Opinion
L & T 250136/2014
09-03-2014
30 WEST 130TH STREET CORP., Petitioner–Landlord, v. Latoya WHITE, Respondent–Tenant.
Zachary J. Rothken, Rose & Rose, New York, for petitioner-landlord. Masooma Javaid, of counsel to Martha Weithman, Esq., SRO Law Project, New York, for respondent-tenant.
Zachary J. Rothken, Rose & Rose, New York, for petitioner-landlord. Masooma Javaid, of counsel to Martha Weithman, Esq., SRO Law Project, New York, for respondent-tenant.
Opinion
KELLY A. O'NEILL LEVY, J. Petitioner commenced the instant nonpayment proceeding on January 13, 2014. It is undisputed that Respondent has moved into Petitioner's rent-regulated Single Room Occupancy (“SRO”) building in or around February 2010 at a monthly rent of $500. On June 12, 2014 Respondent, by counsel, filed a motion for discovery pursuant to CPLR § 408 arguing that during the course of this action, she discovered that her rent had been increased from the previous tenant and seeks discovery to establish her rent overcharge defense. Petitioner filed a cross-motion on July 17, seeking an Order striking Respondent's first affirmative defense and counterclaim of rent overcharge. Respondent filed an affirmation in further support of her motion and in opposition to the cross-motion. The court will examine each motion in turn.
Respondent's Motion for Discovery
Discovery, permissible by leave of court in a summary proceeding to narrow the issues to be presented at trial, requires the moving party to demonstrate ample need. Banchik v. Ruggieri, N.Y.J.L., Nov. 18, 1998 at 29, col. 4 (Civ.Ct., N.Y.County). In New York University v. Farkas, 121 Misc.2d 643, 468 N.Y.S.2d 808 (Civ.Ct., N.Y. County 1983), the court outlined six factors to be considered in determining ample need for disclosure: (i) whether, in the first instance, the petitioner has asserted facts to establish a cause of action; (ii) whether there is a need to determine information directly related to the cause of action; (iii) whether the requested disclosure is carefully tailored and is likely to clarify the disputed facts; (iv) whether prejudice will result from the granting of an application of disclosure; (v) whether the prejudice can be diminished or alleviated by an order fashioned by the court for this purpose ...; and (vi) whether the court, in its supervisory role, can structure discovery so that pro se tenants, in particular, will be protected and not adversely affected by a landlord's discovery requests. Petitioner objects to discovery, arguing that the overcharge claim lacks merit. The court finds that the Farkas factors are satisfied. Here, Respondent presents facts to establish a cause of action and makes an effective argument that a rent overcharge may have occurred and the nature and extent of the improvements were made to the property is directly related to that issue. Additionally, the court finds that Respondent's document demand is carefully tailored, likely to clarify the disputed facts, and will not result in prejudice. Therefore, Respondent's motion for discovery is granted.
Petitioner's Cross–Motion
Petitioner cross-moves for an Order striking Respondent's first affirmative defense and counterclaim of rent overcharge. On a motion to strike an affirmative defense under CPLR § 3211(b), the plaintiff “bears the burden of demonstrating that the affirmative defense is without merit as a matter of law” ' Greco v. Christoffersen, 70 A.D.3d 769, 771, 896 N.Y.S.2d 363 (2d Dep't 2010), quoting Vita v. New York Waste Servs., LLC, 34 A.D.3d 559, 559, 824 N.Y.S.2d 177 (2d Dep't 2006). Where an affirmative defense raises an issue of fact, it should not be stricken. See Atlas Feather Corp. v. Pine Top Ins. Co., 128 A.D.2d 578, 579, 512 N.Y.S.2d 844 (2d Dep't 1987). Where, as here, a counterclaim is “inextricably intertwined” with Petitioner's claim for recovery, it shall not be stricken. See SAP V/Atlas 845 Wea Associates NF L.L.C. v. Spiritos, N.Y.L.J., Mar. 4, 2013, at 27 (Civ.Ct., N.Y. County 2013) permitting rent overcharge counterclaim (citing Haskell v. Surita, 109 Misc.2d 409, 439 N.Y.S.2d 990 (Civ.Ct., N.Y. County 1981) and Coronet Properties Assocs. v. Lederer, N.Y.L.J., Feb. 21, 1986 at 12 (App.Term, 1st Dep't 1986).
Petitioner argues here that the agreed-upon rent does not constitute an overcharge. According to Petitioner's records, the previous regulated rent was $330. Petitioner rightly examines 9 NYCRR 2522 for legal increases or decreases. See 9 NYCRR 2522.1 (“[L]egal regulated rents may be increased or decreased only as hereinafter specified”). Prior to Respondent moving in, the apartment was vacant, so Petitioner looks first to the section of 9 NYCRR 2522 titled “Rent adjustments upon vacancy or succession.” Petitioner argues that under 9 NYCRR 2522.8(a)(2)(ii)(b), there is justification to raise the rent by $100 to $430 per month: [I]f the previous legal regulated rent was at least $300 and no more than $500, in no event shall the total increase pursuant to this subdivision be less than $100 per month. All such increases shall be in lieu of any allowance authorized for the one or two year renewal component of the guideline promulgated by the rent guidelines board, but shall be in addition to any other increases authorized pursuant to the RSL and this Code, including adjustments pursuant to section 2522.4(a) of this Part, and any applicable vacancy allowance authorized by the rent guidelines board.
