Opinion
L T 104610/2010.
Decided May 23, 2011.
Sperber, Denenberg Kahan, P.C., New York, NY, Petitioner's attorney.
South Brooklyn Legal Services, Inc., Brooklyn, NY, Respondent's attorney.
Recitation, as required by CPLR 2219(a), of the papers considered in the review of respondent's order to show cause to vacate default
Papers Numbered
Notice of motion Affidavits Annexed
Order to Show Cause and Affidavits Annexed 1
Notice of Cross-motion and Affidavits Annexed
Answering Affidavits 2
Replying Affidavits 3
Exhibits
Other
Upon the foregoing cited papers, the Decision and Order on this Motion is as follows:
After the service of a Rent Demand Notice (the "Rent Demand"), dated November 4, 2010, petitioner commenced this nonpayment proceeding seeking to recover outstanding rent for apartment 2D (the "Apartment"), in the building located at 781 Washington Avenue, in Brooklyn (the "Building"). When respondent failed to appear or answer petitioner obtained a default judgment against respondent in the sum of $7207.00; a money judgment was entered as respondent had been personally served. Respondent now moves to vacate the default pursuant to CPLR 5015, alleging that both an excuse for default and a meritorious defense to petitioner's claims exist.
A party seeking relief from a default pursuant to CPLR 5015(a) must demonstrate both reasonable excuse for the failure to appear and answer and a meritorious defense to the action ( State Farm Ins. Co. v Dunne, 30 Misc 3d 130[a] [App Term 2d 11th Jud Dists]), and "[t]he determination of what constitutes a reasonable excuse for a default lies within the sound discretion of the court ( Klidonas Realty Co. v Alex Jimmy Corp., 20 Misc 3d 126[a] [App Term 2d 11th Jud Dists 2008]). A respondent must also make a prima facie showing of a meritorious defense ( Energy Sav. Prods. v Milici, 168 AD2d 415 [2d Dept 1990]).
The petition alleges, and respondent acknowledges that the Building is a subsidized multifamily housing project regulated by the U.S. Department of Housing and Urban Development. Tenants of the Building are required to undergo an annual recertification process in order for their rents to be subsidized.
Respondent does not deny that she received the notice of petition and petition, and makes no allegation that she was improperly served. Rather, she asserts that there were delays in her recertification process that arose because, upon meeting with Ms. Tucker, petitioner's representative, to recertify, she was informed that she needed to present a notarized letter regarding child support. Respondent asserts that she did not get that letter until November 2010, three months after she met with Ms. Tucker; in the interim, she noticed that her rent bill reflected market rent for the Apartment as of September 2010. She also asserted that when she brought in the letter, Ms. Tucker reviewed her recertification documents, told her everything appeared proper and that she would be contacted to make an appointment to sign her lease. She states that she assumed that the notice of petition and petition had been served in error, as they had been generated prior to her delivery of the notarized child support letter.
Petitioner submits an affidavit from Ms. Tucker which states that she provided respondent with three separate notices advising her to properly recertify and that the issue was that she was repeatedly late in doing so and failed to include her sister and her sister's family in the recertification. The affidavit, however, is entirely silent as to respondent's specific allegation that in November, when she brought in the certification form, Ms. Tucker told her that everything in the recertification appeared to be in order, which led respondent to assume that the notice of petition and petition had been issued in error, as they did not reflect a rent based on her recertification.
Plainly, the prudent and appropriate course is to appear in court when one is sued, even when the party being sued believes the suit results from error. Respondent has proffered an unrebutted excuse for failure to answer, and the court is mindful of the preference for resolution of disputes on their merits ( See Schonfeld v Blue White Food Products Corp. 29 AD3d 673 [2d Dept 2006]). Under the circumstances presented here, respondent has shown adequate excuse for defaulting.
As a meritorious defense, respondent asserts that petitioner failed to follow the mandated protocol for termination of a subsidy, failed to provide proper notice of the termination, and did not afford respondent an opportunity for review or administrative challenge to the determination to terminate her subsidy.
Petitioner disputes the veracity of respondent's assertions. Specifically, petitioner asserts that respondent failed to recertify properly for 2010 despite multiple notices requesting that she do so. Petitioner further asserts that respondent failed to provide required information regarding her sister's income when her sister and her sister's family resided in the apartment rather than staying there as occasional guests.
Petitioner further asserts that, pursuant to respondent's lease petitioner properly increased her rent to market rent based upon her failure to recertify, and gave her all notices that were required. Respondent's lease provides that
a. If the Tenant does not submit the required recertification information, by the date specified in the Landlord's notice, the Landlord may implement the following penalties. The Landlord may implement these penalties only in accordance with the administrative procedures and time frames specified in HUD's regulations, handbooks and instructions related to the administration of multifamily subsidy programs.
(1) Require the Tenant to pay the higher HUD-approved market rent for the unit.
(2) Implement any increase in rent resulting from the recertification processing without providing the 30-day notice otherwise required by paragraph 4 of this agreement.
(b) The tenant may request to meet with the Landlord to discuss any change in rent or assistance payment resulting from the recertification processing. If the Tenant requests such a meeting, the Landlord agrees to meet with the Tenant and discuss how the Tenant's rent and assistance payment, if any, were computed.
While the lease plainly states that in the event the subsidy is terminated, there need not be a 30 day notice that the lease would otherwise require, it also mandates that if a subsidy is to be terminated as a penalty, it be done in accordance with HUD's regulations, including those that are set forth in HUD handbooks. The HUD Occupancy Handbook provides requires the following:
8-6 Terminating Assistance
1. When terminating a tenant's assistance, the owner increases the tenant's rent to market rent (or contract rent) and, where applicable, makes the assistance available to another tenant.
2. When terminating assistance, an owner must provide proper notice to the tenant of the increase in the tenant's rent.
(HUD Handbook 4350.3 REV-1, § 8-6[1-2][9/07]). The court notes that petitioner relies upon different requirements set forth in the Occupancy handbook in a June 1992 edition. Petitioner provides no copy of any notice issued to respondent prior to the increase to market rent, which appears directly to contradict the mandate of the handbook, that petitioner provide notice prior to terminating the subsidy and charging the market rent. Respondent, therefore, has made a prima facie showing of an affirmative defense.
Having established both excuse for default and having made a prima facie showing of an affirmative defense, respondent has satisfied the requirements of CPLR 5015. Accordingly, respondent's motion is granted and the default judgment and warrant are vacated. Respondent shall have ten days from the date of this decision to interpose an answer, and this matter shall appear on the court's calendar, for trial, June, 2011 at 9:30 A.M. The parties are directed to appear ready for trial on that day.
This is the decision and order of the court.