NEW YORK CITY OFFICE OF ADMINISTRATIVE TRIALS AND HEARINGS

Transcription

1 Matter of Gallo OATH Index No. 2401/13 (Oct. 10, 2014), adopted in part, rejected in part, Loft Board Order No (Jan. 15, 2015), reconsideration denied, Loft Bd. Order No (Sept. 17, 2015), appended [Loft Bd. Dkt. No. TR-1043; 177 Water Street, Brooklyn, N.Y.] In a coverage proceeding, applicants established that the building located at 177 Water Street, Brooklyn is an interim multiple dwelling, their units are covered, and that they qualify for protection under the Loft Law. ALJ recommended that the application be granted. Loft Board adopts ALJ s recommendation that building is an IMD, that two of the applicants are protected tenants, that the basement is excluded from coverage as part of two of the units and that a claim pursuant to Loft Board rule 2-04(c) was not properly before the Loft Board. The Loft Board rejected the recommendation of protected status for one of the applicants and disagreed with the ALJ s determination that it was unnecessary to determine whether the fourth floor was divided into two separate units; instead the Board found that there are 4 IMD units, including 2 separate IMD units on the 4 th floor. The prime lessee found to be unprotected under 29 RCNY 2-09(b)(4), was not in possession of her unit, the unit was not her primary residence as she subdivided it, and rented it out, and did not convincing show even sporadic use of the premises during the window period. NEW YORK CITY OFFICE OF ADMINISTRATIVE TRIALS AND HEARINGS In the Matter of DOREEN GALLO, OCTAVIO MOLINA, AND GAYLE MARRINER-SMITH Petitioners - against WATER STREET REALTY, LLC, AND THOMAS CALFA Respondents REPORT AND RECOMMENDATION ASTRID B. GLOADE, Administrative Law Judge Petitioners Doreen Gallo, Octavio Molina, and Gayle Marriner-Smith filed an application with the Loft Board on November 7, 2012 (Loft Board Docket No. TR-1043) pursuant to Article

2 -2-7-C, section 281(5) of the Multiple Dwelling Law ( Loft Law or MDL ) and title 29 of the Rules of the City of New York ( RCNY or Loft Board Rules ). Petitioners seek a finding that the building located at 177 Water Street, Brooklyn, New York ( the Building ), is an interim multiple dwelling ( IMD ), that they residentially occupied the second, third, and fourth floor units respectively during the applicable window period, and that they are the protected occupants of these units. Respondents, 177 Water Street Realty LLC and Thomas Calfa, owners of the Building, oppose the application (ALJ Exs. 1, 2). The Loft Board referred the matter to this tribunal on March 29, 2013, for settlement conference and hearing. See 29 RCNY 1-06(j)(2)(ii) (Lexis 2014). A nine-day hearing was held during which the parties presented the testimony of 13 witnesses and offered documentary evidence. The parties filed post-trial briefs on July 25, For the reasons below, I find that the Building is an IMD and the second, third, and fourth floor units are covered. I further find that petitioners are the protected occupants of their respective units. ANALYSIS Multiple Dwelling Law To be covered by the Loft Law, a building must: (1) at any time have been occupied for manufacturing, commercial, or warehouse purposes; (2) lack a certificate of occupancy or of compliance permitting residential use on the qualifying unit on June 21, 2010; (3) not be owned by a municipality; and (4) have been 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 ( window period ). MDL 281(5) (Lexis 2014). To qualify for coverage under MDL section 281(5), the unit must (i) not be located in a basement or cellar; (ii) have at least one window opening onto a street or lawful yard or courtyard as defined in the zoning resolution for such municipality; (iii) have at least one entrance that does not require passage through another residential unit to obtain access to the unit; and (iv) be at least 400 square feet in area. MDL 281(5). Most of the requirements for finding that the Building is an IMD and that the units qualify for coverage are undisputed. Indeed, in their answer respondents acknowledge that the

3 -3- Building, which is privately owned, has been occupied for commercial use and lacks a certificate of occupancy (ALJ Ex. 2). The credible and unchallenged evidence establishes that each of the units is located on the second, third and fourth floors of the Building (Tr. 55, 79, 399, 659; Pet. Exs. 5-8, 29-32, 42); has at least one window facing a street or lawful yard or courtyard (Tr , , 468, 503, 578, 704; Pet. Exs. 18, 19, 38, 51: Resp. Ex. BB); is accessed through a public stairway that does not require passage through another residential unit (Tr , , , , 1207; Pet. Exs. 19, 38, 51); and is over 400 square feet (Tr. 480, 660, ; Pet. Ex. 19). The contested issue is whether the Building was residentially occupied by three or more families living independently from one another for 12 consecutive months during the window period. Residential Occupancy During the Window Period To establish the residential nature of a loft unit during the window period, an applicant must show sufficient indicia of independent living to demonstrate the unit s use as a residence, as well as some physical conversion of the unit to a dwelling. Franmar Infants Wear, Inc. v. Rios, 143 Misc.2d 562, 563 (App. Term 1st Dep t 1989); Anthony v. NYC Loft Bd., 122 A.D.2d 725, 727 (1st Dep t 1986); see also Matter of South 11th Street Tenants Assoc. & Matter of Lid Fla Realty Corp., OATH Index Nos /96 at (Mar. 30, 1999), adopted, Loft Bd. Order No (Apr. 29, 1999) (hereinafter Matter of South 11th Street ); 29 RCNY 2-08(a)(3) (Lexis 2014). Determination of the sufficiency of the indicia of residential nature of the loft requires a case-by-case analysis. No single factor is determinative. See Matter of Boyers, OATH Index Nos. 1338/12, 1381/12 & 1403/13 at 13 (Feb. 10, 2014); Matter of Gareza, OATH Index Nos. 2061/12 & 760/13 at 6 (Dec. 12, 2012), adopted in relevant part, Loft Bd. Order No (Feb. 20, 2014); Matter of 333 PAS CoO Tenant Group, OATH Index No. 968/08 at 7 (June 30, 2009), adopted, Loft Bd. Order No (Nov. 19, 2009); Matter of South 11th Street, OATH /96 at 42. Under the Loft Board rules, determining whether the families are living independently of each other requires an examination of whether a unit has a separate entrance accessible from a public hallway or street, and has separate functional areas such as a kitchen, bedroom, living room, or studio space. See 29 RCNY 2-08(a)(3)(i), (ii) (Lexis 2014). Additionally, in

4 -4- determining whether there is sufficient physical conversion of the unit to residential use, this tribunal has considered the presence of permanent improvements, such as bathrooms, bathing facilities, closets, and walls erected to separate living areas, and the presence of non-permanent items reflecting residential use such as refrigerators, stoves, and beds. Matter of Boyers, OATH 1338/12 at 13; see also Matter of Pels, OATH Index No. 2481/11 at 5-6 (June 20, 2012), adopted, Loft Bd. Order No (June 20, 2013) (finding the installation of a kitchen, stove, refrigerator, cabinets, a desk and shelves, and the addition of walls to separate the living area and an additional doorway, were sufficient indicia of independent living and conversion); Matter of 333 PAS CoO Tenants Group, OATH 968/08 at 16 (finding refrigerator, stove, bedroom with built-in closets, and a bathroom with mirrors sufficient proof of conversion to residential use ); Matter of South 11th Street, OATH /96 at 38-39, 41 (sufficient indicia of residential conversion where tenant cleared out debris, erected sheet-rock walls and hung a heavy curtain to enclose his living area, built a loft bed and shelving, installed a bathtub and a mail slot, and had various personalty in the loft including, a table, chairs, hot plates, refrigerator, and stereo); c.f. Matter of Boyers, OATH 1338/12 at (insufficient conversion where loft used as a commercial gym and dance and artist studio); Matter of Wada, OATH Index No. 1519/96 at 23 (July 25, 1997), adopted, Loft Bd. Order No (Oct. 10, 1997) (insufficient physical conversion where though tenant placed bed in the loft behind a movable partition, he had no bathroom, kitchen, running water, appliances or fixtures in his space). Petitioners must establish that they are entitled to the relief that they seek in their application by a preponderance of the credible evidence. 29 RCNY 1-06(i)(4) (Lexis 2014); Matter of Gareza, OATH 2061/12 at 4. Petitioners have met their burden. Second Floor Unit (Molina) Molina moved into the Building in September 1980, when he and a roommate signed a lease for rental of the second floor (Tr. 51, 58; Pet. Ex. 6). According to Molina, when he moved into the second floor it was raw space, lacking walls, a bathroom, or a kitchen, and the floors and windows were in need of repair (Tr. 54). He undertook renovations in the second floor beginning in the fall of The renovations included building partitions to create bedrooms, a kitchen and a bathroom, and installing appliances such as a refrigerator and a washing machine. (Tr ; Pet. Ex. 20A). Molina signed renewal leases for the second floor in 1987, 1992, and, most recently, he signed a lease for a five-year term in 1998 (Tr ; Pet. Exs. 5, 7, 8). Rick

