Matter of Pels OATH Index No. 2841/11, mem. dec. (Mar. 8, 2012)

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1 Matter of Pels OATH Index No. 2841/11, mem. dec. (Mar. 8, 2012) Applicant s motion for summary judgment granted in part, dismissing defense asserting that the structure on the premises constitutes more than one building for Loft Law purposes. ALJ denies summary judgment as to the defense of inherently incompatible uses. NEW YORK CITY OFFICE OF ADMINISTRATIVE TRIALS AND HEARINGS In the Matter of MARSHA PELS Applicant MEMORANDUM DECISION TYNIA D. RICHARD, Administrative Law Judge This application, filed on November 12, 2010 and indexed by the Loft Board as TR-0833, is brought by Marsha Pels ( applicant or Pels ), tenant of a building located at Commercial Street, Brooklyn, block 2472, lot 400 ( 99 Commercial Street or the premises ), who seeks a finding that her unit is an interim multiple dwelling ( IMD ) unit covered by the Loft Law under the new Loft Law amendments, Section 281(5) of Article 7-C of the Multiple Dwelling Law, and that she is the protected occupant of the unit. On January 18, 2011, owner 99 Commercial Street, Inc. ( owner ) filed an answer generally denying the allegations and asserting various defenses to applicant s claims. Here the applicant moves for summary judgment seeking dismissal of defenses asserted by the owner that her unit is located in a commercial building separate from the registered IMD and that there are incompatible uses in the building that preclude a finding that Pels is a protected occupant. The motion was made by applicant s counsel, Robert Petrucci, Esq., by attorney affirmation dated October 26, 2011 ( Petrucci Aff. ). Respondent s opposition, dated November 3, 2011, consists of the affirmation of its counsel Brian Kennedy, Esq. ( Kennedy Aff. ) and the supporting affidavit of Martin Marcus, an architect ( Marcus Aff. ). Applicant served its reply on November 9, 2011 ( Reply ). To obtain summary judgment, the movant must establish his or her claim sufficiently to

2 - 2 - warrant the court as a matter of law in directing judgment in the movant s favor. Zuckerman v. City of New York, 49 N.Y.2d 557, 562 (1980), quoting C.P.L.R. 3212(b). To defeat a motion for summary judgment, the non-movant must show that a genuine and material issue of fact exists that requires a trial. Where the movant has tendered evidentiary proof in admissible form, the burden shifts to the non-movant to produce evidentiary proof in admissible form sufficient to require a trial of material questions of fact... or must demonstrate acceptable excuse for his failure to do so. Zuckerman, 49 N.Y.2d at 562. Mere conclusory assertions, devoid of evidentiary facts, are insufficient for this purpose, as is reliance upon surmise, conjecture or speculation. Smith v. Johnson Products Co., 95 A.D.2d 675, 676 (1st Dep t 1983). Facts appearing in the movant s papers which the opposing party does not controvert, may be deemed to be admitted. Kuehne & Nagel, Inc. v. F.W. Baiden, 36 N.Y.2d 539, 544 (1975). Having found no genuine issue of material fact indicating the premises contain more than one building, the motion for summary judgment is granted in part and the defense asserted on that basis dismissed. As more particularly set forth below, the motion is denied as to the defense of inherently incompatible uses. 1 ANALYSIS In 2010, the state legislature passed the new amendments to the Loft Law, which added Section 281(5) to the Multiple Dwelling Law. L. 2010, Ch (eff. June 21, 2010) (adding Mult. Dwell. Law 281(5)); L. 2010, Ch (eff. June 21, 2010) (amending Mult. Dwell. Law 281(5)). The amendments expand the definition of interim multiple dwelling by, among other things, creating a new qualifying window period from January 1, 2008, to December 31, Pels contends that the building is qualified for coverage under Section 281(5) and that she is a protected occupant, having residentially occupied her unit in the building continuously since 1993 (Pet. 1-11). 2 For purposes of this motion, she further asserts that the premises contain a single building. 1 Prior to the trial of this matter, which was conducted on January 4, 5, and 26, 2012, I issued a summary ruling to the parties on the motion and informed them a written memorandum decision would follow. This memorandum decision revises my initial ruling on the defense of inherently incompatible uses, however, based upon my review of legal issues not raised in the motion and requests further briefing on the matter. It also allows for the potential of reopening the trial record. 2 Section 281(5) defines an IMD as any building that: (1) at any time was occupied for manufacturing, commercial, or warehouse purposes; (2) lacks a certificate of compliance or occupancy pursuant to section 301 of this chapter; (3) is not owned by a municipality; and (4) was occupied for residential purposes as the residence or home of three or more

