Recitation, as required by CPLR 2219(a), of the papers considered in review of respondent’s motion for discovery, petitioner’s opposition and cross motion for summary judgment and dismissal of affirmative defenses and counterclaims and ensuing opposition and reply. Papers Numbered Notice of Motion 1 Cross Motion 2 Opposition and Affirmation 3, 4 Affirmation/Opposition 5 DECISION/ORDER Upon the foregoing cited papers, the Decision and Order on these Motions are as follows: Petitioner commenced this non payment proceeding against respondents alleging $7,753.71 was due and owing through January 31, 2019 at $2,034.51 per month. The premises are subject to rent stabilization. Respondent Christian Alvarado appeared with counsel and asserted the following affirmative defenses and counter claims. (1) the petition should be dismissed as the legal rent claim of $2,034.51 owed is not the correct amount as there was an illegal rent increase of the rent in 2006-2007; (2) the rent sought is not the correct amount, therefore the rent demand does not contain a good faith approximation of the alleged rent owed; (3) stale rent; (4) warranty of habitability and a counterclaim for warranty of habitability, attorney fees and willful overcharge. Respondent now by motion seeks discovery pursuant to CPLR 408 based upon a showing of ample need. In support of respondent’s claim for an overcharge, respondent points to the DHCR rent history which has the legal rent at $677.76 for Irma Perez in 2006. In 2007 the tenants of record were Margartia Vidot and Bark Samy Lopez and the rent was registered at $1,350. Respondent alleges that petitioner’s predecessor in interest was only allowed to collect a 17 percent vacancy and a 0.06 percent longevity increase for a total legal increase of 29 percent, but instead took an additional 70.19 percent increase. Respondent argues that section “F” of the HSTPA permits overcharge claims and that the court can look at all relevant facts to determine a rent overcharge. Respondent does not dispute any other rent increases. Petitioner cross moves seeking summary judgment and dismissal of respondent’s first and second affirmative defense, and third counterclaim. Petitioner argues that the seminal case of Regina Metropolitan Co., LLC v. New York State Division of Housing and Community Renewal (“Herein Regina Metro”) 2020 WL 1557900, 2020 NY Slip Op 02127 [April 2020], held that “over charges calculations and treble damages provision in part F may not be applied retroactively and these appeals must be resolved under the law in effect at the time the overcharge occurred.” Petitioner argues that as the petition was dated in 2019, and rent overcharge pre HSTPA is guided by the law in effect at that time, and respondent’s claim can only go back to 2014, which respondent does not contest. As such, petitioner maintains there are no issues of fact, and as respondent’s over charge complaint is not viable, summary judgment in its favor is appropriate and seeks dismissal of the respondents affirmative defenses and counterclaims. Petitioner provided signed copies of respondent’s leases for the years 2014 through 2019. Respondent in opposition notes that based upon the several leases he signed with a preferential rent, the unexplained large rent increase in 2006-2007, and the failure by the petitioner is giving the respondents a rent rider explaining how the rent was calculated as required by RSC 2522.5(c)(1)(1), are all indicia of fraud, which is an exception to the holding in Regina Metro. (See Grimm v. Div. Of Housing and Community Renewal 15 NY3d 358 [2010]; Morton v. 338 West 46th Street Realty LLC, 992 NYS2d 621 [Civ Ct. NY Co 2014]) and Thorton v. Baron (5 NY3d 175 [2005]; 560-568 Audubon Realty Inc. v. Rodriguez, 54 Misc.3d 1226(A)[Civil Ct. NY Co. 2017]). Discovery Courts have held that pursuant to CPLR 408 disclosure may be granted by permission of the court. To determine whether there is “ample need” court have looked to whether a party has proven the following six considerations: (1) whether petitioner has asserted facts to establish a cause of action; (2) whether there is a need to determine the information directly related to the cause of action; (3) whether the requested disclosure is narrowly tailored and is likely to clarify the disputed facts; (4) whether prejudice will result from granting the application for disclosure; (5) whether prejudice will be diminished by a court order; (6) whether the court can structure discovery (New York University v. Farkas, 121 Misc.2d 643 [Civil Ct NY Co 1983]). Respondent contends that due the questionable rent increases in 2006 to 2007, from a prior tenancy, the court should look beyond the four years from the claim of an overcharge pursuant to the holdings in Grimm v. DHCR, 15 NY3d 358 [2010]; Morton v. 338 West 46th Street Realty LLC, 992 NYS2d 621 [Civ Ct. NY Co 2014]). Respondent argues that in 2006 the rent jumped from $677.76 to $1350, and those increases were unlawful even after crediting a vacancy and longevity increase. Respondent also argues that he was never given a rent calculation rider when he moved in 2010 and had several preferential rent leases. Based on the aforementioned, respondent argues that he has demonstrated ample need in seeking discovery (See New York University v. Farkas, 121 Misc.2d 643 [Civ Ct NY