Matter of Maugenest



Matter of Maugenest

OATH Index No. 152/06 (Mar. 21, 2006)

[Loft Bd. Dkt. No. TM-0060; 280 Nevins Street, Brooklyn, N.Y.]

Petitioners filed an application alleging that the owner diminished services by discontinuing freight elevator service. Judge denied the application finding that access to an elevator in an adjacent non-IMD building, which was not under the landlord's control, was not a service provided by the landlord.

______________________________________________________

NEW YORK CITY OFFICE OF

ADMINISTRATIVE TRIALS AND HEARINGS

In the Matter of

MARGARET MAUGENEST

Petitioner

______________________________________________________

REPORT AND RECOMMENDATION

KARA J. MILLER, Administrative Law Judge

This is a diminution of services application filed by Margaret Maugenest, Janice Everett, William Touchet, Peter Reich and David Schlegel, tenants of the interim multiple dwelling ("IMD") at 280 Nevins Street, Brooklyn, New York, pursuant to Article 7-C of the Multiple Dwelling Law and title 29, section 2-04(c) of the Rules of the City of New York (RCNY). The application alleges that the owner of the building, Chazon, LLC ("Chazon"), diminished services by discontinuing freight elevator service. This case, however, is unusual because the elevator in question is located in an adjacent non-IMD building, currently owned by a different landlord.

The application was filed with the Loft Board on April 20, 2005, and served upon the owner by mail on April 25, 2005. An answer was served on May 27, 2005. On July 12, 2005, the Loft Board referred the matter to this tribunal for a hearing and report. On July 13, 2005, a combined notice of conference and trial and notice of default was served on all affected parties. On August 31, 2005, an amended application was filed adding Mr. Schlegel as an affected party. The hearing was held on November 9, 2005 and the record remained open until November 23, 2005 to permit the parties to submit post-trial briefs.

ANALYSIS

This is a tale of two buildings, one elevator and an easement, which began in 1979, when Norman Kumer, a principal of 280 Nevins Realty Co. ("280 Nevins Realty"), owned two adjacent commercial buildings in Brooklyn, New York - 280 Nevins Street ("280 Nevins") and 543 Union Street ("543 Union"). Mr. Kumer illegally rented space in both buildings to residential tenants who took occupancy of the unfinished raw space. The new tenants were charged with the task of making the former factory a home. To accomplish this mission they had to reconfigure the space by erecting walls, re-doing the floors, plastering, painting and more. Taking into consideration that 280 Nevins does not have an elevator and that the tenants would need a way to bring their building supplies upstairs, Mr. Kumer provided them with access to the freight elevator in the adjacent building, 543 Union. Since these buildings are connected by two causeways or bridge-like structures, the tenants in 280 Nevins were able to enter 543 Union, take the freight elevator upstairs, and cross the causeway to enter their own building. The five-year residential leases issued to the tenants of 280 Nevins in 1979 provided for freight elevator service. The tenants testified that during the first three months of occupancy they used the elevator in 543 Union on a regular basis to bring heavy building supplies, fixtures, and furniture upstairs (Pet. Exs. 5, 6, 7; Tr. 47-50, 65-69, 72-73).

After the building was structurally converted to residential units, the tenants continued to use the elevator in 543 Union as needed. To accomplish this they would enter 543 Union and take the elevator upstairs to a hallway. They would exit the hall through a door that led to the causeway. After traversing the causeway, they would go through another door which led directly into an apartment. They would have to enter the apartment and exit through their neighbor's front door before making their way to their own units. The tenants contended that they maintain a collegial relationship with one another and never had a problem gaining permission and access to drag heavy objects through another tenant's apartment (Tr. 55-59, 61, 88-89, 109).

In 1985, 280 Nevins Realty sold 280 Nevins to Boris, Morris and Sam Weiss (the "Weiss brothers"), while retaining ownership of 543 Union. As part of the agreement of sale, 280 Nevins Realty granted a five-year easement for use of the elevator in 543 Union from 1985 to 1990. The easement permitted the Weiss brothers' tenants to use the elevator in 543 Union as well as the existing passageways (Pet. Ex. 1). The easement was recorded and filed in the New York City Register's Office. In 1986 or thereabout, 280 Nevins Realty sold 543 Union, the building with the elevator, to Indigo Realty, subject to the five-year easement. In 1990, about the time the easement expired, the Weiss brothers declared bankruptcy (Pet. Ex. 1; Tr. 76).

On January 24, 1992, the tenants of 280 Nevins filed an application seeking coverage under the Loft Law. On April 28, 1993, the building was found covered by the Loft Board pursuant to the 1987 amendment to the Loft Law codified in Multiple Dwelling Law ("MDL") section 281(4). Matter of 280 Nevins Street Tenants' Association, Loft Bd. Order No. 1441, 14 Loft Bd. Rptr. 138 (Apr. 28, 1993).

