BSP 1908 Belmont 1 LLC v Tavarez

[*1] BSP 1908 Belmont 1 LLC v Tavarez 2018 NY Slip Op 51107(U) Decided on June 29, 2018 Civil Court Of The City Of New York, Bronx County Lutwak, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on June 29, 2018
Civil Court of the City of New York, Bronx County

BSP 1908 Belmont 1 LLC & BSP 1908 Belmont 2 LLC, Petitioner(s)-Landlord(s),

against

Alexis Tavarez, Respondent(s)-Tenant(s).



72192/2017



Attorneys for Petitioner:

Hertz, Cherson & Rosenthal, P.C.

118-35 Queens Boulevard, 9th floor

Forest Hills, New York 11375

(718) 261-7700

Attorneys for Respondent:

Benjamin Levine, Esq.

The Legal Aid Society

Civil Practice — Bronx Neighborhood Office

260 East 161st Street, 8th floor

Bronx, New York 10451

(929) 285-3460
Diane E. Lutwak, J.

Recitation, as required by CPLR Rule 2219(A), of the papers considered in the review of Respondent's Motion for Leave to Interpose an Amended Answer and for Discovery and Petitioner's Cross-Motion for Leave to Interpose an Amended Petition:

Papers Numbered

Respondent's Notice of Motion With Supporting Affirmation, Affidavit & Exhs A-G 1

Petitioner's Notice of Motion With Supporting Affirmation & Exh 1-9 2

Affidavit in Reply 3

Upon the foregoing papers, Respondent's motion for leave to interpose an Amended Answer and for discovery, and Petitioner's cross-motion to interpose an Amended Petition, which are consolidated herein for determination, are decided as follows.

PROCEDURAL HISTORY & FACTUAL BACKGROUND

This is a nonpayment eviction proceeding brought by Petitioner-Landlord BSP 1908 Belmont 1, LLC & BSP 1908 Belmont 2, LLC against Respondent-Tenant Alexis Tavarez. The petition, dated December 7, 2017, seeks rent and additional rent of $8500, comprised of a monthly rent of $1650 for the months of August 2017 through December 2017 plus a legal fee of $250. The petition states in paragraph 7 that the premises are not subject to Rent Stabilization or [*2]Rent Control because they were "destabilized as a result of luxury decontrol" and "[t]here is no tax abatement on the building that restabilized the apartment."

Respondent answered the petition on December 26, 2017, using the Court's form "Answer in Person" (CIV-LT-91 rev'd Oct 2014) and asserting a "General Denial". Respondent retained counsel after the first court appearance and has now moved to amend the answer to include, inter alia, a specific denial of paragraph 7 of the petition, an affirmative defense that the petition "mischaracterizes the regulatory status of the apartment as it claims the apartment was deregulated due to high rent vacancy" and a counterclaim for attorney's fees.

Respondent's attorney asserts that, contrary to its assertions in the petition herein, in another proceeding pending in this court against another tenant in the same building Petitioner claims that the premises are subject to Rent Stabilization. Causing further confusion, Respondent argues, is the fact that Petitioner has moved to amend the petition in that other proceeding to state that the premises are not subject to rent regulation because the tenant moved in after they were "substantially rehabilitated". Because of these "discrepancies with how the regulatory status of the apartments throughout the building has been plead", Respondent's Attorney's Affirmation at ¶ 19, Respondent argues that the petition is subject to dismissal and amendment of the answer should be permitted, citing to CPLR R 3025(b) which states that "[l]eave shall be freely given" to a party seeking to amend a pleading.

Further, Respondent moves for discovery and argues that "ample need" pursuant to CPLR § 408 and relevant case law has been shown to require Petitioner to produce documents "solely related to how the apartment became deregulated." Respondent's Attorney's Affirmation at ¶ 28; see also id. at ¶¶ 27, 30, 31. Respondent asserts that the 19 categories of documents sought, dating back to January 1, 1974, all relate to "luxury decontrol and substantial rehabilitation, both of which are claims made by Petitioner as to how apartments in this building became deregulated." Id. at ¶ 32.

Petitioner cross-moves to amend paragraph 7 of the petition to state the correct reason why the premises are not subject to Rent Stabilization, namely because they "were built or substantially rehabilitated as family units on or after January 1, 1974 and Respondents took possession of the premises subsequently." Petitioner's Attorney's Affirmation at ¶ 6. Petitioner argues that such amendment is appropriate under CPLR R 3025(b) as there is no prejudice to Respondent.

