NEW YORK CITY LOFT BOARD In the Matter of the Application of

SCOTT LEVELL, Y ANIV ZION SARIG, AND RYAN FIX

ORDER

ORDER

Loft Board Order No. 4971

Docket No. PO-0034 TA-0221

RE: 151 Kent Avenue Brooklyn, New York

IMD No. 30068

The New York City Loft Board (ULoft Board") accepts in part and rejects in part the Report and Recommendation of Administrative Law Judge John B. Spooner dated November 22, 2017 ("Report").

BACKGROUND

1. Procedural Background

On June 10, 2016, the following ten (10) tenants in the building located at 151 Kent Avenue, Brooklyn, New York ("Building"), filed two applications; one seeking protected occupant status and another disputing their rents:

Name of Tenants Unit Nicholas LaGrasta 111 Byron Smith 113 Adam Liebsohn 211 Jacob Kleinman 214 Patrick Burlingham 216 Scott Levell 301 Yaniv Zion Sarig 302 Ryan Fix 310 Lukas Friedrich 311 Danielle Raheem 313

The Loft Board docketed the applications as PO-0034 and T A-0221 respectively.

On August 10, 2016, Kent Ave Holdings I, LLC ("Net Lessee"), the net lessee of the Building, filed an answer opposing both applications.

The Loft Board transferred the applications to the Office of Administrative Trials and Hearings ("OATH"), which assigned the matter to Administrative Law Judge John B. Spooner for adjudication.

In a stipulation of settlement dated March 17, 2017, the following five (5) tenants settled their applications and Net Lessee agreed to register them as protected occupants of their respective units:

Name of Tenants Unit Location Nicholas LaGrasta 111 Byron Smith 113 Adam Liebsohn 211 Jacob Kleinman 214

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I Patrick Burlingham I 216

In a second stipulation of settlement dated March 21,2017, Lukas Friedrich settled his application and Net Lessee agreed to register Mr. Friedrich as the protected occupant of unit 311.

Trial dates were set for the remaining four (4) applicants, Scott Levell, Yaniv Sarig, Ryan Fix and Danielle Raheem. On March 3, 2017, OATH sent a notice of trial to Ms. Raheem advising her that a trial on the applications would be held on March 22,24, and 31,2017. On April 7, 2017, OATH sent a final notice of trial to Ms. Raheem advising her that a trial on the applications would be held on May 2,2017. The trial took place over the course of eleven (11) days. Ms. Raheem failed to appear on any of the trial dates and also failed to respond to any emailsfrom Judge Spooner. See, Report at 2.

2. Factual Background

On August 7, 2012, Ryan Fix and Jeff Cacossa signed a one-year lease with Kent Ave Holding, LLC, the then net lessee of the Building, to rent unit 301 for $4,500.00 per month. See, Fix 301 Lease. Scott Levell, a friend of Mr. Fix's, signed a guaranty of the lease. See, Tr. at 753.

In or about August 2012, Mr. Fix, Mr. Cacossa, and Mr. Levell moved into unit 301 and split the deposit and the rent three ways. See, Tr. at 1639. Mr. Fix took control of two of the four bedrooms and, through his company Pure House, LLC, began to rent them out when he was not there. See, Tr. at 2351 .

On August 15, 2013, Yaniv Zion Sarig signed a two-year lease with Kent Ave Holdings, LLC to rent unit 302 for $4,200.00 per month. Mr. Sarig then sublet the unit under an agreement with his friend Mr. Fix to rent out the rooms in unit 302 to "cover the cost of the rent" and split the profit. See, Tr. 51. Pursuant to this arrangement, Mr. Fix wired money to Mr. Sarig who used the money to pay rent to Kent Ave Holdings, LLC. See, Tr. at 52. In February 2014, Mr. Sarig, his wife, and daughter moved into an apartment in Jersey City.

On August 31,2013 Mr. Fix's and Mr. Cacossa's lease for unit 301 expired.

On August 25,2014, Mr. Fix entered into a one-year lease with Mr. Gross, the building manager for the Building, to rent unit 310 for $5,500.00 per month. See, Fix 310 Lease. Mr. Fix testified that Mr. Gross agreed to build more bedrooms in unit 310 so that he could get additional roommates to cover the rent. See, Tr. 449, 909-912. Once the work was completed, Mr. Fix used various websites including Pure House, LLC, Craigslist, and Hotpads to find roommates. See, Tr. 523. Mr. Fix continued to reside in unit 301 while renting out rooms in 301, 310, and other apartments.

In August 2015, both Mr. Fix's lease for unit 310 and Mr. Sarig's lease for unit 302 expired.

ANALYSIS . ' .

1. Ms. Raheem's Applications Should be Dismissed for Failure to Prosecute.

In the Report, Judge Spooner recommended granting the Net Lessee's motion to dismiss Ms. Raheem's protected occupancy and rent adjustment applications for failure to prosecute. We agree.

Pursuant to Title 29 of the Rules of the City of New York ("29 RCNY") § 1-06(k)(4), if an applicant does not appear for a conference or hearing which has been marked final, the application may be dismissed for failure to prosecute unless a written request for reinstatement is made within 30 calendar days.

Here, in a letter from OATH dated March 3, 2017, Ms. Raheem was notified that trial would be held on March 22, 24, and 31, 2017. Ms. Raheem failed to appear for all 3 trial dates. In the final notice of trial dated April 7, 2017, Ms. Raheem was notified that failure to appear for trial on May 2, 2017, may result in dismissal of her applications with prejudice. Again, Ms. Raheem failed to appear for trial. As it

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has been more than 30 calendar days since the date of the hearing and Ms. Raheem did not file a written request for reinstatement pursuant to 29 RCNY § 1-06{k){4), her applications are dismissed with prejudice

2. Mr. Fix is Not the Protected Occupant of Unit 310 nor is he Entitled to Rent Adjustment or Refund of Overpayments.

Section 2-09{b) of 29 RCNY governs the Loft Board in making protected occupancy determinations. Section 2-09(b){1) states that, except as otherwise provided in the rule, the occupant in possession of an Interim Multiple Dwelling (UIMD") unit is the protected occupant of the unit. However, before the Board can make a determination under (b){1), the Board must first consider the rule as a whole, including the provisions in subsections (b)(2), (b)(3), and (b)(4). See, Matter of Tenants of 79 Lorimer Street, Loft Board Order No. 4688, (Sept. 21, 2017), Matter of Mignola, Loft Board Order No. 4509 (April 21, 2016).

Section (b}(4) applies when the person seeking protected occupancy is the prime lessee with an expired lease. In such a case, the applicant must prove the applicant uses the IMD unit as his or her primary residence. See, § 2-09(b}(4}. Here, Mr. Fix is the prime lessee of unit 310 pursuant toa one year lease executed by Mr. Fix and Mr. Gross on August 25, 2014. See, Fix 310 Lease, Tr. at 455. Mr. Fix's lease expired in August of 2015. See, TI'. at 484. Thus, as Mr. Fix is the prime lessee of unit 310 with an expired lease, he must prove that that he uses unit 310 as his primary residence.

In cases involving protected occupancy, primary residence is determined by factors such as: 1} the address used on a tax return, car registration, driver's license or other documents filed with a public agency; 2} the address used for voting purposes; 3} the number of days the tenant occupied the unit in the most recent calendar year; and 4} whether the tenant subleased the unit. No one factor is determinative. See, Matter of Lopez, Loft Board Order No. 4533 (June 16, 2016).

;

Here, Mr. Fix did not list unit 310 as his residence on his tax returns, driver's license, voter registration, or any other public documents. See, Report at 17. Mr. Fix offered four documents which

. show his address as unit 310, none of which are dated prior to the filing of the June 10, 2016 application. See, Fix Jun.-Jul. Bank Statement, Mar. 2017 Time-Warner, Mar. 2017 Con Ed, Undated Health Insurance Statement.

Additionally, Judge Spooner found that Mr. Fix only slept in unit 310 for a few nights prior to the filing of his application. See, Report at 17-18. After signing the lease for unit 310 on August 25,2014, Mr. Fix rented out the rooms in unit 310 through his company Pure House, LLC while he resided in unit 301. Mr. Fix testified he moved into unit 310 in the beginning of the summer of 2016 by forwarding his mail to unit 310 and by moving some personal items and some furniture into the unit. See, Tr. at 450, 468, 920, 855-856, 943-944. However, he admitted that he continued to have possessions stored in unit 301. See, Tr. at 475-76,524.

After Mr. Fix's supposed move in the summer of 2016, Mr. Fix spent time in Brpzil in October 2016 for private reasons and then went to Paris, Zurich and Bourdeaux. See, Tr. 582, 585. Mr. Fix returned to New York in November or December 2016 and stayed with his girlfriend in Long Island City. See, Tr. at 831-32. He then flew back to Brazil and stayed there until March.10, 2017. See, Tr. 579, 784. Mr. Fix left the country again at the end of April 2017 to go to Europe, India and parts of Asia.

Judge Spooner found that Mr. Fix did not meet his burden of proof in establishing unit 310 was his primary residence and we agree. Therefore, he is not a protected occupant of the unit pursuant to § 2-09(b)(4}. Furthermore, because Mr. Fix is not the protected occupant of unit 310, he is not entitled to a rent adjustment or refund of overpayments.

3. Mr. Levell is the Protected Occupant of Unit 301 and is Entitled to Rent Adjustment and Refund of Overpayments.

a. Mr. Levell is the Protect Occupant of Unit 301

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Neither Mr. Fix nor Mr. Cacossa, the prime lessees of Unit 301 pursuant to a lease date August 7, 2012, seek protected occupant status in the unit. As there is no prime lessee seeking protected occupant status for the unit, the Board must consider whether § 2-09(b)(1), (b)(2) or (b)(3) applies. Pursuant to §2-09(b)(3)(i), when a residential occupant that took possession of an IMD unit on or after June 21, 2010, for an IMD covered by Multiple Dwelling Law ("MDL") § 281 (5), such occupant is qualified for Article 7-C protection if the occupant took possession of the IMD with the consent of the landlord. See, RCNY § 2-09(b)(3)(i). Mr. Levell credibly testified that he took possession of the unit after June 21, 2010, and must therefore establish that he was a statutory tenant who took possession with the consent of the landlord.

Under the Loft Board rules, a landlord is defined as "the oWner of an .. . IMD, the lessee of a whole building, part of which contains IMD units, or the agent, executor, assignee of rents, receiver, trustee, or other person having direct or indirect control of such dwelling: See, 29 RCNY § 2-04(a). Therefore, Mr. Levell must prove Net Lessee or any controlling agent of the Building, granted actual or implied consent to his possession of unit 301.

In Matter of Fogel, the Board found that an owner can grant implied consent by considering such factors as whether: 1) an owner has accepted rent directly from the residential occupant; 2) the owner has started eviction proceedings against the residential occupant for failure to pay rent; and/or 3) the owner has had direct contact with the tenant seeking Article 7-C protection about building issues. See, Matter of Fogel, Loft Board Order No. 3550 (Jan. 21, 2010). (Loft Board found owner granted implied consent when owner accepted a portion of the rent directly and had direct contact with the tenant regarding building issues.)

Here, Mr. Levell testified that unit 301 has been his primary residence since August 2012. See, Tr. at 2061. Mr. Levell submitted rent checks for ,$1,500 per month paid directly to Kent Avenue Holdings from August 2012 to October 2014. See, Levell Rent Checks. Mr. Levell testified that in 2014 or 2015, he created a company named Sol Sleep for the purposes of accepting payments for 1099 consultant work. Mr. Levell submitted Sol Sleep statements reflecting automatic bill payments directly to Kent Avenue Holdings, LLC for unit 301 from November 2014 through May 2016. See, Levell Sol Sleep Statement. Mr. Levell also submitted a spreadsheet captioned "transactions listing" which showed various rent payments for uhit 301 including payments from Mr. Levell. See, Kent Transactions Listing.

Mr. Levell also testified that he had numerous contacts with the building manager, Mr. Gross, and produced screenshots of multiple texts from 2015 through 2017 between himself and Mr. Gross. These texts concerned building issues such as parking, rent checks, furniture in the hallway, bedbugs, gas smells, and gas services. See, Levell Texts, Tr. at 1633-1634.

We agree with Judge Spooner that the proofs offered by Mr. Levell establish he took possession of unit 301 with the landlord's consent. Like Fogel, Mr. Levell's evidence shows the landlord accepted rent directly from Mr. Levell and the Net Lessee's building manager, Mr. Gross, had direct contact with the Mr. Levell about Building issues. Therefore, the Loft Board grants Mr. Levell's protected occupancy application.

b. Mr. Levell is Entitled to Rent Adjustment and Refund of Overpayme'nts.

As a protected occupant of unit 301, Mr. Levell is entitled to rent adjustments as to the legal regulated rent for the unit. The amount of the overcharge is based on several factors. First, section 1-06.1 (c) of the Loft Board rules limits the award of rent overcharges to the four years preceding the filing date of an overcharge application. Second, the total rent must be calculated pursuant the applicable interim rent guidelines in the Loft Board's rules. For IMD's covered by the 2010 law, the total rent is the rent specified in the lease or rental agreement in effect on June 21,2010, paid by the tenant pursuant to said lease or rental agreement including escalators [other than use-based escalators or garbage escalators]. See, § 2-06.2(b)(4)(i). Third, upon the filing of the alteration application, an owner is eligible for a three per cent increase pursuant to MOL § 286(2)(ii)(A). The payment of this code compliance rent adjustment commences the month immediately after the month the alteration application is filed, See, 29 RCNY § 2-12(fO(i).

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To calculate the rent overcharge, the Loft Board compares the total amount of rent paid during the relevant period with the aggregate amount of the maximum permissible rent for the s.ame ,period. See, Matter of Rader, Loft Board Order No. 3513 at 3 (Jun. 18,2009); Matter of 325 West 3r St., Loft Board Order No. 3496 (Apr. 23, 2009). The total rent paid must be established through Tenant's cancelled checks, bank statements or other prima facie evidence of payment. See, Matter of Maugenset, Loft Board Order No. 3118 (Nov. 16, 2008).