3 - 3 - There is no dispute that, in 1987, the owner registered an IMD and 16 residential units at the premises under MDL Section 281(4) (Ex. A to Petrucci Aff.). The IMD is registered with the address 99 Commercial Street. The owner asserts that the premises contain two buildings: a Front Building and a Rear Building ; that only the Front Building is registered as an IMD; that unlike the Front Building, the Rear Building contains only commercial tenants; and Pels is a commercial tenant occupying a unit in the Rear Building which is occupied by 15 other commercial tenants (Ans., Kennedy Aff. at 5, 6, 7). Therefore, neither Pels unit nor the Rear Building where her unit is located qualifies for coverage, according to the owner. If 99 Commercial Street is a single building, Pels would assert that her unit may be added to the list of 16 units registered with the building as an accreted or additional unit under Loft Board Rule 2-08(g)(1)(ii), so long as she is able to prove her own residence during the window period. But if the premises consist of more than one building, Pels would have to prove that there are three or more qualified residentially occupied units in the Rear building, including her unit. See 333 PAS CoO Tenants Group, OATH Index No. 968/08 at 2 (June 30, 2009), adopted, Loft Bd. Order No (Nov. 19, 2009) (if petitioners were unable to prove the structure was a single IMD, they would have to prove that within each building three or more units were residentially occupied during the window period). It is not disputed that the other 15 units in the Rear Building are commercially occupied (Kennedy Aff. at 6; Reply at 9), making it unlikely that Pels could establish the Rear Building as an IMD. I find that 99 Commercial Street is only one building for Loft Law purposes, and respondent has failed to raise a genuine issue of material fact that requires a hearing. I. Single vs. Multiple Buildings The issue of whether a structure constitutes one or more buildings arises in the context of horizontal multiple dwellings. Loft Board Rule 2-08 offers a list of factors to consider in determining whether a structure is a single building or more than one building for purposes of IMD determination. 29 RCNY 2-08(a)(1)(iii). The factors are: families living independently from one another for a period of 12 consecutive months during the period commencing January 1, 2008, and ending December 31, 2009, provided that the unit (i) is not located in a basement or cellar and has at least one entrance that does not require passage through another residential unit to obtain access to the unit, (ii) has at least one window opening onto a street or a lawful yard or court as defined in the zoning resolution for such municipality, and (iii) is at least 550 square feet in area. Mult. Dwell. Law 281(5) (Lexis 2011).

4 - 4 - (1) whether the structure is under common ownership; (2) whether contiguous portions of the structure within the same zoning lot are separated by individual load-bearing walls, without openings for the full length of their contiguity, as distinguished from non-load-bearing partitions; (3) whether the structure has been operated as a single entity having one or more of the following: a. a common boiler; b. a common sprinkler system; c. internal passageways; d. common fire escapes; or e. other indicia of operation as a single entity. (4) Whether the owner or a predecessor has at any time represented in applications or other official papers that the structure was a single building; (5) Whether a single certificate of occupancy has been requested or issued for the structure; and (6) Whether the pattern of usage of the building during the applicable qualifying window periods... suggests one building or more than one building. 29 RCNY 2-08(a)(1)(iii). Each of the factors must be weighed by the tribunal. Compare Matter of Tenants of West 28th Street, OATH Index No. 2877/09 (Jan. 15, 2010), adopted, Loft Bd. Order No (June 17, 2010) (four buildings managed and operated collectively since the turn of the century found to constitute a single horizontal multiple dwelling) with Matter of Live Centre Tenants Ass n, OATH Index No. 834/05, mem. dec. at 7 (Dec. 1, 2005) ( insufficient indicia of commonality to render all seven buildings a single HMD where the seven shared only two factors, common ownership and a common boiler). In applying this set of factors, the tribunal must consider that each case presents different combinations of those factors and no one factor can be said to be determinative, Matter of Wolff, Loft Bd. Order No. 1477, 14 Loft Bd. Rptr. 203, 206 (Sept. 8, 1993), quoting Bambeck v. NYS Division of Housing & Community Renewal, 129 A.D.2d 51, 54 (1st Dep t 1987), and the evidence of common characteristics must predominate over the evidence of individual characteristics, Wolff, 14 Loft Bd. Rptr. at 206, quoting Nine Hunts Lane Realty Corp. v.

