Case Name: In the Matter of Gracecor Realty Co., Inc., Appellant, v. William Hargrove, Respondent
Court: New York Court of Appeals
Jurisdiction: New York
Decision Date: 1997-06-17
Citations: 90 N.Y.2d 350
Docket Number: 
Parties: In the Matter of Gracecor Realty Co., Inc., Appellant, v William Hargrove, Respondent.
Judges: 
Reporter: New York Reports
Volume: 90
Pages: 350–358

Head Matter:
[683 NE2d 326, 660 NYS2d 704]
In the Matter of Gracecor Realty Co., Inc., Appellant, v William Hargrove, Respondent.
Argued May 7, 1997;
decided June 17, 1997
POINTS OF COUNSEL
Shaw & Binder, New York City (Stuart F. Shaw, Benjamin Binder, Robert H. Gordon and Robert H. Goldberg of counsel), and Lawrence P. Wolf for appellant.
I. Application of the legislative history to the construction of the statutes and facts herein shows that the building and its cubicles were not intended to be regulated because they have always been transient, hotel-type serviced lodging houses. (Matter of Bayview Hotel v Temporary State Hous. Rent Commn., 12 NY2d 423; Hotel Armstrong v Temporary State Hous. Rent Commn., 11 AD2d 395; Matter of National El. Indus. v New York State Tax Commn., 49 NY2d 538; Rent Stabilization Assn. v Higgins, 83 NY2d 156.) II. The Court below erred by failing to analyze rent regulatory legislation in the context of the Multiple Dwelling Law and related legislation. If the Court below had made the analysis, it would have concluded that respondent’s cubicle is outside the scope of stabilization. (La Guardia v Cavanaugh, 53 NY2d 67; 23 Realty Assocs. v Teigman, 213 AD2d 306.) III. Rent regulatory agencies and the New York City Council have historically excluded lodging houses used on a transient basis from regulation. Therefore, the Court below erred. (Matter of Salvati v Eimicke, 72 NY2d 784; Shoreham-Wading Riv. Cent. School Dist. v Town of Brookhaven, 107 AD2d 219, 65 NY2d 990; Matter of Gottlieb v Mirabal, 123 AD2d 574, 69 NY2d 609.) IV. Application of rent stabilization to appellant’s property deprives appellant of its constitutional rights pursuant to the Fifth and Fourteenth Amendments to the United States Constitution and article I, §§ 7 and 11 to the New York Constitution. (Seawall Assocs. v City of New York, 74 NY2d 92, 493 US 976; Kaiser Aetna v United States, 444 US 164; Armstrong v United States, 364 US 40; Roslyn Garden Assocs. v Board of Trustees, 190 AD2d 722; Cleburne v Cleburne Living Ctr., 473 US 432; Burstyn v City of Miami Beach, 663 F Supp 528.)
Olive Karen Stamm, New York City, and Wayne G. Hawley for respondent.
I. Lodging houses have long been subject to rent regulation. (Bucho Holding Co. v Temporary State Hous. Rent Commn., 11 NY2d 469; Teeval Co. v Stern, 301 NY 346, 340 US 876; 8200 Realty Corp. v Lindsay, 27 NY2d 124, 400 US 962; Matter of Zeitlin v New York City Conciliation & Appeals Bd., 46 NY2d 992; Duane Thomas Loft Tenants Assn. v Sylvan Lawrence Co., 117 Misc 2d 360; Perth Realty Co. v Dovoll, 79 Misc 2d 514; Rent Stabilization Assn. v Higgins, 83 NY2d 156; Matter of Salvati v Eimicke, 72 NY2d 784; La Guardia v Cavanaugh, 53 NY2d 67; Hickey v Bomark Fabrics, 120 Misc 2d 597.) II. Statutory construction and purpose of the rent laws embrace all class B housing accommodations. (Bucho Holding Co. v Temporary State Hous. Rent Commn., 11 NY2d 469; Bowles v Willingham, 321 US 503; Block v Hirsh, 256 US 135; 8200 Realty Corp. v Lindsay, 27 NY2d 124, 400 US 962; Teeval Co. v Stern, 301 NY 346, 340 US 876; People ex rel. Durham Realty Corp. v La Fetra, 230 NY 429, appeal dismissed sub nom. People ex rel. Brixton Operating Corp. v