SRI Eleven 1407 Broadway Operator LLC v. Mega Wear Inc.

71 Misc.3d 779

144 N.Y.S.3d 289

SRI ELEVEN 1407 BROADWAY OPERATOR LLC, Petitioner,

v.MEGA WEAR INC., Respondent-Tenant,

Sun's Global Trading Inc. and XYZ Corp., Respondents-Undertenants.

301049-20/NY

Civil Court, City of New York.

Decided on March 3, 2021

Law Offices of Kenneth Lieblich, New York City, for Mega Wear Inc., respondent.

Rosenberg & Estis, P.C., New York City (Jason R. Davidson of counsel), for SRI Eleven 1407 Broadway Operator LLC, petitioner.

Richard Tsai, J.

In this holdover proceeding involving a commercial tenancy, respondent Mega Wear Inc. brings a pre-answer motion to dismiss this summary proceeding on the grounds that the proceeding was commenced in violation of Governor Andrew M. Cuomo's Executive Orders 202.28, 202.48, and 202.57, issued in response to the COVID-19 pandemic, which, among other things, bar the initiation of any proceeding or enforcement of an eviction for nonpayment of rent of a commercial tenant facing financial hardship due to the COVID-19 pandemic. Petitioner SRI Eleven 1407 Broadway Operator LLC opposes the motion, arguing that those executive orders do not apply to commercial holdover proceedings.

The issue presented is whether the moratorium on evictions of commercial tenants contained in Executive Orders 202.28 and 202.48 (as continued by Executive Order 202.57) (collectively, the Executive Orders) applies to commercial holdover proceedings, where the expiration of the commercial lease was pursuant to a conditional limitation based on the nonpayment of rent. Respondent's pre-answer motion to dismiss also presents difficult and novel questions as to how an alleged violation of the Executive Orders would fit into the procedural framework of the Civil Practice Law and Rules and into the substantive framework of summary proceedings under Article 7 of the Real Property Actions and Proceedings Law.

I.

According to the petition, petitioner SRI Eleven 1407 Broadway Operator LLC (Landlord) is the landlord of commercial space designated as Suites 2301 and 2300 on the 23rd floor of the building located at 1407 Broadway in Manhattan (the Premises) (see Respondent's exhibit A in support of motion, petition ¶¶ 1-2). Respondent Mega Wear Inc. (Tenant) allegedly entered into a written lease with petitioner, under which Tenant agreed to pay rent for the Premises at the rate of $25,345.25 per month (id. ¶¶ 2, 11). Respondents Sun's Global Trading Inc. and "XYZ Corp." are alleged undertenants, and they have not appeared (id. ¶ 3).

Termination of the Lease

By a "Five (5) Day Notice to Tenant" dated July 7, 2020, Landlord notified Tenant that the lease will be terminated, effective July 15, 2020, "based upon Tenant's failure to pay the Arrears [i.e. rent and additional rent]," as required under the lease (Tenant's exhibit A in support of motion, exhibit B to holdover petition at 5).

Executive Orders and Administrative Orders issued during the COVID-19 pandemic

Meanwhile, on March 7, 2020, in response to the COVID-19 pandemic, Governor Cuomo had declared a disaster emergency in the State of New York pursuant to Executive Order 202 ( 9 NYCRR 8.202 ), and issued additional executive orders to deal with the pandemic. Executive Order 202.8, which was issued on March 20, 2020, provides, in relevant part, "There shall be no enforcement of either an eviction of any tenant residential or commercial, or a foreclosure of any residential or commercial property for a period of ninety days [i.e., until June 18, 2020]" ( 9 NYCRR 8.202.8 ).

The court system also issued a series of administrative orders to deal with the COVID-19 pandemic.

On March 17, 2020, Chief Judge Janet DiFiore issued Administrative Order AO/3/20, which determined that trial courts "shall remain open to handle all essential matters and that the handling of non-essential matters will be postponed to the foreseeable future ..." (http://nycourts.gov/whatsnew/pdf/AO-3-20.pdf [accessed 2/26/2021]). On March 22, 2020, Chief Administrative Judge Lawrence Marks issued Administrative Order AO/78/20, which directed that, "effective immediately and until further order, no papers shall be accepted for filing by a county clerk or a court in any matter of a type not included on the list of essential matters attached as Exh. A. This directive applies to both paper and electronic filings" (http://nycourts.gov/whatsnew/pdf/AO-78-20.pdf [accessed 2/26/2021]). On April 8, 2020, Administrative Order AO/85/20 continued the ban on filings in non-essential matters, stating, "No new nonessential maters may be filed until further notice; nor may additional papers be filed by parties in nonessential matters" (http://nycourts.gov/whatsnew/pdf/AO-85-20.pdf [accessed 2/26/2021]). On May 1, 2020, Administrative Order AO/87/20 authorized the filing of, among other things, motions and cross motions in pending matters, effective May 4, 2020 (http://nycourts.gov/whatsnew/pdf/AO-87-20.pdf [accessed 3/1/2021]).

