Plaintiff commenced this Small Claims action to recover $4700 representing her security deposit and first month’s rent she paid to defendant’s property management company (hereinafter referred to as “Empire” or “defendant’s agent”) upon entering into the subject lease with defendant. The lease stated that “Empire Property Management Group LLC represents the interest of the owner” (Plaintiff’s Exh 1, at pg 1). A trial was held on August 22, 2019, and the Court reserved decision. The Court now makes the following findings of fact and decision of law: Section 1804 of the Uniform City Court Act sets forth the procedure to be followed when conducting a Small Claims trial. The Court is required “to do substantial justice between the parties according to the rules of substantive law…” (U.C.C.A. § 1804; see Blair v. Five Points Shopping Plaza, Inc., 51 AD2d 167 [3d Dept, 1976]; Rowe v Silver and Gold Expressions, 107 AD3d 1090 [3d Dept, 2013]). A Small Claims court is given wide latitude and discretion in the conduct of the proceedings (Buonomo v Stalker, 40 AD2d 733 [3d Dept, 1972]). The trier of fact must make credibility determinations regarding the testimony of the parties and the evidence presented. A trial court judge has the opportunity to hear witnesses and observe their demeanor during testimony and to weigh the evidence (Ransom v Spacc, 57 Misc 3d 259 [City Court, Chautauqua County, 2017]) and, accordingly, the determination of the trier of fact as to issues of credibility is given substantial deference since such opportunity affords a better perspective from which to assess witness credibility (see Vizzari v State of New York, 184 AD2d 564 [2d Dept, 1992]). In the instant case, it is undisputed that plaintiff paid $1175 as her first month’s rent for June 2019 and, in addition, paid $3525 as a security deposit (which represented three months of rent at the rate of $1175 for each month), for a total payment to defendant’s agent of $4700. Plaintiff is suing for the return of those monies based on the alleged poor condition of the subject apartment delivered to her on May 31, 2019 (the undisputed date plaintiff received the keys to the apartment) and because of defendant’s refusal to refund her payment when she sought to terminate the lease due to the apartment’s condition. Defendant countersued for back rent for the months of July and August of 2019, in addition to other fees (such as attorney fees and late fees; however, these fees will not be granted since, respectively, defendant had no attorney representation in this case and plaintiff was legally justified in not paying rent for the two subject months). At trial, two employees of Empire presented testimony in defense of plaintiff’s claim and in support of defendant’s counterclaim. Mary Kelly of Empire appeared both at the first appearance in this case and at trial on behalf of defendant, and she confirmed that Empire had informed defendant of the trial. The second and only other witness at trial on behalf of defendant was an employee of Empire who does maintenance work. On behalf of defendant, Ms. Kelly submitted evidence at trial including a “Move In” inspection report (Defendant’s Exh C) as well as a move out “EPM Apartment Inspection” report (Defendant’s Exh B) reflecting that the subject apartment was inspected by Empire on August 5, 2019, the undisputed date that plaintiff returned the apartment keys to Empire’s office. I. Security Deposit To Be Returned Pursuant To The General Obligations Law With respect to the subject security deposit, the Court finds that defendant did not comply with the legal requirement that a landlord provide to a tenant who vacates an apartment a written statement itemizing the reasons for retaining all or a portion of the tenant’s security deposit. General Obligations Law Section 7-108(1-e), which became effective on July 14, 2019, provides that: “Within fourteen days after the tenant has vacated the premises, the landlord shall provide the tenant with an itemized statement indicating the basis for the amount of the deposit retained, if any, and shall return any remaining portion of the deposit to the tenant. If a landlord fails to provide the tenant with the statement and deposit within fourteen days, the landlord shall forfeit any right to retain any portion of the deposit.” It is undisputed that no such required itemized statement was given to plaintiff. The Court brought to the attention of Ms. Kelly during trial that the recently enacted law with respect to security deposits requires that written notification be given to a tenant within 14 days after the tenant has vacated the premises. When Empire did the move out inspection of the subject premises on August 5, 2019 (after the applicable statutory provision cited above took effect), an itemized statement was required to be provided to plaintiff by August 19, 2019, which was not done. Accordingly, pursuant to the General Obligations Law, defendant has forfeited the right to retain any portion of plaintiff’s security deposit. Plaintiff’s claim for the return of her $3525 security deposit is therefore granted. II. Plaintiff’s Claim For Return Of First Month’s Rent Payment Is Denied As for plaintiff’s claim for the return of her first month’s rent payment, that portion of her claim is denied for the following reasons. Plaintiff testified that in April 2019, before entering into the subject lease, plaintiff visited the subject apartment when the prior tenant still lived and had belongings there. It was undisputed that