Cases decided on: June 13, 2019
By Friedman, J.P., Sweeny, Jr., Kapnick, Kahn, Singh, JJ.Laura DiLorenzo, plf-res, v. Windermere Owners LLC, et al., defs-aps — Defendants appeal from the judgment of the Supreme Court, New York County (Lucy Billings, J.), entered October 26, 2017, in favor of plaintiff against them, and from the order of the same court and Justice, entered October 18, 2017, which, following a nonjury trial, directed entry of judgment in favor of plaintiff.Rosenberg, Feldman, Smith, LLP, New York (Richard Bruce Feldman of counsel), and Cullen & Associates, P.C., New York (Kevin D. Cullen of counsel), for appellants. Marc Bogatin, New York, for respondent.KAHN, J.On this appeal, we are asked to determine whether the record sufficiently demonstrates that defendants Windemere Chateau, Inc. (Chateau), the original owner of a residential building located at 666 West End Avenue in Manhattan, and Windermere Owners, LLC (Owners), the successor owner of the building, expended an amount in qualified individual apartment improvements (IAIs) to apartment 4K in that building sufficient to render that apartment exempt from rent stabilization. Should we answer that question in the negative and conclude that defendants imposed a rent overcharge on the apartment’s tenant, plaintiff Laura DiLorenzo, we are then asked to determine whether there was evidence supporting a finding of willfulness on defendants’ part in doing so, warranting an award of treble damages to plaintiff. Upon our de novo review of the record, we conclude that defendants have substantiated their claims that they have made sufficient expenditures for IAIs performed in the apartment to warrant an exemption from rent stabilization and did not impose a rent overcharge. Thus, we do not reach the issue of whether defendants willfully imposed a rent overcharge.I. FACTUAL BACKGROUND Beginning in 1984, Chateau registered apartment 4K with the New York State Division of Housing and Community Renewal (DHCR) as rent stabilized. The apartment continued to be registered as rent stabilized until June 18, 2009. Prior to that date, the registered monthly rent had been $1,450.70.According to defendants, sometime in 2009, renovations were made to apartment 4K, including general contracting, plumbing and electrical work.On September 25, 2009, plaintiff and then-building owner Chateau entered into a one-year lease commencing on October 1, 2009, for apartment 4K. That lease provided for a monthly rent of $2,300.00, plus a monthly supplement for air conditioning. On July 1, 2010, Chateau filed a registration statement with the DHCR declaring that apartment 4K was permanently exempt from rent stabilization due to high rent vacancy.In October 2010, the lease of apartment 4K was renewed for an additional year for a monthly rent of $2,415.00, plus the supplement.On November 18, 2010, Chateau sold the building to Owners and assigned the renewed lease of apartment 4K to Owners as part of its purchase of the building. On August 31, 2011, plaintiff filed a complaint in which she alleged that she was overcharged, in that the lawful stabilized rent for apartment 4K was $1,450.70, and that the apartment was improperly removed from rent stabilization. She further alleged that defendants’ rent overcharge was willful, as demonstrated by defendants’ July 2010 DHCR filing, which, according to plaintiff, was false and fraudulent.II. THE TRIALA nonjury trial commenced on January 19, 2016. At trial, the parties stipulated that defendants would have to have expended $21,972.00 on in apartment 4K in order to be entitled to the rent increase they charged plaintiff. Defendants claimed that in 2009 they spent $82,015.27 in IAIs on the apartment, including $60,000.00 in renovations performed by general contractor HFM Company, Inc. (HFM), $16,365.27 in plumbing work performed by Mike Lorenz Corp. (Lorenz) and $5,650.00 in electrical work performed by Contractors Electrical Service, Inc. (CES).
