Summary
In Levitt v. Tietz, 2023 NY Slip Op 23266, [Sup Ct Albany County] the court found that the ERAP statute clearly made cooperative shareholders eligible for ERAP funds.
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Index No. 901512-23
08-23-2023
Wendy LEVITT, Petitioner, v. Daniel TIETZ, as Commissioner of the New York State Office of Temporary and Disability Assistance; New York State Office of Temporary and Disability Assistance; and Park Reservoir Housing Corporation, Respondents.
MOBILIZATION FOR JUSTICE, INC., Tiffany Liston, Esq., Jaynor Diaz, Esq., Elizabeth Fisher, Esq., Nora Machuga, Esq., Attorneys for Petitioner, 424 East 147th Street, 3rd Floor, Bronx, New York 10455 LETITIA JAMES, Attorney General, State of New York, Vivian Costandy Michael, Esq., AAG, Attorney for Defendants Daniel Tietz, as Commissioner of the New York State Office of Temporary and Disability Assistance and New York State Office of Temporary and Disability Assistance, 28 Liberty Street, 17th Floor, New York, New York 10005
MOBILIZATION FOR JUSTICE, INC., Tiffany Liston, Esq., Jaynor Diaz, Esq., Elizabeth Fisher, Esq., Nora Machuga, Esq., Attorneys for Petitioner, 424 East 147th Street, 3rd Floor, Bronx, New York 10455
LETITIA JAMES, Attorney General, State of New York, Vivian Costandy Michael, Esq., AAG, Attorney for Defendants Daniel Tietz, as Commissioner of the New York State Office of Temporary and Disability Assistance and New York State Office of Temporary and Disability Assistance, 28 Liberty Street, 17th Floor, New York, New York 10005
Gerald W. Connolly, J. Petitioner Wendy Levitt brings this CPLR Article 78 proceeding seeking to annul the March 15, 2022 determination of respondent New York State Office of Temporary and Disability Assistance ("OTDA") that found petitioner ineligible for funds awarded from the COVID-19 Emergency Rental Assistance Program ("ERAP"). OTDA sought the return of $20,285.55 that was allegedly disbursed in error. Following the commencement of the instant action in Supreme Court, New York County, the Honorable Kim A. Wilson issued an Order dated December 9, 2022 transferring this action to Albany County and staying the enforcement of the March 15, 2022 determination pending this Court's determination of the petition.
BACKGROUND
Petitioner has resided at 3915 Orloff Avenue, Apartment 11B, Bronx, New York 10463 since 1975. Petitioner's residence is located in a cooperative apartment building ("the Subject Building") supervised by the New York State Division of Homes and Community Renewal ("DHCR"). The Subject Building is part of the Park Reservoir Housing Cooperative ("PRHC"), a Mitchell-Lama limited equity cooperative apartment complex subject to Article II of the Private Housing Finance Law.
Residential property in cooperative apartments is held by a corporation. Cooperators buy shares in the cooperative corporation. The shares are allocated to the cooperators’ individual apartments. Cooperators are issued proprietary leases by which they pay a monthly maintenance charge that covers the expenses of the cooperative corporation in maintaining the building. Should a cooperator fail to pay monthly maintenance charges, the cooperative corporation can commence a summary eviction proceeding against the cooperator for possession of their apartment unit, pursuant to New York Real Property Actions and Proceedings Law (RPAPL) § 702.
PRHC commenced a summary nonpayment eviction proceeding against petitioner on December 23, 2019 after petitioner fell behind in paying the monthly maintenance charges on her residence (Petitioner's Exhibit C). Shortly after the onset of the COVID-19 pandemic, petitioner had lost her job as a makeup artist/sales representative and applied for Unemployment Insurance. Her application was approved approximately three months after its submission. Meanwhile, Petitioner retained Mobilization for Justice, Inc., her counsel in the instant proceeding, to represent her in the Housing Court eviction proceeding initiated by PRHC. Petitioner filed a Tenant's Declaration of Hardship during the COVID-19 Pandemic in the eviction proceeding on February 18, 2021. The filing of such declaration secured for petitioner the tenant protections of the COVID-19 Emergency Eviction and Foreclosure Prevention Act ("CEEFPA"), including a stay of the eviction proceeding. The stay expired on January 15, 2022.
