Petitioner IWC 879 DeKalb LLC commenced this nonpayment proceeding against respondents-tenants Valerie Walsh and Tyrone Walsh (the "Respondents") in September 2014. The petition alleges, among other things, that the subject apartment (the "Apartment") is exempt from Rent Control and Rent Stabilization because the rent was $2,000.00 or more and the Apartment was deregulated before the Respondents took possession; that Respondents are in possession of the Apartment pursuant to a written rental agreement in which they promised to pay petitioner a preferential rent in the amount of $1,600.00 per month; and that as of September 4, 2014 Respondents owed petitioner $4,200.00 in rent.

In their answer, Respondents, who, at the time, were not represented by counsel, assert a general denial and further allege that they attempted to pay the rent but petitioner refused to accept it; that a part of the rent sought by petitioner has already been paid; and that there are or were conditions in the Apartment which petitioner did not repair and/or services which it did not provide.

By notice of motion dated November 24, 2014, Respondents, now represented by counsel, move for an order granting them leave to file an amended answer and to conduct discovery relating to the regulatory status of the Apartment and their overcharge claims.

In their proposed amended answer Respondents assert a general denial and several "affirmative defenses" and counterclaims, including that the Apartment is subject to Rent Stabilization as it was improperly deregulated; that specifically, the rent was improperly increased in 2003 or 2004 "in violation of the Rent Guidelines Board Order and so all subsequent increases are thereby voided"; that the amount requested in the rent demand was not made in good faith and the monthly rent sought therein is based on an improper rent increase; that they have been overcharged because their rent should be $548.35 per month; that they tendered $1,000.00 to petitioner, who returned it to them; and that petitioner has breached the warranty of habitability.

Petitioner opposes this part of Respondents' motion, arguing that it is untimely; that it is prejudiced by Respondents' delay in seeking relief; that their claims that the Apartment is Rent [*2]Stabilized and that they have been overcharged are time-barred; that they failed to demonstrate that petitioner is seeking any monies that it did not believe were owed; and that they failed to plead their breach of warranty and habitability defense and counterclaim with the particularity required by Section 3013 of the CPLR.

Section 3025(b) of the CPLR provides that "[a] party may amend his or her pleading . . .

A.Whether Petitioner Has Demonstrated It Will Be Prejudiced

Here, Respondents filed their pro se answer on September 16, 2014. Their attorney served this motion on November 24th, less than a month after filing its notice of appearance.

B.Whether Any of the Defenses and Counterclaims Asserted

Having found that petitioner will not be prejudiced by granting Respondents' motion for leave to file an amended answer, the Court "need only determine whether the proposed amendment is palpably insufficient' to state a cause of action or defense, or is patently devoid of [*3]merit." (Lucido v. Mancuso, supra, 49 AD3d at 229). "No evidentiary showing of merit is required . . ." (Id.). Indeed, "a court shall not examine the legal sufficiency or merits of a pleading unless such insufficiency or lack of merit is clear and free from doubt." (United Fairness, Inc. v. Town of Woodbury, 113 AD3d 754, 755 [2d Dept 2014]).

The Court finds that Respondents' first affirmative defense, asserting that the Apartment is Rent Stabilized and was improperly deregulated, is not palpably insufficient or patently devoid of merit. Although they allege that the basis for that defense is an improper rent increase which allegedly took place in 2003 or 2004, more than 10 years before they asserted the defense and well beyond the four-year statute of limitations for asserting a rent overcharge claim (see CPLR § 213-a), a court may consider events beyond the four-year limitations period for the purpose of determining whether an apartment is regulated. (See East W. Renovating Co. v. New York State Div. of Hous. & Community Renewal, 16 AD3d 166, 167 [1st Dept 2005]). Indeed, a challenge to an apartment's regulatory status may be made at any time. (See Gersten v. 56 7th Ave. LLC, 88 AD3d 189, 199 [1st Dept 2011]).

The Court also finds that Respondents' second affirmative defense, asserting that the amount requested in petitioner's rent demand was not made in good faith, and its second "third" affirmative defense,^[FN1] asserting that they tendered $1,000.00 to petitioner and that petitioner returned those funds to them, are not palpably insufficient or patently devoid of merit.

So too, the Court finds that Respondents' fourth affirmative defense and second counterclaim, asserting breach of warranty of habitability, are not palpably insufficient or patently devoid of merit. The proposed amended answer describes specific conditions that exist in the Apartment and alleges that petitioner was notified about them and failed to correct them.

Finally, the Court finds that Respondents' "first" third affirmative defense and first counterclaim, asserting rent overcharge, are not palpably insufficient or patently devoid of merit to the extent they are based on improper rent increases that were imposed on or after the "base date," defined as the date four years prior to the date their claim is asserted (see Rent Stabilization Code [9 NYCRR] § 2520.6[f]). However, they are patently devoid of merit to the extent they are based on improper rent increases that were imposed before the "base date" since they are barred by the four-year statute of limitations for overcharge claims, set forth in Section 213-a of the CPLR, and the prohibition on examining an apartment's rental history more than four years before an overcharge claim is asserted, set forth in both Section 213-a of the CPLR and Section 26-516(a)(2) of the Rent Stabilization Law. Although the Court of Appeals has held that where a tenant presents "substantial indicia of fraud" the rental history beyond four years may be examined "for the limited purpose of determining whether a fraudulent scheme to destabilize the apartment tainted the reliability of the rent on the base date" (see Matter of Grimm v. State of NY Div. of Hous. & Community Renewal Off. of Rent Admin., 15 NY3d 358, 366-367 [2010]), here Respondents merely allege there was a rent increase in 2003 (or 2004) that exceeded the amount permitted by the Rent Guidelines Board. Because, generally, an increase in the rent alone will not be sufficient to establish a colorable claim of fraud (see Matter of Grimm, supra, 15 NY3d at 367), Respondents' rent overcharge defense and counterclaim are insufficient to trigger an inquiry into the legitimacy of the base date rent.

Accordingly, the Court grants Respondents' motion for leave to file an amended answer to the extent of deeming the proposed amended answer annexed as Exhibit E to their motion papers to have been served and filed. However, the grounds for their "first" third affirmative defense and first counterclaim shall be limited to improper rent increases imposed on and after the "base date." Petitioner may serve a reply to the counterclaims by March 31, 2015.

In summary proceedings, a party requesting discovery must obtain leave of court (see

whether the movant has asserted facts to establish a cause of action;

The Court finds that Respondents have asserted facts to establish a defense that the Apartment was improperly deregulated and that they may have been overcharged; that they have a need to obtain information regarding all rents charged, and rent increases imposed, from 2004 to the present, as well as documentation regarding the tenancies during that period .^[FN2] The Court further finds that Respondents' document request is carefully tailored and likely to clarify whether the Apartment was properly deregulated and whether they have been overcharged. Finally, because petitioner should be able to promptly provide Respondents with whatever relevant documents it has, any delay caused by granting their discovery request will be minimal.[*4]Accordingly, Respondents' motion for leave to conduct discovery is granted. Petitioner shall provide Respondents with the documents described in paragraph 20 of their attorney's affirmation, to the extent they are in its custody or control, by March 31, 2015. However, petitioner need not provide copies of applications for major capital improvement rent increases, since Respondents may obtain such documents from the New York State Division of Housing and Community Renewal.

Upon completion of discovery, either party may move on at least eight days' written notice, or by stipulation, to restore the case to the calendar.

This constitutes the decision and order of the Court.

Brooklyn, New York