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Matter of 400 South 2 Street Tenants

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Matter of 400 South 2 Street Tenants Matter of 400 South 2nd Street Tenants OATH Index No. 1018/16 (Sept. 7, 2018), adopted in part, rejected in part, Loft Bd. Order No. 4860 (Mar. 21, 2019), reconsideration denied, Loft Bd. Order No. 4904 (Oct. 17, 2019) & Loft Bd. Order No. 4974 (May 21, 2020), appended [Loft Bd. Dkt. No. TR-1269; 394-400 South 2nd Street, Brooklyn, N.Y.] Loft tenants sought coverage and protected occupancy of Brooklyn building. Testimony and documentation established residential occupancy and coverage of eight of ten units and protected occupancy for the current occupants of the covered units. The evidence did not support a finding that the remaining two units are entitled to coverage or the current occupants entitled to protected occupancy. Loft Board adopts all of ALJ’s findings except it disagrees that when assessing primary residency, one should look to the applicant’s status at the time the application was filed. Instead, the Board ruled that the entire administrative record must be considered when assessing primary residency. ______________________________________________________ NEW YORK CITY OFFICE OF ADMINISTRATIVE TRIALS AND HEARINGS In the Matter of 400 SOUTH 2ND STREET TENANTS, Petitioners ______________________________________________________ REPORT AND RECOMMENDATION SUSAN J. POGODA, Administrative Law Judge Petitioners Natalie South, Bryan Andrew Small, Jared Cohen, Kirsten Russell, Katalin Junek, John Marc Peckham, Scott Matthew, C. Anderson Miller, Koppel Verma, Mentor and Julie Noci, Ayca Koseogullari and Adam Baer filed coverage and protected occupancy applications on July 6 and 10, 2015, and August 14, 2016, pursuant to Article 7-C, section 281 of the Multiple Dwelling Law (“Loft Law” or “Article 7C of the MDL” or “MDL”) and title 29 of the Rules of the City of New York (“RCNY” or “Loft Board Rules”) ( ALJ Exs. 1, 2). Petitioners seek a finding that the buildings located at 394-400 South 2nd Street Brooklyn, New York (“the Building”), are an interim multiple dwelling (“IMD”), that the applicants - 2 - residentially occupied their second, third, and fourth floor units respectively during the applicable window period, and that they are the protected occupants of these units. Respondent, 400 South 2nd Street Holdings, L.P., the owner of the Building, opposes the applications (ALJ Exs. 1, 2). The Loft Board referred the matter to this tribunal on November 15, 2015, and the parties engaged in a number of settlement conferences and extensive discovery (See 29 RCNY § 1-06(j)(2)(ii) (Lexis 2018). An eight-day trial was held during which the parties presented the testimony of 24 witnesses and offered documentary evidence. For the reasons below, I find that the Building is an IMD and units 204, 205, 301, 302, 304, 402, 403, and 406 are covered by the Loft Law. I further find that petitioners are the protected occupants of the above respective units. PROCEDURAL HISTORY On July 6 and 10, 2015, 11 of the above named petitioners filed a coverage and protected occupancy application with the Loft Board for 9 units in the Building. On August 14, 2015 the owner filed an answer, asserting a general denial and alleging that the applicants do not qualify for protection. On July 20, 2016, on consent, applicants filed a second amended application adding two additional applicants and units (ALJ Exs. 1, 2). On August 16, 2016, the owner filed an answer to the second amended application asserting among other defenses, that the applicants claiming coverage are not the prime lessees of their units (ALJ Ex. 2). On January 27, 2017, applicant Miller withdrew his claim for coverage and protected occupancy with prejudice (ALJ Ex. 4). The trial proceeded with petitioners asserting coverage and protection of the following 10 units and 12 individuals: Unit 204 (Ms. South) Unit 205 (Mr. Small and Mr. Cohen) Unit 301 (Ms. Russell) Unit 302 (Mr. and Ms. Noci) Unit 303 (Ms. Junek) Unit 304 (Mr. Peckham) Unit 402 (Mr. Baer) Unit 403 (Mr. Matthew) Unit 405 (Mr. Verma) Unit 406 (Ms. Koseogullari) - 3 - ANALYSIS The premises are two buildings designated as 394-400 South 2nd Street located on adjacent lots in Brooklyn, and were erected around 1900. One building is four stories while the larger adjacent building is five stories. Neither building has a certificate of occupancy. From 1999 to 2015, the buildings were owned under one deed by 4 Zero S. 2nd St. Corp., whose principal was Isaac Dahan (Resp. Ex. D). The current owner, 400 South 2nd Street Holdings, L.P., purchased the buildings in 2015 and again the buildings were conveyed in a single deed (Pet. Exs. 1, 2; Resp. Ex. C; Tr. 1233). The principals of 400 South 2nd Street Holdings, L.P. are