Here, Tenant filed the rent dispute application on June 10, 2016. Thus, the relevant period in this Gase is August 2012 (the first month of the lease) to June 2016 ("Relevant Period"). The total rent payable was $3,461.00 per month based upon the first page of a 2008-2009 lease agreement for unit 301. See, Unit 301 2008-2009 Lease. Beginning in April of 2016, the month after the filing of the alteration application, the maximum permissible rent would have been $3,564.83 ($3461 + ($3461 x .03».

However, from August of 2012 through February of 2016, Mr. Levell was only responsible for paying one-third of the rent for the unit. Therefore, he can only recoup an overpayment equal to his proportionate share of the total rent paid. Mr. Levell should have been paying $1,153.67 per month (one­third of the total rent of $3,461). During this first 43-month period, the maximum legal rent of $1,153.67 (one-third of the total rent of $3,461) would have been $49,607.81. In March of 2016, when Mr. Levell began paying the entire rent for the unit, his rent for that month should have been $3461. During the period from April 2016 through June 2016, after the landlord filed the alteration application the legal rent would have been $3,564.83 per month for a total of $10,649.49. Adding these figures, the legal rent due was $63,763.30.

As to the total rent paid, Mr. Levell submitted both personal and Sol Sleep bank records, cancelled checks and automatic bill payment records showing that he paid rent of $1,500 per month (one­third of the $4,500.00 per month rent Net Lessee charged for unit 301) for a total of $64,500.00 for the 43 months from August 2012 through February 2016. From March 2016 through June 2016, Mr. Levell paid the entire $4,500 per month 1 for a total of $18,000.00 and a grand total of $82,500.00 rent paid. Subtracting the total rent due from the total rent paid, the amount of overcharge for Mr. Levell is $18,736.70.

The chart below is a breakdown of the rent collected by Net Lessee for Tenant's unit and the overcharge owed to Tenant:

Relevant Period Total Rent Paid Maximum Permissible Rent Overcharge (Rent Charged x Num. of Months) (Legal Rent x Num. of Months)

Aug. 2012-Feb 2016 $1,500.00 x 43 = $64,500.00 $1,153.67 x 43 = $49,607.81 $14,892.19 Mar. 2016 $4,500.00 x 1 = $4,500.00 $3,461.00 x 1 = $3,461.00 $1,039.00 Apr. 2016-June 2016 $4,500.00 x 3 = $13,500.00 $3,564.83 x 3 = $10,694.49 $2,805.51 Total: $82,500.00 $63,763.30 $18,736.70

4. Mr. Sarig is the Protected Occupant ,of Unit 302 and is Entitled to Rent Adjustment and Refund of Overpayments.

a. Mr. Sarig is the Protected Occupant of Unit 302

On August 15, 2013, Mr. Sarig entered into a two-year lease with Kent Avenue Holding, LLC for unit 302 for $4,200.00 per month. See, Sarig 302 Lease. In August 2015, the lease expired. Pursuant to § 2-09(b)(4), Mr. Sarig, the prime lessee of unit of 302 with an expired lease, must prove the unit is his primary residence.

1 Mr. Levell produced proof that he paid $4,500 per month from March 2016 through January 2017. However, payments after June 2016 are beyond the Relevant Period. Therefore, we reject the inclusion of any payments past the Relevant Period and only include 4 months when Mr. Levell paid the entire rent from March 2016 through June 2016.

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Mr. Sarig testified that the week after signing the lease, he met with Mr. Gross, the building manager, and told him he would be subletting the unit though Mr. Fix. See, Tr. at 48. He then relied on Mr. Fix to collect rent from a series of roommates and wired him the money to pay the rent for unit 302. See, Tr. 52. Mr. Fix testified that there were no profits from the rental of the unit due to extra utility and cleaning expenses. See, Tr. at 732-34. In February 2014, Mr. Sarig, his wife, and daughter moved into an apartment in Jersey City. Mr. Sarig's lease was from March 20, 2014 through April 30, 2015. He renewed the lease in both his and his wife's names through April 30, 2016. See, Sarig Jersey City Lease 1, Sarig Jersey City Lease 2, Tr. 60-61.

Mr. Sarig's wife confirmed that she, her husband and daughter moved from Jersey City to unit 302 on April 29, 2016. Mrs. Sarig testified she used a company called Official Movers and paid in cash. See, Tr. 1421. Mr. Sarig produced a photocopy of an order for service dated April 26, 2016, from Official Movers for $285.00 for estimated volume of 850 cubic feet of items to be moved on April 29,2016. See, Official Movers Receipt. He also presented a letter from his Jersey City landlord dated March 14, 2016 addressed to Mr. and Mrs. Sarig at 151 Kent Avenue stating that Mr. Sa rig vacated his apartment on April 30, 2016. See, Letter for JC Landlord. Mr. Sarig provided a series of em ails regarding his security deposit, beginning on June 21, 2016. In the email.Mr. Sarig inquired about his security. deposit. The landlord replied that the security deposit check had been sent "to the address you've provided at move out more than 1 month ago." See, JC Landlord Email. Mr. Sarig's wife also stated her daughter was enrolled in preschool at Bright Horizons on Kent Avenue on May 2,2016: See, Tr. at 1489-90.

Mr. Sarig produced additional evidence as proof that unit 302 was his primary residence including bank statements from August 2016 through January 2017, Mr. Sarig's drivers permit dated October 2016, preschool statements dated May 2016 through February 2017,2016 W-2 forms, and a Verizon bill dated January 2017. See, Sarig Bank Statement, Sarig Driver Permit, Preschool Statement, Sarig 2016 W-2, Sarig Verizon Bills.

We agree with Judge Spooner that Mr. Sarig established that as of May 1, 2016, approximately one and a half months before the protected occupancy application was filed, Mr. Sarig made unit 302 his primary residence. Therefore, as a prime lessee who uses the unit as a primary residence, he is a protected occupant pursuant to 29 RCNY §2-09(b)(4). Furthermore, we agree that Net Lessee is estopped from arguing Mr. Sarig's rights cannot be recognized because he participated in a commercial enterprise of renting out rooms to temporary occupants for profit. We accept Judge Spooner's finding that the unrebutted and credible testimony of Mr. Fix demonstrated Net Lessee and its building manager Mr. Gross assisted in creating additional rooms in some of the units and generally turned a blind eye to the room letting-practices. See, Report at 31. For the reasons stated above, the Loft Board grants Mr. Sarig's protected occupant application.

b. Mr. Sarig is Entitled to Rent Adjustment and Refund of Overpayments.

As a protected occupant of unit 302, Mr. Sarig is entitled to rent adjustments as to the legal regulated rent for the unit. As noted above, the amount of the overcharge is based on the period for which the tenant overpaid rent up to four years preceding the filing of the application, the total rent allowed pursuant to the Loft Board's interim rent guidelines and code compliance rent adjustments.

As a preliminary matter, Net Lessee argues that Mr. Sarig, who collected rent far in excess of the legal rent from subtenants or roommates, cannot collect overcharges because he was collecting more rent than he paid. However, Loft Board precedent states otherwise. In Matter of Andrew Bradfield, the Board declined to offset a $35,169 overcharge by $10,500.00 collected from a subtenant. See, Matter of Andrew Bradfield, Loft Board Order No. 2845 (Feb. 19, 2004). Despite this, we agree with Judge Spooner's finding that Mr. Sarig should not be able to collect overcharges from August 2013 through April 2016 because during this period Mr. Sarig was not a residential occupant entitled to protection. He was a prime lessee who did not occupy the unit as his primary residence. Therefore, Mr. Sarig is entitled to a refund of overcharges for May 2016 through June 2016.

As to the maximum permissible rent, Mr. Sarig offered the first page of a 2009-2010 lease agreement for unit 302 for $3,000 per month as proof of the 2010 rent allowed pursuant to the interim rent

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guidelines. See, Unit 302 2009-2010 Lease. Upon the filing of the alteration application in March 2016, Net Lessee was eligible for a three per cent increase pursuant to MOL § 286(2)(ii)(A). Therefore, we agree with Judge Spooner's finding that the current legal rent for unit 302 is $3,090.00.

According to Mr. Sarig's bank records and the Net Lessee's rent records submitted at the hearing, the total rent paid by Mr. Sarig from May 2016 through June 2016 was $4,200.00 per month for a total of $8,400.00. See, Sarig Bank Statement, Net Lessee's Sarig Rent Records. The total rent chargable during that period was $6180.00. The difference between the rent paid for unit 302 and the legal rent during the Relevant Period is $ 2,220.00.

The chart below is a breakdown of the rent collected by Net Lessee for Tenant's unit and the overcharge owed to Tenant:

Relevant Period Total Rent Paid Maximum Permissible Rent Overcharge (Rent Charged x Number of (Legal Rent x Number of

Months) Months) May 2016-June $4,200.00 x 2 = $8,400.00 $3,090.00x 2 = $6,180.00 $2,220.00 2016

Total: $2,220.00

CONCLUSION

The loft Board grants Net Lessee's motion to dismiss Ms. Raheem's applications with prejudice for failure to prosecute pursuant to § 1-06(k)(4).

The Loft Board denies Mr. Fix's applications for protected occupant status and rent adjustment.

The Loft Board grants Mr. Levell's and Mr. Sarig's applications for protected occupant status arid rent adjustment. . Mr. Levell is the protected occupant of Unit 301. The rent for unit 301 is $3564.83. The amount due Mr. Levell for the overcharge is $18,736.70.

As to Mr. Sa rig, the Board finds he is the protected occupant of Unit 302. The rent for unit 302 is $3,090.00. The amount due Mr. Sarig for the overcharge is $2,220.00.

The other coverage claims on the application docketed PO-0034 and the other rent dispute claims on the application docketed TA-0221 are deemed settled. The Loft Board neither accepts nor rejects the remaining terms of the stipulations dated March 17, 2017, and March 21,2017.

DATED: April 23, 2020 .

Renaldo Hylton Chairperson

Board Members Concurring: Barowitz, Roche, Hernandez, Delaney, Torres, Roslund, Hylton

DATE LOFT BOARD ORDER MAILED: MAY 1 - 2020

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100 CHURCH STREET, 12TH FLOOR, NEW YORK, NEW YORK 10007 NYC.GOV lOATH • JSPooNER@oATH.NYC.GOV

FIDEL F. DEL VALLE COMMISSIONER AND

CHIEF ADMINISTRATNE LAW JUDGE

RickD. Chandler, P.E. Commissioner New York City Loft Board 280 Broadway, 3rd Floor New York, NY 10007

Dear Commissioner Cbandler,

November 22, 2017

JOHN B. SPOONER ADMINISTRATIVE LAW JUDGE

212-933-3016

Re: Matter of Tenants of 151 Kent Avenue, OATH Index Nos. 532117, 533/17 Loft Board Dkt. Nos. TA-0221, PO-OO34 Premises: 151 Kent Avenue

Brooklyn, NY

The above-referenced applications were referred to me to hear and report. My report and recommendation is enclosed for your review and final action. Accordingly, I am returning the Loft Board work folders.

Upon taking final action in this matter, please have your office send a copy of your decision to the Office of Administrative Trials and Hearings so that we may complete our fIle.

JBS:nz Encl.

c: Michael Kozek, Esq. Jason R. Davidson, Esq. Helaine Balsam, Esq. Ryan Fix Danielle Raheem

LOFT BOA.RD

R[ f«JV 2 8 ~J L-- ..... ..,....----

ECEI V E

..

MaUer of Tenants of 151 Kent Avenue, Brooklyn OATH Index Nos.-532117, 533/17 (Nov. 22,2017)

[Loft Bd. Dkt. Nos. TA-0221, PO-0034]

Three loft tenants of IMD sought protected occupancy and rent adjustments. Testimony and documentation established that two tenants were residential occupants qualified for protection of units 301 and 302, but that a third tenant, who failed to prove that he was a residential occupant of unit 310 or that the unit was his primary residence, was not protected. The rents for the two units occupied by protected tenants should be set at $3,564.83 and $3,090 and the tenants are owed overChargeS of $26,321.19 and $10,800.

NEW YORK CITY OFFICE OF ADMINISTRATIVE TRIALS AND HEARINGS

In the Matter of TENANTS OF 151 KENT AVENUE, BROOKLYN

Petitioners

REPORT AND RECOMMENDATION

JOHN B. SPOONER, Administrative Law Judge

This case concerns protected occupancy and rent adjustment applications (AU Exs. 1,2)

filed with the Loft Board on June 10, 2016, bylO tenants of the premises 151 Kent Avenue,

Brooklyn, New York,pursuant to section 281(5) of the Multiple Dwelling Law (MDL) and title

29 of the Rules of the City of New York (RCNY). The applications alleged that the tenants were

occupying their units with the landlord's consent. In answers (AU Exs. 3,4) filed on August 10,

2016, the current landlord, Kent Ave Holdings I, LLC, alleged that the applicants were not

protected because other individuals were previously registered as protected occupants of these

units, some of the applicants did not occupy their respective units as their primary residences,

and at least two of the applicants, Mr~ Sarig and Mr. Fix, operated commercial enterprises by

leasing bedrooms in their units.

The case was transferred to OATH in September 2016. At around this time, Mr. Sarig

substituted Mr. Kozek for Mr. Frazer as his attorney (ALJ Ex. 7). After a conference in

November 2016, six of the applicants, Mr. LaGrasta (unit 111), Mr. Smith (unit 113), Mr.

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Leibsohn (unit 211), Mr. Kleinman (unit 214), Mr. Burlingham (unit 216), and Mr. Friedrich

(unit 311), settled with the landlord and filed stipulations of settlement (AU Ex. 5). Trial dates

were then set for the remaining four units, Mr. Levell (unit 301), Mr. Sarig (unit 302), Mr. Fix

(unit 310), and Ms. Raheem (unit 313). On February 7,2017, Mr. Frazer indicated that he had

had no contact with Ms. Raheem since November 2016 and no longer represented her. He was

then permitted t6 withdraw as counsel (AU Ex. 6). Prior to the trial, pursuant to a substitution

(AU Ex. 8) filed on March 16,2017, Mr. Fix dismissed Mr. Frazer as his attorney and elected to

proceed pro se. Beginning in February 2017, there were a large number of e-mails (AU Ex. 9)

between Mr. Fix and this tribunal concerning questions about scheduling, discovery and the trial

process in which Mr. Fix's various questions were answered and guidance was provided as to

representing himself.

