Papers NumberedNotice of Motion and Affidavits Annexed 1Cross Motion and Affidavits AnnexedOrder to Show Cause and Affidavits AnnexedAnswering Affidavits 2Replying Affidavits 3ExhibitsOtherDECISION/ORDER Upon the foregoing cited papers, the Decision and Order on this Motion is as follows:Petitioner commenced the instant nonpayment proceeding in January, 2018, alleging that respondent owes $2,245.00 in rental arrears through January, 2018, at a rate of $3,003.67 per month, in addition to late charges of $25.00, for the subject premises located at 340 East 139th Street, Apt. 2-W, Bronx, New York, 10454. Respondent filed a pro se answer on February 22, 2018, asserting a general denial and that there were conditions in the apartment that the petitioner did not repair. She also indicated that welfare was responsible for a portion of the arrears. Respondent was informed that the proceeding was scheduled for Part D on March 1, 2018 at 2:00 pm. On that date, respondent failed to appear and a default judgment of possession in the amount of $2,220.00 was entered against her, with issuance of the warrant stayed for 5 days. On the same day, respondent sought an order to show cause (OSC) to vacate her default, which was returnable on March 26, 2018, and on that date the case was further adjourned to April 27, 2018, for respondent to obtain counsel.Boom! Health Legal Services appeared on behalf of respondent, but was subsequently substituted by Mobilization for Justice. The proceeding was then adjourned to May 25, 2018, and was further adjourned to July 5, 2018 for motion practice. On July 5, 2018, respondent’s motion to vacate her default and serve and file an amended answer pursuant to CPLR §3025 (b) was settled by stipulation. Respondent served an amended answer which asserts a number of objections in point of law, including the claim that respondent did not promise to pay $3,003.67 per month rent, that, pursuant to RPAPL §711 (2) the rent demand was improper in that it did not reflect the payments made by HRA for the months of December, 2017, and January, 2018, and that the petition fails to state a cause of action due to illegal deregulation of the rent stabilized premises based upon alleged individual apartment improvements (IAls). Respondent’s answer also asserts the following as affirmative defenses and counterclaims: that the subject premises is rent stabilized and not currently registered with the NYS Department of Housing and Community Renewal (DHCR) as required by NYCRR §2528.1, and breach of warranty of habitability due to numerous dangerous conditions that exist at the subject premises that pose a threat to respondent’s life, health and safety pursuant to New York City Civil Court Act §110 (c). Respondent also asserts the affirmative defense of rent overcharge as HRA has made shelter payments on behalf of respondent, and seeks treble damages as she claims that the premises were removed from rent stabilization due to petitioner’s unlawful deregulation scheme. The proceeding was adjourned for trial on August 14, 2018. The additional terms of the stipulation were as follows: the default judgment and warrant were vacated, the proposed amended answer annexed to the motion was deemed served and filed, and respondent waived any personal jurisdictional defenses. The stipulation also noted that petitioner provided respondent’s attorney with a copy of a contractor’s detailed invoice and proof of payments in court, and that if additional documents were requested then respondent’s attorney would make such request by email. The stipulation also provided that respondent reserved the right to move for discovery, if appropriate, and that petitioner reserved all defenses.On August 14, 2018, the parties entered into a stipulation which adjourned the proceeding to September 26, 2018, for argument on a motion for discovery and which set a schedule for motion practice. On September 26, 2018, the proceeding was adjourned to October 4, 2018, and then to October 15, 2018, for argument on the motion.A review of the factual allegations follows. Respondent moved into the subject premises pursuant to an initial lease commencing October 15, 2015, and terminating September 30, 2016, at a monthly rent of $2,966.59. Respondent was given a preferential rent of $1,900 for the term of this lease. Respondent was also provided with a rider titled “Tenant Request for Documentation” regarding the alleged IAI to the subject premises, which indicated that the bathroom and the kitchen were completely renovated, the door and light fixtures were replaced, and that the apartment was re-sheetrocked. The rider indicated that respondent had 60 days of execution of the lease to request that the owner provide documentation to support and clarify the IAI. It appears that respondent did not request such documentation. When this lease expired, respondent signed a one-year renewal lease commencing October 1, 2016, and terminating September 30, 2017, at a monthly rent of $2,966.59. Pursuant to a rider attached to this renewal lease, respondent was given a specific rent concession limited to the term of this lease and was charged a monthly rent of $2,000 for this period of time.In the motion before the Court, respondent seeks an order pursuant to CPLR §408 for leave to conduct pre-trial discovery regarding respondent’s objections in point of law and affirmative defenses, which include a fraudulent scheme to