Matter of EPDI Associates
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Matter of EPDI Associates OATH Index No. 1489/04 (Jan. 3, 2007) [Loft Bd. Dkt. No. LB-0132; 306-320 Dean Street, Brooklyn, N.Y.]
Respondent tenant has standing, as sole remaining IMD protected occupant, to challenge abandonment application for not only his unit but four other units at issue. Abandonment determination can be based on proof of a residential tenant’s voluntary vacatur of a unit even though such vacatur occurs prior to a determination by the Loft Board that a unit is covered. Abandonment applications for three of the five units at issue granted based on proof that the residential tenants voluntarily vacated their units with no intention of returning, even though their departures occurred four to five years before the Loft Board’s coverage determination. Abandonment application as to a fourth unit denied because the protected occupant was a partner in the ownership entity who did not abandon his unit, but instead assigned his ownership rights to his wife, who remains a partner and continues to exercise control over the unit. Abandonment application as to fifth unit denied where owner constructively evicted tenant by failing to maintain a continuous water supply or make other necessary repairs, tenant has maintained a continuous physical presence at the loft by visiting, keeping his possessions there and using it as his address, and tenant has, over an almost fifteen-year period, continued to assert his legal rights in the unit, including appearing and defending here. ______
NEW YORK CITY OFFICE OF ADMINISTRATIVE TRIALS AND HEARINGS
In the Matter of EPDI ASSOCIATES Petitioner - against - STEPHEN CONLEY Respondent ______
REPORT AND RECOMMENDATION
RAYMOND KRAMER, Administrative Law Judge This application, brought by EPDI Associates, owner of the interim multiple dwelling at 306-320 Dean Street, Brooklyn, seeks a declaration of abandonment for five units, the first and second floors of 314 Dean Street, the third floor of 314 Dean Street, the third floor of 316 Dean Street, the second floor of 320 Dean Street, and the third floor of 320 Dean Street, pursuant to -2-
Article 7-C of the Multiple Dwelling Law and title 29, section 2-10(f) of the Rules of the City of New York (“RCNY”). Hearings were held before me on April 26, 2005, April 27, 2005, July 18, 2005, July 19, 2005, July 20, 2005, August 11, 2005, August 12, 2005 and October 14, 2005. The record closed on January 17, 2006 with the submission of legal briefs. Additional unsolicited legal argument was submitted by petitioner’s counsel by email on February 13, 2006, which this tribunal accepted, and a reply was accepted from respondent’s counsel on February 15, 2006. Petitioner presented the testimony of Bernard Dillenberger, its managing partner for twenty-six years, and also testimony from subpoenaed representatives of Geico Insurance, Verizon Communications and Consolidated Edison. Respondent Conley testified on his own behalf and also recalled Mr. Dillenberger as a witness on his direct case.
ANALYSIS Procedural History The premises at issue, 306-320 Dean Street, in Brooklyn, is roughly a block-long complex of two and three-story buildings of brick and wood joist construction, which contain big open lofts. The complex is owned by petitioner since the late 1970s, and Mr. Dillenberger is petitioner’s managing partner and 82% owner. Currently, every unit in the building complex except respondent Conley’s is being used commercially, with some of the units being used by Mr. Dillenberger for his construction company’s office space and storage. While 306 Dean Street apparently has a separate lot and block number from the other buildings, the buildings share sufficient links and commonalities that the Loft Board determined them to constitute one horizontal interim multiple dwelling for Loft Board purposes in a coverage order issued on January 22, 1987. The Loft Board further determined in that proceeding that the five lofts at issue, which are located within 314-320 Dean Street, were covered by the Loft Law and that there were two protected tenants, respondent Conley and James Hyde, a partner of petitioner. Loft Bd. Order No. 515 (Jan. 22, 1987), aff’d, EPDI Associates v. New York City Loft Bd., Sup. Ct. N.Y. Co. Index No. 40467/88 (Aug. 23, 1994), aff’d, 227 A.D.2d 358, 642 N.Y.S.2d 900 (1st Dep’t 1996). The Board’s order directed petitioner to register the covered units. It is undisputed that the units were not registered until fifteen years later, in 2002. In 1995, petitioner was assessed $8000 in fines for failing to register the units. See Loft Bd. Order No. 1766 (Mar. 23, -3-
1995). An abandonment hearing on these units was originally held before this tribunal on January 9, 2002. Matter of EPDI Associates, OATH Index No. 600/02 (Jan. 9, 2002), aff’d, Loft Bd. Order No. 2714 (Mar. 14, 2002), remanded, Conley v. New York City Loft Bd., Sup. Ct. N.Y. Co. Index No. 113879/02 (Dec. 9, 2002). Tenants did not submit a response or appear to contest the application, and a default proceeding was conducted. The abandonment application was granted primarily on the testimony of Mr. Dillenberger alone, supported by certain affidavits and other documentation. Thereafter, respondent Conley learned of the proceedings when a nonpayment “business” eviction petition and notice was posted on his loft unit door in May 2002, and he brought an Article 78 proceeding requesting that the abandonment finding be set aside because he was not properly served with notice of the hearing. The Loft Board joined his petition to vacate the abandonment finding because, under 29 RCNY § 2-05(f), an owner who has not complied with registration requirements can not bring an application before the Board. The Supreme Court agreed that, as EPDI had not registered the units as ordered to do so in 1987 and again in 1995, the Loft Board should not have permitted it to file the abandonment application as to any of the units. Conley v. New York City Loft Bd., Sup. Ct. N.Y. Co. Index No. 113879/02 (Dec. 9, 2002) (see ALJ Ex. 1). The court also found that respondent Conley was not properly served with notice of the hearing because he did not have a secure place to receive mail at the Dean Street address, his mail being piled on a common stairway. Id. at 6. The proceedings were remanded for a new abandonment hearing as to all five units. The Appellate Division subsequently affirmed the Supreme Court Order and remand, but directed respondent Conley to post the sum of $10,000 as security for costs, which he did. Conley v. New York City Loft Bd., 5 A.D.3d 175, 772 N.Y.S.2d 519 (1st Dep’t 2004); see Resp. Ex. AA. Petitioner is now back seeking an abandonment finding for all five units at issue. Respondent Conley is the only tenant contesting the application. Respondent Conley has opposed not only a finding of abandonment as to his own unit, but as to the other four units as well. Standing As a threshold matter, petitioner argues that respondent Conley does not have standing to challenge the alleged abandonment of any unit besides his own. In support of its argument, -4- petitioner cites to Graziano v. County of Albany, 3 N.Y.3d 475, 787 N.Y.S.2d 689 (2004), where the Court gave the following criteria for determining if a party has standing:
First, a plaintiff must show “injury in fact,” meaning that plaintiff will actually be harmed by the challenged action. As the term itself implies, the injury must be more than conjectural. Second, the injury a plaintiff asserts must fall within the zone of interests or concerns sought to be promoted or protected by the statutory provision under which the agency has acted.
3 N.Y.3d at 479, 787 N.Y.S.2d at 692 (quotation omitted). EPDI argues that respondent Conley cannot show an injury arising from the deregulation of the other units. Specifically, “[i]n the event Conley’s unit is not deregulated the legalization costs for the common areas of the building and Conley’s unit are borne by Conley in the same manner regardless of whether the other units are IMD units or not.” Pet. Brief, at 29 (citing MDL § 286; 29 RCNY § 2-01). Petitioner also argues that respondent Conley cannot show that the injury he asserts falls within the zone of interests sought to be protected by the Loft Law. Although the Loft Board Regulations require that “all affected parties . . . as are necessary for a final resolution of the claims asserted in the application” be notified of an abandonment application, 29 RCNY § 1- 06(a), respondent Conley, as a non-occupant of the other units, is not a necessary party to resolve the issue of the abandonment of the other units, and in any event, is not granted standing by a regulation establishing notice requirements. Respondent Conley argues to the contrary, that under an earlier Court of Appeals holding in Whalen v. Lefkowitz, 36 N.Y.2d 75, 365 N.Y.S.2d 150 (1975), he has standing because a finding of abandonment of the other units would weaken his bargaining power as a tenant. Respondent Conley also argues that because the prior finding of abandonment of all the units was vacated in its entirety – not just with respect to Conley – the State Supreme Court and the Loft Board both implicitly acknowledged respondent Conley’s standing to challenge the abandonment finding for all units. Standing is a fundamental prerequisite to bringing any action, including one in an administrative forum. A party seeking to participate in a proceeding must possess an actual legal stake in the matter being adjudicated. Matter of 115 West 28th Street Corp, OATH Index No. 1216/99 (Mar. 17, 1999), adopted, Loft Bd. Order No. 2563 (Sept. 26, 2000) (citing Society of Plastics Industry, Inc. v. County of Suffolk, 77 N.Y.2d 761, 772-773, 570 N.Y.S.2d 778, 784 -5-
(1991). The Court of Appeals has held that to have standing, a plaintiff must show first, “injury in fact,” and second, that the injury falls within the zone of interests or concerns sought to be promoted or protected by the statutory provision under which the action takes place. Graziano, 3 N.Y.3d 475, 787 N.Y.S.2d 689.
