Court Opinion

ID: 9958709
Source: CourtListenerOpinion
Date Created: 2024-04-09 20:09:39.906256+00
Date Added: 2024-06-11T08:18:38.797806
License: Public Domain

Moore v Greystone Props. 81 LLC
               2024 NY Slip Op 31112(U)
                      April 3, 2024
           Supreme Court, New York County
        Docket Number: Index No. 154133/2017
               Judge: Alexander M. Tisch
Cases posted with a "30000" identifier, i.e., 2013 NY Slip
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                       publication.
                                                                                                        INDEX NO. 154133/2017
  NYSCEF DOC. NO. 164                                                                           RECEIVED NYSCEF: 04/03/2024

                            SUPREME COURT OF THE STATE OF NEW YORK
                                      NEW YORK COUNTY
           PRESENT:        HON. ALEXANDER M. TISCH                              PART     18
                                                                    Justice
                                                 ----------------------X        INDEX NO.             154133/2017
            RAYMOND MOORE and PETER DIMARIO,
                                                                                MOTION DATE            04/14/2021
                                               Plaintiffs,
                                                                                MOTION SEQ. NO.             002
                                       - V -

            GREYSTONE PROPERTIES 81 LLC,                                           DECISION + ORDER ON
                                                                                          MOTION
                                               Defendant.
           - - - - ------------------------X

           The following e-filed documents, listed by NYSCEF document number (Motion 002) 3, 31, 78, 79, 80, 81,
           82, 83, 84, 85, 86, 87, 88, 89, 90, 91, 92, 93, 94, 95, 96, 97, 98, 99, 100, 101, 102, 103, 104, 105, 107,
           108,110,111,112,113,114,115,116,117,118,119,120,121,122,123,124,125,126,127,128,129,
           130,131,132,133,134,135,136,137,139,140,141,142,143,144,145,146,147,148,149,150,151,
           152, 153,154,155, 156, 157, 158, 159, 160,161,163
           were read on this motion to/for                                 JUDGMENT-SUMMARY

           BACKGROUND

                  According to the May 4, 2017, complaint (NYSCEF Doc. No. 97), plaintiffs have rented

           Apartment 43 at 158 West 81st Street in Manhattan from defendant since March 15, 2012. Their

           initial rent was $2,750 per month, pursuant to a lease that stated the apartment was not subject to

           rent stabilization or any other relevant law or regulation (2012 Lease, attached as Exhibit A to

           Aff of Anne Goldrach, NYSCEF Doc. No. 80, although the 2012 Lease has a cover letter

           referring to it as a "New Lease Renewal"). The complaint explains that, between 2013 and 2017,

           plaintiffs' monthly rent was increased annually, to $3,100, $3,300, $3,450, $3,600, and finally to

           $3,636 in 2017. However, plaintiffs assert that "[u]pon review of the records of the Division of

           Housing and Community Renewal ('DHCR'), other New York City Agency records, and review

           of the facts ... the apartment is subject to Rent Stabilization, and was never properly removed

           from said status or deregulated based on lawful rent increases" (Complaint, ,r 9). More

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            Motion No. 002

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           specifically, plaintiffs pointed out that the last lease registered with DHCR had been to a tenant

           named David Turner in 1997 for $972.51 per month. Plaintiffs' 2017 complaint alleges they

           were overcharged both for the rent and for the initial security deposit, the latter in violation of

           General Obligations Law § 7-103.

                   Plaintiffs assert causes of action for ( 1) a declaratory judgment pursuant to CPLR 3001

           that the Apartment is subject to the Rent Stabilization Code and directing the defendant to issue

           the plaintiffs a rent stabilized lease at the legal regulated rent; (2) an injunction directing

           defendant to issue a rent stabilized lease to plaintiffs; (3) money damages for overcharged rent

           from the entire length of their lease of the Apartment; (4) treble damages for the overcharged

           rent, as defendant's conduct was willful; (5) punitive damages; and (6) plaintiffs' legal fees.

           Defendant generally contends the Apartment had been deregulated before plaintiffs moved in,

           despite defendant's failure to file with DHCR for deregulation of the apartment, because the

           legal regulated monthly rent for a prior tenant had reached $2,000. Defendants also argue the

           rent stabilization law does not provide for punitive damages.

