This is holdover proceeding commenced by service of a Notice of Petition and Verified Petition served personally on the Respondent, David Victor. At the initial appearance, Justice Caltigirone recused himself and the matter was scheduled for July 16, 2013 at 5:30 p.m. The Defendant was advised of the adjourn date in court by Justice Caltigirone. On July 16, 2013, the Respondent failed to appear and a Default Judgment was granted for possession and unpaid rent and a Warrant of Eviction issued.

An Order to Show Cause with a temporary Restraining Order was signed by this Court on July 30, 2013, based on the Affidavit of the Respondent, David Victor, claiming a reasonable excuse for his default and meritorious defense to the holdover proceeding. The Respondent sought to vacate the Default Judgment and dismiss the Petition. Oral argument of the Respondent's application occurred on August 8, 2013. The Respondent was represented by Jared Gilman, Esq. of Legal Services of the Hudson Valley. The Petitioner was represented by Keith Ingber, Esq. In essence, the Respondent claimed he missed court because he had a lot going on in his life and forgot about his scheduled appearance. The Respondent did not contest timely receipt of the 60-Day Notice to Quit, nor did he deny that he failed to pay rent. The Respondent remained in possession after the date requested to vacate on the timely served Notice to Quit. [*2]The Respondent disagreed with the amount of the Default Judgment claiming that payments had been paid and not credited to his account. Further, the Respondent questioned the attorney verification on the Petition. The verification was completed by the Petitioner's attorney due to the "time sensitive nature" of the proceeding.

Following the hearing, this Court denied in part the Respondent's requested relief in the Order to Show Cause. The Court determined that the Respondent's excuse for default was not reasonable under the circumstances. Furthermore, the Respondent had no meritorious defense to Petitioner's claim for possession. Accordingly, the Judgment for possession and the Warrant of Eviction were not vacated. The Court did however grant Respondent's request for an inquest to determine the amount of damages Petitioner should recover. The Default Judgment in the amount of $4,537.00 was vacated. In doing so, it should be noted that the purpose of the verification is to foster honesty and ensure reliability of the pleadings. Although the Real Property & Proceeding Law §741 allows for attorney verifications of pleadings in summary proceedings, the wording of the verification mandated an inquest to test the claimed amount due. Furthermore, absent documentation of the amount due or an affidavit of a person with knowledge of the facts, a Default Judgment should not be granted without an inquest. Brusco v. Braun, 84 NY2d 674 (1994).

On August 16, 2013, an inquest was conducted before this Court. On consent of the parties, the expired lease was received in evidence. Petitioner's Property Manager, Jessica Serratore, testified that the Respondent leased apartment No.103 in Village Park Apartments in Pleasant Valley, NY since 2011. The written lease upon which the Respondent first took occupancy expired on September 30, 2012. The Respondent was offered a new lease at an increased rent, but elected not to sign the same. Ms. Serratore testified that based upon the books and records of the apartment complex, the Respondent owed the following rents: April, 2013 $511.00; May, 2013 $1,411.00; June, 2013 $1,411.00; July, 2013 $1,411.00; and August, 2013 $700.00 for a total of $5,444.00. The Petitioner also claimed late fees in the sum of $920.00, attorneys fees for a previously settled summary proceeding in the amount of $325.00 and reasonable attorneys fees for the instant proceeding. The Petitioner's Property Manager acknowledged receipt of $1,571.00 in April, 2013, but was unable to explain how the complex was still owed a balance of $511.00 for April, 2013. Ms. Serratore also testified that the Respondent tendered keys to his unit on August 16, 2013, but she refused on the advise of counsel.

The Respondent, David Victor, testified he did not sign a new lease because he objected to the rental increase, although he paid an increased amount until May, 2013. The rental charges under the expired lease were $1,305.00 per month and at some time following the expiration of the written lease, the Respondent's rent was changed to $1,411.00 per month. The Respondent also disputed late charges claimed as excessive and unsupported by the expired lease. Following the conclusion of the inquest, each party was given the opportunity to provide written summation and argument.

The expired lease executed between the parties explicitly provides that if the Tenant "fails to sign a renewal lease or vacate the premises prior to the end of his term, then you will be a holdover resident" and under such circumstances you must "pay the community market rent for your apartment at such time specified by us and a month-to-month premium as referred to in [*3]paragraph 6". (See, paragraph 13 of the expired lease).Paragraph 6 of the expired lease includes a provision for late charges (6a) and attorneys fees (6h). Furthermore, paragraph 6f provides as follows:

Month-To-Month Premium: If you become a month-to-month resident, as set forth in Paragraph 13, you agree to pay the Community's market rent for your apartment at such time as specified by us, plus the Community's then prevailing month-to-month premium, notwithstanding any amounts set out on the Summary, and a new Summary will be provided at that time specifying the amount of such month-to-month premium.

