Dzganiya v. Pomerantz, Case No. 1:17-cv-04525-GHW
| Decision Date | 15 May 2018 |
| Docket Number | Case No. 1:17-cv-04525-GHW |
| Parties | NINO DZGANIYA, Plaintiff, v. COHEN EHRENFELD POMERANTZ & TENENBAUM, LLP AND SIMILIS MANAGEMENT LLC, Defendants. |
| Court | U.S. District Court — Southern District of New York |
In July 2016, Plaintiff's landlord, through its attorneys, initiated eviction proceedings against her in the Civil Court of the City of New York based on her alleged failure to pay rent. The amounts listed as past due in the rent demand and housing court petition were calculated using an accounting method known as "rent jamming" and did not reflect the actual months for which rent was due, nor the correct balance owed. Plaintiff's landlord and its attorneys also sought attorneys' fees, although no provision existed in Plaintiff's lease that would provide a legal basis for recovery of those fees. These rent-jamming and fee-seeking practices are at the heart of the lawsuit that Plaintiff has brought in federal court. She asserts a claim under the Fair Debt Collection Practices Act ("FDCPA") against her landlord's attorneys, the law firm of Cohen Ehrenfeld Pomerantz & Tenenbaum, LLP ("CHEPT"). Plaintiff also asserts claims under New York's General Business Law ("GBL") against CHEPT and her landlord, Similis Management LLC. Similis has moved to dismiss the only claim against it, asking that the Court decline to exercise supplemental jurisdiction. Because the state claim would substantially predominate over the federal claim if both were to proceed before this Court, the Court declines to exercise supplemental jurisdiction over the claim against Similis. The Court also declines to exercise supplemental jurisdiction over the GBL claim asserted against CHEPT.
Plaintiff Nino Dzganiya, a 56-year-old Georgian immigrant employed as a caregiver for children, moved into a rent-stabilized apartment located at 31 Bennett Avenue, Apartment 4 in Manhattan in May 2014. First Amended Complaint, ECF No. 32 ("FAC") ¶¶ 10-11. Plaintiff entered into a standard "Blumberg" form, one-year lease with her new landlord, Similis, which provided for a monthly rent of $1,625. Id. ¶¶ 11, 13, 45.
The apartment was in poor condition when Plaintiff moved in. Id. ¶ 15. The walls required painting and plastering; floor tiles were loose; the bathtub was chipped and stained; the shower head fell out of the socket; the toilet seat detached from the toilet; there was mold in the kitchen cabinets; and the oven did not work. Id. Similis and its superintendent explained that Plaintiff was required to pay them a "gift" in order to have her apartment repaired or a unit in better condition offered to her. Id. ¶ 16. Despite Plaintiff's payment of $800 to Similis and $700 to the superintendent, adequate repairs were never made, nor was Plaintiff offered a better apartment. Id. ¶¶ 17-21.
When Plaintiff's lease expired in April 2015, she was not offered a rent stabilized lease renewal. Id. ¶ 23. Plaintiff made several requests for a renewal, but by March 2016 still had not received the renewal lease. Id. ¶ 24. Plaintiff retained an attorney to assist her in obtaining the renewed lease and then paid her March rent in cash, without receiving a receipt. Id. ¶¶ 25, 71. Thefollowing month, Similis provided Plaintiff with a renewal lease. Id. ¶ 26. Shortly thereafter, however, Similis's managing agent Chaim Englander informed Plaintiff that he was displeased that she had hired an attorney and was "causing trouble." Id. ¶ 27. Englander warned Plaintiff that he would evict her for non-payment of rent. Id. When Plaintiff stated that she was not behind in her rent payments, Englander reminded her that she paid her rent in cash, had no proof of payment, and that a housing court would believe him rather than her. Id. ¶ 28.
Plaintiff did not pay her rent in April 2016. FAC, Ex. D. However, she paid a total of $3,240 in May. Id. Plaintiff paid her June 2016 rent by check, a check which Similis cashed on June 14. FAC ¶ 40. Nonetheless, true to Englander's word, Similis retained CHEPT to initiate eviction proceedings on its behalf based on Plaintiff's failure to pay rent. Id. ¶ 29. CHEPT prepared a rent demand on June 16, 2016, two days after the firm's client had cashed Plaintiff's rent check. Id. ¶ 32. That demand indicated that Plaintiff owed the entire $1,625 rent for June and a $110 balance from May's rent. Id. ¶ 34. The rent demand reflected the use of "rent jamming," a common accounting practice used in housing court. Id. ¶¶ 74, 77. A rent collector "rent jams" by dividing the total sum of rent arrears by the monthly rent to determine how many months of rent are owed. Id. ¶ 75. The collector then prepares a demand that indicates that rent is due for that number of the most recent months, regardless of whether the tenant has paid rent in those months. Id. In this way, rent jamming disregards the date on which the arrears actually accrued and whether any rent payments were made for the allegedly unpaid months. Id. The rent demand prepared by CHEPT using this rent-jamming method was never served on Plaintiff. Id. ¶ 59.