In December 2020, the Federal Government appropriated $47 billion in funding to support tenants facing eviction as a result of economic hardship caused by the COVID-19 pandemic ("ERA 1"). More funds were appropriated in March 2021 ("ERA 2"). New York State was allocated $1.28 billion under ERA 1 and $1 billion under ERA 2. In April 2021, New York State allocated the funds received from the Federal ERAs to the newly-created COVID-19 Emergency Rent Assistance Program ("ERAP"). OTDA launched the online application portal for ERAP on June 1, 2021. Petitioner submitted an ERAP application seeking assistance with her monthly maintenance arrears that same day. Petitioner submitted additional documentation and her counsel submitted advocacy letters on her behalf in June and July 2021.
On or about August 20, 2021, OTDA updated the "Frequently Asked Questions" section of its ERAP website to state that "Co-op shareholders are not eligible for ERAP to cover monthly co-op/maintenance fees."
Petitioner received an ERAP award letter by e-mail dated August 26, 2021 (Petitioner's Exhibit I). She was awarded $20,285.55 in rental arrears for July 2020 through June 2021 and for prospective rental arrears for August 2021 through October 2021. While Petitioner was awaiting OTDA's decision on her ERAP application, she applied for and received funds from charities to apply to her monthly maintenance arrears. On August 31, 2021, PRHC's representative, Wendy Cosgrove, called the ERAP hotline to inquire how PRHC should apply the ERAP funds since it had already applied the charity funds to some months included in petitioner's ERAP award. The representative on the ERAP hotline treated Cosgrove's inquiry as an appeal regarding an overpayment.
On October 18, 2021, petitioner and PRHC's representative each received an e-mail from OTDA informing them that an appeal of petitioner's ERAP application had been filed. That same day, a PRHC representative called the ERAP hotline to withdraw the appeal (Petitioner's Exhibit L). Assuming that the appeal was successfully withdrawn, PRHC discontinued the eviction proceeding by stipulation dated October 26, 2021 (Petitioner's Exhibit C).
Five months later, on March 15, 2022, petitioner received an e-mail from OTDA advising that it had overpaid ERAP funds and that such overpayment was subject to recoupment (Petitioner's Exhibit M). Upon further inquiry, OTDA advised petitioner's counsel that it was seeking to recoup the entire ERAP amount issued to petitioner on the grounds that co-op shareholders were not eligible for ERAP funds. Petitioner now challenges OTDA's determination of ineligibility through the instant Article 78 proceeding.
LAW AND ANALYSIS
Statutory Scheme
The funding for ERAP was initially appropriated by Congress in the Consolidated Appropriations Act, 2021, division N, title V, subtitle A, section 50, 116th Cong., enacted December 27, 2020 (ERA 1). Additional funding was provided by Congress in the American Rescue Plan Act of 2021, title III, subtitle B, section 3201, 117th Cong., enacted March 11, 2021 (ERA 2). Section 501 (k) (3) of ERA 1 states that an "eligible household" means "a household of 1 or more individuals who are obligated to pay rent on a residential dwelling ...."
New York's ERAP statute authorized and directed OTDA to implement a statewide program providing rental and utility assistance to eligible households using the funds allocated to New York State by ERA 1 and ERA 2 (Affidavit of Barbara C. Guinn, ¶ 9; L 2021, ch 56, § 1, Part BB, § 1, Subpart A, Sec 1, § 5 ). A household is eligible for ERAP if the household consists of "a tenant or occupant obligated to pay rent in their primary residence in the State of New York ..." (L. 2021, ch. 56, Part BB, Subpart A, § 5 [1] [a] [i]). The ERAP statute states that " ‘rent’ shall mean rent as defined by section 702 of the real property actions and proceedings law [RPAPL]" (L. 2021, ch. 56, Part BB, Subpart A, § 2 [9]).
RPAPL § 702 (1) states:
"In a proceeding relating to a residential dwelling or housing accommodation, the term "rent" shall mean the monthly or weekly amount charged in consideration for the use and occupation of a dwelling pursuant to a written or oral rental agreement. No fees, charges or penalties other than rent may be sought in a summary proceeding pursuant to this article, notwithstanding any language to the contrary in any lease or rental agreement."
