Opinion
LT-078832-18/NY
10-15-2019
HIGHLINE 22 LLC, Petitioner, v. Anya Marina KROTH; "John" "Doe"; "Jane" "Doe", Respondents.
Kossoff PLLC, Meredith P. Grasso, Esq., 217 Broadway, Suite 401, New York, NY 10007, (212) 267 - 6364, mgrasso@kaulaw.com Douglas L. Fromme, P.C., Douglas L. Fromme, Esq., 462 Seventh Avenue, 12th floor, New York, NY 10018, (212) 791 — 1409, DouglasFromme@gmail.com
Kossoff PLLC, Meredith P. Grasso, Esq., 217 Broadway, Suite 401, New York, NY 10007, (212) 267 - 6364, mgrasso@kaulaw.com
Douglas L. Fromme, P.C., Douglas L. Fromme, Esq., 462 Seventh Avenue, 12th floor, New York, NY 10018, (212) 791 — 1409, DouglasFromme@gmail.com
Frances A. Ortiz, J.
Recitation, as required by CPLR 2219(A), of the papers considered in the review of this Motion to: strike defenses, partial summary judgment and cross motion for partial summary judgment and/or discovery.
PAPERS/NUMBERED
Notice of Motion and Affidavits Annexed 1
Notice of Cross Motion 2
Answering Affidavits
Replying Affidavits 4
Exhibits
Stipulations
Other
Upon the foregoing cited papers, the Decision/Order in these consolidated Motions is as follows:
This is a non-payment proceeding seeking monthly rent in the amount of $2,925 for the period July 2018 through November 2018. According to paragraph eleven (11) of the petition, the subject premises is not subject to rent stabilization or rent control law because respondent initially entered into possession of the premises on or about October 1, 2012 pursuant to a vacancy lease. It also indicates that at the time the subject premises had previously been deregulated by virtue of the fact that the legal regulated rent exceeded the applicable statutory high rent regulation threshold in accordance with NYC Rent Stabilization Law § 26-504.2 and NYC Rent Stabilization Code § 2520.11(r).
Respondent appears by counsel with a written answer asserting numerous affirmative defenses and counterclaims. Petitioner moves to strike the first affirmative defense and first counterclaim based on rent overcharge, the second affirmative defense and counterclaim that respondent is entitled to a renewal lease, third affirmative defense asserting defective rent demand, fourth affirmative defense and third counterclaim based on breach of warranty of habitability, fifth affirmative defense and fourth counterclaim for attorney's fees and sixth affirmative defense and fifth counterclaim for harassment.
PETITIONER'S MOTION
According to petitioner's registered agent, Jonathan Vayner, the subject former rent stabilized apartment 3E was deregulated in 2009 due to high rent vacancy. The former tenant, Juan Clemente, was a tenant for seventeen (17) years and his last renewal lease commenced on May 1, 2000 and ended on April 30, 2002 at a legal rent of $344.78. (Vayner Affid. 15); (Exhibit F & G). According to Mr. Vayner, when Mr. Clemente vacated, the prior owner performed apartment renovations/improvements in the amount of $66,646.00. (Vayner Affid. 17); (Exhibit H — copies of contracts, invoices, and receipts for the renovations). Mr. Vayner states that after the apartment was renovated, David Kline and Adam Tucker took occupancy of the subject premises pursuant to a lease that commenced on August 16, 2002 and ended on August 31, 2004. (Vayner Affid. 19). He claims that the legal rent increased by $1,762.69 (18% vacancy for $62.06 monthly; 10 % longevity for 17 years totaling $34.48 monthly; and 1/40th of the $66,646.01 worth of improvements totaling $1,666.15 monthly; thereby increasing the legal rent to $2,107.47 ($1,762.69 plus $344.78 prior rent) and making the subject apartment exempt from rent regulation based on high rent decontrol.
This is contradicted by the affirmation of Meredith Grasso which states that apartment 3E was deregulated in 2002. (Grasso Affirmation ¶14). It is not clear to this Court whether Mr. Vayner's affidavit statement that apartment 3E was deregulated in 2009 was a typographical error.