Petitioner then argues that the Rent Guidelines Board's determination for rent increases during the applicable period should be applied. Petitioner cites to “Rent Guidelines Board Order No.39,” which granted a 5.75% rent increase for two-year leases in the period two years prior to Respondent moving in. See Rent Guidelines Board Order # 39. Applying the 5.75% increase to the $430 vacancy rent, Petitioner argues the legal rent was $454.72 prior to improvements. Finally, Petitioner alleges that the rent could be legally increased by an additional $83.96, representing one-fortieth of the $3,358.57 cost of alleged improvements, for a monthly rent total of $538.68. Rent Stabilization Code § 2522.4. Petitioner then allegedly opted to charge Respondent only $500.
The $100 increase under 9 NYCRR 2522.8(a)(2)(ii)(b) expressly states that it “shall be in lieu of any allowance authorized for the ... two year renewal component of the guideline promulgated by the rent guidelines board,” yet Petitioner asks the court to include the 5.75% allowance authorized for two-year renewal leases per guidelines promulgated by the Rent Guidelines Board. Secondly, the $100 rent increase allowable under 9 NYCRR 2522.8(a)(2) (ii)(b) may not apply here as the opening language of 9 NYCRR 2522.8 states that “[t]he legal regulated rent for any vacancy lease entered into after June 15, 1997 shall be hereinafter provided in this subdivision.” 9 NYCRR 2522.8(a) (emphasis added).
The court notes that Petitioner quoted 9 NYCRR 2522.8(a)(2)(ii)(b) “in relevant part” in his cross-motion, but excised this key sentence.
Petitioner further asserts that 5.75% should be added to the legal regulated rent because a Rent Guidelines Board's determination allowed a 5.75% increase to “two-year renewal lease[s] commencing on or after October 1, 2007 and on or before September 30, 2008” despite the property in question being vacant and that same document stating “No ‘vacancy allowance’ is permitted under this Order.” Petitioner cites to “2007 Apartment & Loft Order # 39” which may not apply here as the property at issue is a Single Room Occupancy building which may invoke “Order Number 39–Hotels, Rooming Houses, Single Room Occupancy Buildings and Lodging Houses,” which applies to “leases commencing October 1, 2009 through September 30, 2010,” during which period Respondent moved into the subject premises. This Order calls for an allowable rent adjustment of 0% and also provides for “No ‘vacancy allowance.’ ”
While Respondent did not have a lease, the court recognizes that “Order Number 39–Hotels, Rooming Houses, Single Room Occupancy Buildings and Lodging Houses” might not apply.
Petitioner's alleged improvements to the property would allow an increase of $83.96, representing one-fortieth of the $3,358.57 in improvements allegedly made. See Rent Stabilization Code § 2522.4. Petitioner has not submitted sufficient proof to establish the cost of the improvements however. The submitted checks add up to $2,335 and some have dubious relevance—such as an $825 check made out to “Ashley Dixon” with no explanation of its purpose.
Petitioner next argues that Respondent's defense should be stricken because in order to prevail, Respondent must examine rental history prior to four years ago, which Respondent may not do without proving fraud, which cannot be shown here. See Matter of Boyd v. N.Y. Div. of Hous. & Community Renewal, 23 N.Y.3d 999, 992 N.Y.S.2d 764, 16 N.E.3d 1243 (2014). While courts have understood the legislature to have “specifically precluded examination of the rental history of the housing accommodation prior to the four-year period preceding the filing of the complaint,” Zafra v. Pilkes, 245 A.D.2d 218, 219, 666 N.Y.S.2d 633 (1st Dep't 1997), given the facts as alleged here, past rental history may be examined. Petitioner rightly notes that the legal regulated rent in this case is determined based on the formula set forth in Rent Stabilization Code § 2526.1(a)(3)(iii), but the court notes that Rent Stabilization Code § 2526.1(a)(2)(ix) states:
For the purpose of establishing the legal regulated rent pursuant to 2526.1(a)(3)(iii) of this Title where the apartment was vacant or temporarily exempt on the base date, review of the rental history of the housing accommodation prior to the four-year period preceding the filing of a complaint pursuant to this section shall not be precluded. Rent Stabilization Code § 2526.1(2)(ix) (emphasis added).
Lastly, Petitioner argues that the rent was legal because the apartment was vacant when Respondent moved in, thus setting the legal rent to the price they then agreed upon. See Matter of Ogunrimde v. N.Y. Div. of Hous. & Community Renewal, 2010 WL 5044921, 2010 N.Y. Slip Op. 33350(U) (Sup.Ct., N.Y. County 2010). However, unlike in Ogunrimde, here there was no agency decision to that effect in this case.
As Petitioner has failed to demonstrate that Respondent's defense is without merit and the defense raises factual issues, and the counterclaim is inextricably intertwined with Petitioner's claim, the court denies the cross-motion.
Discovery shall be complete by October 6, 2014. The parties are directed to appear before the court on October 16 at 9:30 a.m. in Part U for resolution or to select a trial date if necessary. This constitutes the Decision and Order of the court. The Clerk is directed to mail a copy to both sides.