Mauro v Choi

[*1] Mauro v Choi 2006 NY Slip Op 50461(U) [11 Misc 3d 1070(A)] Decided on March 24, 2006 Civil Court, New York County Lebovits, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on March 24, 2006
Civil Court, New York County

John Mauro, Petitioner,

against

Anthonia Choi and Gena R. Sabin, Respondents.



54718/06



Jane S. Thies, New York City, for petitioner. Mitchell J. Baker, White Plains, for respondents.

Gerald Lebovits, J.

In this nonpayment proceeding, petitioner alleges that respondents failed to pay $10,873 in rent from November 2005 through January 2006 for apartment 5 located at 432 East 58 Street in New York County. Respondents move under CPLR 3212 for summary judgment on their first and second counterclaims and to dismiss the petition. Respondents argue that petitioner has willfully overcharged them $45,733.42 and seek treble damages for $137,200.26.

The Facts

The following facts are not in dispute. On March 15, 2004, respondents and petitioner signed a non-rent-regulated (destabilized) one-year lease commencing on April 1, 2004, and ending on March 31, 2005. The lease set the monthly rent at $3900; a preferential-rent-[*2]concession rider[FN1] set the rent at $2800 a month. (See Respondents' Notice of Cross-Motion, Feb. 16, 2006, at ¶ 3.) Respondents actually paid $2700 per month. (See Affidavits in Support, Feb. 22, 2006, Exhibit E.) Respondents and petitioner signed another non-rent-regulated (destabilized) one-year lease commencing on April 1, 2005, and ending on March 1, 2006. The lease set the monthly rent at $4036.50; a preferential-rent-concession rider set the rent at $2800 a month. (See Respondents' Notice of Cross-Motion, Feb. 22, 2006, Exhibit D.) Respondents paid the agreed-upon monthly rent of $2800 until November 2005, when they sent a check for $329.82. (See Affidavits in Support, Feb. 22, 2006, at ¶ 6; see also Petitioner's Response, Mar. 20, 2006, at ¶ 5.) Respondents paid this lesser amount because DHCR informed them by a letter dated November 9, 2005, that the apartment was rent controlled with a monthly rent of $329.82. (See Respondents' Notice of Cross-Motion, Feb. 16, 2006, Exhibit E.) The November 2005 DHCR letter also informed respondents of two orders it issued—one on September 14, 1995, the other on May 21, 2002—that prevented petitioner from overcharging any tenant in apartment 5 more than the rent-controlled amount of $329.82.

DHCR's letter to respondents was based on a series of proceedings against petitioner, of which respondents were unaware and were not a party. DHCR on September 14, 1995, in an order by Deputy Commission Paul A. Roldan, determined that petitioner, together with Nancy Walter, his wife, had violated sections 26-412 and 26-516 of the Administrative Code of the City of New York. (See Respondents' Notice of Cross-Motion, Feb. 22, 2006, Exhibit F, at 1.) DHCR found that petitioner wilfully and unlawfully harassed tenants in ten apartments in three buildings on East 58th Street, including the subject building. (Id. at 1-2.) DHCR ordered petitioner and his wife to pay civil penalties totaling $33,000. (Id. at 2.) Petitioner and his wife were directed to cease harassing any tenant at these locations. (Id. at 3.) DHCR also determined that apartment 5, the subject apartment, was subject to rent control and prohibited petitioner from increasing the rent until all lawful conduct discontinued and the order of harassment was lifted. (Id. at 3-4.)

Petitioner then brought an Article 78 proceeding in Supreme Court, New York County. Supreme Court transferred the case to the Appellate Division, First Department. On May 7, 1998, the Appellate Division confirmed DHCR's finding, denied petitioner's Article 78 petition, and dismissed the proceeding. (See Matter of Mauro v NY St. Div. Hous. & Comm. Renewal, 250 AD2d 392 [1st Dept 1998, mem].) The court held that substantial evidence supported DHCR's determination and that the imposed penalties were neither illegal nor inappropriate. (See id.) [*3]

