Recitation as required by CPLR 2219(A), of the papers considered in review of these motions:

Respondent's motion for summary judgment on her first two counterclaims and petitioner's cross-motion to discontinue are both granted. Petitioner's summary eviction proceeding on the ground that respondent failed to sign a renewal lease as offered on or about August 30, 2014 is hereby discontinued with prejudice. A party may not generally be compelled to litigate (Burnham Service Corp. v. Ntl. Council on Compensation Ins., Inc., 288 AD2d 31 [1st Dept. 2001]).

Respondent's counterclaims, however, will not be dismissed merely because the petition is permitted to be discontinued (Siegel, David D., Prac. Comm. McKinney's Cons. Laws of NY, Book 7B, CPLR § 3217:14; counter-claims may be reserved notwithstanding the grant of leave to discontinue the main claim). During the term of this respondent's tenancy some of the core provisions of the Rent Stabilization scheme were violated and respondent will not be denied her choice of forum simply because of the discontinuance.

The relevant facts are not in dispute. The legal regulated rent for the subject premises was reduced by order of the DHCR effective June 1, 1985. The rent was not restored until August 1, 2015. Respondent took possession in September 2011 pursuant to a written lease. The lease indicated that the apartment was not subject to rent regulation, however, the apartment was rent stabilized. The previous owner registered the apartment with DHCR as such. Nevertheless, the respondent was charged and she paid a rent in excess of the legal regulated rent.

Once the moving party establishes entitlement to a judgment, the burden shifts to the opposing party to show a question of fact exists which requires a trial (Kosson v. Algaze, 84 NY2d 1019 [1995]). Here, petitioner contends that the motion must be denied for a number of reasons.

Petitioner argues, in the first instance, that no overcharge award should be granted to respondent because prior to her occupancy there was a substantial renovation of the subject apartment. According to petitioner, because the underlying purpose of the rent reduction order has been met by a correction of the conditions which caused the order, petitioner should not be held liable for the predecessor owner's inadvertent failure to file for a rent restoration order.

This argument is without merit. The calculation of the overcharge in this proceeding must take into account the rent reduction order which was in effect until August 1, 2015. Rent restoration is permitted only upon a determination by the DHCR that a landlord is entitled to restoration (130 E 18th LLC v. Mitchell, 50 Misc 3d 55 [App. T. 2nd Dept 2015]).

Petitioner further contends that respondent is not entitled to judgment because, in the absence of a claim for fraud, an examination of the rental history prior to the four year period immediately preceding the filing is strictly prohibited by statute.

This argument is also without merit. Rent reduction orders impose a continuing obligation on a landlord and if a rent reduction order is still in effect during the four year period, the order is a part of the rental history which must be considered (Matter of Cintron v. Calogero, [*2]15 NY3d 347 [2010]).

Petitioner further contends that when a property changes hands by judicial sale or mortgage foreclosure, a subsequent owner is not liable for overcharges or treble damages. To take advantage of this defense however, the subsequent owner has the obligation to submit evidence showing that sufficient records to determine the legal rents for all apartments were not received (Grimm v. DHCR, NYLJ, Jan. 9, 2002 p.18 c. 3 [S. Ct. NY Co]). Here, although petitioner has evidence indicating that the building was purchased at judicial sale in 1994 by a third party (reply affirmation, exhibit A), there is no evidence to indicate that rent records were unavailable or uninformative. In fact, the reduction order was listed on the DHCR rent history. A judicial sale does not absolve subsequent owners from having to abide by the rent stabilization code.

Petitioner further contends no overcharge should be awarded to respondent because the case has been settled. In November 2015, seven months after commencement of this action, petitioner forwarded a check to respondent for $74,381.48 in full settlement of all claims; that check was not returned to petitioner until January 2016. According to petitioner, respondent's retention of this check for more than two months constitutes an acceptance of the settlement offer.

Respondent, however, did not retain possession of the check; she turned it over to her attorneys to hold (respondent's affidavit ¶14; cf Roxborough Apt. Corp. v. Becker, 176 Misc 2d 503 [Civ. Ct. NY Co. 1998] where three rent checks for July, August, and September were retained by the landlord for the months which preceded the commencement of suit in November).

Moreover, by turning the check over to her attorneys, respondent's actions indicate there was never any intent on her part to settle the matter (West Waverly Equities Group v. Lieff, 190 Misc 2d 280 [App. T. 1st Dept 2001]).

Petitioner further contends that respondent's demand for treble damages must be denied. Citing Heights Assoc. v. Bautista, 178 Misc 2d 669 [App. T. 2d Dept.], petitioner argues that treble damages are punitive in a nature meant to punish and deter; further, the motive of one party can not be imputed to another (Id. at 673).

This argument is also without merit. The rule in the First Department is that carry over liability for treble damages will be imposed on a case-by-case basis depending on the succeeding owner's degree of knowledge or culpability as to as existing overcharge (Matter of East 163rd St. LLC v. DHCR, 4 Misc 3d 169, 176 [S. Ct. Bronx Co. 2004]). Carry over liability for treble damages assists DHCR in regulating rents when property is transferred; the succeeding owner is in the best position to ascertain whether the previous owned was guilty of overcharges (500 West End Ave. Owners v. DHCR, 185 Misc 2d 179 [S. Ct. NY Co. 2000]).

Here, the previous owner represented to respondents, by the various leases and renewals executed, that no rent regulation was in effect, but, simultaneously registered the rents with [*3]DHCR as subject to rent stabilization (respondent's Exhibit E). No explanation was provided for this anomaly.

Petitioner, the current owner, asserted by its managing agent, that based on the books and records of the previous owner, the subject apartment had been deregulated. Petitioner, however, did not proffer any documentary evidence to support this claim except a copy of a lease executed in May 2000 with a prior tenant. A rent overcharge is presumed willful unless a landlord proves otherwise by a preponderance of the evidence (Miller v. DHCR, 289 AD2d 20 [1st Dept. 2001]; Hargrove v. DHCR, 244 AD2d 241 [1st Dept. 1997]). Further, a simple review of the rent history at DHCR should have raised a red flag for any new owner. As previously noted, the apartment was registered with DHCR as rent stabilized. Based on the foregoing, an award of treble damages is warranted in addition to the overcharge award.

Accordingly, respondent is awarded judgment on her first two counterclaims in the total sum of $140,136.00. Due to the complimentary nature of overcharge awards and treble damages, respondent's first two counterclaims are merged for purposes of awarding judgment (see Schedule A annexed).

Respondent's remaining counterclaims are hereby rescheduled for trial in Part E or to any other part to which the matter may be assigned therefrom on June 20, 2016 at 9:30 AM.

The foregoing constitutes the decision and order of this court.