The following papers numbered 1 to 9 were read on this motion commenced by John B. Rhea and New York City House Authority (hereafter "NYCHA")to dismiss the complaint pursuant to CPLR 3211(a)(1), 3211(a)(5), and 3211(a)(7) dismissing the complaint of the plaintiff-landlord (hereafter "Landlord") seeking unpaid housing subsidies relating to premises occupied by a tenant participating in NYCHA's "Section 8" program which is an assistance program established pursuant to 42 USC 1437(f)(hereafter "HUD")because the defendant has failed to make monthly rent subsidy payments for Jean Clay (hereafter "Tenant") on apt B1 at 597 Prospect Place, Brooklyn, New York (hereafter "premises") because of plaintiff's failure to comply with New York Public Housing Law 157 and failure to challenge the NYCHA's determination to suspend subsidies by an Article 78 proceeding.

Papers

Numbered

Defendant's Notice of Motion-

Affirmation-Affidavit-Exhibit(s)-Service1-4 [*2]

Affirmation in Opposition - Exhibits5-7

Affirmation in Support of Motion8-9

Memorandum of Law

_________________________________________________________________

Upon the foregoing papers it is ordered that this motion is determined as follows:

The plaintiff is a landlord participating in a "Section 8" program under HUD which provides rent subsidies to the Landlord of the premises occupied by "qualifying lower-income families". NYCHA administers this Section 8 program through which HUD funds the Section 8 program, The plaintiff-Landlord is required to enter into a Housing Assistance Payment Contract (hereafter "HAPC") with NYCHA to be entitled to payments. Under HAPC NYCHA pays the Landlord funds allocated by HUD known as "housing assistance payments" which is the difference between the actual rent paid by the tenant and the total rent. It is allegedly the landlords obligation to comply with the terms of the HAPC, and pursuant to Federal Law the NYCHA is obliged to inspect the premises to ensure that they meet federal quality standards (hereafter "HQS").HYCHA will make monthly housing assistance payments only to Landlords for apartments which meet HQS standards. Further, pursuant to federal regulations and the HAPC contract "if the subsidy remains suspended for 180 days" the HAPC contract "automatically terminates" (see, 24 CFR 982.455). In the instant matter it is alleged that the NYCHA found violations which remained uncorrected in excess of 189 days, and pursuant to HAPC the "Contract automatically terminates."

In the instant case the NYCHA conducted an inspection on December 3, 3004 and "one serious HQS violation [existed]: the bedroom window guard was missing." Notice was sent to the Landlord of the violation with the warning that the rent subsidy would be "suspended" on January 2, 2005, unless the condition was rectified.

NYCHA ceased making subsidy payments to the Landlord as of January 2, 2005 and such subsidy was suspended in excess of 180 days and was terminated "in or around July 2005". The inspection log shows that it was not corrected on June 23, 2006 when NYCHA conducted a "special inspection" and it was not until January 25, 2007 that the premises passed inspection.

Thereafter, on July 1, 2007 NYCHA issued the Landlord a "retroactive adjustment payment" for subsidies covering February 1, [*3]2007 through June 30, 2007, and thereafter the NYCHA made regular subsidy payments.

The Landlord seeks payments covering March, 2005 up to February, 2007. NYCHA alleges it has made payment for February, 2007 and that there is a difference between the monthly amount claimed by the Landlord and NYCHA's calculations.

In the instant suit the Landlord claims breach of contract and unjust enrichment. NYCHA alleges that the basis for the non-payment was based on the NYCHA's decision made pursuant to Section 8, and that such challenge can only be pursued in an Article 78 proceeding which the Landlord did not ever commence, and is now untimely (CPLR 217(I)).

Plaintiff alleges in its complaint that NYCHA suspended subsidy payment for the "months of March 1, 2005, through and including May 1, 2006" and for "June 1, 2006, through and including February 1, 2007".

NYCHA alleges that its determination to suspend housing assistance "became binding on plaintiff no later than January 2, 2005" and accordingly, the time within which an Article 78 proceeding could be brought expired May 1, 2005.

NYCHA posits that it had no obligation to hold a hearing relating to the subsidy suspension pursuant to the Landlords request made on August 12, 2009. The NYCHA also relates that the Landlords claim to the February, 2007 subsidy must be dismissed.

Plaintiff's affirmation in opposition submits that the defendant "in breach of the parties' contract" owes $21,466.56 covering March, 2005 through February, 2007. Plaintiff claims that it requested a formal hearing by letter dated August 12, 2009 which "NYCHA ignored" requiring the instant suit for breach of contract and unjust enrichment.

