II LLC v. Ruben Milan, Respondent (2026)

Recitation, as required by CPLR § 2219(a) of the papers considered in the review of Respondent's motion:

PAPERS NUMBERED

Respondent's Notice of Motion, Affirmation & Exhibits (NYSCEF #9-18) 1

Petitioner's Opposition, Affirmation & Exhibits (NYSCEF #20-21) 2

Respondent's Reply (NYSCEF #22) 3

Upon the foregoing cited papers, the Decision/Order on the Respondent's motion is decided as follows:

This is a non-payment proceeding seeking possession of premises located at 45-15 48th Street, Apt. 5G, Woodside, NY 11377 (the "Subject Premises") and a money judgment in the amount of $16,087.71. Prior to commencing this proceeding, Petitioner served Respondent with a thirty-day rent demand. The Petition alleges that the Subject Premises is subject to rent-stabilization and thus exempt from the Good Cause Eviction Law.

Respondent moved into the Subject Premises in April 2020 pursuant to a rent-stabilized lease for a term commencing April 1, 2020 and ending on March 31, 2020  ¹ . Respondent subsequently signed one year renewal leases in 2021-2023. The last lease in effect is a two-year lease for the period from April 1, 2024 to March 31, 2026.

Respondent initially appeared pro se and filed a pro se answer. On February 2, 2026, the Legal Aid Society filed a notice of appearance on behalf of Respondent. On March 10, 2026, Respondent filed the instant motion seeking: 1) leave to amend the pro se answer pursuant to CPLR § 3012(d) and CPLR § 3025(b); 2) leave to conduct discovery pursuant to CPLR § 408; and 3) such other relief as this Court deems just and proper. Petitioner has filed written opposition to the motion, Respondent filed reply, the Court heard oral argument, and the motion was marked submitted. The Court adjourned the underlying case to June 30, 2026 as a control date.

The Court will first address that portion of Respondent's motion which seeks to amend the pro se answer. Respondent's pro se answer checked off the following defenses on the pro se form: 1) I or someone on my behalf tried to pay the rent, but the Petitioner refused to accept it; 2) There were conditions in the apartment and/or the building/house which the Petitioner did not repair and/or services which the Petitioner did not provide; and 3) general denial. Respondent also checked off the box for counterclaim(s) based on those defenses.

Respondent's proposed amended answer raises the following defenses/counterclaims: 1) defective rent registrations as an affirmative defense; 2) overcharge as a second affirmative defense and first counterclaim; 3) proper lease and amended registrations as a second counterclaim; 4) that the rent should be established as the 1991 rent of $474.00 or the 2005 rent of $746.33 as a third affirmative defense and third counterclaim; and 5) that Respondent should not pay any use and occupancy until the rent is properly registered as a fourth affirmative defense and fourth counterclaim.

Amendment of pleadings should be freely granted absent unfair prejudice or surprise to the opposing party. CPLR § 3025(b), see 36 Main Realty Corp. v. Wang Law Office, PLLC, 49 Misc 3d 51, (App. Term, 2nd Dept. 11&13 Jud. Distr.,2015). It is within the court's discretion, if the amendments sought are meritorious and not unduly prejudicial, to permit amendment of the pleading. See McCaskey, Davies & Assocs., Inc. v. New York City Health & Hospitals Corp. 59 NY2d 755 (1983); Herrick v. Second Cuthouse Ltd., 64 NY2d 692 (1984); 115 Macombs, LLC v. Jackson, 50 Misc 3d 795 (Civ. Ct., Bronx Cty. 2015). It is axiomatic that courts favor that all claims and defenses be duly asserted so that there can be full adjudication of all rights in a proceeding. The court should allow the amendment if it is not palpably insufficient or devoid of merit. See Miller v. Cohen, 93 AD3d 424 (App. Div., 1st Dept. 2012). The party opposing amendment has the burden to show that a proposed amendment is palpably insufficient or patently devoid of merit. Kismo Apts., LLC v. Gandhi, 24 NY3d 403 (2014).

