Tribbs v. 326-338 E 100th LLC

• Decision Date: 15 July 2019
• Docket Number: INDEX NO. 150179/2018
• Citation: 2019 NY Slip Op 32048 (U)
• Parties: STUART DAVIDSON TRIBBS, on behalf of himself al all others similarly situated Plaintiff, v. 326-338 E 100TH LLC, STEVE CROMAN Defendant.
• Court: New York Supreme Court

2019 NY Slip Op 32048(U)

STUART DAVIDSON TRIBBS, on behalf of himself al all others similarly situated Plaintiff, v. 326-338 E 100TH LLC, STEVE CROMAN Defendant.

INDEX NO. 150179/2018

SUPREME COURT OF THE STATE OF NEW YORK NEW YORK COUNTY PART IAS MOTION 23EFM

RECEIVED: July 16, 2019

July 15, 2019

NYSCEF DOC. NO. 128

PRESENT: HON. W. FRANC PERRY Justice

MOTION DATE March 14, 2019

MOTION SEQ. NO. 002 003

DECISION AND ORDER

The following e-filed documents, listed by NYSCEF document number (Motion 002) 42, 43, 44, 45, 46, 47, 48, 49, 50, 51, 52, 53, 54, 55, 56, 58, 72, 73, 74, 75, 76, 77, 78, 79, 80, 87, 88, 89, 90, 91, 92, 93, 94, 95, 96, 97, 98, 99, 100, 101, 102, 103, 104, 105, 106, 107, 111, 112, 113, 116, 123 were read on this motion to/for ORDER MAINTAIN CLASS ACTION.

The following e-filed documents, listed by NYSCEF document number (Motion 003) 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 57, 59, 60, 61, 62, 63, 64, 65, 66, 67, 68, 69, 70, 71, 81, 82, 83, 84, 85, 86, 108, 110, 118, 121, 126 were read on this motion to/for DISMISSAL

In this proposed class action involving allegations of residential rent overcharge, plaintiff seeks an order pursuant to CPLR §901 et seq. in motion sequence number 002, certifying this action as a class action. Defendants oppose the motion and move separately in motion sequence number 003, to dismiss the complaint. The motions are consolidated for disposition.

BACKGROUND

On January 8, 2018, this action was commenced as a putative class action by plaintiff Tribbs, on behalf of himself and on behalf of all other tenants in the building complex known as and located at 326-338 East 100^th Street, New York, New York (the "Buildings"), currently living in, or who have lived in apartments in the Buildings that were deregulated during the period when the Buildings were receiving J-51 benefits, except those tenants who vacated before January 8, 2014, and a proposed sub-class consisting of all current tenants at the Buildings "who currently live in an unlawfully deregulated apartment". (NYSCEF Doc. No. 2). According to the complaint, defendant 326-338 E 100th LLC is the registered owner of the Buildings and defendant Steve Croman is the managing member of 326-338 E 100th LLC, who is alleged to have directed all aspects of leasing for the Buildings, including the failure to register the apartments with Division of Housing and Community Renewal, n/k/a Homes and Community Renewal ("DHCR"), as required. (NYSCEF Doc. No. 2, ¶¶29-34).

It is alleged that plaintiff did not receive a rent-stabilized lease at the time he moved in May, 2015 and has been provided non-rent stabilized lease renewals; additionally, plaintiff alleges that a rider to his lease specifically noted that his unit was exempt from rent control and rent stabilization laws. (NYSCEF Doc. No. 2, ¶5). Plaintiff alleges that landlords of buildings receiving J-51 tax benefits, such as defendants here, are legally required pursuant to Administrative Code § 26-504(c), to provide tenants with appropriate riders (the "J-51 Rider") detailing the tax credit, and disclosing when it expires. (id. ¶6). Plaintiff contends that because he did not receive a J-51 Rider, plaintiff and the members of the putative class are entitled to rent-stabilized leases for as long as they occupy their apartments. Plaintiff alleges that defendants' failure to properly register his apartment with DHCR deprived him of a full rental history from the date he moved in and as such he is entitled to utilize the default formula, codified in Rent Stabilization Code ("RSC") §2522.6(b)(3) to determine the legal regulated rent for his apartment.

Plaintiff alleges that defendants' June 2015 property tax statements for the Buildings, demonstrate that only 36 out of 92 units were listed as rent-stabilized and that this is in violation of the rent-stabilization laws and the J-51 program's rules, which require that all 92 units,including the unit occupied by plaintiff, be rent-stabilized. (id. at ¶¶18-21). Plaintiff alleges that his apartment and those of the Class were all subject to rent control and/or rent stabilization and previously registered as such with DHCR. (id. at ¶53). Based on conduct that plaintiff alleges demonstrates defendants' intent to circumvent the requirements of New York's rent regulations at the expense of plaintiff and all tenants residing in the Buildings, the complaint alleges three causes of action on behalf of the putative class and sub-class, seeking to recover monetary damages from defendants based on the unlawful overcharges, in violation of Rent Stabilization Law ("RSL") §26-512; seeking a declaratory judgment that plaintiff and members of the sub-class are entitled to reformation of their leases to represent accurately the amount of rent defendants are legally entitled to charge plaintiff and members of the sub-class; and seeking a declaratory judgment that the apartments of plaintiff and members of the sub-class are subject to the RSL and RSC and any purported deregulation by defendants was invalid as a matter of law, and that each are entitled to a rent stabilized lease in a lease form promulgated by DHCR. (NYSCEF Doc. No. 2, ¶¶74-94).

