46 Third, LLC v. Clocktower 46, Inc.
(NYC Civil Court, March 4, 2013)
We represented: Respondent/Tenant
Honorable Genine D. Edwards, J.S.C .
DECISION and ORDER
In this commercial holdover proceeding, landlord 46 Third, LLC ("46 Third") moves for use and occupancy. Tenant Clocktower 46, Inc. and Julie Ipcar d/b/a Hank's Saloon ("Clocktower") oppose the motion and cross-move for leave to conduct discovery. 46 Third opposes the cross-motion on the ground that Clocktower fails to demonstrate ample need for leave to conduct discovery in this summary proceeding.
Relevant Facts and Procedural History
On or about May 17, 2005, Clocktower entered into a written lease agreement with DoRay, the former owner of the premises. Do-Ray and Clocktower agreed to a five-year lease, commencing on December 31, 2005 and ending on December 31, 2010. The lease also contained an option to extend the lease for an additional five year term from December 31, 2010 to December 31, 2015.
By court order dated February 20, 2009, a receiver was appointed for the premises and authorized to take charge and enter into possession of the property due to an ongoing foreclosure action. Despite the appointment of a receiver, Clocktower allegedly contacted Do-Ray directly in early 201 0 regarding its intention to exercise its option to extend the lease for an additional five year term. Clocktower contends that the parties executed one or more writings indicating this extension.
On or about July 24, 2012, the premises were sold to 46 Third. Thereafter, in August 2012, 46 Third sent Clocktower a Notice of Termination, terminating Clocktower's tenancy as of September 30, 2012. Clocktower did not vacate the premises. On October 1, 2012, 46 Third commenced a holdover proceeding.
Use and Occupancy
46 Third contends that it is entitled to use and occupancy from October 1, 2012 to the present. Real Property Law § 220 provides that a "landlord may recover reasonable compensation for the use and occupancy of real property." RPL § 220. "The reasonable value of use and occupancy is the fair market value of the premises after the expiration of the lease (see e.g. Cooper v. Schube, 101 A.D.2d 737, 475 N.Y.S.2d 52 (1st Dept. 1984) …. " Mushlam, Inc. v. Nazar, 80 A.D.3d 471, 916 N.Y.S.2d 25 (1st Dept. 2011). The rent reserved under the lease, while not necessarily conclusive, is also probative. See id; Ideal Parking Corp. v. Rosenthal, 29 Misc.3d 1238(A), 2010 N.Y. Slip Op. 52201(U) (Sup. Ct., Queens County 2010). "[T]he landlord, not the tenant … has the burden of proving [the] reasonable value of use and occupancy." Mushlam, Inc., 80 A.D.3d at 472.
Here, 46 Third annexed an affidavit from its member James Fong, who states Clocktower has not paid use and occupancy since the commencement of this proceeding. Fong's affidavit is neither signed nor notarized. Written statements that are not sworn to be true under the penalties of perjury do not constitute competent evidence. See Banik v. Tarrabocchia, 78 A.D.3d 630, 910 N.Y.S.2d 530 (2d Dept 2010); Buonaiuto v. Shu/berg, 254 A.D.2d 384, 679 N.Y.S.2d 89 (2d Dept. 1998) (Unsworn and unsigned affidavits do not constitute proof in admissible form and are devoid of probative value.); Moore v. Tappen, 242 A.D.2d 526, 661 N.Y.S.2d 665 (2d Dept. 1997); Yonkers Ave. Dodge, Inc. v. BZ Results, LLC, 95 A.D.3d 774, 945 N.Y.S.2d 280 (1st Dept. 2012).
Assuming arguendo that Fong's affidavit is admissible, 46 Third provides no credible evidence of the reasonable value of use and occupancy of the premises. The invoice that purportedly demonstrates Clocktower's rental history does not identify Clocktower as the tenant, and though 46 Third states the fair market value of the premises is $10,000.00, the invoice states the rent is $3,582.13 as of October 2012. A large disparity that was neither explained nor supported with competent evidence. See Notice of Motion, dated November 27, 2012, Exhibit A, Petition, Paragraph 1 0; Notice of Motion, dated November 27, 2012, Exhibit C.