In a motion to dismiss an affirmative defense pursuant to CPLR 3211(b), a plaintiff or petitioner bears the heavy burden of showing that the defense is without merit as a matter of law. Granite State Ins. Co. v. Transatlantic Reinsurance Co., 132 AD3d 479, 481, (1st Dep't 2015) ; 534 E. 11th St. Hous. Dev. Fund Corp. v. Hendrick, 90 AD3d 541 (1st Dep't 2011). The allegations set forth in the answer must be viewed in the light most favorable to the defendant or respondent. 182 Fifth Ave. v. Design Dev. Concepts, 300 AD2d 198, 199 (1st Dep't 2002). "[T]he defendant is entitled to the benefit of every reasonable intendment of the pleading, which is to be liberally construed." 534 E. 11th St v. Hendrick, 90 AD3d at 542. Further, the court should not dismiss a defense where there remain questions of fact requiring a trial. Id.
First, petitioner moves to strike the first affirmative defense and first counterclaim based on rent overcharge, and the second affirmative defense and counterclaim that respondent is entitled to a renewal lease based on overcharge. Petitioner argues that there is no rent overcharge because the 2002 rent was properly registered as deregulated due to high rent decontrol, after apartment improvements were made more than four years from respondent's overcharge claim.
Here, petitioner has failed to show that the rent overcharge defense and counterclaim is without merit as a matter of law. Granite State Ins. Co. v. Transatlantic Reinsurance Co., supra.; 534 E. 11th St. Hous. Dev. Fund Corp. v. Hendrick, supra. Accordingly, petitioner's motion to strike the first affirmative defense and first counterclaim based on rent overcharge, and the second affirmative defense and counterclaim that respondent is entitled to a renewal lease is denied for the reasons discussed below.
The newly-amended RSL § 26—516(a) provides that the legal regulated rent for purposes of determining most overcharges "shall be the rent indicated in the most recent reliable annual registration statement filed and served upon the tenant six or more years prior to the most recent registration statement, ... plus in each case any subsequent lawful increases and adjustments." The new statute requires examination of the "most recent reliable " registration statement that was not only filed but also "served upon the tenant" "six or more years" before the most recent statement. RSL § 26—516 now explicitly provides that a court "shall consider all available rent history which is reasonably necessary" to investigate overcharges and determine the legal regulated rent. RSL § 26—516(a), (h). The new statute makes clear that courts must examine all available rent history necessary to determine the legal regulated rent. Dugan v. London Terrace Gardens, L.P, 2019 NY Slip Op 06578; 2019 WL 4439346, at *3—5 (1st Dep't 2019).
Additionally, RSL § 26—516(h) sets forth a set of nonexclusive records that a court shall consider in determining legal rents and overcharges. These documents a court must examine are: (i) rent registration and other records filed with DHCR or other government agencies, regardless of the date to which the information refers ; (ii) orders issued by government agencies; (iii) records maintained by the owner or tenants; and (iv) public records kept in the regular course of business by any government agency. RSL § 26—516(h) (i) further provides that "[n]othing [therein] shall limit the examination of rent history relevant to a determination as to ...whether the legality of a rental amount charged or registered is reliable in light of all available evidence." Dugan v. London Terrace Gardens, L.P., supra.
Moreover, under CPLR 213—a, "an overcharge claim may be filed at any time," however "[n]o overcharge penalties or damages may be awarded for a period more than six years before the action is commenced." Likewise, RSL § 26—516(a)(2) provides that an overcharge complaint "may be filed with [DHCR] or in a court of competent jurisdiction at any time, however any recovery of overcharge penalties shall be limited to the six years preceding the complaint."
Since both of these statutes provide that an overcharge complaint can be brought "at any time," respondent's claims are timely. Additionally, "[c]ourts are now instructed to look back as far as necessary to find the most reliable rent registration upon which to base its determination regarding an overcharge claim." Gold Rivka 2 LLC v. Rodriguez, 64 Misc 3d 1228(A) (Bronx Cty, Civ. Ct. 2019). Accordingly, this Court can examine all available rent history necessary to determine the legal regulated rent as far back as 1984.
