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Diba Family Limited Partnership v. Ross

United States District Court, S.D. New York

October 27, 2014

DIBA FAMILY LIMITED PARTNERSHIP, et al., Plaintiffs,
v.
DAVID ROSS, et al., Defendants.

MEMORANDUM OPINION AND ORDER

LORNA G. SCHOFIELD, District Judge.

This action arises out of long-standing efforts by Plaintiffs, Diba Family Limited Partnership and 170th East 75th LLC, to remove Defendants, David Ross and Helen Werngren-Ross, as tenants in a residential building that Plaintiffs owned. The Complaint (1) alleges a prima facie tort, (2) seeks attorneys' fees that Plaintiffs incurred and (3) requests punitive damages. Defendants move to dismiss the Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted. For the following reasons, Defendants' motion is granted.

BACKGROUND

The facts below are taken from the Complaint and documents incorporated by reference in or integral to the Complaint. These facts are assumed to be true for purpose of this motion.

Plaintiffs owned the property (the "Property"), a townhouse with residential units, located at 170 East 75th Street in New York, New York. The facts in this matter are somewhat involved insofar as, during the pendency of the underlying holdover action in state court, the Property changed hands twice. The Property was first owned by Arthur Brandt, then sold by Brandt to Plaintiffs, and finally sold by Plaintiffs to Hayim and Danielle Grant (the "Grants").

In March 2001, Arthur Brandt, the former owner of the Property, entered into a lease agreement (the "Lease") with Defendant Helen Werngren-Ross for Apartment 2A (the "Unit") at the Property.

The Lease provides that the tenant defaults if he or she "fail[s] to carry out any agreement or provision of this Lease." It further provides that the tenant "must reimburse [the] Owner for... [a]ny legal fees and disbursements for legal actions or proceedings brought by [the] Owner against [the tenant] because of a Lease default by [the tenant] or for defending lawsuits brought against [the] Owner because of [the tenant's] actions."

The Lease was renewed until 2004, when Brandt, the landlord, chose not to renew the Lease. Defendants refused to give up possession of the apartment. In the fall of 2004, Brandt commenced a holdover, or eviction, action in housing court against Defendants, which was refiled for procedural reasons a year later. Brandt argued that the lease was not required to be renewed and sought possession of the Unit. Brandt also requested attorneys' fees and expenses incurred in the holdover proceeding. Defendants countered that they were legally entitled to renew the lease under New York City's rent regulatory scheme.

In August 2006, the housing court stayed the holdover action, while the New York State Department of Housing and Community Renewal ("DHCR") adjudicated a petition filed by Defendants, asserting that the Unit was covered by rent stabilization regulations and seeking recovery of allegedly illegal rent overcharges.

During the period between 2006 and 2012, while the housing court action was stayed, the Property changed hands twice. This change of ownership was duly reflected in the caption of the stayed housing court action. By order dated October 6, 2011, the housing court replaced Brandt with Plaintiffs as petitioners in the holdover action against the Defendants. By order dated June 22, 2012, the housing court replaced Plaintiffs with the Grants as petitioners in the holdover action.

The DHCR ultimately denied Defendants' petition and found that the Property was not subject to rent stabilization. That decision became final on October 5, 2012, after various unsuccessful efforts by Defendants to challenge it.

On October 15, 2012, the housing court granted summary judgment on the holdover petition and directed the issuance of an eviction warrant against Defendants. The court's decision provided for "a hearing with respect to... attorneys fees to be awarded to petitioner as prevailing party herein." It appears either that no such hearing took place or that the prior petitioners in the action - Brandt and Plaintiffs - did not participate.

By stipulation dated October 15, 2012, the Grants and Defendants settled the outstanding issues in the October 15, 2012, order, including attorneys' fees. The stipulation provided, inter alia, that Defendants "consent to the entry of a money judgment in the amount of $30, 000.000 representing attorneys fees for this proceeding...." The stipulation further provided, "Nothing contained herein shall waive, ...


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