Opinion
Index No. LT-323135-22/KI
03-26-2024
PHA Associates 1X LLC, Petitioner(s) v. Annette Cummings, Respondent(s)
Petitioner's Attorney: Shivers & Associates, LLC Respondent's Attorney: The Legal Aid Society
Unpublished Opinion
Petitioner's Attorney: Shivers & Associates, LLC
Respondent's Attorney: The Legal Aid Society
Jason Vendzules, J.
Recitation, as required by CPLR 2219(a), of the papers considered in the review of this motion:
Papers Numbered
Order to show Cause/ Notice of Motion and Affidavits /Affirmations annexed NYSCEF 9-14
Answering Affidavits/ Affirmations NYSCEF 17-20
Reply Affidavits/ Affirmations NYSCEF 21
Memoranda of Law
Other
This case concerns where month-to-month tenancies apply and, more importantly, where they do not. Petitioner brings this nonpayment proceeding pursuant to RPAPL § 711(2) demanding possession of the subject premises and a money judgment because respondent allegedly accrued rental arrears totaling $26,025.00 through August 2021. Respondent asks the court to dismiss this proceeding pursuant to CPLR § 3211(a)(7) arguing that petitioner cannot maintain this proceeding under the terms of RPAPL § 711(2), as there was no agreement between the parties allowing for petitioner to demand rent at the time the case was commenced. Petitioner opposes. Though petitioner acknowledges that respondent's last written lease expired on January 31, 2019, it argues that respondent's application for and its acceptance of ERAP funds created an implied one-year tenancy. Respondent also moves to amend her answer. After careful review of the arguments presented and the precedent cited, the court denies respondent's motion to dismiss but grants her motion to amend the petition.
The motion was made pursuant to CPLR § 3211(a)(7), but the court will construe it being made pursuant to CPLR § 3212 as the respondent had already filed an answer when the motion was made. Rich v. Lefkovits, 56 N.Y.2d 276 [1982].
Shepard-Neely Analysis
In support of their argument for dismissal, respondent cites to Fairfield Beach 9th LLC v. Shepard-Neely, a 2022 decision from the Appellate Term, 2nd Department. 77 Misc.3d 136[A] [AT 2nd Dep't, 2nd, 11th & 13th Jud. Dists. 2022] (hereinafter" Shepard-Neely II ".) That case concerned a nonpayment proceeding brought against a rent-stabilized tenant. The tenant's last lease had expired more than a year before the nonpayment proceeding was brought, though the landlord had shown evidence of rental payments made in the intervening period. Id. at *2. The holding in Shepard-Neely II concerned whether the trial court properly granted leave for the petitioner to renew its argument, but in dicta the majority wrote that:
Even were we to find that leave to reargue had been properly granted, we agree with tenant's argument that her motion to dismiss the petition was properly granted in the December 24, 2019 order. It is undisputed that no rental agreement was in effect when this proceeding was commenced, and a nonpayment proceeding lies only where a "tenant has defaulted in the payment of rent, pursuant to the agreement under which the premises are held" (RPAPL 711 [2]) or, in other words, there must be a rental agreement in effect at the time the proceeding is commenced pursuant to which rent is due and owing. (Id. at *3.)
Much ink has been spilled by trial courts in interpreting this Appellate Term language. Most have held that Shepard-Neely II stands for the proposition that acceptance of rent after the expiration of a lease term only constitutes an "agreement" under RPAPL § 711(2) for the month in which those payments were made. See e.g., ZB Prospect Rlty v. Olenik, 79 Misc.3d 592 [Civ. Ct., Kings County 2023]; 1779 81st St. LLC v. Mohamed, 2023 WL 6160210 [Civ. Ct., Kings County 2023]; 7 East 14, LLC v. Libson, 79 Misc.3d 1230 [A] at *3 [Civ. Ct., NY County 2023]; 594 Rogers BH LLC v. Frederick, 81 Misc.3d 1240 [A] at *2 [Civ. Ct., Kings County 2024]. This court respectfully disagrees with these trial court decisions and finds that the Appellate Term never reached this issue in Shepard-Neely II.
The Appellate Term in Shepard Neely II was not concerned with whether the rental payments made by respondent created a month-to-month tenancy; it was instead concerned with whether a landlord could ever claim a month-to-month tenancy in a rent stabilized apartment. In doing so, the Appellate Term was engaging in an analysis it had previously conducted in Fairfield Beach 9th, LLC v. Shepard-Neely (74 Misc.3d 14 [AT 2nd Dep't, 2nd, 11th & 13th Jud Dists. 2021]) (hereinafter" Shepard Neely I ") where it found that public assistance payments do not create a month-to-month tenancy in a rent stabilized apartment. This holding in Shepard-Neely I entailed the result in Shepard-Neely II that no nonpayment proceeding can lie in such apartments unless there is a written lease in effect at the time the proceeding is commenced. To understand why, an analysis of Shepard-Neely I is instructive.
