Matter of Tenants of W. 37 th Street OATH Index No. 692/06 (May 18, 2007) [Loft Bd. Dkt. No. TR-0768]

Transcription

1 Matter of Tenants of W. 37 th Street OATH Index No. 692/06 (May 18, 2007) [Loft Bd. Dkt. No. TR-0768] In coverage application, tenants of 12 loft units seek Loft Board finding that the building is an IMD covered by the Loft Law, that each tenant s unit is an IMD unit, that each tenant is a protected occupant, and that the tenants were overcharged for rent. After a contested hearing, ALJ finds the building is an IMD, that 10 units are covered and their occupants protected (with a few exceptions), and that the protected occupants of nine of the units were overcharged in an aggregate amount exceeding $214,000. Tenants sought coverage under MDL 281(1) and 281(4). Basis for seeking coverage under MDL 281(1), which requires that the premises be located in an area permitting residential use, was a recent zoning amendment newly allowing residential use at the premises. ALJ denied coverage under MDL 281(1), finding that residential use must have been permissible during the window period for that section to apply. ALJ granted application pursuant to MDL 281(4), finding petitioners established the prerequisites for coverage under that section. Report contains discussion of the standard to establish window period occupancy required for coverage. Coverage was denied for units where the tenants only showed incidental residential use of primarily commercial spaces. NEW YORK CITY OFFICE OF ADMINISTRATIVE TRIALS AND HEARINGS In the Matter of TENANTS OF WEST 37 TH STREET Petitioners REPORT AND RECOMMENDATION TYNIA RICHARD, Administrative Law Judge This Loft Board proceeding arises from a coverage application filed by 18 loft tenants, under the name Tenants of West 37 th Street. Petitioners seek a determination (i) that West 37 th Street (the building ) is an interim multiple dwelling ( IMD ) covered by the Loft Law, (ii) that each of the named tenants lofts is a covered IMD unit, (iii) that each

2 - 2 - tenant is a protected occupant, and (iv) that each tenant has been charged rent in excess of the maximum legal rent. Petitioners filed their coverage application on April 1, Respondent owner, 37 West Realty Company, filed its answer on July 6, 2005, generally denying liability and asserting various defenses to petitioners claims. Petitioners later moved to disqualify respondent s counsel, because he had represented petitioners in a prior action against the owner. The disqualification motion was granted on December 2, Respondent then sought permission to file an amended answer, which was granted, and the amended answer was filed on April 12, Settlement discussions ensued but when they proved unfruitful, respondent moved to dismiss the petition, which motion was denied by decision dated October 27, Matter of Tenants of W. 37th Street, OATH Index No. 692/06, mem. dec. (Oct. 27, 2006). The trial of this matter was conducted on November 20, 21, 22, and 28, and December 29, 2006, wherein petitioners presented six witnesses and respondent presented two witnesses. The parties also submitted a joint exhibit of stipulated facts (Jt. Ex. 1, Stipulation or Stip. ) and over 70 trial exhibits. Post-trial briefs were submitted and the record was closed on February 27, ANALYSIS Petitioners occupy 12 units of the building and are seeking protected status for their loft units and for themselves as the current residential occupants of those units. According to the petition, the following individuals residentially occupied the loft units during the stated periods. 1 Petitioners assert that they are entitled to coverage under the original and amended provisions of the Loft Law. See Mult. Dwell. Law 281(1) & (4). 1 Although the petition originally sought a finding that included Unit 8 and its current occupant, Manuel Wally, the application as to that unit and occupant has been withdrawn with prejudice (Stip. 16).

3 - 3 - Loft Window period occupants* May 1, 1987 occupants Current occupants 3F John Coli Dick Kinch Susan Munshower John Coli Susan Munshower Horacio Salinas 3R Kevin Hill, James O Hara Julia and Sylvia Gallart Gaetano Salvadore 4F David Shohan Steven Sullivan Ricardo Ramos Cosimo Ricatto 4R Nene Humphrey Nene Humphrey Pascale Ouattara Watts Ouattara 5F Ron Gustafson James Stier Thomas Stier Ron Gustafson James Stier Thomas Stier Brian Durham 6 Warner Wada Steve Merrill Warner Wada Warner Wada Jesse Rosser 7 Rapheal Sason Pat Shannon Mattias Neuman Carmen Oquenda John Furay Erin Hawker 9F Sonia Wagner Sonia Wagner Sonia Wagner 9R Ford Wheeler Ford Wheeler Ford Wheeler 10 Orrin Riley Suzanne Schnitzer 11 Faye Madnick Denise Rosen Lawrence Sacharow Doug Crane Laura Gelles Cole Wallace Faye Madnick Lawrence Sacharow John Bonafede Raeanne Giovanni-Inoue Izumi Inoue 12F Jan Adlman David Lee J. Supernal Wynn Breen P. Kothavala Wynn Breen Phiroza Kothvala Ezequiel de la Rosa *Those alleged to be window period occupants were in possession for all or part of the period. Petitioners may establish that the building is covered under section 281(1) of the Multiple Dwelling Law by proving that (i) the building was occupied at some time for manufacturing, commercial, or warehouse purposes, (ii) it lacks a certificate of occupancy, and (iii) from April 1, 1980 to December 1, 1981, the building