Petitioner does not allege any prejudice caused by allowing Respondent to amend his answer but alleges that the proposed amended answer is palpably insufficient or devoid of merit. Respondent's first affirmative defense is that the rent registrations filed with DHCR are defective. Respondent points out that: 1) the rent registration lists the Subject Premises as exempt for the period of October 1, 1991 to October 1, 2003 without any explanation; 2) the registered rent increased from $746.33 to $1,434.00 in 2006 with no explanation other than a vacancy increase; and 3) in 2023, Respondent signed a one-year renewal lease that had an increase from $2,050 to $2,148.37 which is a 4.79% increase when the Rent Guidelines Board had only approved a 3.25% increase for one-year leases. Petitioner does nothing to explain these issues in the rent registration. Petitioner merely states that all of Respondent's defenses relate to overcharge and Respondent has not established a plausible overcharge claim. However, Respondent's first affirmative defense has nothing to do with overcharge. Respondent merely asserts that the DHCR rent registrations are defective as some of the rent increases are unsupported. Petitioner has presented no evidence to explain these alleged defects, so the defense is not palpably insufficient or devoid of merit.

However, the Court must limit Respondent's claim to the period from January 1, 2006 to present. Respondent has not cited to any issues with the rent history prior to 1991 when the legal regulated rent was $474.00. In 1992, Petitioner  ² registered the Subject Premises as exempt. There is nothing inherently improper about this. There are several legitimate exemptions under the Rent Stabilization Code ("RSC") or Rent Stabilization Law ("RSL") to register an apartment as temporarily exempt if, for example, the premises are rented for non-residential purposes or to an employee of the landlord as an incident of their employment. See 9 NYCRR § 2520.11(n) and (m). For the period from 1993-2003, Petitioner continued to register the Subject Premises is exempt. Again, there is nothing that is necessarily improper or a violation of the RSC or RSL. The only requirement is that once the apartment is no longer used for the exempt purpose the legal regulated rent reverts back to the last legal regulated rent plus any permissible increases. See 9 NYCRR § 2526.1(a)(3)(iii). In October 2003, Petitioner rented to a tenant that was not subject to the previous exemption. As such, Petitioner registered the Subject Premises in 2004 based on the new rent under that October 2023 lease. Petitioner was entitled to six two-year rent increases. The Rent Guidelines Board allowed increases of at least four percent for that entire period. Petitioner would also be entitled to a vacancy increase from the vacatur of the tenant prior to the exemption in 1991. Petitioner also registered in 2004 an IAI. This IAI could have been as little as $1,000.00 in improvements to support the increase to $746.33. Therefore, there is nothing presented by Respondent that shows an improper or defective registration prior to 2006.

Respondent's proposed second affirmative defense and first counterclaim is for overcharge. The first question the Court must address in analyzing an overcharge claim is to determine what law applies. In 2019, the legislature passed the Housing Stability and Tenant Protection Act of 2019 (the "HSTPA") which made significant changes to the law regarding overcharge claims. In Matter of Regina Metro. Co., LLC v. New York State Div. of Hous. & Community Renewal, the Court of Appeals addressed whether HSTPA was intended to have retroactive effect. 35 NY.3d 332 (2020). Given that Respondent's initial lease commenced in April 2020 after the HSPTA went into effect, the Court does not need to conduct any retroactivity analysis. See Matter of West Pierre Assoc. v. Harvey, 241 AD3d 413 (App. Div., 1st Dept. 2025). Respondent filed the instant motion which included a proposed amended answer on March 10, 2026, so the post-HSTPA look-back period for overcharge claims is to March 11, 2020 which predates Respondent's tenancy. See 9 NYCRR § 2526.7(h)(2)(i)(2). Absent fraud, the base date rent would be based on the last lease in effect prior to Respondent's tenancy which was a legal regulated rent of $2,728.05 and a preferential rent of $2,040.20  ³ . Respondent alleges two distinct categories of overcharge in his answer. The first is that his rent was increased from $2,050.00 under his lease from April 1, 2022 through March 31, 2023 to $2,148.37 under his lease from April 1, 2023 through March 31, 2024. This represents a 4.79% increase when Rent Guidelines Board Order #54 provided for a 3.25% increase for one-year leases signed between October 1, 2022 and September 30, 2023.⁴ This potential overcharge claim is for rent due entirely during the six-year lookback period allowed by the Rent Stabilization Code post-HSTPA.

