Baron v Laurence Towers Co. LLC

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Baron v Laurence Towers Co. LLC 2012 NY Slip Op 32177(U) August 14, 2012 Supreme Court, New York County Docket Number: 106835/10 Judge: Judith J. Gische Republished from New York State Unified Court System's E-Courts Service. Search E-Courts (http://www.nycourts.gov/ecourts) for any additional information on this case. This opinion is uncorrected and not selected for official publication. [* 1] 4NED ON 812012012 .- SUPREME COURT OF THE STATE OF NEW YORK NEW YORK COUNTY PRESENT: ).10?4. JUDITH A 018CHE 8JS.G ~ ' 1 " , -- Judcr . - - - Index Number : 108835/20tO BARON, MARLENE DELON VS. LAURENCE TOWERSCO. LLC SEQUENCE NUMBER : 002 - - SUMMARY JUDGMENT Upon the Coragofng papem, ft is ordered that t h motion b h UNFILEO JUDGMENT This Judgment has not been entered by the County Clerk arrd notice o entry cannot be served based hereon- To f .~ obtain entry, counsel or authorized representative must. &w= in persan a the-J t Clerk's t k k ( R t % m 1410) J.8.C. 1. CHECK OHE: .............................................9 ¬ &! DISPOSED 0GRANTED aRN16D 0ORANFeD IN PART 0OTHER c 8WMIT ORDER ] 3. CHECK IF APPROPRIATE: .............................................- 0 SEfTLE ORDER 0DO NOT POST 0FlDUCI.4RY ApwIN7MENT REFERENCE 2. CHECK A9 APPROPRIATE: .............. MOTION 18: [* 2] Supreme Court of the State of New York County of New Yo&: IAS 10 ___" X _ l l l _ _ l _ _ l _ _ _ I _ r l l l ___-I_I- Marlene Delon Baron and Matthew Baron, Plaintiffs, DacklonlOrder Index ## 106835/10 Mot. Seq. # 002 -againstLaurence Towers Company LLC and Plaza Realty Investors, Inc. Defendants. I . Hon. Judith J. Gische: Pursuant to CPLR 2219(A) the following numered papers were considered by the court on this motion: PAPERS NUMBERED Notice of Motion, BS affd., exhbiits .................................................................................. I Notice of Cross-Motion, .................................. .uNEIEo- \J m .................. J, w N T 2 MI3 affd ........................................ mWWmnth = . n o t . b e e n e n t e F e d ~ . t h e ~ ~ o & HVL affirm., exhibits.. .................. .. @Qd * Qf.mby.tannot be.sen& . -~6 BS reply affd., exhibits............................n w ~ Y . . d . a w e dreprasentstive& w i m . m DE m.@..m,.-.wB.aadr.(m MDB reply affd............................. HVL reply affirm., exhibits............................................................................................. ..7 ' 4 W .' * ' ' SK sur-reply affirm., exhibits............................................................................................ 8 Stenographic Record dated June 21, 2012..................................................................... 9 v Upon the foregoing papers, the decision and order of the court Is as follows: Defendants move for summary judgment dlsmissing the complaint. Plaintiffs cross-move for summary judgment and seek an immediate trial to determine damages. The underlying action is a rent overcharge claim and declaratory action brought after the Court of Appeals decided the case of Roberts w. Tishman S R ~ IV NY3d 270 r 3~ (2009). Issue has been joined and the motion in chief was timely brought after the filing of the note of issue. CPLR 53212;Brill v. Citv of New York, 2 NY3d 648 (2004) Although the cross-motion was interposed after the statutory 120 day limit, it raises Page 1 of 8 [* 3] identicat issues to the motion in chief. m n a r d i v. Crur ,73 AR3d 580 [lat dapt. 20103; Flannirla v. TBTA, 34 AD3d 280 dept. 2006) app. dism. 9 NY3d 862 (2007).The motion and cross-motion are, therefore, properly before the court and may be addressed on their merits. The following facts are undisputed on this motion: Plaintiffs Marlene Delon Baron and Matthew Baron, as tenants, entered into a written residential lease ("lease")with defendant Laurence Towers Company, LLC, as landlord, for aparlment 27i ("apartment") located in the building known by the street address 200 East 33mStreet, New York, N.Y. ("bullding"). The lease term began on May 1, 2006 and ended May 31 2007. The monthly rent was $4,625. The apartment had previously been rented to Remo Apparel Gorp. ("Remo") and rqistered as a rent stabilized with the Division of Housing and Community Renewal ("DHCR'), Prior to the commencement o this actlon, the last registered rant for the f apartment was made on July 26,2001 