At the inquest, there was no evidence to indicate that a new summary was

issued as required under paragraph 6f of the expired lease. Furthermore, there was no testimony regarding community "market rent". The only rental amount agreed to by both parties was $1,305.00 per month. Accordingly, based on the facts and evidence presented at the inquest, the Court has determined that the Respondent owes rent for the months of May, June and July, for a total sum of $3,915.00. Further, the Respondent owes for fair use and occupancy through August 15, 2013 in the amount of $631.45, for a total amount due for fair use and occupancy and rent in the sum of $4,546.45.

Next, the Respondent argues the Late Charge provision of the lease should not be enforced because the tenancy was terminated by the Petitioner and further because the clause is unconscionable. The lease executed by the parties provides the lease renews as a month-to-month lease following the expiration of the term. The effect of Respondent's failure to renew allowed for the creation of a month-to-month tenancy with 60-day notice for termination. In essence, the parties agreed to change only the term of the lease if a renewal lease was not executed. All other obligations of both parties remained in full force and effect. Accordingly, this Court will not deny enforcement of the Late Charge provision based on the termination of the month-to-month tenancy.

However, Respondent's claim that the Late Charge provision is unconscionable presents a separate and distinct issue. The Late Charge clause in the lease as set forth in paragraph 6a reads as follows:

"If your rent is not paid on or before NOON of the fifth (5th) day of the month when due, a late charge in the amount of $50.00 will be due immediately. In the event of such a late payment, both the rent and the late charge must be in the form of a money order or cashier's check. Each day following the 5th that the current rent and late charge is not paid in full, a daily charge of $10.00 will accrue until the rent and all applicable late charges are paid. You acknowledge that these charges are fair, reasonable, and acceptable compensation to us for the expenses and harm direct and in direct, that we suffer when your rent is not paid on time. You acknowledge that it would be extremely difficult and burdensome to calculate, assess and collect compensation for such expenses and harm with respect to any particular delay in receiving your rent. The fact that the late charge is not assessed until the late charge date, does not constitute a grace period for the payment of rent. We have the right to follow suit to gain possession of your apartment on the second day of the month if rent is not paid on the first (1st)".

The Petitioner is claiming late charges for May, 2103 in the amount of $310.00 ($50.00 on May 5th and $10.00 per day thereafter until May 31, 2013) for June in the amount of $310.00 and July in the amount of $310.00.

The late charges claimed by Petitioner are not consistent with the a plain reading of paragraph 6a itself. The Petitioner's calculation of late charges terminates the late charge at the end of the respective calendar month. The Late Charge clause does not indicate such late charges would be terminated at the end of the respective calendar month. A more accurate reading of the late charge clause would calculate the Late Charges due Petitioner on July 31, 2013 at $1,840.00.

The ultimate question is the validity of the Late Charge clause. In determining enforcement of such a clause, the primary question to be considered is whether in fact such clause is a penalty as asserted by the Respondent. Courts have often analyzed these types of clauses using the doctrine of a contract of adhesion. A contract of adhesion is a contract formed as a product of gross inequality of bargaining power between the parties. Such a contract will be deemed unconscionable when it inflicts substantive unfairness on the weaker party. Such a contract often arises when a standardized form is presented to a party whose choice is either to accept or reject a contract without and opportunity to negotiate its terms. An adhesion contract tainted by unconscionablity is unenforceable. A contract of adhesion will be set aside upon a showing of unfairness, undue oppression or unconscionablity. Standardized contracts are not unenforceable merely because of an inequality of bargaining power of the parties without additional proof of unconscionablity or violation of public policy. In considering the doctrine of contracts of adhesion, a court must look for the elements of such a contract which are (1) a necessity of life; (2) a contract for the excessive benefit of the offeror; (3) an economic or other advantage of the offeror; and (4) the offer of a proposed contract on a take it or leave it basis. Spring Valley Garden Associates v. Earle, 112 Misc 2d 786 (Special Term Rockland County, 1982).

In this case, the contract was drafted by VP Village Park Apartments, LLC consisting of 19 pages and providing for late fees in the event of a holdover. Although the late fee was not calculated by Petitioner as set forth in the lease, the Late Charge provision is excessive and grossly disproportionate to any amount of damages that could be sustained by the failure to pay rent in a timely fashion. The clause, if applied as written, could virtually spiral to the point that outstanding late charges would far and away exceed the monthly rent in little more than two months. In this Court's view, the Late Charge provision of this lease is a penalty. Accordingly, the Late Charge provision as drafted in the Petitioner's lease is unconscionable and void.

Lastly, the Petitioner's claim for reasonable attorneys fees for the instant proceeding. In support of that, the Petitioner's have provided an Affidavit of Legal Costs and Services. The Petitioners are awarded reasonable attorneys fees in the amount of $750.00 and costs in the amount of $197.00.

All other requested relief not specifically granted, is denied. This shall constitute

the Decision and Order of the Court. Petitioner is directed submit a Judgment

consistent with this Decision and Order within forty-five (45) days on notice to [*5]

Respondent.

Dated:August 28, 2013

________________________________

HON. David A. Sears, Town Justice

TO: