Raden v W7879 LLC
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Raden v W7879 LLC 2013 NY Slip Op 32521(U) October 16, 2013 Supreme Court, New York County Docket Number: 111725/10 Judge: Joan M. Kenney Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various state and local government websites. These include the New York State Unified Court System's E-Courts Service, and the Bronx County Clerk's office. This opinion is uncorrected and not selected for official publication. [* 1] SUPREME COURT OF THE STATE OF NEW YORK - NEW YORK COUNTY PART PRESENT: 8 Justice fj/?e..s/:o INDEX NO. MOTION DATE -v - 06 MOTION SEQ. NO. MOTION CAL. NO. The following papers, numbered 1 to _ _ were read on this motion to/for - - - - - - - Notice of Motion/ Order to Show Cause - Affidavits - Exhibits ... Answering Affidavits - Exhibits---------"-----~ Replying A f f i d a v i t s - - - - - - - - - - - - - - - - Cross-Motion: D Yes ~ No Upon the foregoing papers, it is ordered that this motion MOTION IS DECIDED·IN ACCORDANCE WITH THE ATTACHED MEMORANDUM DECISION. . . UNFILED JUDGMENT J~~s ~u~gme~t has not been entered by the County Clerk ob . o rce o entry cannot be served based hereon To ap:~r~rit~r:rin!f~or Jaudthorized repr~sentative ~ust --.t; j41B).. . .. . ¢... Dated: e u gment Clerks Desk (Room. ¢.. ..r,tf'.,~14...:.~:..,.;~.1:;~~..... /Opb Ji~ Check one: .f. j JQ~N FINAL DISPOSITION Check if appropriate: 0 ,,,~,:. . KENNEY J.sc ~ NON-FINAL DISPOSITION DO NOT POST 0 REFERENCE [* 2] SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK PART 8 ----------------------------------------x JOEL RADEN and ODETTE RADEN, AMENDED DECISION, ORDER & JUDGMENT Plaintiffs, Index No.: 111725/10 -againstW7879 LLC; N, K and S, LLC; West 79th LLC; MN Broadway, LLC; Lisa W. Nagel Irrevocable T LLC; DECENDENTS SINGLE TRUST U/W MICHAEL NAGEL, Evelyn Nagel and Alan Trustees; DECENDENTS SINGLE TRUST U/W MICHAEL NAGEL, FBO STEVEN NAGEL ET AL., Evelyn Nagel and Alan Trustees; DECENDENTS SINGLE TRUST U/W MICHAEL NAGEL, .FBO EVELYN NAGEL ET AL., Evelyn Nagel and Alan Trustees; DECENDENTS SINGLE TRUST U/W MICHAEL NAGEL, FBO CLAIR NAGEL ET AL., DECENDENTS SINGLE TRUST U/W MICHAEL NAGEL, Clair Nagel Jernick and Alan Nagel Trustees; and DECENDENTS SINGLE TRUST U/W MICHAEL NAGEL FBO ALAN NAGEL ET AL, Alan Nagel and Steven Nagel Trustees, Defendants. ----------------------------------------x JOAN M. KENNEY, J.: Brier Deutschmeister Urban Popper PLLC Counsel for Plaintiffs 21 West 39ili Street, 9ili Floor New York, NY 10018 (212) 791-3900 Krucker & Bruh, LLP Counsel for Defendants 747 Third Avenue New York, New York 10017 (212) 869-5030 Papers considered in review of these motions: Papers: Notice of Motion, Affirmation, Affidavit, Exhibits, Memorandum of Law Notice of Cross-Motion, Affirmation in Support and Opposition, Affidavit in Support and Opposition, Exhibits Reply affidavit in Opposition to Cross Motion and Reply Memoranda of Law Support and in Opposition 45-48 Numbered: 1-22 23-44 Defendant moves, pursuant to CPLR 3212, for summary judgment [* 3] Plaintiff cross-moves 1 , pursuant to CPLR dismissing the complaint. 3212, for summary judgment declaring that plaintiffs are rent- stabilized tenants of the apartment they occupy and granting judgment in their favor for their claims of rent ovrcharge and treble damages. FACTUAL BACKGROUND This action involves a landlord-tenant dispute in which the plaintiff tenants seek: (1) a declaration that their apartment is rent-stabilized and that the monthly rents collected by defendant landlord since January 15, 1995, are erroneous, unlawful and/or constitute an overcharge; (2) declarative relief directing landlord to register the premises as a rent-stabilized unit with the New York State Division of Housing and Community Renewal (DHCR) at the lawful rent; ( 3) judgment in the amount of the overcharges plus treble damages for all wilful overcharges; and (4) attorney's fees. This litigation results from the ruling of the Appeals in Roberts v Tishman Speyer Properties, L.P. [2009]), receiving which held, J-51 tax in sum and substance, benefits could not Court of (13 NY3d 270 that properties that deregulate apartments therein, as long as such tax benefits were being received by the landlord of the property. Plaintiffs are challenging 1 the regulatory status The motions were filed simultaneously. The Court is deeming the tenants' "Notice of Motion" a cross motion. 