In a decision dated December 2, 2013, 98 Riverside Drive v. DHCR and 98 Riverside Drive Tenants Association, Justice Cynthia S. Kern of the New York State Supreme Court dismissed the landlord's Article 78 petition against a rent reduction order issued by the DHCR which was based upon the landlord's unilateral discontinuance of electrical inclusion (electricity included in the rent). The tenants had always had their electricity included in their rent. The landlord converted the building from "master metering" to individual metering by installing individual meters in tenants' apartments. The Rent Stabilization Law and Rent Control Law require that a landlord first apply to the DHCR for permission before discontinuing electrical inclusion.
In the 1980's, a Brooklyn brownstone containing 7 units was converted to 4 units. None of the units were ever registered with the DHCR. A duplex unit was occupied by the owners from 1998 to 2008. In 2008, these owners sold the building, and the new owners rented the duplex to new tenants. They were given a "market" lease and paid the rent demanded for 4 years. In 2012, a Housing Court Judge determined that the tenants were rent stabilized and ordered a trial on rent overcharge. After trial, Housing Court Judge McClanahan found, in Chun v. Raywood, that the legal rent had to be set based on the DHCR's "default formula," a calculation used when no reliable rental history records are available, and ordered the owners to refund the amount overpaid for the past 4 years, plus interest. Under the "default formula" the rent could be set on the basis of the lowest rent stabilized rent for a comparable apartment in the same line of apartments, or on other alternative formulas that would generally result in a lower rent.
Class Action law suits allow claims to be brought on behalf of many people who have been adversely affected by the actions of the defendant. Often times the individual claims are small but in the aggregate can be huge. For example, a credit card company that charged a fraction of a percent more than allowed by law may owe one million customers $10 each. Not enough for any individual to sue but as a class of one million, another matter altogether.
Last week our firm week won a huge victory in a long, bitter and hard fought housing court case entitled Samra v. Messeca. This was what is known as an "owner use" proceeding-an eviction case brought against a rent stabilized tenant because the landlord claims that they want to have an immediate family member-in this case one of the landlord's daughters- occupy the unit. In order to prevail in such a case, the landlord only needs to establish that he or she has a good faith, honest intention to have the family member live in the unit. Landlords frequently use owner occupancy as a ruse to evict rent stabilized tenants This case was a textbook example of bad faith. There had been a long history of animosity between the tenant and the landlords. After recovering another apartment under the guise of owner occupancy, the family member for whom the apartment was sought did not move in; instead the landlord destabilized it and quadrupled the rent. Moreover, there were other apartments available which the landlord could have moved his daughter into, and blatant harassment of the tenant. In order to maintain an owner use case, the building must be owned by individuals; in this case, although the deed was transferred to an individual, the building was still managed and operated through a corporation. Tellingly, the landlord had attempted to coerce the tenant into accepting de facto and illegal deregulation of her apartment years before this case began, by suggesting that if she failed to agree, the landlord would evict her in an owner occupancy case. The court, in a 19 page decision, dismissed the case, citing these many factors and held that the landlord did not have a good faith desire to have his daughter occupy the apartment; in effect the court found that the landlord was lying and that the case was a sham. The tenant in this case was represented by Janet Ray Kalson and Sam Himmelstein.
On November 21, 2012, a Civil Court Judge in Brooklyn issued a ruling in favor of the tenants in Chun v. Raywood. At issue in the case was whether a duplex apartment in a brownstone, renting for over $2,500 per month, was subject to rent stabilization. The Court determined that the apartment was rent stabilized because: (1) the building had seven units until the 1980's, when it was converted to a four-unit building, and (2) the apartment was owner-occupied for several years before being rented to the tenants. Generally a building must have a minimum of six units for the apartments to be rent stabilized, but the rule is that when the number of units was above six on the effective date of the law, a reduction in the number of units does not affect their stabilized status. Also, the practice of "high rent/vacancy deregulation" does not apply to an apartment that was owner-occupied immediately before it is rented to a new tenant. The Court's decision was published in the New York Law Journal.
In the case of 354 East 66th Street v. Curry, the son of the deceased rent stabilized tenant proved to the Housing Court that he had the right to succeed to his mother's tenancy. The Housing Court awarded Mr. Curry his attorneys' fees, and the landlord appealed. On appeal, the Appellate Term, First Department, ruled that Mr. Curry was entitled to his attorneys' fees based upon the terms of his mother's original lease dating from 1972. That lease contained a clause stating that the landlord could recover attorneys' fees in the event of a default by the tenant. Under the law (Real Property Law 234), where a lease allows a landlord to recover attorneys' fees, the tenant has an equal right to recover attorneys' fees if the tenant is the prevailing party in a court dispute. The lease also stated that its terms were binding upon successors-in-interest. Therefore, the Appellate Term stated, Mr. Curry was entitled to recover his attorneys' fees. This case is especially significant because there had been some previous court decisions interpreting provisions of old leases, such as the one in this case, in a manner unfavorable to tenants. This case appears to have settled the law, such that old lease provisions like the one in this case will allow for tenants, and their successors, to recover attorneys' fees when they prevail in court.
A photograph of the 1968 riots at the Democratic convention in Chicago remained displayed on two large screens in the main hall of the Bar Association of the City New York throughout the day at the conference titled "New York City's Housing Court at 40: Controversies, Challenges, and Prospects for the Future" on March 11, 2013. The photo, which had been used by New York Law School Professor Richard Chuse to illustrate the effect of the 1960s social movements on housing law, seemed an appropriate image to sum up the deep conflict between landlords and tenants which was the subtext of the conference.
In order for an apartment to be subject to rent stabilization, along with a number of other criteria, it must be located in a building that contains six or more apartments.
Designed to "level the playing field," Real Property Law section 234 states that whenever a lease provides that a landlord may recover attorneys' fees and or expenses due to a tenant's failure to perform any agreement contained in a lease, there is implied a covenant by the landlord to pay to the tenant the reasonable attorney's fees and/or expenses incurred by the tenant as the result of the failure of the landlord to perform any agreement under the lease or in the successful defense of any action or summary proceeding commence by the landlord.