Matter of Gubelmann OATH Index No. 213/13 (Apr. 19, 2016) [Loft Bd. Dkt. No. TR-0870; 442 Broadway, New York, N.Y.]

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1 Matter of Gubelmann OATH Index No. 213/13 (Apr. 19, 2016) [Loft Bd. Dkt. No. TR-0870; 442 Broadway, New York, N.Y.] Third floor tenant filed coverage application. Although applicant was able to demonstrate that he residentially occupied the third floor unit during the window period, he was unable to establish that two other units in the building met the qualifications for coverage and were residentially occupied during the window period. Therefore, the building does not qualify as an interim multiple dwelling. ALJ recommends that application for coverage be denied. NEW YORK CITY OFFICE OF ADMINISTRATIVE TRIALS AND HEARINGS In the Matter of JAMES GUBELMANN Applicant KARA J. MILLER, Administrative Law Judge REPORT AND RECOMMENDATION Applicant James Gubelmann (the Applicant ) applied to the Loft Board, under section 281(5) of the Multiple Dwelling Law ( MDL ) seeking coverage of the third floor unit located at 442 Broadway, New York, New York (the building ) and a finding that he is the protected occupant of the third floor unit. See Mult. Dwell Law 281(5) (the Loft Law); 29 RCNY 2-08, 2-09(b) (Lexis 2015). Respondents Cynthia Lam and Frank Lam (the owners ) opposed the application and the Loft Board referred the matter to this tribunal for trial. 29 RCNY 1-06(j)(2)(ii). (ALJ Exs. 1, 2). A five-day trial was held in which the parties presented 10 witnesses and documentary evidence. After reviewing the record, as well as the parties post-trial briefs, I conclude that the coverage application should be denied. PRELIMINARY ISSUE After the trial had already commenced, applicant filed a motion to amend the application and to conduct an inspection of the fourth floor units of the building to determine if each of the

2 - 2 - units has a qualifying window. Zirojevic Aff., Jan. 23, Respondents opposed the motion, arguing that it was untimely. I denied both motions by . The application before me seeks coverage of the applicant and his third floor unit (ALJ Ex. 1). The motion to amend the application sought to include a third residentially occupied unit, unit 4C. However, a coverage application for unit 4C had been filed with the Loft Board on June 5, 2013, and subsequently withdrawn with prejudice through a stipulation of settlement dated September 23, 2014 (Pet. Exs. 11, 13). With prejudice is defined as with loss of rights, in a way that finally disposes of a party s claim and bars any future action on that claim. Black s Law Dictionary, at 1740 (8th Ed. 2009). Consequently, applicant is not permitted to seek coverage of unit 4C. The motion to amend was denied. Applicant asserted, however, that he should be allowed to establish that unit 4C was residentially occupied during the window period in order to demonstrate that there were three qualifying residential units, as required to establish coverage. Zirojevic Aff. at 4. Respondents contended that it would be improper to count unit 4C as one of the three qualifying units since the motion to amend was late. I reserved decision on the legal issue but permitted applicant to submit evidence relating to the occupancy of unit 4C. As discussed below, I find that unit 4C was not residentially occupied during the window period. Accordingly, it is unnecessary to make this determination. I denied the application to inspect the fourth floor units because it was dilatory. Applicant asserted that it was necessary to examine the fourth floor units because respondents argued that the windows in unit 4B are lot line windows on the first day of trial. Applicant, however, failed to adequately explain why he did not make this application prior to trial. The application seeks coverage of unit 4B, alleging that it meets all of the requirements of coverage, including a window that overlooks a street or lawful yard or court. Applicant should have gathered proof to demonstrate the allegations in the application prior to the trial and not have waited until respondents raised a lot line window defense. Moreover, there was no prejudice since the window placement and footprint of the fourth floor are identical to applicant s third floor unit. ANALYSIS The building is a four-story, L-shaped commercial building, located at 442 Broadway (Pet. Exs. 1, 2, 33; Resp. Exs. B, H; Tr. 10, 144). The length at the top of the L is 30.5 feet on

3 - 3 - Broadway. The building then extends feet east into the interior of the square block, and continues feet south through the interior of the square block towards Howard Street, where the length of the end of the L occupies 25 feet on Howard Street. There are two other buildings tucked inside the interior of the L so that the building in essence wraps around them. The only street frontage is 30.5 feet on Broadway and 25 feet on Howard Street. The remainder of the building is in the interior of the square block (Pet. Exs. 2, 33; Resp. Exs. B, H; Tr. 439, , 499). The first and second floors of the building were commercially occupied (Tr ). The third floor of the building has been occupied by Gubelmann since approximately 2005 and the fourth floor of the building has been occupied by Ted Tyler Hays for about ten or eleven years. At various points over the past decade, Hays, who had subdivided the fourth floor, rented out space to different tenants. Cynthia and Frank Lam own the building. Their son, Michael Lam, an attorney, manages the building (Tr ). Michael Lam, however, testified that he rarely goes to the building. He maintained that it has been more than 18 years since he has been on the third or fourth floors of the building so he has no knowledge as to how the space is being used (Tr. 412). Michael Lam further testified that he believes that the leases for third and fourth floors were drafted by his father, Frank Lam, who is also an attorney, or by someone who works at his father s firm (Tr. 414). Gubelmann filed this application with the Loft Board to obtain protected occupancy for himself and coverage of his third floor unit (ALJ Ex. 1). In order for his unit to be covered under the Loft Law, applicant must establish that the building is an interim multiple dwelling ( IMD ). In 2010, the state legislature passed amendments to the Loft Law, which added section 281(5) to the Multiple Dwelling Law ( MDL ). L. 2010, Ch (eff. June 21, 2010) (adding MDL 281(5)); L. 2010, Ch (eff. June 21, 2010) (amending MDL 281(5)). As amended, 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 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

