Civil Court of the City of New York, Bronx County, December 4, 2017

Part of the Solution, Bronx (Maeve Callagy of counsel), for respondent.

Sidrane & Schwartz-Sidrane, LLP, Rockville Centre (Arun Perinbasekar of counsel), for petitioner.

Background and Procedural History

In this nonpayment proceeding, the issue is whether a rent reduction order issued by the New York State Division of Housing and Community Renewal (DHCR) in 1993 prohibits deregulation of a rent-stabilized apartment. In its petition dated June 7, 2016, petitioner alleged that respondent owed $4,140, comprised of "base rent" at the monthly rate of $1,450 for May and June 2016, plus a balance of $900 for April 2016, and "miscellaneous charges" of $338 (late charges at $72 per month and $25 charges for a smoke alarm and "CM Detector"), and that the [*2]money due had been personally demanded from respondent prior to the commencement of the proceeding. Respondent pro se used the court's form to file an answer on June 14, 2016, raising a "general denial" and a defense of payment/partial payment. Petitioner by counsel and respondent pro se settled the case on July 14, 2016, in an agreement which awarded petitioner a final judgment of possession and for $5,250, with issuance of a warrant of eviction forthwith, execution stayed through August 25, 2016, for respondent to pay the judgment. The agreement also included access dates for repairs.

Respondent retained counsel, who moved to vacate the July 14, 2016 stipulation and judgment, amend the answer to assert a defense of rent overcharge and conduct discovery. Petitioner cross-moved for leave to amend the petition to reflect that the subject apartment is not rent stabilized as stated in paragraph 7 of the petition but rather is unregulated.^[FN1] In an order and decision dated February 15, 2017, the Honorable Brenda Spears{**58 Misc 3d at 642} denied respondent's motion and granted petitioner's cross motion for leave to amend the petition.

Thereafter, respondent moved to renew based upon a newly discovered DHCR rent reduction order issued on October 8, 1993, under docket No. GH-630011-B, effective September 1, 1992, in response to a complaint of decreased services filed by certain tenants on August 4, 1992. The order lists 10 "Services Not Maintained" and

• reduces the "stabilized legal rent" for the affected apartments, including respondent's apartment No. 6H, to the level in effect prior to the most recent guideline increase which commenced before the order's effective date;

• directs the owner to restore the listed services within 30 days; and

• prohibits any rent increase "until the DHCR issues an order restoring rent(s)."

By decision dated July 19, 2017, Judge Spears granted respondent's motion to renew and, upon renewal, vacated the stipulation of July 14, 2016, and permitted respondent to serve and file an amended answer. In doing so, the court explained that, while rent-stabilized apartments are subject to various rent increases and deregulation upon specific occurrences, "if a rent reduction order is in effect, an owner is generally barred from collecting a rent increase until a corresponding rent restoration order is issued," citing Rent Stabilization Code (RSC) (9 NYCRR) § 2523.4 (a) (1).

Respondent served and filed an amended answer and moved for summary judgment on her three objections in point of law and two affirmative defenses:

• 1st objection in point of law: failure to make a proper rent demand as required by the lease and by law;

• 2nd objection in point of law: the alleged rent demand sought arrears that exceed the collectible rent and therefore did not constitute a fair approximation of the alleged arrears;

• 3rd objection in point of law: petition fails to state a cause of action as the alleged rent demand was not a good faith approximation of the rent owed;

• 1st affirmative defense: rent overcharge as DHCR rent reduction order No. GH-630011B froze the rent at $650 per month effective September 1,{**58 Misc 3d at 643} 1992 and is still in effect; and

• 2nd affirmative defense: failure to register the premises with the DHCR as required by the Rent Stabilization Law and Code.