Mr. Strulovitch and Mr. Perlmutter (Tr. 1243-45). The Building was occupied as a factory prior to 1999. According to one witness, in the early 1990’s the second floor was leased by a Chinese garment manufacturer (Thomas: Tr. 1159). Beginning around 2000, various floors in the Building were converted into rental apartments. Jeanine Gerding testified that she leased the entire fourth floor at the Building from 1999 to May 2015 from Mr. Dahan (Tr. 364). After taking the lease, she, Chuck Thomas and David Dubois intended to convert that open factory space into seven apartments (Tr. 365). Mr. Thomas testified that, at the suggestion of Ms. Gerding, he and Mr. Dubois agreed to lease various floors from the owner and build apartments to rent (Tr. 1155). They initially built seven residential lofts on the fourth floor with kitchens and bathrooms (Tr. 1156-57). Mr. Thomas, himself, lived in unit 407 beginning in 2001 (Tr. 1158). Mr. Dubois took the lease for the second floor in 2001 and built five residential units with kitchens and bathrooms (Tr. 1159-61). In 2004, Mr. Thomas helped Mr. Dahan build six residential units on the third floor (Tr. 1162-63). Sometime later, residential units were also built on the fifth floor (Thomas: Tr. 1164). Mr. Thomas indicated that the residential tenants would contact him, Ms. Gerding, or Mr. Dubois if any repairs were needed (Tr. 1166). Ms. Gerding and Mr. Thomas also paid the utilities and billed the tenants for their share of the utility bills (Tr. 1168-69). Repairs to the roof and exterior of the Building were handled by Mr. Dahan (Tr. 1167). On September 10, 2009, the Department of Buildings (“DOB”) issued a vacate order for the Building due to fire and safety violations and all of the tenants were forced to leave the Building. The violations included the absence of secondary means of egress and fireproof doors and the use of open-flame heaters (Thomas: Tr. 1174). Following the issuance of the vacate order, Ms. Gerding, Mr. Dubois, and Mr. Thomas installed forced air heaters and metal doors - 4 - and Mr. Dahan built a fire escape (Tr. 1174, 1208-09). The tenants were not allowed to return to the Building until November 9, 2009 (Seiler: Tr. 23-24; Russell: Tr. 145; Thomas: Tr. 1173). The 2010 amendments to the Loft Law define “interim multiple dwelling” as a building that: (1) at any time was occupied for commercial purposes; (2) lacks a certificate of occupancy pursuant to section 301 of this chapter; (3) is not owned by a municipality; and (4) was occupied for residential purposes by three or more families living independently from one another for a period of twelve consecutive months during the period commencing January 1, 2008, and ending December 31, 2009 (“window period”), provided that the unit (i) is not located in a basement and has at least one entrance that does not require passage through another unit to obtain access to the unit, (ii) has at least one window opening onto a street or yard, and (iii) is at least 400 square feet in area. MDL § 281(5) (Lexis 2018). Prior to the trial, the parties stipulated that all of the foregoing requirements, with the exception of proof of residential occupancy by the applicants, were met (ALJ Ex. 4). Unit 204 Jordan Seiler testified that he lived in unit 204 from 2003 to 2014. He signed a lease with either Mr. Thomas or Mr. Dubois, who he understood to be the landlord (Tr. 21, 47). Mr. Thomas confirmed that Mr. Dubois entered into a residential lease with Mr. Seiler in 2003 (Tr. 1185-87). The rent was paid by check to Mr. Dubois and the utilities to Mr. Thomas (Tr. 22, 45- 46). When Mr. Seiler moved in, the unit had a bathroom with a tub, shower, sink and toilet. He built two bedrooms and a storage room/bedroom. The kitchen had a sink, stove, refrigerator and some shelving. The unit remained unchanged until he moved out in late 2014 or early 2015 (Tr. 20). Natalie South testified she moved into unit 204 after relocating from Texas to New York in July 2004. According to Ms. South, in July 2004 the unit consisted of a kitchen with a sink, stove, refrigerator and shelving, a common area with sofas and a dining table and a bathroom with a sink, toilet and bath/shower. There were three bedrooms furnished with beds and dressers (Tr. 743). During the eleven years she has lived in the unit she occupied different bedrooms. Only two of three bedrooms are currently occupied (Tr. 745). - 5 - Ms. South and Mr. Seiler both testified that the rent was split among the roommates and paid by check, money order or cash and paid to Mr. Dubois (Seiler: Tr. 23; South: Tr. 745-46). Neither Ms. South nor her roommates ever had electricity or gas accounts in their names. Mr. Thomas left a note on the unit door with the amount for the electric and gas owed and they paid him (Tr.
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