In Shepard-Neely I, Fairfield Beach 9th LLC sued Ms. Shepard-Neely in a holdover proceeding for failure to sign a renewal lease for her rent-stabilized apartment (per RSC § 2524.3(f)). Id. Ms. Shepard-Neely argued that the holdover proceeding should be dismissed due to an inadequate termination notice. The landlord had terminated her tenancy pursuant to a fifteen-day notice, but Ms. Shepard-Neely believed that a month-to-month tenancy had been created by her landlord's acceptance of DSS shelter checks after the expiration of the lease term, and that this month-to-month tenancy entitled her to a longer notice period pursuant to RPL § 232-a. Both the trial court and the Appellate Term disagreed with Ms. Shepard-Neely, finding that "the respective rights and responsibilities of a landlord and tenant under a month-to-month tenancy cannot be reconciled with the respective rights and responsibilities of a landlord and tenant of a rent-stabilized apartment." Id. 74 Misc.3d at 15. Ms. Shepard-Neely was therefore not entitled to notice that would be given to a month-to-month tenant pursuant RPL § 232-a. In other words, the Appellate Term in Shepard Neely I said that month-to-month tenancies cannot be created or inferred in rent-stabilized apartments and therefore RPL § 232-a does not apply.
Though Fairfield Beach 9th LLC prevailed in Shepard-Neely I, Ms. Shepard-Neely was not evicted from her apartment. Prior to that eviction taking place, she cured her lease violation by executing the renewal lease offered by her landlord, thereby obviating the grounds for eviction. Importantly, the lease at issue in Shepard-Neely I was for the period commencing May 1, 2017, and, because Ms. Shepard-Neely elected for a one-year term, it expired on April 30, 2018. Thus, when Ms. Shepard-Neely executed the renewal lease at issue in Shepard-Neely I on April 19, 2019, the term of that lease had already been expired for almost a year. She did not execute any written lease for any subsequent period at that time, so this expired lease was the last written lease in effect between the parties.
Petitioner then commenced the nonpayment proceeding that is the subject of Shepard Neely II seeking rent that accrued only during the term of the last written leases. The Appellate Term, however, reads RPAPL § 711(2) as requiring a lease to be in effect when a nonpayment proceeding is commenced. See, e.g. 265 Realty, LLC v. Trec, 39 Misc.3d 150[A] at *2 [AT 2nd Dep't, 2nd, 11th & 13th Jud. Dists 2013]; Shepard-Neely II, 77 Misc.3d 136[A] at *3. As described above, it was uncontroverted that there was no written lease in effect at the time that the nonpayment proceeding was commenced. More importantly, the landlord was foreclosed from arguing the existence of a month-to-month tenancy due to the holding in Shepard-Neely I and its own argument in reaching that decision. If there is no written lease in effect and no month-to-month tenancy can be created, then there is no other possible agreement between the parties sufficient to form the basis of a nonpayment proceeding.
Under this reading, it was no matter that rent was paid after the lease term. Ms. Shepard-Neely could have paid rent every month after the lease term ended up to and including the month that the nonpayment proceeding was brought. The Appellate Term in Shepard-Neely II still would have dismissed the nonpayment proceeding because the subject apartment was rent stabilized and, per Shepard-Neely I, no month-to-month tenancy can be created in such an apartment. In other words, Shepard-Neely II requires a written lease to be in effect at the time a nonpayment proceeding is commenced for a rent stabilized apartment. Anything short of that demands dismissal. Much like Shepard-Neely I foreclosed the applicability of RPL § 232-a for rent-stabilized apartments, Shepard- Neely II forecloses the applicability of RPL § 232-c for those same units.
This interpretation of Shepard-Neely II is supported by the text of the decision in two different ways. First, the Appellate Term citations to both Licht v. Moses (11 Misc.3d 76 [AT 2nd Dep't, 2nd & 11th Jud. Dists. 2006]) and 615 Nostrand Ave. Corp. v. Roach (15 Misc.3d 1 [AT 2nd Dep't, 2nd & 11th Jud. Dists 2006]) in Shepard-Neely II support this court's interpretation. The Licht court dismissed a nonpayment proceeding brought against a rent-stabilized tenant who received a Section 8 Subsidy. The court declined to opine on whether the landlord could suspend the subsidy, instead finding that dismissal was required because there was no written rental agreement between the parties. Licht v. Moses, 11 Misc.3d at 79-80. There was no discussion in Licht as to whether there was a payment made in the month that the proceeding was commenced, or any discussion at all about subsequent payments made by the tenant. Instead, the only analysis was whether there was a written lease in effect between the parties. 615 Nostrand Ave. Corp. v. Roach stands for the proposition that landlords are not entitled to claim rent from a successor tenant until that successor tenant is provided with a written lease. 15 Misc.3d 1, supra. Once again, there is no discussion in that decision about whether or when the tenant made payments. Even though the tenant in possession was determined to be the legal successor to the apartment five months before the lease was tendered, the Appellate Term found that the landlord was not entitled to rent during that period because there was no written lease in effect. Id. at 3.
