Landlord & Tenant

AppDiv, First Dept.

(Opinion by Clark, J.)

'

In landowner's licensee holdover proceeding, occupant appealed from the Appellate Term's reversal of Civil Court's order dismissing the proceeding. The Appellate Division reversed and dismissed the proceeding, holding that a single-room occupant who remained in possession for more than six months acquire status as a rent-stabilized tenant, even if the occupant was in possession pursuant to an agreement between landowner and the New York City Human Resources Administration (HRA).

Landowner and the HRA entered into a memorandum of understanding whereby the HRA agreed to rent 134 rooms in landowner's SRO hotel to house the homeless. HRA agreed to pay a nightly rate of $65 for each person occupying a hotel room. HRA referred Pitt to landowner in 2003, and Pitt resided in a room in landowner's SRO for four years, with HRA paying the nightly rate for that period. On April 17, 2007, HRA notified landowner that payment on Pitt's room would be stopped because Pitt was no longer living there. Pitt, however, continued to reside in the room without paying. Landowner then brought this licensee holdover proceeding in Civil Court.

Pitt moved to dismiss, contending that he was not a licensee but a “permanent tenant” within the meaning of the Rent Stabilization Code, and therefore protected against eviction. Civil Court awarded summary judgment to Pitt, but the Appellate Term reversed and awarded summary judgment to landowner. The Appellate Division granted Pitt's motion for leave to appeal. Pitt voluntarily left the hotel during the pendency of the appeal. Landowner then moved to dismiss on the ground of mootness, but the Appellate Division denied the motion.

In reversing the Appellate Term's grant of summary judgment to landowner, the Appellate Division first reaffirmed that the appeal was not moot because it presented a matter of public interest that was likely to recur in the future. Turning to the merits, the court relied on section 2520.6(j) of the Rent Stabilization Code, which defines “permanent tenant” to include, for housing accommodations located in hotels, an individual who has “continuously resided in the same building as a principal residence for a period of at least six months.” Because Pitt has resided in the hotel for more than four years, he met that definition.

The court then rejected landowner's argument that the accommodation was exempt pursuant to section 2520.11(b) of the Rent Stabilization Code, which exempts accommodations “leased by the United States, the State of New York, any political subdivision, agency or instrumentality thereof, and municipality or any public housing authority.” The court noted first that landowner had not made its memorandum of understanding with the HRA a part of the record, and could not therefore rely on the memorandum. The court then held that the agreement was not, in any event, a lease, because HRA did not guarantee that it would fill all of the rooms subject to the memorandum of understanding.

COMMENT

The Rent Stabilization Code governs rents and renewal rights in “housing accommodations in hotels” unless those accommodations fall within one of three exemptions. Units are exempt if the hotel in which they are located was built after July 1, 1969, or if they are “used for transient occupancy,” or if they were rented on May 31, 1968 for more than $350 per month, or $88 per week. RSC ' 2520.11(g).

The rent charged to a permanent tenant of a hotel unit covered by rent stabilization cannot exceed the amount of rent charged to the prior permanent tenant of the hotel unit, plus any lawful increases permitted by the Rent Stabilization Code (RSC). In Kanti-Savita Realty Corp. v. Santiago, 18 Misc.3d 74, the Appellate Term, while holding that Civil Court had improperly granted the tenant's motion to dismiss a nonpayment proceeding, stated in dicta that once the tenant became a permanent tenant, the collectible rent decreased from the negotiated free-market price to the most recent lawful rent charged a prior tenant, plus lawful increases. The court remanded for a determination of the most recent lawful rent, concluding that Civil Court had an inadequate basis for its determination that landlord had charged more than the legal regulated rent. Id.

