Opinion
No. 053858/12.
2013-01-25
ERNEST AND MARYANNA JEREMIAS FAMILY PARTNERSHIP, LP, Petitioner–Landlord, v. Jayson MATAS and Georgina Morcilio, Respondent–Tenants.
Steve Sidrane, Esq., Sidrane & Schwartz–Sidrane LLP, Hewlett, appeared on behalf of petitioner. Partick Langhenry, Esq., The Legal Aid Society, Brooklyn, appeared on behalf of respondents.
Steve Sidrane, Esq., Sidrane & Schwartz–Sidrane LLP, Hewlett, appeared on behalf of petitioner. Partick Langhenry, Esq., The Legal Aid Society, Brooklyn, appeared on behalf of respondents.
BRUCE E. SCHECKOWITZ, J.
After trial and upon submission of post-trial briefs by petitioner and respondent, the decision and order of the court is as follows:
This is a summary non-payment proceeding commenced by Ernest and Maryanna Jeremias Family Partnership, LP (“petitioner”) against Jayson Matas and Georgina Morcilio (“respondents”). The rent stabilized subject premises is located at 2302 85th Street, Apartment B2, Brooklyn, N.Y. (the “premises”). The case was referred to this part for trial on May 30, 2012 and the trial was conducted over the course of five days. Both parties appeared through counsel. The parties submitted post-trial briefs to the court on October 1, 2012.
At trial petitioner established that it is the landlord of the subject building and that the building is registered as a multiple dwelling with HPD. Rents for the premises have been registered with DHCR. It is undisputed that respondents have not paid any rent to petitioner since March 2011. Petitioner alleges that $22,568.00 is outstanding in unpaid rent for the period April 2011 through August 2012, which is comprised of $1300.00 for April 2011 and $1329.00 per month from May 2011 through August 2012. Petitioner seeks a final judgment in this amount against respondents.
Respondents asserted various defenses to this proceeding. Respondents allege that petitioner unlawfully overcharged them $1300.00 per month for the period of May 2010 through March 2011, which they paid in full, and unlawfully charged $1329.25 in the May 1, 2011 renewal lease, which they accordingly refused to sign. Respondents contend that the overcharge is based on petitioner's impermissible increase of the rent for the premises in 2009 from $955.26 to $1200.00. Respondents claim that petitioner's overcharge was willful and that they are entitled to treble damages as a result. Lastly, respondents maintain that they are entitled to an abatement of the rent due to petitioner's breach of the implied warranty of habitability.
Rent Overcharge
It is undisputed that the rent for the premises was properly registered as $955.26 in 2008. Petitioner argues that the rent was increased from $955.26 to $1200.00 in 2009 due to a vacancy increase of 16% and a $111.75 increase for individual apartment improvements (“IAI”), on which petitioner spent $4470.00. Petitioner's witness, Ernest Jeremias explained that in 2010 the rent increased from $1200.00 to $1300.00 after the previous tenant vacated the premises, due to a statutory 17.75% vacancy increase. Mr. Jeremias further attested that in May 2011 petitioner increased the rent from $1300.00 to $1329.25 based on a permissible Rent Stabilization Guidelines increase after allegedly offering respondents a renewal lease and deeming the lease renewed.
Individual Apartment Improvements
At trial, Mr. Jeremias introduced an invoice into evidence dated April 18, 2009, which lists the IAIs that had allegedly been performed at the premises, for a total cost of $4470.00 to petitioner. (Pet.Ex.10). The letterhead on the invoice states “John Swirsky 584 Dekalb Avenue Brooklyn, NY.” Petitioner also introduced into evidence a cancelled check written to John Swirsky in the amount of $4470.00. (Pet.Ex.13). Petitioner did not call Mr. Swirski, as a witness to testify at trial regarding the alleged work performed at the premises. Jeremias testified that the improvements made to the premises included installing a new refrigerator and a double sink, extending the size of the kitchen, installing new kitchen cabinets, putting in new floors consisting of plywood floor beams and tiles, and painting the whole apartment. Jeremias explained that John Swirsky performed the work at the premises but that he was not present while the work was done. The witness stated that he inspected the work after it was finished. Mr. Jeremias asserted that Mr. Swirsky removed beams, three kitchen walls and the closet in an adjoining room, in order to enlarge the kitchen. The contractor then installed new beams and sheetrock and painted the kitchen.
