Nadler v Carmine Ltd.

[*1] Nadler v Carmine Ltd. 2023 NY Slip Op 50850(U) Decided on August 11, 2023 Supreme Court, New York County Lebovits, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 August 11, 2023
Supreme Court, New York County

Margaret Nadler, Plaintiff,

against

Carmine Limited, Defendant.



Index No. 155461/2022



Gallet Dreyer & Berkey, LLP, New York, NY (Jason Mohabir of counsel), for plaintiff.

Belkin Burden Goldman, LLP, New York, NY (Daniel P. Phillips of counsel), for defendant.
Gerald Lebovits, J.

In this rent-overcharge action, defendant-landlord, Carmine Limited, moves for partial summary judgment dismissing plaintiff-tenant Margaret Nadler's first, second, and third causes of action. The motion is granted.

BACKGROUND

Since October 2006, plaintiff has rented and resided in an apartment in a building located at One Christopher Street in Manhattan. (NYSCEF No. 22 at 1-2.) Defendant is the current owner of the building. (NYSCEF No. 2 at 1.) Plaintiff asserts that defendant and its predecessors have been erroneously increasing the rent for her rent-stabilized apartment since at least 1992. (NYSCEF Nos. 2 at ¶ 6, 22 at 5-7.) Plaintiff alleges that the unjustified increases in rent over the years improperly put the rental rate for her apartment above the deregulation threshold in 2003. (NYSCEF No. 2 at ¶¶ 8-9.) Thereafter, defendant and its predecessors continued to charge plaintiff a rental rate comparable to market rate leases. (Id. at ¶ 10.)

Defendant contends on this motion that plaintiff's apartment was lawfully deregulated in 2003 when the last rent-stabilized tenant vacated the apartment. (NYSCEF No. 9 at ¶ 4.) In 2003, defendant argues, the apartment's rent exceeded the "luxury decontrol threshold" and was deregulated according to "high rent vacancy." (NYSCEF Nos. 9 at ¶ 11, 10 at 4.) Defendant does not deny providing plaintiff with market rate leases thereafter. (NYSCEF No. 6 at ¶¶ 12-13.) In support of its motion, defendant provides a copy of the apartment registration information on file with the New York State Division of Housing and Community Renewal ("DHCR") for plaintiff's apartment, (NYSCEF No. 13), as well as several leases and lease renewals for the apartment (NYSCEF Nos. 3-6).

In opposition, plaintiff asserts that the DHCR registration information and the 1993, 2001, 2006, and 2020 leases and lease renewals defendant provided were insufficient to meet defendant's burden of proof. (NYSCEF No. 22 at 1.) Plaintiff asserts that defendant has not shown that the pricing increases based on vacancy and apartment improvements were proper. (Id.) Plaintiff contends that the DHCR registration information reflects only how defendant chose to register the apartment—as opposed to how the apartment should have been registered. (Id. at 5.) Additionally, plaintiff asserts that the rental increases violated the New York City Rent Guidelines Board's orders because defendant took a vacancy increase in addition to a renewal lease increase. (Id. at 5-6.)

In reply, defendant asserts that it correctly complied with the Rent Guidelines Board's orders by taking both a vacancy increase and a renewal increase in 1992 and 1993. (NYSCEF No. 26 at 5-6.) Defendant further contends that plaintiff's claims are barred by the four-year statute of limitations for overcharge claims, and that no exception to this lookback period applies here because plaintiff has not asserted claims of fraud. (Id. at 6-8.) Additionally, defendant maintains that under pre-Housing Stability and Tenant Protection Act of 2019 ("HSTPA") rent stabilization laws, it was not required to keep records relating to apartment improvements more than four years prior to the last registration in 2003. (Id. at 9.)

DISCUSSION

I. Plaintiff's First Cause of Action

Plaintiff's first cause of action is for a declaratory judgment that (i) her apartment is subject to rent stabilization law; and (ii) plaintiff is entitled to a new lease pursuant to this law. (NYSCEF No. 2 at ¶ 27.) Plaintiff alleges that defendant unjustifiably increased the rent for her apartment as early as 1992, and that these increases improperly put plaintiff's apartment over the deregulatory threshold. (NYSCEF No. 2 at ¶¶ 6, 8-9; NYSCEF No. 22 at 5-7.)