2 of the [* 4] apartment known as 63N, 230 West 79th Street a/k/a 229 West 78th Street, New York, New York 10024. that the subject landlords' apartment is In particular, the tenants claim rent stabilized, based upon the receipt of J-51 tax benefits at the time the tenants first took occupancy of the unit. It is the tenants' position that despite the ruling in the Roberts case, the landlords have refused to abide by the Court of Appeals decision. Essentially, moot because complaint, 2 defendants maintain that the present action is the voluntarily. As attorneys' fees two relief seek first that defendants have already result, plaintiffs are not a causes of action (the third cause of action). in plaintiffs' provided entitled to The landlords state that discovery has revealed that plaintiffs have failed to identify any fraudulent conduct on the part of defendants. Plaintiffs testified during their depositions that defendants never made any written or oral misrepresentations to them with respect to the deregulation of the entitled to treble damages. entitled to the Therefore, premises. amount Consequently, previously plaintiffs are not the tenants are only tendered by defendants, and rejected. Plaintiffs fraud claim asserts that their lease and rider (the 2 The first cause of action seeks a declaratory judgment that the apartment in question is rent stabilized, and the second cause of action seeks a money judgment for rent overcharge and treble damages. 3 [* 5] lease), and the attendant renewals/extensions, contained language stating that the apartment was not subject to rent- stabilization, nor does the DHCR registration indicate how the apartment was deregulated or how the rent was caculated pre- and post de- regulation. Defendants do not proffer an explanation as to how plaintiffs' "base rent" was calculated. The documents from DHCR indicate that in 1984 the legal rent was $610.03 rent-controlled). was $1, 966. 28. (the apartment appears to be In 1992, the registered rent for the apartment The DHCR registration merely notes "VA and MCI" referring to an alleged vacancy allowance and an alleged major capital improvement increase. The Court can only assume that the rent-controlled tenant either died or vacated the apartment before 1992 because defendants papers are silent. Again, defendants do not explain how the registered rent was calculated in 1992. also unclear how plaintiffs' "base rent" of It is $3,500.00 was determined, when the apartment went from being rent-controlled to The only explanation given rent-stabilized. is that this all in opposition occurred before defendants owned the building. In support of their cross motion, and to landlord's motion, plaintiff's contend that the landlords do not dispute any of the facts presented in the complaint, and admit that J-51 tax benefits were being received possession of the apartment in 1995. 4 when plaintiffs took Further, the lease fails to [* 6] contain the required J-51 notice, that the apartment remained subject to rent stabilization, despite the expiration of the J-51 tax period. In opposition to tenant's cross motion, and in reply, landlord concedes that Roberts is retroactive in its applicability, and does not oppose the tenants' rent-stabilized. request that the apartment be declared Defendants' argue that their voluntary, pre- litigation actions, should preclude plaintiffs from obtaining any finding of liability or damages as a matter of law. Moreover, by bringing the instant action plaintiffs' should be held liable for defendants' attorneys' fees. Defendants also contend that they were in compliance with the existing law and the guidelines promulgated by DHCR in 1995, they applied to deregulation of including the apartment at issue. rent regulated as apartments, The basis for this argument is that defendants had a good faith belief that plaintiffs' apartment was properly deregulated based "on the existing interpretation of law." Furthermore, the apartment was deregulated by the prior owners of the building, and as for as defendants were concerned in accordance with the law in effect at the time. Finally, defendants claim that the specious fraud allegations cannot extend the undisputed four year statute of limitations (CPLR 213-a) (rent overcharge), rather than the six year statute governing fraud (CPLR 213[8]). 