Opinion
78353/05.
Decided December 23, 2005.
Fong Wong, P.C., New York City (Robert W. Wong of counsel), for petitioner.
Breier, Deutschmeister, Urban Fromme, P.C., New York City (Jason S. Deutschmeister of counsel), for respondent Stuart.
Background
Petitioner, Wai Chan, brings this nonpayment proceeding against respondents, Gao Xiao Ying and Gregory Stuart, alleging that they failed to pay $11,500 in rent from December 2004 to June 2005 for apartment 9 located at 208 Grand Street in New York County. This is the second nonpayment proceeding between the parties; the first was dismissed without prejudice at trial on the ground that petitioner did not prove its prima facie case. In this proceeding, both sides have engaged in much motion practice. The court can resolve some issues based on the parties' submissions. Other issues can be resolved only at trial.
On September 1, 2003, Ying, who has not appeared in this proceeding, and Stuart signed a two-year lease ending on August 30, 2005, for apartment 9. Respondents agreed to pay monthly rent in the amount of $1700. Stuart alleges that he paid a two-month security deposit and that he moved into apartment 9 at petitioner's request. Before he moved to apartment 9, he lived in apartment 3 in the same building from May 2002 until August 2003 with a monthly rent of $1200, having paid a two-month security deposit.
New York State Division of Housing and Community Renewal (DHCR) rent roll reports show that effective April 1, 1984, apartment 9 was rent controlled at a monthly rent of $73.52, with Tswin Mui as the tenant of record. Additional DHCR records show that the apartment continued to be rent controlled in 1985. For 1986, apartment 9 was registered as rent stabilized, with Mui as the tenant of record, with a monthly rent of $73.52. Other DHCR records show that effective September 1, 2003, apartment 9 was vacancy decontrolled from rent controlled to rent stabilized at a monthly rent of $1700. Gao X. Ying was the tenant of record, with a lease from September 1, 2003, until August 30, 2005. DHCR records further show that apartment 9 was registered with DHCR on May 26, 2005. Apartment 9 was not registered with DHCR from 1986 until 2004.
DHCR records also show that effective April 1, 1984, apartment 3 was rent stabilized at a monthly rent of $70, with Souk-Fung Lee as the tenant of record, with a lease ending March 31, 1985. Apartment 3 continued to be rent stabilized, with Lee as the tenant of record, with a monthly rent of $80 and a lease ending April 30, 1986. Apartment 3 remained registered as a rent-stabilized apartment at a monthly rent of $80, with Lee as the tenant of record, with a lease from December 31, 1985, until January 1, 1987. Neither party has provided records to enable the court to determine apartment 3's status after that date. In May 2005, petitioner filed with DHCR papers to decontrol for vacancy apartment 9's rent-stabilized status effective 2003 and also 2004/2005 annual rent registrations for apartment 9.
Stuart now alleges that petitioner has been overcharging him rent for apartments 3 and 9. With respect to apartment 9, he argues that the rent should have been and should continue to be $73.52 a month, which was the rent as of 1986, when the apartment was legally registered with DHCR as rent stabilized. Stuart claims that because the legal regulated rent has not changed since 1986, the rent for apartment 9 should reflect the $73.52 1986 figure. Stuart also argues that petitioner overcharged him from May 2002 to August 2003 for apartment 3. In that regard, he similarly argues that because apartment 3 was rent stabilized and because the legal regulated rent for apartment 3 has not changed since 1986 — when the apartment was legally registered as a rent-stabilized apartment with DHCR at a monthly rent of $80 — his past and current rent should reflect the 1986 figure: $80 a month.
Stuart therefore contends that petitioner has overcharged him $47,255 and that this court should award him $141,544.44 in treble damages. Petitioner's motions and Stuart's cross-motions are directed toward resolving that ultimate issue. Along the way, both sides move for preliminary relief as well.
The Prior Papers
To begin, petitioner argues that Stuart's reply (when he appeared pro se) and his amended answer, which incorporated that reply (submitted by Stuart's former counsel, Moss Yolleck), fail to comply with CPLR 3014. Petitioner notes that both documents lack numbered sentences, consecutively numbered paragraphs, and single allegations and that they contain several separate causes of action or defenses in one paragraph. Petitioner further argues that Stuart's attorney was not permitted to amend without leave Stuart's pro se reply or even to cite from it. Stuart argues that his counterclaims and affirmative defenses contain precise dates and calculations. He concedes that although his reply was not in single-sentence format, that defect alone is not egregious enough to strike an affirmative defense and a counterclaim. ( See Respondent's Notice of Cross-Motion, Oct. 18, 2005, Exhibit E.)