at $2,079.93 per month. After the last DHCR registration and Remo moved out, the defendants treated the apartment as deregulated under the luxury de-control provisions of the Rent stabilization Laws because the unit became vacant and the legal regulated rent was over $2,000 per month. Consistent with the defendants' position at the time that the apartment was decontrolled, the first monthly rent negotiated with the plaintiffs was a market rent. The lease contained an express rider that the apartment was not subject to the Rent Stabilization Laws. The lease was renewed for a two year period anding May 31, 2009, during which the monthly rent was increased to $4,745. It was renewed again for a thirteen month period expiring June 30, 2010, at a monthly rent of $4,795 and once Page2of 8 [* 4] more for a term expiring December 31,2012, at a monthly rent of $4,795. Each of the rents resewed in the lease renewals was set without respect to any applicable Rent Stabilization Laws. It is not disputed that the building was receiving a J-51 tax benefit from at least tax year 1988-89through tax year 2010-1 I.Defendants claim that the benefit expired in the tax year 2011-12 and the governmental J-51 documentation suppotts the position that after tax year 2010-1Ithe amount of benefit remaining was $0, notwithstanding plaintiffs argument that such abatements have a maximum life of 20 years and should expire during tax year 2018-20. (See also: Schiffrerr v, Lawlor,2011 WL 2323242 [NY Co. Sup. Ct. 201 11)On October 22, 2009, the Court of Appeals decided the case of Roberts v, Tishmap Spever (3 NY3d 270 [2009]), which holds that luxury decontrol of rent stabilized apartments i not available when a building is receiving the benefit of a J-51 s tax abatement. , On May 25, 2010 the plaintiffs filed the instant action which asserts two CE~USBS of action. The first cause of action is for money damages on account of an overcharge of rents, treble damages and reasonable attorney fees. The second cause of action is far a declaration that the apartment is and wlll continue to be subject to rent stabilization until such time as the apartment is properly deregulated. Summary of the Arguments of the Parties Defendants present two arguments why they are entitled to summary Judgment. I The first is that the Roberts decision should not be retroactively applied. The second I argument is that even if Rsberts is retroactively applied, using the formula for ~ I 1 1 Page 3 of 8 [* 5] more for a term expiring December 31, 2012, at a monthly rent of $4,795. Each of the rents reserved in the lease renewals was set without respect to any applicable Rent Stabilization Laws. It is not disputed that the building was receiving a J-51 tax benefit from at least tax year 1988-89 through tax year 2010-1 1. Defendants claim that the benefit expired in the tax year 201 1-12 and the governmental J-51 documentation supports the position that after tax year 2010-11 the amount of benefit remaining was $0, notwithstanding plaintiffs argument that such abatements have a maximum life of 20 years and should expire during tax year 2019-20. (See also: Schiffren v, Lawlo[, 2011 WL 2323242 [NY Co. Sup. Ct. 20111). On October 22, 2009, the Court of Appeals decided the case of Roberts v, Tishman $sever (3 NY3d 270 [2009]), which holds that luxury decontrol of rent s stabilized apartments i not available when a building is receiving the benefit of a J-51 tax abatement. . On May 25, 2010 the plaintiffs filed the instant action which asserts two causes of action. The first cause of action is for money damages on account of an overcharge of rents, treble damages and reasonable attorney fees. The second cause of action is for a declaration that the apartment is and will continue to be subject to rent stabilization until such time a3 the apartment is properly deregulated. Summary of the Arguments of the Parties Defendants present two arguments why they are entitled to summary judgment. The first is that the Robe& decision should not be retroactively applied. The second is argument is that even if j3Qberts retroactively applied, using the formula for Page 3 of 8 [* 6] calculating post && rents as stated in the Appellate Term Case of 72A l%.