Court Opinion

ID: 9958693
Source: CourtListenerOpinion
Date Created: 2024-04-09 20:09:13.466721+00
Date Added: 2024-06-11T08:18:38.099386
License: Public Domain

Scher v 698 D Realty LLC
               2024 NY Slip Op 31135(U)
                      April 4, 2024
           Supreme Court, New York County
        Docket Number: Index No. 153494/2016
                  Judge: Louis L. Nock
Cases posted with a "30000" identifier, i.e., 2013 NY Slip
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                                                                                                                     INDEX NO. 153494/2016
  NYSCEF DOC. NO. 51                                                                                           RECEIVED NYSCEF: 04/05/2024

                                   SUPREME COURT OF THE STATE OF NEW YORK
                                             NEW YORK COUNTY
            PRESENT:             HON. LOUIS L. NOCK                                                 PART                           38M
                                                                                      Justice
            ---------------------------------------------------------------------------------X     INDEX NO.         153494/2016
             ADAM SCHER and JUDITH RENDELL,
                                                                                                   MOTION DATE       06/14/2023
                                                         Plaintiffs,
                                                                                                   MOTION SEQ. NO.       001
                                                -v-
             698 D REALTY LLC,                                                                       DECISION + ORDER ON
                                                                                                           MOTION
                                                         Defendant.
            ---------------------------------------------------------------------------------X

            The following e-filed documents, listed by NYSCEF document numbers (Motion 001) 8, 9, 10, 11, 12, 13,
            14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 44, 45, 46, 47, 48, and 49
            were read on this motion for                                                         SUMMARY JUDGMENT                  .

            LOUIS L. NOCK, J.S.C.

                      Upon the foregoing documents, defendant’s motion for summary judgment dismissing

            the complaint and on its first counterclaim for rent arrears is granted in part and denied in part,

            and plaintiffs’ cross-motion for summary judgment is granted in part and denied in part, as set

            forth in the following memorandum decision.

                      This case arises out of a rent overcharge for an improperly deregulated apartment, which

            plaintiffs have leased from defendant for a number of years. The Court of Appeals, in Regina

            Metro Co., LLC v New York State Div. of Hous. & Community Renewal (35 NY3d 332 [2020]),

            and more recently in Casey v Whitehouse Estates, Inc. (39 NY3d 1104 [2023]), has set forth the

            proper means of calculating the amount due on a rent overcharge, and has foreclosed the

            availability of a fraud claim based solely on the failure to register the apartment properly in the

            wake of the Court of Appeals’ decision in Roberts v Tishman Speyer Props., L.P. (13 NY3d 270

            [2009]). In this regard, the parties are not in dispute that plaintiff’s apartment is rent stabilized,

            and that the proper base date for calculation of the overcharge is four years prior to the date of
             153494/2016 SCHER, ADAM ET AL vs. 698 D REALTY LLC                                                      Page 1 of 5
             Motion No. 001

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                                                                                                   INDEX NO. 153494/2016
  NYSCEF DOC. NO. 51                                                                       RECEIVED NYSCEF: 04/05/2024

            the complaint (Regina, 35 NY3d at 361). Accordingly, the first cause of action of the complaint,

            seeking a declaration that the apartment is rent stabilized, is dismissed as moot.

                     The second cause of action seeking to declare the lawful stabilized rent at $2,113.34

            relies on the incorrect formula for calculating the lawful rent, and a declaratory judgment in the

            correct amount will issue accordingly. Similarly, the fourth cause of action for treble damages is

            foreclosed by the Court of Appeals’ decisions in Regina and Casey, which plaintiffs’ counsel

            acknowledged on the record at oral argument (transcript of proceedings, NYSCEF Doc. No. 49

            at 4).

                     The fifth cause of action for attorneys’ fees relies on 9 NYCRR 2526.1 and

            Administrative Code of the City of New York § 26-516 (a) (4), which apply only to proceedings

            before the New York State Division of Housing and Community Renewal (“DHCR”), and must

            be dismissed for that reason.

                     What remains then, are plaintiffs’ third cause of action for the amount of the rent

            overcharge, and defendant’s counterclaim for alleged rent arrears. In this, the court finds that

            neither side has correctly calculated the net amount due. Plaintiffs argue that they are entitled to

            calculate the rent based on one-year renewals of their lease from the base date, May 2012, on the

            grounds that the Rent Stabilization Code requires them to have been offered one-year or two-

            year renewals (9 NYCRR 2522.6[b]), when in fact, defendant only offered them a two-year

            renewal from July 2014 through August 2016. Plaintiffs provide no authority allowing the court

            to engage in this form of hypothetical analysis regarding which renewal terms might have been

            accepted had they been offered. Thus, the calculation set forth by defendant is correct, at least

            up through August 2018, at which point, it is defendant who has improperly calculated the

            amount due.