New York courts and the Loft Board have held that standing may hinge on whether the party asserting standing was in actual possession of the unit at the time of the relevant events. The implication here is that if a party does not possess a unit, he cannot suffer any injury of rights connected to that unit. Missry v. Ehlich, 1 Misc. 3d 723, 731, 765 N.Y.S.2d 176, 182 (Civ. Ct. N.Y. Co. 2003) (“[h]aving occupied the unit during the period when petitioners claim compliance, respondent has standing to dispute that claim and the consequences flowing from it”); 19 W. 36th Holding Corp. v. Parker, 193 Misc. 2d 519, 523, 749 N.Y.S.2d 824, 827 (Civ. Ct. N.Y. Co. 2002) (“since respondent was not the tenant in occupancy when the unit was deregulated it appears that he does not have standing to dispute the Loft Board's determination”); Matter of 115 West 28th Street Corp, OATH Index No. 1216/99 (Mar. 17, 1999), adopted, Loft Bd. Order No. 2563 (Sept. 26, 2000); Matter of Drogus, Loft Bd. Order 1937, 16 Loft Bd. Rptr. 139 (Mar. 28, 1996). Here, although issues exist as to respondent Conley’s alleged abandonment of the unit, he has not been evicted and at all times he has remained the legal tenant of the unit. Clearly, he has standing to challenge the abandonment application with respect to his own unit. The more difficult inquiry is whether respondent Conley will suffer injury in fact if the other units are found to be abandoned, and if any such injury is of the type against which the Loft Law was designed to protect, thus conferring upon him standing to challenge the abandonment claims as to the other units. In Whalen, the Court of Appeals held that a tenant of a rent controlled unit in a larger apartment complex would suffer injury in fact if the Attorney General were to certify a portion of the units as condominiums:
[A]ccording a condominium status to the quadrant reduces the number and importance of rental tenants, thus diluting their negotiating power as a group and in turn diminishing the strength and significance of each individual tenant, alters profusely the number of fee titleholders of the common interest in the common elements and results in the inevitable disruption that must of necessity follow such -6-
an extensive change of operation. Consonant with liberalized attitudes towards standing, petitioner's interest in the reorganization of the complex in which he resides, therefore, is not abstract but personal, real, direct and substantial, conferring standing to challenge the public official's action.
Whalen v. Lefkowitz, 36 N.Y.2d at 77-8, 365 N.Y.S.2d at 152-3 (citations omitted). But, “[w]hile the courts of this State have adopted ‘liberalized attitudes towards standing,’ plaintiffs must still establish a connection between [the landlord’s actions] and some detriment to their interests, economic or otherwise.” Baxter v. Captain Crow Management, Inc., 128 Misc. 2d 254, 261, 487 N.Y.S.2d 997, 1003 (Sup. Ct. N.Y. Co. 1985) (citation omitted) (finding no standing where the existence or nonexistence of an offering plan is immaterial to plaintiff-tenants’ rights). Loft Board rules do not directly address the issue of standing, and only indirectly touch on the issue in the form of the notice requirements for various proceedings. The Loft Board’s notice rule, which is relatively broad, provides simply that all applications filed with the Board must contain a list of affected parties and must be served on those affected parties by the applicant. 29 RCNY § 1-06(a). The rules further define "affected parties" in the case of an abandonment application to include "the owner and such occupants as are necessary for a final resolution of the claims asserted in the application." Any affected party served with an application has thirty days following service to file an answer to the application. 29 RCNY § 1- 06(b). The Loft Board over the years has routinely required owners to list and serve notice on all tenants of a building as affected parties in an abandonment application, which practice was followed by petitioner in this proceeding (ALJ Ex. 1). Petitioner argues, however, that notice and standing requirements are not co-extensive and that respondent Conley is not necessary to a final resolution of the issue of abandonment of the units he does not occupy. Respondent Conley counters that the abandonment of the other units reduces the number and importance of Loft tenants in the building, thus diluting respondent Conley’s negotiating power, much the same as with the rental tenants in the Whalen case. After careful consideration, I find that a protected occupant of an IMD has standing to challenge the deregulation by abandonment of any other protected unit in the building. For one thing, the Whalen case, which recognized the generally liberalized attitudes toward standing long taken by the courts, has not been overruled or significantly narrowed. In the Graziano case, cited by petitioner, the Court simply reiterated the basic legal test for standing but decided the -7- case based on petitioner’s lack of capacity to sue. Whalen still stands as a decision in which the Court found injury in fact when the number of rent controlled tenants in a building, and thus their negotiating power, was threatened to be reduced. The same circumstance exists here. To afford respondent standing to challenge the abandonment applications of other protected units in his registered IMD also makes sense as a matter of policy. The purpose of an abandonment proceeding and the statutory criteria to be considered therein, is to ensure that the landlord of a registered IMD building, with a concomitant obligation to legalize the building and all covered units for residential use, does not deregulate protected units by forcing out a residential tenant to the detriment of not only that tenant but the remaining residential tenants. A landlord may have a significant economic stake in demonstrating the abandonment of a unit because it would allow him or her to deregulate the unit and convert it to commercial use upon following certain procedures. Typically, and for obvious reasons, an abandonment proceeding is conducted as an inquest with the residential tenant unable to be located any longer. Although one of the criteria for determining abandonment is efforts made by the landlord to locate the last known residential tenant, a landlord is under no compelling pressure to find such departed tenants. In such circumstances, those who may best be able to shed light on the true circumstances surrounding a tenant’s departure or to test the landlord’s assertions that it was voluntary, are the other protected occupants who remain in the building and who have a vested interest in the outcome. Other non-protected tenants too, may have information about a particular tenant’s departure, but they do not have the same stake in the outcome as do protected occupants. The protected tenants share a common interest in ensuring that their building is properly legalized for residential use and that the deregulation of any unit and its conversion to commercial use occurs under the watchful eye of the Loft Board and with its approval. It is not enough to say that these other tenants may serve as witnesses alone. A landlord has no incentive to locate or call such tenants as witnesses, particularly to the extent that they possess information that may be adverse to the landlord’s position. Affording standing to such tenants to challenge, if they so choose, an abandonment application involving other protected units in the building, allows the necessary and relevant information for an abandonment determination to be presented and for deregulation to occur in an orderly manner. The landlord-tenant relationship is one that is fraught with an inherent tension between -8- the owner and the user of rental property. That tension is magnified in a loft setting, where there are certain residential tenants living in commercial buildings not yet brought into compliance with residential codes. The Loft Law (and the rules implementing it) attempts to strike a balance between landlord and tenant interests in protecting residential occupancy, thus, for example, ensuring tenants minimum housing standards and an orderly progression toward legalization while permitting landlords periodic rent increases and, under appropriate circumstances, the deregulation of space and/or reconversion to commercial use. Spring Realty Co. v. New York City Loft Bd., 127 Misc.2d 1090, 1094, 487 N.Y.S.2d 973, 977 (Sup. Ct. N.Y. Co. 1985), aff’d, 117 A.D.2d 1029, 498 N.Y.S.2d 241 (1st Dep’t 1986), app. granted, 68 N.Y.2d 604, 506 N.Y.S.2d 1027 (1986) and modified, 69 N.Y.2d 657, 511 N.Y.S.2d 830 (1986), app. dismd., 482 U.S. 911, 107 S.Ct. 3179 (1987). -9-
The deregulation of a unit and conversion to commercial use, when permitted to occur, has the potential to substantially change the character of a building, as indeed occurred informally in this building over the years. By 1987, respondent Conley was one of only two protected occupants, the other of who, as it turns out, was a partner in petitioner’s ownership of the building. All five units at issue here were declared protected, i.e., subject to legalization, with only one person, respondent Conley in a position to pursue such legalization vis-à-vis the owner. While legalization costs borne by respondent Conley may not be affected by the granting of the other abandonment applications, there is nevertheless a substantial consequence to him should the applications be granted. That consequence occurs both in the form of a fundamental change in the character and quality of his living environment, as well as a significant reduction of his bargaining power and his ability to pursue owner compliance with the Loft Law and minimum housing standards. As in the Whalen case, the impact on a protected tenant of deregulation of any other protected unit in the building is “personal, real, direct and substantial,” even in the absence of an immediate direct economic impact.1 Such impact is “injury in fact” according to the Whalen Court, and falls within the zone of interests or concerns meant to be protected by the Loft Law.
