FILED: QUEENS COUNTY CLERK 05/10/2019 02:50 PM INDEX NO.

712807/2016
NYSCEF DOC. NO. 131 RECEIVED NYSCEF: 05/10/2019

Short Form Order and Judgment

NEW YORK SUPREME COURT - QUEENS COUNTY

Present: HONORABLE LEONARD LIVOTE COMMERCIAL DIVISION

Acting Supreme Court Justice PART A

KCM Realty Company, LP, x Index

Plaintiff, Number 712807 2016

- against - Motion
Date January 15, 2019
New Ram Realty, LLC,
Defendant, Motion Seq. No. 5

The following papers EF numbered below read on this motion by plaintiff KCM Realty
Company for summary judgment on its first and third causes of action.
Papers
Numbered

Notice of Motion - Affidavits - Exhibits 107- 112

Answering Affidavits - Exhibits 119-124
Reply Affidavits 126-127
Memoranda of Law 113, 118, 128

Upon the foregoing papers it is ordered that the motion which is for summary
judgment on the first and third causes of action is granted and judgment is granted
accordingly, as more fully set forth below.

I. The Facts

Plaintiff KCM Realty Company (KCM) owns property located at 59-40 55th
Road, Maspeth, New York which it rented by lease dated March 5, 2004 to defendant
New Ram Realty, LLC (New Ram). Article 5 of the lease provides that "Tenant shall use
the Premises for (i) the erection [and] operation of a hotel which shall not exceed five (5)
stories in height, (ii) retail stores, and (iii) for the parking of vehicles related to the
business of the hotel and such stores *** and for no other use." Section 35.8 of the Lease
states: "Tenant shall not use the Premises for any use other than to accommodate

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transient hotel guests and for retail stores located on the ground floor of the hotel."
Section 12.1(b) of the lease provides that "Tenant and its successors and assigns shall not
directly or indirectly seek to circumvent the requirements of this Article [Article 12]
which require Tenant and is successors and assigns to obtain the consent of Owner."
Section 14.7 of the lease provides in relevant part: "Tenant shall also pay to Owner all
costs and expenses, including reasonable attorney's fees, paid or incurred by Owner in
enforcing any of the covenants and provisions of this lease ***."

In late August, 2016, New Ram contacted KCM about the former's plan to
sublease the hotel to a third party who would convert the building into a shelter for
homeless adults pursuant to an agreement with the New York City Department of
Homeless Services (DHS). New Ram requested KCM's consent to a Room Rental
Agreement that it proposed to enter into with Promesa Housing Fund Development
Corporation, whereby New Ram would rent 110 of the 115 rooms in the hotel to
Promesa for the use of homeless persons at an annual rental of $2,400,000 for five years.

KCM responded by a letter dated August 25, 2016 which stated that the
conversion of the hotel into a shelter for homeless adults violated the use restrictions of
the lease and that KCM would not consent to the conversion. However, a few weeks later
DHS booked some rooms at the subject property directly though the Holiday Inn's
reservation system.

DHS, a "nonprofit provider," is at the premises to provide services to

homeless adults. These services include the provision of three meals a day, security
provided by three to six guards, and social services provided by about nineteen people
used by Acacia Network, Inc., an affiliate of Promesa. DHS or Acacia rented
approximately 53 rooms with 106 beds to house homeless individuals for the period May,
2017 to November, 2018. Acacia requested the removal of the beds in four rooms which
it uses for administrative offices. The rooms rented by DHS or Acacia amount to almost
one half of the hotel's 115 rooms. From October 2016 through March 2018, a total of
254 homeless people resided at the hotel, and on average each individual resided there for
195 nights. 100 of the homeless individuals resided at the hotel from 216 days to 537
days. 43 of the homeless individuals resided at the hotel for 365 days or more from
October, 2016 through March, 2018. Pursuant to an amendment dated December 14, 2017
to the agreement between DHS and Acacia, the latter agreed to provide 53 rooms at the
hotel to house homeless persons for the period October 10, 2016 to June, 2020.

II. Brief Procedural History

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Plaintiff KCM began the instant action by the filing of a summons and a
complaint on October 26, 2016. By an amended complaint dated November 28, 2016, the
plaintiff asserted three causes of action against the defendant. The first is for a judgment
declaring:"that New Ram's renting of 30 rooms at the Premises to DHS or another agency
of New York City to house homeless persons constitutes a material departure from the
use provisions (Article 5 and Section 35.8) of the Lease and a breach of such use
provisions ***." The second cause of action is for a judgment "enjoining New Ram from
violating the Lease's use provisions***." The third cause of action is for a judgment
"awarding KCM costs, expenses, and reasonable attorney's fees incurred in enforcing the
use provisions of the Lease ***."

