ORPER NEW YORK CITY LOFT BOARD Loft Board Order No.: 4688 TENANTS OF 79 LORIMER STREET Docket No. TR-1273 RE: 79 Lorimer Street Brooklyn, New York IMD No.: None ORDER The New York City Loft Board ("Loft Board") accepts in part and rejects in part the Report and Recommendation of Administrative Law Judge Astrid B. Gloade dated March 23, 2017 ("Report"). BACKGROUNp On November 7,2014, the New York City Department of Buildings ("DOB") issued a vacate order for 79 Lorimer Street, Brooklyn, New York ("Building"). That order remains in effect. On August 4, 2015, the following tenants (collectively "Applicants") filed an application seeking Article 7-C coverage for their respective units ("Units") and protected occupant status pursuant to § 281(5) of the Multiple Dwelling Law ("MDL"): Applicant Unit Aaron Scaturro, Toshio Masuda, Bryce Hackford and Travis McDemus Second floor Shad rack Lindo and Katherine Carothers 4B on the Fourth floor Arthur Purvis, Josh Steinbauer, and Peter Pearson Sixth floor The Loft Board transferred the application to the Office of Administrative Trial and Hearings ("OATH"), which assigned the matter to Administrative Law Judge Astrid B. Gloade for adjudication. On February 12, 2016, FJH Realty, Inc. ("Owner"), owner of the Building, filed an answer. Prior to the commencement of the hearing, Applicants and Owner stipulated that the Units and the Building met most of the eligibility and other relevant facts. SpeCifically, • The Units are at least 400 sq. ft. in size and have an entrance that does not require passage through another residential unit; • The Units are not located in a basement or cellar; • Each unit contains at least one window that opens onto a street or a lawful yard or court; • The Building was formerly used for commercial or manufacturing purposes; • The Building lacked a certificate of occupancy pursuant to MDL § 301; • Applicants Scaturro, Purvis, and Lindo are the prime lessees ofthe second and sixth floor units and unit 4B, on the fourth floor, respectively; and • Applicant McDemus did not occupy the second floor unit prior to the effective date of the law. In Owner's Post Trial-Memorandum of Law, dated Decem ber 2, 2016, Owner further conceded that the Units were residentially occupied for twelve (12) consecutive months, between January 1, 2008 and December 31,2009 ("Window Period"), and that prime lessees Scaturro, Lindo and Purvis resided, primarily, in the Units; In the Report, Judge Gloade recommended that the Loft Board find: 1) the Building is an interim multiple dwelling ("IMD") pursuant to MDL § 281 (5) and the second and sixth floor units and unit 4B, on the fourth floor, are IMD units; 2) Aaron Scaturro, Toshio Masuda, Bryce Hackford, Shadrack Lindo, Katherine Carothers, Arthur Purvis, Josh Steinbauer, and Peter Pearson are all protected occupants of their respective units; and 3) Travis McDemus is not a protected occupant of the second floor unit. Based on the extensive testimonial and documentary evidence in the record, along with Owner's concession of residential occupancy during the Window Period, we accept Judge Gloade's finding that the Building is an IMD with one unit on the second and sixth floors and unit 4B on the fourth floor. The Loft Board further accepts the finding that Applicant McDemus is not a protected occupant, but rejects Judge Gloade's reasoning. We also reject the recommendation that the non-prime lessees: Masuda, Hackford, Carothers, Steinbauer, and Pearson are protected occupants. ANALYSIS As noted above, the parties stipulated to most of the eligibility and residency requirements and that Applicants Scaturro, Purvis, and Lindo are the only prime lessees for their respective units. The only issue before the Board is which applicants are entitled to Article 7 -C protection, namely, whether non­ prime lessees can be protected occupants when prime lessees occupy IMD units as their primary residences. Background The coverage of a unit and the protection of the occupants in that unit are two separate areas of the law governed by different sections of the Loft Law and the Loft Board's rules. In 2010, the New York State Legislature amended the Loft Law to add MDL § 281 (5) which established a new window period for coverage. The Legislature also added MDL § 282-a, a deadline for applications for units and buildings seeking Article 7-C coverage. The original deadline was March 11, 2014. Prior to the 2010 amendment, the Board's decisions on the rights of occupants to Article 7-C protection were tangential to coverage determinations of units. Essentially, when the Board found a unit covered under Article 7-C, it also found, usually summarily, that the residential occupants were entitled to Article 7-C protection. Decisions often contained little to no independent analysis of the applicable rule for protected occupant claims found in Title 29 of the Rules of the City of New York ("29 RCNY") § 2- 09(b). See, Matter of Popa, Loft