Court Opinion

ID: 9959904
Source: CourtListenerOpinion
Date Created: 2024-04-12 20:11:50.193015+00
Date Added: 2024-06-11T08:18:59.363748
License: Public Domain

Mlotok v 63 Co. LLC
               2024 NY Slip Op 31190(U)
                      April 8, 2024
           Supreme Court, New York County
        Docket Number: Index No. 161037/2020
                  Judge: Lisa S. Headley
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                       publication.
                                                                                                INDEX NO. 161037/2020
  NYSCEF DOC. NO. 69                                                                    RECEIVED NYSCEF: 04/08/2024

                            SUPREME COURT OF THE STATE OF NEW YORK
                                                   NEW YORK COUNTY
          PRESENT:        HON. LISA S. HEADLEY                             PART                                28M
                                                                Justice
             - - - - - - - - - - - - - - - -------X                        INDEX NO.            161037/2020

           BIANCA MLOTOK,
                                                                           MOTION DATE           12/12/2023

                                             Plaintiff,
                                                                           MOTION SEQ. NO.           002

                                      - V-

           63 COMPANY LLC, DIGBY MANAGEMENT COMPANY
                                                                              DECISION + ORDER ON
           LLC
                                                                                       MOTION
                                             Defendant.

          The following e-filed documents, listed by NYSCEF document number (Motion 002) 46! 47, 48, 49, 50,
          51,52,53,54, 55, 56,57,58,~9,60,61,62,63,64,65,66

          were read on this motion to/for                         PARTIAL SUMMARY JUDGMENT

                 Defendants, 63 Company, LLC ("63 Company") and Digby Management, LLC ("Digby")
          (hereinafter collectively referred to as "Defendants"), filed this instant motion for partial summary
          judgment, pursuant to CPLR § 3212(a) and (b), to dismiss Plaintiff's First and Second Causes of
          Action; for leave to amend 63 Company's counterclaim contained in the answer, pursuant to CPLR
          §3025(c), so as to amend the amount sought in the counterclaim to reflect the total of $9,040.00 in
          fixed monthly rent that has accrued through the expiration of the lease date; for summary
          judgment, pursuant to CPLR §3 212, in favor of 63 Company and awarding 63 Company a final
          judgment against Plaintiff in the sum of $9,040.00. Plaintiff, Bianca Mlotok ("Plaintiff') filed
          opposition and Defendants filed a reply.

                 On December 18, 2020, plaintiff commenced this action by the filing of a complaint for a
          declaratory judgment (the first cause of action) that the plaintiff's residential apartment, number
          5E, located at 200 East 63 rd Street, New York, New York ("the apartment") is subject to rent

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                                                                                                INDEX NO. 161037/2020
  NYSCEF DOC. NO. 69                                                                    RECEIVED NYSCEF: 04/08/2024

          stabilization; and for willful rent overcharge within a fraudulent scheme to deregulate a rent
          stabilized premises in excess of that which is allowed under the Rent Stabilization Law and Rent
          Stabilization Law Code (the second cause of action). The plaintiff asserts additional causes of
          actions for private nuisance, negligence, breach of lease and attorneys' fees for personal property
          damage that occurred in July 2020 as a result of a partial ceiling collapse in the apartment.
                                             Defendants' Affirmation in Support

