NOLTE v. BRIDGESTONE ASSOCIATES LLC (2018)

Order, Supreme Court, New York County (Kathryn E. Freed, J.), entered October 5, 2017, which, insofar as appealed from as limited by the briefs, declared that plaintiff is the rent-stabilized tenant of the subject apartment and is entitled to money damages, including treble damages, for a rent overcharge, and imposed a freeze on the rent determined as the base date rent until corrected registration statements were filed with the Division of Housing and Community Renewal (DHCR), unanimously affirmed, with costs.

The court properly examined the rental history of the subject apartment beyond the four-year statutory limitations period (CPLR 213–a) upon finding that defendant was engaged in a fraudulent scheme to deregulate apartments (see Matter of Park v. New York State Div. of Hous. & Community Renewal, 150 A.D.3d 105, 114–115, 50 N.Y.S.3d 377 [1st Dept. 2017], lv dismissed 30 N.Y.3d 961, 64 N.Y.S.3d 662, 86 N.E.3d 555 [2017] ).  The record shows that defendant failed to promptly register the apartment and 30 other apartments in the building as rent-stabilized in March 2012, when the applicability of Roberts v. Tishman Speyer Props., L.P., 13 N.Y.3d 270, 890 N.Y.S.2d 388, 918 N.E.2d 900 (2009) was clear (see Matter of Park, 150 A.D.3d at 110, 50 N.Y.S.3d 377).

Moreover, defendant failed to raise an issue of fact as to whether the rent was improperly increased between 1999 and 2000 based on false claims of individual apartment improvements.  While defendant was not the owner at that time, it submitted no evidence that controverted plaintiff's expert's affidavit stating that there was no evidence of such improvements.

Defendant argues that its conduct was not willful, because DHCR failed to issue revised policy guidelines for several years following the Roberts decision, and that therefore treble damages are not warranted.  However, as indicated, the court correctly found that defendant had engaged in fraud (see Altschuler v. Jobman 478/480, LLC., 135 A.D.3d 439, 441, 22 N.Y.S.3d 427 [1st Dept. 2016], lv denied 29 N.Y.3d 903, 2017 WL 1169209 [2017] ).

Defendant contends that the court improperly froze plaintiff's rent at the rent it determined as the base date rent until such time as revised registrations were filed with DHCR. However, Rent Stabilization Code (RSC) (9 NYCRR) § 2528.4 provides that an owner who filed an improper rent registration is barred from collecting rent in excess of the base date rent, and is retroactively relieved of that penalty upon the filing of a proper registration only when the increases were lawful except for the failure to file a timely registration (see Matter of 215 W 88th St. Holdings LLC v. New York State Div. of Hous. & Community Renewal, 143 A.D.3d 652, 653, 40 N.Y.S.3d 92 [1st Dept. 2016], lv dismissed 30 N.Y.3d 1016, 66 N.Y.S.3d 227, 88 N.E.3d 388 [2017] ).  That is not the case here.

We have considered defendant's remaining arguments and find them unavailing.

Plaintiff argues, citing certain 2014 amendments to the RSC, that the legal regulated rent should be based on the rent for a comparable rent-stabilized apartment on the date on which she became the tenant, rather than on the base date.  She offers no authority for adopting this new formulation.