Opinion
February 9, 1987
Appeal from the Supreme Court, New York County (Bruce McM. Wright, J., Elliott Wilk, J.).
Plaintiffs are low-income, rent-stabilized tenants whose landlords have been granted approval by the defendant Conciliation and Appeals Board (CAB) for annual base rent increases well in excess of 6%, payable permanently, in conjunction with financing for major capital improvements under article VIII-A of the Private Housing Finance Law. The defendants are the Mayor, the Rent Stabilization Association of New York City and its chairman (hereinafter collectively referred to as the RSA defendants), the CAB, whose functions have been assumed by the New York State Division of Housing and Community Renewal, the New York City Department of Housing, Preservation and Development (HPD), its Commissioner, and various landlords. In this action for a declaratory judgment plaintiffs challenge the validity of section 41 of the Code of the Rent Stabilization Association of New York City, Inc. (Code), which provides for rent adjustment by dividing the cash cost of a capital improvement over a 60-month period of amortization, as violative of section YY51-6.0 (c) (6) of the Rent Stabilization Law (Administrative Code of the City of New York). The latter statute provides that the cost of major capital improvements may be amortized over a five-year period, but that stabilized rent increases should not exceed 6% annually. Plaintiffs also challenge the practices and policies related to the processing and approval of rent increases based on major capital improvements. In this vein, paragraph 55 of the complaint alleges that the defendant CAB, pursuant to the Code promulgated by the RSA defendants and approved by the other municipal defendants, has a practice and policy of failing "to give and to assure that landlords give adequate notice and a meaningful opportunity to be heard prior to the granting of rent insurances [sic] based on major capital improvements." Plaintiff Bryant Avenue Tenants' Association alleges that its members had no notice or opportunity to respond either to the application made by the defendant Donmay Realty Co. for an VIII-A loan or to the application for approval of the proposed rent increases in that they were never served with a tenant answer form, nor were they afforded an opportunity to review the application. Plaintiff Empire Boulevard Tenants Association similarly alleges that its members had no notice and opportunity to respond to the application made by their landlord for an VIII-A loan. Plaintiff Cheryl Turner alleges that she had no notice and opportunity to be heard with respect to her landlord's request for an VIII-A loan. The first claim to relief asserts that defendants have collected, or authorized the collection of, increased rents, inter alia, not based on any ascertainable, rational, fundamental, fair or uniformly applied standards. The fourth claim to relief alleges that defendant CAB has not ensured that landlords give plaintiffs adequate prior written notice, or a meaningful opportunity to be heard, with regard to rent increases granted by the CAB; nor have the RSA defendants done so in promulgating and approving a code that makes no provision for notice and a hearing. The sixth claim to relief is identical to the fourth claim except that it asserts that the VIII-A loan-processing procedure of defendant HPD similarly violates plaintiffs' rights to procedural due process.
We agree with Special Term's conclusion that plaintiffs sufficiently articulated a cause of action, cognizable under the Civil Rights Act ( 42 U.S.C. § 1983), to withstand the motion to dismiss. It is well established that the test for the legal sufficiency of a complaint attacked with extrinsic evidence is whether the pleader has a cause of action, not whether he has properly stated one. (Guggenheimer v. Ginzburg, 43 N.Y.2d 268, 275.) However, "CPLR 3211 allows plaintiff to submit affidavits, but it does not oblige him to do so on penalty of dismissal, as is the case under CPLR 3212 when defendant has made an evidentiary showing that refutes the pleaded cause of action. If plaintiff chooses to stand on his pleading alone, confident that its allegations are sufficient to state all the necessary elements of a cognizable cause of action, he is at liberty to do so and, unless the motion to dismiss is converted by the court to a motion for summary judgment, he will not be penalized because he has not made an evidentiary showing in support of his complaint." (Rovello v. Orofino Realty Co., 40 N.Y.2d 633, 635.)
