Opinion
1149152004.
Decided June 20, 2005.
Stephen Dobkin, Esq., Collins, Dobkin Miller LLP, New York NY, for the Plaintiffs.
Dean Dreiblatt, Esq., Rose Rose, New York NY, For the Defendants.
The motion and cross motion are consolidated for purposes of this decision.
Plaintiffs, five rent-stabilized tenants, move for a preliminary injunction prohibiting their landlords from taking further action to terminate their tenancies on the ground that the personal use exception in the New York City Rent Stabilization Law was not intended to be used to empty an entire tenement apartment building of long term tenants. The defendants oppose the motion, and cross move to dismiss the complaint pursuant to CPLR 3211(a) on the ground that the plaintiffs have failed to state a cause of action. For the reasons which are set forth below, the Court concludes that, on balance, the equities weigh in favor of granting the preliminary injunction to preserve the status quo pending final determination of this action. Accordingly, the plaintiffs' motion for a preliminary injunction is granted. The cross motion to dismiss the complaint is denied.
Factual and Procedural Background
The five plaintiffs are rent-stabilized tenants in a five-story tenement style apartment building located at 47-49 3rd Street, New York, New York. Defendants are the owners of the building. At the time this suit was commenced, two of the plaintiffs had received Notices of Non-Renewal of their leases indicating that defendants seek possession of each of their apartments and indeed all of the apartments in the building, with the intent to use them as their primary residence. The other three plaintiffs' leases are due to expire over the course of 2005. There are six other tenants in the building, not parties to this action, who are currently respondents in summary holdover proceedings underway in the New York City Civil Court's Housing Court.
The leaseholds of the two commercial tenants in the basement of the building are not at issue.
The Notices explain, as do defendants' motion papers, that defendants, husband and wife, currently live in the top floor of a brownstone building in Brooklyn, New York with their newborn child. The other apartments in the Brooklyn building house other members of defendant Catherine Economakis's family. Defendants' Brooklyn apartment is approximately 1,000 square feet, and is accessed internally through a staircase passing the other floors of the building which are occupied by relatives of defendants. They maintain there is no room to expand in the current space which consists of one bedroom, a study, two bathrooms, a kitchen, living room, and a deck.
The building at issue in this action is a 15-family tenement occupied by 11 rent stabilized tenants and their families. Defendants desire, in essence, to create an outer borough or suburban sized home in the heart of the East Village. They assert that they will transform the tenement building into a one-family home consisting of five bedrooms, six bathrooms, a living room, den, playroom, laundry room, library, study, dining room, kitchen, pantry, and gym with shower. They are notifying the tenants in timely fashion that their leases will not being renewed.
Plaintiffs seek a preliminary injunction tolling the two notices already mailed and staying enforcement of the notices, and staying commencement of summary proceedings against them. They do not seek to enjoin defendants from mailing the Notices of Non-Renewal to the remaining three plaintiffs. They argue that defendants' plan to convert the residential apartments of the building to a single residence for defendants' primary use is a violation of the Rent Stabilization Law and Rent Stabilization Code. They contend that the plan fails to comply with the requirements for the recovery by an owner of an entire building or of all the units of a building, and violates the legislative and administrative scheme for non-renewal of stabilized leases based upon owner use.