A permanent tenant is classified as any person living in a rent-stabilized hotel unit who has “continuously resided in the same building as a principal residence for a period of at least six months,” or possesses a lease of at least six months, even if occupancy is less than six months, or simply requests a lease of at least six months. RSC ' 2520.6(j). Thus, in Nutter v. W & J Hotel Co., 171 Misc.2d 302, 654 N.Y.S.2d 274, the court held in an illegal eviction proceeding that the tenant became a permanent tenant when, after registering a rent-stabilized hotel room for only one night, the tenant attempted to give the hotel manager a request for a lease of an unspecified duration. When the hotel manager declined her request, the tenant refused to leave and landlord had the police remove her. Civil Court held the eviction illegal, because tenant's request for a lease met the requirements of ' 2520.6(j) and she became entitled to protection as a permanent tenant. Id.

'

Illegal Conversion Subjects Apartments to Rent Stabilization Status

Joe Lebnan, LLC v. Oliva

NYLJ 4/10/13, p. 21, col. 1

AppTerm, 2nd, 11th, and 13th Districts

(per curiam opinion)

In landlord's holdover proceedings, landlord appealed from Civil Court's dismissal of the proceedings. The Appellate Term affirmed, holding that illegal conversion of apartments, even if completed without landlord's knowledge and acquiescence, were sufficient to subject the building to rent stabilization, and to protect tenants against treatment as month-to-month tenants.

The subject building's certificate of occupancy is for a building with five residential apartments and a dentist's office. Landlord brought holdover proceedings to recover two apartments in the building, contending that tenants were month-to-month tenants and that landlord had terminated their tenancies. Tenants, however, produced testimonial and photographic evidence establishing that the building included eight residential units. Based on this evidence, the court concluded that the building's units were all rent stabilized. Landlord appealed, contending that even if there were eight units in the building, the apartments could not be rent stabilized because illegal apartments cannot become rent stabilized unless the owner knew of and acquiesced in the unlawful conversion of commercial space to residential use.

In rejecting landlord's argument and affirming Civil Court's dismissal of landlord's petition, the Appellate Term held that the Emergency Tenant Protection Act of 1974, which subjects apartments to rent stabilization, applies to regulate residential rents of all housing accommodations which it does not expressly except. The court held that the Loft Law provides an express exception that does not apply in other circumstances, such as those in this case. As a result, the court held that the subject apartments were entitled to rent stabilization status.

COMMENT

Whether the Emergency Tenant Protection Act (ETPA) subject non-loft illegal residences to rent stabilization depends on one's interpretation of the Court of Appeals opinion in Wolinsky v. Kee Yip Realty Corp., 2 N.Y.3d 487. In Wolinsky, the Court of Appeals held the ETPA does not protect tenants who illegally convert commercial lofts to residential use. Id. The court reasoned that if the ETPA covered all illegally converted units, then provisions of the Loft Law permitting conversions of commercial units used residentially between 1980-81, and subjecting those units to regulation, would have been unnecessary. Id.; see also Multiple Dwelling Law ' 281.

Landlords would argue that the reasoning in Wolinsky precludes application of the ETPA to tenants' illegal conversion of commercial units because the Loft Law, by permitting the conversion of some commercial units and not others, necessarily implied that the ETPA did not previously apply to commercial units illegally converted to residential use' As a result, they would argue, only conversions covered by the Loft Law would become subject to the ETPA. For example, in Caldwell v. American Package Co., Inc., 47 A.D.3d 15, 18, the Second Department found the ETPA inapplicable to tenants' illegal conversion of a commercial unit in violation of the lease. The court reasoned that Wolinsky applied because the Loft Law “was not intended to foster future illegal conversions [of commercial units] or undermine legitimate municipal zoning prerogatives.” Id. at 21.

Tenants, on the other hand, would argue that Wolinsky should be read more narrowly, to preclude ETPA coverage if units converted to residential use only when, as in Wolinsky, legal conversions were impossible because the premises were not zoned to permit residential use. Tenants would argue that Wolinsky does not preclude ETPA protection of illegal residences when the space is eligible for residential use. For example, in Matter of 315 Berry St. Corp. v. Hanson Fine Art, 39 A.D.3d 656, 657, the Second Department Appellate Division held that the ETPA covers illegal conversions when the owner acquiesced in the conversion of space to residential, the premises are eligible for residential use under applicable zoning ordinances, and the owner sought to legalize residential use during the proceeding in which a tenant has sought ETPA protection. See also Caldwell, supra, 47 AD3d at 23.