4 - 4 - was occupied for residential purposes... as the residence or home of any three or more families living independently of one another. Mult. Dwell. Law 281(1). In addition to these requirements, the Multiple Dwelling Law required prior to 1987 that the building must also be located in a geographical area in which the local zoning resolution permits residential use as of right, or by minor modification or administrative certification of a local planning agency. Mult. Dwell. Law 281(2)(i); see 29 RCNY 2-08(c)(1). Under the 1987 amendments to the Loft Law (section 281(4)), the residential zoning requirement was eliminated. The first question to address is whether petitioners may establish coverage under section 281(1), because the building is currently located in an area zoned residential. I Zoning Change In January 2005, the New York City Council adopted a zoning text amendment that for the first time permitted residential use as of right in the zone where the building is located (Stip. 4 & 5). Thus, prior to that time, the building could not have qualified under section 281(1). Petitioners contend that it now is entitled to coverage under section 281(1) because of the recent zoning change. Respondent objects, contending that there was no residential occupancy as of right in this zone at the time that the Loft Law was enacted and the Loft Law demonstrates no intention to expand its pool of loft buildings by way of subsequent city zoning amendments. In the absence of case law directly on point, petitioners have analogized the zoning change to the removal of a barrier to coverage. Citing cases in which courts found that rent stabilization attached to units that were previously unprotected due to certain legal exemptions, petitioners argue that: By changing the zoning in 2005, the City of New York removed the exception to coverage under MDL Section 281(1). Thus, if a unit would have qualified for coverage under MDL Section 281(1) but for the limitation of the zoning requirement in MDL Section 281(2), the change in the zoning removes that exemption from coverage under MDL Section 281(1). (Pet. Post-trial Memorandum, at 5 ( Pet. Mem. ), citing KSLM-Columbus Apartments, Inc. v. DHCR, 5 N.Y.3d 303, 801 N.Y.S.2d 783 (2005); Federal Home Loan Mortgage Corp. v. DHCR, 87 N.Y.2d 325, 639 N.Y.S.2d 293 (1995); 223 Chelsea Associates, LLC v. Dobler, 189 Misc.2d 170, 730 N.Y.S.2d 823 (1 st Dep t 2001)).

5 - 5 - Respondent urges a different view and states: Since the language of the statute talks about the effective date on July 27, 1987 or June 21, 1982, later changes in zoning are inapplicable. Either the building was covered by the Loft Law or it is not. There is no hint in the legislation or the legislative history that subsequent changes in the zoning resolution would enlarge the world of eligible units covered by the Loft Law. (Resp. Post-trial Memorandum, at 6 ( Resp. Mem. )). Both parties cite Wolinsky v. Kee Yip Realty Corp., 2 N.Y.3d 487, 779 N.Y.S.2d 812 (2004), in support of their arguments. In Wolinsky, the Court of Appeals held that tenants, who illegally converted a commercially-zoned loft space to residential space 20 years after the window period expired and could prove no window period residential use, were not entitled to rent-stabilization protection. The court also noted that the Loft Law was enacted as an emergency measure to regulate the increasing number of conversions of commercial and manufacturing loft buildings to residential use because illegal conversions were undermining the integrity of the city zoning resolution. 2 N.Y.3d at , 779 N.Y.S.2d at 814. Considering the import of the window period, the court noted that, [b]y adopting an eligibility period that was closed at the time of the enactment, the legislature demonstrated its intent to provide the benefits of the Loft Law only to existing residential tenancies not to encourage new conversions of loft space. 2 N.Y.3d at , 779 N.Y.S.2d at 814. That is, the Loft Law was written so as to take a snap shot of those people eligible for protection under the article. 2 N.Y.3d at 492, 779 N.Y.S.2d at 814 (quoting Mem. of Legis. Rep. of City of NY, 1982 McKinney s Session Laws of NY, at 2484). Similarly, I find that the legislature did not intend to expand the number of buildings eligible for coverage under the Loft Law through subsequently enacted local zoning resolution amendments. I note that petitioners have cited no precedent that stands for allowing a local zoning ordinance to extend the reach of a state statute in a way not provided or anticipated in the statute. To the contrary, the legislature devised a manner of protecting loft buildings that were excluded from protection under the original statute because they were not located in a residential zone: it enacted the 1987 amendments. Thus, contrary to petitioners argument that they are entitled to the benefit of an exemption that was effectively lifted by the recent zoning amendment, in actuality the building is not deprived of the Loft Law s protection. Its protection is found in the 1987 amendments.

6 - 6 - The observation made in Wolinsky that, there, the city ha[d] not acted to amend the Zoning Resolution to include purely residential use of [manufacturing] zoned space or to rezone tenants neighborhood (Pet. Reply Memorandum, at 2) does not work a different result. Although the statement suggests that a zoning change could trigger rent stabilization coverage where it was previously prohibited, the analogy could not be drawn to the Loft Law because the window periods in the statute create an explicit limitation on the number of units that are eligible for coverage, which is not true of the rent-stabilization law. Therefore, I find that the building is not eligible for protection under section 281(1). It does however qualify as a covered IMD under section 281(4), as discussed below. II. Coverage of the IMD and Units 6, 9F, and 9R In the absence of residential zoning as of right, petitioners may establish coverage if they prove that the building had residential occupants during the window period set forth in section 281(4), which extends from 1980 to 1987: Interim multiple dwellings shall also include buildings, structures or portions thereof that had residential occupants on [May 1, 1987] in units occupied residentially since [December 1, 1981] that were occupied for residential purposes since [April 1, 1980]. Mult. Dwell. Law 281(4). Loft Board regulations provide that [r]esidential occupancy of one or more units of the building... on May 1, 1987, on December 1, 1981 and on April 1, 1980, shall create a presumption that the building is an IMD or that such unit or units are covered under Article 7-C, subject only to a determination of the Loft Board that there was a bona fide change to exclusively non-residential use in a unit between April 1, 1980, and December 1, 1981 or between December 1, 1981 and May 1, RCNY 2-08(c)(2). The parties have stipulated that the building was previously used for manufacturing and that it lacks a certificate of occupancy (Stip. 1 & 2). The parties further stipulated that Units 6, 9F and 9R were continuously occupied by the same residential tenants from at least 1979 to the present, petitioners Warner Wada, Sonja Wagner, and Ford Wheeler, respectively (Stip. 6). Thus, petitioners have established that the building is an IMD and that Units 6, 9F and 9R are covered units under section 281(4) of the Loft Law. There are no leases currently in effect for Units 6, 9F and 9R. The respective occupants of those units, Mr. Wada, Ms. Wagner, and Mr. Wheeler, are the protected occupants of those

