Recitation, as required by CPLR §2219(a), of the papers considered in the review of petitioner’s motion.Papers NumberedRespondent’s motion 1Petitioner’s opposition 2Respondent’s reply 3Court file passimDECISION/ORDER Upon the foregoing cited papers, the decision and order on this motion is as follows:This is respondents’ motion for summary judgment pursuant to CPLR 3212 on the (i) first counterclaim entering money judgment representing overcharge and damages arising out of rent overcharge, (ii) first affirmative defense dismissing petition for failure to state a cause of action, (iii) granting such other and further relief as this court may deem just and proper. Respondents’ motion for summary judgment is granted to the extent that this court finds rent overcharge with damages to be determined; petition is dismissed and respondents’ counterclaims for attorney fees, as prevailing party and pursuant to Real Property Law §234 shall be determined at a hearing, for the reasons stated below.Procedural HistoryPetitioner Gold is Gold LLC. (“petitioner”) commenced a nonpayment of rent proceeding against respondent Genaro Martinez and Maricruz German (“respondents”) on February 23, 2018, seeking a final judgment in the amount of $9,270 in connection with respondents’ rent stabilized tenancy at 649 Central Avenue, Apt. 2L, Brooklyn, New York 11207 (“subject premises”). On February 28, 2018, respondent Ms. Maricruz German (“respondent” or “Ms. German”) interposed a pro se answer. Thereafter, Ms. German retained counsel and on or about May 18, 2018, interposed a verified amended answer. Ms. German asserted several affirmative defenses including rent overcharge and several counterclaims including treble damages. Respondent then filed this instant summary judgment motion. The motion was fully briefed as petitioner submitted its opposition, and respondent submitted its reply.DiscussionSummary judgment is a drastic remedy that is appropriate only when proponent can establish that there are no triable issues of fact. 1540 Wallco, Inc. v. Smith, 2017 N.Y.Misc. LEXIS 43 (N.Y.City Civ. Ct. Bx. Cty. 2017)(summary judgment is a drastic remedy which should not be granted where there is any doubt as to the existence of material and triable issues of fact). A proponent of summary judgment must demonstrate that there are no material issues of fact in dispute and that he is entitled to judgment as a matter of law; the evidence must be viewed in favor of the opponent of the motion. See Kahona Beach LLC v. Santa Ana Rest. Corp., 29 Misc.3d 1210(A)(Sup.Ct. N.Y. Cty. 2010). Once a movant establishes entitlement to judgment as a matter of law, the burden shifts to opponent to show that triable issues of fact exist. See Zuckerman v. City of New York, 49 N.Y.2d 557 (1980). Here, for the reasons stated below respondents have established sufficient entitlement of summary judgment for the court to find rent overcharge upon petitioner’s failure to show triable issues of facts.i. Rent overchargeWhen an overcharge petition or complaint is made, examination of the rental history is usually limited to the four-year period immediately preceding the filing of a complaint or petition. See Gilman v. NY State Div. of Hous. & Community Renewal, 99 N.Y.2d 144 (2002). Such date serves as the base date by which to calculate overcharges, if any. See Taylor v. 72A Realty Assoc., L.P., 151560/14, NYLJ 1202788058828 at *1 (App. Div. 1st Dept. 2017).It is undisputed that the subject premises are rent stabilized. Registration history and/or rent roll annexed as exhibits by both respondents and petitioner reflect that petitioner registered the subject premises at $1,300 per month from June 1, 2013 to May 31, 2014 and stated that the tenant of record was Elida Plasencia. Thereafter, on July 29, 2015, petitioner registered the premises as vacant for the year 2015 but registered the rent at $1,352 per month.1 Petitioner then registered the subject premises at $1,700 based on a vacancy increase with Major Capital Improvement increase (“MCI”) from August 1, 2013 to July 31, 2016 and reflecting respondents as tenants. Respondents allege that a rent stabilized lease rider was not included with their initial lease and petitioner offers no proof or explanation to refute this allegation. Petitioner and respondents in fact entered into an initial lease agreement that commenced on August 1, 2015 and ended on July 31, 2016. Subsequently, petitioner registered the subject premises at $1,734 per month from August 1, 2016 to July 31, 2018 and the DHCR registration reflecting respondents as tenants. Petitioner and respondents entered into a two-year rent stabilized lease renewal that commenced on August 1, 2016 and ended on July 31, 2018 and respondents were provided with a rent stabilized lease renewal form.Respondents claim rent overcharge upon discovery of the fact that when they initially entered into a lease agreement with the petitioner, their rent was higher than the permitted vacancy increase of 18 percent for a one-year lease. Since respondents first raised the rent overcharge counterclaim by a verified answer in May 2018, the court may examine rental history from May 2014 as within the four-year rule. Respondents allege that there was no approved MCI order from the New York State Division of Housing and Community Renewal (“DHCR”) for the subject building. Respondents also assert that the rent