Analysis
In general, under New York City's Rent Stabilization Law (New York City Administrative Code § 26-501 et seq. ["RSL"]) and the regulations promulgated pursuant to the statute as the Rent Stabilization Code ( 9 NYCRR § 2520 et seq. ["RSC"]), when a lease for a rent stabilized apartment expires, the landlord must offer the tenant a renewal. "The right to a renewal lease is one of the cornerstones of the rent stabilization system" ( Caine v. Carreker, 116 Misc2d 419, 420 [App Term, 1st Dept., 1982]). Nevertheless, under the Rent Stabilization Law, a landlord may recover possession of a rent stabilized unit for the "owner's personal use and occupancy" or for "the personal use and occupancy of a member of his or her immediate family as his or her primary residence in the City of New York" (RSL § 26-511[c][9][b]; RSC § 2524.4[a]). In order to recover the premises for personal use, the landlord must properly notify the rent stabilized tenant during the statutorily defined period in which a renewal must be offered, of the intent not to renew the lease (RSC § 2524.4). After the expiration of the tenant's lease, a summary eviction proceeding must be commenced in the New York City Civil Court's Housing Court. The tenant will be evicted if the landlord establishes a good faith intent to take occupancy of the unit for his or her personal use or the use of a family member ( Rosenbluth v. Finkelstein, 300 NY 402, 405; Kelly v. Peccarelli, 89 NYS2d 142 [Sup. Ct., New York County 1949]; Chan v. Adossa, 195 Misc2d 590, 595 [App. Term 2nd Dept. 2003]). A determination of whether good faith exists rests "on an appraisal of the totality of the facts in the case" ( Basic Holding Corp. v. Gabel, 21 AD2d 874, 875 [1st Dept. 1964]). The essential issue is whether there is an "honest intention" to use and occupy the apartment ( Axelrod v. Duffin, 154 Misc2d 310 [App. Term 1st Jud. Dist. 1992]). The intent must be "genuine" and not a subterfuge to remove tenants only to put the premises back on the market a short time thereafter ( Asco Equities, Inc. v. McGoldrick, 285 App Div 381, 385 [1st Dept.], aff'd 307 NY 738).
The provision allowing for recovery for personal use had been eliminated from the statute by the Legislature in 1982 (L 1982, ch 555 § 6), and reinstated in its current form as part of the 1983 Emergency Tenant Protection Act (L 1983 ch. 403 § 50[b]). As restored the provision makes exceptions for rent stabilized tenants over 62 years old and disabled tenants, and includes a penalty of forfeiture of three years of rent increases for the entire building should a landlord fail to occupy the space for a period of three years. It also ended the right of multiple owners of a property to each take apartments away by restricting the right to only one owner for personal use ( See, Salaj v. Welsh, NYLJ Oct. 31, 2001, at 22, col. 1[Civ. Ct., New York County], citing L 1983 ch. 403).
Compare with a tenancy governed by the Rent Control Law which requires that the landlord seek a certificate of eviction from the Division of Housing and Community Renewal (DHCR) before commencing a summary proceeding (RCL § 26-408[b][1]). The issuance of the certificate is deemed presumptive of good faith on the part of the landlord ( Maynard v. Greenberg, 195 AD2d 304, 305 [1st Dept. 1993]).
Plaintiffs seek a preliminary injunction staying the commencement of summary holdover proceedings against them in Housing Court. To prevail in a motion for preliminary injunction, the party seeking injunctive relief must demonstrate a likelihood of success on the merits, that it will suffer irreparable injury if the relief is not granted, and that the equities balance in its favor ( W.T. Grant Co. v. Srogi, 52 NY2d 496, 517). The Court recognizes that preliminary injunctions in the context of housing matters are normally not favored. It has been held that the Civil Court's Housing Court is the preferred forum for resolving landlord-tenant issues ( Post v. 120 East End Ave. Corp., 62 NY2d 19). "Only where Civil Court is without authority to grant the relief sought should the prosecution of a summary proceeding be stayed" ( Scheff v. 230 East 73rd Owners Corp., 203 AD2d 151, 152 [1st Dept. 1994]). Thus, given this strong preference for resolving landlord-tenant disputes in the Civil Court, plaintiffs must make a clear prima facie showing entitlement to an injunction staying the commencements of summary holdover proceedings against them (CPLR 6301; 6312).
