Karpf v. Turtle Bay House Co.

127 Misc. 2d 154, 485 N.Y.S.2d 173, 1984 N.Y. Misc. LEXIS 3749
CourtNew York Supreme Court
DecidedNovember 15, 1984
StatusPublished
Cited by2 cases

This text of 127 Misc. 2d 154 (Karpf v. Turtle Bay House Co.) is published on Counsel Stack Legal Research, covering New York Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Karpf v. Turtle Bay House Co., 127 Misc. 2d 154, 485 N.Y.S.2d 173, 1984 N.Y. Misc. LEXIS 3749 (N.Y. Super. Ct. 1984).

Opinion

OPINION OF THE COURT

Martin Evans, J.

This is a motion by way of order to show cause, in an action commenced by service of the order together with the summons and complaint on July 6, 1984.

Plaintiffs, who are tenants in an apartment house as to which a noneviction offering plan was filed on or about August 23, 1983, seek an injunction against any sales by the sponsors on the ground that an amendment dated April 2, 1984 to the plan (the Third Amendment) is a discriminatory inducement and therefore is violative of the proscription set forth in General Business Law § 352-eee (2) (c) (i).

Plaintiffs also seek a declaration that the Attorney-General acted arbitrarily in accepting the plan, and also seeks to enjoin the defendants, both the sponsor and other tenants from violating the terms of a no-buy pledge signed by the individual tenant defendants.

The Attorney-General, the sponsor and the selling agents and all of the individual tenant defendants have moved to dismiss the complaints against them.

[155]*155Under the plethora of arguments and counterarguments it is clear that the parties, aside from the Attorney-General, are seeking to further their economic best interests in the ways that are given to them by law.

The questions for decision are few. They revolve around a portion of the offering plan which was designed to induce a sufficient number of tenants to vacate the premises, in order for the sponsor to sell the vacant apartments and thereby to attract the required number of purchasers so that the plan could be declared to be effective, within the time permitted by law.

The original offering plan was filed with the Attorney-General in August 1983. For this noneviction conversion to be effective, the effectiveness of the plan must be declared by the end of November 1984. Since the plan was a noneviction plan, it was necessary that 15% of the apartments be sold to purchasers. There are 164 apartments in the building.

As of July 15, 1984, six insider tenants have purchased their apartments, and 18 outsiders had purchased vacant apartments. Comprising the 18 are 10 apartments, which were vacant before the Third Amendment was filed; and of the 12 apartments which were vacated as the result of the Third Amendment, 8 have been sold. Of the 18 outside purchasers, 11 have already moved into their apartments and the court is advised that 6 more are planning to move in.

The relevant portion of the Third Amendment provides as follows: “Any eligible tenant, as defined in the Plan, who has not purchased an Apartment Unit, who voluntarily agrees within twenty (20) days after the presentation date of this Third Amendment to vacate his apartment on or before July 15, 1984 will receive from the Sponsor a lump sum payment in the amount of $7500. per room, except that the first ten such Eligible Tenants who elect * * * will receive from the Sponsor a lump sum payment of $15,000. per room.”

Plaintiffs claim that the terms of this Amendment create a “discriminatory inducement” in violation of the proscriptions of General Business Law § 352-eee (2) (c) (i). That section states, in pertinent part: “As to tenants who were in occupancy on the date a letter was issued by the attorney general accepting the plan for filing, the purchase agreement shall be executed and delivered pursuant to an offering made * * * without * * * discriminatory repurchase agreements or other discriminatory inducements.”

The statute may be read, therefore, to bar discrimination in the offering plan which results in the purchase of an apartment [156]*156by a tenant in occupancy, induced by a plan which contains a discriminatory repurchase agreement or any other discriminatory inducement to purchase the apartment.

Under this reading of the statute, which seems to be a plain reading of it, the words “discriminatory repurchase agreement * * * or other discriminatory inducement” relating to or causing the purchasing agreement, there is no prohibition of inducements to vacate the apartments even if that inducement was intended to, appears to be, or in fact does discriminate among tenants who are induced to vacate. The statute, in that reading, merely requires equal nondiscriminatory inducements to purchase, to be given to those tenants who purchase their apartments.

Another, and more strained reading of the statute would extirpate the words “[a]s to tenants who were in occupancy * * * the purchase agreement shall be executed and delivered” and would merely provide that “the offering plan shall not contain discriminatory repurchase agreements or other discriminatory inducements.”

There is no prohibition against move-out inducements, which may be made freely by a sponsor or indeed, by an outsider who wishes to purchase a particular apartment.

Well settled is the proposition that the offering of a vacate allowance, to induce a tenant to surrender the apartment, is permitted. (Hillman v Kersch, NYLJ, Dec. 29, 1983, p 12, col 5 [Sup Ct, Queens County]; 201 E. 25th St. Tenant Assn. v Goldstein, NYLJ, Nov. 23, 1983, p 12, col 4 [Sup Ct, NY County].)

Under the plain reading of the statute, the Third Amendment would not be prohibited.

If the statute were to be given the more restricted reading, the question here would be limited to whether the making of an inducement to vacate an apartment, given to all tenants, but as a greater price to the first 10 persons who accept it, is “discriminatory” within the meaning of the statute. Improper discrimination would “make a difference in treatment or favor on a basis other than individual merit” (Webster’s New Collegiate Dictionary [1977]).

Discrimination may be in existence at the outset of a plan, in that offers may be made to certain persons and not to others, although the members of both groups have identical qualifications for the purposes of the plan.

It can be suggested that an offer which on its face is open to all, is discriminatory in reality since not all persons to whom it [157]*157is made can afford to or are unable for other reasons to accept the offer.

Since that would require that a plan cater to the least common denominator and undoubtedly would never be made, the necessary conclusion is that this construction would not reflect the legislative intent of the statute.

If there were ambiguity, the opinions and conclusions of the agency charged with the enforcement of the statute would be given great weight by the court, and would be adopted if it were not unreasonable. In this case, the Attorney-General, who is charged by law with the application of this statute, has concluded here that the Third Amendment is not violative of the statute. In fact, he has shown by affidavit that the use of a move-out fee, or a vacate allowance, has been permitted in many other plans that he has accepted for filing and the practical construction of the statute is persuasive.

That the instant plan offers a greater inducement to the first 10 persons who accept it, than to others, is not considered by him to violate the statute, since the offer was open to all tenants, and each had an equal opportunity to be among the first 10 to accept it.

Indeed, there is no showing here, by anyone, that there was any tenant who, being desirous of accepting the offer, was denied the opportunity of being among the first 10 persons who subscribed within the time permitted.

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Cite This Page — Counsel Stack

Bluebook (online)
127 Misc. 2d 154, 485 N.Y.S.2d 173, 1984 N.Y. Misc. LEXIS 3749, Counsel Stack Legal Research, https://law.counselstack.com/opinion/karpf-v-turtle-bay-house-co-nysupct-1984.