| Jemrock Realty Co. LLC v Krugman |
| 2010 NY Slip Op 02837 [72 AD3d 438] |
| April 6, 2010 |
| Appellate Division, First Department |
| Jemrock Realty Co. LLC, Respondent, v Jay Krugman,Appellant. |
—[*1] The Abramson Law Group, PLLC, New York (Jeff Bodoff of counsel), forrespondent.
Upon remittitur from the Court of Appeals (13 NY3d 924 [2010]), the order of the AppellateTerm of the Supreme Court of the State of New York, First Department, entered on or aboutDecember 4, 2007, in effect, modifying the order of Civil Court, New York County (Jean T.Schneider, J.), entered on or about September 29, 2006, which, after a nonjury trial, directedjudgment in respondent tenant's favor in the amount of $37,847.92, to the extent of awardingpossession of the apartment to petitioner landlord, declaring that landlord is entitled to a rentincrease above the $2,000 luxury decontrol threshold for improvements and remanding thematter to Civil Court for a determination of the rent arrears owed by tenant to landlord,unanimously affirmed, without costs.
Jemrock Realty Co. LLC (landlord) commenced this proceeding in Civil Court seeking rentarrears and possession of apartment 16E at 210 West 101st Street in Manhattan based onKrugman's (tenant) rent arrears. Tenant answered, asserting, inter alia, that his monthly rent wasillegal under the Rent Stabilization Code (RSC). Specifically, tenant challenges an individualapartment increase (IAI) claimed by the landlord pursuant to RSC (9 NYCRR) § 2522.4(a) (1) for work performed in the apartment during the vacancy period prior to tenant'soccupancy.
When the prior long-term, rent-stabilized tenant vacated the apartment, landlord retained acontractor to perform work in the apartment to prepare it for the new tenant. Landlord paid thecontractor a total sum of $50,000 for the extensive work performed in the apartment, whichlandlord then used as an IAI to increase the apartment's legal rent. The last rent-stabilized tenantpaid a monthly rental of $920.12 and vacancy and longevity increases raised the rent to$1,247.68. Landlord then claimed an additional monthly improvement increase of $1,250 (onefortieth of $50,000), raising the legal rent above $2,000 and exempting the premises fromregulation. Landlord relied upon the $50,000 figure in the notice and certification attached to thelease entered into by Krugman as the basis for the increase. The monthly rent for the apartmentwas listed as $3,600.
At a nonjury trial, landlord proved that the contractor performed extensive work in theapartment for which he was paid $50,000. Civil Court further found that the contractorperformed work that included renovations that were "extensive and substantial," as well as [*2]repairs. Civil Court denied the IAI because it found "no reliablecontemporaneous evidence breaking down the cost of the work so that the court can distinguishbetween the cost of extensive repairs and the cost of allowable improvements." Appellate Term,however, over a dissent, reversed Civil Court's determination that landlord was not entitled to therent increase for improvements, and as a result held that the increased monthly rent properlyexceeded $2,000. Specifically, Appellate Term reasoned that no breakdown of costs wasnecessary to distinguish between costs of allowable improvements and costs of repairs, wherethe work involved extensive renovations. A divided panel of this Court affirmed (64 AD3d 290[2009]), essentially for the reasons expressed by Appellate Term.
On appeal, the Court of Appeals reversed this Court on limited grounds, explaining: "Thiscase turns on the factual issue of whether the landlord's expenditures for 'improvements' were atleast equal to the amount (approximately $30,000) necessary to bring the legal rent above theluxury decontrol threshold. Contrary to the contentions of both parties, and to the majority anddissenting opinions at the Appellate Division, the resolution of that issue is not governed by anyinflexible rule either that a landlord is always required, or that it is never required, to submit anitem-by-item breakdown, showing an allocation between improvements and repairs, where thelandlord has engaged in extensive renovation work. The question is one to be resolved by thefactfinder in the same manner as other issues, based on the persuasive force of the evidencesubmitted by the parties" (13 NY3d at 926).
On this issue, the Court of Appeals pointed out, Appellate Term found that "landlord hadmet its burden of showing that its expenditures on improvements exceeded the requisite amount"(id.). The Court of Appeals, however, remitted the action to this Court because we"erroneously decided this question as a matter of law, and did not exercise [our] power to reviewthe facts" (id.).
Exercising our authority to review the record developed at trial and render the judgmentwarranted by the facts (see Northern Westchester Professional Park Assoc. v Town ofBedford, 60 NY2d 492 [1983]), we find that landlord's expenditures for improvements weresufficient to bring the legal rent for the unit above the luxury decontrol threshold. The trialevidence established, and it is not disputed, that the renovations included installing new kitchencabinets, counter tops and appliances; installing a ceramic tile floor; replacing kitchen andbathroom plumbing; rewiring the apartment's electrical lines and replacing electrical outlets,switches and fixtures; and replacing moldings. On the other hand, the repairs included repairingthe kitchen underflooring, repairing walls, refinishing the wood floors, and plastering andpainting of the entire apartment. Such evidence, in our view clearly establishes that landlord'sexpenditures for[*3]"improvements" vis-à-vis repairs wereat least equal to $30,000, the amount necessary to bring the legal rent above the luxury decontrolthreshold. Concur—Saxe, J.P., Sweeny, McGuire, Renwick and Freedman, JJ. [PriorCase History: 18 Misc 3d 15.]