5 -5- Liss, Molina s friend, testified that he met Molina in Shortly after they met, Molina invited Liss to accompany him to look at a loft that Molina planned to move into on the second floor of the Building (Tr ). Liss visited Molina at the unit during the renovations and after they were completed (Tr. 379). Molina resided in the second floor unit until 1992, when he moved to the third floor of the Building to live with Gallo, with whom he had entered into a relationship (Tr. 73, 147). He and Gallo married in 1994 and had a child in 1997 (Tr. 78; Pet. Exs. 33, 34). According to Molina, he did not live on the second floor during the time he lived with Gallo on the third floor, but had subtenants who occupied the second floor unit (Tr ). In 2002, Molina, who worked in the film industry, returned home from a business trip to find that Gallo had locked him out of the third floor apartment. He resumed living in the second floor unit and has resided there since that time, including during the window period (Molina: Tr. 79, ; Gallo: Tr. 415). After he and Gallo separated, their daughter spent most of her time on the third floor, but he saw her on evenings and weekends. In 2005 or 2006, Molina built a loft bed in the second floor unit to accommodate his daughter s overnight visits (Molina: Tr. 170; Gallo: Tr ). Molina commenced divorce proceedings in 2009 and a divorce decree was issued in July 2011 (Molina: Tr. 164; Gallo: Tr. 579; Pet. Ex. 60). Molina s sixteen-year old daughter, Ms. Molina, testified that her parents separated when she was very young. She has no memory of them living together after her father moved out of the third floor in 2002, when she was five years old, or of him living on the third floor (Tr ). In 2006, her father built her a loft bed in the second floor unit that she used for overnight visits (Tr. 323, 327). Between 2006 and 2011, Ms. Molina spent an average of one day per week with her father on the second floor (Tr ). Ms. Molina considers her father s unit her home, but not her main home, which is with her mother in the third floor unit (Tr. 341). Gallo testified that she and Molina lived on the third floor of the Building until 2002, when he moved back to the second floor (Tr. 416). Abrahams, who has known Gallo and Molina since the early 1980s and has visited them at the Building, testified that after they separated, Molina lived on the second floor while Gallo continued to live on the third floor with their daughter. Their living arrangements remained the same during the window period (Tr , , 223, ). Lerochereuil, Molina s friend and colleague, testified that he first visited Molina on the

6 -6- second floor of the Building in the spring of 2008, when they worked together on a film editing project, which lasted into December Lerochereuil estimated that in 2008 he made over 40 social and business visits with Molina on the second floor of the Building. In 2009, he visited Molina an average of once to twice per month (Tr ). Lerochereuil testified that Molina s unit is equipped with a kitchen in which Molina cooked him meals, a living room, a bathroom, and a bedroom (Tr. 264, ). Molina described the layout of the unit and identified photographs taken inside the unit. A floor plan of the unit drawn by Molina and the photographs were admitted into evidence (Pet. Exs. 18, 19). The floor plan indicates that the unit is over 1,900 square feet (Pet. Ex. 19). Molina identified his bedroom and its furnishings, a boiler room and hot water heater located between the bedroom and a bathroom, a kitchen with appliances, a closet, a second bathroom, a living room, a dining room, and a hallway. An area labeled work studio was used as a bedroom. According to Molina, the photographs and the floor plan depict the unit as it was configured during the window period (Tr ; Pet. Exs. 18, 19). In addition to testimonial evidence, petitioners submitted documentary evidence in support of their contention that Molina was the residential occupant of the second floor unit during the window period. The evidence included voting records, utility bills, driver s license, passport, statements from banks and other financial institutions, and insurance information relating to the window period. Evidence such as receipt of mail at the subject unit and use of the unit s address on official documents may be considered as proof of an applicant s residential use of the unit. See Matter of Cohen, OATH Index No. 2015/12 at 10 (Aug ), adopted, Loft Bd. Order No (Mar. 20, 2014) (citing Matter of Gareza, OATH 2061/12 at 8 (receipt of mail and tax documents at the address, use of the address on a bank account, and being registered to vote at the address); Matter of the Tenants of S. Fifth Street, Loft Bd. Order No. 1739, 15 Loft Bd. Rptr. 199, 212 (Jan. 19, 1995) (designating the loft address as applicant s home address on tax returns and marriage certificate, and maintaining homeowner s insurance policy on the unit); Matter of Muschel, Loft Bd. Order No. 33, 1 Loft Bd. Rptr. 27, 30 (Nov. 23, 1983) (indicating the loft as the applicant s address on tax returns, checks, and a passport was persuasive because the Board considers where one holds oneself out as residing as probative of where one resides in fact ); Matter of Mussman, Loft Bd. Order No. 905, 9 Loft Bd. Rptr. 50, 59 (May 25, 1989)

7 -7- (finding that tenant did not residentially occupy the unit based in part on automobile registration, automobile insurance, and voter registration reflecting another address plus the tenant s inability to explain why his wife resided at the unit without him). Although Molina s electrical bills, telephone bills, and a vehicle insurance identification card identify the second floor unit as his mailing address during the window period (Pet. Exs. 17, 22, 27; Tr ), most of the documents submitted into evidence do not. For example, Molina s mailing address on his federal and state income tax documents, voting records, jury summons, New York State Driver s License, United States passport, dental insurance benefits forms, bank account statements, cell phone statements, and investment account statements does not identify a specific unit or apartment number within the Building (Pet. Exs. 1, 11, 13, 14, 16, 25, 26, 28; Tr , ). Molina maintained that he rarely included the second floor unit in his address because he liked the idea of not having a specific floor designated on his address (Tr. 177). In the face of equivocal documentary evidence, the issue of whether Molina residentially occupied the second floor unit during the window period turns on assessments of his credibility and that of his witnesses. In making credibility determinations, this tribunal may consider such factors as witness demeanor; consistency of witness testimony; supporting or corroborating evidence; witness motivation, bias, or prejudice; and the degree to which a witness testimony comports with common sense and human experience. Dep t of Sanitation v. Menzies, OATH Index No. 678/98 at 2-3 (Feb. 5, 1998), aff d, NYC Civ. Serv. Comm n, Item No. CD A (Sept. 9, 1998). During his testimony, Molina at times appeared to be vague and evasive. For example, petitioners submitted Molina s federal and New York State income tax returns for 2009 and 2010, which were redacted to conceal financial information (Pet. Exs. 3, 4). During 2009 and 2010, Molina had a roommate with whom he shared the second floor unit. Molina asserted on cross-examination that he was unsure whether he reported the monies paid to him by his roommate as income on his tax returns, even after he reviewed the unredacted returns (Tr. 187, 191, ). It was only after vigorous cross-examination that Molina reluctantly acknowledged that the amount he received as rent is identical to the amount declared as shop rental income on his 2009 and 2010 income tax returns (Tr ; Pet. Exs. 3, 4). Molina s professed ignorance appeared feigned and his attempt to deny knowledge of the contents of his

8 -8- tax returns by claiming they were prepared by his accountant was disingenuous (Tr. 291). Respondents sought to impeach Molina s credibility with evidence that in sworn deposition testimony given in May 2010 in a personal injury action filed by Gallo, Molina identified a house he owns at North 6th Street, Brooklyn, as his residence, despite having testified that he never lived there (Tr. 1228; Resp. Ex. V). On cross-examination, Molina explained that in the fall of 2009 he occasionally slept at the North 6th Street house because he was going through a difficult time as a result of the divorce proceedings and he also wanted to repair the house (Tr ). He sometimes used the North 6th Street address as his mailing address for important mail (Tr. 1229). He stated that he occasionally slept at the North 6th Street house, but resided at the Building (Tr ). However, Molina credibly and consistently testified that he resided in the second floor unit throughout the window period. This testimony is corroborated by documentary evidence, including his electrical bills, telephone bills, and a vehicle insurance identification card, and the credible testimony of other witnesses, including Molina s daughter, Gallo, Lerochereuil, and Abrahams. Respondents contention that the second floor unit should not be covered under the Loft Law because Molina commercialized the unit is without merit. Respondents maintained that Molina commercialized his unit because he used part of it for his film production business (Resp. Br. at 28-29). The Loft Law, however, was intended to cover units that are used by artists for both residential and commercial purposes. See Matter of South 11th Street, OATH /96 at (tenant s use of one third of a loft for residential purposes was sufficiently substantial to permit finding that the entire loft is covered); see also Matter of Pels, OATH 2481/11 at 9 ( loft use is understood to be inherently multi-purpose, which is much of the impetus for the passage of Article 7-C ). Therefore, limited non-residential use of a residentially occupied unit is insufficient to defeat coverage. See Matter of Gurkin, OATH Index No. 489/12 at 17 (Dec. 14, 2012), adopted, Loft Bd. Order No (Oct. 17, 2013) (a residential unit may contain a nonresidential use by its occupants that is secondary to the residential use). Respondents offered no evidence of pervasive non-residential use of the second floor unit that would defeat coverage of the unit.

