Becker v Park Murray Assoc., LLC

[*1] Becker v Park Murray Assoc., LLC 2011 NY Slip Op 50976(U) Decided on April 7, 2011 Supreme Court, New York County Rakower, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 April 7, 2011
Supreme Court, New York County

Steven I. Becker and GIOVANNA F. BECKER, Plaintiffs,

against

Park Murray Associates, LLC, Defendants.



109337/10

 

Sokolski & Zekaria, P.C. for Plaintiffs

Belkin Burden Wenig & Goldman, LLP for Defendant

Eileen A. Rakower, J.

Steven I. Becker and Giovanna F. Becker ("Plaintiffs") are the tenants of Apartment 3S ("the Apartment") of 20 Murray Street in New York County ("the Building"), which is owned by defendant Park Murray Associates, LLC ("Landlord"). Plaintiffs bring this action seeking (1) a declaration that the subject Apartment is rent stabilized; (2) an injunction requiring Landlord to furnish Plaintiff's with a rent stabilized lease; (3) monetary damages for alleged rent overcharges; and (4) attorney's fees.

Plaintiffs state in their complaint that they first occupied the Apartment on January 1, 2010 pursuant to a written lease between Plaintiffs and Landlord for a term commencing on January 1, 2010 and ending on February 28, 2012. Plaintiffs' lease provides for a monthly rent of $4,600 per month. Plaintiffs allege that, "[u]pon information and belief, no rent registration statements were filed with the New York State Division of Housing and Community Renewal ("DHCR") in connection with the subject premises for the years 1984 through 2005." Plaintiff states that, on or around September 28, 2006, Landlord (or its predecessor in interest) filed a rent registration statement with DHCR stating that the Apartment was a rent stabilized unit with a legal rent of $1,028.31 per month, and that the tenant was an individual by the name of Nancy Manter. Plaintiffs state that Manter moved out of the [*2]Apartment in 2007; afterward, on or around June 29, 2007, Landlord filed a rent registration statement with DHCR claiming that the Apartment was exempt from rent stabilization on the grounds of high rent vacancy deregulation. Plaintiffs claim that the 2007 registration claiming exemption from rent stabilization "was false, fraudulent, and[/]or erroneous."

Presently before the court is a motion by Landlord to dismiss the complaint pursuant to CPLR §3211(a)(1) & (7). Landlord submits an attorney's affirmation and the affidavit of Richard Djmal, a managing member of Landlord. Landlord states that it has been the owner of the Building since April 17, 1997, and submits a copy of the deed for the Building. Landlord states that Manter was the Apartment's tenant from November 1, 1979 until January 3, 2007, and provides copies of leases commencing on November 1, 1979 and July 1, 2003. According to Djmal, the Apartment became subject to rent stabilization in 2001. On January 3, 2007, pursuant to a surrender agreement entered into by Manter and Landlord, Manter agreed to vacate the Apartment, and to release Landlord from various claims concerning her tenancy, in exchange for payment of $110,000. A copy of the surrender agreement is annexed to Landlord's motion.

Landlord asserts that, after Manter vacated the Apartment, it was entitled to a vacancy increase of 36.8%, citing Rent Stabilization Code ("RSC") (9 NYCRR) §2522.8(a)(1) and (a)(2)(ii), increasing the legal regulated rent from $1,028.31 to $1,406.73.[FN1] In addition, Landlord claims that it made individual apartment improvements in the amount of $26,021.55, which included "demolition and garbage removal, installation of new kitchen cabinets, an island, pantry and flooring, and a substantial upgrade in the electrical work throughout the kitchen." Landlord further claims that it also made improvements in the Apartment's bathroom, including "installing a new shower head, faucets, sinks, countertops, and towel racks," and "new appliances in the kitchen, costing an additional $3,978.45." Landlord provides copies of its contractor's proposal, checks paid to the contractor, a receipt for new kitchen appliances, and a check for the appliances. Accordingly, Landlord claims that it expended a total of $30,000 in improvements to the Apartment and that, consequently, it was entitled to increase the monthly rent by an additional $750 per month pursuant to RSC §2522.4(a)(1) and (4), which allow for a monthly rental [*3]increase of 1/40 of the costs of the improvements. Thus, Landlord argues that it was legally entitled to increase the rent by $1,128.42, raising the total legal regulated rent to $2,156.73 ($1,028.31 + $1,128.42); which in turn rendered the Apartment exempt from rent stabilization pursuant to RSC § 2520.11(r)(4).

