Matter of Gallo OATH Index No. 2401/13 (Oct. 10, 2014), adopted in part, rejected in part, Loft Board Order

No. 4349 (Jan. 15, 2015), reconsideration denied, Loft Bd. Order No. 4426 (Sept. 17, 2015),

appended [Loft Bd. Dkt. No. TR-1043; 177 Water Street, Brooklyn, N.Y.]

In a coverage proceeding, applicants established that the building located at 177 Water Street, Brooklyn is an interim multiple dwelling, their units are covered, and that they qualify for protection under the Loft Law. ALJ recommended that the application be granted. Loft Board adopts ALJ’s recommendation that building is an IMD, that two of the applicants are protected tenants, that the basement is excluded from coverage as part of two of the units and that a claim pursuant to Loft Board rule 2-04(c) was not properly before the Loft Board. The Loft Board rejected the recommendation of protected status for one of the applicants and disagreed with the ALJ’s determination that it was unnecessary to determine whether the fourth floor was divided into two separate units; instead the Board found that there are 4 IMD units, including 2 separate IMD units on the 4

th floor. The prime lessee found to be unprotected

under 29 RCNY 2-09(b)(4), was not in possession of her unit, the unit was not her primary residence as she subdivided it, and rented it out, and did not convincing show even sporadic use of the premises during the window period.

______________________________________________________

NEW YORK CITY OFFICE OF

ADMINISTRATIVE TRIALS AND HEARINGS

In the Matter of

DOREEN GALLO, OCTAVIO MOLINA,

AND GAYLE MARRINER-SMITH Petitioners

- against -

177 WATER STREET REALTY, LLC,

AND THOMAS CALFA

Respondents

______________________________________________________

REPORT AND RECOMMENDATION

ASTRID B. GLOADE, Administrative Law Judge

Petitioners Doreen Gallo, Octavio Molina, and Gayle Marriner-Smith filed an application

with the Loft Board on November 7, 2012 (Loft Board Docket No. TR-1043) pursuant to Article

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7-C, section 281(5) 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

the building located at 177 Water Street, Brooklyn, New York (“the Building”), is an interim

multiple dwelling (“IMD”), that they residentially occupied the second, third, and fourth floor

units respectively during the applicable window period, and that they are the protected occupants

of these units. Respondents, 177 Water Street Realty LLC and Thomas Calfa, owners of the

Building, oppose the application (ALJ Exs. 1, 2). The Loft Board referred the matter to this

tribunal on March 29, 2013, for settlement conference and hearing. See 29 RCNY § 1-

06(j)(2)(ii) (Lexis 2014).

A nine-day hearing was held during which the parties presented the testimony of 13

witnesses and offered documentary evidence. The parties filed post-trial briefs on July 25, 2014.

For the reasons below, I find that the Building is an IMD and the second, third, and fourth

floor units are covered. I further find that petitioners are the protected occupants of their

respective units.

ANALYSIS

Multiple Dwelling Law

To be covered by the Loft Law, a building must: (1) at any time have been occupied for

manufacturing, commercial, or warehouse purposes; (2) lack a certificate of occupancy or of

compliance permitting residential use on the qualifying unit on June 21, 2010; (3) not be owned

by a municipality; and (4) have been 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

(“window period”). MDL § 281(5) (Lexis 2014).

To qualify for coverage under MDL section 281(5), the unit must (i) not be located in a

basement or cellar; (ii) have at least one window opening onto a street or lawful yard or

courtyard as defined in the zoning resolution for such municipality; (iii) have at least one

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

unit; and (iv) be at least 400 square feet in area. MDL § 281(5).

Most of the requirements for finding that the Building is an IMD and that the units

qualify for coverage are undisputed. Indeed, in their answer respondents acknowledge that the

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Building, which is privately owned, has been occupied for commercial use and lacks a certificate

of occupancy (ALJ Ex. 2). The credible and unchallenged evidence establishes that each of the

units is located on the second, third and fourth floors of the Building (Tr. 55, 79, 399, 659; Pet.

Exs. 5-8, 29-32, 42); has at least one window facing a street or lawful yard or courtyard (Tr. 111-

12, 410-11, 468, 503, 578, 704; Pet. Exs. 18, 19, 38, 51: Resp. Ex. BB); is accessed through a

public stairway that does not require passage through another residential unit (Tr. 184-85, 328-

30, 429-30, 503-04, 1207; Pet. Exs. 19, 38, 51); and is over 400 square feet (Tr. 480, 660, 669-

70; Pet. Ex. 19). The contested issue is whether the Building was residentially occupied by three

or more families living independently from one another for 12 consecutive months during the

window period.

Residential Occupancy During the Window Period

To establish the residential nature of a loft unit during the window period, an applicant

must show “sufficient indicia of independent living” to demonstrate the unit’s use as a residence,

as well as some physical conversion of the unit to a dwelling. Franmar Infants Wear, Inc. v.

Rios, 143 Misc.2d 562, 563 (App. Term 1st Dep’t 1989); Anthony v. NYC Loft Bd., 122 A.D.2d

725, 727 (1st Dep’t 1986); see also Matter of South 11th Street Tenants Assoc. & Matter of Lid

Fla Realty Corp., OATH Index Nos. 1242-44/96 at 42-43 (Mar. 30, 1999), adopted, Loft Bd.

Order No. 2397 (Apr. 29, 1999) (hereinafter “Matter of South 11th Street”); 29 RCNY § 2-

08(a)(3) (Lexis 2014).

Determination of the sufficiency of the indicia of residential nature of the loft requires a

case-by-case analysis. No single factor is determinative. See Matter of Boyers, OATH Index

Nos. 1338/12, 1381/12 & 1403/13 at 13 (Feb. 10, 2014); Matter of Gareza, OATH Index Nos.

2061/12 & 760/13 at 6 (Dec. 12, 2012), adopted in relevant part, Loft Bd. Order No. 4243 (Feb.

20, 2014); 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); Matter of South 11th Street, OATH 1242-

44/96 at 42.

Under the Loft Board rules, determining whether the families are “living independently”

of each other requires an examination of whether a unit has a separate entrance accessible from a

public hallway or street, and has separate functional areas such as a kitchen, bedroom, living

room, or studio space. See 29 RCNY § 2-08(a)(3)(i), (ii) (Lexis 2014). Additionally, in

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determining whether there is sufficient physical conversion of the unit to residential use, this

tribunal has considered “the presence of permanent improvements, such as bathrooms, bathing

facilities, closets, and walls erected to separate living areas, and the presence of non-permanent

items reflecting residential use such as refrigerators, stoves, and beds.” Matter of Boyers, OATH

1338/12 at 13; see also Matter of Pels, OATH Index No. 2481/11 at 5-6 (June 20, 2012),

adopted, Loft Bd. Order No. 4161 (June 20, 2013) (finding the installation of a kitchen, stove,

refrigerator, cabinets, a desk and shelves, and the addition of walls to separate the living area and

an additional doorway, were sufficient indicia of independent living and conversion); Matter of

333 PAS CoO Tenants Group, OATH 968/08 at 16 (finding refrigerator, stove, bedroom with

built-in closets, and a bathroom with mirrors “sufficient proof of conversion to residential use”);

Matter of South 11th Street, OATH 1242-44/96 at 38-39, 41 (sufficient indicia of residential

conversion where tenant cleared out debris, erected sheet-rock walls and hung a heavy curtain to

enclose his living area, built a loft bed and shelving, installed a bathtub and a mail slot, and had

various personalty in the loft including, a table, chairs, hot plates, refrigerator, and stereo); c.f.

Matter of Boyers, OATH 1338/12 at 25-26 (insufficient conversion where loft used as a

commercial gym and dance and artist studio); Matter of Wada, OATH Index No. 1519/96 at 23

(July 25, 1997), adopted, Loft Bd. Order No. 2156 (Oct. 10, 1997) (insufficient physical

conversion where though tenant placed bed in the loft behind a movable partition, he had no

bathroom, kitchen, running water, appliances or fixtures in his space).

Petitioners must establish that they are entitled to the relief that they seek in their

application by a preponderance of the credible evidence. 29 RCNY § 1-06(i)(4) (Lexis 2014);

Matter of Gareza, OATH 2061/12 at 4. Petitioners have met their burden.

Second Floor Unit (Molina)

Molina moved into the Building in September 1980, when he and a roommate signed a

lease for rental of the second floor (Tr. 51, 58; Pet. Ex. 6). According to Molina, when he moved

into the second floor it was “raw space,” lacking walls, a bathroom, or a kitchen, and the floors

and windows were in need of repair (Tr. 54). He undertook renovations in the second floor

beginning in the fall of 1980. The renovations included building partitions to create bedrooms, a

kitchen and a bathroom, and installing appliances such as a refrigerator and a washing machine.

(Tr. 54-55; Pet. Ex. 20A). Molina signed renewal leases for the second floor in 1987, 1992, and,

most recently, he signed a lease for a five-year term in 1998 (Tr. 65-67; Pet. Exs. 5, 7, 8). Rick

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Liss, Molina’s friend, testified that he met Molina in 1980. Shortly after they met, Molina

invited Liss to accompany him to look at a loft that Molina planned to move into on the second

floor of the Building (Tr. 377-79). Liss visited Molina at the unit during the renovations and

after they were completed (Tr. 379).

Molina resided in the second floor unit until 1992, when he moved to the third floor of

the Building to live with Gallo, with whom he had entered into a relationship (Tr. 73, 147). He

and Gallo married in 1994 and had a child in 1997 (Tr. 78; Pet. Exs. 33, 34). According to

Molina, he did not live on the second floor during the time he lived with Gallo on the third floor,

but had subtenants who occupied the second floor unit (Tr. 148-49).