9 -9- Therefore, petitioners have established by a preponderance of the credible evidence that Molina was a residential occupant of the second floor unit for at least 12 consecutive months during the window period. Third Floor Unit (Gallo) Gallo moved to the third floor of the Building with her then-boyfriend in 1980, when they signed a five-year lease (Tr. 399; Pet Ex. 30). They cleaned the unit, sanded the floors, and installed walls to define rooms. They also installed plumbing, electricity, insulation, and sheetrock, as well as kitchen and bathroom fixtures and appliances, such as cabinets, sinks, a shower, tub, toilet, stove, and a refrigerator (Tr ). Gallo signed renewal leases in 1987, 1992, and, most recently, in 1998 (Tr ; Pet. Exs. 29, 31, 32). According to Gallo, the second floor unit is approximately 2,200 square feet (Tr. 480). Gallo s testimony regarding her family s living arrangements is consistent with Molina s account. Notably, after they became romantically involved, he moved into the third floor unit with her (Tr ). Beginning in 1991 and continuing after Molina moved into the unit in 1992, Gallo and Molina completely renovated the third floor unit. The renovations included converting open space into bedrooms and closets, updating the electrical system to bring it up to code, installing a new kitchen with new appliances, baseboard heating, new lighting, new insulation, sound insulation, a laundry room, and bathroom fixtures. Gallo also installed granite and marble in the bathroom and laundry room and created a mosaic art installation in the bathroom (Gallo: Tr ; Molina: Tr. 73). According to Gallo, they renovated the unit because she and Molina were planning to marry and start a family (Tr. 413). After the renovations were completed, the unit consisted of two bedrooms, including one at the front of the Building with three windows, a kitchen/dining area, a laundry room, a bathroom, a darkroom that sometimes served as a bedroom, and a studio that has functioned at various times as a work area, a living room, and sleeping area (Tr ; , 581; Pet. Ex. 38). Gallo and Molina married in 1994 and had a child in 1997 (Tr. 415; Pet. Exs. 33, 34). While Molina lived on the third floor, they sublet the second floor and Gallo occasionally went to that floor to attend to issues involving the subtenant (Tr , 583). Gallo and Molina ceased living together in 2002 after Gallo changed the locks on the third floor unit, but did not give Molina a key (Tr. 585). After Molina moved back to the second floor in 2002, Gallo went to the second floor unit only once in 2013 when her father-in-law, who

10 -10- was living with Molina, required assistance during an emergency. She has not had a key to the second floor since 1995 (Tr. 467, ). Gallo continued to live on the third floor with their daughter after Molina moved to the second floor (Tr. 416). In addition to photographs of the loft, petitioners submitted into evidence a drawing that Gallo made of the third floor as it has been configured since 1992, including during the window period. The photographs depict the entrance to the third floor unit and the interior hallway to the rear studio area, as well as furnishings, decorations, extensive mosaic installations, and the bedroom used by Ms. Molina (Tr. 416, ; Pet. Exs. 38, 40, 57). Abrahams, who described herself as a very close friend of Gallo, corroborated Gallo s contention that she resided in the third floor unit during the window period. Abrahams testified that she met Gallo in 1982 or 1983, when Abrahams attended a party hosted by Molina in his unit. During their first meeting, Gallo told Abrahams that she lived in the apartment above Molina s (Tr , 219). Abrahams visited Gallo and Molina in their third floor unit during their marriage. In 2002, when Molina and Gallo separated, he moved out of the third floor unit and transferred his personal possessions, including stereo equipment, photographs, clothing, food, and souvenirs, to the second floor, where he resumed living (Tr ). Abrahams testified that Gallo lived on the third floor with her daughter during the window period (Tr , 223). She visited Gallo often during 2009, because it was a tough time for Gallo, who was in the process of divorcing Molina (Tr ). According to Abrahams, Molina and Gallo always maintained separate apartments and when their marriage dissolved they did not live together anymore (Tr. 248, 252). Gallo also submitted documentary evidence in support of her claim to have occupied the third floor during the window period. Like Molina, however, the addresses on several of the documents did not include a unit number as part of Gallo s address. For example, her bank records, marriage certificate, daughter s birth certificate, passport, and cellular phone bills establish only that she represented the Building as her home or mailing address during the window period (Pet. Exs. 31, 33, 34, 37A, 41). Gallo s income tax returns, including the 2008 and 2009 returns that she filed jointly with Molina, as well as the 2010 return that she filed as the head of household, do not designate a specific unit in the Building (Pet. Exs. 2, 3, 64). However, some documents, such as Gallo s voter registration record and utility bills during the window period, specify the third floor as Gallo s address (Pet. Ex. 35, 23, 24). As with Molina, Gallo s

11 -11- contention that she resided on the third floor during the window period is supported by documentary evidence, as well as the testimony of credible witnesses. In their post-trial brief, respondents concede that Gallo and her daughter were the residential occupants of the third floor unit for 12 months during the window period ( the evidence introduced at the hearing confirms that no more than one (1) independent family (Gallo and her daughter) occupied Applicants units for residential purposes for any twelve (12) month span during the window period ) (Resp. Br. at 5). However, respondents contend that the lack of a unit designation on much of Gallo s and Molina s documentary evidence, together with their filing of joint tax returns several years after their separation, maintaining joint insurance policies, and jointly listing their names on some of the utility bills during the window period, establishes that Gallo and Molina were part of the same household during the window period (Resp. Br. at 24). I disagree. Molina testified that after he and Gallo separated, they continued to pool their finances (Tr. 175). For example, both Molina s and Gallo s names were on utility accounts for the third floor during the window period, although he had not lived there since 2002 (Tr ; Pet. Exs. 23, 24). Similarly, insurance policies for the third floor unit were held in both their names, and Molina s car was included in the policy for the third floor, while Gallo s car was included in the policy for the second floor (Tr ; Pet. Ex. 17). Gallo testified that when she and Molina separated, they informally agreed he would continue to bear certain expenses (Tr. 643). In an effort to bolster its contention that Gallo and Molina were not living independently of each other during the window period, respondents sought to make much of a trip to Mexico that Molina and Gallo took with their daughter in 2007, after they had separated (Resp. Br. at 25-26). However, I credit Molina s and Gallo s testimony that rather than give Molina permission to take their ten-year-old daughter out of the country for a family reunion, Gallo accompanied them on the trip (Molina: Tr ; Gallo: Tr ). Such conduct is consistent with Gallo s testimony about her parenting arrangements with Molina after they separated. Gallo testified that after she locked Molina out of the third floor unit, he was never invited to attend any family functions there (Tr. 587). Further, she testified that there was a period of time after their separation when Molina did not see their daughter very much (Tr. 589). Gallo s conduct is also consistent with the testimony of her friend, Abrahams, who stated that for some time after their separation Molina was not an engaged parent and Gallo was concerned about their daughter

12 -12- spending time with him (Tr. 240). The evident tension and mistrust between Molina and Gallo support their claim that the trip was not so much one undertaken by an intact family unit as it was a parent s attempt to monitor her minor child s travel out of the country with a co-parent about whom she had concerns. While the evidence shows that Molina and Gallo s financial and personal lives remained intertwined during the window period, it is unsurprising given that they remained legally married and shared custody of a minor child. Nevertheless, the evidence establishes that Gallo and Molina lived independently of each other, on different floors of the Building, during the window period. In sum, petitioners have established that Gallo was a residential occupant of the third floor unit for 12 consecutive months during the window period. Fourth Floor Unit (Marriner-Smith) Marriner-Smith testified that when she moved into the unit in 1980, it was 2,500 square feet of raw space with a skylight on the top floor of the Building (Tr. 660, 667; Pet. Ex. 53B). At that time, the Building was owned by the Masotto family, which also owned Alpine Waste, a garbage collection and recycling company that had operated out of the Building before Marriner- Smith moved in (Tr ). Marriner-Smith signed a lease for a five-year term, with renewal options that extended the lease to 13 years. Marriner-Smith s most recent renewal lease was signed in 2000 for a five-year lease term (Tr , ; Pet. Ex. 42). In developing the unit, Marriner-Smith and her then-boyfriend installed electricity, erected walls to create a large front bedroom with a walk-in closet and large bathroom with a toilet and shower, and installed a kitchen, a heater, and plumbing (Tr ; Pet. Ex. 53B). As Marriner-Smith was writing and directing, she used the rear of the unit as a rehearsal studio (Tr. 670). She later converted the back space from a rehearsal studio to an audition theatre space, and added a bathroom, theatre chairs, and bi-fold doors (Tr. 689). In 1989 or 1990, after she and her boyfriend began having problems in their relationship, they erected a wall to create the common hallway and converted the back space into a studio with a kitchen for his use (Tr. 690, 916). Marriner-Smith enclosed her office in 1992 or 1993 to create a middle bedroom (Tr. 690). In 2005, among other things, she hired and paid a contractor to update the electrical system, repair a leak, and retile the floor in the back bathroom (Tr ; Pet. Ex. 56).