When landlord, rather than tenants, spearhead the illegal conversion, courts are less likely to permit landlord to escape application of the rent stabilization laws. Thus, in 24 Henry Street Group, Inc. v. Soo, 2008 WL 4685293, the court held when landlord converted a building zoned for single family residences into nine separate units, the units were protected by rent stabilization. The court did, however, emphasize that the zoning resolution and the CO permitted residential, not commercial, use.

Class Action Available in Rent Overcharge Action

Gudz v. Jemrock Realty Co., LLC

NYLJ 4/29/13, p. 18, col. 3

AppDiv, First Dept.

(3-2 decision; memorandum opinion; dissenting memorandum by Manazanet-Daniels)

In tenant's rent overcharge action, landlord appealed from Supreme Court's grant of tenant's motion for class certification. A divided Appellate Division affirmed, holding that once tenant waived any claim for treble damages, the class action was no longer seeking a penalty within the meaning of CPLR 901(b).

CPLR 901(b) provides that in the absence of express statutory authorization, “an action to recover a penalty, or minimum measure of recovery created of imposed by statute may not be maintained as a class action.” Tenant nevertheless sought to bring this overcharge claim as a class action, and waived any right to treble damages. Landlord contended that CPLR 901(b) barred the claim. Supreme Court disagreed and certified the class.

In affirming, the First Department emphasized that treble damages were not the sole measure of recovery for rent overcharges, and treble damages are not available when landlord overcomes the statutory presumption of willfulness. The court reasoned that the statutory penalty was not mandatory, and that tenant's waiver of treble damages would be effective to permit the class action to go forward. The majority also held that the request for attorneys fees and interest did not bar the class action because those claims were compensatory, and lacked a “punitive, deterrent and litigation-incentivizing purpose.”

Justice Manzanet-Daniels, dissenting for herself and Justice Moskowitz, emphasized that the Rent Stabilization Law denominates treble damages as a penalty, and makes treble damages mandatory in those cases where landlord fails to rebut the statutory presumption of willfulness. Moreover, the dissenters argued that a waiver of treble damages is void because the Rent Stabilization Law declares void any agreement by tenant “to waive the benefit of any provision of the RSL or this Code.”

Rent Overcharge

Borden v. 400 East 55th Street Associates, L.P.

NYLJ 4/29/13, p. 18, col. 6

AppDiv, First Dept.

(memorandum opinion)

'

In tenant's rent overcharge action, landlord appealed from Supreme Court's order granting class certification. The Appellate Division affirmed, holding that CPLR 901(b) did not bar the class action, and that common issues of law and fact predominated.

As in Gudz v. Jemrock Realty (supra), the First Department concluded that CPLR 901(b) does not bar a class action for rent overcharges when tenant waives treble damages. But landlord in this case contended that class certification was inappropriate because the damages to which each tenant would become entitled were individualized, and because landlord's counterclaim for rent arrears against plaintiff-tenant made her an atypical member of the proposed class.

In rejecting landlord's arguments, the court emphasized the elements of tenant's claims ' landlord accepted J-51 benefits, deregulated apartments while receiving those benefits, and wrongfully charged market rents while accepting those benefits ' that were common to all members of the class, and held that the need to conduct individualized damage determinations did not “obviate the utility of the class mechanism.” The court also concluded that landlord's counterclaim against plaintiff-tenant did not materially add to complexity of the case, and did not make tenant an unsuitable class representative, despite landlord's argument that the counterclaim might make tenant inclined to settle the case to avoid her own liability.

'

Rent Stabilization Law

Downing v. First Lenox Terrace Assoc.

NYLJ 5/6/13, p. 17, col. 1

AppDiv, First Dept.

(Opinion by Andrias, J; concurring and dissenting opinion by DeGrasse, J.)