&,y &a Associates v. tucas, 32 Misc3d 47 (AT 1'' dept. 201l ) , there is no overcharge. s Plaintiff opposes the motion, arguing that Roberts i to be given retroactive application. In addition they dispute that the proper method for calculating post Roberts rent stabilized rents is the formula utilized by the court in 37A Re~lltv Assot~&s V, b, supra. They argue that the court should instead look to the rent registered four years before the last registered rent and set that as the base rent. In their cross-motion, plaintiffs argue that they are entitled to summary judgment on their cause of action for declaratory rellaf. They also seek summary judgment on the overcharge claim, based upon the application of what they argue is the proper methodology for calculating post Roberts rent stabilized rents. Defendants oppose the cross-motion for summary judgment. Discussion A movant seeking summary judgment in its favor must make a prima facie showing of entittement to judgment as a matter of law, tendering sufficient evidence to eliminate any material issues of fact from the case" Winear& Qr., New Yo& Univ. Med. 84 N.Y.2d 851, 853 (1985).Once met, this burden shlfis to the opposing party who must then demonstrate the existence o a triable issue of fact AlVare7 v, Prospect f m., N.Y.2d 320,324 (1986); ackern-tan v. Citv of New Yo&, 49 N.Y.2d 557 68 [1980]; m st v . Jew ish Guild for the Blind, 309 A.D.2d 546 (lEt 2003). Dspt To the extent that defendants claim they are entitfed to summary judgment because Roberts is not entitled to retroactive effect, the motion is denied. While the majority opinion in Roberts did not reach the issue of retroactivky (Id. at 287),the Page 4 of 8 [* 7] Appellate Division in this department directly examined the issue and expressly held Avenue LLG , 8 8 AD3d 189 that Roberts is entitled to retroactive effect Gersten v. $8 7th (1" dept. 201l ) , Defendants' second argument, like in so many of the other, post Roberts cases, turns on the proper methodology for determining the rent. In 72A Lycas, supra, the court upheld the formula used by the lower court as the proper basis for calculating a post Roberts rent stabilized rent. The lower court and the Appellate Term both held that the legal rent should be set by looking back to the rent charged four years immediately preceding the bringing o the overcharge complaint, plus allowable f rent guideline board increases. See: 77A Really Associates v. Lucas, 28 Misc3d 585 (NY City Civ. Ct. 2010) affd. 32 Misc3d 47 (AT1 2011). In subsequent cases before this court, it has applied the same formula. See: Rosenzweia v. 305 Riverside Corn., 35 Misc3d 1241(A)(Sup Ct. NY co 2012); Podd v. 98 Riverside ., [decision dated October 18, 201 1, index # 106968/10]; 201 1 WL 5117899 (n.o,r.)decision on reargument June 19,2012. The 72 A Realty A s s o w formula, while not perfect, is the one that, in this court's opinion, makes the most sense. It neither unduly punishes either party nor does it create any windfall because the parties followed what was widely believed to be the correct law at the time the lease was made. Plaintiffs argue that the Rent Stabilization Law ("RSL) required defendants to register the rent and that in the absence of the registration of a proper rent, the base rent should be four years before the last properly registered rent. RSL 525-518. Thus they argue that their overcharge should be based upon the 1997 registered rent of $1,923.00. This interpretation, however, is inconsistent with that part of RSL 26-516 Page 5 of 8 [* 8] and also of CPLR 213-a which preclude the examination of a rental history more than four years before the commencement of the litigation. The effect of plaintiffs' position would be to punish the defendants based upon their failure to register an apartment they, in good faith, believed was luxury decontrolled. This court has already rejected the failure to register as the basis for the calculation of the overcharged rent in situations. Rossnmeiq v. 305 Riverside Corn,, supra; Dodd v. 98 Riverside Drive, u., supra. Roberts overcharge cases, such as this one, are not really about registration compliance; they are, in a broader smse, about the reach and application of the rent stabilization laws and how to now calculate a legal rent. At the time defendants would have been required to register a rent stabilized rent under Roberts, the DHCR did not even require such registration. Fixing the rent stabilization rent in hindsight based solely on defendants' failure to register would be unduly punitive for what was action otherwise taken in good faith, relying upon the agency's own