Recitation, as required by CPLR §2219(a), of the papers considered in the review of the Respondent’s motion for leave to file an amended answer and for discovery.Papers NumberedNotice of Motion & Affidavits Annexed 1Notice of Cross-Motion and Affidavits AnnexedAnswering Affidavits 2Replying Affidavits 3ExhibitsMemorandum of lawDECISION/ORDER After submission of the foregoing cited papers, Respondent’s motion is decided as follows:Audubon Realty, LLC (“Petitioner”) commenced this non-payment proceeding against Oriquidea Michel and Yini Michel pursuant to a petition dated January 16, 2018. The petition seeks rent from the Respondents at a deregulated rent amount of $1675.00 from September 2017 through November 2017 and $2700.00 for the month of December 2017.On the first court appearance of February 6, 2018 the proceeding was adjourned to March 8, 2018 for Orquidea Michel (“Respondent”) to retain counsel. Yini Michel did not appear in the proceeding. Northern Manhattan Improvement Corporation appeared on behalf of Respondent on March 8, 2018 and made the instant motion returnable on April 19, 2018. The parties adjourned the motion twice for submission of opposition and reply and the court heard oral argument on July 23, 2018.In the motion Respondent seeks leave to file an amended answer, which includes the following defenses: that the petition fails to state a cause of action, the rent demand is defective, the premises were improperly deregulated, rent overcharge, defective DHCR rent registrations, and breach of the warranty of habitability. The proposed amended answer also includes counterclaims based upon breach of the warranty of habitability, overcharge and legal fees. Petitioner objects to the amendment of the answer on the grounds that the defenses are not pled with sufficient particularity and lack merit.CPLR §3025(b) provides that motions to amend pleadings shall be freely granted absent prejudice or unfair surprise to the opposing party. Moreover, whether to grant leave to amend a pleading is within the sound discretion of the court so far as such amendment is not palpably lacking in merit, Davis v. South Nassau Community Hosp., 26 N.Y.3d 563, 580 (2014); See also Kimso Apts., LLC v. Gandhi, 24 N.Y.3d 403 (2014). The branch of the motion seeking to amend the answer is granted. The proposed amended answer contains defenses directly related to the cause of action for the non-payment of rent and do not pose an unfair surprise to Petitioner. Respondent’s counsel filed the motion between the date of their first appearance on the case and the next adjourn date, causing minimal delay.Furthermore, the defenses are replete with facts in support. For example, Respondent asserts that the DHCR registration does not reflect a proper basis for deregulation of the premises. In the proposed amended answer, Respondent cites the DHCR registration, which reflects a rent regulated rent amount for the premises of $1776.00 in 2013 and in 2014 lists the apartment as exempt after a vacancy increase. Respondent explains that the the vacancy increase plus the $1776.00 charged in 2013 was not sufficient to increase the rent to over $2500.00 as required in 2014. These facts support the defense of rent overcharge and improper deregulation. Moreover, Respondent’s rent overcharge claim, interposed on April 19, 2018, is within the four year statute of limitations pursuant to CPLR 321-a because Respondent is claiming overcharge from when she moved into the premises in September 2014. Respondent’s breach of warranty of habitability defense also lists specific conditions that bolster the defense and counterclaim. The facts stated within the defenses afford Petitioner an opportunity to prepare for trial and defeat Petitioner’s argument that they lack in merit. The court also notes that the initial answer was filed by Respondent when he was not represented by counsel and may not have been aware of the defenses available to him. Accordingly, the proposed amended answer annexed to the motion as Exhibit G is deemed served and filed.The second branch of Respondent’s motion is for leave to conduct discovery with respect to the purported deregulation of the premises. The parties agree that Respondent moved into the premises on September 1, 2014 pursuant to a lease agreement dated September 1, 2014 (Resp. Ex, C). The lease provides in handwriting “Exempt Unit,” that the monthly rent is $1625.00, and also contains a written notation, “Unit Charge: $2,600.00.” As stated above, the rent for the premises was registered at a rent stabilized amount of $1776.00 in 2013 and the apartment was registered as exempt after a vacancy on July 29, 2014. Respondent maintains that in order to have achieved high rent deregulation, Petitioner would have had to take a vacancy and longevity increase (20 percent vacancy plus.6 percent multiplied by