The case' was initially scheduled for trial on March 14,2017, and three other March dates.

The first trial date was later adjusted to March 22,2017, due to a conflict in the OATH schedule.

After the initial trial date, it became apparent that, due to the substantial volume of proof the

parties wished to present on the primary residence of the applicants, more trial dates would be

required .. At this point, Mr. Fix requested an adjournment of the trial because he was planning

on being out of the country in Europe and Asia from April through at least the end of July and

perhaps longer. This request was opposed by the owner's attorney, who pointed out that delay

prejudiced his client because none of the applicants were paying rent. On this basis, Mr. Fix's

request for a two-to-three month adjournment was denied. Mr. Fix was, however, given the

opportunity to participate in additional trial dates via video conference, which he did on May 25,

2017, for the testimony of his wife, Ms. Chaouat-Fix.

The trial was held before me on March 22,24,31, April 17, 19, May 2, 17,23.25, and

June 8, 16,2017. Ms. Raheem, who was notified by regular mail and e-mail of the trial and that

it was marked final (AU Ex. 6), failed to appear on any of the trial dates or to respond to any of

the e-mails. Due to Ms. Raheem's failure to appear, the landlord's motion to dismiss with

prejudice both the protected occupancy and rent adjustment applications as to her should be

granted. Matter of Tenants of 87-95 Dobbin Street, Brooklyn, Loft Bd. Order No. 4572 (Oct. 20,

2016).

For the reasons provided below, I find that Mr. Levell and Mr. Sarig are residential

occupants qualified for protection of units 301 and 302, but that Mr. Fix failed to establish that

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he is protected as to unit 310. The protected occupancy applications of Mr. Levell and Mr. Sarig

should be granted and the protected occupancy application of Mr. Fix should be denied. The rent

adjustment applications of Mr. Levell and Mr. Sarig should be granted and the rents for units 301

and 302 should be set at $3,564.83 and $3,090 with overcharges of $26,321. 19 and $10,800. Mr.

Fix's rent adjustment application should be denied.

ANALYSIS

The premises consist of a three-story building in an M1-2IR6A special mixed use district

ilJ. Brooklyn. The building is owned by a company called FNw Realty Corp. See AU Ex. 3.

From 2012 until 2015, the building was under a net lease to an entity named Kent Ave Holdings,

LLC (Tr. 2398); According to the application (AU Ex. 1) and the answer (AU Ex. 3), Kent

Ave Holdings, LLC registered the building on March 21,2012, with the Loft Board, identifying

46 residential units, including the three units at issue here. None of the three remaining

applicants were listed as residential occupants at that time.

According to ' statements made at trial by counsel for the owner, Kent Ave Holdings,

LLC, failed to comply with its net lease requiring legalization of the building. On these grounds;

the owner took back control of the building in August 2Q1,5, and began to manage the building

under a net lease with Kent Avenue Holdings I, LLC, a company affiliated with the owner (Tr.

2387, 2395, 2399). , 1ii the answer (AU Ex. 3), this entity is identified as a net lessee of the

building. Mr. Gross, the building manager under the former net lessee, was kept on as manager

due to his familiarity with the building (Tr. 2399). None of this history was disputed by couns~l

for Mr. Levell and Mr. Sarig (Tr. 2402).

The II-day trial concerned appilcations for protected 'rights and rent adjustment by three

individuals, each of whom had a different relationship to the building. Two of the applicants,

Mr. Fix and Mr. Sarig, signed leases to their respective units, units 310 and 302, in 2014 and

2013 but did not Qritially reside in the uillts. Instead, they rented out rooms to short-term guests

using Airbnb and other websites, including one Mr. Fix created called Pure House. After both

leases expired, Mr. Fix and Mr. Sarig began to occupy their units in mid-2016, just before the

Loft Board ap,plications were filed. The third applicant, Mr. Levell, is a close frieI),d of Mr. Fix's

who moved .into unit 301 in 2012 as Mr. Fix's roommate, while continuing to work at a job in

Tampa, Florida.

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The ftrst of the applicants to discover the building was Mr. Fix, who, in August 2012,

saw a listing for unit 301 at the premises. Mr. Fix immediately realized that renting unit 301 was

"an exceptional opportunity" (Tr. 441-42). Mr. Fix proposed to lease the unit with two friends,

Mr. Cacossa, his then-roommate, and Mr. Levell, a close boyhood friend who worked and lived

at the time in Tampa, Florida. Mr. Levell agreed to sign a guaranty of lease (Resp. Ex. BB) to

the landlord, promising to pay the rent if Mr. Fix and Mr. Cacossa'failed to do so (Fix.: Tr.753;

Levell: Tr. 1548-49). On August 7, 2012, Mr. Fix and Mr. Cacossa signed a one-year lease (Pet

Ex. F1, L7)1 to rent unit 301 for $4,500 per month. The first paragraph of the lease for unit 301

(as well as for the leases for units 302 and 310) provided that the apartment "must be used only

as a private apartment to live in as the primary residence of the Tenant and for no other reason."

Mr. Fix and Mr. Cacossa moved into unit 301 soon afterward from an apartment nearby.

In mid-August 2012, Mr. Levell moved most of his possessions from Florida to unit 301 (Tr.

1546, 1553-5). Mter 2012, Mr. Levell continued to work at Tampa General Hospital as a nurse,

working for seven consecutive nights and then having two weeks off, when he would travel to

Brooklyn (fr. 1556).

Initially, Mr. Fix assumed control of two bedrooms and Mr. Levell and Mr. Cacossaeach

took one bedroom. They split the deposit and the rent three ways (Tr. 1639). According to Mr.

Levell, after moving into unit 301, Mr. Fix began renting out both of the rooms 'in unit 301,

essentially paying no rent himself (Tr. 2351). At around the same time, Mr. Fix created an

enterprise called Pure House, LLC in order to "curate roommates" for different apartments (Tr.

490, 662, 666). Mr. Fix explained that he "curated" by advertising rooms available for short­

term stays in various apartments in and around Williamsburg, using Pure House, Airbnb,

Hotpads.com, Craigslist, and other websites. During its existence, Pure House rented out

upwards of 60 rooms, including rooms in units 212, 301, 310, and other friends' units in 151

Kent Avenue (Tr. 534).

Mr. Sarig found unit 302 through Mr. Fix. In early August 2013, Mr. Fix told Mr. Sarig

that unit 302 was available (Tr. 45) and, on August 15, 2013, Mr. Sarig entered into a two-year

lease (Pet. Ex. S3) with Kent Ave Holdings, LLC for unit 302 to be used "as [his] primary

residence" (fr. 42-43). The monthly rent was $4,200 (fr. 268,274).

1 Exhibits offered by the three petitioners are designated by the first letters of their last names: Pet. Ex. Fl (for Mr. Fix), Pet. Ex. L1 (for Mr. Levell), and Pet. Ex. Sl (for Mr. Sarig).

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Mr. Sarig testified that, the week after signing the lease, he met with Mr. Gross, the

landlord's manager, and told Mr. Gross that he would be subletting the unit through Mr. Fix (Tr.

269-70). Mr. Fix then proceeded t~ arrange to sublet the unit under an agreement whereby Mr.

Fix would "cover the. cost of the rent" and split any profit with Mr. Sarig (Tr. 5l). This

agreement was to be in place until Mr. Sarig and his wife could feel "comfortable" moving into

unit 302 (Tr. 51). Pursuant to this arrangement, from 2013 through 2016, Mr. Sarig rec~ived

.money by wire from Mr. Fix for renting out rooms in unit 302 and used this money to pay the

rent to the net lessee (Tr. 52).

Mr. Fix proceeded to obtain leases for two other units in the building. In September

2(H4, Mr. Fix' approached Mr. Gross, the property manager, about renting unit 310 for $5,500

per month (Tr. 448-59): A one-year lease (pet. Ex. F2) for unit 310 was executed on August 25,

2014, by Mr. Fix and Mr. Gross (Tr. 455) . .Mr. Gross agreed to build out more bedrooms so that

Mr. Fix could share the rent with other roommates (Tr. 449, 909-12). Once the work On the unit

310 bedrooms was completed, Mr. Fix used various websites, including Craigslist, Pure House,

and Hotpads, to find roommates (Tr. 523). In May 2015, Mr. Fix signed a one-year lease (Pet.

Ex. F17) for unit 212 at 151 Kent Avenue for $5,500 per month and began to lease out rooms in

this unit was well.

Mr. Fix continued to reside iri unit 301 and rent out rooms in units 301, 310, 212, and

other apartments from 2014 through 2016. In January 2015; Mr. Fix married Mihal Chaouat,

Mr. Sarig's sister. Mer the maniage, Ms. Chaouat-Fix applied for a green card (Tr. 693). Ms.

Chaouat-Fix paid Mr. Fix $1,500 per month to "help bini out" because he had no other income

(Tr. 606). This stipend was later reduced to $950 per month (Tr. 705). According to Mr. Fix and

Ms. Chaouat-Fix, they initially lived together in a room in unit 301 (Tr. 599), but Ms. Chaouat­

Fix moved to a different room in unit 301 in October 2015, some nine months after their

marriage (Chaouat-Fix: Tr. 1113). Ms. Chaouat-Fix continued to reside in the room in unit 301

up until the time of the trial (Tr. 601).

Mr. Fix admitted that, in 2014 through 2016, he earned a living from leasing rooms in

apartments through Pure House and other websites in buildings throughout Williamsburg (Tr.

535). According to Mr. Fix's 2013 and 2014 tax returns (pet: Exs. F3, FlO); Mr. Fix earned a

totl;11 gross income of $1·,303,000 through Pure House.

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Mr. Fix and Jvf..r. Sarig testified that, in 2016, both took steps to take up occupancy, for the

first time, in their respective units. Both Mr. Fix's lease for unit 310 and Mr. Sarig's lease for

unit 302 expired in August 2015 (Tr. 484). Mr. Sang and his wife testified that they moved with

their aaughter into unit 302 in late April 2016, after their lease for a Jersey City apartment

expired. They produced a number of documentary proofs in support of this testimony, as

discussed below.

In the summer of 2016, Mr. Levell married. Mr. Fix offered to leave unit 301 so that Mr.

Levell could start a family (Tr. 448). Mr. Fix testified that, around the middle of2016, he moved

out of.unit 301 and began to ~leep in unit 310 (Tr. 450, 468). His move consisted of transferring

his "daily personal items" (Tr. 920) and a few pieces of furniture, leaving a signific.ant amount of

personal items behind in unit 301 (Tr. 943-44). The only documentation of Mr. Fix's move

consisted of his bank statements (Pet. Ex. F9), for which he changed the mailing address to unit

310 in July 2016.

In 2016 and continuing through the time of trial in 2017, Mr. Fix traveled extensively in

Brazil, Europe, and Asia. When he was away, he rented out the room in unit 310 to which he

haq supposedly moved, as discussed in more detail below', In December 2016, Mr. Fix returned

to New York City briefly and stayed, not in unit 310, but in his girlfriend's apartment in Long

Island City (Tr. 831-32).

Protected Occupancy Rights

The adjudication of the protected occupancy rights sought by the applicants is governed

by the Loft Board rules. Under section 2-09(b)(1), the current residential occupant in possession

of an IMD unit is presumptively protected: ''Except as otherwise provided herein, the occupant

qualified for protection under Article 7-C is the residential occupant in possession of a residential

unit, covered as part of anIMD," The rules further state that if the current residential occupant is

not the prime lessee, then:

the lack of consent of the landlord to it sublet, assignment or subdivision establishing such occupancy does not affect the rights of such occupant to protection under Article 7 -C, provided that such occupant was in possession of such unit prior to: ... (iii) June 21, 2010, for an IMD unit covered by:MDL § 281(5) ... .

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29 RCNY § 2-09(b)(2). A "prime lessee" is defined in the regulation as "the party with whom

the landlord entered into a lease or rental agr.eement for the use and occupancy of a portion. of an

IMD, which is being used residentially regardless of whether such lessee is currently in

occupancy or whether such lease remains in effect." 29 RCNY 2-09(a) (Lexis 2017).

The rules then provide that an occupant who took possession of a unit after June 21,

2010, is qualified for protection only if he or she is "a prime lessee with a lease currently in

effect," "a statutory tenant" who took possession with the consent of the landlord without a lease,

the assignee of a prime lessee consented to by the landlord, or prIor ,to their occupancy the

landlord was Qffe«:d an opportunity to purchase the improvements . . 29 RCNY § 2-09(b)(3)

(Lexis .2017). The next section of the rule, originally promulgated in 1983, provides that the

prime lessee is deemed to be protected if she can prove that unit is her "primary residence, even

if another person is in possession." 29 RCNY § 2-09 (b) (4) (Lexis 2017) .. Following this rule are

two subsections explaining how the prime lessee must exercise the right to recover the unit in a

"court of competent jurisdiction" prior to certain deadlines based upon ·when the unit became

covered by the statute and when the sublease expired,

In order to obtain protection, an applicant must ,establish that he or she is the current

residential occupant of the unit, and not a commercial occupant. See, e.g., Franmar Infants

Wear, Inc. v. Rios, 143 Misc.2d 562 (App. Term, 1st Dep't 1989) (where only a small comer

space, approximately five feet by eight feet, of a 625 square foot artist's studio was used

residentially, space remained commercial); Loft Realty Co. v. Aky Hat Corp., 123 Misc.2d 440,

445 (Civ. Ct. N.Y. Co.), affd, 131 Misc.2d 541 (App. Term, 1st Dep't 1984) (\Vhere'tenant used

~pproxirnately two percent of a unit residentially, and the rest as a hat factory. unit not covered

be<;ause residential use was incidental to commercial use); Matter of Addis, OATH Index Nos.

1574/02, 1575/02 (Nov. 25, 2002), a.dopted, Loft Bd. Order No. 2772 (Jan. 9,2003) (insufficient

residential use where commercial tenant slept in the loft only a few nights per month);

According to recent Loft Board precedent, former prime lessees such as Mr. Fix and Mr.