                  In support of the motion for summary judgment, and to amend its counterclaim, defendants
          submit, inter alia, the affidavit of Debra G. Fechter ("Ms. Fechter") (NYSCEF Doc. No. 47); the
          attorney affirmation of Israel Katz (NYSCEF Doc. No. 48); the memorandum of law (NYSCEF
          Doc. No. 62); the lease agreement for the apartment, dated November 11, 2014, with the
          subsequent lease renewals through May 31, 2020 (NYSCEF Doc. No. 4.9); the J-51 Exemption
          and abatement for the apartment building (N'YSCEF Doc. No. 50); the certified rent registration
          for the apartment (NYSCEF Doc. No. 51 ); and prior tenant leases (NYSCEF Doc. No. 52).
                  In her affidavit, Ms. Fechter, attests that she is the owner and landlord of the building
          located at 200 East 63 rd Street, New York, New York ·10065 ("Building"), and is also a member ·
          of Digby Management Company, LLC, the managing agent for the Landlord.. Ms. Fechter manages
          the collection of rents, maintains tent records, and registers rent stabilized apartments with the
          New York State Divisiqn of Housing and Commu~ity Renewal ("DHCR"). Ms. Fechter attests
          that Plaintiff currently resides in Apartment 5E of the Building and entered into possession by a
          written lease agreement dated November 11, 2014 ("Original Lease"), for a term commencing
          December 1, 2014, and ending May 31, 2016, at a monthly rent of$2,300.00 per month.
                  The plaintiff subseque~tly entered into three separate lease renewals: (1) an Extension of
          Lease Agreement dated as of April 28, 2016, for a term commencing June 1, 2016 and expiring
          May 31, 2016 at a monthly rent of $2,360.00; (2) an Extension of Lease Agreement dated as of
          April 3, 2018 for a term commencing June 1, 2018 and expiring May 31, 2020 at a monthly rent
          of $2,400.00 per month; and (3) an Extension of Lease Agreement dated as of February 6, 2020
          for a term commencing June 1, 2020 and expiring on May 31, 2022 at a monthly rent of$2,475.00
          (hereinafter, collectively referred to as the "Lease").
                  Lastly, Ms. Fechter attests that the Building received J-51 tax abatement benefits from July
          1, 1971, through June 30, 2009, and thereafter the Building no longer received any J-51 tax
          abatements or benefits. (NYSCEF Doc. No. 50). Ms. Fechter
                                                              ,
                                                                    asserts that the DHCR records

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           Motion No. 002

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  NYSCEF DOC. NO. 69                                                                     RECEIVED NYSCEF: 04/08/2024

          demonstrate that the Apartment was deregulated and registered as "Exempt High Rent Vacancy"
          in January 2001. (See, NYSCEF Doc. No. 51 ). The So-Ordered Stipulation of Settlement, and the
          Free-Market Lease and Deregulation Rider executed in December 2000 between the landlord and
          the former tenants who occupied Apartment 5E, indicate that the apartment "is not entitled to Rent
                                                                                        {

          Regulated status[.]"· (See, NYSCEF Doc. No. 53 and 54).
                   Specifically, defendants argue the Apartment reached the high vacancy deregulation
          threshold because the Apartment underwent "individual apartment improvements" (IAI) with one
          check in the amount of $3,500.00 dated November 17, 2000, and a second check in the amount of
          $4,350.00 dated December 4, 2000, totaling $7,850.00. Defendants assert the IAI's performed
          surpassed the then $2,000.00 threshold to qualify for high rent vacancy deregulation. Defendants
          contend that on March 10, 2010, a new tenant, Jamie Sadowsky, entered into possession of the
          Apartment at a legal regulated rent of$2,495.00, after the expiration of the J-51 tax benefit on July
          30, 2009.
                  As to the rent overcharge claims, the plaintiff alleges that the defendant-landlord
          improperly deregulated the Apartment in January 2001 by performing non-qualifying
          improvements in order to meet the high rent vacancy thre~hold. The defendants argue plaintiffs
          overcharge claim is time-barred by the four-year statute oflimitations pursuantto the pre-Housing
          Stability Tenant and Protection Act of 2019 ("HSTPA"). Defendants claim the DHCR base date
          was December 18,.2006, and pursuant to HSTPA, a lookback beyond four years from when the
          action was commenced is not permitted. Here, this action was commenced on December 18, 2020,
          14 years thereafter; thus, Plaintiff is time barred from commencing this present action.
                  In addition, defendants argue that the plaintiffs overcharge claims against co-defendant
          Digby must be dismissed because defendant Digby acted as an agent for a disclosed principal,
          Sunnyside 42 LLC, therefore, Defendant Digby should not be charged as an agent for their
          principal' s liability.
                  Defendant 63 Company argues that it should be granted leave to amend its counterclaim,
          and should be awarded summary judgment against Plaintiff in the amount of $9,040.00, for
          monthly rent owed through May 31; 2022, pursuant to the lease agreement. (See, Exhibit J,
          NYSCEF Doc. No. 58).

