Bankrupt Tenant Can Be Evicted

[consigliere]

The article below appeared in the February 21, 2003 online edition of the New York Law Journal:
 
 
Bankrupt Tenant Can Be Evicted
 
by Tom Perrotta
 
Filing for bankruptcy can absolve New York tenants from paying back rent, but it will not necessarily protect them from eviction, an appellate court in Manhattan has ruled.
 
The unanimous holding marks an about-face for the Appellate Term, First Department, which held last week that lower courts should no longer follow its 1999 ruling that protected bankrupt tenants from eviction as long as they agreed to pay rent that accrued after a bankruptcy proceeding.
 
Before the court was a long-running dispute between Robert Dabrowski, a 26-year tenant at 24 Minetta Lane, and his landlord, Pari Dulac.
 
In 1988, Dulac, the owner of the restaurant La Boheme on the building's first floor, tried to evict Dabrowski, then age 55, from the 900-square-foot apartment on the second floor, claiming she wanted to move in herself.
 
Dabrowski fought the eviction and had early success, convincing the Division of Housing and Community Renewal that his rent-stabilized apartment, which cost a little more than $400 a month, was actually a rent-controlled apartment that should cost $30.70 a month.
 
Dabrowski stopped paying rent and the two sides fought over alleged violations and rent in administrative proceedings over the next 10 years, until DHCR determined in 1998 that the apartment was actually rent stabilized and awarded Dulac $42,000 in back rent.
 
Dabrowski unsuccessfully contested the determination, and later filed for bankruptcy. In January 2001, Southern District Bankruptcy Judge Robert E. Gerber ruled in In re Robert Dabrowski, 257 B.R. 394, that Dabrowski's $42,000 debt had been discharged under Bankruptcy Code § 727(b).
 
However, the bankruptcy judge said, Dulac could under federal law begin an eviction proceeding as long as she "clearly, unequivocally, and irrevocably" renounced any entitlement to the back rent.
 
For support, Judge Gerber cited In re Touloumis, 170 B.R. 825, a 1994 Southern District Bankruptcy Court ruling from Chief Judge Stuart M. Bernstein, which held that "although the discharge prevents the landlord from getting a personal judgment against the Debtor for the unpaid, pre-petition rent, it does not prevent the landlord from evicting the Debtor for its non-payment."
 
In a brief, Dabrowski's attorney cited the Appellate Term's 1999 ruling in Stahl Broadway Co. v. Haskins, 180 Misc. 2d 705, which said an eviction proceeding could not be brought against tenant's like Dabrowski because the past rent, having been discharged, was not in arrears (as described in 2 Rasch, New York Landlord and Tenant -- Summary Proceedings, 4th ed., at 32:8).
 
Judge Gerber declined to grant the eviction outright, but wrote: "The New York courts can decide if the Stahl Broadway court would have ruled as it did (or if it would so rule again) if it had been shown that a premise upon which the Stahl Broadway court may have ruled was incorrect. This court notes . . . that even after a tenant's discharge, there would still be 'rent arrears which has not been paid.' " (referring to Rasch).
 
Dulac returned to housing court later in 2001, and in May, Judge Bruce E. Scheckowitz dismissed the eviction proceeding, saying he was bound to follow the Appellate Term's ruling in Stahl.  
 
Last week, however, the Appellate Term held that its ruling in Stahl "should no longer be followed."
 
When the landlord agrees to not seek a money judgment, the court said, a tenant's bankruptcy should not stop the landlord from seeking possession.
 
"A bankrupt tenant is no more immune from eviction than is a bankrupt mortgagor immune from foreclosure; in neither situation is discharge in bankruptcy available to the debtor as a defense to an in rem proceeding," the court wrote in Dulac v. Dabrowski, 02-087.
 
Meryl L. Wenig, a Brooklyn attorney who represents Dulac, said the ruling was significant in the area of landlord-tenant disputes.
 
"It says to the debtor, 'You can run, but you cannot hide'," Wenig said.
 
Dabrowski's attorney could not be reached for comment.
 
Justices Lucindo Suarez, William P. McCooe and Phyllis B. Gangel-Jacob presided over the case.
 

[MikeW]

Does anyone else find it amazing that this thing has been in court 15 years?!

[mjr203]

did anyone find it amazing that this guy thought it was ok to pay $30.70 a month for an apt on Minetta Lane?

[mjr203]

The state of government in NY is shocking to me.

-The divide between the city and upstate

-The complete lack of fundamental legislative procedure in Albany; having only started to read about this since becoming interested via tenant affairs and by reading the recent NY Times articles on Albany. Essentially the state government is run by 3 men (and a horde of special interests) each of whom seem to have no interest in government by the people's representatives.

-School funding

-Housing - lack of standards enforcement and near total incompetence in the governance of both landlord and tenant complaints.

It blows the mind.