The second category of overcharge is that there were unexplained rent increases in the DHCR rent history going as far back as 1992. Respondent argues that these unexplained increases are evidence of a colorable claim of fraud sufficient to go beyond the six-year lookback period. Petitioner argues that the overcharge claims are conclusory or speculative citing Individual Apartment Improvements ("IAI") in 2004, 2013, and 2021. However, Petitioner does not present any evidence to support these claims other than the reference in the DHCR rent history to an IAI in 2004. There is a reference to Major Capital Improvements ("MCI") in 2013 and 2021, not IAIs as indicated by Petitioner. Regardless, the DHCR Rent History does not show any IAIs or MCIs in 2005-06 when the legal regulated rent went from $746.33 to $1,434.00.

Much has been written regarding what constitutes a colorable claim of fraud sufficient to go beyond the six-year lookback period. Prior to passage of the HSTPA, the standard was based on decisions by the Court of Appeals in Thornton v. Baron, 800 N.Y.S.2d 118 (2005), Matter of Grimm v. State of New York Div. of Hous. & Community Renewal Off. of Rent Admin., 912 N.Y.S.2d 491 (2010), and Conason v. Megan Holding, LLC, 25 NY3d 1 (2015). In interpreting the potential retroactive impact of the HSPTA, the Court of Appeals in Regina indicated in a footnote that more was required to show fraud. 35 NY3d at 356. This triggered a flurry of court decisions and a new law passed by the legislature revising the fraud requirements the end result being a return to the pre-HSTPA standard employed in Thornton, Grimm and Conason  ⁵ .

Grimm discussed three categories of factors to consider when determining whether there is sufficient evidence to establish a colorable claim of fraud: 1) whether the tenant alleges circumstances that indicate landlord's violation of the Rent Stabilization Law ("RSL") or Rent Stabilization Code ("RSC"); 2) whether the evidence indicates a fraudulent scheme to remove the rental unit from rent regulation; and 3) the rent registration history is inconsistent with the lease history. See Matter of Pehrson v. Division of Hous. & Community Renewal of the State of NY, 946 N.Y.S.2d 68 (Sup. Ct., NY Cty. 2011). Grimm indicated that it was a combination of these factors, rather than requiring all of these factors, in order to determine whether a colorable claim of fraud has been established. 15 NY3d at 366.

Considering the first factor, Respondent cites to the DHCR rent history to demonstrate potential violations of the RSL or RSC. First, Petitioner registered the Subject Premises as exempt for the period from 1992-2003 without providing a basis for the exemption. Petitioner does not provide any explanation for this in its opposition. Second, Petitioner took a rent increase from $746.33 to $1,434.00 in 2005-06 that is not explained in the rent history. Notably, Petitioner points to an IAI in 2004 and MCIs in 2013 and 2021. The DHCR registration does not indicate an IAI or MCI. Instead it merely states there was a vacancy lease. Petitioner does not claim in its opposition that there was an IAI or MCI at that time that would explain the increase far beyond what would be allowed for a vacancy increase. As noted above, there is nothing in the rent history that shows any defective or improper rent registrations prior to 2006.

Considering the second factor, Petitioner never reached the threshold for deregulation for the Subject Premises, however Petitioner came close several times  ⁶ . Further, Petitioner has offered a preferential rent every year since the large unexplained rent increase in 2006. Several courts have held that the use of preferential rents can also be a factor in determining that the landlord was attempting a fraudulent scheme to deregulate by using the preferential rents to disguise improper increases in the legal regulated rent. See 3225 Holdings LLC v. Imeraj, 119 N.Y.S.3d 392 (Civ. Ct., Bronx Cty. 2019); 560 Audobon Realty Inc. v. Rodriguez, 55 N.Y.S.3d 692 (Civ. Ct., NY Cty. 2017).

