[*1]
McDermott v Chelsea-Clinton Props. LLC
2008 NY Slip Op 51624(U) [20 Misc 3d 1125(A)]
Decided on July 8, 2008
Supreme Court, New York County
Ling-Cohan, J.
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and will not be published in the printed Official Reports.


Decided on July 8, 2008
Supreme Court, New York County


Thomas Patrick McDermott, a/k/a Patrick McDermott, Plaintiff,

against

Chelsea-Clinton Properties LLC, f/k/a R2R LLC and Clinton Associates LLC, Defendants.




110425/04



Appearances of Counsel are as follow:

Plaintiff:Sokolski & Zekaria, PC

305 Broadway - Suite 201

NY, NY 10007

212-571-4080

Defendants:Chaifetz & Chaifetz

350 Fifth Ave, Suite 6304

NY, NY 10018

212-594-9410

Doris Ling-Cohan, J.

In this residential landlord/tenant action, plaintiff renews his cross motion for the entry of a default judgment against defendant Chelsea-Clinton Properties LLC, f/k/a R2R LLC (Chelsea-Clinton), and for a summary judgment on the complaint against defendant Clinton Associates LLC (Clinton) (motion sequence number 002).[FN1] For the following reasons, plaintiff's cross motion is granted in part and denied in part.

BACKGROUND


The Parties

Plaintiff Thomas Patrick McDermott, a/k/a Patrick McDermott (McDermott), is the tenant of rent-stabilized apartment 1-R in a building located at 438 West 45th Street in the County, City and State of New York (the building). See Notice of Cross Motion, Sokolski [*2]Affirmation, ¶ 8. Defendant Clinton is the building's current owner. Id., ¶ 13. Defendant Chelsea-Clinton was the building's former owner until it transferred the building to Clinton on August 13, 2003. Id.

Prior Proceedings

McDermott states that he first took possession of apartment 1-R on November 15, 2000 as the sublessee of one "George Bajal," a purportedly fictitious tenant who had executed a lease with Chelsea-Clinton for the period of September 1, 2000 through August 31, 2002. Id.; McDermott Affidavit, ¶ 2; Exhibit M. McDermott further states that he paid Chelsea-Clinton rent of $1275.00 per month for the period of November 15, 2000 through November 14, 2002 and $1326.00 per month for the period of November 15, 2002 through September 14, 2003. Id. McDermott further states that Clinton, which had acquired the building in August of 2003, refused to accept any rent payments from him after September 15, 2003. Id., ¶ 4; Exhibit K. Clinton states that it never offered McDermott a lease for apartment 1-R. See Shalom Affidavit in Opposition, ¶ 7. Instead, in April of 2004, Clinton commenced a holdover proceeding against McDermott in the Civil Court of the City of New York (Index Number L & T 67140/04) in which it alleged that he had illegally sublet apartment 1-R. Id., ¶ 8. However, during that proceeding, McDermott presented evidence that: 1) the previous tenant of apartment 1-R, one Ted Rooney, had occupied it pursuant to a rent stabilized lease for the period of September 1, 1999 through August 31, 2000 at a monthly rental of $760.19; and that 2) no "George Bajal" had ever actually resided in the unit. See Notice of Cross Motion, Sokolski Affirmation, ¶¶ 9-12; Exhibit M; Sokolski Affirmation in Reply, ¶¶ 11, 16; Exhibit A. Clinton apparently failed to present evidence to refute McDermott's claims. Accordingly, on July 12, 2004, the Civil Court (Elsner, J.) denied Clinton's motion for summary judgment on the complaint, granted McDermott's motion for summary judgment to dismiss the complaint and severed McDermott's counterclaims for rent overcharge by Clinton. See Notice of Cross Motion; Exhibit L.

The Current Cross-Motion

McDermott initially commenced this action on July 16, 2004. His current amended verified complaint sets forth causes of action for: 1) rent overcharge; 2) an injunction requiring Clinton to furnish McDermott with a rent stabilized lease, at the current lawful monthly rent, for apartment 1-R; 3) attorney's fees in this action; and 4) attorney's fees in the prior Civil Court proceeding. Id.; Exhibit G. Clinton served an amended answer, with a cross claim for judgment over against Chelsea Clinton, on December 7, 2004. Id.; Exhibit H. For its part, Chelsea Clinton never served an answer in this action, and on January 27, 2006 this court (Shafer, J.) so-ordered a stipulation that granted Clinton's earlier motion for a default judgment (motion sequence number 001) to the extent of permitting both McDermott and Clinton to seek the entry of default judgments against Chelsea Clinton. McDermott's request for leave to restore his cross-motion to Clinton's original motion was granted via so-ordered stipulation on August 28, 2007. That cross motion, which is the subject of this decision, seeks the entry of a default judgment against Chelsea Clinton, as well as summary judgment on the complaint against Clinton. Clinton opposes McDermott's cross-motion, but does not seek restoration of its original motion, and makes no other requests for relief.