The invoice introduced at trial to support petitioner's claim that it was entitled to IAIs listed the following:
1. Enlarged kitchen area. Removed 2x10 beams & S.R.
Labor ..$1,285.00
2. Removed old rotten beams.8.14
Labor .$935.00
3. Installed new combination double sink in a kitchen connected to main 2? pipes. Labor .$480.00
4. Installed new kitchen cabinets mounted to house beams. Labor .$565.00
5. Installed new S.R. walls in kitchen. Labor .$760.00
6. Installed a new refrigerator
Labor .$445.00
TOTAL:$4,470.00
There is also a handwritten entry on the bottom, portion of the invoice, that says “paid check No. 25229 4/24/09.” Jeremias averred that the handwriting on the bottom of the invoice was his own handwriting.
Manuel Almonte, the superintendent at the building, also testified on behalf of petitioner. The court did not find his testimony to be credible. Mr. Almonte was not present at the time of the alleged improvements and did not provide any insight into what was performed. Furthermore, the court did not find Mr. Almonte's testimony regarding whether the premises were improved as a result of the work to be informed or persuasive.
Respondents argue that petitioner did not perform any work that would entitle it to an AIA increase, did not provide respondents with a lease rider explaining the IAI increase, did not properly register the premises with DHCR and that there is a rent reduction order in effect from DHCR that precludes petitioner from increasing the rent. Respondent Georgina Morcilio testified that when she moved into the premises the apartment did not appear to have been improved and that petitioner had received multiple violations for items that had allegedly been renovated. Ms. Morcilio introduced two violation reports from HPD into evidence (Resp. Exs. A and W) which showed that in 2011 petitioner was issued violations for loose upper cabinets in the kitchen, painting the bathroom and baseboards, and defective wood floors. Respondent Morcilio also introduced into evidence photographs showing that the premises only contain single sinks in the kitchen and the bathroom (Resp. Exs B and Z), and therefore a double sink was never installed as the invoice states. Ms. Morcilio also testified that the refrigerator had to be replaced after she moved in because it was filthy.
Ms. Morcilio claimed that she does not believe the kitchen was enlarged and new walls installed as stated on the invoice. The witness testified that the sheetrock actually covers a damaged wall in the kitchen, the closet does not look like any work has been done to it, the kitchen walls all look the same, and that the sheetrock and molding go around the whole kitchen. The witness explained that she compared the new sheetrock installed by HPD in the bedroom to the walls in the kitchen. Respondent also introduced into evidence photographs of cracked floor tiles (Resp.Ex.U), and peeling paint and plaster in the kitchen wall above the sink (Resp.Ex.I), both taken on June 22, 2011. The court notes that it appears the condition of the wall in the kitchen existed for over two years. Also missing from the invoice is reference to any improvement or repair made to the floor other than “removed old rotten beams.” (Pet.Ex.10). There is no reference to floor tiles at all. Lastly, Ms. Morcilio testified credibly that she never received a lease rider from petitioner which explained how the rent was increased.
It is petitioner's burden to prove that each of the improvements that entitled landlord to the IAI were actually made, and that the improvements were beyond ordinary repairs. See In the Matter of Charles Birdoff & Co. v. N.Y. State Division of Housing and Community Renewal, 204 A.D.2d 630, 612 N.Y.S.2d 418 (A.D. 2nd Dept.1994); 985 Fifth Avenue Inc. v. N.Y. State Division of Housing and Community Renewal, 171 A.D.2d 572, 567 N.Y.S.2d 657 (A.D. 1st Dept 1991). The court finds that petitioner failed to meet its burden to establish that it performed the IAIs at the premises as alleged by Mr. Jeremias.