Indeed, the need to invest protected occupants with broad standing to challenge abandonment applications which have the potential of changing the character of the building is made starkly clear in this instance. Here, despite a Loft Board order finding coverage of the five units at issue and requiring their registration in 1987, and despite a subsequent enforcement proceeding and the levying of fines in 1995, the units at issue were not even registered until 2002. Mr. Dillenberger, as petitioner’s managing partner, somewhat disingenuously claimed not to be clear about his obligations under the Loft Law despite the order and fines; more apparently, he simply did not agree with the Board’s conclusions. He converted the space in four of the five units at issue years ago to commercial use without Loft Board involvement or approval, in apparent contravention of Loft Board rules. See 29 RCNY § 2-10 (c)(1), 2-10 (f)(4). Indeed, the
1 Contrast the facts here with the circumstances in Baxter v. Captain Crow Management, Inc., 128 Misc. 2d 254, 261, 487 N.Y.S.2d 997, 1003 (Sup. Ct. N.Y. Co. 1985), where the court found that tenants of a registered IMD had no standing to challenge an offering plan to convert their building into a co-op where the tenants, because of substantial rehabilitation of the building, were not protected by any rent control law and did not purchase shares of the co-op. -10- only reason he finally registered the building and the units was after a reversal in court of the initial abandonment application he obtained, because he had failed to register at the time of the application or provide proper notice to respondent. Respondent’s participation and challenge to the landlord’s applications, while it certainly expanded the scope of the proceedings, elicited a number of significant facts and legal arguments about the other units that were helpful or impacted on the disposition of this matter. For the above reasons, I adhere to my initial ruling that respondent Conley has standing, as a protected occupant in his loft building residence, to challenge petitioner’s application for a determination of abandonment as to all of the units at issue here, not just his own.
Analysis Turning to the merits of the applications, the issue to be decided is whether the five registered loft units within the IMD located at 306-320 Dean Street in Brooklyn, were abandoned by their residential tenants and can thus be deregulated. Abandonment is defined in the Loft Board’s rules as “the voluntary relinquishment of possession of a unit and all rights relating to a unit with the intention of never resuming possession or of reclaiming the rights surrendered.” 29 RCNY § 2-10(f)(2). By rule there are nine factors to be considered in the determination of whether a unit has been abandoned:
(i) the length of time since the occupant allegedly abandoned the unit; (ii) whether the occupant owed rent as of the time the occupant allegedly abandoned the unit . . . (iii) whether the occupant’s lease for the unit has expired; (iv) whether the occupant provided notice of an intent to vacate or requested permission to sublet the unit . . . (v) whether the unit contained improvements which were made or purchased by the occupant and whether the occupant was reimbursed for these improvements; (vi) whether any prior harassment findings have been made by the Loft Board concerning the occupant(s) of the unit or whether any harassment application remains pending; (vii) whether any violations or notices to appear pursuant to the Loft Board’s Minimum Housing Maintenance standards have been issued; (viii) whether the owner has made affirmative efforts to locate the occupant to attempt to purchase rights. . . or improvements . . .; and (ix) whether an inspection of the unit by the Loft Board staff indicates that the unit is presently vacant.
29 RCNY §2-10(f)(3). -11-
As to his unit, respondent Conley argues that he never voluntarily left, but was forced out because it was uninhabitable. He contends that he has nevertheless kept his possessions in the loft, continued to visit it, continued to use a Brooklyn address for various purposes and has consistently fought to retain his rights to the unit, and that the abandonment application should thus be defeated. Respondent Conley further challenges petitioner’s abandonment applications with regard to the other four units on factual and legal grounds as well.
First and Second Floor Units at 314 Dean Street The first and second floors of 314 Dean Street were originally a single unit. However, after the coverage finding, Mr. Dillenberger separated the unit into two by removing the stairway that connected the floors and sealing them off. Petitioner did not notify the Loft Board that it was dividing the units and, in 2002, it paid registration fees for only five units, not six (Tr. 203, 206). There was no dispute that Joseph Koch, the brother of current EPDI partner Elizabeth Koch, occupied the first and second floors pursuant to a two-year lease from 1979 to 1981. Although Mr. Dillenberger maintained that Mr. Koch, a comic book dealer, never really lived in the unit and used it primarily as a warehouse to store comic books (Tr. 217), the Loft Board coverage order determined differently. Loft Bd. Order No. 515, at 7-8 (Jan. 22, 1987). Mr. Koch remained in the unit after the lease expired, until sometime in 1982, according to his affidavit (Pet. Ex. 3), or until January 1983, according to Mr. Dillenberger’s recollection. Mr. Dillenberger recalled that Mr. Koch notified him of his intention to vacate the unit and the two of them conducted a walk-through inspection of the vacated space, after which Mr. Koch turned over the keys.2 Mr. Dillenberger testified that after Mr. Koch left, the unit remained vacant for a period of time during which he divided the floors into two units (Tr. 32). From about 1986 on, Mr. Dillenberger has used the second floor unit as a storage space for his company, Abra Construction Company, pursuant to an oral lease agreement. While Abra has paid EPDI rent in the past, essentially to show a rent roll for a mortgage lender, it does not currently pay any rent. Since 1988, Mr. Dillenberger has rented out the first floor unit commercially to a series 2 The Loft Board coverage proceeding, which was conducted as a default proceeding when Mr. Dillenberger and his counsel failed to appear, determined on the evidence presented at that time that Mr. Koch resided in the first and second floor units at 314 Dean Street “during the entire window period through June 1983.” Loft Bd. Order No. 515, at 7-8, 5 Loft Bd. Rptr. 32, 35 (Jan. 22, 1987). -12- of artists for use as an artist’s space. The unit is currently occupied by Christina Cherry, a ceramics artist, who had kilns installed in the unit with Mr. Dillenberger’s assistance and who uses the space as a studio and for ceramics production. Mr. Dillenberger admittedly never formally notified the Loft Board of his “conversion” of the Koch unit to commercial use. Mr. Dillenberger testified that there are bathrooms in both the first and second floor units. There was also a kitchen sink and maybe a stove and refrigerator in the combined unit while Mr. Koch was there, although Mr. Koch, in his affidavit, and Mr. Dillenberger at trial, agreed that Mr. Koch made no significant improvements to the unit. Respondent Conley testified that there was another residential tenant, Rudolph Alexander, who moved into the unit some time after Mr. Koch left. Respondent Conley, whose unit is on the third floor at 314 Dean Street, claimed that Mr. Alexander lived below him in the second floor unit for a couple of years in the mid-1980s. Respondent Conley recalled that in addition to a bathroom, kitchen and stove in that unit, there was also a bedroom during this time. He testified that he and Mr. Alexander shared a hot water account and hot water expenses for almost two years while Mr. Alexander lived there (Tr. 1076, 1078). After Mr. Alexander moved out, respondent Conley transferred the hot water account into his own name. Mr. Dillenberger denied that Rudolph Alexander was a residential tenant and claimed that he was simply an employee of Abra Construction who temporarily lived in the unit rent free for several months while going through a marital separation (Tr. 1173-74). Mr. Dillenberger denied that Mr. Alexander and respondent Conley shared expenses for hot water. He claimed that in order for Mr. Alexander to have hot water, the latter had to open the account because respondent Conley was not paying his bills at the time. Records from Brooklyn Union Gas Company list respondent Conley as the tenant on the gas hot water account from 1987 through 1989 and Rudolph Alexander as the tenant on the account from 1989-1992 (Resp. Ex. G). Petitioner seeks a finding that the first and second floor units at 314 Dean Street were abandoned by the last and only residential tenant, Mr. Koch. There seems to be little question that Mr. Koch, the window period occupant, voluntarily left his unit with no intention of returning, by no later than mid-1983. His affidavit, prepared in May 2000 in support of petitioner’s earlier abandonment application, asserts as much. In considering the criteria outlined in the Loft Board rules for determining whether a unit is abandoned, the evidence with respect to these two floors, which the Loft Board had -13- determined in 1987 to be a single unit, strongly supports such a finding. Thus, it has been more than twenty years since Mr. Koch left the unit without returning (29 RCNY § 2-10(f)(3)(i)); no rent was owed at the time he left, as both he and Mr. Dillenberger agreed ((f)(3)(ii)); his lease had expired ((f)(3)(iii)); he provided notice of his intention to vacate, removed his possessions and surrendered the premises and the key ((f)(3)(iv)); he made no request to sublet or assign the lease ((f)(3)(iv)); and he made no improvements to the unit, as both he and Mr. Dillenberger asserted ((f)(3)(v)). In addition, at the time of his vacatur, he neither filed nor was aware of any harassment proceeding