GOURIN v. 72A REALTY ASSOCIATES (2024)

Order, Supreme Court, New York County (Paul A. Goetz, J.), entered July 27, 2023, which granted defendant landlord's motion to dismiss the complaint seeking a declaration that plaintiff's apartment is rent stabilized, treble damages for rent overcharges, and attorneys’ fees, unanimously modified, on the law, to the extent of declaring that plaintiff's apartment is not rent stabilized, and otherwise affirmed, without costs.

Supreme Court correctly held that the apartment at issue is not rent stabilized based on documentary evidence, submitted with defendant's motion to dismiss, establishing a defense to the claim for declaratory relief as a matter of law.  The documents show that individual apartment improvements (IAIs) were performed in the apartment after a prior tenant moved out in the year 2000 (CPLR 3211[a][1];  see Leon v. Martinez, 84 N.Y.2d 83, 88, 614 N.Y.S.2d 972, 638 N.E.2d 511 [1994];  Dixon v. 105 W. 75th St. LLC, 148 A.D.3d 623, 626–628, 53 N.Y.S.3d 1 [1st Dept. 2017]).  Here, “defendant ‘sufficiently documented the apartment improvements’ by proffering ․ invoices [and] checks showing payment of all the sums charged” that were contemporaneous with the work (Sandlow v. 305 Riverside Corp., 201 A.D.3d 418, 420, 159 N.Y.S.3d 415 [1st Dept. 2022], quoting Matter of Park v. New York State Div. of Hous. & Community Renewal, 150 A.D.3d 105, 115, 50 N.Y.S.3d 377 [1st Dept. 2017]).  Contrary to plaintiff's contention, the documents describe in substantial detail the work performed, including, among other things, a complete kitchen renovation, replacement of woodwork such as windowsills, baseboard, and crown molding, and the addition of a new closet (compare Nolte v. Bridgestone Assoc. LLC, 167 A.D.3d 498, 499, 90 N.Y.S.3d 159 [1st Dept. 2018];  Matter of Pechock v. New York State Div. of Hous. & Community Renewal, 253 A.D.2d 655, 655, 677 N.Y.S.2d 554 [1st Dept. 1998]).  The resulting allowable rent increases applicable to the tenant who moved into the unit in December 2000 raised the rent t0 above $2,000 per month (see former 9 NYCRR 2520.11[r][4], [r][10][i];  former 9 NYCRR 2522.8).

Plaintiff correctly notes that the unit remained rent stabilized in 2000 because defendant's building was receiving J–51 tax benefits (see Roberts v. Tishman Speyer Props., L.P., 13 N.Y.3d 270, 281–287, 890 N.Y.S.2d 388, 918 N.E.2d 900 [2009];  see also Gersten v. 56 7th Ave. LLC, 88 A.D.3d 189, 198, 928 N.Y.S.2d 515 [1st Dept. 2011], appeal withdrawn 18 N.Y.3d 954, 944 N.Y.S.2d 482, 967 N.E.2d 707 [2012]).  However, once the J–51 benefits expired in 2003 and a new tenancy commenced in April 2004, “all the circumstances permitting luxury decontrol were present and satisfied” (Matter of Park, 150 A.D.3d at 108, 112–113, 50 N.Y.S.3d 377), and the apartment was “deregulated by operation of law” (Matter of Kreloff v. New York State Div. of Hous. & Community Renewal, 191 A.D.3d 531, 532, 138 N.Y.S.3d 333 [1st Dept. 2021], lv denied 37 N.Y.3d 915, 2021 WL 5898736 [2021]).

Plaintiff contends that the apartment nonetheless remained rent stabilized because defendant was required to correct its unit registrations after it erroneously registered the unit as exempt in 2001.  However, it was not until “March 2012” — almost nine years after the J–51 benefits expired — that “controlling authority ․ required that owners who had previously luxury decontrolled apartments while still receiving J–51 tax benefits must register those apartments and retroactively restore them to rent stabilization” (Matter of Park, 150 A.D.3d at 110, 50 N.Y.S.3d 377).  To the extent that defendant should have filed retroactive registration statements after 2012, there was no requirement to do so for more than the then-applicable “four-year statutory lookback period” (Sandlow, 201 A.D.3d at 419, 159 N.Y.S.3d 415, citing former CPLR 213–a and former Administrative Code of City of N.Y. § 26–516[a][2]).  Further, contrary to plaintiff's contention, “rent freezing is inapplicable in Roberts cases where the failure to timely register resulted directly from DHCR's endorsement of a misunderstanding of the law,” which is the case here (Matter of Regina Metro. Co., LLC v. New York State Div. of Hous. & Community Renewal, 35 N.Y.3d 332, 358 n 9, 130 N.Y.S.3d 759, 154 N.E.3d 972 [2020];  see Administrative Code of City of N.Y. § 26–517[e]).

Supreme Court properly dismissed plaintiff's claims for rent overcharges and attorneys’ fees as the apartment is not rent stabilized;  plaintiff is thus not a prevailing party (CPLR 3211[a][1],[7];  see Administrative Code of City of N.Y. § 26–516[a];  Real Property Law § 234[1]).

We modify to the extent indicated “because it was error to dismiss plaintiff's [first] cause of action seeking declaratory relief on the basis that plaintiff is not entitled to the declaration sought.  The proper course is to issue a declaration” (644 BRDY Realty Inc. v. Bleecker Tower Tenants Corp., 149 A.D.3d 538, 539, 53 N.Y.S.3d 31 [1st Dept. 2017], citing Lanza v. Wagner, 11 N.Y.2d 317, 334, 229 N.Y.S.2d 380, 183 N.E.2d 670 [1962], cert denied 371 U.S. 901, 83 S.Ct. 205, 9 L.Ed.2d 164 [1962];  accord Maurizzio v. Lumbermens Mut. Cas. Co., 73 N.Y.2d 951, 954, 540 N.Y.S.2d 982, 538 N.E.2d 334 [1989]).

We have considered plaintiff's remaining contentions and find them unavailing.