4 - 4 - 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 400 square feet in area. MDL 281(5) (Lexis 2016). Gubelmann has asserted that he can demonstrate residential occupancy of three qualifying units in the building during the window period. Third Floor Unit The third floor of the building is comprised of one unit measuring approximately 6,000 square feet (Pet. Ex. 3; Tr. 19, 125, 496). Gubelmann and his roommate, Christopher Miller, testified that they residentially occupied the space from either 2005 or 2006 (Tr. 24, 124, 126). Although Miller moved out in June 2012, Gubelmann has continually resided in the unit for the past ten years (Tr. 10, 17, 48, 155). The lease for the space was executed between the Lams, as the owners, and Gubelmann and the Robert Miller Gallery ( Miller Gallery ), as the tenants. Miller s parents own the Miller Gallery and his mother signed the lease on behalf of the gallery (Pet. Ex. 3; Tr. 27, 124, ). Miller testified that he was not involved with the negotiation of the lease. Moreover, he did not read or sign it. Gubelmann s only connection with the Miller Gallery was through his roommate. While Gubelmann did not hire an attorney to represent him in the negotiation of the lease, he maintained that he read it prior to signing it (Tr , ). Pursuant to the lease, the space was to be used as a gallery, storage, and a showroom (Pet. Exs. 3, 28; Tr. 19, 23, 125). Miller and Gubelmann testified that approximately 1,500 to 1,800 square feet of the unit was devoted to storage, mostly art storage, such as books, sculptures, paintings, and empty frames (Tr. 23, 128, 161). Although the lease indicates that the space would be used as a showroom, Miller conceded that they would not frequently show art at the unit (Tr. 126). Gubelmann similarly testified that intellectually the unit could have been considered a gallery, but he only recalled one person coming to the unit to view art (Tr. 23). Gubelmann testified that he did not speak to respondents prior to signing the lease and never informed them that the he intended to reside in the unit (Tr. 248). He assumed, however, that the lease was a standard lease and that the rent was low because Miller and he were building the space out so that they could reside there. Gubelmann also added that he relied on Miller s

5 - 5 - representation that the owners would turn a blind eye to them living in the commercial space. He conceded that the owners never told him this directly (Tr ). Miller testified that the Miller Gallery had paid for some of the renovations, but that Gubelmann and he paid for the remainder (Tr. 159). Gubelmann did not reference the Miller Gallery s financial contribution to the renovations and instead testified that he and Miller paid for the buildout. The owners gave them a six or eight month rent credit in consideration for them paying for the renovations (Tr ). Gubelmann and Miller testified that they removed all of the existing walls and divided the space with new walls. In the process they created a larger open space with three bedrooms (Pet. Ex. 4 P3807, P3808, P3819, P3820; Tr. 44, 49-50). Since there was no kitchen in the unit when they initially moved in, they installed a full kitchen (Pet. Ex. 4 P3809, 3810, P3815; Tr , 41-42, 49-50, 129). They also installed two bathrooms. The bathroom located near the kitchen has a shower, sink and toilet, while the bathroom in the master bedroom has a toilet and sink. The master bedroom also has an exposed bathtub on top of a tiled floor in the bedroom (Pet. Ex. 4 Photos P3811, P3812, P3813, P3814, P3825, P3826; Tr , 49-50, 129). The living room is located on the Broadway side of the building and was decorated with a couch, chairs, artwork, bookshelves, television, and a pool table (Pet. Exs. 4, 10 Photos P3803, P3804 P3805, P3806, 3821, P3824; Tr ). The tenants also testified about their windows. There are windows facing the street on the Broadway side of the unit, and other windows, across from the kitchen, that face onto a courtyard (Pet. Ex. 4 P339-40). In addition, there are three lot line windows on the south side of the unit that face another building (Pet. Ex. 4 P3807; Tr , 497). Further, the unit has multiple access points which do not require passage through another unit. It can be accessed by an elevator on the Broadway side of the building as well as a staircase on the Howard Street side of the building (Pet. Ex. 4 P3822; Tr , ). Arthur Atlas, a licensed architect, visited the building on April 22, 2015, and viewed the lobby, roof, cellar and the third floor unit. In addition, he took photographs of the roof (Pet. Exs. 32, 34, 35; Tr ). Atlas testified that, in his opinion, Gubelmann s third floor unit is residentially occupied. He described the space as approximately 5,000 to 6,000 square feet, consisting of bedrooms, two full bathrooms, and a full kitchen (Tr ). Atlas testified that the windows in the front of the unit look out onto Broadway and the windows in the back look