RPAPL § 702 (2) clarifies the applicability of the preceding section as follows:
"This section shall not apply to a summary proceeding in which the parties are a cooperative housing corporation, other than a cooperative housing corporation subject to the provisions of article two, article four, article five or article eleven of the private housing finance law, and a tenant who is a dwelling unit owner or shareholder of such corporation, provided that the proprietary lease or occupancy agreement between the cooperative housing corporation and the tenant provides for fees, charges, penalties or assessments other than rent to be recoverable in such a proceeding."
It is undisputed that petitioner resides in a Mitchell-Lama limited equity cooperative apartment complex subject to Article II of the Private Housing Finance Law.
Political Question
Respondent argues that the petition presents a non-justiciable political question that deprives the Court of subject matter jurisdiction. The political question doctrine prevents the Court from reviewing "[t]he lawful acts" of the executive and legislative branches "performed in satisfaction of responsibilities conferred by law, involv[ing] questions of judgment, allocation of resources and ordering of priorities" ( Matter of New York State Inspection, Sec. & L. Enf't Emps., Dist. Council 82, AFSCME, AFL-CIO v. Cuomo , 64 N.Y.2d 233, 239, 485 N.Y.S.2d 719, 475 N.E.2d 90 [1984] ).
In arguing that the Court lacks subject matter jurisdiction, respondent misstates the issue before the Court. Respondent states that the Court lacks subject matter jurisdiction over the question of "whether ERAP eligibility should extend to co-op shareholders ..." (Verified Answer, ¶ 123). Contrary to respondent's interpretation of the issue, the petition does not ask the Court to determine whether ERAP eligibility should extend to co-op shareholders. Rather, the question presented is whether the definition of rent set forth in RPAPL § 702 includes the monthly maintenance charges paid by certain co-op shareholders, therefore making petitioner eligible for ERAP funds. Petitioner does not "wish to controvert the wisdom" of ERAP ( Klostermann v. Cuomo , 61 N.Y.2d 525, 537, 475 N.Y.S.2d 247, 463 N.E.2d 588 [1984] ). Rather, she "ask[s] only that the program be effected in the manner that it was legislated" ( id. ). Accordingly, the Court denies to dismiss the petition on this ground.
Standard of Review
In cases challenging an administrative agency's determination where a hearing by the administrative agency is not required under the prevailing statute or regulations, the Court's review is limited to whether the determination lacks a rational basis and is therefore arbitrary and capricious ( Matter of Figel v. Dwyer , 75 A.D.3d 802, 804, 907 N.Y.S.2d 75 [3d Dept. 2010] ). "An action is arbitrary and capricious "where it is taken without sound basis in reason or regard to the facts" " ( Matter of Wooley v. New York State Dept. of Correctional Servs. , 15 N.Y.3d 275, 280, 907 N.Y.S.2d 741, 934 N.E.2d 310 [2010] [internal quotation marks and citation omitted]; see Matter of Pell v. Board of Educ. of Union Free School Dist. No. 1 of Towns of Scarsdale & Mamaroneck, Westchester County , 34 N.Y.2d 222, 231, 356 N.Y.S.2d 833, 313 N.E.2d 321 [1974] ). "If [a] court finds that the determination is supported by a rational basis, it must sustain the determination even if the court concludes that it would have reached a different result than the one reached by the agency" ( Matter of Peckham v. Calogero , 12 N.Y.3d 424, 430, 883 N.Y.S.2d 751, 911 N.E.2d 813 [2009] ; see Matter of Pell , 34 N.Y.2d at 231, 356 N.Y.S.2d 833, 313 N.E.2d 321 ).
