Opinion
Index No. LT-304040-24/NY
07-15-2024
H Work, LLC, by its agent Regus Management Group, LLC, Petitioner-Licensor, v. Current Affairs Times, and Brus Chambers LLC & Current Affairs Times, Respondent(s)-Licensee(s). and John Doe and Jane Doe, Respondent(s)-Undertenants.
Attorneys for Petitioner Bryan Cave Leighton Paisner LLP, Matias Gallego-Manzano, Esq. Attorneys for Respondent Ryan Campbell, Esq.
Unpublished Opinion
Attorneys for Petitioner Bryan Cave Leighton Paisner LLP, Matias Gallego-Manzano, Esq.
Attorneys for Respondent Ryan Campbell, Esq.
Rena Malik, J.
On March 1, 2024, petitioner H Work, LLC commenced this holdover summary proceeding against respondents Current Affairs Times and Brus Chambers LLC & Current Affairs Times, seeking to recover possession of the commercial premises known as 845 Third Avenue, Office # 601, 604ResCo-work02 and 604ResCo-work03, New York, New York 10022 in Manhattan from Current Affairs Times, and 845 Third Avenue, Office # 604ResCo-work04, New York, New York 10022 in Manhattan from Brus Chambers LLC and Current Affairs Times. Respondent did not timely answer or appear in the proceeding at the first hearing date of March 25, 2024 at which time inquest was scheduled for April 18, 2024. Respondents' attorney submitted a Notice of Appearance on April 16, 2024 but did not appear on the inquest date of April 18, 2024. An inquest was held before the undersigned on April 30, 2024, May 7, May 8 and May 9, 2024, at which time both petitioner and respondent appeared by counsel.
Petitioner's exhibits (NYSCEF Doc Nos 44-71) were admitted into evidence:
Petitioner's exhibits 1 through 17 were stipulated into evidence by the parties and exhibits 18 through 28 were moved into evidence at inquest. Respondents did not move any exhibits into evidence.
• Exhibit 1 - Office Service Agreement - Co-working space/desk 604ResCo-work02 term 2-27-22 through 2-29-2024
• Exhibit 2 - Office Agreement - Co-working space/desk 604ResCowork03 term 4-15-22 through 4-30-24
• Exhibit 3 - Respondent name change - desks 02 and 03
• Exhibit 4 - Office Agreement - Office 601 term 3-1-2023 though 2-28-2025
• Exhibit 5 - Office Service Agreement - 604ResCo-work04
• Exhibit 6 - Statement of Account dated November 30, 2023 - Desks 02 and 03
• Exhibit 7 - Statement of Account dated September 30, 2023 - Office 601
• Exhibit 8 - Statement of Account dated September 30, 2023 - Desk 04
• Exhibit 9 - Termination Notice dated December 20, 2023 - Desks 02 and 03
• Exhibit 10 - Termination Notice dated October 26, 2023 for Office 601
• Exhibit 11 - Termination Notice dated October 26, 2023 for Desk 04
• Exhibit 12 - Transaction History - October 1, 2021 to April 14, 2024, Customer Brus Chambers LLC and Current Affairs Times
• Exhibit 13 - Transaction History - October 1, 2021 to April 14, 2024, Customer Current Affairs Times
• Exhibit 14 - Transaction History - August 1, 2023 to April 14, 2024, Customer Brus Chambers LLC and Current Affairs Times
• Exhibit 15 - Ten Day Notice to Quit - Co-working spaces 02 and 03
• Exhibit 16 - Ten Day Notice to Quit - Office 601
• Exhibit 17 - Ten Day Notice to Quit - Co-working space 04
• Exhibit 18 - Direct debit confirmation September 8, 2022
• Exhibit 19 - Respondent's April 3, 2023 ACH set up
• Exhibit 20 - Respondent's October 26, 2023 ACH set up
• Exhibit 21 - March 6, 2023 email re ACH
• Exhibit 22 - Payment failure notification March 7, 2023
• Exhibit 23 - Payment failure notification April 19, 2023
• Exhibit 24 - Payment failure notification August 24, 2023
• Exhibit 25 - Payment failure notification September 11, 2023 at 13:41
• Exhibit 26 - Payment failure notification September 11, 2023 at 13:46
• Exhibit 27 - Payment failure notification September 11, 2023 at 13:47
• Exhibit 28 - Direct debit confirmation October 26, 2023
The Court also takes judicial notice of NYSCEF Doc Nos. 4-15.
