437 Manhattan LLC v Santos
Annotate this CaseDecided on November 25, 2009
Civil Court of the City of New York, New York County
437 Manhattan LLC, Petitioner,
against
Theresa Santos, Respondent.
051961/08
Green & Cohen, P.C. (Michael R. Cohen of counsel), for petitioner.
The Legal Aid Society, New York City (Clarissa M. Gomez and Sheryl Karp of counsel), for respondent.
Gerald Lebovits, J.
In this nonpayment proceeding, petitioner seeks rent arrears in the amount of $30,677.43 at $972.00 a month.
When petitioner bought the subject building from the United States Department of Housing and Urban Development (HUD) on August 15, 2004, it signed a regulatory agreement with HUD in compliance with Section 204 of the Housing and Community Development Amendments of 1978, 12 USC § 1701z-12. Under that agreement, petitioner agreed that until all necessary repairs were completed, petitioner would not increase the rent for any unit to more than what the tenant was paying when HUD owned the building. Respondent argues that she paid $188.00 a month in rent when petitioner bought the building from HUD and that she has continued to pay petitioner at least that amount, and for 52 weeks even more, since then. Respondent also argues that petitioner's agreement with HUD provided that respondent could seek a Section 8 subsidy and that petitioner would cooperate to assure that respondent, if otherwise eligible, would receive the subsidy.
According to respondent, her Section 8 subsidy conversion process was delayed almost three years, from May 2003 until April 2007, because petitioner failed to submit her HUD Certification of Compliance Tenant Eligibility Forms to the New York City Housing Authority (NYCHA) to facilitate the conversion of the Section 8 subsidy. Because petitioner failed to submit these documents, respondent argues, NYCHA did not begin her conversion process until April 2007. Respondent's apartment then failed a NYCHA Section 8 Housing Quality Standards (HQS) inspection on February 26, 2008, because of alleged repair issues. Respondent contends that her subsidy never became effective because petitioner did not complete the conversion [*2]process or make the necessary repairs. Accordingly, respondent argues, petitioner is forbidden to charge her more than $188.00 a month and that she has paid all the rent she owes — and then some.
Respondent has filed several counterclaims. First, respondent alleges that petitioner has breached the warranty of habitability, which requires petitioner to maintain the premises in a condition fit for human habitation, not subject to conditions that are dangerous, hazardous, or detrimental to life, health, or safety. Respondent contends that several conditions in the premises violate the warranty of habitability: (1) bathroom sink needs repairs; (2) peeling paint throughout the apartment; (3) missing baseboard for the living-room heater; and (4) missing window guards. Second, respondent seeks an order to enforce the housing standards set forth in the Multiple Dwelling Law, the Building Code, the Health Code, and RPL § 235-b. Third, respondent alleges that petitioner has overcharged her $27.00 a month for 52 months, totaling $1404.00. Respondent alleges that this overcharge was either intentional or reckless, and she seeks punitive damages.
Respondent now moves for summary judgment under CPLR 3212 (b) on the following defenses and affirmative defenses: (1) Based on the regulatory agreement, petitioner was not entitled to increase the rent until repairs were completed; (2) respondent has paid $188.00 a month in rent since petitioner bought the building and $215.00 a month since December 2004 but that petitioner is not entitled to collect more than $188.00 a month until the repairs are made; and (3) NYCHA found respondent eligible for a Section 8 voucher, but because the apartment failed its inspection, she is not required to pay more than $188.00 a month in rent.
Respondent asks that petitioner be barred from seeking any rent above the HUD-level amount for the period of noncompliance: the time during which petitioner failed to submit respondent's Section 8 certification documents. Respondent also seeks a judgment on her three counterclaims. Respondent further requests that the court direct petitioner to correct conditions that violate the housing standards. Finally, respondent seeks attorney fees.