'

In tenant's rent overcharge proceeding, tenants appealed from Supreme Court's dismissal of the complaint. The Appellate Division reversed and reinstated the complaint, concluding that Supreme Court erred when it dismissed on the ground that the claims should have been brought before the Division of Housing and Community Renewal (DHCR).

Tenant sought to bring this claim as a class action alleging, as in Gudz v. Jemrock Realty (supra), that landlord had unlawfully deregulated apartments while receiving tax J-51 benefits. Supreme Court dismissed the class action claim, relying on CPLR 901(b). In reversing, the First Department held that the class action should not have been dismissed and remanded for further proceedings to determine whether the allegations in the complaint satisfied the criteria for maintaining the case as a class action. The court's majority concluded that, by waiving any treble damage claim, tenant avoided any difficulty with CPLR 901(b).

Justice DeGrasse agreed that Supreme Court should not have dismissed most of the claims although he concluded that some of the claims were time-barred. But Justice DeGrasse argued that the court should not opine on the waiver issue until tenant makes a motion for class certification, a motion never made because of Supreme Court's premature dismissal.

'

Holdover Proceeding Must Be Dismissed

Windy Acres Farm, Inc., v. Penepent

NYLJ 4/25/13

AppTerm, 9th & 10th Districts

(memorandum opinion)

In landlord's residential holdover proceeding, tenant appealed from a Justice Court determination awarding landlord possession and back rent. The Appellate Term reversed, holding that a holdover proceeding must be dismissed if tenant establishes a breach of the warranty of habitability.

Landlord terminated tenant's lease pursuant to a provision purporting to allow termination upon default in rent. Landlord then brought this holdover proceeding, and tenant raised breach of the warranty of habitability as a defense. The Justice Court concluded that the conditions tenant cited ' mouse infestation and contaminated water ' were not sufficiently serious to constitute breach of the warranty. As a result, landlord awarded landlord possession and back rent, and tenant appealed.

In reversing, the Appellate Term held that a lease provision which would waive the implied warranty of habitability would be void as a matter of policy. As a result, the court indicated that a lease provision permitting termination upon default in payment of rent would be unenforceable if it conflicted with tenant's right to assert breach of the implied warranty. Once the tenant establishes such a breach, the holdover proceeding must be dismissed. In this case, the Appellate Term held that tenant had adequately established breach of the implied warranty, mandating dismissal of the holdover proceeding.

”

Co-Tenant Not Liable for Elevated Lead Paint Levels

Turner v. Davis

NYLJ 4/19/13, p. 32, col. 3

AppDiv, Second Dept.

(memorandum opinion)

In an action by tenant against former co-tenant for damages resulting from her child's lead paint exposure, tenant appealed from Supreme Court's dismissal of the complaint against co-tenant. The Appellate Division affirmed, holding that when co-tenant relinquished control over the rental property, she shed potential liability for lead paint exposure.

Co-tenant and her former husband owned both the subject multiple dwelling and their family home as tenants by the entirety. They separated in 1996. Co-tenant continued to reside in the family home, and her former husband moved into an apartment in the multiple dwelling. In 1999, tenant moved into one of the apartments in the multiple dwelling. Then, in 2004, co-tenant and her former husband divorced, and the property settlement provided for co-tenant to receive the marital home and her husband to receive the multiple dwelling. Co-tenant did not, however, execute a deed to her husband until 2009. Meanwhile, tenant gave birth to a daughter in 2004, by which time co-tenant had surrendered possession of the multiple dwelling. When tenant discovered elevated lead levels in her daughter, she brought this action against both co-tenant and her former husband. Supreme Court dismissed the action against co-tenant, and tenant appealed.

In affirming, the Appellate Division indicated that generally, each co-tenant is liable for injuries resulting from defects on the premises, but that the cotenants can contract otherwise. In particular, a cotenant is not liable for defects when the cotenant has surrendered possession and control of the portion of the premises where the injury occurs. In this case, because cotenant established that she had surrendered possession and control, she was not liable for injuries to tenant's child.