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           Motion No. 002

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  NYSCEF DOC. NO. 69                                                                     RECEIVED NYSCEF: 04/08/2024

                                            Plaintiff's Affirmation in Opposition

                  In opposition, pla1ntiff argues that there are issues of fact, therefore, the motion for
          summary judgment should be denied. Plaintiff also argues that defendants have failed to
          demonstrate whethei: the Apartment was properly de-regulated. Plaintiff contends there is an issue.
          of fact regarding the leases, the effect of the J-51, the mistakes in the DHCR history and the overall
          plan of de-regulation. Plaintiff also argues there are issues regarding DHCR's rent history
          regarding the periods where the premises was registered as rent-stabilized.
                  Plaintiff argues defendants have failed to submit, in addition to the lease agreement, the "J-
          51 rider" which would advise a tenant of their regulatory rights under J-51, and that upon expiration
          of that tax abatement, the rent would increase. Specifically, plaintiff asserts defendants have failed
          to present a lease attached with a J-51 rider from the period 1996 through 2010. Therefore, the real
          rent for this apartment should be $1,478.75. Therefore, plaintiff requests that this Court deny the
          instant motion and stay Defendants' request for an order for use and occupancy.
                                                      Defendants' Reply

                  In reply, defendants assert, inter alia, that Plaintiffs opposition lacks an affidavit or
          supporting documents to support Plaintiff's claim that the Landlord and the Landlord's
          predecessor failed to attach J-51. lease riders to the prior tenant leases. Defendants argue the
          Apartment surpassed the hfgh rent vacancy threshold of $2,000.00 resulting in the automatic
          deregulation of the Apartment as of September 1, 2010, when a new tenant, Jamie Sadowsky,
          entered into possession of the Apartment at a legally regulated rent of $2,495.00, which occurred
          after expiration of the J-51 tax benefit on July 30, 2009.
                  Moreover, Defendants highlight Ms. Fetcher's affidavit, which states the deregulation of
          'the Apartment that occurred in 2001 was based upon DHCR guidance which allowed deregulation
          of the Apartment notwithstanding Landlord's receipt of J-51 tax benefits. Lastly, defendants assert
          since Plaintiffs complaint fails to allege the necessary elements for fraud, Plaintiff is not entitled
          to lookback beyond four years from the date of their complaint. Therefore, Defendants respectfully
          request that their instant motion be granted.
                                                           Discussion

                  "[T]he proponent of a summary judgment motion must make a prima facie showing of
          entitlement to judgment as a matter of law, tendering sufficient evidence to demonstrate the

           161037/2020 MLOTOK, BIANCA vs. 63 COMPANY LLC                                          Page 4 of 8
           Motion No. 002