Board Order No. 1586 (Sep. 13, 1994), Matter of Lagmon, Loft Board Order No. 2473 (Feb. 1, 2000), and Matter of VanDerbeek, Loft Board Order No. 2717 (Mar. 27, 2002). In both Matter of VanDerbeek, and Matter of Lagmon, the Board considered the fact that the prime lessee and the other occupant seeking protection were life partners and ultimately a family, to determ ine protected occupancy. The use of fam ilial relationships to determ ine Article 7-C protection, was not based on any part of Article 7-C or the Loft Board's rules. To the contrary, the plain language of § 2-09 precludes awarding non-prime lessees, including family members, protected occupant status if the prime lessee is seeking protection and uses the unit as his or her primary residence. After the 2010 amendment, the Loft Board made changes in its administrative processes and in its quasi-judicial functions because the statutory deadline for coverage and registration applications did not apply to determinations for protected occupancy. To avoid restricting the rights of occupants seeking protection, the Loft Board staff administratively created a separate protected occupant claim by adding it to the General Application form, while the claim for coverage remained as a separate application. In addition, the Board began to include more detailed analyses of the protected occupancy issue in its decisions. The Board adopted a more disciplined approach, adhering to the plain language of 29 RCNY § 2-09(b). This change in the Board's approach was the catalyst for a divide between interpretations of § 2-09(b) by the Loft Board and OATH. 2 The Loft Board Position MDL § 286(2) provides that "residential occupants qualified for protection ... shall be entitled to continued occupancy provided that the unit is their primary residence ... " The Loft Board's interpretation of § 2-09, is consistent with the language of the law and is within the Loft Board's powers under Article 7- C. When the Loft Board makes determinations of protected occupancy, it considers all provisions of 29 RCNY § 2-09(b). See, Matter of Migno/a, Loft Board Order No. 4509 (Apr. 21,2016). Section 2- 09{b)(1) states, "Except as otherwise provided herein, the occupant qualified for protection under Article 7-C is the residential occupant in possession of a residential unit covered as part of an IMD" [emphasis added]. Based on this language, before the Board can make a determination under § 2-09(b}(1), the Board must first consider the rule as a whole, including the provisions in (b)(2), (b)(3) and (b)(4). Furthermore, since the 2010 amendment, the Board has consistently applied § 2-09 when distinguishing the analysis for coverage from the analysis for protected occupancy. The Board has issued multiple congruent determinations where it applied a primary residence analysis for a prime lessee seeking protected occupant status, establishing primary residency as a prerequisite for protected occupancy. See, MatterofPak, Loft Board Order No. 4334 (Nov. 20, 2014), Matter of Gallo, Loft Board Order No. 4349 (Jan. 15, 2015), Matter of Schuss, Loft Board Order No. 4393 (May 21, 2015), Matter of Marriner-Smith, Loft Board Order No. 4426 (Sept. 17, 2015) and Matter of Mignola, Loft Board Order No. 4509 (Apr. 21, 2016). Pursuant to 29 RCNY § 2-09{b){4), the prime lessee is deemed the residential occupant entitled to protection under Article 7-C if the prime lessee can prove that the residential unit covered as part of an IMD is his or her primary residence. Thus, where there is a prime lessee using the unit as a primary residence, that prime lessee is the protected occupant to the exclusion of all other occupants in the same unit. See, Various Tenants of 357 Bowery, Loft Board Order No. 4350 (Jan. 15, 2015). Consequently, when a prime lessee seeks Article 7-C protection, § 2-09(b) requires a protected occupant determination for the prime lessee first, before determining whether a non-prime lessee is the protected occupant. The OATH Position In general, Judge Gloade, in representing the OATH position, holds that the Loft Board's current interpretation of § 2-09 restricts the scope of protection and runs afoul to the remedial purpose of the Loft Law. Furthermore, although Judge Gloade concedes primary residence is not at issue in this case, she questions whether primary residence analyses are required for protected occupant claims, stating that, "[ ... ] The Board's interpretation of section 2-09(b)(4) imposes the more stringent requirement of proving primary residence on prime lessees than on tenants who have never had leases, and is inconsistent with the Loft Law, case law, and the Board's own rules." See, Report at 8. Judge Gloade also claims that the Loft Board's recent decisions are contrary to holdings in prior cases where the Loft Board applied § 2- 09{b)(4) only when a prime lessee who was out of possession sought to recover possession of that unit from a current occupant.