| Raden v W 7879, LLC |
| 2018 NY Slip Op 05799 [164 AD3d 440] |
| August 16, 2018 |
| Appellate Division, First Department |
[*1]
| Joel Raden et al., Appellants, v W 7879, LLC, et al.,Respondents. |
Collins, Dobkin & Miller LLP, New York (Seth A. Miller of counsel), forappellants.
Kucker & Bruh, LLP. New York (Nativ Winiarsky of counsel), for respondents.
Judgment, Supreme Court, New York County (Joan M. Kenney, J.), entered January 25,2018, awarding plaintiffs damages for rent overcharges, affirmed, without costs. Appeal fromorder, same court and Justice, entered March 7, 2016, which confirmed the special referee'sreport, dismissed, without costs, as subsumed in the appeal from the judgment.
In 2010, pursuant to Roberts vTishman Speyer Props., L.P. (13 NY3d 270 [2009]), defendants determined thatplaintiffs' previously rent-stabilized apartment had been improperly deregulated and thatplaintiffs were entitled to a rent adjustment and a rent overcharge payment. Defendantscalculated the overcharge according to Rent Stabilization Code (9 NYCRR)§ 2526.1, which provides that "[t]he legal regulated rent for purposes ofdetermining an overcharge shall be deemed to be the rent charged on the base date, plus in eachcase any subsequent lawful increases and adjustments" (subd [a] [3] [i]), and that "nodetermination of an overcharge and no award or calculation of an award of the amount of anovercharge may be based upon an overcharge having occurred more than four years before the[overcharge] complaint is filed" (subd [a] [2]). Defendants chose May 1, 2010, as the date onwhich plaintiffs would be deemed to have filed a claim for overcharges, in the absence of anysuch claim having been filed, and then used these 2526.1 (a) standards to fix the base date fordetermining the overcharge as May 1, 2006, the date four years before they undertook theirreview. Defendants then reduced plaintiffs' rent and forwarded payment to them for theovercharges so reflected. In June 2010 defendants filed registrations for the years 2006, 2007,2008 and 2009 in accordance with these recalculations.
Plaintiffs then brought the instant action seeking declaratory relief, additional overcharges,treble damages and attorneys' fees. After denying defendants' motion for summary judgmentdismissing the complaint, Supreme Court referred the matter to a special referee to hear andreport, directing the referee to calculate the legal rent under the DHCR regulations, calculate theovercharges, determine whether defendants had willfully registered an illegal rent, and, in theabsence of finding fraud or willfulness, apply the four-year statute of limitations to theovercharge claim.
After holding a hearing, the special referee issued a thorough report, concluding thatdefendants had not engaged in any fraud in deregulating the apartment, so that the look-backperiod was limited to four years, and that no willfulness had been shown in the deregulation, sothat plaintiffs were not entitled to treble damages or attorneys' fees, and determined the stabilizedrent and the amount of the overcharge accordingly. The referee found that setting the free marketbase date rent in May 2006 was a reliable method of establishing the stabilized rent and thatfurther look-back was inappropriate, because every lease renewal stated that the apartment wasnot rent-stabilized and defendants could not have anticipated Roberts, which was contraryto industry practice at the time.
Supreme Court confirmed the report and entered judgment accordingly.
[*2] As we have explained in Matter of Regina Metro. Co.,LLC v New York State Div. of Hous. & Community Renewal (164 AD3d 420, 424 [1st Dept 2018] [decided simultaneously herewith]), 9 NYCRR 2526.1 (a) (2) (ii) andCPLR 213-a are "categorical in barring any examination of a unit's rental history beyond thefour-year limitations period," with the sole exception being cases in which there is evidence thatthe landlord committed fraud in order to avoid the regulatory scheme (Matter of Grimm v State of N.Y. Div. ofHous. & Community Renewal Off. of Rent Admin., 15 NY3d 358, 366[2010]).
In Todres v W7879, LLC (137AD3d 597 [1st Dept 2016], lv denied 28 NY3d 910 [2016]), we considered the verybuilding involved in this case and upheld a determination that this same landlord had notengaged in a fraudulent scheme to remove an apartment from the rent stabilization program andhad not acted with willfulness. We therefore modified the ruling of Supreme Court to deny trebledamages and to conclude that CPLR 213-a precluded examination of the rental history before thefour-year period immediately preceding the filing of the action to recover overcharges.
The same result should obtain here. We choose to follow our prior ruling to the same effectin Stulz v 305 Riverside Corp. (150AD3d 558 [1st Dept 2017], lv denied 30 NY3d 909 [2018]) rather than our decisionin Taylor v 72A Realty Assoc., L.P.(151 AD3d 95, 105 [1st Dept 2017]), for the reasons stated in Regina Metro. (164AD3d 420 [1st Dept 2018]). Concur—Sweeny, J.P., Andrias, Kahn, Moulton, JJ.
Richter, J., dissents in a memorandum as follows: I respectfully dissent. I would reverse thejudgment and remand the matter for a recalculation of the rent overcharge in accordance with Taylor v 72A Realty Assoc., L.P. (151AD3d 95 [1st Dept 2017]), for the reasons explained in both Taylor and the dissentin Matter of Regina Metro. Co., LLC v New York State Div. of Hous. & CommunityRenewal (164 AD3d 420 [1st Dept 2018] [decided simultaneously herewith]).