pending or determined against petitioner ((f)(3)(vi)), nor complained about nor was aware of any minimum housing maintenance standard violations ((f)(3)(vii)). Respondent Conley’s testimony regarding a subsequent residential occupant of the unit, Rudolph Alexander, was corroborated to some extent by Mr. Dillenberger, in that the latter confirmed that Mr. Alexander temporarily stayed in the unit for several months, and by the Brooklyn Union Gas Company records. Nevertheless, the evidence was so sparse, vague and unclear as to the nature, circumstances and duration of his occupancy of the unit, as to fail to establish conclusively his residential occupancy or to defeat the abandonment application. Respondent Conley’s primary challenge to petitioner’s abandonment application for the Koch unit, as well as for the second and third floor units at 320 Dean Street, as discussed below, was legal in nature. Respondent argued that petitioner cannot legally seek a determination of abandonment based on the vacatur of a unit by a residential occupant prior to the issuance of a Loft Board coverage order. Stated another way, a tenant arguably cannot voluntarily relinquish possession of a unit and “all rights relating to a unit with the intention of never resuming possession or of reclaiming the rights surrendered” before he is aware he even has such rights. In this case, Mr. Koch’s departure from the unit occurred in 1982 or 1983, some four or five years before the Loft Board determined that his unit was a covered IMD unit. As respondent notes, the Loft Board was aware at the time of the coverage proceeding that Mr. Koch had vacated the unit years earlier, yet it still directed that the unit be registered as an IMD unit and legalized. Such determination, respondent argues, essentially precludes a finding of abandonment based on the earlier departure of Mr. Koch. Respondent Conley further argues that petitioner cannot seek a determination of abandonment based on an occupant’s departure from a unit prior to the time that the owner actually registered the unit, which in this instance was 2002. There was no dispute that petitioner -14- failed to register any of the units at issue until 2002, despite having been ordered to do so in 1987 and again in 1995. Respondent Conley argued that petitioner should not be able to benefit from its “wrongdoing” in refusing to comply with the Board’s registration orders and that just as it was not permitted to file an abandonment application pre-registration, it should not be entitled to an abandonment determination based on facts that occurred prior to registration. Rather, the relevant time period to be considered regarding abandonment of the unit, according to respondent, must be measured from the belated registration of the units. Resp. Brief at 17-18; fn. 2. As far as the latter argument, the Loft Board has previously held in regard to abandonment proceedings that there is no “date-of-incident” registration requirement for abandonment applications. Matter of White, Loft Bd. Order No. 2194 (Dec. 18, 1997). While it has clearly been established that an abandonment application cannot be filed or processed prior to the registration of an IMD building, the Board is not limited to reviewing only post- registration facts in determining the application once properly filed. See Matter of 103 West 27th Street Realty Corp., OATH Index No. 1409/99 (May 21, 1999), aff’d, Loft Bd. Order No. 2420 (June 25, 1999). Moreover, in the White case, the Board determined that a unit had been abandoned by the occupant in 1985, even though the filing and determination of a coverage application did not occur until a year later, in 1986. Thus, White is precedent for the proposition that a unit can be determined to be abandoned based on facts that occurred prior to a coverage determination. See also Matter of Life Realty Partners, L.P., OATH Index No. 1674/01 (Oct. 12, 2001), aff’d, Loft Bd. Order No. 2687 (Nov. 29, 2001); Matter of Noah Trading Co., OATH Index No. 1675/01 (June 25, 2001), aff'd, Loft Bd. Order No. 2688 (Nov. 29, 2001); Matter of Greenwich Associates, LLC, OATH Index No. 1193/01 (Mar. 1, 2001), aff’d, Loft Bd. Order No. 2636 (Apr. 24, 2001); Matter of Ebbetts Partners, OATH Index No. 1460/97 (May 30, 1997), aff’d, Loft Bd. Order No. 2140 (Aug. 28, 1997) (where at least by inference, window period tenants appeared to have abandoned prior to coverage determination). Such an interpretation of the abandonment rule makes sense. When the rule speaks of the voluntary relinquishment of the unit and “all rights related,” it seems appropriate interpret the language as referring to the relinquishment of physical possession and any other tenancy rights that existed for the tenant at the time. The Loft Law was enacted in June 1982 and specified the -15- criteria for determining whether a building qualified as an interim multiple dwelling and whether residential occupants were eligible for protection. When Mr. Koch, and as discussed below fellow tenants Vryling Roussin and Jacques and Di Browers vacated their units, they may be deemed to have knowledge of the potential protections afforded by the Loft Law and to which they could have availed themselves, and to have relinquished them upon departure. In addition, although landlords were encouraged to register their buildings and units voluntarily, the tenants were also given the ability under Loft Board rules to initiate coverage applications and thus had some control over the timing of such determinations. Indeed in this case, the coverage determination in January 1987 was the result of an application that respondent initiated only after being served with an eviction notice by petitioner. Given such control, it seems unfair to then preclude abandonment findings based on departures that preceded a coverage determination. The fact that the Loft Board was aware through evidence adduced in the 1987 coverage proceeding that certain window period tenants like Mr. Koch, and Ms. Roussin and the Browers in the second and third floor units at 320 Dean Street, had long since vacated their units, yet still ordered the owner to register those units as covered IMD units, does not change the analysis. The focus of the coverage proceeding was to determine whether the criteria for coverage was met, most significantly, whether there were at least three units residentially occupied during the statutory window period. The Board, while aware of the subsequent departure of some of those occupants, was not considering in the coverage proceeding the circumstances of those subsequent departures, or whether they were voluntary in nature or met the statutory criteria for a finding of abandonment. They were simply focused on whether the building, and particular units and occupants therein, should fall within the Loft Law’s ambit. The focus of the abandonment proceeding, in contrast, is on very different things. Thus, I find that an abandonment proceeding can be based on the circumstances of the departure of the last known residential tenant even when that departure predated a coverage determination regarding the tenants or the unit. Petitioner met its burden of proving in this instance that Joseph Koch, the last known residential occupant of the first and second floors at 314 Dean Street, abandoned that unit by no later than June 1983, and thus the application with respect to this unit should be granted. -16-
The Second Floor Unit at 320 Dean Street With regard to the second floor unit at 320 Dean Street, the uncontested evidence revealed that the last apparent residential tenants were Jacques and Di Browers. The Browers initially rented the unit pursuant to a two-year lease from 1979 to 1981. The lease was apparently extended through January 1984, when, according to Mr. Dillenberger, the Browers moved to Oregon, reportedly to join a religious community. Mr. Dillenberger testified that he observed them move out (Tr. 91-93). Mr. Dillenberger further testified that they left no forwarding address, were not subject to an eviction action, made no improvements in the unit, made no request to sublet or assign the lease to the unit and did not owe any rent. Nor had any harassment action been filed against petitioner by them or others in the building through the time that they left. Mr. Dillenberger testified that there has been no residential occupancy of the unit since the Browers left. After a period when the unit was left vacant, he used the unit from 1986 through 2003 as an office for his company, Abra Construction Company. In 2003, he subdivided the space into six smaller units, which he has rented out commercially to graphic artists, a jewelry company, a rug maker, and a gown designer and as office space (Tr. 85). Mr. Dillenberger noted that the Browers had kitchen and bathroom units within their loft, and that petitioner installed the fixtures. He testified that the kitchen was removed after the Browers left and that over time, the bathroom was modified to suit the commercial use of the space, including the removal of the shower. Mr. Dillenberger admittedly never advised the Loft Board nor filed anything to indicate that he had changed the unit to commercial use after the Browers left. Mr. Dillenberger claimed that because the building had a commercial certificate of occupancy, he saw no need to so advise the Loft Board, particularly since the Board did not issue its coverage order determining the unit to be covered until three years later, in January 1987. In reviewing the required criteria for determining an abandonment application, most are present in this instance. Respondent Conley’s primary argument to petitioner’s abandonment application for this unit was that, as with the Koch unit, the unit cannot legally be deemed abandoned where the last residential tenants departed three years before the Loft Board determined the unit to be covered. For the same reasons noted above with respect to the Koch unit, I disagree. -17-
The application for abandonment with respect to the second floor unit at 320 Dean Street should be granted.
