130 Remsen LLC v. Commercial Investigations LLC

57 Misc. 3d 678, 59 N.Y.S.3d 880
CourtCohoes City Court
DecidedAugust 25, 2017
StatusPublished

This text of 57 Misc. 3d 678 (130 Remsen LLC v. Commercial Investigations LLC) is published on Counsel Stack Legal Research, covering Cohoes City Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
130 Remsen LLC v. Commercial Investigations LLC, 57 Misc. 3d 678, 59 N.Y.S.3d 880 (N.Y. Super. Ct. 2017).

Opinion

OPINION OF THE COURT

Thomas Marcelle, J.

130 Remsen LLC (Remsen) brought a nonpayment proceeding under RPAPL 711 (2) against its tenant Commercial Investigations LLC (Commercial). With the consent of the parties, a trial was held on May 15, 2017. After the trial, the parties submitted summations and legal arguments, and the case was fully briefed on June 5, 2017. Based upon the credible evidence, the court finds the facts as follows.

In July 2011, Commercial entered into a written agreement with R&B Properties (R&B) to lease office space at 130 Rem-sen St., 2nd floor. The lease ran six years until June 30, 2017. At the time the lease was executed, Commercial paid R&B $2,250 as a security deposit.

R&B suffered financial difficulties. Sometime in April 2016, Commercial became aware of a looming foreclosure proceeding. Given R&B’s pending calamity, Commercial was hesitant to pay May’s rent to an entity on the brink of going under. Ultimately, the office building was foreclosed upon. Indeed, a referee foreclosure sale was held in April 2016, where Remsen won the auction. Shortly thereafter, on May 1, 2016, R&B assigned its right to collect rents to Remsen. After the assignment, on May 16, 2016, Remsen closed on the property and acquired legal possession and title to the office building.

Remsen never informed Commercial of the rent assignment. Yet the evidence established three facts—first, sometime in May 2016, apparently after the closing on May 16, Commercial knew that Remsen was now the owner of the building and Commercial’s new landlord; second, Commercial never paid May 2016’s rent to either R&B or Remsen; and third, Commercial faithfully paid its rent to Remsen from June 2016 through March 2017.

[681]*681What makes this case a case is what happened between the parties from June 2016 to April 2017. Remsen wanted Commercial to agree to a new longer lease. Commercial had reservations—Remsen planned to renovate and to convert the two floors above its office into residential apartments and the noise and other negative externalities from the renovation might have interfered with Commercial’s business operations. To assuage Commercial’s concerns, Remsen offered terms where if Commercial found the renovations disruptive of its business, Commercial could break the lease and vacate without penalty.

In any event, new lease or no new lease, Remsen wanted Commercial to make a new security deposit because R&B had not transferred Commercial’s previous security deposit to Rem-sen. Commercial took the position that it had already paid a security deposit and no new security deposit would be forthcoming. Remsen countered that when it took possession of the building, Commercial became a month to month tenant and if a new lease was not executed together with payment of the security deposit, Remsen would serve Commercial with a 30 day notice to vacate—in other words Remsen told Commercial to pay the security deposit or get out. These communications were made verbally and in voicemails but never in writing.

Discussions of new leases and security deposits ended in January 2017, when Commercial informed Remsen, by written notice, that it would be vacating the office space at the end of March 2017. Commercial did leave the office as promised at the end of March. Remsen had its management company move into the space at the end of April. Remsen demanded May 2016’s and April 2017’s rent. Commercial declined to pay the rent arguing that it had become a month to month tenant and under such a tenancy, it had given Remsen sufficient notice to quit and thus owed no rent. Remsen then instituted this proceeding to collect the rental arrears.

Before addressing the rent issue, the court must ensure it possesses jurisdiction. This case is a nonpayment proceeding brought under RPAPL 711 (2). RPAPL 711 (2)’s primary purpose is to return control of a landlord’s property to him where a tenant has not paid his rent. While a landlord may seek back rent under RPAPL 711 (2), it may not use the statute to collect an overdue debt (Poulakas v Ortiz, 25 Misc 3d 717, 724-725 [Civ Ct, Kings County 2009]). Consequently, “[i]t is a basic premise of landlord-tenant summary proceedings [682]*682. . . that the person against whom the action is brought be in physical possession of the subject premises at the time the action is commenced in order for the court to obtain jurisdiction” (Torres v Torres, 13 Misc 3d 1167, 1170 [Civ Ct, Kings County 2006]).

Remsen has an issue with timing. Commercial had vacated the office at the end of March and returned the keys no later than April 7. Remsen commenced this summary proceeding on April 18, 2017—after the date that Commercial had already surrendered possession of the office. Thus, the RPAPL does not provide the court with subject matter jurisdiction.

The jurisdictional inquiry does not cease here. While the court cannot hear the case as pleaded, the question becomes whether the court has jurisdiction of this type of claim—a breach of contract (see Matter of Rougeron, 17 NY2d 264, 271 [1966] [explaining that subject matter turns not on the case as pleaded but “th(e) kind of case” in fact]).

This court has “all of the powers that the supreme court would have in like actions and proceedings” (UCCA 212). One power possessed by supreme court is the power to convert proceedings. Indeed, CPLR 103 (c) provides: “If a court has obtained jurisdiction over the parties, a civil judicial proceeding shall not be dismissed solely because it is not brought in the proper form, but the court shall make whatever order is required for its proper prosecution.”

The court will convert this summary proceeding into a regular civil action. Moreover, since neither the legal issues nor the factual basis of the dispute is altered by changing the form of this case, Commercial has not suffered any prejudice by this conversion.

The court now must decide whether Commercial was a tenant under the lease (and thus owes the rent required by it) or whether Commercial was a month to month tenant (which was properly terminated by notice) and owes no rent. Commercial makes three arguments (some expressed and some implied) that its relationship with Remsen was no longer governed by the lease that it signed with R&B.

First, Commercial argues that the lease with R&B was no longer valid. The argument goes that the lease between R&B and Commercial required that if R&B assigned the rents to another person or entity, R&B had to give Commercial notice of [683]*683the assignment (exhibit 1, ¶ 13.02).1 R&B assigned the rents to Remsen (exhibit 2), but gave no notice of this assignment to Commercial. Commercial concludes therefore that since R&B breached the notification of assignment provision of the lease, the lease was broken and no longer valid. Without a valid lease, Commercial maintains that it became a month to month tenant.

The argument is flawed. To begin with, the notice provision provides that upon notice to its tenant of the assignment, the former landlord is off the hook for performance of the lease and the new landlord is on. Thus, the notice provision works solely to protect the old landlord and the provision’s violation causes no impairment of benefits that Commercial derived from the lease. Thus, the breach of this provision by the landlord is immaterial. And here, Commercial never identified any harm it suffered from the breach.

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Cite This Page — Counsel Stack

Bluebook (online)
57 Misc. 3d 678, 59 N.Y.S.3d 880, Counsel Stack Legal Research, https://law.counselstack.com/opinion/130-remsen-llc-v-commercial-investigations-llc-nycohoescityct-2017.