Opinion
Index 161824/2014
11-19-2021
SYLVAIN PASCAUD, LESLIE PASCAUD, JEANNE GOFFI, Plaintiffs, v. B-U REALTY CORP., PAUL BOGONI, Defendants. Motion Seq. No. 005
BARBARA JAFFE, JUDGE
Unpublished Opinion
PRESENT: HON. BARBARA JAFFE Justice
DECISION + ORDER ON MOTION
BARBARA JAFFE, JUDGE
The following e-filed documents, listed by NYSCEF document number (Motion 005) 110-206 were read on this motion for summary judgment.
By notice of motion, plaintiff Goffi moves pursuant to CPLR 3212 for an order granting her partial summary judgment: (1) on her second cause of action, declaring that her apartment, tenancy, and lease are subject to the Rent Stabilization Law and that defendant must offer her a renewal lease; (2) on her fourth and sixth causes of action, granting her a judgment in the amount of her rent overcharges, plus treble damages; and (3) on her eighth cause of action, granting her a judgment for her attorney fees. Defendant opposes.
I. PERTINENT UNDISPUTED BACKGROUND
Defendant, owner of the subject building since at least 1974, has received three J-51 tax abatements, one from 1974 to 1984, one from 1989 to 2000, and one from 2005 to 2019.
Plaintiff moved into the building pursuant to a two-year lease beginning on September 1, 2002 at a monthly rent of $2,000.34. Since then, she has signed 11 more one-year renewal leases at free market rates, most recently for 2014 to 2015, at a monthly rent of $2,892.44. None of the leases provide for a rent-stabilized tenancy.
In January 2015, defendant, for the first time, registered plaintiffs apartment with the Department of Housing and Community Renewal (DHCR), providing a history of the apartment dating back to 1984. In 1984, the apartment was rent-controlled, and from 1985 to 2002, it was listed as rent-stabilized. The history reflects that from January 2002 to December 2003, a rent-stabilized tenant lived in the apartment and paid a monthly rent of $1,600.45. The registration also reflects that as of June 20, 2003 and through May 5, 2004, the apartment was exempt temporarily as it was being used for commercial/professional purposes, that as of July 21, 2005, it was exempt permanently due to a high-rent vacancy, and as of 2006, it was exempt and thus, registration with the DHCR was not required. (NYSCEF 130).
In July 2017, defendant filed an amended registration for the apartment, inhabited by plaintiff in 2003 and 2004, although the legal regulated rent for the apartment in 2003 and 2004 is listed as "amt miss[ing]." In 2005, the apartment is listed as vacant and exempt pursuant to a high-rent vacancy, and beginning in 2006, plaintiff is listed as the tenant, with a legal regulated rent in 2006 of $2,203.34. (Id.).
In December 2014, plaintiff commenced the instant action. There have been at least nine other lawsuits brought by 28 current or former tenants of the building, alleging overcharges by defendant. (NYSCEF 111).
II. OTHER CASES INVOLVING DEFENDANT
In Kreisler v B-U Realty Corp., the trial court's determination denying defendants' motion to dismiss was upheld on the ground that:
[t]he record reflects evidence of a fraudulent scheme to deregulate plaintiffs' apartment, as well as other apartments in the building, including evidence of defendants' failure, while in receipt of J-51 tax benefits, to notify plaintiffs their apartment was protected by rent stabilization laws or issue them a rent-stabilized lease, and further reflects that defendants only addressed the issue when their conduct, which violated
Roberts v Tishman Speyer Props., L.P. (13 N.Y.3d 270 [2009]), came to light in connection with an anonymous complaint. . .(164 A.D.3d 1117 [1st Dept 2018], Iv dism 32 N.Y.3d 1090 [2018]). The Court also rejected defendants' attempt to justify their fraud on the "pre-Roberts" state of the law as the fraud occurred in 2010, after Roberts was decided. Moreover, the Court found relevant other actions brought by plaintiffs co-tenants against defendants alleging the same or similar misconduct and probative of a fraudulent scheme to deregulate. (164 A.D.3d at 1118).
In a more recent decision in the Kreisler matter, the court reviewed the trial court's order granting plaintiff a judgment for rent overcharges and treble damages, and held that as the tenancy at issue was governed by the law in effect before the Housing Stability Tenant Protection Act was passed in 2019, plaintiff was not entitled to overcharges preceding by more than four years before the filing of the complaint or more than two years before for treble damages. Moreover, it stated, the overcharges should have been calculated based on the rent charged on the applicable base date and should have been frozen at that rate, as the overcharges resulted from the charging of a free market rent rather than from nonregistration. (198 A.D.3d 568 [1st Dept 2021]).
In Townsend v B-U Realty Corp., another justice of this court found that the plaintiff had established that defendant had engaged in a fraudulent scheme to deregulate his apartment. (67 Misc.3d l228[A] [Sup Ct, New York County 2020]; see also Aras v B-U Realty Corp., 2021 WL 3741619 [Sup Ct, New York County 2021] [same]). And in this action, the previously presiding justice granted plaintiff Pascaud's motion for partial summary judgment to the extent of finding that defendant had improperly de-regulated the apartment, and had failed to rebut the presumption that any overcharges were willful, thereby entitling plaintiffs to treble damages. (NYSCEF 95).
