Marcondes v. Fort 710 Assocs., Index No. 160189/2017

CourtUnited States State Supreme Court (New York)
Writing for the CourtSABRINA B. KRAUS, J.
Citation2022 NY Slip Op 50498 (U)
PartiesAlice Marcondes, Aimee Bellman, Kyle Dixon, Daniel Propati, Laura Salvatierra, P. Palmer, Christopher Williams, Plaintiff, v. Fort 710 Associates, L.P., Defendant.
Docket NumberIndex No. 160189/2017
Decision Date14 June 2022

2022 NY Slip Op 50498(U)

Alice Marcondes, Aimee Bellman, Kyle Dixon, Daniel Propati, Laura Salvatierra, P. Palmer, Christopher Williams, Plaintiff,
v.

Fort 710 Associates, L.P., Defendant.

Index No. 160189/2017

Supreme Court, New York County

June 14, 2022


Unpublished Opinion

SABRINA B. KRAUS, J.

The following e-filed documents, listed by NYSCEF document number (Motion 001) 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 41, 44, 45, 46, 48

were read on this motion to/for ORDER MAINTAIN CLASS ACTION.

BACKGROUND

This action was commenced as a putative class action against Fort 709 Associates, L.P., on or about November 15, 2017. Plaintiffs initiated this action, on behalf of themselves and on behalf of all other past, present and prospective tenants residing at 710 West 173rd Street in the County, City and State of New York (Subject Premises).

The Subject Premises is subject to rent regulation by virtue of defendant's receipt of J-51 tax benefits. Defendant has continuously received J-51 tax benefits commencing in 1998 and expected to terminate in 2032. Plaintiffs allege defendant systematically schemed to remove tenants from the protections of Rent Stabilization by failing to properly register the units with DHCR, creating false records of inflated rents with DHCR and in the provision of leases to tenants, requiring tenants to sign riders waiving rent stabilization and removing units from rent regulation through fictious Individual Apartment Improvements (IAIs).

PENDING MOTION

On July 26, 2018, plaintiffs moved for an order pursuant to CPLR §901 et seq. certifying a class and subclass. The motion was initially briefed and submitted to the court on or about August 13, 2018.

On or about June 22, 2021, said court directed the parties to supplement their submissions to address how the Court of Appeals holding in Regina Metro Co., LLC v. New York State Division of Housing and Community Renewal 35 N.Y.3d 332 applies to the pending motion. The supplemental papers were submitted by plaintiffs in July 2021, and by defendant in September 2021.

Subsequently, the action and pending motion were assigned to this Court for determination.

For the reasons stated below, the motion is granted.

ALLEGED FACTS

The Complaint was filed on behalf of current and former tenants who have resided in the Subject Premises during four years prior to commencement of this action, who have been treated as deregulated.

This action is one of several related actions:

• Morgan Gould et al v. Fort 250 Associates, Index No 160190/2017
• Emma Griffith et al v. West 171 Associates, Index No 159398/2017
• Brian Hoffman et al v. Fort 709 Associates, Index No. 160191 / 2017
• Alice Marcondes et al v. Fort 710 Assoc, Index No. 160189/2017
• Lietavova et al v. 127 East 101 LLC, Index No. 152075/2018

Each of these actions seeks virtually identical relief, based upon substantially the same fraudulent practice by the landlord being challenged herein.

The buildings in each of those related actions are multiple dwellings located in the Washington Heights section of Northern Manhattan. Despite being owned by various corporate entities, they are all owned by the same principal. The principal owner listed on the Multiple Dwelling Registrations with the Department of Housing Preservation and Development ("HPD") for the buildings in each case, is Mark Scharfman.

Plaintiffs allege that defendant has continuously received J-51 tax benefits, commencing in 1998, and expected to terminate in 2032. Plaintiffs allege that between 2010 and 2016, apartments in the Subject Premises were unlawfully deregulated, and that this pattern permeated not only the Subject Premises, but the buildings in the related cases as well.

In 2016, plaintiff Marcondes commenced her tenancy. Plaintiff Bellman commenced her tenancy in 2015. Plaintiffs Dixon, Propati, Salvatierra, and Palmer commenced their tenancies in 2014. Plaintiff Williams commenced his tenancy in 2009. Plaintiffs allege they were compelled to sign unlawful lease riders entitled "Notice of Unregulated Status," waiving their RSL rights, and that this was a fraudulent form rider, and it was defendant's practice to use it to deceive tenants. These riders were used throughout Mark Scharfman's J-51 buildings in the related cases.