DISCUSSION


I. Default Judgment [*3]

The first branch of McDermott's cross-motion seeks the entry of a default judgment against Chelsea Clinton. CPLR 3215 (a) provides, in pertinent part, that:

When a defendant has failed to appear, plead or proceed to trial of an action reached and called for trial ... the plaintiff may seek a default judgment against him. If the plaintiff's claim is for a sum certain or for a sum which can by computation be made certain, application may be made to the clerk within one year after the default. ... Where the case is not one in which the clerk can enter judgment, the plaintiff shall apply to the court for judgment [emphasis added].


As previously mentioned, on January 27, 2006 McDermott received permission to seek the entry of a default judgment against Chelsea Clinton via Justice Shafer's so-ordered a stipulation. However, McDermott did not move for the entry of such a judgment until August 28, 2007; i.e., more than one year after Chelsea Clinton's default. Thus, McDermott must present his proofs substantiating the amount of such default judgment to the court, rather than the Clerk's office.

Under such circumstances, CPLR 3215 (b) provides that:

The court, with or without a jury, may make an assessment or take an account or proof, or may direct a reference. When a reference is directed, the court may direct that the report be returned to it for further action or, except where otherwise prescribed by law, that judgment be entered by the clerk in accordance with the report without any further application. ... The judgment shall not exceed in amount or differ in type from that demanded in the complaint or stated in the notice served pursuant to subdivision (b) of rule 305 [emphasis added].


Here, McDermott has presented documentary evidence of: 1) the registered rent for apartment 1-R for the period that his occupancy thereof coincided with Chelsea Clinton's ownership of the building; and 2) some of the payments that he made to Chelsea Clinton during that time. See Sokolski Reply Affirmation, Exhibit A; Notice of Cross Motion, Exhibit O. As will be discussed below, McDermott has not presented proof of the amount of the lawful rent for apartment 1-R by the submission of relevant DHCR records; however, the relevant DHCR records are readily available and shall be produced at the hearing directed below. Accordingly, McDermott's motion for a default judgment against Chelsea Clinton is granted and the issue of the amount of such judgment is referred a Referee to hear and report, and that McDermott may thereafter move to confirm the report and a default judgment shall be entered against Chelsea Clinton.

II. Summary Judgment

The second branch of McDermott's cross-motion seeks summary judgment on the complaint against Clinton. When seeking summary judgment, the moving party bears the burden of proving, by competent, admissible evidence, that no material and triable issues of fact exist. See e.g. Winegrad v New York Univ. Med. Ctr., 64 NY2d 851 (1985); Sokolow, Dunaud, Mercadier & Carreras LLP v Lacher, 299 AD2d 64 (1st Dept 2002). Here, as detailed below, McDermott has failed to satisfy his burden of proof with respect to his claims against Clinton.

A) Rent Overcharge

McDermott's first cause of action seeks a money judgment for rent overcharge. See Notice of Cross Motion, Exhibit G (amended complaint), ¶¶ 12-21. McDermott correctly argues that, pursuant to the Rent Stabilization Code, the current owner of a rent-stabilized building is responsible for the overcharges imposed by the previous owner. 9 NYCRR § 2526.1 (f) (2). [*4]However, McDermott incorrectly argues that Chelsea Clinton's default had the collateral effect of rendering Clinton liable for treble damages for wilfully overcharging McDermott in connection with Chelsea Clinton's alleged "illusory prime tenancy" scheme. See Notice of Cross Motion, Sokolski Affirmation, ¶ 18. McDermott cites the Court of Appeals decision in Rokina Optical Co. v Camera King (63 NY2d 728 [1984]) for the proposition that

... a defendant whose answer is stricken as a result of a default admits all traversable allegations in the complaint, including the basic allegation of liability, but does not admit the plaintiff's conclusion as to damages.


63 NY2d at 730. However, in this action, it is clear that Clinton's answer was not stricken as a result of a default. Chelsea Clinton committed the only default herein by failing to answer. Thus, whatever its effect may be on Chelsea Clinton, the holding of Rokina Optical is inapplicable as against Clinton. For its part, Clinton states that it was unaware that McDermott was either overcharged or victimized by an illusory prime tenancy scheme. See Shalom Affidavit in Opposition, ¶¶ 5-6. Accordingly, the court rejects McDermott's argument.

