Matter of Heights 624 LLC v New York City Hous. Auth.

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Matter of Heights 624 LLC v New York City Hous. Auth. 2012 NY Slip Op 32991(U) December 14, 2012 Supreme Court, New York County Docket Number: 102098/2012 Judge: Arlene P. Bluth 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] I . CHECK ONE: ..................................................................... 2. CHECK AS APPROPRIATE: ........................... 3. CHECK IF APPROPRIATE: MOTION IS: ................................................ u 17 c SET ] IDUCIARY APPOINT [* 2] SUPREME COUKT OF THE STATE OF NY COUNTY OF NEW YOIIK: P A W 4 Index No.: 102098/12 In the Matter of the Application of Heights 624 LLC, DECISION and ORDER Petitioner, -against- Present: 110N. ARLENE P. BLUTH New York City Housing Authority, Respondent. Petitioner, a landlord pdicipating in the federally funded Section 8 program, which is administered by respondent Ncw York City I lousing Authority s ( NYCHA ), commenccd this Article 78 proceeding against NYCHA on March 6, 2012. Petitioner seeks ajudgincnt (1) directing N Y U 1A to reverse its prior decision to suspedterminatc the subsidy, and order NYCHA to reinstate thc rcnt subsidy payments for Maria De Luna, its tenant, who resides at 624 Wcst 176 hStreet, Apt.12A in Manhattan for the period October 2010 to date, (2) granting s under its charter, (3) for an award inandamus relief by directing NYPl IA I : t orneys4 fees pursuant to CPLR of damages lor breach of contracj, and ( I $8601(3). i 1 NYCHA cross-moves to ~ : ~ folloding grounds: (1) petitioner s the . ~ ~ i 1 C,L[ -f L; QFflW h f claim i s barred by (a) the statute of limitations and (b) documentary cvidence, (2) the petition fails to state a cause of action, and (3) petitioner is not cntitlcd to attorneys fees. For the reasons set forth below, N Y C I IA s cross-motion is granted only to thc cxtent that the claini for attorneys fkes is dismissed; the balance of the cross-motion to dismiss is denied. NYCHA is dirccted to serve and file an answcr to the petition pursuant to thc CPLR. Page Iof 11 ~ ~ [* 3] l ackground 3 As set forth in thc Verified Petition, petitioner is the owner and landlord of624 West 176* Street in Manhattan. In October 2010, NYCHA stopped making subsidy payments for thc subject apartment. Hronstcin Properties, I,I L ( Bronstein ), petitioner s managing agent for the building , repeatedly attempted to contact NYCHA in order to detcrminc why it stopped making the subsidy payments, but was unsucccssful. Finally, on May 9, 201 1 petitioner received an unsigncd form letter dated April 20,201 1 from NYCl ]A s Imscd Ilousing Dcpartinent stating that the subsidy for thc subject apartment was terniinatcd as of March 3 1, 201 1 based on long-lerri suspcnsioii (see Petition, exh 2); that letter gave no indication of why there was a suspcnsioii in the first place. Petitioncr thought this h r m letter was scnt in error because it never received any prior notification Irom NYCliA that there were any Housing Quality Standard ( HQS ) violations in the apartment (a common reason for suspensions). Petitioncr followed thc direction in the lelter to tclcphoiie the Section 8 Customer Contact Center to inquire further but could not get through on the number given on any 01 the thrcc times it called on May gthand 1 I . Not being able to rcach anyone by telephone, petitioner scnt a letter dated May 12,201 1 stating that the telephone number supplicd on the letter was out of service, m d asked why thc subsidy was terminated. This letter was apparently ignored. After hcaring nothing from NYCIIA in response, in Augusl petitioner callcd tlic Customer Contact Ccnter and spoke to .loselle who stated that thc NYCHA compiiler systeni did not contain any record of a violation at the premises 1 Because thc actions of Bronstein were on behalf of petitioncr, this decision docs not distinguish bctwccii Bronstein s actions and petitioner s actions; both arc rcfcrred to as petitioner. Page 2 of 11 [* 4] and