Bryant Ave. Tenants' Ass'n v. Koch

• Decision Date: 09 February 1987
• Parties: BRYANT AVENUE TENANTS' ASSOCIATION, et al., Plaintiffs-Respondents, v. Edward I. KOCH, etc., et al., Defendants-Appellants, and Donmay Realty Co., et al., Defendants.
• Court: New York Supreme Court — Appellate Division

Page 279

511 N.Y.S.2d 279

127 A.D.2d 470

BRYANT AVENUE TENANTS' ASSOCIATION, et al., Plaintiffs-Respondents, v. Edward I. KOCH, etc., et al., Defendants-Appellants, and Donmay Realty Co., et al., Defendants.

Supreme Court, Appellate Division,

First Department.

Feb. 9, 1987.

A. Scherer, S.A. Rosenberg, New York City, for plaintiffs-respondents.

E.I. Freedman, F.F. Caputo, I.J. Korman, E. Tessler, J.L. Forstadt, P.N. Gruber, New York City, for defendants-appellants.

Before KUPFERMAN, J.P., and ROSS, ASCH, MILONAS and ROSENBERGER, JJ.

MEMORANDUM DECISION.

Order, Supreme Court, New York County (Bruce McM. Wright, J.), entered July 3, 1985, which, inter alia, joins defendant-appellant J.F.I.B. Realty and Lydia Delgado a/k/a Katherine Wender as parties defendants; prevents defendants from collecting major capital improvement rent increases; grants a preliminary injunction against said defendants; joins individual tenants and Astral Gardens Tenants' Association as parties-plaintiffs; and, deems the proposed amended complaint as the amended complaint, affirmed, without costs.

Order, Supreme Court, New York County (Elliott Wilk, J.), entered May 8, 1984, which, inter alia, denied the motions of defendants the New York City Conciliation and Appeals Board, the Rent Stabilization Association of New York City, and its Chairman, to dismiss plaintiffs' complaint for failure to state a cause of action, except insofar as claims for monetary damages against the municipal defendants were dismissed, granted plaintiffs' cross motion for a preliminary injunction, and held the remaining motions for summary judgment and plaintiffs' cross motion for partial summary judgment in abeyance for one decision, pending receipt of opposition papers from other defendants pursuant to CPLR 3211(e), affirmed, without costs.

Order, Supreme Court, New York County (Bruce McM. Wright, J.), entered May 17, 1985, which granted plaintiffs' motion for class certification, affirmed, without costs.

Plaintiffs are low income, rent-stabilized, tenants whose landlords have been granted approval by the defendant Conciliation and Appeals Board (CAB) for annual base rent increases well in excess of six (6) percent, payable permanently, in conjunction with financing for major capital improvements under Article 8-A of the Private Housing Finance Law (PHFL). The defendants are the Mayor, the Rent Stabilization Association of New York City and its Chairman (hereinafter collectively referred to as the RSA defendants), the CAB, whose functions have been assumed by the New York State Division of Housing and Community Renewal, the New York City Department of Housing, Preservation and Development (HPD), its Commissioner, and various landlords. In this action for a declaratory judgment plaintiffs challenge the validity of Section 41 of the Rent Stabilization Code (Code), which provides for rent adjustment by dividing the cash cost of a capital improvement over a sixty (60) month period of amortization, as violative of Section YY51-6.0(c)(6) of the Rent Stabilization Law. The latter statute provides that the cost of major capital improvements may be amortized over a five year period, but that stabilized rent increases should not exceed six percent annually. Plaintiffs also challenge the practices and policies related to the processing and approval of rent increases based on major capital improvements. In this vein, paragraph 55 of the complaint alleges that the defendant CAB, pursuant to the Code promulgated by the RSA defendants and approved by the other municipal defendants, has a practice and policy of failing "to give and to assure that landlords give adequate notice and a meaningful opportunity to be heard prior to the granting of rent insurances [sic] based on major capital improvements." Plaintiff Bryant Avenue Tenants' Association alleges that its members had no notice or opportunity to respond either to the application made by the defendant Donmay Realty Co. for an 8-A loan or to the application for approval of the proposed rent increases in that they were never served with a tenant Answer Form, nor were they afforded an opportunity to review the application. Plaintiff Empire Boulevard Tenants Association similarly alleges that its members had no notice and opportunity to respond to the application made by their landlord for an 8-A loan. Plaintiff Cheryl Turner alleges that she had no notice and opportunity to be heard with respect to her landlord's request for an 8-A loan. The first claim to relief asserts that defendants have collected, or authorized the collection of, increased rents, inter alia, not based on any ascertainable, rational, fundamental, fair or uniformly applied standards. The fourth claim to relief alleges that defendant CAB has not ensured that landlords give plaintiffs adequate prior written notice, or a meaningful opportunity to be heard, with regard to rent increases granted by the CAB; nor have the RSA defendants done so in promulgating and approving a code that makes no provision for notice and a hearing. The sixth claim to relief is identical to the fourth claim except that it asserts that the 8-A loan processing procedure of defendant HPD similarly violates plaintiffs' rights to procedural due process.

We agree with Special Term's conclusion that plaintiffs sufficiently articulated a cause of action, cognizable under the Civil Rights Act, 42 U.S.C. § 1983, to withstand the motion to dismiss. It is well-established that the test for the legal sufficiency of a complaint attacked with extrinsic evidence is whether the pleader has a cause of action, not whether he has properly stated one. Guggenheimer v. Ginzburg, 43 N.Y.2d 268, 275, 401 N.Y.S.2d 182, 372 N.E.2d 17 (1977). However, "CPLR 3211 allows plaintiff to submit affidavits, but it does not oblige him to do so on penalty of dismissal, as is the case under CPLR 3212 when defendant has made an evidentiary showing that refutes the pleaded cause of action. If plaintiff chooses to stand on his pleading alone, confident that its allegations are sufficient to state all the necessary elements of a cognizable cause of action, he is at liberty to do so and, unless the motion to dismiss is converted by the court to a motion for summary judgment, he will not be penalized because he has not made an evidentiary showing in support of his complaint." Rovello v. Orofino Realty Co., 40 N.Y.2d 633, 635, 389 N.Y.S.2d 314, 357 N.E.2d 970 (1976).

As low income tenants, plaintiffs have an interest of a nature which merits due process protection (Matter of Laureano v. Koch, 100 A.D.2d 192, 197-98, 473 N.Y.S.2d 445 [1st Dept. 1984] ), revd. on other grounds, 64 N.Y.2d 1105, 490 N.Y.S.2d 185, 479 N.E.2d 821 [1985] ), and there is evidence of sufficient state action to withstand the motion to dismiss. Sharrock v. Dell Buick-Cadillac, Inc., 45 N.Y.2d 152, 157-63, 408 N.Y.S.2d 39, 379 N.E.2d 1169 (1978). Plaintiffs specifically allege no notice, or inadequate notice, and thus denial of a meaningful opportunity to be heard in a meaningful manner as to 8-A loans and concomitant rent increases. Paragraph 55, and the fourth and sixth claims to relief, of the complaint allege that the established practice and...