The court permitted petitioner to introduce the invoice from Mr. Swirsky (Pet.Ex.10) into evidence subject to further substantiation by petitioner. However, petitioner did not corroborate the contents of the invoice through credible testimony or documentary evidence. Mr. Jeremias testified Mr. Swirsky made improvements to the premises and that he reviewed the work after it was completed. However, Mr. Jeremias failed to show that the improvements alleged on the invoice were actually performed at the premises. Petitioner did not produce Mr. Swirsky as a witness to testify as to how the work had been performed and Mr. Jeremias could not testify to that himself. Notably, there is no apartment number listed on the invoice or the check paid to Mr. Swirsky so these documents alone do not prove that these improvements were actually made at the premises.
Petitioner cites DHCR Office of Rent Administration Policy Statement 90–10, as well as various DHCR orders (Docket Numbers XA410023RT and BH410756R), which provide the criteria for proving that a landlord is entitled to an IAI increase. Such criteria consists of: cancelled check for the work completed; invoice receipt marked paid in full for the work; signed contract agreement; affidavit from the contractor stating that the installation was complete and paid for. Conspicuously absent from the trial was an affidavit from the contractor and testimony from anyone with personal knowledge that the work listed on the invoice was actually completed. Petitioner also did not submit into evidence a contract listing the work to be completed by the contractor. Petitioner simply submitted a one page invoice which lacked any detail as to the work completed or the manner in which the alleged improvements were made.
Additionally, respondents successfully rebutted petitioner's claim that the improvements listed on the invoice were actually performed through credible testimony and documentary and photographic evidence. It is clear from the DHCR violation reports (Resp. Exs. AA and W) that petitioner did not install new cabinets or a new floor at the premises because violations were reported for both of those items a mere two years after allegedly improving them. Respondents' photographs show that a double sink was not installed at the premises. (Resp. Exs B and Z), and respondent Moricilio testified that her refrigerator was old and filthy when she moved in. Ms. Morcilio also stated that the kitchen did not appear to be enlarged and her photograph shows peeling paint and plaster in the kitchen that appears to have existed for over two years. (Resp.Ex.I). Furthermore, the invoice is ambiguous as to what “replace old rotten beams” refers to. It is unclear whether this refers to floor beams or wall beams, which petitioner also alleges it replaced. There is no reference to the installation of tiles on the invoice, which Mr. Jeremias testified petitioner installed on the floor. Rather, respondents' photograph shows evidence of cracked floor tiles. (Resp.Ex.U).
Petitioner has also failed to establish that the work purportedly performed as listed on the invoice constituted improvements rather than ordinary repairs required by law. See In the Matter of Mayfair York Company v. N.Y. State Division of Housing and Community Renewal, 240 A.D.2d 158, 658 N.Y.S.2d 270 (1st Dept.1997); and In the Matter of Linden v. N.Y. State Division of Housing and Community Renewal, 217 A.D.2d 407, 629 N.Y.S.2d 32 (1st Dept.1995). In Mayfair York, the court distinguished between repairs, such as painting, partial floor replacement, and partial rewiring, and improvements that entitle a landlord to an IAI. Assuming arguendo that all of the items listed on the invoice were completed, items such as removing rotten beams, and painting, do not constitute improvements but rather repairs for which a landlord cannot receive an IAI.It should be noted that in both Mayfair York and Linden the court held that it was correct to impose treble damages if the landlord took an increase for normal repairs.
Vacancy Increases
Petitioner argues that notwithstanding whether petitioner was entitled to an increase for IAIs, respondents were not overcharged. Petitioner posits that even without receiving an IAI increase for the premises, respondents' rent would have increased to at least $1300.00 per month based on vacancy increases. Petitioner calculates that the rent for the premises could have been increased from $955.26 to $1108.10 in 2009 based on a vacancy increase of 16% and then increased again to $1304.79 in 2010 based on a vacancy increase of 17.75%. Therefore, petitioner claims that charging respondents $1300.00 per month in 2010 was proper.
