[*1]
APF 286 Mad LLC v RIS Real Props., Inc.
2014 NY Slip Op 50485(U) [43 Misc 3d 1203(A)]
Decided on January 30, 2014
Civil Court Of The City Of New York, New York County
Bannon, J.
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and will not be published in the printed Official Reports.


Decided on January 30, 2014
Civil Court of the City of New York, New York County


APF 286 MAD LLC, GAN 286 MADISON LLC, and 286 MADISON ASSOCIATES LLC, , Petitioners-Landlords,

against

RIS Real Properties, Inc., Respondent-Tenant, -and- ROBERT I. STROUGO, ESQ., WATTERS & SVETSKEY, LLP, DAVID M. BLUM, ESQ., ROBERT A. BURSTEIN, ESQ., KEITH E. WILSON, ESQ., MANOLO COSTA NEW YORK, NYC REALTY, and XYZ, INC., Respondents-Subtenants.




L & T 73123/12



Counsel for Petitioner-Landlord: Klein & Solomon LLP

275 Madison Ave, 11th Floor

New York, NY 10016

Counsel for Respondent -Tenant: Robert I. Strougo, Esq.

286 Madison Avenue, Suite 2200

New York, NY 10017

Nancy M. Bannon, J.

BACKGROUND



The petitioner-landlord, APF 286 MAD LLC, commenced this summary non-payment proceeding against the respondent-tenant RIS Real Properties, Inc. after it ceased paying rent and additional rent on the ground that the petitioner had interfered with the use of its space by performing mandatory "Local Law 11" work on the building [*2]facade. The subject premises consist of the entire 22nd floor at 286 Madison Avenue in Manhattan, which is divided into separate office suites, many of which are occupied by lawyers or law firms.

Pursuant to an order dated January 2, 2013, this court (Nervo, J.) granted the motion of the petitioner for summary judgment on the petition, dismissed the respondent's affirmative defenses and counterclaims, awarded a judgment of possession to the petitioner and directed a hearing to determine the proper amount of rent and additional rent arrears and attorneys fees to be awarded.

After the hearing, by an order dated June 28, 2013, this court awarded the petitioner a money judgment for rent and additional rent plus legal fees and expenses in the total amount of $210,831.89, plus statutory interest from May 1, 2012. By an order dated August 20, 2013, this court, sua sponte, modified the order dated June 28, 2013, by amending it to add a provision awarding a judgment of possession, as per Judge Nervo's order. A money judgment in the sum of $232,875.65 ($210,831.89 plus interest of $22,043.76) was entered July 25, 2013.

The respondent filed notices of appeal from all orders and the judgment, and moved, by order to show cause, for a stay and an order fixing an undertaking pursuant to CPLR 5519(a)(6). Neither in its moving papers nor its affirmation in opposition to the cross-motion does the respondent suggest any ground for the appeals.

By an order dated October 15, 2013, this court (Samuels, J.) granted the interim relief of directing the respondent to deposit with the clerk of the court or to pay the petitioner directly the sum of $100,000.00 within 10 days. The respondent has paid that amount to the petitioner.

The respondent now moves (1) for an order pursuant to CPLR 5519(a)(6) fixing an undertaking so as to stay the warrant of eviction pending its appeals of this court's Decision and Orders and (2) to modify that portion of the June 28, 2013 Decision and Order which awarded Petitioner interest from May 1, 2012 on the money damages.

The petitioner agrees with the respondent that, pursuant to CPLR 5001, September 1, 2012 is an appropriate intermediate date from which to calculate pre-judgment interest for the portion of the award concerning rent and additional rent arrears and concedes that no interest should be awarded on the balance of the judgment. However, the petitioner opposes the respondent's motion seeking an order fixing an undertaking. The petitioner argues that RPAPL § 747-a governs as opposed to the CPLR 5519(a)(6) such that the appropriate amount of the undertaking would be the full amount of the money judgment, plus additional interest, along with ongoing use and occupancy of $18,354.61 pending determination of the appeal.

