Taylor v 72A Realty Assoc., L.P.

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Taylor v 72A Realty Assoc., L.P. 2016 NY Slip Op 32737(U) January 29, 2016 Supreme Court, New York County Docket Number: 151560/14 Judge: Jennifer G. Schecter 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] HON. JENNfFER G. SCHECTER J.S.C. SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK: PART 57 ----------------------------------------x JAMES TAYLOR and TAMARA JENKINS, Index No.151560/14 Plaintiffs, -against- 72A REALTY ASSOCIATES, L.P. and JANET ZINBERG, Defendants. ----------------------------------------x JENNIFER G. SCHECTER, J.: Pursuant to CPLR 3212, defendants judgment dismissing the complaint. move for summary Alternatively, they seek dismissal of the action as against defendant Janet Zinberg, 72A Realty Associates, L.P. 's managing agent. Plaintiffs cross-move ( 1) for a declaration that the subject apartment is rent stabilized and that they are the rent stabilized tenants and (2) for dismissal of defendants' seventh and ninth affirmative defenses. The motion is granted to complaint is dismissed as the limited extent that to Janet the Zinberg and the cross- motion is granted. Background Plaintiffs, tenants of apartment 5M at 187 East 4th Street in Manhattan since February 2000, commenced this action alleging that defendant landlord improperly and fraudulently removed the subject overcharged rent apartment for the from rent last 15 stabilization and years. They seek a [* 2] Taylor v 72A Realty Associates, Index No. 151560/14 Page 2 LP declaration that the apartment is rent stabilized and that they are the lawful tenants and a judgment setting the maximum legal rent. They also seek recovery for overcharges, treble damages and attorneys' fees. In 1993 (and later expanded in 1997), the Legislature enacted the Rent Regulation Reform Act (RRRA) , which provided f9r the deregulation of certain rent stabilized apartments. Under the RRRA, and as relevant here, rent stabilized apartments could be deregulated when there was (1) a vacancy and (2) the legal regulated rent was $2,000 per month or more (Roberts v Tishman Speyer 13 Props., L.P., City created NY3d 270, 280 [2009 J) . In addition, New York a tax abatement program commonly referred to as J-51 (Administrative Code of City of complete NY § 11-243), eligible which projects allows such property as owners who rehabilitation or improvements to properties, to receive tax exemptions and/or abatements (id.). In large part, the facts are undisputed. through 2002/2003, defendants (Affirmation in Support [Supp] at received ~ 29). From 1991/1992 J-5,l' · benefits From 1993 through 2000 the apartment was occupied by Peter Zajonc, who was the rent stabilized tenant of record. In 1999, the last annual registration statement was filed for the apartment listing the [* 3] Index No. 151560/14 Page 3 Taylor v 72A Realty Associates, LP legal rent at $1,464 per month. Zajonc left in late 1999 or early 2000 creating a vacancy. After Zajonc vacated, defendants, while still receiving the J-51 tax abatement, and relying on DHCR's interpretation of the RRRA, allegedly performed $18, 343. 07 apartment improvements (IMis) (Supp at of individual 11, 24). ~~ Plaintiffs allege that no renovations were actually performed (Supp, Ex A [Complaint] at~ 41). Defendants urge that upon the vacancy and completion of the IMis, lawful rent because they they believed that $2,200 was a added the permissible 20% rent increase and 1/40 of the IMI costs to the last rental amount ($1,464 [last rent amount] + $292.80 [20% vacancy increase] + $458.57 [1/40 2522. 4 [a] [1]). of $18,343.07 $ 2 , 215 . 3 7 ) ( 9 (IMI)] NYCRR Defendants believed that they could deregulate the apartment pursuant to the high rent/high income decontrol provision of Rent Stabilization Law and DHCR's interpretation of such law. Plaintiff Jenkins took possession of the apartment in February 2000 and signed a free-market lease with the monthly rent set at $2, 200 through February 28, 2002. Since that time, defendants stopped filing annual registration statements for the apartment, Subsequently, Plaintiffs believing plaintiff renewed that Taylor their lease was on it was added to multiple deregulated. the lease. occasions. [* 4] Taylor v 72A Realty Associates, LP Index No. 151560/14 Page 4 Plaintiffs' monthly rent was $2,400 from March 2002 through February 2003, $2,500 from March 2003 through February 2004, $2,700 from March 2004 March 2006 through February 2006, through February 2007, $3,100 $2,900 from from March 2007 through February 2008, $3,400 from March 2008 through February 2009; $3, 500 from March 2009 through February 2010, $3, 575 from March 2010 through February 2012, $3,709 from March 2012 through February 2013 and February 2014 (Complaint $3, 783 at~ 17). from March 2013 through In the last lease renewal in 2013, based on the decision in Roberts v Tishman Speyer Props., L.P., 13 NY3d 270 (2009), plaintiffs a rent-stabilized renewal defendants lease offered (Complaint at ~ 45) . Analysis Summary Judgment is a drastic remedy that should not be granted if there is any doubt as to the existence of material triable issues(see Glick & Dolleck v Tri-Pac Export Corp, 22 NY2d 439, 441 [1968] [denial of summary judgment appropriate where an issue is "arguable"]; Sosa v 46th Street Develop. LLC, 