On January 11, 2018, three days after the commencement of this lawsuit, the Tenant Protection Unit ("TPU") of the DHCR sent notice to defendants that "there has been a significant increase in the reported legal regulated rent for the apartment" occupied by plaintiff and that it was conducting an audit for the unit noted. (NYSCEF Doc. No. 36). On June 29, 2018, TPU sent a notice of audit determination to defendants' attorney indicating that it had calculated the legal regulated rent for the apartment and directing the owner to register the unit for registration years 2014-2017; the letter also listed remedial actions that the owner must undertake to resolve the discrepancies identified by the audit. (NYSCEF Doc. No. 94).¹

Defendants contend that TPU's audit determination demonstrates that plaintiff's motion seeking class certification is premature and further demonstrates that plaintiff Tribbs is not an adequate class representative and that plaintiff cannot satisfy the prerequisites of CPLR 901(a). Additionally, defendants argue that jurisdiction of the overcharge claim lies with DHCR, the agency with the expertise to adjudicate overcharge complaints and as it has already begun the process of auditing all other similarly situated apartments in the Buildings, it should retain jurisdiction of the claims alleged here. Plaintiff argues that he did not participate in the TPU audit as he received no notice of the audit nor does he agree with the formula utilized by TPU to calculate the legal regulated rent. To the contrary, plaintiff maintains that defendants are simply attempting to delay adjudication of the claims alleged in the complaint and that a review of the record demonstrates that plaintiff's motion seeking class certification should be granted and that defendants' motion to dismiss should be denied by the court.

STANDARD OF REVIEW/ANALYSIS

It is well established that DHCR has no jurisdiction to adjudicate a class action alleging rent overcharges and as such, the court will address the issue of class certification raised in motion sequence number 002, before it considers defendants' motion to dismiss the action based on the doctrine of primary jurisdiction in motion sequence number 003. (Hess v EDR Assets LLC, 171 AD3d 498, 95 NYS3d 805 [1^st Dept 2019], citing, Kreisler v B-U Realty Corp., 164 A.D.3d 1117, 83 N.Y.S.3d 442 [1st Dept 2018], lv dismissed 32 N.Y.3d 1090, 90 N.Y.S.3d 636, 114 N.E.3d 1089 [2018]; Dugan v London Terrace Gardens, L.P., 101 AD3d 648, 955 N.Y.S.2d 873 [1st Dept 2012] [holding that Supreme Court properly declined to cede primary jurisdictionof these actions to DHCR, since the actions raise legal issues, including class certification and applicable limitations periods, that should be addressed in the first instance by the courts]).

Whether a lawsuit qualifies as a class action rests within the sound discretion of the trial court. (Askey v Occidental Chem. Corp., 102 A.D.2d 130, 477 N.Y.S.2d 242 [4th Dept. 1984].) The movant bears the burden of proving that the prerequisites set forth in CPLR 901 (a) have been met. (Kudinov v. Kel-Tech Constr. Inc., 65 A.D.3d 48, 884 N.Y.S.2d 413 [1^st Dept. 2009].) It is well settled that CPLR 901(a) "should be broadly construed" and that "the Legislature intended article 9 to be a liberal substitute for the narrow class action legislation which preceded it" (City of New York v Maul, 14 NY3d 499, 509, 929 NE2d 366, 903 NYS2d 304 [2010]; see also, Brandon v Chefetz, 106 A.D.2d 162, 168, 485 N,Y.S.2d 55 [1st Dept. 1985] [holding that the prerequisites of CPLR 901(a) are to be liberally construed, since the State's policy favors the maintenance of class actions]).

The court must also consider the five factors enumerated in CPLR 902, but consideration of those factors is not triggered until the prerequisites of CPLR 901(a) have been met. (2 Weinstein-Korn-Miller, NY Civ Prac P 902.06.) If there is any doubt in deciding whether to certify a class, the court should err in favor of allowing the class action. (Super Glue Corp. v Avis Rent A Car Sys., 132 A.D.2d 604, 517 N.Y.S.2d 764 [2d Dept. 1987]). The court may consider the merits of plaintiffs' claims only to the extent of ensuring those claims are not a sham, (Pludeman v. Northern Leasing Sys., Inc., 74 A.D.3d 420, 422, 904 N.Y.S.2d 372 [1st Dep't 2010]; Kudinov v. Kel-Tech Constr. Inc., 65 A.D.3d at 482; Jim & Phil's Family Pharm. v. Aetna U.S. Healthcare, 271 A.D.2d 281, 282, 707 N.Y.S.2d 58 [1st Dep't 2000]), as C.P.L.R. §902 contemplates a determination of class certification "early in the litigation . . . well before any.determination on the merits." (O'Hara v. Del Bello, 47 N.Y.2d 363, 369, 391 N.E.2d 1311, 418 N.Y.S.2d 334 [1979]).

CPLR § 901(a) sets forth five threshold requirements that must be...