CPLR 3014 provides that "[e]very pleading shall consist of plain and concise statements in consecutively numbered paragraphs. Each paragraph shall contain, as far as practicable, a single allegation. . . . Separate causes of action or defenses shall be separately stated and numbered." The court concludes that Stuart's reply and counsel's amended answer do not violate CPLR 3014. The amended answer has numbered paragraphs containing single allegations as well as separate causes of action and defenses. Stuart's reply conforms to this standard as far as practicable, considering that he was pro se when he wrote and submitted it. A pro se litigant's papers are not subject to hypercorrective reading when an adversary's rights are not prejudiced Moreover, an attorney may cite from a client's pro se papers.
Petitioner's motion (made at oral argument) to strike Stuart's former counsel's affirmation in opposition is granted, however. Former counsel submitted an affirmation in opposition dated September 9, 2005, opposing petitioner's motion to strike Stuart's counterclaims and defenses related to rent overcharge and petitioner's motion for use and occupancy. Stuart's former and current attorneys submitted affirmations opposing petitioner's motion. Stuart's current papers are now complete. Current counsel's affirmation in opposition refers not only to every issue stated in the former attorneys' affirmation but also addresses other issues. ( See Respondent's Affirmation in Opposition and in Support of Cross-Motion, Oct. 18, 2005.) Former counsel's papers are duplicative.
The Alleged Overcharge for a Different Apartment
Petitioner's motion to strike Stuart's affirmative defense and counterclaim relating to apartment 3 is granted, and that counterclaim is severed. According to petitioner, paragraph 17 of the lease to apartment 9 denies Stuart the right to raise any counterclaims. Petitioner further contends that Stuart's claim of a rent overcharge for apartment 3 is not "intrinsically intertwined" with apartment 9. ( See Petitioner's Affidavit in Opposition to Cross-Motion and Reply Affidavit, Oct. 27, 2005, at 2, ¶ 5.) Petitioner seeks rental arrears for apartment 9, not for apartment 3. Petitioner thus argues that anything relating to apartment 3 represents a cause of action separate from a claim for rent for apartment 9. Petitioner argues that Stuart has already chosen his forum to address this issue before the current nonpayment proceeding began by filing an overcharge claim with DHCR for apartment 3.
Stuart, on the other hand, argues that his rent overcharge claims for apartments 3 and 9 are "inextricably intertwined" with one another. ( See Respondent's Affidavit in Opposition and in Support of Cross-Motion, Oct. 18, 2005, at ¶¶ 6-9.) Stuart states that petitioner overcharged him in the same way for both apartments. ( Id.) Stuart argues common issues of law and fact exist between his counterclaim for apartment 3 and his counterclaim for apartment 9. Stuart argues that the court should consider the counterclaims to avoid inconsistent rulings between Civil Court and DHCR. Stuart's counsel told this court at oral argument that he wrote to DHCR asking that it hold its decision in abeyance until Civil Court decides the overcharge issue with respect to apartment 3, but counsel did not withdraw Stuart's DHCR complaint.
Courts enforce lease provisions precluding a tenant from interposing a counterclaim unless the counterclaim is inextricably intertwined with the landlord's entitlement to rent or possession of subject apartment of the underlying proceeding. ( E.g. Sutton Fifty-Six Co. v. Fridecky, 93 AD2d 720, 722 [1st Dept 1983, mem] ["Where the issues raised in the counterclaim bear directly upon the landlord's right to possession, they are said to be intertwined in the summary proceeding issues and should be disposed of in one proceeding."].) The parties here disagree about why Stuart moved from apartment 3 to apartment 9 and about who told Stuart to move from one apartment to another. Stuart alleges that he moved to apartment 9 at petitioner's behest. Petitioner alleges that Stuart moved into apartment 9 because it is a larger apartment and because Stuart wanted a renovated apartment.