5 - 5 - NYS Division of Housing & Community Renewal, 151 A.D.2d 465 (2d Dep t 1989). Common ownership There is no dispute that the structure at issue here, which the owner refers to as the Front Building and Rear Building, has one owner. 29 RCNY 2-08(a)(1)(iii)(A). Pels offered evidence of combined finances by submitting her rent checks which are deposited into the same bank account from which the owner pays its IMD fees (Ex. E to Petrucci Aff.). The owner offered no evidence of financial separation between the claimed Front and Rear buildings and failed even to assert there is any financial separation (see Kennedy Aff ). Further, there is no dispute that the structure, front and back, occupies a single zoning lot and no dispute that the front and rear share the same address. Representations in official papers that the structure is a single building Representations by the owners and their agents in official papers indicate that there is only one structure on the premises and the IMD is that structure. Until this litigation, the owner has consistently represented in official papers that the premises contain a single building. In 1987, the owner registered 99 Commercial Street, Brooklyn, block 2472, lot 400, with the Loft Board as an IMD (Ex. A to Petrucci Aff. at 1). In subsequent filings, the owner referred to the IMD interchangeably as 99 Commercial Street and Commercial Street (Ex. A to Petrucci Aff. at 5), suggesting there is no meaningful difference in the addresses. The owner has also represented in official papers that Pels resides in the IMD. In a 1997 application seeking the extension of legalization deadlines, the owner listed Pels as an affected party, along with all the occupants of the so-called Front and Rear buildings (Ex. A to Petrucci Aff. at 10-14). Although the owner claims that only commercial tenants are located in the Rear building, leases for Pels and commercial tenant Hollister Pearson, Inc., both indicate occupancy in 99 Commercial Street the premises registered as the IMD (Ex. B to Petrucci Aff.). The rent rolls state that Pels pays rent for residing at 99 Commercial Street (Ex. C to Petrucci Aff.). Testimony by the owner s architect in a prior Loft Board proceeding confirms that the owner believed there was only one building on the premises. In reference to the suggestion that the structure at the premises might be divided into separate structures to overcome objections made by

6 - 6 - the Department of Buildings to egress problems, the architect Edward Weinstein testified in 1997 that the Department of Buildings had rejected the idea of multiple structures on the premises and warned that approval of the Board of Standards and Appeals would be required if such a plan were proposed (Ex. G to Petrucci Aff., at 18-22). Demolition plans cited by the parties do not indicate there is more than one building on the premises (Ex. D to Petrucci Aff.). Aside from the answer filed in this proceeding, the owner has produced no official filings in which it represented that the premises known as 99 Commercial Street contain anything other than a single building. A Single Certificate of Occupancy There is no current Certificate of Occupancy for 99 Commercial Street. However, the owner s legalization plans seek a single Certificate of Occupancy (Exs. D, G to Petrucci Aff.), a fact that respondent does not dispute. In the same Loft Board proceeding mentioned above, respondent s architect stated under oath that he was hired to go through the formal process to obtain a Certificate of Occupancy for the entire building, but specifically for a number of artists in residence units, which were in the building (Ex. G to Petrucci Aff. at 6). The architect also stated that the owner was seeking a temporary or partial Certificate of Occupancy related to the residential work so that it could be approved more quickly, and would exclude certain work on the commercial portions that would be done later (Ex. G to Petrucci Aff. at 19). Thus, the testimony indicates that the building housed both residential and commercial tenants and would do so under a single Certificate of Occupancy. Contiguous portions separated by a load-bearing wall with openings There is no dispute that contiguous parts of the structure are separated by a load-bearing wall that is shared by them (Kennedy Aff. at 18). However, there are four openings in the wall, at least three of which create passageways between the front and rear portions of the building, according to plans drawn by the owner s architect (Ex. F to Petrucci Aff.). Respondent contends that two of the openings are unavailable for use (one is sealed off and the other is 10 feet above ground), and a third opening was created illegally by Pels (Marcus Aff. at 6(1)). These claims were refuted in part. Pels did break through the wall to expand her living space which (according to current plans)