III. Discussion

"[T]he proponent of a summary judgment motion must make a prima facie

showing of entitlement to judgment as a matter of law, tendering sufficient evidence to
demonstrate the absence of any material issues of fact ***." (Alvarez v. Prospect
Hospital, 68 NY2d 320, 324 [1986].) Plaintiff KCM successfully carried this burden.

Turning to the first cause of action, Article 5 of the lease provides in

relevant part that "Tenant shall use the Premises for (i) the erection [and] operation of a
hotel ***" and Section 35.8 of the Lease states in relevant part: "Tenant shall not use the
Premises for any use other than to accommodate transient hotel guests ***." The lease
between the parties does not define "transient hotel guests" in any special way, and thus
the phrase in the contract must be given its "plain and ordinary meaning." (See, Blake v.
Solomon, 169 AD3d 791 [2 Dept. 2019]). The phrase was intended to be" interpreted
in its accepted and dictionary meaning"( See, Engel v. Calgon Corp., 114 AD2d 108,
110, [ 3rd Dept 1986]), affd, 69 NY2d 753 [1987]; Amato v. New York City Dep't of Parks
& Recreation, 110 AD3d 439, 440[ 1" Dept 2013] ["based on the ordinary dictionary
meaning of the word"].) "The words and phrases used in an agreement must be given
their plain meaning so as to define the rights of the parties ***and in this regard, it is
common practice for the courts of this State to refer to the dictionary to determine the
plain and ordinary meaning of words to a contract" (Mazzola v. Cty. of Suffolk, 143
AD2d 734, 735[ 2" Dept 1988]; Mann v. 125 E. 50th St Corp., 124 Misc2d 115,
117[Civ. Ct. 1984]), affd, on the opinion below, 126 Misc 2d 1016, [App. Term 1985]
[court resorted to dictionary to determine whether an occupant of a hotel for a long
period could be considered a "transient"]).

Black's Law Dictionary (10th ed. 2014) defines "transient" as "[a] person or
thing whose presence is temporary or fleeting." It defines temporary as: "[1]asting for a
time only; existing or continuing for a limited (usu. short) time; transitory." The Merriam

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Webster on line Dictionary defines "transient" the adjective as: "passing through or by a
place with only a brief stay or sojourn." and "transient" the noun as " a guest or boarder
who stays only briefly." The homeless individuals placed into the subject property for
months on end by defendant New Ram do not meet these definitions.

The closest case on point, Town of Brookhaven v. Marian Chun

Enterprises, Inc., (133 AD2d 754 [211" Dept. 1987], rev'd on other grounds, 71 NY2d 953
[1988]), supports plaintiff KCM's claims. In that case, the Town of Brookhaven brought
an action to permanently enjoin the defendant from operating Lakeview Lodge Motel as a
lodging, boarding and/or rooming house without having first obtained a proper certificate
of occupancy. In enjoining the the owner of the facility from operating the facility
without a proper certificate of occupancy, the Appellate Division, Second Department„
stated: "Under the amended ordinance, a motel is defined, inter alia, as a place which
provides lodging for "transient travelers" (see, Code of Town of Brookhaven § 85-1[B] ).
The facts in this case indicate that persons referred to Lakeview Lodge Motel by the
Suffolk County Department of Social Services may reside there for periods of three to six
months or at times longer, register their children in the local schools, and consider
Lakeview Lodge Motel as their home. Such persons cannot be considered "transient"
travelers ***A certificate of occupancy appropriate to the use of Lakeview Lodge Motel
as housing for such persons is necessary (see, Code of the Town of Brookhaven §
85-14)" ( Town of Brookhaven v. Marian Chun Enterprises, Inc., supra, 754-755)."

The Brookhaven case relied on Mann v. 125 E. 50th St. Corp. (supra) in
which the court stated: 'Transient" has been considered the opposite of "resident" (see
The Leontios Teryazos, 45 F Supp 618), and with respect to a hotel, is one who has a
home elsewhere and is staying at the hotel for a short period in connection with a trip
away from home" (Mann at 117).

"A landlord has a legal right to control the uses to which his building may
be put by appropriate lease provisions, which to be effective must be enforced."
(Qwakazi, Ltd., v. 107 W. 86th St. Owners Corp., 123 AD2d 253,254[ 1' Dept 1986];
Beauty Plus Stores, II, Inc. v 404 6th Ave. Realty Corp., 70 AD3d 604 [1' Dept 2010]).
"Where the use and occupation of the premises are restricted by express provision to the
purpose therein specified, any material departure from the specified use constitutes a
violation of the express terms of the lease" (74 N.Y. Jur. 2d Landlord and Tenant § 271;
see, Burber v. Jilamb Prime Meat, Inc., 115 Misc2d 976 [Civ. Ct. 1982]).