6 - 6 - out onto a lawful courtyard (Tr , 462). In addition, Atlas noted that there are three lot line windows, which he concluded were unlawful windows under the Loft Law (Tr ). In Atlas opinion, Gubelmann s unit would qualify for coverage based on its size, accessibility, location on the third floor, qualifying windows, and residential occupancy (Tr. 458). John Furth Peachy, a licensed architect, testified that he, too, visited the building and took photographs (Pet. Ex. 36). Peachy testified that the third floor unit has windows that face out onto the Broadway and Howard Street sides of the building (Tr. 495). In addition to the qualifying windows, Peachy also noted that there are lot line windows on the south side of the building (Tr. 497). Peachy echoed Atlas testimony in that the unit appears to be residentially occupied. In addition, he believed that the third floor unit would qualify for Loft Board coverage because there are windows facing the street, it is larger than 400 square feet, it is not located in a basement or cellar, it has independent access, and is residentially occupied (Tr. 498, 500). Although respondents did not contest that the third floor unit has the requisite physical attributes to qualify for coverage, they did argue that the unit was not residentially occupied during the window period. In support of Gubelmann s and Miller s testimony regarding residency in the third floor unit during the window period, Gubelmann submitted a number of financial documents from the applicable time period. Gubelmann, however, was unfamiliar with his financial documents because his finances are managed by Julie Bedard, a certified public accountant and financial planner for Constellation Management Corporation ( Constellation ). Constellation is an accounting, tax, and investment advisory firm for the Gubelmann family. Bedard prepares Gubelmann s financial statements and assists in the preparation of his taxes (Tr. 57, 63-64, 68, ). Bedard testified about the preparation of Gubelmann s financial documents and his residency in the third floor unit during the window period. When preparing Gubelmann s taxes, Bedard compiled and assembled all of the documents, checked to make sure they were accurate, and forwarded them to an outside accountant. When the tax returns were completed, Bedard reviewed them with Gubelmann, who signed them in her presence (Tr. 337, 339, 342, 345). Bedard and Gubelmann followed this procedure for both his 2008 and 2009 New York tax returns (Pet. Exs. 8, 9, 24, 25, 26; Tr. 345, ).

7 - 7 - Bedard testified that Gubelmann is a resident of New York City and pays New York City and State income taxes. She further testified that any income taxes that Gubelmann pays in other states is as a non-resident (Tr ). His tax returns have Constellation s West Palm Beach, Florida address on them because Constellation s office is the repository for all of Gubelmann s tax information (Pet. Exs. 8, 9; Tr. 235, ). Gubelmann produces movies through a company called Paper Street Films (Tr. 83, 260). His work requires him to travel to Los Angeles and movie locations in other cities, such as Pittsburgh and San Diego. At times he would relocate to another city for several months while a movie was in production (Tr. 83, 85-87). Gubelmann testified that he would travel if the script required a location other than New York City or if it made financial sense, such as for tax benefits (Tr. 267). One of the scenes from his film Happythankyoumoreplease, was filmed in New York City and used Gubelmann s unit with his furnishings as a location in the movie during the window period (Pet. Ex. 10; Tr. 90, 92, 96). Gubelmann testified that while he was away on location during the window period, Miller still resided at the unit (Tr. 90). The rent for the third floor unit was paid by the Miller Gallery (Resp. Ex. A; Tr. 163). Bedard testified that she wired Gubelmann s share of the rent directly to the Miller Gallery from the time that Gubelmann moved into the loft until Miller moved out (Tr. 255, 353). At that point, the rent was wired directly to the owners. Bedard maintained that Gubelmann did not pay rent for any other residence during the window period (Tr. 367). The Consolidated Edison of New York ( Con Ed ) utility bill was in Miller s name during the window period and Gubelmann believed that Bedard wired money to Miller for his share of the bill (Tr. 264). Zola Farquharson, a customer service representative in Con Ed s legal department, testified that Gubelmann had a residential account which was opened on September 28, 2012 (Tr. 382). Before Gubelmann took over the electric and gas account it was a commercial account in Miller s name (Resp. Exs. I, J, K; Tr. 384). In further support of Gubelmann s contention that he resided in the third-floor unit during the window period, he submitted renter s insurance policies from Chubb for the periods of June 1, 2007 through June 1, 2008, June 1, 2008 through June 1, 2009, and June 1, 2009 through June 1, 2010, covering the unit and its contents. These policies also provided personal liability coverage. In addition, the June 1, 2009 through June 1, 2010 policy incorporated a flood insurance policy for the period (Pet. Exs. 5, 6, 7; Tr. 51, 60, 62).

