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SEBCO IV ASSOCIATES LP, Petitioner-Landlord, v. Lytza COLON, Respondent-Tenant.
Recitation, as required by CPLR 2219 (a), of the papers considered in review of this motion.
Notice of Motion, Affidavits, and annexed Exhibits (A — N) 1
Answering Affidavits and annexed Exhibits (A — Q) 2
Replying Affidavit and annexed Exhibits 3
After oral argument and upon the foregoing cited papers, the decision and order on this motion is as follows:
BACKGROUND & PROCEDURAL POSTURE
Petitioner commenced the instant nonpayment proceeding against Respondent, Lytza Colon ("Respondent"). Respondent resides in a project-based Section 8 federally subsidized building which is regulated by the Department of Housing and Urban Development ("HUD"). This proceeding was brought pursuant to a ten-day rent demand which seeks the market rent for the months of December 2017 and January 2018.
On September 18, 2018, Respondent moved this Court seeking leave to amend her pro se Answer and conduct discovery. During argument of that motion on the record on November 8, 2018, Respondent withdrew her first and second affirmative defenses relating to the non-receipt of a rent demand and service of the Notice of Petition and Petition, respectively. The subsequent decision dated November 9, 2018 memorialized Respondent's withdrawal of her first and second affirmative defenses and granted Respondent's motion to the extent of deeming her amended Answer (as modified by the decision), filed. The Court also granted limited discovery and ordered Petitioner to provide copies of the 2017 recertification documents it purportedly sent to Respondent prior to termination of her subsidy for her failure to recertify, as well as any affidavits of service.
On January 23, 2019, the case was transferred from the resolution part to the trial expediter part ("Part X"), and further adjourned to February 14, 2019 for trial. On February 9, 2019, Respondent made the instant motion for summary judgment and the matter was returned to the resolution part for disposition of same.1
Respondent now seeks summary judgment on the defense that Petitioner's failure to comply with the HUD Handbook in terminating her assistance precludes Petitioner from seeking in excess of her subsidized portion of the rent in this proceeding. (See United States Department of Housing and Urban Development Handbook 4350.3 REV-1 [“HUD Handbook” or “Handbook”].)
Petitioner opposes Respondent's motion on the grounds that Respondent improperly moves for summary judgment on unpleaded defenses, causing Petitioner surprise and undue prejudice. In the alternative, Petitioner urges a denial of Respondent's motion arguing that Petitioner did, in fact, comply with the HUD rules prior to terminating Respondent's subsidy and seeking her eviction premised on the nonpayment of market rate rent.
Respondent argues that Petitioner could not terminate Respondent's rental assistance and charge her market rent because the pre-termination notices Petitioner sent to Respondent do not comply with the requirements of the HUD Handbook. Respondent claims the First Reminder notice is facially defective because it gives conflicting deadlines by which she needed to complete her recertification to avoid termination of her assistance. It is not disputed that at all times relevant to this motion, the date by which she was required to recertify her income was December 1, 2017 — the anniversary of the date she entered into possession.2 Respondent asserts that while her anniversary date is December 1st, her First Reminder notice improperly gives her a premature deadline of October 1, 2017 as the date by which she had to recertify before being charged market rent.
Respondent argues that the content of Third Reminder notice is defective as a notice of termination of assistance as required by Chapter 8 of the HUD Handbook.3 (See generally HUD Handbook, ch 8, ¶ 8-6 [A].) Respondent argues that the notice fails to give her two required pieces of information: (1) that if she failed to pay the increased rent, the owner could seek to enforce the termination of her assistance in court; and (2) that she had 10 calendar days from the date of the notice to request a meeting with Petitioner to discuss the proposed termination of her subsidy. Respondent further argues that delivery of the Third Reminder was also noncompliant with HUD rules as Petitioner's affidavit of service for the notices does not establish attempted delivery of the notice in person, or by affixing it to her door or placing underneath her door in addition to mailing, as required by the Handbook.