Danette Bristol, employee and City Manager of Regus Management Group, LLC as the agent for petitioner H Work LLC, testified on behalf of petitioner. Bristol credibly testified that she is familiar with petitioner's collection of license fees, that license agreements were entered into between petitioner and respondents to use the premises, and that the premises is not a multiple dwelling or subject to rent stabilization. Bristol also credibly testified that respondents had failed to pay license fees timely because respondents payment methods were denied due to insufficient funds and incomplete wire transfers. As no payments were made, despite multiple attempts, petitioner served the termination notices and notices to quit (exhibits 9-17). Bristol also testified that petitioner has not accepted payment from respondent after the dates of termination and the respondents remain in possession of the licensed premises.
On behalf of respondent Afia Sengupta (Sengupta), the owner and founder of Current Affairs Times testified on behalf of respondents and admitted to owing base rent and tax, but says that she tried making payments and continually ran into electronic payment issues. Sengupta admitted that payments were required to be made electronically according to the parties' agreements, that various payments were not processed electronically or returned because of insufficient funds, and that petitioner's representative worked with her in good faith to resolve the electronic payment issues.
Sengupta testified that respondents disputed certain other monthly charges related to the co-workspace coffee and tea services, as well as technology services (IT charges). With respect to the coffee and tea charges, Sengupta explained that, since petitioner offers unlimited coffee for a monthly charge, she informed petitioner in 2021 that respondents would prefer to have one coffee card and all of respondents' employees would share the card or purchase office with their individual credit cards, and disputes the charges related to 604ResCo-work02 and 604ResCo-work03. Sengupta testified she could not say the total amount of the coffee charges in dispute.
The Court finds that respondent is responsible for the coffee and tea charges, per employee, as contracted for. There is no valid reason, in the lease or otherwise, why respondents should be entitled to unlimited coffee/tea for four employees, when they are only paying for one.
With respect to the IT charges, Sengupta testified that respondents could not connect their own leased printer to petitioner's wi-fi and that over a year of various attempts it never worked. Sengupta stated that she consistently raised the concern about the printer and disputed the IT charges for Office 601 almost a year beginning in early 2023. Sengupta explained that after multiple tests and checks respondents reverted back to using petitioner's copier and floor printer (which respondents were charged for using) rather than connecting their own printer through wi-fi. The statement entered into evidence reflects a recurring charge of $47.00 per month for Office 601 related to the network device (exhibit 7). Over a one year period as Sengupta testified about, the disputed IT charges would total $564. The Court finds that Sengupta's testimony was sufficient to show that she contracted for a separate wi-fi network that never worked and will deduct that amount from the monetary judgment accordingly (see e.g. Inland Diversified Real Estate Serv., LLC v Keiko New York, Inc., 51 Misc.3d 139 (A), 2016 NY Slip Op 50613(U) [App Term, 2d Dept, 9th & 10th Jud Dists 2016][landlord must demonstrate entitlement to additional rent charges such as utilities]).
For relief to be granted to a petitioner in a licensee holdover proceeding, petitioner must show that: respondent "is the licensee of the person entitled to possession of the property at the time of the license, and (a) his license has expired, or (b) his license has been revoked by the licensor, or (c) the licensor is no longer entitled to possession of the property (RPAPL 713; see also Parkview Apts. Corp. v Pryce, 58 Misc.3d 155 [A], 2018 NY Slip Op 50187[U] [App Term, 2d Dept, 9th & 10th Jud Dists 2018). For this court to have subject matter over a holdover proceeding, the tenant must be either in possession or exerting control over the property at the time the proceeding is commenced (see Daniel Finkelstein & Lucas A. Ferrara, Landlord and Tenant Practice in New York § 15:481 [West's NY Prac Series Vol G]).