In 1994, 280 Nevins went into receivership and was managed by a receiver for the next six or seven years. Although it is unclear, it appears that the receiver may have paid a fee to Indigo Realty for use of the elevator in 543 Union. In 2000, Isaac Schwartz, a principal of Chazon, the current owner, purchased the mortgage for 280 Nevins. The following year Chazon purchased the building. Four years later, in 2004, Indigo Realty, the owner of the adjacent building with the elevator, sold 543 Union to the tenants residing there (Pet. Ex. 17; Tr. 112-13, 121, 126-27, 132).

After the elevator easement expired in 1990, permission for the tenants of 280 Nevins to use the elevator in 543 Union became more and more restrictive. Jay Tran, a manager or superintendent of 543 Union from 2002 through 2004, testified that Indigo Realty restricted usage of the elevator by forbidding unsupervised usage. Mr. Tran was instructed to accompany anyone who needed to use the elevator, such as outside workers from utility companies or tenants from 280 Nevins. Mr. Tran used this arrangement to his benefit and started charging the residents of 280 Nevins to use the elevator in 543 Union. When Indigo Realty started to look for a potential buyer for the building in late 2002, it forbade the tenants at 280 Nevins to use the elevator and padlocked the doors in 543 Union leading to the causeways between the buildings. The tenants who lived at 543 Union eventually purchased the building from Indigo Realty in 2004 and remain the current owners. As the new owners of 543 Union, they decided to keep the doors leading to the causeways padlocked and continue to forbid the residents in 280 Nevins to use their elevator (Tr. 33-37, 40-41, 85-86, 94-95).

The tenants who reside at 280 Nevins used the elevator at 543 Union to varying degrees during their tenancy. There was a general consensus that during the initial renovation of the raw space, the elevator was used a great deal to carry heavy building supplies and furniture. Otherwise, the usage described in the subsequent years was sporadic, depending on whether or not they had something very heavy or bulky to bring upstairs. Once Mr. Tran started charging the tenants of 280 Nevins to use the elevator in 2002, it appears that most of them elected not to use it. Also, although the tenants claimed to have a very friendly relationship with one another, usage of the elevator was still dependent upon access to the causeway door by entering another tenant's apartment. Even though some of the tenants had keys to the causeway apartments, access to someone else's apartment would have had to have been pre-arranged. Furthermore, the testimony adduced at trial established that after the initial renovation phase, the pattern of elevator usage was one of convenience rather than necessity (Tr. 50-51, 74-75, 77-78, 108).

Petitioners allege that respondent diminished services by discontinuing freight elevator service. The Loft Board Rules require that landlords provide certain minimum services to IMD tenants. Freight elevator service is not a minimum housing service, such as heat, hot water or electricity, which an owner of an IMD is under an affirmative obligation to provide under the Loft Board Regulations . The Regulations do, however, prohibit the diminution of legal elevator service if it was being provided as of the effective date of the Loft Law. See Loft Bd. v. Rudd Realty Management, OATH Index No. 289/03, mem. dec. (Dec. 11, 2002).

The Minimum Housing Maintenance Standards contained in the Loft Board Regulations states in relevant part:

(b) Basic services. Landlords of interim multiple dwellings shall provide the following minimum housing maintenance services to residential occupants eligible for the protection of Article 7-C of the Multiple Dwelling Law:

. . .

(9) Elevator service. The landlord shall not diminish nor permit the diminution of legal freight or passenger elevator service and shall cause said service to be maintained in good working order.

29 RCNY § 2-04(b)(9) (LEXIS 2006).

The Loft Board has held that the critical date for determining whether services were provided and thus have to be continued under section 2-04(b)(9) or 2-04(c) for buildings covered by the Loft Law as originally enacted is June 21, 1982, the effective date of the Loft Law. Matter of Hennen, OATH Index No. 2323/01, at 10 (Oct. 22, 2002) remanded on other grounds, Loft Bd. Order No. 2762 (Nov. 19, 2002); Matter of Ando, OATH Index No. 1829/96, at 7 (Sept. 17, 1996), aff'd, Loft Bd. Order No. 2036 (Nov. 21, 1996); Matter of 42 N. Moore Street, Loft Bd. Order No. 1411, 14 Loft Bd. Rptr. 79, 80 (Mar. 3, 1993). Although these cases do not explain this interpretation of the Loft Board's rules, in the alternate plans proceeding Matter of 4-6 White Street, Loft Bd. Order No. 1553, 14 Loft Bd. Rptr. 328B, 331 (May 4, 1994), the Loft Board held that an owner's legalization responsibilities are those to which the owner was obligated to address as of June 21, 1982, the effective date of the original Loft Law. By analogy, an owner's responsibilities concerning maintenance of building services would be those to which an owner was providing, and thus obligated to address, as of the effective date of the Loft Law. Therefore, the date for determining whether services were provided for 280 Nevins is May 1, 1987, the date upon which the building became eligible for coverage under the 1987 amendment to the Loft Law.