13 -13- Gallo testified that when she moved into the Building, Marriner-Smith was already living there and renovating the top floor (Tr ). Gallo and Marriner-Smith became friends and had dinners together on both the third and fourth floors (Tr. 476). Marriner-Smith also had her personal belongings on the fourth floor and cooked there (Tr. 477). When Gallo visited the fourth floor during 2008 and 2009, she observed a bedroom, bathroom, living room, and kitchen in the front part of the unit and a backspace bedroom set up further down the hall (Tr ). Gallo testified that the top floor was used for residential purposes by Marriner-Smith and her roommates during that time (Tr. 477). She testified that the configuration of the top floor remains the same today (Tr. 474; Pet. Ex. 51). Photographs of the fourth floor show a dining room, the front bathroom with a sink and bathtub, the front bedroom with windows that look out onto Water Street, the interior hallway, the front kitchen with appliances and cabinets, the library with shelves and a piano, the living room with a couch and television, the laundry room, the middle bedroom/office with a bed and desk, the back bathroom with a toilet, the rear studio with a bed, furniture, air conditioner, and windows that look out onto the courtyard, and the back kitchen with appliances and cabinets (Pet. Ex. 52A-R; Tr ). Marriner-Smith testified that the rear studio area occupies 400 to 500 square feet of the unit s total size of 2,500 square feet (Tr. 660, 712, 1026). In 1992, Marriner-Smith married Chris Smith, whose work as a marine scientist required him to maintain a connection to the Long Island area (Tr. 681, , 687, 838). They found a house together on Long Island in 1992 and since then have maintained residences in Southold and Mattituck in Suffolk County, New York (Tr. 683, 685, ). After her marriage, Marriner-Smith continued to live at the loft because she was working in New York City, but she travelled to Long Island on the weekends to stay with Smith (Tr. 683, ). In 1999 or 2000, Marriner-Smith, who described herself as a fourth generation summer person on the North Fork of Long Island, began to spend more time on Long Island. She eventually moved there, but left her furniture and belongings in the fourth floor unit (Tr. 682, 746, 824, 872). From 2005 to 2011, she and Smith lived in a house in Southold that was provided through Smith s work and was located on a preserve for which Smith acted as the caretaker (Tr , 842). Marriner-Smith subleased the fourth floor unit after she moved to Long Island, but asserted that she shared the unit with several roommates throughout the window period (Tr , 915). According to Marriner-Smith, Laura James moved into the front part of the loft in

14 -14- late 2005 or early 2006 (Tr. 713, 865). Marriner-Smith testified that she and James initially had only an oral agreement, which Marriner-Smith maintained provided that they were roommates, that James would occupy the front bedroom, and that they would share the other spaces (Tr ). Around April 2009, James moved from the front area of the loft into the rear studio and lived there until she moved out of the loft in 2010 (Tr. 713, ; Pet. Ex. 54). When James moved to the rear studio, she and Marriner-Smith entered into a written agreement which provided that [t]he landlord reserves the right to stay overnight in the said back space on a needbe basis and will give reasonable notice to the sub-tenant when this is necessary (Tr. 713; Pet. Ex. 54). From 2006 until sometime between April and early June 2009, Iris Welcome, the daughter of one of Marriner-Smith s good friends, lived in the rear studio area (Marriner-Smith: Tr. 688, , 712, 865; Welcome: Tr. 500, 503, 517). Welcome testified that her living space included a bedroom, full bathroom, and kitchen (Tr. 525; Pet. Ex. 51). When Welcome moved in, the loft was fully furnished with Marriner-Smith s belongings, including her bed, desk, kitchenware, plates, pots and pans, flatware, books, and rugs. Welcome kept only clothes, toiletries, and food in the unit (Tr. 502, 523). As part of her arrangement with Marriner-Smith, Welcome agreed that Marriner-Smith could stay in the rear studio whenever she needed to do so, which was reflected in their written agreement (Marriner-Smith: Tr. 709; Welcome: Tr. 501, 522, ; Resp. Ex. Y). According to Welcome, Marriner-Smith possessed keys to the front and rear portions of the unit (Tr ). Welcome identified photographs which depict the front and back spaces of the loft while she lived there, including the bedrooms, living and dining rooms, bathrooms, and kitchens (Tr ; Pet. Exs. 52A-52R). Greg Kitowicz lived in the front part of the fourth floor from April 2009 through the summer of 2010 (Tr. 691, 726, , 869; Pet. Ex. 54). Kitowicz was a friend of James and was the first tenant with whom Marriner-Smith did not have a previous personal connection (Tr. 728). Marriner-Smith had a written agreement with Kitowicz which provided that the Landlord hereby sub-leases to the sub-tenant the front space at the Building... to be used by the subtenant April 1 st, 2009 through March 31 st, (Pet. Ex. 54; Tr. 726). Unlike the agreements with James and Welcome, the agreement did not reserve Marriner-Smith s right to

15 -15- stay in the front space overnight (Tr. 870). Marriner-Smith testified that the agreement with Kitowicz was different because she did not know him (Tr. 728). Marriner-Smith acknowledged that the fourth floor at the Building has not been her primary residence since 1999 or 2000 and the evidence establishes that she subleased the unit to residential occupants during the window period (Tr. 815, 816, 1066; Pet. Ex. 54). However, petitioners need not prove that the unit was the applicant s primary residence in order to establish residential occupancy during the window period. See Vlachos v. NYC Loft Bd., 70 N.Y.2d 769, 770 (1987); BOR Realty Corp. v. NYC Loft Bd., 129 A.D.2d 496 (1st Dep t), aff d, 70 N.Y.2d 720 (1987); Matter of Pels, OATH 2481/11 at Respondents argued that Marriner-Smith operated a for-profit rental business and that by treating the fourth floor unit as a commercial enterprise and subletting the entire space for the duration of the window period and beyond she has rendered the unit commercial rather than residential (Resp. Br. at 13, 21). Respondents rely on Franmar Infants Wear, Inc. v. Rios, 143 Misc.2d 562, 564 (App. Term 1st Dep t 1989) and Matter of South 11th Street, OATH /96 for the proposition that the fourth floor unit is ineligible for coverage because its primary use is commercial. Franmar is distinguishable. In that case, only a small portion of the unit was allocated to residential use and the space lacked the essential amenities for dwelling purposes. Franmar Infants Wear, 143 Misc.2d at 564. Here, the evidence establishes that the entire fourth floor was converted to residential use and included amenities such as bedrooms, bathrooms, kitchens and laundry facilities, with related fixtures and appliances. Reliance on Matter of South 11th Street is also misplaced. In that case, this tribunal determined that coverage was appropriate where the tenant used two-thirds of the loft space for commercial purposes. Matter of South 11th Street, OATH /96 at Moreover, subletting to residential tenants that produces income does not defeat coverage of the unit since the unit continued to be used for residential purposes. See, e.g., MDL 281(5) (Lexis 2014) (an IMD unit includes those which were occupied for residential purposes as the residence or home of any three or more families living independently from one another ); see also Matter of Pels, OATH 2481/11 at 9 (income producing activity did not undermine entitlement to coverage where tenant had rented out a portion of her studio space to two artists for commercial purposes).

16 -16- To the extent respondents argument is that the fourth floor unit is ineligible for coverage because someone other than the applicant residentially occupied the unit during the window period (Resp. Br. at 5), the argument lacks merit. On its face, the Loft Law does not require that the applicant herself have residentially occupied the unit during the window period. MDL 281(5). It is noteworthy that respondents provided no legal authority in support of their contention that subleasing a unit for residential purposes removes that unit from eligibility for coverage under the Loft Law. Thus, even were I to conclude that Marriner-Smith was not a residential occupant of the unit during the window period, residential occupancy by others for twelve months would still qualify the unit for coverage. The evidence establishes that Marriner-Smith converted what was once a raw space on the fourth floor of the Building into a residence, which originally included work and theatre space in the back of the loft. The back of the loft was subsequently converted into a residential space with a bathroom and kitchen, and the entire fourth floor has been used for residential purposes since the early 1990s, including for 12 consecutive months during the window period. 1 In sum, I find that petitioners have met their burden of establishing sufficient physical conversion of the second, third, and fourth floor units to residential use and that there were three or more families lived independently of each other for 12 consecutive months during the window period. Therefore, I find that the Building is an IMD and the second, third, and fourth floor units should be covered under the Loft Law. Protected Occupants Section 2-09(b)(1) of the Loft Board Rules provides that [e]xcept as otherwise provided herein, the occupant qualified for protection under Article 7-C is the residential occupant in 1 While both parties made reference to whether the fourth floor was subdivided into two separate units, neither party contended that it should be considered as such. Petitioners maintain that the fourth floor is a single unit and its occupants enjoyed shared use of the entire floor (Pet. Br. at 46-47). Respondents assert that any claim that the fourth floor constitutes two units is barred by petitioners failure to so allege throughout the proceedings and their assertion that the Building consists of three units (Resp. Br. at 5, n. 1). There is evidence that Marriner-Smith created two distinct residential portions with separate amenities on the fourth floor, including separate kitchens, bathrooms, sleeping areas, and separate means of access through a shared hallway within the unit. See S. Axelrod Co., Inc. v. Mel Dixon Studio, Inc., 122 Misc.2d 770, 782 (Civ. Ct. N.Y. Co. 1983) (where tenant divided leased space into two separate studios with separate locked entrances and residential amenities, each space deemed a separate unit for purposes of Loft Law coverage); see also Matter of Mignola, OATH Index Nos. 2482/11, 2483/11, 2484/11, 240/12, 808/12, 809/12, 810/12, & 1616/12 at (May 29, 2013) (unit that was subdivided into two separately occupied, self-contained units before the window period deemed separate units). However, it is not necessary to determine whether the fourth floor was divided into two units for purposes of the coverage application.