Other than the first objection in point of law which she supports with her sworn statement denying receipt of any written or oral rent demand, respondent's claims all derive from the DHCR's rent reduction order. Respondent argues that the effect of that order was to freeze the rent at $650 per month as of September 1, 1992, and foreclose any possibility of the apartment's deregulation^[FN2] until such time as the DHCR issues an order fully restoring the rent, which it has not yet done. Accordingly, none of the rent increases that occurred over the years were permitted as the rent remains frozen and the apartment remains rent stabilized. Based on the rent payments made from the commencement of her tenancy in February 2016 through May 2016 for a total of $3,450, respondent argues that at the correct monthly rate of $650, she owed no rent as of the date of the petition. Respondent argues that there are no material issues of fact, she is entitled to summary judgment as a matter of law and the petition should be dismissed as (1) any rent demand that may have been made was defective both because it was based on an improper monthly rent of $1,450 and because respondent owed no rent; (2) the petition demands rent at an excessive rate; and (3) the petition as amended pursuant to the court's decision and order of July 19, 2017, fails to state the facts upon which the proceeding is based as required by RPAPL 741 (4), and fails to state a cause of action, as it alleges that the premises are unregulated and not subject to rent stabilization, citing MSG Pomp Corp. v Doe (185 AD2d 798 [1st Dept 1992]).

In opposition, petitioner calls the rent reduction order "ancient" (it was issued 24 years ago) and asserts that it purchased the building in 2005 and lacked any knowledge of the order until it surfaced in this proceeding. Further, petitioner argues that its predecessor-in-interest did file two rent restoration applications relating to the rent-controlled{**58 Misc 3d at 644} apartments^[FN3] in the building. The first resulted in a DHCR order partially restoring rent dated August 29, 1995, which found after an inspection that five conditions had been corrected but four remained. The second resulted in a DHCR order partially restoring rent dated August 20, 1998, which found after an inspection that three conditions had been corrected but one remained, specifically, "the vestibule door is not self-locking and is missing its lock." The 1998 order notes that the owner may refile "after the door is made to be self-locking" and that "[t]he owner failed to file applications for the affected rent stabilized apartments."

Petitioner cites to Rules of Department of Buildings (1 RCNY) § 42-01 and [*4]asserts that there is no requirement that the vestibule door exist, much less that it be self-locking, and that the DHCR has found in another case that the maintenance of a vestibule door is a de minimus issue under RSC § 2523.4 (e), citing and attaching a copy of the DHCR's order in In re 1646 Union LLC (July 16, 2016, admin docket No. DV-230009-RO). Petitioner further asserts that, as in In re 1646 Union LLC, no tenants have complained about the vestibule door and that, in any event, it recently filed an application with the DHCR seeking retroactive restoration of the rents for all apartments in the building.

Petitioner argues that summary judgment should be denied for several reasons. First, respondent's motion is procedurally defective as a copy of her amended answer is not attached to it, as required by CPLR 3212 (b). Second, the "permissive language" included in RSC § 2526.1 (a) (2) (v) regarding the effect of a rent reduction order issued under RSC § 2523.4 (a) on a rent overcharge complaint "makes it clear that there is no requirement that ancient rent reduction orders serve as an automatic basis for issuing a rent overcharge award." (Affirmation in opp ¶ 21.) Petitioner argues that respondent's implicit reliance on Matter of Cintron v Calogero (15 NY3d 347, 356 [2010]) is misplaced, since the Code was amended to include,{**58 Misc 3d at 645} inter alia, RSC § 2526.1 (a) (2) (v) after the Court of Appeals issued that decision. In support of this argument, petitioner cites to, discusses and attaches a copy of a Queens County Supreme Court decision dated June 21, 2016 (Napa Partners, LLC v Div. of Hous. & Community Renewal, Sup Ct, Queens County, June 21, 2016, Raffaele, J., index No. 11928/2015) and argues that issues of fact have been raised as to the effect of the rent reduction order on this proceeding. Third, at a minimum there are issues of fact as to whether the lack of a self-locking vestibule door is a de minimis condition under RSC § 2523.4 (e).