In opposition, Petitioner argues that the issues raised by Respondent on this motion constitute an affirmative defense which were waived by her failure to plead it in her Answer. Petitioner claims that it would be prejudicially surprised if the Court now considered the motion.
Petitioner further argues that its pre-termination notices complied with the HUD Handbook and therefore it was entitled to terminate the rental assistance and charge market rent. Petitioner does not dispute that the notices annexed to Respondent's motion are true copies of the notices Petitioner mailed to Respondent. Instead, it argues that each reminder notice included all required information and was timely sent to Respondent. Petitioner adds that the Third Reminder (which also served as a termination notice) is sufficient because the provisions of the HUD handbook regarding termination notices and their delivery apply only to termination of a tenancy and not to the termination of assistance.
Respondent's reply asserts that summary judgment here is appropriate because the argument that Petitioner failed to comply with HUD rules is contemplated by the overcharge affirmative defense in her amended Answer wherein she alleges that Petitioner improperly seeks in excess of Respondent's subsidized rent.
Summary judgment is properly granted after joinder of issue where “upon all the papers and proof submitted, the cause of action or defense shall be established sufficiently to warrant the court as a matter of law in directing judgment in favor of any party.” (CPLR 3212 [b].) Summary judgment is a remedy which should only be employed when there is no doubt as to the absence of triable issues. (Andre v. Pomeroy, 35 NY2d 361, 364 .) On such a motion, a court's sole function is to find, rather than to decide, issues of fact. (Southbridge Towers, Inc. v. Renda, 21 Misc 3d 1138[A], 2008 NY Slip Op 52418[U] [Civ Ct, NY County 2008], citing Epstein v. Scally, 99 AD2d 713 [1st Dept 1984].) In the absence of an issue of material fact, summary judgment should be granted. (Zuckerman v. City of New York, 49 NY2d 557 .)
Despite Petitioner's argument to the contrary, the Court finds that Respondent's arguments properly fall within Respondent's second affirmative defense and counterclaim (“Overcharge”), as Petitioner could only charge Respondent market rent if it complied with the HUD Handbook.4 Respondent states in her Amended Answer, “The Petition seeks rent in excess of the proper subsidized rent. In addition, [P]etitioner and/or its predecessor-in-interest have charged and collected a rent in excess of the proper subsidized rent for the subject premises.” (Amended Answer at 20-21.) Petitioner does not elucidate how it is surprised or unduly prejudiced by Respondent's motion and the Court finds this argument specious considering the prior discovery Order requiring Petitioner to provide copies of the notices now at issue.
Compliance with the HUD Handbook Procedures
Eligibility for HUD assistance is based on household income. Because a family's income and household composition can change over time, tenants are responsible for recertifying their income on an annual basis in accordance with a recertification process set forth in the HUD Handbook. (HUD Handbook, ch 7, ¶ 7-1 [A]-[B].)
Before charging a tenant market rent, the HUD Handbook requires owners to provide the tenant with a series of detailed written notices regarding recertification procedures which the tenant must follow in order to avoid termination of their subsidy. These notices must contain certain very specific information and must be delivered in the manner prescribed by the Handbook. An owner's failure to provide tenants with notices which comply with HUD requirements invalidates the termination of the subsidy for failure to recertify, and bars the maintenance of a nonpayment proceeding demanding market rent. (Starrett City, Inc. v. Brownlee, 22 Misc 3d 38 [App Term, 2nd Dept 2008]; Lower E. Side I Assocs. LLC v. Estevez, 6 Misc 3d 632 [Civ Ct, NY County 2004].)