17 -17- possession of a residential unit, covered as part of an IMD. 29 RCNY 2-09(b)(1) (Lexis 2014). Applicants for coverage may be deemed the occupants entitled to Loft Law protection pursuant to 2-09(b)(1) where they are the prime lessees of their respective units and are in possession of their respective units. See Matter of Gareza, Loft Bd. Order No at 3-4 (Feb. 20, 2014), adopting in relevant part OATH Index Nos. 2061/12 & 760/13 (Dec. 12, 2012). A prime lessee is defined as the party with whom the landlord entered into a lease or rental agreement for use and occupancy of a portion of an IMD, which is being used residentially, regardless of whether the lessee is currently in occupancy or whether the lease remains in effect. 29 RCNY 2-09(a) (Lexis 2014). Molina and Gallo (Second and Third Floor Units) Petitioners have established that Molina and Gallo are protected occupants of their units. The credible evidence supports a finding that Molina, the prime lessee of the second floor, converted the second floor unit to residential use in the early 1980s, lived there throughout the window period, and is currently the residential occupant in possession of the second floor. Similarly, the evidence establishes that Gallo, prime lessee of the third floor unit, has been the residential occupant in possession of that unit since the 1980s, lived there throughout the window period, and is currently occupying the third floor unit as her residence. Marriner-Smith (Fourth Floor Unit) Respondents contend that Marriner-Smith is not a protected occupant of the fourth floor unit because she resides in Long Island, New York, full time and did so during the window period (Resp. Br. at 6, 22). Respondents also asserted that Marriner-Smith has failed to establish that she resided in the fourth floor unit as of the effective date of the Loft Law and is therefore not a protected occupant (Resp. Br. at 21). Marriner-Smith testified that she absolutely maintained a residence at the Building during the window period (Tr. 687). She described the unit as her retreat and stated that she has an emotional attachment to the space (Tr. 687, ). She feels like she is home when she walks in the door of the unit (Tr. 1028). According to Marriner-Smith, even though she had a residence on Long Island during the window period, she maintained residence at the unit because she has a connection to the City, where she networks for her business (Tr ). She also has friends in the City, and gets her hair done, shops, and goes to plays in the City (Tr. 688).

18 -18- Corroborating Marriner-Smith s testimony, Gallo testified that around 2008, Marriner- Smith continued to live upstairs, but she also resided out East, so it s more in and out and she still used [the fourth floor] for residential purposes and she has had a roommate or two during that time (Tr. 477). According to Gallo, during the window period, she and Marriner-Smith socialized very often and she personally observed Marriner-Smith at the Building a couple of times a month (Tr ). Marriner-Smith has been licensed as a real estate agent since 2006, and has worked as a real estate agent through Douglas Elliman Real Estate on the North Fork since that time (Tr ). She primarily works as an agent for clients who live in New York City and are looking for a second home on the North Fork (Tr ). Marriner-Smith testified that she has rarely used the Douglas Elliman office on Long Island because she is a virtual worker (Tr. 908). During 2008 and 2009, Marriner-Smith visited the Douglas Elliman offices in New York City to network approximately once every two months (Tr , ). She also networked whenever she came into the City by having meals with acquaintances (Tr. 750, ). In 2008 and 2009, approximately 50 percent of her clients lived in New York City (Tr. 751). Marriner-Smith maintained that from January 2008 to April 2009, she kept an office and bedroom in the front part of the fourth floor unit while James was living there (Tr. 688, 715). She testified that during that period, she stayed in the front part of the unit one to three times per month (Tr. 688, 714, 858). According to Marriner-Smith, she began to spend more time at the unit after she broke her wrist on June 13, 2008, because she had to visit the Hospital for Special Surgery (Tr , 711, , 878). From mid-june to mid-august 2008, she initially had medical appointments in the City two to three times a week, and then once a week (Tr. 711). Marriner-Smith and Welcome testified that even though Welcome was living in the rear studio during that time, she was on Long Island on Monday and Tuesday nights for a period of time while she helped a friend open a restaurant (Marriner-Smith: Tr , 710; Welcome: Tr ). Marriner-Smith stayed in the rear proportion of the unit since she knew Welcome was away on those nights (Tr. 688, 710, ). Marriner-Smith booked her medical appointments on Mondays and Tuesdays so she could stay in the rear studio while Welcome was on Long Island (Tr. 710). She preferred to stay in the rear studio because her books and paperwork were there and she had that space to herself because Welcome was away (Tr. 689, , 716). Marriner-Smith did not notify Welcome when she stayed in the rear studio and she never stayed

19 -19- there at the same time as Welcome (Marriner-Smith: Tr. 710, 875; Welcome: Tr , 538). When Marriner-Smith was unable to book an appointment on a Monday or Tuesday, she would schedule it for Thursday and stay in the front part of the unit or just travel to and from the City in the same day (Tr. 711, 878, 890). Marriner-Smith testified that between April 2009 and April 2010, she was at the fourth floor unit approximately four times in total (Tr. 688, , 920). Kitowicz was living in the front part of the unit and she never stayed with him because she did not know him (Tr. 728, 919). Instead, she stayed in the rear studio while James was away (Tr. 728, 920). Marriner-Smith and her husband stayed in the rear studio for either one or two nights in December of 2009, when James was away for the holidays (Tr. 728, 920). Smith lived in Southold during the window period and only stayed in the fourth floor unit twice during that time (Marriner-Smith: Tr. 920; Smith: Tr , 1142). He testified that Marriner-Smith stayed at the loft at least once a month during the window period (Tr. 1125, 1151). Marriner-Smith maintained that between April and July of 2010, she spent a lot of time in the rear studio because James, who was looking for a new place to live, was frequently away (Tr. 688, ). She stayed maybe a little longer than one or two nights a month in the unit during that time because she was using the back space to write after being accepted to a writer s conference (Tr. 922). After spending more time in the rear studio she decided that she wanted the front space back, so she informed Kitowicz that after his lease expired he could only stay through the summer (Tr. 729, 921). Marriner-Smith testified that after Kitowicz moved out of the front space in October or November of 2010, she took over the whole front space (Tr. 729). Since the window period, Marriner-Smith has continued to rent space in the unit. In July 2010, Elizabeth Dickey moved into the rear studio, and currently lives in that space (Tr. 731, 733, 892). In December 2010, Ainsley Lester and Clara Jacquet moved into and shared the front bedroom, while Marriner-Smith occupied the middle bedroom (Tr. 729; Pet. Ex. 54). During 2011 and 2012, Marriner-Smith stayed at the loft about two times a month on average (Tr. 873, 894). At the end of 2012, Marriner Smith took over the front space again fully and, since spring 2013, she has had another roommate in the front area (Tr , 893). There is very little documentary evidence to corroborate Marriner-Smith s claim that she regularly stayed at the loft during the window period and continues to do so. Her bank statements, for example, do not reflect that she made any debit purchases or ATM withdrawals in

20 -20- New York City from June to August 2008, when she claimed to have stayed at the loft more often because of doctors visits relating to a broken wrist (Resp. Exs. K1-K3; Tr ). In addition, Welcome, Marriner-Smith s purported roommate during much of the window period, testified that she knew Marriner-Smith stayed at the loft, but could not recall a specific instance when Marriner-Smith stayed on the fourth floor (Tr. 522). As stated above, where one holds oneself out as residing is probative of where one resides in fact. Matter of Muschel, Loft Bd. Order No. 33, 1 Loft Bd. Rptr. 27, 30 (Nov. 23, 1983). Here, the New York State driver s license Marriner-Smith held during the window period listed a Long Island home address (Tr. 752). However, her current driver s license, issued on October 5, 2012, lists the Building as her home address (Pet. Ex. 43; Tr. 751). Marriner-Smith testified that she changed the address on her driver s license to the Building in 2012 because for the first time in 34 years [her] residency at [the Building]... was being questioned (Tr. 949, 988). She also previously used her Long Island address for her driver s license because insurance is less expensive that way (Tr. 850). She testified that she was registered to vote on Long Island during the window period and has been voting there since the early 1990s, and her cars were most likely registered to her Long Island address during the window period (Tr , ). Her cellular phone bills throughout the window period listed her Southold address (Resp. Ex. F). Marriner-Smith and her husband listed a Long Island address as their home address in their jointly filed federal and New York State tax returns for 2007, 2008, 2009, and 2010 (Pet. Exs. 46, 47, 48, 49). They deducted the rent and utility payments for the fourth floor unit as business expenses on their federal income taxes filed for the window period. They also represented on those forms that their family did not use their rental property, the fourth floor unit, for personal purposes during the tax year for more than the greater of 14 days or 10% of the total days rented at fair rental value (Pet. Exs. 46, 47, 48, 49; Tr ). In addition, Marriner-Smith s New York State Resident Income Tax Returns from 2007 to 2010, jointly filed with her husband, indicated that neither of them maintained living quarters in New York City during that period (Pet. Exs. 46, 47, 48, 49). The representations made on her income tax documents contradict Marriner-Smith s contention that she resided at the Building during the window period.