Sarig, must also establish that the units either are (or perhaps were) their primary residence. This

is the result of a series of Loft B~ard Orders beginning in 2014 reinterpreting the .requirements

for p:rotected occupancy and rejecting recommendations, of this tribunal relying upon some 30

years of precedent from the Loft Board itself establishing that primary residence was not

required for Loft Law protection. See Matter of Mignoia, OATH Index Nos. 2482/11, 2483/11,

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2484111,240/12,808/12,809/12,810/12 & 1616/12 (May 29, 2013), adopted in part, rejected in

part, Loft Bd. Order No. 4509 (Apr. 21, 2016); Matt.er of Schuss, OATH Index No. 2066/12

(Mar. 25, 2013), adopted in part, rejected in part, Loft Bd. Order No. 4393 (May 21, 2015);

Matter of Gallo, OATH Index No. 2401113 (Oct. 10, 2014), adopted in part, rejected in part,

Loft Board Order No. 4349 (Jan. 15, 2015); Matter of Pak, OATH Index No. 2447/13 (Oct. 9,

2014), adopted in part, rejected in part, and remanded, Loft Bd. Order No. 4334 (Nov. 20,

2014).

As noted before by this tribunal, the Board's reinterpretation of 2-09(b)(4), a rule

promulgated over 30 years ago, to suddenly require proof of primary residency jor prime lessees

has raised a host of serious legal concerns. The rule in question had never before been held to

create a new requirement for protection but rather had been used to allow an out-of-possession

prime lessee to evict a subtenant upon a showing in a court of competent jurisdiction that the unit

is the prime lessee's primary residence. There is also considerable doubt whether the Loft Board

possesses jurisdiction to adjudicate primary residence, which is grounds for an eviction or

holdover action in state court. See Matter of Allweis, OATH Index No. 2569/14 at 28 (Jan. 18,

2017). These recent Loft Board holdings have also placed unforeseen burdens upon prime

lessees some four to five years after their applications were filed, raising serious due process

issues. See Matter of Tenants of 58 Grand St, OATH Index No. 212/15 at 30-31 (June 24,2016).

The holdings have placed prime lessees seeking protection in a weaker position than subtenants

who are not required to establish primary residence. See Matter of Saladino, OATH Index Nos.

2412/13 & 1879/14 at 61. (May 20, 2016). See also Matter of Mignola, Delaney Dissent, Loft

Board Order No. 4509 (Apr. 29, 2016) (Mr. Delaney, the only current Board member serving on

the Board in 1983 when the section 2-09 was first adopted, disavows Board's interpretation of

rule 2-09(b)(4).

In two recent orders, the Loft Board attempted to clarify its creation of a primary

residence requirement for prime lessees seeking protected occupancy. In Matter of Tenants of 79

Lorimer Street, OATH Index No. 1020/16 (Mar. 23,2017), adopted in part and rejected in part,

Loft Board Order No. 4688 (Sept. 21, 2017), the Board wrote, "[s]ince the 2010 amendment, the

Board has consistently applied § 2-09 when distinguishing the analysis for coverage from the

analysis for protected occupancy" and issued "congruent determinations" applying a "primary

residence ana1ysis." The earliest case cited for this statement is the Board's order in Pak,

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decided in November 2014, more than three years after the 2010 amendment to the Loft Law

became effective. In a more recent order, Matter of Tenants of 58 Grand Street, OATH Index

No. 212115 (June 24, 2016), adopted in part and rejected in part, Loft Board Order" No. 4702

(Oct. 26, 2017), the Board stated that the primary residence requirement is found in the "plain

language" of section 2-09(b)(4).

Neither of these most recent orders provides analytical or practical assistance to parties

attempting to understand the Board's post-2014 primary residence rulings. Notably, no

explanations are offered, for example, as · to how the Board's interpretation of the "plain

language" of a 1983 rule emerged in 2014 or, more importantly, what the relevant time frames

for adjudication of primary residence are.

A criticism of OATH in one of the 2017 cases warrants mention. In 79 Lorimer Street,

the Board cautioned OATH administrative law judges from citing to prior OATH decisions

which the referring agency has not ruled on because such decisions "have no precedential value."

79 Lorimer Street, Loft Bd. Order No. 4688 at 5. This assertion that OATH decisions have no

value unless adopted by the Board or an agency head is, in fac~, a misstatement of OATH's

position within City government and inconsistent with OATH's mandate and history. OATH

was established in 1979 by Executive Order No. 32 as an adjudicative tribunal independent of

the agencies that bring cases before it. From its inception, OATH functioned as a citywide

resource for the practice of administrative law; issuing both finaldeclsions and recommended

decisions on dozens of types of administrative cases. In 1989, OATH began publishing

Benchnotes, a summary of notable OATH decisions. The electronic version of Benchnotes,

which often includes discussion of OATH cases involving the L9ft law, currently has 2,400

subscribers. OATH itself and other tribunals, including the Civil Service Commission and the

Police Department trials tribunal, regularly cite to OATH's prior decisions as precedent, even

though many of those decisions were in the form of reports to referring agencies.

In 2000, all OATH decisions, including both final decisions and reports, were made

available online via the Center for New York City Law website and later to Lexis. OATH also

provides texis with annotations of all OATH decisions dealing with City rules for inclusion in

the electronic version of the Ruies of the City of New York, including the Loft Board niles. This

far-reaching distribution of past OATH decisions demonstrates that they constitute a well­

recognized body of law, used widely to facilitate legal research on administrative issues.

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Whether adopted by a referring agency or not, OATH decisions are recognized to have

persuasive force as a legal matter and bear witness to the consistency of OATH decision-making,

a hallmark of some 37 years of administrative practice under OATH's charter mandate as the

City's central administrative tribunal.

For Loft Board cases in particular, there are reasons to look to all OATH reports, even

those not reviewed by the Loft Board: A good number of OATH reports and holdings are never

ruled upon by the Board because the cases settle before they reach the Board or because the

Board itself declines to consider certain issues. In addition, there are frequently delays between

the issuanc~ of an OATH report and a Lo{t Board disposition. See, . e.g., Mignola, Loft Bd. Order

No. 4509 (three years between OATH report and Loft Board Order). In these instances, prior

OATH cases provide the sole guidance for the issues being adjudicated.

In short, OATH has been independently . adjudicating and issuing decisions on City

administrative cases for nearly 40 years, looking to its own past decisions for guidance. There

are no persuasive reasons to alter this practice.

The instant case is illustrative of some of inequities and due process quandaries created

by the recent Loft Board decisions. As to the two prime lessees, Mr. Fix and Mr. S'arig, neither

was aware at the time their leases were in 'effect that their respective units were covered by the

Loft Law and rent -regulated. They therefore had no reason to appreciate, until a few weeks.

before they filed their protected occupancy applications, that they would violate rent regulation

rules if the units were not their primary residences. Forcing them to produce past proofs of

primary residence in order to establish protected rights at the same time they realized that such

rights existed was not fair. Nor was it fair that Mr. Levell, who came into the building at

approximately the same time but without being named on a lease, could become protected

without establishing primary residence.

The instant case also displays how the Loft Board's newly announced rule requiring

proof of primary residence has expanded the scope of litigation as to protected occupancy. The

discovery in this case took months longer due to the parties' efforts to produce and review

volumes of bank records and credit card statements that would not have been required in the

past. . In the absence of guidance from the Loft Board as to time frames to establish primary

residence, the applicants produced all the records they could fmd going back to the beginning of

their occupancy. Mr. Levell's documents alone filled two large cardboard boxes. The trial time

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was extended as' the attorneys offered documents and asked the applicants questions about them.

These extra litigation costs were a direct result of the Loft Board's recent holdings as to primary

residence ..

In one way the parties in the instant · case were in a better position than previous

applicants. Unlike in past Loft. Board decisions adjudicating primary residence, all three

applicants here, including Mr. Fix, were aware 'of the new primary residence requirement and

addressed it during pretrial conferences, during the tri'al, arid in their post-:-hearing submissions.

According to their own testimony and proof, all three of the applicants here took

.possession oftheir respective units· after June 21,2010 .. Both Mr. Fix and Mr. Sarig were prime

lessees of units 302 and 310, although neither of them residentially occupied their respective

units while their prime leases were in effect. Mr. Fix's lease for unit 310 expired in August 2015

and he· first stayed in a room in the unit sometime in the summer of 2016 . . Mr.Sarig's lease also

expired in August 2015 and he fIrst occupied unit 302 in May 2016. Mr. Levell has never had a

lease and therefore, under the 2014 Loft Board interpretation of section 2~09(b)(4); need not

establish that the unit was his primary residenc~ in order to be a protected occupant.

As discussed below, Mr. Fix failed to establish that he is the protected occupant of unit

310. On the other hand, the evidence offered by Mr. LevelJ and Mr. Sarig supported their claims

of protected occupancy.

Mr. Fix - Unit 310

From 2012 to 2016, Mr. Fix admitted that he resided in unit 301. It was not until the

summer of 2016, at approximately the same time as the Loft Board applications were filed, that

he allegedly began to reside in unit 310. Mr. Fix "moved oyer to" unit 310 by having his mail

forwarded to this unit (Tr. 450, 468). He also moved his "daily personal items" from unit 301 to

unit 310 (Tr. 920). He transferred some of the fuiniture, including a night stand and a lamp (Tr.

943-44). His wife, Ms.Chaouat-Fix, continued to live in unit 301 (Tr. 601).

Mr. Fix testified that, as of April 1,2017, he stopped paying his $5,500 monthly rent for

unit 310 because "the landlord is out of compliance with the Loft Law" (Tr. 654). Nevertheless.

Mr. Fix continued to collect rent from all of his roomIDates in order to have this money in case

he was ever ordered to pay it to the landlord (Tr. 765, 955). At the time of the April 17, 2017

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trial. Mr. Fix was listing his room in unit 310 to find a roommate for the time he intended to be

out of the country (Tr. 829).

Mr. Fix repeatedly contended that unit 310 has been his primary residence since the

beginning of the summer 2016 (Tr. 855-56). He insisted it had always been his intention to

move into this unit but he was not "ready" to do so until 2016 (Tr. 859-60). He testified that he

had his "daily belongings" there, including his clothing, his computer, and some crystals. He

received mail there (Tr. 859-60).

At .the same time, Mr. Fix admitted thai, for the year preceding the 2017 hearing, he spent

little time at 151 Kent Avenue and even less time in unit 310. Mr. Fix was in Paris. and Europe

for a month around April 2016 (Tr. 584). After Mr. Fix moved into unit 310 sometime during

the summer, he was "living" (Tr.582) an~ spending time in Brazil "for private reasons"

beginning on October 10,2016. He visited Paris, Zurich and Bourdeaux in November 2016 (Tr.

585). He returned to New York in November or December 2016 and stayed with his girlfriend

Poppy Liu in her apartment in Long Island City (Tr. 831-32). He then flew back to Brazil and

stayed there until MarchIO, 2017, just before the OATH trial started (Tr. 579,784).

At the end of Apri12017, Mr. Fix left the country again to go to "Europe, India, and parts

of Asia" (Tr. 580). This travel was in connection with another not-for-profit company called

Pure House Lab which he set' up in November 2016 and "is based in Paris" (Tr. 580). Pure

House Lab was set up with a friend, Fabrice, and uses Fabrice's office address in Paris (Tr. 583).

In further support of his protected occupancy application, Mr. Fix called two witnesses.

his former girlfriend, Ms. Liu, and his wife, Ms. Chaouat-Fix. Ms. Liu testified that she met Mr.

Fix on Valentine's Day in 2015, only a few weeks after Mr. Fix's marriage to Ms. Chaouat-Fix

(Tr. 1004). A few months later, they began a romantic relationship (Tr. 1018) which, according

to Ms. Liu, ended two months before the Apri119, 2017, trial (Tr. 1011). Ms. Liu believed that

Mr. Fix moved from unit 301 to unit 310 "a little over a year ago" or around April 2016 (Tr.

1012). She recalled helping him move some furniture (Tr. 1012). She also recalled that Me. Fix

"lived in several of the bedrooms" as roommates came and went (Tr. 1013-14). Ms. Liu recalled

sleeping with Mr. Fix in each of the six bedrooms and also the living room in unit 310 at some

point (Tr. 1014).

Ms. Liu confirmed much of Mr. Fix's travel in 2016. She recalled that, in October 2016,

Me. Fix may have spent four nights per week in her apartment (Tr. 1026). Ms. Liu and Mr. Fix

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spent a week together in Switzerland in November 2016 (Tr, 1074-75). They were also together

in Brazil in December 2016 and spent New Year's Eve together there (Tr. 1076).

Ms. Chaouat-Fix testified. that she has Israeli and French citizenship and received a

UDited States green card as a result of her 2015 ·marriage to Mr. Fix (Tr. 1118). She started

living in unit 301 just before she married.Mr. Fix in 2015 (Tr. 1112, 2091). Because of her long

work hours, she began sleeping in a room above Mr. Fix's room which had been used as an

office (Tr. 1113). Ms. Chaouat-Fix stated that her rriarriage to Mr. Fix was initially "great" but

they later needed "a little bit of time off." She "fuUy" moved into the .upper room in unit 301 in

.approximately October 2015, a year and a half before the trial (Tr. 1113) ..

Ms. Chaouat-Fix could not recall when Mr. Fix moved out of unit 301, indicating only

that it was "probably" in 2016 (Tr. 2094-95). After Mr. Fix. moved out of unit 301, Ms.

Chaouat-Fix brought in one of her employees, James, as a roommate (Tr. 1143-44), but could not

recall when he moved into the unit (Tr. 2095, 2119).

Ms. Chaouat-Fix stated that, when she and Mr. Fix were interviewed in 2016 by

immigration services, they stated that they resided together in unit 301 (Tr. 2146). She continues

to give Mr. Fix money each month, including $1,900 in May 2017, by wiring it to his checking

account (Tr. 2138-39). Even though she has a joint checking account with Mr. Fix, he is

"respectful" and does not withdraw money from it (Tr. 2140).

Mr. Fix offered only four documents which show his address as unit 310: (1) July 2016

through January 2017 bank statements (pet. Ex. F9); (2) a M!il'ch 2017 Time Warner statement

(Pet. Ex. FI3);(3) March 2017 Con Edison statement (Pet. Ex. FI4); and (4) an undated health

insurance statement (Pet. Ex. FI2) ..

Other documents offered into evidence by Mr. Fix show multiple other addresses. On

Mr. Fix's 2013 tax returns (Pet. Ex. FlO), he gave his address as unit 301 at 151 Kent Avenue.

