action." (Index No. 161569/2019, NYSCEF No. 17 at 8.) Eastgate is mistaken. A substantial identity of parties "generally is present when at least one plaintiff and one defendant is common in each action." ( Morgulas v J. Yudell Realty, Inc. , 161 AD2d 211, 213 [1st Dept 1990] ; accord JPMorgan Chase Bank, N.A. v Luxama , 172 AD3d 1341, 1342 [2d Dept 2019].) Where, as here, both suits arise out of the same subject matter and factual circumstances, the mere "presence of additional parties" in one of the actions does not destroy the identity of parties. ( White Light Productions , 231 AD2d at 94 ; accord Barringer v Zgoda , 91 AD2d 811, 811 [3d Dept 1982].)
The common parties need not be aligned the same way in each action. (See Kent Dev. Co. v Liccione , 37 NY2d 899, 901 [1975] [noting that a CPLR 3211 [a] [4] motion to dismiss is not defeated by "the mere fact that a plaintiff in an action under consideration is a defendant in litigation previously commenced"].)
The identity-of-claims requirement of CPLR 3211 (a) (4) is not satisfied unless the "relief sought" in the two actions "must be the same or substantially the same." ( White Light Productions , 231 AD2d at 94.) Thus, for example, two actions will differ for purposes of CPLR 3211 (a) (4) where their respective claims arise out of different facts and seek relief to redress different wrongs (see Sprecher v Thibodeau , 148 AD3d 654, 656 [1st Dept 2017] ); or where the two sets of claims have been brought in different capacities or for different purposes (see Alpert v 28 Williams St. Corp. , 63 NY2d 557, 568 n 4 [1984].)
Here, on the other hand, the core claim is the same in both actions—Eastgate's contention that its tenant owes substantial sums in U & O that she must pay under this court's prior orders. To be sure, as Eastgate emphasizes (see Index No. 161569/2019, NYSCEF No. 17 at 8), in this action Eastgate has added a claim for a judgment of possession that it did not assert in Casey . But that claim for possession is not sufficient to distinguish this action from Casey . The claim for possession here is premised solely on the tenant's alleged failure to comply with her obligation to pay Eastgate U & O. (See Index No. 161569/2019, NYSCEF No. 1 at 2-3.) Thus, before Eastgate can obtain the additional relief that it seeks here, it must prove precisely the same U & O claim as the one it is maintaining in Casey . In these circumstances, a substantial identity of claims exists between the two actions for purposes of CPLR 3211 (a) (4).
As noted above, dismissal under this provision is discretionary, rather than mandatory. Dismissal is the appropriate course here because there is no good reason for this action to continue. If Eastgate believes the lack of progress in obtaining a special-referee report constitutes changed circumstances that undermine the U & O provisions of this court's 2017 order in Casey , then Eastgate can move in that action to modify them—just as it moved to modify the preliminary-injunction provision of the 2017 order. And Eastgate does not explain why it is necessary for it to be able to litigate both proceedings.
II. The Branch of Defendant's Motion Seeking Dismissal under CPLR 3211 (a) (1)
In addition to the grounds for dismissal under CPLR 3211 (a) (4) discussed above, this action independently must be dismissed under CPLR 3211 (a) (1). Eastgate's claims here plainly are refuted by the terms of this court's 2017 U & O order. (See Fontanetta v Doe , 73 AD3d 78, 84-85 [2d Dept 2010] [noting that "judicial records" can appropriately constitute documentary evidence for purposes of CPLR 3211 [a] [1] ].)
Eastgate contends that it is entitled to collect U & O from defendant under the terms of Justice Singh's 2014 order. (See Index No. 161569/2019, NYSCEF No. 17 at 6.) But the specific requirements of that order were superseded by the U & O provisions of this court's 2017 order. Indeed, this court included those provisions in the 2017 order on Whitehouse's cross-motion precisely because the 2014 order had not brought about payment of U & O to Whitehouse. (See Background Section I.B.) Moreover, this court declined in the 2017 order to fix U & O itself, given the poor state of Whitehouse's own rental records. Instead, the court referred the issue of U & O to the special referee. And this court expressly provided that the tenants would not be required to post a U & O-based bond (and Eastgate would not be able to seek an ejectment order) until Eastgate had obtained confirmation of the referee's report. (See Casey , 2017 WL 1151744, at *18, *21.)
To be sure, as Eastgate contends, this court's 2017 order "expressly rejected [tenants'] claim that they should not have to pay U & O pendente lite ." (See Index No. 161569/2019, NYSCEF No. 17 at 4.) But even as Eastgate accuses defendant of "a flagrant attempt to mislead the court" about the 2017 order, Eastgate omits this court's directive in that order as to how the tenants' obligation to pay U & O pendente lite would be carried into effect. (See id. at 4-5, 6.) It is undisputed—indeed, indisputable—that Eastgate has not met that order's preconditions either to require payment of a specific amount of U & O or to award Eastgate possession. Yet Eastgate now seeks that relief anyway. This it may not do.
Finally, Eastgate asserts that in light of this court's June 2019 order in Casey awarding Eastgate a money judgment against the intervenor-plaintiffs, Eastgate is "not precluded from seeking relief based upon a tenant's violation of the 2014 U & O Order." (Id. at 7; see also id. at 6.) The opposite is true. This court entered the June 2019 order only after (i) Eastgate sought and obtained a modification of the 2017 order as it pertained to the intervenors alone, and (ii) the intervenors then failed to comply with the terms of the order as modified. (See Background Section I.C, supra .) Eastgate may move in Casey for an order modifying the provisions of this court's 2017 U & O order as to defendant and directing her to pay specific sums of U & O, just as Eastgate did with respect to the intervenors. But Eastgate has not done so. And absent such modification, Eastgate may not maintain a freestanding action against defendant for U & O and a judgment of possession as though the terms of this court's 2017 order did not exist.
Accordingly, it is hereby
ORDERED that defendant's motion to dismiss under CPLR 3211 is granted, and the complaint is dismissed, with costs and disbursements to be taxed by the Clerk of the Court upon the submission of an appropriate bill of costs; and it is further
ORDERED that defendant shall serve a copy of this order with notice of its entry on plaintiff and on the office of the General Clerk and the office of the County Clerk, which shall enter judgment accordingly.