                  Around January 18, 2018, defendant moved to dismiss the complaint pursuant to CPLR

           §§ 3211 (a) (1) and (a) (7). The Court granted the motion, concluding that the apartment's rent

           "exceeded the deregulation threshold at the time plaintiffs took occupancy and this claim is

           barred by the four[- ]year statute of limitations" (NYSCEF Doc. No. 99). The Appellate

           Division, First Department reversed concluding that "defendant landlord only showed its

           entitlement to collect the last registered rent for the subject apartment (i.e., $972.51 in 1998), as

           it failed to comply with the rent registration requirements .... and did not demonstrate what

           increases, if any, it may be entitled to as a legal regulated rent for the apartment" (Moore v

           Greystone Props. 81 LLC, 176 AD3d 516,516 [1st Dept 2019] [internal citations omitted]). The

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            Motion No. 002

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           First Department further concluded that plaintiffs' claims for rent overcharges and treble

           damages were timely under CPLR 213-a and remitted the case to this Court (id.).

                  Now, defendant moves for summary judgment on all claims and the plaintiffs cross-move

           for summary judgment on the questions of rent stabilization and rent overcharge, treble damages,

           and legal fees, along with other relief.

           DISCUSSION

                  Summary judgment is a drastic remedy which will be granted only when the party

           seeking summary judgment has established that there are no triable issues of fact (see CPLR

           3212 [b]; Alvarez v Prospect Hosp., 68 NY2d 329 [1986]; Sillman v Twentieth Century-Fox Film

           Corporation, 3 NY2d 395 [1957]). To prevail, the party seeking summary judgment must make

           a prima facie showing of entitlement to judgment as a matter of law tendering evidentiary proof

           in admissible form, which may include deposition transcripts and other proof annexed to an

           attorney's affirmation (see Alvarez v Prospect Hosp., supra; Olan v Farrell Lines, 64 NY2d

           1092 [1985]; Zuckerman v City of New York, 49 NY2d 557 [1980]). Absent a sufficient

           showing, the court should deny the motion without regard to the strength of the opposing papers

           (see Winegrad v New York Univ. Med. Ctr., 64 NY2d 851 [1985]).

                   Once the initial showing has been made, the burden shifts to the party opposing the

           motion for summary judgment to rebut the prima facie showing by producing evidentiary proof

           in admissible form sufficient to require a trial of material issues of fact (see Kaufman v Silver, 90

           NY2d 204, 208 [1997]). Although the court must carefully scrutinize the motion papers in a

           light most favorable to the party opposing the motion and must give that party the benefit of

           every favorable inference (see Negri v Stop & Shop, 65 NY2d 625 [1985]) and summary

          judgment should be denied where there is any doubt as to the existence of a triable issue of fact

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            Motion No. 002

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           (see Rotuba Extruders, v Ceppos, 46 NY2d 223, 231 [1978]), and bald, conclusory assertions or

           speculation and "[a] shadowy semblance of an issue" are insufficient to defeat a summary

           judgment motion (SJ Capalin Assoc. v Globe Mfg. Corp., 34 NY2d 338,341 [1974]; see

           Zuckerman v City of New York, supra; Ehrlich v American Moninger Greenhouse Mfg. Corp., 26

           NY2d 255, 259 [1970]).

                      Lastly, "[a] motion for summary judgment should not be granted where the facts are in

           dispute, where conflicting inferences may be drawn from the evidence, or where there are issues

           of credibility" (Ruiz v Griffin, 71 AD3d 1112 [2d Dept 201 OJ, quoting Scott v Long Is. Power

           Auth., 294 AD2d 348 [2d Dept 2002]).

                      Defendant's Prima Facie Case

                      In its motion, defendant contends the claims are untimely as CPLR § 213-a, as it existed

           at the time this action commenced, limited rent actions to a four-year lookback period.

