In Re Nur Ashki Jerrahi Community

• Decision Date: 30 November 2010
• Docket Number: 3052,108599/08,3051
• Citation: 2010 NY Slip Op 08805
• Parties: In re Nur Ashki Jerrahi Community, Petitioner-Respondent-Appellant, v. New York City Loft Board, Respondent-Appellant-Respondent, Patricia Thornley, Respondent-Respondent-Appellant.
• Court: New York Supreme Court — Appellate Division

2010 NY Slip Op 08805

In re Nur Ashki Jerrahi Community, Petitioner-Respondent-Appellant,

v.New York City Loft Board, Respondent-Appellant-Respondent, Patricia Thornley, Respondent-Respondent-Appellant.

108599/08

3051

3052

Supreme Court Of The State Of New York

Appellate Division

First Judicial Department

Decided on November 30, 2010

Richard T. Andrias, J.P.

David B. Saxe

John W. Sweeny, Jr.

Eugene Nardelli

James M. Catterson, JJ.

RespondentNew York City Loft Board appeals from a judgment of the Supreme Court, New York County (Edward H. Lehner, J.), entered December 30, 2008, annulling as time-barred the Loft Board's determination of overcharge.Petitioner Nur Ashki Jerrahi Community and respondentPatricia Thornley appeal from an order of the same court and Justice, entered on or about August 21, 2009, which, upon reargument, inter alia, found that the subject unit had not been deregulated from coverage under the Loft Law.

Michael A. Cardozo, CorporationCounsel, New York (Jane L. Gordon, Edward F.X. Hart and Kristin M. Helmers of counsel), for appellant-respondent.

Belkin Burden Wenig & Goldman, LLP, New York (Joseph Burden, Robert A. Jacobs, Sherwin Belkin and Magda L. Cruz of counsel), for Nur Ashki Jerrahi Community, respondent-appellant.

Simon, Eisenberg & Baum, LLP, New York (Sheldon Karasik and Harry J. Gaffney of counsel), for Patricia Thornley, respondent-appellant.

CATTERSON, J.

The issue raised by the New York City Loft Board in this article 78 proceeding is whether the four-year statute of limitations in CPLR 213-a titled "Actions to be commenced within four years; residential rent overcharge" applies to overcharge claims brought by Loft Law covered tenants.We find that the rationale that led this Court to conclude recently in Matter of Hicks v. New York State Div. of Hous. & Community Renewal(75 AD3d 127, 901 N.Y.S.2d 186(1st Dept.2010)) that the four-year statute of limitations does not apply to rent-controlled residences may be similarly applied to interim multiple dwellings covered under the Loft Law.

Patricia Thornley is the tenant of unit 5B, an interim multiple dwelling (hereinafter referred to as "IMD") under article 7-C of the New York Multiple Dwelling Law(hereinafter referred to as "MDL" or "Loft Law"), at 5-7 White Street in Manhattan.Sal Cucinotta, a prior owner, registered the building as an IMD with the Loft Board in 1983, listing the loft as a covered unit, Alfred Hyatt as the tenant, and the rent as $770 per month.

After Hyatt's death in 1986, his estranged wife and his live-in partner fought over successor rights to the loft.However, in a holdover proceeding, possession was granted to Cucinotta.Following the evictions, Thornley entered into a lease of unit 5B in July 1990 containing a rider acknowledging the building's IMD status, but waiving coverage under the Loft Law.She has since executed three lease renewals, each containing the same waiver.Cucinotta sold the building in 1992 to Masjid Al-Farah a/k/a/ 5-7 White Street Company.

On March 6, 2006, Thornley filed two applications with the Loft Board: a coverage application requesting a determination that she was a protected tenant under the Loft Law, and an overcharge application requesting a determination that she had been overcharged in excess of the IMD registered rent of $770 per month for the four-year period from February 2002 through February 2006.

The applications were consolidated and referred to the Office of Administrative Trials and Hearings(hereinafter referred to as "OATH").At the conclusion of the proceedings, the Administrative Law Judge (hereinafter referred to as "ALJ") found that Thornley was covered bythe Loft Law and recommended that the Loft Board grant Thornley's motion for summary judgment.The ALJ further recommended an award of $62,880.80, the amount Thornley was overcharged in the four years prior to her filing of the application pursuant to New York City Loft Board Regulations(29 RCNY) 1-06.1(c).

After the issuance of the ALJ's report and recommendation, but pending the Loft Board's final decision, the building was sold to petitioner Nur Ashki Jerrahi Community (hereinafter referred to as the "Owner"), which sent a letter to the Loft Board asserting that CPLR 213-a rendered Thornley's application untimely.Upon review of the ALJ's recommendations, the Loft Board, without addressing the statute of limitations issue raised by the Owner, issued its final order consistent with the ALJ's recommendations.

The Owner petitioned for article 78 judicial review, and in its November 19, 2008 decision, Supreme Court annulled the order on the grounds that Thornley's claim for overcharge was untimely under CPLR 213-a.Upon reargument, the court upheld the Loft Board's finding that Thornley's tenancy was protected by the Loft Law, but affirmed its earlier determination that her rent overcharge claim was time-barred.

