310 E. 4th St. HDFC v Rooks
Annotate this CaseDecided on November 25, 2019
Civil Court of the City of New York, New York County
310 East 4th Street HDFC, Petitioner-Landlord,
against
Awilda Rooks, Respondent-Tenant, and "JOHN DOE" and "JANE DOE", Respondents-Undertenants.
Index No. 56434/19
Appearing for Petitioner: Kaplan & Chun, P.C., By: Howard Chun, Esq.
Appearing for Respondent-Tenant: Housing Conservation Coordinators, Inc., By: Lynn Horowitz, Esq.
Kimon C. Thermos, J.
Recitation, as required by CPLR §2219(a), of the papers considered in review of the instant moving papers.
Papers Numbered
Notice of Motion, Affidavits and Annexed (Ex. A-G) 1
Notice of Cross-Motion, Affirmation, Affidavit and Annexed (untabbed exhibits) 2
Affidavits in Opposition to Cross-Motion and in Reply and Annexed (Ex. A-H &
Appendix 1) 3
Reply Affirmation 4
Supplemental Affidavit in Opposition to Motion and in Reply and Annexed
(Appendices 1-2) 5
Upon the foregoing cited papers, the motion and cross-motion are decided as follows:
Petitioner commenced this nonpayment proceeding in March 2019 seeking possession of the subject apartment based upon $6,768.56 in rent due from June 2018 through February 2019 at $828.00 monthly. A rent demand was served on or about February 11, 2019. The notice of petition and petition, which alleges that the subject apartment is rent stabilized, were served on or about March 18, 2019.
On March 25, 2019, Respondent-Tenant Awilda Rooks ("Respondent-Tenant") filed a pro se answer asserting a general denial and alleging that the rent, or a part of the rent, has already been paid to Petitioner and breach of the warranty of habitability. Housing Conservation [*2]Coordinators, Inc. subsequently filed a notice of appearance on behalf of Respondent-Tenant.
Respondent-Tenant, by counsel, now moves for an Order dismissing the petition based upon lack of subject matter jurisdiction pursuant to CPLR §3211(a)(2) and/or failure to state a cause of action pursuant to CPLR §3211(a)(7), on the grounds that the rent demanded is not a good faith assertion of the rent due. Respondent-Tenant argues that, although the petition alleges that the subject premises is rent stabilized, Petitioner has not filed rent registrations for the subject apartment with the New York State Division of Homes and Community Renewal ("DHCR") since 1993. At which time, the last registered rent was $453.00. Respondent-Tenant avers that since Petitioner has not filed annual rent registrations for the subject apartment, it is barred from collecting rent until proper rent registrations are filed pursuant to NYC Admin. Code §26-517(e) and RSC §2528.4(a). Therefore, Respondent-Tenant contends that the rent demanded is not a good faith assertion of the rent due, which requires dismissal of the petition pursuant to RPAPL §711(2) and §741(4). Alternatively, Respondent-Tenant seeks an Order granting her leave to file an amended answer, pursuant to CPLR §3025(b), to include affirmative defenses based upon rent overcharge and laches and counterclaims based upon rent overcharge, breach of the warranty of habitability, harassment and legal fees. As additional alternative relief, Respondent-Tenant seeks leave to conduct discovery regarding the apartment's regulatory status, pursuant to CPLR §408 and §3101.
Petitioner opposes the motion and cross moves to amend the petition to correct the present allegation that the premises is rent stabilized to allege that the premises is unregulated. Petitioner argues that the apartment is not subject to rent regulation, since Petitioner is a Type D not-for-profit corporation, which operates exclusively for charitable purposes under Article XI of the Private Housing Finance Law ("PHFL"). Petitioner also seeks sanctions against Respondent-Tenant for frivolously alleging that the subject premises is rent stabilized, despite alleging knowing otherwise due to her position as a Board member of Petitioner and since Petitioner claims that the regulatory status of the building was resolved in a prior case in which Respondent-Tenant was a party.
In opposing Petitioner's cross-motion, Respondent-Tenant contends that the subject premises is rent stabilized pursuant to PHFL §607 because Petitioner, which acquired ownership of the subject premises by deed dated January 5, 1979, received a federal rehabilitation loan pursuant to §312 of the Housing Act of 1964 from Chemical Bank, which extended construction financing via a note that was subsequently assigned to the U.S. Department of Housing and Urban Development ("HUD") in 1981. Respondent-Tenant submitted a copy of the Assignment Agreement dated April 2, 1981 relevant to the loan obtained from the N.Y.C. Automated City Register Information System ("ACRIS"), which is a N.Y.C. Department of Finance registration program intended to provide notice to property owners when deeds, mortgages and related documents affecting an ownership interest in real property has been recorded in the N.Y.C. Office of City Register against a property located in New York City. Respondent-Tenant also points out that Petitioner registered the subject apartment with DHCR as rent stabilized from 1984 through 1993. According to Respondent-Tenant, she took possession of the subject apartment in April 1995 pursuant to an unregulated lease with a monthly rent amount of $453.00. In 2009, she was offered a two-year rent stabilized lease renewal for the subject apartment with a monthly rent of $900.00. Respondent-Tenant avers that the prior 1991 case referenced by Petitioner involved a different apartment in the subject building, in which she lived before residing in the subject apartment and the fact that Petitioner received a federal [*3]rehabilitation loan was not raised in that case. Instead, the court found that the apartment at issue in that case was unregulated solely based on the fact that Petitioner was a not-for-profit corporation organized under Article XI of the PHFL to operate exclusively for charitable purposes. Therefore, Respondent-Tenant argues that the regulatory status of the subject apartment remains at issue, particularly since, in 2018, the Commissioner of DHCR affirmed a Rent Administrator's Order finding that another apartment in the subject building was rent stabilized in accordance with PHFL §607 as a result of Petitioner's receipt of the federal rehabilitation loan.