7 - 7 - resulted in her bedroom and bathroom being located in the Front portion of the building, while her living room, kitchen and studio are in the rear portion. According to the owner, Pels did so illegally and without the owner s permission (Ex. F to Petrucci Aff. at #4). 3 Pels use of her unit is a triable issue reserved for the hearing, and I render no opinion on it for purposes of this motion. Nor is the opening inside her unit crucial to my determination on this motion, as there are three other openings that are accessible to building occupants. One opening goes into the rear portion of the building from the courtyard (Ex. F to Petrucci Aff. at #2). Respondent claims this opening is not accessible as an exit because it is located 10 feet above ground and used as a loading dock with an operating hoist (Marcus Aff. 6(1)), but that does not prevent its use. Hoists are commonly used commercially and there are several commercial units in this part of the building. A second opening is another entry into the rear portion of the building from the courtyard (Ex. F to Petrucci Aff. at #3). The third opening -- a passageway commonly used by the commercial occupants who use the rear part of the building -- was sealed by the owner (Ex. F to Petrucci Aff. at #1) but later reopened by order of the Department of Buildings when tenants complained (Marcus Aff. 6(1); Ex. I to Reply). Importantly, the latter three openings all existed during the pertinent window period. Plainly, these openings in the load-bearing wall evidence an intent to provide passage between the front and rear portions of the building. Respondent also argues that the Department of Buildings approved plans (subsequently jettisoned) to remove the Rear portion of the building and would not have done so if only one building existed (Marcus Aff. at 6(2)). The owner s conclusory assertion is insufficient for this purpose. Smith, 95 A.D.2d at 676. While true that the rear portion of the building is set back at least 250 feet from the street, as the owner contends, this fact is insufficient to conclude that there is more than one building. In my view, the four factors above all weigh significantly in favor of applicant s assertion 3 An architect hired by the owner as a code and zoning consultant, Martin Marcus, stated by affidavit that Pels converted the space to her own use illegally and without the owner s knowledge or permission (Marcus Aff. at 6(7)). Marcus does not assert a basis for his knowledge and no owner affidavit was submitted confirming the statement or explaining the basis for Marcus knowledge, facts that undermined the reliability of Marcus statement. Pels contends the owner knew she was using the space, and the use was indicated on her leases in 1993, 1995, 2000, and 2004 (Ex. H. to Reply). Although the leases describe Pels space, the leases are insufficient by themselves to prove her claim. In any event, a finding on culpability is not material here because there are three other openings that evidence the intention to provide access between the front and rear portions of the building.

8 - 8 - that the premises contain a single building. The remaining two factors, addressed below, offer no compelling argument in either direction. Indicia of operating as a single building The owner argues that three factors prove that the Front and Rear operate as separate buildings (Marcus Aff. 6(3), 6(4), 6(5)): there is no common boiler, there are no common fire escapes, and there is no common sprinkler system. The contention misses the point because the structure has no boiler at all; heat is provided to tenants in the front and the rear by individual heaters (Marcus Aff. 6(3)). It is true that there are no common fire escapes but, again, there are no fire escapes at all. There is a dispute as to the operation of the sprinkler system. Respondent asserts there are two separate sprinkler systems: a wet one in the front of the building and a dry one in the rear (Marcus Aff. 6(4)). Applicant asserts that the two systems are connected to a single source with a Siamese connection (Reply at 7-8; Ex. J to Reply). This dispute, however, did not raise a triable issue. Pattern of use Respondent asserts that the Rear building is a steel shed like structure erected separately from the Front building with a paved street tunnel and courtyard between the two structures (Marcus Aff. at 6(6)). Contrary to respondent s description of the rear portion of the building as a shed like structure, it is constructed of masonry (Ex. C to Marcus Aff.), and the structural materials led me to draw no particular conclusion as to pattern of use. Respondent offered no reason why it should. The owner offered no evidence of its claim that the premises consist of separately erected buildings, information that should be available to the owner or on file at Department of Buildings, if true. See Zuckerman, 49 N.Y.2d at 562 (non-movant must produce evidentiary proof in admissible form sufficient to require a trial of material questions of fact... or... demonstrate acceptable excuse for his failure to do so.). Nevertheless, it is not disputed that the character of the front and rear portions of the building appears to be different to the extent that the front contains mainly residential units and the rear offers largely commercial space. Viewed in combination, the common ownership, common bank account, common identification (same block and lot and same address), representations by the owner and its agents in

