In what is believed to be the first appellate decision addressing the retroactivity of the Housing Stability and Tenant Protection Act of 2019 as it pertains to rent overcharge claims, a state appeals court has made clear that overcharge claims pending on the act's enactment date will not be dismissed as time-barred and that the act's changes to overcharge claims will apply to the pending claims.

In a decision penned by Appellate Division, First Department Justice Rosalyn Richter on behalf of a unanimous panel, the justice wrote that because the state statutes regarding rent overcharge claims and their statute of limitations, as amended by the act, "provide that an overcharge complaint can be brought 'at any time,'" then the plaintiffs' pending claims in the case before the panel "are timely."

But the class plaintiffs in the case at hand "may recover for overcharges only as far back as … six years before the [lawsuit's] commencement date," Richter also wrote, referring to the newly expanded six-year look-back—or statute of limitations—period for overcharge claims. (Before the enactment on June 14 of the act, which has been touted by state congressional leaders as the strongest tenant protections in state history, the applicable look-back period was four years.)

Richter also stated that "because plaintiffs' overcharge claims were pending on the effective date of Part F of the HSTPA [Housing Stability and Tenant Protection Act]," which is the part relevant to tenant overcharge claims, "the changes made therein [to overcharge claims] are applicable here" in the case before the panel.

The opinion, and its instructional language on rent overcharge claims, addressed two consolidated class action litigations pending in Manhattan Supreme Court that challenge the deregulation of hundreds of apartments at London Terrace Gardens, a 10-building Manhattan residential complex, according to Richter.

London Terrace, comprised of about 1,000 units, was constructed in 1931 and was originally subject to rent-control laws, the justice explained, adding that since 1974 there's been a mix there of rent-stabilized and rent-controlled apartments.

Beginning in 1993, London Terrace began deregulating apartments, and eventually disputes arose as tenants claimed multiple violations of the changing applicable law, according to Richter, such as a 2009 lawsuit launched by tenant William Dugan and nine other London Terrace tenants. Their class action suit alleged that London Terrace and related defendants wrongfully deregulated apartments while receiving J-51 tax benefits, and that London Terrace failed to return previously deregulated apartments to rent stabilization when the J-51 benefits commenced, Richter wrote.

The Dugan action was consolidated with another, similar 2009 class action.

And in their Sept. 17 opinion, Richter and panel Justices Judith Gische, Cynthia Kern, Jeffrey Oing and Peter Moulton addressed four appeals arising from the consolidated class action litigations.

One of those appellate issues dealt with class plaintiffs' claims for rent overcharges allegedly paid by London Terrace tenants over the years.

In addressing the rent overcharge claims, Richter also wrote that "we reject defendant's contention that the complaint should be dismissed as time-barred."

She continued, "The newly-enacted CPLR 213-a," which is part of the HSTPA, "provides that 'an overcharge claim may be filed at any time,' however '[n]o overcharge penalties or damages may be awarded for a period more than six years before the action is commenced.'"

"Likewise," continued Richter, "the amended version of RSL § 26-516(a)(2) provides that an overcharge complaint 'may be filed with [DHCR] or in a court of competent jurisdiction at any time, however any recovery of overcharge penalties shall be limited to the six years preceding the complaint.'"

Borah, Goldstein, Altschuler, Nahins & Goidel and Proskauer Rose represented London Terrace in the action.

Robert Goldstein, a partner at Borah Goldstein, said in a Sept. 28 email that Borah Goldstein "and our clients are disappointed with the [First Department] court's decision and are discussing what our next steps will be."

Goldstein added that "the June 2019 [HSTPA] legislation and the validity of its draconian retroactive provisions as applied to our case that has been pending since [the case was filed in] 2009 is another important issue for the state's highest court."

Ronald Languedoc, a partner at Himmelstein, McConnell, Gribben, Donoghue & Joseph, helped represent the plaintiff class. He said on Sept. 27 that "the appellate division was absolutely correct that the HSTPA made clear that the law is effective immediately and it applies to pending claims as of the effective date of the law," before noting that plaintiffs' claim is pending.

He added that "we are very pleased" with the decision, though he did note that the ruling went against the class on expanding it, and that the plaintiffs are considering options on that issue, including possibly seeking leave to appeal.

The plaintiffs in the suit are also represented by Emery Celli Brinckerhoff & Abady and Bernstein Liebhard.

The act itself and its series of changes are aimed at bolstering tenant protections, especially for lower-income residents and those living in rent-stabilized dwellings. They include doing away with allowing residential units to be removed from rent stabilization when the cost of rent, or a tenant's income, passed specific thresholds, for example.

The changes led landlords and building owners to form a coalition in July and file a lawsuit in the U.S. District Court for the Eastern District of New York aimed at striking down the state's rent-control laws.

In August, city Civil/Housing Court Judge Frances Ortiz issued an opinion that some landlord lawyers have read to mean that a tenant overcharge claim already dismissed may not be relitigated even if that claim is still within the newly expanded six-year look-back, or statute of limitations, period, because the changes made to the statutory rent overcharge provisions only pertain to still-pending or newly brought claims.

Some tenant attorneys have said that landlord attorneys involved in the Ortiz case have given the decision much more weight than it deserves.