Sage Franklin LLC v Cameron
Annotate this CaseDecided on December 13, 2005
Civil Court of the City of New York, Kings County,
Sage Franklin LLC,., Petitioner,
against
SANREE HINDS CAMERON, Respondent
70632/05
Anthony J. Fiorella, J.
On August 17, 2005 Respondent was evicted from the subject premises, Apartment 2L located at 360 Franklin Avenue, Brooklyn New York. After eviction, Respondent made three pro se applications for restoration to the subject premises. Each application was denied. She then obtained representation by the Legal Aid Society whose initial application was also denied. Counsel for Respondent now makes the instant application seeking restoration to the premises. This Court denied two of the prior applications based on the Courts understanding that Respondent no longer wished to reside in the apartment and that her claim of rent overcharge was governed by the four year statute of limitations. The Appellate Term also denied Respondent's requested relief. On September 16th 2005, Respondent moved before this Court for an Order of Restoration to possession of the premises and supplemented her Order to Show Cause (returnable September 23rd) upon learning that the premises had been relet. Respondent further sought to stay petitioner from removing Respondent's belongings on the grounds of fraudulent leases and rent registration filings between the years 2001-2005. This Court signed the Order to Show Cause and directed Respondent to implead the alleged new tenant, Richard Rozo. Petitioner opposes on all grounds. Respondent's motion for a stay of this proceeding and for a trial on the issue of the alleged fraudulent leases is granted.
Brief History
Respondent entered into possession of the subject premises in the late fall of 2003 pursuant to a written lease for $1,300 per month. Respondent resided in apartment 2L with her five children, infant grandchild and teenage niece. This nonpayment proceeding was initially settled by stipulation on May 25th. Respondent failed to make payments, and the matter was restored by Petitioner and a judgment was entered by stipulation on June 22nd. Respondent then sought her first Order to Show Cause, resulting in this Court's order of July 29th. Respondent again failed to make full payment and was evicted August 17th. There is no dispute that Respondent was in arrears at the time of her eviction. However, in her moving affidavit, [*2]Respondent seeks the vacatur of the judgment and warrant of eviction upon the grounds that, through newly discovered evidence [CPLR § 5015(a)(2)], the rent sued for herein may be illegal. After her eviction and consultation with an attorney Respondent alleges that prior leases and registrations with the current and former landlord were fraudulent, resulting in an egregious overcharge, thus permitting Respondent to be restored to possession.
Legal Arguments
Contrary to Petitioner's assertion, this Court does have the inherent power to stay further actions by Petitioner until the issue is resolved. This authority is conferred upon the Court under CPLR § 5015(a). Petitioner admits that while "incorrect" registrations were filed, there was no fraud and that no rent overcharge has occurred. Petitioner's assertion is self serving and has no merit in ultimately determining whether the current lease and prior leases were fraudulent. Since fraud in the inception and/or execution of a lease is a question of fact for determination at trial, Respondent should be granted leave to prove her case. If in fact, Respondent is unable to prove her allegations, Petitioner's possession of the apartment will remain undisturbed.
Courts have inherent power to supervise the proceedings before them (Grisi v. Shainswit, 119 AD2d 418, 421), to supervise judgments rendered or granted by them and to grant relief therefrom where appropriate. The Court's power to relieve a party from a judgment is not limited by statute but in the exercise of its control over its judgments, it may open them upon application of anyone for sufficient reason in the furtherance of justice. (James v. Allen NYLJ 6/30/2000, p. 30 col 3, App. Term 2nd Dept.). The Appellate Term 2nd Dept. has held that the Courts have the power to stay reletting, and to restore the tenant to possession to avoid a substantial injustice (Brooklyn Properties v. Shade, NYLJ 2/11/03, p. 23, col.6).
Petitioner's assertion that "after execution of a warrant of eviction a tenant may be restored to possession only upon a showing that the landlord obtained the judgment and warrant through fraud or misrepresentation" does not accurately articulate the current law. There are additional grounds which justify the vacatur of a warrant. The warrant may be vacated for good cause shown (KC Aston Jones Management v. Brown, NYLJ 11/29/05, p. 27 col 5, App Term 2nd Dept), (1058 Bushwick v Heard, 2005 Slip OP 50647). Respondent's research and investigation evinces a clear indication of newly discovered evidence which discloses that the prior leases and registrations may very well have been fraudulent. As earlier stated herein, this Court's function is to determine whether there are genuine issues of fact which can not be resolved on the papers alone but require a hearing of the issues (Mallard Constr. Corp. v. Country Fed. Sav. & Loan Assn., 32 NY2d 285, 290). Whether the prior leases were executed improperly with inflated, legally unsupported increases is a triable issue. The fact that a registered rent is filed with DHCR is not dispositive of whether that rent is the legal rent under the Rent Stabilization Code. CCA § 212 grants Civil Court the power to vacate a judgment and restore a tenant to possession if it is shown that there was fraud on the part of the petitioner or prior landlord.
