The decision paves the way for the owners, Alistair and Catherine Economakis, to convert the Lower East Side building into a 60-room mansion-or to convert it to luxury-rate apartments or sell it, having used "owner occupancy" as a pretext to clear out the rent-regulated tenants. The nine tenants remaining in the 15-apartment building will receive $75,000 each in exchange for being out by the end of August 2009.
The tenants voted to accept the deal after their lawyer Stephen Dobkin warned them that their chances of winning at trial were as low as 20 percent, and that if they lost, they'd be liable for the Economakises' legal fees.
Combined with their own legal fees, that meant the tenants would have owed as much as $90,000 each, says tenant Robert Appleton. "That was the thing that really swayed us," he says. "We would have been facing bankruptcy and having our wages garnished for the rest of our lives."
"I just did not have the money to continue," adds Laura Zambrano.
Though some tenants wanted to continue the fight, most decided to settle after they suffered a string of legal defeats. In June, the state Court of Appeals ruled that it would be legal for the Economakises to evict all the tenants, because the law set no limit on the number of rent-stabilized apartments a landlord could claim for "personal use." More critically, the Housing Court judge who initially handled the case rejected all 20 subpoenas the tenants filed. They had hoped to find documents proving that the Economakises did not genuinely intend to live in the building.
"The heart of our defense was blocked," says David Pultz. "We were trying to show that the whole owner-occupancy thing was a scam."
Specifically, the tenants were trying to find proof that the Economakises had purchased the building as an investment, not a home, and that they had neither financing nor an officially approved plan to renovate the building.
"I'm 100 percent sure they're not going to try to turn this into a mansion," says Ursula Kinzel.
The Economakises claimed that they were the sole owners of Third St. Development LLC, the company that owned the building and had transferred them the building in 2003. But eviction notices to tenants in 2002 were signed by Catherine Economakis's sister, Anastasia Thanopolus, as a company member-which would have made the transfer illegal, Pultz said. Tenants were also beginning to uncover evidence that the women's father, landlord Peter Yatrakis, was also involved, he adds. The judge denied a subpoena for Third St. Development's operating agreement.
The judge also denied subpoenas for loan documents from M&T Bank, which had given the Economakises the mortgage to buy 47 East 3rd St. In depositions, says Pultz, the couple submitted two letters from a bank official saying that they had a $1.8 million line of credit for the renovations. But such loans are supposed to be filed with the city and posted on the ACRIS Web site, and tenants were unable to find the loan on the site. A title-insurance lawyer the tenants consulted said the letters looked phony, Pultz adds.
Tenants were also barred from introducing evidence about the Economakises harassing and evicting tenants in three other buildings they had bought at the same time. "We wanted to prove this was part of a scheme," says Janet Dunson.
What the case turned on, explains Pultz, was whether the Economakises could prove they intended in good faith to occupy the building. The Economakises had already moved into one apartment, which bolstered their case. Without the relevant documents, he said, the tenants had little hope of disproving it.
Kinzel and George Boyd were the two tenants who wanted to continue the fight. Kinzel felt that if they could keep going until the spring, the Legislature might change the law to protect tenants from abuse of owner-occupancy evictions. Boyd thought that the landlords were "frightened" about going to trial-and held out until he got a slightly larger buyout.
The tenants have no idea where they will move to. "None of us are going to find a rent-stabilized apartment," fears Zambrano. The Economakises immediately rejected the idea of relocating them to apartments in other buildings they own, tenants say.
"People think we got a good deal, but we didn't," says Appleton. After taxes and legal fees are deducted, he estimates, their buyouts will probably amount to around $10,000 each.
"I just never thought that they would get away with this," says Kinzel. "It was totally unthinkable they would succeed. I thought they would get laughed out of court."
Economakis Sues His Cousin for Libel
The attempted mass evictions at 47 East Third St. have also generated litigation in Greece. Landlord Alistair Economakis is suing his cousin Evel for calling him a "rotten scoundrel" and a "spoiled rich brat."
The cause is a letter that Evel Economakis, a high-school history teacher in Athens and author of From Peasant to Petersburger, posted on a Lower East Side Web site last July. It was also published by the New York Observer.
In the letter, Evel Economakis wrote that Alistair's fight to drive the tenants out of the building "has disturbed me, but it hasn't surprised me," because "Alistair was always a spoiled rich brat. I remember once, in some village in southern Greece, he stuck his five-year-old head out of his father's-my uncle's-car, and, encouraged by his guffawing dad, shouted insults at elderly women, calling them 'hags.' I nearly slapped my little cousin's face for that. I regret now I didn't."
Evel wrote that when he asked his uncle if it were true that Alistair was trying to evict all the building's residents, his answer was: "Yes, and good for him-most of the tenants are Jews anyway. He'll make a killing when he sells the building."
The letter said that Alistair and his wife, Catherine, would not be fazed by anyone's moral outrage about the eviction, because "it's almost impossible to be filthy rich and not be a rotten scoundrel inside."
"Low-income tenants of New York! Run the Economakises-and all human lice like them-out of town!" Evel urged. "Turn their 'American dream'-a dream at your expense-into a real nightmare! Give them no quarter! Make it physically and psychologically impossible for them to evict you! Send THEM packing!"
In a letter sent out in September, Evel Economakis wrote that the libel suit is an attempt "to send me to jail and destroy me financially (which is not a hard thing to do, as I make under $12,000 a year)." According to Third Street tenants, Greek law allows plaintiffs to sue for libel even if the accusations are true.
So in that letter, Evel apologized for "the mistake of calling my cousin Alistair a 'spoiled rich brat.'
"Alistair grew up with a silver spoon in his mouth, was surrounded by maids and other servants, had everything handed to him, played on his father's yacht, and rode his father's horses on their estate in England. More, on at least two occasions I personally witnessed how rudely he addressed poor elderly people in Greece. But none of this, of course, constitutes evidence that he is a 'spoiled rich brat.' Sorry, Alistair, I shouldn't have said that about you."
"If I had the chance to rewrite the letter, I wouldn't use characterizations and other adjectives," he concluded. "But I have always believed-and will always believe-that a parasite is a person who takes and never gives back. A parasite buys and sells, producing nothing. Worse still, he does so at the expense of others."