Garfunkel & Tauster Corp. v Gulinazzo

[*1] Garfunkel & Tauster Corp. v Gulinazzo 2009 NY Slip Op 51269(U) [24 Misc 3d 1205(A)] Decided on June 23, 2009 Civil Court Of The City Of New York, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 June 23, 2009
Civil Court of the City of New York, New York County

Garfunkel & Tauster Corp., Petitioner,

against

Salvatore Gulinazzo and DIANE LESTRANGE,, Respondents.



087529/08



Horing Welikson & Rosen PC., New York City (Leonard R. Kaplain of counsel), for petitioner. MFY Legal Services, Inc., New York City (Runa Rajagopal of counsel), for respondents.

Gerald Lebovits, J.

In this nonpayment proceeding over a rent-controlled apartment, petitioner claims that respondents owe rent, fuel-cost adjustments, and washing-machine surcharges.

Respondents move for partial summary judgment under CPLR 3212. They note that a different judge, in a 2006 nonpayment proceeding between the parties, found in January 2007 that a claim for fuel-cost adjustments, also called fuel-cost passalongs, and washing-machine surcharges may form the basis of a monetary judgment but not a possessory judgment. (See Garfunkel & Tauster Corp v Gulinazzo, Civ Ct, NY County Jan 31, 2007, Schneider, J., Index No. L & T 099318/06, at 1-2.) Respondents' motion raises two issues. The first is whether petitioner's claim for a possessory judgment for fuel-cost adjustments and washing-machine surcharges is collaterally estopped because of the January 2007 order. The second is whether, if the claim is not barred, petitioner may nevertheless not secure a possessory judgment for the washing-machine surcharges or fuel-cost adjustments. The motion is granted in part and denied in part.

I. Case History

In the parties' 2006 proceeding, the court found that washing-machine surcharges and fuel-cost adjustments are "additional rent," not "legally regulated rent." (Id. at 1.) The court ruled that petitioner can sue for "additional rent" in a summary proceeding if "legal regulated rent" is outstanding but may not obtain a possessory judgment for "additional rent." (Id. at 1-2.) The court found that petitioner may seek a nonpossessory judgment for the washing-machine surcharges and fuel-cost adjustments ancillary to its claim for the regulated rent. (See id. at 2.) [*2]

The parties settled their claims in a stipulation dated May 31, 2007. Petitioner was awarded a consent judgment for money and possession for the rental arrears and a money judgment for $739.28 for the washing-machine surcharges and fuel-cost adjustments. Respondents withdrew their counterclaims through the date of the stipulation with prejudice, and petitioner preserved its right to appeal the court's January 2007 order.

II. Collateral Estoppel

Respondents first argue that the court's January 2007 order collaterally bars a possessory judgment for the fuel-cost adjustments and washing-machine surcharges that have come due since the 2006 litigation.

The court's January 2007 order does not preclude petitioner's claim for a possessory judgment for fuel-cost adjustments and washing-machine surcharges. To invoke the principles of collateral estoppel, or issue preclusion, as a defense to a proceeding, a proponent must establish, among other things, "that the issue as to which preclusion is sought be identical with the issue decided in the prior proceeding that the issue have been necessarily decided in the prior proceeding, and that the litigant who will be held precluded in the present proceeding have had a full and fair opportunity to litigate the issue in the prior proceeding." (Capital Tel. Co. v Pattersonville Tel. Co., 56 NY2d 11, 17 [1982]; accord Schwartz v Public Administrator of County of Bronx, 24 NY2d 65, 71 [1969].) The doctrine of collateral estoppel "is grounded on concepts of fairness and should not be rigidly or mechanically applied." (D'Arata v New York Cent. Mut. Fire Ins. Co., 76 NY2d 659, 664 [1990]; accord Staatsburg Water Co. v Staatsburg Fire Dist., 72 NY2d 147, 153 [1988].) Factors that affect whether the parties had a full and fair opportunity to litigate the issue in the prior proceeding include the size of the claim, use of initiative or vigor to assert the claim, conservation of the court's and the litigants' resources, and societal interests. (See e.g. Schwartz, 24 NY2d at 72; B.R. DeWitt, Inc. v Hall, 19 NY2d 141, 148 [1967]; David D. Siegel, 17 NY Prac § 467, at 784-789 [4th ed 2005].)

