Queens Fresh Meadows LLC v. Beckford
| Docket Number | Index No. L&T 311580/22 |
| Decision Date | 08 June 2023 |
| Citation | 2023 NY Slip Op 50552 (U) |
| Parties | Queens Fresh Meadows LLC, Petitioner-Landlord v. Jermaine Beckford, GILLIAN BECKFORD, Respondents-Tenants, and JOHN DOE & JANE DOE, Respondents-Occupants |
| Court | New York Civil Court |
Unpublished Opinion
Adam M. Bernstein Belkin Burden Goldman LLP Attorneys for Petitioner-Landlord
Jay Hedges The Legal Aid Society Attorneys for Respondents-Tenants
Recitation as required by CPLR § 2219(a), of the papers considered in the review of Petitioner's cross-motion for summary judgment:
Papers NYSCEF Doc.
Notice of Cross-Motion & Affirmation/Affidavits/Exhibits 21-37
Affirmation in Opposition 40
Affirmation in Reply & Exhibits 41-48
Upon the foregoing cited papers, the court's decision and order is as follows:
The question presented is under what circumstances may a landlord remove a rent-stabilized apartment from regulation through high rent vacancy decontrol where the unit was previously improperly deregulated during the pendency of J-51 tax abatement in reliance on erroneous guidance from Division of Housing and Community Renewal ("DHCR").
Many of the facts in this "no grounds" lease expiration holdover are undisputed. The subject apartment 64-15 A 186th Lane No.A in Queens, New York, is located within the Queens Fresh Meadows housing complex, and is a presumptively rent-stabilized housing accommodation subject to the New York City Rent Stabilization Law of 1969 ("RSL") by virtue of the Emergency Tenant Protection Act ("ETPA") (Unconsol. L. § 8621 et seq L. 1974, Ch 576, § 4). The apartment benefited from a tax abatement pursuant to the J-51 program (NYC Admin. Code § 11-243, and 28 RCNY Chapter 5) until approximately June 2012. The J-51 program, which is authorized by New York Real Property Tax Law ("RPTL") § 489, funds the rehabilitation of distressed properties and mandates rent stabilization protection for all covered units for the duration of the abatement period. Housing accommodations independently subject to the RSL by virtue of the ETPA remain rent-stabilized after expiration of J-51 benefits (see NYC Admin. Code ("RSL") § 26-504(c)).
Respondents' apartment is one of thousands of units across New York City that were erroneously deregulated prior to 2009 through the RSL's high rent vacancy decontrol mechanism (see RSL § 26-504.2) based on what turned out to be incorrect guidance from DHCR. Petitioner concedes this and agrees that the unit was rent stabilized during its occupancy by the tenant immediately prior to Respondents from 2010-2014. Petitioner treated the unit as deregulated on annual registrations with DHCR, which listed the unit as exempt as of 2003 (NYSCEF 27), until the registration was amended in February 2023 in response to this litigation (NYSCEF 33). The amended registration shows a final registered legal rent of $2,126.88 for the period of September 1, 2013, through August 31, 2014.
When Respondents Jermaine Beckford and Gillian Beckford moved to the premises on April 1, 2014, after the J-51 abatement had expired, they were given a free market lease (NYSCEF 12) with a monthly rent of $2,100. This lease included a Rent Stabilization Exemption Rider stating that the last regulated rent for the prior tenant was $3,069.28, before adding an additional vacancy allowance, entitling the landlord to take advantage of the RSL's high rent decontrol mechanism for units with legal rents in excess of $2,500.
Petitioner commenced the instant lease expiration holdover on August 3 2022, following service of a 90-day non-renewal and termination notice. Tenants in units not subject to rent regulation may be evicted in a holdover upon service of the appropriate predicate notices pursuant to Real Property § 226-c and § 232-a, whereas tenants in rent-stabilized units may not and are entitled to renewal leases. Respondents filed an answer on December 19, 2022. Respondents challenge the regulatory status of the premises and have interposed five counterclaims, including one for rent overcharge. Respondents separately filed a rent overcharge complaint with DHCR and initially moved for a stay of this holdover (motion sequence 2) before subsequently withdrawing the DHCR proceeding and their request for a stay in April 2023.
Respondents moved for discovery related to their claims of unlawful deregulation and overcharge (motion sequence 1). In response Petitioner cross-moved to dismiss Respondents' counterclaims and for summary judgment as to Petitioner's case in chief, an award of use and occupancy, and legal fees. Petitioner produced a significant number of documents in support of its motion, including all prior leases and rent histories in its possession and affidavits from its client. As a result, Respondents have withdrawn their discovery motion and all that remains before the court is Petitioner's cross-motion (motion sequence 3).