Respondents argue that since petitioner was not entitled to an IAI for the premises, petitioner improperly registered the rent amount for the premises as $1200.00 in 2009. Respondents further argue that since the registered rent amount has been incorrect since 2009, the rent amount reverts back to the last time the rent for the premises was properly registered with DHCR, which was in 2008 in the amount of $955.26. The court agrees. The rule that the rent amount reverts back to the last legal amount if, as here, a false amount was listed on DHCR registration has been established through many recent cases. See Thornton v. Baron, 5 N.Y.3d 175, 800 N.Y.S.2d 118, 833 N.E.2d 261 (2005); Jazilek v. Albart Holdings, LLC, 72 A.D.3d 529, 899 N.Y.S.2d 198 (A.D. 2nd Dept.2010); 72A Realty Assoc. v. Lucas, 101 A.D.3d 401, 955 N.Y.S.2d 19, 2012 N.Y. Slip Op 08241 (A .D. 1st Dept.); Bradbury v. 342 West 30th Street, 84 A.D.3d 681, 924 N.Y.S.2d 349 (A.D. 1st Dept.2011).
Citing Jazilek, petitioner argues that despite Thornton and its progeny, a landlord can still receive vacancy increases for an apartment even if the rent for the apartment was improperly registered. Petitioner mischaracterizes the language in Jazilek. Petitioner is correct that the Jazilek court permitted landlord to obtain a vacancy increase, although the rent reverted back to the amount listed on the last proper registration. Importantly, however, in Jazilek the court noted that the parties agreed that the vacancy increase of 20% applied. Here, no such agreement exists between parties. The additional cases cited by petitioner in support of the vacancy increases, Rosenzweig v. 305 Riverside Corp., 35 Misc.3d 1241A, 2012 WL 2295535 (Sup.Ct. N.Y. Co.2012) and Dodd v. 98 Riverside, LLC, 2012 Slip op 31653U (Sup.Ct. N.Y. Co.2012) are inapposite here. In Rosenzweig and Dodd, the courts applied the formula dictated in 72A Associates v. Lucas, 28 Misc.3d 585, 902 N.Y.S.2d 791 (N.Y.City Civ.Ct.2010)affd . 32 Misc.3d 47, 929 N.Y.S.2d 349 (A.T. 1st Dept.2011) to overcharge claims in the wake of Roberts v. Tishman Speyer 13 N.Y.2d 270 (2009). In Rosenzweig and Dodd the courts held that it was appropriate to calculate the rent for the purposes of overcharge claims based on the rent that was registered four years prior to the date of the claim. However, this calculation has since been overruled by the Appellate Division First Department in 72A Realty Assoc. v. Lucas 101 A.D.3d 401, 955 N.Y.S.2d 19, 2012 N.Y. Slip Op 08241. The courts now follow the holdings in Thornton and Jazilek, supra. and calculate the rent based on the last proper registration in effect, even if the rent reverts back to a period in excess of four years prior to the date of the claim. Therefore court finds that it cannot impose a retroactive vacancy increase on respondents and must use the last legal registered rent in effect to determine respondents' rent amount. Petitioner has not provided the court with any precedent that would permit the imposition of such a vacancy increase, nor should petitioner be rewarded for filing improper registrations with DHCR.
Additionally, there is currently a DHCR reduction in services order dated July 10, 2012, under Docket number AO210015S, in effect. (Pet.Ex.12). The DHCR order reduces the rent, as of April 1, 2012, to the rent amount in effect prior to the most recent guidelines increase. The order is specific that aside from MCI increases “no other rent increases may be collected after the effective date of this rent reduction order.” Therefore, assuming arguendo that the court were inclined to allow the petitioner vacancy increases, the court is precluded from issuing any increases because there is a rent reduction order in effect.
Petitioner contends it is entitled to collect vacancy increases even though there is currently a rent reduction order. However, the July 11, 2000 letter by DHCR cited by petitioner in support is not applicable here. The letter states that a landlord may collect a vacancy increase, despite the existence of a DHCR rent reduction order, if a tenant vacates after the rent reduction order has been issued. Here, the petitioner is seeking an increase for a vacancy that occurred prior to the issuance of the rent reduction order, and while the tenants who filed the complaint with DHCR are still in possession of the premises. Clearly, it is not the intention of the DHCR to permit a vacancy increase for a landlord under these circumstances. Moreover the July 11, 2000 DHCR letter appears to have been superseded by the Court of Appeals in Matter of Cintron v. Calogero, where the court expressly held that a landlord could not collect any increases from the time that a DHCR rent reduction order was in effect. 15 N.Y.3d 347, 912 N.Y.S.2d 498, 938 N.E.2d 931 (2010). Accordingly, the rent for the premises remains at $955.26, the level lawfully in effect prior to the most recent guidelines increase, from 2009 forward.