On May 7, 2020, Governor Cuomo issued Executive Order 202.28, which states, in relevant part,

"There shall be no initiation of a proceeding or enforcement of either an eviction of any residential or commercial tenant, for nonpayment of rent or a foreclosure of any residential or commercial mortgage, for nonpayment of such mortgage, owned or rented by someone that is eligible for unemployment insurance or benefits under state or federal law or otherwise facing financial hardship due to the COVID-19 pandemic for a period of sixty days beginning on June 20, 2020 [i.e., until August 19, 2020]"

( 9 NYCRR 8.202.28 ). On July 6, 2020, Governor Cuomo issued Executive Order 202.48, which states, in relevant part,

"The directive contained in Executive Order 202.28, as extended, that prohibited initiation of a proceeding or enforcement of either an eviction of any residential or commercial tenant, for nonpayment of rent or a foreclosure of any residential or commercial mortgage, for nonpayment of such mortgage, is continued only insofar as it applies to a commercial tenant or commercial mortgagor, as it has been superseded by legislation for a residential tenant, and residential mortgagor, in Chapters 112, 126, and 127 of the Laws of 2020"

( 9 NYCRR 8.202.48 ). On August 5, 2020, Executive Order 202.55 continued the directives contained in Executive Order 202.48, among other executive orders, through September 4, 2020 ( 9 NYCRR 8.202.55 ).

Meanwhile, on June 18, 2020, Chief Administrative Judge Marks issued Administrative Order AO/127/20, which ordered that, effective June 20, 2020, petitions in eviction proceedings involving residential or commercial property pursuant to Article 7 of the Real Property Actions and Proceedings Law (whether brought on the ground that the respondent defaulted in the payment of rent or on some other ground), must include an attorney affirmation or petitioner's affidavit confirming that the summary proceeding comports with the requirements of state and federal directives, including the requirement contained in Executive Order 202.28 (see http://nycourts.gov/whatsnew/pdf/AO-127-20.pdf [accessed 3/1/2021]). On July 7, 2020, Chief Administrative Judge Marks issued Administrative Order AO/143/20, which eliminated the requirement of the attorney affirmation or petitioner's affidavit of compliance in eviction proceedings (http://nycourts.gov/whatsnew/pdf/AO-143-20.pdf [accessed 3/1/2021]).

On August 13, 2020, Chief Administrative Judge Marks issued Administrative Order AO/160A/20, setting forth procedures and protocols for the conduct of residential and commercial eviction matters before the New York State courts. AO/160A/20 states, in relevant part:

"Continued Suspension of Eviction Matters Commenced After March 16, 2020 : Eviction proceedings commenced after March 16, 2020 shall, upon the filing of a petition (if no answer is filed thereafter) or the filing of an answer, be suspended until further order. Notwithstanding the foregoing, eviction matters in which all parties are represented by counsel shall be eligible for calendaring for virtual settlement conferences"

(http://nycourts.gov/whatsnew/pdf/ao160a20.pdf [accessed 2/22/2021]). Administrative Order AO/160A/20 superseded Administrative Order AO/127/20 (id. ).

On August 19, 2020, Administrative Judge of the Civil Court of the City of New York Anthony Cannataro¹ issued Civil Court Directive DRP-214, effective August 19, 2020, which stated, in relevant part:

"BACKGROUND :

In response to the Coronavirus emergency declared in Executive Order 202, Governor Cuomo imposed several temporary suspensions and modifications of laws, most pertinently here Executive Order 202.28, as amended by Executive Orders 202.38, 202.48, and 202.55. One of the restrictions contained therein stayed commencement and enforcement of commercial eviction matters against tenants facing financial hardship due to COVID-19. According to the time limitations set forth in Executive Order 202.28, many of those restrictions, including the stay of commencement and enforcement of commercial eviction proceedings against tenants facing financial hardship due to COVID-19, are set to expire on August 19, 2020.

In advance of the expiration of those restrictions, the Chief Administrative Judge issued Administrative Order 160A/20 which, among other things, discontinued the affidavit requirement contained in Administrative Order 127/20, and lifted the stay of proceedings imposed on eviction cases commenced before March 17, 2020. However, Administrative Order 160A/20 continued the automatic stay of all eviction cases commenced after March 16, 2020.

Accordingly, the following directives shall apply.

DIRECTIVE :

* * *

Motions : Civil Court is accepting both procedural and dispositive motions in commercial eviction cases"

(http://nycourts.gov/courts/nyc/SSI/directives/DRP/DRP214.pdf [accessed 3/1/2021]). Directive DRP-214 was rescinded on August 21, 2020 (see id. ).

On August 20, 2020, Governor Cuomo issued Executive Order 202.57, which states, in relevant part:

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