The core issue in this action is whether the Rent Stabilization Code and the regulations promulgated in New York City's Administrative Code permit the landlords to oust an entire tenement building of its rent-stabilized tenants so as to renovate and convert the building into a single residence for their personal use and, if so, the procedure that the landlords must follow to effectuate that outcome. The issue pits the sound public policy underlying the rent laws which is to promote available and affordable housing ( Cox v. J.D. Realty Assoc., 217 AD2d 179, 185 [1st Dept. 1995]), against the owner's constitutional right to withdraw real property from the rental market ( see, Emray Realty Corp. v. McGoldrick, 307 NY 772, 773, reh'g denied 307 NY 909).
Plaintiffs argue that the defendants are not complying with either the spirit or the letter of the RSC and RSL. They note that defendants propose to remove the entire residential portion of the building from the rental market, but that under the RSC and RSL, the only permissible grounds for removing a building from the rental market are to demolish the building, to turn it into space for the landlord's business, or because there are substantial violations that equal or exceed the assessed value of the building (RSC § 2524.5[a][1-2]; RSL § 26-511[c][9]; see, Sohn v. Calderon, 78 NY2d 755). In both situations, the landlord is required to obtain permission either from DHCR or from the Department of Buildings before it can evict the tenants and demolish or withdraw the building from the rental market (RSC § 2524.5[a][[1-2]; RSL § 26-511[c][9][a]). These protections conceivably protect tenants from unscrupulous landlords who, in tight housing markets, might scheme to eject lower-rent tenants in order ultimately to rent to tenants paying greater or market rates.
The RSL includes other provisions concerning ownership by non-profit organizations, which are not relevant ( see RSL § 26-511[c][9][c]).
Plaintiffs contend that because defendants are seeking to empty their entire building of its residential tenants so as to turn the building into a one-family home, they should be required to obtain permission from the DHCR, just as if they were seeking to remove the tenants in order to demolish the building or to withdraw it from the rental market to make a business. They contend that defendants should not be allowed to cite the personal use section of the statute, so as to terminate their leases and commence summary proceedings when they have not established their good faith intent to actually create a one-family home in which they will live. In essence, they argue that there is no difference in outcome between emptying a building so as to demolish it or to turn it into a landlord-owned business, or emptying a building to make a one-family home New York City loses a an entire building of rent-stabilized apartments from its housing stock.
Defendants' plans do not include the possibility that one or more tenants might be disabled over 62 years of age, and would need to be provided with equivalent or superior housing before they could recover the apartment for personal use (RSC § 2524.4[a][2]). It appears at least one tenant, non-party George Boyd, is a senior citizen (Cross Mot. Ex. C, Economakis v. Boyd, LT Ind. No. 53510/04 [Civ. Ct., New York County], Notice of Appearance, Answer Counterclaims).
In addition, plaintiffs argue that recovery of 15 units for personal use is simply not within either the purview or the intent of the statute. Plaintiffs state that until recently, it was understood that the personal use exception allowed a landlord to recover a unit or perhaps two at a time ( see, e.g., Proctor v. Barns, 2002 WL 1291835, 2002 NY Slip Op. 50215[U] [App. Term 1st J.D.] [finding that owners established genuine intent to occupy subject apartment, possibly as a bedroom for a child not yet born, as part of an "overall, documented plan to utilize the brownstone building as a one-family residence"]; Karmely v. Gill, NYLJ, Nov. 25, 1997 at 25, col. 3 [App. Term 1st J.D.] [concerning owner's notice of intent to occupy one apartment and his ultimate plan to convert the entire building to a single-family residence]; Leshinsky v. Lawson, NYLJ, Feb. 24, 1994 at 30, col. 6 [App. Term 1st J.D.] [holding the landlord was not required to seek both apartments rented by tenant, which were noncontiguous, given that the statute permits recovery of "one or more" dwelling units]; Axelrod v. Duffin, 154 Misc2d 310 [App.Term 1st J.D. 1992] [awarding possession of two apartments to landlord]; Tauber v. Ruscica, NYLJ, Oct. 14, 1983 at 14, col. 3 [Civ. Ct., NY County] [recovery of two remaining apartments in brownstone]; Edelman v. McGoldrick, 281 App. Div. 686 [2nd Dept. 1952] [holding that the owner bought the house in good faith so as to obtain possession of the second floor apartment for her use]).