As low-income tenants, plaintiffs have an interest of a nature which merits due process protection (Matter of Laureano v. Koch, 100 A.D.2d 192, 197-198 [1st Dept 1984], revd on other grounds 64 N.Y.2d 1105), and there is evidence of sufficient State action to withstand the motion to dismiss. (Sharrock v. Dell Buick-Cadillac, 45 N.Y.2d 152, 157-163). Plaintiffs specifically allege no notice, or inadequate notice, and thus denial of a meaningful opportunity to be heard in a meaningful manner as to VIII-A loans and concomitant rent increases. Paragraph 55 and the fourth and sixth claims to relief of the complaint alleged that the established practice and policy of the municipal defendants, of failing to give and assure adequate notice, violates plaintiffs' rights to procedural due process under N.Y. Constitution, article I, § 6 and the Fourteenth Amendment of the US Constitution. Since plaintiffs allege a practice and policy, rather than a single instance of official misconduct or negligence on the part of individuals acting under color of law (Parratt v. Taylor, 451 U.S. 527, 542-543), the complaint sufficiently pleads a deprivation of civil rights. (See also, Broadway 67th St. Corp. v. City of New York, 100 A.D.2d 478, 483 [1st Dept 1984]; but see, Praprotnik v. City of St. Louis, 798 F.2d 1168 [8th Cir 1986], cert granted ___ US ___, 93 L Ed 2d 826.) Additionally, the first claim to relief asserts violation of plaintiffs' substantive and procedural due process rights, based upon the defendants' arbitrary collection of increased rents pursuant to section 41 of the Code. Notwithstanding the absence in the complaint of a specific citation to the Civil Rights Law, all of the foregoing allegations give fair indication that plaintiffs assert a claim under 42 U.S.C. § 1983 and of the grounds upon which it rests.
Neither the averments of defense counsel for HPD and the CAB, nor the affidavit submitted by defendant Advance Properties, Inc., nor the form notices in HPD files allegedly sent to plaintiffs, established beyond substantial question that plaintiffs have no section 1983 claims. Indeed, the record substantiates the allegations of plaintiffs Bryant Avenue Tenants' Assn., Cheryl Turner, and plaintiff-intervenor Carmen Acosta, inter alia, that they received no notice of pending VIII-A loan applications. The HPD notice concerning defendant Donmay Realty Co.'s application, the letter from defendant landlord David T. Diamond concerning his application, and the letter from Sachs Realty Co. concerning its application are all concededly missing from HPD files. More significantly, although HPD purports to require landlords to serve notices and file certifications of such service, no such certifications were adduced by HPD in support of its motion to dismiss.
The dissent's reliance on De Luise v. Gliedman ( 109 A.D.2d 601 [1st Dept 1985], affd 65 N.Y.2d 916) is misplaced. In De Luise this court found that the record established literal compliance with HPD regulations, which were constitutionally sufficient to enable petitioner tenant association to voice its objections. De Luise is inapposite because, as discussed supra, the record here raises substantial questions as to defendants' compliance with HPD regulations. Contrary to HPD's contention, the presumption of regularity does not arise absent proof exhibiting an office practice and procedure followed in the regular course of business. (Nassau Ins. Co. v. Murray, 46 N.Y.2d 828, 829.) Furthermore, De Luise should not be deemed controlling in the present case insofar as HPD contended at Special Term that Private Housing Finance Law regulation 4.1 (d) does not even require advance notice to rent-stabilized tenants, although it allegedly is provided to such tenants as a matter of policy.
In sum, on this record and at this juncture, we cannot categorically conclude that plaintiff will be unable to prove any section 1983 violations. The pending motions for summary judgment are the appropriate vehicle for defendants to seek to establish that the alleged failures to provide adequate notice, relied upon by plaintiffs, are isolated, innocuous acts which do not rise to the level of a practice or policy. We have examined the remaining contentions of the defendants, and find that they are lacking in merit.
Concur — Asch, Milonas and Rosenberger, JJ.
There is impliedly asserted a claim pursuant to the Civil Rights Act ( 42 U.S.C. § 1983) to the effect that plaintiffs were deprived of due process by failure of adequate notice and opportunity to be heard in connection with capital improvement rent increases and the authorization of loans to the landlord under article 8-A of the Public Housing Finance Law. The court at Special Term seemingly sustained such a cause of action, and so it should be dealt with.
We have heretofore determined that the type of notice given is sufficient. (De Luise v. Gliedman, 109 A.D.2d 601.) Moreover, the contention is not one that rises to constitutional dimensions. (Parratt v. Taylor, 451 U.S. 527.) These plaintiffs are not being deprived "of any rights, privileges or immunities secured by the Constitution and laws". (Cf., 423 S. Salina St. v. City of Syracuse, 68 N.Y.2d 474.)
Accordingly, any such cause of action should be dismissed, and the demand in the prayer for relief for attorney's fees and costs pursuant to 42 U.S.C. should be stricken.