In 143 E. 30th St. v. Shankman ( 2005 WL 3115205, *1-2, 2005 NY Slip Op 51883[U], *1-2 [App Term, 1st Dept, Nov. 21, 2005, per curiam]), the court found that a tenant's relocation from one apartment, A-4, to another apartment, A-5, in the same building resulted from a relocation "pattern" undertaken at the "behest of the landlord." The court noted that a landlord may not "reap the benefit" of a tenant's occupying various apartments and cause a vacancy allowance to avoid "possible overcharge liability." ( Id.) The Shankman court therefore reversed the trial court's award of possession to the landlord and a recovery of rental arrears and dismissal of the tenant's rent overcharge counterclaim. The Shankman court held that the tenant could pursue an overcharge claim with respect to the first apartment, A-4, which the tenant occupied for 10 months. ( Id.) The Shankman court based its decision on the possibility that the tenant "may return" to the same apartment in which he once resided, A-4. ( Id.)
Here, however, no evidence suggests that petitioner is reaping the benefit of Stuart's occupancy of apartments 3 and 9 to avoid possible overcharge liability. Neither party has submitted evidence that a relocation "pattern" has existed. Unlike the tenant in Shankman, Stuart has not and will not return to his former apartment, number 3. Stuart's overcharge claim for apartment 3 is not, therefore, intrinsically intertwined with petitioner's rent claim for apartment 9. Accordingly, Stuart is bound to pursue the DHCR overcharge remedy he himself sought and declines to withdraw.
The Subpoena
Petitioner's motion to quash Stuart's subpoena duces tecum is denied as academic. Petitioner seeks, under CPLR 2304, to quash or modify Stuart's subpoena duces tecum to DHCR for a building-wide rent-registration report for all apartments at 208 Grant Street from 1984 to the present. Petitioner seeks to suppress the information DHCR already turned over, which is in the Civil Court's record room, and which both sides have reviewed; an order of protection to prevent abuse under CPLR 3103; and to have the records returned to petitioner. Petitioner argues that the subpoena is overly broad. Stuart disagrees; he argues that petitioner has no standing to move to quash the subpoena.
The court has granted petitioner's motion to strike Stuart's affirmative defense and counterclaim relating to apartment 3, as explained above. Thus, Stuart has no need to use in this proceeding the DHCR documents pertaining to apartment 3. Stuart may use documents received from DHCR relating to apartment 9. Petitioner's request that this court suppress the information obtained from the subpoena and grant an order of protection is denied.
The Four-Year Overcharge Rule
A remaining issue regarding the subpoena is to determine how far back Stuart may use the subpoenaed rent-regulation records for apartment 9 to challenge the alleged overcharge. Rent Stabilization Code (RSC) (9 NYCRR) § 26-516 (a) (2) provides that "no determination of an overcharge and no award or calculation of an award of an amount of an overcharge may be based upon an overcharge having occurred more than four years before the complaint is filed." Case law, however, allows tenants to challenge records before the four-year period preceding the filing of an overcharge complaint if the landlord registered an apartment (and its rent) with DHCR within four years of a tenant's complaint. ( Thornton v. Baron, 5 NY3d 175, 181 [finding that tenants alleging rent overcharge may evaluate documents exceeding four-year statute of limitations implemented by RSC § 26-516 [a] [2] to prevent landlord's fraud]; Curry v. Battistotti, 5 Misc 3d 1012[A], *4, 2004 WL 2535041, 2004 NY Slip Op 51355[U] [Hous Part, Civ Ct, NY County 2004].)
In Curry, this court found that the landlord committed fraud by falsely registering the apartment's rent-regulatory status. ( See 2004 NY Slip Op 51355[U] at *4.) In Thornton, the Court of Appeals found that both the landlord and the tenant engaged in fraud. ( See 5 NY3d at 181.) In light of these opinions, a motion or trial court that finds that either party or both parties committed fraud may go beyond the four-year statute of limitations to assess records to ascertain whether a landlord overcharged a tenant.
Both parties contest the issue of fraud and have submitted numerous documents to support their contentions. Because issues of fact exist here, the time period for which Stuart may use the rent-regulation records in challenging the supposed overcharge counterclaim will be resolved at trial.
Use and Occupancy
Petitioner's motion seeking payment for use and occupancy is denied. Stuart alleges that petitioner willfully overcharged him. The amount of legal rent can be determined only at trial because the contested issues of fact. To award at this phase use and occupancy to petitioner or to direct Stuart to deposit use and occupancy in court would be to predetermine this case.