Where the propriety of the agency's determination turns in part on the applicability of statutory provisions, the Court must " ‘ascertain and give effect to the intention of the [l]egislature’ " ( Matter of Adirondack Wild: Friends of the Forest Pres. v. New York State Adirondack Park Agency , 34 N.Y.3d 184, 191, 115 N.Y.S.3d 171, 138 N.E.3d 1055 [2019], quoting Samiento v. World Yacht Inc. , 10 N.Y.3d 70, 77, 854 N.Y.S.2d 83, 883 N.E.2d 990 [2008] [additional citation omitted]). "As the clearest indicator of legislative intent is the statutory text, the starting point in any case of interpretation must always be the language itself, giving effect to the plain meaning thereof" ( Majewski v. Broadalbin-Perth Cent. Sch. Dist. , 91 N.Y.2d 577, 583, 673 N.Y.S.2d 966, 696 N.E.2d 978 [1998] ). The plain meaning of the statute "must be interpreted ‘in the light of conditions existing at the time of its passage and construed as the courts would have construed it soon after its passage’ " ( People v. Litto , 8 N.Y.3d 692, 697, 840 N.Y.S.2d 736, 872 N.E.2d 848 [2007], quoting People v. Koch , 250 A.D. 623, 624, 294 N.Y.S. 987 [2d Dept. 1937] ). Moreover, if "the question is one of pure statutory reading and analysis, dependent only on accurate apprehension of legislative intent," then the Court need not rely on the expertise of the agency in interpreting the statute ( Kurcsics v. Merchants Mut. Ins. Co. , 49 N.Y.2d 451, 459, 426 N.Y.S.2d 454, 403 N.E.2d 159 [1980] ; see also Matter of Raritan Dev. Corp. v. Silva , 91 N.Y.2d 98, 102-103, 667 N.Y.S.2d 327, 689 N.E.2d 1373 [1997] ). The expertise of the agency is only necessary "[w]here the interpretation of a statute or its application involves knowledge and understanding of underlying operational practices or entails an evaluation of factual data and inferences to be drawn therefrom" ( Kurcsics , 49 N.Y.2d at 459, 426 N.Y.S.2d 454, 403 N.E.2d 159 ). Here, the question of whether the Legislature intended to include maintenance charges paid by cooperative shareholders in ERAP's definition of "rent" is one of pure statutory reading. Deference to the agency is therefore not required.
Application
Petitioner argues that pursuant to RPAPL § 702, PRHC cooperative shareholders are tenants and the maintenance that they pay is rent and, therefore, OTDA wrongfully excluded petitioner from ERAP eligibility. Respondent contends that its interpretation of the ERAP statute is rational and consistent with the statute's plain language and legislative history.
The ERAP statute defines rent by reference to the definition given in section 702 of the RPAPL. The Court is therefore bound by such definition.
RPAPL § 702 (1) defines rent for the purpose of delineating what charges are recoverable in summary proceedings. In plain terms, RPAPL § 702 (1) mandates that no charges other than the monthly or weekly payment tendered in exchange for the use of an occupancy of a dwelling may be recovered in a summary proceeding. This payment is defined as "rent" ( RPAPL § 702 [1] ). RPAPL § 702 (2) allows market rate cooperative apartments to seek the recovery of certain charges and fees other than rent in summary proceedings, but specifically denies low-income cooperative apartments the ability to recover fees, charges and penalties other than rent in summary proceedings. The only reasonable interpretation of section 2, when read in conjunction with section 1, is that a landlord may only recover "rent" in a summary proceeding initiated against a tenant in a traditional landlord-tenant relationship, or a tenant shareholder residing in " "a cooperative housing corporation subject to the provisions of article two, article four, article five or article eleven of the private housing finance law," such as a Mitchell-Lama housing cooperative. Charges other than rent are recoverable in summary proceedings brought by all other cooperative housing corporations. Implicit in reading both sections of RPAPL § 702 is the interpretation that the prohibition on recovering charges other than rent is applicable to housing cooperatives subject to Articles 2, 4, 5, and 11 of the Private Housing Finance Law, but is not applicable to all other housing cooperatives. If the legislature did not intend for section 1 to apply to any cooperative apartments, then the addition of section 2 delineating to which cooperative apartments the preceding section does and does not apply to would not have been necessary. Indeed, "relevant appellate case law has not questioned the fundamental ability of Mitchell-Lama cooperatives to seek cooperative rent/occupancy charges (but not use and occupancy or surcharges) in summary nonpayment proceedings" ( First Hous. Co., Inc. v. Tchiremu , 185 N.Y.S.3d 646 [N.Y. Civ. Ct. 2023], citing Matter of Dayton Towers Corp. v. Gethers , 24 A.D.3d 663, 664, 807 N.Y.S.2d 126 [2d Dept. 2005] ; Rochdale Vil., Inc. v. Chadwick , 73 Misc.3d 131[A], 2021 N.Y. Slip Op. 50958[U], 2021 WL 4736813 [App. Term 2021] ; see also Tilden Towers Hous. Co. v. Edwards , 78 Misc.3d 1205[A], 2023 N.Y. Slip Op. 50160[U], 2023 WL 2397120 [N.Y. Civ. Ct. 2023] ). The term "rent" is also used by appellate courts when deciding issues pertinent to summary proceedings involving Mitchell-Lama housing cooperatives ( Lincoln Amsterdam House, Inc. v. Baxter , 224 A.D.2d 207, 207, 637 N.Y.S.2d 696 [1st Dept. 1996] ; Rochdale Vil., Inc. v. Goode , 16 Misc.3d 49, 52, 842 N.Y.S.2d 142 [App. Term 2007] ).
