DORIS LING-COHAN, J.S.C
In this action, commenced by two residential tenants against their land County defendant/landlord moves for leave to renew and/or reargue a portion of this court's decision dated April 16, 2012, and plaintiffs/tenants cross move for an order to strike certain discovery. For the following reasons, both motions are denied.
Plaintiffs Mark Dignam (Dignam) and Laura Leopard (Leopard) are tenants of apartment 9E, in a residential apartment building (the building), located at 305 Riverside Drive in the County, City and State of New York. See Notice of Motion, Paul Affidavit, Exhibit A (complaint), ¶¶ 3-11. Defendant 305 Riverside Corp. a/k/a 305 Riverside Dr. Corporation (305 Riverside) is the building's owner and landlord. Id., ¶4.
On April 22, 2010, plaintiffs commenced this action by serving a summons and complaint setting forth causes of action for: 1) a declaratory judgment that apartment 9E is rent stabilized; 2) an injunction requiring 305 Riverside to register apartment 9E as a rent stabilized unit; 3) rent overcharge; and 4) attorney's fees. See Notice of Motion, Paul Affidavit, Exhibit A. Defendants answered on August 12, 2010. Id., Exhibit B.
On April 16, 2012, this court issued a decision that denied 305 Riverside's motion for summary judgment to dismiss the complaint and granted plaintiffs' cross-motion for partial summary judgment on the complaint (motion sequence number 001). See Notice of Motion, Welikson Affirmation, Exhibit A (decision). The court's April 16, 2012 decision stated, in relevant part, as follows:
305 Riverside ... seeks to dismiss the balance of plaintiffs' first cause of action on the ground that the declaration that they seek would require the examination of rent records older than those permitted by the applicable four-year statute of limitations. See Memorandum of Law in Opposition to Cross Motion, at 2-11. Plaintiffs reply that the law permits the court to look beyond the four-year statute of limitations in order to ascertain whether a rent calculation was the product of fraud. See Sokolski Affirmation in Reply, ¶15. Plaintiffs are correct.
In Matter of Grimm v State of N.Y.Div. of Hous. & Community Renewal Off. of Rent Admin. (15 N.Y.3d 358, 362 ), the Court of Appeals squarely held that:
On this appeal, we are asked to determine whether the rationale employed in Thornton v. Baron ... which allowed the parties to look back farther than four years, applies in a situation where it is alleged that the standard base date rent is tainted by fraudulent conduct on the part of a landlord. We conclude that it does, and that such base date rent may not be used as a basis for calculating subsequent regulated rent if fraud is indeed present [internal citation omitted].
Here, 305 Riverside argues that "there is no fraudulent scheme alleged or shown with respect to this action." See Memorandum of Law in Opposition to Cross Motion, at 8-10. Plaintiffs reply that the unexplained increase of Shapiro's and Benezra's rent from $1, 098.00 to $1, 800.00 in 2004, and the subsequent further increase of apartment 9E's rent to $2, 600.00 when Abrahami [a prior tenant] took possession of it in 2005, "clearly warrants ... an inquiry into the circumstances, because ... the lack of evidence to support the rent increase[s]... indicate[s] fraud." See Sokolski Affirmation in Reply, ¶ 16.
In Grimm, the Court of Appeals also held that:
Generally, an increase in the rent alone will not be sufficient to establish a "colorable claim of fraud, " and a mere allegation of fraud alone, without more, will not be sufficient to require DHCR to inquire further. What is required is evidence of a landlord's fraudulent deregulation scheme to remove an apartment from the protections of rent stabilization. As in Thornton, the rental history may be examined for the limited purpose of determining whether a fraudulent scheme to destabilize the apartment tainted the reliability of the rent on the base date.
Id. at 367. The evidence at hand - which consists of documents evincing significant unexplained rent increases - may not be sufficient to "indicate fraud, " as plaintiffs argue; however, it is sufficient to warrant a further inquiry herein, as to whether 305 Riverside was engaged in a "fraudulent deregulation scheme to remove an apartment from the protections of rent stabilization", when it made the subject increases. Therefore, the court rejects 305 Riverside's statute of limitations argument, and ...