Teisseiere v W7879 LLC
2012 NY Slip Op 31049(U)
April 12, 2012
Sup Ct, NY County
Docket Number: 150439/11
Judge: Donna M. Mills
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SUPREME COURT OF THE STATE OF NEW YORK- NEW YORK COUNTY
PRESENT : DONNA M. MILLS
SHARON CALIFANO TEISSEIERE,
W7879 LLC, et al.,
MOTION A L NO.
The following papers, numbered 1 to
were read on this motion for
Notice of MotiodOrder to Show Cause-Affidavits- Exhibits....
Answering Affidavits- Exhibits
COUNTY CLERK'S OFFICE
Upon the foregoing papers, it is ordered that the motion is hereby decided in
accordance with the attached memorandum decision.
APR 17 2012
Plaintiff tenant brings this action to compel defendant owners to give a rent
stabilized lease for her apartment and refund alleged rent overcharges from 2008 to the
present. Plaintiffs claims center around the deregulation of her apartment while the
building received J-5 I tax benefits. Defendants now seek dismissal of the complaint
pursuant to CPLR § 321 l(a)(l,5 & 7).
The current action concerns real property located at 230 West 7gthStreet, New
York, New York (the “Building”). The Building is mixed use with commercial and
residential space. Several of the residential apartments are rent controlled and
stabilized. The defendants are the owners of the Building (the “Building Owners”) and
plaintiff has lived in Apartment 101N of the Building for decades, first with her parents
and then as the successor in law to the rent controlled tenancy, and has continuously
occupied the subject unit.
In 1992, the Building was granted J-51 tax exemption status,
June 2004. On February 28, 2007, the Building Owners filed a luxury
petition at the New York State Division of Housing and CornrncrrrttpRemwal (“DHCR”)
with respect to plaintiffs apartment pursuant to Sec. 26-403.1 of the New York City
Rent and Rehabilitation Law (Rent Control), Sec. 26-504.1 of the New York City Rent
Stabilization Law of 1969, as amended (“RSL”), and Part 2531 of the Rent Stabilization
Code (“RSC”). The luxury deregulation petition resulted in an Order of Deregulation
issued on February 5, 2008. DHCR determined that because the legal rent stabilized
rent for the subject unit was $2,107.14 per month and the plaintiffs income was in
excess of $175,000.00 the subject unit was to be deregulated. It is undisputed that
plaintiff never challenged the petition for deregulation before DHCR, nor sought an
Article 78 proceeding regarding the Order of Deregulation.
Plaintiff alleges in her complaint that the Building Owners improperly deregulated
her apartment in light of the Court of Appeals decision in PQbertsv Tishman S p e w
Propertie$, 13 NY3d 270 (2009). In Roberts, the Court of Appeals found incorrect
longstanding interpretation of rules and regulations of DHCR and others which allowed
for deregulation of apartments while a premise received J-51 tax benefits. However, in
the instant matter, the Building Owners did not file the prior administrative proceeding
for high income decontrol until after the expiration of the J-51 tax status. This Court’s
reading of Roberts merely prohibits the filing for decontrol while the building is receiving
J-51 tax benefits. It is undisputed that the subject apartment was in fact rent controlled
throughout the time the Building received J-51 tax status. The apartment was not,
however, deregulated until several years after the expiration of J-51 tax benefits, thus
the Roberts decision cannot be relied on to support plaintiffs contentions.
In opposition, plaintiff takes the position that J-51 benefits place a permanent
banishment from luxury deregulation on all rent controlled apartments_Plaintiffs
argument was expressly rejected by the court in Schiffren v Lawlor, 201 1 NY Slip Op
3151 1U (NY Sup Ct 201 1):
“To support petitioner’s interpretation of the statute, petitioner cites
Roberts v Tishman $peyer Properties, L.P., 13 NY3d 270, 918 N.E.2d
900, 890 N.Y.S.2d 388 (2009). Roberts, however, holds that a rent
stabilized unit that is located in a building receiving J-51 benefits, and
would be subject to luxury deregulation but for such J-51 benefits, cannot
be deregulated until such benefits expire, Roberts does not in any way
support petitioner’s interpretation of RSL 5 26-504( c). The Court
therefore finds that, pursuant to RSL 9 26-504( c), petitioner’s apartment
unit was not granted permanent rent stabilized status until vacancy ...”
Plaintiff attempts to distinguish the Schiffren decision by submitting an
unpublished administrative decision In re Berk, Adm. Rev. Docket Number YL-420051RT (DHCR 201 I),unpersuasive. This Court does not agree with and is not bound by
the holding In re Berk, which suggests that a building owner is forever precluded from
moving to deregulate a rent controlled apartment if the Building had previously
received J-51 benefits.
