Civil Court of the City of New York, New York County, November 18, 2019

Lenox Hill Neighborhood House (Ilene Goodman of counsel) for respondent.

Robert Mizrahi for petitioner.

The decision and order on this motion and trial are as follows:

CRP 88 East 111th Street LLC, the petitioner in this proceeding, commenced this holdover proceeding against Viki Vizcho Guamarrigra (respondent), a respondent in the proceeding, and "Jane Doe," another respondent in this proceeding (collectively, respondents), seeking possession of 1814 Broadway, Suite 400, New York, New York (the subject premises), on the grounds that respondent refused an offer of a lease renewal. Respondent interposed an answer dated May 16, 2017, with a number of defenses, with an emphasis on respondent's claim seeking damages resulting from a rent overcharge, including treble damages. The court held a trial of this matter on June 17, 2019, and then adjourned the matter for posttrial submissions to July 30, 2019. Subsequent to the submissions of the posttrial memorandums, respondent moved by order to show cause to stay this court from rendering a decision and to grant respondent the opportunity to supplement the trial record with a Division of Housing and Community Renewal (DHCR) response to a Freedom of Information Act (5 USC § 552 [FOIA]) request. On September 26, 2019, the court granted both parties the opportunity to brief the recently-decided Appellate Division case, Dugan v London Terrace Gardens, L.P. (177 AD3d 1 [1st Dept 2019]), and adjourned the matter to October 31, 2019, for submission.

Order to Show Cause

Respondent requests that this court reopen the trial record to submit a DHCR order dated October 3, 2016, denying a major capital improvement (MCI) rent increase on the basis that the petitioner withdrew its application for an MCI.

Trial courts have the power to permit a litigant to reopen a case under appropriate [*2]circumstances (Lieberman-Massoni v{**66 Misc 3d at 330}Massoni, 146 AD3d 869, 869 [2d Dept 2017]), although a trial court's discretion to reopen a case after a party has rested should be "sparingly exercised." (LaSalle Bank N.A. v Nomura Asset Capital Corp., 72 AD3d 409, 412 [1st Dept 2010].) "When a motion to reopen is made, the trial court should consider whether the movant has provided a sufficient offer of proof, whether the opposing party is prejudiced, and whether significant delay in the trial will result if the motion is granted." (Sweet v Rios, 113 AD3d 750, 752 [2014].)

This standard presents challenges to respondent's motion. Respondent made its FOIA request to DHCR two weeks before the trial. Given that this proceeding was commenced in 2017, respondent had more than ample time to make the necessary arrangements to obtain orders from DHCR. Furthermore, at no time during the trial did petitioner attribute the rent increase to an MCI, which achieves the same end as respondent's proposed evidence. Submission of the DHCR order under these circumstances sustains little, if any, effect on the court's decision other than a further delay of this proceeding. Accordingly, the court denies respondent's order to show cause.

Trial

The parties stipulated that petitioner is the proper party to commence the proceeding; that petitioner and respondent are in a landlord/tenant relationship with one another; that the predicate notice was timely served; that the subject premises are subject to the Rent Stabilization Law; that petitioner has complied with the registration requirements of Multiple Dwelling Law § 325; and that respondent did not execute the lease offer commencing in June 2016.

Respondent introduced into evidence a history of registrations of the subject premises filed with DHCR pursuant to 9 NYCRR 2528.3 (the registration history). The registration history shows a legal regulated rent (LRR) as of June 24, 2002, of $455.01 and a one-year vacancy lease commencing on November 11, 2002, with an LRR of $1,500 followed. As noted above, petitioner offered no proof of any improvement, be it an MCI or an individual apartment improvement, that might justify the rent increase from $455.01 to $1,500. The registration history shows that a two-year renewal lease commencing on May 20, 2003, with an LRR of $1,500 followed; that a two-year renewal lease commencing on May 20, 2005, with an LRR of $1,500 followed; that a two-year renewal lease commencing on May 20, 2007, with an LRR of $1,608.75 and a preferential{**66 Misc 3d at 331} rent of $1,500 followed; that a two-year renewal lease commencing on May 20, 2009, with an LRR of $1,745.49 and a preferential rent of $1,627.50 followed; that a one-year renewal lease commencing on June 1, 2011, with an LRR of $1,784.76 and a preferential rent of $1,627.50 followed; that a one-year renewal lease commencing on June 1, 2012, with an LRR of $1,851.69 and a preferential rent of $1,627.50 followed; that a one-year renewal lease commencing on June 1, 2013, with an LRR of $1,888.72 followed; and that a two-year renewal lease commencing on June 1, 2014, with an LRR of $2,035.09 followed.