Plaintiffs allege that between 2010 and 2016, defendant consistently and unlawfully deregulated the tenants' apartments. In 2016, the Attorney General circulated a letter to landlords, reminding them to obey the law as determined by Roberts some eight years before. Plaintiffs allege defendant used this as an opportunity not to correct a good faith error, but to lock in its ability to overcharge tenants by re-registering numerous apartments at an unlawfully high rent, having nothing to do with the last rent registered, and exceeding the rent actually paid by the tenants at that time.

Plaintiffs allege said registrations were a blatant violation of the RSC, RSL, Roberts, Gersten, and the attorney General's instruction.

With each lease renewal, defendant failed to provide Rent Stabilization riders, which are mandated by RSL §826-511(d). Defendant systematically failed to offer tenants the option of a one or two-year lease, when in fact tenants in a J-51 Building are entitled to continued occupancy under the RSC and RSL. Arbitrary evictions, rent hikes, and refusal to renew leases were constant threats to the tenants of defendant's buildings, including the Subject Premises.

Further, none of the plaintiffs' leases contain the required J-51 notice, "informing such tenant that the unit shall become subject to deregulation upon the expiration of such [J-51] Tax benefit period," pursuant to RSL §826-504(c).

DISCUSSION

Class Certification

The State's rules on class actions, like their federal counterparts, "favor the maintenance of class actions" and support "a liberal interpretation" (Pruitt v Rockefeller Ctr. Props., 167 A.D.2d 14, 20-21 [1st Dept 1991] [internal quotation marks and citation omitted]; see City of New York v Maul, 14 N.Y.3d 499, 509 [2010] [ Maul ] [courts should broadly construe criteria set forth in CPLR 901 (a)]).

In the context of rent-stabilization challenges against landlords who allegedly violated J-51, "CPLR 901 (b) permits... plaintiffs to utilize the class action mechanism to recover compensatory overcharges... even though the Rent Stabilization Law of 1969... does not specifically authorize class action recovery" (Borden v 400 E. 55th St. Assoc., L.P., 24 N.Y.3d 382, 389-90 [2014]). Although damages may vary among the class members, this "does not per se foreclose class certification" (Andryeyeva v New York Health Care, Inc., 33 N.Y.3d 152, 185 [2019]). It is appropriate to bring a class action with one or more representative plaintiffs if 1) the size of the class is so large that it is impracticable to include them all as named plaintiffs, 2) common questions of law or fact predominate over questions which only impact one or more class members, 3) the named plaintiffs assert claims which are typical of the claims of the class, 4) the representative plaintiffs are appropriate individuals who will fairly, adequately protect the class' interests, and 5) a class action is the best and most efficient way to proceed (CPLR 901 [a]). The court considers these five factors in its evaluation of whether a class action is appropriate (Rabouin v Metropolitan Life Ins. Co., 25 A.D.3d 349, 350 [1st Dept 2006]).

Courts liberally construe the criteria in part because "the Legislature intended article 9 to be a liberal substitute for the narrow class action legislation which preceded it" (Maul, 14 N.Y.3d at 509 [citation and internal quotation marks omitted]). "The determination of whether... a matter qualifies as a class action... rests within the sound discretion of the motion court" (Rabouin, 25 A.D.3d at 350). However, the class representatives must satisfy an evidentiary burden, absent which the court denies certification. For example, "general and conclusory allegations in the affirmation of... counsel and the exhibits attached thereto" will not suffice (Rallis v City of New York, 3 A.D.3d 525, 526 [2d Dept 2004]).

It is well settled that qualified plaintiffs may use the class action mechanism to recover rent overcharges against landlords who deregulated apartments in contravention of the Rent Stabilization Laws while accepting tax benefits under New York City's J-51 tax abatement program (Hoffman v Fort 709 Associates LP 204 A.D.3d 516).

There are five prerequisites for class certification: numerosity, common questions, typicality, adequacy of representation and superiority.

Numerosity

CPLR § 901(a)(1) requires that the individuals constituting the class be so numerous that joinder of all members is impossible. There is no mechanical test or set quantity of prospective class members which must exist to determine whether the class membership is so numerous as to make actual joinder impracticable. Pajaczek v. Rema Construction Corp., 18 Misc.2d 1140(A) (Sup. Ct. NY Co., 2005), citing Pesantez v. Boyle Envtl. Servs., 251 A.D.2d 11 (1st Dept. 1998). It has been held that the legislature contemplated classes involving as few as 18 members (Borden v 400 E 55th St. Assoc. LP 24 N.Y.3d 382, 383).

In this case there are 47 units alleged to be involved and some of those units have had multiple tenants during the applicable period. Plaintiffs assert that accounting for co-tenancies and tenants who have lived in those apartments within the last four years and moved out, the number of affected members of the class is close to one hundred (100). Plaintiffs further allege that the class is easily defined because every unit in the Subject Premises is subject to rent stabilization, every deregulation was unlawful, every deregulated rent charged...

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