III. ANALYSIS
A. Rent-stabilized lease and renewal
Defendant does not dispute that plaintiff is entitled to a rent-stabilized renewal lease.
B. Fraud and treble damages
As other trial courts have determined that defendant engaged in a building-wide scheme to deregulate the building fraudulently, with the Appellate Division affirming the trial court's findings in Kreisler, and absent a sufficient basis shown by defendant for distinguishing its conduct toward plaintiff from that at issue in the other cases, plaintiff establishes that defendant engaged in fraud, warranting an award of treble damages. Moreover, defendant cites no authority in support of its claim that its attempt to refund any alleged overcharges moots plaintiffs claims here. In any event, it did not offer plaintiff the amount due her.
C. Rent overcharges
Based on the recent decision in Kreisler v B-U Realty Corp., 198 A.D.3d 568 (1st Dept 2021), and absent a reason for using an analysis that differs from that employed therein in calculating plaintiffs request for rent overcharges, plaintiff is entitled to overcharges beginning four years from before the date that she filed her complaint, which was in December 2014. Pursuant to Kreisler, where the overcharges resulted from the improper charging of free market rent, rather than from nonregistration, the proper calculation is based on the rent charged on the base date, which is then frozen at that rate, entitling plaintiff to a refund of any increases beyond that rate. (Cf. Casey v Whitehouse Estates, Inc., 197 A.D.3d 401 [1st Dept 2021] [overcharges to be calculated using default formula given fraudulent scheme to deregulate and absent evidence as to actual rent charged on base date]).
Defendant agreed at oral argument that a determination that it had engaged in fraud would warrant employment of the default formula set forth in 9 NYCRR § 2522.6. (NYSCEF 206).
Pursuant to 9 NYCRR § 2522.6, where the legal regulated rent or a fact necessary to determine the legal regulated rent is in dispute, the court may decide the rent, and where the base date rent is the product of a fraudulent scheme to deregulate the apartment, the base date rent is either:
(b)(3)(i) the lowest rent registered for a comparable apartment in the building in effect on the date the complaining tenant first occupied the apartment; or
(ii) the complaining tenant's initial rent reduced by the percentage adjustment authorized by section 2522.8; or
(iii) the last registered rent paid by the prior tenant (if within the four year period of review)
Here, plaintiff asserts that the base date rate should be set by using the lowest rent for a comparable apartment, and as her tenancy of the three-room apartment commenced in 2002, the most comparable apartment in the building is apartment 2D, a four-room apartment, for which the monthly rent in 2002 was $611.44. (NYSCEF 157). The document submitted by plaintiff in support of her argument does not reflect the rent paid by the tenant of apartment 2D in 2002, as the rental history begins in 2008. Moreover, the document shows that between 2008 and 2010, the legal regulated rent for the apartment was $1,174.90, although the tenant paid $616.44 through the SCRIE program. The SCRIE (Senior Citizen Rent Increase Exemption) program provides rent increase exemption orders to senior citizen tenants. (Jadam Equities, Ltd. v Stupp, 182 Misc.2d 666 [Sup Ct, New York County 1999]). There is no evidence here that plaintiff is eligible for the SCRIE program and while apartment 2D may be comparable to plaintiffs apartment and its rent before application of the SCRIE benefit would be probative of the legal regulated rent, plaintiff does not offer that figure for the year 2008.
Absent a comparable apartment in the building, plaintiff does not establish that her base date rent should be based on comparability. And, as the last registered rent paid by the prior tenant is not within the four-year lookback period, that factor is also not pertinent. Therefore, the base date rent must be based on plaintiffs initial rent of $2,003.34 in 2002, minus a 20 percent vacancy increase pursuant to 9 NYCRR § 2522.8, resulting in a base date rent amount of $1,602.67.
As neither party calculated plaintiffs damages, based on a base date rent amount of $1,602.67, the parties are directed to do so in a supplemental briefing, detailed below.
D. Attorney fees
There is no dispute that plaintiff is entitled to attorney fees as she is the prevailing party.
IV. CONCLUSION
Accordingly, it is hereby
ORDERED, that plaintiffs motion for partial summary judgment is granted as follows:
(1) on her second cause of action, it is declared that plaintiffs apartment, tenancy, and lease are subject to the Rent Stabilization Law, and defendant is directed to offer her a proper renewal lease within 30 days of the date of this order;
(2) on her fourth and sixth causes of action, a judgment is granted in plaintiffs favor as against defendant, and the parties are directed to submit proposed orders and judgments containing a calculation of the amounts owed for plaintiffs overcharges and treble damages, along with a letter explaining same. Plaintiff is directed to e-file her proposed order and judgment within 30 days of the date of this order, and defendant is directed to file its proposed order and judgment within 30 days of receipt of plaintiff s submission; and it is further
(3) on her eighth cause of action for attorney fees, the parties are directed to indicate in their letters to the court whether a hearing must be held on plaintiffs request for attorney fees or whether they consent to have the fees application decided on papers.