125 Court St., LLC v. Sher

• Decision Date: 19 January 2018
• Docket Number: 2015–2505 K C
• Citation: 125 Court St., LLC v. Sher, 58 Misc.3d 150(A), 94 N.Y.S.3d 539(Table) (N.Y. App. Term 2018)
• Parties: 125 COURT STREET, LLC, Respondent–Appellant, v. Nancy SHER, Appellant–Respondent.
• Court: New York Supreme Court — Appellate Term

58 Misc.3d 150 (A)

94 N.Y.S.3d 539 (Table)

125 COURT STREET, LLC, Respondent–Appellant,

v.Nancy SHER, Appellant–Respondent.

2015–2505 K C

Supreme Court, Appellate Term, New York, Second Department, 2d, 11th and 13th Judicial Districts.

Decided on January 19, 2018

Brian F. Ward, Esq., PLLC (Brian F. Ward, Esq.), for appellant-respondent.

Leon I. Behar, P.C. (Leon I. Behar, Esq.), for respondent-appellant.

PRESENT: DAVID ELLIOT, J.P., MICHAEL L. PESCE, THOMAS P. ALIOTTA, JJ

ORDERED that the final judgment is reversed, with $30 costs to tenant, and the matter is remitted to the Civil Court for the entry of a final judgment dismissing the petition; and it is further,

ORDERED that the cross appeal is dismissed as moot.

In this nonpayment proceeding, landlord served a rent demand alleging that tenant owed rent at the rate of $3,700 for January through April 2012, and at the rate of $4,475.65 for May 2012 through October 2013. The petition incorporates the rent demand and alleges, among other things, that the apartment is subject to rent stabilization because landlord is the recipient of an RPTL 421–a tax abatement (see 28 RCNY 6–01 et seq. ). Tenant interposed an answer denying, among other things, the petition's allegation that a proper rent demand had been served, and asserting, among other things, that landlord had fraudulently registered the rents, that landlord had overcharged her, and that landlord had breached the warranty of habitability.

At a nonjury trial, the evidence established that tenant's initial 2005 lease, which was the first lease for the unit, listed a "legal regulated rent" of $9,175 and a preferential rent of $3,540. Each subsequent lease contained a "legal regulated rent" calculated based on that initial $9,175 figure. The renewal lease commencing May 2012 stated a legal regulated rent of $11,388.83 and a preferential rent of $5,000. In September 2013, landlord amended its Department of Housing and Community Renewal (DHCR) filings for tenant's apartment to restate the initial legal regulated rent as $3,540, with increases in the legal regulated rent in subsequent renewal leases calculated from that base. An employee of landlord's management company, Two Trees Management Company, testified that, based on this recalculation, landlord had unilaterally lowered the rent during the May 2012 lease term to the newly registered legal maximum, $4,475.65, and had given tenant certain credits, but no lease containing that amount had been executed. There was substantial testimony from both parties regarding tenant's warranty of habitability claim and landlord's claim that tenant did not provide sufficient access for repairs. Following the trial, the Civil Court found that landlord was entitled to rent at the rate of $3,700 per month for January 2012 through April 2012, and at the rate of $4,475.65 per month from May 2012 through September 2014, for a total unpaid balance of $127,693.85. The court further found that tenant was entitled to a 20% abatement for August 2011 through November 2012 and a 40% abatement for December 2012 through October 2013. After crediting the abatement, the court awarded landlord a final judgment of possession and the sum of $95,075.08.

Pursuant to Rent Stabilization Code (RSC) (9 NYCRR) § 2521.1 (g), "The initial legal regulated rent for a housing accommodation constructed pursuant to section 421–a of the Real Property Tax Law shall be the initial adjusted monthly rent charged and paid[.]" Since tenant was the first occupant of the premises and the rent she paid was $3,540, that sum became the initial legal regulated rent and all subsequent legal rents should have been calculated from that base. Landlord failed to register the correct maximum legal regulated rent for the initial 2005 lease term until September 2013 and offered no explanation for its filing of improper registrations, and none of the leases it proffered to tenant during those years accurately represented the maximum legal regulated rents.

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