Discussion

Petitioner cites CPLR 213-a in support of its argument that the statute of limitations bars respondent's claim of overcharge. However, the New York State Legislature amended CPLR 213-a on June 14, 2019, by the Housing Stability and Tenant Protection Act of 2019 (HSTPA). The legislature passed the HSTPA while this proceeding was pending. The legislation directed that the statutory amendments regarding overcharge "shall take effect immediately and shall apply to any claims pending or filed on and after such date." (HSTPA, L 2019, ch 36, § 1, part F, § 7; Dugan, 177 AD3d at 8.) Although respondent interposed rent overcharge defenses and counterclaims in an answer before the effective date, the court had not entered a final judgment as of the effective date, which renders his overcharge claim "pending" as of the effective date. (US Bank N.A. v Saintus, 153 AD3d 1380, 1382 [2d Dept 2017]; Cooke-Garrett v Hoque, 109 AD3d 457 [2d Dept 2013]; Knapek v MV Southwest Cape, 110 AD2d 928, 929 [3d Dept 1985]; Matter of Bailey [BushTerm Co.], 265 App Div 758, 761 [1st Dept 1943]; cf. 400 E58 Owner LLC v Hernson, NYLJ, Sept. 4, 2019 at 24, 2019 NYLJ LEXIS 3091 [Civ Ct, NY County 2019]; 315 Jefferson LLC v Dominguez, 65 Misc 3d 418 [Civ Ct, Kings County 2019] [rent overcharge claim was not "pending" as of the effective date when the court dismissed the claims before the effective date].)

CPLR 213-a, as amended by the HSTPA, now expands the statute of limitations on overcharge claims from four years to six years. (L 2019, ch 36, § 1, part F, § 6.) In addition, and most relevant to the case in point, the HSTPA expands examination of the rental history and determination of rent overcharges and legal regulated rents, by stating, "the courts, in investigating complaints of overcharge and in determining legal regulated{**66 Misc 3d at 332} rents, shall consider all available rent history which is reasonably necessary to make such determinations." (Emergency Tenant Protection Act of 1974 § 12 [a] [9] [McKinney's Uncons Laws of NY § 8632 (a) (9) (L 1974, ch 576, sec 4, § 12), as amended by HSTPA, L 2019, ch 36, § 1, part F, § 2] [emphasis added]; Dugan, 177 AD3d at 9; 699 Venture Corp. v Zuniga, 64 Misc 3d 847, 853 [Civ Ct, Bronx County 2019].) "Gone is the temporal limitation on the rental history that can be examined to determine whether an overcharge based on a registered rent . . . has occurred." (699 Venture Corp. at 854.)

In its review of CPLR 213-a, the court must presume that each word used in a statute expresses a distinct and different idea (Matter of Tonis v Board of Regents of Univ. of State of N.Y., 295 NY 286, 293 [1946]), and that the legislature inserted every provision of a statute for some useful purpose. (McGowan v Mayor of City of N.Y., 53 NY2d 86, 95 [1981]; Matter of Albano v Kirby, 36 NY2d 526, 530 [1975].) Conversely, the court cannot conclude that the legislature deliberately placed a phrase in the statute which was intended to serve no purpose. (Matter of Rodriguez v Perales, 86 NY2d 361, 366 [1995]; Matter of Smathers, 309 NY 487, 495 [1956]; People v Dethloff, 283 NY 309, 315 [1940]; see also Matter of New York County Lawyers' Assn. v Bloomberg, 95 AD3d 92, 101 [1st Dept 2012] [courts must avoid a construction rendering statutory language to be superfluous].) Canons of statutory construction compel the finding that words like "all" and "shall" allot this court broad review and/or application power. Accordingly, the amended CPLR 213-a instructs this court "to look back as far as necessary to find the most reliable rent registration upon which to base its determination regarding an overcharge claim," which in this current context means reviewing the disputed increase in rent from 2002. (699 Venture Corp., 64 Misc 3d at 854; see Dugan, 177 AD3d at 8-9.)

