Matter of Various Tenants of 357 Bowery OATH Index No. 1067/14 (Oct. 22, 2014), adopted in part, rejected in part, Loft Bd. Order No. 4350 (Jan. 15, 2015), appended, reconsideration dismissed as moot, Loft Bd. Order No. 4498

(Apr. 21, 2016), appended [Loft Bd. Dkt. No. TR-1098; 357 Bowery, New York, N.Y.]

In coverage proceeding, petitioners demonstrated that 357 Bowery is an interim multiple dwelling that had three residentially occupied units during the applicable window period and that they qualify for protection under the Loft Law. ALJ recommended that the application be granted. Loft Board adopts finding that building is an IMD with three IMD units and that two of the applicants are the protected occupants of their units, as they are prime lessees whose tenancies began before the effective date of the amended Loft Law (June 21, 2010). The Loft Board rejected the ALJ’s recommendation that the third applicant is a protected occupant pursuant to 29 RCNY 2-09(b)(2), because she shared the unit with the prime lessee, who was in occupancy on June 21, 2010, and was not a subletter or assignee of the prime lessee. The Loft Board opined that the third applicant could be covered under (b)(1) or (2), depending upon her relationship with the prime lessee. Loft Board dismissed reconsideration application as moot because the owner agreed to register the third applicant. ______________________________________________________

NEW YORK CITY OFFICE OF

ADMINISTRATIVE TRIALS AND HEARINGS

In the Matter of VARIOUS TENANTS OF 357 BOWERY

Petitioners ______________________________________________________

REPORT AND RECOMMENDATION

ALESSANDRA F. ZORGNIOTTI Administrative Law Judge

On July 2, 2013, an application was filed with the Loft Board on behalf of Denise

Langenegger, Christian Wassmann, and Louisa Gui pursuant to Article 7-C, section 281 of the

Multiple Dwelling Law (“Loft Law” or “MDL”) and title 29 of the Rules of the City of New

York (“RCNY” or “Loft Board Rules”). Petitioners seek a finding that: (1) the building known

as 357 Bowery, New York, New York, is an interim multiple dwelling (“IMD”); (2) during the

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applicable window period, Ms. Langenegger occupied the second floor, Mr. Wassmann and Ms.

Gui occupied the third floor, and the then-owner, Ingo Swann, occupied the fourth floor as

residences; and (3) they are the protected occupants of the second and third floor units

respectively (ALJ Ex. 1).

Respondent-owner, Swann Spieker Partners, filed an answer denying that there were

three residentially occupied units during the window period (ALJ Ex. 2). Respondent argued

that Mr. Swann, now deceased, lived in the basement, not on the fourth floor which was a guest

suite for his numerous visitors. Respondent also challenged whether petitioners, who are not

American citizens, legally resided in this country and whether Ms. Langenegger, who travelled

extensively, occupied the second floor unit continuously for the required 12-month period.

A hearing was held on seven days between June 30 and September 29, 2014. Both

parties presented extensive documentary evidence. Petitioners testified on their own behalf and

presented the testimony of Mr. Nunez, a friend of Mr. Swann, and Mr. Elsener, Ms.

Langenegger’s former boyfriend from 1992 to 2010. Respondent presented the testimony of

Elsbeth Flippen, Mr. Swann’s niece, and Murleen Swann Ryder, Mr. Swann’s sister and the

executor of his estate (Tr. 579, 581).

For the reasons below, 357 Bowery is an IMD that had three residentially occupied units

during the window period and petitioners are the protected occupants of their respective units.

ANALYSIS

In 2010, the state legislature passed amendments to the Loft Law, which added section

281(5) to the MDL. L. 2010, Ch. 135 § 1 (eff. June 21, 2010) (adding MDL § 281(5)); L. 2010,

Ch. 147 § 1 (eff. June 21, 2010) (amending MDL § 281(5)). Amended section 281(5) defines an

IMD as any building that: (1) at any time was occupied for manufacturing, commercial, or

warehouse purposes; (2) lacks a certificate of compliance or occupancy pursuant to section 301

of this chapter; (3) is not owned by a municipality; and (4) was occupied for residential purposes

as the residence or home of three or more families living independently from one another for a

period of 12 consecutive months during the period commencing January 1, 2008, and ending

December 31, 2009, “provided that the unit” (i) is not located in a basement or cellar and has at

least one entrance that does not require passage through another residential unit to obtain access

to the unit, (ii) has at least one window opening onto a street or a lawful yard or court as defined

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in the zoning resolution for such municipality, and (iii) is at least 550 square feet in area. MDL §

281(5) (Lexis 2014).

The following facts are not in dispute. 357 Bowery is a four-story building that was

purchased by Mr. Swann and Mr. Spieker in 1979 (Pet. Ex. 4). During the window period the

first floor was occupied by a commercial tenant named Mr. Lord and is currently vacant (Tr. 70,

292, 481). There is a basement unit that has a bathroom but no kitchen and there is a sub-

basement that holds the mechanical equipment for the building. There are single residential units

on the second, third, and fourth floors with essentially the same floor plan and layout (Pet. Exs.

6, 7, 17). Each residential unit is larger than 550 square feet in area, has windows facing the

street, and is accessed through a public stairway or freight elevator that opens on every floor

including into the kitchens of the three residential units (Pet. Exs. 6, 7, 17). The building is

located in New York City with a population of more than one million people and qualifies as

having prior commercial use under MDL section 281(1). There is a certificate of occupancy

listing the first through fourth floors as factory and storage as well as an office on the second and

third floors (Pet. Ex. 5). During the window period there were doorbells on the street level that

listed: Swann; Langenegger/Elsener; Lord; Wassmann/Gui; and Swann. The buzzers for Swann

were for the basement and the fourth floor (Pet. Ex. 37; Flippen: Tr. 551-52).

The disputed issues concern the residential occupancy of the second, third, and fourth

floor units. Petitioners must present a prima facie case that they are entitled to relief. 29 RCNY

§ 1-06(i)(4) (Lexis 2014); Matter of 180 Varick Street Corp., OATH Index No. 2049/04 at 6 n.1

(Oct. 29, 2004), adopted, Loft Bd. Order No. 2885 (Nov. 18, 2004) (“applicants in Loft Board

proceedings must establish their entitlement to the relief requested by a preponderance of the

credible evidence”). Petitioners have met their burden.

1. The building had three residentially occupied units in 2008 and 2009

In order for a unit to be covered by the Loft Law, “it must possess sufficient indicia of

independent living to demonstrate its use as a family residence.” Anthony v. NYC Loft Bd., 122

A.D.2d 725, 727 (1st Dep’t 1986). The determination of coverage requires a case by case

analysis of the indicia of residential use. Matter of 333 PAS CoO Tenant Group, OATH Index

No. 968/08 at 7 (June 30, 2009), adopted, Loft Bd. Order No. 3552 (Nov. 19, 2009). As noted in

Matter of South 11th Street Tenants’ Association, OATH Index Nos. 1242/96, 1243/96, 1244/96

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at 39-42 (Mar. 30, 1999), adopted, Loft Bd. Order No. 2397 (Apr. 29, 1999), “no one factor is

dispositive . . . the regulations defining a residential unit were deliberately left open-ended to

allow for a more flexible approach to coverage determination.” Although this evaluation is open

ended, the regulations specify two factors to consider: whether a unit has a separate entrance

accessible from a public hallway or street, and has “one or more rooms such as a kitchen area, a

bathroom, a sleeping area and a living room area arranged to be occupied exclusively by the

members of a family and their guests . . . .” See 29 RCNY § 2-08(a)(3)(i), (ii) (Lexis 2014).

To the extent resolution of the disputed issues relies on a determination of witness

credibility, this tribunal has looked to witness demeanor, the consistency of a witness’s

testimony, supporting or corroborating evidence, witness motivation, bias or prejudice, and the

degree to which a witness’s testimony comports with common sense and human experience in

determining credibility. Dep’t of Sanitation v. Menzies, OATH Index No. 678/98 at 2-3 (Feb. 5,

1998), aff’d, NYC Civ. Serv. Comm’n Item No. CD 98-101-A (Sept. 9, 1998).

In describing the occupancy of the building in 2008 and 2009, Ms. Langenegger, Mr.

