Opinion
083490/04.
Decided July 29, 2005.
Rosenberg Estis, P.C. (Warren Estis and Norman Flitt of counsel), New York City, for petitioner.
Lowenstein Sandler PC (Robert Boneberg, Brian Ullman, and Adrian Zuckerman of counsel), New York City, for respondent.
Petitioner commenced this holdover proceeding in early August 2004 to recover possession of the subject premises and for and use and occupancy. Respondent surrendered possession in late August 2004, after this holdover proceeding began. The only remaining issue is whether and how much use and occupancy petitioner is entitled to. For the reasons stated below, the court, under paragraph 7 of the parties' lease extension agreement, awards petitioner use and occupancy for May, June, July, and August 2004 in the amount of $143,325 and, under paragraph five of the lease extension agreement, a four-percent late charge (but not also the 18-percent interest charge that petitioner seeks), for a total of $149,058.
Respondent and petitioner's predecessor in interest — the former owner of the subject building — entered into a lease beginning on October 30, 2000, and expiring on January 31, 2004, with a monthly rent of $21,000. Petitioner then bought the building where respondent resided. On December 3, 2003, respondent and petitioner executed a three-month lease extension agreement beginning February 1, 2004, with an expiration date of April 30, 2004, for a monthly rent of $22,050. The lease and lease extension agreement (annexed to petitioner's notice to admit and petitioner's notice to produce as Court's 1-A and 1-B and Court's 2-A and 2-B), although only copies of the original, were admitted into evidence because respondent responded neither to petitioner's notice to produce requesting the originals nor to petitioner's notice to admit, which called for respondent to admit the genuineness of the lease and the lease extension. The lease and the lease extension were thus deemed admitted. ( See CPLR 3123.)
On April 29, 2004, petitioner's counsel sent a letter to respondent stating that he should vacate the premises by the expiration date set in the lease extension agreement as April 30, 2004. ( See Petitioner's Exhibit 3.) Respondent held over beyond that date, and petitioner commenced a holdover proceeding under Index No. LT 69218/04.
Respondent moved to dismiss the holdover petition, arguing that under the terms of the lease extension agreement, he became a month-to-month tenant entitled to a 30-day termination notice before the tenancy could be terminated. He further argued that the lease extension agreement allowed him to stay in possession for at least five months past April 30, 2004, at an increasing schedule of rent amounts.
In a decision dated June 15, 2004, the Honorable Michelle D. Schreiber dismissed the proceeding on the ground that respondent, a month-to-month tenant, did not receive a 30-day notice before the proceeding began.
Petitioner then served respondent with a 30-day notice terminating respondent's month-to-month tenancy on July 31, 2004. When respondent did not vacate, petitioner commenced this holdover proceeding. The proceeding was returnable before Judge Schreiber, who resolved the pretrial matters. Among other things, Judge Schreiber struck the respondent's warranty-of-habitability counterclaim. After some delays because of a collateral Supreme Court action and an appeal to Appellate Division, First Department, the trial began.
Two witnesses testified at trial, which took place over a period of six days: petitioner Sharon Goldman and respondent Aby Rosen. Both testified credibly. Both testified that respondent lived at the premises when petitioner bought it, that respondent made his last rental payment in April 2004, and that respondent moved out in late August, or four months later. Both petitioner and respondent also testified that a lease was in effect when petitioner purchased the building and that they signed the lease extension agreement.
Respondent testified that before he and petitioner signed the lease extension agreement, he had a conversation with petitioner during which he told her that the town house to which he was moving might require as many as four months after April 30, 2004, for renovations to be completed. Respondent testified that they agreed that his tenancy would extend five months beyond April 30, the expiration date of the lease extension. But that agreement has no legal import, for three reasons.
First, the relevant provision of the lease extension agreement — paragraph seven — is unambiguous. As a matter of law, therefore, the parol-evidence rule bars testimony about the parties' intent in interpreting this provision. ( See e.g. Vermont Teddy Bear Co., Inc. v. 538 Madison Realty Co., 1 NY3d 470, 475 [enforcing clear and complete document according to its terms]; Matter of Wallace v. 600 Partners Co., 86 NY2d 543, 548 [allowing court to alter terms of written contract only when it is ambiguous or unenforceable as written]; Breed v. Ins. Co. of N. America, 46 NY2d 351, 355 [refusing to vary contract when language is express and unambiguous].) Paragraph seven of the lease extension agreement provides as follows:
"Any holding over after the Expiration Date, with or without the consent of Landlord, shall be construed to be a tenancy from month to month at the rents herein specified (prorated on a monthly basis) and shall otherwise be on the terms and conditions herein specified, so fart as applicable; provided however, if such holding over is without the consent of Landlord, then the use and occupancy due for (a) the first two (2) months following the Expiration Date shall be equal to one and one-quarter (1 1/4) times the Monthly Rent due for the last month of the Term, (b) the third and fourth months following the Expiration Date shall be equal to two (2) times the Monthly Rent due for the last month of the Term and (c) each month thereafter following the Expiration Date shall be equal to three (3) times the monthly rent due for the last month of the Term."