Here, petitioner's rent history in Exhibit G contains the Division of Housing and Community Renewal ("DHCR") apartment registration for the subject unit, which indicates that Juan Clemente was the registered rent stabilized tenant from 1984 through registration year 2000 for a lease period of May 1, 1998 through April 30, 2000. Registration year 2001 indicates the apartment status as "VA" with a filing date of July 31, 2001 and under legal regulated rent it reads "amt miss." The Registration year 2002 indicates the rent stabilized tenant as Joan Marks at a legal regulated rent of $496.49 for the lease period May 1, 2000 through April 30, 2002. However, this is contradicted by the affidavit of Mr. Vayner who fails to mention Joan Marks' tenancy and merely alludes to the occupancy of David Kline and Adam Tucker with a lease commencing August 16, 2002. (Vayner Affid. 19). Then, the registration years 2003 - 2017 indicate no registration found for subject premises. Therefore, petitioner's claim that the respondent's rent overcharge defense and counterclaim should be dismissed as time-barred is inapplicable. There remain issues of fact including and not limited to the rent registration increases for years 2001, 2002 and 2003.
Petitioner's counsel after oral argument on this motion submitted to the Court and to opposing counsel a certified copy of the DHCR apartment registration now showing that the 2003 registration for the subject premises was filed in December 12, 2018 and shows the legal regulated rent as exempt due to high rent vacancy.
Further, there are issues of fact regarding Joan Marks' tenancy at the premises at a legal regulated rent of $496.49 for the lease period May 1, 2000 through April 30, 2002. Also, there are issues of fact and document admissibility regarding petitioner's claim for apartment improvements in the amount of $66,646.00, after Juan Clemente's vacatur. (Exhibit G).
In a rent overcharge action, where an owner asserts individual apartment improvements as a defense, the building owner has the burden of proving the cost of the renovations made to the apartment to justify the rent it charged the tenant. DiLorenzo v. Windermere Owners LLC, 174 AD3d 102, 109—10 (1st Dep't 2019) ; Bradbury v. 342 W. 30th St. Corp., 84 AD3d 681, 683 (1st Dep't. 2011 ). In order to meet that burden, the owner must present "documentary support [including] ... all relevant invoices, bills, cancelled checks and/or other material..." Matter of 985 Fifth Ave. v. State Div. of Hous. & Community Renewal, 171 AD2d 572, 574–575, (1st Dep't. 1991), lv denied 78 NY2d 861, (1991). According to DHCR Policy Statement 90—10 [revised November 2017],
Claimed individual apartment improvements are required to be supported by adequate and specific documentation which should include: 1) Cancelled check(s) (front and back) contemporaneous with the completion of the work or proof of electronic payment; 2) Invoice receipt marked paid in full contemporaneous with the completion of the work; 3) Signed contract agreement; and 4) Contractor's affidavit indicating that the installation was completed and paid in full.
Here, the documents (Exhibit D) submitted included "cancelled checks" that do not show back endorsements that they were cashed, and some invoices that do not indicate what apartment number work was done on. Respondent in her affidavit contends that the condition of her apartment shows no individual apartment improvements were done. (Affi'd Kroth ¶s 31).
Also, this Court finds no merit to petitioner's claim at oral argument that applying the amendments to RSL § 26—516 and CPLR 213—a to this pending litigation violates its constitutional due process rights. The Court in Dugan v. London Terrace Gardens, L.P , supra. addressed this exact issue and indicated the following:
The legislature expressly made the amendments applicable to pending claims, and legislative enactments carry ‘an exceedingly strong presumption of constitutionality’ ( Barklee Realty Co. v. Pataki , 309 AD2d 310, 311, 765 N.Y.S.2d 599 [1st Dept. 2003] [internal quotation marks omitted], appeal dismissed 1 NY3d 622, 777 N.Y.S.2d 20, 808 N.E.2d 1279 [2004], lv denied 2 NY3d 707, 781 N.Y.S.2d 288, 814 N.E.2d 460 [2004] ). Further, it is well settled that absent deliberate or negligent delay, "[w]here a statute has been amended during the pendency of a proceeding, the application of that amended statute to the pending proceeding is appropriate and poses no constitutional problem" (Matter of St. Vincent's Hosp. & Med. Ctr. Of NY v. New York State Div. of Hous. & Community Renewal , 109 AD2d 711, 712, 487 N.Y.S.2d 36 [1st Dept. 1985], affd 66 NY2d 959, 498 N.Y.S.2d 799, 489 N.E.2d 768 [1985] ; accord Matter of Kass v. Club Mart of Am. , 160 AD2d 1148, 554 N.Y.S.2d 357 [3d Dept. 1990] ; Jonathan Woodner Co. v. Eimicke , 160 AD2d 907, 554 N.Y.S.2d 630 [2d Dept. 1990] ).