Wassmann, and Ms. Gui were more credible than Ms. Flippen and Ms. Ryder. While petitioners

had a motive to lie to obtain Loft Law protection, their testimony was generally consistent and

corroborated by Mr. Nunez and Mr. Elsener, neither of whom had an apparent interest in the

outcome of this proceeding. Moreover, petitioners’ testimony about the residential occupancy of

the three upper floors comported with common sense and was corroborated by documentary

evidence. Respondent’s repeated attempts to portray petitioners as liars, tax cheats, illegal

foreigners, and opportunistic predators were wholly unconvincing. Indeed, many of the

documents used to impeach petitioners supported petitioners’ testimony and rendered their case

more credible. Any inconsistencies in petitioners’ proof were at most minor, irrelevant to the

issues at bar, or of the type to be expected in a hearing.

Ms. Ryder and her daughter, Ms. Flippen, also had a motive to lie to avoid a finding of

Loft Law coverage and thereby increasing the value of the building which Ms. Ryder is going to

inherit (Tr. 537). Mr. Wassmann’s offer to purchase the building from Mr. Swann’s estate for

$6.5 million was rejected (Tr. 225), and respondent’s counsel acknowledged that the building

would be more valuable without Loft Law coverage (Tr. 744). However, Ms. Flippen was

evasive and uncomfortable when testifying that she had no idea whether the building would be

more valuable without Loft Law tenants (Tr. 537-40). Similarly, Ms. Ryder’s assertions that she

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was speaking for her dead brother who loved the building and not out of her own interest (Tr.

616-17) were unpersuasive.

Ms. Ryder’s and Ms. Flippen’s claim that Mr. Swann preferred living in the basement

during the window period, not on the residentially equipped fourth floor, did not comport with

common sense and was contrary to the weight of the evidence. Much of the testimony offered in

opposition to petitioners’ testimony was self-serving, irrelevant, and incredible.

Similarly, Ms. Ryder’s and Ms. Flippen’s allegations that petitioners broke Mr. Swann’s

heart by filing a Loft Law application which caused him to abandon the basement and move to

the fourth floor where he died shortly thereafter was incredible (Tr. 203-10, 482-83, 490, 553,

600-01, 614). Mr. Lord, the first floor commercial tenant, filed an application in August 2012,

listing petitioners and Mr. Swann as the residential tenants of the second, third, and fourth floors

(Pet. Ex. 39). That application was subsequently withdrawn. Petitioners filed their application

on July 2, 2013 (ALJ Ex. 1), after Mr. Swann’s death on January 31, 2013 (Tr. 419). Ms. Ryder

contradicted her earlier assertion by testifying that Mr. Swann moved to the fourth floor in 2011

which was before the first application was filed (Tr. 666-68). While it is possible that Mr.

Swann was upset by the application, it seems highly unlikely that it caused his death. Even

though no medical evidence was presented, it is notable that Mr. Swann was a “non-stop cigar

smoker” who died at age 79 (Tr. 445, 494, 659).

Moreover, the record was replete with evidence of the warm and friendly relationship that

existed between Mr. Swann and petitioners. There can be little doubt that Mr. Swann was a

unique and extraordinary man who meant different things to many people. His professional

accomplishments included being an exhibited painter, a published writer, and a renowned

psychic who worked with the United States military and intelligence communities (Pet. Exs. 36,

38; Resp. Ex. JJ; Tr. 12, 25).1 Mr. Swann also had many friends, colleagues, admirers, and

family members who visited him regularly. The record also has multiple examples of Mr.

Swann socializing and entertaining in the basement, on the fourth floor, and on the stoop of his

building (Tr. 71, 100, 170-71, 180, 202, 212, 249, 390, 474, 484, 597, 608, 613, 650-51; Pet. Ex.

35; Resp. Exs. A, Z, AA, BB, CC, GG, HH, N). While Mr. Swann was not present to testify, the

record supports a finding that before, during, and after the window period, he occupied the

basement and the fourth floor residentially and that the second and third floor units were

1 Petitioner’s exhibits 34 and 38 were admitted into evidence after the hearing following review of the record.

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residentially occupied continuously by petitioners and other people.

Petitioners demonstrated that the second and third floor units were residentially occupied

Petitioners provided testimony and documentary evidence to support their claim that

during the window period, Ms. Langenegger occupied the second floor and that Mr. Zingg and

then Mr. Wassmann and Ms. Gui occupied the third floor. Respondent was unable to offer any

evidence to the contrary. Instead, respondent focused on petitioners’ legal status in this country

and Ms. Langenegger’s extensive travels and numerous roommates who paid her rent. However,

none of these factors are relevant to the question of residential occupancy under the Loft Law.

Petitioners gave credible, unrebutted testimony that before, during, and after the window

period the second and third floor apartments had all the indicia of a residential unit including: a

sleeping area; a living room/dining area; a bathroom with a tub, sink, and shower; and a kitchen

with a refrigerator, stove, sink and various kitchen appliances. Both units had residential

furniture, televisions, clothing, and other personal items (Wassmann: Tr. 60-62, 65-67, 69, 163-

64; Gui: Tr. 236, 242, 256; Langenegger: Tr. 290, 293; Pet. Exs. 6, 7).

Ms. Langenegger testified that she moved to the second floor of 357 Bowery in 2000 (Tr.

288) and had residential leases with Mr. Swann between 2000 and 2006 (Pet. Ex. 25A-E).

Petitioners testified that in 2008, Mr. Zingg was living on the third floor. He took

occupancy in the fall of 2007 and stayed until two days before Mr. Wassmann moved in on

August 15, 2008. Ms. Gui arrived in September 2008 (Langenegger: Tr. 291-92; Wassmann: Tr.

57-59, 71, 137-38; Gui: Tr. 234). Mr. Wassmann signed a residential lease with Mr. Swann and

listed Ms. Gui as an emergency contact (Pet. Ex. 8; Wassmann: Tr. 72; Gui: Tr. 259).

Respondent points to the fact that Ms. Gui was not listed on the lease as a resident and suggests

that she was there without Mr. Swann’s knowledge or consent (Tr. 161, 259). Whether Ms. Gui

was on the lease and present with Mr. Swann’s consent is of no moment. Korn v. Batista, 131

Misc. 2d 196, 200 (Sup. Ct. N.Y. Co. 1986), aff’d, 123 A.D.2d 526 (1st Dep’t 1986) (“The Loft

Law was designed to protect all residential occupants whether or not they are in privity of

contract with the landlord.”). In any event, Mr. Wassmann’s assertion that he told Mr. Swann

that Ms. Gui would be living with him (Tr. 58, 71) was credible and corroborated by her name

appearing on the outside buzzer (Pet. Ex. 37).

Prior to August 2008, Mr. Wassmann was living in Chelsea and Ms. Gui was living in an

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apartment that she owned with her parents (Wassmann: Tr. 62; Gui: Tr. 235; Pet. Ex. 19). Mr.

Wassmann sublet his Chelsea apartment to a friend until another friend obtained a lease in her

own name (Tr. 62, 155, 183-84). Ms. Gui rented her apartment under short-term leases (Tr. 236-

41; Pet. Ex. 20). Contrary to respondent’s assertions (Tr. 155-56, 160), whether petitioners

profited from these other properties has no relevance to the issues at bar.

To support their claims that they occupied the second and third floors residentially during

the window period, petitioners submitted documents from 2008, 2009, and 2010 listing 357

Bowery as their address. These documents included: Mr. Wassmann’s New York State driver’s

license, car insurance, a homeowner’s insurance policy, and a social security statement (Pet. Exs.

9, 10, 11, 12, 16); Mr. Wassmann’s and Ms. Gui’s tax returns (Pet. Exs. 13, 21); cell phone and

bank records for petitioners (Pet. Exs. 14, 15, 22, 23, 26, 28, 29); Ms. Gui’s dry cleaning receipts

(Pet. Ex. 24); and Ms. Langenegger’s bills for various subscriptions (Pet. Ex. 27).

Ms. Langenegger testified that in 2008 and 2009 she travelled extensively for her work as

a Swiss television correspondent and to visit family and friends during her vacations. She stated

that during the window period she maintained her apartment at 357 Bowery (Tr. 306-12; Resp.