In 2002, Molina, who worked in the film industry, returned home from a business trip to

find that Gallo had locked him out of the third floor apartment. He resumed living in the second

floor unit and has resided there since that time, including during the window period (Molina: Tr.

79, 149-50; Gallo: Tr. 415). After he and Gallo separated, their daughter spent most of her time

on the third floor, but he saw her on evenings and weekends. In 2005 or 2006, Molina built a

loft bed in the second floor unit to accommodate his daughter’s overnight visits (Molina: Tr. 170;

Gallo: Tr. 417-18). Molina commenced divorce proceedings in 2009 and a divorce decree was

issued in July 2011 (Molina: Tr. 164; Gallo: Tr. 579; Pet. Ex. 60).

Molina’s sixteen-year old daughter, Ms. Molina, testified that her parents separated when

she was very young. She has no memory of them living together after her father moved out of

the third floor in 2002, when she was five years old, or of him living on the third floor (Tr. 323-

26). In 2006, her father built her a loft bed in the second floor unit that she used for overnight

visits (Tr. 323, 327). Between 2006 and 2011, Ms. Molina spent an average of one day per week

with her father on the second floor (Tr. 334-35). Ms. Molina considers her father’s unit her

home, but not her main home, which is with her mother in the third floor unit (Tr. 341).

Gallo testified that she and Molina lived on the third floor of the Building until 2002,

when he moved back to the second floor (Tr. 416). Abrahams, who has known Gallo and Molina

since the early 1980s and has visited them at the Building, testified that after they separated,

Molina lived on the second floor while Gallo continued to live on the third floor with their

daughter. Their living arrangements remained the same during the window period (Tr. 212-14,

218-20, 223, 232-33).

Lerochereuil, Molina’s friend and colleague, testified that he first visited Molina on the

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second floor of the Building in the spring of 2008, when they worked together on a film editing

project, which lasted into December 2008. Lerochereuil estimated that in 2008 he made over 40

social and business visits with Molina on the second floor of the Building. In 2009, he visited

Molina an average of once to twice per month (Tr. 262-67). Lerochereuil testified that Molina’s

unit is equipped with a kitchen in which Molina cooked him meals, a living room, a bathroom,

and a bedroom (Tr. 264, 281-82).

Molina described the layout of the unit and identified photographs taken inside the unit.

A floor plan of the unit drawn by Molina and the photographs were admitted into evidence (Pet.

Exs. 18, 19). The floor plan indicates that the unit is over 1,900 square feet (Pet. Ex. 19).

Molina identified his bedroom and its furnishings, a boiler room and hot water heater located

between the bedroom and a bathroom, a kitchen with appliances, a closet, a second bathroom, a

living room, a dining room, and a hallway. An area labeled “work studio” was used as a

bedroom. According to Molina, the photographs and the floor plan depict the unit as it was

configured during the window period (Tr. 97-112; Pet. Exs. 18, 19).

In addition to testimonial evidence, petitioners submitted documentary evidence in

support of their contention that Molina was the residential occupant of the second floor unit

during the window period. The evidence included voting records, utility bills, driver’s license,

passport, statements from banks and other financial institutions, and insurance information

relating to the window period.

Evidence such as receipt of mail at the subject unit and use of the unit’s address on

official documents may be considered as proof of an applicant’s residential use of the unit. See

Matter of Cohen, OATH Index No. 2015/12 at 10 (Aug. 23. 2013), adopted, Loft Bd. Order No.

4261 (Mar. 20, 2014) (citing Matter of Gareza, OATH 2061/12 at 8 (receipt of mail and tax

documents at the address, use of the address on a bank account, and being registered to vote at

the address); Matter of the Tenants of 141-155 S. Fifth Street, Loft Bd. Order No. 1739, 15 Loft

Bd. Rptr. 199, 212 (Jan. 19, 1995) (designating the loft address as applicant’s home address on

tax returns and marriage certificate, and maintaining homeowner’s insurance policy on the unit);

Matter of Muschel, Loft Bd. Order No. 33, 1 Loft Bd. Rptr. 27, 30 (Nov. 23, 1983) (indicating

the loft as the applicant’s address on tax returns, checks, and a passport was persuasive because

“the Board considers where one holds oneself out as residing as probative of where one resides

in fact”); Matter of Mussman, Loft Bd. Order No. 905, 9 Loft Bd. Rptr. 50, 59 (May 25, 1989)

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(finding that tenant did not residentially occupy the unit based in part on automobile registration,

automobile insurance, and voter registration reflecting another address plus the tenant’s inability

to explain why his wife resided at the unit without him).

Although Molina’s electrical bills, telephone bills, and a vehicle insurance identification

card identify the second floor unit as his mailing address during the window period (Pet. Exs. 17,

22, 27; Tr. 119-20), most of the documents submitted into evidence do not. For example,

Molina’s mailing address on his federal and state income tax documents, voting records, jury

summons, New York State Driver’s License, United States passport, dental insurance benefits

forms, bank account statements, cell phone statements, and investment account statements does

not identify a specific unit or apartment number within the Building (Pet. Exs. 1, 11, 13, 14, 16,

25, 26, 28; Tr. 172-77, 195-96). Molina maintained that he rarely included the second floor unit

in his address because he liked the idea of not having a specific floor designated on his address

(Tr. 177).

In the face of equivocal documentary evidence, the issue of whether Molina residentially

occupied the second floor unit during the window period turns on assessments of his credibility

and that of his witnesses. In making credibility determinations, this tribunal may consider such

factors as witness demeanor; consistency of witness’ testimony; supporting or corroborating

evidence; witness motivation, bias, or prejudice; and the degree to which a witness’ testimony

comports with common sense and human experience. 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).

During his testimony, Molina at times appeared to be vague and evasive. For example,

petitioners submitted Molina’s federal and New York State income tax returns for 2009 and

2010, which were redacted to conceal financial information (Pet. Exs. 3, 4). During 2009 and

2010, Molina had a roommate with whom he shared the second floor unit. Molina asserted on

cross-examination that he was unsure whether he reported the monies paid to him by his

roommate as income on his tax returns, even after he reviewed the unredacted returns (Tr. 187,

191, 197-99). It was only after vigorous cross-examination that Molina reluctantly

acknowledged that the amount he received as rent is identical to the amount declared as shop

rental income on his 2009 and 2010 income tax returns (Tr. 289-94; Pet. Exs. 3, 4). Molina’s

professed ignorance appeared feigned and his attempt to deny knowledge of the contents of his

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tax returns by claiming they were prepared by his accountant was disingenuous (Tr. 291).

Respondents sought to impeach Molina’s credibility with evidence that in sworn

deposition testimony given in May 2010 in a personal injury action filed by Gallo, Molina

identified a house he owns at North 6th Street, Brooklyn, as his residence, despite having

testified that he never lived there (Tr. 1228; Resp. Ex. V). On cross-examination, Molina

explained that in the fall of 2009 he occasionally slept at the North 6th Street house because he

was going through a difficult time as a result of the divorce proceedings and he also wanted to

repair the house (Tr. 1243-44). He sometimes used the North 6th Street address as his mailing

address for important mail (Tr. 1229). He stated that he occasionally slept at the North 6th Street

house, but resided at the Building (Tr. 1243-45).

However, Molina credibly and consistently testified that he resided in the second floor

unit throughout the window period. This testimony is corroborated by documentary evidence,

including his electrical bills, telephone bills, and a vehicle insurance identification card, and the

credible testimony of other witnesses, including Molina’s daughter, Gallo, Lerochereuil, and

Abrahams.

Respondents’ contention that the second floor unit should not be covered under the Loft

Law because Molina “commercialized” the unit is without merit. Respondents maintained that

Molina commercialized his unit because he used part of it for his film production business (Resp.

Br. at 28-29). The Loft Law, however, was intended to cover units that are used by artists for

both residential and commercial purposes. See Matter of South 11th Street, OATH 1242-44/96 at

60-61 (tenant’s use of one third of a loft for residential purposes was sufficiently substantial to

permit finding that the entire loft is covered); see also Matter of Pels, OATH 2481/11 at 9 (“loft

use is understood to be inherently multi-purpose, which is “much of the impetus” for the passage

of Article 7-C”). Therefore, limited non-residential use of a residentially occupied unit is

insufficient to defeat coverage. See Matter of Gurkin, OATH Index No. 489/12 at 17 (Dec. 14,

2012), adopted, Loft Bd. Order No. 4186 (Oct. 17, 2013) (a residential unit may contain a non-

residential use by its occupants that is secondary to the residential use). Respondents offered no

evidence of pervasive non-residential use of the second floor unit that would defeat coverage of

the unit.

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Therefore, petitioners have established by a preponderance of the credible evidence that

Molina was a residential occupant of the second floor unit for at least 12 consecutive months

during the window period.

Third Floor Unit (Gallo)

Gallo moved to the third floor of the Building with her then-boyfriend in 1980, when they

signed a five-year lease (Tr. 399; Pet Ex. 30). They cleaned the unit, sanded the floors, and

installed walls to define rooms. They also installed plumbing, electricity, insulation, and

sheetrock, as well as kitchen and bathroom fixtures and appliances, such as cabinets, sinks, a

shower, tub, toilet, stove, and a refrigerator (Tr. 399-401). Gallo signed renewal leases in 1987,

1992, and, most recently, in 1998 (Tr. 401-06; Pet. Exs. 29, 31, 32). According to Gallo, the

second floor unit is approximately 2,200 square feet (Tr. 480).