The third factor is irrelevant at present as Respondent does not have leases for the period prior to his tenancy. Discovery as to those leases will be addressed below. However, in considering all three factors in their totality, Respondent has presented enough indicia of fraud to determine that its overcharge defense is not palpably devoid of merit.

The second counterclaim in Respondent's proposed amended answer seeks a lease at the proper regulated rent and amended rent registrations. Housing Court is a court of limited jurisdiction and does not have the power to issue injunctive or declaratory relief. See Park v. Howard Ave. Realty, LLC, 56 Misc 3d 15 (App. Term, 2nd Dept. 2017); see also Jamaica Seven, LLC v. Villa, 67 Misc 3d 138(A)(App. Term, 2nd Dept. 2020)("The branch of occupant's motion seeking to direct landlord to offer a renewal lease without a vacancy increase must be dismissed, as the Civil Court lacks jurisdiction to grant that branch of the motion, which seeks injunctive relief."). Given that this counterclaims seeks relief that this Court does not have the authority to issue, the counterclaim is patently devoid of merit.

The proposed third affirmative defense and third counterclaim seeks a determination that the last reliable registered rent is either the $474.00 registered in 1991 or the $746.33 registered in 2005  ⁷ . Such a determination is necessary for the court to determine Respondent's first and second affirmative defenses and first counterclaim and is thus largely redundant. As noted above, the Court only has the jurisdiction to determine what the rent should be in order to determine: 1) whether Petitioner has a valid claim for rent due; and 2) whether Respondent has a valid overcharge claim. Once that is determined, the Court can then determine the amount owed, if any, under such claims. The Court cannot require that Petitioner offer new leases, amend registrations, etc. Thus Respondent's third counterclaim is stricken.

Respondent's fourth affirmative defense and fourth counterclaim states "In the alternative, if the Court does not find that the most reliable rent is the $474.00 registered in 1991 and/or $746.33 registered in 2005, the Court should find that Mr. Millan should not pay rent nor use and occupancy until the rent is properly registered and filed." This defense/counterclaim is palpably devoid of merit. First, if Respondent cannot prove that the 1991 or 2005 rent amounts are the last reliable rent, then there will be nothing improper about the rent that needs to be amended. Therefore, the fourth affirmative defense and fourth counterclaim lack merit.

In summary, that portion of Respondent's motion which sought leave to file an amended answer is granted to the extent of allowing all defenses and counterclaims except the fourth affirmative defense and second through fourth counterclaims.

The Court will now address that portion of Respondent's motion that seeks discovery. Discovery is not available as a matter of right in a summary proceeding. Leave of court is required. CPLR § 408. Upon seeking such leave, the movant must demonstrate ample need for discovery. New York University v. Farkas, 121 Misc 2d 643 (Civ. Ct., NY Cty. 1983). See also, 86 West Corp. v. Singh, 2007 NY Misc. Lexis 8544 (Civ. Ct., NY Cty. 2007). Among the factors considered by the court in determining if ample need has been shown are: (1) whether the moving party has asserted necessary facts to establish a viable cause of action or defense; (2) whether the information sought is directly related to the cause of action or defense; (3) whether the discovery request is, or can be, carefully tailored to clarify disputed facts; and (4) whether a party would be prejudiced by the grant of discovery and, if so, whether the prejudice can be alleviated. New York University v Farkas, supra.

Furthermore, pursuant to CPLR § 3103(a),

"[t]he court may at any time on its own initiative, or on motion of any party or of any person from whom discovery is sought, make a protective order denying, limiting, conditioning or regulating the use of any disclosure device. Such order shall be designed to prevent unreasonable annoyance, expense, embarrassment, disadvantage, or other prejudice to any person or the courts."