After petitioner paid the civil penalties, he once again challenged DHCR's order of September 1995. Petitioner filed an application with DHCR's Enforcement Unit in mid-1998 requesting DHCR to lift its September 1995 order. A hearing was scheduled to determine (1) whether petitioner was entitled to termination of the finding of harassment; (2) whether petitioner continued to violate rent control and rent stabilization laws by "harassing tenants, retaliating against them for making good faith complaints, commencing and threatening unwarranted eviction proceedings, decreasing, modifying, discontinuing, interrupting, and interfering with basic, essential, and required services, failing to comply with DHCR Orders and Enforcement Unit directives, and by otherwise evading and violating the rent laws"; (3) whether petitioner continued to violate rent control and rent stabilization laws and engaged in evasive practices, including submitting false or altered documents to DHCR; and (4) whether a penalty would be imposed against petitioner. (See Respondents' Notice of Cross-Motion, Feb. 22, 2006, Exhibit H, at 2.)

DHCR conducted a hearing from September 1999 through July 2000. (Id. at 3.) Twenty-two witnesses testified. (Id. at 5) At the hearing, petitioner testified that "DHCR's [September 1995] Order depends on interpretation.'" (Id. at 7.) He admitted that "he did not feel the Order was correct and as far as we are concerned [Apartments 3 and 5] were not under Rent Control.'" (Id.) On May 7, 2002, the hearing officer made findings and recommendations in a 26-page decision. The hearing officer found that despite the Appellate Division's determination, petitioner "did not lower the rent to the lawful amount consistent with DHCR's Order which was affirmed by the Court." (Id.) The hearing officer also found that DHCR's September 1995 order made it "abundantly clear" that apartment 5 was rent controlled. (Id. at 8) The hearing officer froze the rent for apartment 5 and the other apartments until DHCR lifted its finding of harassment. (Id. at 8.) The hearing officer further found that petitioner understood the September 1995 order but that petitioner's

"own testimony and documents remove any doubt that they did not understand the import and effect of such Order. Indeed, their steadfastly wrongheaded refusal to abide by the dictates of the

Order, which was affirmed by the Court, is indicative of their attitude displayed throughout this proceeding. These illegal rent increases, for Apartments 3 and 5, 432 East 58th Street, constitute unlawful conduct, which, when considered with the harassment directed at rent regulated tenants of 428 and 430 East 58th Street . . . show that [petitioner has] not complied with either the spirit or substance of the Commissioner's September 14, 1995 Order." (Id. at 8-9.)

The DHCR hearing officer thus clearly articulated that petitioner understood that apartment 5 was rent controlled.

In an order dated May 21, 2002, signed by Executive Deputy Commissioner Dennis P. [*4]Ryan, DHCR approved and adopted the hearing officer's findings.[FN2] (See Respondents' Notice of Cross-Motion, Feb. 22, 2006, Exhibit H, at 2.) DHCR denied petitioner's request to lift the September 1995 harassment finding. DHCR determined that petitioner willfully violated the Rent Control Law and Rent and Eviction Regulations and the Rent Stabilization Law and Rent Stabilization Code. (Id.) DHCR found petitioner guilty of harassment and imposed civil penalties totaling $9200, including $200 for petitioner's "failure to comply with the Commissioner's Order, dated September 14, 1995, which prohibited them [petitioner and his wife] from raising the rents for Apartments 3 and 5, 432 East 58th Street . . . until all unlawful conduct has been discontinued and the Finding of Harassment, has been removed as of record." (Id. at 3.) Included in the total civil penalty amount was a $6000 penalty for petitioner's "pattern of verbal abuse and intimidating behavior directed . . . [and] designed to disturb and cause these tenants to vacate their apartments." (Id. at 2.) Also included in the total was a $3000 penalty for petitioner's failure to make repairs. (Id. at 3.) DHCR informed petitioner that he could bring an Article 78 proceeding in Supreme Court, but petitioner did not seek to review DHCR's order.

Conclusions of Law

Respondents' motion for summary judgment on their first counterclaim for rent overcharge and to dismiss the petition is granted. The movant for summary judgment "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 NY Univ. Med. Ctr., 64 NY2d 851, 853 [1985, mem], citing Zuckerman v City of NY, 49 NY2d 557, 562 [1980].) Based on the affidavits and exhibits attached to respondents' motion, respondents have made a prima facie entitlement to judgment as a matter of law. No issue of fact warrants a trial.