21 -21- Marriner-Smith provided several explanations for the use of the Long Island addresses on her joint tax documents. She claimed that during the window period she and her husband used their Long Island addresses because Smith usually provided his information to the account first, and because they spent more time at their Long Island homes than at the Building (Tr , 777, 782, , 956). She also claimed that she was not aware the returns indicated her Long Island home address at the time they were filed because she signed and filed the returns without reviewing them (Tr ). In February 2014, after the hearing in this matter had commenced, Marriner-Smith amended her jointly filed 2008, 2009, and 2010 New York State Resident Income Tax Returns to reflect that she maintained a residence in New York City during those years (Pet. Exs. 61, 62, 63; Tr , 783). Marriner-Smith asserted that the information in the original tax returns was inaccurate because she had been living at the Building during those years, and that she amended her tax returns because she wanted to make things right (Tr. 764, 783, 988). She also testified that she only filed amendments for 2008 through 2010, because she amended the ones that would be necessary for this court case first, and would amend the other years when she is financially able to do so (Tr. 989). Respondents argued that Marriner-Smith s initial representations on her tax returns are binding, as parties may not assert positions contrary to their tax returns (Resp. Br. at 8-9) (citing Mahoney-Buntzman v. Buntzman, 12 N.Y.3d 415 (2009)). Respondents also contended that Marriner-Smith s amended tax returns, which were filed on the eve of her testimony in this matter, amounted to fabrication of evidence and should be discounted (Resp. Br. at 10-11). While tax returns may be considered in assessing where one resides in fact, they are not determinative. See Matter of Boyers, OATH 1338/12 at 23; Matter of Muschel, Loft Bd. Order No. 33, 1 Loft Bd. Rptr. 27, 30 (Nov. 23, 1983) ( testimony taken in connection with a [tax return] might very well lead to an analysis based on the tax laws, rather than Article 7-C, taking the inquiry away from the issue of residency ). In Matter of Boyers, Judge Miller undertook a comprehensive analysis of the weight to be accorded to tax returns that contain representations contrary to those asserted in a Loft Law proceeding. There, the applicants testimony that they residentially occupied the subject premises was contradicted by evidence that they deducted 100 percent of the rent, utilities, and other items relating to the loft as expenses relating to a fitness business they operated in the premises. After noting that the Loft Board has been disinclined to

22 -22- consider tax documents dispositive of residence, Judge Miller determined that at a minimum, [the applicants ] contradictory statements on their tax returns should be assessed in analyzing their credibility. Id. at Here, Marriner-Smith s credibility was undermined by the conflict between her testimony and original state tax returns, and also by her efforts to bolster her claim by amending her tax returns on the eve of her testimony. While Marriner-Smith maintained that she did so out of a desire to make things right, I have no doubt that her motives were self-serving. Marriner-Smith engaged in other conduct seemingly designed to buttress the appearance that she maintained the fourth floor unit as a residence. For example, in November 2012, Marriner-Smith started to list herself as a real estate agent at the Douglas Elliman office on Montague Street in Brooklyn. She claimed to have done so because many of her clients are from Brooklyn (Tr. 746, , 988; Resp. Ex. M). However, Marriner-Smith conceded that she has never worked out of, nor has she had any listings at that location (Tr ). Around the same time, she edited her biography on the Douglas Elliman office website to include that [s]he resides on both the North Fork, with husband, Chris Smith... and at her loft in DUMBO, NYC (Resp. Ex. E; Tr , 1065). Her previous online biography stated that [s]ince 1992 she has resided full-time on the North Fork with husband, Chris Smith... while still maintaining her loft in DUMBO, NYC (Resp. Ex. D). Marriner-Smith testified that the change in her biography was primarily related to marketing herself as an agent out of the Brooklyn office (Tr , , 1038). She also testified that the two versions say the exact same thing (Tr. 949). Were that the case, there would have been no need to revise her biography. Further, coming in the midst of Marriner-Smith having filed a coverage application, the revision was a transparent attempt to enhance the appearance that she resided in the unit. Similarly, as noted earlier, around October 2012, Marriner-Smith changed the address on her driver s license from her Long Island address to the Building. It was not coincidental that she changed her address on her driver s license, listed herself as an agent at the Brooklyn office, and edited her online biography around this time: She did so because she had become conscious of the need to prove her residency at the Building (Tr ). Overall, Marriner-Smith s testimony seemed evasive at some points, calculated and overly rehearsed at others. She had ready explanations for why she changed her designated home address on several documents, yet did not have clear explanations for why her Long Island

23 -23- addresses were provided as her home address on others. She was vague as to details about her stays in the unit, although she claimed to have regularly stayed there throughout much of the window period. Yet, the weight of the credible evidence supports Marriner-Smith s claim that she is the protected occupant of the fourth floor unit. It is undisputed that Marriner-Smith is the prime lessee, having entered into lease arrangements with the prior owner of the Building. Marriner- Smith paid rent for the unit to the owner during the window period and continues to do so (Pet. Ex. 50; Tr. 781, , 808). She has maintained accounts for gas and electrical services to the unit in her name since 1980 and continues to do so (Tr. 806; Pet. Exs. 44, 45). Welcome corroborated that Marriner-Smith kept furniture, books, utensils, and other personal items in the unit during the window period. Smith, who did not appear to have significant contact with the unit, testified that Marriner-Smith stayed at the loft on average once per month, consistent with Marriner-Smith s contention. Similarly, Gallo testified to regularly observing Marriner-Smith at the Building. I find that Marriner-Smith s residential use of the fourth floor unit was, at best, intermittent. However, this is not sufficient basis for denying her the protection of the Loft Law. See Matter of Pels, OATH 2481/11. In Matter of Pels, the applicant, an artist and college professor, converted a loft to residential use and occupied the loft until she moved to Michigan for a full time teaching position. During the window period, Pels paid taxes in Michigan, where she registered her car and voted. Pels, who rented part of her studio for commercial use during her absence, left most of her possessions in the unit and returned to the loft during school breaks. Judge Richard determined that Pels occupied her loft during the window period even though she did not reside there full time. Id. at Judge Richard considered several factors as indicia that Pels occupied her loft even though she was not there full time, including: 1) Pels kept her personal possessions there during the entire window period; 2) she periodically returned to the loft during the window period to spend time there; 3) she paid her rent; 4) she received mail there; and 5) she intended to and did return to the loft at the end of her position in Michigan. Id. at 10. Applying the analysis in Pels to this case, Marriner-Smith periodically spent time in the fourth floor unit during the window period and continues to do so, keeps personal possessions

24 -24- there, and pays rent. Thus, the evidence supports a finding that she is the residential occupant in possession of the fourth floor unit, even though her residential occupancy has been intermittent. The crux of respondents argument against finding Marriner-Smith the protected occupant of her unit is that she lived full time on Long Island rather than at the Building. This is, in essence, a claim that Marriner-Smith is not entitled to coverage because the unit is not her primary residence. Respondents rely on language from Matter of Gurkin in support of their contention that petitioners are required to show that the fourth floor unit is Marriner-Smith s primary residence (Resp. Br. at 21-22). Yet, the language respondents rely on is drawn from a version of the decision that was subsequently amended to correct an error that goes to the heart of the quoted language. See Matter of Gurkin, OATH 489/12 at 23, n Thus, respondents reliance on this language is misplaced. Gurkin does not stand for the proposition that the applicant for protection must establish use of the unit as his or her primary residence, as respondents asserted; instead, it states that the applicant is required to show that he or she currently occupies the unit residentially. Id. at 23 (citing 29 RCNY 2-09(b)(1)). Respondents also rely on Section 2-09(b)(4) of the Loft Law, which provides: The prime lessee... is deemed to be the residential occupant qualified for protection under Article 7-C, if the prime lessee... can prove that the residential unit covered as part of an IMD is his or her primary residence, even if another person is in possession. If the prime lessee... fails to prove that such unit is his or her primary residence, any rights of such person to recover the unit are extinguished. 29 RCNY 2-09(b)(4) (Lexis 2014). The record establishes that Marriner-Smith is the prime lessee, given that she is the party with whom the prior owner of the Building entered into a lease, although that lease is no longer in effect. However, the provision to which respondents refer is inapplicable as it concerns rights of the prime lessee to recover his or her unit in the face of challenge by a subtenant. Accordingly, like Molina and Gallo, Marriner-Smith is a prime lessee in possession of her unit, of which she is the residential occupant. The Molina, Gallo, and Marriner-Smith coverage application should be granted. 2 The report and recommendation relied on by respondents, dated August 23, 2012, was amended by a report and recommendation issued on December 14, 2012, which decision was adopted by the Loft Board by Order No

25 -25- Basement Storage Petitioners contended, for the first time at the hearing, that the basement of the Building is part of Gallo s and Molina s covered space or is a required service pursuant to Loft Board rule 2-04(c) because the former owners of the Building consented to their use of the basement for storage and they have used the basement to store their personal belongings for several decades (Pet. Br. at 47-48). Respondents do not seem to dispute that Molina and Gallo have used the basement as storage (Resp. Br. at 31). Respondents asserted that the petitioners cannot rightfully claim that they are entitled to use the basement because they did not receive written permission signed by their landlord, as is required by their leases, and merely have a revocable license. Respondents further argued that to the extent petitioners claim that the basement is a base date service, it is beyond the ambit of the coverage application filed by petitioners and remains the subject of a matter pending in Civil Court. Finally, respondents maintained that basement premises are ineligible for coverage (Resp. Br. at 30-31). The Loft Law expressly exempts from coverage units that are located in a basement or cellar. MDL 281(5). Thus, to the extent petitioners seek coverage of the basement as part of their units, the basement space is ineligible for coverage. See Matter of Schuss, OATH Index No. 2066/12 (Mar. 25, 2013) (cellar portion of unit used by applicants for storage excluded from coverage). Petitioners reliance on Matter of McIntosh, OATH Index No. 604/02 at 26 (Oct. 15, 2002), adopted, Loft Bd. Order No (Nov. 19, 2002) is misplaced. Matter of McIntosh applied a prior version of the Multiple Dwelling Law which did not contain the exemption of basements from coverage that is reflected in the 2010 amendments. Petitioners claim that use of the basement for storage was a base date service pursuant to section 2-04(c) of the Loft Board Rules is not properly before this tribunal as part of their coverage application. 29 RCNY 1-06(a)(3) ( The applicant may only have one claim per application ). Petitioners may pursue a diminution of services claim pursuant to the Loft Board rules. FINDINGS AND CONCLUSIONS

