KST Realty LLC v. Olatoye

Decision Date14 July 2015
Docket Number100841/14
PartiesKST REALTY LLC, Petitioner, v. Shola OLATOYE, as Chair of the New York City Housing Authority and New York City Housing Authority, Respondents.
CourtNew York Supreme Court

49 Misc.3d 934
15 N.Y.S.3d 630
2015 N.Y. Slip Op. 25269

KST REALTY LLC, Petitioner
v.
Shola OLATOYE, as Chair of the New York City Housing Authority and New York City Housing Authority, Respondents.

100841/14

Supreme Court, New York County, New York.

July 14, 2015.


15 N.Y.S.3d 631

Novick, Edelstein, Lubell, Reisman, Wasserman & Leventhal, P.C., by Gregory S. Bougopoulos, Esq., Yonkers, for plaintiff.

David I. Farber, Esq., General Counsel by Marlowe L. Doman, Esq., of Counsel and Matthew G. Dineen, Esq., of Counsel New York City Housing Authority, New York, for defendants.

Opinion

MICHAEL D. STALLMAN, J.

49 Misc.3d 935

Petitioner KST Realty LLC, the landlord and owner of the premises located at 2258 Grand Avenue, Bronx, New York, brings this Article 78 petition to challenge respondents' determination to deduct payments from petitioner for tenant, E.M., intended for other tenants of the premises who hold section 8 vouchers administered by respondents. Petitioner seeks an order:

(1)vacating respondents' determination under which respondents have deducted and continued to deduct for sums originally paid to petitioner for the section 8 subsidy of tenant, E.M.;
49 Misc.3d 936
(2)reimbursing all payments to petitioner for E.M. which respondents have erroneously reclaimed; and /or
(3)permanently enjoining respondents from deducting any future amounts originally paid by respondents for E.M.'s subsidy to petitioner.

Respondents oppose the petition and counterclaim seeking to recover the remainder of overpayments to petitioner, including causes of action for:

15 N.Y.S.3d 632
(1)moneys had and received;
(2)payment made under mistake of fact;
(3)conversion;
(4)the common law right of a government entity to recoup erroneously disbursed public funds; and
(5)a judgment declaring respondents are entitled to retain the subsidies already recouped ($11,630.05) and recoup an additional $20,276.98 from petitioner from subsidies otherwise payable to petitioner for its other section 8 tenants—$20,276.98 representing the difference between total overpayments ($31,907.03) and the amount of subsidies the respondents have already recouped from April 2014—October 2014 ($11,630.05).

BACKGROUND

Petitioner KST Realty LLC is the landlord and owner of the premises located at 2258 Grand Avenue, Bronx, New York (premises). (Petition ¶ 1.) The New York City Housing Authority (NYCHA) administers section 8 vouchers for certain tenants at the premises, including E.M. who resided in apartment 3D (Voucher Number 0047682). (Id. ¶ 9.) By letter dated March 17, 2014, NYCHA informed petitioner that it had overpaid petitioner by $31,907.03 from March 7, 2014 to April 30, 2014. (Id. Ex. B.) By another letter dated March 17, 2014, NYCHA informed petitioner that E.M.'s subsidy was terminated effective August 31, 2011 because E.M. had been institutionalized. (Id. Ex. C., Answer Ex. F, G.) According to respondents, petitioner “continued to receive Section 8 subsidies from [NYCHA] for a portion of E.M.'s rent from September 2011 through March 2014, payments totaling $31,907.03.” (Answer ¶ 21.) NYCHA then sent the March 17, 2014 termination letter “because under federal regulations and its Housing Assistance Payment (HAP) contract with [p]etitioner, [NYCHA] can only pay subsidies while the family is residing in the apartment. ” (Id. [internal quotations and citations omitted].)

49 Misc.3d 937

In April 2014, respondents deducted $633.55 from the total payment intended to cover subsidies for all section 8 tenants in the premises for that month. (Petition ¶ 19, Ex. D.) From May 2014–August 2014, NYCHA did pay petitioner subsidies for the other section 8 tenants in the premises. (Id. ¶¶ 20.) Petitioner alleges it was entitled to $1809.55 per month for those months, for a total of $7,238.20. (Id. ¶ 21.)

According to respondents, NYCHA recouped part of its purported $31,907.03 overpayment to petitioner by withholding $11,630.05 in subsidies that it would have otherwise paid to petitioner for the other section 8 tenants in the premises because petitioner failed to send NYCHA a check for the overpayment as requested in the March 17, 2014 letter. (Answer Ex. A.)

By letter dated January 23, 2012, NYCHA notified petitioner of housing quality standards (HQS) violations in E.M.'s apartment as of that date. (Id. Ex. E.) Petitioner alleges, upon information and belief, that E.M. provided access to NYCHA to her apartment for the HQS inspection and continued to make payments to NYCHA after August 31, 2011. (Petition ¶¶ 25–27, Ex. G.) Petitioner also alleges that NYCHA may have not terminated E.M.'s section 8 subsidy until September 7, 2013 due to lack of certification. (Id. ¶ 26, Ex. F.) Petitioner claims that it is owed $7,871.15 in subsidy arrears wrongly reclaimed by respondents for E.M.'s subsidy through August 2014. (Id. ¶ 30.)

Petitioner commenced this Article 78 proceeding on September 5, 2014.

15 N.Y.S.3d 633

DISCUSSION

Respondents argue that the petition should be dismissed because (1) NYCHA's determination to terminate section 8 subsidies to petitioner effective August 31, 2011, which resulted in the recoupment of its erroneous payments, was not arbitrary and capricious or an abuse of discretion but rather rational and a prudent exercise of its discretion and in compliance with the requirements of federal law governing the use of the federal government's funds in the section 8 subsidy program and the terms of the parties' HAP contract; and (2) to the extent that petitioner seeks to enjoin NYCHA from further recouping overpayments, and seeks a judgment from NYCHA for the subsidies already recouped, the petition fails to state a cause of action.

49 Misc.3d 938

Respondents also bring counterclaims seeking to recover the remainder of overpayments to petitioner, including causes of action for:

(1) moneys had and received; (2) payment made under mistake of fact; (3) conversion; (4) the common law right of a government entity to recoup erroneously disbursed public funds; and (5) a judgment declaring respondents are entitled to retain the subsidies already recouped ($11,630.05) and recoup an additional $20,276.98 from petitioner from subsidies otherwise payable to petitioner for its other section 8 tenants.

“In reviewing administrative proceedings in...

To continue reading

Request your trial
1 cases
  • KST Realty LLC v. Olatoye
    • United States
    • New York Supreme Court
    • 14 Julio 2015
    ...49 Misc.3d 93415 N.Y.S.3d 6302015 N.Y. Slip Op. 25269KST REALTY LLC, Petitioner,v.Shola OLATOYE, as Chair of the New York City Housing Authority and New York City Housing Authority, Respondents.Supreme Court, New York County, New York.July 14, [15 N.Y.S.3d 631]Novick, Edelstein, Lubell, Rei......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT