HAYGOOD v. PRINCE HOLDINGS 2012 LLC (2020)

Order, Supreme Court, New York County (Kathryn E. Freed, J.), entered August 7, 2018, which, to the extent appealed from as limited by the briefs, (i) granted, in part, plaintiff's motion for summary judgment as to liability on his rent stabilization overcharge claim, and (ii) denied, in part, defendants' cross motion to dismiss or for summary judgment on plaintiff's General Business Law (GBL) § 349 and New York City Consumer Protection Law claims, as well as on all claims against the individual defendants, except as to defendant Donovan, for failure to state a cause of action, unanimously modified, on the law, to grant defendants' cross motion to dismiss the GBL §§ 349 and New York City Consumer Protection Law claims, and otherwise affirmed, without costs.

Plaintiff demonstrated that the rent increases attributable to the vacancy and individual apartment improvements (IAIs) in his apartment prior to his tenancy did not raise the rent above the then-applicable $2,500 high-rent vacancy deregulation threshold (see former Administrative Code of City of N.Y. § 26–504.2; 9 NYCRR 2520.11[r][10][i]). Specifically, defendants were required to, but did not, seek approval from the State Division of Housing and Community Renewal for their asserted building-wide electrical upgrade, under the regulations governing major capital improvements (MCI) (see Administrative Code § 26–511; 9 NYCRR 2522.4[a][2][i][a]-[d]). The IAI provisions apply only to improvements “provided in or to the tenant's housing accommodation” (9 NYCRR 2522.4[a][1]). Defendants failed to raise a triable issue of fact concerning what electrical work was provided to plaintiff's unit.

Contrary to defendants' contention, even if they were ineligible for an MCI increase due to having rewired the building within the applicable 25–year useful life period, this would not entitle them to split a building-wide cost evenly among all units as an IAI. In any event, their proffered evidence shows only that work was performed in the basement one or two years beforehand.

However, defendants' cross motion to dismiss the GBL §§ 349 and New York City Consumer Protection Law claims should have been granted. The rent overcharge claim at issue here is a private dispute between one landlord and one tenant and does not concern consumer-oriented conduct aimed at the public at large (see Collazo v. Netherland Prop. Assets LLC, 155 A.D.3d 538, 64 N.Y.S.3d 537 [1st Dept. 2017], mod on other grounds 35 N.Y.3d 987, 125 N.Y.S.3d 337, 149 N.E.3d 30 [2020]; Aguaiza v. Vantage Prop., LLC, 69 A.D.3d 422, 893 N.Y.S.2d 19 [1st Dept. 2010]; cf. 23 Realty Assoc. v. Teigman, 213 A.D.2d 306, 308, 624 N.Y.S.2d 155 [1st Dept. 1995] [permitting tenant's New York City Consumer Protection Law claims to proceed against real estate broker who advertised space in the building as rent-stabilized apartments, when in fact the building was a hotel]).

Finally, the motion to dismiss as against Steven Croman, Harriet Croman a/k/a Harriet Kahan (Kahan), and Oren Goldstein was properly denied. Croman and Kahan were allegedly owners of defendant Prince Holdings 2012 LLC (Prince) who used their domination of the company to commit a fraud or wrong against plaintiff (see Matter of Morris v. New York State Dept. of Taxation & Fin., 82 N.Y.2d 135, 141, 603 N.Y.S.2d 807, 623 N.E.2d 1157 [1993]; see also Conason v. Megan Holding, LLC, 25 N.Y.3d 1, 10–12, 18–19, 6 N.Y.S.3d 206, 29 N.E.3d 215 [2015] [allegation of willful rent overcharge]; Walling v. Holman, 858 F.2d 79, 81–82 [2d Cir.1988], cert denied 489 U.S. 1082, 109 S.Ct. 1537, 103 L.Ed.2d 842 [1989] [allegation of breach of implied warranty of habitability under Real Property Law § 235–b]). Goldstein was allegedly the managing agent of Prince who participated in the alleged fraudulent scheme (see People v. Apple Health & Sports Clubs, 80 N.Y.2d 803, 807, 587 N.Y.S.2d 279, 599 N.E.2d 683 [1992]; A–1 Check Cashing Serv. v. Goodman, 148 A.D.2d 482, 482, 538 N.Y.S.2d 830 [2d Dept. 1989]).