The court observed that stipulations are not readily cast aside, particularly where all sides are represented by counsel. However, where good cause exist, the fact that attorneys were involved is not dispositive. The court found that the tenants have submitted a "compelling argument" undisputed by the landlord for setting aside the stipulation of settlement. The court held that the landlord would be rewarded were the status quo preserved, and that landlord was duty bound to register the building with the DHCR. To enforce this stipulation would work a gross injustice, according to the court, and would encourage other landlords to also evade the rent stabilization laws. The court pointed out that tenants cannot waive their rent stabilization protection, especially so where they never were told of their rights. Vacating the stipulation does no more than return the parties to the status quo, given that the landlord never had a right to evict the tenant on grounds that the tenant had no regulated status. Since the petition was false and since no proper termination notice was served in this holdover proceeding, the court not only set aside the stipulation, but dismissed the proceeding as well.

The tenant's guardian did not wait for the proceeding to come to Housing Court. Rather, the guardian went to the Supreme Court judge seeking a stay on terminating the tenancy. The Supreme Court granted the guardian's motion citing ample case law to substantiate the legal standard that a guardian has a duty to attend to the ward's living situation, and keeping the incapacitated person in the home is generally preferable. Hence, it was within the court's power to stay the termination of the tenancy based on the guardian's duty.

The court conducted a hearing regarding the condition of the apartment. The evidence established that the tenant's apartment is even more improved than when the court visited it almost a year earlier. And a home attendant comes to the apartment to monitor and clean on a regular basis. The landlord's photographs differed from the guardian's photographs. For example, the rooms were painted in the guardian's pictures, and in need of paint in the landlord's photos. The collecting activity continues, but it is reduced. The original excess of possessions, however, has been eliminated. Hence, the court concluded that the landlord failed to establish evidence of a current unreasonable accumulation of objects in the apartment on a daily or continuous basis, vermin infestation or any condition endangering life, health or safety of the ward or other tenants. The conditions simply do not establish a nuisance sufficient for eviction upon the basis set forth in the termination notice. The court therefore permanently stayed the notice of termination, and permission to sue the guardian based upon the termination's notice was denied by the court.

The subtenant informed the court that she never met or spoke with the alleged prime tenant, and that in fact, according to a letter received from a principal of the prior owner, the alleged prime tenant was a partner of the former corporate owner. The subtenant argued that since the alleged prime tenant is a "phantom," the notices and the petition (continuing to name the alleged prime tenant as a prime tenant) are all in violation of RPAPL 741 which requires a landlord to set forth the interests of the parties. In this case, the subtenant is actually the tenant, and the petition errs for not recognizing this. The landlord did not dispute the prior owner's illusory prime tenancy scheme, but rather claimed that since the subtenant was not overcharged there can be no illusory prime tenancy.

The narrow issue before the court was whether, to prove an illusory prime tenancy, there must exist an overcharge. The court noted that an illusory prime tenancy occurs when a party assumes the guise of a prime tenant, enters into a sublease and these acts have the effect of directly or indirectly evading the requirements of the rent stabilization laws. The court noted that the subtenant never met the prime tenant and that it seemed clear that the prime tenant did not occupy the apartment as his primary residency, or intend to return at the end of the sublease. The court noted that this landlord knew the occupant of the apartment was not the prime tenant, and therefore should have inquired into the alleged prime tenant's prolonged absence when this proceeding was commenced. The court held that profiteering was only one factor and not a requirement in a finding of illusory prime tenancy, and that profiteering can occur by means other than rent gouging. A rent stabilized tenancy involves more than just stabilizing the rent, it also stabilizes the tenancy itself by guaranteeing continued occupancy, which is immeasurable in value.

The court concluded that even though profiteering did not occur, there is not a good faith tenancy here. The court declared the prime tenant an illusory prime tenant and therefore the subtenant is entitled to the rent stabilized lease in her name with the identical terms and conditions as the new lease with the exception of rent which must be the legal regulated rent pursuant to rent stabilization guidelines and law. While the tenant is afforded the protection she was wrongfully denied, she should not be entitled to an impermissible windfall. The court preserved the tenant's claim for legal fees.