Based on the evidence and the credible testimony of petitioner's witness at the inquest, petitioner met its prima facie burden that the license agreements between petitioner and respondent had expired pursuant to conditional limitation contained in paragraph 1.7(b) of the General Terms and Conditions forming a part of the license agreements, prior to commencement of this holdover proceeding (exhibits 1, 2, 4, 9, 10 & 11). Both petitioner's and respondent's witnesses testified that respondents remained in possession after expiration of the license agreements and remain in possession without petitioner's permission. Therefore, petitioner is entitled to recover possession of the premises (see Parkview Apts. Corp., 58 Misc.3d 155[A], 2018 NY Slip Op 50187[U]).
In order to obtain a monetary recovery against a tenant in a summary proceeding, the tenant must appear, or landlord must establish that the petition and notice of petition were served personally, or that the process server used due diligence before resorting to conspicuous service (see Borg v Feeley, 56 Misc.3d 128 [A], 2017 NY Slip Op 50834[U] [App Term, 1st Dept 2017]). In this proceeding respondents appeared at inquest to be heard on the question of damages and did not move to vacate their default or contest personal jurisdiction. Accordingly, this Court has the jurisdiction to award monetary damages against the respondents (see Rosebud Owner LLC v Sang Tan Park, 81 Misc.3d 143 [A], 2024 NY Slip Op 50151[U] [App Term, 1st Dept 2024]).
Accordingly, based on the findings above, the Court finds that petitioner is entitled to the following in license fee arrears up through the date of termination: $30,582.11 for 604Res-Cowork02 and 604Res-Cowork03 (see exhibit 9); $12,187.45 for Office No 601 (see exhibit 10); and $1,400.76 for 604Res-Cowork04 (see exhibit 11).
Petitioner is also entitled to use and occupancy since the various termination dates for each space. "The reasonable value of use and occupancy is the fair market value of the premises after the expiration of the lease, and it is the landlord, not the tenant, who has the burden of proving reasonable value of use and occupancy" (Mushlam, Inc. v Nazor, 80 A.D.3d 471, 472 [1st Dept 2011]). "In determining the reasonable value of use and occupancy, the rent reserved under the lease, while not necessarily conclusive, is probative" (id.).
Here, the amount of use and occupancy that petitioner seeks is based on the amount of the monthly license fees in effect prior to the expiration of the agreement plus applicable tax, from the date of termination through the date of trial, as follows:
With respect to respondents Brus Chambers LLC and Current Affairs Times:
(a) For 604Res-Cowork02 and 604Res-Cowork03: $924.99 per month for the 4 months from February 2024 to May 2024 = $3,699.96 in use and occupancy
(b) For 604Res-Co-work04: $256.44 per month for the 6 months from December 2024 to May 2024 = $1,538.64 in use and occupancy
With respect to respondent Current Affairs Times:
(a) For Office 601: $875.61 per month for 6 months from December 2023 to May 2024 = $5,253.66 in use and occupancy
The Court finds the amount as reasonable as it is the monthly license fee in parties' prior agreement (see Andejo Corp. v S. St. Seaport Ltd. Partnership, 35 A.D.3d 174 [1st Dept 2006] ["The award of interim use and occupancy, without a hearing, in the amount of the base rents contained in existing leases was a proper exercise of discretion"]; see also Synod of Bishops of Russian Orthodox Church Outside of Russia v Preschool of Am. (USA) Inc., 214 A.D.3d 466, 467 [1st Dept 2023]; Seymour v Hovnanian, 211 A.D.3d 549, 554 [1st Dept 2022]).