deregulate, illegal deregulation, illegal overcharge and individual apartment Improvements (IAls) for a period of time within and beyond the four year statute of limitations. Respondent is seeking documents and records from January 1, 2001, one year prior to the second DHCR registration filing for the subject premises through the present. Upon review of the DHCR registrations for the subject premises, the court notes that according to DHCR’s records, in 1984 the legal regulated rent was reported to be $300 and that no registrations were found for the period from 1985 through 2001. In 2002 the legal regulated rent was listed as $800 as of February 13, 2003, based upon a lease for the period from April 1, 2002 — March 30, 2003. The registration indicated that the tenant (Margarito Panteleon) was paying a preferential rent of $700. No registrations were filed for the years 2003-2005. Pursuant to a rent registration filed on May 10, 2010, for the year 2006, the legal regulated rent for 2006 was stated to be $1,275 pursuant to a lease issued to Carmen Alicea for the period from October 1, 2005 — September 30, 2007. Pursuant to a registration statement filed October 17, 2007, the apartment was listed as vacant and the legal regulated rent was stated to be $1,275. Pursuant to a rent registration filed on November 10, 2008 for the registration year 2008, the apartment was listed as vacant and the legal regulated rent was stated to be $1,375. Pursuant to a rent registration filed on May 10, 2010, for the year 2009, the apartment was listed as vacant and the legal regulated rent was listed as $1,681. According to DHCR’s record of rent registrations filed, after the owner registered the 2009 rent, Marianela Tavares rented the apartment pursuant to a vacancy lease from July 1, 2009, to June 30, 2010, at the legal registered rent of $1,681. On May 10, 2010, the owner registered the rent at $1,681. According to the rent registrations filed with DHCR, on May 25, 2011, pursuant to a one-year vacancy lease for the period from May 1, 2010 — April 30, 2011, Silvestria Candia rented the apartment at a legal registered rent of $2,055.27. The records indicate that Ms. Candia was given a preferential rent of $1,400 during this period of time. The records indicate that in 2012 and 2013, the owner registered the rent as $2,055.27 based upon a two-year lease renewal for the period of May 1, 2011, to April 30, 2013. According to the records, Ms Candia was charged a preferential rent of $1,410 during this period. In 2014 and 2015, the rent was registered at $2, 137.48, pursuant to a lease renewal for the period from May 1, 2013, to April 30, 2015, and the records indicate that Ms Candia was charged a preferential rent of $1,450.As noted above, respondent states that she rented the premises on October 15, 2015, pursuant to a one-year lease which indicated that the rent for the apartment was $2,966.59 and that she was given a preferential rent of $1900 for the term of the lease. Respondent also states that she was given notice of IAls done to the premises.On July 25, 2016, the subject premises was registered as exempt due to high rent vacancy, and in 2017 the apartment was also listed as an exempt apartment for which registration was not required.Respondent further contends that in addition to the rent registration history summarized above for the tenant’s apartment (2W), DHCR’s Rent Registration History for apartment 5W in the building shows that the owner was engaged in a building-wide fraudulent scheme to deregulate rent stabilized apartments in the building. Respondent argues that the rent registrations for both apartments show a pattern of deregulation of rent stabilized apartments due to alleged high rent vacancy due to unexplained rental increases that are evidenced by a failure to file registration for years, late filings and alleged IAls.In the Matter of Grimm v. State of New York Div Of Hous. & Community Renewal Off. Of Rent Admin. 15 NY3d 358, 366 (CANY, 2010), the Court of Appeals held that where an overcharge complaint alleges fraud, as here, DHCR has the obligation to ascertain whether the rent on the base date is a lawful rent. The Court of Appeals further stated that “[g]enerally, an increase in the rent alone will not be sufficient to establish a colorable claim of fraud, and a mere allegation of fraud alone, without more, will not be sufficient to require DHCR to inquire further. What is required is evidence of a landlord’s fraudulent deregulation scheme to remove an apartment from the protection of rent stabilization.” Id at p.367.Here the respondent alleges that the petitioner engaged in a scheme of fraud to remove the subject premises from the protections of the rent stabilization law, and, in order to evaluate respondent’s overcharge complaint, it is necessary look back beyond the four period because the base rent may have been improperly registered prior to that time frame. The Housing Court has concurrent jurisdiction with DHCR in determining rent overcharge complaints and in applying the four-year rule.In the instant proceeding, upon review of the rent registrations for the subject premises as well as those for apartment 5W, petitioner’s alleged fraudulent scheme is suggested by unexplained and irregular rental increases for years prior to the look-back period and perhaps afterwards, a similar pattern in the registrations between the two apartments and the tenant’s claim that