A party seeking summary judgment "must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to eliminate any material issues of fact from the case." (Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853 [1985]; accord Zuckerman v City of New York, 49 NY2d 557, 562 [1980]; Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986].) If the party's burden is not met, the motion must be denied: "Failure to make such showing requires denial of the motion, regardless of the sufficiency of the opposing papers." (Winegrad, 64 NY2d at 853.) Once a movant for summary judgment makes a prima facie showing of entitlement, the opposing party "must produce evidentiary proof in admissible form sufficient to require a trial of material questions of fact on which he rests his claim or must demonstrate acceptable excuse for his failure to meet the requirement of tender in admissible form; mere conclusions, expressions of hope or unsubstantiated allegations or assertions are insufficient." (Zuckerman, 49 NY2d at 562.)
In support of her argument that petitioner was not entitled to raise the rent because [*3]petitioner failed to submit her Section 8 conversion documents and because the premises do not meet federal Housing Quality Standards (HQS), respondent submits an affidavit from Alan Stone, the NYCHA Housing Manager who was overseeing the conversion process. Stone states that he has worked for NYCHA for 19 years and is familiar with the conversion procedures that take place when a HUD building is bought by a private owner that signs this type of regulatory agreement. Stone avers that to begin the conversion process, an owner must send the latest HUD Certifications of Compliance Tenant Eligibility forms to the NYCHA Section 8 Housing Assistance Program to facilitate the conversion of the subsidies for the building's eligible tenants. Once the certifications are received, according to Stone, NYCHA reviews them and notifies the tenants of their eligibility for Section 8. Then each tenant meets with NYCHA to complete paperwork and schedule an HQS inspection. Once the apartment passes inspection, the tenant's Section 8 subsidy becomes effective.
On the issue of conversion procedures, respondent argues that petitioner's delay in submitting the certification documents is the primary reason that her Section 8 subsidy never came into effect. According to Stone, he met with petitioner's agents to explain the conversion procedures. Stone recalls that petitioner was not compliant in sending the HUD certification forms even though he asked petitioner to submit them during three separate meetings: approximately one month after closing, when Stone explained the conversion procedures to petitioner's agents; approximately six months after the closing, when Stone met personally with someone from petitioner LLC and informed him that NYCHA had received only 25 of the 50 certification forms for eligible tenants; and again in a second meeting with petitioner's agents. Stone asserts that petitioner's lack of compliance delayed respondent's subsidy-conversion process for almost three years. Respondent's certification is dated May 28, 2003, yet NYCHA did not receive the certification until March 22, 2007. NYCHA began respondent's conversion in April 2007. According to Stone, petitioner's failure to submit respondent's certification forms violated the regulatory agreement.
Petitioner argues that respondent has failed to meet its burden to demonstrate that petitioner violated the regulatory agreement by failing to make repairs. Petitioner argues that respondent's evidence of a failed NYCHA inspection in 2008 is insufficient because petitioner bought the building in 2004. Petitioner argues that it made the necessary repairs after it bought the building and that it is conceivable that the current conditions arose well after the initial repairs were made in compliance with the regulatory agreement. Petitioner argues, therefore, that respondent is not entitled to summary judgment. Petitioner submits an affidavit from Baruch Singer stating that it made the repairs in compliance with the agreement.
The regulatory agreement petitioner signed promises that necessary repairs be made within 12 months of closing. Stone states in his affidavit that the apartment failed the HQS inspection on February 26, 2008, and that he asked petitioner to make all necessary repairs within 30 days of the failed inspection. Stone states that the repairs were never made. Stone then advised petitioner to contact NYCHA when the repairs were made, but petitioner has not done so. According to Stone, petitioner's failure to submit the certification to NYCHA and to make the [*4]repairs violated petitioner's regulatory agreement with HUD. Further, under NYCHA's interpretation of 12 USC § 1701 2-11c (B) 3, according to Stone, the rent must remain at the HUD level until the premises meet federal HQS so that a Section 8 voucher will protect respondent from displacement for an alleged nonpayment of rent. A landlord's failure to pass HQS inspections will delay the subsidy, a delay "not within respondent's control." (Townhouse W. LLC v Williams, 19 Misc 3d 847, 851 [Hous Part, Civ Ct, NY County 2008].)