Having determined that May 1, 1987, is the critical date for determining whether services were provided by the owner of 280 Nevins, the lease that was in effect at the time would be germane. Section 2-04(c) of the Minimum Housing Maintenance Standards provides in pertinent part that:

Additional lease agreement services. In addition to those services mandated by § 2-04(b) of this Rule, owners . . . shall maintain and shall continue to provide to residential occupants services specified in their lease or rental agreement. In the absence of a lease or rental agreement, owners . . . shall provide those services to residential occupants which were specified in the lease or rental agreement most recently in effect in addition to those services mandated in § 2-04(b). There shall be no diminution of services.

29 RCNY § 2-04(c) (LEXIS 2006).

No proof was submitted as to any leases in effect in 1987. Instead, petitioners submitted two 1979 leases, which expired in 1984, from original residential tenants at 280 Nevins to demonstrate what services the owner provided in the original residential leases. The leases that were issued in 1979 contained a provision stating,

29. The landlord shall furnish, insofar as the present facility provides, for other than commercial purposes, the following services:

. . .

(d) an elevator operator to operate the elevators at the mutual convenience of tenant and landlord, at the landlord's expense during business hours. After business hours, tenant agrees to pay the operator. At all times the elevator must be operated by a person designated by the landlord.

The 1979 leases further provide,

37. a) Tenants residing in Nevins Street Building shall have access to elevators on their floor by arrangement with tenants in whose premises elevator exists.

b) Tenant in whose space elevator exists, may not unreasonably withhold access to these elevators.

(Pet. Exs. 5, 7).

For a number of reasons, I am disinclined to accept the 1979 leases as controlling in this particular case. The Loft Board has determined in certain instances that leases in existence prior to the enactment of the Loft Law controlled. See Matter of 42 N. Moore Street, Loft Bd. Order No. 1411, 14 Loft Bd. Rptr. 79, 85 (Mar. 3, 1993) (hearing officer held that "the first step in determining the leases or rental agreements in effect on June 21, 1982 is to look to the leases most recently in effect before that date"; the hearing officer found that leases of unstated duration dated 1973, 1975, and 1976 expressly excluded elevator service). See also Matter of Bernstein, OATH Index No. 1710/02 (Aug. 1, 2003), aff'd, Loft Bd. Order No. 2823 (Oct. 6, 2003); Matter of 24 Harrison Street, OATH Index No. 1120/96 (Feb. 12, 1999), aff'd, Loft Bd. Order No. 2380 (Mar. 23, 1999); Matter of Seyfried, OATH Index No. 127/97 (Jan. 3, 1997), adopted in part, Loft Bd. Order No. 2083 (Mar. 20, 1997), on remand, Loft Bd. Order No. 2107 (May 22, 1997); Matter of DeCallatay, Loft Bd. Order No. 1318, 13 Loft Bd. Rptr. 311A (Mar. 26, 1992); Matter of Moskowitz, Loft Bd. Order No. 357, 3 Loft Bd. Rptr. 118 (Jan. 29, 1986); Matter of 8 Beach Street Tenants Association, Loft Bd. Order No. 301, 3 Loft Bd. Rptr. 29 (Sept. 26, 1985).

In other cases, however, the Loft Board has held that leases issued subsequent to enactment of the Loft Law were considered to be controlling. See Matter of Perretti, Loft Bd. Order No. 989, 10 Loft Bd. Rptr. 65 (Jan. 25, 1990) (owner obligated to provide elevator service based on a lease from 1984 to 1989). See also Matter of Dormuth, Loft. Bd. Order No. 363, 3 Loft Bd. Rptr. 125 (Feb. 21, 1986). While yet in other cases little detail is provided as to why a particular lease was considered pertinent or even if that lease was still in effect when the Loft Law was enacted. See Matter of Hennen, OATH Index No. 2323/01 (Oct. 22, 2002), remanded, Loft Bd. Order No. 2762 (Nov. 19, 2002), on remand, OATH Index No. 925/03 (Apr. 23, 2002), aff'd, Loft Bd. Order No. 2833 (Nov. 13, 2003); Matter of Jones, Loft Bd. Order No. 1822, 16 Loft Bd. Rptr. 4 (July 27, 1995);Matter of Myers, Loft Bd. Order No. 1336, 13 Loft Bd. Rptr. 369 (June 25, 1992); Matter of Nadelson, Loft Bd. Order No. 686, 6 Loft Bd. Rptr. 77 (Nov. 5, 1987).