7 - 7 - units because they were in possession prior to July 27, See 29 RCNY 2-09 (b)(2); 545 Eighth Avenue Assoc. v. New York City Loft Bd., 232 A.D.2d 153, 647 N.Y.S.2d 223 (1 st Dep t 1996). Jesse Rosser, Mr. Wada s wife, also seeks protected occupant status in connection with Unit 6. While it is undisputed that she is married to Mr. Wada and has lived with him in the unit since August 2000 (Stip. 7), the record contains little else about Ms. Rosser. For loft occupants who took possession of their units after the effective date of the Loft Law, i.e., on or after July 27, 1987, as Ms. Rosser did, Loft Board regulations qualify such occupants for protection if he/she is a prime lessee with a lease currently in effect or if he/she took possession, with the consent of the landlord, as a statutory tenant pursuant to Article 7-C, without the issuance of a new lease. 29 RCNY 2-09(b)(3). Ms. Rosser is not a lessee, nor is there evidence that she made any rent payments accepted by the owner that would imply his consent to her tenancy. See Matter of Zabari, OATH Index No. 419/96 (Oct. 16, 1995), aff d, Loft Bd. Order No (Jan. 4, 1996), aff d, Index No /96 (Sup. Ct. N.Y. Co., Feb. 11, 1997), aff d in part, rev d in part, 245 A.D.2d 200, 666 N.Y.S.2d 598 (1 st Dep t 1997) (brother of tenant not protected occupant where he took occupancy without landlord s consent and was not a prime lessee); Matter of McLean, OATH Index No. 105/96 (June 25, 1996), aff d, Loft Bd. Order No (Sept. 26, 1996); see also Matter of DeLaney, OATH Index No. 2122/99 (Feb. 9, 2000), aff'd in part, modified in part, Loft Bd. Order No (Apr. 27, 2000) (spouses are not automatically considered tenants, but may receive independent rights upon the death or departure of the tenant of record ). Therefore, I did not find evidence establishing that she is a protected occupant. 2 With respect to the remaining units and occupants seeking protection under the Loft Law, petitioners must establish that the units were residentially occupied during the window period (April 1, 1980 to May 1, 1987), and that the current occupants are protected occupants. 2 However, as a family member who has lived with a protected occupant in a covered unit for more than one year, Ms. Rosser may have succession rights, which would protect her from eviction. See 29 RCNY (c).

8 - 8 - III. Coverage of the Individual Units and the Protected Status of their Occupants Units 4F, 4R, and 11 I find that Units 4F, 4R, and 11 are all qualified for coverage under section 281(4). The undisputed facts establish that all three units were residentially occupied during the window period, from April 1, 1980 to May 1, 1987, and that these units were all physically converted to accommodate residential use (Stip. 8, 9, 12, 13). Moreover, there was no evidence that these units were removed from coverage after the window period. The occupants of Units 4F, 4R and 11 all took possession after July 27, 1987; thus, they must show that they are prime lessees with a lease currently in effect or that they took possession with the consent of the landlord. 29 RCNY 2-09(b)(3)(i). It should be noted that all of the petitioning tenants who have leases took occupancy pursuant to commercial form leases that were prepared by the owner (Stip. 14). The current tenant of Unit 4F, Cosimo Ricatto, has been a residential tenant of the unit since 1988; he occupies the unit as his primary residence (Stip. 8, 12). The lease currently in effect, through February 28, 2009, is in the name of Cosimo Di Leo Ricatto (Cosimo Art) and states that the use and occupancy is for commercial art (Pet. Ex. 26). Although the Ricatto lease appears on its face to be a commercial lease, the owner concedes that Mr. Ricatto is a residential occupant (Resp. Mem., at 15). 3 I find that Mr. Ricatto is a protected occupant under Loft Board regulations as a prime lessee with a lease currently in effect. The current tenants of Unit 4R, Watts Ouattara and Pascale Ouattara, have been residential tenants of the unit since 2001 and occupy the unit as their primary residence (Stip. 8 & 12). Although their lease states that it is for use of an art studio (Pet. Ex. 27), the owner concedes that the Ouattara s are residential occupants (Resp. Mem., at 16). I find that, as prime lessee[s] with a lease currently in effect, the Ouattara s are protected occupants. 4 The current tenants of Unit 11, Raeanne Giovanni-Inoue and Izumi Inoue, have been residential tenants of the unit since 1990 and occupy the unit as their primary residence (Stip. 8, 12). Although their lease states that it is to be used exclusively as a photography studio 3 As discussed below, even if the owner did not make this concession, it would be unsuccessful in contesting the residential nature of these tenancies. See Matter of McIntosh, OATH Index No. 604/02, at 12 (Oct. 15, 2002), aff d, Loft Bd. Order No (Nov. 19, 2002); Matter of White, Loft Bd. Order No. 2194, at 10 n.3 (Dec. 18, 1997). 4 Although the Ouattaras lease expired during the pendency of this Loft Board proceeding (as of July 31, 2006), it is sufficient that the lease was current at the time the application was filed. Similarly, the leases for Units 3F, 3R, 4R, 10, 11, and 12R have also expired during the pendency of this proceeding.