the number of years since the last vacancy increase in 2004, or 25.4 percent) plus an additional increase. Respondent argues that the 25.4 percent increase above the registered rent of $1776.19 totals $2,227.34 ($451.15 plus $1776.19) which does not reach the $2500.00 threshold for high rent vacancy decontrol in place in 2014 per the Rent Guidelines Board Order in effect (Order #45). Accordingly, Respondent seeks to obtain documentation and information which explains how the additional increase was calculated that afforded Petitioner the right to remove the apartment from rent stabilization. Respondent also maintains that the lease is confusing and does not support Petitioner’s position that the premises are not subject to rent stabilization. Specifically, she asserts that if the premises were truly deregulated, Petitioner did not need to charge her a lower rent and indicate a higher “Unit Charge” as Petitioner would have been entitled to set the rent at whatever amount it chose once it reached the $2500.00 threshold in 2014.Petitioner argues that Respondent may not seek discovery with respect to the deregulation of the premises because it occurred over four years after she filed the answer and she is therefore barred from examining the rent registration pursuant to CPLR 312-a. Based upon multiple appellate cases, Petitioner’s argument fails. In East West Renovating Co. v. DHCR, 16 A.D.3d 166 (1st Dept. 2005), the court held that the four year statute of limitations barring examination of rental records in a rent overcharge case pursuant to CPLR 213-a does not apply in cases challenging the rent regulatory status of the apartment. See also Gersten v. 56 7th Ave., LLC, 88 A.D.3d 189 (1st Dept 2011); 2701 Grand Assn LLC v. Morel, 31 N.Y.S.3d 924 (App. Term 1st Dept. 2016); Aimco 322 E. 61st St., LLC v. Brosius, 21 N.Y.S.3d 803 (App. Term 1st Dept. 2015). Petitioner urges the court not to follow appellate authority which has granted discovery to tenants challenging the rent regulated status of the apartment. Petitioner maintains that the appellate decisions conflict with the relevant statutes that effectively created the “Four Year Rule” or four year statute of limitations barring examination of rental registrations beyond the four years prior to assertion of an overcharge complaint. This court does not have the authority to ignore appellate precedent. Therefore, Respondent’s motion for discovery is granted with respect to obtaining information related to the deregulation of the premises in 2014.Respondent also seeks discovery connected to an increase in the rent stabilized rent amount from $653.06 in 2004 to $1350.00 in 2005 to determine how Petitioner calculated this increase. Respondent asserts that without this increase Petitioner would not have been entitled to remove the premises from stabilization in 2014. Respondent also notes that the marking on the registration in 2005, that the rent was increased due to a vacancy increase, does not support an increase in the rent of over 200 percent. Petitioner objects to an award of discovery dating back to 2004 as the premises were deregulated in 2014. Petitioner maintains that the court should limit any discovery award to the time the premises were deregulated.Faced with a similar issue, the court in Aimco 322 E. 61st St., LLC v. Brosius, supra, permitted the tenant to examine documents with respect to Individual Apartment Improvements that occurred a year prior to the deregulation of the premises. The court reasoned that issues of fact existed including “whether landlord’s expenditures for apartment improvements in the year prior to the high rent vacancy justified the increase in rent over the $2,000.00 threshold then in effect.” Id. at 2. In the instant proceeding, the rent could not have increased from $653.06 in 2004 to $1350.00 in 2005 on the basis of a vacancy increase alone, as stated on the registration, and without the landlord having performed IAIs or MCIs. Here too, Respondent cannot accurately determine the correct increases without discovery dating back to 2004. Accordingly, as in Aimco 322 E. 61st St., LLC v. Brosius, this court will permit discovery from the period of 2004 through 2014. The court limits the commencement period of Respondent’s document demand and interrogatories to January 1, 2004, rather than January 1, 2000 as requested.Accordingly, the motion is granted in full. The proceeding is marked off of the court’s calendar for discovery. Petitioner is ordered to tender to Respondent documents responsive to the demand and responses to the interrogatories within 45 days after service of a copy of this decision, along with Notice of Entry, on Petitioner’s counsel. The proceeding may be restored to the calendar by motion or stipulation.This constitutes the decision and order of this court.Dated: New York, New YorkJuly 30, 2018
