Summary
referring rent overcharge case to DHCR given its expertise in rent regulation
Summary of this case from Williams v. Daphne Realty Corp.Opinion
2012-06-7
Mary OLSEN, et al., Plaintiffs–Appellants, v. STELLAR WEST 110, LLC, Defendant–Respondent.
Grad and Weinraub, LLP, New York (David Weinraub of counsel), for appellants. Rosenberg & Estis, P.C., New York (Jeffrey Turkel of counsel), for respondent.
Grad and Weinraub, LLP, New York (David Weinraub of counsel), for appellants. Rosenberg & Estis, P.C., New York (Jeffrey Turkel of counsel), for respondent.
GONZALEZ, P.J., FRIEDMAN, RENWICK, MANZANET–DANIELS, ROMÁN, JJ.
Order, Supreme Court, New York County (Debra A. James, J.), entered January 25, 2012, which granted defendant's motion to dismiss the complaint, unanimously affirmed, without costs.
Plaintiffs moved into an apartment in a building owned by defendant's predecessor on December 15, 2001. The previous rent-controlled tenant, who was paying $846.66 at end of her tenancy, had vacated the apartment on December 10, 2001. The rent amount was omitted from plaintiffs' November 20, 2001 lease. Defendant's predecessor told plaintiffs that the monthly rent was $2,800, and plaintiffs apparently agreed to the amount. They remained in the apartment pursuant to a series of month-to-month and longer-term leases; plaintiff Haridopolos moved out in 2008. All these leases indicate that the tenancy was non-stabilized. Defendant's predecessor never notified plaintiffs of the change in the status of the apartment, the initial registered legal regulated rent, or their right to file a fair market rental appeal (FMRA) with DHCR—all in violation of the Rent Stabilization Law and Rent Stabilization Code ( see Administrative Code of the City of New York § 26–513[d]; 9 NYCRR 2523.1). Nor did defendant's predecessor ever file a report of vacancy decontrol, or the initial registration documents with DHCR. It had registered the apartment as rent-controlled, with a monthly rental rate of $413, in April 1984, but it filed no annual registration statements with DHCR at least from 1986 through 2007.
Plaintiffs commenced this action in 2010 against defendant, who acquired the building in 2007, seeking a declaration that their tenancy was subject to the Rent Stabilization Law, that defendant must offer plaintiff Olsen a regulated rent, and that the base rent should be calculated using DHCR's default formula for establishing a legal regulated rent where reliable rent records are unavailable ( see Thornton v. Baron, 5 N.Y.3d 175, 800 N.Y.S.2d 118, 833 N.E.2d 261 [2005] ). They argued that defendant's failure to notify them of the apartment's rent-stabilized status and of their right to challenge the initial regulated rent constituted fraud, which prevented them from timely filing an FMRA within the four years after their tenancy began ( see9 NYCRR 2523.1; see also9 NYCRR 2522.3[c] ), and that this fraud warranted the court's retention of jurisdiction over this matter.
We agree with Supreme Court that the complaint should be dismissed, although for different reasons. The time to file an FMRA expired in December 2005 ( see9 NYCRR 2523.1). Thus, as plaintiffs were the first-rent stabilized tenants, the adjustment of the rent was not governed by provisions applicable to an FMRA ( see Wasserman v. Gordon, 24 A.D.3d 201, 806 N.Y.S.2d 49 [2005];Levinson v. 390 W. End Assoc., LLC, 22 A.D.3d 397, 401, 802 N.Y.S.2d 659 [2005] ). Rather, plaintiffs may seek only to “recover rent overcharges paid during the four years immediately preceding the filing of [the] complaint, and to set a legal rent prospectively” ( Levinson, 22 A.D.3d at 401 n. 5, 802 N.Y.S.2d 659).
The court has jurisdiction over this rent overcharge matter ( see Wolfisch v. Mailman, 182 A.D.2d 533, 582 N.Y.S.2d 704 [1992];see also Thornton, 5 N.Y.3d at 175, 800 N.Y.S.2d 118, 833 N.E.2d 261;Levinson, 22 A.D.3d at 397, 802 N.Y.S.2d 659;Wasserman, 24 A.D.3d at 201, 806 N.Y.S.2d 49). However, pursuant to the doctrine of primary jurisdiction, we believe that the matter should be determined by DHCR, given its expertise in rent regulation ( Sohn v. Calderon, 78 N.Y.2d 755, 768, 579 N.Y.S.2d 940, 587 N.E.2d 807 [1991];Davis v. Waterside Hous. Co., 274 A.D.2d 318, 711 N.Y.S.2d 4 [2000],lv. denied95 N.Y.2d 770, 722 N.Y.S.2d 473, 745 N.E.2d 393 [2000] ). DHCR can investigate plaintiffs' fraud allegations, determine the regulatory status of the apartment, and, if warranted, apply the default formula adopted in Thornton to determine the base rate ( see Matter of Grimm v. State of New York, 15 N.Y.3d 358, 912 N.Y.S.2d 491, 938 N.E.2d 924 [2010] ).