26 Petitioners demonstrated that the building located at 177 Water Street, Brooklyn, New York, is an interim multiple dwelling under the Loft Law. 2. Petitioner Molina is the protected occupant of the second floor unit, which is a covered unit. 3. Petitioner Gallo is the protected occupant of the third floor unit, which is a covered unit. 4. Petitioner Marriner-Smith is the protected occupant of the fourth floor unit, which is a covered unit. 5. The basement is excluded from coverage as part of the second and third floor units and a claim pursuant to 2-04(c) of the Loft Board rules is not properly before this tribunal. RECOMMENDATION I recommend that the Loft Board grant petitioners coverage application. Astrid B. Gloade Administrative Law Judge October 10, 2014 SUBMITTED TO: RICK D. CHANDLER, PE Commissioner APPEARANCES: WEEN & KOZEK, LLP Attorneys for Petitioners BY: MICHAEL P. KOZEK, ESQ.

27 WARSHAW BURSTEIN, LLP Attorneys for Respondents BY: BRUCE H. WIENER, ESQ. MAXWELL BREED, ESQ

28 ORDER NEW YORK CITY LOFT BOARD In the Matter of the Reconsideration Application of GAYLE MARRINER-SMITH Loft Board Order No Docket No. R-0340 RE: 177 Water Street Brooklyn, New York IMD No Challenged Order No.: 4349 ORDER The New York City Loft Board accepts the Report and Recommendation of Martha Cruz, Deputy General Counsel, dated September 3, The application seeks reconsideration of Loft Board Order No. 4349, in which the Loft Board determined that: 1. The fourth floor in the building located at 177 Water Street, Brooklyn, New York ("Building"), constitutes two separate interim multiple dwelling units; 2. Gayle Marriner-Smith ("Tenant") is not a protected occupant of the fourth floor because Tenant failed to demonstrate that she was in possession of the fourth floor and used it as her primary residence. For the reasons set forth in the report and recommendation, the r hereby denied in its entirety. nsideration application is DATED: September 17, 2015 Board Members Concurring: Barowitz, Spadafora, Fisher, Delaney, Schachter, Shelton Board Members Absent: Bolden-Rivera DATE LOFT BOARD ORDER MAILED: SEP ~8 2015

29 NEW YORK CITY LOFT BOARD In the Matter of the Reconsideration Application of GAYLE MARRINER-SMITH REPORT AND RECOMMENDATION Docket No. R-0340 RE: 177 Water Street Brooklyn, New York IMD No Challenged Order No.: 4349 Martha Cruz, Deputy General Counsel On February 23, 2015, Gayle Marriner-Smith ("Tenant"}, an occupant of the fourth floor in the building located at 177 Water Street, Brooklyn, New York ("Building"), filed a timely reconsideration application ("Application") seeking review of Loft Board Order No ("Order"), issued on January 15, 2015, and mailed on January 23, BACKGROUND On November 7, 2012, Doreen Gallo, the occupant of the third floor, Octavia Molina, the occupant of the second floor, and Tenant filed a coverage application seeking a determination that the Building is an interim multiple dwelling ("IMD") pursuant to 281(5) of the Multiple Dwelling Law ("MDL") consisting of three units, one on each of the second, third, and fourth floors and that they are the protected occupants of their respective units. On January 15, 2015, the Loft Board issued the Order, finding that: 1) the Building is an I MD, with units on the second, third and fourth floors; 2) Octavia Molina and Doreen Gallo are the protected occupants of the second and third floors respectively; 3) the basement is excluded from coverage as part of the second and third floor units; 4) the fourth floor was residentially occupied as two separate IMD units during the period commencing January 1, 2008, and ending December 31, 2009 ("Window Period") and on June 21, 2010, the effective date of the law; and 5) Tenant is not the protected occupant of the fourth floor because she, who was not in possession of the Unit, failed to demonstrate that she used it as her primary residence. On February 23, 2015, Tenant filed the Application. On March 19, 2015, 177 Water Street Realty LLC and Thomas Calfa ("Owner"), the owner of the Building, filed an answer in opposition to the Application. STANDARD FOR RECONSIDERATION Under the Loft Board's rules, Title 29 of the Rules of the City of New York ("29 RCNY") 1-07(a)(2}, there are four circumstances under which an application for reconsideration may be granted: i. Denial of due process or material fraud in the prior proceeding; ii. An error of law; iii. An erroneous determination based on a ground not argued by the parties in the prior proceeding that the parties could not have reasonably anticipated would be the basis for a determination; or iv. The discovery of probative, relevant evidence that could not have been discovered at the time of the hearing despite the exercise of due diligence. Here, Tenant seeks reconsideration of the Order on two grounds. Tenant argues that:

30 1) The Loft Board made an error of law by denying her claim for protected occupant status based on her failure to show that she is in possession of the fourth floor and that the fourth floor is her primary residence; and 2) The Loft Board's determination that the fourth floor consists of two IMD units was a denial of due process. However, a review of the arguments advanced and the record shows no legal error or denial of due process. Therefore, I recommend the Application be denied. ANALYSIS The Loft Board, having found the fourth floor to be eligible for IMD coverage as two units, determined in accordance with 29 RCNY 2-09(b)(4) qf its rules that Tenant, who is the prime lessee of the fourth floor, is not a protected occupant because she did not use the fourth floor as her primary residence. This finding was based upon testimony and evidence produced at hearing and also Tenant's uncontroverted testimony that the fourth floor was not now and had not been, for at least a decade, Tenant's primary residence. Transcript ("Tr.") at In her Memorandum of Law in Support of the Application ("Memorandum"), Tenant claims that the Loft Board Order overlooked the remedial purpose of the Loft Law, which is to protect the residential aspect of occupancy of an I MD, notwithstanding the fact that the Order found the Building and the units covered pursuant to MDL 281 (5). Tenant fails to recognize that the Loft Law's remedial purpose does not include protecting a prime lessee who is profiteering from the residential use of her unit. Rather by her various convoluted and often incorrect interpretations of the Loft Law and the Loft Board's rules, Tenant seeks to be declared the protected occupant of the fourth floor, which she uses solely as income property while living in Mattituck, New York- a use that is antithetical to the Legislature's declarations of purpose. See, Marriner-Smith Sublet Rental Chart- 4th Floor Units. Indeed, Tenant's continuous subletting of the fourth floor at unregulated rents, is not permitted under the Loft Board rules, and is one of the things the Loft Law seeks to prevent. See, 29 RCNY 2-09(c)(4)(ii). It is undeniable that Tenant's primary residence is in Mattituck, New York. Tr. at and Having disclosed this, Tenant now goes to great lengths to prove that primary residence is not applicable to determinations of protected occupancy. Relying on BOR Realty Corp. v. New York City Loft Board, 514 N.Y.S.2d 339, 129 A.D.2d 496 (1st Dep't 1987); and Vlachos v. New York City Loft Board, 70 N.Y.2d 769 (1987), Tenant argues that primary residence is never a factor in determining Loft Law coverage or protected occupant status. See, Memorandum at 2. Tenant wrongly conflates the analysis of eligibility for coverage of units and the analysis of protected occupant status. These are separate issues and are analyzed under different standards. The holdings in BOR and its progeny concern eligibility of loft units, and contain no pronouncement regarding protected occupant status. Rather, 29 RCNY 2-09(b) that controls here. A. Rule 29 RCNY 2-09(b)(4) Applies to a Prime Tenant's Claim for Protected Occupancy. Section 2-09(b) of the Loft Board's rules identifies who and under what circumstances a residential occupant is determined to be eligible for Article 7-C protection. The first subsection, 2-09(b)(1 ), is the catchall section that provides that unless otherwise provided in the rule, the occupant in possession of a covered IMD unit is the protected occupant of the unit. Section 2-09(b)(2) provides that where a residential occupant, who was not the prime lessee, was in possession of a covered unit prior to the effective date of the law, the lack of consent of the landlord to a sublet, assignment or subdivision that established the occupancy could not be used as a defense against a finding of Article 7-C protection. 2