she could not ascertain why the subsidy had not been paid. Joselle furthcr stated that petitioner would receivc a follow-up rcsponsc from NYCI 1A within two weeks. Aftcr hcaring nothing further from NYCHA, petitioner contacted the Section 8 Customer Contact Center once again, spoke to Adan who again conlirmed that the NYCFlA database had 110 I-ccord of any violations fur the subject premises; Adam statcd that pctitioner would receivc a call back within two weeks. Not surprisingly, pctitiorier never received a return phone call. Justifiably frustrated, petitioner contacted its attorneys to try to get to the bottom of this pctitioncr deserved an answer as to why N Y C I I A stopped paying the subsidy. On November 2, 20 1 1 its attorncys sent a certified letter lo various NY C I IA officials (exli 2 to Petition) detailing the situation and asking for assistance in resolving thc matter. Finally, NYCHA paid attcntion. A month later, Elliott Lauterstein, Housing Managcr for the Leased Housing Correspondcncc Unit sent petitioner s attorncys a neceniber 1, 20 1 1 letter (exh 3 to petition) which stated in pertinent A review of Ms. De Luna s case reveals that her apartmcnt fdiled thc I IQS inspection on August 12, 20 1 0. A failing HQS will result in a suspension of subsidy, ifnot correctcd within 30 days. On August 27, 2010, a lettcr was inailed to both the landlord a i d the tenanl; the following were the violations that were h u n d during the inspection: Living Room - Floor Condition- Floor -Weak/liottedlBuckled The letter further instructed petitioner how to correct the violations and (i)f the inspcction passes (sic), the process to restore Ms. L)c I m a s subsidy can bcgjn and payments, if restored, would be paid prospcctivcly. Tn this proceeding, petitioncr asserts, inter alia, that NYCFIA s failure to pay thc Page 3 of 11 [* 5] subsidy f or the period October 1, 2010 through February 20 12 (when thc procecding was commenced) was arbitrary and capricious, and an abuse of discretion because NYCI IA did not inform it why it stopped paying the subsidy until Mr. Lauterstein s lcttcr (Pctition, para. 1 5). Statute of limitations T In support of its cross-motion to dismiss, NY C IA submits only an attorney s afiirmation. 111 paragraph 6, counsel states, without offcring the basis lbr his knowlcdgc, that NYCHA suspended the subsidy payments on the grounds that petitioner hiled to timely correct llQS violations describcd in an August 27,2010 notice of failed inspection. While the noticc is annexed to his affirmation as exhibit A, there is no proof o r service whatsocvcr in the cross-rnoviiig papers. Olcourse, this omission is stunning the wliolc point in the petition is that the petitioner had no notice as to why thc paynients stopped; evcn a paralegal would know that some prool is necessary to show that NYCHA actually scnt a notice. Counsel contends that this proceeding is barred by the lbur month statute 01 limitations applicable l o Article 78 proceedings which starts running when a filial agency determination bccoines binding 011 petitioner (ail., para. 14). Without any proof whatsocvcr, and without any supporting affidavits, counscl suggests three scenarios as to when NYCI 1A may have issued a final, binding determination. First, counsel argues that the date that the statutc of. limitations starting running w a s Octobcr 1, 20 10, when NYCHA stopped making payments. In the alternative, counsel asscrts that petitioner knew of NYCHA s dccision to terminatc the subsidy by November 2, 20 IO, whcn it received a check with the payment breakdowns lor Novcrnbcr which showed payments lor other tcnants but no payment for the Page 4 of 11 [* 6] subject apartmciit; pctitioncr s knowledge ofthe lack of payment is adinittcd because it inarkcd the breakdown as follows: 12A? Why suspen& (exh C to cross-motion). Finally, counsel asscrts that at thc latest, pctitioncr knew as olMay 9,201 1 that NYCHA had tcriiiinatcd the subsidy when petitioner conccdcs it received the April 20,201 1 letter of termination (exh