The Third Floor Unit at 320 Dean Street The evidence with respect to the third floor unit at 320 Dean Street revealed that the last known residential occupant was Vryling Roussin, who rented the unit pursuant to a two-year lease from 1979 to 1981. She left the unit in late 1982. Mr. Dillenberger inspected the unit afterwards and observed it to be empty. Mr. Dillenberger testified that the unit remained empty until about 1988. At that point, he subdivided the unit into five spaces, which he rented commercially pursuant to individual leases from that point forward (Tr. 98). Petitioner submitted affidavits from two commercial tenants of the unit, Jeffrey Tolbert and Gretchen Van Lente, the former who has been a tenant since 1989, and they affirmed that the unit has not been used for residential purposes during their tenancies (Pet. Exs. 8 and 9). Mr. Dillenberger further testified that there was no eviction action taken against Ms. Roussin, no harassment action filed by her, no rent owed when she left the unit and that no improvements to the unit were made or purchased. Petitioner had installed the bathroom and kitchen that was in the unit. Petitioner’s evidence sufficiently established the criteria for a finding that Ms. Roussin, the last known residential tenant of the third floor unit at 320 Dean Street, voluntarily and permanently relinquished her rights in the unit in 1982. The only challenge respondent presented to petitioner’s abandonment application for this unit was the same as the one presented for the Koch and Browers units, that abandonment cannot legally occur prior to the Loft Board coverage order for the unit. For the same reasons noted above, I find that argument fails. The abandonment application for the third floor unit at 320 Dean Street should be granted.
Third Floor Unit at 316 Dean Street The evidence as to the third floor unit at 316 Dean Street revealed the following. Mr. Hyde resided in that unit from 1979 through 1992. He may have originally had a lease through 1981 or 1983. Mr. Hyde initially lived in the unit with Sharon Brant. He and Ms. Brant bought into the EDPI partnership in September 1983 and became partners with Mr. Dillenberger. As a -18- partner, Mr. Hyde and Mrs. Brant obtained a proprietary lease with respect to the third floor unit with the right to use that unit as they wished (Resp. Ex. P). In August 1985, Ms. Brant assigned her partnership interest in EPDI, which included the proprietary rights to the unit, to Mr. Hyde and voluntarily moved out. Petitioner submitted an affidavit from Ms. Brant, prepared in April 2000, attesting as much (Pet. Ex. 4). Mr. Dillenberger was notified of the assignment of partnership rights and consented. Mr. Hyde continued to reside in the unit and in the Loft Board coverage proceeding decided in 1987, he was determined to be a protected occupant (Tr. 45). Loft Bd. Order No. 515 (Jan. 22, 1987). Mr. Hyde remained in the unit until 1992. In an affidavit submitted by petitioner, Mr. Hyde represented that in 1992, he removed his personal property and appliances and vacated the unit. He attached to the affidavit a photocopy of his driver’s license as proof that he had established residence elsewhere (Pet. Ex. 5). Because he had proprietary rights to the unit, he leased it commercially to a graphic design firm, Z-Graphik, in 1992 pursuant to a verbal agreement. Mr. Dillenberger was aware of the arrangement. When Mr. Hyde left the unit, he vacated voluntarily, owed no rent, and had filed no harassment actions or complaints of violations against petitioner. In 1995, Mr. Hyde assigned his partnership interest in EPDI to his wife, Elizabeth Koch, the sister of former tenant Joseph Koch. The assignment was performed pursuant to a letter agreement dated September 6, 1995, and was consented to in writing by Mr. Dillenberger, as required by the partnership agreement (Pet. Ex. 6; Resp. Ex. C, para. 13). Elizabeth Koch remains to this date the only other partner with Mr. Dillenberger in EPDI and has retained the proprietary lease and concomitant ownership rights to 316 Dean Street.3 Upon assuming Mr. Hyde’s ownership rights to the unit, Ms. Koch continued to rent the premises commercially on a monthly basis to Z-Graphik, as asserted in her affidavit (Pet. Ex. 7). Z-Graphik has remained in tenancy in the unit through the date of the hearing. Ms. Koch remains a partner in EPDI and remains in control of the third floor unit at 316 Dean Street. Under the partnership agreement, she, as did Mr. Hyde, has the right to reside in the space without interference from the partnership, pursuant to a 50-year proprietary lease. She, as did Mr. Hyde before her, pays rent to EPDI for use of the space, but she has the right to rent 3 Mr. Dillenberger testified that he sold an 18% partnership interest along with the rights to the unit at 316 Dean Street to Mr. Hyde and Ms. Brant, and it is that interest and ownership rights that were assigned to Ms. Koch and remain in her control (see also Resp. Ex. P). -19- out the unit, with Mr. Dillenberger’s consent, which she has done. She keeps any and all rents collected for her sublet. She continues to collect rent from Z-Graphik and she is obligated under the partnership agreement for all necessary repairs and renovation to the unit space, and, as part of the partnership, for all repairs and renovations necessary to the common areas (Resp. Exs. C and P).4 Indeed, Ms. Koch put a new roof on 316 Dean Street. Mr. Dillenberger noted that Mr. Hyde before had done a fair amount of construction in the unit, and that petitioner has never removed any fixtures. Respondent Conley testified that he believed that Mr. Hyde’s unit was at one time, and may still be, residentially occupied by a man named “Mr. Zimmerman.” According to respondent, he has spoken with Mr. Zimmerman on at least one occasion and has seen his mail on the common stairway. He also testified that he has seen Mr. Zimmerman carrying groceries and a briefcase into the building and has seen him in area stores (Tr. 783-84). Mr. Dillenberger, who is in the complex of buildings regularly because of offices he maintains there, testified that he has never observed anyone residing in Mr. Hyde’s unit since the latter left in 1992. He has never inspected the unit because it has always belonged to a partner, first to Mr. Hyde and then to Ms. Koch. He accepted Ms. Koch’s representations at the time he filed the abandonment application that no one was residing in the unit and that it was occupied by no one other than Z-Graphik. Petitioner seeks a determination that Mr. Hyde “abandoned” the third floor unit of 316 Dean Street. Clearly, however, Mr. Hyde did not abandon this unit within the meaning of the Loft Board’s rules. The evidence established that Mr. Hyde did not voluntarily relinquish possession of the unit along with “all rights relating to [the] unit with the intention of never resuming possession of or reclaiming the rights surrendered.” 29 RCNY § 2-10(f)(2). Instead, Mr. Hyde, the declared protected occupant, entered into a transaction with Elizabeth Koch in which he assigned his partnership rights in EPDI and his concomitant ownership rights in the unit, for value (Pet. Ex. 6). The assignment was conducted with the knowledge and written consent of petitioner.5
4 Although the Loft Board was aware during the coverage proceeding of Mr. Hyde’s 18% ownership of EPDI and nevertheless granted him protected occupant status, it would seem that he was in reality an owner-occupant not entitled to such status. See First Edition Composite, Inc. v. Wilkson, 177 A.D.2d 297, 575 N.Y.S.2d 870 (1st Dep’t 1991); Matter of Domingo, Loft Bd. Order No. 2453 (Dec. 13, 1999), aff’d sub nom. Domingo v. NYC Loft Bd., Sup. Ct. N.Y.Co. Index No. 107058/00 (May 1, 2000); Matter of 70 West 38th Street Co., Loft Bd. Order No. 2533 (June 29, 2000); Matter of 115 West 28th Street Corp., Loft Bd. Order No. 2335 (Nov. 24, 1998). 5 One of the criteria to be considered in determining whether a unit was abandoned is whether the vacating tenant -20-
Not only were the rights in this unit transferred as part of an orderly transaction in which petitioner was involved, but at no time has petitioner even suffered a break in rental payments. Under the terms of the partnership agreement, Mr. Hyde, as a partner, obtained a 50-year proprietary lease in his unit, in exchange for which he was obligated to pay a certain monthly rent to EPDI for use and occupancy of the space (Resp. Ex. C, para. 19). Mr. Hyde paid rent while living in the unit and continued to pay that rent under the partnership agreement even after he moved out in 1992, and until he assigned his partnership rights to Ms. Koch in 1995. At that time, she assumed the obligation which she has apparently continued to honor. Both she and Mr. Hyde collected rents from their sublessee, Z-Graphik, as they were so entitled under the agreement. At all times, therefore, this unit was controlled by an owner and occupied either by an owner or a commercial sublessee without a break in rent. In short, neither Mr. Hyde, nor his assignee, his wife Ms. Koch, surrendered their rights in the unit and instead Ms. Koch still retains an unqualified right to reside in the unit. Respondent Conley’s testimony that the unit was at one time, and may still be, residentially occupied by a “Mr. Zimmerman” was so vague, sparse and inconclusive that it merits no credit. As discussed further below, respondent has rarely been in the building over the last ten years and has not been in Mr. Hyde’s units for many years. When pressed on cross- examination, he had only a vague recollection of meeting “Mr. Zimmerman” once in passing and having a momentary social conversation with him. He could not provide details or dates for his sightings of Mr. Zimmerman in the neighborhood, nor would he be expected to after so many years and under the circumstances. Mr. Hyde and Ms. Koch were in the best position to know who was in their unit, and their affidavits reliably reflect that the only occupant since Mr. Hyde’s departure has been Z-Graphik, and I so find. The circumstances presented by the evidence with respect to this unit simply do not reflect an “abandonment” as that term is contemplated under Loft Board rules. Thus, petitioner’s abandonment application for the third floor unit at 316 Dean Street, which remains in the control of one of its partners who acquired the rights by assignment from the declared protected occupant, must be denied.