31 Section 2-09(b)(3) applies only to residential occupants who took possession of a covered IMD unit after the effective date of the law. This includes a prime tenant with a current lease in effect who took possession of the unit after the effective date of the law. Where, as here, a tenant is the prime lessee who took possession of the residential unit prior to the effective date of the law and has an expired lease, 2-09(b)(4) governs. Rule 2-09(b)(4) states in relevant part: The prime lessee... is deemed to be the residential occupant qualified for protection under Article 7-C, if the prime lessee... can prove that the residential unit covered as part of an IMD is his or her primary residence, even if another person is in possession. In an attempt to avoid the ramifications of her testimony, and notwithstanding the plain language in the rule, Tenant claims that because she is not seeking to recover the space from a subtenant, and because she is in possession of the Unit, the Loft Board should have used 2-09(b)(1 ), which does not require primary residence. Tenant's narrow application of 2-09(b)(4), applying it only when a prime tenant is out of possession and is seeking to recover a unit, contradicts the plain language of the rule. The rule clearly states that the prime tenant is deemed to be the protected occupant if the prime tenant can prove the unit is his or her primary residence even if another person is in possession - not only if another person is in possession. Accordingly, contrary to Tenant's reading of 2-09(b}(4), this rule applies to determinations of protected occupancy status of a prime tenant whether or not the prime tenant is in possession; and is not confined solely to determinations of protected occupancy status where a prime tenant is out of possession of the unit and is seeking to recover possession from a subtenant. B. The Loft Board Prooerlv Found Tenant Was Not the Protected Tenant of the Fourth Floor. In any event, Tenant is not eligible for protected occupancy status under any of the other provisions of 2-09(b) because the Loft Board properly determined that Tenant, a prime lessee, was in fact, not in possession. Although Tenant's Memorandum is quite lengthy, it offers scant support to her argument that she was in possession of the fourth floor during the window period and what she refers to as the "base date", which we take to mean the effective date of the law. See, Memorandum at 7. In those few paragraphs she states that: In 2008 and 2009, she maintained residences in both the fourth floor and also on Long Island with her husband; That as a real estate broker she relies on referrals and 70% of her business comes from Brooklyn and Manhattan so it was crucial for her to spend time in New York City and Long Island; In recent years she shared the fourth floor with roommates; Apart from her roommates' personal belongings and toiletries, the fourth floor was entirely furnished with her possessions; and Although she consistently maintained roommates, she always retained the right to use all areas of the fourth floor and did in fact do so during the window period. However, the bulk of the testimony and documentary evidence tells a different story. According to her testimony, Tenant moved into the fourth floor in Tr. at 660, In 1992, she married. Tr. at 681. Still working in New York City while her husband lived on the North Fork of Long Island, she only spent weekends on the North Fork. Tr. at 683. With regard to Tenant's testimony that she used the fourth floor during the summer of 2008 when she broke her wrist, Judge Gloade found that her testimony to be vague and uncorroborated. See, Judge Gloade's Report and Recommendation ("Report"), at 22. Tenant also testified that from April 2009 to April 2010 she visited the fourth floor four times total that year. Tr. at 688,

32 Yet the evidence shows that by 2005, Tenant was renting the front and rear of the fourth floor to her friends' children, and, as it turned out, renting to them at a substantial profit. Tr. at , 713. As shown below, Tenant's un-redacted tax returns for the years 2008, 2009 and 2010 show she used the fourth floor as income property, charging her subtenants well in excess of the rent she paid to the landlord. Year Rent Paid by Tenant Rent Received from Profit Subtenants 2008 $23,937 $ $14, $23,400 $36,000 $12, $25,541 $39,450 $13,909 See, Schedule E of her un-redacted Tax Returns for 2008, 2009 and Moreover, Tenant had her subtenants reimburse her for 100% of the utilities for the Unit, with 80% allocable to the "front loft space" and 20% to the "back loft space". See, Laura James and Greg Kitowicz Occupancy Agreements; See also Tr. at Despite the fact that Tenant did not actually pay the utilities, she also deducted the utilities on her taxes even though her tenants paid 100% of the utilities. Tenant and her husband testified that the information on the Schedule E was a mistake that they blamed on their accountant. Tr. at 753, , Tenant and her husband, both of whom signed the joint returns, testified they never noticed the mistake, even though the same mistake appeared on the 2008, 2009, and 2010 tax returns. Just before her second day of testimony Tenant had her accountant amend the New York State tax returns for 2008, 2009 and 2010 to comport with her testimony that she resided on the fourth floor. Tr. at 764, , 983, As stated in the Report, Judge Gloade observed that Tenant's testimony was evasive, calculated and overly rehearsed. She had ready explanations for why she changed her designated home address on several documents yet did not have a clear explanation for why her Long Island addresses were provided as her home address on others. She was vague as to details about her stays on the fourth floor, although she claimed to have regularly stayed there throughout much of the window period. See, Report at 22. We agree with Judge Gloade's assessment of Tenant's credibility as well as her motive in amending her tax returns, which she found to be self-serving. See, Report at 21. The fact that after her first day of testimony she amended her 2008, 2009 and 2010 tax returns does not lessen the significance of this so called mistake. We find that the accountant accurately described the use of the fourth floor based upon information given by Tenant and that Tenant used 100% of the fourth floor as income property, not as her primary residence. Tenant argues that she has always remained in possession because "she maintained a constant nexus to the [fourth floor] because of her emotional attachment to the space" and because she left her personal belongings on the fourth floor. See, Memorandum at 19. Her emotional attachment has no bearing on whether Tenant was in possession of the fourth floor or whether she is the protected occupant of the fourth floor. Tenant also claims that her situation is analogous to Matter of Pels, Loft Board Order No (June 20, 2013) in that, like Ms. Pels, she was in possession of the fourth floor. We disagree. While both Tenant and Ms. Pels lived in their loft spaces before the Window Period and both kept their belongings there while not residing in the space, that is where the similarities end. Unlike Tenant, Ms. Pels left her unit for an out of state full-time teaching assignment and never rented her unit for residential purposes, but simply continued to rent a part of her unit as an artist studio space as she had done while she occupied her unit. Most importantly, Ms. Pels demonstrated that she had every intention of returning to live in her unit full-time at the conclusion of her teaching assignment, 4

33 as she had at the conclusion of each of her earlier academic engagements. Accordingly, Ms. Pels had always remained in possession of her unit. In contrast, Tenant lives with her husband in Mattituck, New York. Tenant has not lived on the fourth floor full-time for at least fifteen years and instead uses the fourth floor as income property, not as her residence or home. Tenant has never expressed any intention of returning to the fourth floor full-time. Rather, she stated she might use the fourth floor when she and her husband retire, and "can come in and spend more time here." Tr. at 857. Tenant also argues that her situation is similar to Ms. Langenegger's in Matter of Various Tenants of 357 Bowery, Loft Board Order No (Jan. 15, 2015) because like Ms. Langenegger, she is a prime tenant, who kept her personal belongings on the fourth floor, maintained the residential nature of the space, and returned to the fourth floor. Again, there are stark differences between Tenant's use of the fourth floor and Ms. Langenegger's use of her space. Unlike Tenant, Ms. Langenegger, who worked as a television correspondent and was required to travel for work purposes, always returned to her unit because the unit was where she lived and there was nothing in the record to show that she lived anywhere other than her loft unit. In sum, even under Tenant's erroneous construction of 2-09(b), the record does not support tenant's claim that she was in possession of the fourth floor and therefore eligible for protected occupant status. The Loft Board correctly found that: Tenant was the prime lessee of the fourth floor and that Tenant's primary residence was in Mattituck, New York and under 29 RCNY 2-09(b)(4), Tenant does not qualify as a protected occupant. C. The Loft Board Properly Found the Fourth Floor To Be Two Distinct IMD Units.. Tenant argues that the Loft Board's determination that the fourth floor constitutes two separate IMD units was a denial of Tenant's due process rights. Tenant argues that the Loft Board based its decision upon a ground not argued by the parties, nor a ground the parties could have reasonably anticipated would have been the basis of a determination. Yet, Tenant, in her post trial brief argued: Even if the fourth floor unit was two separate units, each unit would individually qualify as an IMD unit because both the front and rear spaces were residentially occupied for a consecutive twelve month period during January 1, 2008 through December 31, Additionally, both the front and rear portions (1) have at least one window that opens onto a street, lawful yard, or court; (2) are at least 400 square feet in area; (3) are not located in a basement or cellar and has at least one entrance that does not require passage through another residential unit to obtain access to the unit". See, Petitioner's Post Trial Brief at 23, note 2. In light of Tenant's post-trial brief, the Loft Board does not find Tenant's argument that she could not have reasonably anticipated such a determination persuasive nor did the Loft Board's determination to treat the fourth floor as two distinct IMD units deprive Tenant of her due process rights, or constitute an error of law. In Matter of Malis, Loft Board Order No (Jan. 18, 2007), the Loft Board considered the following factors to determine whether a unit was one or two separate units: (1) the physical characteristics of the two units during the window period; (2) whether each of the units was residentially occupied during the window period; (3) whether physical alterations were made to the units, and if so, when they were made; and (4) how the units were occupied since the window period. Applying these factors, the record supports a finding that the fourth floor constitutes two separate IMD units independent from one another. As was stated in the Order, Tenant admitted that the fourth floor had two distinct units as early as 1989/1990 when Tenant's then boyfriend converted the rear studio into a living space for himself, with a separate kitchen, bathroom and separate entrances. 5