Plaintiff request's that NYCHA's motion should be dismissed because it is unsupported by "a signed copy of the contract between the parties" but instead submitted a HUD contract from January, 2007, a date after the date which is the subject of the instant action (CPLR 3211(a)(1)). [*4]

Plaintiff submits that it was in compliance with New York Public Housing Law 157, that this provision does not use the term "notice of claim", which is "found in the General Municipal Law" and it "relates to actions based on torts [sic]." Therefore, the notice of claim requirement to which the NYCHA's papers refer does not apply to the instant action. Plaintiff posits that Public House Law 157 "merely requires that the complaint plead that 30 days elapsed since the demand, claim or claims upon which the action ... is founded were presented to the authority'..." Plaintiff states that all that is needed is for the plaintiff to make a demand. That the plaintiff has met its burden of establishing a legitimate claim by stating that 30 days has passed since demand was made and payment refused.

Plaintiff submits that an Article 78 is not required because an action for "breach of contract" may be heard by this Court. That no order was ever issued from which the plaintiff could have sought review. That payments "simply ceased" without an "appealable order" which could have been the subject of Article 78 review.

Plaintiff refers to Exhibit "2" which at page "5" at paragraph "10.b" which is under the heading "Owner's Breach of HAP Contract" which provides that if the Public Housing Authority "PHA" determines that a breach has occurred that the PHA may exercise any of its right "under the HAP contract, or any other available rights and remedies for such breach. The PHA shall notify the owner of such determination, including a brief statement of the reasons for the determination. The notice by the PHA to the owner may require the owner to take corrective action ... by a deadline prescribed in the notice."

Attention is called to the same paragraph at line "f." which states:

The PHA's exercise or non-exercise of any right or remedy for owner breach of the HAP contract is not a waiver of the right to exercise that or any other right or remedy at any time.

Plaintiff charges that the notices of violation fail to state that NYCHA determined that there was a "breach of contract" and it "could not because the notices afforded plaintiff an opportunity to cure" the violations. Plaintiff submits that NYCHA would have had to issue a determination "that its notice was not complied with and [*5]therefore there was breach of contract by the landlord. Such a determination must be in writing" under page "6" paragraph "15" which provides "Written Notices. Any notices by the PHA or the owner in connection with this contract must be in writing." It is alleged that this is so because the NYCHA may not exercise its remedies because of "an HQS breach", that is a breach of the Housing quality standards, "for which the family is responsible", the "family" being defined as the person who resides in the unit with the assistance of the program, and is not caused by the owner.

Plaintiff submits that "[t]o the extent the defendant's breach of contract by the cessation of payments could be deemed an administrative act' requiring an Article 78 proceeding, the complaint can be simply converted to an Article 78 petition".

Plaintiff submits that its claims are not time-barred because the instant action is founded as a breach of contract with a six year limitation. The plaintiff submits that because of the "on-going" relationship between the litigants that the defendant should be estopped from asserting the statute of limitations, and waived such right to terminate the contract by making payments until 2008. Plaintiff alleges its complaint is not moot, and the plaintiff is entitled to a hearing.

An agency's determination is deemed final "when the petitioner is aggrieved" by that determination which occurred in January, 2005 (Yarbough v Franco, 95 NY2d 342; Biondo v New York State Board of Parole, 60 NY2d 832). The plaintiff was then obliged to seek redress by brining an Article 78 proceeding within four months after the decision by NYCHA became final and binding (Best Payphones, Inc v Department of Information Technology and Telecommunications of City of New York, 5 NY3d 30, 34). This policy is necessary to shelter governmental agencies from potential unnecessary litigation (Solnick v Whalen, 49 NY2d 244). This four month period has been strictly construed with regard to NYCHA decisions (see, Stephens v New York City Housing Authority, 293 AD2d 318).

Where an agency's ruling is founded on a rational basis, its determination is supported by the Courts (see, Mid-State Management Corp v New York City Conciliation and Appeals Board, 112 AD2d 72 aff'd 66 NY2d 1032; Howard v Wyman, 28 NY2d 434). [*6]

In order to contest the NYCHA's actions the plaintiff must have commenced an action within four months. This four month period is final and binding (Rocco v Kelly, 20 AD3d 364). This four month period is triggered by the objectionable determination made by NYCHA (Walton v New York State Department of Correctional Services, 8 NY3d 186). This four month period cannot be circumvented (In re Long Island Power Authority Rate Payer Litigation, 47 AD3d 899). And while it may constitute a hardship for the plaintiff this Court finds that with regard to the countervailing policy of insulating state agencies from unnecessary and potential litigation obliges the determination of granting the defendant's motion (In the Matter of Smith v New York City House Authority, 40 AD3d 235 aff'd 9 NY3d 816).

Accordingly, defendant's motion to dismiss the plaintiff's complaint pursuant to CPLR 3211(a)(1),(a)(5) and (a)(7) is granted.

So Ordered.

Dated: Long Island City, NY

October 1, 2010

______________________________

ROBERT J. MCDONALD

J.S.C.