As for respondent's other grounds for dismissal petitioner asserts:

• regarding the predicate rent demand, there are issues of fact which can only be decided at trial: while respondent denies that it was made, petitioner's agent asserts that it was;

• further regarding the rent demand, the amount demanded was proper as petitioner's failure previously to file proper paperwork with the DHCR should not result in a windfall to respondent; and

• regarding the apartment's status as regulated or not, "as the rent reduction order has no real effect it cannot be utilized to change the status of the subject premises" (affirmation in opp ¶ 32), and petitioner anticipates that the DHCR will grant its rent restoration request retroactively.

Petitioner also argues that even if respondent is correct and the legal regulated rent must be frozen at the rent in effect prior to the rent reduction order, the monthly rent would be $675, not $650.

On reply, respondent argues that regardless of the severity of the conditions that gave rise to the 1993 rent reduction order, the DHCR still has not restored the rent and petitioner was not permitted unilaterally to do so and thereby to remove the apartment from rent stabilization based on subsequent rent increases. Respondent cites to and provides copies of DHCR Fact Sheet Nos. 36 and 26 in further support of her claim that a landlord cannot deregulate or charge vacancy increases for an apartment which is subject to a rent reduction order. Respondent counters petitioner's "windfall" argument {**58 Misc 3d at 646}with her own: "the court setting the rent reduction order aside and holding that it no longer affects the subject premises would present a windfall to [*5]Petitioner." (Affirmation in reply ¶ 7.) Respondent addresses petitioner's argument that the motion should be denied for failure to annex a copy of the amended answer by attaching it to the reply.

Discussion

As a preliminary matter, petitioner is correct that CPLR 3212 (b) requires that a motion for summary judgment be supported by copies of the pleadings, which respondent failed to do. (Washington Realty Owners, LLC v 260 Wash. St., LLC, 105 AD3d 675 [1st Dept 2013].) Here, while respondent did attach to her moving papers a copy of the petition and respondent's original answer, she did not include a copy of her amended answer, although she did attach it to her reply. In the interest of judicial economy, rather than denying respondent's motion without prejudice to refiling with a copy of the amended answer attached, the court will overlook this procedural defect. (CPLR 2001 ["Mistakes, omissions, defects and irregularities"]; Pandian v New York Health & Hosps. Corp., 54 AD3d 590 [1st Dept 2008] [affirming lower court's determination not to dismiss defendants' motion for summary judgment for failure to annex their answer to the moving papers where it was attached to the reply papers].)

On the substance of respondent's motion, Judge Spears in her decision granting respondent's prior motion for renewal and, upon renewal, vacating the stipulation of settlement, already determined that "if a rent reduction order is in effect, an owner is generally barred from collecting a rent increase until a corresponding rent restoration order is issued," citing RSC § 2523.4 (a) (1). Rent reduction orders due to a landlord's failure to maintain services are covered by both the RSC section cited by Judge Spears and by Rent Stabilization Law of 1969 (RSL) (Administrative Code of City of NY) § 26-514, which states:

"any tenant may apply to the [DHCR], for a reduction in the rent to the level in effect prior to its most recent adjustment and for an order requiring services to be maintained as provided in this section, and the [DHCR] shall so reduce the rent if it is found that the owner has failed to maintain such services. The owner shall also be barred from applying for or collecting any further rent increases. The restoration of such services shall result in the{**58 Misc 3d at 647} prospective elimination of such sanctions."^[FN4]

The purpose of this section is "to motivate owners of rent-stabilized housing accommodations to provide required services, compensate tenants deprived of those services, and preserve and maintain the housing stock in New York City." (Matter of Cintron v Calogero, 15 NY3d 347, 356 [2010], quoting Jenkins v Fieldbridge Assoc., LLC, 65 AD3d 169, 173 [2d Dept 2009]; see also Matter of ANF Co. v Division of Hous. & Community Renewal, 176 AD2d 518, 520 [1st Dept 1991] [noting that the consequence for owners of a suspension of the most recent guideline increase "is directed toward implementing an important public policy and achieving a significant goal of the Rent Stabilization Law—the preservation and maintenance of New York City's housing stock"].)