In reply, Petitioner generally states that Respondent-Tenant has raised a material issue of fact that requires a trial.
This Court will first address Petitioner's cross-motion. Therein, Petitioner seeks, inter alia, to amend the petition to correct the present allegation that the premises is rent stabilized to allege that the premises is unregulated. These facts are distinguishable from the facts presented in MSG Pomp Corp v Jane Doe, 185 AD2d 798 (1st Dept. 1992), where the court held that failure to properly allege that the premises was subject to rent regulation was a fatal defect. The court reasoned that, under RPAPL §741, when a tenancy is subject to a specific type of regulation, the petition must state the premises' proper regulatory status, as it may determine the scope of the parties' rights and defenses arising from the rules and regulations under which the premises is governed. MSG Pomp Corp v Jane Doe, supra.
This case presents the opposite scenario, where the petition alleges that the premises is subject to rent regulation. This Court finds Petitioner's claim, that this allegation is an error and that the premises is actually unregulated, does not prejudice the tenant's relevant rights and defenses as contemplated by the court in MSG Pomp Corp v Jane Doe, given the absence of governing rules and regulations and since any allegations that the premises is subject to rent regulation can still be affirmatively plead. See, 205 Assoc., LLC v Roman, 55 Misc 3d 1223A (Civ. Bronx 2017) and Pri Villa Ave. LP v Santiago, 62 Misc 3d 1206A (Civ. Bronx 2019). As a result, such error does not render the petition fatally defective. Instead, Petitioner's request to amend the petition falls within the ambit of CPLR §3025(b).
According to CPLR §3025(b), leave to amend a pleading should generally be freely granted absent a showing of prejudice or surprise. However, the court has discretion to deny such leave when the proposed amendment is palpably insufficient or totally devoid of merit as a matter of law. 46 East 91st Street Associates, LLC v Bogoch, 23 Misc 3d 36 (1st Dept. 2009).
In the case at bar, the evidence presented reveals that Petitioner's proposed amendment is totally devoid of merit as a matter of law. Generally, as a nonprofit corporation organized under Article XI of the PHFL to operate exclusively for charitable purposes, Petitioner would be statutorily exempt from rent stabilization. See, 9 NYCRR §2520.11(j). However, Petitioner's receipt of a federal rehabilitation loan pursuant to §312 of the Housing Act of 1964 for the subject premises in 1981 made the premises subject to the Rent Stabilization Law pursuant to PHFL §607. Petitioner neither disputes that it received the federal rehabilitation loan nor Respondent-Tenant's allegation that its receipt of the loan was not raised in the prior 1991 case involving the parties herein. In addition, Petitioner did not submit any proof of proper deregulation due to satisfaction of the loan or on other grounds. Notably, unlike in the case of a J-51 abatement, there is no comparable provision for exemption from rent regulation in PHFL §607 upon satisfaction of a federal rehabilitation loan pursuant to §312 of the Housing Act of 1964. Notwithstanding, Petitioner neither confirmed nor denied receipt of the loan, much less [*4]alleged that the loan was repaid. Petitioner also does not dispute, or otherwise address, the fact that it registered the subject apartment as rent stabilized from 1984 through 1993. For these reasons, that branch of Petitioner's cross-motion seeking leave to amend the petition to allege that the subject apartment is unregulated is denied.
In view of this, that branch of Respondent-Tenant's motion to dismiss the petition for failure to state a cause of action is granted, pursuant to CPLR §3211(a)(7), on the grounds that the rent demanded is not a good faith assertion of the rent due. Since Petitioner has not filed proper and timely annual rent registrations for the subject apartment since 1993, it is barred from collecting rent for the subject apartment until proper rent registrations are filed, pursuant to N.Y.C. Admin. Code §26-517(e) and RSC §2528.4(a). Therefore, the subject rent demand cannot serve as a proper predicate to this proceeding as mandated by RPAPL §711(2); and the petition fails to state the facts upon which the petition is based as required by RPAPL §741. Accordingly, the petition is hereby dismissed.
That branch of Respondent-Tenant's motion to dismiss the petition, pursuant to CPLR §3211(a)(2), based upon lack of subject matter jurisdiction is denied, since a defective rent demand does not affect this Court's subject matter jurisdiction, which is conferred by N.Y.C. Civil Court Act §110. Instead, it is grounds for dismissal of the petition, pursuant to CPLR §3211(a)(7), for failure to state a cause of action. 170 W. 85th Street Tenants Assn. v. Cruz, 173 AD2d 338 (1st Dept. 1991). See also, King Enterprises Ltd. v. Mastro, 2001 NY Misc. Lexis 1246 (Civ. NY 2001).
In light of the foregoing, the remaining branches of Respondent-Tenant's motion are denied, as moot; and that branch of Petitioner's cross-motion seeking sanctions against Respondent-Tenant is denied, as without merit. Any of the parties' rights and defenses relating to this proceeding not addressed in this Decision are reserved, including Respondent-Tenant's right to file a DHCR complaint regarding her allegation of rent overcharge and to set the proper legal regulated rent for the subject apartment.
Accordingly, Respondent-Tenant's motion is granted, in part, and denied, in part, as explained herein; Petitioner's cross-motion is denied, in its entirety; and the herein petition is dismissed.
This constitutes the Decision and Order of the Court.
Dated: November 25, 2019
New York, New York
_______________________________
Kimon C. Thermos, J.H.C.
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