KOZAK v. KUSHNER VILLAGE 329 EAST 9TH STREET LLC (2024)

Order, Supreme Court, New York County (David B. Cohen, J.), entered on or about November 10, 2022, which denied plaintiffs' motion for class certification and granted defendants' cross-motion for summary judgment dismissing the complaint, unanimously modified, on the law, the motion granted, and the cross-motion denied with respect to the first, second, fourth, and fifth causes of action, and so much of the third cause of action as is asserted by plaintiffs Michael Maher and Ana Sussmann, and otherwise affirmed, without costs.

Supreme Court properly granted summary judgment dismissing plaintiffs Andrew Kozak, Daniel Porvin, Darla Stachecki, and Monique Safford's claims for breach of the warranty of habitability (third cause of action).  “Civil Court has jurisdiction of landlord tenant disputes and when it can decide the dispute ․, it is desirable that it do so” (Post v. 120 E. End Ave. Corp., 62 N.Y.2d 19, 28, 475 N.Y.S.2d 821, 464 N.E.2d 125 [1984] [internal citation omitted]).  Here, defendants submitted evidence demonstrating that plaintiffs previously raised these claims as a defense in now-resolved nonpayment proceedings in Civil Court and plaintiffs may not relitigate them here.  However, we agree with plaintiffs' contention that the court should not have dismissed Maher and Sussman's claims for breach of the warranty of habitability because no evidence was presented that defendant Kushner commenced Civil Court proceedings against them.  The third cause of action is therefore dismissed except for Maher and Sussman's claims.

Plaintiffs' request for a declaration that the temporary certificates of occupancy (TCOs) that Kushner obtained for the buildings where plaintiffs live are illegal (first cause of action) should not have been dismissed on the ground that they had failed to exhaust administrative remedies.  Multiple Dwelling Law § 301(4) states that a TCO “shall not extend, together with [any] renewals, beyond a total period of two years from the date of its original issuance.”  Here, plaintiffs challenge the renewal of defendants' TCOs on the ground that they were originally issued in 2015 and have been renewed ever since, well beyond the two-year maximum set forth in the statute.  Supreme Court concluded that the claim should have been raised in the first instance before the Department of Buildings (DOB) based on the well-settled principle that “[a] litigant who seeks to challenge a determination of an administrative agency must exhaust all possibilities of obtaining relief through administrative channels before appealing to the courts” (Matter of Frumoff v. Wing, 239 A.D.2d 216, 217, 657 N.Y.S.2d 646 [1st Dept. 1997]).

However, “[t]he exhaustion rule ․ need not be followed ․ when an agency's action is challenged as ․ wholly beyond its grant of power” (Watergate II Apts. v. Buffalo Sewer Auth., 46 N.Y.2d 52, 57, 412 N.Y.S.2d 821, 385 N.E.2d 560 [1978]).  A declaratory judgment action challenges an agency's determination as wholly beyond its grant of power where, “although the agency's general authority to act on the plaintiff [is] unquestioned, the plaintiff contend[s] that the agency had purported to exercise that authority in a manner beyond its statutory power” (Bankers Trust Corp. v. New York City Dept. of Fin., 301 A.D.2d 321, 328, 750 N.Y.S.2d 29 [1st Dept. 2002], citing Watergate II. Apts., 46 N.Y.2d at 58, 412 N.Y.S.2d 821, 385 N.E.2d 560).  Conversely, a challenge that an agency's exercise of its duly granted authority was tainted by factual or mathematical errors, or was otherwise arbitrary, capricious or irrational, is subject to the exhaustion rule (see id.).  In the present case, plaintiffs are clearly challenging DOB's determination to extend the TCOs beyond the two-year limit set forth in the statute as wholly beyond its grant of power.  They are not challenging that DOB is vested with the general authority to renew TCOs or that the exercise of its duly granted authority was tainted by factual or mathematical errors or was otherwise arbitrary, capricious or irrational (see id.).  Therefore, inasmuch as this is purely a matter of interpretation of the plain language of the statute, without any substantive factual dispute involved, the exhaustion rule does not apply and plaintiffs' claim for a declaratory judgment should not have been dismissed (see id. at 327–328, 750 N.Y.S.2d 29;  see also Matter of Herberg v. Perales, 180 A.D.2d 166, 585 N.Y.S.2d 1 [1st Dept. 1992]).  We note that DOB is not a party to this litigation and has not had an opportunity to be heard on any of the issues in this case.

