Richards v. Estate of Kaskel

169 A.D.2d 111, 570 N.Y.S.2d 509, 1991 N.Y. App. Div. LEXIS 7300
CourtAppellate Division of the Supreme Court of the State of New York
DecidedMay 23, 1991
StatusPublished
Cited by17 cases

This text of 169 A.D.2d 111 (Richards v. Estate of Kaskel) is published on Counsel Stack Legal Research, covering Appellate Division of the Supreme Court of the State of New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Richards v. Estate of Kaskel, 169 A.D.2d 111, 570 N.Y.S.2d 509, 1991 N.Y. App. Div. LEXIS 7300 (N.Y. Ct. App. 1991).

Opinion

OPINION OF THE COURT

Sullivan, J. P.

These appeals involve the interpretation of a. 1972 judgment, entered in 1 of the 2 underlying actions, insofar as it required the cooperative corporation to offer renewal leases to the nonpurchasing tenants at the subject building.

Both actions arise out of the conversion of the building located at 360 East 72nd Street in Manhattan to cooperative ownership pursuant to an offering plan filed by the owner-sponsor in 1969 and declared effective as an eviction plan on April 21, 1971. Under the terms of the plan, those tenants who did not purchase their respective apartments could, notwithstanding their status as rent-stabilized tenants, be evicted at the expiration of their leases. After the declaration of effectiveness, plaintiffs, nonpurchasing tenants, claiming that the sponsor had obtained the requisite number of subscription agreements by false and fraudulent representations, without which it would not have been able to declare the plan effective on an eviction basis, brought an action (action No. 1) against the sponsor (the estate of Alfred L. Kaskel), the cooperative corporation (360 East 72nd Street Owners, Incorporated) and others for a declaration to that effect and as to their entitle[115]*115ment, as nonpurchasing tenants, to continue in occupancy and receive lease renewals pursuant to the Rent Stabilization Law. The tenants ultimately prevailed when the Court of Appeals (Richards v Kaskel, 32 NY2d 524) reinstated the 1972 judgment of the trial court (69 Mise 2d 435), which had found the declaration of effectiveness to have been tainted by two sales secured as a result of the sponsor’s false statements and directed the "co-operative corporation, as present owner of the building, to enter into leases with each of the nonpurchasing tenants” in accordance with the then-current Rent Stabilization Law. (Supra, 69 Mise 2d, at 444-445.) A review of its decision, however, reveals that the issue of whether the cooperative corporation or the sponsor should be named on the leases was never specifically presented to the trial court, which did expressly note that the provisions of the cooperative offering plan neither enlarged nor diminished rights under the Rent Stabilization Law (supra, at 444). Review of the Court of Appeals’ decision discloses that the question of who should enter into the leases with the tenants was not at issue. Notably, at that time, the owner-sponsor and the cooperative corporation were essentially the same entity.

In 1973, two months after the Court of Appeals’ determination, the cooperative corporation and sponsor moved in the trial court for a modification of the judgment to provide that the actual owner of the occupied apartments be substituted for the "cooperative corporation” as the party responsible for offering renewal leases. The motion was denied without prejudice to a similar application to the Court of Appeals. Since, as is typical of most cooperative conversions, the board of directors of the newly formed cooperative corporation was, for a period of time, controlled by the sponsor and was, for the most part, its alter ego, the sponsor, which became the owner of the unsold occupied apartments, foresook the opportunity to make such an application and adopted that format provided for in the 1972 judgment.

Thus, for the next 16 years, the sponsor’s managing agent, Carol Management, offered rent-stabilized renewal leases to the nonpurchasing tenants and typically executed them as follows:

"360 East 72nd Street Owners, Inc., Landlord
By Carol Management Company, Agent
[[Image here]]
Carol Management Company”

[116]*116After executing the lease renewals, the tenants returned them to Carol Management, to which they paid rent.

As this record demonstrates, the cooperative corporation had no knowledge that leases were being executed in its name by Carol Management. It has never, from the time the shareholders assumed control of the board of directors, authorized the execution of leases in such manner. Carol Management, it should be noted, the family owned management arm of the Kaskel family, the sponsor, was retained by it to manage the apartments which it continued to own and which are occupied by the nonpurchasing tenants. To the extent that these tenants were entitled to services over and beyond those provided by the cooperative corporation to all shareholders, e.g., the painting of apartment interiors and replacement of appliances, such services were provided by Carol Management.

During this same period of time, the cooperative corporation used, at various times, either Douglas-Elliman Gibbons & Ives or Kreisel Company as its managing agent. Moreover, the nonpurchasing tenants always knew that in their rent-stabilized relationship with the sponsor Carol Management was representing the sponsor’s interests. When these tenants sought services of the type provided to all shareholders, they made their requests to the cooperative corporation’s managing agent. When they sought additional services predicated upon their rights as rent-stabilized tenants, they made their requests to Carol Management.

In any event, in 1989, in renewing these leases, the sponsor and Carol Management decided that the party who actually owned the apartments should be included in both the leases and the notice of renewal. Accordingly, the sponsor offered to issue renewal leases as follows:

"landlord:
360 East 72nd Street Owners Incorporated,
Owner of the Building
Estate of Doris Kaskel, Proprietary Lessee and
Landlord of the Apartment.”

The nonpurchasing tenants, 57 in all, refused to execute the renewal leases, as tendered. The two interested parties, the sponsor and the tenants, discussed various proposals but were unable to agree on any specific language. Thereafter, the cooperative corporation and the sponsor sought guidance from the New York State Department of Law. At that time, the [117]*117tenants were threatening to sue and had, on the basis of the dispute, collectively withheld more than $100,000 in rent.

Without waiting for the Attorney-General’s opinion, the tenants, in March 1990, claiming a violation of the 1972 judgment because the renewal leases were being offered by the owner of the apartments (now the estate of Doris Kaskel), instead of the cooperative corporation, as required, moved to hold the cooperative corporation in contempt and for a direction that it comply with said judgment. Although unable to cite a single instance of the estate’s failure, in almost two decades, to maintain the apartments or to comply with all the requirements of the Rent Stabilization Code, the tenants alleged an impairment of their rights and prejudice from the change in the form of the renewal leases.

Since the estate was not a party to the tenants’ contempt motion, it commenced a separate but parallel action (action No. 2), seeking, inter alia, a declaration that the renewal leases it offered were in compliance with the Rent Stabilization Law and Code, and moved concurrently with the tenants’ contempt motion for consolidation of the two actions and for summary judgment on its complaint.

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Bluebook (online)
169 A.D.2d 111, 570 N.Y.S.2d 509, 1991 N.Y. App. Div. LEXIS 7300, Counsel Stack Legal Research, https://law.counselstack.com/opinion/richards-v-estate-of-kaskel-nyappdiv-1991.