           Substantively, defendant argues the apartment was properly deregulated and the rents charged

           the plaintiffs were legitimate. Defendant submits copies of a rent-stabilized lease and a renewal

           lease to someone after David Turner (who was the tenant in 1997), tenant Cheryl Hunter

           (NYSCEF Doc. No. 84-85). Hunter's rent under the 2000-2002 renewal lease was $2101.34

           (NYSCEF Doc. No. 85). It is undisputed that, at the time, luxury deregulation was allowed

           when the rent for an apartment exceeded $2000 (see fact-sheet-36-02-2020.pdf [ny.gov] 1).

           Defendant justifies the increase from $972.51 to $2101.34 by stating that defendant was entitled

           to a longevity bonus of $81.69, a two-year vacancy lease increase of 20%, or $194.50, and an

           Individual Apartment Improvement (IAI) increase of $811.44. In support of this last increase,

           defendant submits 77 pages of bills, purchase orders, and canceled checks (NYSCEF Doc. No.

           1
               Available at https://hcr.ny.gov/system/files/documents/2020/1 I/fact-sheet-36-02-2020.pdf
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               Motion No. 002

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           83). Defendant further states that the apartment was vacant in 2002 and 2003 and that the next

           tenant, Evan Hirsch, with a lease dated August 8, 2002, paid $2,100 per month in rent under a

           lease that stated the apartment was not subject to rent stabilization (First Hirsch Lease, NYSCEF

           Doc. No. 86). Defendant also provides copies of subsequent tenants' non-rent-stabilized leases

           (NYSCEF Doc. Nos. 85-93 ). Defendant has made a prima facie case that the apartment was

           deregulated and it was entitled to charge the rent it charged plaintiffs. The burden then shifts to

           the plaintiffs.

                   Timeliness

                   The Court first addresses the threshold issue that the challenge is untimely. Under the law

           that existed prior to 2019,

                             "[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"
                             (CPLR 213-a [2012]).

           Therefore, "absent fraud, an overcharge was to be calculated by using the rent charged on the

           date four years prior to filing of the overcharge complaint (the lookback period) as the 'base date

           rent"' (Matter of Regina Metro. Co., LLC v New York State Div. of Haus. & Community

           Renewal, 35 NY3d 332, 348 [2020] [Regina]).

                   Part F of the Housing Stability and Tenant Protection Act of 2019 (HSTPA) extended the

           lookback period to six years. In its 2019 decision in this case, the First Department applied the

           new six-year lookback period (see Moore v Greystone Props. 81 LLC, 176 AD3d at 516). The

           following year, however, the Court of Appeals in Regina held that the six-year period did not

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            Motion No. 002

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           apply retroactively (see Matter o_f Regina Metro. Co., LLC, 35 NY3d at 349-350, 361).

           Therefore, the 2012 version of the limitations period applies to the case at hand (see Matter of

           Bazan v New York State Div. o_f Haus. & Community Renewal, 189 AD3d 495, 496 [1st Dept

           2020]). 2 By its terms, the limitations period "commences to run with the first overcharge

           alleged" (Matter of Brinckerhoff v New York State Div. o_f Haus. & Community Renewal, 275

           AD2d 622, 622 [1st Dept 2000] [internal quotation marks and citation omitted]).

                     Plaintiffs' complaint is dated May 4, 2017. Four years earlier, plaintiffs were the tenants

           of record under a lease dated March 15, 2012, for rent of $2,750 per month, over the

           deregulation threshold (see Complaint, NYSCEF Doc. No. 97, 14; Plaintiffs' Lease, NYSCEF

           Doc. No. 80, 13). According to the complaint, plaintiffs renewed their lease on April 1, 2013, at

           a rent of$3,100 per month (Complaint, 15). Further, plaintiffs' leases consistently have stated

           the apartment is not subject to rent stabilization. Under the four-year limitations period,

           therefore, the defendant's motion for summary judgment dismissing the suit should be granted,

           the plaintiffs' cross-motion for summary judgment should be denied, and the suit should be

           dismissed as untimely.