Motion to Dismiss
Stuart's motion to dismiss the petition on the ground that the petition fails to state a valid cause of action is denied. Stuart notes that the prior proceeding was dismissed because petitioner did not prove the legal rent for apartment 9 and argues that for the same reasons this court should dismiss this matter. ( See Respondent's Affidavit in Opposition and in Support of Cross-Motion, Oct. 18, 2005, at ¶ 8.) Stating a valid cause of action does not, however, obligate a party to prove any fact. That evidentiary standard applies only when a party moves for summary judgment. The petition states a valid cause of action because petitioner alleges that respondents did not pay rent.
Stuart's Summary-Judgment Motion
Stuart's motion for summary judgment on his willful overcharge counterclaims is denied. The movant in a summary judgment motion "must make a prime facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to eliminate any material issues of fact from the case." ( Winegrad v. NYU Med. Ctr., 64 NY2d 851, 853, citing Zuckerman v. City of NY, 49 NY2d 557, 562.) If the movant fails to make a prima facie showing, the motion must be denied even if the nonmovant's papers are insufficient to defeat the motion. ( E.g. Redemption Church of Christ of Apostolic Faith, Inc. v. Williams, 84 AD2d 648, 649 [3rd Dept 1981].) According to Stuart, petitioner last registered apartment 9 with DHCR in 1986 as a rent-stabilized apartment. In 1986, the legal rent was $73.52 a month. Because petitioner charged respondents $1700 a month, Stuart alleges that petitioner has "grossly" overcharged him a total of $29,335. Stuart also seeks treble damages from petitioner for the alleged willful overcharge. The damages would result in petitioner's paying three times the amount of the overcharge. ( See Respondent's Affirmation in Opposition and in Support of Cross-Motion, Oct. 18, 2005, at ¶¶ 12-13; see RSC § 2526.1 [a] [1] [providing if owner collected rent exceeding legal regulated rent, owner pays tenant penalty equal to three times excess; owner has burden by preponderance of evidence to show that overcharge was unwillful].)
Petitioner contends that he did not overcharge respondents. Petitioner argues that after Mui, the rent-controlled tenant, moved out of apartment 9, petitioner's family members moved into apartment 9. Petitioner submits that because respondents were not the first occupants of apartment 9, they were not entitled to a fair-market rental appeal at DHCR. Petitioner argues, therefore, that the agreed-to rent between petitioner and respondents is the correct and binding rental amount. Petitioner submits that Mui resided in apartment 9 as a rent-controlled tenant paying $73.52 per month, without a lease from the 1960s to 1990. Petitioner states that because of his limited knowledge of English, he mistakenly listed Mui as a rent-stabilized tenant in the 1986 rent-registration form instead of as a rent-controlled tenant. Mui continued to pay the same amount of rent until he vacated the apartment in 1990. ( See Petitioner's Affidavit in Opposition to Cross-Motion, Oct. 27, 2005, at 8, ¶ 21.) Petitioner alleges that his family resided in apartment 9 when Mui left and that they remained there for about 13 years. ( Id. at 9, ¶ 22.)
Petitioner also alleges that his grandson, Kam Hoi Chan, resided in apartment 9 from 1989 to 2003 and offers documents to support that allegation. ( See Petitioner's Affidavit, Nov. 7, 2005, at 1-2, ¶¶ 1-6.) Petitioner further alleges that he made substantial renovations to apartment 9. ( See Petitioner's Affidavit in Opposition to Cross-Motion, Oct. 27, 2005, at 7, ¶ 20.) Petitioner argues, therefore, because respondents were not the first occupants of apartment 9 after Mui, the rent-controlled tenant, vacated, respondents were not entitled to a fair-market rental appeal. See RSC § 2522.3 [a]; Fichera v. DHCR, 233 AD2d 107, 108 [1st Dept 1996, mem].) Petitioner thus argues that he and Stuart agreed to the monthly rent of $1700 when both parties signed the lease for apartment 9. ( See Petitioner's Affidavit in Opposition to Cross-Motion, Oct. 27, 2005, at 9, ¶ 22.) Petitioner argues, accordingly, that because respondents were the first rent-stabilized tenants after his family lived in apartment 9, he had the right to charge respondents whatever rent was agreed: $1700. ( Id. at 9, ¶ 23; see RSC § 2526.1 [a] [3] [iii] ["Where a housing accommodation is vacant or temporarily exempt from regulation pursuant to section 2520.11 of this Title on the base date, the legal regulated rent shall be the rent agreed to by the owner and the first rent stabilized tenant taking occupancy after such vacancy or temporary exemption, and reserved in a lease or rental agreement."].)