La Fetra, 257 US 665; Rent Stabilization Assn. v Higgins, 83 NY2d 156; Matter of Salvati v Eimicke, 72 NY2d 784; Federal Home Loan Mtge. Corp. v New York State Div. of Hous. & Community Renewal, 87 NY2d 325.) III. Appellant cannot meet its burden of proof. (Villas of Forest Hills Co. v Lumberger, 128 AD2d 701; Pelhut Realty Co. v White, 77 Misc 2d 585; Kips Bay Towers v Armstrong, 82 Misc 2d 489; Sapphire Hotel Corp. v Netzick, 82 Misc 2d 95; 353 Realty Corp. v Disla, 81 Misc 2d 68; Towers Hotel Investors Corp. v Davis, 85 Misc 2d 451, 54 AD2d 730, 42 NY2d 923.) IV. Respondent is a permanent tenant. (Federal Home Loan Mtge. Corp. v New York State Div. of Hous. & Community Renewal, 87 NY2d 325; Braschi v Stahl Assocs. Co., 74 NY2d 201; Tonetti v Penati, 48 AD2d 25; Bolotnikov v Katz, 95 Misc 2d 377; Mann v 125 E. 50th St. Corp., 124 Misc 2d 115, 126 Misc 2d 1016; Kaypar Corp. v Fosterport Realty Corp., 1 Misc 2d 469, 272 App Div 878; Bierman v Katz, 274 App Div 1003; Shearman v Iroquois Hotel & Apt. Co., 42 Misc 217; de Wolf v Ford, 119 App Div 808, 193 NY 397; Seminole Realty Co. v Greenbaum, 209 AD2d 345, 85 NY2d 922.) V. The Division of Housing and Community Renewal misstates the law and is not entitled to deference. (La Guardia v Cavanaugh, 53 NY2d 67; Kurcsics v Merchants Mut. Ins. Co., 49 NY2d 451; Matter of Drew v Schenectady County, 88 NY2d 242; Matter of Town of Brookhaven v New York State Bd. of Equalization & Assessment, 88 NY2d 354; Matter of Jewish Home & Infirmary v Commissioner of N. Y. State Dept. of Health, 84 NY2d 252; Matter of Rodriguez v Perales, 86 NY2d 361; Matter of Jones v Berman, 37 NY2d 42; Towers Hotel Investors Corp. v Davis, 85 Misc 2d 451, 54 AD2d 730, 42 NY2d 923; Federal Home Loan Mtge. Corp. v New York State Div. of Hous. & Community Renewal, 87 NY2d 325; Matter of Zeitlin v New York City Conciliation & Appeals Bd., 46 NY2d 992.) VI. Appellant’s questions and theories of law are not preserved for review. (Matter of Ruskin v Miller, 172 AD2d 164; Gordon v American Museum of Natural History, 67 NY2d 836; Cooper v City of New York, 81 NY2d 584; Cummins v County of Onondaga, 84 NY2d 322; Quain v Buzzetta Constr. Corp., 69 NY2d 376; Snyder v Wetzler, 84 NY2d 941; People v Two Wheel Corp., 71 NY2d 693; Di Bella v Di Bella, 47 NY2d 828; Telaro v Telaro, 25 NY2d 433, 26 NY2d 751; Cibro Petroleum Prods. v Chu, 67 NY2d 806.) VII. Hotels are subject to rent regulation. (Feeley v Woods, 190 F2d 228; Sherman Inv. Co. v United States, 199 F2d 504; Hotel Armstrong v Temporary State Hous. Rent Commn., 11 AD2d 395, 12 AD2d 756; Matter of Bayview Hotel v Temporary State Hous. Rent Commn., 12 NY2d 423, 13 NY2d 895; Matter of Fablan Studios v Herman, 25 Misc 2d 752, 13 AD2d 943; Matter of Noxon Operating Corp. v Herman, 32 Misc 2d 557, 16 AD2d 774, 13 NY2d 604; 378 Realty Corp. v New York City Rent & Rehabilitation Admin., 39 Misc 2d 30, 13 NY2d 817, 377 US 124; Towers Hotel Investors Corp. v Davis, 85 Misc 2d 451, 54 AD2d 730, 42 NY2d 923.) VIII. Appellant fails to raise a color-able constitutional claim. (Nordlinger v Hahn, 505 US 1; United States R. R. Retirement Bd. v Fritz, 449 US 166; de St. Aubin v Flacke, 68 NY2d 66; 23 Realty Assocs. v Teigman, 213 AD2d 306; Mann v 125 E. 50th St. Corp., 124 Misc 2d 115, 126 Misc 2d 1016; Cleburne v Cleburne Living Ctr., 473 US 432; Burstyn v City of Miami Beach, 663 F Supp 528; Long Is. Light. Co. v Cuomo, 666 F Supp 370; Bucho Holding Co. v Temporary State Hous. Rent Commn., 11 NY2d 469; Federal Home Loan Mtge. Corp. v New York State Div. of Hous. & Community Renewal, 87 NY2d 325.)