Landlord appealed on grounds that the lower court did not have jurisdiction to hear the Fair Market Rent Appeal. The Appellate Term rejected this argument, holding that since a tenant is entitled to bring a plenary action to enforce a Fair Market Rent Appeal adjustment order where excess rent has not been fully refunded within six months, the lower court had jurisdiction to entertain tenant's counterclaim and render judgment for the amount due. Since the amount due was not in dispute, the lower court properly rendered summary judgment in favor of the tenant. The lower court also ruled that the tenant is not entitled to attorneys fees in defense of landlord's appeal of the DHCR order in an Article 78 proceeding (and up to the Court of Appeals). The Appellate Term, however, ruled that the tenant is entitled to fees in connection with his action to enforce the order and a hearing on fees was appropriately held to that extent by the lower court.

Landlord's architect submits that it is not feasible for the landlord to obtain an amended certificate of occupancy. This is because in order for this unit to be given legal residential status, its ceiling must be a certain height but it is not possible to raise the ceiling of this cellar apartment. Hence, the landlord is required to bring an ejectment proceeding in Supreme Court based on illegal occupancy, but landlord is precluded from accepting the rent as the occupancy usage violates the Multiple Dwelling Law. The landlord did bring an ejectment action in Supreme Court. Tenant's first argument is that landlord did not serve tenant a proper termination notice as required by the rent stabilization law. But the court analyzed the common law and prior case law and ruled that a termination notice is not a prerequisite to an ejectment action in Supreme Court (although it is a requirement for a summary proceeding in Housing Court). Tenant further argues that where a tenancy is illegal, the remedy is for the landlord to cure the problem rather than evict the tenant. But landlord's architect submits that it is impossible to satisfy numerous legal requirements to convert the unit to proper residential standards, citing Zoning Regulations and the Multiple Dwelling Law. The tenant submitted a counter affidavit from her architect who stated that he did not have sufficient time to determine whether the apartment can be legalized. The court, however, found that since the time of submission until the decision was written, there was ample time to submit additional papers, but in any event, parts of the landlord's architect's position appear "incontrovertible."

The court concluded that the tenant's occupancy is illegal and dangerous, even if the tenant did not know that when she moved in. The court held that in addition to the law, legal decisions should follow common sense. Here a greedy, or very uninformed, landlord rented out as residential space a basement area designed as office space. A new landlord bought the building around the time the tenant stopped paying the rent because the space was illegally inhabited. The landlord's nonpayment proceeding was foiled because the tenant was not required to pay rent to an illegal apartment. The illegality was not a mere technical defect, but inherent in the design and nature of the building which would subject the new landlord to fines and penalties and subjected the tenant to risk of injury and death. Common sense dictates that the landlord be given the space back but not be allowed to collect the rent normally due if the space had been legally occupied. For these reasons the court granted landlord's motion for summary judgment.

Apparently, tenant argued that the landlord has acted with unclean hands by collecting rent for all these years knowing that the apartment's certificate of occupancy did not permit residential tenants. To that, the court held that the landlord could be made to go to Supreme Court in an ejectment action. But weighing the equities it is clear that public policy compels that in this instance the Housing Court prioritize the well-being of the tenant, firefighters or the public if "calamity" struck, so the expeditious nature of Housing Court is preferable to the slow- moving Supreme Court. The court declined to dismiss the petition, but set the matter down for a hearing, presumably to determine whether "legalization of the premises is a remedy available to the tenant."

The court analyzed the history of the term "disabled" as applied to owner occupancy proceedings and succession rights cases. The definition focused on an impairment which was expected to be permanent and prevented a person ". . . from engaging in any substantial employment." Later, the law changed and broadened with respect to succession rights so that one could be employed and still come within the ambit of the definition of a "disabled person." Now the term has four elements: (1) an impairment resulting from anatomical, physiological or psychological conditions, (2) demonstrable by medically acceptable clinical and laboratory diagnostic techniques, (3) which are expected to be permanent, and (4) substantially limit one or more of such person's major life activities.

