| Jazilek v Abart Holdings, LLC |
| 2010 NY Slip Op 03165 [72 AD3d 529] |
| April 20, 2010 |
| Appellate Division, First Department |
| Roger Jazilek, Respondent, v Abart Holdings, LLC,Appellant. |
—[*1] Sokolski & Zekaria, P.C., New York (Robert E. Sokolski of counsel), forrespondent.
Judgment, Supreme Court, New York County (Judith J. Gische, J.), entered December 11,2009, awarding plaintiff principal damages of $12,377.85, treble damages of $31,205.31, andlegal fees of $30,545.86, unanimously affirmed, with costs. Appeal from amended order (samecourt and Justice), entered October 28, 2009, which granted plaintiff's motion and denieddefendant's cross motion for summary judgment, unanimously dismissed, without costs, assubsumed in the appeal from the judgment.
Defendant owns the apartment building at 50 East Third Street in Manhattan. From about1981 through March 2002, defendant leased apartment 1B to a prior tenant, under arent-stabilized lease. The stabilized tenant then agreed to vacate the premises and surrender all ofher rights. The apartment's registered legal rent on file with the State Division of Housing andCommunity Renewal at that time was $812.34 per month.
After the tenant of record vacated the premises, the landlord commenced a holdoverproceeding in housing court against plaintiff herein, on the grounds that he was an illegalsubtenant. On April 2, 2002, the parties executed a so-ordered settlement stipulation whereby thelandlord offered plaintiff a two-year lease in his own name, at a monthly rent of $2,200, with a"preferential rent" of $1,800 per month during the two-year term.
On April 2, 2002, in accordance with the stipulation, the parties executed a two-year leasewith a rider reciting that the apartment's "legal regulated rent" was $2,200 and providing for a"lower preferential rent" of $1,800 during the term of the lease. In March 2004, the partiesexecuted a renewal lease with a similar rider reciting a "legal regulated rent" of $2,299 permonth and a preferential rent of $1,881.
In July 2005, plaintiff commenced this action seeking a declaration that the stipulation was"void as against public policy" because it violated the Rent Stabilization Law (RSL) and RentStabilization Code (RSC), and that he was the apartment's "lawful rent-stabilized tenant," andalso a declaration as to the apartment's maximum legal rent. Plaintiff also sought damages andtreble damages for any rent overcharges, as well as attorneys' fees. On a prior appeal, the Courtof Appeals held that the "stipulation violates the Rent Stabilization Code and is void as against[*2]public policy"(10 NY3d 943, 944 [2008]).
We reject defendant's contention that since the Court of Appeals held the stipulation to bevoid, the parties should be restored to the status quo ante the stipulation, thus permittingdefendant to pursue its claims against plaintiff as a holdover from an illegal sublet. Review ofthe parties' lease reveals it was a freestanding agreement, not specifically tied to the stipulation.Rather than incorporating or otherwise referring to the stipulation, the lease instead contains amerger clause expressly reciting that "[a]ll promises made by the Landlord are in this lease.There are no others." Additionally, the stipulation did not in any way compel defendant to renewplaintiff's lease, which the landlord did in 2004. Hence, even assuming that the initial lease was,contrary to its own terms, inextricably bound to the voided stipulation, the renewal lease wascompletely independent of the stipulation.
Moreover, the holding of the Court of Appeals specifically voided only the stipulation, notthe parties' lease agreement. The lease expressly provided that if any of its terms were found tobe "illegal, the rest of this lease remains in full force." Hence, although the lease provisionsetting the rent at $2,200 and deregulating the apartment is violative of the RSL and thus void,the balance of the lease, and with it the parties' landlord-tenant relationship, is unaffected(see Rent Stabilization Code [RSC] [9 NYCRR] § 2520.12 ["(t)he provisions ofany lease . . . shall remain in force pursuant to the terms thereof, except insofar asthose provisions are inconsistent with . . . the RSL or this Code, and in such eventsuch provisions shall be void and unenforceable"]).
In calculating the amount of the rent overcharges, the motion court correctly declined toapply any periodic or other rent increases, other than a vacancy increase of 20% (seeRSC § 2522.8 [a] [1]), which the parties agreed applied. A landlord's failure to file a"proper and timely" annual rent registration statement results in the rent being frozen at the levelof the "legal regulated rent in effect on the date of the last preceding registration statement"(RentStabilization Law [Administrative Code of City of NY] § 26-517 [e]; see RSC§ 2528.4 [a]). The rent registration filed by the landlord in February 2004 was false, as itcontinued to list the prior tenant as tenant of record, and listed the prior rent of $812.34, insteadof the actual paid "preferential" rent of $1,800. The rent registration filed in June 2004 was alsodefective, as it listed a legal rent of $2,200, vastly in excess of $974.81, the highest possible legalrent at that time. As such, both the February and the June 2004 rent registration statements werenullities (Thornton v Baron, 5NY3d 175 [2005]), and no further registration statements were filed.
The court also correctly held treble damages to be applicable. In support of its argument thatthe overcharge was not willful, defendant relies on the so-ordered stipulation containing theagreed-upon rental figure of $2,200. Although that document recites that the rent for theapartment shall be set at $2,200 per month, there is no representation that this number constitutesthe apartment's legal regulated rent. In any event, a representation in a stipulation—even aso-ordered stipulation—"is not to be equated with a judicial finding" (Urban Assoc. vHettinger, 177 AD2d 439, 439 [1991], lv denied 79 NY2d 759 [1992]). Hence, itcannot be presumed that in so-[*3]ordering the stipulation, thehousing court was making any finding that the stated monthly rent was the legal regulated rent.Concur—Andrias, J.P., Sweeny, Renwick, Abdus-Salaam and Manzanet-Daniels, JJ.