Here, the rent registration history shows an increase of more than 300% in 2002, obviously in excess of permissible increases in effect at the time. (See 9 NYCRR 2522.8 [a] [1].) Had petitioner followed the respective legal increases promulgated by the Rent Guidelines Board, pursuant to Administrative Code of the City of New York § 26-511 (c) (5-a) and 9 NYCRR 2522.8 (a) (2), the rent for the subject premises would have increased as follows: an LRR of $536.91 in 2002 reflecting a 20% one-year vacancy increase less the difference between a 4% two-year renewal and a 2% one-year renewal lease; $644.29 in 2003{**66 Misc 3d at 333} reflecting a 20% two-year vacancy increase; $686.17 in 2005 reflecting a 6.5% two-year lease renewal increase; $735.92 in 2007 reflecting a 7.25% two-year lease renewal increase; $798.47 in 2009 reflecting an 8.5% two-year lease renewal increase; $816.44 in 2011 reflecting a 2.25% one-year lease renewal increase; $847.06 in 2012 reflecting a 3.75% one-year lease renewal increase; $867.06 in 2013 reflecting a $20 increase for a one-year lease renewal; and $934.26 in 2014 reflecting a 7.75% two-year renewal increase.

The renewal lease that petitioner offered respondent predicated rent increases on a baseline well in excess of the permissible legal rent of $934.26. A tenant does not have to execute a lease if the renewal lease offer was not proper. (Haberman v Neumann, 2003 NY Slip Op 50031[U] [App Term, 1st Dept 2003] [renewal notice not in the form prescribed by DHCR]; KSB Broadway Assoc. v Sanders, 191 Misc 2d 651, 652 [App Term, 1st Dept 2002], lv denied 2003 NY App Div LEXIS 6042 [1st Dept 2003] [lease renewal not made prospectively as required]; Mitchell Place Inc. v Capetillo, NYLJ, May 30, 2001 at 20, col 1 [App Term, 2d Dept 2001] [errors in the rent on a renewal lease]; East 122 Realty LLC v Perez, 23 Misc 3d 1131[A], 2009 NY Slip Op 51037[U] [Civ Ct, NY County 2009] [unlawful rent]; First Lenox Terrace Assoc. v Hill, 13 Misc 3d 488, 491 [Civ Ct, NY County 2006] [improper offer of two renewal leases separating rent from parking charges]; Fishbein v Mackay, 36 Misc 3d 1228[A], 2012 NY Slip Op 51529[U] [Civ Ct, NY County 2012] [lease renewal which is not offered on the same terms and conditions as the expiring lease].) Accordingly, petitioner has not proved its cause of action and the court dismisses petitioner's cause of action for possession against respondents, without prejudice to renewal if petitioner makes a proper lease renewal offer that respondent wrongfully declines to sign.

Respondent counterclaimed for overcharge damages, including treble damages, accruing in the immediate two years before his verified answer, which covers the time period from May of 2015 through May of 2017. As stated above, the LRR at that time should have been $934.26. The evidence shows that, from May of 2015 through May of 2017, respondent made 23 monthly rent payments of $1,753.63, a monthly overcharge of $819.37. At a rate of $819.37 for 23 months, the aggregate overcharge petitioner collected was $18,845.51. The court shall award treble damages for this overcharge. (9 NYCRR 2526.1 [a] [2] [i].) Three times $18,845.51 is $56,536.53.{**66 Misc 3d at 334}

Accordingly, the court grants respondent's counterclaim. The court awards respondent a final judgment in the amount of $56,536.53 against petitioner. This judgment amount shall be without prejudice to petitioner's potential cause of action for any unpaid use and occupancy and/or rent.