                     Fraud

                     Only if there was evidence that defendant "engaged in a fraudulent scheme to deregulate"

           the apartment can the Court go beyond the four-year limitations period when it examines the

           apartment's rental history (Nolte v Bridgeston Assoc. LLC, 167 AD3d 498,498 [1st Dept 2018]

           [applying pre-HSTPA law]). In their opposition and in support of their cross-motion, 3 plaintiffs

           2
             Due to Regina, the First Department's order in Moore is not binding on this issue.
           3
             Plaintiffs argue that they should prevail on their claim regardless of whether the Court applies the HSTPA, with its
           six-year lookback period, or the four-year limitations period that existed before its enactment. However, because of
           the ruling in Regina, this Court only evaluates the pre-HSTPA law for this purpose (see Regina, 35 NY3d at 349-
           350, 361).

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               Motion No. 002

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           stress that the Court is not limited by the four-year lookback period when a landlord has engaged

           in fraud (Vendaval Realty, LLC v Felder, 67 Misc. 3d 145 [A], 2020 NY Slip Op 50786 [U], *1-

           2 [App Term, 1st Dept 2020]). Plaintiffs argue, "[t]here is compelling indicia of fraud" here, and

           the court should examine the entire rental history (NYSCEF Doc. No. 110, ,r 34).

                  "Fraud consists of evidence of a representation of material fact, falsity, scienter, reliance

           and injury" (Regina Metro. Co., LLC v New York State Div. of Haus. and Community Renewal,

           35 NY3d 332,426 [2020] quoting Vermeer Owners v Guterman, 78 NY2d 1114, 1116 [1991];

           see e.g. Ambac Assur. Corp. v Countrywide Home Loans, Inc., 31 NY3d 569 [2018]; Pasternack

           v Laboratory Corp. ofAm. Holdings, 27 NY3d 817, 827 [2016]). "An increase in rent and

           failure to register the apartment with [DHCR], standing alone, are insufficient to establish a

           colorable claim of a fraudulent scheme to deregulate the apartment (Ampim v 160 E. 48th St.

           Owner II LLC, 208 AD3d 1085, 1085-1086 [1st Dept 2022]; accord Hess v EDR Assets LLC,

           217 AD3d 542, 543 [1st Dept 2023]). Plaintiffs have not provided sufficient additional evidence

           to satisfy their burden and make a prima facie case of fraud. Plaintiffs contend that the

           defendant "clearly ... removed the Premises from rent regulation" in approximately 1997 and

           that the subsequent registrations showing an "RS" designation, reflecting that the Premises'

           status remained "Rent stabilized" were incorrect (Aff of Ronald D. Hariri, NYSCEF Doc. No.

           110, ,r 15) and simultaneously take the position that the RS designation on the recent filings was

           correct and the defendant engaged in fraud in 1997 by "remov[ing] the Premises from rent

           stabilization" (id., ,r 34 ). Plaintiffs rely on Vendaval (67 Misc 3d 145 [A] at *2 ), but that case is

           distinguishable, as that court had found that fraud existed, not simply because the landlord did

           not inform renters that the apartment was rent stabilized and failed to file timely registrations, but

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            Motion No. 002

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           because "the documentary proof otherwise reveal[ ed] a pattern of unsubstantiated and

           unexplained increases in rent." That is not the situation in the instant matter.

                   Plaintiffs' reliance on other caselaw is similarly unpersuasive. In Simi/is Mgt. LLC v

           Dzganiya (71 Misc 3d 129 [A], 2021 NY Slip Op 50245 [U] [App Term, 1st Dept 2021]), the

           Appellate Term, First Department, found triable issues of fact with respect to the question of

           fraud because of the size of the rent increase, which may have been as much as 73 % in a single

           year but was falsely reported as spread over several years, the extremely limited evidence

           substantiating the landlord's claim of improvements meriting increases, and the landlord's failure

           to provide a lease rider explaining how it had computed the rent. Here, defendant has provided

           extensive evidence of the improvements and there is no evidence that the prior leases were not

           legitimate. The vacancy lease defendant issued to Hunter, moreover, contained the requisite

           rider explaining how the landlord had computed the new rent (see Hunter 1998 Lease, attached

           as Exhibit E to Goldrach Aff., NYSCEF Doc. No. 84, 14 of Rider and Rider end note). The

           ruling in Sandlow v 305 Riverside Corp. (69 Misc 3d 893 [Sup Ct, NY County 2020], affd as

           mod 201 AD3d 418 [1st Dept 2022]) on which plaintiffs also rely, is not relevant because after

           plaintiffs submitted their papers that decision was modified by the First Department, which

           determined that there was no showing of fraud (see Sandlow v 305 Riverside Corp., 201 AD3d

           418).