Third Floor Unit at 314 Dean Street – Respondent Conley’s Unit ought permission to sublet the unit. 29 RCNY § 2-10(f)(3)(iv). -21-
The primary unit in contention is the third floor unit at 314 Dean Street, the protected occupant of which is respondent Conley, as declared by the Loft Board in 1987. Respondent Conley testified that he first arrived in the building and entered into a lease to rent the unit in 1979 (Pet. Ex. 10). In 1985, Mr. Dillenberger offered respondent the opportunity to become a partner in EPDI (see Resp. Ex. P; Tr. 256). Respondent testified that he understood this offer to be an attempt to “co-op” the building. He requested certain changes to the partnership agreement that were not made (Tr. 712). After refusing to sign, respondent was served with an eviction notice (Resp. Ex. II; Tr. 709). At that point, he filed for coverage with the Loft Board. Mr. Dillenberger confirmed that it was after the partnership offer that respondent filed a coverage application with the Loft Board (Tr. 258). Respondent testified that he spoke with Mr. Hyde about the Loft Law but Mr. Hyde stated that he and Mr. Dillenberger felt that the law was “toothless” and would not protect respondent (Tr. 715). Petitioner and respondent presented two very different accounts of what has happened to the unit since the Loft Board’s coverage order. While petitioner alleges that respondent has voluntarily vacated, respondent contends that petitioner has rendered the loft uninhabitable by turning off the water and failing to repair large holes in the windows and ceiling, forcing him to live elsewhere. Respondent Conley testified that petitioner cut off water service to his unit in 1991, although he presented no independent evidence of such. He stated that at this time there were not any problems with the pipes and that he was not given any notice that the water would be turned off (Tr. 719). In a June 24, 1994 letter to petitioner, respondent wrote to Mr. Dillenberger and noted that he had repeatedly informed petitioner that his unit did not have water and in the absence of any response, he had turned to the Loft Board for help (Resp. Ex. J). Also in that letter, he detailed other significant problems with the unit, specifically: ten broken window panes in the front window, a deteriorating cornice over the front window, water damage from roof leaks, several faucets that would not turn off when water service was operational, the toilet bowl was cracked and leaking, and access to his front door was blocked by debris (Resp. Ex. J). A copy of the letter was also sent to the Loft Board on June 29, 1994 (Resp. Ex. X). Respondent Conley testified that since 1991, his unit has only had water for approximately two months and that petitioner has never given him any notice as to when the water would be shut off or when it will be running (Tr. 1058-59). On June 15, 1994, petitioner -22- was issued a violation by the Loft Board because water was not being provided to respondent’s unit (Resp. Ex. M). Mr. Dillenberger initially testified that he cut off water to the unit in 1995, after pipes in the unit froze and burst causing flooding, because respondent failed to heat the unit (Tr. 160). Much later in the proceeding, Mr. Dillenberger amended his testimony, and recalled that the pipes also froze and burst in 1993 and that he also cut off water service at that time, but subsequently restored it upon an order from the Loft Board (Tr. 1136). A hearing was held by the Loft Board on July 29, 1994 and January 26, 1995 concerning the lack of water service to respondent’s apartment (Resp. Ex. NN). At this hearing, Mr. Dillenberger testified that he cut off water service to respondent’s unit in December of 1993 because the pipes had frozen due to respondent Conley’s failure to properly heat the unit. A Loft Board inspector testified that he had inspected the unit twice in June of 1994 and that the water was not running either time. The inspector testified that respondent let him into the unit on both occasions. Petitioner was fined $100 and ordered to restore water service (Resp. Ex. NN). On September 29, 1994, respondent sent petitioner a letter stating that representatives from the gas company had come to connect hot water for the unit and had been refused access to the basement three separate times (Resp. Ex. K). Mr. Dillenberger denied that the gas company was ever refused access to the building and stated that the gas meters are in an unlocked room (Tr. 1178). However, he did acknowledge that the gas company would need to be admitted to the building, which was kept locked (Tr. 1184). A photograph taken by respondent in 1995 shows that there is running water coming out of a kitchen faucet (Pet. Ex. 23). Respondent explained that the water would work intermittently, but was not consistently running. On February 21, 1996, respondent Conley wrote a letter to the Loft Board complaining about conditions in his unit. Along with the letter, respondent enclosed pictures showing that there was a hole in the roof which allowed water to enter the loft, a broken toilet, and three large holes in the windows (Pet. Ex. 20). He also stated that he had previously shown these conditions to two Loft Board inspectors (Pet. Ex. 20). In addition to the lack of water service, respondent testified to other problems with the unit since 1991 (Tr. 720-21). There were approximately twenty-five holes in the window panes and the structure above the front window was deteriorating, preventing any insulation or curtains -23- from being hung. Photographs taken by respondent in October of 1995 show large holes in the window panes (Resp. Exs. R1-R3). Respondent also testified that there were holes in the ceiling allowing water to enter the unit from the roof; and that because of these holes in the roof, the loft can not be adequately heated in winter or cooled in summer (Tr. 785). The faucets in the bathroom do not work and the toilet has been broken since early 1990s (Tr. 750). Respondent testified that he has not had a secure mailbox since the early 1980s (Tr. 746). Aside from repairing the broken window panes some time after 1994, which respondent testified have been broken again (Tr. 1054), none of these conditions have been fixed (Tr. 721). Petitioner does not maintain records of repair work done to the building, but Mr. Dillenberger stated during the mid-1990s he repaired broken windows in respondent’s unit and the roof (Resp. Ex. E; Tr. 163, 546). In a Loft Board registration renewal application dated August 2004, the statement that the owner of the building “is maintaining and will continue to maintain all minimum housing standards required by the Loft Board rules” is crossed out (Pet. Ex. 2). Mr. Dillenberger testified that he did not think it was necessary in the circumstances, with respondent Conley gone and no other residential tenants in the building, to provide such services. In addition to writing letters to the Loft Board about conditions in his unit, respondent Conley testified that he also called the Loft Board many times (Tr. 758). Respondent testified that after the water was turned off, he felt that he had no choice but to leave the apartment and he moved into his mother’s house in Westport, Connecticut (Tr. 775). He initially returned to the loft every day for several months and then decreased his visits to weekly for several years (Tr. 776). When he realized the water was not going to be turned back on, he came back to the loft less frequently, limiting the visits to every other month or so (Tr. 776). He testified that he eventually turned the gas and telephone services off because he could not live in the unit without running water and needed to save money (Tr. 777). Respondent testified that the manner in which he terminated his telephone and electrical services was to simply stopping paying his bills at some point (Tr. 931). He attempted to have the gas turned on but petitioner would not let the employees of the gas company into the building (Tr. 933). Mr. Dillenberger stated he has not seen respondent Conley in the building since the early 1990s (Tr. 124). When he entered the unit to fix what he described as flooding from frozen pipes in 1995, Mr. Dillenberger testified that he saw piles of garbage, some furniture, and that the toilet -24- bowl was broken and the water inside had frozen (Tr. 132). It is undisputed that respondent stopped paying rent in December of 1995 (Tr. 159; 459). Mr. Dillenberger testified that, in an effort to learn respondent’s current address, in 1998 he mailed respondent a certified envelope requesting a forwarding address from the post office (Tr. 149). The envelope contained a blank piece of paper (Pet. Ex. 13; Tr. 496). Although respondent’s address is 314 Dean Street, the envelope was mailed to 316 Dean Street. Mr. Dillenberger testified that 314 and 316 Dean Street share the same entrance (Tr. 483). When asked if respondent had a post office box, Mr. Dillenberger said he did not