The petitioner also moves, by order to show cause, (1) pursuant to CPLR 3025 for leave to amend the caption of the petition to add RIS Investments and Caraballo & Mandell, LLC as respondent-subtenants (2) to amend the judgment of possession granted to petitioner pursuant to this court's August 20, 2013 order to include all of the subtenants together with respondent R.I.S. Real Properties and (3) an award for additional attorneys fees for the instant motion.

In opposition, the respondent consents to pay use and occupancy of $18,354.61 but argues that the undertaking should be set at $110,885.67, taking into account the judgment amount of $210,831.89, less the $100,000 it paid to petitioner pursuant to [*3]Judge Samuel's order and a $64,000 security deposit held by the petitioner.

The motions are granted in part as follows: (1) Pursuant to CPLR 5519(a)(6) and (a)(2), the judgment of possession and money judgment are stayed upon the respondent posting an additional undertaking in the sum of $100,000, and paying to the petitioner monthly use and occupancy of $18,354.61. (2) Pursuant to CPLR 5001(b), this court's prior orders dated June 28, 2013 and August 20, 2013, are modified, on consent, to the extent of setting the interest accrual date to September 1, 2012, as to the award of rent and additional rent arrears, and no interest on the balance of the money judgment. (3) Pursuant to CPLR 3025, the judgment of possession is amended to include those subtenants previously served in the instant action as respondents. The motions are otherwise denied.

DISCUSSION


(1) Respondent's Motion for a Stay Pursuant to CPLR 5519

The respondent is correct in arguing that it is entitled to relief under CPLR 5519. Subsection (a)(6) of that statute provides that a stay of enforcement of a judgment pending appeal may be obtained without a court order where, as here, the appellant is "in possession or control of real property which the judgment or order directs be conveyed or delivered, and an undertaking in a sum fixed by the court of original instance is given that the appellant or moving party will not commit or suffer to be committed any waste."

"[T]he theory underlying the requirement for posting an undertaking [is] entitlement to recover damages for the withholding of property during the pendency of litigation contesting title thereto (13 Carmody-Wait 2d, NY Practice, § 89:8)." Livoti v Mallon, 91 AD2d 899 (1st Dept 1983). The purpose of the undertaking is to prevent the landlord from suffering additional losses while the case is pending appeal. See Andrada Owners Corp. v DiGrazia, 38 Misc 3d 1219(A) (Civ Ct, NY County 2013). While the stay is automatic, the amount of an undertaking to be fixed is generally left to the court's discretion. See Willis of New York, Inc. v DeFelice, 299 AD2d 240 (1st Dept 2002); Crippen v United Petroleum Feedstocks, Inc., 245 AD2d 152 (1st Dept 1997); see also CPLR 2201.

CPLR 5519(a)(6) is broad in scope and by its very terms applies not only to non-payment proceedings (see Andrada Owners Corp v DiGrazia, supra; Mountbatten Equites v Tabard Press Corp., 87 Misc 2d 861 [Civ Ct, NY County 1976], affd 88 Misc 2d 831 [App Term 1st Dept, 1976]) but to a much broader range of real estate actions, many where the proper undertaking amount is not readily ascertainable such as actions for specific performance of a contract for the sale of real property. See e.g. Goldstein v Held, 63 AD3d 881 (2d Dept 2009); Livoti v Mallon, supra; Essa v Weiner, 178 Misc 2d 149 (Sup Ct, Kings County 1998). As such, CPLR 5519(a)(6) requires the court to make a considered determination, based on the particular facts of the case before it, of the amount of money that will prevent "waste" to the property in possession of the appellant pending the appeal. It has been held that, notwithstanding the "imprecise nature" of similar analyses under CPLR 6312(b), the undertaking fixed should be "rationally related to the amount of the potential damages." See Clover St. Assoc. v Nilsson, 244 AD2d 312 (2d Dept 1997). [*4]

The court notes that such analysis is not required by subsection (a)(2) of CPLR 5519, which also applies in this case. That section provides for a stay where the judgment appealed from "directs the payment of a sum of money and an undertaking in that sum is given." As noted above, the petitioner was granted a money judgment as well as a judgment of possession and the respondent has appealed from all orders and the judgment. Thus, to the extent that the respondent appeals from the money judgment, it is required to post an undertaking in that exact amount, $232,875.65, in full, in order to be granted a stay.