Gallo’s testimony regarding her family’s living arrangements is consistent with Molina’s

account. Notably, after they became romantically involved, he moved into the third floor unit

with her (Tr. 413-15). Beginning in 1991 and continuing after Molina moved into the unit in

1992, Gallo and Molina completely renovated the third floor unit. The renovations included

converting open space into bedrooms and closets, updating the electrical system to bring it up to

code, installing a new kitchen with new appliances, baseboard heating, new lighting, new

insulation, sound insulation, a laundry room, and bathroom fixtures. Gallo also installed granite

and marble in the bathroom and laundry room and created a mosaic art installation in the

bathroom (Gallo: Tr. 410-13; Molina: Tr. 73). According to Gallo, they renovated the unit

because she and Molina were planning to marry and start a family (Tr. 413). After the

renovations were completed, the unit consisted of two bedrooms, including one at the front of the

Building with three windows, a kitchen/dining area, a laundry room, a bathroom, a darkroom that

sometimes served as a bedroom, and a studio that has functioned at various times as a work area,

a living room, and sleeping area (Tr. 411-13; 480-81, 581; Pet. Ex. 38). Gallo and Molina

married in 1994 and had a child in 1997 (Tr. 415; Pet. Exs. 33, 34).

While Molina lived on the third floor, they sublet the second floor and Gallo occasionally

went to that floor to attend to issues involving the subtenant (Tr. 466-67, 583).

Gallo and Molina ceased living together in 2002 after Gallo changed the locks on the

third floor unit, but did not give Molina a key (Tr. 585). After Molina moved back to the second

floor in 2002, Gallo went to the second floor unit only once in 2013 when her father-in-law, who

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was living with Molina, required assistance during an emergency. She has not had a key to the

second floor since 1995 (Tr. 467, 585-86).

Gallo continued to live on the third floor with their daughter after Molina moved to the

second floor (Tr. 416). In addition to photographs of the loft, petitioners submitted into evidence

a drawing that Gallo made of the third floor as it has been configured since 1992, including

during the window period. The photographs depict the entrance to the third floor unit and the

interior hallway to the rear studio area, as well as furnishings, decorations, extensive mosaic

installations, and the bedroom used by Ms. Molina (Tr. 416, 424-37; Pet. Exs. 38, 40, 57).

Abrahams, who described herself as a very close friend of Gallo, corroborated Gallo’s

contention that she resided in the third floor unit during the window period. Abrahams testified

that she met Gallo in 1982 or 1983, when Abrahams attended a party hosted by Molina in his

unit. During their first meeting, Gallo told Abrahams that she lived in the apartment above

Molina’s (Tr. 212-14, 219). Abrahams visited Gallo and Molina in their third floor unit during

their marriage. In 2002, when Molina and Gallo separated, he moved out of the third floor unit

and transferred his personal possessions, including stereo equipment, photographs, clothing,

food, and souvenirs, to the second floor, where he resumed living (Tr. 218-22). Abrahams

testified that Gallo lived on the third floor with her daughter during the window period (Tr. 217-

19, 223). She visited Gallo often during 2009, because it was a tough time for Gallo, who was in

the process of divorcing Molina (Tr. 217-18). According to Abrahams, Molina and Gallo

“always maintained separate apartments and when their marriage dissolved they did not live

together anymore” (Tr. 248, 252).

Gallo also submitted documentary evidence in support of her claim to have occupied the

third floor during the window period. Like Molina, however, the addresses on several of the

documents did not include a unit number as part of Gallo’s address. For example, her bank

records, marriage certificate, daughter’s birth certificate, passport, and cellular phone bills

establish only that she represented the Building as her home or mailing address during the

window period (Pet. Exs. 31, 33, 34, 37A, 41). Gallo’s income tax returns, including the 2008

and 2009 returns that she filed jointly with Molina, as well as the 2010 return that she filed as the

head of household, do not designate a specific unit in the Building (Pet. Exs. 2, 3, 64). However,

some documents, such as Gallo’s voter registration record and utility bills during the window

period, specify the third floor as Gallo’s address (Pet. Ex. 35, 23, 24). As with Molina, Gallo’s

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contention that she resided on the third floor during the window period is supported by

documentary evidence, as well as the testimony of credible witnesses.

In their post-trial brief, respondents concede that Gallo and her daughter were the

residential occupants of the third floor unit for 12 months during the window period (“the

evidence introduced at the hearing confirms that no more than one (1) independent family (Gallo

and her daughter) occupied Applicants’ units for residential purposes for any twelve (12) month

span during the window period”) (Resp. Br. at 5). However, respondents contend that the lack of

a unit designation on much of Gallo’s and Molina’s documentary evidence, together with their

filing of joint tax returns several years after their separation, maintaining joint insurance policies,

and jointly listing their names on some of the utility bills during the window period, establishes

that Gallo and Molina were part of the same household during the window period (Resp. Br. at

24). I disagree.

Molina testified that after he and Gallo separated, they continued to pool their finances

(Tr. 175). For example, both Molina’s and Gallo’s names were on utility accounts for the third

floor during the window period, although he had not lived there since 2002 (Tr. 194-95; Pet. Exs.

23, 24). Similarly, insurance policies for the third floor unit were held in both their names, and

Molina’s car was included in the policy for the third floor, while Gallo’s car was included in the

policy for the second floor (Tr. 299-301; Pet. Ex. 17). Gallo testified that when she and Molina

separated, they informally agreed he would continue to bear certain expenses (Tr. 643).

In an effort to bolster its contention that Gallo and Molina were not living independently

of each other during the window period, respondents sought to make much of a trip to Mexico

that Molina and Gallo took with their daughter in 2007, after they had separated (Resp. Br. at 25-

26). However, I credit Molina’s and Gallo’s testimony that rather than give Molina permission

to take their ten-year-old daughter out of the country for a family reunion, Gallo accompanied

them on the trip (Molina: Tr. 1245-46; Gallo: Tr. 1286-87). Such conduct is consistent with

Gallo’s testimony about her parenting arrangements with Molina after they separated. Gallo

testified that after she locked Molina out of the third floor unit, he was never invited to attend

any family functions there (Tr. 587). Further, she testified that there was a period of time after

their separation when Molina did not see their daughter very much (Tr. 589). Gallo’s conduct is

also consistent with the testimony of her friend, Abrahams, who stated that for some time after

their separation Molina was not an engaged parent and Gallo was concerned about their daughter

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spending time with him (Tr. 240). The evident tension and mistrust between Molina and Gallo

support their claim that the trip was not so much one undertaken by an intact family unit as it

was a parent’s attempt to monitor her minor child’s travel out of the country with a co-parent

about whom she had concerns.

While the evidence shows that Molina and Gallo’s financial and personal lives remained

intertwined during the window period, it is unsurprising given that they remained legally married

and shared custody of a minor child. Nevertheless, the evidence establishes that Gallo and

Molina lived independently of each other, on different floors of the Building, during the window

period.

In sum, petitioners have established that Gallo was a residential occupant of the third

floor unit for 12 consecutive months during the window period.

Fourth Floor Unit (Marriner-Smith)

Marriner-Smith testified that when she moved into the unit in 1980, it was 2,500 square

feet of “raw space” with a skylight on the top floor of the Building (Tr. 660, 667; Pet. Ex. 53B).

At that time, the Building was owned by the Masotto family, which also owned Alpine Waste, a

garbage collection and recycling company that had operated out of the Building before Marriner-

Smith moved in (Tr. 660-62). Marriner-Smith signed a lease for a five-year term, with renewal

options that extended the lease to 13 years. Marriner-Smith’s most recent renewal lease was

signed in 2000 for a five-year lease term (Tr. 667-68, 677-78; Pet. Ex. 42).

In developing the unit, Marriner-Smith and her then-boyfriend installed electricity,

erected walls to create a large front bedroom with a walk-in closet and large bathroom with a

toilet and shower, and installed a kitchen, a heater, and plumbing (Tr. 668-69; Pet. Ex. 53B). As

Marriner-Smith was writing and directing, she used the rear of the unit as a rehearsal studio (Tr.

670). She later converted the back space from a rehearsal studio to an “audition theatre space,”

and added a bathroom, theatre chairs, and bi-fold doors (Tr. 689). In 1989 or 1990, after she and

her boyfriend began having problems in their relationship, they erected a wall to create the

common hallway and converted the back space into a studio with a kitchen for his use (Tr. 690,

916). Marriner-Smith enclosed her office in 1992 or 1993 to create a middle bedroom (Tr. 690).

In 2005, among other things, she hired and paid a contractor to update the electrical system,

repair a leak, and retile the floor in the back bathroom (Tr. 739-40; Pet. Ex. 56).

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Gallo testified that when she moved into the Building, Marriner-Smith was already living

there and renovating the top floor (Tr. 475-76). Gallo and Marriner-Smith became friends and

had dinners together on both the third and fourth floors (Tr. 476). Marriner-Smith also had her

personal belongings on the fourth floor and cooked there (Tr. 477). When Gallo visited the

fourth floor during 2008 and 2009, she observed a bedroom, bathroom, living room, and kitchen

in the front part of the unit and “a backspace bedroom set up” further down the hall (Tr. 468-69).

Gallo testified that the top floor was used for residential purposes by Marriner-Smith and her

roommates during that time (Tr. 477). She testified that the configuration of the top floor

remains the same today (Tr. 474; Pet. Ex. 51).

Photographs of the fourth floor show a dining room, the front bathroom with a sink and

bathtub, the front bedroom with windows that look out onto Water Street, the interior hallway,

the front kitchen with appliances and cabinets, the library with shelves and a piano, the living

room with a couch and television, the laundry room, the middle bedroom/office with a bed and

desk, the back bathroom with a toilet, the rear studio with a bed, furniture, air conditioner, and

windows that look out onto the courtyard, and the back kitchen with appliances and cabinets

(Pet. Ex. 52A-R; Tr.692-706). Marriner-Smith testified that the rear studio area occupies 400 to

500 square feet of the unit’s total size of 2,500 square feet (Tr. 660, 712, 1026).

