E. HARLEM BLDG. 1 v. Cordero

Citation196 Misc.2d 36,763 N.Y.S.2d 203
PartiesEAST HARLEM PILOT BLOCK BUILDING 1 HDFC, Petitioner,<BR>v.<BR>NIDIA CORDERO, Respondent.
Decision Date28 April 2003
CourtNew York Civil Court

Legal Aid Society, New York City (James Regan of counsel), for respondent.

Gutman, Mintz, Baker & Sonnenfeldt, New Hyde Park (Jose Saladin of counsel), for petitioner.

OPINION OF THE COURT

ROLANDO T. ACOSTA, J.

Petitioner landlord commenced this nonpayment proceeding against respondent, a tenant recipient of a "Project-based" section 8 subsidy administered by the Department of Housing and Urban Development (HUD).[1]

Respondent moves for an order granting partial summary judgment for respondent and dismissing all claims for the HUD subsidy portion of respondent's alleged arrears. Respondent's motion presents a purely legal issue for the court's review: whether the HUD regulations require project-based section 8 landlords to retroactively apply a rental assistance subsidy upon a tenant's late recertification—a novel issue not resolved in any reported decision to date.[2]

Background

The petition alleges that respondent owes $16,643.71, which represents over nine months of market rent in the amount of $1,709 per month. Petitioner and respondent essentially agree that respondent was charged market rent commencing in October 2001 because of her failure to timely submit her annual recertification, as required by the HUD rules. Respondent alleged that she failed to timely recertify because of a cancer-related hospitalization during the recertification period.

When respondent ultimately submitted, however belatedly, the recertification documents to petitioner in this case, petitioner sent respondent a letter dated July 2, 2002, informing respondent that based upon their "recent review of [her] income and family composition, [her] rent has been adjusted to $158 * * * effective and due 10-1-01." (Emphasis added.) This retroactive adjustment was also reflected in certain rent invoices sent to respondent following the date of the letter.

After the submission of the letter, however, petitioner commenced this nonpayment proceeding charging respondent not $158 per month effective October 2001, but the full market rent per month ($1,709) effective October 2001. Subsequent correspondence also informed respondent that (a) petitioner had determined that respondent's cancer-related hospitalization does not constitute an extenuating circumstance which excused respondent's failure to timely recertify, and (b) that the "HUD Processing Center" was not going to retroactively apply the subsidy to October 2001, notwithstanding the July 2, 2002 letter. Petitioner claims that respondent had been informed that the promises contained in the July 2 letter were expressly contingent upon HUD's determination.

There is no dispute that sometime after the commencement of this proceeding, respondent was duly recertified.

The Motion for Partial Summary Judgment

Respondent now moves for an order granting partial summary judgment for respondent and dismissing all claims for the HUD subsidy portion of respondent's alleged arrears. Respondent argues that upon respondent's admittedly late recertification, petitioner was obliged by the HUD rules to apply respondent's subsidy retroactively to October 2001.

Petitioner opposes the motion. Although petitioner agrees that the court is required to adjudicate "the amount of outstanding rent arrears owed by the respondent," petitioner contends that, as a preliminary matter, the court "lacks the requisite jurisdiction to review HUD's decision * * * den[ying] * * * the retroactive re-instatement of the respondent's section 8 subsidy." Petitioner further argues that even if the court possessed the necessary jurisdiction, the motion should be denied because respondent's subsidy was "effectively terminated" as a result of her failure to timely file her annual recertification documents. Further, following termination of the subsidy, HUD, according to petitioner, possessed the regulatory discretion "not to reinstate the subsidy retroactively" upon respondent's belated recertification.

Because the court holds that the HUD regulations unequivocally mandate the retroactive implementation of a section 8 subsidy where the tenant, as the respondent here, submits a late recertification, the court grants the motion for partial summary judgment in favor of respondent. Petitioner's claims for the HUD subsidy portion of respondent's alleged arrears ($1,551 per month) are therefore dismissed and the matter is restored to the calendar on May 15, 2003, for the parties to conference the matter to determine the amount of the claimed arrears (i.e., the tenant's share) to date.