While not addressing the applicability of CPLR 5519(a)(2), the petitioner maintains that the respondent must post an undertaking in the full amount of the judgment pursuant to RPAPL § 747-a before a stay can be granted. RPAPL § 747-a is more limited in scope than CPLR 5519 and applies to all non-payment summary proceedings in New York City where the petitioner has obtained a judgment, and prohibits the court from granting any stay of the judgment unless the respondent submits proof that it paid the judgment amount to the petitioner prior to the judgment. The import of this statute, which does not contemplate appeals, is to stay and prevent evictions where the tenant has in fact paid the claimed arrears. That is not the case here, since the respondent is not claiming that it has paid any of the arrears ordered but is arguing that it need not pay them and, by appealing, is challenging this court's determination that it must pay them. Indeed, the petitioner provides no persuasive argument or authority for its position that RPAPL § 747-a governs here so as to require the court to fix an undertaking in the full amount of the judgment. In any event, as discussed above, CPLR 5519(a)(2) and (a)(6) do apply and support a similar result.

Under the circumstances presented, including the judgment amount, without interest, of $210,831.89, the lack of any apparent merit to the respondent's appeals, the applicability of both CPLR 5519(a)(2) and (a)(6), and the parties' agreement to modify the interest accrual date and for an ongoing monthly use and occupancy payment of $18,354.61, the court finds that the proper amount of the undertaking should be $200,000.00. Since the respondent has already paid $100,000.00 directly to the petitioner pursuant to a prior order, that undertaking is extended and an additional undertaking of $100,000.00 is ordered, to be paid within 30 days. Thus, the judgment of possession (CPLR 5519[a][6]) and the money judgment (CPLR 5519[a][2]) are stayed upon the respondent posting an additional undertaking in the sum of $100,000.00, and paying to the petitioner monthly use and occupancy of $18,354.61.

(2) Respondent's Motion to Modify the Interest Accrual Date

The petitioner does not oppose the respondent's application to "resettle" or modify this court's prior orders to the extent of changing the interest accrual date on the portions of the money judgment concerning rent and additional rent from May 1, 2012, to a later date, and denying any interest on the portions concerning late fees and attorneys fees. Under CPLR 5001(b), interest on damages which were incurred at various times, such as in a non-payment proceeding, "shall be computed upon each item form the date it was incurred or upon all of the damages from a single reasonable intermediate date." See e.g. Wolf v American Tech. Ceramics Corp., 84 AD3d 1224 (2nd Dept 2011); Rose Assoc. v Lenox Hill Hosp., 262 AD2d 68 (1st Dept 1999), lv [*5]denied 94 NY2d 836 (1999). Here, the petitioner was awarded a money judgment which included rent, additional rent, late fees and attorneys fees, with interest on all awards calculated from May 1, 2012. However, the rent and additional rent arrears arose from May 2012 through January 2013, such that the damages arose each month during that period of time. Therefore, an appropriate intermediate date pursuant to CPLR 5001(b) would be September 1, 2012. And, as conceded by the petitioner, interest shall not apply on the awards of late fees and attorneys fees. The court notes that, ordinarily, interest on an award of attorneys' fees accrues on the date the movant is determined to be the prevailing party. CPLR 5001(a); Housing Corp. v Jimco Restoration Corp., 77 AD3d 502 (1st Dept 2010); Solow Management Corp v Tanger, 19 AD3d 225 (1st Dept. 2005), appeal after remand 38 AD3d 49 (1st Dept 2007), affd 10 NY3d 326 (2008); see also Miller Realty Assocs. v Amendola, 51 AD3d 987 (2d Dept 2008). Here, were interest being awarded on attorneys fees, that date would be January 2, 2013, the date the court granted summary judgment to the petitioner.

Accordingly, the Decisions and Orders of this court dated June 28, 2013 and August 20, 2013, are modified to the extent of setting the interest accrual date at September 1, 2012, for the award of rent and additional rent arrears and awarding no interest on the balance of the money judgment.