Collateral estoppel is inapplicable here. The identity of the claim is different, and petitioner's initiative to pursue the first claim was incomplete because the stakes of the 2006 claim were lower.

The current claim is different from the 2006 claim because the current claim is based on fuel-cost adjustments and washing-machine surcharges that have accrued after May 31, 2007, while the 2006 proceeding concerned the fuel-cost adjustments and washing-machine surcharges before May 31, 2007. In Cary v Fisher (149 AD2d 890, 891 [3d Dept 1989]), for example, the Appellate Division found that collateral estoppel does not preclude a second claim in which the plaintiff alleges the same acts but in which the time frame differs from that of the first claim.

Additionally, the stakes of petitioner's 2006 claim are lower than those of the current claim. Petitioner did not immediately appeal the 2006 order. It would have cost more to appeal than the claim was worth. Petitioner has since filed a notice of appeal; the notice is timely, the [*3]parties agree, because respondents served petitioner with the January 2007 order only recently. The 2006 claim amounted to $739.28 while the current claim totals $1344.40 through June 2009. The stakes of the current claim are even higher than the $1344.40, because estoppel would forever bar petitioner from collecting any fuel-cost adjustments and washing-machine surcharges unless respondents voluntarily pay or satisfy any money judgment. But money judgments are unenforceable against indigent tenants like respondent. Indigent tenants pay, or the Department of Social Services and charities pay, only upon a possessory judgment enforceable by eviction. These grounds require that petitioner be granted the opportunity to litigate this claim for fuel-cost adjustments and washing-machine surcharges accruing after May 31, 2007.

III. The Merits

Respondent argues in the alternative that if this court does not bar the claim, the court should find, like the judge in the prior proceeding did, that fuel-cost adjustments and washing-machine surcharges may not form the basis of a possessory judgment.

Fuel-cost adjustments are part of the legally regulated rent and can be collected through a possessory judgment. Under New York State Rent and Eviction Regulations (9 NYCRR) § 2202.13 (a), authorized fuel-cost adjustments are "rent adjustments." "Rent adjustments" are available to landlords of rent-controlled apartments. (E.g. Daniel Finkelstein and Lucas A. Ferrara, Landlord and Tenant Practice in New York § 6:20, at 6-11 [Vol F, 2008-2009 ed.].) Respondents contend that § 2202.13 (i) disallows fuel-cost adjustments as part of the legally regulated rent and instead considers them separate, additional rent. Section 2202.13 (i), however, only removes the fuel-cost adjustments from the rent to calculate percentage adjustments to the maximum base and collectible rent. Under subdivision 2202.13 (a) fuel-cost adjustments are part of the legally regulated rent, and "a demand for legal regulated rent may support a possessory judgment." (London Terrace Gardens v Stevens, 159 Misc 2d 542, 545 [Hous Part, Civ Ct, NY County 1993].) Petitioner is entitled to seek a possessory judgment for the fuel-cost adjustments that have accrued since May 31, 2007.

Washing-machine surcharges, on the other hand, are not part of the legally regulated rent. New York State Rent and Eviction Regulations (9 NYCRR) § 2202.26 (a) provides that authorized washing-machine surcharges "shall not be part of the maximum rent." Thus, petitioner may not obtain a possessory claim for washing-machine surcharges. In a summary nonpayment proceeding, this court does not have the "jurisdiction to adjudicate a monetary claim other than rent allegedly due." (Allyn v Markowitz, 83 Misc 2d 250, 252 [Rockland County Ct. 1975].)

Respondents' motion for summary judgment is granted in part and denied in part. Collateral estoppel does not apply to this claim, and washing-machine surcharges are not a part of legal regulated rent under the New York State Rent and Eviction Regulations. Petitioner has no basis to move for a possessory judgement for "additional rent." Petitioner may, however, seek a possessory claim for the fuel-cost adjustments that have accrued from June 1, 2007. [*4]

This proceeding is adjourned for all purposes to July 2, 2009.

This opinion is the court's decision and order.

Dated: June 23, 2009

J.H.C.