In opposition to Respondent's motion to amend the answer, Petitioner argues that the proposed defenses lack merit and are refuted by documentary evidence. Petitioner provides a copy of the building's "I-Card" and asserts that, whereas when the building was built in 1922 it contained 52 apartments, following the issuance of a "Vacate Order" from Bronx County Supreme Court dated November 20, 1978, the number of apartments in the building decreased to 46, as reflected in a certificate occupancy issued in 1980. Petitioner asserts that, "Upon information and belief, while the subject building was vacant, Belmont Court Associates [Petitioner's predecessor-in-interest] gut rehabilitated the subject building ." Id. at ¶ 35. Petitioner argues that, pursuant to DHCR Operational Bulletin 95-2, "the vacate order and new certificate of occupancy are sufficient to establish that the subject building and premises were substantially rehabilitated." Id. at ¶ 40. The only way the building would be Rent Stabilized, Petitioner argues, would be if it had received a 421a or J-51 tax abatement, which it has not.

Petitioner similarly opposes Respondent's motion for discovery, arguing that because it has provided documentation showing that the premises are not subject to Rent Stabilization due [*3]to substantial rehabilitation, discovery is not warranted. Further, to the extent the requested disclosure dates back more than four years, Petitioner argues that it is prohibited by Rent Stabilization Law § 26-516(g).

On reply, Respondent argues that the documents provided by Petitioner do not establish that the building was substantially rehabilitated and thereby removed from Rent Stabilization. Accordingly, the proposed Amended Answer should be permitted as, "there is no prejudice as the type of defense is a normal defense and should not come with surprise considering the initial pleadings and the lease." Reply Affirmation at ¶ 7. Similarly, as the documents are inconclusive, Respondent argues that discovery should be permitted. In particular, the "Vacate Order" does not apply, Respondent argues, as none of the buildings it references by block and lot numbers match those for the subject premises. Further, Respondent argues that the four-year rule does not apply here where Respondent is challenging the regulatory status of the building.

Respondent opposes Petitioner's cross-motion to amend the petition, arguing that Petitioner has unduly delayed in moving for such relief and that it would be prejudicial to Respondent to allow such amendment which, if permitted, would require Respondent "to prepare a second defense based upon a new theory ." Reply Affirmation at ¶ 17.

DISCUSSION

Motion and Cross-Motion to Amend Pleadings

It is well-settled that, pursuant to CPLR R 3025(b), leave to amend pleadings is to be freely given absent prejudice or surprise to the opposing party. McCaskey, Davies & Assoc v New York City Health & Hosps Corp (59 NY2d 755, 450 NE2d 240, 463 NYS2d 434 [1983]). In the absence of surprise or prejudice, it is an abuse of discretion, as a matter of law, for a trial court to deny a party leave to amend a pleading during or even after trial, Pensee Assocs v Quon Shih-Shong (199 AD2d 73, 605 NYS2d 35 [1st Dep't 1993]), unless the proposed pleading is palpably insufficient or clearly devoid of merit, Delta Dallas Alpha Corp v South St Seaport LP (127 AD3d 419, 420, 4 NYS3d 510 [1st Dep't 2015]). Top of Form

In evaluating the merits of the amended pleading, the court's purpose is not to resolve disputed factual issues, but simply to ensure that the amended allegations establish a prima facie cause of action. Digital Broadcast Corp v Ladenburg, Thalmann & Co, Inc (19 Misc 3d 1130[A], 866 NYS2d 91 [Sup Ct NY Co 2008]). Bottom of Form

Liberal amendment of pleadings furthers the State's preference for disposition of cases on their merits. Cf. Fromartz v Bodner (266 AD2d 122, 698 NYS2d 142 [1st Dep't 1999]).

Here, based on the above principles, it is appropriate to allow both of the proposed amended pleadings to be deemed duly served and filed. As to the Amended Answer, Respondent's denial of Petitioner's claim that the premises are not subject to Rent Stabilization is certainly permissible, and is neither palpably insufficient nor clearly devoid of merit. Petitioner cannot claim surprise or prejudice as proof of the premises' regulatory status or lack thereof is an element of its case on which it bears the burden of proof. 143 E 30th St Corp v Shankman (10 Misc 3d 126[A], 809 NYS2d 482 [App Term 1st Dep't 2005]). The documents Petitioner presents are not "sufficient to establish that the subject building and premises were substantially rehabilitated." Petitioner's Attorney's Affirmation at ¶ 40. The fact that the number of units in the building was reduced from 52 to 46 as indicated in the building's I-Card and Certificates of Occupancy is inconclusive, and the Vacate Order is not relevant to Petitioner's claim. As Respondent points out, the block and lot numbers for the subject premises (Block 2946, Lot 22) do not appear on the Vacate Order. Further, that Order does not pertain to any action related to [*4]the New York State Multiple Dwelling Law, the New York City Housing Maintenance Code or the City's authority to issue a vacate order when a building is unsafe. See generally, Lacks v City of New York (201 AD2d 309, 607 NYS2d2d 32 [1st Dep't 1994]). Rather, the Order grants the motion of the Corporation Counsel to vacate a prior judgment of foreclosure and a deed recorded based on that judgment.

