Petitioner commenced this non-payment proceeding against respondent, Manuel T. Carchi, by service of a five-day demand notice, and, thereafter, a notice of petition and petition. Respondent, represented by counsel, filed an amended answer, accepted on consent, which asserts eight affirmative defenses and three counterclaims, including a claim that the rent was illegal and that the Individual Apartment Improvements ("IAI") were improper and fraudulent.

Respondent now moves for discovery seeking documents and information regarding any IAI made to the apartment, between January 2004 and April 2007. Respondent moved into the subject apartment in April 2007 and only recently filed his overcharge complaint in October 2013, however, respondent argues that he is entitled to discovery going back to 2004 because current case-law has provided an exception to the four-year look-back period where a substantial indicia of fraud is shown.

Respondent alleges that when he moved into the subject apartment, it was in disrepair. Respondent also estimates that the increased amount in rent, from the amount charged to the prior tenant, to the amount he was charged when he moved into the apartment, would have required petitioner to have spent $20,000.00 in apartment improvements.

Petitioner opposes the motion arguing that respondent's discovery request is overly broad and that discovery should be limited to the four years prior to respondent's overcharge claim, dated October 16, 2013, and therefore limited to October 2009. [*2]

The Rent Stabilization Code §2520.6 (e), (f) (1) and §2526.1 (a)(3)(I) has established that the legal rent for an apartment is the rent charged on the base date set forth by the Code, which is four years prior to the date of the filing of an appeal or complaint, however, respondent relies on several cases wherein the Courts have allowed an extension of the four-year look-back period. Respondent cites, Thornton v Baron, 5 NY3d 175 (2005); In the Matter of Grimm v DHCR, 15 NY3d 358 (2010); and Bogatin v Windermere Owners LLC, 98 AD3d 896 (2012). The Court of Appeals in Thornton, found that where the landlord sought to circumvent the Rent Stabilization Law, the lease was voided, the rent charged was deemed illegal, and the rent registration was a nullity. In Matter of Grimm, the Court of Appeals held that the base-date rent should not be used as a basis for calculating the regulated rent if fraud is present. Both courts held that the parties are allowed to look back further than four years where it is alleged that the standard base-date rent is tainted by fraudulent conduct on the part of a landlord. The Grimm court expanded the Thornton decision, making it applicable to overcharge cases. The Court also found that where the overcharge complaint alleges fraud, DHCR has an obligation to ascertain whether the rent on the base date was lawful.

In Bogatin, the Appellate Division affirmed the Supreme Court, holding that it was proper for the Court to look beyond the four-year period prior to the rent overcharge complaint. The tenant's allegations, that the landlord falsely claimed to have made substantial improvements prior to the tenants moving in, were supported by the tenants' affidavit and a contractor's estimate. The Court granted discovery on the issue of alleged fraudulent deregulation.

Additionally, in Boyd v DHCR, 110 AD3d 594 (2013), the Appellate Division allowed

the parties to look back beyond the four years because the tenants established a substantial indicia of fraud. The tenant alleged that based on the condition of the premises when she moved in, the owner could not have spent $39,000.00 for improvements to the apartment. The Court found that the tenant sufficiently exhibited a substantial indicia of fraud.

The facts herein are similar to Boyd. Respondent moved into the subject apartment in April 2007 after having signed a lease. Although there are various disputes between the parties as to a preferential rent agreement, the monthly rent for the prior tenant was $645.00, while respondent's lease indicates a rent of $1,254.00. Respondent claims that petitioner required him to purchase a refrigerator, the oven did not work, the floor and bathroom tiles were lifting and breaking, chunks of the ceiling started collapsing, and other conditions existed in the apartment. Respondent calculates that the petitioner would have had to spend $20,000.00 in improvements in order for the rent to have doubled from the prior tenant's rent. Respondent avers that the state of the apartment, at the time he moved in, did not indicate such improvements. Respondent further indicates that there are 80 building-wide HPD violations, and 13 HPD violations for the subject premises.

It is well established, that discovery may be given in non-payment cases upon a showing of ample need. New York University v Farkas, 121 Misc 2d 643 (Civ Ct, NY County 1983). In Farkas, the Court set forth six factors to consider when determining whether ample need is established. The factors include (1) whether the petitioner has asserted facts to establish a cause of action; (2) whether there is a need to discover information directly related to the cause of action; (3) whether the information requested is carefully tailored and is likely to clarify the disputed facts; (4) whether prejudice will result from granting discovery; (5) whether the court [*3]can alleviate the prejudice; and (6) whether the court can structure discovery to protect pro se tenants against any adverse effects of a landlord's discovery request.

Applying the factors set forth in Farkas, this Court finds that respondent has established ample need, in that, the information sought herein relates directly to petitioner's cause of action and the information is needed and is likely to clarify the disputed facts without causing prejudice to the petitioner. The Court also finds that under the circumstances of this case, respondent has established a sufficient indicia of fraud to allow discovery for the period January 1, 2004 through July 31, 2007.

Petitioner shall provide respondent's counsel with the requested documents listed in paragraphs one through nine, of the Notice to Take Deposition and Document Demand attached to the moving papers ("Exhibit F"), within forty-five days (45) from the date of this order. The applicable time period for the documents shall be January 1, 2004 through July 31, 2007. In the event petitioner is unable to provide a document, petitioner shall provide an affidavit of explanation as to why such documents are unavailable. Respondent shall notify petitioner regarding the date, place and time for the Examination Before Trial (EBT).

Based on the foregoing, respondent's motion for discovery is granted and the matter is marked off the Court's calendar for completion of discovery. The parties may restore the matter by stipulation or notice of motion.

This constitutes the decision and order of the Court.

Dated: Brooklyn, New York

April 3, 2014

____________________________

ELEANORA OFSHTEIN

JUDGE HOUSING COURT