Opinion
Index No. 65142/13
02-10-2015
2257 UNIVERSITY REALTY, L.L.C., Petitioner-Landlord, v. GERALDINE OCASIO, Respondent-Tenant.
(Sequence No. 002)
DECISION/ORDER
Recitation, as required by CPLR 2219(a), of the papers considered in the review of petitioner's motion pursuant to Sections 3212 and 3211(b) of the CPLR for an order granting summary judgment dismissing respondent's first, second, and third affirmative defenses and her first and second counterclaims:
| PAPERS | NUMBERED |
| Petitioner's Notice of Motion, Affirmation, and Exhibits | 1 |
| Respondent's Affirmation, Affidavit and Exhibits in | |
| Opposition | 2 |
| Petitioner's Reply Affirmation | 3 |
Background
Petitioner 2257 University Realty, L.L.C. commenced this nonpayment proceeding against respondent Geraldine Ocasio in November 2013. The petition alleges, among other things, that the subject apartment is Rent Stabilized; that respondent's rent is $901.16 per month; and that as of October 30, 2013 she owed petitioner $2,020.24 for rent, $525.11 for security, $20.02 for washing machine fees, and $33.18 for repair charges.
In her amended answer, respondent, who is represented by counsel, asserts, among other things, three affirmative defenses and four counterclaims. The affirmative defenses and first two counterclaims are based on a rent reduction order for decreased services issued by the New York State Division of Housing and Community Renewal ("DHCR") on April 24, 1987 and a rent overcharge order issued by DHCR on January 10, 1990.
By notice of motion dated October 8, 2014, petitioner moves pursuant to Sections 3212 and 3211(b) of the CPLR for an order granting it summary judgment dismissing respondent's first, second, and third affirmative defenses, as well as her first and second counterclaims. Respondent opposes the motion.
Respondent's Affirmative Defenses and First Two Counterclaims
In her first affirmative defense, respondent alleges that on April 24, 1987, DHCR issued an order reducing her rent to the level in effect prior to the date of the last guidelines increase which occurred prior to September 1, 1986, the order's effective date; that such order remained in effect for 14 years, until August 1, 2000; that despite the order, petitioner's predecessor in interest did not reduce respondent's rent for the entire 14-year period; that as a result, respondent overpaid her rent for 14 years; that she has never been credited for those overpayments; that such overpayments exceed the amount of rent currently owed; that petitioner is liable for any overpayments she made; and that, as a result, she owes no rent and is entitled to a credit.
In her second affirmative defense, respondent alleges that because petitioner's predecessor in interest failed to reduce her rent pursuant to the 1987 rent reduction order, she was overcharged; that she is entitled to triple damages for such overcharges; that petitioner is liable for any overpayments made; and that the amount overpaid and triple damages must be deducted from any rent owed to petitioner.
In her third affirmative defense, respondent alleges that on January 10, 1990, DHCR issued an order finding that petitioner's predecessors in interest had overcharged her in the amount of $9,235.35; that she has never collected that amount; that petitioner is liable for any overpayments made by respondent; that the overcharge amount exceeds any unpaid rent owed to petitioner; and that accordingly, the petition should be dismissed.
In her first counterclaim, respondent repeats most of her allegations regarding the rent reduction order and rent overcharge order, and seeks a judgment "in the amount of all the rent paid by [her] in excess of the amount collectible under the rent reduction order."
In her second counterclaim, respondent again repeats her allegations regarding the rent reduction order and rent overcharge order, and seeks a judgment "in the amount of all the rent paid by [her] in excess of the amount collectible under the rent reduction order," as well as for "triple the overcharge amount as permitted under the rent stabilization code."
The Parties' Arguments
In his affirmation in support of the motion, petitioner's attorney argues that the affirmative defenses and counterclaims based on the 1987 rent reduction order all constitute rent overcharge claims; that, accordingly, they are barred by the four-year statute of limitations set forth in Section 213-a of the CPLR and Section 2526.1(a)(2) of the Rent Stabilization Code ("RSC"); and that in the alternative, they are barred by the six-year statute of limitations set forth in Section 213(1) of the CPLR. He further argues that respondent's affirmative defense and counterclaim based on the 1990 rent overcharge order are barred by Section 213(1) of the CPLR or, in the alternative, by laches. With respect to his laches argument, petitioner's attorney states that because it is now 24 years since the rent overcharge order was issued and long after petitioner acquired title to the subject building, petitioner "would be substantially prejudiced in attempting to defend [respondent's] claim." Elaborating on this point in his reply affirmation, petitioner's attorney argues that the Rent Stabilization Law ("RSL") requires owners to keep records for only four years and that petitioner took title and began managing the building in or about 1999, long after both the rent reduction order and rent overcharge order were issued. Neither the initial motion papers nor the reply papers includes an affidavit by any one else.