Accordingly, the Court is disregarding the "Vacate Order" and Petitioner's argument that this document, along with the documents showing the reduction in the number of apartments in the building, conclusively establish its claim of substantial rehabilitation under DHCR Operational Bulletin 95-2. Whether the building was substantially rehabilitated and thereby removed from Rent Stabilization cannot be determined from the documents presented.

As to the Amended Petition, the mere fact of delay in the progress of this proceeding does not constitute the type of prejudice to Respondent that would warrant a denial of Petitioner's motion, as any such denial would be without prejudice and would therefore cause further delay in reaching the merits of the issues presented. Further, the proposed Amended Petition substituting "substantial rehabilitation" for "luxury decontrol" clearly causes no surprise to Respondent, whose own motion papers reference Petitioner's claim in another proceeding of deregulation due to substantial rehabilitation of the building.

Accordingly, the proposed pleadings shall be deemed substituted for the original versions of these documents, except as to Respondent's First Affirmative Defense that the petition erroneously claims deregulation due to high rent vacancy, which is obviated by the petition amendment and therefore stricken.

Respondent's Motion for Discovery

As for discovery, in summary proceedings a party requesting discovery must obtain leave of court (CPLR § 408) and, to obtain such leave, must demonstrate "ample need." Antillean Holding Co v Lindley (76 Misc 2d 1044, 1047, 352 NYS2d 557 [Civ Ct NY Co 1973]). In determining whether a party has established "ample need", courts consider a number of factors, not all of which need to be present in every case, including:

• whether the movant has asserted facts to establish a claim or defense;• whether there is a need to determine information directly related to the claim or defense;• whether the requested disclosure is carefully tailored and likely to clarify the disputed facts;• whether prejudice will result from granting leave to conduct discovery; and• whether any prejudice caused by granting a discovery request can be diminished by an order fashioned by the court for that purpose.

See New York University v Farkas (121 Misc 2d 643, 647, 468 NYS2d 808 [Civ Ct NY Co 1983]), citing Antillean Holding Co v Lindley, supra.

Courts have regularly granted disclosure in eviction proceedings when there are disputes as to whether an apartment is subject to Rent Stabilization and/or there is a rent overcharge. See, e.g., 2701 Grand Assn LLC v Morel (50 Misc 3d 139[A], 31 NYS3d 924 [App Term 1st Dep't 2016])(reversing lower court which had denied tenants' motion to vacate stipulation and to file an amended answer and finding that, "Tenants also demonstrated ample need for limited discovery relating to the apartment improvements that were the basis of the $891 rent increase"); Aimco 322 E 61st St LLC v Brosius (50 Misc 3d 10, 12, 21 NYS3d 803, 805 [App Term 1st Dep't 2015])(reversing lower court which had denied tenant's motion for discovery and finding that [*5]"Tenant demonstrated ample need for limited discovery relating to the apartment improvements that were the basis for the purported deregulation"); Mn Baldwin Isham LLC v Carpenter (2017 NYLJ LEXIS 3018 [Civ Ct NY Co Oct 24 2017])(in nonpayment proceeding, granting discovery related to respondent's defense that the subject premises was Rent Stabilized and improperly deregulated).

Tenants are allowed to challenge the deregulated status of an apartment at any time; events beyond the four-year statute of limitations for rent overcharges may be considered to determine whether the apartment is regulated, Gersten v 56 7th Ave LLC (88 AD3d 189, 199-201, 928 NYS2d 515 [1st Dep't 2011]); East West Renovating Co v NY State Div of Hous & Cmty Renewal (16 AD3d 166, 791 NYS2d 88 [1st Dep't 2005]), and "whether a fraudulent scheme to destabilize the apartment tainted the reliability of the rent on the base date," Matter of Grimm v State of New York Div of Hous & Community Renewal Off of Rent Admin (15 NY3d 358, 367, 938 NE2d 924, 929, 912 NYS2d 491, 496 [2010]).

Here, discovery is appropriate under the above principles; however, given that the court has allowed Petitioner to amend its petition to substitute "substantial rehabilitation" for "luxury decontrol" as the basis for the deregulation, and that Respondent's proposed document demand seeks documents relating to both bases, Respondent will be given an opportunity to prepare a revised document production demand which eliminates those demands which are directed towards luxury decontrol.

CONCLUSION

For the reasons stated above, the motion and cross-motion to amend the pleadings are granted and the proposed pleadings are deemed duly served and filed and substituted for the originals, except as to Respondent's First Affirmative Defense which is deemed stricken. Further, Respondent's motion for discovery is granted except that Respondent is directed to serve and file by July 9, 2018 a revised document production request narrowly tailored to Petitioner's amended claim that the premises were deregulated due to substantial rehabilitation.

This proceeding is restored to the Court's calendar for settlement or trial on August 13, 2018 at 9:30 a.m. Copies of this Decision & Order will be provided to the parties' respective counsel in the Part.

Diane E. Lutwak, H.C.J.

Dated: June 29, 2018

Bronx, New York