plaintiff paid Empire $1175 to hold the subject apartment prior to plaintiff receiving approval of her rental application. According to plaintiff, Empire told her that she would only be approved if she paid an additional $3525 as a security deposit due to her not having good credit. It was undisputed that after plaintiff’s application was approved, her $1175 payment was applied by Empire as her first month’s rent payment for June 2019. On May 31, 2019 when plaintiff was given the keys to the apartment, plaintiff testified that was the day she saw the subject apartment empty for the first time. Plaintiff submitted photographs into evidence showing the condition of the apartment when it was delivered to her on May 31, 2019. Plaintiff testified that on May 31, 2019 there was a male employee of Empire present when she first walked into the apartment (she did not know his name to provide at trial, but it is undisputed that he was not the same male employee who testified at the trial) and he told her he was doing an “inspection” of the apartment. According to plaintiff, the apartment was not in the condition she expected it to be when she arrived on that day. Plaintiff testified that, on May 31, 2019 while at the apartment, she told the Empire employee that there were several problems with the apartment, including a non working shower. Plaintiff testified that she took the photographs on that day (Plaintiff’s Exh 3), and they depict the following information: Exhibit 3A shows a missing nozzle on the shower faucet which is used to put the shower on. The Court notes that plaintiff’s testimony that she could not take a shower because of the missing nozzle is testimony that was not contradicted or disputed by defendant. In Empire’s move in report (Defendant’s Exh C), the Court finds that no entries of information about the shower were included in the sole section of the report which pertained to a bathroom at the premises (id. at C13). Exhibit 3B shows a hole in one of the bedroom doors. Exhibit 3C depicts black spots on the outside of the refrigerator’s doors. Plaintiff testified that this was “black mold” and that there was also some mold spots inside the freezer. Exhibit 3D shows burn marks on the kitchen counter top. Exhibit 3E shows the window in the shower area with a damaged screen. Exhibit 3G shows chipping paint in the bathroom. According to plaintiff, there was also a hole in the back of the bathroom door. Exhibit 3H was submitted to show that there was no spring on a screen door, which plaintiff testified was the screen door that was attached to her bedroom door and that the screen door caused a loud noise when it was shut. Exhibit 3I shows paint missing on the window sill in one of the bedrooms, and Exhibit 3J shows a missing electrical outlet cover in one of the bedrooms. Plaintiff testified that on May 31, 2019 when she complained to the employee about these problems while they were at the apartment, he told her that she would have to go to Empire’s office on that Monday, June 3, 2019, and report her complaints through the “portal”. Ms. Kelly testified that she stopped by the subject premises for a brief visit on May 31, 2019 after plaintiff was already there and the employee of Empire whose name is David was present conducting the “move in inspection”. According to Ms. Kelly, the first time she became aware of plaintiff’s complaints about the apartment was when plaintiff went to Empire’s office on June 3, 2019. Ms. Kelly testified that no paperwork was ever filled out by David reflecting the complaints plaintiff alleged she told him about on May 31, 2019. On cross examination, plaintiff acknowledged that she did not have a conversation with Ms. Kelly detailing her complaints about the apartment on May 31, 2019, but plaintiff testified that when she was on the phone with her boyfriend telling him she was not satisfied with the apartment Ms. Kelly asked her “how was the apartment?”, to which plaintiff testified she said “it was a disaster”. Plaintiff testified that on June 3, 2019 at Empire’s office, she spoke to Ms. Kelly and told her based on the condition of the apartment for the amount of money she paid she just wanted her money back. On that day, a portal account was set up for plaintiff while she was at the office for her to input her complaints. The print out of plaintiff’s complaint was submitted into evidence at trial (Exhibit 5), and states in relevant part: “When I went to move my belongings into the apartment, the apartment was a disaster. There isn’t a lease legally signed and I’m requesting my deposit n first months rent to be refunded immediately…I am no longer interested in pursuing the lease…” (id. at 5A). In response to plaintiff’s specific complaints about each problem with the apartment, defendant’s agent sent a reply message (id. at 5B-5C). Plaintiff testified the response to her complaints and request for the return of her money was, in essence, that she was legally bound by the lease, that the problems were not substantial and could be repaired, and that she would suffer a monetary penalty if she got out of the lease early. According to plaintiff, in addition to the shower not working, carpet near the front door had tripped her child when they were at the apartment with her boyfriend on Saturday, June 1, 2019. Plaintiff had called the City of Albany Department of Buildings and Regulatory Compliance (hereinafter the “Codes Department”) requesting an inspection, and a code enforcement officer from the Codes Department inspected the subject