believe so (Tr. 486). In 1995, petitioner’s attorney subpoenaed the records for respondent’s unit from Brooklyn Union Gas Company and these records listed respondent’s post office box as the billing address (Tr. 487; Resp. Ex. G). In another effort to locate respondent, Mr. Dillenberger testified that he called the phone number on record for respondent and was advised by the phone company that the number had been assigned to someone else (Tr. 152). In September of 2002, petitioner hired a private investigator to locate respondent and discovered that he was living in Westport, Connecticut (Tr. 166, 587). After the initial default abandonment finding in 2002, petitioner commenced an action to evict respondent for non-payment of rent (Resp. Ex. H). In the non-payment proceeding, petitioner asserted that respondent was the commercial tenant of the premises and was in possession of the premises (Resp. Ex. H). A representative from Consolidated Edison testified about electrical service to respondent’s unit. According to Consolidated Edison’s records, respondent opened an account for the unit in November of 1980 and it was closed because of non-payment in February of 1998 (Tr. 414). Respondent’s billing address for this account was a post office box. The records reveal low levels of electrical use. Respondent last paid an electric bill for this unit in February of 1997. A representative from respondent’s car insurance company, Geico, was subpoenaed by petitioner. According to Geico’s records, respondent’s car was registered in New York but kept at a Connecticut address (Tr. 634). In August of 1996, Geico records indicate that respondent requested Geico send mail to him at the Connecticut address (Tr. 637). Respondent testified that he never requested Geico send his policy information to the Connecticut address but that their corporate offices changed the address without his knowledge and he requested that they change it -25- back to the Brooklyn address (Tr. 782). Geico’s records confirm that respondent called the company to inform them that his mailing address was a post office box in Brooklyn and that he resided in Brooklyn (Tr. 638). According to telephone company records, respondent had a phone line installed in October of 1995, which he closed in January of 1998 (Tr. 437-38). Respondent testified that he has not moved his possessions out of the loft or told petitioner that he planned to vacate (Tr. 708-09). He provided photographs taken in May of 2002 that show furniture and his belongings still in the unit (Resp. Ex. S2-S5). Respondent testified he keeps many of his possessions in the loft, including his files, books, artwork, silverware, wall hangings, blankets, and furniture (Tr. 1081). On his tax returns from 1990-95 and 1997-2003, respondent gives as his mailing address a post office box in Brooklyn and lists the Dean Street address as his permanent address (Resp. Ex. CC). Respondent’s bank statements are mailed to a post office box in Brooklyn (Resp. Ex. DD), and he has a New York State driver’s license that lists 314 Dean Street as his address (Resp. Ex. EE). He is also registered to vote in Brooklyn, although he has not voted in recent years (Resp. Ex. FF). As noted, petitioner alleges that respondent Conley voluntarily left the unit in 1991 and that he has never returned to live, but resides instead in Connecticut. Respondent Conley alleges that he only left his unit because he was forced out or “constructively evicted” by the landlord, who shut off the water in 1991 and has continuously refused since to make necessary repairs or to make the unit habitable. Respondent Conley acknowledged that he has lived for years in his mother’s house, first in Westport, Connecticut, and more recently in Stratford, Connecticut, but only because he has been prevented by conditions in his loft from returning to live there. Neither witness was particularly reliable or credible in their accounts. Both were often reticent with answers, vague in their recollections, apt to spin facts to fit their own versions, and at times even impeached on significant points. Trying to unravel the history of respondent Conley’s loft unit was further complicated by the length of time covered by the testimony in this proceeding, with the alleged abandonment dating back to some fifteen years ago.6 Much of the evidence presented by petitioner focused on attempting to establish not only 6 The problems presented by the filing of an abandonment proceeding so many years after the alleged abandonment occurred should not recur in the future in light of a recent amendment to the Loft Board’s rules which places a one- year statute of limitations on the filing of abandonment applications. See 29 RCNY § 2-10(f)(3), as amended (Oct. 8, 2006). -26- that respondent Conley voluntarily left the unit in 1991, never to return, but that he has taken up permanent residence in Connecticut since at least the mid-1990s. Evidence indicates that he has been employed in Connecticut at various times since 1996, although only part time since 2000, that he pays a cable bill there, kept his car garaged there and had it rated for insurance purposes there from 1996 through 2003, allowed his mother to claim him as an exemption on her Connecticut income tax returns from 1998 to 2003, and has at times had a Connecticut phone number and a Connecticut address on his letterhead. Petitioner also tried to show a lack of significant ties to his loft in Brooklyn, including the undisputed facts that respondent’s gas account was turned off in 1992 for non-payment, and that his phone service and electricity were terminated in 1998 for nonpayment. Ultimately, petitioner’s efforts proved to be somewhat misdirected since the issue here is not whether respondent has his primary residence elsewhere, but whether he has voluntarily abandoned possession and all rights to his loft unit. Respondent Conley does not dispute much of this evidence but claimed that he has never voluntarily relinquished his rights to his loft unit and that to the extent he resides in Connecticut, it is because he was constructively evicted by the landlord. Petitioner argued that as a matter of law, respondent cannot maintain a constructive eviction defense without conceding his abandonment of the unit. See Barash v. Pennsylvania Real Estate Corp., 26 N.Y.2d 77, 83, 308 N.Y.S.2d 649, 653 (1970) (tenant is constructively evicted where “the landlord’s wrongful acts substantially and materially deprive the tenant of the beneficial use and enjoyment of the premises. The tenant, however, must abandon possession in order to claim that there was constructive eviction”). Respondent Conley effectively conceded that he has abandoned possession to the extent that he no longer lives in the unit, although he continues to visit the premises and has left his possessions there. Indeed, he testified that he has not slept overnight in the unit since probably 1998, when the electric service was terminated. The abandonment that he concedes, however, is a surrender of his daily physical occupation of the unit, as would be required to assert a constructive eviction defense in a non-payment proceeding, but it is not the “voluntary relinquishment” of his possession and rights as is required for a determination of abandonment within the meaning of the Loft Board rules. Thus, respondent Conley may properly assert a constructive eviction defense to petitioner’s abandonment application regarding his unit without conceding the ultimate point in issue. See Matter of Owen, OATH Index No. 585/97 (Dec. 6, -27-
1996), aff’d, Loft Bd. Order No. 2062 (Jan. 30, 1997). Nor is he precluded by any statute of limitations from asserting this defense as argue by petitioner. The six-year statute of limitations on asserting such defense set forth in CPLR § 213 is not applicable to a Loft Board proceeding. Nor should it be where until a recent amendment, there has been no statute of limitations on the time within which an owner may file an abandonment proceeding. Nor does the fact that respondent failed to aggressively pursue other remedies, such as the filing of a diminution or harassment application, undercut his defense or establish an abandonment. There is no question that the lack of water service since at least 1993 (with the exception of a period of a few months in 1995 when it was turned back on at the direction of the Loft Board) has rendered the unit uninhabitable. Other fundamental problems with the unit which have essentially gone unaddressed by petitioner and which add to the uninhabitable condition of the unit include holes in the roof that allow for rain and cold to come in, broken windows on the Dean Street side, and a broken toilet. Pictures taken of the unit over the intervening years have documented a serious need for repairs and deleterious conditions which have remained unremedied. Mr. Dillenberger does not dispute that he turned off the water or that certain fundamental repairs are needed in the unit