9 - 9 - official proceedings, load-bearing wall with several openings in it, and the owner s own application for a single Certificate of Occupancy for the structure encompassing four of the six factors listed in Rule 2-08(a) overwhelmingly support the conclusion that there is only one building on the premises. I find that these characteristics, shared in common by the front and rear portions of the building, predominate over the evidence of individual characteristics. Wolff, 14 Loft Bd. Rptr. at 206, quoting Nine Hunts Lane Realty Corp., 151 A.D.2d at 466. While there are some individual characteristics, such as the operation of the sprinkler system and the fact that the front of the building contains mainly residential units and the rear mainly commercial ones, these facts did not raise a genuine issue of material fact requiring trial of whether the structure consists of more than one building. I therefore find that respondent s defense that there is more than one building on the premises and Pels lives in a commercial building that cannot establish the basis for coverage should be dismissed. II. Inherently incompatible use The owner argues here that the applicant s unit cannot be covered under the 2010 amendments, because there are inherently incompatible uses in the building today that were active on June 21, 2010, in violation of Section 281(5). Applicant has moved for summary judgment seeking dismissal of this defense. building: Section 281(5) prohibits coverage where there are inherently incompatible uses in an IMD The term interim multiple dwelling as used in this subdivision shall not include... units in any building that, at the time this subdivision shall take effect, also contains a use actively and currently pursued, which use is set forth in use groups fifteen through eighteen, as described in the zoning resolution of such municipality in effect on June twenty-first, two thousand ten, and which the loft board has determined in rules and regulation is inherently incompatible with residential use in the same building.... Mult. Dwell. L. ( MDL ) 281(5) (emphasis added). The owner asserts that a commercial prototyping company and three metal welding shops that occupy the building conduct inherently incompatible uses (Kennedy Aff. 27; Marcus Aff. 8). Soldering or welding shops are listed in

10 Use Group 16A of the Zoning Resolution and are among the list of inherently incompatible uses adopted by the Loft Board in the Appendix to Rule See Appendix to 29 RCNY 2-08(k). Pels disputes the accuracy of respondent s description of these uses (Reply at 9). Pels seeks dismissal of the defense, contending that the Loft Board promulgated Rule 2-08(j) to remove buildings like 99 Commercial Street, which has IMD status pursuant to MDL Section 281(4), from the prohibition against inherently incompatible uses set forth in Section 281(5). Rule 2-08(j) holds to the general rule that an IMD shall not include any building in which an inherently incompatible use... is being actively and currently pursued in any unit other than a residential unit of the building (29 RCNY 2-08(j)). However, the rule also exempts units located in previously registered IMDs: A unit eligible for coverage pursuant to MDL 281(5), which is located in a building registered as an IMD under MDL 281(1) or (4), shall not be excluded from Article 7-C coverage on the basis that any prohibited activity in use groups 15 through 18 existed in the building on June 21, RCNY 2-08(j) (emphasis added); see also 29 RCNY 2-08(m), (q) (similarly, exempting units located in buildings registered as IMDs under MDL 281(1) or (4)). Because 99 Commercial Street was registered as an IMD in 1987 under Section 281(4), the owner would be prevented under Rule 2-08(j) from asserting inherently incompatible use as a defense, assuming the Pels unit is otherwise eligible for coverage. The owner contends that Rule 2-08(j) is ultra vires, citing as support Trump-Equitable Fifth Avenue Co. v. Gliedman, 57 N.Y.2d 588, 595 (1982) (an agency cannot promulgate a rule out of harmony with or inconsistent with the plain meaning of the statutory language ). Indeed, an agency rule may be invalidated when found inconsistent with the applicable law. See Thorgeirsdottir v. NYC Loft Bd., 161 A.D.2d 337 (1st Dep t 1990) (invalidating a Loft Board rule that added a condition not found in the Loft Law). In Thorgeirsdottir, the Loft Board rule in dispute provided that an owner s deregulation rights would not be effective until the owner filed the record of a sale of improvements with the Loft Board, even though the Loft Law stated that deregulation was effective upon purchase of such improvements by the owner. MDL 286(6). The court found the rule contrary to the explicit

