Peckham Battles On:Case That Could Set Precedent in Gut-Demolition Issue is Argued

Arguments were heard Friday (2/15/08) in Landlord Larry Tauber’s appellate court case against tenant Daniel Peckham.  Tauber’s lawyer came out first thing and started bitching about how her client had to hold up his construction plans just because of this one tenant, but the judges quickly silenced her, directing her to focus on the issue at hand.  What the case was really about was whether or not gut renovation (at Peckham’s building, and in general, since the case may set a precedent), which tenant activists characterize as “phony demolition” fits the DHCR’s standards for permissible demolition.  (Gut renovation has become popular of late as a way for landlords to try to get rid of rent-stabilized tenants) The DHCR had decided that it did, and then the State Supreme Court had ruled that the DHCR needed to revisit that decision, and in the present case Tauber was arguing that the original determination should hold.

            Tauber’s lawyer argued that the DHCR had a clear standard in place stating that demolition did not have to involve taking down the exterior walls of a building, that if you could stand in the basement and look up at the sky that constituted demolition under the DHCR rules.  Judges asked if it was not permissible for the DHCR to revise it’s standards, perhaps in response to the overheated real estate situation, and Tauber’s lawyer said it wasn’t fair to do so midstream in Tauber’s project.

            Both Peckham’s lawyer, Stewart W. Lawrence, and the DHCR lawyer argued that the DHCR should get the case back so that they could clarify their standard as to whether or not gut-renovation constituted actual demolition.  Judges pointed out that the DHCR seemed to have been comfortable with the “stand-in-the-basement-and-look-at-the-sky” standard, and asked whether or not this seeming change of heart on the part of the DHCR had anything to do with the recent gubernatorial election, in which the democrat Eliot Spitzer replaced the outgoing republican Pataki.  The DHCR lawyer said no, but that they now intended to be more proactive in articulating their standards in this and other issues.

            It was difficult to tell which way the case will go.  Although the Judges didn’t seem to think it was necessarily too late for the DHCR to change its standard in Tauber’s case, one of them saying that, actually, the decision was still ongoing as it worked its way through the courts, they seemed to bristle at the suggestion that political ideology might be influencing the DHCR to revisit cases that had already been decided.  But one of the judges asked why the DHCR couldn’t just use the cases before it presently to articulate its standard as to what constitutes demolition, which seems to suggest that even if Tauber wins this case it won’t necessarily constitute a precedent for future gut-renovations.

At one point one of the judges briefly brought up the subsidiary issue of Tauber’s financial fitness to complete the renovations of the building.  Though his lawyer assured the judge that Tauber had satisfied the requirements, Tauber has been losing hundreds of thousands of dollars a year in rents simply because he refuses to settle with Peckham.  The decision in this case will take two to five months to complete, during which time Tauber will lose even more money, and perhaps by that point his financial situation really will become relevant. -- Ed Hamilton

Arguments were heard Friday (2/15/08) in Landlord Larry Tauber’s appellate court case against tenant Daniel Peckham.  Tauber’s lawyer came out first thing and started bitching about how her client had to hold up his construction plans just because of this one tenant, but the judges quickly silenced her, directing her to focus on the issue at hand.  What the case was really about was whether or not gut renovation (at Peckham’s building, and in general, since the case may set a precedent), which tenant activists characterize as “phony demolition” fits the DHCR’s standards for permissible demolition.  (Gut renovation has become popular of late as a way for landlords to try to get rid of rent-stabilized tenants) The DHCR had decided that it did, and then the State Supreme Court had ruled that the DHCR needed to revisit that decision, and in the present case Tauber was arguing that the original determination should hold.

            Tauber’s lawyer argued that the DHCR had a clear standard in place stating that demolition did not have to involve taking down the exterior walls of a building, that if you could stand in the basement and look up at the sky that constituted demolition under the DHCR rules.  Judges asked if it was not permissible for the DHCR to revise it’s standards, perhaps in response to the overheated real estate situation, and Tauber’s lawyer said it wasn’t fair to do so midstream in Tauber’s project.

            Both Peckham’s lawyer, Stewart W. Lawrence, and the DHCR lawyer argued that the DHCR should get the case back so that they could clarify their standard as to whether or not gut-renovation constituted actual demolition.  Judges pointed out that the DHCR seemed to have been comfortable with the “stand-in-the-basement-and-look-at-the-sky” standard, and asked whether or not this seeming change of heart on the part of the DHCR had anything to do with the recent gubernatorial election, in which the democrat Eliot Spitzer replaced the outgoing republican Pataki.  The DHCR lawyer said no, but that they now intended to be more proactive in articulating their standards in this and other issues.

            It was difficult to tell which way the case will go.  Although the Judges didn’t seem to think it was necessarily too late for the DHCR to change its standard in Tauber’s case, one of them saying that, actually, the decision was still ongoing as it worked its way through the courts, they seemed to bristle at the suggestion that political ideology might be influencing the DHCR to revisit cases that had already been decided.  But one of the judges asked why the DHCR couldn’t just use the cases before it presently to articulate its standard as to what constitutes demolition, which seems to suggest that even if Tauber wins this case it won’t necessarily constitute a precedent for future gut-renovations.

At one point one of the judges briefly brought up the subsidiary issue of Tauber’s financial fitness to complete the renovations of the building.  Though his lawyer assured the judge that Tauber had satisfied the requirements, Tauber has been losing hundreds of thousands of dollars a year in rents simply because he refuses to settle with Peckham.  The decision in this case will take two to five months to complete, during which time Tauber will lose even more money, and perhaps by that point his financial situation really will become relevant. -- Ed Hamilton