registration for the year 2015 filed with DHCR is incorrect because subject premises was not vacant. To substantiate respondents’ claim, Ms. German asserts that prior to their occupancy of the subject premises she had visited the subject premises and it was not vacant. Ms. German then alleges that upon information and belief Elida Plasencia, the same person who was the named tenant in the year 2014, occupied the subject premises immediately before respondents moved in Ms. German further states in her affidavit that her brother also lives in the subject building and her brother believes the same is true. There is no affidavit from her brother.Although both parties do not dispute that respondents’ initial one-year lease term commenced on August 1, 2015, petitioner failed to address the discrepancy in the lease term it reported to DHCR. Petitioner did not produce an order from DHCR that approved the MCI claimed in 2016 rent registration. Instead, petitioner attempts to justify the increase from $1,352 to $1,700 as proper increase [$1352+$246.76 (vacancy increase of 18.5 percent) + $101.25 ($4,050 MCI)]. Petitioner alleges that there were improvements to the subject premises for which invoices were produced — one dated June 15, 2015 in the amount of $2,000 from Zone Plumbing and Heating, Corp. and second dated July 5, 2015 in the amount of $2,050 from Manhar Construction, Inc. Both invoices states “paid cash”. Thereafter, petitioner alleges that the rent increase to $1,734 from August 1, 2016 is proper as having taken 2 percent increase of $1700 for a two-year lease renewal term. Petitioner has not produced any MCI increase approval order from DHCR. An owner of a building-wide improvement cannot charge MCI increase until a DHCR order authorizes the charge and sets the amount. See DHCR Fact Sheet #24. As such, the $101.25 per month MCI increase cannot serve as a basis for the increased reflected in the DHCR registration for 2016.2The increase is otherwise unsupported and therefore provides the court with one of the indicia of fraud required to look back beyond the four-year statute of limitation as well as factor supporting a finding of willful overcharge. Taken all together — the lack of any other documentary evidence aside from the two invoices, the conflicting information on the invoices which indicate installation of bathroom items predating demolition, invoice from a company/contractor that underwent dissolution five years prior to the issuance of the invoice, lack of affidavit from personnel with personal knowledge of such improvements, respondent’s affidavit (although self-serving) that there were no improvements when the respondents moved in, petitioner’s failure to provide a rent stabilized lease rider with IAI items and their total cost included in the rent calculation — this court does not find a legitimate IAI increase. While petitioner does not plead the basis of the overcharge as attributable to IAI but rather an MCI, its reliance on the alleged work at the premises to support the increase fails and insufficient to rebut that it overcharged respondents. (see Matter of H.O. Realty Corp. v. State of N.Y. Div. of Hous. & Community Renewal, 46 A.D.3d 103, 844 N.Y.S.2d 204 [1st Dept. 2007]). Petitioner submitted no affidavit by a person with knowledge justifying the rent increase, whether MCI or IAI. (see Matter of Mangano v. New York State Div. of Hous. & Community Renewal, 30 A.D.3d 267, 817 N.Y.S.2d 262 [1st Dept 2006]).Petitioner also failed to address the increase from $1,300 to $1,352 for the year 2015, albeit claiming the subject premises was vacant. Respondents contend that the subject premises were occupied by the same tenant who occupied it in 2014 and as such the maximum allowable increase upon renewal would have been $13 for a one-year and $35.75 for a two-year lease. Therefore, the increase that the petitioner obtained in the year 2015 was also unsubstantiated. So, based on CPLR §213-a, the examination of overcharge stops with the $1,300 per month rent under the four-year “lookback” rule. Since petitioner took unauthorized MCI for the lease term starting August 1, 2015 and ending on July 31, 2016, took unexplained $52 increase in the year 2015, this court finds that the maximum rent that petitioner could have charged respondents within the four-year “lookback” period was $1,300.This court is not however bound by CPLR §213-a by virtue of sufficient indicia of fraud presented in this case. The Court of Appeals held that the court can ignore the four-year “lookback” period for rent overcharge claims where the tenant raises a colorable claim of fraud. See Grimm v. New York State Div. of Hous. and Community Renewal, 15 N.Y.3d 358, 912 N.Y.S.2d 491 (2010). In addition to illegitimate increases discussed supra, petitioner failed to register any legal rent for the subject premises for the years 2011, 2012, 2013. Once again, petitioner in its opposition provided no explanation for the lack of registration but simply state that respondents do not have colorable claim of fraud and make mere allegations of fraud. This court disagrees with petitioner’s position. Taken together with the fact that petitioner purchased the subject building on or about February 1, 2011, immediately failed to register rent from 2011 to 2013, took an unexplained rent increase in 2014, took another unexplained and unsubstantiated rent increase in 2015, and took