Exs. Q, R, U). During this period she had ten different roommates who paid her rent. They slept

on the extra bed or in her bedroom if she was away (Tr. 312-25; Pet. Ex. 30; Resp. Ex. P). Ms.

Langenegger’s boyfriend, Mr. Elsener would stay in the apartment but never lived there. Mr.

Elsener, whose name appeared on the buzzer, got his mail at 357 Bowery (Langenegger: Tr. 322-

23; Elsener: Tr. 384-85, 391, 399, 406; Flippen: Tr. 553).

Ms. Flippen and Ms. Ryder acknowledged seeing petitioners in the building during the

window period and that they were tenants on the second and third floors (Flippen: Tr. 484-87,

552; Ryder: Tr. 607-08, 612-14, 649-50; Langenegger: Tr. 687).

The unrebutted, credible testimony from petitioners as corroborated by voluminous

documentation supports a finding that the second and third floors were residentially occupied for

12 consecutive months between January 1, 2008 and December 31, 2009. With regard to the

third floor, except for two days in August 2008, it was occupied first by Mr. Zingg and then Mr.

Wassmann and Ms. Gui.

Ms. Langenegger occupied the second floor continuously during the window period.

Contrary to respondent’s assertion, Ms. Langenegger’s extensive travelling does not require

dismissal of the application. Ms. Langenegger, who has lived on the second floor since 2000,

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kept her personal belongings in the unit, maintained the residential nature of the space, and

always returned to the unit. Matter of Pels, OATH Index No. 2481/11 at 9-11 (June 20, 2012),

adopted, Loft Bd. Order No. 4161 (June 20, 2013), reconsideration denied, Loft Bd. Order No.

4208 (Dec. 12, 2013) (tenant who created a residential occupancy in her unit prior to the window

period but lived there only intermittently during the window period, found to be a protected

occupant under MDL section 281(5)); see also Coronet Properties Co. v. Brychova, 122 Misc.

2d 212, 213-14 (Civ. Ct. N.Y. Co. 1983), aff’d, 126 Misc. 2d 946 (App. Term, 1st Dep’t 1984)

(Individuals “engaged in itinerant occupations do not lose their domicile by virtue of their

constant travel.”).

Respondent failed to provide any support that Ms. Langenegger’s financial arrangements

with various roommates somehow disqualified the unit from coverage. Indeed, during her

absences the unit continued to be residentially occupied by her roommates.

Finally, whether petitioners are American citizens or permanent residents has no bearing

on this proceeding. Matter of Cohen, OATH Index No. 2015/12 at 3-5 (Aug. 23, 2013), adopted,

Loft Bd. Order No. 4261 (Mar. 20, 2014) (ALJ denied motion to dismiss coverage application

because petitioner was neither a permanent resident nor a citizen of the United States).

Moreover, there was no evidence that petitioners maintained any other residences during the

window period. Even if they did, a unit need not be the sole residence of the occupant during the

window period in order for it to count as a residentially occupied unit. Vlachos v. NYC Loft Bd.,

70 N.Y.2d 769, 770 (1987) (“[T]here is no requirement for Loft Law coverage that residentially

occupied units be the primary residences of their tenants.”); see also Kaufman v. American

Electrofax Corp., 102 A.D.2d 140, 142 (1st Dep’t 1984) (unit covered by Loft Law even though

occupant maintained a separate primary residence); Little West 12th St. Realty L.P. v.

Inconiglios, 19 Misc. 3d 508, 516-17 (Civ. Ct. N.Y. Co. 2008) (“Loft Law coverage depends on

whether three or more units were occupied for residential purposes during the window period,

not on whether they were occupied as the primary residences of their tenants.”).

Petitioners demonstrated that the fourth floor unit was residentially occupied

Petitioners provided testimony and documentary evidence that during the window period,

Mr. Swann lived on the fourth floor and used the basement as his office. Respondent provided

contrary evidence that Mr. Swann lived in the basement and used the fourth floor as a museum

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for his collections and for his guests who came to visit. The record supports a finding that during

the window period, Mr. Swann used the fourth floor as his residence and also used the basement

office for sleeping and entertaining. Even if respondent’s version was credited, the fourth floor

would still qualify as a residential unit as it was maintained and occupied as a residence and used

by Mr. Swann’s guests for that purpose.

It was undisputed that before, during, and after the window period, the fourth floor was

set up and furnished as a residential unit by Mr. Swann and was in his exclusive control. The

unit had a kitchen with a sink, a refrigerator, a hot plate, pans, plates, glasses, and cooking

utensils. There was a large canopy bed in the main room and a cot near the kitchen. There were

tables and chairs for sitting and eating, and a telephone. There was a bathroom with a tub, a

sink, a toilet, and toiletries. Throughout the unit were books, artwork, and other personal items

belonging to Mr. Swann (Pet. Exs. 1, 2, 3, 17, 34; Tr. 16-17, 29-35; Nunez: Tr. 16-17, 29-35;

Wassmann: Tr. 85, 89-98; Gui: Tr. 250-52; Langenegger: Tr. 295-96; Elsener: Tr. 390; Flippen:

Tr. 502-07, 519-25, 535, 547-48; Ryder: Tr. 621-28).

It was also undisputed that before, during, and after the window period, the basement was

set up, furnished, and used exclusively by Mr. Swann. The basement contained Mr. Swann’s

office and had computer equipment, work tables, books, shelves, file cabinets, and professional

and personal papers belonging to him. Mr. Swann, a painter, also maintained a painting area

under the stairs. Throughout the basement were paintings by Mr. Swann and other personal

items belonging to him. In another area, there were worn couches and chairs and several tables,

including a large one that could be used for conferences or dining. There was a buffet that held

some plates and glasses. There was a bathroom with a stand-up shower, a sink, a toilet, and a

washer and a dryer. In the rear of the basement, by the bathroom, was an area with a twin bed,

an army cot, nightstands, a shelf with personal items, and an air conditioner in the window. The

basement was open but could be separated with curtains. The basement was not finished and had

hanging wires, pipes, open walls, and open electric fixtures (Pet. Ex. 18; Resp. Exs. L, X, Z, AA,

BB, CC, DD, EE, FF, GG, HH; Nunez: Tr. 25; Wassmann: Tr. 48, 100-01, 104-05; Gui: Tr. 254;

Langenegger: Tr. 296; Flippen: Tr. 427-61; Ryder: Tr. 641-43, 648, 653). There was no kitchen,

refrigerator, stove, or television in the basement (Tr. 26, 503, 636). Mr. Swann had an old

hotplate near the bed to make espresso and a shelf with cups and glasses (Flippen: Tr. 457-59;

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Ryder: Tr. 640-41; Resp. Exs. X, EE).2

During the window period, Mr. Swann received Con Edison and telephone bills in his

name for the fourth floor and the basement (Pet. Exs. 31, 32, 33; Resp. Ex. W). Ms. Ryder

testified that since Mr. Swann’s death, the amount of the bills for the fourth floor was the same

as before his death even though the apartment was now empty. She called Con Edison and has

received refunds for the overcharge (Tr. 582-85).

Mr. Nunez, who shared Mr. Swann’s interest in the supernatural, testified that he has

known Mr. Swann since the early 1990s. In 2003 or 2004, Mr. Swann broke his leg while

cleaning the building sidewalk and was hospitalized. He had a pin inserted into his leg and had

trouble walking ever since. Mr. Nunez testified that after Mr. Swann was released from the

hospital he would go six or seven times a week to see Mr. Swann. Until Mr. Swann’s death in

2013, Mr. Nunez would help him with shopping and errands. Mr. Nunez testified that from the

time of his accident until his death, Mr. Swann lived on the fourth floor and would work during

the day in his basement (Tr. 12-13).

Mr. Nunez testified that he would arrive at around 4:00 p.m. and would take the stairs

down to the basement where Mr. Swann was working. They would smoke cigars and after Mr.

Swann was done working, they would take the elevator to the fourth floor. They would smoke

and Mr. Swann would have a drink while they talked or watched television. Sometimes Mr.

Nunez would wash the dishes or warm up food that he had bought. Mr. Nunez would leave

around 7:00 or 7:30 p.m. (Tr. 12-14, 22-24, 47). Mr. Wassmann testified that he often saw Mr.

Nunez visiting and helping Mr. Swann (Tr. 109).