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          absence of any material issues of fact. Failure to make such prima facie showing requires denial
          of the motion, regardless of the sufficiency of the opposing papers." Alvarez v. Prospect Hosp., 68
          N.Y.2d 320,324 (1986).
                  Under CPLR §3025, a party may amend a pleading "at any time by leave of court" (CPLR
          3025 [bl), "before or after judgment to conform [the pleading] to the evidence" (CPLR 3025 [c]).
          A request to amend is determined in accordance with the general considerations applicable to such
          motion, including the statute's direction that leave "shall be freely given upon such terms as may
          be just" (CPLR 3025 [b]; See, KimsoApartments, LLCv. Gandhi, 24 N.Y.3d403 (1st Dep't 2014).
                  This Court grants defendants' motion to amend the amount sought in the counterclaim
          because there is no surprise or prejudice to the Plaintiff. More accurately, this Court finds that
          Plaintiff voluntarily entered into a lease agreement with defendants' which required Plaintiff to
          pay a fixed monthly rent that has accrued through the expiration of the lease date. (See, Exhibit A,
          NYSCEF Doc. No. 49). Plaintiff is not prejudiced because Plaintiff entered into a contract detailing
          the monthly rental amount, and Plaintiff cannot claim surprise because the lease agreement which
          Plaintiff signed states that a tenant "must pay an equal amount for what the law calls 'use and
          occupancy' until You actually move out." (See, Exhibit A, NYSCEF Doc. No. 49).
                  Further, this Court finds that the defendants have demonstrated, based upon the submitted
          evidence, that the subject Apartment was lawfully deregulated by the Division of Housing and
          Community Renewal ("DHCR"). Pursuant to Rent Stabilization Law RSL §26-504(c):
                            "Dwelling units in a building or structure receiving the benefits of
                            section 11-243 or section 11-244 of the code or article eighteen of
                            the private housing finance law, not owned as a cooperative or as a
                            condominium, except as provided in section three hundred fifty-
                            two-eeee of the general business law and not subject to chapter three
                            of this title. Upon the expiration or termination for any reason of the
                            benefits of section 11-243 or section 11-244 of the code or article
                            eighteen of the private housing finance law any such dwelling unit
                            shall be subject to this chapter until the occurrence of the first
                            vacancy of such unit after such benefits are no longer being received
                            or if each lease and renewal thereof for such unit for the tenant in
                            residence at the time of the expiration of the tax benefit period has
                            included a notice in at least twelve point type informing such tenant
                            that the unit shall become subject to deregulation upon the
                            expiration of such tax benefit period and states the approximate date
                            on which such tax benefit period is scheduled to expire, such
                            dwelling unit shall be deregulated as of the end of the tax benefit

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           Motion No. 002

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                            period; provided, however, that if such dwelling unit would have
                            been subject to this chapter or the emergency tenant protection act
                            of nineteen seventy-four in the absence of Jhis subdivision, such
                            dwelling unit shall, upon the expiration of such benefits, continue to
                            be subject to this chapter or the emergency tenant protection act of
                            nineteen seventy-four to the same extent and in the same manner as
                            if this subdivision had never applied thereto."

                  Pursuant to Rent Stabilization Code RSC §2520.11 (o)(l):
                            "(o) housing accommodations in buildings completed or substantially
                            rehabilitated as family units on or after January 1, 1974, or located in a
                            building containing less than six housing accommodations, and which
                            were originally made subject to regulation solely as a conditio•n of
                            receiving tax benefits pursuant to section 11-243 (formerly JSl-2.5) or
                            section 11-244 (formerly JSl-5.0) of the Administrative Code cf the City
                            of New York, as amended, or article XVIII of the PHFL; and thereafter
                            receipt of such tax benefits has concluded pursuant to these sections or
                            article XVIII, and:(1) for housing accommodations which were subject to
                            the RSL pursuant to section 11-243 (formerly JSl-2.5) or section 11-244
                            (formerly JS 1-5.0) or PHFL article XVIII became vacant."

                  Here, the defendants have demonstrated that in late 2000 the Apartment was subject to rent
          stabilization when the Apartment-was subject to J-51 tax benefits. Defendants have demonstrated
          that the J-51 benefits expired on July 30, 2009, and therefore the Apartment was subject to
          deregulation after a vacancy and the expiration of J-51 benefits. (See, RSL §26-504(c) and RSC
          §2520.11 (o)(l)).
                  Additionally, the DHCR's Registration Apartment Information dated September 13, 2023,
          demonstrates the Apartment has not been registered as rent stabilized since 2001. (See, Exhibit C,
          NYSCEF Doc. No. 51). Here, based on the certified rent registration the Apartment was subject to
          high rent vacancy deregulation because the regulated rent for the Apartment exceeded the then
          $2,000.00 due to the Apartment receiving Individual Apartment Improvements (IAI) totaling
          $7,850.00. (See, NYSCEF Doc. No. 55). The apartment was deregulated in 2001 prior to when the
          plaintiff took possession in Decen:iber 2014.
                  This Court further finds that DHCR's ruling was sound and will not be disturbed. "Once
          an administrative agency has decided a matter, based upon a proper factual showing and the
          application of its own regulations and precedent, the parties to that matter are entitled to have the
          determination treated as final." See, Matter of Peckham v. Calogero, 54 A.D.3d 27 (1st Dep't
          2008), aff'd. 12 N.Y.3d 424, (2009). "Although ... a remand may be appropriate where the agency

