ZB Prospect Realty LLC v. Frankel

• Decision Date: 25 August 2020
• Docket Number: 56349/2019
• Citation: 68 Misc.3d 1214 (A),130 N.Y.S.3d 268 (Table)
• Parties: ZB PROSPECT REALTY LLC, Petitioner, v. Deneice FRANKEL, Respondent.
• Court: New York Civil Court

68 Misc.3d 1214 (A)

130 N.Y.S.3d 268 (Table)

ZB PROSPECT REALTY LLC, Petitioner,

v.Deneice FRANKEL, Respondent.

56349/2019

Civil Court, City of New York.

Decided August 25, 2020

For Petitioner: Steve Sidrane

For Respondent: Ellery Ireland

Jack Stoller, J.

Recitation, as required by CPLR § 2219(a), of the papers considered in the review of this motion:

Pages numbered

Notice of Motion Supplemental Affidavits and Affirmations Annexed 1, 2

Affirmation and Affidavit In Opposition 3, 4

Affirmation In Reply 5

Upon the foregoing papers, the Decision and Order on this motion are as follows:

ZB Prospect Realty LLC, the petitioner in this proceeding ("Petitioner"), commenced this holdover proceeding against Deneice Frankel, the respondent in this proceeding ("Respondent"), seeking possession of 846-48 Prospect Place, Apt. 4, Brooklyn, New York ("the subject premises") on the basis of termination of a month-to-month tenancy. Respondent interposed a counterclaim sounding in rent overcharge. Petitioner then discontinued this proceeding and the proceeding continues on Respondent's counterclaim. Respondent now moves for partial summary judgment on her counterclaim.

Respondent shows a history of registrations of the subject premises with the New York State Division of Housing and Community Renewal ("DHCR") pursuant to 9 N.Y.C.R.R. § 2528.3 ("the registration history"). The registration history shows that, while Petitioner¹ annually registered the subject premises, it did not do so in 2000, 2001, 2002, or 2010, and did not register the subject premises at all after 2011. The last registered rent was $1,227.00 for a lease that expired on January 31, 2012.

Respondent annexes to her motion the following leases for the subject premises: one that commenced on October 15, 2012 that Petitioner purportedly entered into with other tenants with a monthly rent of $3,700.00, another commencing on October 1, 2013 that Petitioner purportedly entered into with other tenants with a monthly rent of $4,100.00, and a third lease commencing on February 1, 2017 that Petitioner purportedly entered into with a number of co-tenants, including one named "Deneice France," with a monthly rent of $4,200.00. None of these leases appear in the registration history.

Respondent argues that Petitioner's past failures to register the rent for the subject premises has the effect of freezing the rent in effect at the level of the last registered rent. N.Y.C. Admin. Code § 26-517(e). Ascertaining that last registered rent, however, requires an inspection of the registration history more than four years before Respondent interposed her counterclaim.²

Before the passage of the Housing Stability and Tenant Protection Act ("HSTPA") in 2019, the Court could not consider registrations made four years before the interposition of a rent overcharge cause of action, even if a landlord failed to register a rent-stabilized apartment within that four-year timeframe. 435 Cent. Park W. Tenant Ass'n v. Park Front Apartments, LLC, 183 A.D.3d 509, 510-11 (1st Dept. 2020), Myers v. Frankel , 292 A.D.2d 575, 576 (2nd Dept. 2002),³ Sessler v. NY State Div. of Hous. & Cmty. Renewal , 282 A.D.2d 262 (1st Dept. 2001), Ridges & Spots Realty Corp. v. Edwards , 4 Misc. 3d 130(A)(App. Term 1st Dept. 2004). HSTPA amended the Rent Stabilization Law so as to permit a review of, inter alia , the entire registration history. N.Y.C. Admin. Code §§ 26-516(a), 26-517(h).

A statute has a retroactive effect if it would impair rights a party possessed when the party acted, increase a party's liability for past conduct, or impose new duties with respect to transactions already completed. Matter of Regina Metro. Co., LLC v. NY State Div. of Hous. & Cmty. Renewal , 2020 NY Slip Op. 02127 (Court of Appeals). Granting Respondent's summary judgment motion in this context would indeed increase Petitioner's liability for its failure to register the subject premises more than four years before Respondent interposed her cause of action. Such a retroactive application of this provision of HSTPA, to consider a registration for more than four years, violates substantive due process. Id. That violation of due process means that the Court must resolve Respondent's overcharge claim according to the law in effect at the time the overcharge occurred which, as noted above, proscribed the inspection of the registration history more than four years before the cause of action. Myers, supra , 292 A.D.2d at 576, Sessler, supra , 282 A.D.2d at 262, Ridges & Spots Realty Corp., supra , 4 Misc. 3d at 130(A). Regina, supra , itself noted that a lack of registrations in the four years prior to an overcharge complaint does not warrant a consideration of older registrations, as the regulation used the rent charged, not the registered rent, as the basis upon which to evaluate an overcharge complaint. 9 N.Y.C.R.R. §§ 2526.1(a)(3)(i), 2520.6(e). See 435 Cent. Park W. Tenant Ass'n, supra , 183 A.D.3d 509, at 510 (using the rent charged four years prior to the overcharge complaint as the basis to determine the lawful rent in the absence of registrations).