Ms. Ryder and Ms. Flippen acknowledged that Mr. Swann broke his leg in 2003, but

claimed that he recovered fully. They denied that Mr. Swann needed Mr. Nunez’s help and the

little help he needed was provided by other people (Flippen: Tr. 474-77, 484-86; Ryder: Tr. 596-

98, 601, 603). Respondent submitted a video from 2007 showing Mr. Swann walking without a

limp (Resp. Ex. II; Tr. 479).

Mr. Nunez testified that Mr. Swann did not have air conditioning on the fourth floor and

2 Many of the photographs of the fourth floor and basement were taken before, during, or after the window period. There was testimony from both parties that the photos accurately represented how these areas looked during the window period. Other photos were taken after Mr. Swann’s death when the fourth floor and basement had been partially dismantled. There was testimony that the objects depicted therein were there during the window period. There were no photographs of Mr. Swann’s bedroom in the basement. Ms. Flippin and Ms. Ryder testified that the reason was because Mr. Swann’s bedroom was too intimate to be photographed (Tr. 453, 634).

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would sometimes sleep on a bed in the basement when it was too hot upstairs (Tr. 25). Mr.

Wassmann and Ms. Gui also testified that Mr. Swann’s apartment was very warm and that in the

summer when they visited, Mr. Swann would often be in his underwear or a towel and that he

also wore shorts and a t-shirt (Wassmann: Tr. 85, 175; Gui: Tr. 253). When it was too hot on the

fourth floor or if they were having a party that would keep Mr. Swann awoke, he would sleep in

the basement (Wassmann: Tr. 180-81; Gui: Tr. 255). Ms. Ryder denied that Mr. Swann walked

around in a towel or in his underwear. She did Mr. Swann’s laundry when she visited and never

saw any underwear. He always wore shorts or sweatpants and a shirt with a pocket (Tr. 608-12).

Mr. Nunez testified that Mr. Swann had clothes in the basement where the washer and

dryer were located but that he kept the majority of his clothing on the fourth floor in a closet in

the bathroom. Mr. Swann also kept a small amount of food and liquor on the fourth floor (Tr.

26-27). He lived in a Spartan manner (Tr. 32). Ms. Flippen testified that Mr. Swann kept his

clothing in an armoire in the basement (Tr. 455; Resp. Ex. DD) but agreed that he lived in a

Spartan manner (Tr. 460).

Mr. Nunez testified that when Ms. Ryder visited each month, she would use the area on

the fourth floor by the mirror as an office (Tr. 18). Mr. Nunez would make shorter visits to allow

her and Mr. Swann to spend more time together. When she came, Ms. Ryder would sleep on one

of the sofas on the fourth floor. According to Mr. Nunez, Mr. Swann’s friend Mr. Bergen would

come every month to see Mr. Swann and he too would sleep on one of the sofas (Tr. 21-22). Ms.

Ryder denied that she visited Mr. Swann on a monthly basis but acknowledged that Mr. Bergen

did (Tr. 586, 621). She also testified that it was not until she went in 2012 to live with Mr.

Swann during his illness that she set up her office on the fourth floor because it was the only

place Verizon could install a phone line (Tr. 603-04).

Ms. Langenegger testified that when she moved into 357 Bowery, Mr. Swann was living

on the fourth floor and that he was also living there in 2008 and 2009 (Tr. 292-93). Mr.

Wassmann and Ms. Gui testified that during the window period, Mr. Swann was living on the

fourth floor and would use the basement as his office. Because the building was old, they could

hear Mr. Swann walking above them in the mornings and evenings and would also hear the

television at night until about 9:00 p.m. when Mr. Swann would go to sleep. They sometimes

heard him using the bathroom in the middle of the night (Wassmann: Tr. 82; Gui: Tr. 249).

Petitioners testified that Mr. Swann usually got up very early and would take the elevator

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that he operated down to the basement (Wassmann: Tr. 82, 101; Gui: Tr. 252; Langenegger: Tr.

293). Mr. Swann often left the basement door open so that air would come in. When they saw

him in the basement, he was usually sitting at his desk working or was painting (Wassmann: Tr.

102; Gui: Tr. 255; Langenegger: Tr. 296-97). Ms. Langenegger stated that she sometimes got

worried if she did not hear Mr. Swann taking the elevator to the basement, and that she would go

to the fourth floor to check on him. This started in 2005 and continued until Mr. Swann’s death

(Tr. 294). Ms. Flippen testified that Mr. Swann did not have a daily pattern (Tr. 464-66, 536).

Mr. Wassmann testified that he visited Mr. Swann on the fourth floor in the evenings to

bring him the monthly rent and they would chat. Mr. Swann was very talkative and they often

spoke about books and art (Tr. 83-84, 86, 102, 166, 176). If it was too late, he would bring Mr.

Swann the rent the next morning in the basement (Tr. 84, 179).

Petitioners testified about how they would sometimes help Mr. Swann during the window

period. Mr. Wassmann would clean the gutters outside the fourth floor windows when they were

clogged with leaves (Tr. 87), he climbed on the roof, and he looked at the pipes in the basement

(Tr. 166). Prior to 2010, Ms. Langenegger would go to Mr. Swann’s apartment frequently with

Mr. Elsener because Mr. Swann was having trouble with his landline. They would check the

cable and get it working again (Langenegger: Tr. 295; Elsener: Tr. 388-89). Mr. Elsener also

testified that in 2008 or 2009 he went to the fourth floor to hookup Mr. Swann’s DVD player for

the television that he kept next to his bed (Tr. 388-90, 400-03). Ms. Flippen testified that Mr.

Swann got a television on the fourth floor in 2012 (Tr. 547). However, Ms. Ryder testified that

there was a television in 2008 (Tr. 635).

Mr. Wassmann testified that he saw Mr. Swann eat snacks in the basement but never saw

him eat a meal there (Tr. 103). Mr. Wassmann and Ms. Gui would sometimes bring him food on

the fourth floor including leftovers from Thanksgiving dinner (Wassmann: Tr. 98-100, 171-73;

Gui: Tr. 250). Ms. Langenegger testified that she liked to bake cakes and would bring Mr.

Swann food in his fourth floor apartment (Tr. 294). Ms. Ryder testified that she spent many

Thanksgivings with her brother, most recently in 2010, 2011, and 2012. They always had dinner

in the basement (Tr. 588). She denied seeing Mr. Wassmann or Ms. Gui on Thanksgiving and

testified that she never saw them bring Mr. Swann any leftovers (Tr. 612-13). Ms. Flippen

testified that Mr. Swann did not cook or take regular meals. When he needed something he

would go next door to the bodega (Tr. 460, 468). He liked to keep half and half by his desk and

- 13 -

drank it from the carton (Tr. 467-68, 477, 504, 555).

It was undisputed that Mr. Swann allowed petitioners to use the washer and dryer in the

basement as well as the elevator when they needed it (Tr. 26, 182, 253, 297-98, 386). Ms.

Langenegger and Mr. Elsener testified that she had a key to the basement so she could use the

laundry machines in the evening after Mr. Swann had gone upstairs. Mr. Swann would

sometimes leave a post-it note on the door saying, “Gone to bed” (Langenegger: Tr. 298-99;

Elsener: Tr. 387-88, 390). Ms. Flippen testified that she would be surprised if Mr. Swann left

such a note because, having worked for the CIA, he was conscious about security and such a

message could be seen from the street and could lead to a break in (Tr. 487-88).

Ms. Ryder, who lives in California, testified that Mr. Swann used the fourth floor as a

guest suite for the “hundreds” of guests that visited over the years. The canopy bed was made

for their parents who visited after they moved to Texas in the 1970’s (Tr. 594-95). Ms. Flippen

testified that in addition to the fourth floor being used for guests (Tr. 569, 572), it was also a

“museum” for Mr. Swann’s collections and paintings by other people (Tr. 494-95).