8 - 8 - Respondents attempted to impeach Gubelmann s testimony and documentary evidence regarding window period occupancy by highlighting that Gubelmann s 2008 and 2009 tax returns have a Florida address (Pet. Exs. 8, 9; Tr. 69, 75). Similarly, respondent s car insurance policy has a Florida address (Resp. Ex. D). In addition, respondents search of New York City s voter registration records established that Gubelmann never registered to vote in New York City (Resp. Ex. E; Tr. 245). Gubelmann had an out-of-state driver s license and his car was registered to an address in New Jersey (Resp. Exs. C, D). Finally, the guarantee on the lease for the third floor unit has a New Jersey address (Pet. Exs. 3, 28; Tr. 229, 232, 249). Both Bedard and Gubelmann, however, credibly testified that due to the nature of Gubelmann s occupation, using a central address ensures that everything is received and answered in a timely fashion (Tr. 235, 266, ). Gubelmann explained that he did not have a car in 2008 and 2009 because his license was revoked, but he continued to pay the insurance for a Mercedes that was registered to an address in New Jersey. The address in New Jersey is for the home where he grew up, which his family no longer owns. His parents sold the New Jersey home in 2007, when they relocated to Florida (Tr. 238, ). Gubelmann testified that the first time he registered to vote was in New Jersey and he is unsure whether he ever changed that (Tr. 245). I find that applicant established that the third floor unit meets all of the physical qualifications necessary for coverage. The unit is larger than 400 square feet and has windows looking out on two streets, Broadway and Howard Street. In addition, it is not located in a basement or cellar and is accessible by both elevator and stairs without passing through another unit. Futhermore, I credit Gubelmann s and Miller s testimony that they were residing in the unit for more than 12 consecutive months during the window period. Their testimony regarding building out the space and creating a residence by installing bedrooms, bathrooms, and a kitchen was corroborated by photographs and the video clip from one of Gubelmann s films. While the architects testified that the third floor unit currently is a residential unit, other testimony supported that the unit was residentially occupied during the window period. Thorson testified that while he was living on the fourth floor of the building during the window period, he knew that Miller was residing in the third floor unit because he would see him with his dog and he would hear noise coming from the unit at night (Tr ). The renter s insurance policies that

9 - 9 - were purchased to cover the unit during 2008, 2009, and 2010 were further proof of residential occupancy during the window period. Additionally, Bedard credibly testified that Gubelmann s residential income taxes were paid in New York and non-residential income taxes were paid when income was earned in other states. Overall, Bedard s testimony was straightforward and supported Gubelmann s testimony regarding his New York residency and use of a Florida address for financial documents. Adverse Inference Several of the witnesses testified that the building manager, who they only know as Pe, has an office on the first floor on the Howard Street side of the building. Miller and Gubelmann testified that Pe operated the freight elevator when they brought building supplies into the building to reconfigure the third floor unit, and that he was sometimes present in the unit during the construction. In addition, after the construction was completed, Pe operated the elevator to bring up their furniture and a pool table. Miller and Gubelmann maintained that Pe was aware that they were living in the unit because he had responded to complaints about leaks and had seen their bedrooms and bathrooms. Gubelmann believed that Pe told the owners that he and Miller were living in the third floor unit (Tr , , , ). Pe did not testify during the trial. Consequently, applicant filed a Notice of Intention to Seek Missing Witness Charge prior to the conclusion to the trial. He requested that an adverse inference be taken against respondents for failing to call their employee, Pe, to testify in their case-in-chief. Applicant argued that Pe has personal knowledge of material issues in this case and his testimony would not be cumulative. Notice of Intention to Seek Missing Witness Charge, Apr. 27, Respondent s counsel replied by a letter dated June 26, 2015, stating that: Resp. Letter, June 26, Kauk Pe Lee, the freight elevator operator at 442 Broadway, after discussions with his employer and me, is now refusing to testify because he simply does not want to testify. He has stated to both my associate and me that he has no knowledge of the third floor and concerning the occupancy of James Gubelmann and Chris Miller.

10 In his post-trial brief, applicant argued that respondents should have called Pe, their employee, to rebut Gubelmann s and Miller s testimony since respondents were aware that he would be seeking a missing witness charge. Since respondents failed to produce Pe, applicant asserted that the only logical conclusion is that his testimony would have been adverse to respondents. Applicant urged this tribunal to draw an adverse inference that had Pe testified, his testimony would have corroborated that third floor unit has been used residentially since Pet. Post-Trial Brief at It is unnecessary, however, to reach a conclusion regarding Pe s failure to testify. I have found that applicant has met his burden in establishing that the third floor unit had been residentially occupied during the window period. The evidence presented demonstrated that the third floor unit would be eligible for coverage provided that two additional units in the building are also eligible. Fourth Floor Units Hays is an interior designer and manufacturer of high-end furniture. His business is called BDDW Studio. He testified that approximately ten or eleven years ago he rented the entire fourth floor in the building as a commercial space. Hays showroom is around the corner from the building at 5 Crosby Street (Tr. 287, 314, ). Lam testified that he met Hays when he was representing the owner of the building at 5 Crosby Street while negotiating a lease with Hays for his showroom. Hays had asked Lam if he knew of any other space in the area because he was expanding his business and needed more room. Lam told him about the fourth floor unit at the building, which Hays then rented pursuant to a lease dated December 1, 2003 (Pet. Ex. 29; Tr ). After signing the lease, Hays subdivided the fourth floor into three units (Tr. 111, 145, 520). He conceded that he never asked the owner s permission to subdivide the floor or rent it to anyone (Tr. 639). Hays occupied unit 4C and initially sublet the other two units (Tr. 111, 639). Unit 4A Shortly after Hays rented the fourth floor, he sublet unit 4A, a two-bedroom unit facing Broadway, to Michael Tische. After Tische moved out in May 2009, Andrew McLaughlin, who