In 1992, Marriner-Smith married Chris Smith, whose work as a marine scientist required

him to maintain a connection to the Long Island area (Tr. 681, 683-84, 687, 838). They found a

house together on Long Island in 1992 and since then have maintained residences in Southold

and Mattituck in Suffolk County, New York (Tr. 683, 685, 841-42). After her marriage,

Marriner-Smith continued to live at the loft because she was working in New York City, but she

travelled to Long Island on the weekends to stay with Smith (Tr. 683, 823-24). In 1999 or 2000,

Marriner-Smith, who described herself as a “fourth generation summer person” on the North

Fork of Long Island, began to spend more time on Long Island. She eventually moved there, but

left her furniture and belongings in the fourth floor unit (Tr. 682, 746, 824, 872). From 2005 to

2011, she and Smith lived in a house in Southold that was provided through Smith’s work and

was located on a preserve for which Smith acted as the caretaker (Tr. 685-86, 842).

Marriner-Smith subleased the fourth floor unit after she moved to Long Island, but

asserted that she shared the unit with several “roommates” throughout the window period (Tr.

859-60, 915). According to Marriner-Smith, Laura James moved into the front part of the loft in

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late 2005 or early 2006 (Tr. 713, 865). Marriner-Smith testified that she and James initially had

only an oral agreement, which Marriner-Smith maintained provided that they were roommates,

that James would occupy the front bedroom, and that they would share the other spaces (Tr. 713-

14). Around April 2009, James moved from the front area of the loft into the rear studio and

lived there until she moved out of the loft in 2010 (Tr. 713, 865-66; Pet. Ex. 54). When James

moved to the rear studio, she and Marriner-Smith entered into a written agreement which

provided that “[t]he landlord reserves the right to stay overnight in the said back space on a need-

be basis and will give reasonable notice to the sub-tenant when this is necessary” (Tr. 713; Pet.

Ex. 54).

From 2006 until sometime between April and early June 2009, Iris Welcome, the

daughter of one of Marriner-Smith’s good friends, lived in the rear studio area (Marriner-Smith:

Tr. 688, 708-09, 712, 865; Welcome: Tr. 500, 503, 517). Welcome testified that her living space

included a bedroom, full bathroom, and kitchen (Tr. 525; Pet. Ex. 51). When Welcome moved

in, the loft was “fully furnished” with Marriner-Smith’s belongings, including her bed, desk,

kitchenware, plates, pots and pans, flatware, books, and rugs. Welcome kept only clothes,

toiletries, and food in the unit (Tr. 502, 523). As part of her arrangement with Marriner-Smith,

Welcome agreed that Marriner-Smith could stay in the rear studio whenever she needed to do so,

which was reflected in their written agreement (Marriner-Smith: Tr. 709; Welcome: Tr. 501,

522, 1269-70; Resp. Ex. Y). According to Welcome, Marriner-Smith possessed keys to the front

and rear portions of the unit (Tr. 533-34).

Welcome identified photographs which depict the front and back spaces of the loft while

she lived there, including the bedrooms, living and dining rooms, bathrooms, and kitchens (Tr.

504-11; Pet. Exs. 52A-52R).

Greg Kitowicz lived in the front part of the fourth floor from April 2009 through the

summer of 2010 (Tr. 691, 726, 728-29, 869; Pet. Ex. 54). Kitowicz was a friend of James and

was the first tenant with whom Marriner-Smith did not have a previous personal connection (Tr.

728). Marriner-Smith had a written agreement with Kitowicz which provided that the “Landlord

hereby sub-leases to the sub-tenant the front space at the Building . . . to be used by the sub-

tenant April 1st, 2009 through March 31

st, 2010 . . . .” (Pet. Ex. 54; Tr. 726). Unlike the

agreements with James and Welcome, the agreement did not reserve Marriner-Smith’s right to

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stay in the front space overnight (Tr. 870). Marriner-Smith testified that the agreement with

Kitowicz was different because she did not know him (Tr. 728).

Marriner-Smith acknowledged that the fourth floor at the Building has not been her

“primary residence” since 1999 or 2000 and the evidence establishes that she subleased the unit

to residential occupants during the window period (Tr. 815, 816, 1066; Pet. Ex. 54). However,

petitioners need not prove that the unit was the applicant’s primary residence in order to establish

residential occupancy during the window period. See Vlachos v. NYC Loft Bd., 70 N.Y.2d 769,

770 (1987); BOR Realty Corp. v. NYC Loft Bd., 129 A.D.2d 496 (1st Dep’t), aff’d, 70 N.Y.2d

720 (1987); Matter of Pels, OATH 2481/11 at 11-12.

Respondents argued that Marriner-Smith operated a for-profit rental business and that by

treating the fourth floor unit “as a commercial enterprise and subletting the entire space for the

duration of the window period and beyond” she has rendered the unit commercial rather than

residential (Resp. Br. at 13, 21). Respondents rely on Franmar Infants Wear, Inc. v. Rios, 143

Misc.2d 562, 564 (App. Term 1st Dep’t 1989) and Matter of South 11th Street, OATH 1242-

44/96 for the proposition that the fourth floor unit is ineligible for coverage because its primary

use is commercial. Franmar is distinguishable. In that case, “only a small portion” of the unit

was allocated to residential use and the space lacked “the essential amenities” for dwelling

purposes. Franmar Infants Wear, 143 Misc.2d at 564. Here, the evidence establishes that the

entire fourth floor was converted to residential use and included amenities such as bedrooms,

bathrooms, kitchens and laundry facilities, with related fixtures and appliances. Reliance on

Matter of South 11th Street is also misplaced. In that case, this tribunal determined that coverage

was appropriate where the tenant used two-thirds of the loft space for commercial purposes.

Matter of South 11th Street, OATH 1242-44/96 at 59-61.

Moreover, subletting to residential tenants that produces income does not defeat coverage

of the unit since the unit continued to be used for residential purposes. See, e.g., MDL § 281(5)

(Lexis 2014) (an IMD unit includes those “which were occupied for residential purposes as the

residence or home of any three or more families living independently from one another”); see

also Matter of Pels, OATH 2481/11 at 9 (income producing activity did not undermine

entitlement to coverage where tenant had rented out a portion of her studio space to two artists

for commercial purposes).

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To the extent respondents’ argument is that the fourth floor unit is ineligible for coverage

because someone other than the applicant residentially occupied the unit during the window

period (Resp. Br. at 5), the argument lacks merit. On its face, the Loft Law does not require that

the applicant herself have residentially occupied the unit during the window period. MDL §

281(5). It is noteworthy that respondents provided no legal authority in support of their

contention that subleasing a unit for residential purposes removes that unit from eligibility for

coverage under the Loft Law. Thus, even were I to conclude that Marriner-Smith was not a

residential occupant of the unit during the window period, residential occupancy by others for

twelve months would still qualify the unit for coverage.

The evidence establishes that Marriner-Smith converted what was once a raw space on

the fourth floor of the Building into a residence, which originally included work and theatre

space in the back of the loft. The back of the loft was subsequently converted into a residential

space with a bathroom and kitchen, and the entire fourth floor has been used for residential

purposes since the early 1990s, including for 12 consecutive months during the window period.1

In sum, I find that petitioners have met their burden of establishing sufficient physical

conversion of the second, third, and fourth floor units to residential use and that there were three

or more families lived independently of each other for 12 consecutive months during the window

period. Therefore, I find that the Building is an IMD and the second, third, and fourth floor units

should be covered under the Loft Law.

Protected Occupants

Section 2-09(b)(1) of the Loft Board Rules provides that “[e]xcept as otherwise provided

herein, the occupant qualified for protection under Article 7-C is the residential occupant in

1 While both parties made reference to whether the fourth floor was subdivided into two separate units, neither party

contended that it should be considered as such. Petitioners maintain that the fourth floor is a single unit and its

occupants enjoyed shared use of the entire floor (Pet. Br. at 46-47). Respondents assert that any claim that the

fourth floor constitutes two units is barred by petitioners’ failure to so allege throughout the proceedings and their

assertion that the Building consists of three units (Resp. Br. at 5, n. 1). There is evidence that Marriner-Smith

created two distinct residential portions with separate amenities on the fourth floor, including separate kitchens,

bathrooms, sleeping areas, and separate means of access through a shared hallway within the unit. See S. Axelrod

Co., Inc. v. Mel Dixon Studio, Inc., 122 Misc.2d 770, 782 (Civ. Ct. N.Y. Co. 1983) (where tenant divided leased

space into two separate studios with separate locked entrances and residential amenities, each space deemed a

separate unit for purposes of Loft Law coverage); see also Matter of Mignola, OATH Index Nos. 2482/11, 2483/11,

2484/11, 240/12, 808/12, 809/12, 810/12, & 1616/12 at 12-13 (May 29, 2013) (unit that was subdivided into two

separately occupied, self-contained units before the window period deemed separate units). However, it is not

necessary to determine whether the fourth floor was divided into two units for purposes of the coverage application.

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possession of a residential unit, covered as part of an IMD.” 29 RCNY § 2-09(b)(1) (Lexis

2014). Applicants for coverage may be deemed the occupants entitled to Loft Law protection

pursuant to § 2-09(b)(1) where “they are the prime lessees of their respective units and are in

possession of their respective units.” See Matter of Gareza, Loft Bd. Order No. 4243 at 3-4

(Feb. 20, 2014), adopting in relevant part OATH Index Nos. 2061/12 & 760/13 (Dec. 12, 2012).

A “prime lessee” is defined as “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.”

29 RCNY § 2-09(a) (Lexis 2014).

Molina and Gallo (Second and Third Floor Units)

Petitioners have established that Molina and Gallo are protected occupants of their units.

