Civil Court of the City of New York, Kings County, September 26, 2019

The Law Office of Ellery Ireland, New York City, for Kenna Kindig, respondent.

Wenig Saltiel LLP, Brooklyn, for petitioner.

The decision and order is as follows:

In this nonpayment proceeding respondent moves to dismiss the proceeding pursuant to CPLR 3211 (a) (7), claiming that the petition fails to state a cause of action. Respondent also seeks summary judgment on its "counterclaims" pursuant to CPLR 3212. Petitioner, in response, cross-moves to amend the petition to reflect the correct basis for petitioner's assertion that the subject premises are deregulated.

The court addresses first petitioner's cross motion. In the underlying petition it was alleged that the subject premises "is not subject to rent regulation as it is contained in a building constructed after June 1, 1974." While still claiming nonregulatory status, petitioner's attorney concedes that the subject building was in fact built prior to 1974. Instead he asserts on{**65 Misc 3d at 1018} behalf of petitioner that the subject premises are not subject to rent stabilization by virtue of "high rent decontrol under the then controlling guidelines" (see paras 8, 9 of the affirmation [*2]in support of the cross mot).^[FN1] Petitioner's counsel notes that it was respondent's current motion that brought the "scrivener's error" in the petition to petitioner's attention.

Petitioner notes that there is no prejudice to respondent in allowing amendment of the petition as respondent's counsel is fully aware that petitioner claims "high rent" deregulation. Petitioner's counsel points to the fact that respondent's counsel has been representing another tenant in the subject building (People Home Improvement LLC v Landaverde, index No. LT-085837-18/KI), and has seen the construction plans, and has engaged in conversations where the issues of decontrol were discussed (see para 21 of the affirmation in support of the cross mot; para 12 of the reply affirmation). In opposition, respondent's counsel asserts that the cross motion should be denied for failing to annex a sworn statement by petitioner confirming the basis for the alleged deregulation (see para 3 of the affirmation in opp to the cross mot).

[1] As to the issue of whether petitioner should be permitted to amend the petition to properly reflect the allegation of "high rent" deregulation, respondent has failed to present any meritorious defense to this request. The courts have established a liberal policy with respect to motions seeking amendment of pleadings pursuant to CPLR 3025 (b). (See McCaskey, Davies & Assoc. v New York City Health & Hosps. Corp., 59 NY2d 755 [1983]; see also Villas of Forest Hills v Lumberger, 128 AD2d 701 [2d Dept 1987] [finding the failure to allege that the premises are subject to rent stabilization could be corrected by amendment and does not deprive the court of subject matter jurisdiction]; GSL Enters. v Williams, NYLJ, Feb. 24, 2000 [App Term, 1st Dept 2000] [finding that the tenant was not prejudiced by inadvertent incorrect allegation that the premises were subject to both rent control and rent stabilization and that the defect was curable]; 631 Edgecombe LP v Fajardo, 39 Misc 3d 143[A], 2013 NY Slip Op 50779[U] [App {**65 Misc 3d at 1019}Term, 1st Dept 2013]; Corastor Holding Co. Inc. v Mastny, 12 Misc 3d 13 [App Term, 2d Dept, 2d & 11th Jud Dists 2006].)

Furthermore, in Paikoff v Harris (185 Misc 2d 372, 376 [App Term, 2d Dept 1999]), the court held:

"The Appellate Division, Second Department, has ruled that, in the absence of prejudice to a party, it is permissible to amend the pleadings in summary proceedings even with respect to misstatements of the rent-regulated status of the tenancy. In the instant case, tenants were clearly prepared to litigate the status of their tenancy and were not in the least prejudiced . . . . Accordingly, the misstatement in the petition provides no basis for dismissal." (Citations omitted.)

Under the facts of this case the court determines that no prejudice would result to respondent in allowing the amendment. Furthermore, respondent's raising of the lack of a sworn statement by petitioner is misplaced, as the underlying petition was properly verified by counsel for petitioner pursuant to RPAPL 741, which states in pertinent part:

"The petition shall be verified by the person authorized by section seven hundred twenty-one to maintain the proceeding; or by a legal representative, attorney or agent of such person pursuant to subdivision (d) of section thirty hundred twenty of the civil practice law and rules. An attorney of such person may verify the petition on information and belief notwithstanding the fact that such person is in the county where the attorney has his office" (emphasis supplied).

Accordingly, the court grants petitioner's cross motion amending the petition to allege that the subject premises are not subject to rent stabilization due to "high rent" deregulation.

Turning to the respondent's motion-in-chief, the motion is founded upon respondent's assertion that, as a matter of law, petitioner could not deregulate the subject premises under high rent deregulation in 2017 through application of a vacancy increase and individual apartment increases (IAIs). Respondent asserts that under the Rent Act of 2015 high rent deregulation only occurs when an apartment is vacated after reaching the threshold rent of $2,700, plus any applicable one-{**65 Misc 3d at 1020}year renewal increases.^[FN2],^[FN3] Respondent relies on section 26-504.2 (a) of the Rent Stabilization Law of 1969 (Administrative Code of City of NY) which in part exempts housing accommodations

"with a legal regulated rent of two thousand five hundred dollars or more per month at any time on or after the effective date of the rent act of 2011, which is or becomes vacant on or after such effective date, but prior to the effective date of the rent act of 2015;^[FN4] or, any housing accommodation with a legal regulated rent that was two thousand seven hundred dollars or more per month at any time on or after the effective date of the rent act of 2015, which becomes vacant after the effective date of the rent act of 2015" (emphasis supplied).