11 had been living in unit 4B, moved in (Tr ). When McLaughlin moved out in November 2011, John Thorson and his wife, who had been living in unit 4B, moved into the unit. They have been living there for approximately three years (Tr. 110, 194, 238, 291, 641, 643). Thorson works for Hays at his shop located on Crosby Street (Tr. 287, 641). Unit 4A is approximately 1,300 square feet with an open kitchen that has a refrigerator, microwave, and stove. The unit has two bedrooms and a full bathroom with a shower, but no bathtub (Tr. 192, 194). Unit 4A is accessible by an elevator and stairs, neither of which requires entrance through another unit (Tr , 109, 641). The unit has a skylight and four windows which face Broadway (Tr , 284, 495). Applicant established that unit 4A is more than 400 square feet and accessible without entering another unit. In addition, the unit is not in a cellar or basement and has qualifying windows overlooking a street. Applicant further established through undisputed testimony of McLaughlin, Thorson, Hays, Miller and Gubelmann that unit 4A was residentially occupied for at least 12 consecutive months during the window period. Tische lived in the unit from 2007 through May or June Immediately, upon Tische s departure McLaughlin resided in the unit until In addition, McLaughlin submitted financial documents showing his address while he resided in both units 4A and 4B, which are discussed below. Based on the evidence presented, I find that unit 4A was residentially occupied during the window period and otherwise meets the requirements for coverage. Unit 4B Hays testified that unit 4B is not an entirely separate unit from unit 4C because there is an internal opening between the two units. He maintains that instead of three units, the fourth floor is subdivided into to two and a half-ish units because unit 4B is really part of unit 4C (Tr. 521, 597). Although there was a wall between units 4B and 4C, it was possible to remove it with a screw gun to make the units internally accessible to one another (Tr. 659). Unit 4B was reconnected to unit 4C and used as part of the showroom when the Thorsons moved into Unit 4A (Tr. 291). Regardless, the wall was present during the window period, creating two separate units which were each accessible without entering the other (Tr. 184, 213, 597). During the window period, unit 4B was a large open space measuring approximately 1,000 to 1,300 square feet. The unit had one bedroom and an open kitchen that had a

12 refrigerator, microwave and stove. The unit also had a bathroom with a shower, but no bathtub. Unit 4B had two skylights and three lot line windows facing south. In addition, the unit was accessible by a staircase without going through another unit to gain access (Tr , , , 190, ). McLaughlin testified that he rented unit 4B from Hays in 2007 for $3,500 a month and resided there until June 2009, when he moved into unit 4A (Tr ). McLaughlin ran an online magazine while he was living in the building and worked from home (Tr. 208). Even after moving from unit 4B to 4A in June 2009, McLaughlin kept his mailing address as unit 4B. Consequently, Thorson used unit 4A as his mailing address while he was living in unit 4B (Tr. 194). To support his testimony that he resided on the fourth floor of the building, McLaughlin provided credit card, financial, and bank statements indicating that his address was 442 Broadway for various periods of time throughout 2009 (Tr ). McLaughlin submitted Merrill Lynch statements for the period of January through August 2009 (Pet. Ex. 19), American Express credit card statements from March through June 2009 (Pet. Ex. 20), Chase Bank credit card statements for the period of June through August 2009 (Pet. Ex. 17), and CitiBank statements for the period of September through December 2009 (Pet. Ex. 18). When he lived in the building he had a New York State identification card (Tr ). McLaughlin also registered to vote on November 4, 2008, and the election affidavit reflects his address to be 442 Broadway, unit 4B (Pet. Ex. 16; Tr ). Thorson testified that he and his wife moved into unit 4B in June or July of 2009, when McLaughlin moved into unit 4A (Tr. 283). They did not have a lease but Thorson paid $2,000 per month in rent to Hays (Tr ). Thorson s and his wife s voter registration were submitted into evidence to show that they resided in the building during the window period (Pet. Exs. 22, 23; Tr ). Applicant established that unit 4B was residentially occupied for 12 consecutive months between January 1, 2008, and December 31, It is also undisputed that unit 4B is not located in a basement or cellar, is accessible without going through another unit, and is larger than 400 square feet. The question is whether it has at least one window opening onto a street or a lawful yard or court.

13 All of the witnesses who testified regarding the three windows in unit 4B classified them as lot line windows. Indeed, McLaughlin acknowledged that the windows on unit 4B face the roof of the adjacent building and that it is impossible to see the street from the windows (Tr. 214, 219). Thorson testified that the street cannot be seen from the windows because they face the adjacent building (Tr. 284, ). He explained that the building next to theirs had fewer floors so when you looked out of the windows of unit 4B you looked at the roof of the other building. Thorson further testified that there was no yard or court between the south side of the building and the adjacent building (Tr ). He described the view from the windows of unit 4B as a brick wall and a sliver of sky (Tr. 323). Atlas testified that the footprint of the building for the third and fourth floors was the same (Pet. Ex. 33; Tr. 439). Consequently, the lot line windows in Gubelmann s unit would be along the same wall as the lot line windows in unit 4B. Atlas testified that in his expert opinion, the three lot line windows are unlawful windows under the Loft Law (Tr ). Peachy similarly testified that lot line windows do not qualify for coverage (Tr. 501). Despite both of his experts testifying the contrary, applicant argued that lot line windows qualify for coverage under the 2010 amendments to the Loft Law, citing Matter of Doris, OATH Index Nos. 2542/14 & 2543/14 (July 10, 2015). In Matter of Doris, Administrative Law Judge Kevin Casey found that the lot line window in a unit opened onto a lawful yard on the adjacent property. Although the lawful yard was not on the same property as the premises, he held that the lot line windows facing it were lawful under MDL 281(5). Although respondents disagreed with Judge Casey s analysis in the Matter of Doris, they argued that even if it were applied here, the lot line windows in unit 4B would still not be considered qualifying because they open onto the roof of the abutting building. Applicant, in an attempt to apply the ruling in the Matter of Doris to this case, argued that the roof of the adjacent building constitutes an inner court as defined in the Zoning Resolution. Under the Zoning Resolution, an inner court is defined as any open area, other than a yard or portion thereof, which is unobstructed from its lowest level to the sky and which is bounded by either: (a) building walls; or (b) building walls and one or more lot lines other than a front lot line; or