Marcia P. Hirsch, Bronx, and Martin B. Schneider for New York State Division of Housing and Community Renewal, amicus curiae.
A cubicle-type sleeping place located in a lodging house is not subject to regulation under the Rent Stabilization Law and Code. (Matter of Lavanant v State Div. of Hous. & Community Renewal, 148 AD2d 185; Crow v 83rd St. Assocs., 68 NY2d 796; Matter of Versailles Realty Co. v New York State Div. of Hous. & Community Renewal, 76 NY2d 325; Rent Stabilization Assn. v Higgins, 83 NY2d 156; Matter of Clason Mgt. Corp. v Herman, 29 Misc 2d 258, 14 AD2d 765, 10 NY2d 1022; Hankin v Division of Hous. & Community Renewal, 112 Misc 2d 1085; Matter of Salvati v Eimicke, 72 NY2d 784; de Wolf v Ford, 119 App Div 808, 193 NY 397; Shearman v Iroquois Hotel & Apt. Co., 42 Misc 217; Bierman v Katz, 274 App Div 1003.)

Opinion:
OPINION OF THE COURT
Smith, J.
The issue in this case is whether the space which respondent occupied in a lodging house is subject to rent-stabilization regulation. We affirm the order of the Appellate Division because under the facts of this particular case, the area in question constituted a "housing accommodation" not expressly excluded from the coverage of the rent-stabilization laws.
Petitioner brought a holdover proceeding alleging that respondent's tenancy expired on July 31, 1990 and that his right to occupy the space at issue had been terminated by a 30-day notice of termination. The petition further alleged that the respondent's partitioned space was not "subject to rent control, rent stabilization or hotel stabilization." The notice of termination did not state any grounds for the termination.
Respondent moved to dismiss the petition on the ground that the space was subject to the Rent Stabilization Law and that the notice of termination failed to state any of the authorized grounds contained in the Rent Stabilization Code for terminating a rent-stabilized tenancy. Civil Court dismissed the petition on the ground that the termination notice was defective since the area in question was subject to rent stabilization.
Petitioner appealed the dismissal to the Appellate Term which affirmed, with one Justice dissenting. On further leave to appeal to the Appellate Division, that Court also affirmed, and held that the Palace Hotel was subject to rent stabilization as a class B multiple dwelling. The Appellate Division thereafter granted petitioner leave to appeal to this Court.
The Rent Stabilization Law (RSL) is a local law which governs rent stabilization in New York City. In March 1997, its provisions were extended by the City Council to April 1, 2000 (Local Laws, 1997, No. 13, of City of New York). The Emergency Tenant Protection Act of 1974 (ETPA) was enacted by the New York State Legislature and permits regulation of residential rents upon the declaration of a housing emergency in New York City (McKinney's Uncons Laws of NY § 8623 [a]; § 8634). As of this date, the ETPA remains in "full force and effect until and including June 15, 1997" (see, L 1993, ch 253, § 29; McKinney's Uncons Laws of NY § 8581 [Emergency Tenant Protection Act of 1974, L 1974, ch 576, § 4, as amended]).
As relevant here, the RSL covers "housing accommodations in class A or class B multiple dwellings made subject to this law pursuant to the emergency tenant protection act of nineteen seventy-four" (Administrative Code of City of NY § 26-504 [b]). It is undisputed that the Palace Hotel is structurally classified as a class B multiple dwelling by the Department of Buildings (see, Multiple Dwelling Law § 4 [9]). The ETPA provides for "the regulation of all housing accommodations which it does not expressly except, including previously unregulated accommodations (McKinney's Uncons Laws of NY § 8623, 8625)" (Matter of Salvati v Eimicke, 72 NY2d 784, 791). The ETPA does not contain any exemptions applicable to respondent's living space.
The definition of "housing accommodation" for rent-stabilization purposes appears in the Rent Stabilization Code which defines the term as,
"[t]hat part of any building or structure, occupied or intended to be occupied by one or more individuals as a residence, home, dwelling unit or apartment, and all services, privileges, furnishings, furniture and facilities supplied in connection with the occupation thereof" (9 NYCRR 2520.6 [a] [emphasis supplied]).