'

SRO Occupant Acquires Rent Stabilization

Branic International Realty Corp. v. Pitt

NYLJ 4/18/13

AppDiv, First Dept.

(Opinion by Clark, J.)

'

In landowner's licensee holdover proceeding, occupant appealed from the Appellate Term's reversal of Civil Court's order dismissing the proceeding. The Appellate Division reversed and dismissed the proceeding, holding that a single-room occupant who remained in possession for more than six months acquire status as a rent-stabilized tenant, even if the occupant was in possession pursuant to an agreement between landowner and the New York City Human Resources Administration (HRA).

Landowner and the HRA entered into a memorandum of understanding whereby the HRA agreed to rent 134 rooms in landowner's SRO hotel to house the homeless. HRA agreed to pay a nightly rate of $65 for each person occupying a hotel room. HRA referred Pitt to landowner in 2003, and Pitt resided in a room in landowner's SRO for four years, with HRA paying the nightly rate for that period. On April 17, 2007, HRA notified landowner that payment on Pitt's room would be stopped because Pitt was no longer living there. Pitt, however, continued to reside in the room without paying. Landowner then brought this licensee holdover proceeding in Civil Court.

Pitt moved to dismiss, contending that he was not a licensee but a “permanent tenant” within the meaning of the Rent Stabilization Code, and therefore protected against eviction. Civil Court awarded summary judgment to Pitt, but the Appellate Term reversed and awarded summary judgment to landowner. The Appellate Division granted Pitt's motion for leave to appeal. Pitt voluntarily left the hotel during the pendency of the appeal. Landowner then moved to dismiss on the ground of mootness, but the Appellate Division denied the motion.

In reversing the Appellate Term's grant of summary judgment to landowner, the Appellate Division first reaffirmed that the appeal was not moot because it presented a matter of public interest that was likely to recur in the future. Turning to the merits, the court relied on section 2520.6(j) of the Rent Stabilization Code, which defines “permanent tenant” to include, for housing accommodations located in hotels, an individual who has “continuously resided in the same building as a principal residence for a period of at least six months.” Because Pitt has resided in the hotel for more than four years, he met that definition.

The court then rejected landowner's argument that the accommodation was exempt pursuant to section 2520.11(b) of the Rent Stabilization Code, which exempts accommodations “leased by the United States, the State of New York, any political subdivision, agency or instrumentality thereof, and municipality or any public housing authority.” The court noted first that landowner had not made its memorandum of understanding with the HRA a part of the record, and could not therefore rely on the memorandum. The court then held that the agreement was not, in any event, a lease, because HRA did not guarantee that it would fill all of the rooms subject to the memorandum of understanding.

COMMENT

The Rent Stabilization Code governs rents and renewal rights in “housing accommodations in hotels” unless those accommodations fall within one of three exemptions. Units are exempt if the hotel in which they are located was built after July 1, 1969, or if they are “used for transient occupancy,” or if they were rented on May 31, 1968 for more than $350 per month, or $88 per week. RSC ' 2520.11(g).

The rent charged to a permanent tenant of a hotel unit covered by rent stabilization cannot exceed the amount of rent charged to the prior permanent tenant of the hotel unit, plus any lawful increases permitted by the Rent Stabilization Code (RSC). In Kanti-Savita Realty Corp. v. Santiago, 18 Misc.3d 74, the Appellate Term, while holding that Civil Court had improperly granted the tenant's motion to dismiss a nonpayment proceeding, stated in dicta that once the tenant became a permanent tenant, the collectible rent decreased from the negotiated free-market price to the most recent lawful rent charged a prior tenant, plus lawful increases. The court remanded for a determination of the most recent lawful rent, concluding that Civil Court had an inadequate basis for its determination that landlord had charged more than the legal regulated rent. Id.