9 - 9 - commercial use only not for living the owner has conceded that Ms. Giovanni-Inoue and Mr. Inoue are residential occupants (Resp. Mem., at 17). The lease, however, names Tony Cenicola & Raeanne Giovanni-Inoue, not Izumi Inoue. Although Mr. Inoue is Ms. Giovanni- Inoue s husband (Affidavit of Izumi Inoue, dated January 1, 2007), there is no evidence of the owner s consent to his tenancy. Thus, I find that Ms. Giovanni-Inoue qualifies as a prime lessee with a lease currently in effect and is a protected occupant pursuant to Loft Law regulations. The record is inadequate to find Mr. Inoue a protected occupant. Units 3F, 3R, 5F, 7, 10, 12F and 12R Respondent disputes that Units 3F, 3R, 5F, 7, 10, 12F and 12R are qualified for protection. Each unit is addressed individually below. Unit 3F The parties do not dispute that Unit 3F was physically converted to residential use and was residentially occupied from at least 1979 through 1990 (Stip. 9). It is also undisputed that the current tenant Horacio Salinas has been a residential occupant of the unit from 1997 to the present (Stip. 9), and that he occupies the unit as his primary residence (Stip. 12). The record establishes that Mr. Salinas was issued several leases after 1982 and has a lease currently in effect in the name of Horacio F. Salinas Photography (Pet. Exs. 15 & 16), yet respondent disputes that he is a protected occupant. Even though respondent concedes residential use of the premises throughout the window period, respondent contends that Unit 3F is ineligible for coverage because of an intervening commercial use from 1990 to 1997, prior to Mr. Salinas residency (Resp. Mem., at 18; Stip. 10). As evidence, respondent submits two commercial leases for the unit, one to ACE or Andrew Hochstadt from 1990 to 1995 for a security service office ( for commercial use only ) (Pet. Ex. 13), and one to Timoteo Robayo from 1994 to 1997 for a sewing factory (Resp. Ex. D). Respondent also elicited the testimony of Juan Lebron, the building superintendent, who stated that sometime after he started working in the building in 1986, a belt-making factory moved into the unit and remained there for four to six years, during which time no one resided in the loft (Tr ). Mr. Lebron s testimony that no one resided in the unit was unconvincing precisely because he claimed to have made this conclusion with respect to virtually all of the petitioning units, and he supplied few factual observations to support his conclusions.

10 As a matter of law, respondent s argument is without merit. First of all, the mere representation in these leases that the premises were to be used for commercial purposes, even exclusively, does not establish a commercial use of the premises as a matter of fact, nor does it foreclose petitioners from establishing there was an actual residential use of the premises. Protected occupancy flows from the status of the parties and of the unit rented and not from the label placed on the lease or rental agreement. Matter of Law, Loft Board Order No. 1319, at (Mar. 26, 1992). The fact that a lease is commercial is insufficient, by itself, to lead to a conclusion that a tenant waived Loft Law protection. Matter of White, Loft Board Order No. 2194, at 10 n.3 (Dec. 18, 1997); Matter of Alexander, Loft Board Order No. 2069, at (Feb. 27, 1997). Second, the case law does not support respondent s claim that an intervening commercial occupancy prevents a unit from obtaining protected status. Even if I credited Mr. Lebron s testimony that a commercial use occurred after the window period, I would have no basis for concluding that such use had destroyed the protected status of the unit created by continuous residential occupancy during the window period, because a unit can only be removed from coverage in accordance with Loft Law regulations. See Matter of Andrew Bradfield, LLC, OATH Index No. 1345/03 (Nov. 18, 2003), aff'd in part, modified in part, Loft Bd. Order No (Feb. 19, 2004) (tenants issued a post-1982 lease were protected occupants, where unit had not been deregulated by virtue of a sale of rights, sale of fixtures, or abandonment); see also Thornley v. Al-Farah, OATH Index Nos. 1819, 1935/06, at 3 (Aug. 11, 2006) (according to section 2-09(b)(3), the sole issues to decide regarding a post window-period occupant is whether she is a prime lessee with a lease currently in effect, or whether she took possession with the consent of the landlord). There is no evidence that the unit was ever removed from coverage. According to Loft Board regulations, any occupant who took possession on or after July 27, 1987, is qualified for Loft Law protection if he or she: is a prime lessee with a lease currently in effect or if he/she took possession with the consent of the landlord, as a statutory tenant pursuant to Article 7-C, without the issuance of a new lease. 29 RCNY 2-09(b)(3)(i). The Loft Board has interpreted this provision to mean that, absent the removal of a unit from coverage pursuant to statute or Loft Board regulations, the issuance of a post-june 21, 1982 lease by [an owner] will confer Article 7-C protection on the residential