Plaintiff subsequently paid her July rent by check, which was cashed by Similar on July 7, 2016. Id. ¶ 40. Twelve days later, on July 19, 2016, CHEPT prepared a housing court petition on Similis's behalf, alleging that Plaintiff owed $110 for May 2016, $1,625 for June 2016, $1,625 for July 2016 rent, and demanding $260 in attorneys' fees. Id. ¶¶ 36, 38. The petition was filed with theNew York County Civil Court on July 25, 2016, but was never served on Plaintiff. Id. ¶ 59; FAC, Ex. C. Instead, Plaintiff learned of the pending eviction action when she received notice from the court the month after the petition was filed. FAC ¶ 62. Plaintiff paid her rent for August and September 2016 in cash and was not provided a receipt. Id. ¶ 71.
Plaintiff initially represented herself in the housing court proceeding. Id. ¶ 63. She retained an attorney in October 2016, however, and through counsel moved to dismiss the proceeding. Id. ¶¶ 63-64. Plaintiff paid her rent for October and November 2016 by checks that were given to Defendants in court and later cashed by Similis. Id. ¶¶ 69-70. In December 2016, CHEPT filed a motion seeking leave to amend the petition to seek a total of $8,235 in rent arrears. Id. ¶ 65. That amount consisted of $1,625 per month for March, August, September, October, and November 2016, and $110 for July 2014 through April 2016 arrears, accounting for an accumulation of small balances due from months in which Plaintiff paid $1,620 instead of $1,625. Id. With that motion, CHEPT provided the housing court with a ledger of Plaintiff's rent payments, which showed a total owed balance of $1,735 as of July 2016—not the $3,620 originally identified in the petition—and did not account for the March, August, September, October, or November 2016 rent payments. Id. ¶ 66; FAC, Exs. C, D.
The housing court denied Plaintiff's motion to dismiss, explaining that a rent demand need not be entirely accurate and that factual disputes existed regarding the receipt of rent for months in which Plaintiff paid in cash. Id. ¶ 101. During her preparation for trial, which was originally scheduled to begin on May 16, 2016, Plaintiff discovered that Similis had been overcharging her for rent. Id. ¶ 102-03. She moved for leave to amend her answer to add a counterclaim based on Similis's charge of rent in excess of the amount permitted under the rent stabilization laws. Id. ¶ 102. Similis later substituted counsel from the CHEPT law firm with attorneys from Kucker &Bruh, LLP. Id. ¶ 104. The housing court proceeding remained ongoing as of the date of the complaint in this matter. Id. ¶ 105.
Plaintiff has suffered emotional distress as a result of Defendants' rent-jamming practice. Id. ¶ 108. Plaintiff suffers from continual anxiety and lost sleep. Id. ¶ 110. Because of the rent-jamming calculations, Plaintiff was unable to properly defend herself before the petition was filed in housing court. Id. ¶ 108. She has been exposed to derogatory credit reporting and to being "blacklisted" by tenant screening bureaus.2 Id. And because Plaintiff was forced to take too much time off to attend court proceedings, one of the families for whom Plaintiff worked as a caregiver terminated her employment. Id. ¶ 109.
Similis owns at least two residential apartment buildings in Manhattan. Id. ¶ 46. All, or nearly all, of the seventy-three apartments are rent stabilized, and Similis generally uses the standard form lease that Plaintiff executed. Id. ¶¶ 46-47.
CHEPT is a regular patron of the housing court, with over 300 cases pending as of the filing of the complaint in this matter. Id. ¶¶ 30, 58. Similis is also no stranger to the housing court; it has filed ninety-six landlord-tenant summary proceedings in the county of New York, a majority of which are based on non-payment of rent. Id. ¶¶ 79-80. The six most recent cases that are publicly available are all non-payment proceedings in which Similis was represented by CHEPT. Id. ¶¶ 81-82. Each of the tenants in those cases, like Plaintiff, was a low-income, rent-stabilized tenant, had entered into a rent-stabilized lease with Similis, and was pro se when the cases were initially filed. Id. ¶¶ 51-53. The petitions filed in each of those six cases reflected past-due rent calculations that weredone in accordance with rent-jamming accounting. Id. ¶ 84. The petitions also sought attorneys' fees, despite the lack of a provision for such fees in the rent-stabilized leases. Id. ¶¶ 54-55. In fact, both Defendants routinely seek attorneys' fees, regardless of the lease provisions, and rely on rent-jamming calculations in their housing court proceedings. Id. ¶¶ 42-43, 57, 76, 87.
Plaintiff claims that rent jamming is "materially misleading"...
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