Second, petitioner moves to strike the third affirmative defense asserting a defective rent demand. Upon a review of the rent demand, this Court finds the rent demand is not defective on its face. It properly demanded a monthly rent amount for the period July 2018 through November 2018 and even provided respondent with a 25% monthly rent abatement for those months. If, however, respondent proves her rent overcharge claim at trial, the rent demand would be deemed defective, as it would ask for rent above the legally permissible amount. As such, there are issues of fact to be determined with regard to the validity of this defense. Accordingly, petitioner's request to strike the third affirmative defense asserting a defective rent demand is denied.
Third, petitioner moves to strike the fourth affirmative defense and third counterclaim based on breach of warranty of habitability. Upon review of respondent's statement in her affidavit and supporting exhibits with photographs of her apartment conditions, respondent's breach of warranty of habitability defense and counterclaim remains. (Affi'd Kroth ¶s 55 - 66); (Exhibit G to Cross Motion). Accordingly, petitioner's request to strike the fourth affirmative defense and third counterclaim asserting a breach of warranty of habitability is denied.
Fourth, petitioner moves to strike the fifth affirmative defense and fourth counterclaim for attorney's fees arguing that respondent's defenses and counterclaims are based on an "erroneous assertion that she is a rent stabilized tenant, when she is not " This argument is unavailing, defies logic and "places the cart before the horse." Paragraph 19 of respondent's lease dated September 24, 2012 entitles the owner to attorney's fees. Under the reciprocal tenant right to attorney's fees in RPL § 234 , respondent if she prevails at trial may be entitled to attorney's fees. (Exhibit 1- lease). Accordingly, petitioner's request to strike the fifth affirmative defense and fourth counterclaim for attorney's fees is denied.
Fifth, petitioner moves to strike the sixth affirmative defense and fifth counterclaim for harassment. Here, respondent has facially shown a cause of action on the basis of a harassment claim in her verified answer. The housing court has subject matter jurisdiction to hear harassment claims, under New York City Housing Maintenance Code Sections 27-2004 (b) and (b-1). Also, the Civil Court Act § 110, authorizes any housing court judge to hear any Housing Maintenance Code matters. Therefore, claims related to New York City Housing Maintenance Code Sections 27-2004 (b) and (b-1) are not exclusively heard in the HP Part, under certain circumstances like the one presented here. Accordingly, petitioner's request to strike the sixth affirmative defense and fifth counterclaim for harassment is denied.
Lastly, petitioner moves pursuant to CPLR 3211 (e) for partial summary judgment as to the deregulated status of the subject premises. Summary judgment is appropriate where the movant establishes the claim by tender of evidentiary proof in admissible form sufficiently to warrant the court as a matter of law to direct judgment in its favor. Rodriguez v. City of New York, 31 NY3d 312, 317 (2018) ; Friends of Animals, Inc. v Associated Fur Manufacturers, Inc. , 46 NY2d 1065 (1979) . The failure to make such a prima facie showing requires denial of the motion regardless of the sufficiency of the opposing papers. Alvarez v Prospect Hospital, 68 NY2d 320 (1986) . In determining the motion, the Court must be mindful that summary judgment is a drastic remedy and should not be granted when there is any doubt as to the existence of a triable issue. Rotuba Extruders, Inc. v Ceppos, 46 NY2d 223, 231 (1978) . The evidence must be considered in the light most favorable to the party opposing the motion, Henderson v City of NY, 178 AD2d 129, 130 (1st Dept 1991) , and the motion must be denied where conflicting inferences may be drawn from the evidence. Nowacki v Metropolitan Life Ins. Co., 242 AD2d 265, 266 (2nd Dept 1997) .