A permanent tenant is classified as any person living in a rent-stabilized hotel unit who has “continuously resided in the same building as a principal residence for a period of at least six months,” or possesses a lease of at least six months, even if occupancy is less than six months, or simply requests a lease of at least six months. RSC ' 2520.6(j). Thus, in Nutter v. W & J Hotel Co., 171 Misc.2d 302, 654 N.Y.S.2d 274, the court held in an illegal eviction proceeding that the tenant became a permanent tenant when, after registering a rent-stabilized hotel room for only one night, the tenant attempted to give the hotel manager a request for a lease of an unspecified duration. When the hotel manager declined her request, the tenant refused to leave and landlord had the police remove her. Civil Court held the eviction illegal, because tenant's request for a lease met the requirements of ' 2520.6(j) and she became entitled to protection as a permanent tenant. Id.

'

Illegal Conversion Subjects Apartments to Rent Stabilization Status

Joe Lebnan, LLC v. Oliva

NYLJ 4/10/13, p. 21, col. 1

AppTerm, 2nd, 11th, and 13th Districts

(per curiam opinion)

In landlord's holdover proceedings, landlord appealed from Civil Court's dismissal of the proceedings. The Appellate Term affirmed, holding that illegal conversion of apartments, even if completed without landlord's knowledge and acquiescence, were sufficient to subject the building to rent stabilization, and to protect tenants against treatment as month-to-month tenants.

The subject building's certificate of occupancy is for a building with five residential apartments and a dentist's office. Landlord brought holdover proceedings to recover two apartments in the building, contending that tenants were month-to-month tenants and that landlord had terminated their tenancies. Tenants, however, produced testimonial and photographic evidence establishing that the building included eight residential units. Based on this evidence, the court concluded that the building's units were all rent stabilized. Landlord appealed, contending that even if there were eight units in the building, the apartments could not be rent stabilized because illegal apartments cannot become rent stabilized unless the owner knew of and acquiesced in the unlawful conversion of commercial space to residential use.

In rejecting landlord's argument and affirming Civil Court's dismissal of landlord's petition, the Appellate Term held that the Emergency Tenant Protection Act of 1974, which subjects apartments to rent stabilization, applies to regulate residential rents of all housing accommodations which it does not expressly except. The court held that the Loft Law provides an express exception that does not apply in other circumstances, such as those in this case. As a result, the court held that the subject apartments were entitled to rent stabilization status.

COMMENT

Whether the Emergency Tenant Protection Act (ETPA) subject non-loft illegal residences to rent stabilization depends on one's interpretation of the Court of Appeals opinion in Wolinsky v. Kee Yip Realty Corp., 2 N.Y.3d 487. In Wolinsky, the Court of Appeals held the ETPA does not protect tenants who illegally convert commercial lofts to residential use. Id. The court reasoned that if the ETPA covered all illegally converted units, then provisions of the Loft Law permitting conversions of commercial units used residentially between 1980-81, and subjecting those units to regulation, would have been unnecessary. Id.; see also Multiple Dwelling Law ' 281.

Landlords would argue that the reasoning in Wolinsky precludes application of the ETPA to tenants' illegal conversion of commercial units because the Loft Law, by permitting the conversion of some commercial units and not others, necessarily implied that the ETPA did not previously apply to commercial units illegally converted to residential use' As a result, they would argue, only conversions covered by the Loft Law would become subject to the ETPA. For example, in Caldwell v. American Package Co., Inc., 47 A.D.3d 15, 18, the Second Department found the ETPA inapplicable to tenants' illegal conversion of a commercial unit in violation of the lease. The court reasoned that Wolinsky applied because the Loft Law “was not intended to foster future illegal conversions [of commercial units] or undermine legitimate municipal zoning prerogatives.” Id. at 21.

Tenants, on the other hand, would argue that Wolinsky should be read more narrowly, to preclude ETPA coverage if units converted to residential use only when, as in Wolinsky, legal conversions were impossible because the premises were not zoned to permit residential use. Tenants would argue that Wolinsky does not preclude ETPA protection of illegal residences when the space is eligible for residential use. For example, in Matter of 315 Berry St. Corp. v. Hanson Fine Art, 39 A.D.3d 656, 657, the Second Department Appellate Division held that the ETPA covers illegal conversions when the owner acquiesced in the conversion of space to residential, the premises are eligible for residential use under applicable zoning ordinances, and the owner sought to legalize residential use during the proceeding in which a tenant has sought ETPA protection. See also Caldwell, supra, 47 AD3d at 23.

