The prime issues raised on the motions before me are i) whether residential tenants who moved into loft premises after the "window period" provided in the Loft Law, and are thus not subject to such law, are entitled to the protection of the Emergency Tenant Protection Act ("ETPA") and the Rent Stabilization Law ("RSL") if the subject premises are located in an area in which residential use is permitted, and ii) whether a stipulation executed in 1996 (the "Stipulation") wherein defendants agreed to waive their rights under said laws, but which contains an intentional misrepresentation of fact, is enforceable.

The pending motions are by defendants to consolidate various holdover proceedings pending in the Civil Court with this action, and by plaintiff i) to dismiss defendants' affirmative defenses and counterclaims; ii) for summary judgment declaring that defendants are not subject to the ETPA nor article 7-C of the Multiple

Dwelling Law ("MDL")(the "Loft Law"); and iii) a judgment of ejectment.

The basic facts in this litigation are set forth in my decision (the "Decision") in this action (sub nom. Century Realty, Inc. v. Hyatt) dated June 26, 2006 (NYLJ, July 19, 2006, p. 21). Therein I vacated a 1996 judgment issued by former Justice Omansky pursuant to the Stipulation (which required defendants to vacate the premises by June 30, 2006) because the Stipulation contained a false representation that the subject building was "substantially rehabilitated for residential use after January 1, 1974." I concluded that "the parties were thus placed in the position they occupied prior to the submission of the judgment ... (and could thus) litigate based on facts, not fiction."

It is agreed that the building was constructed before 1974, contains at least six dwelling units (Tr. p. 22), is zoned for residential use (Tr. pp. 24-25), and that all of the defendants entered into possession after December 1, 1981 (Tr. pp. 18-19).

As far as the Loft Law is concerned, the fact that the subject units were admittedly not occupied during the "window period" set forth in MDL §281 (April 1, 1980 to December 1, 1981) bars coverage. See, Wolinsky v. Kee Yip Realty Corp., 2 NY3d 487, 492-493 (2004); [*2]Laermer v. New York City Loft Board, 184 AD2d 339 (1st Dept. 1992); Kaplan v. New York City Loft Board, 159 AD2d 439 (1st Dept. 1990); Anthony v. New York City Loft Board, 122 AD2d 725 (1st Dept. 1986).

To support a claim of coverage under the Loft Law, defendants made the argument that the residential requirements during the "window period" were satisfied because the definition of "occupied," as used in the MDL, as set forth in paragraph 1 of §4 thereof, includes space "intended, arranged or designed to be used or occupied." This contention totally lacks merit as §4 provides that the definitions therein are not applicable where "the context or subject matter requires otherwise," and it is clear from MDL §281 and the case law that actual residency during the "window period" is required for the Loft Law to apply.

With respect to the ETPA, there are now seemingly conflicting decisions as to whether that Act may apply to tenants of loft space who were not in possession during the "window period," with the crucial issue apparently being whether the space is "capable" of being converted to legal occupancy under the provisions of the Zoning Resolution.

In Wolinsky v. Kee Yip Realty Corp., supra, the Court of Appeals found the ETPA did not apply to units first used for residential purposes in 1997, stating that the "statute was not intended to foster future illegal conversions," reasoning that "[i]f the prior-enacted ETPA already protected illegal residential conversions of manufacturing space, significant portions of the Loft Law would have been unnecessary ... (and that) although illegal conversions are not expressly exempted from ETPA coverage, it is evident that the legislature did not view the ETPA as safeguarding the interests of loft pioneers'" (p. 493). However, in that case it was noted that under the Zoning Resolution the building could not be legally converted to residential use, and the court stated that it was affirming the Appellate Division decision that had ruled that the ETPA "does not extend to tenancies that are illegal and incapable of becoming legal" (p. 491).

Subsequently, the Appellate Division in the Second Department, relying on Wolinsky, held that illegally converted lofts not subject to the Loft Law are not entitled to the protection of ETPA [Gloverman Realty Corp. v. Jeffreys, 18 AD3d 812 (2005)]. Although not discussed by that court, the lower court decision in that case (NYLJ, November 11, 2003, p. 30, c. 1) shows that the subject premises were located in a district where residential use was permitted. Based on that case, several courts have ruled that loft units converted to residential use in violation of the certificate of occupancy after the window period (and thus not covered by the Loft Law) are not protected by the ETPA even though located in an area where the Zoning Resolution would permit residential use. See, Corastor Holding Company, Inc. v. Mastny, 12 Misc 3d 13 (App. Term, 2nd and 11th Districts, 2006); American Package Company v. Kocik, 2006 WL 1548252 (Sup. Ct. Kings Co.) ("this court is constrained by Gloverman to hold that the illegally converted spaces ... are not entitled to rent stabilization protection even where the residential use of the spaces may become legalized"); Sasson v. Gissler, 2005 WL 3863698 (Civ. Ct., NY Co.)("Gloverman binds me in the absence of a First Department decision interpreting Wolinsky"); Forrester v. American Package Company, Inc., 2006 WL 1559452 (Sup. Ct., Kings Co.).