             153494/2016 SCHER, ADAM ET AL vs. 698 D REALTY LLC                                    Page 2 of 5
             Motion No. 001

                                                           2 of 5
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                                                                                                    INDEX NO. 153494/2016
  NYSCEF DOC. NO. 51                                                                         RECEIVED NYSCEF: 04/05/2024

                    Beginning as of June 3, 2016, defendant registered plaintiffs’ apartment with DHCR at a

            stabilized rent of $4,846.12 (DHCR Rent Registration History, NYSCEF Doc. No. 40). Such

            registration continued through the most recent registration on July 14, 2023. Defendant

            calculates that it was entitled to one year increases per the Rent Stabilization Guidelines, but

            defendant has waived its ability to claim those increases by failing to apply them to the

            apartment’s registration before now (81st Realty Corp. v New York State Div. of Hous. and

            Community Renewal, 213 AD3d 610 [1st Dept 2023]). Thus, the appropriate calculation, using

            the rate of $4,846.12 per month for the period from September 1, 2018, through the present date,

            and applied against the $4,875.00 rate that plaintiffs have actually been paying, yields an

            aggregate overcharge of $8,703.44. As plaintiffs have continued to pay rent in excess of the

            registered rate, defendant is not entitled to any purported arrears.

                    Finally, defendant’s application for fees as a sanction for alleged frivolous conduct on the

            part of plaintiffs is denied. Uniform Rules for Trial Courts (22 NYCRR) § 130-1.1 provides that

            a court may award costs and attorney’s fees or impose financial sanctions on a party who

            engages in frivolous conduct. Frivolous conduct is defined as conduct “completely without merit

            in law . . . undertaken primarily to delay or prolong resolution of the litigation, or to harass or

            maliciously injure another: or [that] asserts material factual statements that are false” (22

            NYCRR 130-1.1[c]). Given that plaintiffs have proven successful in their claims for a rent

            overcharge, albeit for a smaller amount than was originally sought in the complaint, the court has

            no basis to find that plaintiffs have engaged in frivolous conduct.

                    Accordingly, it is hereby

                    ORDERED that defendant’s motion for summary judgment is granted to the extent that

            the first, fourth, and fifth causes of action are dismissed; and it is further

             153494/2016 SCHER, ADAM ET AL vs. 698 D REALTY LLC                                      Page 3 of 5
             Motion No. 001

                                                            3 of 5
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                                                                                                            INDEX NO. 153494/2016
  NYSCEF DOC. NO. 51                                                                                RECEIVED NYSCEF: 04/05/2024

                      ORDERED that the defendant’s motion for summary judgment dismissing the second

            cause of action for a declaratory judgment setting the lawful stabilized rent for the apartment is

            resolved by issuance of the following declaration; and it is further

                      ADJUDGED and DECLARED that the lawful stabilized rent for plaintiffs’ apartment is

            $4846.12 per month, as set forth in the DHCR Rent Registration History; and it is further

                      ORDERED that defendant’s motion is otherwise denied; and it is further

                      ORDERED that plaintiffs’ cross-motion for summary judgment on the third cause of

            action for the amount of the rent overcharge and the fifth cause of action for attorneys’ fees is

            granted as to the claim for rent overcharge and otherwise denied; and it is further

                      ORDERED that the Clerk of the Court is directed to enter judgment in favor of plaintiffs,

            jointly, and against defendant, in the amount of $8,703.44, with interest thereon at the statutory

            rate from May 1, 2018,1 through entry of judgment, as calculated by the Clerk, and continuing to

            accrue thereon through satisfaction of judgment, together with costs and disbursements as taxed

            by the Clerk upon submission of an appropriate bill of costs.

            1
             “Where such damages were incurred at various times, interest shall be computed upon each item from the date it
            was incurred or upon all of the damages from a single reasonable intermediate date” (CPLR 5001[b]; Kachkovskiy v
            Khlebopros, 164 AD3d 568, 572 [2d Dept 2018]).
                153494/2016 SCHER, ADAM ET AL vs. 698 D REALTY LLC                                           Page 4 of 5
                Motion No. 001

                                                                4 of 5
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                                                                                                     INDEX NO. 153494/2016
  NYSCEF DOC. NO. 51                                                                           RECEIVED NYSCEF: 04/05/2024

                   This constitutes the decision and order of the court.

                                                                           ENTER:

                    4/4/2024                                                               $SIG$
                     DATE                                                           LOUIS L. NOCK, J.S.C.
            CHECK ONE:               X   CASE DISPOSED                     NON-FINAL DISPOSITION

                                                                                                    □
                                         GRANTED             DENIED   X    GRANTED IN PART              OTHER

            APPLICATION:                 SETTLE ORDER                      SUBMIT ORDER

                                                                                                    □
            CHECK IF APPROPRIATE:        INCLUDES TRANSFER/REASSIGN        FIDUCIARY APPOINTMENT        REFERENCE

            153494/2016 SCHER, ADAM ET AL vs. 698 D REALTY LLC                                       Page 5 of 5
            Motion No. 001

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