When landlord, rather than tenants, spearhead the illegal conversion, courts are less likely to permit landlord to escape application of the rent stabilization laws. Thus, in 24 Henry Street Group, Inc. v. Soo, 2008 WL 4685293, the court held when landlord converted a building zoned for single family residences into nine separate units, the units were protected by rent stabilization. The court did, however, emphasize that the zoning resolution and the CO permitted residential, not commercial, use.

Class Action Available in Rent Overcharge Action

Gudz v. Jemrock Realty Co., LLC

NYLJ 4/29/13, p. 18, col. 3

AppDiv, First Dept.

(3-2 decision; memorandum opinion; dissenting memorandum by Manazanet-Daniels)

In tenant's rent overcharge action, landlord appealed from Supreme Court's grant of tenant's motion for class certification. A divided Appellate Division affirmed, holding that once tenant waived any claim for treble damages, the class action was no longer seeking a penalty within the meaning of CPLR 901(b).

CPLR 901(b) provides that in the absence of express statutory authorization, “an action to recover a penalty, or minimum measure of recovery created of imposed by statute may not be maintained as a class action.” Tenant nevertheless sought to bring this overcharge claim as a class action, and waived any right to treble damages. Landlord contended that CPLR 901(b) barred the claim. Supreme Court disagreed and certified the class.

In affirming, the First Department emphasized that treble damages were not the sole measure of recovery for rent overcharges, and treble damages are not available when landlord overcomes the statutory presumption of willfulness. The court reasoned that the statutory penalty was not mandatory, and that tenant's waiver of treble damages would be effective to permit the class action to go forward. The majority also held that the request for attorneys fees and interest did not bar the class action because those claims were compensatory, and lacked a “punitive, deterrent and litigation-incentivizing purpose.”

Justice Manzanet-Daniels, dissenting for herself and Justice Moskowitz, emphasized that the Rent Stabilization Law denominates treble damages as a penalty, and makes treble damages mandatory in those cases where landlord fails to rebut the statutory presumption of willfulness. Moreover, the dissenters argued that a waiver of treble damages is void because the Rent Stabilization Law declares void any agreement by tenant “to waive the benefit of any provision of the RSL or this Code.”

Rent Overcharge

Borden v. 400 East 55th Street Associates, L.P.

NYLJ 4/29/13, p. 18, col. 6

AppDiv, First Dept.

(memorandum opinion)

'

In tenant's rent overcharge action, landlord appealed from Supreme Court's order granting class certification. The Appellate Division affirmed, holding that CPLR 901(b) did not bar the class action, and that common issues of law and fact predominated.

As in Gudz v. Jemrock Realty (supra), the First Department concluded that CPLR 901(b) does not bar a class action for rent overcharges when tenant waives treble damages. But landlord in this case contended that class certification was inappropriate because the damages to which each tenant would become entitled were individualized, and because landlord's counterclaim for rent arrears against plaintiff-tenant made her an atypical member of the proposed class.

In rejecting landlord's arguments, the court emphasized the elements of tenant's claims ' landlord accepted J-51 benefits, deregulated apartments while receiving those benefits, and wrongfully charged market rents while accepting those benefits ' that were common to all members of the class, and held that the need to conduct individualized damage determinations did not “obviate the utility of the class mechanism.” The court also concluded that landlord's counterclaim against plaintiff-tenant did not materially add to complexity of the case, and did not make tenant an unsuitable class representative, despite landlord's argument that the counterclaim might make tenant inclined to settle the case to avoid her own liability.

'

Rent Stabilization Law

Downing v. First Lenox Terrace Assoc.

NYLJ 5/6/13, p. 17, col. 1

AppDiv, First Dept.

(Opinion by Andrias, J; concurring and dissenting opinion by DeGrasse, J.)