which he has not performed. The main difference between his account and respondent’s is as to who is to be blamed for these conditions. Mr. Dillenberger maintained that he last saw respondent Conley in or around the building in 1991 and that it was respondent Conley’s failure to keep his unit properly heated, as he was required to do under the lease provisions, that led to pipes bursting in late 1993 and forced Mr. Dillenberger to shut off the water to protect his property. Respondent Conley maintained that Mr. Dillenberger shut off the water at least two years earlier, in the fall of 1991, with no warning or notice and for no stated reason. Respondent explained that he often shut off the gas for the Dynavent wall heaters, which was his source of heat in the unit, in the non-winter months to save money. In the fall of 1991, after the water was turned off and he could not get Mr. Dillenberger to turn it back on, he stopped paying on his gas heater account to save money and allowed it to be terminated for nonpayment in April 1992, as reflected by Brooklyn Union Gas records. Like the philosophical question about the chicken and egg, it is hard to know now which came first – whether, as respondent Conley claims, the water was shut off and he then stopped paying to heat the unit or that he stopped properly heating the unit, which led the pipes to freeze and burst and caused Mr. Dillenberger to shut off the water in response. There was no -28- independent proof presented to support either account and neither principal proved to be wholly reliable in his recall. Ultimately, however, it does not matter. As the Loft Board ruled in the 1995 enforcement proceeding brought against petitioner for failing to provide water to respondent Conley’s loft in accordance with minimum housing standards, capping the water to the unit may have been an appropriate emergency measure for Mr. Dillenberger to protect his property, but was not permitted to be a permanent condition. Mr. Dillenberger was obligated to pursue other remedies if he was concerned that respondent Conley was not complying with his lease provisions, had abandoned the unit, or was otherwise interfering with the owner’s obligation to provide water, but he could not continue to withhold such a basic service as water. Moreover, the Board ruled that Mr. Dillenberger was mistaken in his belief that it was the tenant’s obligation to correct conditions that may have led to the water being shut off. Rather, it was the landlord’s affirmative obligation to comply with minimum housing standards, the first of which requires an owner to provide and maintain a sufficient supply of water. 29 RCNY § 2- 04(b)(1). As a result of the enforcement proceeding, petitioner was fined $100 and ordered to turn on the water again, which Mr. Dillenberger apparently did. Yet, before the year was out, according to him, the pipes froze and burst again and despite the prior enforcement proceeding ruling, he took the same course of action, capping the water to the unit and leaving it in that state without taking any further action against respondent. The water has remained off to the present. To take such action without pursuing other remedies or attempting to restore water service to the unit, was another violation of the minimum housing standards and was sufficient to constitute a constructive eviction of respondent Conley from the unit and defeat the abandonment application, regardless of how passive respondent Conley might have been in response. See Johnson v. Cabrera, 246 A.D.2d 578, 668 N.Y.S.2d 45 (2d Dep’t 1998) (finding tenant had been constructively evicted where deprived of heat and water for two months); Matter of Owen, OATH Index No. 585/97 (Dec. 6, 1996), aff’d, Loft Bd. Order No. 2062 (Jan. 30, 1997) (no abandonment where tenants forced out by fire which rendered premises uninhabitable and landlord failed to make repairs or permit tenants access). Indeed, in considering the criteria for determining abandonment under the Loft Board’s rules, it is abundantly clear that respondent Conley cannot be said to have voluntarily relinquished possession of the unit and the rights related thereto. While he has given up -29- occupancy, I find, as noted above, that he was constructively evicted by the landlord’s failure to provide water, in combination with the landlord’s failure to repair damage to the roof and windows. The evidence further established that he has kept a continuous physical presence in the Loft even after the water was turned off, by visiting periodically and retaining his possessions there, including furniture, art work, clothing, kitchen appliances, utensils, books, electrical equipment and other personal property, as demonstrated by the various photographs submitted into evidence. He has also maintained significant indicia of residence at the loft and/or at his corresponding Brooklyn post office box address. Thus, he has maintained a New York driver’s license with the 314 Dean Street address; he had his car registered at his New York address through 2003, when he got rid of it; he filed all his income tax returns from his New York address and received his W-2 forms there; his voter registration is at his New York address; and, he maintains a banking account at his New York address (Resp. Exs. CC, DD, EE, GG, HH, JJ). Perhaps the most telling refutation of petitioner’s claim that respondent Conley abandoned his loft unit in 1991, was the fact that he paid rent regularly through 1995. He did so despite Mr. Dillenberger’s failure to register the unit as ordered by the Loft Board and failure to take any steps to attempt to legalize the building and unit for residential use, which failure could have served as a defense in a nonpayment proceeding. It was only after Mr. Dillenberger turned the water off a second time and refused to restore it, that respondent Conley stopped paying rent. No rent was due the owner at the time of respondent Conley’s forced departure, nor had any attempt been made by petitioner to purchase respondent’s fixtures or rights to the unit. Although no harassment proceedings have been filed against petitioner, there was at least one violation of the minimum housing standards sustained against him, as noted above, for not providing water service to the very unit at issue (Resp. Exs. M and NN). Nor did respondent Conley ever indicate to petitioner that he intended to vacate the unit or surrender his rights. Indeed, his conduct has demonstrated an opposite intent – a continued willingness to fight since 1985, albeit a fight that has apparently ebbed and flowed at times, to assert his rights in the unit. Thus, respondent defended against petitioner’s attempt to evict him 1985; filed a coverage application which resulted in a determination in his favor in 1987; wrote letters of complaint to Mr. Dillenberger when his water was shut off and about conditions in the unit; complained to the Loft Board and offered access to a loft board inspector at least twice to inspect the unit in connection with the water shut off; sent a letter to the Board in February 1996 -30- along with photos of the conditions in the loft; legally intervened in petitioner’s appeals of the Loft Board’s coverage order; defended against a “commercial” nonpayment action in 2002; undertook the expense of an ultimately successful appeal of the original default abandonment proceeding when he learned of it that same year, which helped uncover the landlord’s deliberate failure to register the units at issue; and posted a $10,000 security, as forced by the landlord in litigation, to pursue his legal rights in this proceeding. Respondent’s counsel correctly observed in his brief that most abandonment proceedings, for obvious reasons, are conducted as default hearings. Indeed, respondent Conley’s very appearance in this proceeding and vigorous defense of his rights militates against a finding that he voluntarily relinquished those rights. In sum, petitioner failed to meet its burden of proving respondent Conley’s abandonment of his unit. Petitioner’s application for an abandonment determination for the third floor unit at 314 Dean Street should be denied.
RECOMMENDATION I recommend that petitioner’s abandonment applications with respect to the first and second floor units at 314 Dean Street and the second and third floor units at 320 Dean Street be granted. Petitioner must comply with the Loft Board Rules § 2-10(c)(1)(ii) to properly convert the units to commercial use. I further recommend that petitioner’s abandonment applications with respect to the third floor units at 314 and 316 Dean Street be denied.
Raymond Kramer Administrative Law Judge January 3, 2007
SUBMITTED TO:
DIANNE E. DIXON Executive Director
APPEARANCES: -31-
LAW OFFICE OF ROBERT MILETSKY BORAH, GOLDSTEIN, ALTSCHULER, SCHWARTZ & NAHINS Attorneys for Petitioner BY: ROBERT MILETSKY, ESQ. DAVID R. BRODY, ESQ.
WARSHAW, BURSTEIN, COHEN, SCHLESINGER, & KUH LLC Attorneys for Respondent BY: BRUCE H. WIENER, ESQ.