The provisions of the HUD Handbook are mandatory. (Henry Phipps Plaza S. Assoc. v. Quijano, 137 AD3d 602 , revg for reasons set forth within dissenting op of Schoenfeld, J., 45 Misc 3d 12, 14 [App Term, 1st Dept 2014] [“HUD requires that owners of buildings with tenants who receive federal subsidies, including Section 8 tenants, must follow mandatory written procedures before they may seek evictions.”]; Green Park Assocs. v. Inman, 121 Misc 2d 204, 205 [Civ Ct, NY County 1983] [“It is established that the handbook-prescribed recertification and termination procedures were intended to be mandatory and not, as petitioner suggests, merely advisory.”], citing Thorpe v. Hous. Auth. Of the City Of Durham, 383 US 268 ; Remeeder Houses LP v. Myrick, 2019 NYLJ LEXIS 1251, *11 [Civ Ct, Kings County 2019] [“The provisions of the Handbook are intended to be mandatory, and are so treated by New York courts.”]; Green Ave. Assocs., v. Cardwell, 191 Misc 2d 775, 777-78 [Civ Ct, Kings County 2002]; Park Lane Residences, L.P. v. Boose, 26 Misc 3d 1233[A], 2010 NY Slip Op 50364[U] [Nassau Dist Ct 2010] [“It is established that the handbook prescribed recertification and termination procedures were intended to be mandatory and not ․ merely advisory.”].)
Because the Handbook provisions are mandatory, they are strictly construed by the courts. (See e.g. 2013 Amsterdam Ave. Hous. Assn., L.P. v. King, 2019 NY Slip Op 29074 [App Term, 1st Dept 2019] [finding that a notice which used the word “may” rather than “shall” and failed to inform disabled tenant of her right to request a reasonable accommodation could not serve as a predicate for termination]; Starrett City, Inc. v. Brownlee, 22 Misc 3d at 40 [finding that the failure to provide name of contact at management office in reminder notice barred maintenance of nonpayment proceeding]; Bedford Gardens Co. v. Rosenberg, 1988 NY Misc LEXIS 744 [App Term, 2nd Dept 1998] [upholding trial court's dismissal of landlord's petition where recertification and termination notices failed to advise tenant of his right to meet with landlord as required in the HUD Handbook]; Lambert Houses Redevelpment Co. v. Jobi, 43 Misc 3d 1227[A], 2014 NY Slip Op 50819[U] [Civ Ct, Bronx County 2014] [dismissing a nonpayment proceeding for market rent where notice that was mailed “one day late”].)
HUD Handbook Procedures for Recertification and Termination of Assistance
Chapter 7 of the HUD Handbook sets forth the procedures by which a tenant must verify its household income so that an owner can calculate the respective tenant and HUD shares of the rent. (HUD Handbook, ch 7, ¶ 7-1 [E] .) HUD rules require tenants to complete their recertification by their anniversary date, which is the first day of the month in which the tenant moved into the property. (HUD Handbook, ch 7, ¶ 7-5 [A]-[B].) After an Initial Notice is provided to the tenant at the previous year's recertification, the owner must provide three additional reminder notices to the tenant before the owner is permitted to terminate the tenant's subsidy and charge market rent. (HUD Handbook, ch 7, ¶ 7-7 [B].)
The First Reminder must be sent 120 days prior to the recertification anniversary date and inform the tenant that if they respond after the specified “cutoff date” (10th day of the 11th month after the last annual recertification), the owner will process the annual recertification but will not provide a 30-day notice of any resulting rent increase. (HUD Handbook, ch 7, ¶ 7-7 [B]  [a]-[b] .) It must also state that if the tenant fails to respond before the recertification anniversary date, the tenant will lose the assistance and will be responsible for paying market rent. (HUD Handbook, ch 7, ¶ 7-7 [B]  [b] .) If the tenant does not respond to the First Reminder Notice within 30 days, an owner must send a Second Reminder Notice approximately 90 days prior to the tenant's recertification anniversary date. (HUD Handbook, ch 7, ¶ 7-7 [B]  [a].) It must contain the same information as that provided in the First Reminder Notice. (HUD Handbook, ch 7, ¶ 7-7 [B]  [b].)
Should the tenant fail to respond to the Second Reminder, the owner must send the tenant a Third Reminder Notice no later than 60 days prior to the anniversary date. (HUD Handbook, ch 7, ¶ 7-7 [B]  [a].) The Third Reminder Notice must include the information given in the First Reminder Notice as well as specify the amount of rent the tenant will be required to pay if the tenant fails to provide the required recertification information by the recertification anniversary date. (HUD Handbook, ch 7, ¶ 7-7 [B]  [b] -.).