Ms. Ryder testified that between 2003 and 2008 she visited Mr. Swann a couple of times

a year (Tr. 599-600). After he broke his leg, Mr. Swann lived on the fourth floor to recuperate

(Tr. 628, 653). During the window period, Mr. Swann lived in the basement. In 2008 and 2009,

she visited Mr. Swann five times for two to four days at a time. She always slept in the basement

with her brother. She slept on a cot and he slept on his bed in the same room. She did not stay

on the fourth floor in order to be near her brother (Tr. 586-87, 633, 659). In 2010, she visited

four times (Tr. 600) and started staying on the fourth floor (Tr. 643-45). Mr. Swann would

sometimes sleep up there in 2011 (Tr. 663). In 2012, she visited six times. On the last visit she

moved in with Mr. Swann to care for him until his death (Tr. 600). Ms. Ryder testified that Mr.

Swann moved up to the fourth floor in 2012 after Mr. Lord filed a Loft Board application (Tr.

606-07), but also testified that he moved there in 2011 before the application was filed (Tr. 666-

68).

Ms. Flippen testified that she lived with Mr. Swann four times including from late

August 2009 until February 2010 (Tr. 420, 423, 717-22; Resp. Exs. NN, OO, PP). During the

window period, Ms. Flippen would come home in the evening and would either bring dinner or

they would go out. When they were done eating, Mr. Swann would take her to the fourth floor in

the elevator and return to the basement to sleep (Tr. 465). During the day Mr. Swann would

- 14 -

work, sleep, and paint in the basement (Tr. 467-68).

Ms. Flippen testified she also visited Mr. Swann for shorter stays between 1996 and his

death in 2013 (Tr. 434). She always slept on the fourth floor and Mr. Swann slept in the

basement (Tr. 425). Ms. Flippen testified that before, during, and after the window period, Mr.

Swann would have Thanksgiving and other parties on both the fourth floor and in the basement

(Tr. 426; Resp. Exs. Z, GG). Ms. Flippen testified that Mr. Swann moved to the fourth floor in

2012 after Mr. Lord’s application was filed. Prior to that, he was living in the basement (Tr.

541-43).

Petitioners’ proof that Mr. Swann lived and slept on the fourth floor and used the

basement as his office and slept there occasionally was more credible than respondent’s proof

that Mr. Swann lived in the basement for the entire window period. While it is very likely that

Mr. Swann slept in the basement on a cot when guests visited, it seems more likely than not that

he would sleep in the large, comfortable bed on the residentially furnished fourth floor when no

one was visiting and it was not too hot. It seems highly unlikely that Mr. Swann lived in a dirty,

unfinished basement that had no kitchen and a small bathroom that housed the laundry machines

used by the tenants in order to live with and “guard” his life’s work, as claimed by respondent’s

witnesses (Flippen: Tr. 556-59, 567-68; Ryder: Tr. 629-30). Ms. Flippen acknowledged that

when she was not visiting, she did not know where Mr. Swann slept, where he took his meals, or

whether Mr. Nunez visited him regularly (Tr. 499-502). Mr. Nunez’s credible testimony that he

made shorter visits when Ms. Ryder was visiting would explain why she was unaware that he

was regularly helping Mr. Swann.

Ms. Ryder’s testimony that Mr. Swann lived on the fourth floor before and after the

window period but lived in the basement during the window period was not credible. She was

unable to state when Mr. Swann changed residences except to say that he was not living on the

fourth floor during the window period (Tr. 628-29, 666-68). Ms. Ryder’s further explanation

that the basement was not always musty and dirty and that the fourth floor was not always

pristine (Tr. 659-62) was nonsensical since both spaces were in regular use by Mr. Swann and

his visitors. Her statement was also inconsistent with the photographic evidence and with Ms.

Flippen’s assertion that Mr. Swann always had overflowing ashtrays and clutter around him in

the basement and that the fourth floor was kept clean because it held his collections (Tr. 494-95,

569). Also incredible was Ms. Ryder’s claim that when she visited in 2008 and 2009 she chose

- 15 -

to sleep on the army cot next to her brother in the basement so that she could be near him. While

it is understandable that Ms. Ryder wanted to be nearby while caring for Mr. Swann at the end of

his life, this was not the case during other non-window periods when she visited and there was

no logical explanation why this was necessary during the window period.

Even if respondent’s version of Mr. Swann’s living arrangements were credited, the

fourth floor would still qualify as a residence. Under MDL section 281(5), an IMD must be

“occupied for residential purposes as the residence or home of any three or more families living

independently from one another for” 12 consecutive months between January 1, 2008, and

December 31, 2009. According to MDL section 4(1), the word “occupied” must be construed as

if followed by the words “or is intended, arranged or designed to be used or occupied;” see also

Pels, OATH 2481/11 at 9.

Thus, even if Mr. Swann slept, worked, and ate in the basement, he also occupied the

fourth floor under the MDL. The fourth floor was arranged as a residence and included typical

residential features such as a bed, a kitchen, dining and living room furniture, a bathroom, and

personal belongings. This space was created by Mr. Swann to be a residence before the window

period and remained in that state during and after the window period. Mr. Swann had exclusive

control of the unit enabling him and his guests to utilize it as a residence whenever he wanted,

including Ms. Flippen who lived there for six months during the window period. Moreover, Mr.

Swann occupied the fourth floor as his residence before and after the window period. The fact

that Mr. Swann allowed guests to stay there while he slept in the basement during the window

period, does not diminish the inherent residential character of the space. Pels, OATH 2481/11 at

10 (fact that tenant sublet space to other artists during window period did not diminish inherent

character of the residential space).

Whether the basement and fourth floor should be considered a single residential IMD was

never addressed by the parties. Thus, only the fourth floor should be a covered IMD unit.

2. Petitioners qualify for protection under the Loft Law

Unlike building coverage, a determination that an applicant is a residential occupant

qualified for protection requires a showing that, “[e]xcept as otherwise provided herein . . . the

residential occupant is in possession of a residential unit, covered as part of an IMD.” 29 RCNY

§ 2-09(b)(1).

- 16 -

The unrebutted testimony of Ms. Langenegger, Mr. Wassmann, and Ms. Gui, as

corroborated by documentary evidence and admissions by Ms. Flippen and Ms. Ryder,

established that they currently occupy their units as residences and, that they have done so since

prior to the effective date of the Loft Law.

Mr. Wassmann and Ms. Langenegger are protected occupants because they are the prime

lessees and are in possession of their respective units. 29 RCNY § 2-09(a) (Lexis 2014) (“Prime

lessee means the party with whom the landlord entered into a lease or rental agreement for use

and occupancy of a portion of an IMD, which is being used residentially, regardless of whether

the lessee is currently in occupancy or whether the lease remains in effect.”); see also Matter of

Gareza, Loft Bd. Order No. 4243 at 3-4 (Feb. 20, 2014) (“Tenants are the occupants entitled to

Loft Law protection pursuant to § 2-09(b)(1) because they are the prime lessees of the [sic] their

respective units and are in possession of their respective units.”).

Even though Ms. Gui was not on the third floor lease, she is also a protected occupant.

Loft Board Rule 2-09 provides for such protection if the occupant was in possession of the unit

prior to June 21, 2010, the effective date of the Loft Law, even when the occupant does not have

a written lease and occupies the unit without consent of the landlord. 29 RCNY § 2-09(b)(2)

(Lexis 2014); see also 545 Eighth Ave. Assocs. v. NYC Loft Bd., 232 A.D.2d 153, 154 (1st Dep’t

1996) (residential occupants in possession on the requisite dates entitled to be protected

occupants); Gareza, Loft Bd. Order No. 4243 at 4 (“Section 2-09(b)(2) provides for protected

occupancy status in the case that the tenant in possession of the unit is not the prime lessee.”).

FINDINGS AND CONCLUSIONS

1. Petitioners demonstrated that 357 Bowery is an interim multiple dwelling under the Loft Law and had three residentially occupied units during the applicable window period on the second, third, and fourth floors.

2. Petitioners demonstrated that Ms. Langenegger is the protected

occupant of the second floor and that Mr. Wassmann and Ms. Gui are the protected occupants of the third floor.

- 17 -

RECOMMENDATION

The application should be granted.

Alessandra F. Zorgniotti Administrative Law Judge

October 22, 2014 SUBMITTED TO: RICK D. CHANDLER, P.E. Commissioner APPEARANCES: DAVID E. FRAZER, ESQ. Attorney for Petitioners ROSENBERG & ESTIS, P.C. Attorneys for Respondent BY: LUISE A. BARRACK, ESQ. BY: EMILY MACHIZ PRAGER, ESQ.