Plaintiffs submit an attorneys affirmation; the affidavit of Steven Becker; and the affidavit of Susan Treanor, President of Susan Treanor Associates, Inc., which provides construction management and consulting services. Plaintiffs note that, although the Apartment has been subject to rent stabilization since 2002, "there were never any rent registration statements for the subject premises filed with DHCR for 2002, 2003, 2004, or 2005."Plaintiffs annex a DHCR printout of the Apartment's rent registration history, which shows that Landlord registered the Apartment as rent stabilized on September 28, 2006, with a legal regulated rent of $1,028.31; and that on June 29, 2007, Landlord registered the Apartment as exempt due to high rent vacancy. Plaintiffs argue that, as a result of Landlord's failure to provide registration statements from 2002-2005, the legal regulated rent should have been frozen at the legal rent as of the time the Apartment first became stabilized pursuant to Rent Stabilization Law ("RSL") (NYC Admin. Code) §26-517(e). Thus, Plaintiffs argue that Landlord's failure to file registration statements barred him from raising the monthly rent above $956.57 - the legal rent as of September 30, 2002, as indicated by Manter's renewal lease effective from July 1, 2003 through June 30, 2005.[FN2]

Plaintiffs further claim that Landlord improperly calculated the vacancy increase for lawful regulated rent after Manter's departure. Plaintiffs state that, contrary to Landlord's assertion, RSC §2522.8(a)(2)(ii) only permitted Landlord to count the number of years that the Apartment was subject to rent stabilization, and not the total number of years that Manter lived in the Apartment.

In addition, Plaintiffs dispute the accuracy, authenticity, and sufficiency of Landlord's documentary evidence in support of its claimed improvements to the Apartment. Plaintiffs point to the proposals which Landlord claims are for the work done by Jexcon Construction Corp. on the Apartment, and notes that the "Scope of Work" section states "23 Park Place, 5th Floor, 3rd Floor;" on the first page of the proposal, the portion which (presumably) states "5th Floor" is blacked out. Plaintiffs [*4]also refer the court to the copies of the checks submitted by Landlord for the work allegedly performed on the Apartment. Plaintiffs note that while two of the checks (checks No.2364 and 2365, both dated 1/18/2007) list "3369.0007 #3S Renovations" in the memo section, the third check (#2389, dated 3/12/2007 and for payment of $13,521.55) reads "Release Escrow Proceeds-3369.0007." Plaintiffs claim that this check is insufficient evidence of an individual apartment improvement, since it does not indicate the location to which the expenditures were applied. Plaintiffs further note that, while check #2365 (paid to the order of Jexcon in the amount of $12,500) corresponds to the first scheduled payment on the Jexcon proposal, check #2389's payment of $13,521.55 is $1,104.05 less than the second and last scheduled payment of $14,625.60 contained in the proposal.

Plaintiffs also claim that the proposal fails to sufficiently itemize the expenditures contained therein; that there are no records of DOB permits issued for alleged improvements which would have required permits; that contractor Jexcon is not licensed; that Landlord falsely reported that certain fixtures were installed in the Apartment that were not; and that Landlord improperly classified certain ordinary repairs and/or maintenance as individual apartment improvements.

CPLR §3211 provides, in relevant part:

(a)a party may move for judgment dismissing one or more causes of action asserted against him on the ground that:

(1)a defense is founded upon documentary evidence;

(7)the pleading fails to state a cause of action.

In determining whether dismissal is warranted for failure to state a cause of action, the court must "accept the facts alleged as true ... and determine simply whether the facts alleged fit within any cognizable legal theory." (People ex rel. Spitzer v. Sturm, Ruger & Co., Inc., 309 AD2d 91[1st Dept. 2003]) (internal citations omitted) (see CPLR §3211[a][7]). On a motion to dismiss pursuant to CPLR §3211(a)(1) "the court may grant dismissal when documentary evidence submitted conclusively establishes a defense to the asserted claims as a matter of law." (Beal Sav. Bank v. Sommer, 8 NY3d 318, 324 [2007]) (internal citations omitted) "When [*5]evidentiary material is considered, the criterion is whether the proponent of the pleading has a cause of action, not whether he has stated one" (Guggenheimer v. Ginzburg, 43 NY2d 268, 275 [1977]) (emphasis added). A movant is entitled to dismissal under CPLR §3211 when his or her evidentiary submissions flatly contradict the legal conclusions and factual allegations of the complaint (Rivietz v. Wolohojian, 38 AD3d 301 [1st Dept. 2007]) (citation omitted).