As explained by the Court of Appeals, "rent reduction orders impose a continuing obligation on a landlord" and "if still in effect during the four-year [statutory rent overcharge] period, are in fact part of the rental history which DHCR must consider" (Matter of Cintron v Calogero at 356), even where the rent reduction order was issued many years earlier (see e.g. Scott v Rockaway Pratt, LLC, 17 NY3d 739 [2011] [finding that lower court properly held that calculation of the amount of rent overcharge should be made [*6]by reference to a 25-year-old rent reduction order]; Matter of Nelson v New York State Div. of Hous. & Community Renewal, 95 AD3d 733 [1st Dept 2012] [finding that lower court properly held that rent increases could not be collected until restoration of rent reduction for failure to maintain marble baseboards under a 34-year-old DHCR order]). Vacancy increases cannot be collected while a rent reduction is in effect. (130 E. 18th, L.L.C. v Mitchel, 50 Misc 3d 55 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2015]; RSC § 2523.4 [a] [1]; DHCR Fact Sheet No. 26.)

Rent restoration following issuance of a rent reduction order is permitted only upon a determination by the DHCR that the owner is entitled to such restoration. (RSL §§ 26-511 [c] [10]; 26-514; RSC § 2523.3; Atsiki Realty LLC v Munoz, 48 Misc 3d 33 [App Term, 1st Dept 2015]; FIYA RSD Partners, LLC v Lee, 51 Misc 3d 1225[A], 2016 NY Slip Op 50815[U] [Civ Ct, NY County 2016]; see also e.g. 130 E. 18th, L.L.C. v Mitchel at 57, citing DHCR Policy Statement 90-2 ["where DHCR determines that an owner has failed to maintain services, such owner shall{**58 Misc 3d at 648} not be entitled to a rent restoration until he or she has made an application and DHCR issues an order restoring the rent"].) The statute's mandate leaves no discretion in the imposition of a sanction to the monitoring agency, and "is keyed not to the nature and quality of services being maintained but rather to a determination that services have been reduced." (Matter of ANF Co. v Division of Hous. & Community Renewal at 520.)

The proponent of a summary judgment motion under CPLR 3212 must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence in admissible form to demonstrate the absence of any material issues of fact. (Winegrad v New York Univ. Med. Ctr., 64 NY2d 851 [1985]; Zuckerman v City of New York, 49 NY2d 557 [1980].) Once this showing has been made, the burden shifts to the party opposing the motion for summary judgment to produce evidentiary proof in admissible form sufficient to establish the existence of material issues of fact which require a trial of the action; mere conclusions, expressions of hope or unsubstantiated allegations or assertions are insufficient. (Alvarez v Prospect Hosp., 68 NY2d 320, 324 [1986].) A motion for summary judgment should be granted where "[n]othing but conclusory assertion is offered" in opposition. (Friends of Animals v Associated Fur Mfrs., 46 NY2d 1065, 1068 [1979].)

Based on the above authority, and given that it is undisputed that the DHCR has not issued a rent restoration order ending the rent reduction and rent freeze set forth in its order of October 8, 1993, summary judgment must be granted to respondent and the proceeding dismissed. The DHCR's order mandates that no rent increases be collected "until the DHCR issues an order restoring rent(s)," which means that the vacancy and other increases charged over the years after 1992 were illegal and the apartment could not have been exempted from rent stabilization due to "high rent vacancy." The petition as amended asserts otherwise, and it is undisputed that the apartment has been registered as "exempt" since 2008. Further, the rent is not $1,450 as stated in the petition (and, presumably, in the oral rent demand asserted by petitioner), but rather remains at "the level in effect prior to the most recent guideline increase which commenced before the effective date" of the order. Whether that level is $650 as argued by respondent or $675 as argued by petitioner cannot be determined by{**58 Misc 3d at 649} the documents presented^[FN5] and will therefore not be decided herein. [*7]However, either way, with a tenancy that began in February 2016, and it being undisputed that respondent had paid $3,450 during the four-month period from February through May 2016, by the time petitioner filed its petition against her in June 2016 no rent was owed (5 months x $650 = $3,250; 5 months x $675 = $3,375).