Paragraph two of the lease extension agreement defines the phrase "Expiration Date" as April 30, 2004. Consistent, moreover, with the parol-evidence rule are paragraphs 11 and 13 of the agreement, which bar oral modifications to the agreement.
Although respondent did not have counsel when he signed the lease extension, he is a sophisticated businessperson who has negotiated leases. Respondent's handwriting in the margin, changing the use and occupancy for the first two months from one and one-half the monthly rent to one and one-quarter if he held over without petitioner's consent, shows that he negotiated and agreed to the unambiguous terms of paragraph seven.
Second, assuming that respondent's testimony about the agreement is true, his testimony is consistent with paragraph seven, which allowed him to hold over without petitioner's consent — so long as he pays increases in rent.
Third, even if the parol-evidence rule never existed and the court could rely on respondent's conversation with petitioner, judicial estoppel bars respondent from arguing that he had four or five months beyond April 30 before having to pay the increased rents provided for in paragraph seven. Respondent swore in his May 10, 2004, affidavit on page 2, paragraph 4, in the first holdover proceeding (Index No. LT 69218/04) as follows: "In my discussions with Landlord and her representative, during the negotiation of Lease Extension, it was always understood that I might need to retain possession of the premises after the expiration of the Lease and would be permitted to do so at the increased rent set forth in the Lease Extension." The accompanying May 11, 2004, affirmation by respondent's attorney also argued that respondent was a month-to-month tenant at the increasing-rent schedule. According to respondent's attorney, "The Lease extension also provides an increasing schedule of rental amounts due Landlord under such a month to month arrangement for, at a minimum, the first five months after expiration of the Lease Extension, demonstrating that the parties intended Mr. Rosen to have the right to occupy the premises for at least five months after the expiration fo the Lease Extension." (Affirmation of Ralph Berman, Esq., at 2 n. 1.) Respondent's current attorney repeated that sentiment in the instant case in his August 24, 2004, affidavit:
"As set forth in Mr. Rosen's accompanying affidavit, the parties expressly discussed and agreed that Mr. Rosen might need to remain in the Premises after the nominal April 30, 2004 lease termination date while he was preparing his new residence for occupancy and that Mr. Rosen would pay increased rent during that time period." (Affirmation of Adrian Zuckerman, Esq., at 2, ¶ 3.)
For these reasons, therefore, the court applies paragraph seven of the lease extension agreement and finds that respondent must pay the rent increases from May 2004 forward, after he held over without petitioner's consent, as proven by petitioner's counsel's letter of April 30, 2004.
Respondent further raises as a defense that the petition misidentified the subject premises as the second, third, and fourth floors. He argues that he occupied not only that portion of the building but also half the first floor, which contains a staircase, an entryway, and some seating. However, paragraph five of respondent's answer admits the truth of paragraph five of the petition, which describes the premises as "the entire 2nd, 3rd and 4th floors, in the building known as and located at 12 East 68th Street, New York, New York." Moreover, respondent did not answer the notice to admit, the first paragraph of which states that "Rosen entered into a lease dated October 27, 2000 with 813 Park Corp. for the entire 2nd, 3rd and 4th floors (the 'Premises') in the building located at 12 East 68th Street, New York, New York (the 'Building')." Having not answered the notice to admit, petitioner's identification of the premises is deemed true.
Respondent's defense that the lease in evidence as Court's 1-A and Court's 2-A is partly illegible is of no moment. Nothing important in the lease is illegible, and the only document affecting this case is the lease extension agreement, which is printed clearly and is wholly legible.