Stuart argues that petitioner's affidavits and records do not show that apartment 9 was owner occupied. Stuart asserts, rather, that the records show that apartment 9 was rent stabilized in 1986. Stuart notes that petitioner does not support with objective evidence that his apartment was subject to rent control in 1986; important documents are lacking, such as a vacancy decontrol report, leases or other writings for alleged intervening tenants, and any rent records or receipts to show what rent, if any, was collected in 1986. ( See Respondent's Reply Affirmation, Oct. 31, 2005, at ¶ 5.)
Stuart, as the movant, has not made a prima facie entitlement to judgment as a matter of law sufficient to eliminate any material issues of fact. A trial judge must resolve at least two issues of fact that cannot be resolved on the papers. First, were respondents the first occupants of apartment 9 after the rent-controlled tenant vacated? Second, what is the legal rent for apartment 9? Stuart's motion for summary judgment is therefore denied.
Petitioner's Summary-Judgment Motion
Petitioner's motion for summary judgment is also denied. According to petitioner, respondents occupied apartment 9 after it was temporarily exempt from regulation. Thus, according to petitioner, respondents were not entitled to a DHCR fair-market rental appeal. Petitioner submitted an affidavit of his grandson, Kam Hoi Chan, who swears that he resided in apartment 9 from 1989 to 2003. Petitioner also submitted documents — tax returns, bank statements, bills, social-security statements, posted letters, a death certificate, among others — to support his claim that his family resided in apartment 9 during that period. ( See Petitioner's Affidavit, Nov. 7, 2005, at 1-2, ¶¶ 1-6.) Stuart disagrees with this contention. He submits Binh Ba Nguyen's affidavit alleging that from the time Nguyen moved into the building (February 2002) until Stuart moved into apartment 9 (September 2003), she "never saw" Kam Hoi Chan living in apartment 9. The court does not know who the first tenant was after the rent-controlled tenant moved out of apartment 9. This issue must therefore be resolved at trial. Petitioner has not demonstrated from the documents he submitted that apartment 9 was owner-occupied when Mui, the rent-controlled tenant, vacated.
Another reason the court cannot grant summary judgment for either side is that the parties have not submitted complete and comprehensible rent records. Stuart submits copies of cashed checks from 2002 until 2005 as well as receipts from petitioner. The checks do not appear to be in any order and are incomplete. The face of these checks do not indicate the specific rent month. It is unclear whether the checks are for rent paid for apartment 3 or apartment 9. Some of the checks do not indicate the full amount of rent; it appears that respondent made partial-payments at various points of the month. Neither party has provided comprehensible receipts to show for which months Stuart has been credited. And the receipts submitted are incomprehensible. They are written in Chinese, and Stuart did not provide English translations to facilitate any understanding. If neither petitioner nor respondents provide reliable rent records at trial, then "the legal rent must be fixed based on the default formula used by . . . DHCR to set the base date rent in overcharge cases. . . ." ( Thornton, 5 NY3d at 179 [affirming Appellate Division's majority opinion].)
The Security Deposit
Issues of fact arise about whether respondents were the first rent-stabilized tenants. Anything relating to respondents' payment of security deposit should therefore be decided at trial. Stuart alleges that he was illegally required to pay two months' security deposit, totaling $3400. ( See Respondent's Affidavit in Support of Cross-Motion, Oct. 18, 2005, at ¶ 5.) Petitioner argues that because respondents were the first rent-stabilized tenants to occupy apartment 9 and because they agreed to pay two months' security deposit, petitioner had the right to collect the higher security deposit. ( See Petitioner's Affidavit in Opposition to Cross-Motion and Reply Affidavit, Oct. 27, 2005, at 10, ¶ 26, citing RSC § 2525.4.) Petitioner, however, offers to return one month security deposit to respondents if they pay the rent arrears allegedly owed. ( Id. at 10, ¶ 27.) Any possible set off will be decided at trial.
Conclusion
The proceeding is adjourned for trial to January 12, 2006. Issues of fact exist regarding the legal rent for apartment 9. Once these issues are resolved, the trial judge must decide whether petitioner willfully overcharged respondents for apartment 9.
This opinion is the court's decision and order.