Defendant improperly frames plaintiff's first and second causes of action as overcharge claims. In an overcharge claim, defendant seeks monetary damages for excessive rent paid during the recovery period. (Regina Metro. Co. v New York State Div. of Hous. & Cmty. Renewal, 35 NY3d 332, 351 & n 4 [2020].) Plaintiff's first and second causes of action only seek declaratory and injunctive relief related to deregulatory status—not monetary damages. Plaintiff's first and second causes of action, which are not overcharge claims, should not be assessed as such.

This court may look at the rental history surrounding the deregulation of plaintiff's apartment in 2003 for plaintiff's first cause of action, to determine whether the apartment was [*2]properly deregulated. (See Mautner-Glick Corp. v Higgins, 2019 NY Slip Op 29129, *19 [App Term 1st Dept 2019]; Diagonal Realty, LLC v Linares, 2020 NY Slip Op 51572[U], *1-2 [App Term 1st Dept 2020]; accord Kostic v New York State Div. of Hous. & Cmty. Renewal, 188 AD3d 569, 569 [1st Dept 2020] ["Regardless of its age, an apartment's rent history is always subject to review to determine whether a unit is rent-stabilized . . . ."].) Defendant's reliance on case law stating that a four-year statute of limitations applies is misplaced because the cases it cites focus on overcharge claims, not on whether a unit has remained rent-stabilized. (NYSCEF No. 30 at 1; NYSCEF No. 26 at 6.)

To oppose a summary-judgment motion, a party must present an issue of fact still in dispute. (Zuckerman v City of New York, 49 NY2d 557, 562 [1980].) If an opposing party solely provides the court with "bare, conclusory allegations" or a "repetition of the allegations of the complaint," it has not met its burden. (Oates v Marino, 106 AD2d 289, 291 [1st Dept 1984].) Plaintiff has not established that factual disputes exist about the lawful rent for her apartment that would preclude summary judgment. Defendant's motion for partial summary judgment on plaintiff's first cause of action is granted.

Plaintiff claims there are issues of fact regarding defendant's rental calculations leading up to the apartment's deregulation. Plaintiff argues that defendant improperly took a vacancy increase and a two-year renewal increase in 1992 and 1993 when it was only permitted to take one or the other. (NYSCEF No. 22 at 5-6.) Plaintiff relies on this assertion to argue that the "DHCR rent registration is fraught with improper rent increases." (Id. at 1.) But the New York City Rent Guidelines Board orders provided by defendant indicate otherwise. (NYSCEF Nos. 28, 29.) For example, Order No. 23 from June 24, 1991, states that leases renewed between 1991 and 1992 should be renewed according to annual adjustments in addition to "such further adjustments as may be authorized by law." (NYSCEF No. 29 at 2.) These further adjustments included vacancy rates, as indicated by the language of Order No. 23: "The levels of rent increase governing a new tenancy commencing on or after October 1, 1991 and on or before September 30, 1992 are . . . those set forth above for lease renewals, plus 5% over the rent charged." (Id.) Thus, contrary to what plaintiff contends, there appears no reason to question the leases registered by defendant with the DHCR. The record establishes instead that defendant properly took a vacancy increase and a two-year renewal lease when permitted to do so.

Plaintiff also claims that defendant did not meet its burden of proof on this motion because defendant solely relied on four lease agreements and the DHCR registration information annexed as exhibits. Plaintiff asserts that these documents "do not prove the regulatory status of the [a]partment." (NYSCEF No. 22 at 1, 7.) But defendant also provided this court with two full New York City Rent Guidelines Board orders, which, as stated above, show that defendant was permitted to impose the rent increases it registered with the DHCR. (NYSCEF Nos. 28, 29.)

Additionally, there is no merit to plaintiff's argument that summary judgment should be denied because further discovery is warranted about the apartment improvements. Although plaintiff's discovery demands seek a variety of documentation, (NYSCEF No. 24), plaintiff's opposition focuses on her request for information regarding the rent increase connected to the improvements listed on the DHCR registration for 1994 (NYSCEF No. 22 at 6-7). Specifically, plaintiff states in her opposition that defendant has not answered her discovery demands "showing the type and cost of the work performed in the [a]partment to support the individual apartment improvement rent increases." (Id. at 4.)