Using the figure listed above, the court finds that respondents have been overcharged by petitioner in the amount of $3447.40. This figure is based on respondents' payment of $1300.00 per month from May 2010 through March 2011, in the amount of $13000.00, when $9552.60 was actually due at a rent of $955.26 during that period. See RSC 2526.1.
Treble Damages
Respondents argue that they are entitled to treble damages for the overcharge because petitioner wilfully overcharged them the rent. Indeed, the burden is on petitioner to establish the lack of willfulness to overcharge respondents by a preponderance of the evidence. See In the Matter of Metz v. New York State Div. of Housing Preservation and Community Renewal, 113 A.D.2d 758, 493 N.Y.S.2d 351 (A.D. 2nd Dept 1985). Petitioner has failed to establish a lack of willfulness in this proceeding. As stated above, the court finds that petitioner improperly registered the rent for the premises and overcharged respondents from the time they moved into the premises. Petitioner was unable to substantiate the alleged improvements performed at the premises. Petitioner simply proffered to the court a one page itemized invoice in support of an increase of $111.75 per month in rent for an alleged IAI. Petitioner did not produce a witness to testify that the work was done and respondent Morcilio's testimony and evidence established that some of the work was not actually performed at all. See Two Lincoln Square Associations v. New York State Div. Of Housing Preservation and Community Renewal, 191 A.D.2d 281, 594 N.Y.S.2d 755 (A.D. 1st Dept.1993), where treble damages were imposed against landlord for taking an IAI for improvements that were never made.Petitioner represented to this court that a double sink had been installed at the premises, yet respondent Morcilio provides photographs showing that the premises only contain a single sink. Ms. Morcilio testified credibly that her refrigerator had been replaced two years after she had already moved in. Furthermore, petitioner was issued violations for the alleged improvements made only two years earlier, such as installing new cabinets and a new floor. It is clear to this court that Mr. Jeremias misrepresented that improvements were made to the premises, and that they were, at best, no more than ordinary repairs. Petitioner is an experienced landlord who owns and operates many buildings, yet when questioned about whether an improvement is supposed to last a long time, Mr. Jeremias responded, “I am not an expert on improvements.” Such statement is not persuasive and a mere disingenuous rouse to avoid the consequences of his own misrepresentations. The court finds that petitioner wilfully overcharged respondents and imposes treble damages.
Cases cited by petitioner in opposition to the request for respondents' request for treble damages, such as Rosenzweig v. 305 Riverside Corp., 35 Misc.3d 1241A and Dodd v. 98 Riverside, LLC, 2012 Slip op 31653U do not apply here. As stated above, Rosenzweig and Dodd both dealt with calculating overcharges after Roberts v. Tishman Speyer, 13 N.Y.2d 270 was decided. In both Rosenzweig and Dodd, the court found that the landlords failed to properly register the apartments based on DHCRs “own interpretation of the law” and that the landlords charged those rents based upon the DHCR regulations as they existed at that time. Therefore, the court found that these overcharges were not willful. Here, the landlord did not rely on any such agency determinations. Petitioner simply used its experience and knowledge of the law to assert that improvements were made to the premises in order to unlawfully increase the rent. Notably petitioner also failed to provide respondents with the appropriate lease rider to establish why the rent had been increased in 2009. Accordingly, this court makes the determination that petitioner's overcharge of $3447.40 in treble constitutes $10,342.20.