           161037/2020 MLOTOK, BIANCA vs. 63 COMPANY LLC                                                 Page 6 of 8
           Motion No. 002

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         has made the type of substantial error that constitutes an "irregularity in vital matters"". Matter of
          Porter v. New York State Div. of Hous. & Community Renewal, 51 A.D.3d 417 (1st Dep't 2008),
          Iv. denied 11 N.Y.3d 703 (2008). "A final administrative determination cannot be reopened to give
         a party an opportunity to make a new argument based on the existing administrative record." See,
          Matter ofPantelidis v. New York City Bd. ofStds. & Appeals, 43 A.D.3d 314,315 (1st Dep't 2007),
         affd. 10 N.Y.3d 846 (2008) [no remand is appropriate where a party is "merely seeking a second
         chance to reach a different determination on the merits."] "That is simply not one of the recognized
         exceptions to the principle of administrative finality." See, Gersten v. 56 7th Ave. LLC, 88 A.D.3d
          189 (1st Dep't 2011).
                 This Court is "mindful of the fact that, notwithstanding the general rule of administrative
         finality- giving res judicata or collateral estoppel effect to an administrative agency ruling- DHCR
         has the discretion to reconsider its determinations under certain circumstances." See, Gersten v.
         56 7th Ave. LLC, 88 A.D.3d 189 (1st Dep't 2011 ). The plaintiff did not file an appeal to the DHCR
         deregulation by way of an administrative appeal, or by commencing an Article 78 proceeding. This
         Court finds Plaintiff has failed to raise a legal challenge to DHCR's determinations regarding the
         rent stabilization of the subject apartment, and this Court will not disturb DHCR's ruling on the
         basis of an administrative reconsideration over a decade later. Id. Thus, this Court finds Plaintiff
         has failed to raise new legal challenges to the former owner's initial application with DHCR.
         Therefore, this Court grants Defendants' motion.
                 Accordingly, it is hereby
                 ORDERED that the Defendants 63 Company, LLC and Digby Management, LLC's
         motion for summary judgment pursuant to CPLR § 3212{a) and (b), awarding Defendants partial
         summary judgment _dismissing Plaintiff's First Cause of Action for a declaratory judgment and
         Second Cause of Action for willful rent overcharge is GRANTED; and it is further
                 ORDERED that the Defendants 63 Company, LLC and Digby Management, LLC's
         motion to amend their counterclaim pursuant to CPLR §3025{c) is GRANTED; and it is further
                 ORDERED that the Defendants 63 Company, LLC and Digby Management, LLC's
         motion pursuant to CPLR § 3212 granting summary judgment in favor of 63 Company is
         GRANTED; and it is further
                 ORDERED that 63 Company, LLC is awarded a final judgment against Plaintiff Bianca
         Mlotok in the amount of$9,040.00 for monthly rent owed through May 31, 2022; and it is further

          161037/2020 MLOTOK, BIANCA vs. 63 COMPANY LLC                                         Page 7 of 8
          Motion No. 002

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                  ORDERED that within 30 days of entry, defendants shall serve a copy of this
          decision/order upon the plaintiff with notice of entry; and it is further
                  ORDERED that any requested relief sought not expressly addressed herein has
          nonetheless been considered.
                            This constitutes the Decision and Order of the Court.

                  4/8/2024
                    DATE
           CHECK ONE:

           APPLICATION:

           CHECK IF APPROPRIATE:
                                   '§ X
                                          CASE DISPOSED

                                          GRANTED
                                          SETTLE ORDER
                                                          □ DENIED

                                          INCLUDES TRANSFER/REASSIGN   '
                                                                           NON-FINAL DISPOSITION

                                                                           GRANTED IN PART

                                                                           SUBMIT ORDER

                                                                           FIDUCIARY APPOINTMENT
                                                                                                   □ OTHER

                                                                                                   □ REFERENCE

           161037/2020 MLOTOK, BIANCA vs. 63 COMPANY LLC                                            Page 8 of 8
           Motion No. 002

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