Realty Law Digest
Landlord-Tenant—J-51— 'Roberts v. Tishman Speyer'—Overcharge, Fraud and Abatement Claims Rejected—Tenant Was Undercharged Rather Than Overcharged—"Complex Legal Environment Created by the Changing Law" Affected This Case—Warranty of Habitability
A landlord commenced a summary nonpayment proceeding seeking to recover rent and late fees. The tenant interposed "affirmative defenses of breach of the warranty of habitability," "rent overcharge and fraud and counter-claims for treble damages and harassment."
The tenant took occupancy on March 1, 2009, pursuant to an unregulated lease at a monthly rental of $2,200. Her next lease, also unregulated, ended Feb. 28, 2011, at the same monthly rent. The tenant signed a third unregulated lease ending Feb. 28, 2012, at the rate of $2,250 per month. On Jan. 4, 2012, the landlord advised the tenant that because of the recent Roberts v. Tishman Speyer decision, 13 N.Y.3d 270 (2009) (Roberts), the tenant "was now a rent-stabilized tenant, would soon receive a new, rent-stabilized lease renewal, and that based on its recalculation of the rent in light of [the Roberts] case, she had been overcharged $0.50 for a period of eleven months…totaling $5.50, for which a check in that amount was remitted."
The landlord also sought rent arrears of approximately $27,612.32, exclusive of late fees. The landlord had mailed the tenant a rent-stabilized renewal lease, offering her "a choice of a one-year lease at the rate of $2,333.86/month or a two-year lease at the rate of $2,412.59/month, based on the rent guideline increases…on a legal regulated rent of $2,249.50." The tenant neither signed nor returned the rent-stabilized lease renewal.
The issues were whether the landlord had overcharged the tenant, and if so, was it done willfully and whether the landlord committed fraud such that the court had to look beyond the four-year statute of limitations and review the entire rental history in making a determination. The court found that the tenant had not been overcharged and the landlord had not committed fraud.
The landlord's prior motion for partial summary judgment had been granted. The court had dismissed the tenant's rent overcharge defense "considering the base date to be four years prior to the interposition of the rent overcharge defenses and counterclaims, applied the relevant Rent Guidelines Board [RGB] increases and found that the rent…charged…did not exceed the permissible amount." Based upon the law that existed at the relevant time, the court found that the evidence did not "rise to the level of fraud found to justify an inspection of the rent history of the apartment prior to the base date…."
During the trial of this case, the tenant had moved to reargue in light of the Appellate Division's decision in 72A Realty Assoc. v. Lucas, 101 A.D.3d 401 (1st Dept., 2012). The court had reversed its decision, finding that there were triable issues of fact precluding summary judgment. Thus, the court reinstated the tenant's "defenses and counterclaims sounding in rent overcharge."
A mistrial had been declared and a second trial was commenced. A third decision clarified that:
the only issue…that the Court has ruled on is whether Respondent's rent overcharge defenses and counterclaims should be dismissed. The court has ultimately denied that motion…. In advance of the trial, the Court will not make a determination as to what evidence Respondent may or may not introduce to rebut Petitioner's case or establish her affirmative defenses and/or counterclaims, which is best left with the sound discretion of the trial court, except to reiterate that the Court interpreted the holding of 72A Realty, supra to warrant examination of the entire rent history.
Following the trial, the court held that the landlord had "neither overcharged" the tenant "nor committed any fraud." The last lease rent of $2,249.50 was supported by the evidence and was not an "improper rent from which to calculate the rent stabilized lease renewal." Moreover, the court found that the tenant had in fact been "undercharged, rather than overcharged, based on the comparison of rent charged her to the legal regulated rent."