Opinion
INDEX NO. 152203/2017
02-26-2019
LANCE HOLLOWAY, et al., Plaintiffs, v. 37 DRIGGS AVENUE, LLC, Defendant.
NYSCEF DOC. NO. 119 PRESENT: HON. BARBARA JAFFE Justice MOTION DATE __________ MOTION SEQ. NO. 003
DECISION AND ORDER
The following e-filed documents, listed by NYSCEF document number (Motion 003) 49, 50, 51, 52, 53, 54, 55, 56, 57, 58, 59, 60, 61, 62, 63, 64, 65, 66, 67, 68, 69, 70, 71, 72, 73, 74, 75, 76, 77, 78, 79, 80, 81, 82, 83, 84, 85, 86, 87, 88, 89, 90, 91, 92, 93, 94, 95, 96, 97, 98, 99, 100, 101, 102, 103, 105, 106, 107, 108, 109, 110, 111, 112, 113, 114 were read on this motion to/for summary judgment.
By notice of motion, defendant moves pursuant to CPLR 3212 for an order summarily dismissing the complaint against it and awarding it reasonable attorney fees, costs, and disbursements. Plaintiffs oppose and, by notice of cross motion, move for an order granting them summary judgment on their claims for rent overcharges, treble damages, attorney fees, and related relief. Defendant opposes the cross motion.
I. UNDISPUTED BACKGROUND
Plaintiff Lance Holloway is a tenant of apartment 2A in a building owned by defendant; plaintiff Itai Gruss is, and plaintiff Alexander L. Jogalla was, the tenant of apartment 3C. In this consolidated action, plaintiffs seek an order declaring them to be rent-stabilized tenants and awarding them rent overcharges and other relief. (NYSCEF 71).
The resolution of plaintiffs' claim requires a finding of whether they should have been offered rent-stabilized leases, which depends on whether defendant performed a substantial rehabilitation of the building after buying it by renovating the interior and exterior of the building and/or by converting the first-floor commercial space into two additional residential apartments, and whether the rehabilitation thereby exempted the building from rent stabilization. To defendant, defendant must prove, in part, that it performed a substantial rehabilitation of the building, which plaintiffs deny.
II. ANALYSIS
This court has concurrent jurisdiction with DHCR to adjudicate actions to recover rent overcharges. (Downing v First Lenox Terrace Assocs., 107 AD3d 86, 91 [1st Dept 2013], affd sub nom. Borden v 400 E. 55th St. Assocs., LP, 24 NY3d 382 [2014]). Although appellate courts have not expressly addressed whether a court may sua sponte dismiss a case in favor of resolution by DHCR, a review of the filings before the First Department in Olsen v Stellar W. 110, LLC, shows that although neither party had raised the issue, the court granted dismissal on the basis of primary jurisdiction. (96 AD3d 440, 441-42 [1st Dept 2012], lv dismissed 20 NY3d 1000 [2013]; Burton v 198 West 10th Street LLC, 2018 WL 1172596, 2018 NY Slip Op 31591[U] [Sup Ct, NY County 2018] [relying on Olsen to sua sponte invoke primary jurisdiction]).
Deferral to DHCR reflects the understanding that when an administrative agency has the necessary expertise to dispose of an issue, a judicial tribunal should withhold ruling on it pending resolution of the administrative proceeding. (Wilcox v Pinewood Apt. Assoc., Inc., 100 AD3d 873, 874 [2d Dept 2012], citing Wong v Gouverneur Gardens Hous. Corp., 308 AD2d 301, 303 [1st Dept 2003]).
Here, plaintiffs' claims that their tenancies are subject to rent stabilization and that they have therefore been fraudulently overcharged are issues best decided by DHCR. (See Olsen, 96 AD3d at 442 [referring rent overcharge case to DHCR given its expertise in rent regulation]; Collazo v Netherland Prop. Assets LLC, 155 AD3d 538 [1st Dept 2017], lv granted 31 NY3d 910 [2018] [adjudication of claim for rent overcharge should be resolved in first instance by DHCR]; 390 W. End Assocs. v Nelligan, 35 AD3d 306 [1st Dept 2006] [same]; Davidson v 730 Riverside Drive, LLC, 2015 WL 5171072, 2015 NY Slip Op 31714[U] [Sup Ct, NY County] [denying tenant's motion for partial summary judgment on claim for rent overcharge and attorney fees, and severing claim, dismissing it without prejudice, and directing tenant to bring appropriate claim before DHCR]).
Similarly, the defense related to defendant's renovation and rehabilitation of the building is also within DHCR's expertise. (See e.g., Matter of Gonzalez v Div. of Housing and Community Renewal, 95 AD3d 681 [1st Dept 2012], lv denied 20 NY3d 1003 [2013] [affirming DHCR finding that building had been substantially rehabilitated and was thus exempt from rent stabilization]; Matter of Pavia v New York State Div. of Housing and Community Renewal, 22 AD3d 393 [1st Dept 2005] [DHCR order denying application for substantial rehabilitation exemption upheld]).
Deferring the matter for resolution by DHCR promotes "a uniformity of ruling [which] is essential to comply with the purposes of the regulatory statute." (2 NY Jur 2d, Administrative Law § 328 [2018]). Thus, in Davis v Waterside Hous. Co., Inc., the Court held that the trial court should have dismissed a complaint by tenants seeking a declaratory judgment that their apartments were subject to rent stabilization, observing that rent regulation issues are matters routinely within DHCR's area of expertise. (274 AD2d 318, 318 [1st Dept 2000], lv denied 95 NY2d 770). It quoted from Capital Tel. Co. v Pattersonville Tel. Co., 56 NY2d 11, 22 (1982):
The doctrine of primary jurisdiction is intended to co-ordinate the relationship between courts and administrative agencies to the end that divergence of opinion between them not render ineffective the statutes with which both are concerned, and to the extent that the matter before the court is within the agency's specialized field, to make available to
the court in reaching its judgment the agency's views concerning not only the factual and technical issues involved but also the scope and meaning of the statute administered by the agency.(274 AD2d at 318).
III. CONCLUSION
Accordingly, it is hereby
ORDERED, that plaintiffs' motion for summary judgment is denied; and it is further
ORDERED, that defendant's motion for summary dismissal is granted and the complaint is dismissed in its entirety, with costs and disbursements to defendants as taxed by the Clerk upon the submission of an appropriate bill of costs; and it is further
ORDERED, that the Clerk is directed to enter judgment accordingly. 2/26/2019
DATE
/s/ _________
BARBARA JAFFE, J.S.C.