| Roberts v Tishman Speyer Props., L.P. |
| 2011 NY Slip Op 07717 [89 AD3d 444] |
| November 3, 2011 |
| Appellate Division, First Department |
| Amy Roberts et al., Respondents, v Tishman SpeyerProperties, L.P., et al., Defendants, and Metropolitan Insurance and Annuity Company et al.,Appellants. |
—[*1] Wolf Haldenstein Adler Freeman & Herz LLP, New York (Alexander H. Schmidt ofcounsel), for respondents.
Order, Supreme Court, New York County (Richard B. Lowe, III, J.), entered August 5, 2010,which denied the motion of defendants Metropolitan Insurance and Annuity Company andMetropolitan Tower Life Insurance Company to dismiss this action as against them pursuant toCPLR 3211 (a) (1) and (7), unanimously affirmed, with costs.
In January 2007, plaintiffs commenced this action (Roberts v Tishman Speyer Props., L.P., 62 AD3d 71, 73 [2009][Roberts I], affd 13 NY3d270 [2009]). In the complaint, plaintiffs contended they represented a class of "all personswho are or were, or become, residential tenants of Stuyvesant Town and Peter Cooper Villagewho have signed or will sign a market lease or any lease other than a Rent Stabilized lease forany period during which Defendants (and any successors or assigns) were receiving or arescheduled to receive real estate tax benefits under New York City's J-51 program." Plaintiffssought a declaration that Stuyvesant Town and Peter Cooper Village remain subject to rentstabilization as long as defendants receive J-51 tax benefits; plaintiffs also sought the differencebetween their rents and rent-stabilized rents for the four-year period preceding thecommencement of their action. They estimated their damages at not less than $215 million.
In Roberts v Tishman Speyer Props., L.P. (13 NY3d 270 [2009] [Roberts II]),the Court of Appeals set out defendants' position as "[defendants] moved to dismiss thecomplaint for failure to state a cause of action, arguing that the RRRA's exception to deregulationfor apartments that 'became or become' subject to the RSL 'by virtue of' receiving J-51 taxbenefits did not apply to the properties because they did not 'become subject to' the RSL 'byvirtue' of the receipt of J-51 tax benefits. Rather, the apartment complex 'became subject to rentstabilization in or prior to 1974,' nearly two decades before MetLife [i.e., Met Insurance and MetTower] first received J-51 benefits" (13 NY3d at 282-283).[*2]
Supreme Court originally dismissed the complaint, butthis Court unanimously reversed (Roberts I, 62 AD3d at 75). The Court of Appealsaffirmed (Roberts II, 13 NY3d at 280, 287). MetLife has now moved to dismiss, arguingthat Roberts II should not be applied retroactively.
The motion court properly gave retroactive effect to Roberts II. The motion courtrejected MetLife's argument that retroactive application of Roberts II would violate dueprocess: "MetLife's argument is based upon its assertion that the Decision was unforeseen. . . [T]he Decision was not unforeseen . . . Therefore, the retroactiveapplication of the Decision is neither 'unexpected and indefensible to the law as it then existed'nor an 'arbitrary change[ ] in the law' " (citations omitted). The background or default rule is thatjudicial decisions have retrospective effect (see e.g. Harper v Virginia Dept. of Taxation,509 US 86, 94 [1993]; Gurnee v Aetna Life & Cas. Co., 55 NY2d 184, 191 [1982],cert denied 459 US 837 [1982]). Prospective application is an exception which shouldnot be permitted to swallow the rule (see People v Favor, 82 NY2d 254, 263 [1993]).
"The threshold question . . . is whether [the case whose retroactivity is at issue]is really a 'new' rule of law at all" (Favor, 82 NY2d at 262-263; see also Matter ofAmericorp Sec. v Sager, 239 AD2d 115, 117 [1997], lv denied 90 NY2d 808 [1997]["Before reaching any of [the three] factors, the threshold question of whether the rulingat issue is really a new rule of law at all must be answered" (emphasis added)]). " 'A judicialdecision construing the words of a statute . . . does not constitute the creation of anew legal principle' " (Pachter v BernardHodes Group, Inc., 10 NY3d 609, 616 n 3 [2008], quoting Gurnee, 55 NY2d at192; see also People v Hill, 85 NY2d 256, 261-262 [1995] ["Since (the case whoseretroactivity was in question) construed the words of a statute, it established no new legalprinciple . . . The construction of a statute is . . . the exercise ofdetermining the intent of the Legislature when the act was passed"]).
Defendants claim that "the requirement that a decision announce a new principle of law isnot a threshold requirement to the three-prong Gurnee test." This ignores the clearlanguage of Favor (82 NY2d at 262) and Americorp (239 AD2d at 117).
Defendants note that when the Favor Court quoted Gurnee, the Court said, "'[a] judicial decision construing the words of a statute [for the first time] does notconstitute the creation of a new legal principle' " (82 NY2d at 263 [emphasis added]). Defendantscontend that Roberts II should not be deemed a first-time construction of a statutebecause it overruled established Division of Housing and Community Renewal (DHCR)precedent. However, both Favor and Gurnee talk of judicial decisionsconstruing a statute. A DHCR opinion letter or regulation is not a judicial decision. In addition,when the Court of Appeals more recently quoted Gurnee in Pachter (10 NY3d at616 n 3), it did not add "for the first time." Similarly, Hill, which postdates Favor,did not add the "first time" requirement (85 NY2d at 262).
It is true that courts sometimes engage in a tripartite analysis even after deciding that the casewhose retroactivity is at issue did not establish a new rule of law (see e.g.,Americorp, 239 [*3]AD2d at 117-118). However, inPachter, the Court of Appeals rejected the defendant's "argument that our conclusionshould be applied prospectively only" without further analysis (10 NY3d at 616 n 3).Concur—Tom, J.P., Saxe, Catterson, Moskowitz and Manzanet-Daniels, JJ.
Motion to supplement record granted.