Because the Third Reminder Notice also serves as a 60-day notice to terminate the subsidy and increase of the rent to market rate, it is subject to additional HUD requirements for termination notices pursuant to Chapter 8 of the Handbook. (HUD Handbook, ch 7, ¶ 7-7 [B]  [a].) Accordingly, the Third Reminder Notice is to include (1) the specific date the assistance will terminate; (2) notification that if the tenant fails to pay the increased rent, the owner may terminate tenancy and seek to enforce the termination in court; and (3) notice to the tenant of the right to request within 10 calendar days from the date of the notice a meeting with the owner to discuss the proposed termination of assistance. (HUD Handbook, ch 8, ¶ 8-6 [A] .) The Third Reminder/Termination Notice is also subject to special delivery procedures. The owner must send the notice by first class mail and “[deliver] a copy of the notice to any adult person answering the door at the unit. If no adult answers the door, the person serving the notice may place it under or through the door, or affix it to the door.” (HUD Handbook, ch 8, ¶ 8-6 [A] .) Service of the notice is only “effective once the notice has been both mailed and hand delivered.” (HUD Handbook, ch 8, ¶ 8-6 [A] .)
Defects in the First Recertification Reminder Notice
Petitioner's First Reminder Notice is facially improper as it provides conflicting deadlines by which Respondent must respond to avoid termination of her subsidy. While the parties agree that December 1, 2017 was the date by which Respondent was required to recertify before her subsidy was terminated, the notice erroneously advises Respondent that her failure to respond to the notice by October 1, 2017 entitles Petitioner to terminate her assistance “effective October 1, 2017” — two months before her anniversary date of December 1, 2017. Petitioner's statement at Paragraph 18 of its attorney's affirmation that this defect is de minimis is unavailing as the provisions of the HUD Handbook are mandatory and are strictly construed by the courts. (See Henry Phipps Plaza, 137 AD3d 602.)
Defects in the Combined Third Recertification Reminder Notice and Notice of Termination
The combined Third Reminder Notice and Notice of Termination is similarly defective as it does not comply with the requirements of the HUD Handbook. Like the First Reminder, the Third Reminder improperly gives Respondent two conflicting recertification deadlines: October 1, 2017 and December 1, 2017. It also fails to include the information required of termination notices pursuant to Chapter 8 of the Handbook in that it does not advise Respondent that Petitioner could seek to enforce the termination of her subsidy in a court proceeding and that she may request a meeting with management to discuss the potential termination of the assistance. (Bedford Gardens Co., 1988 NY Misc LEXIS 744.)
The Third Reminder Notice does not comply with the Handbook's requirement for delivery of termination notices.5 Adherence to the requirements of the HUD Handbook is mandatory to protect a tenant's due process rights. This principle is recognized and accounted for in the HUD Handbook itself. In reversing the Appellate Term in Henry Phipps Plaza, the Appellate Division, First Department ratified Justice Schoenfeld's dissenting opinion below that “[t]hese procedures preserve low income tenants' due process rights by ensuring that they ‘have received proper notice and an opportunity to respond’ before being evicted.” (Henry Phipps Plaza S. Assocs. Ltd., Partnership v. Quijano, 45 Misc 3d 12, 14 [App Term, 1st Dept 2014, J. Schoenfeld, dissenting], quoting HUD Handbook, ch 8, ¶ 8-1 [A].) The Handbook is not only mandatory but also cautionary in its language: “Owners are advised that HUD termination policies and procedures must be followed when initiating a termination, including proper notices and documentation.” (HUD Handbook, ch 8, ¶ 8-1 [C] [emphasis added].) Petitioner annexes to its opposition papers an affidavit of service by Gloria Allen, its property manager. Ms. Allen does not aver that Petitioner attempted to deliver the notice personally or affixed it to the door of Respondent's apartment or placed it under the door as required by the Handbook. In fact, Ms. Allen's affidavit leaves no question that the notice was tendered only by regular mail in derogation of the HUD Handbook and Respondent's due process rights. (Id.; Remeeder Houses LP v. Myrick, 2019 NYLJ LEXIS 1251, *13 [dismissing a nonpayment proceeding on the basis that “any termination notice was to be served by first class mail and by delivering a copy to any adult answering the tenant's door, or if no adult answered the door placed under, through or affixed to the door.”]; Lambert Houses Redevelopment Co., 43 Misc 3d 1227 [A], 2014 NY Slip Op 50819[U].)
