Mauro v. Choi, 2006 NY Slip Op 50461(U) (NY 3/24/2006)

• Decision Date: 24 March 2006
• Docket Number: 54718/06.
• Parties: JOHN MAURO, Petitioner, v. ANTHONIA CHOI AND GENA R. SABIN, Respondents.
• Court: New York Court of Appeals Court of Appeals

Page 1

2006 NY Slip Op 50461(U)

JOHN MAURO, Petitioner, v. ANTHONIA CHOI AND GENA R. SABIN, Respondents.

54718/06.

Civil Court of the City of New York, New York County.

Decided March 24, 2006.

Jane S. Thies, New York City, for petitioner.

Mitchell J. Baker, White Plains, for respondents.

GERALD LEBOVITS, J.

In this nonpayment proceeding, petitioner alleges that respondents failed to pay $10,873 in rent from November 2005 through January 2006 for apartment 5 located at 432 East 58 Street in New York County. Respondents move under CPLR 3212 for summary judgment on their first and second counterclaims and to dismiss the petition. Respondents argue that petitioner has willfully overcharged them $45,733.42 and seek treble damages for $137,200.26.

The Facts

The following facts are not in dispute. On March 15, 2004, respondents and petitioner signed a non-rent-regulated (destabilized) one-year lease commencing on April 1, 2004, and ending on March 31, 2005. The lease set the monthly rent at $3900; a preferential-rent-concession rider¹ set the rent at $2800 a month. (See Respondents' Notice of Cross-Motion, Feb. 16, 2006, at ¶ 3.) Respondents actually paid $2700 per month. (See Affidavits in Support, Feb. 22, 2006, Exhibit E.) Respondents and petitioner signed another non-rent-regulated (destabilized) one-year lease commencing on April 1, 2005, and ending on March 1, 2006. The lease set the monthly rent at $4036.50; a preferential-rent-concession rider set the rent at $2800 a month. (See Respondents' Notice of Cross-Motion, Feb. 22, 2006, Exhibit D.) Respondents paid the agreed-upon monthly rent of $2800 until November 2005, when they sent a check for $329.82. (See Affidavits in Support, Feb. 22, 2006, at ¶ 6; see also Petitioner's Response, Mar. 20, 2006, at ¶ 5.) Respondents paid this lesser amount because DHCR informed them by a letter dated November 9, 2005, that the apartment was rent controlled with a monthly rent of $329.82. (See Respondents' Notice of Cross-Motion, Feb. 16, 2006, Exhibit E.) The November 2005 DHCR letter also informed respondents of two orders it issued—one on September 14, 1995, the other on May 21, 2002—that prevented petitioner from overcharging any tenant in apartment 5 more than the rent-controlled amount of $329.82.

DHCR's letter to respondents was based on a series of proceedings against petitioner, of which respondents were unaware and were not a party. DHCR on September 14, 1995, in an order by Deputy Commission Paul A. Roldan, determined that petitioner, together with Nancy Walter, his wife, had violated sections 26-412 and 26-516 of the Administrative Code of the City of New York. (See Respondents' Notice of Cross-Motion, Feb. 22, 2006, Exhibit F, at 1.) DHCR found that petitioner wilfully and unlawfully harassed tenants in ten apartments in three buildings on East 58th Street, including the subject building. (Id. at 1-2.) DHCR ordered petitioner and his wife to pay civil penalties totaling $33,000. (Id. at 2.) Petitioner and his wife were directed to cease harassing any tenant at these locations. (Id. at 3.) DHCR also determined that apartment 5, the subject apartment, was subject to rent control and prohibited petitioner from increasing the rent until all lawful conduct discontinued and the order of harassment was lifted. (Id. at 3-4.)

Petitioner then brought an Article 78 proceeding in Supreme Court, New York County. Supreme Court transferred the case to the Appellate Division, First Department. On May 7, 1998, the Appellate Division confirmed DHCR's finding, denied petitioner's Article 78 petition, and dismissed the proceeding. (See Matter of Mauro v. NY St. Div. Hous. & Comm. Renewal, 250 AD2d 392 [1st Dept 1998, mem].) The court held that substantial evidence supported DHCR's determination and that the imposed penalties were neither illegal nor inappropriate. (See id.)

After petitioner paid the civil penalties, he once again challenged DHCR's order of September 1995. Petitioner filed an application with DHCR's Enforcement Unit in mid-1998 requesting DHCR to lift its September 1995 order. A hearing was scheduled to determine (1) whether petitioner was entitled to termination of the finding of harassment; (2) whether petitioner continued to violate rent control and rent stabilization laws by "harassing tenants, retaliating against them for making good faith complaints, commencing and threatening unwarranted eviction proceedings, decreasing, modifying, discontinuing, interrupting, and interfering with basic, essential, and required services, failing to comply with DHCR Orders and Enforcement Unit directives, and by otherwise evading and violating the rent laws"; (3) whether petitioner continued to violate rent control and rent stabilization laws and engaged in evasive practices, including submitting false or altered documents to DHCR; and (4) whether a penalty would be imposed against petitioner. (See Respondents' Notice of Cross-Motion, Feb. 22, 2006, Exhibit H, at 2.)