Dj. Ihcrcforc, NYCl IA claims that, assuming arguendo, that the applicable four month statuc of liinitations starting running on May 9, 201 1 at the latest, this proceeding, commeiiced on March 6, 20 12, is untimely. In opposition to the motion, petitioner submits the affirmation oi Leslie Rubel, a building managcr of Rronstein Propcrtics, pctitioiicr s managing agcnt. Shc spccifically denies that hcr officc cvcr receivcd an IlQS violation for the subject prciniscs (aff., para. 6). Rubel statcs in dctail petitioner s unsucccssful cfforts to dctcriniiic why NYCl IA stoppcd making monthly subsidy payincnts, including telephone calls to NYCITA s Scction 8 Custonier in Aiigiist and September 201 1 (at which time two different NYCHA represciitativcs stated there were no violations showing in the computer database), and the certified lettcr pctitioncr s attorneys scnt on November 2,201 1, which were set lorth in the Petition. Ms. Rubel statcs that hcr officc belicvcd that NYCIIA s failure to make the subsidy payments was due to NYClIA s oversight which would be corrcctcd, as had happcned in many otlicr cases. Significantly, Ms. Rubel further states it was not until llcccmber 1, 201 1 that pctitioner finally learned the reason for the suspension: it was whcn Elliot Lauterstein, NYCHA s I lousing Manager, responded to the attorneys Noveiiibcr 2, 201 1 letter. Until that letter, petitioner did not know why the payments had stopped, despitc nuincrous cfforts. Page 5 of 11 [* 7] Ms. Kubel states that after receiving this letter, her o l k e contacted the tciiant who had repaired the lloor, and submitted a certificate of repairs to NYCHA, along with the HAP contract and Icasc, aiid that upon inlormation and belief , NYCl IA tliercaftcr re-inspected the prcinises which then passcd inspection. In other words, Ms. Rubel explains in detail petitioner s attempt to find out why the subsidy was terminated aiid NYCIIA s failure to respond. Whether that failure was due to NYCI-IA s incompetence or some otlicr rcason, it is clear that once petitioiicr filially lcarned about tlic violation, it absolutely did take prompt action. In reply, NYCI-IA submits oiily its attorneys affirmation, who cites to thrcc unreported Suprcnic Court dccisions. Nom of those decisions discuss situations wlicre, as here, petitioiicr rcpcatcdly sought to lcarn why tlic subsidy was terminated but was stonewalled by NYCl IA. Rcspondctit relies heavily on Royal Churler Proper.lie,s v NYCHA, Index No. 100189/10 (Sup Ct, N Y Co., 7/23/10, n.o.r.), and BNLSBuiZding.s, LLC v Hhen, liidcx No. 377&/10(Sup Ct, Qiieens c o., 9/16/10, n.o.r.) (which relies heavily on Ruyul). In BNS the court spccifically found that tlic NE-1 lcttcr was mailed; ol cousse, that is not the situation Iicrc. llic court did not make reference to the issue of-servicdrcceipt of tlic Nlj-1 in 201 I Newkirk LLC v NK HA, Index No. 109(766/11 (Sup Ct, NY Co., 12/5/11, n.0.r.); as such, it is distinguishable. To tlic cxtciit that the comt in Xoyal indicated, in a two paragraph decision, that the statute of limitations starts to ruii when [he payments stop, making the entire NE- 1 irrclevant, this Court rcspcctftilly disagrees. Merely missing a payment, or even many payments, The NE-I notifies the landlord of specific violation(s) found. Page 6 of 11 [* 8] without communicating that the payments wcrc purposcly stoppcd and the reason thereibr cannot be considered a final determination. Additionally, NYCHh s attorney rejects petitioner s claim that Mr. Lauterstein s letter constitutes thc final and binding determination which started the four month limitations period running. 