On August 17, 2006, the New York State Division of Housing and Community Renewal, in Matter of 7005 Shore Road, LLC, DHCR Adm. Rev. Dckt. No. UE-210052-RO, issued an important administrative law ruling in favor of landlords, by determining the landlord could not be assessed with treble damages because it reduced the tenant’s rent pending the outcome of an overcharge proceeding.
On May 24, 2006, in South Pierre Associates v. Meyers, Civ.Ct. N.Y.Co. Index No. 300023 TSN 2006, 2006 NY Slip Op 26208, 2006 N.Y.Misc. LEXIS 1278, the New York court issued a second important decision which should be of great interest to attorneys and non-attorneys. Earlier, the court awarded liability in plaintiffs’ favor on all five causes of action, including fraud, breach of the employee’s duties of loyalty to his employer, and negligence (the first decision, on Jan. 13, 2006, is discussed below). Subsequently, defendant attempted to obtain dismissal of the action by filing a CPLR 3212 motion which argued that a final judgment was not possible because allegedly there were no damages to support the prior liability award. On May 24, the trial court upheld Kucker, Marino, Winiarsky, & Bittens, LLP’s arguments in response and denied defendant’s motion in its entirety. The court ruled that, as a disloyal employee, defendant may be “subject to severe penalties such as the forfeiture of all compensation plaintiffs paid for the period of his disloyalty . . . even if plaintiffs cannot prove any damage or loss arising out of Meyers’ admitted culpable conduct.” In practical terms, this would result in the employee’s disgorgement of the many thousands of dollars in wages he had accepted while acting illicitly in violation of his duties of loyalty to the employers paying those wages. The court also ruled that an award of punitive damages may be available against this employee based on the breach of fiduciary duty claim.
On March 10, 2006, in Rolling Realty LLC v. Dubinsky, Civ.Ct. N.Y.Co., Index No. L&T 98864/05 (Schneider, J.), the trial court issued an important decision which recognized limits on the use of an alleged warranty of habitability as an excuse for the nonpayment of rent. Kucker, Marino, Winiarsky, & Bittens, LLP prevailed at trial and defeated the respondent-tenant’s warranty of habitability defense which alleged the landlord had placed noisy tenants in an adjacent apartment and encouraged them to make intolerable noise in an effort to drive the respondent from his apartment. The respondent-tenant was ordered to pay the entire balance of unpaid rent, plus the landlord’s attorneys’ fees and costs.
On January 13, 2006, in South Pierre Associates v. Meyers, Sup.Ct. N.Y.Co., Index No. 105682/05 , the New York Supreme Court rendered a critical decision on the issue of summary judgment in an action based on causes of action including fraud, breach of the employee’s duties of loyalty to his employer and negligence. Kucker, Marino, Winiarsky, & Bittens, LLP had filed a pre-discovery motion for summary judgment in which the firm argued this particular action warranted the imposition of a partial final award of liability in favor of the plaintiffs on all five causes of action alleged in the complaint (including fraud, breach of fiduciary duty, breach of employment, breach of agent-principal relationship and negligence.] Kucker, Marino, Winiarsky, & Bittens argued and the court agreed that summary judgment was appropriate, even on the fraud claim, based on two affidavits by defendant in another action, in which he admitted all of the facts necessary to establish his liability to plaintiffs by having acted contrary to the interests of his employers. Defendant’s efforts to recant his prior sworn statements in the other action were unsuccessful. The trial court transferred the case to the Civil Court for an assessment of damages.
On July 18, 2005, in Rego Estates v. DHCR, 20 AD3d 539, 799 N.Y.S.2d 539 (2nd Dep’t 2005), the Appellate Division rendered a significant decision which held the DHCR erred in denying an owner’s request for establishing a higher rent retroactively, and the error must be corrected by the administrative agency.
On May 24, 2005, in 4 Third Avenue Leasehold, LLC v. Permanent Mission of the United Arab Emirates, 133 Fed.Appx. 768, 2005 U.S. App. LEXIS 9494 (2nd Cir. 2005), the U.S. Court of Appeals rendered an important decision which validated the enforcement of liquidated damages clauses in private contracts. Kucker, Marino, Winiarsky, & Bittens, LLP was victorious in convincing the Second Circuit to overturn the district court’s incorrect ruling which had failed to enforce the liquidated damages clause in a commercial lease agreement. The appellate court ruled this liquidated damages provision was not an unenforceable penalty and had not been waived.
On September 10, 2004, in Water Street Leasehold LLC v. Deloitte & Touche, LLP (Sup.Ct., N.Y. Co.), in response to a motion for reargument by the defendant, the trial court affirmed its prior ruling in favor of the plaintiff represented by Kucker, Marino, Winiarsky, & Bittens, concerning accountant third party liability (see April 19, 2004 decision below).
On April 18, 2005, in In re 127 John Street Associates, 2005 U.S.Dist.LEXIS 6729; 54 Collier Bankr. Cas. 2d (MB) (S.D.N.Y.), the U.S. District Court issued a critical ruling. The court decided the entity which had purchased a commercial building in Manhattan could not appeal from an interim order which required the purchaser to deposit $6.2 million in escrow for the benefit of former commercial tenants who claimed a substantial share of the prior real estate tax refund. In the related earlier ruling, which was not reported (In re 127 John Street Associates, 93-B-46171 (CB) (Bankr. S.D.N.Y., Nov.12, 2004)), the petition of Kucker, Marino, Winiarsky, & Bittens, LLP for the interim order was granted by the bankruptcy court. At Kucker, Marino, Winiarsky, & Bittens’s urging, the bankruptcy court reversed its own prior orders which had been predicated on inaccurate fact representations by the purchaser of property, and the court reopened the chapter 11 case to permit the former tenants to claim a share of the $6.2 million real estate tax refund which had been withheld by the purchaser of property. In addition, the purchaser was ordered to provide explicit notice to the former tenants; the court found the first notice by the purchaser was severely inadequate.