                   Evidence oflmprovements

                   As far as plaintiffs challenge defendant's assessments ofIAis and major capital

           improvements (MCis), the law in effect when defendant assessed the IAI increases states:

                          "Any claimed MCI or individual apartment improvement cost must
                          be supported by adequate documentation which should include at
                          least one of the following: 1) Cancelled check(s) contemporaneous

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            Motion No. 002

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                             with the completion of the work; 2) Invoice receipt marked paid in
                             full contemporaneous with the completion of the work; 3) Signed
                             contract agreement; 4) Contractor's affidavit indicating that the
                             installation was completed and paid in full. Whenever it is found
                             that a claimed cost warrants further inquiry, the processor may
                             request that the owner provide additional documentation ....
                             Where proof is not adequately substantiated, the difference
                             between the claimed cost and the substantiated cost will be
                             disallowed" (DHCR Policy Statement 90-10 [June 26, 1990]).

           As stated above, to show that work was performed for apartment 43, defendant has submitted a

           77-page exhibit including copies of purchase orders, invoices, and checks from late 1997 and

           early 1998. These evidence substantial work being done on the apartment during the period in

           question. 4

                     In their challenge to the IAis, plaintiffs file a letter from defendant dated September 6,

           2017, in which defendant stated that DHCR granted a $10.02 increase per room per month for

           the installation of apartment entry doors and common area windows (NYSCEF Doc. No. 124).

           However, the September 2017 letter does not support plaintiffs' position. Instead, it addresses an

           MCI application defendant submitted on December 20, 2016, for building-wide improvements

           including the replacement of all apartment doors and of the windows in the common areas.

           There is no indication that the referenced MCI application is related to the IAI increases

           defendant assessed 18 years earlier in the Hunter lease. Further, although DHCR denied a

           4
             The Court notes that there were duplicate copies of one bill, for $109.82 (NYSCEF Doc. No. 83, * 16-17, 75-77),
           and that some of the pages were unreadable in part. However, the duplicate amount is de minimis, and the
           unreadable pages generally were accompanied by other documents, such as invoices and canceled checks, that
           adequately substantiated the amounts claimed. Therefore, these problems "do not constitute indicia of fraud"
           (Matter of Haskin v New York State Div. of Haus. & Community Renewal, 203 AD3d 603,604 [1st Dept 2022]; see
           also Begium v Mateo Prods., Inc., 138 AD3d 479,480 [1st Dept 2016] [gaps in defendant's evidence had not
           justified granting of cross-motion for summary judgment]). This is especially true as the rent stabilization laws do
           not require the landlord to maintain IAI records indefinitely (see Fuentes v Kwik Realty LLC, 186 AD3d 435, 438
           [1st Dept 2020]).

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               Motion No. 002

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           portion of the application, defendant sent plaintiffs the DHCR decision, by which it apparently

           abided.

                     As a further challenge to the IAis, plaintiffs file the affidavit of Gary Horowitz, who

           states he is a licensed architect and he inspected the premises on March 28, 2017, at plaintiffs'

           request (NYSCEF Doc. No. 121 ). 5 Horowitz opines the improvements would have cost $12,000,

           rather than $32,457.60, and that defendant performed the work around 1991. He states that, in

           1991, the kitchen renovations would have cost $118.00 per square foot and the bathroom

           renovations would have cost $30.00 per square foot. He contends that no other renovations

           occurred in 1998, and notes that he did not find any building permits for electrical or plumbing

           work. Plaintiffs contend that the Horowitz affidavit establishes the claimed increases were

           fraudulent.