The court noted that there are no decisions interpreting "disabled person" in succession rights cases. The court turned to a federal statute, the Americans for Disabilities Act, which has a wealth of reported cases, and whose definition is quite similar to that in the succession rights statute. The court analyzed many of those cases and their holdings as to what constitutes a disability. An impairment cannot be trivial, such as obesity which limits walking, lifting, bending and other physical activity, but not necessarily impair a major life activity. The impairment, rather, must be substantial and affect a major life activity, such as employment. In the case at bar, the respondent testified that he suffers from depression, diabetes, chronic fatigue syndrome, ankylosing spondylitis and arthritis. Respondent's doctor testified that he began treating his patient more than a year ago after respondent had already been diagnosed with these afflictions by other physicians.

In essence, respondent's testimony addressed how his major life activity of working was affected by his disabilities. He claimed that his impairment limits his ability to adequately perform work as a plumber and/or steam fitter. But he has been gainfully employed with a corporation which he formed in 1997 to provide certain plumbing and/or steam fitting services. He is the sole shareholder and president of the corporation which contracts with the Department of Corrections to inspect its extensive sprinkler systems. Respondent received a salary and filed New Jersey tax returns, yet he received no private or government disability benefits. The court thus concluded that respondent cannot be regarded as substantially limited in the major life activity of working because as a plumber and/or steam fitting. His employment actually involves a broader class of work that requires and utilizes his knowledge of plumbing and/or steam fitting (i.e. without necessarily involving physical labor on his part). The court determined that his alleged disqualification from performing certain specific plumbing work and/or steam fitting as well as his inability to perform any single particular job is not substantially limiting to qualify him as a "disabled person" under the Rent Stabilization Code's definition. Whatever other limitations the respondent suffers, such as difficulty to lift or run and jog, cannot be classified as a substantial limitation of a major life activity. The court concluded that even if the respondent were legally disabled, he still cannot satisfy the one-year contemporaneous co- occupancy because all his documentation places him in New Jersey.

The Appellate Term reversed, holding that the tenant's minimal occupancy did not constitute the type of ongoing, substantial physical nexus with the apartment that is necessary to maintain rent regulated status. The Court acknowledged that simply because a tenant spends relatively little time in their apartment does not automatically result in a nonprimary residency finding because there are absences which are excusable (e.g., military service, full-time academic study, hospitalization). In this case, the Court agreed with the trial court that the tenant's grounds for absenceþconstructive eviction due to asbestosþwas not credible. Her testimony that her singing career, itinerant and unsubstantiated, was not addressed by the lower court, but had it been, the Appellate Term opined that it was not an excusable reason for her absence. Finally, the Court noted that a landlord is not obliged to identify or pinpoint with certainty the precise location of a tenant's primary residence in a situation where, as here, the tenant is shown to spend considerable amounts of time at several different alternate addresses. It was sufficient for the landlord to show that the tenant did not actively use the apartment for dwelling purposes, but rather regularly lived elsewhere.

The new owner maintains that once he took over operation of the building he began to legalize the 15th floor which had previously been designated an "interim multiple dwelling" (i.e., a loft) by the Loft Board in 1993. He contends that he didn't initially know the 9th, 12th and 14th floors were sublet and used residentially when there was no residential certificate of occupancy, and this was done without his consent.

The court was faced with several issues. First, does the location of the building in a M1- 5 zoning district foreclose coverage under the rent laws? Landlord argues that the building is located in a location which strictly prohibits residential use. The tenants, however, argue that the Zoning Resolution's residential restrictions do not necessarily mean that the units are not protected from rent regulation. The court cited to Tan Holding v. Wallace (NYLJ, January 16, 2001), an Appellate Term case which held that rent stabilization protection cannot be absolutely excluded simply based on the zoning classification. The court chose to follow the Appellate Term's holding, and noted that if variances for other residences have been granted in this neighborhood, as tenants maintain, then a variance granted to this building would not necessarily "alter the essential character of the neighborhood," the legal reason why a variance would otherwise be denied.