The credible evidence supports a finding that Molina, the prime lessee of the second floor,

converted the second floor unit to residential use in the early 1980s, lived there throughout the

window period, and is currently the residential occupant in possession of the second floor.

Similarly, the evidence establishes that Gallo, prime lessee of the third floor unit, has been the

residential occupant in possession of that unit since the 1980s, lived there throughout the window

period, and is currently occupying the third floor unit as her residence.

Marriner-Smith (Fourth Floor Unit)

Respondents contend that Marriner-Smith is not a protected occupant of the fourth floor

unit because she resides in Long Island, New York, full time and did so during the window

period (Resp. Br. at 6, 22). Respondents also asserted that Marriner-Smith has failed to establish

that she resided in the fourth floor unit as of the effective date of the Loft Law and is therefore

not a protected occupant (Resp. Br. at 21).

Marriner-Smith testified that she “absolutely” maintained a residence at the Building

during the window period (Tr. 687). She described the unit as her “retreat” and stated that she

has an “emotional attachment” to the space (Tr. 687, 838-39). She feels like she is “home” when

she walks in the door of the unit (Tr. 1028). According to Marriner-Smith, even though she had

a residence on Long Island during the window period, she maintained residence at the unit

because she has a connection to the City, where she networks for her business (Tr. 687-88). She

also has friends in the City, and gets her hair done, shops, and goes to plays in the City (Tr. 688).

-18-

Corroborating Marriner-Smith’s testimony, Gallo testified that around 2008, Marriner-

Smith “continued to live upstairs, but she also resided out East, so it’s more in and out and she

still used [the fourth floor] for residential purposes and she has had a roommate or two during

that time” (Tr. 477). According to Gallo, during the window period, she and Marriner-Smith

socialized “very often” and she personally observed Marriner-Smith at the Building “a couple of

times a month” (Tr. 477-79).

Marriner-Smith has been licensed as a real estate agent since 2006, and has worked as a

real estate agent through Douglas Elliman Real Estate on the North Fork since that time (Tr. 745-

46). She primarily works as an agent for clients who live in New York City and are looking for a

second home on the North Fork (Tr. 746-47). Marriner-Smith testified that she has rarely used

the Douglas Elliman office on Long Island because she is a “virtual worker” (Tr. 908). During

2008 and 2009, Marriner-Smith visited the Douglas Elliman offices in New York City to

network approximately once every two months (Tr. 749-50, 947-48). She also networked

whenever she came into the City by having meals with acquaintances (Tr. 750, 947-48). In 2008

and 2009, approximately 50 percent of her clients lived in New York City (Tr. 751).

Marriner-Smith maintained that from January 2008 to April 2009, she kept an office and

bedroom in the front part of the fourth floor unit while James was living there (Tr. 688, 715).

She testified that during that period, she stayed in the front part of the unit one to three times per

month (Tr. 688, 714, 858). According to Marriner-Smith, she began to spend more time at the

unit after she broke her wrist on June 13, 2008, because she had to visit the Hospital for Special

Surgery (Tr. 688-89, 711, 715-16, 878). From mid-June to mid-August 2008, she initially had

medical appointments in the City two to three times a week, and then once a week (Tr. 711).

Marriner-Smith and Welcome testified that even though Welcome was living in the rear

studio during that time, she was on Long Island on Monday and Tuesday nights for a period of

time while she helped a friend open a restaurant (Marriner-Smith: Tr. 688-89, 710; Welcome: Tr.

511-12). Marriner-Smith stayed in the rear proportion of the unit since she knew Welcome was

away on those nights (Tr. 688, 710, 715-16). Marriner-Smith booked her medical appointments

on Mondays and Tuesdays so she could stay in the rear studio while Welcome was on Long

Island (Tr. 710). She preferred to stay in the rear studio because her books and paperwork were

there and she had that space to herself because Welcome was away (Tr. 689, 709-10, 716).

Marriner-Smith did not notify Welcome when she stayed in the rear studio and she never stayed

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there at the same time as Welcome (Marriner-Smith: Tr. 710, 875; Welcome: Tr. 522-23, 538).

When Marriner-Smith was unable to book an appointment on a Monday or Tuesday, she would

schedule it for Thursday and stay in the front part of the unit or just travel to and from the City in

the same day (Tr. 711, 878, 890).

Marriner-Smith testified that between April 2009 and April 2010, she was at the fourth

floor unit approximately four times in total (Tr. 688, 858-59, 920). Kitowicz was living in the

front part of the unit and she never stayed with him because she did not know him (Tr. 728, 919).

Instead, she stayed in the rear studio while James was away (Tr. 728, 920).

Marriner-Smith and her husband stayed in the rear studio for either one or two nights in

December of 2009, when James was away for the holidays (Tr. 728, 920). Smith lived in

Southold during the window period and only stayed in the fourth floor unit twice during that time

(Marriner-Smith: Tr. 920; Smith: Tr. 1127-28, 1142). He testified that Marriner-Smith stayed at

the loft at least once a month during the window period (Tr. 1125, 1151).

Marriner-Smith maintained that between April and July of 2010, she spent a lot of time in

the rear studio because James, who was looking for a new place to live, was frequently away (Tr.

688, 920-22). She stayed “maybe a little longer” than one or two nights a month in the unit

during that time because she was using the back space to write after being accepted to a writer’s

conference (Tr. 922). After spending more time in the rear studio she decided that she wanted

the front space back, so she informed Kitowicz that after his lease expired he could only stay

through the summer (Tr. 729, 921). Marriner-Smith testified that after Kitowicz moved out of

the front space in October or November of 2010, she “took over the whole front space” (Tr. 729).

Since the window period, Marriner-Smith has continued to rent space in the unit. In July

2010, Elizabeth Dickey moved into the rear studio, and currently lives in that space (Tr. 731,

733, 892). In December 2010, Ainsley Lester and Clara Jacquet moved into and shared the front

bedroom, while Marriner-Smith occupied the middle bedroom (Tr. 729; Pet. Ex. 54). During

2011 and 2012, Marriner-Smith stayed at the loft about two times a month on average (Tr. 873,

894). At the end of 2012, Marriner Smith “took over the front space again fully” and, since

spring 2013, she has had another roommate in the front area (Tr. 734-35, 893).

There is very little documentary evidence to corroborate Marriner-Smith’s claim that she

regularly stayed at the loft during the window period and continues to do so. Her bank

statements, for example, do not reflect that she made any debit purchases or ATM withdrawals in

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New York City from June to August 2008, when she claimed to have stayed at the loft more

often because of doctors’ visits relating to a broken wrist (Resp. Exs. K1-K3; Tr. 881-83). In

addition, Welcome, Marriner-Smith’s purported roommate during much of the window period,

testified that she knew Marriner-Smith stayed at the loft, but could not recall a specific instance

when Marriner-Smith stayed on the fourth floor (Tr. 522).

As stated above, where one holds oneself out as residing is probative of where one

resides in fact. Matter of Muschel, Loft Bd. Order No. 33, 1 Loft Bd. Rptr. 27, 30 (Nov. 23,

1983). Here, the New York State driver’s license Marriner-Smith held during the window period

listed a Long Island home address (Tr. 752). However, her current driver’s license, issued on

October 5, 2012, lists the Building as her home address (Pet. Ex. 43; Tr. 751). Marriner-Smith

testified that she changed the address on her driver’s license to the Building in 2012 “because for

the first time in 34 years [her] residency at [the Building] . . . was being questioned” (Tr. 949,

988). She also previously used her Long Island address for her driver’s license because

“insurance is less expensive that way” (Tr. 850). She testified that she was registered to vote on

Long Island during the window period and has been voting there since the early 1990s, and her

cars were “most likely” registered to her Long Island address during the window period (Tr. 853-

50, 854-55). Her cellular phone bills throughout the window period listed her Southold address

(Resp. Ex. F).

Marriner-Smith and her husband listed a Long Island address as their home address in

their jointly filed federal and New York State tax returns for 2007, 2008, 2009, and 2010 (Pet.

Exs. 46, 47, 48, 49). They deducted the rent and utility payments for the fourth floor unit as

business expenses on their federal income taxes filed for the window period. They also

represented on those forms that their family did not use their rental property, the fourth floor

unit, for personal purposes during the tax year for more than the greater of 14 days or 10% of the

total days rented at fair rental value (Pet. Exs. 46, 47, 48, 49; Tr. 1014-15).

In addition, Marriner-Smith’s New York State Resident Income Tax Returns from 2007

to 2010, jointly filed with her husband, indicated that neither of them maintained living quarters

in New York City during that period (Pet. Exs. 46, 47, 48, 49). The representations made on her

income tax documents contradict Marriner-Smith’s contention that she resided at the Building

during the window period.

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Marriner-Smith provided several explanations for the use of the Long Island addresses on

her joint tax documents. She claimed that during the window period she and her husband used

their Long Island addresses because Smith usually provided his information to the account first,

and because they spent more time at their Long Island homes than at the Building (Tr. 757-58,

777, 782, 797-98, 956). She also claimed that she was not aware the returns indicated her Long

Island home address at the time they were filed because she signed and filed the returns without

reviewing them (Tr. 955-56).

In February 2014, after the hearing in this matter had commenced, Marriner-Smith

amended her jointly filed 2008, 2009, and 2010 New York State Resident Income Tax Returns to

reflect that she maintained a residence in New York City during those years (Pet. Exs. 61, 62, 63;

Tr. 764-65, 783). Marriner-Smith asserted that the information in the original tax returns was

inaccurate because she had been living at the Building during those years, and that she amended

her tax returns because she wanted “to make things right” (Tr. 764, 783, 988). She also testified

that she only filed amendments for 2008 through 2010, because she amended “the ones that

would be necessary for this court case first,” and would amend the other years when she is

financially able to do so (Tr. 989).