In its motion, Petitioner argues that notwithstanding its failure to re-register the premises until 2023, even applying the minimum legally permitted annual guidelines increases and vacancy allowances from 2004 to when Respondents moved to the premises in April 2014, the legal regulated rent would have reached $2,520, thus exceeding the $2,500 decontrol threshold then in effect. Petitioner also notes that it never charged any tenant more than it could have charged had it taken only the minimum allowable increases and therefore these increases are "otherwise allowable" and are lawful now that it has corrected the registrations.
In opposition, Respondents dispute that Petitioner can retroactively claim increases based on an untimely registration, noting that any penalties for failing to register can only be relieved prospectively, thereby precluding a deregulation event in 2014. Respondents further argue that Petitioner failed to register with DHCR or produce a key final lease from September 2013- August 2014, whereby Petitioner alleges the rent increased from $2,126.88 to $2,169.42, and without which the rent would not have reached the $2,500 threshold. In reply, Petitioner argues that while it cannot locate the last lease for the prior tenant, it is confident one was executed. Petitioner further argues that the payment history for the unit reflects that the prior tenants paid $2,169.42 as of September 2013, which the court should consider in lieu of the lease based on the "collateral matters" exception to the best evidence rule. Petitioner avers that it did not register this last lease with DHCR because the prior tenant moved out early in January 2014, and by the time the annual registration was required in April 2014, Respondents had moved in, and the unit became exempt. In sur-reply on the limited issue of the missing last lease, Respondents argue that the use of secondary evidence is inappropriate on a summary judgment motion.
In a lease expiration holdover premised on the deregulation of a rent-stabilized apartment, it is the petitioner's burden to prove the existence of a valid exemption from regulation (see Leya, LLC v Kodicek, 154 N.Y.S.3d 577 [App Term, 1st Dept 2021]; 867-871 Knickerbocker, LLC v Poli, 108 N.Y.S.3d 266, 268 [App Term, 2d, 11th & 13th Jud Dists, 2d Dept 2019]; see also Matter of Kostic v New York State Div. of Hous. & Community Renewal 188 A.D.3d 569, 569 [1st Dept 2020] []). The failure of a landlord to prove its case at trial or on summary judgment will result in dismissal and issue preclusion as to regulatory status (see 867-871 Knickerbocker, LLC v Poli, 117 N.Y.S.3d 799 [App Term, 2d, 11th & 13th Jud Dists, 2d Dept 2019]; Diagonal Realty, LLC v Estella, 155 N.Y.S.3d 273 [App Term, 1st Dept 2021]).
Unlike claims for rent overcharge, "there has never been a statute of limitations as to challenges to the wrongful deregulation of apartments" (Matter of Regina Metro. Co., LLC v New York State Div. of Hous. & Community Renewal, 35 N.Y.3d 332, 402 [2020] [Wilson, J. dissenting] [emphasis original]; Regina at n4 ["Critically, there is a distinction between an overcharge claim and a challenge to the deregulated status of an apartment "]; Matter of AEJ 534 E. 88th LLC v New York State Div. of Hous. & Community Renewal, 194 A.D.3d 464, 469-70 [1st Dept 2021]; Gersten v 56 7th Ave. LLC, 88 A.D.3d 189, 199 [1st Dept, 2011], app withdrawn 18 N.Y.3d 954 [2012]). [1] In determining the regulatory status of an apartment, the court can always consider the unit's entire rental history (see Matter of AEJ 534 E. 88th LLC, 194 A.D.3d at 469 [1st Dept 2021]; Matter of Kostic, 188 A.D.3d at 569 [1st Dept 2020]; Rosa v Koscal 59, LLC, 74 N.Y.S.3d 746, 746 [1st Dept 2018]).
Here, it is undisputed that the subject apartment is in a building that is presumptively subject to the Rent Stabilization Law of 1969 (see RSL § 26-504(a); ETPA §5(a)(4)). The building also received J-51 tax benefits until approximately June 2012, resulting in an additional layer of coverage under the RSL during that time period (see RPTL § 489, NYC Admin. Code § 11-243, and 28 RCNY Chapter 5). Upon expiration of the J-51 abatement, all housing accommodations in the building were to remain rent-stabilized, provided they were not otherwise subject to an applicable exemption from coverage under the RSL and ETPA (see RSL § 26-504(c); Matter of Regina Metro. Co., LLC, 35 N.Y.3d at 361 [2020]). [2]
Respondents' apartment is one of the thousands of units that were deregulated based on the RSL's high rent vacancy decontrol exemption during the pendency of a J-51 tax abatement, potentially in reliance on incorrect guidance from DHCR (see Roberts v Tishman Speyer Props., L.P.,13...
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