BHAWAN 330 REALTY LLC v. BRIONES (2025)

ORDERED that the order, insofar as appealed from, is affirmed, without costs.

In this nonpayment proceeding commenced in 2020, the petition alleged that the subject apartment is rent stabilized and sought possession based upon unpaid monthly rent of $1,037.46 from October 2019 to January 2020. Tenant answered, asserting five affirmative defenses and four counterclaims, which landlord moved to dismiss pursuant to CPLR 3211 (b) and 3211 (a) (7), respectively. In an order dated November 2, 2023, the Civil Court (Julie Poley, J.) granted the branches of landlord's motion seeking to dismiss the first four affirmative defenses and the first three counterclaims, characterizing the first three affirmative defenses and first three counterclaims as “sound[ing] in overcharge,” and finding that tenant did not identify substantial evidence of fraud. Tenant moved for leave to reargue his opposition to landlord's motion, adopting the Civil Court's characterization of the first three affirmative defenses and counterclaims. By order dated December 20, 2023, insofar as appealed from and as limited by the brief, the Civil Court (Julie Poley, J.), upon reargument, adhered to so much of its prior order as granted the branches of landlord's motion seeking to dismiss the first three affirmative defenses and counterclaims, which “sounded in overcharge.”

When reviewing a motion to dismiss a counterclaim pursuant to CPLR 3211 (a) (7), the motion court must afford the pleading a liberal construction, accept the alleged facts as true, and give the nonmoving party the benefit of every inference (see Shah v Mitra, 171 AD3d 971 [2019]; Wells Fargo Bank, N.A. v Rios, 160 AD3d 912 [2018]). “Dismissal ․ is warranted if the [party] fails to assert facts in support of an element of the claim, or if the factual allegations and inferences to be drawn from them do not allow for an enforceable right of recovery” (Connaughton v Chipotle Mexican Grill, Inc., 29 NY3d 137, 142 [2017]). “On a motion pursuant to CPLR 3211 (b), the court should apply the same standard it applies to a motion to dismiss pursuant to CPLR 3211 (a) (7), and the factual assertions of the defense will be accepted as true” (Wells Fargo Bank, N.A. v Rios, 160 AD3d at 913). “[I]f there is any doubt as to the availability of a defense, it should not be dismissed” (Shah v Mitra, 171 AD3d at 974, quoting Wells Fargo Bank, N.A. v Rios, 160 AD3d at 913).

The overcharge affirmative defenses and counterclaims at issue are predicated on alleged conduct predating the enactment of the Housing Stability and Tenant Protection Act of 2019 (“HSTPA”). Thus, contrary to tenant's argument on appeal, the HSTPA does not apply (see Regina Metro. Co., LLC v New York State Div. of Hous. & Community Renewal, 35 NY3d 332 [2020]). Applying the law in effect prior to the HSTPA, we are precluded from examining the subject apartment's rental history more than four years before the answer was interposed, unless tenant has “made a colorable claim of fraud by identifying substantial indicia, i.e., evidence, of a landlord's fraudulent deregulation scheme to remove an apartment from the protections of rent stabilization” (id. at 355 [internal quotation marks omitted]). The Civil Court found that tenant did not identify substantial evidence of fraud. Tenant argues on appeal that he has made such a colorable claim.

Tenant bases his argument on allegations that landlord's predecessor improperly increased the previous tenant's vacancy rent in 2001 from $408.68 to $650 due to alleged individual apartment improvements despite no visible improvements, failed to register the apartment for numerous years while tenant resided there, failed to execute leases for the majority of his tenancy, and registered the apartment for amounts that did not match the few leases executed (and when no leases were executed) while collecting periodic increases. However, tenant fails to allege that the increases he paid exceeded the permissible increases promulgated by the Rent Guidelines Board; his vacancy rent was $800 in 2005 (a 16.1 percent increase over the previous registered rent) and, as of 2019, the registered rent had increased to only $1,037.46. Tenant's rent has never approached the deregulation threshold, which threshold increased from $2,000 to $2,500 to $2,700 since tenant moved into the subject apartment in 2005 (see 326 Starr, LLC v Martinez, 74 Misc 3d 77 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2021]). Nor has tenant ever alleged that landlord's predecessor misrepresented the rent-stabilized status of the apartment. Thus, even accepting all of tenant's allegations as true, they do not amount to a fraudulent scheme to deregulate the subject apartment, and therefore tenant's arguments on appeal lack merit (see CPLR 3211 [a] [7], [b]).

Accordingly, the order, insofar as appealed from, is affirmed.

BUGGS and OTTLEY, JJ., concur. MUNDY, J.P., taking no part.