5 [* 7] DISCUSSION "The proponent of a summary judgment motion must make a prima f acie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to eliminate any material issues of fact from omitted]." 2006). the case [internal San ti ago v Filstein, quotation marks 35 AD3d 18 4, and citation 18 5-18 6 (1st Dept The burden then shifts to the motion's opponent to "present evidentiary facts in admissible form sufficient to raise a genuine, triable issue of fact." Mazurek v Metropolitan Museum of Art, 27 AD3d 227, 228 (1st Dept 2006); see Zuckerman v City of New York, 49 NY2d 557, 562 (1980). a triable fact, If there is any doubt as to the existence of the motion for summary judgment must be denied. See Rotuba Extruders, Inc. v Ceppos, 46 NY2d 223, 231 (1978). Since the landlords have admitted that the apartment is rentstabilized, this fact has rendered moot any question as to the apartment's rent regulated status and whether plaintiffs are to be provided with a rent stabilized lease. the calculation determined. of the correct However, stabilized rent the issue as to remains to be For the purpose of calculating the correct rent, the tenants' rent~overcharge claim is subject to a four-year statute of limitations (see Rent Stabilization Law of 1969 ... ). The Rent Regulation Reform Act of 1997 'clarified and reinforced the fouryear statute of limitations applicable to rent overcharge claims by limiting examination of 6 the rental history of housing [* 8] accommodations prior to the four-year period preceding the filing of an overcharge complaint' of Cintron v Calogero, [internal citations omitted] . " Matter 15 NY3d 347, 353 Riverside Corp., 93 AD3d 590 (Pt Dept 2012). Gordon (2010); v 305 Defendants argue that the sole function of plaintiffs' fraud allegations, is an attempt to provide a subterfuge to circumvent, the well-settled four year statute of limitation applicable to rent overcharge complaints. (See CPLR 213[8]). The elements of fraud are a misrepresentation or a material omission of fact which was known to be false by the defendant, made for the purpose of inducing the other party to rely upon it, justifiable reliance of the other party on the misrepresentation or omission, and injury (VisionChina Media Inc. Representative Services, LLC, 2013 WL 2476558, v Shareholder quoting, Mandarin Trading Ltd. v. Wildenstein, 16 NY3d 173, 178 [2011)). "[R] eliance must be found to be justifiable under all the circumstances before a complaint can be found to state a cause of action in fraud" (1959)). What (Danann Realty Corp. constitutes v Harris, reasonable 5 NY2d 317, reliance is 322 "always nettlesome" because it is so fact-intensive (DDJ Mgt., LLC v Rhone Group L.L.C., 15 NY3d 147, 155 [2010) [internal quotation marks omitted]). All of the elements of a fraud claim "must be supported by factual allegations containing the details constituting the wrong," 7 [* 9] in order to satisfy the pleading requirements (Cohen v Houseconnect Realty Corp., 2001]; Corp., 18 AD3d 857 requirement "is 289 AD2d 277, 68 Burns New Holding, see also, [2nd Dept 2005]). to inform a of CPLR 3016 (b) Inc. 278 [2nd v Burns St. Dept Owners The purpose of this pleading defendant of the complained-of incidents" (Eurycleia Partners, LP v Seward & Kissel, LLP, 12 NY3d 353 [2009]). Nonetheless, it may be "almost impossible to state in detail the circumstances constituting a fraud where those circumstances are peculiarly within the knowledge of [an adverse] party" (Jered Con tr. Corp. v New York City Tr. Auth., 22 NY2d 187, 194 [ 1968]) . "Under such circumstances, the heightened pleading requirements of CPLR 3016(b) may be met when the material facts alleged in circumstances, the complaint, in light of the surrounding 'are sufficient to permit a reasonable inference of the alleged conduct' including the adverse party's knowledge of, or participation in, the DeMichele, 88 AD3d 954, fraudulent 957 scheme'' (High