Although petitioner states that respondent's second counterclaim is based on the 1990 rent overcharge order, it is actually based on the 1987 rent reduction order.
In opposition to petitioner's motion, respondent's attorney argues, with respect to the affirmative defenses and counterclaims based on the rent reduction order, that because such order does not require "active enforcement" or commencement of a proceeding, it is not subject to any statute of limitations; that respondent is not seeking to commence an action; and that, instead, she merely seeks to assert any overpayments made by her as a defense to petitioner's nonpayment claims. With respect to respondent's affirmative defense based on the rent overcharge order, respondent's attorney argues that such order is enforceable now because her rent overcharge proceeding was timely commenced with DHCR; that there are no time limits set forth in the CPLR, RSL, or RSC limiting when an overcharge award may be collected; and that petitioner is not entitled to summary judgment on its laches claim because, among other reasons, it did not explain how it would be prejudiced if respondent is allowed to proceed with her rent overcharge order defense. The affirmation of respondent's attorney is supported by an affidavit by respondent herself, as well as several exhibits, including copies of the 1987 rent reduction order and the 1993 order and opinion denying the former owner's petition for administrative review challenging the 1990 rent overcharge order.
Discussion
Section 3211(b) of the CPLR provides that "[a] party may move for judgment dismissing one or more defenses, on the ground that a defense is not stated or has no merit." Similarly, Section 3212(b) of the CPLR provides that a motion for summary judgment with respect to a defense must show that the defense "has no merit."
Here, petitioner argues that respondent's three affirmative defenses and first two counterclaims are barred by the applicable statute of limitations set forth in the CPLR and/or the RSC. In addition, petitioner argues that respondent's affirmative defense and counterclaim based on the 1990 rent overcharge order are barred by laches.
As noted above (see n. 1, supra), neither of respondent's first two counterclaims is based on the rent overcharge order. Instead, both are based on the rent reduction order.
Statute of Limitations
Section 213-a of the CPLR provides, in pertinent part, that
[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.Similarly, Section 2526.1(a)(2) of the RSC provides, in pertinent part, that a rent overcharge complaint
must be filed with the DHCR 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 an overcharge may be based upon an overcharge having occurred more than four years before the complaint is filed.(See also RSL [Administrative Code of City of NY] § 26-516[a][2]). Finally, Section 213(1) of the CPLR provides that "an action for which no limitation is specifically prescribed by law" must be commenced within six years. Thus, petitioner's statute of limitations argument will only succeed to the extent that respondent's remedies with respect to its affirmative defenses and first two counterclaims require her to commence an action or file a rent overcharge complaint with DHCR.
The various statutes of limitations set forth in Article 2 of the CPLR apply to deadlines for commencing an "action." (See CPLR § 201). As defined in the CPLR, an action includes a special proceeding. (See CPLR § 105[b]).
A. Respondent's First and Second Affirmative Defenses and First and Second Counterclaims
Respondent's first affirmative defense alleges that she overpaid her rent for 14 years because petitioner's predecessor in interest failed to reduce her rent pursuant to the 1987 rent reduction order and that, accordingly, she is entitled to a credit for those overpayments. Her second affirmative defense is similar to the first, but adds that during that 14-year period she was overcharged and that she is entitled to a credit for such overpayments and for triple damages as well. Her first counterclaim seeks a judgment in the amount of all rent she paid in excess of the amount collectible under the rent reduction order and her second counterclaim seeks a judgment for all rent paid in excess of such amount and triple damages as well.
Rent reductions for decreased services are governed by Sections 26-514 of the RSL and 2523.4 of the RSC. Neither specifies how overpayments resulting from an owner's failure to reduce a tenant's rent pursuant to a rent reduction order are to be collected. Respondent's rent reduction order, however, provides that the owner must refund to her "all amounts collected in excess of the reduced rent, since the effective date of the rent reduction" and that if the owner fails to do so within 30 days from the date of the order, "the tenant is authorized to deduct the amount from the future rent(s) until the total amount has been refunded."
The Court finds that any overpayments made by respondent due to her former landlord's failure to reduce her rent pursuant to the 1987 rent reduction order constitute rent overcharges. Accordingly, except for overpayments made between September 1, 1986 (the effective date of the rent reduction order) and April 24, 1987 (the date the rent reduction order was issued), which the order authorizes her to deduct from future rent, in order to obtain compensation for such overpayments, she was required to file a rent overcharge complaint with DHCR, commence an action or proceeding for rent overcharge, or assert rent overcharge as a defense or counterclaim in an action or proceeding commenced against her. Because such claims are limited to overcharges occurring within the four-year period before the claim is asserted, and respondent's answer fails to allege that she was overcharged during that period, the Court grants petitioner's motion to the extent of striking her second affirmative defense and first two counterclaims, and limiting her first affirmative defense to overpayments made between September 1, 1986 and April 24, 1987.
