| 72A Realty Assoc. v Lucas |
| 2012 NY Slip Op 08241 [101 AD3d 401] |
| December 4, 2012 |
| Appellate Division, First Department |
| 72A Realty Associates, Appellant-Respondent, v SandraLucas, Respondent-Appellant, et al., Respondents. |
—[*1] Sokolski & Zekaria, P.C., New York (Robert E. Sokolski of counsel), forrespondent-appellant. Borah, Goldstein, Altschuler Nahins & Goidel, P.C., New York (Paul N. Gruber of counsel),for amicus curiae.
Order of the Appellate Term of the Supreme Court, First Department, entered June 13, 2011,which, to the extent appealed from, affirmed those portions of the order of the Civil Court, NewYork County (Peter M. Wendt, J.), entered on or about May 25, 2010, granting respondenttenant's motion to dismiss the holdover petition and denying petitioner landlord's cross motionfor summary judgment on the petition, denying tenant's rent overcharge counterclaim to theextent it sought treble damages, and directing a hearing on the issue of rent overcharges based ona base date rent amount of $2,250, and modified that portion of the order conditionally grantingher counterclaim for attorneys' fees to deny that counterclaim, unanimously modified, on the law,to vacate the base date rental rate determination and reinstate tenant's counterclaims for trebledamages and attorneys' fees to the extent indicated below, and remand for further inquiry onthose issues, and otherwise affirmed, without costs.
In light of the Court of Appeals' decision in Roberts v Tishman Speyer Props., L.P. (13 NY3d 270 [2009]) andsubsequent case law giving retroactive effect to Roberts (Roberts v Tishman Speyer Props., L.P.,89 AD3d 444, 445 [1st Dept 2011]; Gersten v 56 7th Ave. LLC, 88 AD3d 189, 196-197 [1st Dept2011]), tenant is entitled to rent-stabilized status for the duration of her tenancy and to collect anyrent overcharges, as her apartment was improperly deregulated by landlord while it was receivingJ-51 tax benefits. That the J-51 benefits subsequently expired does not support landlord's claimthat the apartment must be denied ongoing regulated status. Our determination that the tenancy isrent stabilized is not, as found by [*2]the lower courts, based onthe failure of the owner to have provided notice as set forth in Rent Stabilization Law of 1969(Administrative Code of City of NY) § 26-504, but is premised on the apartment havingbeen improperly deregulated as of the time that the tenant took occupancy.[FN*] Additionally, as we explained in Gersten, tenant's challenge to the deregulated status ofher apartment, which presents a "continuous circumstance" (88 AD3d at 198-199), is not barredby the six-year statute of limitations period set forth in CPLR 213 (2).
The courts below, however, erred in setting the base date rent for the overchargecounterclaim at the $2,250 per month rate based on the market rate in the lease effective forOctober 2004. While that date is correct under CPLR 213-a, in light of the improper deregulationof the apartment and given that the record does not clearly establish the validity of the rentincrease that brought the rent-stabilized amount above $2,000, the free market lease amountshould not be adopted, and the matter must be remanded for further review of any availablerecord of rental history necessary to set the proper base date rate.
The courts also erred to the extent they dismissed, as a matter of law, tenant's counterclaimseeking treble damages. Landlord, in its affidavit, states that in 2001, $30,000 worth ofrenovations to the apartment were completed, bringing the monthly rent above the $2,000threshold. However, the record does not contain anything to support landlord's renovation claim,including for example, bills from a contractor, an agreement or contract for work in theapartment, or records of payments for the renovations. A $1,491 monthly increase in rent is asubstantial amount, and landlord did not provide sufficient information to validate the increase.Further inquiry upon remand is required to determine whether the overcharge was not willful, butrather the result of reasonable reliance on a Division of Housing and Community Renewalregulation.
Finally, regarding attorneys' fees, the issue is remanded to the Civil Court for a trial todetermine whether there is a clause in the lease that would entitle tenant to an award of attorneys'fees under Real Property Law § 234 as a prevailing party. If there is such a clause, thedetermination of whether to award her attorneys' fees is best left to the discretion of the trialcourt, taking into account all the facts and circumstances of the case, including whether any [*3]overcharge was willful, and the state of the law with respect toderegulation and J-51 benefits as it existed at the time the proceeding was commenced.Concur—Mazzarelli, J.P., Saxe, DeGrasse, Richter and Abdus-Salaam, JJ. [Prior CaseHistory: 32 Misc 3d 47.]
Footnote *: Rent Stabilization Law §26-504 (c) provides in its last clause that if the dwelling unit would have been subject to rentstabilization in the absence of J-51 benefits, the unit, upon the expiration of the benefits, shallcontinue to be subject to regulation as if that subdivision had never applied. Thus, the noticerequirement plainly does not apply to dwellings, such as the one here, that were subject to rentregulation for a reason other than the receipt of J-51 benefits (see Gersten, 88 AD3d at195). As for tenant's citation to the notice provisions of RPTL 489 (7) (b) (2), that statute isinapplicable on its face, as it applies to "[a]ny dwelling unit subject to rent regulation on orbefore the effective date of this subparagraph [(June 19, 1985)] as a result of receiving a taxexemption or abatement," which is not the case here where this building received J-51 benefits in1991 (see Walsh v Wusinich, 32AD3d 743, 744 [1st Dept 2006]).