Breach of the Warranty of Habitability
Lastly, respondents assert that they are entitled to an abatement of the rent based on the landlord's breach of the implied warranty of habitability. Respondent Morcilio testified credibly that the following conditions existed at the premises and produced photographs in support: defective stove (Resp. Exs. J and K); broken bathroom doorknob (Resp.Ex.L); rusted kitchen cabinets (Resp.Ex.M); peeling paint and hole in bathroom doorframe (Resp.Ex.N); peeling paint and missing plaster in kitchen window (Resp.Ex.I); knob missing in the hallway closet (Resp.Ex.T); side of bathroom sink shows gap in cabinet and wall where mice and rodents enter the premises with mice feces visible under the cabinet (Resp.Ex.V); bathtub stain from continuing hot water leak from faucet (Resp.Ex.X); base kitchen cabinets all rusted, and the doors do not close (Resp.Exs.Y–1–Y4); bathroom sink clogged and leaking (Resp.Ex.Z); holes in the corner of the hallway between the bathroom and bedroom doors holes where roaches came through (Resp.Ex.AA); chipping paint on the radiator cover with the radiator cover detached (Resp.Ex.BB); hole in bedroom floor next to radiator (Resp.Ex.CC); overflowing garbage in the common area (Resp.Ex.DD).
Ms. Morcilio testified that these conditions existed since 2010 and were remediated on July 25, 2012, with the exception of the replacement of the hallway closet knob and some painting, which was completed in April 2012. Respondent Morcilio also testified that lead paint existed in the apartment in 2011, which HPD removed, and to leaks in the bedroom ceiling and wall that lead to mold. HPD fixed the leaks and found lead in the wall, which it remediated, and the super repaired the bedroom ceiling in 2012. HPD also removed the rust from the bathtub in 2011. Mr. Jeremias testified that he does not check for lead paint in an apartment he manages after the prior tenant vacates, and that he does not ask the new tenants if they have children under the age of seven before moving in. Petitioner also received multiple violations for roaches and vermin since 2002 and the HPD printout shows that petitioner falsely certified this violation. (Resp.Ex.A). Furthermore, DHCR reduced the rent in its July 10, 2012 order as a result of conditions such as mice and vermin. See DHCR Docket Number AO210015S (Pet.Ex.12).
Petitioner argues that respondents are precluded from receiving a rent abatement based on a breach of the warranty of habitability because they did not provide the landlord with written notice of the repairs. This assertion is patently false. Respondents submitted numerous HPD violation reports into evidence. Accordingly, petitioner received notice in writing from HPD for each of these reports. Petitioner also cites Solow v. Wellner, 86 N.Y.2d 582, 635 N.Y.S.2d 132, 658 N.E.2d 1005 (1995) and argues that the repairs needed at the premises do not constitute a breach or the warranty of habitability because they were non-essential. Again, the court disagrees. Unlike the repairs requested in Solow, which were based on the expectations a tenant would have in a luxury apartment, the repairs that were necessary at the premises were clearly hazardous to respondents' safety and health, such as vermin, mold and lead paint. The court in Solow maintained that the warranty of habitability is a “minimum standard to protect tenants against conditions that render residential premises uninhabitable or unuseable.” Id. See also Park West Mgt. v. Mitchell, 47 N.Y.2d 316, 418 N.Y.S.2d 310, 391 N.E.2d 1288 (1979). Here, it is clear that the conditions at the premises were beyond mere “inconveniences, annoyances and aggravating” as characterized by petitioner's attorney, and warrant an abatement pursuant to RPL 235–b.
Accordingly, due to a continuous and persistent lack of repairs, as evidenced by respondent Morcilio's credible testimony, photographs and violation reports, the court finds respondents are entitled to an abatement of 17% for conditions that existed during the period of 2010 through July 2012.
Respondents are awarded a rent abatement of $4234.55. (This amount constitutes 17% of $24,909.12, which is the rent from May 1, 2010 through July 2012 at $922.56 per month). Petitioner is therefore awarded a final judgment against respondents in the amount of $1826.17. (This amount constitutes $16,402.92, which is all rent outstanding from April 2011 through August 2012 at $922.56 per month, minus abatement of $4234.55 and treble damages of $10,342.20). Issuance of the warrant is stayed five days from the date of service of this decision and order with Notice of Entry on respondents' attorneys.
Th is abatement is in addition to the DHCR rent reduction order dated July 10, 2012 under Docket Number AO210015S. The existence of a rent reduction order does not preclude respondents from seeking an additional rent abatement. See Baumrind v. Valentine, 2002WL704461 (App.Term. 1st Dept.)
This constitutes the decision and order of the court.