County 1983]). In the seminal case of Regina Metropolitan Co. LLC v. New York Division of Housing and Renewal, 2020 WL 1557900, 2020 NY Slip Op 02127 [April 2020], the court held that rent overcharges must be decided on the law that was in effect at the time of the overcharge and that section “F” violated due process as it imposed a penalty for conduct imposed in the past and limited the overcharge claim to four years as contemplated for in pre HSTPA claims (See former RSL-26-516[a][2]. Regina, supra reinforced that holding that in claims prior to the enactment of HSTPA, only where a party demonstrated a “colorable claims of fraud” or identification of “substantial indicia” of a “landlord’s fraudulent deregulation scheme to remove an apartment form the protections of rent stabilization”, a rental history could be examined beyond the four years from the date of the claim. (See also Matter of Grimm v. New York State Div. Of Housing and Community Renewal, 15 NY3d 358 [2010]. Further the court reiterated its holding in Matter of Boyd v. New York State Div. Of Housing and Community Renewal, 23 NY3d 999 [2014] which found that absent fraud, the four year look back rule applied to reviewing rental history in examining a rent overcharge. The based date, absent a showing of fraud, is the rent actually charged four years before the overcharge claim, adding any legal increases entitled to the owner pursuant to the RSL for pre HSTPA claims (See Corcoran v. Narrows Bayview Co. LLC, 183 AD3d 511 [1st dept 2020] (absent proof owner engaged in fraud, overcharge subject to four year look back period), West v. BCRE 90 West Street LLC, 124 NYS2d 886 [Sup. Court NY Co. 2020 (where respondent failed to prove fraudulent scheme, base date is rent in effect four years prior to filing an action plus lawful increases). Here, the mere fact that the rent increased in 2006-2007 from $677.76 to $1,350 and respondent received preferential leases, or a failure to provide documentation of how the rent was calculated in 2010, does not in of itself rise to an indicia of fraud, requiring a look beyond the four year period, for pre HSTPA claims. The court notes that in 2010, when a new tenant moved in, the $677.76 rent was permitted to be increased with a 17 percent vacancy and a 16 year longevity increase at 0.006 percent for a rent of $869.06. An additional increase of $480.91 thirteen years ago, even taking into account that the respondent was signing preferential leases throughout his tenancy, does not rise to an indicia of fraud and does not indicate a nefarious intent. Respondent's offer of fraud, other than the DHCR rent history stems from his assertion that he failed to receive a rent stabilized rider calculation and the preferential leases he signed. The court notes that there is no set formula to determine whether a tenant has raised an "indicia of fraud," a mere jump alone in the rent would not trigger an investigation beyond the four years (Matter of Lowinger v. DHCR, 161 AD3d 550 [1st Dept 2018]). The court of appeals has carved out an exception to the four year rule in Matter of Grimm v. New York State Div. Of Hous. & Community Renewal, 15 NY3d 358 [2010] where the court found that given the specific facts of this case, that “where there is an indicia of possible fraud that would render the rent records unreliable, it was an abuse of discretion for DHCR not to investigate it” (id. At 33). The court found factors such as the tenants not receiving rent stabilized riders, failing to file rent registrations, filing registrations retroactively, substantial increases in rent and the requirement of the tenants for making their own repairs in exchange for a “lower” rent indicia of fraud requiring a look back beyond the four year rent history. Grimm, supra also held that “an increase in the rent alone will not be sufficient to establish a colorable claim of fraud” and a mere allegations of fraud alone, would not suffice to inquire beyond the four year period. What is required “is evidence of landlord’s fraudulent deregulation scheme to remove an apartment from the protections of rent stabilization. Although some mathematical irregularity may be seen in 2006-2007, the court is bound by the holding in Regina, Surpra. Respondent has not come forth with adequate facts to demonstrate fraud, requiring a look back beyond four years and has failed to demonstrate a cause of action entitling respondent to discovery of leases from prior tenants from 2006 onwards and any documentation associated with them or the premises from 2006 (Farkas, 121 Misc2d at 647). Respondent does not dispute any increases since his initial lease in 2010 based upon his preferential leases. Here, respondent having failed to sufficiently raise an indicia of fraud, discovery from 2006 is denied. Based upon the above, respondent’s motion for discovery is denied, petitioner’s cross motion to dismiss respondent’s first and second affirmative defenses and third counterclaim is granted. Petitioner motion for summary judgment is denied as respondent has raised the affirmative defense of warranty of habitability and stale rent which is properly before the court. The case is restored to the courts calendar to October 5, 2020 10:00 am for all purposes including trial. This constitutes the decision and order of this court. Dated: September 18, 2020