Respondents argued that Marriner-Smith’s initial representations on her tax returns are

binding, “as parties may not assert positions contrary to their tax returns” (Resp. Br. at 8-9)

(citing Mahoney-Buntzman v. Buntzman, 12 N.Y.3d 415 (2009)). Respondents also contended

that Marriner-Smith’s amended tax returns, which were filed on the eve of her testimony in this

matter, amounted to fabrication of evidence and should be discounted (Resp. Br. at 10-11).

While tax returns may be considered in assessing where one resides in fact, they are not

determinative. See Matter of Boyers, OATH 1338/12 at 23; Matter of Muschel, Loft Bd. Order

No. 33, 1 Loft Bd. Rptr. 27, 30 (Nov. 23, 1983) (“testimony taken in connection with a [tax

return] might very well lead to an analysis based on the tax laws, rather than Article 7-C, taking

the inquiry away from the issue of residency”). In Matter of Boyers, Judge Miller undertook a

comprehensive analysis of the weight to be accorded to tax returns that contain representations

contrary to those asserted in a Loft Law proceeding. There, the applicants’ testimony that they

residentially occupied the subject premises was contradicted by evidence that they deducted 100

percent of the rent, utilities, and other items relating to the loft as expenses relating to a fitness

business they operated in the premises. After noting that the Loft Board has been disinclined to

-22-

consider tax documents dispositive of residence, Judge Miller determined that “at a minimum,

[the applicants’] contradictory statements on their tax returns should be assessed in analyzing

their credibility.” Id. at 23-24.

Here, Marriner-Smith’s credibility was undermined by the conflict between her testimony

and original state tax returns, and also by her efforts to bolster her claim by amending her tax

returns on the eve of her testimony. While Marriner-Smith maintained that she did so out of a

desire to make things right, I have no doubt that her motives were self-serving.

Marriner-Smith engaged in other conduct seemingly designed to buttress the appearance

that she maintained the fourth floor unit as a residence. For example, in November 2012,

Marriner-Smith started to list herself as a real estate agent at the Douglas Elliman office on

Montague Street in Brooklyn. She claimed to have done so because many of her clients are from

Brooklyn (Tr. 746, 937-39, 988; Resp. Ex. M). However, Marriner-Smith conceded that she has

never worked out of, nor has she had any listings at that location (Tr. 939-41). Around the same

time, she edited her biography on the Douglas Elliman office website to include that “[s]he

resides on both the North Fork, with husband, Chris Smith . . . and at her loft in DUMBO, NYC”

(Resp. Ex. E; Tr. 942-43, 1065). Her previous online biography stated that “[s]ince 1992 she has

resided full-time on the North Fork with husband, Chris Smith . . . while still maintaining her loft

in DUMBO, NYC” (Resp. Ex. D). Marriner-Smith testified that the change in her biography

was primarily related to marketing herself as an agent out of the Brooklyn office (Tr. 943-44,

949-50, 1038). She also testified that the two versions say “the exact same thing” (Tr. 949).

Were that the case, there would have been no need to revise her biography. Further, coming in

the midst of Marriner-Smith having filed a coverage application, the revision was a transparent

attempt to enhance the appearance that she resided in the unit.

Similarly, as noted earlier, around October 2012, Marriner-Smith changed the address on

her driver’s license from her Long Island address to the Building. It was not coincidental that

she changed her address on her driver’s license, listed herself as an agent at the Brooklyn office,

and edited her online biography around this time: She did so because she had become conscious

of the need to prove her residency at the Building (Tr. 949-50).

Overall, Marriner-Smith’s testimony seemed evasive at some points, calculated and

overly rehearsed at others. She had ready explanations for why she changed her designated

home address on several documents, yet did not have clear explanations for why her Long Island

-23-

addresses were provided as her home address on others. She was vague as to details about her

stays in the unit, although she claimed to have regularly stayed there throughout much of the

window period.

Yet, the weight of the credible evidence supports Marriner-Smith’s claim that she is the

protected occupant of the fourth floor unit. It is undisputed that Marriner-Smith is the prime

lessee, having entered into lease arrangements with the prior owner of the Building. Marriner-

Smith paid rent for the unit to the owner during the window period and continues to do so (Pet.

Ex. 50; Tr. 781, 801-02, 808). She has maintained accounts for gas and electrical services to the

unit in her name since 1980 and continues to do so (Tr. 806; Pet. Exs. 44, 45). Welcome

corroborated that Marriner-Smith kept furniture, books, utensils, and other personal items in the

unit during the window period. Smith, who did not appear to have significant contact with the

unit, testified that Marriner-Smith stayed at the loft on average once per month, consistent with

Marriner-Smith’s contention. Similarly, Gallo testified to regularly observing Marriner-Smith at

the Building.

I find that Marriner-Smith’s residential use of the fourth floor unit was, at best,

intermittent. However, this is not sufficient basis for denying her the protection of the Loft Law.

See Matter of Pels, OATH 2481/11. In Matter of Pels, the applicant, an artist and college

professor, converted a loft to residential use and occupied the loft until she moved to Michigan

for a full time teaching position. During the window period, Pels paid taxes in Michigan, where

she registered her car and voted. Pels, who rented part of her studio for commercial use during

her absence, left most of her possessions in the unit and returned to the loft during school breaks.

Judge Richard determined that Pels “occupied” her loft during the window period even though

she did not reside there full time. Id. at 9-10. Judge Richard considered several factors as

indicia that Pels occupied her loft even though she was not there full time, including: 1) Pels kept

her personal possessions there during the entire window period; 2) she periodically returned to

the loft during the window period to spend time there; 3) she paid her rent; 4) she received mail

there; and 5) she intended to and did return to the loft at the end of her position in Michigan. Id.

at 10.

Applying the analysis in Pels to this case, Marriner-Smith periodically spent time in the

fourth floor unit during the window period and continues to do so, keeps personal possessions

-24-

there, and pays rent. Thus, the evidence supports a finding that she is the residential occupant in

possession of the fourth floor unit, even though her residential occupancy has been intermittent.

The crux of respondents’ argument against finding Marriner-Smith the protected

occupant of her unit is that she lived full time on Long Island rather than at the Building. This is,

in essence, a claim that Marriner-Smith is not entitled to coverage because the unit is not her

primary residence. Respondents rely on language from Matter of Gurkin in support of their

contention that petitioners are required to show that the fourth floor unit is Marriner-Smith’s

primary residence (Resp. Br. at 21-22). Yet, the language respondents rely on is drawn from a

version of the decision that was subsequently amended to correct an error that goes to the heart

of the quoted language. See Matter of Gurkin, OATH 489/12 at 23, n. 5.2 Thus, respondents’

reliance on this language is misplaced. Gurkin does not stand for the proposition that the

applicant for protection must establish use of the unit as his or her primary residence, as

respondents asserted; instead, it states that the applicant is required to show that he or she

“currently occupies the unit residentially.” Id. at 23 (citing 29 RCNY § 2-09(b)(1)).

Respondents also rely on Section 2-09(b)(4) of the Loft Law, which provides:

The prime lessee . . . is deemed to be the residential occupant

qualified for protection under Article 7-C, if the prime lessee . . .

can prove that the residential unit covered as part of an IMD is his

or her primary residence, even if another person is in possession. If

the prime lessee . . . fails to prove that such unit is his or her

primary residence, any rights of such person to recover the unit are

extinguished.

29 RCNY § 2-09(b)(4) (Lexis 2014). The record establishes that Marriner-Smith is the prime

lessee, given that she is the party with whom the prior owner of the Building entered into a lease,

although that lease is no longer in effect. However, the provision to which respondents refer is

inapplicable as it concerns rights of the prime lessee to recover his or her unit in the face of

challenge by a subtenant.

Accordingly, like Molina and Gallo, Marriner-Smith is a prime lessee in possession of

her unit, of which she is the residential occupant. The Molina, Gallo, and Marriner-Smith

coverage application should be granted.

2 The report and recommendation relied on by respondents, dated August 23, 2012, was amended by a report and

recommendation issued on December 14, 2012, which decision was adopted by the Loft Board by Order No. 4186.

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Basement Storage

Petitioners contended, for the first time at the hearing, that the basement of the Building

is part of Gallo’s and Molina’s covered space or is a required service pursuant to Loft Board rule

2-04(c) because the former owners of the Building consented to their use of the basement for

storage and they have used the basement to store their personal belongings for several decades

(Pet. Br. at 47-48).

Respondents do not seem to dispute that Molina and Gallo have used the basement as

storage (Resp. Br. at 31). Respondents asserted that the petitioners cannot rightfully claim that

they are entitled to use the basement because they did not receive written permission signed by

their landlord, as is required by their leases, and merely have a revocable license. Respondents

further argued that to the extent petitioners’ claim that the basement is a “base date service,” it is

beyond the ambit of the coverage application filed by petitioners and remains the subject of a

matter pending in Civil Court. Finally, respondents maintained that basement premises are

ineligible for coverage (Resp. Br. at 30-31).

The Loft Law expressly exempts from coverage units that are “located in a basement or

cellar.” MDL § 281(5). Thus, to the extent petitioners seek coverage of the basement as part of

their units, the basement space is ineligible for coverage. See Matter of Schuss, OATH Index

No. 2066/12 (Mar. 25, 2013) (cellar portion of unit used by applicants for storage excluded from

coverage). Petitioners’ reliance on Matter of McIntosh, OATH Index No. 604/02 at 26 (Oct. 15,

2002), adopted, Loft Bd. Order No. 2763 (Nov. 19, 2002) is misplaced. Matter of McIntosh

applied a prior version of the Multiple Dwelling Law which did not contain the exemption of

basements from coverage that is reflected in the 2010 amendments.

