Maddicks v. Big City Props., LLC

• Citation: 163 A.D.3d 501,84 N.Y.S.3d 4
• Decision Date: 26 July 2018
• Docket Number: 6315,Index 656345/16
• Parties: Theresa MADDICKS, et al., Plaintiffs–Appellants, v. BIG CITY PROPERTIES, LLC, et al., Defendants, Big City Realty Management, LLC, et al., Defendants–Respondents.
• Court: New York Supreme Court — Appellate Division

163 A.D.3d 501

84 N.Y.S.3d 4

Theresa MADDICKS, et al., Plaintiffs–Appellants,

v. BIG CITY PROPERTIES, LLC, et al., Defendants,Big City Realty Management, LLC, et al., Defendants–Respondents.

6315

Index 656345/16

Supreme Court, Appellate Division, First Department, New York.

ENTERED: JULY 26, 2018

Newman Ferrara LLP, New York (Roger A. Sachar, Jr. of the bar of the State of Missouri, admitted pro hac vice, of counsel), for appellants.

Koss & Schonfeld, LLP, New York (Simcha D. Schonfeld of counsel), for respondents.

Friedman, J.P., Richter, Andrias, Kapnick, Webber, JJ.

Order, Supreme Court, New York County (Erika M. Edwards, J.), entered November 16, 2017, which, upon defendants' motion, dismissed the amended complaint pursuant to CPLR 3211 without prejudice, modified, on the law, to deny the motion as to the claims, except those involving General Business Law § 349, against defendants Big City Realty Management, LLC, Big City Acquisitions, LLC, 408–412 Pineapple LLC, 510–512 Yellow Apple, LLC, 535–539 West 155 BCR, LLC, 545 Edgecombe BCR, LLC, 106–108 Convent BCR, LLC, 110 Convent BCR, LLC, 3750 Broadway BCR, LLC, 3660 Broadway BCR, LLC, and 605 West 151 BCR, LLC, and to deny the motion as to the class action allegations against these defendants, except those supporting the General Business Law § 349 claim, and otherwise affirmed, without costs.

Defendants moved to dismiss the claims against 145 Pineapple LLC, 2363 ACP Pineapple LLC, 513 Yellow Apple LLC, 603–607 West 139th BCR LLC, 3660 Broadway BCR LLC, 559 West 156 BCR LLC, 605–607 West 141 BCR LLC, and 580 St. Nicholas BCR LLC on the ground that plaintiffs had made no allegations of wrongdoing against those defendants. The court sua sponte dismissed the claims against Big City Realty Management and the other defendants named in the decretal paragraph above based on an argument not raised by defendants. Since plaintiffs are prejudiced by their inability to respond to the court's reasoning in support of the dismissal (see Matter of Dental Socy. of State of N.Y. v Carey, 92 A.D.2d 263, 264, 461 N.Y.S.2d 77 [3d Dept. 1983], affd on other grounds 61 N.Y.2d 330, 474 N.Y.S.2d 262, 462 N.E.2d 362 [1984] ), we reinstate the claims only against the defendants named in the decretal paragraph, except for those involving General Business Law § 349. We do not, in any way, prejudge arguments that have not been fully briefed on this appeal, e.g., that 545 Edgecombe BCR does not own 545 Edgecombe Avenue, or that plaintiffs have not actually pleaded conspiracy or aiding and abetting. Moreover, it appears from the record that defendant 3660 Broadway BCR, LLC owns one of the buildings named in plaintiffs' complaint. 3660 Broadway's reinstatement is without prejudice to any claims it may raise, later in this litigation, about this ownership issue.

We affirm the dismissal of the class action allegations addressed to the General Business Law § 349 claim and the General Business Law § 349 claim as against the landlord defendants since plaintiffs make no arguments on appeal as to that claim. As to the remaining class allegations, the dismissal, at this early stage, before an answer was filed and before any discovery occurred, was premature ( Bernstein v. Kelso & Co., 231 A.D.2d 314, 659 N.Y.S.2d 276 [1st Dept. 1997] ). As this Court noted in Bernstein, "Pursuant to CPLR 902, a motion to determine whether a class action may be maintained is to be made within 60 days after the time to serve the responsive pleading has expired" ( id. at 323, 659 N.Y.S.2d 276 ). Because the time to make such a motion had not occurred, it was premature, in this case, for the court to engage in a detailed analysis of whether the requirements for class certification were met (see Ackerman v. New York Hosp. Med. Ctr. of Queens, 127 A.D.3d 794, 796, 7 N.Y.S.3d 327 [2d Dept. 2015] ).