14 (c) building walls, except for one opening on any open area along a side lot line which has a width of less than 30 feet at any point. NYC Zoning Resolution (eff. Dec. 15, 1961). Applicant argued that the roof is an open area, unobstructed from its lowest level to the sky and bounded by building walls, and is therefore an inner court. It is doubtful that the term inner court as used in the Zoning Resolution, was intended to apply to a roof. Nonetheless, even if one were to accept that premise that a roof is an inner court, applicant s argument is unsupported by the record. Although a zoning map was entered into evidence, there was nothing in the record to demonstrate where the adjacent building was located on the lot. There was no photographic evidence introduced. Moreover, there was no testimony or evidence regarding whether the roof was bounded by building walls, or lot lines, or whether it was unobstructed. As such, applicant failed to establish that the roof of the adjacent building equates to an inner court. Pursuant to section 1-06(i)(4) of the Loft Law, the applicant bears the burden of establishing his case by the preponderance of the evidence. 29 RCNY 1-06(i)(4). See Matter of Nazor, OATH Index No. 2570/14 at 14 (May 29, 2015). Applicant failed to meet this burden. Accordingly, the lot line windows in unit 4B should not be deemed qualifying windows. Applicant alternatively argued that if it is determined that the lot line windows in unit 4B are not qualifying, that the unit s skylights should be considered windows. During his inspection of the building, Atlas took photographs of the roof to show that there were skylights in unit 4B s ceiling (Pet. Exs. 34, 35). Peachy examined the roof of the building as well and similarly testified that he observed skylights on the roof (Tr ). Atlas testified that the Building Code defines skylights as a legal source of light and ventilation. He maintained that for legalization purposes, a skylight is a qualifying window (Tr. 452). Atlas contended that since the Loft Board has not ruled on whether a skylight is a window, it is possible that this unit could qualify for Loft Board coverage (Tr. 457, 462). Whether a skylight is a window was addressed by Judge Casey in Matter of American Package Co., Inc., OATH Index Nos. 2206/13 & 2207/13 (Nov. 15, 2013), accepted in part and rejected in part, Loft Bd. Order No (Mar. 19, 2015), reconsideration denied, Loft Bd. Order No (Sept. 17, 2015). In American Package, the unit in question had no windows in

15 any of the walls and instead had three skylights in the ceiling that did not open. Judge Casey found that a skylight is not a window. American Package, OATH 2206/13 at 4. He explained his findings by noting that, the skylights do not face a street, yard, or court. Instead they face the sky. American Package at 4. I concur with Judge Casey s analysis and conclusion. See also, Matter of Tenants of North 7th Street, OATH Index No. 1720/14 at 13 (Nov. 4, 2015) (skylights, although openable, do not qualify as windows under MDL 281(5) as they do not open onto a street, court, or yard ). The skylights in unit 4B do not constitute qualifying windows under the MDL. Consequently, applicant failed to establish that unit 4B meets the qualifications for coverage. Unit 4C Hays is the occupant of unit 4C, which is a very large loft, approximately 3,500 square feet, with two bedrooms and two bathrooms and is accessible by an elevator and stairs without going through another unit. Gubelmann testified that, while he and Miller were residing on the third floor, Hays lived in unit 4C the entire time (Tr ). McLaughlin testified that when he first moved in, he had been invited into Hays unit in the rear of the building on the Howard Street side. He had been in the unit perhaps five times (Tr. 196, 212). Hays testified that he did not live in the unit during 2008 and 2009 or at any other time (Tr. 688). He owns a three-bedroom farmhouse in Westpark, New York and a home in Philadelphia, Pennsylvania (Tr. 550). He testified that he purchased his first home in Philadelphia on East Thompson Street in 2008 and lived there for two years before moving to another house in Philadelphia (Res. Ex. P; Tr. 538). Prior to that time, he split his time between his girlfriend s place in Brooklyn, his house in upstate New York, and the loft, where he would sometimes crash (Tr. 539). Hays testified that he has slept in unit 4C occasionally during the past decade (Tr. 599). During 2008, Hays came to New York City maybe once or twice a month for business and would crash at the loft (Tr , 610). During 2009, he stayed at the loft very few times, perhaps three times during an eight month period because at that point he had a child and came to New York City less frequently (Tr. 567, 610). Hays does not keep clothes in the unit. When he stays overnight, he brings a travel bag (Tr. 635).