Discovery in a Summary Proceeding
There is a presumption against discovery in summary proceedings. See New York University v. Farkas, 121 Misc.2d 643,468 N.Y.S.2d 808 (Civ. Ct., New York County 1984). The rationale being that discovery is adverse to the expeditious nature of such proceedings and should only be granted where "ample need" is demonstrated. See Steele v. Acevedo, 2002 N.Y. Slip Op. 50102(U) (App. Term, P1 Dept. 2002); Houston Village Apartment Co. v. Zitin, 2001 N.Y. Slip Op. 40237(U) (App. Term, P1 Dept. 2001); Plaza Operating Partners Ltd v. IRM (U.S.A.) Inc., 143 Misc.2d 22, 539 N.Y.S.2d 671 (Civ. Ct., New York County 1989).
Clocktower alleges that it needs "limited discovery of the Petitioner and Receiver to determine what documents, correspondence, notes, etc. are in their possession to demonstrate extension of the Lease term and/or the Petitioner/Receiver/Petitioner's predecessor-in-interests' knowledge ofthe Lease extension."Notice of Motion, dated December 24, 2012, Paragraph 36. Clocktower does not explain why such documents are not in its possession and does not provide titles, descriptions, dates of executions, or dates when such documents were turned over to 46 Third and/or the receiver. More importantly, Clocktower and the original owner of the premises do not show that such documents are in existence as they preface all statements with, "[W]hile I believe that I sent … one or more writings to this extent …. "Notice of Motion, dated December 24, 2012, Exhibit 1 and Exhibit 2. Broad requests of this nature do not demonstrate "ample need." Banigan v. Hill, 57 A.D.3d 463, 868 N.Y.S.2d 313 (2d Dept. 2008) (Plaintiff is not required to produce documents absent showing that such documents were in existence at time motion was made.).
As an ancillary matter, Clocktower fails to adequately explain its reasoning for circumventing the court appointed receiver when allegedly renewing its lease. It implies that it communicated with the original owner about extending the lease term for an additional five years because the language in the Order Appointing Temporary Receiver In A Foreclosure Action precluded the receiver from entering into any lease agreement longer than one year. This argument, however, disregards the clear language in the Order which enjoined the original owner "from interfering in any manner with the property or its possession …. "Notice of Motion, dated December 24, 2012, Exhibit 4.
A receiver is an officer of the court and not an agent of the mortgagee or the owner. See Jacynicz v. 73 Seaman Assoc., 270 A.D.2d 83, 704 N.Y.S.2d 68 (1st Dept. 2000) (quoting Knickerbocker Ice Co., v. Benson, 155 Misc. 738, 279 N.Y.S. 86 (Mun. Ct. 1935)). During the pendency of a receivership, the property is in the possession of the court itself. Bank of Am., N.A. v. Oneonta, L.P., 97 A.D.3d 1023,949 N.Y.S.2d 794 (3rd Dept. 2012). The moment a receiver is appointed to the premises, the original owner is divested of his authority to enter into subsequent leases. Hence, any prohibition of the receiver from entering into leases in excess of one year is not to preserve such authority with the original owner, but rather, for practical purposes, to protect and preserve the value of the property. A written extension of the lease between the original owner and Clocktower, without the receiver's consent, would undermine the very purpose of appointing a receiver.
Accordingly, the motion and the cross-motion are denied. All parties shall appear for trial on April 30, 2013 in Room 603 at 10:00 A.M.
This constitutes the decision and order of the Court. 1
Date: March 4, 2013
Genine D. Edwards
Acting Justice, Supreme Court
1 The Chambers of the Hon. Genine D. Edwards thanks intern Genki Shiohara, a student at New York Law School, for his contributions to this Decision and Order.