Mr. Fix!s identification card (Pet. Ex. F5). issued· in January 4·, 2017. gives·his address as 148

East Broadway, Apartment 6. Mr. Fix testified that this was an address where he was "staying at

for a period of time" in 2010 and 2012 (Tr. 576). Mr. Fix changed the address ori the card in

March 2017 just before the trial, indicating he could not change the address before this because

he was "abroad" ·CTr. 577).

Mr. Fix's private health insurance currently has his address as unit 310, although he

admitted that he made this change only in "the last couple of months" (Tr. 774). As of March

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2017, he continued to have accounts for gas at National Grid listing his address as unit 301 (Pet.

Ex. F15) and 'also as unit 212 (pet. Ex. F16). He stated that, although the National Grid account

for unit 301 is in his name as the lessee, Mr. Levell's credit card is used to pay the account (Tr.

783). Mr. Fix stated that he voted in the November 2016 election using an address on Elizabeth

Street in Manhattan. Although he insisted that he is currently registered to vote in unit 310, he

produced no records to support this contention (Tr. 789-90). In fact, a voter registration search

for Kings County (Pet. Ex. F11), dated March 19, 2107, indicated that Mr. Fix was not registered

to vote in Brooklyn at all.

Mr. Fix produced 12 photographs (Pet.Ex. FI8), taken in the last six months, of unit 310,

including photographs of the room where he usually sleeps eTr. 889-98). He indicated that all of

the furniture and other items in the room belonged to him (Tr. 901-02). In addition, most of the

other furnishings in the living room and kitchen belonged to him (Tr. 902-04). The paraglider,

which was initially left in unit 301, is now stored on the mezzanine in unit 310 (Tr. 935).

The uncontroverted proof established that, from 2014 to 2016, Mr. Fix used unit 310 to

generate income through the renting out of rooms for temporary guests. Such a practice would

likely be considered a commercial use under the Zoning Resolution. See Zoning Resolution §

12-10 (definition of "transient hotel"); Appendix A Index of Uses ("transient hotel" is use group

5 and permitted in commercial or manufacturing zones). Mr. Fix's alleged residential occupancy

of unit 310 beginning in mid-2016 was based primarily upOIi his own testimony. Mr. Fix

initially testified that he moved into unit 310 in the summer of 2016 after Mr. Levell got married

(Tr.440-50). He went to considerable lengths to suggest that his move was prior to, rather than

after, the date that the Loft Board application was filed on June 10, 2016. When pressed on

cross-examination as to what month he moved, he indicated he would "prefer to say June" rather

than August (Tr. 581).

The description of Mr. Fix's supposed move out of unit 301, where he was a prime

lessee, where his wife was residing, and where most of his [mancial accoun~s were registered, to

unit 310 was vague and contradictory. While he insisted that, from June or August 2016

forward, unit 310 had been his primary residence, he continued to have possessions stored in unit

301 (Tr. 475-76, 524). The items he left behind were "big things" he did not use "often,"

including a paraglider and clothes and shoes that he never wears (Tr. 811), and kitesurfing gear

(Tr. 920). Mr. Fix also acknowledged that "most" of his clothing was kept in storage, either in

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unit 301 or elsewhere, and was currently not in unit 310 because he is a "minimalist" (Tr. 968-

69) .. Mr. Fix continued to curate short term roommates for unit 310, apparently paying little or

no rent himself. At the same time, he continued to pay a portion of the rent to Mr. Levell for unit

301 until December 2016 (Tr. 760; Pet. Ex. F6).

The testimony of Ms. Liu, Ms. Chaouat-Fix, and Mr. Levell was equally vague as to

when Mr. Fix moved. They testified only that at !iome point in mid-2016 Mr. Fix ceased

sleeping in unit 301 and began staying in various rooms in unit 310. Due to the evasiveness of

Mr. Fix as to this issue, and his apparent motive to place his move into unit 310 as before the

ftling of the Loft. Board application on June 10, 2016, I did not credit his testimony as ~o the

timing of the supposed move and fmdonly that, in the mid-summer of 2016, Mr. Fix began

sleeping overnight in unit 310 and also received his bank statements there. At the same time, he

continued to list his address as unit 301 on his other accounts up until March 2017, continued to

pay rent on unit 301 through December 2016, and left many personal items behind in unit 301.

I also fmd that Mr. Fix's stays in unit 310 in 2016 and 2017 were not continuous or

frequent. Only weeks after supposedly moving into unit 310, Mr. Fix left New York and began

traveling for most of the next six months, beginning on October 10, 2016, when he traveled to

Brazil, then to Paris, Zurich and Bourdeaux in November 2016 (Tr. 585). He returned to New

York briefly in November or December'2016 and stayed not at unit 310 but at his girlfriend

Poppy Liu's apartment in Long Island City (Tr. 831-32). He then flew back to Brazil and stayed

there until March 10, 2017, just before the OATH trial started (Tr. 579, 784). At the time of the

trial, Mr'. Fix stated that he was also staying a few times per month with Ms. Liu in her coop

apartment in Long Island. City. In April 2017, he indicated that he was again traveling to Europe

and Asia for several months. returning to New York sometime in'the summer of 2017. Thus,

prior to filing the Loft Board application. Mr. Fix had stayed in unit 310 at most a few nights

and, prior to the OATH trial, Mr. Fix had spent no more than some five months'staying in unit

310. since he allegedly moved in nine months before.

Mr. Fix's testimony indicated that he moved into unit 301 in 2012 and considered it his

home. In contrast, motivated by a desire to obtain rent-regulated rights to a unit he had never

previously occupied, he did little' but move some personal effects into' unit 310 in 2016 and

continued to rent out the rooms in the unit. At the same time, he left many items in unit 301,

continued to list unit 301 on most of his financial and business documents, travelled extensively

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and slept in his girlfriend's apartment, returning to unit 310 only when there happened to be a

vacant room to sleep in.

Based upon this proof, I find that, from 2014 to 2016, unit 310 was used commercially by

Mr. Fix for short-term rentals, while he himself resided in unit 301. rhus, at the time Mr. Fix

filed his Loft Board application for protected occupancy of unit 310 in June 2016, he was not a

residential occupant of unit 310 and was, in fact, residing in unit 301. While he would likely

have qualified as a protected occupant of unit 301, his relationship to unit 310 was strictly as a

prime lessee who was renting out rooms in the unit on Pure House, Airbnb, Hotpads.com, and

Craigsli~t for profit. On tbis basis, he should not be found to be. a protected residential occupant

of unit 310 under section 2~09(b)(I).

Furthermore, Mr. Fix should not be held to be a protected residential occupant because he

failed to establish that he met the Loft Board's recently created requirement of primary

residence.. As already discussed, Mr. Fix leased unit 310 for two years without ever residing

there or, from all appearances, planning to reside there. As he admitted in his testimony, he saw

the leasing of unit 310 and mUltiple other units at 151 Kent and elsewhere in Williamsburg as

"exceptional opportunities" for profit through the curating of roommates. For two years, Mr. Fix

solicited short-term guests for unit 310 and various other units through the website of his own

company, Pure House, as well as other websites such as Craigslist, Hotpads, and Airbnb,

maintaining a residence in a room in unit 301.

Although the Loft Board has issued few guidelines as to how primary residence for

purposes of protected occupancy is to be determined, the handful of recent cases in which the

Loft Board has made findings of primary residence suggest that the proof of primary residence

must encompass more than a few ·days or weeks of overnight stays at the time of a protected

occupancy application. In Matter of Schuss, Loft Board Order No. 4393 (May 15, 2015), the

Board concluded that a tenant "occupies" a unit as the tenant's primary residence based upon

two-year-old or older documents including tax returns, a marriage license, a birth certificate, and

utility and medical bills. In Matter of Lopez, Loft Board Order No. 4533 (June 16, 2016), the

Board found that a unit "is" two tenants' primary residences. One tenant provided only eight­

year-old or older tax returns, while the other provided a six-year~old tax return, a driver's license,

an auto registration, and insurance bills. See Matter of Allweis, OATH Index No. 2569/14(Jan.

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18, 2017) (proofs of primary residence should be current and need not include the window

period).

Prior litigated cases in Housing Court where landlords sought to'evict tenants from rent­

regulated apartments due to non-primary residence also support rejection of Mr. Fix's claim of

primary residence. These cases were brought pursuant to Rent Stabilization Code, 9 NYCRR §

2524.4(c), which provides that several factors should be considered when determining whether

an apartment is being occupied as a primary residence, including the address on the tenant's tax

returns, motor vehicle ' registration, dri-yer's license, voter registration, or other document flIed

with a public agency. Other factors are whether the tenant has occupied the apartment for an

aggregate of 183 days "in the most recent calendar year, except for temporary periods of

relocation," and whether the apartment has been sublet. "[N]o single factor shall be solely

determinative." 9 NYCRR § 2520.6(u). See Katz Park Ave. Corp. v Jagger, 11 N.Y.3d 314, 317

(2008); Glenbriar Co .. v Lipsman, 5 N.Y.3d 388, 392-393 (2005).

A tenant's failure to use a rent-regulated apartment as a primary residence is grounds to

refuse to renew a rent-stabili~ed lease. 520 E. 8Ft St. Assoc. v. Lenox Hill Hosp .• 77 N.Y.2d 944

(1991). Non-primary residence cases brought in Housing Court under this provision require that

tenants be provided with notice of the landlord's intention to deny the tenant a renewal lease on

the grounds of non-primary residence at least 90 days prior to the expiratipn of the lease. Rent

Stabilization Code, 9 NYCRR § 2424.2(c)(3) (Lexis 2017); Golub v. Frank, 65 N,Y.2d 900

(1985). Where tenants failed to use a rent-stabilized apartment ~ a primary residence during the

period prior to the notice and the lease expiration, the tenant's rights may be terminated. Toa

Constr. Co. v. Tsitsires, 9 Misc.3d 469, 487 (Civ. Ct. of City of N.Y., N.Y. Co. 2005). Primary

residence consists of an "ongoing, substantial, physical nexus with the controlled premises for

actual living purposes." Berwick Land Corp. v. Mucelli, 249 A.D.2d 18 (1st Dep't 1998).

Landlords typically prevail in a non-primary residence holdover action by showing that a tenant

maintains a primary residence in a location other than the rent-regulated apartment. Sharp v.

Melendez, 139 A.D.2d 262, 264 (1 st Dep't 1988).

Mr. Fix did not give unit 310 as his residence on his tax. returns, motor vehicle

registration, driver's license, voter .registration, or any other public documents. Prior to the filing

of his application for protected occupancy on June 10, 2016\ Mr. Fix had slept in unit 310 at

most only a few nights, far short of the 183 days that would be required under the Rent

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Stabilization Code. After flling the application, he stayed in unit 310 for no more than 100 days

between July 2016 and the first hearing date in March 2017. It seems fairly certain that, if a non­

primary residence holdover action had been commenced in Housing Court in 2016, Mr. Fix's

rights would likely have been terminated. Emel Realty Corp. v. Carey, 188 Misc. 2d 280 (App.

Term, First Dep't 2001) (tenant's mere seven overnights per year in apartment, her stays in

Florida for roughly half the year, her subletting of the apartment, and her frequent overnight

stays with her boyfriend when in New Yark supported a finding that the apartment was not her

primary residence).

This case is distinguishable from Matter of-Pels, OATH Index No. 248.1/11 (June "20,

2012), adopted, Loft Bd. Order No. 4161 (June 20, 2013), where the Loft Board adopted Judge

Richard's holding that ·a tenant's "itinerant career ali a sculptor and temporary visiting professor

during the window period did not bar her claim to Article 7-C coverage." In Pels, the tenant

moved to Michigan for three years from 2007 to 2010 for a temporary academic position, leaving

most of her belongings in the loft unit. She kept the unit as the address for her bank account. her

health care proxy, and her driver's license, although she paid taxes in Michigan, voted in

Michigan, and had a car registered in Michigan. While she was in Michigan, the tenant leased

out her space as an artist's studio but not for residential use. Mr. Fix, by contrast, had a primary

residence in unit 301 beginning in 2012 which he never effectively altered. His travels and

frequent stays with his girlfriend were not required by his employment. His primary relationship

with unit 310 was to generate income from the subletting of rooms, not as a residence for

himself.

Nor can Mr. Fix avail himself of cases holding that, where tenants are absent from their

rent-regulated spaces for employment reasons, courts have typically not terminated their rent­

regul~ted rights. In Coronet Properties Co. v. Brychova, 122 Misc. 2d 212 (Civ. Ct. of City of

N.Y., N.Y. Co. 1983), a professional singer who spent all but a "handful" of days traveling to

professional engagements was permitted to retain rights to a " rent-regulated apartment in

Manhattan based upon her keeping of her piano and personal belongings in the apartment, her

expressed desire to reside in !be apartment when she stops touring, and the failure of the

landlord's evidence to show that she had any other "principal home." The Court observed,

"Persons engaged in itinerant occupations do not lose their domicile by virtue of their constant

travel." 122 Misc. 2d at 213-14. See Chelsmore Apts., L.L.C. v. Garcia 189 Misc.2d 542 (Civ.

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O. of City of N.Y., N.Y. Co. 2001) (proof that tenant spent much of the year at sea employed as

ship steward but listed the premises on her tax returns and voting records as her residence failed

to show that premises was not her primary residence). There was no indication that Mr. Fix's

wanderings in 2016 to Brazil and Europe were'related to employment, since he himself admitted

that he had no employment "and no source of income except through his renting out of rooms in .

Williamsburg.

Under these circumstances, Mr. Fix failed to prove that he was a residential occupant of

unit 310 either at the time he filed his application or thereafter. He also failed to demo~strate

that unit 310 was his primary residence. On these grounds, I fmd that Mr. Fix's application for

protected occupancy as to unit 310 should be denied.

Mr. Levell- Unit 301

Mr. Levell, who is seeking to be recognized as the protected occupant of unit 301,

testified that he is a certified nurse anesthetist. He began working at Tampa General Hospital in

Tampa, Florida, in. late 2004. Mr. Levell and Mr. Fix grew up together in Tampa. Florida, and

are life-long friends.