However, other courts have taken a contrary position where the units were capable of being legalized, basing their conclusions on the fact that in Wolinsky the subject space was not capable of being legalized, and the absence of any discussion of the issue in Gloverman. See, [*3]Otus v. Northside Development L.L.C., 2006 WL 2079336 (Sup. Ct. Kings Co.) ("Where zoning expressly allows residential use as of right, and apartments can be legalized by the owner filing a Certificate of Occupancy, there is no rationale under Wolinsky to foreclose ETPA coverage"); 480-486 Broadway, LLC v. No Mystery Sound, Inc., 2006 WL 456818 (Civ. Ct. NY Co.)("Wolinsky follows a line of cases that have held that rent stabilization protection under the ETPA can be afforded to premises that are not covered by the Loft Law so long as the premises are capable of being legalized"); Tan Holding Corp. v. Wallace, 187 Misc 2d 687 (App. Term, 1st Dept. 2001) ("Permanent coverage under a rent regulatory scheme should not, however, attach to dwelling units which have not been legalized or are incapable of being legalized. In this regard, no residential certificate of occupancy has yet been obtained for the premises.")

The foregoing conflict on the issue of coverage has just last month been resolved in the First Department by the ruling in the case of Duane Thomas LLC v. Wallin, ___ AD3d ___, 2006 WL 3593006, where, in a brief decision, the court wrote:

"Although tenant commenced occupancy in 1991, after the Loft Law window period had closed without the subject unit having been registered with the Loft Board, the applicable Zoning Resolution ... permits residential use of loft dwellings,' which the subject building admittedly is, .... It therefore appears that the unit is capable of being legalized, and may therefore be subject to rent stabilization."

The issue thus remaining is whether the waiver in the Stipulation of the protection provided by the rent laws should be enforced. With respect to this question, I stated in the Decision that "I agree with the ... legal principle enunciated by Justice Omansky that a court could enforce a stipulation with respect to coverage if parties, who were all represented by counsel, present a stipulation setting forth facts that raise a bona fide dispute as to whether a tenant, whose occupancy had never been acknowledged by the landlord or determined by a court or administrative agency as subject to the RSL, was entitled to its protection." See, Merwest Realty Corp. v Prager, 264 AD2d 313 (1st Dept. 1999); Eckstein v. New York University, 270 AD2d 208 (1st Dept. 2000); Arkansas Leasing Co. v. Gabriel, 3 Misc 3d 46 (App. Term, 2nd & 11th Districts, 2004); 437 Palisade Avenue Realty Corp. v. Boyd, 124 Misc 2d 759 (App. Term, 9th & 10th Districts 1984); Veski v. Connors, 2002 WL 1174676 (App. Term, 1st Dept.). In Kent v. Bedford Apartments Co., 237 AD2d 140 (1st Dept. 1997), the court wrote:

"Therefore, even assuming, arguendo, that Rent Stabilization Code (9 NYCRR) §2520.13 prohibits the waiver, under any and all circumstances, of a tenant's rights under the Rent Stabilization Law, plaintiff had not yet been established as a rent-stabilized tenant at the time she entered into the stipulation, and thus cannot rely on that provision. Plaintiff had a choice of either obtaining a judicial [*4]declaration of her status under the rent laws or entering into a stipulation that, much to her advantage, conferred that status. As indicated, we perceive no public policy or other reason for disregarding that choice, made with advice of counsel ...."

Here, in 1996 the parties were unclear as to whether the defendants could be entitled to protection under the ETPA and the RSL and, as demonstrated above, the law remains unclear on that issue even today, with the result apparently depending on whether the property is located in the First or Second Department. As indicated in the Decision, the Stipulation contained benefits and detriments to both parties, with defendants' counsel acknowledging that in negotiating the Stipulation it was "believed in good faith that we seized upon an appropriate means to avoid a regulatory system that the parties were willing to cast aside."

But the parties (then represented by their present counsel), rather than submit their agreement on occupancy that they considered fair to a court and allow it to determine whether the waiver of the protection of the ETPA and RSL was enforceable, deliberately inserted into the Stipulation a factual representation that the landlord rehabilitated the building after 1974, which all sides knew was false. The factual misrepresentation was apparently inserted because in Wilson v. Ten Duane Street Realty Co., 123 AD2d 198 (1st Dept. 1987), it was indicated that a building substantially rehabilitated after 1974 would not be subject to the ETPA.

I denied plaintiff's prior application to enforce the aforesaid judgment because it was procured by "a misrepresentation to the court of a material fact," concluding the "the integrity of the judicial system is at stake when judicial mandates are procured by fraudulent representations," citing Thornton v. Baron, 5 NY3d 175 (2005); In re Holden, 271 NY 212 (1936); and Shaw v. Shaw, 97 AD2d 403 (2nd Dept. 1983). For the same reason, the waivers in the Stipulation (which contained the consent for the said judgment) will not be enforced. Litigants should be aware that a court will not countenance the employment of factual misrepresentations to cause it to take a certain action, even when mutually agreed upon by all parties. Consequently, the motion by plaintiff is denied except to declare that the defendants' units are not subject to the Loft Law.

Since plaintiff consented to defendants' motion to consolidate the various summary proceedings pending in the Civil Court with this action (Tr. pp. 7-8), that application is granted.

This decision constitutes the order of the court. Settle order with respect to the aforesaid consolidation.

Dated: January 30, 2007_______________

J.S.C.