11 provision of the law, because the rule added a condition precedent to rent deregulation that was not present in the law. Citing the well-settled principle that an administrative agency may only promulgate rules to implement a law as enacted, the court stated that the agency has no authority to fashion any rule out of harmony or in conflict with the statute. 161 A.D.2d at 708; see also Jones v. Berman, 37 N.Y.2d 42, 53 (1975) (an administrative agency is without authority to create rule or regulation out of harmony with the enabling statute). This tribunal has followed the reasoning of Thorgeirsdottir in a number of cases involving the validity of rules in conflict with statutory authority. See, e.g., Matter of Dube, OATH Index No. 733/98 (Mar. 13, 1998), vacated and remanded, Loft Bd. Order No (Nov. 24, 1998) (Loft Board regulation barring coverage applications after June 6, 1994, found ultra vires as it was out of harmony with the statutory scheme to bring unregulated loft dwellings under regulation); Matter of Perry, OATH Index No. 583/97 (Oct. 20, 1997), adopted, Loft Bd. Order No (Dec. 18, 1997) (Loft Board s failure to inspect, as required by its rules, did not act to foreclose the effect of the sale of fixtures in 1987). The Thorgeirsdottir analysis was applied by the Loft Board in Hoon On Corp., where the rule at issue was found in harmony with the law. Matter of Hoon On Corp., Loft. Bd. Order No (Nov. 21, 1996). In Hoon On, the owner challenged the Loft Board rule that required owners register an IMD before being eligible to exercise their statutory right to purchase improvements from an outgoing tenant. Loft Bd. Order No at 2. Days after the owner learned that an outgoing tenant had entered into an agreement to sell improvements to an incoming tenant and had filed the sale disclosure form with the Loft Board, the owner registered the building as an IMD and sought, on that basis, to challenge the sale. The Loft Board denied the claim because, under Rule 2-07(f)(3), the owner had not registered the building at the time the tenant filed the sale disclosure form. The owner argued that the rule was ultra vires because it was inconsistent with an owner s absolute right to purchase improvements under MDL Section 286(6). The Loft Board disagreed that the registration requirement in Rule 2-07(f)(3) contradicted the statutory language, instead finding the purpose of the registration requirement set forth in the rule ( to encourage owners to register their buildings ) consistent with the statutory registration mandate contained in Section 284(2). Loft Bd. Order No at 4.

12 The applicant here contends that the language of Section 281(5) ( and which the loft board has determined in rules and regulation is inherently incompatible with residential use in the same building ) delegates to the Loft Board the authority to adopt rules to effectuate the statutory purpose. Pels claims that the Board has done so in Rule 2-08(j) by exempting IMDs already covered by Sections 281(1) and 281(4) from the prohibition against inherently incompatible uses, an interpretation that applicant contends is not out of harmony with the law because there is nothing irrational about the Loft Board s decision to treat registered IMDs differently with regard to incompatible uses than unregistered buildings (Reply at 10). I disagree that Section 281(5) s delegation to the Loft Board of the ability to determine which uses are inherently incompatible with residential use is commensurate with a delegation of authority to exempt certain units from the general prohibition against inherently incompatible uses. See Meltzer v. Koenigsberg, 302 N.Y. 523, 525 (1951) (under ordinary rules of construction, courts must give effect to the plain meaning of a statute s clear and unambiguous language). The primary command to the judiciary in the interpretation of statutes is to ascertain and effectuate the purpose of the Legislature. In finding such purpose, one should look to the entire statute, its legislative history and the statutes of which it is made a part. Rankin v. Shanker, 23 N.Y.2d 111, 114 (1968). It should be noted that, unlike Section 281(5), MDL 281(1) and (4) impose no limitations on IMD status based upon inherently incompatible uses. The limitation was added to the 2010 amendments at the urging of Mayor Bloomberg who voiced concern about [b]asic safety, quality-of-life and environmental compatibility and emphasized that [n]o additional buildings should be granted the protections of the Loft Law unless they do not involve incompatible manufacturing or industrial uses, have operable wet sprinklers, and provide at least one direct egress and a window in each covered unit. Mayor s Disapproval Memo, June 21, 2010, Bill Jacket, L. 2010, Ch The law that was subsequently adopted established the existence of inherently incompatible uses as an obstacle to coverage. Nothing in the statute created any exemptions to the prohibition. Thus, it appears that Rule 2-08(j) is ultra vires, although I will give the parties an opportunity to further brief the matter in light of the following. Accreted and additional units