The next question the court asked is: Are residential units that are not covered by the Loft Law subject to the Emergency Tenant Protection Act ("ETPA")? Landlord argues that because the building was declared to be an interim multiple dwelling (IMD) (i.e., a loft), then it is governed exclusively by the Loft Laws. The landlord also argues that once a certificate of occupancy is obtained and a final rent order declared by the Loft Board, then only the 15th floor will receive the protections of the Rent Stabilization Law. The landlord further argues that in enacting the Loft Law, the Legislature narrowed the reach of the EPTA to protect only tenants who are covered under the Loft Law. (Coverage under the Loft Law entails, among other elements, a window period in the early 1980s, or continuous occupancy through 1987). Since only the 15th floor is deemed an IMD, then the other tenants cannot claim Loft Law protection, and thereupon cannot claim rent regulated status. Finally, the owner argues that because there were less than six residential units in the building on January 1, 1974, the tenants cannot receive the protections of the Rent Stabilization Law.

The tenants argue that the owner has subsequently added residential units, so that now there are more than 6 units, and this makes their tenancies protected by the ETPA. The statute applies to any housing accommodation except those specifically excluded. It does not contain an exemption for non-IMD units. The court rejected the landlord's argument that the Legislature narrowed the applicability of the EPTA to residential tenants covered by the Loft Law because at the time the Loft Law was passed, it was settled law that the EPTA applied to all residentially occupied commercial lofts as well. Thus, had the Legislature intended to exclude non-IMD units, the EPTA would have been explicitly amended creating a further exemption. The court noted a line of cases that recognize that the EPTA extends rent stabilization protection to loft units that were not covered by the Loft Law. The court ruled that coverage applies to these tenants, and the factual issue is merely whether the current landlord acquiesced in the residential usage of the units. The final issue is whether the building is exempt from the ETPA because it was substantially rehabilitated after 1974. The tenants argue that the purpose of exemption on this ground is to increase the number of habitable family units, the best evidence of which is a residential certificate of occupancy. Since the building still lacks a certificate of occupancy, it is not entitled to the exemption. The tenants also argue that they contributed to the substantial rehabilitation, but the owner disputes this. The court ruled that this is a question of fact necessitating a trial.

While the Civil Court action was pending, the landlord discovered that the tenant vacated to California and unlawfully sublet the premises. Apparently the tenant and subtenant had a dispute which went to court and it was resolved between them that the subtenant agreed to vacate the premises on April 1, 2001 at which time the prime tenant would re-take possession. The landlord began this action seeking, inter alia, a declaration to preclude the tenant from re-taking possession, and for a declaration that the Unit 206 is not subject to the Rent Stabilization Law. The landlord argued that Unit 206 was never subject to Loft Board coverage, and even if it were, the unit is now deregulated and cannot be stabilized because (a) it was substantially rehabilitated, (b) the rent is over $2,000 per month, (c) the tenant profiteered by overcharging the subtenants, and (d) the tenant did not occupy the unit as a primary residence.

The court cited to Tan Holding v. Wallace (NYLJ, January 16, 2001), an Appellate Term case, for the principal that commercial lofts converted to residential use after the Loft Law "window period could be subject to rent stabilization if (1) the lofts were capable of legalization and (2) the tenant "substantially bore" the cost of conversion. The court noted that the landlord failed to offer evidence why the Loft Board excluded Unit 206 and that the Civil Court's decision gives rise to an inference that Unit 206 is capable of being legalized by the Loft Board. The court also found problematic landlord's claim of substantial rehabilitation. Thus, on those first two preliminary questions, the court held that landlord's likelihood of success on the merits of its complaint was far from clear. (A likelihood of success on the merits is one of the criteria a party must prove when seeking a preliminary injunction).