An agency's interpretation of the statute under which it functions is "entitled to the greatest weight" (Matter of Coffey v Joy, 91 AD2d 923, 924 [1st Dept 1983] [internal quotation marks omitted]), and will be upheld if it is "not unreasonable or irrational." (Matter of Salvati v Eimicke, 72 NY2d 784, 791 [1988]; accord Matter of 300 W. 49th St. Assocs. v NY St. Div. of Housing & Community Renewal, 212 AD2d 250, 255 [1st Dept 2009].) Judicial deference for an agency's interpretation is owed when at stake is the " specialized knowledge and understanding of underlying operational practices or . . . an evaluation of factual data and inferences to be drawn therefrom.'" (Roberts v Tishman Speyer Properties, L.P., 2009 NY Slip Op 07480 [U], 2009 WL 3378513, *6 [Ct App, Oct. 22, 2009] [quoting Matter of KSLM-Columbus Apts., Inc. v NY St. Div. Of Hous. & Community Renewal, 5 NY3d 303, 312 [2005] [internal quotation marks omitted].) The U.S. Housing Act regulates sales of multi-family dwellings from HUD and is designed to keep tenants with Section 8 subsidies in place after an HUD building is sold to a private investor. Stone's conclusion that petitioner has a duty to facilitate the conversion process is consistent with the Act's regulatory scheme.
Respondent provides an affidavit stating that repairs were not made. Respondent's affidavit is corroborated by Stone's affidavit and by the apartment's failing the HQS inspection on February 26, 2008. Petitioner, on the other hand, argues that it made the repairs when it bought the building in 2004 and that a failed inspection in 2008 is insufficient to show that repairs were never made. Singer's affidavit states that petitioner performed the necessary repairs within 12 months of closing, but Singer's affidavit is conclusory. It fails to provide any detail about the alleged repairs, such as when repairs were made, who made them, or even what repairs were made.
Respondent's motion for summary judgment is granted on two grounds. First, petitioner failed to comply with the conversion process. This delayed the process almost three years, from May 2003 until April 2007. Petitioner does not dispute that it failed to comply with the conversion process, and therefore respondent's allegations are deemed true. (See Zuckerman, 49 NY2d at 562.) The second ground for granting respondent's motion for summary judgment has two elements. After petitioner's period of noncompliance, repairs were not made, an allegation that must be deemed true because petitioner has not come forward with proof to rebut respondent's detailed allegations. (Id.) Even if petitioner had made the repairs, however, the dispute over the Section 8 subsidy is not between petitioner and respondent. A Section 8 tenant — or here, a would-be Section 8 tenant — is not responsible for paying the Section 8 portion of the rent. (24 CFR 982.451 [b] [4] [iii] ["The family is not responsible for payment of the portion of rent to owner covered by the housing assistance payment under the HAP [Housing Assistance [*5]Payments] contract between the owner and the PHA [Public Housing Authority — in this case, NYCHA Section 8]."]; 24 CFR 982.310 [b] [1] [same quotation]; Vincenzi v Strong, 2007 NY Slip Op 51534 [U], *2, 16 Misc 3d 1121 [A] [Civ Ct, Bronx County, Aug. 13, 2007].) Even if petitioner had effected repairs as stated in Singer's affidavit, therefore, its dispute about the HQS inspection and repairs is between petitioner and NYCHA.
Petitioner has demanded rent of $972.00 a month, and respondent has paid $188.00 a month since petitioner bought the building. It is unclear why respondent paid petitioner $215.00 a month in rent for 52 months, but is it clear, on the motion for summary judgment, that respondent was liable only to pay $188.00 a month. Respondent is awarded a money-only judgment for $1404.00. Respondent is not entitled to punitive damages. Respondent does not show that petitioner's conduct was so outrageous that it "evinced a high degree of moral turpitude and demonstrated such wanton dishonesty as to imply a criminal indifference to civil obligations." (Walker v Sheldon, 10 NY2d 401, 405 [1961].)
Respondent's counterclaim for a court order to enforce housing standards is granted to the extend that the trial court will resolve what conditions petitioner must repair and all other issues relating to a possible abatement for any supposed violation of the warranty of habitability. This proceeding is adjourned for trial on those issues to January 6, 2010.
This opinion is the court's decision and order.
Dated: November 27, 2009
J.H.C.
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