1 le clainis that petitioner s attorneys November 2, 20 1 1 letter was a simply an untimely rcqucst for reconsideration, and that Lauterstein s lettcr was imcrcly a restatement that a final detcrniination had alrcady been made. Counsel misses tlic point: thc four month statute of limitations governing Article 78 proceedings which challcngc an admjnistrativc determination begins to run on the datc the determination bccomcs final and binding upon the petitioner, which is the datc petitioner receives notice of the dccision. Sc~eCPLR $217(I); Muttcr ofMclropoIilan Muscuni Iistoric Disiricl Ccdition v De Montehello, 20AI13d 28, 796 NYS2d 64 (1st Dept2005). The undisputed f k t s presented hcre show that the first time pctitiotier ever knew that there was an administrative dctcrniiiiation (as opposed to mother NYCHA mistake) was when it reccivcd Mr. Lauterstein s letter. I hcCourt notes that NYCHA s counsel did not, and could not, dispute any of-the factual allegations set forth in Ms. Rubel s afiidavit in opposition to thc cross-motion. Because NYCHA did not submit the affidavit of any individual with personal knowledgc to dispute anytliing in Ms. Rubel s affidavit, i.e. that it has eniployecs nanicd Joselle and Adam in the Customer Call Centcr, and that these individuals took calls from pctitioiier and aftirniativcly stated that [here wcre no HQS violations lor the subject prcniiscs in NYCHh s computers, these allegations are admitted. Page 7 of 11 [* 9] Analysis NYCHA does not providc any proof whatsoever that it mailed the August 27,20 10 NE- 1 notice to petitioner, despite having had ample tiinc to do so. N Y CI IA should Iiavc submitted it in its cross-motion, as the petition makcs clear that pctitioner s claim is that it ticver had tioticc. llaviiig failcd to submit it on the cross-motion, it could have submitted it in reply; hcrc, too, NYC I IA failed to providc any proof of mailing. I hcCourt notcs that NYCI ]A s unauthorizcd submissions, purporting to bc proof of mailing o l the NE- 1, offered without any explanation as to why these affidavits were not submitted as part of the reply, wcre not considered by the Court. These papers, sent to tlie court arid petitioner s counscl after a telephone settlement conference, constitute an improper attempt to circumvent the rules of the court. This is especially true because further submissions were specifically prohibited and were in direct violation o l the court s direction, as communicated to counsel by the court attorney s statement that the motion was fully submitted and no additional papers would be accepted by the Court. As set forth above, the statute of limitations governing Article 78 proceedings begins to run on the date the petitioner receives notice olthe decision. NYCJ IA did not dispute that tlic tbst time petitioner ever knew that there was an adrninistrativc dctcrinination (as opposed to aiiotlicr NYCI 1A mistake) was when it received Mr. Lauterstein s lcttcr. Accordingly, this proceeding, brought within four montlis of receiving Mr. Lauterstein s Icttcr, is timely. Moreover, petitioner s atternpts to fiiid thc rcason why the payments stopped before incurring thc cxpense of this proceeding, and its prompt action to challenge this dctcrrnination once iinally coriimunicatcd via Mr. I mterstein s letter, sliould not be used Page 8 of 11 [* 10] against it. While pctitioncr does admit that on May 9, 201 1 it received the April 20, 201 1 letter advising that the rent subsidy had been tcrniinatcd on March 3 1,2011, petitioner had no reason to bclicvc the letter was correct because it never received tlic NE- 1 noticc. Additionally, this April 20, 201 1 letter (exh D to cross-motion) is not signcd by an individual, but gcncratcd by the Ceased Housing Department . It stated that thc rent subsidy for the apartment will be/has been terminated . Morcovcr, wliilc it statcd that this action is being/has been taken for the following reason: I,ong- l erni Suspension , the reason for the suspension was not iitentijiecfeven tltoiigli there was ample space for this crucial informution on the f o r m Finally, this letter stated If you havc any questions, please contact the Custonicr Contact Center at (718) 707-7707 . As Ms. liubel explained in her affidavit, petitioncr s attempts to get answers by calling tlic NYCI-IA center were futilc. NYCHA should not gct an advantage when it never told the landlord about the violation, whcn it suspended payments but