This functional definition is not limited by any physical or structural requirements, such as minimum square footage.
Whether a period of occupancy is accompanied by sufficient indicia of "permanency" such that the space occupied may be characterized as a home, residence or dwelling unit for rent-stabilization purposes is a fact-intensive question substantially turning on the intent and behavior of the parties. One factor to consider in reaching an appropriate determination is the length of time a landlord permits a person to continuously occupy the same space (see, e.g., Rent Stabilization Code [9 NYCRR] § 2520.6 [j]; RPAPL 711).
Other factors which may be considered include whether the occupant has any other residence, and any limitations relating to an occupant's use and control of the premises which have been imposed and enforced by a landlord. The Code itself identifies the intent of the occupant as a relevant consideration (see, 9 NYCRR 2520.6 [a] [providing that a tenant must occupy or intend to occupy that part of any building or structure as a residence, home or dwelling unit]).
The landlord's conduct in relation to respondent's use of the rental space assigned to him demonstrates that, from the landlord's perspective, it was expected and intended that respondent would occupy the area as his residence. The record reflects that the landlord rented the same space to the respondent for a continuous period of two years, and that respondent had no other residence during that time. That the landlord could have limited the length of respondent's stay in the same living area to less than one week at a time is irrelevant since the actual length of continuous occupancy was significantly longer.
Furthermore, the landlord allowed respondent to retain a key over an extended period, which enabled respondent to exclude others from his designated space. The landlord also gave respondent extended permission to store all of his personal possessions, including clothes and a television set, inside a locker within the enclosed confines. Moreover, the record also contains an affidavit from the respondent which states that he considered the rented space to be his home. Thus, the findings below that the area was subject to rent-stabilization regulation are amply supported by the record.
Petitioner's contention that the space at issue cannot be characterized as a housing accommodation for rent-stabilization purposes because of its structural configuration is contradicted by the plain language of the Rent Stabilization Code. The Code defines a housing accommodation as that "part" of any building or structure, which is occupied, or intended to be occupied as, inter alia, a home, residence or dwelling unit.
Petitioner also argues that courts should accord deference to the "longstanding interpretation" of the Division of Housing and Community Renewal (DHCR) (the agency responsible for the administration of the rent-stabilization laws in New York City) that places in lodging houses, such as the one at issue here, are exempt from rent regulation. "DHCR's interpretation of the statutes it administers, if not unreasonable or irrational, is entitled to deference" (Matter of Salvati v Eimicke, 72 NY2d 784, 791, supra). Although the question of whether a particular space is subject to rent stabilization falls within DHCR's administrative expertise, this Court will annul DHCR determinations which are irrational or unsupported by substantial evidence (see, e.g., Matter of Salvati v Eimicke, supra).
Petitioner cites to two DHCR orders as evidence of the agency's "longstanding interpretation" that living compartments in lodging houses are not subject to rent stabilization. The orders (issued in 1992 and 1994), however, do not involve the Palace Hotel, and state, without any further elaboration, that the areas in question do not fall under the jurisdiction of the agency (Order of DHCR Denying Application or Terminating Proceeding, Docket No. ZEG 440321 [Aug. 20, 1992]; Order of DHCR Denying Application or Termination Proceeding, Docket No. HD-440167-R [Dec. 21, 1994]). As these orders, by their terms, limit their applicability to the specific premises which were at issue, it is unclear what general principle, if any, may be drawn from these determinations. Moreover, the orders are bare of any facts or reasoning which led DHCR to find that it lacked jurisdiction over the proceedings. Under these circumstances, no judicial deference to these DHCR orders is required in this essentially statutory construction controversy.
To the extent that DHCR, participating as amicus curiae in this appeal, argues that the partitioned space here cannot be a housing accommodation as a matter of law, its position is unreasonable and inconsistent with the applicable statutes. As we have already observed, the definition of "housing accom modation" in the Rent Stabilization Code encompasses the space at issue in this case.
Accordingly, the order of the Appellate Division should be affirmed, with costs.
Chief Judge Kaye and Judges Titone, Bellacosa, Levine, Ciparick and Wesley concur.
Order affirmed, with costs.
. See, Multiple Dwelling Law § 4 (14) (defining a lodging house as a multiple dwelling in which "persons are housed for hire for a single night, or for less than a week at one time, or any part of which is let for any person to sleep in for any term less than a week"); Administrative Code § 27-2004 (a) (18) (same).
. We do not address petitioner's constitutional claims as they are unpreserved.