16 Hays testified that during the window period in 2008 and 2009, unit 4C was not occupied residentially and was being used commercially as a furniture showroom, for storage, and as an art studio (Tr. 521, 583, 612, 690). Thorson testified that unit 4C is a big open space decorated with the furniture that the company makes (Tr. 294, 311). The loft has two full bathrooms with a shower, but no tub. One of the bathrooms is used as a utility room because it has the washer/dryer and boiler inside it (Tr. 618, 628). Hays also described unit 4C as one big open space with a separate room in the back, which he refers to as the back room. It has a bed in it but it is for display. He explained that the entire unit is used as a showroom. Consequently, the furniture, including the number of beds, could possibly change from week to week. When Hays stayed overnight in unit 4C, he would sleep on a couch or a bed depending upon what furniture was there. He admitted that he has slept in the back room at times because it is more private (Tr ). Hays testified that he could not recall if there was a television in the unit but assumed that there probably was some kind of television because it would have been set up with the furniture to look like a living room. Similarly, he could not recall a sound system being installed because he did not listen to music while he was there. He was certain, however, that there was internet service because he used his laptop computer while he was in the loft (Tr ). Miller testified that he had been in unit 4C only once and had trouble recalling whether Thorson or Maureen Roffoni, a friend of Hays, invited him into to the unit. Miller believed that Thorson lived in unit 4C and that Roffoni also may have resided in the unit at some point during 2009 (Tr. 154). Hays testified, however, that Roffoni is a friend and has a key to the loft but she did not live there. Indeed, she lives on Long Island and would occasionally stay at the loft if she was out late in the City, often sleeping in the back room because it was more private. He also noted that Roffoni had stayed at the loft for a week once while her apartment was being renovated (Tr. 633). Hays contended that more people actually crash at the Crosby Street showroom than at the unit 4C showroom (Tr. 634). Miller described the unit as having furniture, bedding, very nice wood floors, marble finishes, and a very nice chef-style kitchen (Tr. 153, ). Hays explained that the kitchen was nicely decorated to highlight the furniture in the remainder of the unit but, was never used as a kitchen (Tr. 522, 618). The kitchen counter is made of stone but underneath it are inexpensive, particle board cabinets from IKEA (Tr. 617, 622, 630). There were no sets of dishes but there

17 were random plates, mugs, and some utensils (Tr , 629). Hays testified that he makes and sells mugs and plates in his workshop in Philadelphia, so any items like that at the loft would have been made by him (Tr. 631). According to McLaughlin, Hays would have people over for dinner in unit 4C. Indeed, McLaughlin recalled that he had been invited to dinner a few times when Hays had other guests over (Tr. 213). Hays, however, testified that he has never had a dinner party, invited guests for dinner or even cooked dinner at the loft because the stove is not functioning. If anyone has eaten hot food in unit 4C, it would have been takeout or food heated up on a hot plate. There is a large refrigerator in the kitchen, but it is mostly to reflect an upscale kitchen as part of the showroom and only contained fruit and half and half when he was in town. Hays further testified that he has held catered business events at both the Crosby Street showroom and at the loft, which may be what McLaughlin was referring to (Tr. 522, , , 634). In order to corroborate Hays testimony that he did not reside in unit 4C, a number of Hays documents were submitted into evidence, including utility bills, credit card statements, leases, and tax returns. Hays testified that he does not receive any mail at the building and is not even certain where his mailbox is located (Tr. 542, 658). Hays rent bills for the fourth floor loft were faxed from the owners to the 5 Crosby Street address until the beginning of 2009, when his corporate headquarters moved from Crosby Street to Philadelphia (Resp. Ex. N; Tr ). The rent checks for the fourth floor were issued on the BDDW Studio s account (Resp. Ex. M; Tr. 523). The fourth floor gas and electric bill is a commercial account in Hays name with a turn-on date of December 11, The account continued as a commercial account throughout 2008 and 2009 (Resp. Exs. I, J, O; Tr ). The Con Ed bills which were mailed to the Crosby Street address were also paid from a business account (Resp. Ex. O; Tr. Tr. 536). Similarly, Hays American Express credit card bills were sent to his office on Crosby Street, so that his bookkeeper could process them (Resp. Ex. Q; Tr ). Hays also used the Crosby Street address on his tax returns because that was where he conducted his personal business (Resp. Exs. W, X, Z, AA, BB; Tr. 557, 561, 564). Hays paid approximately $8,000 or $9,000 a month in rent for the fourth floor in 2008, and $9,000 per month in One hundred percent of the rent was deducted as a business expense (Resp. Exs. W, X; Tr. 563, 565, 583). The title to Hays car, a 2006 Land Rover, has the upstate New York address (Resp. Ex. T; ; 660). Likewise, Hays New York State driver s license, which was issued on March