apartment on June 3, 2019. Ms. Kelly testified that on June 3, 2019, plaintiff refused to allow employees of Empire to enter the apartment to fix anything on that day. Plaintiff testified that she did not want anything fixed before the Codes Department officer conducted the inspection and had the opportunity to observe the problems. The Codes Department found code violations existing in the apartment, and defendant was ordered to take the following corrective action: “Hole in the bedroom door needs repair”; “Rug near front door is a trip hazard”; “Knob on the tub needs to be replaced”; and “Outlet cover in bedroom needs a cover” (Plaintiff’s Exh 6). The compliance deadline for defendant to complete such corrective action was July 10, 2019 (id.). Plaintiff testified that she moved her personal belongings into the subject premises because she had to move out of her prior apartment by May 31, 2019 and she had paid defendant for first month’s rent for June 2019. Plaintiff testified that after moving her furniture and belongings into the subject apartment she was not living there but staying at her boyfriend’s house and was only using the apartment to store her personal property. Ms. Kelly testified that not having a working shower would be “an inconvenience”, but that plaintiff had refused to have Empire’s maintenance staff repair the problem with the shower. Pursuant to Real Property Law § 223-a (Remedies of lessee when possession is not delivered), “there shall be implied in every lease of real property a condition that the lessor will deliver possession at the beginning of the term. In the event of breach of such implied condition the lessee shall have the right to rescind the lease and to recover the consideration paid.” In the instant case, the Court finds that based on the condition of the apartment when defendant gave plaintiff the keys to the apartment, which included a non working shower, defendant violated Section 223-a of the Real Property Law (“RPL 223-a”). Accordingly, as a matter of law, defendant had the right to rescind the subject lease, and she availed herself of that right when she demanded the return of her monies and claimed that there was no longer a valid lease between the parties. However, defendant’s agent improperly refused to refund plaintiff’s June rent money and security deposit. The fact that plaintiff moved her personal property into the subject premises after the lease was rescinded, however, exposed plaintiff to liability for money damages. In applying the fair use and occupancy standard to determine what money compensation defendant is entitled to for plaintiff’s storage use of the premises for the months of June and July 2019, the Court has determined that one half of the $1175 monthly rental amount is the proper measure of damages for each of the two months in which plaintiff’s personal property was stored at the premises, for total damages of $1175. Accordingly, plaintiff’s claim for the return of her $1175 first month’s rent payment is denied. III. Defendant’s Counterclaim For July And August 2019 Rent With respect to August 2019 rent for the subject apartment, defendant’s counterclaim is denied. Plaintiff had her personal belongings moved out of the premises prior to dropping off the keys to Empire’s office on Monday, August 5, 2019. Based on the facts herein and pursuant to substantial justice principles and applicable legal standards, the Court finds that defendant’s evidence is insufficient to justify an award of rent or fair use and occupancy for August 2019. With respect to July 2019 rent, based upon the facts herein and the reasons fully set forth above, pursuant to RPL 223-a the subject lease was rescinded. However, as with June 2019 where the Court applied a fair use and occupancy analysis, because plaintiff had personal belongings in the apartment in July 2019 the Court finds that 50 percent of the monthly rental value is what defendant is entitled to for plaintiff’s storage use of the premises both for June and July of 2019, for a total of $1175. Plaintiff’s first month’s rent payment of $1175 offsets this amount and, accordingly, no monies are awarded to defendant on its counterclaim. The Court finds that even in the absence of a determination that the lease was rescinded and, thus, assuming a claim for rent could be pursued by defendant for the subject two month period when plaintiff possessed the premises, since plaintiff established that significant problems existed in the apartment, the Court’s application of the warranty of habitability doctrine in this case would result in the conclusion that a 50 percent rent abatement was justified for the months of June and July 2019. The factual findings that support a 50 percent rent abatement determination include plaintiff’s testimony and supporting documentation (Plaintiff’s Exh 8) establishing that the problem with the shower and other issues existed during those two months (see H & R Bernstein v Barrett and Hugh, 101 Misc 2d 611 [NY City Civil Court, 1979] [where tenant prevented from bathing, breach of warranty found and a 50 percent abatement justified]). In the instant action, the Court finds that defendant is liable to plaintiff for $3525. Therefore, judgment shall enter in favor of plaintiff and against defendant in the sum of $3525, together with the $20 court filing fee. A Small Claims Judgment for a total amount of $3545 has been issued and mailed to the parties with this Decision and Order herein. So ordered. Dated: September 20, 2019 Albany, New York