Plaintiffs argue that the manner in which defendants acquired the building as well as the fact that upon acquisition they immediately began serving notices of their intent not to renew the tenants' leases, suggest that defendants targeted the building for business reasons rather than a personal reason and lack the good faith intent required by a landlord intending to recover possession of a premises for personal use and occupancy (Ord. to Show Cause, Dobkin Aff. ¶¶ 26-37). The court need not address these allegations at this time other than to point out that they are pertinent to defendants' good faith intentions.
However, in 2002, the owner of a six-story building located at 12 East 72nd Street, New York, New York, notified all of the 23 tenants that their rent-stabilized leases would not be renewed and that he would seek to evict them so as to create a quadruplex for his family and a duplex for a sister-in-law and her family. The owner has since commenced summary proceedings involving certain of the tenants. In one of the proceedings, Steven Harriet Cromans v. Melanie Siben, the court called the landlord's plan "unprecedented" but not, on first blush, invalid (Not. of Cross Mot. Ex. E, Dec. Ord., Cromans v. Siben, LT Ind. No. 50347/03, Seq. 001, Sept. 8, 2003 [Cavallo, J.]). Thus, the traditional method of employing the personal use exception found in the RSC has been challenged, and the law lacks clarity.
This building and the litigation underway was highlighted in the 2004 edition of Scherer's Residential Landlord-Tenant Law in New York, at 8-71, with the comment that the various summary proceedings may test the RSC and RSL personal use section.
Defendants contend that they, like the owner of 12 East 72nd Street, are not out of bounds of the statute's intent because there is no explicit statutory limit on how much space a landlord can recover for personal use. They heavily rely on Sobel v. Mauri, NYLJ, Dec. 12, 1984 at 10, col. 4 (App. Term 1st J.D.), which granted a landlord's petition to recover a fourth-floor room from the respondent tenant while acknowledging that the landlord and her family already occupied the basement, first and second floors of the brownstone, used some of the rooms on the third and fourth floors as a guest room and storage areas, and rented space to four other tenants on the third and fourth floors. In holding that the landlord had established a good faith intention to use the recovered space as a sewing room, Sobel observed that "[t]he Legislature has as yet placed no limitation upon the amount of space a given owner may regain for personal use" and noted that it is not for the court to "pass judgment" on the propriety of the use to which the recovered space would be put. Notably, however, while the owner in Sobel testified that her "ultimate goal was to recapture and occupy the entire brownstone," she sought only the one room, and merely stated that she "ha[d] no intention to rent space on the top two floors to any tenants not presently in possession," clearly suggesting that piecemeal repossession was required under the statute.
Sobel's observation concerning the Legislative stance has been cited in subsequent Housing Court decisions which are also relied upon by defendants. In Wong v. Repass, NYLJ Dec. 2, 1998 at 29, col. 2 (Civ.Ct., New York County), the landlord was allowed to recover the apartments of two tenants as a part of a plan to make the entire third, fourth and fifth floors of the building into a triplex home for personal use. In Canino v. Fogel, NYLJ, Sept. 22, 1993 at 23, col. 3 (Civ. Court, New York County); aff'd NYLJ May 19, 1994 at 27, col. 4 (App. Term 1st J.D.), it was held that the landlords could recover an apartment in their brownstone despite the fact that they already occupied a "significant" amount of space, in order to create a "cohesive" home within the building. In Tauber v. Ruscica, NYLJ, Oct. 14, 1987, at 14, col. 3 (Civ.Ct., New York County), it was held that the landlord could recover possession of the last two remaining apartments in its brownstone for personal use, after previously recovering other apartments either through summary proceedings or by giving cash consideration to various tenants for leaving ( see also, Delavan v. Spirounias, NYLJ, March 14, 2001 at 19, col. 5 [Civ. Ct., New York County]).