It does not appear conclusively from the complaint that, as a matter of law, there is no basis for class action relief (see Downing v. First Lenox Terrace Assoc., 107 A.D.3d 86, 91, 965 N.Y.S.2d 9 [1st Dept. 2013], affd sub nom. Borden v. 400 E. 55th St. Assoc., L.P., 24 N.Y.3d 382, 998 N.Y.S.2d 729, 23 N.E.3d 997 [2014] ). For example, plaintiffs allege that some defendants receive J–51 tax benefits and are therefore required to provide tenants with rent-stabilized leases but failed to do so. This claim was also made in Borden (see 24 N.Y.3d at 390, 998 N.Y.S.2d 729, 23 N.E.3d 997 ), and the Court of Appeals found that the plaintiffs satisfied the class action requirements of numerosity, predominance of common issues of law or fact, typicality of the named plaintiffs' claims, adequate representation, and superiority of class action versus other methods (see id. at 399–400, 998 N.Y.S.2d 729, 23 N.E.3d 997 ).

Although the instant action involves 11 buildings and 8 owners, all the buildings are allegedly managed by Big City Realty Management, and all the owners are allegedly part of one holding company, Big City Acquisitions. Moreover, Downing —another putative class action about J–51 (see 107 A.D.3d at 88, 965 N.Y.S.2d 9 )—involved "a residential complex owned by defendants" ( id. ).

The dissent argues that the claims at issue are fact intensive, and can be determined only by examining the evidence concerning each individual unit. As noted above, this cannot be determined, as a matter of law, merely from reading the complaint. The dissent fails to consider plaintiffs' allegation that the setting of the improper rents in these apartments was part of a systematic effort by Big City Acquisitions to avoid compliance with the rent stabilization laws. Plaintiffs identify several different ways this alleged scheme was accomplished, and offer examples of each. We disagree with the dissent's statement that it is "irrelevant" whether Big City was engaged in a systematic effort to destabilize these units. If discovery were to show that, for example, Big City charged all the tenants the same fraudulent and inflated amounts for claimed improvements, this would support a class action and make one tenant's proof relevant to that of other tenants. It simply is premature, before discovery and before a class certification motion has been made, to rule out the class claims in their entirety.

Although there may be some differences in the documents to be examined for each apartment, whether individual issues will predominate over class concerns can be fleshed out once plaintiffs make a motion for class certification and defendants oppose it. We note, however, that the possibility that the damages might be different for individual plaintiffs is not a reason to deny class certification ( Pruitt v. Rockefeller Ctr. Props., 167 A.D.2d 14, 23, 574 N.Y.S.2d 672 [1st Dept. 1991] ). At this stage when defendants have not answered, we do not know what documents they have, if any, to justify the increases or what explanations they have for the purported failures to register the apartments. If their defenses are the same for many of the units, then the scheme alleged by plaintiffs may have relevance, and the potential members of the class should not, as a matter of law, be precluded from raising these claims as a group. Moreover, class actions may be appropriate where the members of the class include former tenants, who may be unaware of their rights (see generally Borden, 24 N.Y.3d at 399, 998 N.Y.S.2d 729, 23 N.E.3d 997 ).

Although the dissent criticizes the majority for not citing any cases in which class allegations like these have been sustained, as noted above, generally a detailed analysis of class certification status is inappropriate at the pleading stage. Thus, it is not surprising that there is not extensive case law analyzing class pleadings at this stage. It is worth noting that the dissent, which takes the majority to task for its holding, only cites one case, from another Department, in which class claims have been dismissed at the pre-answer stage. That case, Wojciechowski v. Republic Steel Corp., 67 A.D.2d 830, 413 N.Y.S.2d 70 (4th Dept. 1979), lv dismissed 47 N.Y.2d 802 (1979), does not contain a lot of facts, but the decision contains no reference to the type of common scheme alleged in the complaint here.

Finally, the dissent acknowledges that the J–51 claims might be appropriate for class relief. We see no reason, at this pre-answer stage, to distinguish between those claims and the other aspects of the purported scheme asserted by plaintiffs. The J–51 claims will involve the review of individual documents, and the assessment of individual rent histories. If those claims are potentially appropriate for class action relief, the others should be too, at least for pleading purposes.

All concur except Friedman, J.P. and Andrias, J. who dissent in part in a memorandum by Friedman, J.P. as follows:

At issue in this putative class action are claims by current and former tenants of several different buildings, allegedly owned by entities under common control, for rent overcharges in violation of the Rent Stabilization Law. Although the complaint alleges that the overcharges fall into four broadly similar categories, and that the overcharges were systematically planned, the complaint does not identify any question of law or fact common to the entire proposed class (or to the proposed subclass of current tenants). Stated otherwise, in the end, regardless of any plan by defendants or any overcharges of other tenants, each class member either was or was not overcharged—a question that can be determined only by looking at the evidence concerning that tenant's individual unit. In nonetheless modifying the order of Supreme Court to reinstate plaintiffs' class allegations, the majority writes a new roadmap for the litigation of these types of disputes, turning every overcharge claim into a potential class action. This certainly has not been the approach taken with these cases until now—the majority cites no case in which a similar class has been certified or even...