In support of her motion, Respondent cites 125 Court St., LLC v. Nicholson , 67 Misc. 3d 28, 33 (App. Term 2nd Dept. 2019) and 325 Melrose, LLC v. Bloemendall , 65 Misc. 3d 43 (App. Term 2nd Dept. 2019). However, these matters post-dated the passage of HSTPA but pre-dated the Court of Appeals' holding that a retroactive application of that HSTPA provision violates due process. Respondent also cites Ema Realty, LLC v. Leyva , 64 Misc. 3d 11, 14 (App. Term 2nd Dept. 2019). However, the Court in this matter considered rent registrations older than four years to determine an apartment's rent regulatory status, not for overcharge cause of action. Law pre-dating HSTPA already permitted inspection of older rents registered and/or charged to determine rent regulatory status, Rosa v. Koscal 59, LLC , 162 A.D.3d 466, 466 (1st Dept. 2018), H.O. Realty Corp. v. State of NY Div. of Hous. & Community Renewal , 46 A.D.3d 103, 109 (1st Dept. 2007), East West Renovating Co. v. State of NY Div. of Hous. & Community Renewal , 16 A.D.3d 166, 167 (1st Dept. 2005), 449 W. 37 Realty LLC v. Herman , 2019 NY Slip Op. 50201(U)(App. Term 1st Dept.), CS 393 LLC v. Eisenberg , 48 Misc. 3d 128(A)(App. Term 1st Dept. 2015), 49 E. 74th St., LLC v. Slater , 42 Misc. 3d 134(A)(App. Term 1st Dept. 2014), a proposition of law that Regina, supra , did not disturb. "Critically, there is a distinction between an overcharge claim and a challenge to the deregulated status of an apartment." Regina, supra , 2020 NY Slip Op. 02127 n.4.

Respondent also cites 125 Court St., LLC v. Sher , 58 Misc. 3d 150(A)(App. Term 2nd Dept. 2018). However, this decision did not award damages on a rent overcharge claim. Instead, the decision found fault with a rent demand pursuant to RPAPL § 711(2) and dismissed a nonpayment petition because of that.

Respondent argues in reply that the Court can consider the entirety of the registration history because Petitioner engaged in a fraudulent scheme to deregulate the subject premises. However, this was not the basis for which Respondent moved for summary judgment at the outset. The Court cannot award relief based upon a ground raised for the first time in reply. Stang LLC v. Hudson Square Hotel, LLC , 158 A.D.3d 446, 447 (1st Dept. 2018), All State Flooring Distribs., L.P. v. MD Floors, LLC , 131 A.D.3d 834, 836 (1st Dept. 2015).

Even assuming arguendo that the Court could consider the rent registered more than four years before Respondent interposed her cause of action, the Court "permit[s] tenants to use such evidence only to prove that the owner engaged in a fraudulent scheme to deregulate the apartment. For overcharge calculation purposes, the last regulated rent charged before that period [is] ‘of no relevance,’ " Regina Metro. Co., LLC, supra , 2020 NY Slip Op. 02127, ¶ 5, with the so-called "default formula"⁴ used to set rents in such a situation. Id., Gold Rivka 2 LLC v. Rodriguez , 2020 NY Slip Op. 50904(U)(Civ. Ct. Bronx Co.).

The Court therefore denies Respondent's motion for summary judgment, without prejudice to the ultimate outcome of Respondent's cause of action.

Although Petitioner does not cross-move for such relief, Petitioner's opposition papers contain a request that the Court, pursuant to CPLR § 3212(b), to search the record and award a possessory judgment for unpaid rent.

A Court may only search the record and grant summary judgment in favor of a nonmoving party with respect to a cause of action or issue that is the subject of the motions before the Court. Dunham v. Hilco Constr. Co., 89 N.Y.2d 425, 429-30 (1996), Zhigue v. Lexington Landmark Props., LLC, 183 A.D.3d 854, 856 (2nd Dept. 2020). Not only is Respondent's payment or nonpayment of rent not an issue on this motion practice, it is not even a cause of action in this proceeding, which started out as a holdover proceeding. And even that holdover cause of action was discontinued. A summary judgment motion is not an occasion for opposing parties to seek relief on "every claim and defense asserted by every other party." Weinberg v. Picker, 172 A.D.3d 784, 788 (2nd Dept. 2019).

Even assuming arguendo that Petitioner's cause of action for unpaid rent bore some relation to this matter and this summary judgment motion, Petitioner does not prove that it demanded payment of rent from Respondent pursuant to RPAPL § 711(2), a prerequisite for a judgment for nonpayment of rent.

Even assuming arguendo that a deficiency in a rent demand were not an issue, Petitioner's president avers in opposition to the summary judgment motion that he has no lease with any of the named respondents....