an unsubstantiated rent increase from August 1, 2015 to July 31, 2016 claiming vacancy increase and an unauthorized MCI increase, this court finds that respondents have colorable claim of fraud.False rent registrations are treated as nullity. See Thornton v. Baron, 5 N.Y.3d 175 (2005). Base date rent reverts to prior registered rent when landlord fails to file rent registration containing lawful rent. See Bradbury v. 342 West 30th Street Corp., 84 A.D.3d 681 (1st Dept. 2011). Landlord is barred from collecting rent in excess of the lawfully registered rent until it files a registration stating the correct legal rent. See RSC [9 NYCRR] §2528.4(a); Matter of 425 3rd Ave. Realty Co. v. DHCR, 29 A.D.3d 332, 816 N.Y.S.2d 411 (1st Dept 2006). As such, this court finds that respondents’ legal regulated rent should be $1007 per month as it is the last lawfully registered rent for this subject premises notwithstanding that this calculation requires inquiry beyond four years from the date that respondents asserted its counterclaims. The court shall base its calculations at trial of respondents’ overcharge claim on the monthly rent of $1,007.00.ii. Dismissal of the petitionRPAPL §711 requires that prior to a landlord commencing a nonpayment proceeding, the landlord must demand rent from the tenant to give him or her time to cure and avoid litigation. The court in Schwartz v. Weiss-Newell, 87 Misc. 2d 558 (Civ. Ct. N.Y. Co. 1976) articulated the standard for sufficiency of a rent demand: “[a] proper demand for rent must fairly afford the tenant, at least, actual notice of the alleged amount due and of the period for which such claim is made. At a minimum, the landlord or his agent should clearly inform the tenant of the particular period for which a rent payment is allegedly in default and of the approximate good faith sum of rent due for each such period.” Id at 561. See ShopRite Supermarkets, Inc. v. Yonkers Plaza Shopping, LLC, 29 A.D.3d 564 (2nd Dept. 2006). The sum sought in the rent demand must not be, “misleading or deceptive”. See 200 E. 74 Corp. v. Dallas, 164 Misc. 2d 417 (Civ. Ct. N.Y. Co. 1995). When determining the sufficiency of rent demand, the test is one of reasonableness when viewing the attendant circumstances. See Hughes v. Lenox Hill Hosp., 226 A.D.2d 4 (2nd Dept. 1996). Furthermore, the rent demand is not amendable. See Chinatown Apartments v. Chu Cho Lam, 51 N.Y.2d 786 (1980).Here, petitioner cannot maintain a nonpayment proceeding where the rent amount sought in the rent demand is neither proper (because of overcharge) nor reasonable since the court as discussed supra found that respondent’s base rent is $1,007 per month. Since rent demand is not amendable, petitioner’s nonpayment proceeding is hereby dismissed pursuant to CPLR §3212 insofar as there is no issue of fact that $1,734.00 monthly rent is incorrect and cannot serve as the basis of this non-payment proceeding. See Renaissance Equity Holdings LLC v. O’Neil, 2009 Misc. LEXIS 2416 (Sup. Ct. Kings Cty. 2009)(summary judgment dismissal of petition which substantially misstates the arrears owed is appropriate) and RPAPL §741(4) (petitioner must state grounds upon which the proceeding is based).iii. DamagesPursuant to Rent Stabilization Law §26-516 (a), where an owner is found to have collected an overcharge above the rent authorized for a housing accommodation subject to rent stabilization, that owner shall be liable to the tenant for a penalty equal to three times the amount of such overcharge. See Champagne v. Piller, Case Number 505268/16, NYLJ Pg. 29; Vol. 259; No. 22 (Sup. Ct. Kings Cnty. 02/01/2018). Once the occurrence of a rent overcharge has been established, it becomes incumbent upon the landlord to establish by a preponderance of the evidence that the overcharge was not willful. See Matter of Obiora v. New York State Div. of Hous. & Community Renewal, 77 A.D.3d 755 [2d Dept 2010]; see Matter of Metropolitan 118-80 Ltd. Partnership v. New York State Div. of Hous. & Community Renewal, 83 A.D.3d 944 [2d Dept 2011]). Treble damages may not be awarded for a period more than two years immediately preceding the complaint (RSC 2526.1 [a] [2] [i]). If the owner establishes by a preponderance of the evidence that the overcharge was not willful, the penalty shall be established as the amount of the overcharge plus interest. See Champagne v. Piller, Case Number 505268/16, NYLJ Pg. 29; Vol. 259; No. 22 (Sup. Ct. Kings Cnty. 02/01/2018). By virtue of this decision, all parties are directed to return to court for a conference at the date and time stated below to address whether the overcharge was willful and to determine the amount of damages respondent incurred.ConclusionFor the reasons stated above, respondents’ motion is for summary judgment finding rent overcharge is granted, petition is dismissed, and parties are directed to return to this court to address outstanding counterclaims and to address whether the overcharge was willful in order to determine the amount of damages. Respondents, as prevailing parties, also are entitled to legal fees to be determined at a hearing. All parties shall return to Kings County Housing Court, Part H, Room 507 on January 4, 2019 at 9:30 A.M. to schedule a trial on counterclaims as well as a hearing on reasonable attorneys’ fees.This constitutes the decision and order of the court.SO ORDEREDDated: Brooklyn, New YorkDecember 5, 2018
