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Rosenzweig v. 305 Riverside Corp.

Supreme Court, New York County

August 16, 2013

305 RIVERSIDE CORP aka 305 RIVERSIDE DR. CORPORATION Index No. 116367-2009

Unpublished Opinion

Hon. George J. Silver Justice

The following papers, numbered 1 to 4 were read on this motion for Notice of Motion/ Order to Show Cause — Affirmation — Affidavit(s) —

Exhibits............................................................................................. No(s)-1-2-

Answering Affirmation(s) — Affidavit(s) — Exhibits ................................ No(s).3

Replying Affirmation — Affidavit(s) — Exhibits............................... No(s).4

Upon the foregoing papers, it is ordered that the motion is

Plaintiff Robert H. Rosenzweig ("Plaintiff) moves pursuant to CPLR§2221(d) and (e) for an order granting leave to renew and reargue the motion Court's prior Order dated June 14, 2012 and upon renewal and reargument, seeks to vacate a portion of the prior order. Defendant 305 Riverside Corp. ("Defendant") opposes this motion. I

In the underlying motion, Defendant moved for summary judgment and asked the Court to declare that $9, 797.32 is the legal regulated rent-stabilized rent for Plaintiffs apartment, to award Defendant a judgment in ejectment on its counterclaim, and to dismiss Plaintiffs second, third, and fourth causes of action. The motion Court, in partial reliance on the Appellate Term's decision in 72A Realty Associates v. Lucas, 32 Misc.3d 47, 929 N.Y.S.2d 349 (N.Y. App. Term. 2011) ("Lucas") held that in order to calculate rent, the Court should look back to the rent charged four years immediately preceding an overcharge complaint and then add allowable rent stabilized increases. The motion Court held that there are issues of fact remaining which preclude the granting of summary judgment on the issue of what the calculated rent should be for this apartment. Further, the motion Court found that the major rent stabilized increase at issue in this case is the amount of Major Capital Improvements ("MCI's"), to which the motion Court found that Plaintiff raised issues of fact. Specifically, the motion Court found there were issues of fact as to whether the work claimed was actually done in the renovation of the apartment and whether the value of the work was inappropriately padded or bolstered. Lastly, the motion Court dismissed Plaintiffs claims for treble damages, where it found no evidence of Defendant's willfulness in their overcharge.

After the motion Court issued its decision in June 2012, The Appellate Division, First Department vacated two portions of the Appellate Term decision in Lucas, holding that the Appellate Term erred in setting the base date rent for the overcharge counterclaim at the 2004 rent of $2, 250/month. (72A Realty Associates v. Lucas, 101 A.D.3d 401, 955 N.Y.S.2d 19 (2012)) The Appellate Division found that where the deregulation)was improper and the record doesn't clearly establish the validity of the rent increase which brought the rent-stabilized amount over $2, 000, the Appellate Term should not have adopted the free market lease. Further, the Appellate Division found that the Appellate Term erred in dismissing Plaintiffs claim for treble damages, finding that the record did not contain anything to support Landlord's renovation claim, including but not limited to bills, contracts, or records of payment. The Appellate Division held that further inquiry was required to determine whether the overcharge was willful or the result of reasonable reliance on a DHCR regulation.

In support of this motion to reargue, Plaintiff avers that the motion Court made an incorrect determination in finding that Defendant exhibited no fraud when it refused to recognize Plaintiffs premises as rent stabilized. Having found no evidence of fraud, the motion Court limited its inquiry into the apartment's rent history (in order to be able to determine proper rent) to the four years prior to Plaintiffs filing the complaint. Plaintiff argues that if the historical rent charged is found to be unlawful or fraudulent, then the rental agreement between Plaintiff and Defendant is void and therefore, the Court must look back at the entire relevant rental history in order to calculate the new, post-renovation rent. Further, the motion Court's incorrect finding of lack of willfulness on the part of Defendant caused the motion Court to incorrectly dismiss Plaintiffs claim for treble damages. Plaintiff argues that once the Roberts v. Tishman Speyer Properties, LP, 13 N.Y.3d 279, 918 N.E.2d 900 (“Roberts”)decision came down from the Court of Appeals in October 2009, Defendant should have immediately changed Plaintiffs rent from deregulated to regulated, which it did not do. Plaintiff argues that the motion Court should have found that Defendant's failure to acknowledge Plaintiffs regulated status was willful.

In support of his motion to renew, Plaintiff argues that there has been a change in the law which warrants vacating a portion of the motion Court's prior order. Plaintiff argues he is entitled to reargument based upon the Appellate Division's decision in Lucas. Plaintiff argues that Defendant claims it spent over $233, 000 for renovations to the apartment and the only evidence of the renovations is a contract proposal, which provides no breakdown for the contractors alleged charges. The Appellate Division in Lucas opined that the entire rental history of the apartment should be examined where the Landlord spent $30, 000 in renovations and failed to substantiate it with evidence. Plaintiff argues that Defendant's claims of a $233, 000 renovation to his apartment also requires a complete examination for fraud or wilfulness in accordance with the Lucas precedent.

In opposition, Defendant argues that Plaintiffs application to the Court lacks merit. Defendant entered into a deregulated two-year lease with Plaintiff on December 4, 2007 for the period from January 1, 2008- December 31, 2009 at an agreed upon rent of $ 10, 000/month. After the parties entered into the lease, the Court of Appeals issued its decision in Roberts, which in relevant part held that landlords and building owners were no longer able to utilize luxury deregulation mechanisms while receiving J-51 tax benefits. Defendant admits that it improperly deregulated Plaintiffs apartment, but only became aware of its improper deregulation post-Roberts. However, Defendant contends that Plaintiffs reliance on the Appellate Division's Lucas decision is inapplicable Where Lucas is about whether the record establishes the validity of the rent increase that brought the rent-stabilized apartment above $2000/month after renovations were made to the apartment. Defendant argues that the Appellate Division's decision in Lucas is factually specific and distinguishable from this case where the pre-renovation rent-stabilized value for Plaintiffs apartment was $2, 178.00 per month, already over the $2, 000/month threshold. Defendant argues that the only question left for the Court, which the motion Court stated in its prior order, is to determine whether the improvements made to Plaintiffs apartment were sufficient to justify the increased rent sought by Defendants.

Defendant argues it provided evidence of the improvements as part of its original motion for summary judgment, including an affidavit from Plaintiff s expert, Susan Treanor, attesting to which work was actually completed, an affidavit from the Defendants expert, Frederick Porcello, who stated the expenditure was relatively low for the size of the Apartment and explaining the work which he completed. Defendants also attached copies of checks for the completed work. Defendants argue that until the Roberts decision came down from the Court pf Appeals in October 2009, there was no reason for Defendant to believe that it needed to justify its increased rent by showing extensive and inflated renovations. Defendant believed it was entitled to the luxury ...

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