Here, petitioner has not submitted admissible evidentiary proof to warrant partial summary judgment in its favor on the issue of the deregulated status of the subject premises. Actually, petitioner's own affidavits are contradictory as to the year of deregulation and at this point provide insufficient admissible proof to confirm individual apartment improvements to the premises in 2002. Matter of 985 Fifth Ave. v. DHCR, supra. Accordingly, petitioner's partial motion for summary judgment is denied.
RESPONDENT'S CROSS-MOTION
Respondent cross-moves for partial summary judgment on the issue that the subject unit was wrongfully deregulated, subject to rent stabilization and for a determination of the legal regulated rent. Respondent claims that, since petitioner was unable to provide proof to support its summary judgment motion, the Court must instead determine that no individual apartment improvements were made and award respondent summary judgment. Respondent's summary judgment motion must be determined by the same standard as petitioner's motion: summary judgment is appropriate only where the movant establishes the claim by tender of evidentiary proof in admissible form sufficiently to warrant the court as a matter of law to direct judgment in its favor. Rodriguez v. City of New York, supra ; Friends of Animals, Inc. v Associated Fur Manufacturers, Inc. , supra . As stated above, there are issues of fact as to whether the premises was properly deregulated, and respondent offers no proof that resolves that question of fact in her favor. As such, respondent's cross motion for summary judgment on the issue that the subject unit was wrongfully deregulated and subject to rent stabilization is denied.
Alternatively, respondent moves pursuant to CPLR 408 seeking the production of documents set forth in the Proposed Notice to Produce and to answer to interrogatories, leave to take deposition of Jonathan Vayer and Adam Tucker (non-party) and permitting the respondent permission to subpoena DHCR to produce certain documents.
In summary proceedings, leave to conduct discovery may be granted where the movant demonstrates a meritorious claim, ample need, that the discovery sought is tailored to the facts of the case, and no prejudice to the opposing party. New York University v. Farkas, 121 Misc 2d 643 (Civ. Ct. NY Cty 1983) ; CPLR 408. Respondents have shown ample need for the documents sought in the "Notice for Discovery and Inspection." The documents sought are narrowly tailored to respondent's rent overcharge defense and counterclaim. These documents also echo the proof landlords must provide to DHCR in order to obtain an increase of rent for an individual apartment improvement. DHCR Policy Statement 90—10 [revised November 2017]; DiLorenzo v. Windermere Owners LLC, supra. Petitioner is not prejudiced by the requests which are documents typically sought, under the circumstances. However, respondent has not shown ample need for the documents sought in demand numbers 5A, 7A, 8A, 9A, 10A, 11A, 12A, 13A, 14A and 15A in "Notice for Discovery and Inspection." These are not relevant. Respondent's "Demand for Answers to Interrogatories" is granted except that interrogatories 23, 24, 25, 26, 28, 29, 30, 35 and 36 are stricken. (Exhibit K) . Accordingly, petitioner is to provide all other documents and answers sought in the "Notice for Discovery and Inspection" (Exhibit J) and "Demand for Answers to Interrogatories" (Exhibit K) within 45 days of the date of this decision.
Additionally, this Court grants respondent's request to depose Jonathan Vayner as respondent has shown ample need for his deposition. Accordingly, Jonathan Vayner is to appear for a deposition at a mutually agreed date and location by the parties, after the completion of document production and response to interrogatories. However, this Court declines to order a deposition of Adam Tucker, as respondents have not shown ample need for such deposition. Mr. Tucker is a non-party and petitioner has not shown nor indicated in its papers a basis to depose him.
Lastly, this Court declines to sign the subpoena duces tecum annexed as Exhibit L. The proposed subpoena to DHCR is not relevant to respondent's defenses or claims.
This matter is marked off calendar pending completion of discovery.
ORDEDED petitioner's motion to strike defenses and for partial summary judgment is denied.
ORDERED respondent's cross-motion for partial summary judgment is denied and the cross-motion for discovery is granted.
This is the decision and order of the Court, copies of which are being emailed and mailed to those indicated below.