First, the court rejects Plaintiffs' argument that rent has been frozen at $956.57 per month based upon Landlord's failure to file registration statements from 2002-2005. "Regardless of the forum in which it is commenced, a rent overcharge claim is subject to a four-year statute of limitations" (Cintron v. Calogero, 2010 NY Slip Op 7376, *3 [2010]) (citing RSL § 26-516 [a] [2]; CPLR 213-a). It is well settled that, where a complaining tenant sets forth a "colorable claim of fraud," examination of the apartment's rental history beyond the limitations period is appropriate to establish the legitimate rent on the base date (the date four years prior to the filing of an overcharge complaint) (see Grimm v. DHCR, 2010 NY Slip Op 7379, *5 [2010]).

Here, the documentary evidence defeats any contention or intimation by Plaintiffs that Landlord fraudulently inflated the Apartment's rent during Manter's tenancy. Landlord submits the January 9, 2001order of the New York City Loft Board, which established the Apartment's legal regulated rent for the term of July 1, 2000 through June 30, 2002 at $902.42. Taking lawful increases as promulgated by the Rent Guidelines Board into account, the Apartment's monthly rent of $1,028.31, as registered with DHCR by Landlord in 2006, was legitimate. Accordingly, the court finds that the legal regulated rent on the base date of July 15, 2006 (the date four years prior to the commencement of this action) was $1,028.31.

With respect to Landlord's calculation of legal regulated rent after Manter's surrender of the Apartment, Plaintiffs correctly note that Landlord applied the wrong formula in calculating the additional longevity increase on top of the standard vacancy increase. Landlord's reliance on RSC §2522.8(a)(2)(ii)(a) is misplaced since, at the time of Manter's departure, there was no prior vacancy allowance. Landlord should have instead applied RSC §2522.8(a)(2)(ii)(b), which provides that, if an apartment's rent was not increased by a permanent vacancy allowance since becoming subject to the RSL and RSC, then the landlord may increase the rent by multiplying the legal regulated rent by .6%, and then multiplying that by the number of years that the apartment has been subject to the RSL and RSC. Here, after Manter's departure, [*6]the legal regulated rent for a subsequent two year lease (prior to Landlord's claimed improvements) would be $1,270.99.[FN3]

In order to legally remove the Apartment from rent stabilization through individual apartment improvements, Landlord would have to have incurred at least $29,160.40 in individual apartment improvements.[FN4] Landlord's documentary evidence fails to conclusively establish, as a matter of law, that it incurred this amount in legitimate individual apartment improvements. As noted by Plaintiffs, the proposal relied on by Landlord states that the scope of work involves the third and fifth floors of the building; however, the subject Apartment is one of several apartments on the third floor. In addition, one of the checks relied on by Landlord, which constitutes half of Landlord's purported expenditures in improving the Apartment, does not state that it constitutes payment for improvements to the subject Apartment. While Landlord provides affidavits from one of its managing members explaining the legitimacy of Landlord's expenditures, and that they were applied solely to the subject Apartment, it is well settled that affidavits do not constitute "documentary evidence" for purposes of a 3211(a)(1) motion (see Williamson, Picket, Gross, Inc. v. Hirschfeld, 92 AD2d 289, 290 [1st Dept. 1983]).

Wherefore it is hereby

ORDERED that Landlord's motion to dismiss is denied.

This constitutes the decision and order of the court. All other relief requested is denied.

DATED: April 7, 2011___________________________________

EILEEN A. RAKOWER, J.S.C. Footnotes

Footnote 1:Landlord claims that it was entitled to increase the rent by 20% on account of the vacancy; plus the number of years without a prior vacancy allowance (28) times .6% percent.

Footnote 2:Plaintiffs also note that the lease, dated September 28, 2004, is partially retroactive, and is not signed by Manter.

Footnote 3:$1,028.31 x .006 x 6 (# of years stabilized) = $37.02 longevity;

$1,028.31 x .2 = $205.66 two-year vacancy allowance;

$1,028.31 + $37.02 + $205.66 = $1,270.99

Footnote 4:1/40th of $29,160.40 is $729.01: the difference of $2,000 - $1,270.99.