Petitioners’ claim that use of the basement for storage was a base date service pursuant to

section 2-04(c) of the Loft Board Rules is not properly before this tribunal as part of their

coverage application. 29 RCNY § 1-06(a)(3) (“The applicant may only have one claim per

application”). Petitioners may pursue a diminution of services claim pursuant to the Loft Board

rules.

FINDINGS AND CONCLUSIONS

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1. Petitioners demonstrated that the building located at 177

Water Street, Brooklyn, New York, is an interim multiple

dwelling under the Loft Law.

2. Petitioner Molina is the protected occupant of the second floor

unit, which is a covered unit.

3. Petitioner Gallo is the protected occupant of the third floor

unit, which is a covered unit.

4. Petitioner Marriner-Smith is the protected occupant of the

fourth floor unit, which is a covered unit.

5. The basement is excluded from coverage as part of the second

and third floor units and a claim pursuant to 2-04(c) of the Loft

Board rules is not properly before this tribunal.

RECOMMENDATION

I recommend that the Loft Board grant petitioners’ coverage application.

Astrid B. Gloade

Administrative Law Judge

October 10, 2014

SUBMITTED TO:

RICK D. CHANDLER, PE Commissioner

APPEARANCES:

WEEN & KOZEK, LLP

Attorneys for Petitioners

BY: MICHAEL P. KOZEK, ESQ.

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WARSHAW BURSTEIN, LLP

Attorneys for Respondents

BY: BRUCE H. WIENER, ESQ.

MAXWELL BREED, ESQ.

ORDER

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

GAYLE MARRINER-SMITH

ORDER

Loft Board Order No. 4426

Docket No. R-0340

RE: 177 Water Street Brooklyn, New York

IMD No. 30098

Challenged Order No.: 4349

The New York City Loft Board accepts the Report and Recommendation of Martha Cruz, Deputy General Counsel, dated September 3, 2015.

The application seeks reconsideration of Loft Board Order No. 4349, in which the Loft Board determined that:

1. The fourth floor in the building located at 177 Water Street, Brooklyn, New York ("Building"), constitutes two separate interim multiple dwelling units;

2. Gayle Marriner-Smith ("Tenant") is not a protected occupant of the fourth floor because Tenant failed to demonstrate that she was in possession of the fourth floor and used it as her primary residence.

For the reasons set forth in the report and recommendation, the r nsideration application is hereby denied in its entirety.

DATED: September 17, 2015

Board Members Concurring: Barowitz, Spadafora, Fisher, Delaney, Schachter, Shelton

Board Members Absent: Bolden-Rivera

DATE LOFT BOARD ORDER MAILED: SEP ~8 2015

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

GAYLE MARRINER-SMITH

Martha Cruz, Deputy General Counsel

REPORT AND RECOMMENDATION

Docket No. R-0340

RE: 177 Water Street Brooklyn, New York

IMD No. 30098

Challenged Order No.: 4349

On February 23, 2015, Gayle Marriner-Smith ("Tenant"}, an occupant of the fourth floor in the building located at 177 Water Street, Brooklyn, New York ("Building"), filed a timely reconsideration application ("Application") seeking review of Loft Board Order No. 4349 ("Order"), issued on January 15, 2015, and mailed on January 23, 2015.

BACKGROUND

On November 7, 2012, Doreen Gallo, the occupant of the third floor, Octavia Molina, the occupant of the second floor, and Tenant filed a coverage application seeking a determination that the Building is an interim multiple dwelling ("IMD") pursuant to§ 281(5) of the Multiple Dwelling Law ("MDL") consisting of three units, one on each of the second, third, and fourth floors and that they are the protected occupants of their respective units.

On January 15, 2015, the Loft Board issued the Order, finding that: 1) the Building is an I MD, with units on the second, third and fourth floors; 2) Octavia Molina and Doreen Gallo are the protected occupants of the second and third floors respectively; 3) the basement is excluded from coverage as part of the second and third floor units; 4) the fourth floor was residentially occupied as two separate IMD units during the period commencing January 1, 2008, and ending December 31, 2009 ("Window Period") and on June 21, 2010, the effective date of the law; and 5) Tenant is not the protected occupant of the fourth floor because she, who was not in possession of the Unit, failed to demonstrate that she used it as her primary residence.

On February 23, 2015, Tenant filed the Application. On March 19, 2015, 177 Water Street Realty LLC and Thomas Calfa ("Owner"), the owner of the Building, filed an answer in opposition to the Application.

STANDARD FOR RECONSIDERATION

Under the Loft Board's rules, Title 29 of the Rules of the City of New York ("29 RCNY") § 1-07(a)(2}, there are four circumstances under which an application for reconsideration may be granted:

i. Denial of due process or material fraud in the prior proceeding; ii. An error of law; iii. An erroneous determination based on a ground not argued by the parties in the prior

proceeding that the parties could not have reasonably anticipated would be the basis for a determination; or

iv. The discovery of probative, relevant evidence that could not have been discovered at the time of the hearing despite the exercise of due diligence.

Here, Tenant seeks reconsideration of the Order on two grounds. Tenant argues that:

1) The Loft Board made an error of law by denying her claim for protected occupant status based on her failure to show that she is in possession of the fourth floor and that the fourth floor is her primary residence; and

2) The Loft Board's determination that the fourth floor consists of two IMD units was a denial of due process.

However, a review of the arguments advanced and the record shows no legal error or denial of due process. Therefore, I recommend the Application be denied.

ANALYSIS

The Loft Board, having found the fourth floor to be eligible for IMD coverage as two units, determined in accordance with 29 RCNY § 2-09(b)(4) qf its rules that Tenant, who is the prime lessee of the fourth floor, is not a protected occupant because she did not use the fourth floor as her primary residence. This finding was based upon testimony and evidence produced at hearing and also Tenant's uncontroverted testimony that the fourth floor was not now and had not been, for at least a decade, Tenant's primary residence. Transcript ("Tr.") at 1066.

In her Memorandum of Law in Support of the Application ("Memorandum"), Tenant claims that the Loft Board Order overlooked the remedial purpose of the Loft Law, which is to protect the residential aspect of occupancy of an I MD, notwithstanding the fact that the Order found the Building and the units covered pursuant to MDL § 281 (5). Tenant fails to recognize that the Loft Law's remedial purpose does not include protecting a prime lessee who is profiteering from the residential use of her unit.

Rather by her various convoluted and often incorrect interpretations of the Loft Law and the Loft Board's rules, Tenant seeks to be declared the protected occupant of the fourth floor, which she uses solely as income property while living in Mattituck, New York- a use that is antithetical to the Legislature's declarations of purpose. See, Marriner-Smith Sublet Rental Chart- 4th Floor Units. Indeed, Tenant's continuous subletting of the fourth floor at unregulated rents, is not permitted under the Loft Board rules, and is one of the things the Loft Law seeks to prevent. See, 29 RCNY § 2-09(c)(4)(ii).

It is undeniable that Tenant's primary residence is in Mattituck, New York. Tr. at 815-816 and 1066. Having disclosed this, Tenant now goes to great lengths to prove that primary residence is not applicable to determinations of protected occupancy. Relying on BOR Realty Corp. v. New York City Loft Board, 514 N.Y.S.2d 339, 129 A.D.2d 496 (1st Dep't 1987); and Vlachos v. New York City Loft Board, 70 N.Y.2d 769 (1987), Tenant argues that primary residence is never a factor in determining Loft Law coverage or protected occupant status. See, Memorandum at 2.

Tenant wrongly conflates the analysis of eligibility for coverage of units and the analysis of protected occupant status. These are separate issues and are analyzed under different standards. The holdings in BOR and its progeny concern eligibility of loft units, and contain no pronouncement regarding protected occupant status. Rather, 29 RCNY § 2-09(b) that controls here.

A. Rule 29 RCNY § 2-09(b)(4) Applies to a Prime Tenant's Claim for Protected Occupancy.

Section 2-09(b) of the Loft Board's rules identifies who and under what circumstances a residential occupant is determined to be eligible for Article 7-C protection. The first subsection, § 2-09(b)(1 ), is the catchall section that provides that unless otherwise provided in the rule, the occupant in possession of a covered IMD unit is the protected occupant of the unit.

Section 2-09(b)(2) provides that where a residential occupant, who was not the prime lessee, was in possession of a covered unit prior to the effective date of the law, the lack of consent of the landlord to a sublet, assignment or subdivision that established the occupancy could not be used as a defense against a finding of Article 7-C protection.

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Section 2-09(b)(3) applies only to residential occupants who took possession of a covered IMD unit after the effective date of the law. This includes a prime tenant with a current lease in effect who took possession of the unit after the effective date of the law.

Where, as here, a tenant is the prime lessee who took possession of the residential unit prior to the effective date of the law and has an expired lease, § 2-09(b)(4) governs. Rule§ 2-09(b)(4) states in relevant part:

The prime lessee ... is deemed to be the residential occupant qualified for protection under Article 7-C, if the prime lessee ... can prove that the residential unit covered as part of an IMD is his or her primary residence, even if another person is in possession.

In an attempt to avoid the ramifications of her testimony, and notwithstanding the plain language in the rule, Tenant claims that because she is not seeking to recover the space from a subtenant, and because she is in possession of the Unit, the Loft Board should have used § 2-09(b)(1 ), which does not require primary residence.

Tenant's narrow application of§ 2-09(b)(4), applying it only when a prime tenant is out of possession and is seeking to recover a unit, contradicts the plain language of the rule. The rule clearly states that the prime tenant is deemed to be the protected occupant if the prime tenant can prove the unit is his or her primary residence even if another person is in possession - not only if another person is in possession. Accordingly, contrary to Tenant's reading of§ 2-09(b}(4), this rule applies to determinations of protected occupancy status of a prime tenant whether or not the prime tenant is in possession; and is not confined solely to determinations of protected occupancy status where a prime tenant is out of possession of the unit and is seeking to recover possession from a subtenant.