Another concern about relying on the 1979 leases, which expired in 1984, is petitioners' failure to submit any subsequent leases for the building. More specifically, there is no indication whether there were any leases in effect on May 1, 1987, the critical date for determining whether services were provided, despite petitioners being on notice that if a lease covering this period exists, it would be highly relevant. See Matter of Maugenest, OATH Index No. 672/05 at 9, 10 (June 13, 2005). I must therefore conclude that in 1987 there were no leases providing for elevator services.1 This conclusion finds further support in the fact that the 1979 leases were issued by 280 Nevins Realty who actually had it within its capacity to provide elevator service to the tenants of 280 Nevins because it owned both buildings at the time. It stands to reason that any leases issued after 1985, would not be able to provide for legal elevator service because 543 Union, and the elevator therein, was not within the ownership or control of the landlord of 280 Nevins.

In addition, the limited five-year elevator easement entered into in 1985, does not support petitioners' assertion that the landlord had provided legal elevator service as of this date. Based on the record before me, on May 1, 1987, the critical date for determining whether services were provided, the controlling legal document was not a lease but an easement. An easement creates a non-possessory right to enter and use land in the possession of another and obligates the possessor not to interfere with the uses authorized by the easement. Restatement (Third) of Property (Servitudes) § 1.2(1) (Lexis 2006). The five-year elevator easement was entered into between 280 Nevins Realty and the Weiss brothers. It permitted the tenants of the Weiss brothers to use the elevator located in 543 Union and the existing passageways between the two buildings. Once the easement expired in 1990, however, usage of the elevator was at the discretion of Indigo Realty and beyond the control of the owners of 280 Nevins. Thus, on May 1, 1987, the owner did not have control over the elevator in 543 Union and was consequently not providing elevator service.

As of 1987, the tenants could not have had an expectation that they could use the elevator in 543 Union in an ongoing manner or that they could rely on it after the expiration of the easement. See Matter of Bernstein, OATH Index No. 1710/02 (Aug. 1, 2003), aff'd, Loft Bd. Order No. 2823 (Oct. 6, 2003). Access and use of the elevator in 543 Union, ceased to become a legal service provided by the landlord in 1984, when the 1979 lease expired and the five-year easement was entered into. Once the easement was in effect, the only thing that the Weiss brothers were providing to their tenants was access to the causeways between the buildings since the elevator was under the dominion and control of the owner of 543 Union.

Even if one were to conclude that the landlord provided elevator service to the tenants at 280 Nevins on the critical date, it would be nonsensical to interpret the Loft Law as requiring the current landlord to install a new elevator in a building that never had an elevator. The diminution regulations require that the landlord not diminish elevator service and maintain existing service in good working order. The only elevator service the tenants at 280 Nevins Street ever had available to them was in an adjacent building accessed by walking through neighbors' apartments and along a causeway. Requiring the current landlord to install an elevator within this building would not be restoring the same service, but instead creating a new and different service.

Such a requirement would unreasonably exceed the obligations placed on the landlord by this regulation. When the Loft Board drafted and discussed the portion of the regulations pertaining to diminution of legal elevator service, in addition to being concerned about the health and safety of the tenants, it took into account the costs associated with complying with these regulations. The Loft Board attempted to minimize capital investments that landlords would have to expend in order to be in compliance. See Matter of Nadelson, Loft Bd. Order No. 686, 6 Loft Bd. Rptr. 77, 85 (Nov. 5, 1987). Clearly, in the present case, it would be extremely costly for a landlord to install a new elevator in this building. The purpose of the diminution regulations is to prevent the landlord from stopping or diminishing a legal service that was provided to the tenants, not to create a service that does not already exist.

Accordingly, I find that elevator service was not a legal service provided by or within the control of the landlord as of 1987 and that it would be unreasonable to require the current landlord to install a new elevator at the premises.

RECOMMENDATION

I recommend that petitioners' application seeking a finding of diminution of services by failing to provide elevator service be denied.

Kara J. Miller

Administrative Law Judge

March 21, 2006

SUBMITTED TO:

DIANNE E. DIXON

Executive Director

APPEARANCES:

GOODFARB & SANDERCOCK, LLP

Attorneys for Petitioner

BY: MARGARET B. SANDERCOCK, ESQ.

TENENBAUM & BERGER LLP

Attorneys for Respondent

BY: DAVID M. BERGER, ESQ.

1 Although Ms. Maugenest submitted a copy of her 1990 lease in a prior case before me, she failed to make that lease part of the record of the present case.

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