alleged IAls in the subject apartment occurred before and after the look-back period.In opposition, petitioner argues that there is no right to discovery in summary non-payment proceedings. Petitioner contends that respondent has not demonstrated ample need for discovery and the demand is not narrowly tailored, and that requesting leases, rent rolls, riders and myriad other documents for the subject premises dating back to 2001 to present is entirely inappropriate and irrelevant to the proceeding at hand. New York University v. Farkas, 121 Misc2d 643, 646 (Civ. Ct., NY County 1983). Petitioner indicates that the proposed interrogatories are drastically overbroad, and that they are not responsive to the issues related to the subject premises and the outstanding arrears. Petitioner adds that the vast majority of documents sought in discovery may be obtained through a simple subpoena. Moreover, petitioner argues that respondent’s request for documents and interrogatories pertaining to apartment 5W in the same building is overly broad and burdensome in that it is requesting documents from 2001 for an apartment completely unrelated to the instant proceeding and violates the privacy rights of individuals.Summary proceedings in Housing Court operate on an accelerated timetable. (Scherer, Residential Landlord-Tenant Law in New York 1:31 (2004)). Discovery is not available as a matter of right in summary proceeding and is only allowed with leave of court, upon with a showing of special circumstances. CPLR §408; see also, Clark v. Kellogg, NYLJ June 28, 1982, p 6, col 1 (App Term, 1st Dept.); Antillean Holding Co. v. Lindley, 76 Misc. 2d 1044, 1047 (Civ. Ct., NY County, 1983).In New York University v. Farkas, 121 Misc2d 643, 646 (Civ. Ct., NY County, 1983) the court states: “[i]n a simple nonpayment proceeding there is generally no reason to permit discovery as there are usually insufficient facts to justify any further delay to the landlord’s recovery of rent or possession. Thus, to permit discovery in a simple nonpayment case would, more often than not, be prejudicial to the landlord.” (Emphasis added). Discovery is usually granted only in holdover summary proceedings where the issues are often complex and intensely disputed and only when it is narrowly tailored and there is a showing of ample need. Id. at 646. The court in Farkas set out six factors to weigh in determining whether there is ample need for discovery:1. Whether, in the first instance, the petitioner has asserted facts to establish a cause of action;2. Whether there is a need to determine information directly related to the cause of action;3. Whether the requested disclosure is carefully tailored and is likely to clarify the disputed facts;4. Whether prejudice will result from the granting of an application for disclosure;5. Whether the prejudice can be diminished or alleviated by an order fashioned by the court for this purpose;6. Whether the court, in its supervisory role, can structure discovery so that pro se tenants, in particular, will be protected and not adversely affected by a landlords discovery requests.Farkas further provides that a fishing expedition utilized by the landlord to establish a cause of action or by the tenant to establish a defense should never be permitted. Id. 647. Moreover, when the discovery is properly utilized it promotes the efficiency of the litigation process. 153-155 Essex Street Tenants Assn. v. Kahan, 4 Misc.3d 1008 (A) (Civil Court, NY County, 2004).The instant case is not a simple garden variety nonpayment proceeding. Furthermore, respondent’s discovery request comports with the criteria set forth in Farkas. Respondent has demonstrated ample need for discovery. Respondent has stated a meritorious defense and the document request is narrowly tailored, and within petitioner’s control. Respondent has demonstrated through the registration history that petitioner has taken rental increases which removed the subject apartment from the protections of rent stabilization often without any explanation either in the registration notations or in its oppositions papers as to how the rental calculations were made. Moreover, the petitioner not only fails to address the alleged IAls in the subject premises, but also fails to address or even explain the multitude of discrepancies contained in the rent registrations from 2001 to the present.Petitioner’s prejudice is diminished in that discovery must be completed within a short amount of time. Respondent has also established a colorable claim of fraud. Therefore, respondent’s motion seeking discovery is granted. Within twenty days of receipt of this order, petitioner must answer the interrogatories and produce the documents that are within the petitioner’s custody and control only as to apartment 2W for the period from 2001 to present or provide proof that the documentation that has been requested is unavailable, or must be requested from a third party. The court notes that review of the rent registration for apartment 5W is only relevant insofar as it shows that there is a possible fraudulent scheme to deregulate the instant premises at issue.This matter is restored to the calendar on June 28, 2019, at 9:30 am in Part D. The parties are expected to be ready to proceed to trial on said date. The foregoing constitutes the decision and order of this Court, copies of which are being mailed to counsel for both parties.Dated: May 23, 2019
