[Aras 360 Hd 2.1.0.3 Crack
Julieann Rohde
Cross-appeals from an order of the Supreme Court, New York County (James D' Auguste, J.) entered on or about September 9, 2021, which, to the extent appealed from as limited by the briefs, granted the motion of plaintiffs Leisa Aras, Robert Arnot, Sarah Barish-Straus, James Gladstone, Kathleen Campana, Patricia Lederer, Albert Panozzo, Georgia Marantos, John Menapace, Karen Menapace, Peter Kane, and Paulina Perera-Riveroll for summary judgment on liability on the cause of action in the amended complaint for rent overcharges (the first cause of action) only with respect to plaintiffs Aras, Panozzo, Marantos, Kane, Perera-Riveroll, John Menapace, Karen Menapace, Barish-Straus, and Lederer, held the motion in abeyance with respect to plaintiffs Gladstone and Campana, and denied the motion with respect to plaintiff Arnot.
The issues presented on this appeal are (1) what is the appropriate base date rent for calculating damages and (2) whether the record before us sets forth evidence of a fraudulent scheme to deregulate the subject apartments to permit use of the default formula pursuant to Rent Stabilization Code (RSC) (9 NYCRR) 2526.1(g).
As relevant herein, plaintiffs are current and former tenants of the residential apartment building located at 945 West End Avenue in Manhattan as follows: Leisa Aras (apartment 11B); Robert Arnot (formerly apartment 11C); Sarah Barish-Straus (apartments 2C and 9D); James Gladstone and Kathleen Campana (formerly apartment 10B); Patricia Lederer (apartment 8D); Albert Panozzo and Georgia Marantos (apartment 1B); John Menapace and Karen Menapace (apartment 8A); and Peter Kane and Paulina Perera-Riveroll (apartment 10D). Defendant B-U Realty Corp. is the building's owner, and defendant Paul Bogoni is B-U's managing member and agent.
By summons and complaint dated November 18, 2014, plaintiffs commenced this action, and by amended complaint dated November 15, 2016, plaintiffs Arnot, Barish-Straus, and Lederer joined the action, asserting claims for, inter alia, rent overcharges. Defendants denied the material allegations in the amended complaint and asserted affirmative defenses, including offset and accord and satisfaction. The note of issue was filed in September 2020, certifying that discovery was complete.
Plaintiffs moved for partial summary judgment, arguing that the evidence established a building-wide fraudulent scheme, requiring application of the default formula in calculating damages. Specifically, plaintiffs argue that the following facts demonstrate fraud: (1) Bogoni testified at a deposition in Pascaud v B-U Realty (2017 NY Slip Op 31482[U] at *4 [Sup Ct, NY County 2017]) that he heard about Roberts v
Tishman Speyer Props, L.P. (13 NY3d 270 [2009]) by [*2]2011;[FN1](2) in Kreisler v B-U Realty Corp. (164 AD3d 1117 [1st Dept 2018], lv dismissed 32 NY3d 1090 [2018]), this Court found thatthese same defendants engaged in a building-wide fraudulent scheme to deregulate the building; (3) on or about July 14, 2014, Assemblymember Daniel O'Donnell wrote to the Bureau Chief of the Tenant Protection Unit of the New York State Division of Housing and Community Renewal (DHCR) concerning defendants deregulating apartments while in receipt of J51 benefits;[FN2] (4) on or about August 14, 2014, DHCR directed the landlord to register eight apartments (including 8A, 9D, and 10D); and (5) after receiving that letter, defendants filed amended registrations in 2015 and in some instances 2017.
The motion court granted summary judgment as to plaintiffs Aras (apartment 11B), Panozzo & Marantos (apartment 1B), Kane & Perera-Riveroll (apartment 10D), the Menapaces (apartment 8A), Barish-Straus (apartment 9D) and Lederer (apartment 8D), and found that fraud was established, determining that the default formula would be used to calculate damages. The court denied the motion as to Arnot and his wife, Ellen Hirsch (apartment 11C) and Barish-Straus (apartment 2C) and held the claims in abeyance as to Gladstone and Campana (apartment 10B). For the reasons that follow, we conclude that the record before us did not establish evidence of a fraudulent scheme to deregulate the subject apartments as a matter of law, and that it was improper to utilize the default formula to calculate damages, and further modify the order as set forth herein.
The history of the complex statutory and factual framework surrounding rent overcharge claims in buildings deregulated while receiving J51 benefits has led to the development of precedent upon which our decision now rests. Most notably, the Court of Appeals' decisions in Roberts v Tishman Speyer Props., L.P. (13 NY3d at 280), Matter of Regina Metro. Co., LLC v New York State Div. of Hous. & Community Renewal (35 NY3d 332 [2020]) and Casey v Whitehouse Estates, Inc. (39 NY3d 1104 [2023]) provide an evolving roadmap to resolve these cases.