Defendants contend that the statement in Sobel that the Legislature has not yet placed a limit on the amount of space, is a holding, while plaintiff's argue that it is dictum. A holding is defined as "[t]he legal principle to be drawn from the opinion (decision) of the court." (Black's Law Dict., 5th ed., at 658.) In contrast, dictum is a "statement, remark, or observation" and "an observation or remark made by a judge in pronouncing an opinion upon a cause, concerning some rule, principle, or application of law, or the solution of a question suggested by the case at bar, but not necessarily involved in the case or essential to its determination; any statement of the law enunciated by the court merely by way of illustration, argument, analogy, or suggestion," (Black's Law Dict., 5th ed., at 409). Although some decisions subsequent to Sobel cite and even quote the observation, it is not the holding in Sobel, which is rather that a landlord may occupy the space of her choosing, even when for specialized purposes, as long as there is demonstrated an honest intention.
Defendants argue that there is no legal difference between allowing a landlord who is already in possession of space in its building to recover more space for personal use and occupancy, the scenario in Sobel, Tauber, and the other above-cited cases, and allowing them to recover all the apartments in their building before they occupy any of the space. However, as noted by plaintiffs, current occupancy by an owner allows a court to examine the owner's good faith intention in seeking additional space. For example, in Nestor v. Britt, NYLJ, Apr. 18, 1994 at 27, col. 3 (App. Term 1st Dept.), aff'd, 213 AD2d 255 (1st Dept. 1995), the dismissal of the summary proceeding was based in part on the fact that the landlord could not adequately explain the "acknowledged non- or under-use of at least three other units in the building which [the landlords] now control" (NYLJ, at 27, col. 3). In Garner v. Berger, NYLJ, July 15, 2002 at 20, col. 3 (Civ.Ct., NY County), the court found the landlord's claims to need more space because he and his son currently lived in a cramped one-bedroom apartment, not credible, in large part because of the manner in which the landlord actually used the entirety of the space. Defendants cannot, without this background of previous residence in the building, as easily establish their good faith intent to create and live in an enormous one-family house, especially when compared to their current living situation of a one-bedroom, one-thousand square foot apartment on the top floor of a building in Brooklyn.
They suggest that they have been hindered in occupying at least some of the space because the tenants failed to remove themselves from their apartments at the end of their leases and chose to litigate the evictions (Rosman Aff. in Reply ¶ 13).
By comparison, for example, the owners of the five-story brownstone in Tauber v. Ruscica had previously lived in a "spacious home" in Merrick, Long Island, consisting of a "large master bedroom, living room, dining room, kitchen with a pantry area, exercise room, library, office area, guest room, and a T.V. room," as well as a two-car garage and a swimming pool, and "wanted a house on the upper west side which would provide them with the similar life style they enjoyed in the Merrick house." (NYLJ, Oct. 14, 1987 at 14, col. 3 [Civ. Ct., New York County]).
Defendants also dispute plaintiffs' attempt to equate demolition or withdrawal of a building from the rental market with an owner's personal use of a building, arguing that the personal use category is much more restrictive. While an owner can, if it wishes, replace a demolished building with a larger or smaller building or no building at all ( see, Sheridan Assocs. v. Coffey, 1 Misc2d 938 [Sup. Ct., NY County 1955]), a personal use proceeding requires the owner to occupy the premises as its primary residence for at least three years (Cross Mot. Rosman Aff. ¶¶ 48-51). Plaintiffs concede that demolition of a building is not the same as a gut renovation ( see, Robbins v. Herman, 11 NY2d 670 [major renovations to the entirety of a 13-story apartment building requiring the eviction of tenants from all 26 apartments, did not constitute a demolition]), but argue that the wholesale evictions will nullify the RSC provisions which ensure an owner's compliance with the statute, thus weakening the rent laws.