Petitioner is entitled to prejudgment interest (see Solow v Bradley, 273 A.D.2d 75, 75-76 [1st Dept 2000]). Although petitioner makes no argument as to the applicable rate or the appropriate date for calculating prejudgment interest, this court awards prejudgment interest to petitioner at the statutory rate of nine percent per annum, pursuant to CPLR 5004 (see Music Sales Corp. v Mark Music Serv., Ltd., 194 A.D.2d 470, 471 [1st Dept 1993]). The court further exercises its discretion to select the dates of termination of the license agreement corresponding to each premises as a "reasonable intermediate date" for purposes of calculating prejudgment interest, pursuant to CPLR 5001 (b) (APF 286 MAD LLC v RIS Real Props., 43 Misc.3d 1203 [A], 2014 NY Slip Op 50485[U] [Civ Ct, NY County 2014]; see also Solow Mgt. Corp. v Tanger, 43 A.D.3d 691 [1st Dept 2007]).
Petitioner is also awarded costs and disbursements against tenant in the total amount of $55.00 (RPAPL 747; see also NY City Civ Ct Act § 1906-a).
The Court's VERDICT is in favor of petitioner and petitioner is awarded a judgment of possession of the demised premises.
Accordingly, it is hereby ORDERED that petitioner's application at the inquest to amend the caption is granted without objection and the caption is hereby amended to read as follows:
Index No.: LT-304040-24/NY
H WORK, LLC, by its agent REGUS MANAGEMENT GROUP, LLC, Petitioner-Licensor,
against
CURRENT AFFAIRS TIMES, 845 Third Avenue, Office #601 New York, New York 10022 and BRUS CHAMBERS LLC & CURRENT AFFAIRS TIMES,
845 Third Avenue, 604ResCo-work02,
604ResCo-Work03, 604ResCo-work04
New York, New York 10022,
Respondent(s)-Licensee(s).
and
JOHN DOE and JANE DOE,
Respondent(s)-Undertenants.
ORDERED that, after inquest, the Clerk is directed to enter a final judgment granting the holdover petition and awarding possession of the premises as follows:
(a) awarding possession of the co-working spaces 604Res-Cowork02 and 604Res-Cowork03 at 845 Third Avenue in Manhattan - to petitioner H WORK LLC against respondent(s) BRUS CHAMBERS LLC and CURRENT AFFAIRS TIMES, along with a money judgment in petitioner's favor and against respondents BRUS CHAMBERS LLC and CURRENT AFFAIRS TIMES jointly and severally in the amount of $34,282.07, with interest at the statutory rate from January 3, 2024 through entry of judgment; and
(b) awarding possession of the co-working spaces 604Res-Cowork04 at 845 Third Avenue in Manhattan - to petitioner H WORK LLC against respondent(s) BRUS CHAMBERS LLC and CURRENT AFFAIRS TIMES, along with a money judgment in petitioner's favor and against respondents BRUS CHAMBERS LLC and CURRENT AFFAIRS TIMES jointly and severally in the amount of $2,939.40, with interest at the statutory rate from November 9, 2023 through entry of judgment; and
(c) awarding possession of the premises Office #601 at 845 Third Avenue in Manhattan - to petitioner H WORK LLC against respondent CURRENT AFFAIRS TIMES, along with a money judgment in petitioner's favor and against respondent CURRENT AFFAIRS TIMES in the amount of $17,441.11, with interest at the statutory rate from November 9, 2023 through entry of judgment; and it is further
ORDERED that petitioner is awarded costs and disbursements in the amount of $55.00 against respondents jointly and severally; and its if further
ORDERED that a warrant of eviction shall be issued forthwith, without stay. The earliest execution date of the warrant is July 25, 2024 and it is further
ORDERED that the proceeding against fictitious entities JOHN DOE and JANE DOE is dismissed without prejudice; and it is further
This constitutes the decision verdict, and order of the court.