kcpt tlic reason a mystery, when it tcrminated the payments by scnding an unsigned letter, inviting inquirics to a non-working phone nuniber, announcing that payments were teriminatcd but never disclosing why payincnts were suspended in the f?rst placc. As if>that were iiot bad cnougli, there was a huge spacc on the forni lcttcr to explain why the bcnefits wcre initially suspended; if tlic anoiiymo~~s author had only fillcd in payments terminated duc to uncured violation , then a whole lot daggravatinn could have been avoided. liistcad NYC HA s lawyers are trying fn put the blainc on the petitioner, the victim of NYCHA s inability to respond to petitioner s inquiries (until Mr. Lauterstein respondcd to the attorney s lettcr). In 1Y3 Rcully, L I L v Rheu, 37 Misc.3d 1203 (A), -NYS2d -, 2012 WL 4477616, Page 9 of I 1 [* 11] the court (Feirunan, J.), agreed with NYCl IA s position that the statute of limitations began to run when NYCl IA suspends Section 8 paymentsjusl us petitioner had been warned would happen by the NE-1 notice. In that casc, petitioner conceded having received the NE-1 notice ofthe failed inspection. Here it is undisputcd tliat pctitioner did not rcccivc such noticc, and accordingly never kncw about the violations and never had a date by which to corrcct such t violations and was never warned of what would happen. T is also undisputcd that petitioncr timely brought this proceeding once it was Gnally told about the already-cured violation. For all the foregoing reasons, that branch of NYCHA s cross-motion seeking to dismiss the petition as time-barred is denicd. Docuinciitary cvidcncc and failure to state a cause of action Jn support ofthat branch of its motion seeking to dismiss the petition based on docuiiieiitaiy cvidcnce and failure to state a cause of action, NYClIA s counsel cites to 24 C.F.R. Section 982.404(a)(3) which states tliat NYC HA is not permitted to make subsidy payments for a unit that f-ails to meet the HQS unless the owner corrects the defect and NYCl IA vcril-ies the correction. This argument fails for several reasons. First, a federal regulatioii is not tlic typc of documentary cvidcricc contemplated by CPLR 532 I 1(a)( 1). Additionally, the petition clearly states a cause of-action in that it sccks rctroactivc payment of Section 8 subsidies from NYCHA for a specifjed period for the subject apartment. ¬inally, the grounds presupposes that NYCHA served the appropriate NE-1 noticc which, based on the papers presented, as this Court has already determined, it did not. Page 10 of 11 [* 12] . Breach of contract and Attorney s fees The branch of the cross-motion seeking to dismiss petitioncr s contract claim was not raiscd i n the moving affirmation, only in the reply (paras. 27-28), and as such is denied. The branch of the cross-niotion sccking to dismiss petitioner s rcqucst for m award ~ of attoriicys fccs is grlmted. Assuming rtrguciido petitioner were to be the prevailing party, I I CPLR scction 8601(b), provides in pcititincnt part that a court shall award to a prevailing party, other than the state, fccs and other expenses incurred by such party in any civil action brought against the state, uiilcss the court h d s that the position of the state was substantially justified or that spccjal circumstances niakc an award unjust. However, CPI ,R 8601(a) does not provide for an award of attorney s fees against a city agency such as NYCHA. See BRG 3715, LLC v New York Cily Hous. Auth,, 2012 NY Slip Op. 306561UI (Sup Ct, New York Co. 2012) citing Flcmcmdez 17. Hammons, 98 NY2d 735, 750 NYS2d 813 (2002). I hcrcfore, NYC I IA s niotioii to dismiss lhis claim is granted. Accordingly, NYCl IA s cross-motion is grantcd only to the cxtcnt that the claim for attoriicys fees is dismisscd; the balance of thc cross-motion to dismiss the petition is dcnicd. 7NYCI-fA is directed to scrve a r k file Fnb&&p n i o n pursuant to the CPLK. Dated: December 14,2012 New York, New York RON. ARLENE P. BLUTH, JSC Page11 of I 1

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