11 occupant of an IMD unit. Matter of Andrew Bradfield, LLC, OATH No. 1345/03, at 4-5; Matter of White, Loft Bd. Order No. 2194, at 10 n.3, 17 Loft Bd. Rptr. at 389; Matter of Law, Loft Bd. Order No. 1319, at 42-43, 13 Loft Bd. Rptr. at 333. Mr. Salinas is a prime lessee with a lease currently in effect and therefore is a protected occupant. In accordance with the foregoing, I find that Unit 3F is a covered unit and that Mr. Salinas is the protected occupant of the unit. Unit 3R It is not disputed that Unit 3R was physically converted to accommodate residential use and was residentially occupied by Jay O Hara, a former building superintendent, at least from 1980 through 1983 (Stip. 9, 13, 15). To establish that the unit is protected under 281(4), petitioners must prove that it was residentially occupied from 1983 through May 1, 1987, the end of the window period. Respondent contends that there was substantial non-residential occupancy in the years from 1983 to 1997, when the current tenant Gaetano Salvadore moved in (Resp. Mem., at 19). It is not disputed that Mr. Salvadore has been a residential occupant of the unit from 1997 to the present (Stip. 9), and that he occupies the unit as his primary residence (Stip. 12). The record establishes that Mr. Salvadore was issued two leases after 1982 and has a lease currently in effect in the name of Guy Salvadore Photography (Pet. Ex. 21). Ms. Wagner testified that she spent time inside Unit 3R when Jay O Hara lived there from 1978 to 1983 (Tr ). During that time, the loft contained a bedroom, a kitchen with a stove, refrigerator, and cupboards, a sofa, a shower and a toilet area. She testified that when Mr. O Hara moved out, the Garcia family moved in: a mother and father and two children. They stayed in the unit for three years, from 1983 to Although Ms. Wagner did not enter the unit while they were living there, she believed the family lived there and she noted that she saw the children going off to school each day. According to Ms. Wagner, after the Garcias moved out, Andrew Hochstadt moved into the unit (Tr ). Although she was not inside the unit while Hochstadt lived there, she believed it was his residence and she saw him in the building everyday. He worked with Ace Protection Agency, and he convinced the tenants to install a security system in the building. Although she could not be specific about the date of his arrival, Ms. Wagner said that Hochstadt

12 lived there a long time, perhaps into the 1990 s. She did not recall who lived in the unit after he left. Mr. Lebron testified that Unit 3R was a dressmaking factory when he started working in the building in 1986, and no one lived there (Tr. 197). He said the factory remained there for 20 years. He denied knowing anyone named Andrew Hochstadt (Tr. 201). I assessed the credibility of the witnesses to evaluate their conflicting testimony and found Ms. Wagner to be more credible. Her ability to recall was appropriate -- not overly detailed which might diminish her credibility given the passage of time. On the other hand, I found Mr. Lebron much less credible and his ability to recall unreliable. For instance, his recollection that the dressmaking factory remained in the unit for 20 years, until only a year ago, was contradicted by the undisputed fact that the current tenant has been there since 1997 (Stip. 9). 5 Mr. Lebron s claim that he had never heard of Mr. Hochstadt also was not credible since the presence of Mr. Hochstadt s business, ACE Protective Services, on the third floor from 1986 through 1994, was corroborated by respondent s own rent rolls (Pet. Exs. 8, 13 & 19). Even if Mr. Hochstadt did not reside in the building, it would be impossible to believe that Mr. Lebron did not encounter him in eight years (Pet. Mem., at 8). Mr. Lebron s credibility suffered also because of his repeated testimony that he began working in the building in 1986, which I discredited. His contention was contradicted by the 1988 affidavit of Angelo Rivera, apparently submitted by the owner in a housing court action against a former tenant, which indicates that Mr. Rivera was still employed as the building superintendent in 1988 (Pet. Ex. 61). Moreover, three petitioners submitted post-trial affidavits stating that they recall that Mr. Lebron did not begin working in the building until 1988 (Posttrial Petitioners Exhibits). 6 As previously noted, I found that his repeated denials that there were residential occupancies lacked credibility, particularly when compared to Ms. Wagner s more detailed recollection of the Garcia children going to school each morning. In light of the witness s noted inconsistencies and the incentive that an employee like Mr. Lebron would have 5 Respondent s attorney tried to correct the witness recollection by asking if it was 12 years, but that was not Mr. Lebron s testimony (Tr. 197). 6 Petitioners were allowed to submit affidavits post-trial to respond to the testimony of Mr. Lebron, which was unscheduled and came as a surprise to them. Sonja Wagner stated in her affidavit that she specifically recalled that the tenants hired a security guard who worked from January to December 1987, and that Mr. Lebron started work in the building in 1988, sometime after that guard left (Affidavit of Wagner, dated January 1, 2007). Izumi Inoue stated in his affidavit that he moved into the building in 1988, sometime before Mr. Lebron worked there (Affidavit of Inoue, dated January 1, 2007).

