Opinion
L&T No. 307123/21
07-11-2022
1337 FULTON STREET, LLC Petitioner, v. JEREMY P. SMITH Respondent.
Unpublished Opinion
DECISION/ORDER
HON. HANNAH COHEN JUDGE.
Recitation, as required by CPLR §2219 (a), of the papers considered in review of petitioner's motion to restore and respondent's cross motion to dismiss:
PAPERS
NUMBERED
Respondent's Notice of Motion-Exhibits Annexed
Petitioner's Affirmation in Opposition
Respondent's affirmation in reply
Upon the foregoing cited papers, the Decision and Order on petitioner's motion is as follows:
Petitioner commenced this non-payment proceeding by service of a Notice of Petition and Petition in August 2021, seeking rental arrears totaling $31,972.50 for the period of January 2020 through June 2021 at $1,776.25 per month. Thereafter, petitioner moved to place the case on the court's calendar for a conference. On March 1, 2022, Brooklyn Legal Services filed a Notice of Appearance for respondent. On March 10, 2022, respondent filed an answer and the case appeared on the court's calendar, when it was adjourned to April 25, 2022. On April 25, 2022, the case was adjourned to June 8, 2022, for motion practice. Respondent now moves for leave to interpose an amended answer and for partial summary judgment pursuant to CPLR §3212 because the rent sought by petitioner is improper, as it is not calculated in accordance with the Housing Stability and Tenant Protection Act of 2019 ("HSTPA") or the DHCR Operational Bulletin 2016-1.
Respondent is a rent-stabilized tenant of the subject premises. Petitioner made certain repairs and improvements in the subject premises in or around spring of 2019, prior to the enactment of the HSTPA in June 2019, which petitioner claims cost $30,000.00 and constituted Individual Apartment Improvements ("IAIs"). Based on the alleged cost of the IAIs of $30,000.00, petitioner increased respondent's monthly rent commencing January 2020, by $750.00, which constitutes 1/40th of the expended amount in accordance with the pre-HSTPA formula. Respondent argues that petitioner is entitled to an increase in respondent's rent based upon the post-HSTPA formula of a 1/168th increase of the total cost for the alleged IAIs. Respondent cites to the DHCR Operational Bulletin 2016-1 in support of her argument. Petitioner, in opposition, argues that in March 2019, when petitioner contracted with respondent to renovate the subject premises, and when the work was commenced and completed, the law in effect allowed a 1/40th increase in rent and, as such, petitioner is entitled to same. Petitioner further argues that neither the HSTPA, which came into effect on June 14, 2019, nor the revised DHCR Bulletin, which came into effect in February 2020, after the respondent's renewal lease was signed, can be applied retroactively. Petitioner further argues that the DHCR Bulletin 2016-1 should not be applied as it exists only to lend guidance and is not code or law.
Courts have held that in order to succeed on a motion for summary judgment a party moving for summary judgment must establish the cause of action or defense to warrant as a matter of law in directing judgment in the moving party's favor. Weingrad v. New York University Medical Center, 64 N.Y.2d 851 (1985). Once that has been established the opposing party has the burden to submit opposition and evidentiary facts or materials, demonstrating triable issues of fact.