As such, the court may structure discovery orders in a manner that protects the interests of all parties and elicits relevant information directly related to the issues before the court. Parrallax 109 Partners LLC v. Molina, 2002 NY Slip Op 50296U (App. Term, 1st Dept. 2002). Discovery requests that are irrelevant, overly broad, unduly burdensome and/or which seek documents that are not in the exclusive control of the party from which discovery is sought will not be granted. Law Offices of Binder & Binder, P.C. v. O'Shea, 44 AD3d 626 (App. Div., 2nd Dept. 2007); 244 Madison LLC v. Pearson, 2005 NY Misc. Lexis 3326 (Civ. Ct., Kings Cty. 2005); Center for Behavioral Health Services v. Bock, 18 Misc 3d 1111A (Civ. Ct., Kings Cty. 2008); Theodoli v. 170 East 77th LLC, 24 Misc 3d 1103 (Sup. Ct. NY Cty. 2009).

Petitioner first argues that Respondent is not entitled to discovery because they have not sufficiently plead fraud to allow going back beyond the six-year lookback period. As noted above, Respondent has alleged sufficient indicia of fraud to assert a defense of overcharge and go beyond the six-year lookback period provided by the HSPTA. Regardless, the HSPTA amended NYC Admin Code 26-516 to add section H which provides: The division of housing and community renewal, and the courts, in investigating complaints of overcharge and in determining regulated rents, shall consider all available rent history which is reasonably necessary to make such determinations, including but not limited to (i) any rent registration or other records filed with the state division of housing and community renewal, or any other state, municipal or federal agency, regardless of the date to which the information on such registration refers; (ii) any order issued by any state, municipal or federal agency; (iii) any records maintained by the owner or tenants; and (iv) any public record kept in the regular course of business by any state, municipal or federal agency. Nothing contained in this subdivision shall limited the examination of rent history relevant as to a determination as to: (i) whether the legality of a rental amount charged or registered is reliable in light of all available evidence including but not limited to whether an unexplained increase in the registered or lease rents, or a fraudulent scheme to destabilize the housing accommodation, rendered such rent or registration unreliable . . . "

Based on this statute, Respondent would be entitled to discovery going back beyond the six-year statute of limitations based on either an unexplained rent increase or a fraudulent scheme to deregulate or both. Here, Respondent has effectively plead both and thus meets the first prong of the Farkas test. As noted above, there is no unexplained rent increase prior to 2006. Petitioner is entitled under the RSC and RSL to rent increases that explain the rent increase from $474.00 in 1991 to $746.33 in 2004 despite the exempt status for that period.

Petitioner next argues that Respondent's discovery demands are not narrowly tailored to clarify disputed facts. Here Petitioner is somewhat correct. Respondent seeks three different forms of discovery: 1) deposition; 2) interrogatories; and 3) document demands. The Court will first address Respondent's Proposed Notice for the Production of Documents (the "Document Demand") which was filed as Exhibit C to Respondent's motion. As an initial matter, the Document Demand seeks records from either January 1, 1991 to present or January 1, 2003 to present. In light of the Court's determination above that Respondent has pleaded defenses of improper rent and overcharge going back to when Petitioner took an unexplained rent increase from $746.33 to $1,434.00, Respondent is entitled to discovery going back to 2006. Petitioner has not provided any explanations or evidence to justify denying Respondent from asking for documents going back that far.

Respondent's Document Demand only seeks five  ⁸ categories of documents: 1) leases and lease renewals for the Subject Premises; 2) orders and/or documents related to J51 covered periods; 3) records showing the amounts charged and collected for the Subject Premises; 4) records of IAIs for the Subject Premises; and 5) DHCR orders for the Subject Premises. These documents are all directly related to the unexplained increases in the DHCR rent history and thus are likely to clarify disputed facts.