Discussion

It is well settled in this state that when the owner of project-based section 8 units commences a nonpayment proceeding in housing court seeking a judgment for market rent based upon the suspension or termination of a section 8 subsidy, housing court has jurisdiction to determine the propriety of the subsidy termination or suspension and the market rent charges. (1199 Hous. Corp. v McCartney, NYLJ, Jan. 28, 1997, at 25, col 3 [App Term, 1st Dept]; see also Bedford Gardens Co. v Rosenberg, NYLJ, Mar. 27, 1998, at 31, col 2 [App Term, 2d Dept] [housing court "properly dismissed landlord's (nonpayment) petition on the ground that the notices of recertification and of termination of tenant's subsidy did not comply with the requirements of the HUD Handbook and of tenant's lease"]; Goldstein v Bush, NYLJ, Oct. 31, 2001, at 21, col 3 [Civ Ct, Kings County] ["Petitioner may not maintain a nonpayment proceeding based upon a suspension of a section 8 subsidy where the notices for recertification do not comply with the requirements of the HUD Handbook"]; 2921 Assoc. v Willis, NYLJ, July 20, 2001, at 20, col 5 [Civ Ct, Kings County] ["petitioner was not permitted to terminate the (section 8) subsidy and raise the rent to market rent" in this nonpayment proceeding where "petitioner failed to comply with the notice requirements of the HUD Handbook"].)

In 1199 Hous. Corp. (supra), the landlord commenced a nonpayment proceeding against the tenant, claiming that the tenant owed numerous months of market rent because her section 8 subsidy had been terminated. The tenant's claim that the termination of her subsidy contravened the controlling federal regulations was disregarded by the housing court because the housing court believed that it was "without jurisdiction" to resolve such claims. Such claims, according to the housing court, had to be resolved in a "different forum." (Id.)

The Appellate Term, however, reversed the housing court's determination, finding, in pertinent part, that: "In this case, tenant may defend against the [landlord's] rent claim on the ground that her subsidy was improperly terminated under the controlling federal regulations. This defense bears directly upon the amount of unsubsidized rent sought in the petition." (Id.) The Appellate Term, therefore, remanded the matter to the trial court for a trial on the issues.

Fieldbridge Assoc. v Champion (NYLJ, Mar. 26, 1993, at 24, cols 5-6 [App Term, 2d Dept]) and 1543-75 Nostrand Assoc. v Flowers (NYLJ, Apr. 21, 1994, at 26, col 2 [App Term, 2d Dept]) are not to the contrary. In Fieldbridge and 1543-75 Nostrand, the Appellate Term held that housing court did not have the requisite jurisdiction to direct the newly joined parties, New York City Housing Authority (NYCHA) and Department of Housing Preservation and Development (DHPD), respectively, to retroactively restore a tenant's section 8 subsidy, because, inter alia, such relief was statutorily only available through an article 78 proceeding.

Those cases are distinguishable for two reasons. First, HUD is not a party to this proceeding and this court has no intention of directing HUD to do anything. Instead, the issue for the court is whether petitioner, the owner of project-based section 8 units, may properly charge a recertified tenant market rent when HUD regulations unequivocally mandate the retroactive implementation of the section 8 subsidy upon the tenant's submission of a "past due recertification" (see discussion post).

Second, unlike recipients of NYCHA/DHPD section 8 subsidies, tenant recipients of project-based section 8 subsidies, such as respondent here, do not have any "procedure in place for review of project revocations of the particular subsidy at issue" and "[n]o hearing—formal or informalâ€[is] held." (1199 Hous. Corp. v McCartney, NYLJ, Jan. 28, 1997, at 25, col 3 [App Term, 1st Dept].) Under these circumstancesâ€"where there is no opportunity to be heard on the landlord's claim at the administrative level"—project-based section 8 tenants should be "permitted to litigate the merits at the eviction proceeding" in housing court. (Id.)

Accordingly, contrary to petitioner's contentions, this court has jurisdiction to determine the propriety of petitioner's and HUD's refusal to retroactively apply respondent's subsidy following her concededly past-due recertification. The court must determine whether petitioner is entitled to market rent arrears based upon the rules that define the relationship and rights of the parties—namely, the HUD rules contained in HUD Handbook 4350.3 ("Occupancy Requirements of Subsidized Multifamily Housing Programs").

The HUD Handbook sets forth the procedures which are to be followed by owners of project-based section 8 units regarding recertification and the suspension or termination of a subsidy. Significantly, owners of project-based section 8 units are required to comply with the procedures set forth in the Handbook, inasmuch as those provisions are mandatory. (See Model Lease for Subsidized Programs ¶¶ 15-16; Greene Ave. Assoc. v Cardwell, 191 Misc 2d 775, 777-778 [Civ Ct, Kings County 2002]; Jackson Terrace v Rice, 142 Misc 2d 438 [Nassau Dist Ct 1988]; Green Park Assoc. v Inman, 121 Misc 2d 204, 205 [Civ Ct, NY County 1983]; see also Thorpe v Housing Auth....

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