If it was determined that the unit was subject to regulation, the court went on to examine whether the unit would then be deregulated. The court ruled that in order for the deregulation to occur based on the rent being over $2,000 a month, the tenant had to have vacated the apartment. [The tenant's initial rent, however, was above $2,000 when the tenant took possession, so the judge's ruling here that a vacatur first has to occur seems contrary to the law]. In this case, the tenant did not vacate because he intended to come back as evidenced by his suit against the subtenant to recover possession. With respect to overcharging the subtenant, the court ruled that the rent stabilization laws require a forfeiture of the apartment based on profiteering, but there is nothing in the Loft Law rules that require a similar result. Also, it is not clear yet if the unit is even subject to the rent stabilization law. The court ruled that tenant's absence from the premises for a period greater than two years does not necessarily add up to a nonprimary residence, since the tenant alleges that the absence is for work related reasons.

In granting a party's motion for preliminary injunction, the court must weigh the equities. The landlord has not demonstrated irreparable harm if the tenant is able to re-gain possession pending the outcome of the landlord's lawsuit that the premises are not subject to rent regulation. On the other hand, the tenant has not been in the apartment for two years so a delay while the litigation is pending should not prejudice the tenant. Since the balance of equities is equal the court ruled that the sensible resolution would be to maintain the status quo until the issues of the case are resolved. The tenant was not allowed to re-possess the apartment, but was allowed to use the court order to evict the subtenants. The landlord and tenant both had to post a $20,000 bond to cover the other in the event of loss.

The court denied the landlord additional discovery. The court held that the landlord failed to satisfy the six criteria necessary for "ample need" for discovery: (1) whether there are sufficient facts to establish a cause of action, (2) whether there is a need to determine information directly related to the case, (3) whether the discovery request is carefully tailored to clarify disputed facts, (4) whether prejudice will result if discovery is granted, (5) whether the prejudice can be diminished by an order fashioned by the court, and (6) whether the discovery can be structured by the court so that pro se tenants can be protected and not adversely affected by a landlord's discovery request. In this case, the landlord seeks discovery for the period January 1989 to December 1996 (which is eight years prior to what the tenant agreed to testify to). The court found that the request is just a fishing expedition to pinpoint the period of tenant's absence from the apartment. The court, however, ordered the tenant to produce certain documents, including her 1997 tax returns. The court denied the landlord a right to collect the past rent that has accrued since the delay in this matter (and accumulation of rent) has been caused by the landlord's discovery demands.

The landlord's attorney did not substantially dispute the executor's claim, but argued that the executor's motion should be denied for failure to name the current occupant as a party. The court disagreed, holding that had the executor sought to recover possession of the apartment, then in that instance, it would be necessary to add the occupant as a party to protect that occupant's due process rights. Landlord also argued that the executor abandoned its claim because he waited nine months to make this motion. The court also disagreed with this position because the executor had previously brought an action for conversion with respect to the property removed from the apartment, but that action was dismissed without prejudice. The court looked to prior case law that held that where a landlord knows the tenant has died, the landlord must obtain personal jurisdiction over the estate, and if it is known that no one is at the property to receive legal papers on behalf of the estate, the petition must be dismissed if papers are served only at the property. The court set the matter down for a hearing on whether sanctions and costs may be imposed against the landlord's counsel.

In the stipulation the owner agreed to install and pay for electric stoves and electric accounts and waived any right to a rent increase or terminate the electric account for the electric stoves. In 1988, the tenant was provided with a gas fuel cooking stove that has an electric ignition. In 1993 the tenant began paying for her own cooking gas when the owner unilaterally eliminated the service and installed a separate gas meter for the first floor apartment. The tenant had also paid electricity for a shared meter that included common areas and boiler. Finally, in 1992 the owner installed a separate electric meter and the tenant only paid electric charges for her own apartment. In Civil Court the parties agreed to refer to the DHCR for determination what amount of the rent reduction, if any, was appropriate for the gas exclusion and the owner's assumption of electric charges previously paid by the tenant.