ORDER

NEW YORK CITY LOFT BOARD

In the Matter of the Application of Loft Board Order No. 4350

VARIOUS TENANTS OF 357 BOWERY Docket No. TR-1 098

RE: 357 Bowery New York, New York

IMD No.: None

ORDER

The New York City Loft Board accepts in part and rejects in part the Report and Recommendation of Administrative Law Judge Alessandra F. Zorgniotti dated October 22, 2014 ("Report").

BACKGROUND

On July 2, 2013, Denise Langenegger, occupant of the second floor unit, and Christian Wassman and Luisa Gui, occupants of the third floor unit ("Tenants") in the building located at 357 Bowery, New York, New York ("Building") filed an application seeking a finding that: 1) the Building is subject to Article 7-C coverage pursuant to Multiple Dwelling Law ("MDL") § 281 (5); 2) the second, third and fourth floor units ("Units") are covered interim multiple dwelling ("IMD") units; and 3) Tenants are the protected occupants of their respective units. Tenants claim that, during the requisite window period ("Window Period"}, they occupied their respective units, and that lngo Swann, former owner of the Building, now deceased, occupied the fourth floor unit.

On August 1, 2013, Swann Spieker Partners ("Owner"}, the owner of the Building, filed an answer opposing Tenants' application.

The Loft Board referred the matter to the Office of Administrative Trials and Hearings, which assigned the case to Administrative Law Judge Alessandra F. Zorgniotti for adjudication. In her Report, Judge Zorgniotti recommended the Loft Board find that: 1) the Building is an IMD pursuant to MDL§ 281(5) with covered units on the second, third and fourth floors; and 2) Tenants are the protected occupants of their respective units. We agree that the Units are IMDs, but reject the finding of protected occupancy for Ms. Gui.

ANALYSIS

A. The Building is an IMD pursuant to MDL§ 281 (5).

Owner's only challenge to eligibility for Loft Law coverage is its claim that there were not three or more families living independently for twelve consecutive months during the Window Period. As discussed below, we accept Judge Zorgniotti's finding that the Tenants and Mr. Swann each residentially occupied their respective Units for at least twelve consecutive months during the Window Period and therefore, the Building is an IMD.

1. The second floor unit was residentially occupied during the Window Period.

Ms. Langenegger testified that she has resided in the second floor unit since May of 2000, and presented six residential leases that she signed with Mr. Swann between 2000 and 2006. Ms. Langenegger stated that her work as a Swiss television correspondent required frequent travel in 2008 and 2009, but that she maintained her residence on the second floor.

Owner did not present any evidence to refute Ms. Langenegger's Window Period occupancy. Rather, Owner claimed that Ms. Langenegger's frequent travel meant that there was no residential occupancy in the second floor unit for twelve consecutive months during the Window Period. Judge Zorgniotti correctly held that Ms. Langenegger's frequent travel does not disqualify the unit from Loft Law coverage. It is well established that an occupant's itinerant occupation does not bar Article 7-C coverage.

See, Matter of Jackson, Loft Board Order No 1043 (May 31, 1990)(holding that the tenant still occupied his unit during the Window Period despite his frequent career-related travel). Thus, we find that Ms. Langenegger residentially occupied the second floor unit for at least twelve consecutive months during the Window Period.

2. The third floor unit was residentially occupied during the Window Period.

Mr. Wassman and Ms. Gui testified that although the lease term began in September 2008, Mr. Wassman has resided in the third floor unit since August 2008 and Ms. Gui, has resided in the third floor unit since September of 2008. See, Transcript ("Tr.") at 57. Mr. Wassman presented a lease effective September 1, 2008, listing him as tenant and listing Ms. Gui is listed as his emergency contact and next of kin. See, Lease, dated September 1, 2008. Mr. Wassman and Ms. Gui also submitted extensive documentary evidence in support of their Window Period occupancy, including Mr. Wassman's driver's license, insurance policies, social security statement, joint tax returns, cell phone, and bank records.

Here, Owner also presented no evidence to counter the claim that they occupied their unit during the Window Period. In light of the record, we accept Judge Zorgniotti's finding that Mr. Wassman and Ms. Gui residentially occupied the third floor unit for twelve consecutive months during the Window Period.

3. The fourth floor unit was residentially occupied during the Window Period.

Owner disputes that Mr. Swann, the former owner, residentially occupied the fourth floor unit during the Window Period. Murleen Ryder, Mr. Swann's sister, who is the executrix of his will and beneficiary of his estate, testified that he occupied the unit before and after, but not during, the Window Period. See, Tr. at 653, 664. According Ms. Ryder's testimony and that of her daughter, Elsbeth Flippen, Mr. Swann lived and worked in the basement, and maintained the fourth floor as a guest apartment and museum for his artwork during the Window Period. See, Tr. at 494-95.

The record shows, and Owner does not dispute, that the basement is unfinished, has hanging wires, pipes, open walls, open electrical fixtures and does not contain a kitchen. See, Tr. at 26, 641-643. On the other hand, the fourth floor unit is a finished residential unit and contains a kitchen with a sink, refrigerator, hot plate and cooking utensils as well as a bathroom with a tub. In her Report, Judge Zorgniotti found Owner's claim that Mr. Swann chose to live in an unfinished basement without a kitchen, as opposed to the fourth floor apartment, to be contrary to the weight of the evidence. See, Report at 14. We agree.

Ms. Ryder's and Ms. Flippen's testimony is also contradicted by the other testimony in the record, most notably the testimony of Jacques Nunez, Mr. Swann's friend. Mr. Nunez testified that he visited Mr. Swann daily during the Window Period and that Mr. Swann slept in the fourth floor unit. Mr. Nunez also described Mr. Swann's daily routine of taking the elevator down to the basement to work during the day, and returning to fourth floor in the evening to drink, eat and watch television before going to bed. See, Tr. at 13, 14. Tenants' testimony corroborated the basic details of Mr. Swann's daily routine as described by Mr. Nunez. See, Tr. at 82, 249-50, 298.

Judge Zorgniotti found that testimony provided by Tenants regarding the Buildings' occupancy during the Window Period was more credible than that of Ms. Flippen and Ms. Ryder. See, Report at 4 and 14. We accept Judge Zorgniotti's assessment of credibility and fact finding that Mr. Swann lived in the fourth floor unit for twelve consecutive months during the Window Period.

B. Protected Occupancy Status.

The record includes leases for applicants Denise Langenegger and Christian Wassman that predate the effective date of MDL§ 281 (5), June 21, 2010. Ms. Langenegger and Mr. Wassman submitted extensive documentary evidence that showed that they are in possession of their respective unit and it is their primary residence. Mr. Wassman submitted his driver's license, car insurance records, homeowner's insurance policy and social security statement, all listing the Building's address. Ms. Langenegger presented bank records, various newspaper and magazine subscriptions, and bills for her telephone and internet service addressed to the Building.

2

Owner argued that Mr. Wassman and Ms. Gui's immigration status, tax status, and the fact that Mr. Wassman practices architecture without a license affects their claim for Article 7 -C coverage of the third floor unit. However, the Loft Board has held that a tenant's citizenship status is irrelevant to the issue of coverage and protected occupancy status. See, Matter of Cohen, Loft Board Order No. 4261 (Mar. 20, 2014). Also irrelevant are the alleged tax irregularities and Mr. Wassman's professional status.

Based on the evidence in the record, we find that Ms. Langenegger and Mr. Wassman are the prime lessees of their respective unit, their tenancies began prior to June 21, 2010, they are in possession of their units and occupy their units as their primary residences. Therefore, they are the protected occupants of their respective units pursuant to 29 RCNY § 2-09(b)(1).

Judge Zorgniotti also found that Ms. Gui was the residential occupant entitled to protection of the third floor unit under 29 RCNY § 2-09(b)(2) because Ms. Gui was in possession of the unit prior to the effective date of the Loft Law. We disagree.

As an initial matter, 29 RCNY § 2-09(b)(2), is the only subsection of 2-09(b) that does not determine protected occupant status. This subsection only provides that where a residential occupant in possession of a covered unit is not the prime lessee and was in possession of the unit on the effective date of the law, the lack of consent of the landlord to a sublet, assignment or subdivision that established the occupancy cannot be used as a defense against a finding of Article 7-C protection. Accordingly, relying on subsection (2) alone is insufficient.