Mr. Levell visited Mr. Fix in Brooklyn several times prior to 2012, contemplating

moving to New York to pursue a career as a standup comedian, writer, and artist (Tr. 1548,

1549). In June 2012, Mr. Levell learned from Mr. Fix that he and Mr. Cacossa were going to

lease unit 301 at 151 Kent Avenue and wanted a third roommate. Mr. Levell sent his financial

information to the broker. As a result, a one-year lease (Pet. Exs. Fl, L 7) for unit 301 was issued

on August 7,2012, to Mr. Fix and Mr. Cacossa based upon a guaranty of lease (Resp. Ex. BB)

signed by Mr. Levell.

In mid-June 2012, Mr. Levell put ''90 percent" of his possessions into a U-Haul truck and

moved them to unit 301 (Tr. 1546, 1553-5). He brought a 'couch, a coffee table, antique end

tables, lamps, pain~ings, a dresser, some pots and pans, a toy wooden sailboat his father gave

him, trading cards, a .snowboard, a surf board, tennis rackets, and knick-knacks (Tr. 1554-55).

Mr. Levell left his Tampa apartment empty and has not returned to it since (Tr. 1556), although

he left some of belongings in a V-Haul storage unit m Tampa (Tr. 1556).

Mr. Levell produced a copy of a post he made to Facebook (Pet. Ex. L3) dated August

14, 2012, and showing a U-Hatil trailer. The post stated, "Finally, I will have all of my art to fill

- 20-

out my new loft in Williamsburg, Brooklyn." Other posts from August 2012 show a photo of

unit 301 and a concert in Williamsburg. Still other posts from 2012 through 2015 show various

New York events, including announcement') of Mr. Levell performing in comedy shows.

After 2012, Mr. Levell continued to work at Tampa General Hospital as a nurse, working

for seven days at night and then having two weeks off, when he would travel to Brooklyn (Tr.

1556). Mr. Levell also testified that kept his job in Tampa because he has been caring for his

ailing father in Tampa for several years and needed to travel back to Tampa frequently (Tr.

1812). In December 2014, he became an independent contractor on a per diem basis, scheduling

his work around his need to care for his father in Tampa and his career in New Yark writing and

doing comedy (TI. 1838-40, 2028-29). Mr. Levell had a job in Manhattan for a few months in

2015 (Tr. 2260). Mr. Levell submitted records from Tampa General Hospital showing his work

hours from August 2012 through March 2017 (Pet. Ex. L32).

When Mr. Levell returned to Tampa, he stayed at various places. In 2014, he rented an

apartment near the hospital for several .months (Tr. 1842-43). He also stayed with his sister,

several different friends (Tr. 1842), and more recently with a friend who lives near the hospital

(Tr.1840).

Mr. Levell stated that, in 2014 or 2015, he created a company named Sol Sleep for the

purposes of accepting payments for 1099 consultant work ·CTr. 1667). He submitted Sol Sleep

statements reflecting automatic bill payments to Kent Avenue Holdings, LLC for unit 301 from

November 2014 through May 2016 (Pet. Ex. L9).

Mr. Levell submitted rent checks for $1,500 per month to Kent Avenue Holdings from

August 2012 to October 2014, as well as a check for one-third of the deposit (Pet. Ex. LlO). He

stated that these checks were created electronically on a personal Wells Fargo bank account (Tr.

1645-53). Mr. Levell also produced spreadsheets (pet. Ex. L13) showing the division of utility

expenses between Mr. Fix, Mr. Cacossa, and himself from 2012 through 2015.

Mr. Levell's Sol Sleep bank account was used to make rent payments to Kent Ave

Holdings, LLC from 2014 to July 2016 (Pet. Exs. L22, L60; TI. 1668). Mr. Levell stated that

Ms. Chaouat-Fix did not pay rent until after December 2016, when Mr. Levell began collecting

rent from her (Tr. 1802). Counsel for Mr. Levell also haq admitted, over the owner's objection,

a spreadsheet (Pet. Ex. L60) produced in discovery apparently from the prior net lessee, Kent

Ave Holdings LLC. This spreadsheet, captioned a "transaction listing" for Mr. Fix, showed

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various rent payments for unit 301 by Mr. Fix, Mr. Cacossa, Mr. Levell, Pure House, and Sol

Sleep from August 2012 through December 2015.

Mr. Levell testified that he has had numerous contacts with the buildiIig manager, Mr.

Gross. Mr. Levell produced screenshots of multiple texts (pet. Ex. L17) from 2015 through 2017

between himself and Mr. Gross concerning parking, rent checks, furniture in the hallway, bed

bugs, gas smells~ and gas service (fr. 1679-80). Several of the texts indicate that Mr. Levell was

in Florida or other locations outside New York. Mr. Levell recalled contacting Mr. Gross in

approximately May 2017 concerning leaks in the shower, which the landlord replaced (Tr. 1603,

1608, 1610). Mr. Levell also contacted Mr. Gross several times about the windows leaking, but

nothing was done (Tr. 1633-34).

Mr. Levell testified that he objected to Mr. Fix's and Mr. Cacossa's practice of renting

bedrooms to multiple people. Mr. Cacossa moved out of unit 301 and rented his bedroom to a

man named Tony (fi. 1626). Because of Mr. Levell's objections to this renting of rooms, Mr.

Levell bought out Mr. Cacossa in March 2015 by paying him $16,000 and signing a document

(Pet. Ex. L58) stating that Mr. Cacossa grants "all rights to his room and common areas" to Mr.

Levell (Tr. 1623-24). In the agreement, Mr. Cacossa promised to assist Mr. Levell in

"maintaining possession and control of .the apartment" and "applying for 10ft law." The

agreement stated that if Mr. Levell and his wife "permanently" left the apartment while ~.

Cacossa was still on the lease, Mr. Cacossa could regain possession.

Tony left after March 2016 and Mr. Fix found another subtenant fQr four months. After

this subtenant left, Mr. Levell kept Mr. Cacossa's bedroom vacant and the other roommates used

it for a TV room (fr. 1626-27).

Mr. Levell's wife, Ms. Taylor, testified that she is also a registered nurse. She and Mr.

Levell met in February 2015 when they were both working at Tampa General Hospital (fr.

1893). In May 2015, Ms. Taylor visited Mr. Levell in unit 301 for a long weekend (Tr. 1899).

From July through November 2015, Ms. Taylor obtained a temporary assignment in New York

and rented a room close to 151 Kent Avenue (Tr. 1903-04). During this time, Ms. Taylor spent

three to five nights per week in Mr. Levell's apartment (Tr. 1904, 1950). Ms. Taylor recalled

that, during tl1ese months in 2015, a German couple stayed for a time in one of the bedrooms at

unit 301 using Airbnb (Tr. 1951).

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·After a vacation with Mr. Levell to New Zealand during December 2015, Ms. Taylor

took a five-month nursing assignment in Sarasota, Florida (Tr. 1906-07). During this time, Mr.

Levell stayed with her in Tampa several times (Tr. 1956-57, 1961).

Ms. Taylor and Mr. Levell were married in June 2016 (Tr. 1908). Ms. Taylor then

moved to 151 Kent Avenue, initially getting ajob in New Hampshire and commuting (Tr. 1850-

51, 1908-09). From November 2016 through May 2017, Ms. Taylor worked in Manhattan (Tr.

1910).

Mr. Levell stopped paying rent for unit 301 in May 2017 (Tr. 1605).

Mr. Levell admitted the he has owned other property in Florida. Mr. Levell testified that

he purchased a house for his father in Seminole, Florida; in 2005 where his father lived for about

five years. After his father became too ill to live alone, Mr. Levell stopped paying the mortgage

and this house was foreclosed in 2012 or 2013 (Tr. 1818-20, 1822). The foreclosure was

finalized in 2014 with a: deed in lieu of foreclosure (Pet. Ex. L57; Tr. 1820). Mr. Levell also

owns a rental property in Tampa which he rehabilitated and rented to a friend from 2012 to 2013

(Tr. 1559). In 2012, he kept a bed and dresser there because of his job at Tampa General

Hospital (Tr. 1556-57). When the house was rented to new tenants at some point, he no longer

used the bed (Tr. 1558).

Mr. Levell stated that he began renting out his room in unit 301 in 2012 when he traveled

to Florida. He found renters by "word of mouth," by using Craigslist, and through the assistance

of Mr. Fix (Tr. 2232-33). He stopped renting out the room in 2016 after he got married (Tr.

2234).

Mr. Levell testified that unit 301 at 151 Kent Avenue has been his primary residence

since August 2012 (Tr. 2061). He submitted a large volume (filling two file boxes) of

documents, all showing his address as unit 301 at 151 Kent Avenue: (1) a New York state

driver's license (Pet. Ex. LI2A), issued in November 2016; (2) electric bills from Con Edison

(Pet. Ex. L46) from June 2016 to 2017; (3) his amended 2014 federal tax returns (Pet. Ex.

L15B), submitted in March 2017; (4) 2014 and 2015 federal taxes for Sol Sleep (Pet. Ex. LI5C)

and his 2015, filed in March 2017; (5) his 2015 federal taxes (Pet. Ex. LI5D), dated March 2017;

(6) 2015 federal taxes for Sol Sleep (Pet. Ex. LISE), dated March 2017; (6) his 2016 federal

taxes (Pet. Ex. LI5P), filed in April 2017; (7) 2016 federal taxes for Sol Sleep (Pet. Ex. LI5G),

filed in April 2017; (8) voter's registration (Pet. Ex. L16), effective February 2017; (9) Sprint

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telephone bills (Pet. Ex. LI8) from December 2014 to December 2016; (10) Chase SaP1?hire

credit card bills (pet. Ex. L23A) from AugUst 2014 through June 2016; and (11) Wells Fargo

bank statements (pet. Ex. L27) from May 2014 to January 2017; (12) Dec·ember 2012 through

October 2016 payment and purchase history (Pet. Ex. L41) for Brooklyn gym membership; (13)

August 20161etter (pet. Ex. L50) and September 2016 through February 2017 statements (Pet.

Ex. L44) confirming opening and usage of E-ZPass account.

Other records submitted included 2016 ·and 20i 7 credit card and bank statements (Pet.

Exs. L23B, L21, L22), Florida state confrrmations (pet. Exs. L27, L28) for Mr. Levell's

registration as a nurse dated November 2016, New York. state records (Pet. Exs. L30, L54) for

Mr. Levell's registration as a nurse dated March and April 2017, 2017 auto insurance statements

and auto title (Pet. Exs. lA7, L48, IA9, L51), 2014-.2016 health and disability insurance

statements (Pet. Exs. L53, 1A5, L52), a 2015 statement of homeowner's insurance (Pet. Ex. L56)

for Tampa house, arid 2015 IRS 1099 statements (Pet. Ex. L42).

Some documents submitted by Mr. Levell still had Florida addresses. Mr. Levell

submitted a Florida driver's license (Pet. Ex. "L12B), issued in .2010, giving his address as his

rental property in Tampa. Ms. Taylor indicated that in 2016 she had her W-2 fonns from her

New Hampshire employer sent to Mr. Levell's rental house in Tampa err. 1987). Mr. Levell's

American Express credit card bills (Pet. Ex. L19) from September 2012 to January 2017 give ~s

address as a post office box in Tampa: Mr. Levell stated that these bills, like his Sprint and

Verizon bills, were received electronically (Tr. 1742). Mr. Levell's Delta credit card bills (Pet.

Ex. L20) from September 2012 through December 2014 give his address as the rental property in

Tampa. On a Florida county government website, Mr. Levell is shown as claiming a homestead

exemption for his rental property in Tampa (Resp. Ex. CC; Tr. 2221-29) .

. Mr. Levell's 2013 tax returns (pet. Ex. LI5A) were not provided in pretrial discovery to

the owner's counsel and were therefore . precluded (Tr. 1706-08). Mr. Levell indicated·on his

2014 and ·2015 tax returns that his residence is Brooklyn and he deducted his travel expenses to

and from Florida as busiriess expenses (TI. 2296).

The proofs offered by Mr. Levell convincingly established that he moved into unit 301 in

August 2012. Mr. Levell p~~duced Facebook postings commemorating his move, checks

showing rent payments, and boxes of documents showing his address as unit 301.

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The protected occupancy analysis for Mr. Levell, who was not a prime lessee of unit 301,

is simpler than that of Mr. Fix or Mr. Sarig. Since neither Mr. Fix nor Mr. Cacossa, the prime

lessees of unit 301, were seeking protected rights, Mr. Levell can be a protected occupant if he

can establish that he was a "statutory tenant who took possession with the consent of the

landlord." Under the Loft Board rules, a landlord is defined as "the owner of an ... IN.1D, the

lessee of a whole building, part of which contains IMD units, or the agent, executor, assignee of

rents, receiver, trustee, or other person having direct or indirect control of such dwelling." 29

RCNY § 2-04(a) (Lexis 2017). In this case, as of the time that the 2012 lease was issued to Mr.

Fix and Mr. Cacossa for unit 301, the landlord of the building was Kent Ave Holdings, LLC.

The landlord's building manager was Mr. Gross.

Mr. Levell submitted proof that Kent Ave Holdings, LLC was aware of his occupancy of

unit 301. Mr. Levell signed a guaranty to cover the rent for unit 301 in case of default by Mr.

Fix or Mr. Cacossa. It is fair to infer that the landlord was aware that Mr. Levell was willing to

make this guaranty because he also planned to occupy unit 301. Mr. Levell's bank records show

that, beginning in 2012, he paid one-third his share of the rent for unit 301 directly to Kent Ave

Holdings, LLC. After the expiration of the unit 301 lease in August 2015, the landlord continued

to accept a third of the rent from Mr. Levell and, beginning in March 2016, accepted the entire

rent. Mr. Levell testified credibly that he often communicated with Mr. Gross about problems in

the building and that Mr. Gross referred to him as a tenant. Mr. Levell supplied a lengthy string

of text messages eXChanged between the two about parking spaces and tenants leaving furniture

in hallways.