The rent overcharge claims before us are governed by the former provisions of the RSL and the RSC, the latter of which are regulations that DHCR sets and administers.[FN3]These rent overcharges are to be calculated based upon the "legal regulated rent" (RSL 26-516), which "shall be deemed to be the rent charged on the base date, plus in each case any subsequent lawful increases and adjustments" (RSC 2526.1 [a][3][i]; see also 2520.6 [e]).
(iv) in a proceeding pursuant to this section the rental history of the housing accommodation pre-dating the base date may be examinedfor the limited purpose of determining whether a fraudulent scheme to destabilize the housing accommodation . . . rendered unreliable the rent on the base date (emphasis added).
A tenant's overcharge complaint, if proven, requires landlords to pay treble damages "equal to three times the amount of [an] overcharge" or "[i]f the owner establishes by a preponderance of the evidence that the overcharge was not willful" then the amount of the overcharge plus interest (RSL 26-516; RSC 2526.1[a][1]).
Finally, RSC 2526.1(g) permits use of the default formula to establish the "legal regulated rent," only when, in pertinent part, "[(1)] the rent charged on the base date cannot be determined, [(2)] a full rental history from the base date is not provided, or [(3)] the base date rent is the product of a fraudulent scheme to deregulate the apartment" (see also RSC 2522.6[b]).
In Regina (35 NY3d 332), the Court of Appeals affirmed the foregoing statutory framework and held that: (1) [*4]a tenant's overcharge claim is limited to the amount actually charged on the base date, four years prior to the filing of the complaint, plus any permitted increases; (2) review of the rental history outside of the lookback period is limited only to determine whether a fraud to deregulatethe apartment occurred; and (3) if a fraudulent scheme to deregulateis established, only then may the rent charged be deemed unreliable to permit use of the default formula. Thus, Roberts cases (where deregulation occurred during receipt of J51 benefits), generally do not support fraud because deregulation is usually based upon a misunderstanding of the law at that time. Moreover, regardless of fraud, the Court of Appeals expressly rejected the notion that the base date rent can be reconstructed (Regina, 35 NY3d at 358).
The issue was again reviewed and reaffirmed by the Court of Appeals in Casey v Whitehouse Estates, Inc. (39 NY3d at 1106). There, the landlord's amended registration statements, which improperly reported the rent paid, were filed after the commencement of that action. This Court found that such was an indicia of defendant's fraud to alter the rental history and leave that apartment outside the rent stabilization framework, and applied the default formula (197 AD3d 401 [1st Dept 2021]). The Court of Appeals reversed, concluding that the foregoing was not evidence of fraud to deregulate and thatdefendants' subsequent re-registration of the apartment in 2011 was of no moment. The amendments were registered after the four-year lookback period, and plaintiffs failed to offer evidence that the inaccurate amended registrations "somehow affected the reliability of the actual rent plaintiffs paid on the base date" (Casey, 39 NY3d at 1107; see also Matter of Trainer v State of N.Y. Div. of Hous. & Community Renewal, 162 AD3d 461, 463 [1st Dept 2018] ["Although petitioner correctly notes that there was a significant increase in rent from 2003 to 2004, that increase and a few discrepancies in the registration statement do not suffice as indicia of fraud to require DHCR to inquire beyond the four-year statute of limitations"]; Gridley v Turnbury Vil., LLC, 196 AD3d 95, 103 [2d Dept 2021] lv denied __NY3d__, 2021 NY Slip Op 75990 [2021]). The Casey Court also clarified that "[f]or purposes of calculating overcharges, where it is possible to determine the rent 'actually charged on the base date' . . . that amount should be used and rent increases legally available to defendants pursuant to the [RSL] during the four-year period should be added" (39 NY3d at 1107).
Court of Appeals precedent consistently instructs us to strictly enforce the four-year lookback period which, like any statute of limitations, serves to cut off claims (Regina, 35 NY3d at 360 ["Civil liability is always bounded by the public policy of repose embodied in statutes of limitations. Overcharge liability under the RSL is no different. That Roberts revealed particular conduct to [*5]be illegal does not mean that tenants must be able to recover a certain measure of monetary damages for associated rent increases despite their failure to seek recovery within the limitations and lookback periods"][internal citations omitted]).
Speculation of fraud will not suffice to expand the lookback period or invoke the default formula. All elements of fraud must be established. Even in the absence of fraud, tenants whose units were improperly deregulated while in receipt of J51 benefits have recourse. To the extent plaintiffs complain that their initial rents were inaccurate and tainted by defendants' failure to comply with the RSC and RSL, there are alternative statutory methods by which to remedy these inaccuracies (see RSC 2528.4; see also e.g. Grady v Hessert Realty L.P., 178 AD3d 401 [1st Dept 2019]).
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