What the Petition Doesn't Say Can Sink the Case: Pleading Martin Act Status in a Co-op Holdover

Aero Mgt. v Moghadasian, 74 Misc 3d 132(A), 2022 NY Slip Op 50154(U) (App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2022)

By Bikram Singh, Esq. | Singh & Rani LLP

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A landlord obtained a final judgment of possession against our client when he failed to appear for trial. Ordinarily that is the end of the story. Here it was not — because the petition that produced the judgment never alleged that the tenancy was subject to the Martin Act.

Civil Court, Queens County (Kimon C. Thermos, J.) vacated the default judgment and dismissed the petition by order dated May 8, 2020. On February 25, 2022, the Appellate Term, Second Department, affirmed.

Bikram Singh of Singh & Rani LLP represented the tenant in this case.

Two Hurdles, Both Cleared

To vacate a default final judgment under CPLR 5015 (a) (1), a tenant must show both a reasonable excuse for the default and a potentially meritorious defense (Nationstar Mtge., LLC v McLean, 140 AD3d 1131, 1132 [2016]; Santiago v New York City Health & Hosps. Corp., 10 AD3d 393, 394 [2004]; 136-76 39th Ave., LLC v Ai Ping Wu, 55 Misc 3d 128[A]).

Our client established a reasonable excuse for failing to appear at the scheduled hearing. The meritorious defense came from the face of the landlord's own pleading: the petition failed to allege that the tenancy was subject to the Martin Act (General Business Law § 352-eeee).

Why Regulatory Status Belongs in the Petition

RPAPL 741 requires a petition to contain a concise statement of the ultimate facts on which the proceeding is based (Giannini v Stuart, 6 AD2d 418 [1958]).

The Appellate Term restated the rule that follows from it: where a tenancy is subject to a specific form of regulation, the petition must set forth the tenant's regulatory status, because that status may determine the scope of the tenant's rights (Migliaccio v Childs, 65 Misc 3d 131[A]; Brookwood Coram I, LLC v Oliva, 47 Misc 3d 140[A]; Volunteers of Am.-Greater NY, Inc. v Almonte, 17 Misc 3d 57, 59 [App Term, 2d Dept 2007], affd 65 AD3d 1155 [2009]).

A petition containing material omissions is subject to dismissal (Jamaica Seven, LLC v Villa, 67 Misc 3d 138[A]).

Here it was undisputed that the tenancy was subject to the Martin Act. That being so, the landlord was obliged to say so in the petition, so that both the tenant and the court would be adequately apprised of the basis of the claim (Todman v Thompson, 2003 NY Slip Op 51195[U]; Kew Gardens Hills Apt. Assoc., L.P. v Jeffers, 2003 NY Slip Op 51132[U]; Joseph M. d'Assern Hous. Corp. v Day, 24 Misc 3d 132[A]). It did not, and dismissal followed.

Why This Omission Matters So Much

The Martin Act is not a technicality in a converted building. Under General Business Law § 352-eeee, a non-purchasing tenant in a building converted under a non-eviction plan cannot be dispossessed simply for declining to buy, and a landlord proceeding against such a tenant must state a proper statutory ground for eviction.

A petition that says nothing about conversion status — or that describes the apartment merely as a co-op not subject to rent control — leaves the tenant and the court without the information needed to identify which defenses are even on the table. That is precisely the prejudice the pleading rule exists to prevent.

The Decision's Afterlife

Aero Mgt. has become a working citation in the Housing Courts.

In WFHA Rockaway L.P. v Stevens (2023), the court cited it for the proposition that a petition containing a material omission cannot support entry of a judgment, because it fails to adequately apprise the tenant and the court of the basis of the landlord's claim.

In Westchester Capital Co., LLC v Richardson (2025), the court read Aero Mgt. together with Kew Gardens Hills Apt. Assoc. v Jeffers as Second Department authority that failure to plead non-purchasing tenant status is a non-amendable defect warranting dismissal — and rejected as insufficient a petition describing the regulatory status only as "not subject to rent control" because the unit is a co-op.

That is the practical reach of the case: not merely that the status must be pleaded, but that pleading around it does not work.

Takeaways

For tenants and their counsel:

• A default judgment is not necessarily final. CPLR 5015 (a) (1) is a two-part test, and a defective petition can supply the meritorious defense.
• Read the petition before anything else. In a converted building, the absence of any allegation about conversion or non-purchasing tenant status is a defense sitting in plain view.
• "Not subject to rent control" is not a regulatory status. Under Richardson, that formulation understates the regulatory picture rather than disclosing it.

For landlords and their counsel:

• Plead the status affirmatively and specifically. If the building was converted, say so, identify the plan type, and state the statutory ground relied upon.
• Do not count on amendment. Second Department authority treats this omission as non-amendable.
• A default does not cure a defective pleading. A judgment obtained on a materially incomplete petition is exposed for as long as the tenant has grounds to move.

A Note on Scope

This is Appellate Term, Second Department authority, governing Kings, Queens, and Richmond Counties. Practitioners in the First Department should confirm the treatment of pleading defects and amendment in that Department before assuming the analysis transfers.

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Singh & Rani LLP represents tenants and landlords in Housing Court, Civil Court, Supreme Court, and on appeal throughout New York City, including co-op conversion, Martin Act, rent stabilization, and holdover litigation. Bikram Singh represented the tenant in Aero Mgt. v Moghadasian. If a judgment was entered against you by default, or if you are a non-purchasing tenant in a converted building, the pleadings are worth a careful look.

Singh & Rani LLP 5 Penn Plaza, 19th Floor New York, NY 10001

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Attorney Advertising. This article is for general informational purposes only, does not constitute legal advice, and does not create an attorney-client relationship. Prior results do not guarantee a similar outcome. Each matter turns on its own facts and applicable law.

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