Where it is clear that a tenant has violated the "use" clause in his lease.
summary judgment declaring the landlord's rights is appropriate" (see Qwalcazi, Ltd., v.
107 W. 86th St. Owners Corp., supra; Dennis & Jimmy's Food Corp. v. Milton Co., 99

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AD2d 477 [2nd Dept 1984], affd, 62 NY2d 613[1984].) Under all of the facts and
circumstances of this case, including "an analysis of percentage mix *** to ascertain
whether a departure is material or deminimus " (see Burlier v. Jilamb Prime Meat, Inc.,
supra, 978), plaintiff KCM has demonstrated its prima facie right to summary judgment
on its first cause of action. The court again notes that from October 2016 through March
2018, a total of 254 homeless people resided at the hotel, and on average each individual
resided there for 195 nights.

The burden on this branch of the motion shifted to defendant New Ram,
requiring it to produce proof that there is an issue of fact which must be tried (see Alvarez
v. Prospect Hospital, supra) or of demonstrating the existence of a defense warranting
the denial of summary judgment. (See Plantamura v. Penske Truck Leasing, Inc., 246
AD2d 347 [1" Dept 1998]). Defendant New Ram failed to carry this burden. First,
contrary to the assertions made in the defendant's memorandum of law, no issue of fact
arises merely because the lease does not expressly prohibit defendant New Ram "from
licensing rooms to Acacia or DHS to house homeless persons for any period of time" and
merely because the lease does not expressly prohibit the hotel from being used as a
homeless shelter. Although the lease requires some interpretation, the lease
unambiguously restricts the use of the premises to the operation of a hotel, which a
homeless shelter is not. Second, the defendant relies on Chelsea Bus. & Prop. Owners'
Ass'n, LLC v. City of New York (107 AD3d 414, [1" Dept 2013]), an Article 78
proceeding brought to annul a determination by the Board of Standards and Appeals of
the City of New York (BSA) concerning the approvals issued for the operation of a
homeless shelter. In upholding the administrative determination, the Appellate Division,
First Department stated: "The BSA rationally determined that the definition of "transient
hotel" in section 12-10 of the Zoning Resolution is clear and unambiguous and that the
proposed use of the building meets the three criteria of the definition, i.e., it (1) provides
sleeping accommodations used primarily for transient occupancy; (2) has a common
entrance to serve the sleeping accommodations; and (3) provides 24—hour desk service,
housekeeping, telephone and linen laundering." Defendant New Ram's reliance on
Chelsea is misplaced. At best for the defendant, Chelsea, decided by the Appellate
Division, First Department, conflicts with Town of Brookhaven, decided by the Appellate
Division, Second Department, and, of course, this court is obligated to follow the
decisions of the latter. Moreover, the Chelsea court followed the usual practice in Article
78 proceedings in deferring to interpretations made by administrative agencies, and the
Appellate Division, First Department made little or no analysis of its own concerning the
terms "transient hotel" and "transient occupancy." Finally, the case at bar is
distinguishable from Chelsea because the meaning and intent of the use clause in the
lease differs from the meaning and intent of the Zoning Resolution as interpreted by

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BSA. The use clause in the lease was clearly intended to restrict the use of the premises to
the operation of a hotel as that term is traditionally and commonly understood.
The interest of a landlord in tightly controlling the use of his private property differs from
the interest of an administrative agency in expanding the use of property for public
purposes.

Accordingly, plaintiff KCR is entitled to summary judgment on its first .

cause of action.

Turning to the third cause of action, generally, a plaintiff may be awarded

attorney's fees as part of a damages award where such relief is specifically authorized by
statute, rule or contract (Lemming v. Barnwell Nursing Home & Health Facilities, Inc., 15
NY3d 375 [2010]; Hooper Assoc. v. AGS Computers, 74 NY2d 487 [1989]). In the case
at bar, a judgment awarding KCM costs, expenses, and reasonable attorney's fees
incurred in enforcing the use provisions of the Lease is authorized by Section 14.7 of the
lease. Accordingly, it is,

Ordered, adjudged and decreed that defendant New Ram Realty, LLC's
renting of rooms at property located at 59-40 55'h Road, Maspeth, New York to DHS or
another agency of New York City to house homeless persons constitutes a material
departure from the use provisions (Article 5 and Section 35.8) of the lease and a breach of
such use provisions; and it is further,

Ordered, adjudged and decreed that plaintiff KCM Realty Company is

entitled to exercise its remedies under the lease; and it is further,

Ordered, that the motion for summary judgment on the third cause of action
is granted on the issue of liability.

This constitutes the Order of the Court.

Dated: HA/ J01019

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