(3) Petitioner's Motions to Amend the Pleadings and Judgment

The petitioner seeks to amend (1) the caption to add as subtenants-respondents RIS Investments and Caraballo & Mandell, LLC, and (2) the final judgment of possession issued against respondent R.I.S. Real Properties, Inc. to add the subtenants-respondents previously served with the Notice of Petition. The second branch of the petitioner's application is granted.

The first branch of the petitioner's motion is denied as RIS Investments and Caraballo & Mandell were not served with notice of the petition prior to the entry of final judgment. The instant action was commenced in July 2012. Caraballo & Mandell moved into the subject premises in December 2012. The petitioner does not dispute the proof that it was aware of Caraballo & Mandell's subtenancy by July 2013 or sooner, and that it nonetheless did not seek to join them as a party to the action at any time prior to obtaining a final judgment. "Due process requires . . . that, for the warrant to be effective against a subtenant, licensee or occupant, he be made a party to the proceeding, either by naming him in and serving him with the petition and notice of petition or by joining him as a party during the pendency of the proceeding." (emphasis added). 170 West 85th Street Tenants Assn. v Cruz, 173 AD2d 338, 339 (1st Dept 1991). This procedure was not followed in the instant action. Rather, the petitioner seeks to add Caraballo & Mandell and RIS Investments after the action has been concluded. Moreover, the petitioner proffers no basis for adding these parties except to say that RIS Investments "is obviously affiliated" with RIS Real Properties and Caraballo & Mandello are new subtenants affiliated with Robert Strougo, attorney for the respondent RIS Real Properties. This is too little, too late. Therefore, and contrary to the petitioner's contention, this is not the type of amendment to the pleading contemplated by CPLR 3025(b). Although that relief is to be freely given, it must only be given absent prejudice or surprise resulting directly from the delay and where the [*6]evidence submitted in support of the motion indicates that the proposed amendment has merit. See McCaskey, Davies and Assocs., Inc. v New York City Health & Hospitals Corp., 59 NY2d 755 (1983); 360 West 11th LLC v ACG Credit Co. II, LLC, 90 AD3d 552 (1st Dept 2011); Ingrami v Rovner, 45 AD3d 806 (2d Dept 2007). Accordingly, petitioner's application to amend the caption to include subtenants RIS Investments and Caraballo & Mandell must be denied.

The second branch of the petitioner's application seeks to amend the final judgment of possession issued against RIS Real Properties, Inc. so as to add the named respondent-subtenants Robert I Strougo, Esq., Watters & Svetskey, LLP, David M. Blum, Esq., Robert A. Burstein, Esq., Keith E. Wilson, Esq., Manolo Costa New York and NYC Realty. The petitioner argues, and the respondent does not dispute, that these parties were all named in the Notice of Petition and Petition and were served with those papers. Indeed, the court file includes the affidavit of service, which demonstrates that all were served on July 24, 2012, at approximately 12:00 P.M. at the subject premises, and that service was personally made on proposed subtenant David M. Blum, Esq., who also accepted service on behalf of all other named subtenants. Although named and served, these subtenants did not answer or appear in the action.

While they "are proper' parties in the instant ... proceeding, they are not necessary' parties whose presence is indispensable to the according of complete relief as between landlord and tenant." Triborough Bridge and Tunnel Auth. v Wimpfheimer, 165 Misc 2d 584, at 586; see also Fernandez v Batista, 42 Misc 3d 130(A) (App Term, 1st Dept 2013). However, should the landlord seek to evict the subtenants in the same proceeding, it must name them in the petition as respondents and provide proper notice of the proceeding. See Triborough Bridge and Tunnel Auth. v Wimpfheimer, supra at 586 citing Teachers College v Wolterding, 77 Misc 2d 81 (App Term, 1st Dept 1974). Failure to do so requires commencement of a separate proceeding as to them. See New York Railways Corp. v Savoy Assoc., Inc., 239 AD 504 (1st Dept 1933); Teachers College v Wolterding, supra. However, since the subtenants in this case were named and served, they can be added to the final judgment of possession and no additional proceeding is necessary.