Under prior precedent, the circumstances of Mr. Levell's occupancy establish that he was

in possession of unit 301 with the consent of the landlord. Factors in determining consent

include "whether: 1) an owner has accepted rent directly from the residential occupant; 2) the

owner has started eviction proceedings against the residential occupant for failure to pay rent;

andlor 3) the owner has had direct cOIitact with the tenant seeking Article 7-C protection about

building issues."Matter of Fogel, Loft Bd. Order No. 3550 at 2 (Jan. 21, 2010). In Fogel, the

Board found that the owner gave implied consent to the occupant as a statutory tenant because

the owner accepted the tenant's portion of the rent directly from the tenant for five years and bad

direct contact with the tenant regarding building issues. Id., at 3. See also Matter of 400 West

14th Street Tenants' Committee, Loft Bd. Order No. 1554, 14 Loft. Bd. Rptr. 332, 348 (May 4,

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1994) (consent established by payment of rent directly to the owner for three ' years, direct

dealings with ' the owner regarding repairs; and appearance in litigation with other residential

tenants of the building).

I find that Mr. Levell's payment of rent directly to the landlord from August 2012

through January 2017, combined with the extensive communications between Mr. Levell and

Mr. Gross, establish consent to Mr. Levell's occupancy as a tenant. On this basis, Mr. Levell

should be found to be a protected occupant of unit 301 and his application for protected

occupancy should be granted.

Mr. Sari!! - Unit 302

Mr. Sarig testified that he moved from Israel to New York City in 2007 (Tr. 1181). In

2009, he purchased a studio coop apartment on East 37th Street, where he resided for several

ye~s (Tr. 52; Pet. Ex. S7). In June 2012,Mr. Sarig married, and, in December 2012, he and his

wife had a daughter (p. Sarig: Tr. 1444) .

. Mr. Sarig stated that prior to 2013 he visited friends at 151 Kent Avenue ~everal times.

In early August 2013, one friend, Mr. Fix, who occupied unit 301, told Mr. Sarig that unit 302

was "on the market" (Tr. 45). Mr. Sarig stated that these units are rarely~)fl the market because it

is such an "amazing area" (Tr. 45). The day after speaking with MI. Fix, Mr. Sarig went to unit

302 with Mr. Fix and was "excited" (Tr. 45). The unit had a large open area with a kitchen and

living room, three side-by-side rooms with lofts which could be used as bedrooms, and a small

bathroom and shower (Tr. 49; Pet. Ex. S 1). He spoke to his wife about this "incredible

opportunity" and about how it would be a "great place for our daughter to grow up" (Tr. 46). At

the same time, Mr, Sarig found that the unit was "a little run down," although with "tons of

potential" (Tr. 47): Mr. Sarig also observed that the rent was ''too high for us to afford" and the

four flights of stairs would be impossible for their daughter, who was ' eight months old, to climb

(Tr. 46). Mr. Fix offered a solution to these reservations by offering to sublease the unit "until

we felt we were ready to move in" (Tr. 46-47).

On August 15,2013, Mr. Sarig entered into a two-year lease (pet. Ex. S3) with Kent Ave

Holdings, ric for unit 302 to be used "as [his] .primary residence" (Tr. 42-43). The monthly

rent was $4,200 and Mr. Sarig testified that he paid both the first month's rent and a $4,200

security deposit (Tr. 268,274). Mr. Sarig testified that, the week after signing the lease, he met

- 26-

with Mr. Gross, the landlord's manager, and told Mr. Gross that he would be subletting the unit

through Mr. Fix (Tr. 269-70).

Mr. Sarig spent a day cleaning and fixing up the apartment (Tr. 48). He then relied upon

Mr. Fix to collect rent from a series of roommates who used to pay the rent for unit 302 (Tr. 52).

According to Mr. Fix, he collected "different amounts at different times" for the three rooms in

unit 302, with the average rent exceeding the total $4,200 rent being paid. Mr. Fix insisted that

there were no profits on the unit due to the extra utility expenses and cleaning expenses (Tr. 732-

34). At some point, Mr. Fix took over paying the utilities directly because the system of having

Mr. Fix reimburse Mr. Sarig for utility payments "wasn't working" (Tr. 1257).

In February 2014, the Sarigs moved to an apartment in Jersey City for $3,100 per month

(Tc 55). It contained two bedrooms, one of which was used as an office for a new business

venture called Mohawk (Tr. 315-16). The lease (Pet. Ex. S4)to Mr. Sarig was from March 20,

2014, to April 3D, 2015. He renewed the lease in both his and his wife's names through April

30, 2016, for $3,175 per month (Tr. 60-61; Pet. Ex. S5). Mr. Sarig tried to rent out the East 37th

Street coop but could not due to the coop rules. He therefore sold the coop apartment in March

2015 (Tr. 59; Pet. Ex. SIS).

In approximately 2014, Mr. Sarig moved his Mohawk operations to offices at 18th Street

near Union Square (Tr. 1195).

In August of 2015, when the lease on unit 302 expired, Mr. Sarig did not request that the

lease be renewed, although he continued to pay rent (Tr. 1262). Mr. Sarig understood that, when

the lease for 302 expired, he became a month-to-month tenant (Tr. 278).

The Sarigs found New Jersey "isolated" and no longer a "good place." Their daughter

was also older and could now walk up and down stairs. When the lease on the Jersey City

apartment expired on April 30, 2016, they decided to move into 151 Kent Avenue (Tr. 62). At

this time, unit 302 was occupied by one female roommate, paying $1,750 per month, and Mr.

Sarig permitted her to remain until September 2016 (Tr. 62-63,331-32, 337). Since December

2016, Mr. Sarig has had another female roommate in the third bedroom paying $1,200 per

month, which Mr. Sarig thought was "fair" (Tr. 41, 86-87, 337). This roommate left in April

2017, apparently as a result of being subpoenaed to testify in the OATH trial, and the Sarigs are

in the process of fmding anotherroonunate (Tr. 1316).

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Mr. Sarig indicated that he sleeps "four or five nights" per week, or maybe less, at 151

Kent Avenue because he works late hours and sleeps in his office "nap .pod" or in a hotel (Tr.

1200-02). Mr. Sarig's credit card bills (Pet. Ex. Sll) reflect charges at various Manhattan hotels

in February, March, and April 2017 (Tr. 1207-08). Mr. Sarig was aware of "protected

occupancy" prior to 2016 but only realized he was "eligible" afteJ: he moved into unit 302 in

2016 (Tr. 1331-32).

Like Mr. Levell, MI. Sarig stated that he stopped paYmg rent in approximately April

2017 (Tr. 1316-17).·

Mrs. Sarig confirmed that she, her husband, and daughter moved from Jersey City to unit

302 at 1St Kent Avenue on April 29, 2016 (Tr. 1421) .. She used a company called Official

Movers that she found on the internet (Tr. 1423) and paid the fee in cash (Tr. 1496). She also

identified photos of her family's furniture, clothing, and other belongings in ihe unit (Tr. 1428-

34). She stated that her daughter was emolled in preschool at Bright Horizons on Kent Avenue

bn May 2, 2016 (Tr. 1434). She also recalled finding a·new roommate using a website called

Spare Room (Tr. 1489-90).

The mother of a classmate of Mr. Sarig's daughter confirmed that she met Mrs. Sarig and

her daughter in July of2016 and that her own daughter played with the Sarigs' daughter at their

apartment at 151 Kent Avenue (Tr. 115-16).

Another male friend of Mr. Sarig recalled that Mr: Sarig moved from Jersey City to 151

Kent Avenue because it. was closer to Mr. Sarig's office and the neighborhood was "child

friendly" and had excellent schools. He visited the Sarigs at 151 Kent Avenue on Mr. Sarig's

birthday, May 7, the week after they moved in (Tr. 152-53).

In 'support of his testimony that he moved into unit 302 around May 1, 2016, Mr. Sarig

produced a photocopy of an Order for Service Job (Pet. Ex. S12) dated April 26, 2016, from

Official Movers for $285 for estimated volume of 850 cubic feet of items to be moved on April

29,2016. Mr. Sarig recalled that the [mal m~)Ving bill came to around $800 (Tr. 358). Mr. Sarig

indicated that much of the furniture at the Jersey City apartment was given away on Craigslist

(Tr.361).

Mr .. Sarig presented a letter (Pet. Ex. S6) from the Jersey City landlord, dated March 14,

2016, and addressed to Mr. and Mrs. Sarig ~t 151 Kent Avenue, stating that Mr. Sarig vacated

his apartment on "April 30,2016," and providing an accounting of a security deposit. Mr. Sarig

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also presented a series of e-mails (Pet. Ex. S32) regarding his security deposit, beginning on June

21, 20i6, when Mr. Sarig asked where his security deposit was and the landlord replied that the

deposit check had been sent to Mr. Sarig "to the address you've provided at move out more than

1 month ago."

Mr. Sarig presented a series of photographs of his wife, his daughter, and him in the unit

(Pet. Ex. S2), all taken after May 1, 2016 (Tr. 94). Mr. Sarig presented a billing statement (Pet.

Ex. S28) from Bright Horizons which Mr. Sarig indicated was a preschool for his daughter, Eva

(Tr. 1343). Tbe statement shows that the Sarigs paid tuition for Eva from June I, 2016, through

January 30, 2017.

Mr. Sarig produced the following documents showing his andlor his wife's address as

unit 302 at 151 Kent Avenue: (1) National Grid bills from Jaimary to March 2017 (Pet. Ex. SlO);

(2) 2015 federal tax returns (Pet. Ex. SI6C); (3) 2016 W-2 forms (Pet. Ex. SI8); (4) March 2017

personal data statement for a Trinet passport (Pet. Ex. S21); (5) August 2016 thro~gh January

2017 bank statements (Pet. Ex. S22); (6) January 2017 Verizon bill (Pet. Ex. S23); (7) undated

Visa prepaid card statement (Pet. Ex. S24); (8) Mrs. Sarig's 2016 W-2 form (Pet. Ex. S25); (9)

Mrs. Sarig's driver's permit issued in October 2016 (Pet. Ex. S26; Tr. 1442, 1504); (10)

February 2017 Bright Horizons tuition statement (Pet. Ex. S27); (11) May 2016 through January

2017 Bright Horizons. account summary (Pet. Ex. S28); (12) a transaction listing from the

landlord for Mr. Sarig showing. rent received of $4,200 per month from August 2013 through

January 2017 (pet. Ex. S31).

Mr. Sarig stated that he receives electronic bank and credit card statements and changed

his mailing address on only one of these accounts (Tr. 202-03; Pet. Exs. S11, S22). He changed

the address for his bank account to 151 Kent Avenue in August 2016 (Tr. 1334; Pet. Ex. S22).

He did not change the address on his American Express credit card until just before the April

2017 trial (Tr. 1341) and never changed the address on his Jet Blue credit card or on his Verizon

account (Tr. 1335, 1338). Mr. Sarig has an Israeli driver's license with an address in Israel on it

(Tr. 218; Pet. Ex. S33). As a prime lessee who was issued a lease after the effective date of the

law in 2010 and is currently in occupancy, Mr. Sarig qualifies as the protected occupant under 29

RCNY section 2-09(b)(3). See Matter of Bradfield, Loft Bd. Order No. 2845 (Feb. 29, 2004)

("[I]ssuance of a post-June 21, 1982, lease ... will confer Article 7-C protection of the

residential occupant of an IMD unit.").

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Under the recent Loft ~oard precedent, as the prime lessee of unit 302, Mr. Sarig must

also establish he is the ies~dential occupant and ~hat the unit is his primary residence. Mr. and

Mrs. Sarig's testimony and documentation established the following fundam~nta1, generally

uncontested, facts. Mr. Sarig leased unit 302 in August 2013, allegedly with the intention of

later. residing there, but immediately arranged with Mr. Fix to lease out rooms to short-term

guests to cover the monthly rent. At the time he continued to reside with his wife and infant

daughter in a studio apartment in Gramercy. He later moved to a tw.o-bedroom apartment in

Jersey City, New Jersey, where he was resi4ing in ~ugust 2015 when his lease for unit 302

expired. Some eight months later, in late April 2016, the Jersey City lease expired and Mr.

Sarig. his wife, and daughter moved into unit 302. The move is documented by the Jersey City

lease, showing that it expired in April 2016, by the quote from the movers, and by the preschool

statements (Pet. Ex. S28) showing an account was opened in May 2016.

Furthennore. Mr. Sarig's proofs established that, as of May 1. 2016, approxiinately a

month and one-half before the protected occupancy application was filed, Mr. Sarig and his wife

made unit 302 th~ir primary residence. A large number of 2016 documents with the address of

unit 302 support this finding: August 2016 through January 2017 bank statements .(Pet. Ex. S22),

Mrs. Sarig's October 2016 driver's permit (Pet. Ex. S26), and May 2016 through February 2017

preschool statements (Pet. Exs. 827. S28). Other documents from 2017 also confmn that unit

302 was the Sarigs' primary residence, including utility records (Pet. EX. SlO), 2016 W-2 forms

(Pet. Ex. SI8). federal tax returns for 2015 (pet. Ex. SI6C). and Vemon bills (Pet. Ex. S23). As

to the other accounts which retained the Jersey City address, I found credible Mr. Sarig's

explanation that his bills and statements were all delivered electronic~y through e-mail or

online notifications and that he felt little need to change his mailing address on all of his

accounts.

It is true that, like Mr. Fix, Mr. Sarig might have been vulnerable to a lan.dlord holdover

action for non-primary residence prior to May 2016 . . However, unlike Mr. Fix, Mr. Sarig

provided credible proof that he let his prior lease ·expire, moved all of his furniture and

belongings out of his former residence, and immediately began to sleep overnight in unit 302

with his wife and daughter. Furthermore, prior to April or May 2016, it would appear that Mr.

Sarig was unaware that unit 302 was rent-regulated.

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Based upon this evidence, I find that, as of June 10, 2016, when the Loft Board

applications were filed, Mr. Sarig's primary residence was unit 302. Furthermore, as the prime

lessee of unit 302 since 2013, he was the residential occupant qualified to protection and his

protected occupancy application should also be granted.

Commercial Use of the Units

Counsel for the current landlord and owner contends that, even assuming that Mr. Fix and

Mr.Sarig satisfy the requirements for protection under the applicable Loft Board rules, their

rights cannot be recognized ,because they participated in a commercial enterprise of renting out

rooms to temporary occupants for profit. The owner contends that these two applicants

participated in a commercial enterprise by cooperating and profiteering from Mr. Fix's curating

of rooms using his company Pure House. According to the tax returns (Pet. Exs. F3 and FlO)

supplied by Mr. Fix, Pure House generated gross income of $1,300,000 between January 1,

2013, and Decemper 31, 2014.