13 to testify favorably for his employer, I found Mr. Lebron s testimony unreliable on the issue of whether the tenants established residence in their units. I did not find similar deficiencies in Ms. Wagner s account. Having occupied her own loft unit since at least 1979, she had the opportunity to make the observations that she did. I also noted that Ms. Wagner s testimony appeared unbiased in that it did not corroborate residential use in every instance. That is, there were some units for which she did not observe residential use or could not recall it. Also, Ms. Wagner s testimony that Mr. O Hara had physically converted the unit to residential living supports the inference that the Garcias also occupied the unit for residential purposes. Her observations of the Garcia children living in the unit support an inference that the residential use was not transient. Since the Garcias moved out in 1986, however, petitioners still must establish that the residential use extended through the end of the window period, May 1, Petitioners contend that Andrew Hochstadt occupied the unit residentially after the Garcias left, at least through the end of the window period. In support of this contention, petitioners submitted 1993 plans and an Alt 1 permit to convert the third floor of the building to an art gallery and caretaker s apartment (Pet. Exs. 17 & 17A). Also in 1993, the Department of Buildings issued the building a citation for illegal occupancy of the third floor, noting the presence of a gallery and living quarters (Pet. Ex. 58A). Although the evidence supports the existence of a residence in 1993, it does not support Mr. Hochstadt s residency from 1986 to Nevertheless, respondent s rent roll does. It confirms that Mr. Hochstadt s company occupied the unit by January 1986 at least through the end of 1987 (Pet. Ex. 8). The fact that the Garcias occupied the unit residentially prior to his tenancy supports the inference that Mr. Hochstadt did also. That is, there was convincing evidence that the unit was converted and used as a residence before Hochstadt s arrival and no evidence that the residential appurtenances were removed thereafter. Finally, there is Ms. Wagner s belief that Hochstadt lived there and her credible testimony about her observations of him there everyday. I concluded that the record of Mr. Hochstadt s use of the unit was sufficient to establish residential occupancy through the end of the window period thus qualifying the unit for protected status. As a residential occupant with a current lease in effect, Mr. Salvadore qualifies as a protected occupant of Unit 3R.

14 Unit 5F It is not disputed that Unit 5F was physically converted for residential use and was residentially occupied from at least 1979 through 1994, which covers the entire window period (Stip. 9, 13). Although respondent does not dispute residential use during the window period and respondent s witness corroborated it (Tr ), respondent again claims that the unit is not entitled to protection under section 281(4), because the residential use was interrupted by commercial use from 1994 to Mr. Lebron testified that, when the residential tenants moved out five years after he started work there, a company run by Koreans that sold and repaired sewing machines occupied the unit, and no one resided there. That company remained for five to seven years. The current tenant Brian Durham moved in after that. Even if true, respondent s evidence is insufficient to defeat the unit s coverage under the Loft Law. Since the unit was converted and occupied residentially throughout the window period, it is covered unless removed from coverage, Matter of Andrew Bradfield, LLC, OATH No. 1345/03, at 4-5, and respondent put on no evidence that it was removed from coverage. Thus, the unit qualifies as a protected loft unit under the Loft Law. It is undisputed that the current tenant of 5F, Brian Durham, has been the residential occupant of the unit from 1998 to the present (Stip. 9), and he occupies the unit as his primary residence (Stip. 12) and has a current lease in effect (Pet. Ex. 29). As a residential occupant with a current lease in effect, Mr. Durham qualifies as a protected occupant of Unit 5F. Unit 7 It is undisputed that Unit 7 has been continuously occupied for residential use as the primary residence of the current occupants, Jon Furay and Erin Hawker, since 1997, and that the unit was physically converted to accommodate such use during the period of their occupancy (Stip ). The prior use of the unit has a complicated history and is in dispute. The first tenant of the unit during the window period was Sason Custom Creations, a small business run by principals Raphael and Uziel Sason, brothers who along with their father constructed museum display cases (Tr. 155). The business also employed a secretary and a few other wood workers. The company executed a lease with the owner for the seventh floor of the IMD for the period January 1, 1978 to December 31, 1980 (Pet. Ex. 31). The company remained in the space until approximately May 1982.

15 Raphael Sason testified that he and his brother both had other residences when they began renting the seventh floor unit in 1976 or 1977 (Tr ). The landlord cleaned the apartment of the debris left by the prior tenant, but they made some improvements. There was no electricity so the brothers installed a new electrical panel; they also cleaned, painted and partitioned the space into an office, a cutting area, and a hangout space in the back, where they put a bed and a $20 couch to have a place to sit (Tr ). According to Raphael, the size of the hangout space was 20 to 25% of the unit. One had to walk through the shop to get to the bathroom from the hangout space, which had no running water (Tr ). In the main area of the loft were the refrigerator, stove, and tables and chairs for a lunch area (Tr ). Raphael and Uziel purchased a used refrigerator and sometimes used the stove for cooking, but they frequently ate take-out. They constructed a plywood counter next to the stove. Their only sink was in the bathroom which also had a toilet; there was no hot water so they purchased an electric heater that was connected to the sink to heat the running water, which was the only hot water in the loft (Tr ). They later installed a cheap-o plastic shower stall over a hole in the bathroom (Tr ). Eventually, they sheet rocked one side of the back wall to keep the dust out of the back room and installed doors (Tr. 159). They had woodworking machinery on premises, including a table saw, band saw, a planer and joiner, as well as plywood and other materials (Tr. 172). Raphael testified that both he and Uziel used the space to live. Uziel used it as a crash pad when he was evicted from his apartment until he found another apartment -- splitting his time between the loft and his girlfriend s apartment (Tr ). Uziel also stored his possessions there until he moved to Detroit in April 1980, and stayed there whenever he returned from Detroit for visits (Tr. 162). Raphael stayed in the loft while separated from his wife during 1981 and 1982 (Tr ). He said it became his home away from home. He slept on the couch or the bed, ate, and showered there, but he did not really live there. Sometimes he was there four nights a week and spent weekends in Syosset with his children. He said he hung out at the loft. Raphael produced no documents evidencing that he used the loft as a residence, and he admitted that he listed the loft only as a business address on his taxes. He was never registered to vote at that address (Tr. 165). In his testimony, he first claimed that he changed his legal address to the loft on his tax papers, driver s license, and other papers while separated from his

