Opinion
INDEX NO. 152114/2015
03-15-2019
MARSHA JACOBSON, Plaintiff, v. JEMROCK REALTY COMPANY, LLC, and ARGO REAL ESTATE, LLC, Defendant.
NYSCEF DOC. NO. 44 PRESENT: HON. ANTHONY CANNATARO Justice
DECISION AND ORDER
Plaintiff Marsha Jacobson, the tenant of apartment 14C in the building located at 210 West 101st Street in Manhattan, commenced this action against defendants, Jemrock Realty Company, LLC, the owner of the building, and Argo Real Estate, LLC, the managing agent, for rent overcharge, injunctive relief, a declaratory judgment, and legal fees.
A nonjury trial was held on October 16, 2018. At the trial, neither plaintiff nor defendant called any witnesses. Instead, both sides stipulated to admit a set of documents for the Court to consider and submitted memoranda of law articulating their legal arguments. After due deliberation and consideration of the documentary evidence, the Court makes the following findings of fact and conclusions of law:
On July 15, 2012, plaintiff commenced her tenancy of the apartment pursuant to a written, market-rate lease dated May 11, 2012, at a monthly rent of $3,900. She subsequently renewed her lease three times, with the last lease set to expire July 31, 2019 at a monthly rent of $4,161.38. Before plaintiff's tenancy commenced, the apartment had been registered as rent stabilized with the Department of Housing and Community Renewal (DHCR). The last rent stabilized tenant vacated the unit in 2008 with a registered rent of $2,408.73. After 2008, defendants treated the apartment as permanently exempt from rent stabilization based on high rent vacancy despite receiving real property tax exemptions and/or abatements under the City of New York's J-51 tax benefit program. After plaintiff commenced this action, defendants conceded that the unit was and remains subject to rent stabilization and have since offered plaintiff rent stabilized renewal leases.
Plaintiff argues that because the apartment was unlawfully treated as exempt from rent stabilization, defendants should not have calculated the rent by simply adopting the market rent charged as of the base date, four years prior to the commencement of this action. She further argues that defendants' choice to do so has resulted in plaintiff being overcharged for rent.
Before 2009, a landlord's belief that it could rely on the luxury decontrol laws to return an apartment to the free market was consistent with DHCR's interpretation of the relevant laws and regulations at that time (Matter of Park v New York State Div. of Hous. & Community Renewal, 150 AD3d 105 [2017]). To prevent an owner from charging what is otherwise a legal rent, solely based on the lack of registration filings during the period before Roberts v Tishman Speyer., L.P. (13 NY3d 270 [2009]) and Gersten v 56 7th Ave. LLC (88 AD3d 189 [2011]) were decided, would unfairly penalize the owner for action that was taken in good faith, relying upon DHCR's own interpretation of the law, without furthering any legitimate purpose of the rent stabilization laws (Park at 113).
Furthermore, the Appellate Division recently upheld the general statutory rule, repeatedly endorsed by the Court of Appeals, that in the absence of fraud, rent overcharge claims are subject to a four-year statute of limitations and courts ought not question rental amounts charged before that four-year period (Matter of Regina Metro. Co., LLC, v New York State Div. of Hous. & Community Renewal, 164 AD3d 420 [2018]). In Regina, the court found that DHCR erred in looking beyond the four-year limitations period to find the last legal regulated rent, as such a method of calculation violated clear provisions of Rent Stabilization Law of 1969 (Administrative Code of the City of NY) § 26-516 (a) (2), Rent Stabilization Code (RSC) (9 NYCRR) § 2526.1(a) (2) (ii), and CPLR 213, all of which are detailed and categorical in barring any examination of a unit's rental history beyond the four-year limitations period (id.; see also Raden v W 7879, LLC, 164 AD3d 440 [2018]).
However, the fact that this Court cannot examine the rent history beyond four years to determine whether there has been an overcharge does not mean that the rent charged on the base date is presumed to be correct (see Matter of 160 E. 84th St. Assocs. LLC v. New York State Div. of Hous. & Community Renewal, 160 AD3d 474, 474-75 [2018] citing 72A Realty Assoc. v Lucas, 101 AD3d 401 [2012]; Gordon v 305 Riverside Corp., 93 AD3d 590, 592 [2012]). There are other methods of calculating base date rent "that do not run afoul of the limitations period" (Matter of Regina Metro. Co., LLC, 164 AD3d at 428).
The meager evidence presented by the parties, consisting solely of leases for the apartment and the DHCR rent roll, leaves ths Court without any legally sanctioned method to determine the base date rent for the apartment (id. at 426-428). Thus no finding on this crucial question can be made. Rather than reconvening to reopen the trial record, as the parties have urged the Court to do in the event that their submissions proved inadequate, this matter should now be determined by DHCR. That agency has the necessary expertise and discretion in rent regulation matters, especially as it relates to methods for calculating legal rent (see Olsen v Stellar W. 110, LLC, 96 AD3d 440, 441-42 [2012] citing Sohn v Calderon, 78 NY2d 755 [1991]; Davis v Waterside Hous. Co., 274 AD2d 318 [2000], lv. denied 95 NY2d 770 [2000]; see also Myers v Frankel, 184 Misc 2d 608, 620 [App Term, 2d & 11th Jud. Dists. 2000], modified, 292 AD2d 575 [2002]. Moreover, permitting the parties to return for what would essentially be a second opportunity for trial would be improvident use of scarce judicial resources.
Accordingly, it is
ORDERED that the complaint is dismissed without prejudice to plaintiff seeking a determination from DHCR as to the legal regulated base rent of the apartment and any overcharge; and it is further
ORDERED that Clerk is directed to enter judgment accordingly.
This constitutes the decision and order of the Court. 3/15/2019
DATE
/s/ _________
ANTHONY CANNATARO, J.S.C.