As mentioned earlier, the complaint seeks a judicial declaration regarding the
status of the subject apartment as rent stabilized despite the deregulation order of
DHCR. DHCR’s Order of Deregulation from 2008 is a final administrative order which
became effective on March 1, 2008. Thus, the plaintiffs rent controlled unit became
deregulated on the effective date stated in DHCR’s Order of Deregulation from 2008.
Pursuant to RSC 52529.2, the plaintiff had 35 days from the issuance date of the
deregulation orders to file a Petition for Administrative Review (“PAR”), The Rent
Stabilization Code unambiguously provides: “A PAR against an order of a Rent
Administrator must be filed in person or by mail with the DHCR within thirty-five days
after the date such order is issued.” (RSC [9 NYCRR] 5 2529.21 ). The 35-day time limit
has been strictly enforced ( Windsor Place Corp. v. State Div. of Hous. and Community
Revewal, 161 A.D.2d 279, 280, 554 N.Y.S.2d 913; Kaplen v. New York State Div. of
Hous. & Communitv Renewal. Office of Rent Admin., 131 A.D.2d 483, 516 N.Y.S.2d
100; see also, Lipes v. State Div. of Hous. and Communitv Renewal, 174 A.D.2d 571,
570 N.Y.S.2d 684), and courts have found DHCR’s interpretation of its own regulation
to be neither arbitrary nor irrational ( see, id.; Rusty Realty Assocs.. Ltd. v. New YQrk
State Div. of Hous. and Communitv Renowal, Office of Rent Admin., 161 A.D.2d 207,
209, 554 N.Y.S.2d 594, Iv. denied 76 N.Y.2d 711, 563 N.Y.S.2d 62, 564 N.E.2d 672).
Moreover, the untimely filing of a PAR constitutes a failure to exhaust administrative
remedies and justifies dismissal of a subsequent Article 78 proceeding ( see, Ponds v.
and Communitv Renewal, I 9 1 A.D.2d 153, 594 N.Y.S.2d
New York State Div. of HQIIS.
28, Iv. denied 82 N.Y.2d 657, 604 N.Y.S.2d 47, 624 N.E.2d 177).
A motion to dismiss a complaint pursuant to CPLR 321 1 (a)(l) may be granted
only if the documentary evidence submitted by the moving party utterly refutes the
factual allegations of the complaint and conclusively establishes a defense to the claims
as a matter of law (see Goshen v Mutual Life Ins. Co. of N,Y., 98 NY2d 314, 326
). Put differently, the documentary evidence must “resolv[e] all factual issues as a
matter of law and conclusively dispose of the plaintiffs claim” (Paramount; Transp. Svs.,
Inc. v Lasertone Corp., 76 AD3d 519, 520 ).
Where a party has had a full and fair opportunity to litigate an issue, but has
received an adverse final ruling on it, that party is collaterally estopped from litigating
the same issue in another proceeding (see Continental Cas. Co. v Rapid-American
Cow., 80 NY2d 640, 649 ). In order for collateral estoppel to apply, two elements
must be established: (1) that “the identical issue was necessarily decided in the prior
action and is decisive in the present action;” and (2) that the precluded party “must have
had a full and fair opportunity to contest the prior determination” (D’Arata v New York
Cent, Mut. Fire Ins. Co., 76 NY2d 659, 664 ). An issue is “raised” and ““actually
litigated” for collateral estoppel purposes when it is submitted for determination, and is
determined, and may be so submitted, inter alia, by pleading, or on a motion for
summary judgment (Restatement [Second] of Judgments 5 27, Comment d). Here,
defendants established that in the first action, the plaintiff challenged the deregulation
of her apartment and this contention was rejected by DHCR when it issued the Order of
Deregulation in 2008.
This Court finds that the documentary evidence resolves all factual issues as a
matter of law and conclusively disposes of the plaintiffs claim. Moreover, plaintiff failed
to challenge the DHCR Order of Deregulation, dated February 5, 2008 and is precluded
from relitigating the issue of status of the subject apartment in this action.
Accordingly, it is hereby
ORDERED that defendant’s motion to dismiss the complaint herein is granted
and the complaint is dismissed in its entirety with costs and disbursements to said
defendants as taxed by the Clerk of the Court, and the Clerk is directed to enter
judgment accordingly in favor of all defendants.
.- . .
COUNTY CLERKS OFFICE