13 Though not raised in the parties submissions on the motion, Rule 2-08(g), the rule addressed to accreted and additional units appears to affect Pels entitlement to coverage more directly. After enactment of the 2010 amendments, the Loft Board promulgated Rule 2-08(g)(1)(ii), which describes how units located in IMD s covered under MDL 281(1) or (4) may obtain coverage under Section 281(5). Rule 2-08(g)(1)(ii) provides that these accreted and additional units will be covered if it can be proven that the unit was residentially occupied for a consecutive 12-month period between January 1, 2008 and December 31, 2009, provided that the unit also meets the criteria set forth in MDL 281(5) and as further delineated in these rules, including 2-08(a)(4). Section 2-08(a)(4), however, prohibits coverage if the unit is located in the same building that contained [an inherently incompatible use], as of June 21, RCNY 2-08(a)(4)(iii)(F). Thus, just as Rule 2-08(j) (and similarly Rules 2-08(m) and (q)) would exempt Pels from the prohibition against inherently incompatible uses, Rule 2-08(g) expressly imposes the prohibition. There is no obvious explanation for this contradiction in the Loft Board s own rules. Nevertheless, the clear prohibition in Rules 2-08(g) and 2-08(a)(4)(iii)(F), consistent with Section 281(5), weakens Pels claim that she is exempt from having to prove there are no incompatible uses in the building under Rule 2-08(j). See 29 RCNY 2-08(q) ( the applicant seeking coverage must establish by a preponderance of the evidence that there are no commercial, manufacturing or industrial uses in the non-residential units that are inherently incompatible with residential use ); Matter of 180 Varick Street Corp., OATH Index No. 2049/04 at 6 n.1 (Oct. 29, 2004) ( applicants in Loft Board proceedings must establish their entitlement to the relief requested by a preponderance of the credible evidence ), adopted, Loft Bd Order No (Nov. 18, 2004). Indeed, Rules 2-08(g) and 2-08(a)(4)(iii)(F) offer further support for respondent s contention that Rule 2-08(j) is out of harmony with Section 281(5). As a result of the foregoing, the parties are asked to submit briefs that address the meaning and effect of these rules: Rule 2-08(g) and Rule 2-08(j). Given that Rule 2-08(g) requires Pels to prove there are no inherently incompatible uses in the building, and respondent has identified existing inherently incompatible uses in the building, in accordance with Loft Board Rule 2-08(k), there is a material fact in dispute precluding summary judgment. Thus, this portion of applicant s motion must be denied.