While the "unambiguous language of a statute is alone determinative" of the intention of the Legislature, the legislative history of the statute may also be relevant and included in the Court's analysis even if the language of the statute is clear as to the Legislature's intent ( Riley v. County of Broome , 95 N.Y.2d 455, 463, 719 N.Y.S.2d 623, 742 N.E.2d 98, citing Matter of Washington Post Co. v. New York State Ins. Dep't , 61 N.Y.2d 557, 565, 475 N.Y.S.2d 263, 463 N.E.2d 604 [1984] ). Here, the legislative history supports petitioner's argument.
Section 702 was added to the RPAPL in 2019 as part of the Housing Stability and Tenant Protection Act, the purpose of which was to "[p]rovide permanent rent regulation protections to covered buildings; extend tenant protections statewide; [and] expand tenant protections for mobile and manufactured home owners and residents in manufactured home parks" (New York Bill Jacket, Memorandum in Support, 2019 S.B. 6458, Ch. 36). Section 2 of RPAPL § 702 was added in 2021 as part of "[a]n act to amend the general obligations law, the real property law, and the real property actions and proceedings law, in relation to excluding tenant-shareholders in cooperative housing corporations from certain housing provisions" (New York Bill Jacket, Memorandum in Support, 2021 S.B. 5105, Ch. 789). The 2021 bill's sponsor further explained that "[t]he Housing Stability and Tenant Protection Act of 2019 was a landmark bill in protecting tenant rights. However, several provisions of the bill were unclear regarding its application to shareholder-tenants who utilize their cooperative as their residence. This bill adds clarifying language and exempts these homeowner shareholder-tenants from those provisions that would have a negative impact to their homeownership." The letters submitted in support of the bill adding section 2 of RPAPL § 702 indicate that its passage would restore the ability of certain cooperative apartments to recover charges and fees other than rent in summary proceedings (New York Bill Jacket, Memorandum in Support, 2021 S.B. 5105, Ch. 789).
Respondent argues that a prior version of the Legislature's bill establishing the ERAP program included "statutory rents and maintenance fees paid pursuant to a proprietary lease on a co-operative dwelling unit" (Guinn Aff., ¶ 36, Exhibit I). Having declined to add this language to the final version of the bill, respondent argues that the omission of such language indicates the Legislature's intent to exclude cooperative shareholders from ERAP assistance. However, as argued by petitioner, the omitted language is superfluous if statutory rents and maintenance charges paid by certain cooperative shareholders are already included in the RPAPL § 702 definition of rent. Petitioner's argument is further supported by the omission of "statutory rents" in the final ERAP bill. Both the terms "statutory rents" and "maintenance fees" were removed from the final bill, but OTDA has not maintained the position that those paying statutory rents in rent-controlled apartments are ineligible for ERAP funds. The Court therefore finds that the definition of "rent" in RPAPL § 702 includes maintenance charges paid by certain cooperative shareholders, including under these circumstances. OTDA's determination that petitioner was not eligible for ERAP funds is therefore arbitrary and capricious.
In light of the foregoing, the Court need not reach petitioner's alternative grounds on entitlement to relief.
Attorney's Fees
The petition requests an award of attorney's fees and costs under CPLR 8601 and 42 USC § 1988. CPLR 8601 permits the Court to award fees to the prevailing party in certain civil actions commenced against the State unless the Court determines that the position of the State was substantially justified or that special circumstances make an award unjust. Here, petitioner is the prevailing party and the position of the State was not substantially justified nor do special circumstances make an award unjust.
Accordingly, it is hereby
ORDERED that the petition is GRANTED, and it is further
ORDERED that OTDA's March 15, 2022 reversing petitioner's ERAP award is ANNULLED; and it is further
ORDERED that petitioner shall, within thirty (30) days of the entry of this Order, submit an affirmation on notice outlining the requested costs, disbursements and fees for the Court's review.
This constitutes the Decision/Order/Judgment of the Court.
SO ORDERED.