Under RSC § 2524.4(a)(5), if an owner recovers a premises but fails to "utilize the housing accommodations for the purpose intended after the tenant vacates," or fails to "continue in occupancy for a period of three years," he or she will forfeit the right to any increases in the legal regulated rent in the building for a period of three years ( see, Parkash v. Barnes, NYLJ, May 11, 1989 at 27, col. 3 [App. Term 2d 11th Jud. Dists.] [noting "severe penalties that the landlord would incur if he failed to [occupy the apartment] and to continue in occupancy for three years"]). In order not to suffer the statutory penalty, the landlord may allow the tenant to reoccupy the space as before, or the owner can attempt to establish to DHCR's satisfaction that circumstances changed after the tenant vacated which prevented the owner from occupying the space ( see, Maynard v. Greenberg, 195 AD2d 304 [1st Dept. 1993], app dismissed 82 NY2d 913). Plaintiffs argue that if defendants successfully evict all the tenants but ultimately do not ultimately occupy a one-family private home for whatever reason, or evict the tenants and ultimately renovate the apartment building but only register it with DHCR after four years which would allow the apartments to be rented at a much higher rate, even market rate (Pl. Memo of Law at 19-20, citing RSL § 26-516[a][2]; Marmelstein v. DHCR, 292 AD2d 207 [1st Dept. 2002]; see also, Thornton v. Baron, 4 AD3d 258 [1st Dept. 2004], lv to appeal granted, 10 AD3d 846 [1st Dept. 2004]), the sole punishment of forfeiture of three years of rent increases will have no force, as there are no remaining units under the rent laws.
Plaintiffs' suggestion that were defendants to turn the building into one containing less than six units, it would be taken out from the rent stabilization rules, citing RSC § 2520.11(d), appears not to be valid based on Application of Shubert v. New York State DHCR, 162 AD2d 261 [1st Dept. 1990] [holding that a "unilateral action" by a landlord to combine apartments and reduce the number of apartments from seven to five, "cannot effect an exemption from the pertinent regulations" and noting that "[s]uch a result would be inconsistent with the purpose underlying the legislation regulating rents for multiple dwellings" ( Id. at 261, citing RSC § 2520.11; RSL § 26-504). See also, Fleur v. Croy, 137 Misc2d 628 (Civ.Ct., New York County 1987), aff'd 139 Misc2d 885 (App. Term 1st J.D. 1988]).
The Rent Stabilization Code and the regulations are designed to address the chronic housing shortage in New York City. As noted in Governor Mario Cuomo's Approval Memorandum concerning the 1983 Emergency Tenant Protection Act, which includes the provision allowing a landlord to recover space for personal use, the "inadequate supply of affordable rental housing, remains a major problem for New Yorkers, particularly those residing in New York City" (1983 NY Legis. Ann. 1983, vol. 2, p. 177). The rent control and rent stabilization laws are described by one court as "a tacit recognition of the devastating impact that evictions can have on . . . tenants and their communities" ( McMurray v. New York State DHCR, 135 AD2d 235, 238 [1st Dept.], aff'd 72 NY2d 1002), which quotes a 1984 New York State Assembly memorandum in support of amending the rent laws stating:
In the present housing market, renting a new apartment can be financially devastating to a person on a retirement or limited income. Yet, these people are often singled out by landlords for eviction because they often have been in the apartment for many years and thus pay lower rents.