14 Additionally, further review of Rule 2-08(g) unearths a more fundamental question about Pels entitlement to coverage. While Rule 2-08(g) addresses itself to so-called accreted and additional units and how such units may be brought under the Loft Law s protection, it is unclear whether Section 281(5) makes provision for coverage of such units. I query whether Section 281(5) is intended to expand coverage to a single unit such as Pels unit that is located in an IMD previously registered or covered under an earlier provision of the Loft Law, in this case MDL 281(4). This appears to be an open question not addressed in the caselaw. The original version of the Loft Law, enacted in 1982 and set forth in MDL 281(1) and (2), defined an IMD as a building that had been occupied for manufacturing, commercial, or warehouse purposes, lacked a certificate of occupancy, and was residentially occupied by three or more families living independently on December 1, 1981 and had been since April 1, L. 1982, Ch. 349 (eff. June 21, 1982). Section 281(2) restricted the geographical areas in which a building could claim IMD status to those located within certain zoning regions. Section 281(3), also adopted in the original law, offered Loft Law protection to individual loft units that sought coverage after the building had obtained IMD status. 4 Under Section 281(3), an individual unit that was not registered and had no coverage determination issued by the Loft Board could establish its entitlement to coverage by proving at a hearing that its residential occupants first occupied the unit after April 1, 1980, and prior to April 1, In 1983, the Loft Board promulgated rules, the predecessors to Rule 2-08(g), outlining how accreted units obtain coverage in accordance with Section 281(3). See Rules and Regulations Relating to Determination of Interim Multiple Dwelling Status and Issues of Coverage and Bases for Eviction under Article 7- C of the Multiple Dwelling Law G.1. (May 31, 1983) ( In a building, structure or portion thereof which meets the criteria of Sections 281(1) and 281(2) of the Multiple Dwelling Law and these regulations, thereby qualifying as an IMD, the occupant or occupants of any additional unit 4 Section 281(3) provides: In addition to the residents of an interim multiple dwelling, residential occupants in units first occupied after April first, nineteen hundred eighty and prior to April first, nineteen hundred eighty-one shall be qualified for protection pursuant to this article, provided that the building or any portion thereof otherwise qualifies as an interim multiple dwelling, and the tenants are eligible under the local zoning resolution for such occupancy. MDL 281(3).

15 residentially occupied for the first time after April 1, 1980 but prior to April 1, 1981 in such IMD may also be covered under Article 7-C. ); see Matter of Greene, Loft Bd. Order No. 111 at 159 (Aug. 15, 1884) (fourth floor unit found to be accreted unit under Section 281(3) and Section G of Loft Board regulations adopted on May 31, 1983). After the 2010 amendments, the Loft Board amended Rule 2-08(g) (now entitled Accreted and additional units ) to add a subsection that provides coverage for accreted units if they can prove residential occupancy during the window period established in MDL 281(5): In a building, structure, or portion thereof that meets the criteria of MDL 281(1), and 281(2), or 281(4), and these rules, thereby qualifying as an IMD building, the occupant or occupants of any additional unit residentially occupied during a period of twelve consecutive months between January 1, 2008 through December 31, 2009, in the IMD building may also be covered under Article 7-C provided that such additional unit meets the criteria set forth in MDL 281(5) and as further delineated in these rules, including 2-08(a)(4). 29 RCNY 2-08(g)(1)(ii) (emphasis added). It should be noted that MDL 281(5) makes no provision for the addition of accreted units. Moreover, MDL 281(3), which does, was never amended to authorize coverage for units residentially occupied between January 1, 2008 through December 31, 2009, as the Loft Board provides in Rule 2-08(g)(1)(ii). Thus, it is unclear where the statutory predicate for Rule 2-08(g)(1)(ii) arises. Accordingly, I have noted that Loft Board Rule 2-08(g) requires Pels to prove that there are no inherently incompatible uses in the building, and asked the parties to submit briefs that address the contradiction in Rule 2-08(g) and Rule 2-08(j). I am denying applicant s motion for summary judgment because the parties dispute a material fact, whether there are inherently incompatible uses in the building. In addition, I have posed the question whether Section 281(5) is intended to expand coverage to a single unit which, like Pels, is located in an IMD previously registered or covered under an earlier provision of the Loft Law (in this case MDL 281(4)). Given the significance of these questions regarding the meaning and breadth of Section 281(5) to the ultimate issue of Pels rights, I ask that the parties consider the relevant legislative history. If these issues are resolved in the applicant s favor, the trial record will be reopened for the submission of evidence on the issue of

16 inherently incompatible uses in the building, as it was not addressed during trial. March 8, 2012 Tynia D. Richard Administrative Law Judge APPEARANCES: ROBERT PETRUCCI, ESQ. Attorney for Applicant BRIAN KENNEDY, ESQ. Attorney for Respondent