In Lucas' case, Housing Court Judge Peter Wendt (See Profile) decided that it should, ruling in 2010 that her apartment was rent stabilized because her 76-unit building had been receiving J-51 benefits for the first few months of her lease in 2002.
Wendt said the landlord could have deregulated the unit after the J-51 benefits expired later in 2002 if it had given Lucas notice that it was planning to do so when she signed her lease. However, Wendt said, because the landlord gave her no such notice, the apartment must remain rent stabilized as long as she lives there.
To calculate Lucas' new, stabilized rent, Wendt used her rent from four years before the lawsuit began, $2,250, following the standard four-year statute of limitations for rent overcharge actions rather than trying to determine what the rent would be if the apartment had never been deregulated.
Wendt also awarded Lucas attorney fees, but denied her request for treble damages.
On appeal, the Appellate Term affirmed Wendt except on the issue of attorney fees. The Appellate Term panel, which consisted of Justices Martin Schoenfeld, Martin Shulman and Alexander Hunter, said it was not appropriate to award fees because the landlord believed, before Roberts, that Lucas' apartment was properly deregulated.
Both sides appealed.
The First Department panel said the lower courts should have looked beyond the four-year statute of limitations "in light of the improper deregulation of the apartment and given that the record does not clearly establish the validity of the rent increase that brought the rent-stabilized amount above $2,000."
The panel said the landlord had provided no documentation of the claimed $30,000 in renovations.
The panel also reinstated Lucas' claim for treble damages, ordering further proceedings on remand.
"Further inquiry upon remand is required to determine whether the overcharge was not willful, but rather the result of reasonable reliance on a DHCR regulation," the panel said.