There is no merit to the argument of RIS Real Properties that the petitioner can not add the subtenants to the judgment of possession since it failed to move for a default judgment pursuant to CPLR 3215. It is well settled that CPLR 3215 "does not apply because it has been abrogated by the more specific RPAPL § 732." Matter of Brusco v Braun, 84 NY2d 674, 681 (1994). Article 7 of the RPAPL "represents the Legislature's intent to establish an expeditious procedure for the recovery of possession of real property balancing the rights of landlords and tenants." Matter of Mennella v Lopez-Torres, 229 AD2d 153, 155 (2d Dept 1997), affd 91 NY2d 474 (1998), citing Brusco v Braun, supra. Thus, where the petitioner has complied with the procedural requirements of RPAPL article 7, specifically, where the petition was verified upon personal knowledge of the landlord and the notice of petition and petition were personally served upon the tenant, the respondent has failed to answer within five days and there is no question as to the sufficiency of the petition, the court is required by RPAPL § 732(3) to render judgment in favor of the petitioner. See Brusco v Braun, [*7]supra; Matter of Mennella v Lopez-Torres, supra. Inasmuch as all of these requirements have been met here, the petitioner is entitled to a judgment of possession as against these subtenants, without the necessity of moving for a default judgment.Furthermore, pursuant to CPLR 5019(a), " a trial judge may amend a final judgment so that the judgment effectuates the intention of the court and provides relief to which a party would be entitled as a matter of course.'" Matter of Storman v New York City Dept. of Educ., 38 Misc 3d 1207(A), (Sup Ct, NY County 2013), citing Security Pacific Mtge. and Real Estate Serv. v Herald Center Ltd., 731 F Supp 605, 607 (2d Cir 1990); see Beaumont v American Can Co., 215 AD2d 249 (1st Dept 1995).

Accordingly, the final judgment of possession shall be amended to include as respondents-subtenants Robert I Strougo, Esq., Watters & Svetskey, LLP, David M. Blum, Esq., Robert A. Burstein, Esq., Keith E. Wilson, Esq., Manolo Costa New York and NYC Realty. The court notes that the proposed amended caption in the petitioner's moving papers erroneously includes the disallowed proposed parties - RIS Investments and Caraballo & Mandell, LLC - in addition to these subtenants.

(4) Petitioner's Motion for Additional Attorneys Fees

Finally, the petitioner's application for an award of additional attorneys' fees to cover the cost of the instant motion is denied. It argues that it was required to bring this motion due to its own oversight in naming all proper parties as subtenant-respondents and the respondent's subsequent refusal to stipulate to that relief. However, the petitioner's own law office failure occasioned the motion in the first instance, and there is no requirement that one's adversary stipulate to any relief, particularly relief that may be unwarranted or untimely.

Accordingly, it is:

ORDERED that the respondent's motion pursuant to CPLR 5519 is granted to the extent that the judgment of eviction and the money judgment are stayed upon the respondent posting an additional undertaking in the sum of $100,000.00 within 30 days of service of this order with notice of entry, and it is further,

ORDERED that the respondent is directed to pay the petitioner monthly use and occupancy of $18,354.61, on the first of each month commencing March 1, 2014, and it is further,

ORDERED that the failure of the respondent to comply with any of these directives shall result in vacatur of the stay, and it is further,

ORDERED that this court's Decisions and Order dated June 28, 2013, is hereby modified, on consent, to the extent of setting the interest accrual date to September 1, 2012, for that portion fo the money judgment that includes rent and additional rent arrears, and vacates so much of the orders as awarded interest on the balance of the money judgment; and it is further,

ORDERED that the petitioner's motion to amend the caption to add as subtenants-respondents RIS Investments and Caraballo & Mandell, LLC, is denied; and it is further,

ORDERED that the petitioner's motion to amend the judgment of possession to include those subtenants-respondents named and served is granted, and the judgment of possession is hereby amended to add Robert I Strougo, Esq., Watters & Svetskey, LLP, David M. Blum, Esq., Robert A. Burstein, Esq., Keith E. Wilson, Esq., Manolo [*8]Costa New York and NYC Realty as subtenants-respondents, and the Clerk is directed to amend the judgment of possession accordingly, and it is further

ORDERED that the petitioner's motion for an award of additional attorneys fees is denied.

This constitutes the Decision and Order of this Court.

Dated: January 30, 2014__________________________

NANCY M. BANNON, J.S.C