                     The Court concludes that the Horowitz affidavit - only one page of which discusses the

           architect's conclusions - is insufficient to create an issue of fact in opposition to defendant's

           evidentiary support. Other than stating that the cabinets, appliances, floors, and fixtures "appear

           to have been renovated circa 1991" (NYSCEF Doc. No. 121, ,i 9 [a], see ,i 9 [b] ["looks to have

           last been renovated ... "]), Horowitz does not explain his conclusion that the improvements

           occurred in 1991, when all the bills and other evidentiary support relate to work done in 1997

           and 1998 and when he did not inspect the apartment until 2017 (see Rios Cruz v Mall Props.,

           Inc., 145 AD3d 463,463 [1st Dept 2016] [finding that engineer's report "was of little probative

           value" where inspection of accident site occurred years after the accident in question]). He

           provides only conclusory assertions regarding the basis of his knowledge and cites no pertinent

           guidelines (see Acosta v Consolidated Edison Co. ofN Y, Inc., 117 AD3d 475,476 [1st Dept

           5
             Plaintiffs did not file a copy of Horowitz's curriculum vitae with this motion, but the Court was able to locate it in
           the file for defendant's earlier motion to dismiss (NYSCEF Doc. No. 3 I).
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           2014]; Sarmiento v C & E Assoc., 40 AD3d 524, 526 [1st Dept 2007] [failure to cite to standards

           that support expert assertions rendered affidavit inadequate]). Even had his testimony been

           credible, his assessment of the cost "does not prove that the work was not performed" (Sand/ow,

           201 AD3d at 420). Also, Horowitz does not describe his records search other than to say that it

           was "diligent" (NYSCEF Doc. No. 121, ,i 7).

                  Plaintiffs also argue that because defendant did not file an updated rent registration

           statement with DHCR, leaving DHCR's records reflecting a last stabilized rent of $972.51 per

           month, the rent should be frozen at that amount (see Rent Stabilization Code § 2524 [a]).

           However, defendant filed a rent registration statement with DHCR on March 3, 2021 (NYSCEF

           Doc. No. 94). Under Rent Stabilization Code (RSC § 2528.4), the rent is retroactively unfrozen

           upon the filing a proper registration when "increases in the legal regulated rent were lawful

           except for the failure to file a timely registration" (Grady v Hessert Realty, L. P., 178 AD3d 401,

          404 [1st Dept 2019] [internal quotation marks and citation omitted]; see Matter a/Cardona v

           New York State Div. of Haus. & Community Renewal, 214 AD2d 393, 394 [1st Dept 1995]

           [determining that the subsequent filing of rent registration statements "prospectively eliminate[]"

          the rent freeze]). Plaintiffs' argument that the 2021 registration statement refers to all the tenants

          as "rent stabilized" is also unpersuasive. However, plaintiffs misunderstand the import of the

          registration requirement. Once the apartment is exempt from rent stabilization, it does not matter

          if the "landlord subsequently mistakenly registered the apartment as stabilized" because rent

          stabilization status is governed by statute (3505 BWAY Owner LLC v McNeely, 72 Misc 3d 1, 4

          [App Term 1st Dept 2021]). Further, a mere failure to comply with Department of Buildings

          requirements "[does] not establish a sufficient indicia of fraud" (Bazan, 189 AD3d at 496).

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           CONCLUSION

                     For the reasons above, the Court grants the defendant's motion and dismisses the

           complaint. The Court, for the same reasons, denies plaintiffs' cross-motion for summary

           judgment. The Court has considered all of the parties' remaining arguments and finds them

           without merit.

                     Accordingly, it is

                     ORDERED that defendant's motion for summary judgment is granted and the action is

           dismissed with costs and disbursements to defendant as taxed by the Clerk upon the submission

           of an appropriate bill of costs; and it is further

                     ORDERED that plaintiffs' cross-motion for summary judgment is denied; and it is

           further

                     ORDERED that the Clerk is directed to enter judgment accordingly.

                     4/3/2024
                       DATE                                                     ALEXANDER M. TISCH, J.S.C.

                                                                       ~
            CHECK ONE:                    CASE DISPOSED                    NON-FINAL DISPOSITION

                                          GRANTED         □ DENIED         GRANTED IN PART             □ OTHER
            APPLICATION:                  SETTLE ORDER                     SUBMIT ORDER

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

            154133/2017 MOORE, RAYMOND vs. GREYSTONE PROPERTIES 81 LLC                                 Page 12 of 12
            Motion No. 002

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