Although the record shows that Ms. Gui occupied the third floor unit prior to June 21, 2010, where, as here, there is a prime lessee, she does not become a protected occupant. Mr. Wassman is the prime lessee who is in possession. As such, he is deemed the residential occupant entitled to protection. The mere fact that Ms. Gul shared the unit with Mr. Wassman, the prime lessee, on the effective date of the law does not automatically entitle her to protected occupant status. Moreover, we note that Ms. Gui's tenancy is not the result of sublet, assignment or subdivision. Therefore, § 2-09(b)(2) does not apply. However, in Mr. Wassman's absence, Ms Gui may be entitled to protected occupant status under 29 RCNY § 2-09(b)(1) and (2) or, depending upon her relationship with Mr. Wassman, she may have succession rights pursuant to 29 RCNY § 2-08.1 (c).

For the reasons set forth above, the Loft Board finds that: 1) the Building is an IMD pursuant to MDL§ 281(5), with covered units on the second, third and fourth floors; 2) Denise Langenegger is the protected occupant of the second floor unit; and 3) Christian Wassmann is the protected occupant of the third floor unit.

The Loft Board hereby directs the Owner to register the second, third and fourth floor units with the Loft Board within 30 days of the mailing date of this Order pursuant to 29 R(ZNY 2-05. Failure to do so may result in enforcement proceedings and the imposition of fines.

DATED: January 15, 2015

Alexandra Fisher Chairperson

Board Members Concurring: Barowitz, Spadafora, Fisher, Bolden-Rivera, Shelton

Board Members Dissenting: Delaney

Board Members Absent: Foggin, Schachter

DATE LOFT BOARD ORDER MAILED: JAN 2 3 2015.

3

Opinion

Re: 80 Varick Street, Brendan Behlke, P0-0001 177 Water Street, Brooklyn, Doreen Gallo, Octavia Molina, Gayle Marriner-Smith, TR-1043 Various Tenants of 357 Bowery, 357 Bowery, TR-1098

Opinion of Chuck Delaney

As the tenant representative I voted against the proposed orders for P0-0001 (80 Varick Street) and TR-

1098 (357 Bowery) but voted in favor ofTR-1043 {177 Water Street, Brooklyn). I'm filing a single

opinion to be appended to all three cases because each involves a different facet of the same question:

Who is the residential occupant qualified for protection of the Loft Law?

In my view, in two of these cases, staff has confused the issue of protected occupancy in a covered unit

with the question of who is entitled to possession of a unit in cases where there is a dispute between

different parties.

The culprit here is the overly-complex Loft Board Rule 2-09 which is currently entitled: "Occupant

Qualified for Article 7-C Protection, Privity, Subletting and Recovery of a Subdivided Unit." When this

Rule was adopted in 1983 (when the Board called its Rules "Regulations"), it was titled "Subletting, Sub­

Division and Assignment."

Whatever 'it's called, the Rule attempts to address multiple issues that are distinctly different and does

so in a very confusing way. The rule provides the terms for:

• Future subletting in a covered IMD unit

• Determining who would be entitled to possession of a single IMD unit that was sublet for a

period of time that may have included some or all of the qualifying window period if the

subtenant was in occupancy when the Law took effect.

• Establishing privity with the landlord for subtenants in a space that has been subdivided into

multiple units and determining the rent to be paid by the subtenant to the landlord once a

direct relationship between them is established.

• Providing a way for a prime tenant to recover some or all subdivided space under certain

conditions.

• Providing a way for a prime tenant to recover some of the costs associated with the

development of one or more subdivided units.

• Establishing a rent for a former prime tenant to pay to the landlord in situations where the rent

the prime tenant was collecting for the subdivided spaces exceeded the total rent the prime

tenant was paying to the landlord.

These are all complicated issues that had to be sorted out after the origina I Loft Law passed in 1982. It

is unfortunate that they're all grouped in a lengthy rule that is hard to parse. In these cases, all of which

involve buildings that were covered under the 2010 amendments to the Loft Law that added section

281.5, the building and the residentially occupied units need to meet certain requirements. As with the

1982 and 1987 versions of the Loft Law, the building needs to have a history of commercial or

manufacturing use, lack a residential C of 0, and meet certain zoning requirements. It also has to have

been the home of the requisite number of families that were living independently of each other for

twelve continuous months during the January 1, 2008 to December 31, 2009 window period. For MDL

281.5 coverage there are also exclusions for buildings in many Industrial Business Zones (IBZ) and

buildings that contain certain uses from several zoning Use Groups that has been determined by the Loft

Board to be incompatible with residential use.

Unlike the earlier versions of the Law, to be covered under MDL 281.5 the units need to meet certain

requirements as well- a minimum square footage, a window, a means of egress that doesn't go through

another unit and a location other than in a cellar or basement. In the original Loft Law, conditions such

as there were not a reason for exclusion from coverage but rather issues to be dealt with during the

I ega lization process.

However, the requirements for residential use are clear- the unit must be the home of a family. The

Loft Board's coverage rule states that the definition of family to be used by the Board for coverage

issues is the definition contained in MDL Section 4 (Definitions).S

5. A "family" is either a person occupying a dwelling and maintaining a household, with not more than four boarders, roomers or lodgers, or two or more persons occupying a dwelling, living together and maintaining a common household, with not more than four boarders, roomers or lodgers. A "boarder," "roomer" or "lodger" residing with a family shall mean a person living within the household who pays a consideration for such residence and does not occupy such space within the household as an incident of employment therein.

It is clear from the definition that a "boarder," "roomer," or " lodger" pays a "consideration for such

residence." It does not specify to whom that consideration is paid.

There have been many cases approved by the Loft Board over the years where more than one person

was identified as being a "residential occupant qualified for protection" (ROQFP) after the satisfactory

proofs were submitted during a hearing or conference. Nowhere in the Board's rules does it state that

there can only be one ROQFP in a unit. Nowhere does it state that to be considered a ROQFP requires

that the individual be known to the building owner or pay rent to that owner. All an individual needs to

do to gain that status is demonstrate that he/she occupied the unit residentially during the window

period and was there whenthe law took effect.

A former Loft Board chair once observed, "The Loft Law is a hybrid. In rent stabilization it is the unit that

is covered, in rent control it is the individual who is covered. Under the Loft Law, both the unit and the

protected occupant are covered." For example, the ROQFP can sell fixtures and improvements once to

another incoming tenant under MDL 286.6. The unit would remain covered and the new tenant would

also be the protected occupant. On the other hand, the tenant could sell his/her rights to the unit under

MDL 286.12 and the owner could install a new tenant who would not be a ROQFP with regard to the

benefit of rent protection or the responsibility to assist in the cost of code compliance. However, the

unit would remain a covered unit that must be brought up to code compliance and the same

requirements for meeting rules such as minimum housing maintenance standards still apply to the unit.

It has been the Loft Board's practice since its inception to determine protected occupancy status based

on proof of residential occupancy during the window period. While it is true that there are either/or

situations in some sublet circumstances where possession is in dispute, if several people occupied the

space during the window period they have all been named as ROQFPs, regardless of whether a specific

tenant paid rent or was known to the landlord. For the Board to change this practice now for no reason

is arbitrary.

The specific cases on the January 2015 docket involve different scenarios.

In P0-0001, 80 Varick Street, the decision by the OATH judge was made on the papers that were

submitted by the parties which included a stipulation of facts . Both parties agree that the applicant,

Brendan Behlke, has lived in the unit since the summer of 2004, as recounted in the proposed order.

Other facts include the owner listing Jesse Redniss in its Registration application as the "tenant in

occupancy" during the window period and at the present time. In its answer to the coverage

application, the owner's attorney identifies Jesse Redniss as the "prime tenant." Loft Board records

don't show any lease between the owner and Jesse Redniss, but rather a lease dated June, 1996 and a

2000 lease extension between the owner and three individuals- Seth Redniss, Christopher Brown, and

Jessica Kirwin .

In the summary of the case, it is pointed out that both the applicant and the landlord use the term

"tenant of record" which does not equate in my mind with ROQFP, and is not a term that appears in the

Board's rules.

One of the central tenets of the Loft Law is that owners gave sham leases that often prohibited living.