For similar reasons, respondent is not entitled to the "triple damages" sought in her second affirmative defense and second counterclaim. Such damages may only be awarded for overcharges which occurred up to two years before a rent overcharge claim is asserted. (See RSL § 26-516[a][2][i]; RSC [9 NYCRR] § 2526.1[a][2][i]).
B. Respondent's Third Affirmative Defense
Respondent's third affirmative defense alleges that in its 1990 rent overcharge order, DHCR determined that she was overcharged in the amount of $9,235.35; that she never collected that amount; and that the amount of that overcharge exceeds any unpaid rent.
Enforcement of rent overcharge awards is governed by Sections 26-516(a)(5) of the RSL and 2526.1(e) of the RSC. Section 26-516(a)(5) of the RSL provides, in pertinent part, that a rent overcharge order may "be filed and enforced by a tenant in the same manner as a judgment or not in excess of twenty thereof per month may be offset against any rent thereafter due the owner." Similarly, section 2526.1(e) of the RSC provides, in pertinent part, that
[a] tenant may recover any overcharge penalty established by the DHCR by deducting it from the rent due to the present owner at a rate not in excess of 20 percent of the amount of the penalty for any one month's rent. If no such rent credit has been taken, the order of the DHCR awarding penalties may be entered, filed and enforced by a tenant in the same manner as a judgment of the Supreme Court, on form prescribed by the DHCR, provided that the amount of the penalty exceeds $1,000 or the tenant is no longer in possession.Neither the RSL nor RSC provides a deadline by which a tenant must begin to withhold her rent to recover an overcharge penalty. Moreover, for overcharges collected on or after April 1, 1984, a current owner is responsible for all overcharge penalties, including those based on overcharges collected by any prior owner. (RSC § 2526.1[f][2][i]). Accordingly, where a tenant elects to deduct her overcharge award from rent due, she may withhold rent from a successor owner. (See 277 Enters., LLC v. Lebron, 17 Misc 3d 67 [2d and 11th Jud Dists 2007]; Olton v. Hunter, 3 Misc 3d 133[A], 2004 NY Slip Op 50437[U][App Term, 1st Dept 2004]).
Here, respondent has already received an overcharge award from DHCR and need not commence an action or proceeding, or file a rent overcharge complaint, in order to enforce it. Instead, she may recover the overcharge penalties awarded her by withholding rent against a successor owner, such as petitioner. Consequently, the statute of limitations set forth in the CPLR, the RSL and the RSC do not apply and, accordingly, do not provide a ground for striking respondent's third affirmative defense.
Laches
While the statute of limitations may not serve as a basis for striking respondent's third affirmative defense, given the passage of time since the rent overcharge award was issued, laches might. To obtain summary judgment, however, petitioner must establish laches "sufficiently to warrant the court as a matter of law in directing judgment . . ." (CPLR § 3212[b]), and it must do so by tender of evidentiary proof in admissible form. (See Zuckerman v. City of New York, 49 NY2d 557, 562 [1980]). Here, petitioner's proof with respect to laches consists solely of two affirmations by its attorney. Those affirmations, which state that petitioner would be prejudiced by allowing respondent to assert her third affirmative defense, fail to indicate that the attorney has personal knowledge that, due to respondent's delay in asserting her claim, petitioner now lacks sufficient evidence to contest it. Consequently, the affirmations are "without evidentiary value and thus unavailing." (Zuckerman v. City of New York, supra, 49 NY2d at 563). There being no other evidence to support petitioner's claim of prejudice, its motion for summary judgment dismissing respondent's third affirmative defense is denied.
Indeed, while petitioner's attorney states that the RSL requires owners to keep records for only four years, he does not claim that petitioner failed to keep records for longer than that or that it lacks access to other proof, such as the court files from previous cases which respondent states she has requisitioned, that can aid its opposition to respondent's claim.
Relief
For the reasons stated herein, the Court grants petitioner's motion to the extent of striking respondent's second affirmative defense and first two counterclaims, and limiting her first affirmative defense to overpayments made between September 1, 1986 and April 24, 1987. In all other respects, its motion is denied.
This case is restored to the Part L calendar on February 27, 2015 at 9:30 a.m. for all purposes, including trial.
This constitutes the decision and order of the Court. Dated: February 10, 2015
Bronx, NY
/s/_________
Hon. Andrew Lehrer
Judge, Housing Court