Applying the above law and rules to the facts herein, the Court finds that Respondent has established prima facie entitlement to summary judgment on her defense that she has been unlawfully charged more than her subsidized portion of the rent as Petitioner improperly terminated Respondent's HUD rental assistance. Because Petitioner failed to provide Respondent with pre-termination notices that complied with the HUD Handbook, this Court finds that Petitioner improperly terminated her subsidy and unlawfully charged her market rent thereby barring maintenance of this proceeding. As Petitioner fails to raise any triable issue of fact, Respondent's motion for summary judgment is granted, and the proceeding is dismissed.
This constitutes the Decision and Order of the Court.
1. Petitioner opposes the motion as procedurally improper because the trial part rules prevent Respondent from making this motion without leave of the court. In Bronx County, when a case is sent out of a Resolution Part for trial, the parties are first assigned to Part X where the case is conferenced, and, if it does not settle, calendared for trial in one of the trial parts (Part S or Part T). At the time Respondent's motion was made, the Part S and Part T rules which require leave of the trial court judge to make a pre-trial motion had not been published. Accordingly, the Court considers this motion properly made.
2. At argument of the instant motion on April 23, 2019, both parties agreed on the record that Respondent's anniversary date as it relates to the facts herein is December 1, 2017.
3. Indeed, Petitioner calls the Third Reminder Notice “THIRD REMINDER NOTICE/NOTICE OF TERMINATION.” (Petitioner's exhibit L.)
4. This Court disagrees with Petitioner's characterization of the law as “clear that Petitioner does not have to prove compliance with the HUD Handbook to maintain its instant non-payment proceeding” seeking market rent. (Affirmation of Petitioner's counsel at 96). Counsel supports this position with a single citation to a decision of the City Court of Poughkeepsie, which is not binding authority on this Court and seemingly ignores the myriad of cases cited below regarding the mandatory nature of the notice provisions of the HUD Handbook and their due process implications. (See Rip Van Winkle House, LLC v. Bartee, 49 Misc 3d 693 [Poughkeepsie City Ct 2015].) Bartee itself cites to a single trial court decision for support: Ramos v. Federline (36 HCR 119A, NYLJ, Jan. 16, 2008 at 28, col 1 [Civ Ct, Kings County 2008].) Ramos is very clearly not a case on point here. The Ramos court dismissed a nonpayment case in a month-to-month tenancy where no agreement existed between the parties to pay a rent any higher than the amount in the expired lease which was sought in the petition. (Id.) Instead, because it is entirely dependent upon compliance with HUD pre-termination rules, proof of such may very well be a prima facie element of Petitioner's claim for market rent. (See e.g. Lower E. Side II Assoc. v. Aaron, 58 Misc 3d 1213[A], 2017 NY Slip Op 51970[U] [Civ Ct, NY County 2017] [dismissing complaint seeking market rent after trial where plaintiff landlord failed to demonstrate compliance with HUD recertification regulations].) The fact that the pleading here contains an allegation of Petitioner's compliance with the rules and regulations governing Section 8, which Respondent affirmatively denied, leads the Court to believe that Petitioner may even be aware of this burden. (Petition at 7; Amended Answer at 5.)
5. Petitioner's argument that Chapter 8 governs only termination of the tenancy and not termination of assistance founders on the clear language of the Handbook itself which states that “Chapter 8 addresses terminating housing assistance and terminating tenancy.” (HUD Handbook, ch 8, ¶ 8-1 [A] [emphasis added].)
Karen May Bacdayan, J.
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