Apart from said foregoing argument, the only evidence that McDermott presents to support his overcharge claim against Clinton are the building's registration rent roll reports for the period of April, 1984 through August, 2003. See Sokolski Affirmation in Reply, Exhibit A. McDermott bases his overcharge claim on the differential between the 1999-2000 registered rent of $760.19 and the 2000-2002 registered rent of $1600.00. See Notice of Cross Motion, Sokolski Affirmation, ¶¶ 11-12. This is certainly difficult to account for, and may well indicate that Chelsea Clinton sought to impose an illicit overcharge. However, a review of the registration rent roll shows that this is not the only disparity. Over approximately a fifteen year period, the rents for apartment 1-R are listed as follows:

July 31, 1990 -vacant
September 1, 1990 - August 31, 1991 -$ 672.33
September 1, 1991 - August 31, 1992 -$ 702.58
September 1, 1992 - August 31, 1994 -$748.25
September 1, 1994 - August 31, 1996 -$785.66
September 1, 1996 - August 31, 1998 -$817.09
September 1, 1998 - August 31, 1999 -$745.29
September 1, 1999 - August 31, 2000 -$760.19
September 1, 2000 - August 31, 2002 -$1600.00

November 15, 2000 - November 14, 2002 -$1275.00

November 15, 2002 - November 14, 2004 -$1326.00


See Sokolski Affirmation in Reply, Exhibit A. Given these unexplained increases and decreases, it is impossible to tell from the yearly registrations going what the legal rent for apartment 1-R actually is. Thus, there is also no way to fix a dollar amount on the overcharge that Chelsea Clinton imposed on McDermott. Further, McDermott himself avers that Clinton has not accepted any rent payments from him at all since September 15, 2003 (i.e., since immediately after purchasing the building on August 13, 2003). See Notice of Cross Motion, McDermott Affidavit, ¶ 4; Exhibit K. Therefore, McDermott has also failed to prove that Clinton itself ever [*5]collected an overcharge from him,[FN2] regardless of its liability for Chelsea Clinton's actions. It is likely, however, that McDermott will be able to establish both of these matters via further documentary evidence at the hearing before the Referee. Accordingly, the court concludes that McDermott is not entitled to summary judgment on his cause of action for rent overcharge against Clinton at this juncture - until there is a determination that the was in fact a rent overcharge - and holds in abeyance the portion of his motion that seeks such relief pending the delivery and confirmation of the Referee's report.

B) Injunctive Relief

McDermott's second cause of action seeks an injunction requiring Clinton to furnish McDermott with a rent stabilized lease, at the current lawful monthly rent, for apartment 1-R. See Notice of Cross Motion, Exhibit G (amended complaint), ¶¶ 22-23. McDermott claims that the current lawful rent for apartment 1-R is $760.19 per month; i.e., the amount charged to the previous tenant (Ted Rooney) without any increases. See Sokolski Reply Affirmation, ¶ 16.

Pursuant to CPLR 6301:

A preliminary injunction may be granted in any action where it appears that the defendant threatens or is about to do, or is doing or procuring or suffering to be done, an act in violation of the plaintiff's rights respecting the subject of the action.


CPLR 6301. The court notes that both McDermott's moving papers and his reply papers are devoid of any legal argument to support this cause of action. Nevertheless, the Court of Appeals holds that "[a] preliminary injunction may be granted under CPLR article 63 when the party seeking such relief demonstrates: (1) a likelihood of ultimate success on the merits; (2) the prospect of irreparable injury if the provisional relief is withheld; and (3) a balance of equities tipping in the moving party's favor." Doe v Axelrod, 73 NY2d 748, 750 (1988). Here, however, as previously discussed, McDermott has failed to establish the current, lawful regulated rent for apartment 1-R. There is no basis for accepting McDermott's contention that the $760.19 monthly registered rent for 2000 is the "maximum legal regulated rent" for apartment 1-R, given that a higher rent was registered between 1994 and 1998. See Sokolski Reply Affirmation, ¶ 16; Exhibit A. Without proof of the actual, current legal regulated rent for apartment 1-R, McDermott is unable to prevail on the merits of his claim that he is entitled to a rent-stabilized lease with a monthly rental of $760.16. Therefore, although McDermott is certainly a rent-stabilized tenant and - as such - entitled to a rent-stabilized lease, he has failed to demonstrate that he is likely to prevail on the merits of his particular claim for a lease in the monthly rental amount of $760.19. Accordingly, McDermott is not entitled to summary judgment on this claim at this juncture, and the portion of his motion that seeks such relief is held in abeyance pending the delivery and confirmation of the Referee's report.