DHCR conducted a hearing from September 1999 through July 2000. (Id. at 3.) Twenty-two witnesses testified. (Id. at 5) At the hearing, petitioner testified that "DHCR's [September 1995] Order depends on interpretation.'" (Id. at 7.) He admitted that "he did not feel the Order was correct and as far as we are concerned [Apartments 3 and 5] were not under Rent Control.'" (Id.) On May 7, 2002, the hearing officer made findings and recommendations in a 26-page decision. The hearing officer found that despite the Appellate Division's determination, petitioner "did not lower the rent to the lawful amount consistent with DHCR's Order which was affirmed by the Court." (Id.) The hearing officer also found that DHCR's September 1995 order made it "abundantly clear" that apartment 5 was rent controlled. (Id. at 8) The hearing officer froze the rent for apartment 5 and the other apartments until DHCR lifted its finding of harassment. (Id. at 8.) The hearing officer further found that petitioner understood the September 1995 order but that petitioner's

"own testimony and documents remove any doubt that they did not understand the import and effect of such Order. Indeed, their steadfastly wrongheaded refusal to abide by the dictates of the Order, which was affirmed by the Court, is indicative of their attitude displayed throughout this proceeding. These illegal rent increases, for Apartments 3 and 5, 432 East 58th Street, constitute unlawful conduct, which, when considered with the harassment directed at rent regulated tenants of 428 and 430 East 58th Street . . . show that [petitioner has] not complied with either the spirit or substance of the Commissioner's September 14, 1995 Order." (Id. at 8-9.)

The DHCR hearing officer thus clearly articulated that petitioner understood that apartment 5 was rent controlled.

In an order dated May 21, 2002, signed by Executive Deputy Commissioner Dennis P Ryan, DHCR approved and adopted the hearing officer's findings.² (See Respondents' Notice of Cross-Motion, Feb. 22, 2006, Exhibit H, at 2.) DHCR denied petitioner's request to lift the September 1995 harassment finding. DHCR determined that petitioner willfully violated the Rent Control Law and Rent and Eviction Regulations and the Rent Stabilization Law and Rent Stabilization Code. (Id.) DHCR found petitioner guilty of harassment and imposed civil penalties totaling $9200, including $200 for petitioner's "failure to comply with the Commissioner's Order, dated September 14, 1995, which prohibited them [petitioner and his wife] from raising the rents for Apartments 3 and 5, 432 East 58th Street . . . until all unlawful conduct has been discontinued and the Finding of Harassment, has been removed as of record." (Id. at 3.) Included in the total civil penalty amount was a $6000 penalty for petitioner's "pattern of verbal abuse and intimidating behavior directed . . . [and] designed to disturb and cause these tenants to vacate their apartments." (Id. at 2.) Also included in the total was a $3000 penalty for petitioner's failure to make repairs. (Id. at 3.) DHCR informed petitioner that he could bring an Article 78 proceeding in Supreme Court, but petitioner did not seek to review DHCR's order.

Conclusions of Law

Respondents' motion for summary judgment on their first counterclaim for rent overcharge and to dismiss the petition is granted. The movant for summary judgment "must make a prime facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to eliminate any material issues of fact from the case." (Winegrad v. NY Univ. Med. Ctr., 64 NY2d 851, 853 [1985, mem], citing Zuckerman v. City of NY, 49 NY2d 557, 562 [1980].) Based on the affidavits and exhibits attached to respondents' motion, respondents have made a prima facie entitlement to judgment as a matter of law. No issue of fact warrants a trial.

DHCR's September 1995 order is clear and unambiguous. Petitioner was "barred from applying for or collecting any rent increases for the affected rent-stabilized housing accommodations . . . [and] denied any and all future rent increases for the subject rent-controlled apartments at the subject buildings until such time as all unlawful conduct has been discontinued and the finding of harassment imposed herein has been removed as of record . . . ." (Respondents' Notice of Cross-Motion, Feb. 22, 2006, Exhibit F, at 3 [emphasis added].) The last paragraph in DHCR's September 2005 order provides that "apartments 2B, 2D and 2E at 430 East 58th Street, New York, New York, and apartments 3 and 5 at 432 East 58th Street, New York, New York, or any replacement or subdivision thereof, remain and continue to be subject to the applicable rent control laws until the finding of harassment herein is removed by an order of the Commissioner notwithstanding that they have or may become vacant because they were involuntarily vacated within the meaning and intent of the applicable statutory provisions." (Id....