Many owners encouraged tenants to list a different address as their residence. The entire purpose of

the window period in the Loft Law is to set out a significant period of time when the owner should have

been aware of who was residing in the building and how the space was being used. If the residential

tenant can provide sufficient proof of residence during this period, the occupant has been deemed to be

a ROQFP.

In this instance, all parties agree that the applicant has been living in the space for over 10 years. No

other tenant filed an answer to this application. I understand that there may be a service question

involved. However, since three names were on the original lease, it would appear that this is a loft unit

with multiple sleeping areas and that Mr. Behlke has been occupying one of these for 10 years without

any complaint or action by either the landlord or any other occupant. It was only when he had the

audacity to request his status be recognized by the Loft Board that the owner objected. I have no

problem remanding the case for a review to make certain proper service was effectuated. However, in

the draft of the order there is a line of reasoning that sets out an "either/or" line of reasoning that I

don't think is correct. For example, on page 3 the order states:

"Under 29 RCNY § 2-09(b)(4), the prime lessee or sublessor is deemed to be the protected

occupant if he or she can prove that the IMD unit is his or her primary residence, even if another person is in possession. If Jesse Redniss is the prime lessee, the mere fact that he had a roommate on the effective date of the law does not automatically entitle the roommate to protected occupant status. Jesse Redniss, who Tenant served at the Unit's address, did not file an answer to the application, or make an appearance at OATH following a Notice of Default also served to him at the Unit. Further complicating the analysis is the fact that according to Loft Board records, the prime lessees of the Unit are Seth Redniss, Christopher Brown, and Jessica Kirwin . The original prime lessees were not served and it is not known whether t~ey assigned the lease to Jesse Redniss or if Jesse Redniss is a sublessor.

"Thus, in order to determine Tenant's status, we first must establish Jesse Redniss' status. Because we do not know whether Jesse Redniss is the prime lessee or the sublessor; or whether or not he is in possession of the unit, we cannot determine if he is the protected occupant. Only if he is not the protected occupant can we make a determination as to Tenant's status as a protected occupant. Accordingly, further fact finding is necessary to determine who if anyone is the prime lessee, whether Jesse Redniss was properly served, and whether the prime lessee, if any, uses the Unit as his primary residence."

The various questions posed here are relevant in terms of whether the landlord's claim that Jesse Redniss is the "tenant of record ." Redniss may be a prime tenant, a sublessor, or a straw man. It will indeed be interesting to learn more. But none of that is pertinent to the applicant's status. Regardless of the whereabouts of Jesse Redniss, it doesn't alter the fact that Behlke has been a resident of this unit for more than 10 years. If he had moved in two weeks before the effective date of the law, we would be dealing with a separate set of facts.

Behlke should be recognized as a protected occupant. He has met all the requirements set out in the Loft Law.

In TR-1043, 177 Water Street, we see a very different set of facts. Three applicants are seeking coverage for their respective units. The Order correctly finds the building to be an IMD consisting of four units- one on the second floor with an identified ROQFP, one on the third floor with an identified ROQFP. On the fourth floor, the order finds that the floor was divided into two separate residential units and orders them both to be registered by the landlord . This is also correct.

It is clear that the fourth floor was divided into two units by 1990. At various times prior to the window period, the applicant seeking coverage for this floor occupied one or the other of those units. However, the evidence that she no longer maintains either unit as her primary residence is very strong. The Board was correct to distinguish this case from Matter of Pels, LB Order 4161 .

The other outstanding questions are:

With the fourth floor applicant having been found to not be the protected occupant, do any other the individuals who lived on the fourth floor during the window period have a claim for protected occupancy? If so, who?

With regard to the claim by the second and third floor protected occupants that the basement is not part of the covered space for either unit, the current exclusions of basements and cellars under MDL 281.5 is clear. However, as pointed out in the order, a claim for use of the basement as a service was

not properly before the Loft Board. I would think that a claim for diminution of services would be the proper way to pursue that issue.

Finally, in TR-1098 we encounter another situation where the Loft Board order takes issue with the OATH Judge's finding of protected occupancy status for one of the applicants. In this case,

"Although the record shows that Ms. Gui occupied the third floor unit prior to June 21, 2010, where, as here, there is a prime lessee, she does not become a protected occupant. Mr. Wassman is the prime lessee who is in possession. As such, he is deemed the residential occupant entitled to protection. The mere fact that Ms. Gui shared the unit with Mr. Wassman, the prime lessee, on the effective date of the law does not automatically entitle her to protected occupant status. Moreover, we note that Ms. Gui's tenancy is not the result of sublet, assignment or subdivision. Therefore, § 2-09(b)(2) does not apply. However, in Mr. Wassman's absence, Ms. Gui may be entitled to protected occupant status under 29 RCNY § 2-09(b)(1) and (2) or, depending upon her relationship with Mr. Wassman, she may have succession rights pursuant to 29RCNY § 2-08.1(c)."

As in the Varick Street case, I think the OATH judge was correct to find that Ms. Gui is a protected occupant of the unit in question. Again, there is nothing in the Loft Board's rules that sets forth that there can only be one protected occupant in a unit. Her status is not dependent on her relationship with Mr. Wassman. She should be acknowledged as a ROQFP. With the various other issues settled, I think this portion ofthe order should be reconsidered .

It would be helpful for the Board to examine whether this cumbersome rule can be divided into several different shorter rules that pertain to the various circumstances that it seeks to address. One rule should apply to subdivided space and all the related privity, rent, recovery, and compensation issues, and another to future subletting of covered IMD units. An additional rule should be crafted to address the issue where a subtenant was in possession on the effective date of the law and there is a dispute over who has the right to possession.

ORDER

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

LUISA GUI, CHRISTIAN WASSMAN & DENISE LANGENEGGER

ORDER

Loft Board Order No. 4498

Docket No. R-0338

RE: 357 Bowery New York, New York

IMD No. 10925

Challenged Order No. 4350

On July 2, 2013, Denise Langenegger, the occupant of the second floor unit, and Christian Wassman and Luisa Gui ('Tenants"), the occupants of the third floor unit in the building located at 357 Bowery, New York, New York ("Building") filed an application seeking Article 7-C coverage pursuant to Multiple Dwelling Law ("MDL") § 281 (5) for the second, third and fourth floor units; and protected occupant status of their respective units.

On January 15, 2015, the Loft Board issued Order No. 4350 ("Order''), which found that the Building is an interim multiple dwelling pursuant to MDL § 281 (5) with three units, one unit each on the second, third and fourth floors, and that Ms. Langenegger and Mr. Wassman are the protected occupants of their respective units.

On February 18, 2015, Tenants filed an application requesting reconsideration of the Order based on an alleged error of law.

On January 8, 2016, 357 Bowery Partners LLC ("Owner"), the owner of the Building, filed an application registering the Building and the second, third and fourth floors as IMD's pursuant to MDL § 281 (5) and listed Ms. Langenegger and Mr. Wassman as protected occupants.

On March 24, 2016, Owner amended its registration application to include Luisa Gui as an additional protected occupant of the third floor. The Loft Board records have been updated accordingly.

· Based on the foregoing, the reconsideration application is deemed dismissed as moot.

DATED: April21, 2016

Alexandra Fisher Chairperson

Board Members Concurring: Carver, Barowitz, Gregory, Fisher, Delaney, Bolden-Rivera Schachter, Shelton

DATE LOFT BOARD oRDER MAILED: APR at ~om

Opinions from April 21, 2016 Meeting

4) Gui et. al., 357 Bowery, R-0338

Opinion of Chuck Delaney

As the tenant representative on the Loft Board, I voted for the proposed order.

This was among the first cases to reach the Loft Board that raised questions about who is a protected

occupant under the Loft Law. The Board is, in my opinion, mistakenly applying sections of Rule 2-09 that

were originally intended to address matters of subdivision, subletting, and assignment in disputed cases

to coverage cases where there is no dispute between a prime tenant and subtenant.

The applicant was forced to file for Reconsideration which is now withdrawn after the landlord agreed

to register Ms. Gui, who lived in the unit on June 21, 2010 and during the window period. This is

another case where only the Loft Board feels compelled to apply Rule 2-09 to coverage cases when

there is no dispute between a prime tenant and a subtenant.