The DHCR issued an order permitting the owner to exclude electric current service from the rent, granted the tenant a rent adjustment and permitted the owner to eliminate cooking gas and provided the tenant with a 10% reduction of the rent for the cooking gas. The tenant appealed the DHCR's decision, but she filed too late so the appeal was dismissed. The owner, however, did appeal on grounds that there should be no rent adjustment for the exclusion of electricity as the tenant had always paid for her own electricity and it was not a service included in her rent, and the 10% decrease in rent was excessive. The Commissioner issued a decision in which he found that the provision of electricity was not a service provided by the owner on the base date of January 1, 1989 (i.e., when the tenant obtained stabilized status), and therefore, the Rent Administrator should not have granted a rent reduction for electrical inclusion. He did find, however, that cooking gas was a service provided by the owner on the base day of January 1, 1989 and that the tenant had not filed a PAR objecting to the elimination of cooking gas. In reviewing her account records, the Commissioner determined that her median monthly gas payment was $23.58, and therefore the 10% reduction was excessive. The adjustment was modified to $24 a month beginning August 12, 1997.

Tenant appealed this decision in an Article 78 proceeding to the Supreme Court. She states that the owner was required to pay for the electricity that ignites her cooking stove under the stipulation and that the amount of the reduction in rent for the elimination of the cooking gas service was too little, and as a senior citizen her current rent is barely affordable. DHCR responded that the issue of the tenant's permission to modify or eliminate the gas and electric service had already been settled in Civil Court and that the only issue for the agency to determine was the proper rent. She responded that she should have received an electric stove in 1989, paid for by the landlord and that the dollar amount of the rent reduction set by the landlord is arbitrary.

The Supreme Court disagreed holding that the Code requires services as including a service that was maintained on the base date or that was provided by the owner thereafter. The tenant and owner agreed to make January 1, 1989 the base date and the Commissioner properly determined that the electricity usage of the apartment was not included in the rent on January 1, 1989, and therefore it was proper fro him to correct the Rent Administrator's order which granted a rent reduction based on the elimination of electrical usage. The court also ruled that the Commissioner properly determined that the cooking gas was a service provided by the owner on January 1, 1989 and that the parties agreed to eliminate this service and that the rent reduction of 10% for the gas meter modification was excessive, as it would, in effect, reduce the rent by nearly double the average monthly amount the tenant paid for cooking gas. In examining the tenant's bills, the Commissioner arrived at $24 as a medium amount, and the court found this accurate and reasonable. The court noted that the tenant admitted in her papers that her gas bills would be higher sometimes because she turned on the stove to keep warm in winter. This act does not entitle her to any greater reduction in rent based on the elimination of cooking gas. The court held that if the tenant has heat complaints she should file them with the appropriate agency. If the tenant claims that the owner failed to provide her with an electric stove pursuant to the stipulation, she may commence an action to enforce the stipulation, or for breach of contact. The court denied tenant's request to vacate the DHCR's order.

Landlord appealed on grounds that the lower court did not have jurisdiction to hear the Fair Market Rent Appeal. The Appellate Term rejected this argument, holding that since a tenant is entitled to bring a plenary action to enforce a Fair Market Rent Appeal adjustment order where excess rent has not been fully refunded within six months, the lower court had jurisdiction to entertain tenant's counterclaim and render judgment for the amount due. Since the amount due was not in dispute, the lower court properly rendered summary judgment in favor of the tenant. The lower court also ruled that the tenant is not entitled to attorneys fees in defense of landlord's appeal of the DHCR order in an Article 78 proceeding (and up to the Court of Appeals). The Appellate Term, however, ruled that the tenant is entitled to fees in connection with his action to enforce the order and a hearing on fees was appropriately held to that extent by the lower court.