2904 ATLANTIC AVENUE LLC v. HOYTE (2026)

ORDERED that the appeal from the order entered March 7, 2024 is dismissed, as the portion of the order being appealed was superseded by the order entered July 3, 2024, made upon renewal and reargument; and it is further,

ORDERED that the order entered July 3, 2024, insofar as reviewed, is affirmed, without costs.

In this August 2022 nonpayment proceeding based upon arrears of $12,000.53, tenant interposed a counterclaim for overcharges from March 21, 2017 to March 21, 2023, the date of the answer. Tenant moved for summary judgment dismissing the petition and on her overcharge counterclaim from March 21, 2017, for a total of $284,686.82, including treble damages from June 15, 2017. In an order entered March 7, 2024, the Civil Court (Sergio Jimenez, J.) granted the branch of the motion seeking to dismiss the petition, granted the branch of the motion seeking a finding of liability on the overcharge counterclaim for the period after March 21, 2019, denied the branch of the motion seeking a finding of liability on the overcharge counterclaim for the period March 21, 2017 to March 21, 2019, and set the matter down for a hearing to determine the amount of damages, including whether there was any willfulness as necessary to award treble damages. Tenant appeals, as limited by her brief, from so much of the order as denied the branch of the motion seeking a finding of liability on the overcharge counterclaim for the period March 21, 2017 to March 21, 2019.

In an order dated July 3, 2024, the Civil Court (Sergio Jimenez, J.) granted tenant's motion for leave to renew and reargue the branch of her prior motion for summary judgment, which sought a finding of liability on her overcharge counterclaim for the period of March 21, 2017 to March 21, 2019, but adhered to its March 7, 2024 order.

Tenant's argument that the appropriate statute of limitations period for her claim is six years is based upon Part F of the of the Housing Stability and Tenant Protection Act of 2019 (HSTPA) (L 2019, ch 36, § 1, part F), effective June 14, 2019, which, insofar as is relevant here, changed the overcharge statute of limitations from four to six years and changed the period for which treble damages could be sought for willful overcharge from two years to six years (see CPLR 213-a; former CPLR 213-a; Rent Stabilization Law of 1969 [RSL] [Administrative Code of City of NY] § 26-516 [a]; former RSL § 26-516 [a]). Tenant's motion for renewal and reargument was, in part, based upon Rent Stabilization Code (RSC) (9 NYCRR) § 2526.7 (i) (2), promulgated on November 8, 2023, which was after tenant's original motion was filed but before the Civil Court rendered its decision thereon. The regulation provides that:

“Any recovery of overcharge penalties, including treble damages ․ shall be limited to the six years preceding the complaint, provided, however, that there shall be no recovery of treble damages for overcharges that occurred prior to June 15, 2017 and no recovery of damages for overcharges that occurred prior to June 15, 2015.”

The Civil Court held that RSC § 2526.7 (i) (2) was inconsistent with the finding in Matter of Regina Metro. Co., LLC v. New York State Div. of Hous. & Community Renewal, 35 N.Y.3d 332, 130 N.Y.S.3d 759, 154 N.E.3d 972 (2020) regarding the application of the new statute of limitations to overcharge claims that arose prior to the passage of the HSTPA, and did not apply it.

In Regina, 35 N.Y.3d 332, 130 N.Y.S.3d 759, 154 N.E.3d 972, the Court of Appeals conducted a detailed review of whether Part F of the HSTPA, which stated that it “shall take effect immediately and shall apply to any claims pending or filed on and after such date” (L 2019, ch 36, Part F, § 7), could be applied to four pending appeals in four cases, in which the claims for overcharges accruing as far back as 2005 were interposed between 2009 and 2015, prior to the enactment of the HSTPA. The application of Part F to those cases would have resulted in liability for overcharges that tenants claimed for the first time after the HSTPA's enactment in 2019, but accrued as far back as 2003. The Regina court concluded that this would unconstitutionally increase the scope of the landlords’ liability for past wrongs (Regina, 35 N.Y.3d 332, 130 N.Y.S.3d 759, 154 N.E.3d 972), and then broadly held that Part F could not “be applied retroactively to overcharges that occurred prior to [its] enactment” (Regina, 35 N.Y.3d at 363, 130 N.Y.S.3d 759, 154 N.E.3d 972). The Court, however, specifically did not “address the prospective application of any portion of the HSTPA” (id.).

The Regina Court did not consider the application of Part F to overcharge claims which, on the effective date of Part F of the HSTPA, (1) had already accrued (2) were not already pending before a court or New York State Division of Housing and Community Renewal (DHCR), and (3) were still viable—meaning the four-year statute of limitations had not yet run (see Hopkins v. Lincoln Trust Co., 233 N.Y. 213, 135 N.E. 267 [1922]; Denkensohn v. Ridgway Apts., 13 Misc.2d 389, 392, 180 N.Y.S.2d 144 [App. Term, 2d Dept. 1958]). However, citing Regina, the Appellate Division, First Department, has held that Part F is not applicable to such overcharge claims that had accrued, were not pending, and were still viable on June 14, 2019 (see Wise v. 1614 Madison Partners, LLC, 214 A.D.3d 550, 186 N.Y.S.3d 613 [2023]; Austin v. 25 Grove St. LLC, 202 A.D.3d 429, 162 N.Y.S.3d 342 [2022]). In Austin, the tenants interposed their overcharge claim in July 2020 (see Austin v. 25 Grove St. LLC, 2021 WL 3725598 [Sup. Ct., NY County 2021]), and the Appellate Division held that Part F was not applicable to the claims that had accrued before its effective date (see Austin, 202 A.D.3d at 430). In Wise, the tenants interposed their overcharge claim on May 27, 2022, and the Appellate Division similarly found that Part F did not apply, limiting the tenants to overcharges accruing in the prior four years, i.e., after May 27, 2018 (see Wise, 214 A.D.3d at 550).

DHCR reached a different conclusion with respect to overcharge claims that had accrued, but were not pending, on the effective date of Part F. On November 8, 2023, after Austin and Wise had been decided, DHCR promulgated RSC § 2526.7 (i) (2), allowing for the application of the statute of limitations provisions of Part F to claims that were not pending on its June 14, 2019 effective date, but were still viable on that date under the former four-year statute of limitations. The regulation is, however, inconsistent with the First Department's interpretation of Regina. Here, where the Appellate Division, Second Department, has not considered this specific issue and the regulation is inconsistent with the Appellate Division, First Department's interpretation of Regina, which, in turn, interpreted a statute, this court is bound by the interpretation adopted by the Appellate Division, First Department (see Mountain View Coach Lines v. Storms, 102 A.D.2d 663, 476 N.Y.S.2d 918 [1984]), as the regulation would therefore not have the force of law (cf. Matter of General Elec. Capital Corp. v. New York State Div. of Tax Appeals, Tax Appeals Trib., 2 N.Y.3d 249, 254, 778 N.Y.S.2d 412, 810 N.E.2d 864 [2004]).

Accordingly, the order entered July 3, 2024, insofar as reviewed, is affirmed.

TOUSSAINT, P.J., BUGGS and OTTLEY, JJ., concur.