16 wife, but he brought none of those documents with him (Tr. 166). He later admitted however that he never filed personal taxes using the loft as his home address (Tr ). He maintained Syosset as his legal address until the formal legal separation from his wife in 1984, whereupon he moved out and got his own apartment in Manhattan. Raphael said he vacated the space in May 1982 apparently as a result of litigation with the landlord (Tr ). He had commenced a rent strike because of problems using the elevator and receiving heat. The combination of the elevator problems and the loss of his father in 1979 and brother in 1980 led him to cease operations on the site in 1980 or 1981 (Tr ). He admitted that he failed to pay rent after the landlord began litigation at the end of 1980 (Tr. 165). The landlord obtained a judgment against him for $9,625 and attorney s fees of $1,290, which he did not recall paying (Tr. 170). I find the evidence of the Sasons use of the loft inadequate to demonstrate sufficient indicia of independent living or the requisite physical conversion of the unit into a dwelling, according to Loft Law requirements. The standard for proving residential occupancy of a loft unit is well established. The Appellate Division enunciated it in Anthony v. New York City Loft Bd., as follows: For a unit to qualify as a residence under MDL 281 it must possess sufficient indicia of independent living to demonstrate its use as a family residence.... It is not enough to show residential use alone. The showing of residential use must be accompanied by a showing that the formerly commercial premises, the domestic use of which is claimed, physically reflect that use, i.e., that the premises have been converted, at least in part, into a dwelling. Anthony, 122 A.D.2d 725, 727, 511 N.Y.S.2d 600, 602 (1 st Dep t 1986). The cases consistently have held that, to establish the residential nature of a loft unit during the window period, petitioners must show sufficient indicia of independent living as well as some physical conversion of the unit that reflects its residential use. See Matter of South 11 th Street Tenants Assoc. & Matter of Lid Fla Realty Corp., OATH Index Nos /96, at (Mar. 30, 1999), aff d, Loft Bd. Order No (Apr. 29, 1999) (hereinafter Matter of South 11 th Street ) (citing Franmar Infants Wear, Inc. v. Rios, 143 Misc.2d 562, 544 N.Y.S.2d 911 (1 st Dep t 1989); Anthony, 122 A.D.2d at 727, 511 N.Y.S.2d at 602; Loft Realty Co. v. Aky Hat Corp., 123 Misc.2d 440, 474 N.Y.S.2d 204 (Civ. Ct. N.Y. Co.), aff d, 131 Misc.2d 541, 503 N.Y.S.2d 663 (1 st Dep t 1984); Matter of Tenants of Water Street, Loft Bd. Order No.

17 , 15 Loft Bd. Rptr. 199A (Jan. 19, 1995); Matter of Bal, Loft Bd. Order No. 153, 2 Loft Bd. Rptr. 1, 4 (Dec. 19, 1984)). It is not enough to show residential use alone. Anthony, 122 A.D.2d at 727, 511 N.Y.S.2d at 602. Rather, a case-by-case analysis of the indicia must be done, in which no one factor is dispositive. For example, in Loft Realty Co. v. Aky Hat Corp., supra, the court denied protected status to a tenant who resided in a loft primarily occupied by a hat factory, finding that the residential use was incidental to the commercial use. The tenant, who was employed by the hat factory, paid no rent, took possession with the permission of his brother, and the total residential space occupied only 2% of the loft. The court stated that [m]erely setting aside a very small space in which an employee... may live does not bring the employee within the group of loft dwellers sought to be protected by the statute. 123 Misc.2d at 445, 474 N.Y.S.2d at 208. In Anthony v. New York City Loft Board, supra, the tenant resided occasionally in the loft unit, which she leased as a dance studio. Although she had another apartment that was her primary residence, she slept in the studio when preparing for performances. Various others also stayed in the unit from time to time, but it was not intended to be their home. The court found that, at most, the loft was occupied only intermittently during the window period and the residential use was incidental to the commercial use; thus, there was no conversion to independent living. 122 A.D.2d at 727, 511 N.Y.S.2d at 602; see also Lower Manhattan Loft Tenants v. NYC Loft Bd., 66 N.Y.2d 298, 303, 496 N.Y.S.2d 979, 982 (1985) (court upheld Loft Board regulation permitting an owner to seek eviction of residential occupant on ground that the unit is not the occupant s primary residence, noting the purpose of Loft Law is to protect the residential aspect of occupancy of an interim multiple dwelling rather than to shield the tenant whose use is essentially commercial and only incidentally residential ). Similarly, in Franmar Infants Wear, Inc. v. Rios, supra, the Appellate Division found there was no conversion to residential use in any meaningful way where the tenant made no physical improvements to adapt the premises for living purposes and had no bathroom, sink or kitchen inside the loft. 143 Misc. 2d at , 544 N.Y.S.2d at 911. Distinguishing the facts of Aky Hat, this tribunal in Matter of South 11 th Street, supra, upheld the residential use, noting that the loft was the tenant s primary residence, the tenant occupied 33% of the loft and paid rent pursuant to an arms length rental agreement, and lived