Respondent next seeks Interrogatories  ⁹ as part of his discovery request. These interrogatories are extraordinarily broad and seek information well beyond the scope of Respondent's amended defenses. For example, Respondent's first interrogatory seeks the "names of every person who has lived at the subject building from 2013 to present and indicate for each person where in the premises they resided, the dates of their occupancy, whether they paid rent and the rent amount charged." Respondent does not provide any reasoning why this information would clarify the issues regarding whether Respondent was charged an improper rent or was overcharged for the Subject Premises. Another interrogatory provides: "state any violations cited by any government agency, local, state, or federal in relation to the subject premises from 1991 to present." First, the interrogatory does not specify what type of violations it seeks information regarding. Second, any violations issued by a government agency would be public record and could be obtained by Respondent without an interrogatory. Without going into all of the specific interrogatories, the Court finds that they are not in any way narrowly tailored to clarify disputed facts and appear to be nothing more than a fishing expedition.

Finally, Respondent seeks a deposition. Respondent does not indicate who it wishes to depose except to say that it should be "a person with knowledge the claims and defenses in this proceeding . . . "¹⁰ Again, this is not in any way narrowly tailored to clarify disputed facts. In summary, while Respondent has shown ample need for discovery, only the Document Demand was narrowly tailored to clarify disputed facts. Therefore, that portion of Respondent's motion that sought discovery is granted only to the extent of requiring that Petitioner respond to the Document Demand. Respondent shall amend the Document Demand filed as Exhibit C to Respondent's motion to: 1) indicate that documents are sought for the period of January 1, 2006 to present; and 2) correct the duplicate numbering of the categories of documents demanded.

In summary, Respondent's motion is granted to the following extent: 1) Respondent's motion to amend the answer is granted except that the fourth affirmative defense and second through fourth counterclaims are stricken; 2) Respondent's motion seeking leave to conduct discovery is granted only to the extent of granting leave to serve the Document Demand.

Respondent shall file the amended answer (with the stricken defenses/counterclaims removed) to NYSCEF. Respondent shall amend the proposed Document Demand and serve a copy on Petitioner by filing to NYSCEF within ten days of this Decision/Order. As per the Document Demand, Petitioner shall have twenty days to respond with the requested documents and/or provide a Jackson Affidavit detailing its search and the absence of unavailability of the documents requested. See Jackson v. New York, 185 AD2d 768, 770 (App. Div., 1st Dept. 1992). Respondent shall also file notice of entry of this Decision/Order on Petitioner by filing to NYSCEF within ten days. Parties shall appear on the previously scheduled September 24, 2026 adjourn date for all purposes.

This constitutes the Decision and Order of the Court.

Dated: August 11, 2026

Queens, New York

Hon. Kimon C. Thermos, JHC

FOOTNOTES

1.   See DHCR Rent History (NYSCEF #15)

2.   Or Petitioner's predecessor in interest

3.   See DHCR Rent History (NYCEF #15)

4.   NYSCEF #14

5.   For a more detailed discussion of the evolution of the fraud standard post-HSTPA, see Judge Bacdayan's thorough analysis in 650 Crown Equities, LLC v. Sealey, 2026 NY Slip Op 26051 (Civ. Ct., Kings Cty. 2026)

6.   The legal regulated rent was $1,893.00 beginning July 1, 2011 when the threshold was increased from $2,000.00 to $2,500.00. The legal regulated rent was $2,687.73 beginning October 1, 2017 when the threshold was $2,700.00.

7.   . Respondent requests in the alternative that if the Court determines that those rents were proper, that Respondent is entitled to his preferential rent for the duration of his tenancy. However, all rent increases since the inception of Respondent's tenancy have been based off the preferential rent in Respondent's initial lease except for the increase in 2023 that sought a 4.79% increase instead of the 3.25% allowed by the RGB. The rent sought in the Petition is based off the continued preferential rent.

8.   Two of the five categories are labeled as #2

9.   Exhibit H, NYSCEF #18

10.   Exhibit G, NYSCEF #17

Kimon C. Thermos, J.