101 AD3d 490, 493 [1st Dept 2012]). movant to judgment make as admissible a a prima matter of facie law showing by The burden is on the of entitlement presenting form demonstrating the absence evidence to in of any disputed [* 5] Taylor v 72A Realty Associates, LP material facts. burden then Index No. 151560/14 Page 5 Once the movant has made this showing, shifts competent evidence, to the opponent to establish, the through that there is a material issue of fact that warrants a trial (Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986]). In light of the Court of Appeals' decision in Roberts v Tishman Speyer Props., and subsequent case law giving L.P. Roberts retroactive effect, it has become settled law that luxury deregulation is improper if, as is the case here, the landlord is receiving a J-51 tax benefit (Roberts v Tishman Speyer Props., L.P., 89 Ad3d 444 [l8t Dept 2011]; Gersten v 56 7th Ave. has LLC, also 88 AD3d 189 been Dept 2011]). [l8t established that once a In addition, tenant is it rent stabilized, the tenant is entitled to rent-stabilized status for the duration of the tenancy and to collect any overcharge when an apartment had been improperly deregulated while receiving J-51 benefits (72A Realty Assoc. v Lucas, 101 Ad3d 401 [l8t Dept 2012]). As such, defendants correctly point out that there must be a determination of the validity of the rent increase that brought the rent above $2,000. After such determination is made, the base-date rent can be established and there can be a determination of whether overcharges are due and whether plaintiffs are entitled to treble damages and attorneys' fees [* 6] Taylor v 72A Realty Associates, LP (Supp at ~ Index No. 151560/14 Page 6 10; Meyers v Four Thirty Realty, LLC, 2013 NY Slip Op 32486[U] [Sup Ct, New York County 2013], affd 127 AD3d 501 [1st Dept 2015]). At this early stage of the proceedings--before plaintiffs have had any opportunity for disclosure that could impact the substance of their opposition--the court will not determine the base date rent and whether treble damages and attorneys' fees are appropriate. Defendants attach canceled checks and receipts purporting to establish the renovations performed (Supp, Ex E). performed Plaintiffs' urge that the renovations were not (Complaint at ~ 41). The record does not definitively establish whether the renovations were performed, whether they comply with 9 NYCRR 2522.4 and the condition of the apartment prior to and after the renovations. In addition, further inquiry is required to determine whether the increase over the $2,000 threshold, fraudulent. if improper, was willful and/or Once these questions are answered, the court will be able to make the appropriate determinations (Meyers v Four Thirty Realty, LLC, 127 AD3d 501[lst Dept 2015] ["motion court properly declined, at . . . early stage in the proceedings, to determine the base date rent"]; NY Slip Op 31949 [U] Rosenzweig v [Sup Ct, 305 Riverside Corp., 2013 New York County 2013]; 72A Realty Assoc. v Lucas, 101 AD3d 401, 402 [1st Dept 2012]; contrast Matter of Boyd v New York State Div. of Haus. [* 7] Taylor v 72A Realty Associates, LP & Community Renewal, 23 Index No. 151560/14 Page 7 NY3d 999 [2014] [upholding administrative determination in the context of an article 78 proceeding where there is no discovery] ) . Defendants also argue that the action must be dismissed against Janet Zinberg.· It is undisputed that at all times Zinberg was acting on behalf of 72A Realty Associates, LP, her disclosed principal. liable for rent Managing overcharges agents unless are not "there is personally clear and explicit evidence of the agent's intention to substitute or superadd his principal" [1998] NY2d 1, personal (Crimmins liability v Handler citing Savoy Record Co. 4 [1964]; & for, or Co., 249 to that AD2d 89, of his 91-92 v Cardinal Export Corp., Paganuzzi v Primrose Management Co., 15 181 Misc 2d 34 [Sup Ct, New York County 1999] affd 268 AD2d 213 [1st Dept 2000]). There has been no allegation or showing that Zinberg can be personally liable here. Plaintiffs' cross-motion is granted as defendants concede that the apartment is stabilized and have offered plaintiffs a stabilized lease, which plaintiffs have already signed (Supp · Zinberg's argument that she was not properly served is rejected. Bald statements of denial of receipt are insufficient to rebut the process server's affidavit, which is prima facie evidence of proper service under CPLR 308(4) (CPLR 308[4]; ATM One, LLC v Landaverde, 2 NY3d 472, 477-78[2004]; Reem Contr. v Altschul, 117 AD3d 583, 584 [1st Dept 2014] Fairmont Funding Ltd. v Stefansky, 235 AD2d 213 [1st nPnr 1 gq71 ) . [* 8] Taylor v 72A Realty Associates, LP Index No. 151560/14 Page 8 47, Exs F and G; Affirmation in Reply and Opposition to at~ Cross-Motion at defendants' ~ 94). Plaintiffs' cross-motion to dismiss seventh and ninth affirmative defenses is also granted based on the precedent cited above. Accordingly, it is ORDERED that defendants' motion is granted to the limited extent that the complaint is dismissed as to Janet Zinberg and in all other respects defendants' motion is denied; and it is further ORDERED the plaintiffs' cross-motion is granted. This constitutes the Decision and Order of the Co Dated: January 29, 2016 HON. t.

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