'

In tenant's rent overcharge proceeding, tenants appealed from Supreme Court's dismissal of the complaint. The Appellate Division reversed and reinstated the complaint, concluding that Supreme Court erred when it dismissed on the ground that the claims should have been brought before the Division of Housing and Community Renewal (DHCR).

Tenant sought to bring this claim as a class action alleging, as in Gudz v. Jemrock Realty (supra), that landlord had unlawfully deregulated apartments while receiving tax J-51 benefits. Supreme Court dismissed the class action claim, relying on CPLR 901(b). In reversing, the First Department held that the class action should not have been dismissed and remanded for further proceedings to determine whether the allegations in the complaint satisfied the criteria for maintaining the case as a class action. The court's majority concluded that, by waiving any treble damage claim, tenant avoided any difficulty with CPLR 901(b).

Justice DeGrasse agreed that Supreme Court should not have dismissed most of the claims although he concluded that some of the claims were time-barred. But Justice DeGrasse argued that the court should not opine on the waiver issue until tenant makes a motion for class certification, a motion never made because of Supreme Court's premature dismissal.

'

Holdover Proceeding Must Be Dismissed

Windy Acres Farm, Inc., v. Penepent

NYLJ 4/25/13

AppTerm, 9th & 10th Districts

(memorandum opinion)

In landlord's residential holdover proceeding, tenant appealed from a Justice Court determination awarding landlord possession and back rent. The Appellate Term reversed, holding that a holdover proceeding must be dismissed if tenant establishes a breach of the warranty of habitability.

Landlord terminated tenant's lease pursuant to a provision purporting to allow termination upon default in rent. Landlord then brought this holdover proceeding, and tenant raised breach of the warranty of habitability as a defense. The Justice Court concluded that the conditions tenant cited ' mouse infestation and contaminated water ' were not sufficiently serious to constitute breach of the warranty. As a result, landlord awarded landlord possession and back rent, and tenant appealed.

In reversing, the Appellate Term held that a lease provision which would waive the implied warranty of habitability would be void as a matter of policy. As a result, the court indicated that a lease provision permitting termination upon default in payment of rent would be unenforceable if it conflicted with tenant's right to assert breach of the implied warranty. Once the tenant establishes such a breach, the holdover proceeding must be dismissed. In this case, the Appellate Term held that tenant had adequately established breach of the implied warranty, mandating dismissal of the holdover proceeding.

”

Co-Tenant Not Liable for Elevated Lead Paint Levels

Turner v. Davis

NYLJ 4/19/13, p. 32, col. 3

AppDiv, Second Dept.

(memorandum opinion)

In an action by tenant against former co-tenant for damages resulting from her child's lead paint exposure, tenant appealed from Supreme Court's dismissal of the complaint against co-tenant. The Appellate Division affirmed, holding that when co-tenant relinquished control over the rental property, she shed potential liability for lead paint exposure.

Co-tenant and her former husband owned both the subject multiple dwelling and their family home as tenants by the entirety. They separated in 1996. Co-tenant continued to reside in the family home, and her former husband moved into an apartment in the multiple dwelling. In 1999, tenant moved into one of the apartments in the multiple dwelling. Then, in 2004, co-tenant and her former husband divorced, and the property settlement provided for co-tenant to receive the marital home and her husband to receive the multiple dwelling. Co-tenant did not, however, execute a deed to her husband until 2009. Meanwhile, tenant gave birth to a daughter in 2004, by which time co-tenant had surrendered possession of the multiple dwelling. When tenant discovered elevated lead levels in her daughter, she brought this action against both co-tenant and her former husband. Supreme Court dismissed the action against co-tenant, and tenant appealed.

In affirming, the Appellate Division indicated that generally, each co-tenant is liable for injuries resulting from defects on the premises, but that the cotenants can contract otherwise. In particular, a cotenant is not liable for defects when the cotenant has surrendered possession and control of the portion of the premises where the injury occurs. In this case, because cotenant established that she had surrendered possession and control, she was not liable for injuries to tenant's child.

'