DHCR's September 1995 order is clear and unambiguous. Petitioner was "barred from applying for or collecting any rent increases for the affected rent-stabilized housing accommodations . . . [and] denied any and all future rent increases for the subject rent-controlled [*5]apartments at the subject buildings until such time as all unlawful conduct has been discontinued and the finding of harassment imposed herein has been removed as of record . . . ." (Respondents' Notice of Cross-Motion, Feb. 22, 2006, Exhibit F, at 3 [emphasis added].) The last paragraph in DHCR's September 2005 order provides that "apartments 2B, 2D and 2E at 430 East 58th Street, New York, New York, and apartments 3 and 5 at 432 East 58th Street, New York, New York, or any replacement or subdivision thereof, remain and continue to be subject to the applicable rent control laws until the finding of harassment herein is removed by an order of the Commissioner notwithstanding that they have or may become vacant because they were involuntarily vacated within the meaning and intent of the applicable statutory provisions." (Id. at 4 [emphasis added].) This court agrees with the hearing officer's May 7, 2002, finding that DHCR's September 1995 order was "abundantly clear." This court therefore rejects petitioner's argument that because the September 1995 order does not include the figure "$329.82," he was not required to decrease the rent to $329.82.

Petitioner admitted before DHCR that he knew about its multiple orders determining that apartment 5 was rent controlled for $329.82. Petitioner was also aware of the Appellate Division's order that confirmed DHCR's order of September 1995. Petitioner argued at the second DHCR hearing only that the orders were incorrect. Petitioner is judicially estopped from arguing that he never knew of the rent decrease to $329.82. The doctrine of judicial estoppel prevents a party from asserting in a legal proceeding a position contrary to the one the party took in an earlier proceeding. (Bates v Long Island R.R. Co., 997 F2d 1028, 1037-1038 [2d Cir 1993]; Kalikow 78/79 Co. v State of NY, 174 AD2d 7, 11 [1st Dept 1992].) The preclusive effect applies whether the earlier proceeding was administrative or judicial. (Missry v Ehlich, 1 Misc 3d 723, 726-727 [Civ Ct, NY County 2003], citing 67 Vestry Tenants Assn. v Raab, 172 Misc 2d 214, 219 [Sup Ct, NY County 1997].) Petitioner's current argument that the September 1995 order is unclear does not create a material issue of fact sufficient to warrant a trial.

Also without merit is petitioner's contention that a triable issue of fact exists that he did not violate DHCR's September 1995 order. In its orders of May 7 and 12, 2002, DHCR found that petitioner failed to comply with its order of September 1995. Because petitioner did not challenge them, DHCR's 2002 findings are binding.

Petitioner's argument that he never received a copy of DHCR's letter of November 9, 2005, which was sent only to respondents and which reflected the $329.82 figure, is irrelevant. Petitioner was notified of the rent-controlled rate for apartment 5 from DHCR's orders of September 15, 1995, May 7, 2002, and May 12, 2002. Petitioner's suggestion that he was unaware of the rent-controlled amount contravenes DHCR's findings and human rationality. Petitioner's argument that he relied on a DHCR approval from June 7, 1993, which fixed the rent for apartment 5 at $2500, also lacks merit, given DHCR's subsequent orders of May 7 and 12, 2002, enumerating past violations and future prohibitions.

Petitioner charged respondents $45,733.42 in rent exceeding the legal rent-controlled amount. This figure is reached, first, by multiplying $2700 by twelve and then by multiplying [*6]$2800 by seven. These amounts, added together, total $52,000, which represents the rent respondents paid under the two leases from April 2004 through October 2005.[FN3] From $52,000, $6266.58 is subtracted. The $6266.58 figure represents the rent-controlled rate for the subject premises for 19 months ($329.82 multiplied by 19 months).

An owner who collects rent exceeding the legal regulated rent must pay the tenant a threefold penalty. (NY City Rent and Rehabilitation Law [Administrative Code of City of NY] § 26-413 [d] [2].) The owner has the burden by a preponderance of the evidence to show that the overcharge was unwillful. (E.g. Graham Ct. Owners Corp. v Green, NY Slip Op 50333[U], *1, 2006 WL 587572, at *1 [App Term, 1st Dept, Mar. 2, 2006, per curiam] [awarding treble damages if landlord fails to establish that overcharge was unwillful].) Petitioner has not shown that the overcharge was unwillful. To the contrary, the documentary evidence that petitioner overcharged respondents is conclusive. The court awards treble damages in the amount of $137,200.26.

