Court Opinion

ID: 5489813
Source: CourtListenerOpinion
Date Created: 2022-01-10 02:25:37.213285+00
Date Added: 2024-06-11T08:33:44.755551
License: Public Domain

Pigott, J.
(dissenting). The majority holds, apparently on the basis of Thornton v Baron (5 NY3d 175 [2005]) and Matter of Grimm v State of N.Y. Div. of Hous. & Community Renewal Off of Rent Admin. (15 NY3d 358 [2010]), that because the tenants “advance a colorable claim of fraud within the meaning of Grimm . . . Supreme Court in this case properly considered tenants’ counterclaim alleging rent overcharges notwithstanding expiration of the four-year statute of limitations to which such claims are generally subject” (majority op at 16). Thornton and Grimm do not support that conclusion, and there are strong policy considerations why.
In Thornton, this Court held that a lease provision circumventing rent stabilization was void as against public policy, and that the rent registration statement in effect on the base date listing the illegal rent was “a nullity” (Thornton, 5 NY3d at 181). We instructed DHCR to use a default formula to calculate the rent on the base date, which “uses the lowest rent charged for a rent-stabilized apartment with the same number of rooms in the same building on the relevant base date” (id. at 180 n 1). The Court expressly noted that “[o]nly one question is before us: How is the legal regulated rent of the apartment to be established?” (Id. at 180.) The majority opinion did not decide the statute of limitations issue — the lawsuit was brought more than seven years after the first alleged overcharge — and indeed the dissent pointed out that the majority “ignore[d] the four-year limitation” (id. at 183 [Smith and Read, JJ., dissenting]).
In Grimm, we held that where “substantial indicia of fraud [exist] on the record” and “the overcharge complaint alleges fraud, . . . DHCR has an obligation to ascertain whether the rent on the base date is a lawful rent” (Grimm, 15 NY3d at 366). In that case, however, petitioner’s action was not barred by the statute of limitations, since it was brought well within four years following the first alleged rent overcharge. The ques*20tion was whether DHCR could examine the rental history of the housing accommodation prior to the four-year period preceding the filing of a complaint, so as to determine whether the rent on the base date was itself an overcharge. We said it could and should, but, necessarily, we did not address the statute of limitations. The Court “merely conclude[d] that DHCR acted arbitrarily in disregarding the nature of petitioner’s allegations and in using a base date without, at a minimum, examining its own records to ascertain the reliability and the legality of the rent charged on that date” (id. at 367).
The appeal before us now raises the question the Court avoided in Thornton and had no need to address in Grimm, namely whether CPLR 213-a precludes an action on a residential rent overcharge commenced more than four years after the first alleged overcharge. Yet, the majority gives no justification for its holding other than the two abovementioned Court of Appeals cases that do not support it.
The statute is abundantly clear. Under CPLR 213-a, as amended in 1997:
“[a]n action on a residential rent overcharge shall be commenced within four years of the first overcharge alleged and no determination of an overcharge and no award or calculation of an award of the amount of any overcharge may be based upon an overcharge having occurred more than four years before the action is commenced. This section shall preclude examination of the rental history of the housing accommodation prior to the four-year period immediately preceding the commencement of the action” (emphasis added).
Regardless of whether the action is brought as an administrative or judicial claim, “a rent overcharge claim is subject to a four-year statute of limitations” (Matter of Cintron v Calogero, 15 NY3d 347, 353 [2010]; see also e.g. Matter of Brinckerhoff v New York State Div. of Hous. & Community Renewal, 275 AD2d 622 [1st Dept 2000], lv denied 96 NY2d 712 [2001]; Mozes v Shanaman, 21 AD3d 854 [1st Dept 2005], lv denied 6 NY3d 715 [2006]; Direnna v Christensen, 57 AD3d 408 [1st Dept 2008]).
The majority now rewrites the statute, so as to delete the first clause (“[a]n action on a residential rent overcharge shall be commenced within four years of the first overcharge alleged”), with the result that “section 213-a merely limits ten*21ants’ recovery to those overcharges occurring during the four-year period immediately preceding Conason’s rent challenge” (majority op at 6). In effect, the Court has simply removed the statute of limitations from the statute. In doing so, it overlooks the well-established principle that, irrespective of whether the misconduct alleged is minor or heinous, “actions are subject to the time limits created by the Legislature” and “[a]ny exception to be made to allow these types of claims to proceed outside of the applicable statutes of limitations would be for the Legislature” to enact (Zumpano v Quinn, 6 NY3d 666, 677 [2006]).
The majority’s decision will have several serious and troublesome ramifications. Rent records will be subject to challenge indefinitely. Property owners and buyers will have no certainty as to the value of residential rental property. Landlords will have to keep evidence of rent charges indefinitely, in order to preserve their ability to defend against fraudulent rent overcharge claims. And endless litigation will ensue concerning whether tenants are making “a colorable claim of fraud within the meaning of Grimm,” before any complaint challenging years-old rents can be dismissed.
I would reverse the order of the Appellate Division and hold that Conason’s complaint should have been dismissed as barred by the statute of limitations. Accordingly, I would not reach the collateral estoppel and piercing the corporate veil issues and I do not join the Court’s opinion as to the merits of those claims.
Chief Judge Lippman and Judges Rivera and Abdus-Salaam concur; Judge Pigott dissents and votes to reverse and dismiss the complaint in an opinion; Judges Stein and Fahey taking no part.
Order modified, without costs, by remitting to Supreme Court, New York County, for further proceedings in accordance with the opinion herein and, as so modified, affirmed, and certified question answered in the negative.