Tides, LLC v. [2nd Dept 2011], quoting Pludeman v. Northern Leasing Sys., Inc., 10 NY3d 486, 492 [2008)). In order to determine the correct rent and whether there has been any wilful rent overcharge, entitling plaintiffs to both treble damages and attorneys' fees, evidence must be presented on these issues. See Matter of Obiora ~New York State Division of Housing and Community Renewalr 77 AD3d 755 (2d Dept 2010); Matter of Graham Court Owners Corp. v Division of Housing and Community 8 [* 10] Renewal, 71 AD3d 515 (l5t Dept 2010). In light of the landlords' admissions, there is no basis to dismiss plaintiffs' claims. With respect to the rent overcharges, defendants have failed to establish, as a matter of law, that the base rent was calculated properly when the previous tenants took possession of the apartment in 1992 or that plaintiffs' base rent was properly calculated. The evidence of the rent previously charged by the landlord has been provided by both plaintiffs and defendants, consisting of a copy of the lease and extensions/renewals thereof for the period January 15, 1995 through January 31, 2010, and the annual apartment registrations for the years 1994 through 2008 3 , which indicate that the apartment was reclassified as rent stabilized, from rent controlled, with the registered rent in 1992 being $1966.28. The landlord contends that the apartment was completely decontrolled in 1994 because of DHCR's luxury decontrol regulations applied to the apartment and the rent included an alleged vacancy allowance, and an assessment for a major capital improvement increase to the registered rent, thereby increasing the rent to exceed $2,000.00. Defendant has not met its burden of demonstrating the method of calculation used, and whether such calculation conforms to rent stabilization requirements. Moreover, 3 defendants fail to The landlord attached the rent registrations for the years 2011-2012, post-Roberts. 9 [* 11] "acknowledge that under Roberts, the apartment was rent stabilized and not subject to luxury decontrol" during the period J-51 benefits were relevant. See, Gordon, at 591. Excluding the issue of the rent-regulated status of the apartment, all of the causes of action are based on what would be the lawful rent for the unit and what, if any, increases from that amount are permissible under rent-regulation law. Since neither party has provided sufficient evidence for the court to make that determination, the following issues are referred to a Special Referee to hear and report, in no particular order: 1. 2. 3. 4. 5. Calculate the legal rent for the apartment in accordance with applicable DHCR regulations et al; Calculate the overcharges, if any, attendant to the apt; Take testimony and evidence in order to be able to recommend, or not, whether defendants wilfully registered an illegal rent for the subject apartment; In the event the Special Referee recommends an award of damages for rent overcharge without the presence of fraud, a 4-year statute of limitations is to be applied; None of the foregoing shall preclude plaintiff from making a motion before the Special Referee to conform the pleadings to the proof. Accordingly, it is ORDERED that defendant's motion for summary judgment is denied; and it is further ORDERED that the portion of plaintiffs' cross motion seeking a declaration that the apartment is rent-stabilized is granted; and it is further ADJUDGED and DECLARED that the apartment known as 63N, 230 West 79th Street a/k/a 229 West 7gth Street, New York, 10 New York 10024 is [* 12] a rent-stabilized apartment; and it is further ORDERED that the issue of calculating plaintiffs' legal rent stabilized rent is referred to a Special Referee to hear and report with recommendations, except that, in the event of and upon the filing of a stipulation of the parties, as permitted by CPLR 4317, the Special Referee, or another person designated by the parties to serve as referee, shall determine the aforesaid issue; and it is further ORDERED that the remainder of plaintiff's cross motion is denied; and it is further ORDERED that defendants' motion is denied. Dated: October 16, 2013 ENTER: Jo~y, 11 J.S.C.
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