The court rejects petitioner's argument that the "permissive language" of RSC § 2526.1 (a) (2) (v), one of the DHCR's 2014 amendments to the Rent Stabilization Code, should be read to contradict the Court of Appeals' 2010 holding in Matter of Cintron v Calogero. Rather, codification of case law was one of the hallmarks of the DHCR's 2014 Code revisions. In a recent decision rejecting a constitutional challenge to the 2014 Code amendments (Portofino Realty Corp. v New York State Div. of Hous. & Community Renewal, 2017 NY Slip Op 32773[U], *5 [Sup Ct, Kings County 2017]) the court noted that the DHCR issued those regulations to implement the legislature's Rent Act of 2011, which "amended the rent stabilization laws to make them more protective of tenants' rights." The amendments to the regulations, in turn "further revised the RSC to enhance tenant protections against fraud and abuse which result in unlawful and excessive rents." (2017 NY Slip Op 32773[U], *6.) With respect to the Code amendments pertaining to the "four-year rule," and the exceptions permitting consideration of an apartment's rental history more than four years prior to the filing of an overcharge proceeding, the court noted that they "are consistent with well established case law which has created exceptions to the Four-Year Rule" and that they "codify this case law." (Id. at *23.) Regarding the effect of rent reduction orders, in response to the Portofino plaintiffs' argument that the amendment to RSC § 2523.4 (a) (1) violates other provisions of the Rent Stabilization Law which allow owners to increase rents due to vacancies, major capital{**58 Misc 3d at 650} improvements and individual apartment improvements, the court noted that "RSC § 2523.4 is consistent with RSL § 26-514, which provides that an owner subject to a rent reduction order is 'barred from applying for or collecting any . . . rent increases' while such a rent reduction order remains in effect." (Id. at *32; see also 130 E 18th LLC v Mitchel at 58 [finding that the 2014 Code amendments clarified that "any further increases in rent" under RSL § 26-514 includes vacancy increases].)

The court also rejects petitioner's claim that this court should ignore the continued existence of the rent reduction order because the absence of a self-locking vestibule door is a de minimis condition under RSC § 2523.4 (e). It is for the DHCR, not for this court, to decide whether a condition is de minimis such that it does not constitute a failure to maintain a required service warranting a rent reduction. In this case, the DHCR did not find the condition to be de minimus, and even left the rent reduction order intact when the absence of the self-locking vestibule door was the only item left after petitioner's predecessor-in-interest filed two partially successful requests to restore the rent, in 1995 and 1998.^[FN6]

The court further finds unavailing petitioner's claim that it did not know about the rent reduction order until respondent brought it to its attention in this proceeding. Presumably, the order was included in records provided by the prior owner upon petitioner's purchase of the building in 2005; if not, it was easily available from the DHCR. (Compare FIYA RSD Partners, LLC v Lee, 51 Misc 3d 1225[A], 2016 NY Slip Op 50815[U] [Civ {**58 Misc 3d at 651}Ct, NY County 2016] [even when a property changes hands by judicial sale or mortgage foreclosure, subsequent owners are not absolved from compliance with the Rent Stabilization Code].)

Conclusion

For the reasons set forth above, respondent's motion for summary judgment is granted and the proceeding is dismissed, without prejudice to any claims petitioner may have for unpaid rent at the legally correct amount.