Plaintiffs' request for injunctive relief (second cause of action) should not have been dismissed based on (Balay v. Manhattan 140 LLC, 204 A.D.3d 491, 167 N.Y.S.3d 62 [1st Dept. 2022]).  Unlike Balay, the case at bar does not present a situation where “the plaintiff would receive the ultimate relief sought, pendente lite” (id. at 494, 167 N.Y.S.3d 62 [internal quotation marks omitted]).  Moreover, when the motion court said plaintiffs cited no authority for the proposition that the renewal of the TCOs was illegal, it overlooked the complaint's citation of Multiple Dwelling Law § 301(4).

In their opening papers at nisi prius defendants made no specific arguments with respect to the fourth and fifth causes of action;  thus, they failed to make a prima facie case that they were entitled, as a matter of law, to judgment dismissing those claims.

Because the court granted defendants' cross-motion, it did not consider whether plaintiffs had satisfied the requirements of CPLR 901(a) and 902.  We find that they have done so;  therefore, we grant their motion for class certification.

With respect to numerosity, “[t]he legislature contemplated classes involving as few as 18 members” (Hoffman v. Fort 709 Assoc., L.P., 204 A.D.3d 516, 517, 164 N.Y.S.3d 818 [1st Dept. 2022];  see also Borden v 400 E. 55th St. Assoc., L.P., 24 N.Y.3d 382, 399, 998 N.Y.S.2d 729, 23 N.E.3d 997 [2014];  CPLR 901[a][1]).  This case involves 35 residential and 5 commercial units;  plaintiffs believe there are at least 40 class members, which satisfies the requirement (see also Caesar v. Chemical Bank, 118 Misc.2d 118, 121, 460 N.Y.S.2d 235 [Sup. Ct., N.Y. County 1983] [certifying class of 38 members], affd 106 A.D.2d 353, 483 N.Y.S.2d 16 [1st Dept. 1984], mod on other grounds 66 N.Y.2d 698, 496 N.Y.S.2d 418, 487 N.E.2d 275 [1985]).

Except for part of the breach of the warranty of habitability, which involves issues in individual plaintiffs' apartments as well as building-wide issues, this case is about problems that are common to all four buildings where plaintiffs reside.  Hence, commonality is present (see Simon v. Cunard Line, 75 A.D.2d 283, 289, 428 N.Y.S.2d 952 [1st Dept. 1980];  CPLR 901[a][2]).

The typicality requirement is satisfied “[i]f it is shown that a plaintiff's claims derive from the same practice or course of conduct that gave rise to the remaining claims of other class members and is based upon the same legal theory” (Pludeman v. Northern Leasing Sys., Inc., 74 A.D.3d 420, 423, 904 N.Y.S.2d 372 [1st Dept. 2010] [internal quotation marks omitted];  CPLR 901[a][3]).  Plaintiffs made such a showing.

“The factors to be considered in determining adequacy of representation are whether any conflict exists between the representative and the class members, the representative's familiarity with the lawsuit and his or her financial resources, and the competence and experience of class counsel” (Ackerman v. Price Waterhouse, 252 A.D.2d 179, 202, 683 N.Y.S.2d 179 [1st Dept. 1998];  CPLR 901[a][4]).  The only factor that the named plaintiffs might not satisfy is financial resources.  However, their counsel submitted an affirmation stating that they (counsel) are bearing the costs of this action.  “Certification has been granted where a responsible third party has agreed to bear the costs for plaintiff” (Brandon v. Chefetz, 106 A.D.2d 162, 170, 485 N.Y.S.2d 55 [1st Dept. 1985]).

As for superiority, “[t]he public benefit of the class action remedy has been described as a means of inducing socially and ethically responsible behavior on the part of large and wealthy institutions which will be deterred from carrying out policies or engaging in activities harmful to large numbers of individuals” (Weinberg v. Hertz Corp., 116 A.D.2d 1, 5, 499 N.Y.S.2d 693 [1st Dept. 1986] [internal quotation marks omitted], affd 69 N.Y.2d 979, 516 N.Y.S.2d 652, 509 N.E.2d 347 [1987];  CPLR 901[a][5]).  “Without the benefit of the class action, these institutions could act with impunity” (Pruitt v. Rockefeller Ctr. Props., Inc., 167 A.D.2d 14, 24, 574 N.Y.S.2d 672 [1st Dept. 1991]).  That is the case here – defendants did not finish the installation of the sprinkler system until plaintiffs brought the instant action.

Finally, the CPLR 902 factors have been satisfied.  Furthermore, “the Legislature intended article 9 to be a liberal substitute for the narrow class action legislation which preceded it” (City of New York v. Maul, 14 N.Y.3d 499, 509, 903 N.Y.S.2d 304, 929 N.E.2d 366 [2010]).