Petitioner's posture is that Respondent first raised an overcharge complaint in September 2005 in her attorney's Order to Show Cause to be restored. According to Petitioner, the "base date" for the purposes of determining any overcharge would be September 2001. The registered rent in 2001 was $1375. However, the mere fact that a rent registration is filed with DHCR is [*3]not conclusive that the rent charged in that statement is the legal rent. If any legitimate query of fraud is raised with the respect to the amount charged then the landlord should be prepared to defend such allegations within the context of this proceeding.
Respondent has produced affidavits by the former tenant of subject apartment, Patricia Holmes, as well as prior Court documents, which establish that Ms. Holmes was not sued for nonpayment of rent until July 2000, and she remained in the apartment until her eviction in July 2001. Respondent included affidavits from neighbors which state that after Ms. Holmes was evicted, the apartment remained vacant until the Sanchez family moved in on November 2001. Petitioner acknowledges that the DHCR registrations for 2001 and 2000, listing "G. Olsen" as the tenant in 2001 with no stated lease term and "Paeston Joseph" as the tenant in 2000 pursuant to an alleged lease for the period April 2000 - March 2001 are completely inaccurate, but asserts that these were merely errors.
Petitioner asserts that since the former owner allegedly made approximately $8,000 in improvements to the premises while the apartment was vacant, Petitioner was entitled to an increase equal to one fortieth of that sum. Notwithstanding this allegation there is no factual or documentary evidence to support this conclusory statement. Petitioner has failed to substantiate that the prior landlord expended $8,000 on individual apartment improvements. Petitioner also attempts to explain away the increase by stating that Ms. Holmes was rent controlled, and the Sanchez rent was the first stabilized rent. The DHCR documents do not support Petitioner's position.
Petitioner's reliance on the four year statute of limitations for a rent overcharge claim is not accurate where there are genuine issues of fraud. Where there is no valid registration on the base date the registration is void, and a default formula should be used to determine the base date rent. In Levinson v. 390 West End Associates, Slip Op 07845, 10/25/2005 the Appellate Division 1st Dept. precluded any argument that the four year statute of limitations would bar the tenant Levinson's present action to the extent it seeks to recover rent overcharges during the four years immediately preceding the filing of his complaint and set a legal rent prospectively applying the default formula used in Thornton, infra . Leases signed in violation of the Rent Stabilization Law are void and rents set by those leases are a nullity. The Court of Appeals stated in Thornton v. Baron, 5 NY3d 175, 181:
"A landlord whose fraud remains undetected for
four years, however willful or egregious the violation
would, simply by virtue of having filed a registration
statement transform an illegal rent into a lawful
assessment that would form the basis for all future
rent increases. Indeed, an unscrupulous landlord in
collusion with a tenant could register a wholly
fictitious, exorbitant rent and as long as the fraud is
not discovered for four years, render that rent
unchallengeable. That surely is not the intention of
the Legislature when it enacted RRRA. It's purpose
was to alleviate the burden on honest landlords to
retain rent records indefinitely, not to immunize [*4]
dishonest ones from compliance with the law".
Thornton v. Baron, supra at 181-182.
Conclusion
Based upon the foregoing discussion this Court concludes that there are bona fide issues of fact which must be resolved at trial. Specifically, was the 2001 registration fraudulent, and if so what would be the correct rent using the DHCR default formula?
Accordingly, Respondent's motion is granted to the extent that the attorneys shall appear in Part D on December 21, 2005 for assignment to the expediter for trial. Pending final outcome of the trial Petitioner and its agents are stayed from reletting the premises, removing Respondent's belongings and performing any interior work on said apartment.
This constitutes the decision and order of the Court.
Dated: December 13, 2005
__________________________
Anthony J. Fiorella Jr., J.H.C.
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