On January 25, 2005, in Schoberle v. DHCR and 235 West 71st Street LLC, 14 A.D.3d 438, 788 N.Y.S.2d 361 (1st Dep’t 2005), the Appellate Division granted the petition of Kucker, Marino, Winiarsky, & Bittens, LLP, and retroactively applied the “de minimus” rule to dismiss a tenant’s complaint against the landlord (Kucker, Marino, Winiarsky, & Bittens’s client) for alleged removal of a storage area.
On April 19, 2004, in Water Street Leasehold LLC v. Deloitte & Touche, LLP, 2004 NY Slip Op 51260U; 5 Misc. 3d 1008A; 798 N.Y.S.2d 714; 2004 N.Y. Misc. LEXIS 1896 (Sup.Ct., N.Y. Co.) (Lowe, III, J.), the trial court upheld a complex civil complaint which alleged the defendant accountants had third party liability for fraud, negligence and gross negligence in having certified as accurate the financial statements of insurance company which became insolvent and failed to pay a $1.1 million debt under a real estate lease, and also alleged the defendant accountants of gross errors in having failed to make certain the insurance company maintained adequate reserves to cover the policies of insurance which had been issued, rev’d on other grounds, 796 N.Y.S.2d 598 (1st Dep’t June 14, 2005).
On March 22, 2004, in Sted Tenants Owners Corp v. Chumpitaz, et al., 5 A.D.3d 663, 774 N.Y.S.2d 718 (2nd Dep’t 2004), the Appellate Division issued a significant ruling which upheld the integrity of motion practice under the CPLR. The appellate court unanimously reversed the trial court’s decision which had granted summary judgment in favor of a plaintiff property owner because its papers in support of the motion had a fatal flaw — they failed to include copies of the pleadings.
On December 3, 2003, in the Matter of Sabrina Equities Corp., DHCR Adm. Rev. Dckt. No. QH-410014-RP, an administrative proceeding before the New York State Division of Housing and Community Renewal (DHCR), a notable administrative ruling was rendered in favor of the landlord, represented by Kucker, Marino, Winiarsky, & Bittens, LLP. In the tenant’s fair market rent appeal, the DHCR initially ruled for the tenant and set the rent without information concerning comparable apartments. The landlord was ordered to refund $46,000.00. In appealing, the landlord argued the DHCR’s new comparability rules should apply. The DHCR agreed, applied comparability data, and reduced the refund to only $4,000.00. The DHCR agreed, because the landlord had purchased the building at judicial sale and did not obtain complete records, there was good cause for any prior failure to submit comparability data.
On August 18, 2003, in Board of Managers of the Kingsley Condominium v. Villinvestment A.V.V. and Feldman, Index No. 603944/02 (Sup. Ct., New York Co., August 18, 2003) (Tolub, J.), based on a motion filed by Kucker, Marino, Winiarsky, & Bittens, LLP (Kucker, Marino, Winiarsky, & Bittens) the court rendered a significant decision which limits a condominium board’s protection under the “business judgment” rule. The motion filed by Kucker, Marino, Winiarsky, & Bittens sought summary judgment on defendants’ behalf, enabling them to proceed with a proposed condominium unit sale. Among other things, the court held that the plaintiff’s treatment of a proposed offer as bona fide precluded plaintiff from subsequently asserting otherwise. An offer may not be bona fide for some purposes but not for other purposes. Court also held plaintiff was required in its motion papers to include any alleged evidence that proposed purchase price was not bona fide. Evidence presented by the plaintiff for the first time in reply papers on a cross-motion could not be considered for either defendants’ motion or plaintiffs’ cross-motion because defendants had no opportunity to respond to the evidence. The court also held that the Board received notice when its managing agent received notice. While the business judgment rule may protect a Condominium Board in the event of a challenge to its determination of whether or not to exercise a right of first refusal, a failure to act within the time limits set forth in the by-laws has nothing to do with business judgment. Equity will intervene in the event that the party who failed to act will suffer a forfeiture if not permitted to exercise its right of first refusal. However, cases in which such forfeiture is found generally involve parties that have invested considerable sums of money in renovating the subject premises, which they will lose if they cannot exercise the option that they had, whether it was to renew the lease or to purchase the property.]
On September 3, 2003, in 325 Third Street LLC v. Maldonado, Index No. L&T 077865/03 (Civ. Ct. Kings Co., September 3, 2003) (Marton, J.H.C.), at the request of Kucker, Marino, Winiarsky, & Bittens, LLP, the court denied Respondent’s motion to vacate the previously executed “so ordered” stipulation of settlement and the resultant final judgment and held that a government subsidy approval was not a basis for relief, especially where the relief was less than the amount owed.
On June 20, 2003, in 328 West 86th Assoc. v. Wakstein, Index No. L&T 081652/01 (Civ. Ct. New York Co., June 20, 2003) (Lebovits, J.H.C.), an important decision was rendered which recognizes that a party’s right to attend a deposition is not absolute. Based on Kucker, Marino, Winiarsky, & Bittens, LLP’s motion, a party was excluded from attending a deposition. The court held, because CPLR ยง3103(a) obligated the court to prevent one party from being disadvantaged by the other’s potentially collusive testimony, the court may exclude individual respondents from attending pretrial depositions of other Respondents when the Respondents’ interests were virtually identical and each Respondent was represented by the same attorney.]