B. The Loft Board Prooerlv Found Tenant Was Not the Protected Tenant of the Fourth Floor.

In any event, Tenant is not eligible for protected occupancy status under any of the other provisions of§ 2-09(b) because the Loft Board properly determined that Tenant, a prime lessee, was in fact, not in possession.

Although Tenant's Memorandum is quite lengthy, it offers scant support to her argument that she was in possession of the fourth floor during the window period and what she refers to as the "base date", which we take to mean the effective date of the law. See, Memorandum at 7. In those few paragraphs she states that:

• In 2008 and 2009, she maintained residences in both the fourth floor and also on Long Island with her husband;

• That as a real estate broker she relies on referrals and 70% of her business comes from Brooklyn and Manhattan so it was crucial for her to spend time in New York City and Long Island;

• In recent years she shared the fourth floor with roommates; • Apart from her roommates' personal belongings and toiletries, the fourth floor was entirely

furnished with her possessions; and • Although she consistently maintained roommates, she always retained the right to use all

areas of the fourth floor and did in fact do so during the window period.

However, the bulk of the testimony and documentary evidence tells a different story. According to her testimony, Tenant moved into the fourth floor in 1980. Tr. at 660,667-668. In 1992, she married. Tr. at 681. Still working in New York City while her husband lived on the North Fork of Long Island, she only spent weekends on the North Fork. Tr. at 683. With regard to Tenant's testimony that she used the fourth floor during the summer of 2008 when she broke her wrist, Judge Gloade found that her testimony to be vague and uncorroborated. See, Judge Gloade's Report and Recommendation ("Report"), at 22. Tenant also testified that from April 2009 to April 2010 she visited the fourth floor four times total that year. Tr. at 688, 858.

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Yet the evidence shows that by 2005, Tenant was renting the front and rear of the fourth floor to her friends' children, and, as it turned out, renting to them at a substantial profit. Tr. at 708-709, 713. As shown below, Tenant's un-redacted tax returns for the years 2008, 2009 and 2010 show she used the fourth floor as income property, charging her subtenants well in excess of the rent she paid to the landlord.

Year Rent Paid by Tenant Rent Received from Profit Subtenants

2008 $23,937 $38 388 $14,451 2009 $23,400 $36,000 $12,600 2010 $25,541 $39,450 $13,909

See, Schedule E of her un-redacted Tax Returns for 2008, 2009 and 2010.

Moreover, Tenant had her subtenants reimburse her for 100% of the utilities for the Unit, with 80% allocable to the "front loft space" and 20% to the "back loft space". See, Laura James and Greg Kitowicz Occupancy Agreements; See also Tr. at 867-868. Despite the fact that Tenant did not actually pay the utilities, she also deducted the utilities on her taxes even though her tenants paid 100% of the utilities.

Tenant and her husband testified that the information on the Schedule E was a mistake that they blamed on their accountant. Tr. at 753, 953-955, 1118. Tenant and her husband, both of whom signed the joint returns, testified they never noticed the mistake, even though the same mistake appeared on the 2008, 2009, and 2010 tax returns. Just before her second day of testimony Tenant had her accountant amend the New York State tax returns for 2008, 2009 and 2010 to comport with her testimony that she resided on the fourth floor. Tr. at 764, 782-783, 983, 985 1122-1123.

As stated in the Report, Judge Gloade observed that Tenant's testimony was evasive, calculated and overly rehearsed. She had ready explanations for why she changed her designated home address on several documents yet did not have a clear explanation for why her Long Island addresses were provided as her home address on others. She was vague as to details about her stays on the fourth floor, although she claimed to have regularly stayed there throughout much of the window period. See, Report at 22.

We agree with Judge Gloade's assessment of Tenant's credibility as well as her motive in amending her tax returns, which she found to be self-serving. See, Report at 21. The fact that after her first day of testimony she amended her 2008, 2009 and 2010 tax returns does not lessen the significance of this so called mistake. We find that the accountant accurately described the use of the fourth floor based upon information given by Tenant and that Tenant used 100% of the fourth floor as income property, not as her primary residence.

Tenant argues that she has always remained in possession because "she maintained a constant nexus to the [fourth floor] because of her emotional attachment to the space" and because she left her personal belongings on the fourth floor. See, Memorandum at 19. Her emotional attachment has no bearing on whether Tenant was in possession of the fourth floor or whether she is the protected occupant of the fourth floor.

Tenant also claims that her situation is analogous to Matter of Pels, Loft Board Order No. 4161 (June 20, 2013) in that, like Ms. Pels, she was in possession of the fourth floor. We disagree. While both Tenant and Ms. Pels lived in their loft spaces before the Window Period and both kept their belongings there while not residing in the space, that is where the similarities end.

Unlike Tenant, Ms. Pels left her unit for an out of state full-time teaching assignment and never rented her unit for residential purposes, but simply continued to rent a part of her unit as an artist studio space as she had done while she occupied her unit. Most importantly, Ms. Pels demonstrated that she had every intention of returning to live in her unit full-time at the conclusion of her teaching assignment,

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as she had at the conclusion of each of her earlier academic engagements. Accordingly, Ms. Pels had always remained in possession of her unit.

In contrast, Tenant lives with her husband in Mattituck, New York. Tenant has not lived on the fourth floor full-time for at least fifteen years and instead uses the fourth floor as income property, not as her residence or home. Tenant has never expressed any intention of returning to the fourth floor full-time. Rather, she stated she might use the fourth floor when she and her husband retire, and "can come in and spend more time here." Tr. at 857.

Tenant also argues that her situation is similar to Ms. Langenegger's in Matter of Various Tenants of 357 Bowery, Loft Board Order No. 4350 (Jan. 15, 2015) because like Ms. Langenegger, she is a prime tenant, who kept her personal belongings on the fourth floor, maintained the residential nature of the space, and returned to the fourth floor. Again, there are stark differences between Tenant's use of the fourth floor and Ms. Langenegger's use of her space. Unlike Tenant, Ms. Langenegger, who worked as a television correspondent and was required to travel for work purposes, always returned to her unit because the unit was where she lived and there was nothing in the record to show that she lived anywhere other than her loft unit.

In sum, even under Tenant's erroneous construction of§ 2-09(b), the record does not support tenant's claim that she was in possession of the fourth floor and therefore eligible for protected occupant status. The Loft Board correctly found that: Tenant was the prime lessee of the fourth floor and that Tenant's primary residence was in Mattituck, New York and under 29 RCNY § 2-09(b)(4), Tenant does not qualify as a protected occupant.

C. The Loft Board Properly Found the Fourth Floor To Be Two Distinct IMD Units. .

Tenant argues that the Loft Board's determination that the fourth floor constitutes two separate IMD units was a denial of Tenant's due process rights. Tenant argues that the Loft Board based its decision upon a ground not argued by the parties, nor a ground the parties could have reasonably anticipated would have been the basis of a determination. Yet, Tenant, in her post trial brief argued:

Even if the fourth floor unit was two separate units, each unit would individually qualify as an IMD unit because both the front and rear spaces were residentially occupied for a consecutive twelve month period during January 1, 2008 through December 31, 2009. Additionally, both the front and rear portions (1) have at least one window that opens onto a street, lawful yard, or court; (2) are at least 400 square feet in area; (3) are 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".

See, Petitioner's Post Trial Brief at 23, note 2.

In light of Tenant's post-trial brief, the Loft Board does not find Tenant's argument that she could not have reasonably anticipated such a determination persuasive nor did the Loft Board's determination to treat the fourth floor as two distinct IMD units deprive Tenant of her due process rights, or constitute an error of law.

In Matter of Malis, Loft Board Order No. 3132 (Jan. 18, 2007), the Loft Board considered the following factors to determine whether a unit was one or two separate units: (1) the physical characteristics of the two units during the window period; (2) whether each of the units was residentially occupied during the window period; (3) whether physical alterations were made to the units, and if so, when they were made; and (4) how the units were occupied since the window period.

Applying these factors, the record supports a finding that the fourth floor constitutes two separate IMD units independent from one another. As was stated in the Order, Tenant admitted that the fourth floor had two distinct units as early as 1989/1990 when Tenant's then boyfriend converted the rear studio into a living space for himself, with a separate kitchen, bathroom and separate entrances.

5

During her testimony, Iris Welcome, a tenant who lived on the fourth floor during the Window Period, described what her space included. She stated that her back loft space consisted of the studio, a kitchen, a full bath and a closet and that she did not have access to the kitchen or laundry room located in the front space. As Tenant states in the Memorandum, "occupants access the subject premises' rear space without passing through the subject premises front space." See, Memorandum at 30. Each space had its own separate entrance.

Tenant identified the fourth floor as having a "back loft space" and a "front loft space" in the occupancy agreements entered into with her subtenants and each space had its own occupancy agreement. Not only was the fourth floor occupied as two separate IMD units during the Window Period, it also has been used as two separate IMD units after the Window Period, with each unit having its own kitchen, bathroom, living space and the passage from the front unit to the back was locked. Tenant argues that these subtenants were her "roommates". If the subtenants were roommates, Tenant would have called them roommates in the occupancy agreements. Instead, Tenant referred to herself as landlord, and the residential occupants as "subtenants". In addition, Tenant had her subtenants reimburse her for 100% of the utilities for the fourth floor, with 80% allocable to the front loft space and 20% to the back loft space. See, Order.

Accordingly, the Loft Board's determination that the fourth floor is two separate IMD units did not deprive Tenant of her due process rights nor did it constitute an error of law.

RECOMMENDATION

For the reasons explained above, I recommend that the Loft Board deny the reconsideration application in its entirety.

DATED: September 3, 2015

Deputy General Counsel

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