Second, the concerns of the dissent in Shepard-Neely II come into stark relief if one interprets Shepard-Neely II as applicable only to rent-stabilized tenancies. If a written lease must be in effect for a landlord to bring a nonpayment proceeding against a rent-stabilized tenant, then both Shepard-Neely decisions in concert provide a roadmap for rent-stabilized tenants to abuse the judicial system to remain in possession of their apartments without paying rent. Say, for example, a rent-stabilized tenant who had fallen into rental arrears was offered a renewal lease but refused to sign. Under Shepard-Neely II, the landlord would be forced to bring a holdover proceeding for failure to sign the renewal lease before commencing a nonpayment proceeding, since a current written lease is a prerequisite to a nonpayment proceeding. If the tenant, like Ms. Shepard-Neely, was successful in prolonging that proceeding and only signed the renewal lease after it was already expired, then the landlord would be forced to offer another lease before commencing a nonpayment proceeding. If the tenant refused once again to execute the renewal lease, the resulting cycle of holdover proceedings could be used to forestall the landlord from ever commencing a nonpayment proceeding and collecting the rent due and owing. As discussed by the dissent in Shepard-Neely II, "when a rent stabilized tenant refuses to timely renew their lease, stays in possession, and partially pays rent, a situation arises that is not seemingly contemplated by existing legal analysis or statute. The potential of abuse is evident and the consequential uncertainty facing the parties can have draconian effects." 77 Misc.3d 136[A] at *5.
Respondent's Argument for Dismissal
It is uncontested that the subject unit in this proceeding is not rent stabilized. As such Shepard-Neely II is inapplicable. Instead, the court is bound by the decision reached in Priegue v. Paulus (43 Misc.3d 135 [A] [AT 2nd Dep't, 9th & 10th Jud. Dists 2014]) and Tricarichi v. Moran (38 Misc.3d 31 [AT 2nd Dep't, 9th & 10th Jud. Dists 2012]). These decisions find that a month-to-month tenancy is created by a single payment of rent made by a tenant and accepted by a landlord after the end of a lease term, and that this lease term continues under the same terms as the expired lease for so long as the tenant remains in possession. Tricarichi, supra, 38 Misc.3d at 34; Priegue, supra, 43 Misc.3d 135[A] at *1. If a month-to-month tenancy is found, the landlord may elect to bring a nonpayment proceeding against a tenant for arrears accruing during that month-to month tenancy. Id.
Its uncontroverted that the term of the last written lease between the parties ended on January 31, 2019. Petitioner's rent ledger shows numerous payments made by respondent after that date. (Exhibit A to Pet. Opp.; NYSCEF 18.) As such, respondent fails to raise adequate grounds for the court to rule in its favor as a matter of law, and the motion must be denied pursuant to CPLR § 3212.
Respondent's Motion to Amend the Answer
Respondent moves to amend her answer pursuant to CPLR § 3025(b) to include several defenses including lack of jurisdiction, bad faith rent demand, laches, and no agreement being in effect between the parties. The court grants this portion of respondent's motion.
Barring prejudice or surprise to the opposing party, leave to amend pleadings should be freely granted so long as the amendments are not without merit. Edwards v. 1234 Pacific Mgmt, LLC, 139 A.D.3d 658, 659 [2nd Dep't 2016]; Favia v. Harley-Davidson Motor Co., 119 A.D.3d 836 [2nd Dep't 2014). This standard similarly applies to amending pleadings in summary proceedings. Putnam Realty Assoc. LLC v. Piggot, 34 Misc.3d 1228 [A] at *3 [Civ. Ct. Kings County 2012]. Petitioner shows no prejudice or surprise. As such, respondent's motion is granted.
The court notes that petitioner requests that the court strike certain defenses without making a cross-motion for such relief pursuant to CPLR § 2215. Absent compliance with that provision, petitioner is not entitled to have its motion considered and the court may, at its discretion, refuse to entertain the request. Fried v. Jacob Holding, 110 A.D.3d 56, 65 [2nd Dep't 2013]. As such, the court declines to consider the arguments in support of dismissal of these affirmative defenses.
ORDERED: Respondent's motion to dismiss pursuant to § CPLR 3211(a)(7) is DENIED.
ORDERED: Respondent's motion to amend the petition pursuant to CPLR § 3025(b) is GRANTED. The annexed proposed amended answer is deemed served and filed nunc pro tunc.
This matter is adjourned to May 6, 2024 at 9:30 AM for all purposes.
This is the decision and order of the court, which will be delivered to the parties via posting on NYSCEF.