CPLR 5001 (b) provides that "[w]here such damages were incurred at various times, interest shall be computed upon each item from the date it was incurred or upon all of the damages from a single reasonable intermediate date." The intermediate date in the 723-day period between April 1, 2004, and today, March 24, 2006, is March 28, 2005 (the 362nd day). To the sum of $137,200.26 is added nine-percent legal interest for 362 days. To compute the interest for one year, the sum of $137,200.26 is multiplied by 0.09, for a total of $12,348.02. To calculate the interest for 362 days, $12,348.02 is multiplied by 362 and then divided by 365, the number of days in a year. The interest for 362 days is $12,246.53. Accordingly, to the sum of $137,200.26 in treble damages is added $12,246.53 in interest, for a total money-only final judgment in respondents' favor of $149,446.79.

Even though respondents admit that they owe rent from November 2005 to date, the petition is dismissed in its entirety. A court must dismiss a petition alleging that an apartment is not rent regulated when it is rent regulated. (E.g. MSG Pomp Corp. v Doe, 185 AD2d 798, 800 [1st Dept 1992, mem].) This petition alleges that "the premises is [sic] not subject to rent control or the Rent Stabilization Law." Given the DHCR orders of September 1995 and May 2002, the subject apartment is rent controlled. Petitioner failed to mention in his petition that the apartment is rent controlled—a failure consistent with petitioner's offering respondents two destabilized leases. No conclusion is possible but that petitioner, in drafting both the leases and this petition, intentionally tried to deceive respondents, DHCR, and this court.

[*7]

As for respondents' second counterclaim, they may move separately for attorney fees. (See NY City Rent and Rehabilitation Law [Administrative Code of City of NY] § 26-413 [d] [2] [rendering landlord liable for reasonable attorney fees and costs for charges exceeding applicable rent-controlled maximum rent].)

This opinion is the court's decision and order.

Dated: March 24, 2006

J.H.C. Footnotes

Footnote 1: Petitioner's offering preferential rents of over $2000 for the allegedly destabilized apartments to new tenants made no sense. Market apartments need no preferential-rent riders, and removal from rent stabilization is suggested when apartments rent for more than $2000 for new tenants. (See generally Rent Stabilization Law [9 NYCRR] § 2531 et seq.) As is made clear below, the preferential-rent riders were part of petitioner's amateurish scheme to deceive respondents into believing that the apartments were recently destabilized when they were rent controlled and to hide their scheme from DHCR.

Footnote 2: The DHCR hearing officer noted that the evidence, including leases, rent histories, and vacancy-decontrol reports, was inconsistent and that petitioner failed to explain the inconsistencies. (See Respondents' Notice of Cross-Motion, Feb. 22, 2006, Exhibit H, at 6-7.) The hearing officer also found many disturbing instances of petitioner's "pattern of verbal abuse," including following a tenant down the street and yelling "cheap, cheap, cheap, you'll hear from me soon" and "I'm not through with you yet, you little piece of shit." (Id. at 9.) When the same tenant complained about noises in the pipes, petitioner was overheard saying that "she can move out if she doesn't like it with the fucking rent she pays." (Id. at 10.) Petitioner also called another tenant a "fucking bullshit artist." (Id.) When the witness made this statement at the hearing, petitioner blurted out, "That's exactly what you are." (Id.) Petitioner also called this same on the telephone repeatedly at 7:30 a.m. accusing the tenant of being a "fucking scam artist." (Id. at 11.) Petitioner called another tenant a "shithead" and a "motherfucker." (Id. at 11-12.) The DHCR hearing officer found that petitioner meant these and many other instances of harassment to disturb the tenants and cause them to vacate their apartments. (Id. at 12.)

Footnote 3: Because the claim of overcharge stems from rent respondents paid from April 2004, the four-year statute of limitations is inapplicable. This affirmative defense provides for rent-controlled apartments 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." (NY City Rent and Rehabilitation Law [Administrative Code of the City of NY] § 26-516 [a]; accord CPLR 213-a.)