The legal issue raised in this motion is whether petitioner is entitled to the pre-HSTPA formula or the post-HSTPA formula under which petitioner may calculate claimed IAIs in the subject premises. The HSTPA amended the IAI program and changed the formula for calculating the IAIs based on work completed by the owner from 1/40th of the total cost to 1/168th for buildings with less than 35 units. These amendments went into effect on June 14, 2019 and applied to all improvements "where such increase takes effect on or after the effective date of the chapter of the laws of two thousand nineteen that amended this paragraph." NYC Admin. Code §26-511 (c)(13). In this case, the claimed IAIs were completed in March 2019, prior to the enactment of the HSTPA. However, after the enactment of the HSTPA and its effective date, on or about August 1, 2019, petitioner offered respondent a renewal lease, commencing January 1, 2020, implementing the $750.00 or 1/40th of the total cost rent increase based on the IAIs. Thereafter, in February 2020, DHCR revised its Operation Bulletin 2016-1 to reflect the changes in the rent laws made by the HSTPA regarding Individual Apartment Improvements (IAIs). The revised DHCR Operation Bulletin 2016-1 states that "if an IAI was completed prior to June 14, 2019, but the rent increase for that IAI did not become effective until after June 14, 2019, the IAI rent increase is based on the new HSTPA amortization formulas, but the IAI does not count toward the $15,000 limitation and/or the three installations in a 15-year period limitation." Thus, in accordance with the revised DHCR Bulletin, as petitioner herein completed the IAIs prior to June 14, 2019, but the rent increase for those IAIs did not become effective until after June 14, 2019, the IAI increase in this case should be based on the new HSTPA amortization formulas and petitioner is entitled to a 1/168th increase of the total cost of the IAIs.
Petitioner argues that DHCR Bulletin 2016-1 should not be applied in this case, as it exists only to lend guidance and is not code or law. However, this court disagrees. The DHCR is the administrative agency which oversees rent stabilized housing accommodations located within New York City. DHCR has the authority pursuant to RSL §26-511.1 and RSC § 2527.11 to promulgate operational bulletins. The Rent Stabilization Code § 2527.11 provides authority to DHCR to render advisory opinions and operational bulletins interpreting the rent stabilization laws. Further, the post-HSTPA version of RSL §26-511.1 specifically provides that the DHCR "shall promulgate rules and regulations applicable to all rent regulated units" which govern certain "major capital improvements and individual apartment improvements in rent regulated units." Also see, 300 Wadsworth LLC v. New York State Div. of Housing and Community Renewal, Ruthanne Visnauskas, 2022 NY Slip Op. 30095 (U) (Sup Ct, NY County Jan 14, 2022).
Petitioner also argues that neither the HSTPA nor the DHCR Bulletin can be applied retroactively and cites Matter of Regina Metro. Co., LLC v. NYS DHCR in support of its argument. 30 N.Y.3d 332 (2020). However, in Matter of Regina Metro, the Court of Appeals was addressing whether the HSTPA amendments that extend the statute of limitations for rent overcharge claims "alter the method for determining the legal regulated rent for overcharge purposes and substantially expand the nature and scope of owner liability in rent overcharge cases." 35 N.Y.3d 332, 349 (2020). In regard to the HSTPA amendment to RSL § 26-511(c)(13), which alters the formula for rent increases that may be collected for IAI work, the landlord "is not facing increased liability and new duties but rather merely a diminished return on its investment in the improvements" to the subject premises. 300 Wadsworth LLC v. New York State Div. of Housing and Community Renewal, Ruthanne Visnauskas, 2022 NY Slip Op. 30095 (U), 2022 WL 135332 (Sup Ct, NY County Jan 14, 2022). As such, the HSTPA amendment to RSL § 26-511(c)(13) is applicable in the instant case. In addition, the DHCR Bulletin addresses the situation in this case wherein the landlord offered the renewal lease to respondent prior to June 14, 2019, which is effective after June 14, 2019, that used the old amortization formula. The DHCR Operational Bulletin 2016-1 specifically provides that the landlord "must within 150 days of this Operational Bulletin provide their tenant with a revised lease as well as any refund required based on any needed recalculation of the amortization formula and the legal rent."
Based on the above, and in accordance with the HSTPA of 2019 and the revised DHCR Operational Bulletin 2016-1, the IAI increase in this case should be based on the new HSTPA amortization formulas and petitioner is entitled to a 1/168th increase of the total cost of the IAIs.
Petitioner does not oppose respondent's motion for leave to interpose an amended answer (Exhibit "C" to respondent's motion). As such, respondent's amended answer is deemed filed. Based on the above, respondent's motion for partial summary judgment is also granted. All parties must be present in person on August 1, 2022, at 11:00am, part H, Room 507 to be sent to the trial part.
This constitutes the decision and order of this court.