Respondent argues that the legislature, as demonstrated by the failure to include the words "is or" in the Rent Act of 2015, unlike earlier acts, effectively removed the ability of landlords to use vacancy increases and/or IAIs to push a vacant unit above the threshold rent of $2,700, as increased.^[FN5]

The leading case in this area is Altman v 285 W. Fourth LLC (31 NY3d 178 [2018]). There the Court upheld the landlord's right to deregulate an apartment through a pre-2011 vacancy increase which resulted in a rent exceeding the then applicable threshold rent of $2,000. The tenant in Altman, like respondent herein, argued that the apartment had to be above the{**65 Misc 3d at 1021} threshold when vacated and not as a result of increases undertaken after the vacancy. In allowing vacancy deregulation the Court in Altman specifically noted that the Rent Regulation Reform Act of 1997, which governed the facts of that case, included two separate and distinct factual scenarios leading to "high rent" deregulation. Those two parts specifically excluded from rent regulation

"any housing accommodation which becomes vacant on or after April [1, 1997] and before the effective date of the rent act of 2011 and where at the time the tenant vacated such housing accommodation the legal regulated rent was two thousand dollars or more per month; or, for any housing accommodation which is or becomes vacant on or after the effective date of the rent regulation reform act of 1997 and before the effective date of the rent act of 2011, with a legal regulated rent of two thousand dollars or more per month" (id. at 184-185 [additional emphasis supplied]).

The Court in Altman reasoned that these two separate and distinct clauses under which high rent deregulation could occur pre-2011 applied separately to vacant apartments where the threshold rent had already been met ("becomes vacant") and those where vacancy increases and/or IAIs were applied after the vacancy to reach a rent beyond the threshold rent ("is or becomes vacant"). As stated by the Court therein:

"The Appellate Division relied on the first clause, which plainly states that the relevant consideration for deregulation purposes is the legal regulated rent 'at the time the tenant vacated' the apartment. By contrast, the second clause provides that the key consideration when there is a vacancy is the legal regulated rent, without reference to the rent at the time of the [*4]tenant's vacatur. Given that the second clause is an alternative to the first (preceded by 'or'), it must mean something different from the first clause—i.e., something other than the legal regulated rent at the time the tenant vacated the apartment. Thus, it is reasonable to read the plain language of the second clause to refer to the legal regulated rent (including the available statutory increases) applicable to the apartment after the{**65 Misc 3d at 1022} tenant's vacancy." (Altman, 31 NY3d at 185.)^[FN6]

See also Aimco 322 E. 61st St., LLC v Brosius (50 Misc 3d 10 [App Term, 1st Dept 2015]) involving a pre-2011 deregulation resulting from IAIs that raised the rent above the $2,000 threshold. As noted therein:

"In this regard, we note that Rent Stabilization Law of 1969 (RSL) (Administrative Code of City of NY) § 26-504.2 (a) contains two statutory bases for high rent deregulation, the second of which is if the housing accommodation 'is or becomes vacant . . . with a legal regulated rent of two thousand dollars or more per month.' " (Id. at 11; see also 233 E. 5th St. LLC v Smith, 54 Misc 3d 79 [App Term, 1st Dept 2016]; Matter of COB 3420 Broadway, LLC v Towns, 156 AD3d 577 [1st Dept 2017].)

[2] There is no gainsaying the fact that the Rent Act of 2015, under which petitioner deregulated the subject premises, fails to contain the two different clauses referred to in Altman. In applying the maxim "inclusio unius est exclusio alterius" (the inclusion of one is to the exclusion of the other), it follows that the legislature, in the Rent Act of 2015, did not intend to allow deregulation of a vacant apartment below the threshold rent, through the vacancy and/or IAI increases if the vacancy occurred after the effective date of the Act.^[FN7] (See also David Hershey-Webb, Key Change In Rent Law Was Overlooked, NYLJ, July 6, 2015 at 6, col 4; Bailey & Treiman, Rent Law of 2015: Deregulation, decontrol, renewals and you, Real Estate Weekly, Aug. 10, 2015 [The New Rent Threshold Needs Two Tenants to Decontrol].) It follows, therefore, and this court holds, that petitioner could not deregulate the vacant subject premises in 2017 by raising the rent above the threshold through a vacancy increase and IAIs.

As such the court holds that respondent tenant Kenna Kindig is a rent-stabilized tenant. The court therefore grants that portion of respondent's motion seeking dismissal of the petition{**65 Misc 3d at 1023} pursuant to CPLR 3211 (a) (7) upon the failure of the petition to state a cause of action, in that the petition, as amended, fails to properly set forth respondent's regulatory status; see RPAPL 741 (4) which specifically requires a petition to "[s]tate the facts upon which the special proceeding is based."

As to the balance of respondent's motion seeking summary judgment on respondent's purported counterclaims such relief is denied without prejudice to asserting in any future proceeding or action. Notably, no "counterclaims" were asserted in respondent's answer which only raises rent overcharge and attorney's fees, each as "Affirmative Defenses."^[FN8] In fact, the only place that the word "counterclaim" appears at all is in the "Wherefore" clause.

Furthermore, even if this court were to interpret the affirmative defenses as counterclaims, which it does not, no affidavit of the tenant with personal knowledge of the facts is submitted to establish overcharge, supported by admissible evidence. Moreover, the respondent's attorney cannot establish the existence of the lease (exhibit A to the mot) as he has no personal knowledge of the transaction and which the court additionally notes is unsigned. Therefore, in the absence of an admissible lease provision establishing a reciprocal right to legal fees no such award can be made.