18 and worked in the loft independently of the prime tenant s commercial activities. OATH /96, at 47. The tenant had conducted a physical conversion of the unit that included establishing living and working space, enclosing the living area, and installing a bathtub, mail slot and shelves, the accumulation of which changed the character of the space from commercial to residential. Here, as in Anthony v. New York City Loft Board, Raphael and Uziel Sason resided only occasionally in the loft. Despite his separation, he maintained a primary residence in Long Island with his family, and the time he spent sleeping in the loft was clearly a temporary arrangement created by his marital discord. He admitted that he never intended to make the loft his home, and he never indicated it was his residence on official documents. Moreover, I was skeptical if Raphael s claim that he slept in the loft as many as four nights a week, because of contradictions in his testimony. Based on his testimony, I suspect that, had he been forced to pay for use of the premises, he would have found accommodations elsewhere, which he eventually did after his separation was formalized. Thus, I find the Sasons use of the loft unit only incidental to the commercial use. Unlike Matter of South 11 th Street, where the unit was qualified as protected, the loft here was not the tenants primary residence, the Sasons paid no rent, and there was no true conversion of the space for residential use. See OATH /96, at 47. In addition, the bath facilities, which were across the work floor from the living quarters, were rudimentary, consisting of a sink, toilet and shower fixture that hung over a hole in the floor. There was no true bedroom -- only a hangout space in the back of the unit with a bed in it. The plywood counter installed near the stove and the $20 couch purchased for seating both suggested a transient nature to the accoutrements furnishing the unit. In sum, I found no true conversion of this space to a residential dwelling. See Anthony, supra, 122 A.D.2d at 727, 511 N.Y.S.2d at 602 (where the loft was occupied only intermittently during the window period and the residential use was incidental to the commercial use, there was no conversion to independent living). Having found that Unit 7 was without a residential occupant during this portion of the window period, I conclude that the unit is ineligible for coverage. However, to complete my review of the record, I will also review the evidence of the occupancy during the remainder of the window period.

19 After the Sasons moved out of the unit, a pleating company moved into the space (Tr ). Ms. Wagner testified that she visited the space twice, once shortly after they moved in. She observed that three quarters of the space was used commercially, but in the rear, there was a kitchen, refrigerator, and two sets of bunk beds. Although the owner left everyday, she observed the workers in and out of the building after hours, bringing in groceries. Mr. Lebron testified that when he started in 1986, the seventh floor was being used as a factory, Camille Pleating (Tr ). He said he entered this space everyday. He saw 30 to 40 people working there at tables, but he never saw anyone living in the space. While he conceded that his work hours ended at 5:00 in the afternoon, he declared that nobody ever stayed overnight in the unit (Tr. 199). Santiago Camilo signed a three-year lease for his company, M.C. Pleating Company, to occupy Unit 7F from 1983 to 1986 (Pet. Ex. 32). Another company, Suhey Pleating, occupied Unit 7R during those three years with a lease from March 1983 through February 1986 (Pet. Ex. 33). Mr. Camilo testified that the seventh floor was undivided at that time, and in 1986 he took over the entire floor and maintained it until 1997 (Tr ). There is a lease evidencing Mr. Camilo s use of the entire floor for the period February 1986 through January 1989 (Pet. Ex. 34). Mr. Camilo testified that he employed a number of Mexican laborers to work for his company, and some of them also slept in the unit. He too slept in the unit on occasion. From 1983 to 1985, Mr. Camilo and a friend slept in his office in the loft approximately twice a week (Tr. 142). From 1985 to 1990, a number of Mexican workers slept there almost the full week (Tr , 140). Those who could not fit in the three sets of bunk beds that Mr. Camilo purchased slept on the work tables. The beds were in the open floor area, not located in bedrooms (Tr. 139). There was no place for the workers to store their clothes, so they kept them in bags (Tr. 141). One of the workers, Lewis, had a key to the loft and he would let the others into the unit. The workers could access the unit on weekends. The workers who lived in the unit varied, because they periodically returned to Mexico (Tr. 137). This arrangement commenced when Lewis was assaulted by his roommates and Camilo offered him the seventh floor space to live (Tr ). Lewis eventually asked if others could stay and, because they were good workers, Camilo allowed it. Lewis remained for many years and took on a leadership role in managing the other workers who stayed there.

20 Mr. Camilo admitted that he maintained a primary residence elsewhere, where his wife and children lived, the entire time that he stayed in the building (Tr. 131). The Mexican workers who stayed there, however, were illegal immigrants who had no other place to live. There was a small kitchen area on site where the workers had meals (Tr ). The kitchen area, which was not separated from the rest of the floor, had a stove and refrigerator and a few metal pots for cooking (Tr. 138). There was a ladies restroom and a men s restroom, the latter of which had a shower that was used by the workers who stayed overnight (Tr. 133). There were two offices in the space. Camilo s office contained a bed, a desk and other office materials. Based upon the record, I find that Camilo s use of the unit during the window period failed to qualify the unit for protection under the Loft Law. His use, which consisted of occasional overnight stays in which he slept in his office, was incidental in nature. It is also significant that he maintained his primary residence elsewhere. See Lower Manhattan Loft Tenants, 66 N.Y.2d at 303, 496 N.Y.S.2d at 982. On the other hand, the Mexican workers were more dependent upon the living space as a home as they had no other homes to live in. However, they paid no rent and the living quarters were minimally appointed for purposes of sleeping several men. The bunk beds situated in one room suited the purpose of accommodating the labor pool, but they were not outfitted for longterm primary residence. These men slept as they would in a dormitory or work camp, not a home where their families would be welcomed. There were no cabinets for them even to store their clothing and personal items. Respondent argues that the workers provide an inappropriate basis upon which to claim residential use. That is, the Multiple Dwelling Law defines a residential unit as the residence or home of a family as defined in Multiple Dwelling Law 4(5). 29 RCNY 2-08 (a). A family is defined as: either a person occupying a dwelling and maintaining a household, with not more than four boarders, roomers or lodgers, or two or more persons occupying a dwelling, living together and maintaining a common household, with not more than four boarders, roomers or lodgers. A "boarder," "roomer" or "lodger" residing with a family shall mean a person living within the household who pays a consideration for such residence and does not occupy such space within the household as an incident of employment therein.