interpretation of the law. Applying the 72A Realtv Associ- v. Lucag formula to this case reveals that there is no overcharge. Four years prior to this complaint being brought, the rent was $4.625.00 month. While there were subsequent increases to the rent when the per lease was renewed, at no time did the increase in rent exceed the increases that otherwise would have been allowed for rent stabilized premises. Defendants are, therefore, entitled to summary judgment dismissing the first cause of action for overcharge. The second cause of action is for declaratory relief. Plaintiffs seek a dedaration that the apartment is subject to rent stabilization and, further, that it will remain subject Page 6 of 8 [* 9] to rent Stabilization for the entire period in which defendants are receiving a 3-51 tax beneflt and until such time as the apartment may thereafter be properly deregulated. Under Rnbea, it is clear that the apartment should not have been luxury decontrolled while the building was receiving the J-51 beneflts. The benefts, however, have expired. In 3% Realtv Asnnciatos v. L u c a, supra, the court addressed this circumstance. The court held: We also sustain Civil Court s ruling that, although the J-51 tax abatement period has now expired, tenant s apartment remains subject to rant stabilization, in the absence of any showing that landlord provided the applicable lease notice informing the tenant that the apartment was to become deregulated at the expiration of the abatement period....We acknowledge that the strict application of the J - 51 notice requirement in the circumstances here present may work a hardship on this landlord. After all, landlord, In good faith reliance on DHCR s long-standing and unambiguous interpretation of the luxury decontrol statutecodified in Rent Stabilization Code (GI NYCRR) 5 2520.1 l(o) and unchallenged for the better part of a decade until determined to be erroneous by the Roberts court - proceeded with the understanding that it was exempt from the notice requirement based upon a reasonable, but as it turns out, mistaken, belief that respondent s tenancy was not subject to rent stabilization coverage in the first instance. However, we are constralned to strictly enforce the statutory J-51 notice requirement as written, without engrafting onto the regulatory framework equitable factors not specifled therein, At bar, the underlying lease does not contain any notice that Rent Stabilization benefits will terminate upon the expiration of the J-51 benefit. Indeed, that lease was predicated on the assumption that the plaintiffs had no rights under Rent Stabilization at the time. Consequently, the court follows the reasoning in 7% Realtv Assodates, supra, and finds that plaintiffs continue to be entitled to the rights and benefits afforded tenants under rent stabilization, until such time as the apartment is lawfully deregulated. Plaintiffs motion for summary judgment on their second cause of action Page 7 of 8 [* 10] for a declaration that apartment 27i within the building located at 200 East 33d Street, New York, NY is, and continues to be, subject to the Rent Stabilization laws until such time as it is lawfully deregulated. Conclusion In accordance herewith it is hereby: OROERED that defendants motion for summary judgment dismissing the first cause of action for rent overcharge is granted, and it is further ORDERED that plaintiffs cross-motion for summary judgment an their first cause of action for rent overcharge is denied, and it is further ORDERED, DECREED AND ADJUDGED that the first cause of action in plaintiffs complaint is hereby dismissed with prejudice, and lt Is further ORDERED, DECREED, ADJUDGED AND DECLARED that apartment 2 i 7 located in the building known by the street address of 200 East 33 Street, New York, NY is, and continues to be, subject to the Rent Stabilization laws until such time as such apartment is lawfully deregulated, and it is further ORDERED that any requested relief not otherwise expressly granted herein is denied and that his constitutes the decision, order and judgment on the court. Dated: New York, New York August 14,2012 E NTER kUNFILED JUDGMENT I l l s Judgmenthas not been entered by the County clerk and notke o entry cannot be served based hereon. TO f chtmiln entry, counsel o authorized -ve r mu& at t JlJ4ylmt clerk's Desk ( R m l k Page 8 of 8

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