( McMurray at 238, quoting Memo. of Assemblyman Gottfried, 1984 NY Legis. Ann. at 109). The rent laws are remedial in nature and as such, are to be "liberally construed to carry out the reform intended and spread its beneficial effects as widely as possible" ( Lesser v. Park 65 Realty Corp., 140 AD2d 169, 173 [1st Dept. 1988], lv dismissed 72 NY2d 1042). Under the rules of statutory construction, a statute must be read and given effect as it was written (Practice Commentaries, McKinney's Consol. Laws of NY, Book 1, Statutes § 73, at 148). While the failure of the Legislature to include a matter within the scope of a statute may be "construed as an indication that its exclusion was intended" (McKinney's Consol. Laws of NY, Book 1, Statutes § 74), the "primary consideration of the courts in the construction of statutes is to ascertain and give effect to the intention of the Legislature" (McKinney's Consol. Laws of NY, Book 1, Statutes § 91), and a construction which would make a statute absurd must be rejected (McKinney's Consol. Laws of NY, Book 1, Statutes § 145). The courts should consider the "mischief" to be remedied by the statute and construe the statute "so as to suppress the evil and advance the remedy" (McKinney's Consol. Laws of NY, Book 1, Statutes § 95). All parts of a statute are to be read and construed as a whole (McKinney's Consol. Laws of NY, Book 1, Statutes § 97). If there is an "irreconcilable conflict" in the language of the statute, the court is to "preserve the paramount intention although this may lead to the rejection of some subordinate and secondary provision" (McKinney's Consol. Laws of NY, Book 1, Statutes § 98[b]).
Assemblyman Gottfried was addressing a bill focusing on rent controlled tenants, rather than rent stabilized tenants, but his words apply to New York City tenants in general.
Based on these principles of statutory construction, a reading of the RSC which allows a landlord to recover all of the rental premises in a tenement building at one time based on plans to turn the entire building into a private home, would appear to be incompatible with the statute's intent to provide New York City residents with the affordable and stable housing. Many, if not all, of the cases relied upon by the defendants refer to smaller brownstone buildings, the restoration of which to an owner-occupied single family home may well be permitted. However, the statute cannot be read as permitting a tenement apartment building to be rid of an entire rent roll of tenants who, given today's rental market, will never be able to find comparable housing in Manhattan, and perhaps not in the City. In addition, were the Court to construe the statute in the manner urged by defendants, as pointed out previously, there would be no remedy for tenants to punish greedy or unethical landlords. To be clear, the Court is not characterizing these particular landlords as greedy or unethical, but is merely noting that the law must be interpreted in a way that prevents potential abuses. "The Legislature does not contemplate the leaving of a party without a remedy," and construing a statute so as to cause that effect is to be avoided (Practice Commentaries, McKinney's Consol. Laws of NY, Book 1, Statutes § 144, p. 293).
Plaintiffs have set forth sufficient arguments to suggest that they will prevail in this forum. Supreme Court is clearly the proper arena for the action, given that it presents a novel issue involving legislative intent, apparent most clearly in a non-Housing Court context ( cf., Kanter v. East 62nd Street Assocs., 111 AD2d 26 [1st Dept. 1985] [denying the tenant's motion for an injunction and holding that the plaintiff would be able to obtain "full redress" when a proceeding was brought in Civil Court]). It affects public policy, statutory intent, and regulatory construction. The fact that some landlords have become emboldened to test the parameters of the statutes formerly used conservatively, suggests that the court should address the issues now being raised. Although defendants argue that plaintiffs' arguments have been set forth in the affirmative defenses of the tenants involved in the summary proceedings already underway, the nature of a summary proceeding, involving only one tenant at a time, appears unlikely to illuminate the questions now at hand.
As set forth in Catherine Economakis et al. v. Karen Singleton, et al, Index No. 082881/04 (Civ.Ct., New York), and similarly by the other respondents, the Fourth Affirmative Defense alleges that the landlords' plan violates the intent and purpose of the RSL, RSC and other statutes, and the Eleventh Affirmative Defenses alleges that the RSL forbids recovery of an entire building (Cross Mot. Ex. C, at 3, 5).