C) Attorney's Fees in This Action

McDermott's third cause of action seeks attorney's fees in this action. See Notice of [*6]Cross Motion, Exhibit G (amended complaint), ¶¶ 24-27. Pursuant to the Rent Stabilization Code:

An owner who is found to have overcharged by the DHCR may be assessed and ordered to pay to the tenant as an additional penalty the reasonable costs and attorney's fees of the proceeding, and except where treble damages are awarded, interest from the date of the overcharge occurring on or after April 1, 1984, at the rate of interest payable on a judgment pursuant to section 5004 of the Civil Practice Law and Rules.


9 NYCRR § 2526.1 (d). Here, as previously discussed, although it appears that Chelsea Clinton did impose a rent overcharge on McDermott, it is not clear that Clinton did so. Therefore, although Clinton - as successor in interest - may be responsible for the legal fees that Chelsea Clinton's actions occasioned to McDermott, it would be improper to also make a legal fees assessment against Clinton at this juncture. Accordingly, McDermott is not entitled to summary judgment on this claim, and the portion of his motion that seeks such relief is held in abeyance pending the delivery and confirmation of the Referee's report.

D) Attorney's Fees in the Civil Court Proceeding

McDermott's final cause of action seeks attorney's fees in the prior Civil Court proceeding that was dismissed on July 12, 2004. See Notice of Cross Motion, Exhibit G (amended complaint), ¶¶ 28-37. In her decision, Judge Elsner specifically found that McDermott was the rent-stabilized tenant of apartment 1-R, but ordered that his legal fees claim be severed. Id.; Exhibit L. McDermott correctly notes that the law accords him a reciprocal right to seek legal fees from his landlord in any lease related litigation, and that, as the prevailing party in the proceeding below, his claim is now mature. Real Property Law § 234; Notice of Cross Motion, Sokolski Affirmation, ¶ 30. McDermott has presented copies of all of his legal bills to support his claim. Id.; Exhibit N. However, Clinton also correctly notes that the court has the responsibility to ensure that any claim for legal fees be "reasonable;" i.e., that it be "derived from the amount of work actually performed and billed, rather than an amount bearing no particular relation to the work performed." Solow Management Corp. v Tanger, 19 AD3d 225, 226 (1st Dept 2005). Therefore, the Court believes that it would be provident to refer this issue to the Referee as well. Accordingly, McDermott is entitled to summary judgment on his fourth cause of action solely on the issue of liability, and the issue of the computation of damages is referred to a Referee to hear and report.

DECISION

ACCORDINGLY, for the foregoing reasons, it is hereby

ORDERED that the cross motion of plaintiff Thomas Patrick McDermott, a/k/a Patrick McDermott is granted with respect to defendant Chelsea-Clinton Properties LLC, f/k/a R2R LLC solely to the extent that the issues of: 1) determining the current, lawful regulated rent for rent-stabilized apartment 1-R located at 438 West 45th Street in the County, City and State of New York; 2) determining the amounts of rent overcharges, if any, that were imposed on plaintiff by defendants Chelsea-Clinton Properties LLC, f/k/a R2R LLC and Clinton Associates LLC; and 3) determining what amounts of reasonable legal fees that plaintiff has expended in both this action and in the special proceeding bearing Index Number L & T 67140/04 that was previously heard and dismissed by the Civil Court of the City of New York; are referred to a Special Referee to [*7]hear and report with recommendations, except that, in the event of and upon the filing of a stipulation of the parties, as permitted by CPLR 4317, the Special Referee, or another person designated by the parties to serve as referee, shall determine the aforesaid issue; and it is further

ORDERED that the balance of plaintiff's cross motion is held in abeyance pending receipt of the report and recommendations of the Special Referee and a motion pursuant to CPLR 4403; and it is further

ORDERED that within 30 days, movant shall serve a copy of this order with notice of entry on defendant and on the Clerk of the Judicial Support Office (Room 311) to arrange a date for the reference to a Special Referee, or such motion is denied.

Dated: New York, New York

July 8, 2008

_________________________

Hon. Doris Ling-Cohan, J.S.C. C:\htformat\f5162480.txt

Footnotes


Footnote 1:Clinton's original motion, for a default judgment against Chelsea Clinton on its cross-claims (motion sequence number 001), was disposed of via stipulation on January 27, 2006, on which date this Court (Shafer, J.) also marked this action off calendar. McDermott had also filed a cross-motion in opposition to Clinton's original motion. McDermott now seeks to return this cross-motion to the court's calendar, although Clinton does not seek to restore its original motion.

Footnote 2:The court notes that the Civil Court proceeding that Clinton commenced against McDermott was a holdover in which it evidently made no request for use and occupancy for apartment 1-R. See Notice of Cross Motion, Exhibits K, L.