Under pre-HSTPA law, though, defendant was not required to maintain or produce [*3]documents pertaining to improvements outside the four-year period prior to its most recent registration.[FN1] (9 NYCRR 26-516[a]; see also Fuentes v Kwik Realty LLC, 186 AD3d 435, 438 [1st Dept 2020] ["[A]lthough defendant concededly failed to maintain records of the alleged [apartment improvements], there is no requirement under the statute that such records be maintained indefinitely."].) Defendant's last registration for the apartment was in 2003 when the apartment was registered as "permanently exempt" according to high-rent vacancy deregulation. (NYSCEF No. 13 at 4.) Because all registered apartment improvements occurred outside the four-year period prior to 2003, defendant is not required to produce such documentation in discovery.

Absent a nonspeculative basis to believe that further discovery will uncover relevant and material evidence, defendant's partial-summary-judgment motion is not premature, as plaintiff would have it. (See Flores v City of New York, 66 AD3d 599, 600 [1st Dept 2009].)

II. Plaintiff's Second Cause of Action

Plaintiff's second cause of action is for injunctive relief ordering defendant to provide plaintiff with a rent-stabilized renewal lease. (NYSCEF No. 2 at ¶ 29.) This claim turns on plaintiff's first cause of action, arguing that her apartment is subject to rent-stabilization. As discussed above, the first cause of action fails. Plaintiff's second cause of action is therefore subject to dismissal as well.

III. Plaintiff's Third Cause of Action

Plaintiff's third cause of action is for a money judgment against defendant, seeking three times the amount of the alleged rent overcharge (plus attorney fees). (NYSCEF No. 2 at ¶ 31.) This cause of action must be dismissed as time-barred.

The governing regulations provide that a lawsuit alleging overcharge claims must be filed "within four years of the first overcharge alleged, and no determination of an overcharge and no award or calculation of an award of the amount of an overcharge may be based upon an overcharge having occurred more than four years before the complaint is filed." (9 NYCRR 2526.1.) In 2019, HSTPA extended this four-year lookback period to six years. Plaintiff has alleged on this claim that she was first overcharged by defendant in her initial lease commencing in October 2006—nearly 16 years before plaintiff brought this action. (NYSCEF No. 2 at 14.) And a plaintiff may not amend a complaint to withdraw overcharge claims that accrued outside the statute of limitations in order to save the rest. (Direnna v Christensen, 57 AD3d 408, 408 [1st Dept 2008].) Because the first overcharge alleged here occurred more than six years before the complaint was filed, plaintiff's overcharge claims are untimely.

Nor does the fraud exception to the six-year lookback period render timely plaintiff's overcharge claim. A court may permit review of rental history beyond the designated period if a [*4]"tenant produced evidence of a fraudulent scheme to deregulate." (Regina Metro., 35 NY3d at 335.) Fraud consists of "evidence [of] a representation of material fact, falsity, scienter, reliance and injury." (Id. at 336 n 7; see also Barbarito v Zahavi, 107 AD3d 416, 419 [1st Dept 2013] [finding that plaintiff's cause of action for fraud failed because they did not allege material misrepresentations of fact].) Plaintiff did not plead any claims of fraud in her complaint or her opposition papers on this motion.[FN2]

Accordingly, it is

ORDERED that defendant's motion for partial summary judgment dismissing plaintiff's first, second, and third causes of action is granted, and those claims are dismissed; and it is further

ORDERED that the balance of the action is severed and shall continue.

DATE 8/11/2023 Footnotes

Footnote 1: Although high-rent vacancy deregulation was abolished by HSTPA, defendant's position is that the apartment was permissibly deregulated in 2003 when high-rent deregulation was still in effect. Thus, assessing whether the 2003 deregulation was proper entails looking to pre-HSTPA law.

Footnote 2: Plaintiff and defendant each also argue that the opposing party's motion is not supported by an affidavit of someone with personal knowledge and thus should be disregarded. (NYSCEF No. 22 at 1; NYSCEF No. 26 at 4.) These arguments are unpersuasive. The challenged affidavits permissibly "serve as a vehicle for the submission of acceptable attachments providing . . . evidentiary proof in admissible form." (Zuckerman, 49 NY2d at 563; see also Bovis Lend Lease LMB, Inc. v St. Paul Fire & Marine Ins. Co., 2011 NY Slip Op 30763[U], at *6-7 [Sup Ct, NY County Mar. 31, 2011] [rejecting nonmovant's argument that a summary-judgment motion must be denied because it is not supported by an affidavit from an individual with personal knowledge].)