Furthermore, plaintiffs demonstrate sufficient irreparable injury if the injunction is denied and summary proceedings are commenced in Housing Court. Plaintiffs argue that there are now various credit agencies whose primary business is to report to landlord subscribers, the names of all tenants who have appeared in the computer indices of Housing Court, no matter whether they were the petitioner or respondent, and without regard to whether they were successful in their proceedings. This "blacklist" potentially makes the finding of a rental apartment potentially very difficult if not impossible (Ord. to Show Cause, Ex. J [articles]; see also, DeCastro v. Bhokari, 201 AD2d 382 [1st Dept. 1994] [noting the irreparable damage that would ensue were negative information released to credit reporting agencies]). As plaintiffs are tenants of relatively modest means, the possibility of winding up on a blacklist should they ultimately lose, would be devastating. Moreover, were this matter dismissed and the plaintiffs forced to litigate their individual summary proceedings in the Housing Court, where the issues would be addressed piecemeal in Housing Court over the course of time, the plaintiffs would not have benefit of presenting the totality of the circumstances of the entire building to the ultimate fact finder regarding defendants' intent, given the interpretations of the personal use statutes currently used.
As for the prejudice to defendants, they argue that they will be compelled to litigate in two courts, first by proving their affirmative defenses in Supreme Court and, if they prevail, then again in Housing Court. However, they ignore the doctrines of collateral estoppel and res judicata in making this argument.
The Court is persuaded that the balance of equities falls in favor of the plaintiffs. They have demonstrated the necessity and entitlement to a preliminary injunction. Accordingly, plaintiffs' motion for a preliminary injunction staying commencement of summary proceedings against them is granted.
Defendants' cross motion to dismiss the action pursuant to CPLR 3211(a)(7) is denied. In assessing a motion to dismiss pursuant to CPLR 3211, the Court must "accept the facts as alleged in the complaint as true, accord plaintiff the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory." ( Leon v. Martinez, 84 NY2d 83, 87-88; accord Campaign for Fiscal Equity, Inc. v. State of NY, 86 NY2d 307, 318). In order for a defendant to prevail in a motion to dismiss, he or she must convince the court that nothing the plaintiff can reasonably be expected to prove would establish a valid claim (Siegel, New York Practice, § 265 [3d ed.]). Here, for the same reasons the preliminary injunction is granted, the motion to dismiss must be denied.
Neither side has addressed in their papers the issue of an undertaking being fixed pursuant to CPLR 6312 (b). Although defendants oppose the motion for preliminary relief, they do not argue in the alternative how the amount of an undertaking should be determined in the event that preliminary injunctive relief is granted. Thus, absent input from the parties the Court is unable to fix the amount of such undertaking without resort to sheer speculation as to the potential damages should it turn out this preliminary injunctive relief was improvidently granted. Accordingly, it is
ORDERED that the motion by plaintiffs for a preliminary injunction is granted upon the condition that plaintiffs continue to pay ongoing rent/use and occupancy in the same amount as their leases provide for, or if their leases have expired, as would be called for under a one-year renewal lease; and it is further
ORDERED that plaintiffs are directed to post a preliminary injunction bond in an amount to be determined upon the serving and filing of a motion by plaintiffs to fix the bond amount within 15 (fifteen) days of entry of this decision. Defendants may submit their position on the amount of the bond in the form of opposition or a cross motion.
ORDERED that defendants, their agents, servants, employees and all other persons acting under the jurisdiction, supervision and/or direction of defendants, are enjoined and restrained, during the pendency of this action, from taking any action to cancel or terminate any of the plaintiffs' lease for the premises located at 47-49 East Third Street, New York, New York except that the landlord may serve the initial Notices of Non-Renewal upon the three plaintiffs not yet served as their leases expire; and it is further
ORDERED that the cross motion is denied.
ORDERED that, other than for setting the bond previously referred to, further supervision of this matter shall be by the Hon. Faviola A. Soto, who is now the Justice assigned to IA Part 7.
This constitutes the decision and order of the court. The court has mailed copies of this decision to counsel.