18 - 18-5, 2009, and expires on August 31, 2017, has his upstate New York address (Resp. Ex. S; Tr ). His prior driver s license was issued to a Brooklyn address (Tr. 548). Additionally, Hays is registered to vote in Pennsylvania, not New York (Resp. Ex. V; Tr. 553). Thorson s testimony corroborated that Hays did not reside in unit 4C. Thorson started working with Hays in either 2003 or 2004 in the showroom on Crosby Street (Tr. 312). Although he was uncertain about the exact date, Thorson testified that in 2008 and 2009, Hays was splitting his time between New York City, upstate New York, and Philadelphia. Hays had a home in upstate New York, where his factory was located, and a home in Philadelphia, where he had a workshop (Tr , 320). Thorson was the face of the business because Hays spent about 90 percent of his time in the factory or workshop (Tr. 315). Thorson testified that while he was living in unit 4B, Hays was in the building perhaps once a month and would usually stay overnight (Tr. 317). Thorson maintained that unit 4C was used for events, openings, and parties associated with the business, but testified that he would be surprised if anyone had dinner there. He noted that it was more likely that the person was invited to an event (Tr. 318). In an attempt to discredit Hays testimony, applicant highlighted a prior Loft Board coverage application filed by Hays and Thorson, which was ultimately withdrawn. He argued that if Hays sought coverage of his unit, he must have thought he had grounds to do so and was admitting residential occupancy (Pet. Exs. 11, 12, 13). Hays testified, however, that he retained an attorney to discuss Loft Board coverage but he was unaware that the attorney had filed an application on his behalf. He was unfamiliar with the Loft Law and believed that the attorney was trying to sell him on the idea of coverage. But, once he learned more about what was involved he realized that he did not have a case and decided not to go forward with it because there was not enough truth there to make it work (Tr. 664). He did not live in the unit so he did not believe he could obtain coverage (Tr , 671). Applicant also attempted to impeach Hays credibility by noting inconsistencies in his testimony. Lam testified that Hays and the Thorsons received a new lease in consideration for withdrawing their Loft Board application (Tr ). Hays initially testified that he was not given anything in exchange for withdrawing his coverage application with the Loft Board. When told that Lam had testified that he renewed Hays lease, Hays reluctantly acknowledged that he received a new lease but did not view it as a bribe for his testimony or a trade to withdraw his application (Tr , ).

19 Overall, I found Hays testimony credible that he did not residentially occupy unit 4C during the window period. Despite being on the stand for almost a day, Hays was straightforward, forthright, and cooperative by providing a significant amount of documentation to demonstrate that he did not reside in the loft. Hays did not appear to be overly invested the outcome of the trial and was somewhat frustrated that he wasted his day in court (Tr. 674). Moreover, his explanation about why he withdrew his Loft Board application was extremely plausible. Hays explained that he agreed to initially file a coverage application without knowing much about the Loft Law or what the application was asserting. Upon further reflection and conversations with his former attorney, he decided to withdraw the application because he could not credibly state that he resided in unit 4C during the window period. Applicant argued that the fact that Hays used the space at times residentially by staying overnight periodically and permitting his friend to stay there on occasion qualifies as residential use. I do not agree. Such limited, intermittent use does not establish that either Hays or Roffoni residentially occupied the unit for 12 consecutive months during the window period. See, e.g., Matter of Romano, OATH Index No. 2661/14 at 12 (Nov. 18, 2015), adopted, Loft Bd. Order No (Jan. 21, 2016) (cannot rely upon a tenant s intermittent stays in the loft to establish residential occupancy for 12 consecutive months during the window period); Matter of Tenants of W. 37th Street, OATH Index No. 692/06 at (May 18, 2007), adopted in part, modified in part, Loft Bd. Order No (Sept. 18, 2008), application for reconsideration granted in part and denied in part, Loft Bd. Order No (Apr. 23, 2009), aff d, 79 A.D.3d 488 (1st Dep t 2010), (unit leased by a museum display company was primarily commercial, despite the tenants creation of a hangout space with a bed and a couch in the back of the workshop and the presence of a refrigerator and stove in the lunch area, where one of the tenants testified that he temporarily used the place as a crash pad when he was evicted from his apartment because the unit was never intended to as a residence); Matter of Addis, OATH Index Nos. 1574/02, 1575/02 at 12 (Nov. 25, 2002), adopted, Loft Bd. Order No (Jan. 9, 2003), reconsideration denied, Loft Bd. Order No (Sept. 15, 2005) (insufficient residential use where commercial tenant slept in loft only a few nights per month). Further, the circumstantial evidence of Hays intent to make unit 4C his residence is noticeably missing. For instance, Hays does not receive any mail at the building, his rent was paid on a business account, the Con Ed account is commercial, he took a business deduction for

20 the unit on his income taxes, his driver s license and car title have an upstate New York address, and he is not registered to vote in New York State. It is undisputed that Hays is very involved in the design and manufacture of the furniture and other products sold by his company. His home in upstate New York is adjacent to his factory and his home in Philadelphia is nearby his workshop. He needed to spend most of his time near the creative and manufacturing centers of his business, outside of New York City. Hays infrequent trips to New York City to oversee the commercial aspect of his business at his showrooms, which resulted in him periodically staying overnight in unit 4C, demonstrates that his use of the loft was incidental to a predominantly commercial use. Although unit 4C has the outward appearances of residential use, it is not actually a residence. Instead, the unit is a furniture showroom, with multiple pieces of high end furniture that are displayed in a manner to represent residential use for merchandising purposes. Hays credibly testified that the furniture is changed periodically and the number of beds or couches in the unit will vary depending on how it is displayed. It is also of note that the kitchen was not completely functional since the stove was not even hooked up. Accordingly, I find that applicant failed to establish that unit 4C was residentially occupied for 12 consecutive months during the window period and is not eligible for coverage under the Loft Law. FINDINGS AND CONCLUSIONS 1. Applicant established that the third floor unit was residentially occupied during the window period and meets the qualifications for coverage under the Loft Law. 2. Applicant established that unit 4A was residentially occupied during the window period and meets the qualifications for coverage under the Loft Law. 3. Applicant established that unit 4B was residentially occupied during the window period but failed to establish that it meets the qualifications for coverage under the Loft Law because it does not have a qualifying window. 4. Applicant failed to establish that unit 4C was residentially occupied during the window period.