On appeal, the petitioner Owner argues that Supreme Court erred in upholding the Loft Board's determination that Thornley is protected under the Loft Law.RespondentsLoft Board and Thornley appeal, asserting that the Owner's statute of limitations defense was not timely raised but, in the alternative, that Supreme Court erred in applying CPLR 213-a, which states that an "action on a residential rent overcharge shall be commenced within four years of the first overcharge alleged"(emphasis added).The respondents assert instead that 29 RCNY 1-06.1(c) applies, pursuant to which the four-year limitation limits recovery but does not restrict how far back the Loft Board can examine the rent history in order to compute overcharges.For the reasons set forth below, we agree with respondents that CPLR 213-a does not apply to Loft Board overcharge proceedings.

As a threshold matter, the petitioner Owner failed to demonstrate that the unit was deregulated from coverage depriving the tenant of protection under the Loft Law.The Owner specifically asserts that three de-regulatory events, the death of the predecessor IMD tenant, the sale of rights, and waiver by Thornley, preclude such a finding.However, the record contains no finding of abandonment under 29 RCNY 2-10(f)(1) and no reliable evidence of a prime lessee's sale of improvements under MDL 286(6)(see 29 RCNY 2-10(b)).In addition, the Loft Law contains no broad waiver exception.It is a governmental residential regulatory scheme that is not subject to waiver by the tenant.Matter of Jo-Fra Props., Inc., 27 AD3d 298, 299, 813 N.Y.S.2d 63, 64(1st Dept.2006), lv. denied, 8 NY3d 801, 830 N.Y.S.2d 9, 862 N.E.2d 88(2007).

Furthermore, the Owner's statute of limitations defense was timely raised.Judicial review of administrative determinations is limited to the facts adduced and the record made before the administrative agency, and arguments raised before the agency are preserved on appeal.Matter of L & M Bus Corp. v. New York City Dept. of Educ., 71 AD3d 127, 135-136, 892 N.Y.S.2d 60, 66-67(1st Dept.2009).

Although it was not raised before the ALJ at the OATH hearing, the statute of limitationsdefense was raised in a letter sent to the Loft Board before its final decision.The Loft Board guidelines state that the purpose of the hearing before the administrative judge is merely to provide a recommendation for the Loft Board to consider in making its final decision.29 RCNY 1-06(n). 48 RCNY 1-52 also specifically provides for submission of motions brought after issuance of the ALJ's report and recommendations to "the deciding authority," which in this case was the Loft Board.Therefore, the fact that the letter was not considered by the ALJ does not render the defense untimely.

However, this does not help the petitioner Owner since CPLR 213-a does not apply to IMD covered units subject to Loft Board rent regulation, just as it does not apply to rent controlled apartments or New York Division of Housing and Community Renewal(hereinafter referred to as "DHCR") administrative rent control proceedings.SeeMatter of Hicks, 75 AD3d at 131, 901 N.Y.S.2d at 189(holding that CPLR 213-a does not apply to rent controlled dwellings or DHCR administrative proceedings).

In Matter of Hicks, this Court held that the 1997amendment to CPLR 213-a was not intended to supersede rent regulation limitations in all other regulatory schemes.Seeid. at 131, 901 N.Y.S.2d at 189.Moreover, there is no indication that in amending CPLR 213-a, the Legislature intended to expand the scope of the CPLR beyond judicial actions to administrative proceedings.75 AD3d at 133, 901 N.Y.S.2d at 191.Matter of Hicks concluded, "the CPLR does not purport to dictate the procedure to be applied in administrative matters; and... it clearly does not supplant the procedures specified by... regulations promulgated in the exercise of an agency's administrative prerogative."75 AD3d at 133, 901 N.Y.S.2d at 190-191;see alsoMatter of Sori-Goalya Realty v. New York City Loft Bd., 284 A.D.2d 137, 137-138, 726 N.Y.S.2d 93, 94(1st Dept.2001), lv. denied, 97 N.Y.2d 601, 735 N.Y.S.2d 490, 760 N.E.2d 1286(2001)(holding that CPLR 213-a does not apply to Loft Board proceedings and is limited to civil judicial proceedings).

As this Court held in Matter of Hicks, the limited scope ofCPLR 213-a is evident from the Legislature's failure to amend the Rent Control Law when it amended the Rent Stabilization Law leaving intact inconsistent limitations periods for rent controlled units.Matter of Hicks75 AD3d at 132, 901 N.Y.S.2d at 190, citingPeople v. Finnegan, 85 N.Y.2d 53, 58, 647 N.E.2d 758, 761, 623 N.Y.S.2d 546, 549(1995), cert. denied, 516 U.S. 919, 116 S. Ct. 311, 133 L. Ed. 2d 214(1995)("the failure of the Legislature to include a substantive, significant prescription in a statute is a strong indication that its exclusion was intended").Rent stabilization and rent control apply to different types of housing and, while consolidated for administration by the DHCR, remain separate and...