In propounding this argument, the owner relies upon the case of BFL Realty Holding

Corp. v. Kasher, 299 A.D.2d 87 (1 st Dep't 2002). In BFL Realty, the landlord of an IMD

building sought to terminate the tenancy of a loft tenant who divided his unit and sublet a portion

of his space to another subtenant for three times the amount of rent being paid for the entire unit.

The First Department held that a protected loft tenant, like a rent-stabilized tenant, was subject to

eviction for charging a roommate in excess of a proportionate share of the total rent. The Court

held that rent profiteering, under either rent stabilization or the Loft Law, constitutes "an

incurable ground for eviction." 299 A.D.2d at 93.

More recent cases support the proposition that rent-regulated tenants who knowingly

profiteer by renting rooms for short-term guests may lose their rights to rent regulation. In

Goldstein v. Lipetz, 150 A.D.3d 562 (1 st Dep't 2017), a tenant rented out a room in her rent­

stabilized apartment on Airbnb for 338 nights over the course of 18 months, collecting 72 per

cent more than she paid her landlord in rent. In granting summary judgment for the landlord, the

Court held that the tenant's profiteering made her subject to "eviction without any right to cure,

as a matter of law." 150 A.D.3d at 570. The Court also observed that trapsient Alrbnb guests

were not legal roommates but subtenants, rent for whom was subject to the ten per cent

subletting limit under the Rent Stabilization Code, 9 NYCRR § 2525.6(b). 150 A.D.3d at 565.

-31-

In the instant case, however, there is no evidence that either of the applicants who

obtained leases to units at 151 Kent Avenue between 2012 and 2014 w~re aware that the units

were rent-regulated IMD units. The rents for units 301, 302, arid 310 were likely close to the

market rent at the time, $4,500, $4,200, and $5,500 respectively. The three lease agreements for

these units stated that the units must be-the tenants' primary residence but made no mention of

either the Loft Law or rent regulation. There was no indication that Mr. Gross or anyone else

ever told the tenants about the Loft Law. The record suggests that it was not until sometime in

the spring of 2016 that the tenants of the building realized that 151 Kent Avenue was a registered

IMD building and that their units were rent regulated. Thus, the facts of BLF Realty are

djstinguishable from those of the · instant case in that, in BLF Realty, the protected 10ft tenant

knowingly profiteered by collecting three times the rent-regulated rent from various roommates

while paying only the regulated rent to the landlord.

In addition, unlike the landlord in BLF Realty, the landlord in this case, Kent Ave

Holdings, LLC, . abetted and profited from the tenants' renting out of rooms by itself collecting

the relatively high rents being charged! According to the unrebutted and credible testimony of

Mr. Fix, the net lessee and its building manager Mr. Gross assisted in creating additional rooms

in some of the units and generally turned a blind eye to the room-letting practices. The language

in the leases requiring that the units be the lessees' primary residence was clearly ignored, since

multiple leases were issued to Mr. Fix. The only conclusion possible is that the net lessee, who

was aware of the rent-regulated status of the units, was primarily responsible for any profiteering

which occurred in the collection of the rents.

For these reasons, the owner's efforts to deny protection on the basis of the charging of

illegal rents must be rejected.

Rent Adjustment

As protected occupants, both Mr. Levell and Mr. Sarig would be entitled to rent

adjustments as to the legal regulated rent for their units. Pursuant to MDL section 286(2)(i), the

rents for an IMD covered by the 2010 law are frozen as of the effective date of June 21, 2010.

The Loft · Board rules· provide· that, for these .buildings, the legal rent is "the rent, including

escalators [other than use-based escalators or garbage escalators], specified in the lease or rental

- 32-

agreement in effect on June 21, 2010, paid by the tenant pursuant to said lease or rental

agreement." 29 RCNY § 2-06.2(b)(4)(i).

As proof of the 2010 rent for unit 301, counsel for Mr. Levell offered the fIrSt page of a

2008-2009 form lease (Pet. Ex. L59) for unit 301 to a tenant named Niv-Ron for $3,461 per

month. Although counsel for the owner objected to this document on foundation grounds, this

objection was overruled because the document was produced by the owner in response to a

discovery demand for prior leases (Tr. 2384-87). It is illogical for the owner,_ having produced a

record from its own files, to object to the record at trial on grounds of authenticity, whi1e offering

no proof to suggest that the document is not what it appears to be.

As proof of the 2010 rent for unit 302, counsel offered a 2009-2010 lease (Pet. Ex. S29)

dated July 31, 2009, indicating that the rent at that time was $3,000 per month. The only lease

offered for unit 310 was Mr. Fix's 2014 lease.

Based upon these two leases, the legal regulated rent for unit 301, as of June 21, 2010,

should be $3,461 and the legal rent for unit 302 should be $3,000. In a post-trial telephone

conference call, initiated at the request of this tribunal, the owner's attorney indicated that the

only legalization ac(ions taken by the owner has been the filing of an alteration application in

February 2017. With the filing of this application, the owner was eligible fm a three per cent

increase pursuant to MDL section 286(2)(ii)(A), bringing the current legal rents for units 301 and

302 to $3,564.83 and $3,090 as of March 1,2017.

In addition to a finding of the legal rent, Mr. Levell and Mr. Sarig seek overcharges of

rent paid in excess of the legal rent. Pursuant to 29 RCNY section 1-06.1(c), the amount of an

overcharge is limited to the four years preceding the filing of the rent adjustment application,

which was filed here in June 2016. The Loft Board has held that the calculation of overcharges

should be based upon the difference between the total rent paid and the aggregate amount of the

maximum legal rent. Matter of Solomon, OATH Index No. 560/07 (Jan. 31, 2007), adopted in

part, rejected in part, Loft Bd. Order No. 3452 (July 17, 2008).

The total rent paid must be established through the tenant's cancelled checks and bank

statements. Matter oj Maugenest, Loft Bd. Order No. 3118 (Nov. 16, 2008). The Loft Board

does not have jurisdiction to consider security deposits as part of a rent · overcharge application.

See Matter ojChantrtanapichate, OATH Index No. 0031/17 (Aug. 17,2017); Matter of Erben,

Loft Bd. Order No. 1967 at 16 (May t 6, 1996) ("The Board lacks the jurisdiction to direct the

- 33 -

reimbursement of any secunty deposit overpayment, becau~e the Loft Board's rules do not

govern the administration of security deposits."); Matter of Vigil, Loft Bd. Order No. 1312 at 10

(Feb. 27, 1992) ("The Board lacks jUrisdiction to direct the adjustment of any further

overcharges based on [tenant's] security deposit as Loft :ijoard regulations do not govern the

administration of security deposits."); Matter of Colbert, Loft Bd. Order No. 609 at 2 (June 17,

1987) ("[N]eitner Article 7-C nor the Board's regulations make any mention of security deposits

... The security deposit .. : issue [is] therefore outside the Board's jurisdiction and the

subtenant's remedy must.lie in Housing Court").

Mr. Levell submitted both personal and Sol Sleep bank records (Pet. Exs. L22, L27) and

also 'cancelled checks and automatic bill payment records (Pet. Exs. L9, L10) showing that he

paid rent of $1,500 per month for a total of $64,500 for the 43 months from August 2012 through

February 2016 and payments of $4,500 fOl: the 11 months from March 2016 through January

2017 for a total of $49,500, making a grand total for of rent paid from August 2012 through

January 2017, $114,000. According to Loft Board precedent, Mr. Levell's portion ofthe $4,500

security deposit paid- to Mr. Fix in August 2012 cannot be included in a rent adjustment

overcharge.

During the first 43-month period, the maximum legal rent of $1,153.67 per month (one­

tllird of the total rent of $3,461) would have been $49,607.81. During the second ll-month

period from March 2016 through January 2017, after Mr. Levell began paying all of the rent for

unit 301, the legal rent would have been $38,071, making a grand total of legal rent due of

$87,678.81. The amount of overcharges for Mr. Levell would therefore be $26,321.19.

According to Mr. Sarig's bank records (Pet. Ex. S22) and the landlord's rent records (pet.

Ex. S31) submitted here, the total rent paid by Mr. Sarig from August 20132 through January

2017 was $4,200 per month, for a total of $176,400. The legal rent for this 42-month period

would have been $126,000. The security deposit which Mr. Sarig paid in August 2013, as

2 Accoiding to Mr. Sarig's testimony, he paid half a month's rent, or $2,100, for the month of August, plus a security deposit of $4,200 (fr. 284-85, 1367-68). These amounts are not reflected, however, in the heavily redacted bank statements (Pet. Ex. S22), whic~ were provided to respondent's cOQnsel in discovery and which were offered into evidence at trial (Tr. 1356-70). The bank statements offered contain only one unredacted transaction for August 2013 - a mortgage payme~t on Mr. Sarig's coop apartment. Because the unredacted August 2013 statements were never provided in discovery or during the multiple days of trial, and appeared for the frrst time on the sixth trial day of May 2,2017, they were preclilded as caUsing unfair prejudice to respondent's counsel, who had repeatedly objected to the redaction as limiting his ability to prepare for trial and cross-examine witnesses. See Human

_ Resources Admin. v. Ltvitant, OATH Index No. 397/04 at 3-4 (Sept. 7, 2004), aff'd, NYC Civ_ Servo Comm'n Item No.CD06-59 (May 2, 2006) (documents deliberately withheld in pretrial discovery precluded at trial).

- 34-

reflected in Mr. Sarig's testimony and in the landlord's rent history, cannot be included in the

amount of an overcharge according to the prior Loft Board cases cited above. The difference

between the rent paid for unit 302 and the legal rent as of January 2017 is $50,400.

The owner contends that Mr. Sarig, who collected the rent far in excess of the legal rent

from subtenants or roommates with the assistance of Mr. Fix, cannot collect overcharges

because, in fact, he was collecting more rent than he paid. Indeed, Mr. Sarig's bank statements

show that Pure House deposited to Mr. Sarigis bank account a total of $163,800 from August

2013 through February 2016. The legal maximum rent for this twenty-nine and one-half month

period would have been $91,500, meaning that Mr. Sarig collected some 56 per cent more than

the tota1legal rent.

In Matter of Andrew Bradfield, ac, OATH Index No. 1345/03 (Nov. 18,2003), adopted

in part, modified in part, Loft Bd. Order No. 2845 (Feb. 19,2004), the Board declined to permit

offset of an overcharge $35,169 by $10,500 collected from a subtenant. In Matter of Klein,

OATH Index No. 300/06 (May 3, 2006), adopted, Loft Bd. Order No. 3460 (Oct. 16,2008),

Judge Casey and the Board rejected an owner's argument that rents paid by subtenants or

roommates, representing less than half of the total rent, should be offset against an overcharge.

Notably, in Klein, Judge Casey noted that the amount of the subtenants' rent did not violate the

Loft Board rule that protected occupants cannot charge subtenants more than the legal rent for

the unit, plus a ten per cent surcharge if the unit is furnished. 29 RCNY § 2-09(c)(4)(ii)(A).

I agree with the owner that Mr. Sarig should not be able to collect overcharges for the

period from August 2013 to April 2016. During this period, he was not, in fact, a residential

occupant entitled to protection because he had never live~ in the unit. Moreover, he himself was

collecting rent in excess of what the legal rent would have been. Mr. Sarig should, however, be

entitled to overcharges for the nine months from May 2016 through January 2017 when he paid

rent of $37,800 even though the legal rent should have been $27,000. For this period, Mr. Sarig

is entitled to overcharges of $10,800.

I note that Mr. Levell, too, collected rent from Mr. Fix and later from Ms. Chaouat-Fix

for unit 301 after March 2016, when he began paying the entire $4,500 monthly rent to the

landlord. From March 2016 through.January 2017, Mr. Levell's Sol Sleep statements (Pet. Ex.

S22) show that he received approximately $2.250 per month from Mr. Fix's company Pure

Project. Ms. Chaouat-Fix also indicated that, as -of March 2017, she was paying Mr. Levell

- 35 -

$1,000 in rent. Under Alulrew Bradfield, ILC and Klein, these amounts, which were collected

at a time Mr. Levell was in occupancy and were for substantially less than the total rent, should

not be used to offset the overcharges owed.

In sum, I recommend that the protected occupancy and rent adjustment applications of

Mr. Levell and Mr. Sarig be granted, that they be found the protected occupants of units 301 and

302. that their legal rents be set at $3,564.83 and $3,090 as of March 1,2017, and thatMr. Levell

IS entitled to rent overcharges of $26,321.19 while Mi. Sarig is entitled to rent overcharges of

$10,800. I recommend that the protected occupancy aqd rent adjustment applications of Mr. Fix

b~ denied.

November 22, 2017

SUBMlTI'ED TO;

RICKD. CHANDLER, P.E. Commissioner

APPEARANCES:

WEEN & KOZEK, PLLC Attorneys for Petitioners BY: MICHAEL P. KOZEK, ESQ.

ROSENBERG & ESTIS, P.C. Attorneys for Respondent BY: JASON R. DAVIDSON, ESQ~

RYAN FIX ProSe

~.

NOTICE

A party aggrieved by a determination of the Loft Board may file an application for reconsideration of the determination. Under 29 RCNY § 1-07(b), an aggrieved party must serve the reconsideration application on the affected parties to the prior proceeding. Service of the application shall be completed in accordance with 29 RCNY § 1-06. The aggrieved party must then file the application at the Loft Board's office along with proof of service and the required application fee. Under section 1-07(b), U(t)o be considered timely, a complete reconsideration application must be received by the Loft Board within 30 calendar days after the mailing date of the determination sought to be reconsidered."

Pursuant to 29 RCNY §1-07(d):

A Loft Board determination pursuant to section 1-06 if these rules shall be the final agency determination for the purpose of judicial review, unless a timely application for reconsideration of the determination has been filed. In such case, (i) if the Loft Board modifies or revokes the underlying order, such revocation or modification shall be deemed the final agency determination from which judicial review may be sought; (ii) if the Loft Board denies the reconsideration application, the underlying order shall be deemed the final agency determination; and (iii) if the Loft Board decided the reconsideration application by remanding the matter to the hearing officer for further proceeding, neither the underlying order nor the remand order shall constitute a final agency determination, and no judicial review may be sought until such time as the Loft Board issues a final agency determination following the remand .