Respondent's next point is that the 18-percent interest rate petitioner seeks is usurious. Petitioner responds that courts routinely enforce contract provisions calling for interest rates higher than the legal rate applicable to judgments and that the 18-percent rate does not violate Penal Law § 109.40. Given that petitioner's request is based on paragraph three of the lease ( see Petitioner's Post-Trial Brief at 17, ¶ 2), the court need not decide this argument. Paragraph three, which is irrelevant in this case, provides that "[i]f rent or added rent is not received within 5 days of the due date, Landlord may charge the Tenant a late fee of (1) $25, or (2) 1½% of the sum due, each month, as added rent." Paragraph three provides only for a one-and-one-half percent late fee; that paragraph mentions nothing about interest.
Paragraph three of the lease, moreover, has been superceded by paragraph five of the lease extension, which provides that
"[i]f Tenant shall fail to pay any installment of Monthly Rent when first due hereunder (irrespective of any grace period as may be applicable thereto) and if such failure to pay shall continue for more than ten (10) days after such payment was first due, then, as liquidated damages for the delay in payment and administrative inconvenience (and not as a penalty), Tenant shall be required to pay Landlord, upon demand, a late charge of four (4%) percent of such unpaid amount."
The lease extension provides at paragraph 11 that the lease remains in full force and effect except as modified therein. The lease extension's late-charge provision modifies the lease's late-fee provision and therefore governs. Both provisions allow petitioner to charge a fee for late payment of rent; neither mentions interest. Because paragraph five replaces paragraph three, petitioner is not entitled to collect both the 18-percent under paragraph three and the four-percent under paragraph five, as she requests. Unlike the one-and-one-half percent charged monthly under paragraph three, the four-percent is a one-time charge. Accordingly, petitioner is entitled only to four-percent of the total use and occupancy owed. Petitioner is entitled to that amount because payments are more than ten days overdue.
Respondent contends, next, that petitioner did not issue any rent demand and so cannot now ask the court for rent. But in a holdover proceeding, a petitioner need not demand rent to request use and occupancy. ( See Baiocco v. Charles H. Greenthal Mgmt., 220 AD2d 322, 322 [1st Dep't 1995, mem] [holding that landlord's failure to demand rent during tenant's holdover period does not bar recovery for use and occupancy].) Respondent cites paragraph 16 of the lease to support his contention that even without a statutory obligation to issue a rent demand, petitioner is contractually obligated to provide respondent with written notice of default, which includes failure to pay rent or added rent on time. (Respondent's Post-Trial Memorandum of Law at 6 ¶ 2.) However, paragraph 16 outlines conditions precedent to terminating the lease before its expiration date. It does not apply during the period in which respondent was holding over past the lease-extension expiration date.
Respondent also argues that the court cannot determine how much to award in use and occupancy. According to respondent, alleged problems with the subject premises should lead to fair-market use and occupancy being something less than the base rent of $22,050 per month. (Respondent's Post-Trial Memorandum of Law at 7 ¶ 2.) Judge Schreiber struck respondent's warranty-of-habitability defense. This is the law of the case, and the court may not reconsider it. However, petitioner is not asking for the fair-market value as use and occupancy but rather use and occupancy as specified in paragraph seven of the lease extension agreement.
Respondent additionally contends that petitioner violated the certificate of occupancy by renting office space on the first floor to a physician and renting the sixth and seventh floors to other tenants. But respondent introduced no evidence to suggest a violation. Furthermore, objective evidence contradicts respondent's contention. The court must take judicial notice of any violations it can access by computer. (MDL § 328 [3]; see also Hoya Saxa, Inc. v. Gowan, 149 Misc 2d 191, 192 [App Term 1st Dept 1991, per curiam] [holding that MDL § 328 (3) requires court to take judicial notice of DOB violation report].) Accordingly, the court accessed the Department of Building's Web site and found that someone lodged a certificate-of-occupancy complaint, that a DOB inspector conducted an inspection on May 12, 2004, and that the DOB found no violation. This created a rebuttable presumption that the building conforms to the Certificate of Occupancy. Respondent did not rebut that presumption.
The terms of paragraph seven of the lease extension agreement are clear. They govern the calculation of use and occupancy. Respondent made his last payment in April 2004. For the first two months after the lease extension ended and respondent held over without petitioner's consent — May and June 2004 — use and occupancy is calculated as one and one-quarter times the monthly rent of $22,050. For the third and fourth month after the lease extension ended and respondent held over without petitioner's consent — July and August 2004 — use and occupancy is calculated as double the monthly rent of $22,050. Use and occupancy for May and June, therefore, is $27,562.50 a month; use and occupancy for July and August is $44,100 a month. The total use and occupancy owed is $143,325, plus a four-percent late charge of $5733.
Final judgement for petitioner, for money only, in the amount of $149,058.
This opinion is the court's decision and order.