Recitation, as required by CPLR 2219(A), of the papers considered in the review of Respondent’s motion for limited discovery pursuant to CPLR §408: PAPERS NYSCEF NUMBER Notice of Motion, Affirmation/Affidavit, Exhibits 18-21 Petitioner’s Opposition Affirmation/Affidavit 25 Respondent’s Reply Affirmation 26 Decision/Order Upon the foregoing cited papers, the Decision/Order on this Motion is as follows: granted. Respondent’s motion seeking discovery beyond the 4-year look back period for overcharge claims based upon a claim of fraudulent scheme to deregulate the Premises is granted. Generally, there is a four-year statute of limitations on overcharge claims; in August 2019 the HSTPA enlarged that statute of limitations to six years, but only for conduct occurring after passage of the HSTPA. Here, the alleged scheme commenced in 2012; thus, the four-year statute of limitations applies. Respondent first raised overcharge in her order to show cause seeking to vacate a default judgment and warrant on September 11, 2023 (nyscef 10). The look-back period is, therefore, September 2019. Respondent is seeking documents going back to 2012, beyond the base date. Respondent relies on Petitioner’s rent registrations filed with the Division of Home and Community Renewal (DHCR), which indicate a rent of $652.67 per month in 2011, a vacancy in 2012, and $2000 per month in 2013 (nyscef 20). The increase recorded in 2013 is based upon vacancy of the prior long-term tenant. Respondent calculates the vacancy and longevity increases available to Petitioner at the time and asserts the maximum allowable rent would have been $1082.82, not the $2000 charged. Moreover, the registration for 2012 states only “RS-V 7/17/2012 AMT MISS.” Respondent alleges she moved in in May 2012 with William Grover, as co-tenant. Petitioner did not register her as a tenant until 2015, after Mr Grover vacated, and indicated a vacancy in 2015 when there was not one. Finally, Petitioner registered preferential rents each year after raising the rent to $2000. Petitioner argues that the above is not sufficient indicia of fraud to permit discovery beyond the look-back period of four years. Petitioner claims, instead, that Respondent moved in in 2015 and is only raising this issue now because she is in arrears. Petitioner does not attach Respondent’s initial lease from 2015. Moreover, Petitioner fails to allege any basis for the increase to $2000 after the vacancy in 2012. Petitioner merely states its math is correct but does not attack Respondent’s calculations determining the correct rent in 2013 was $1802.82. Petitioner also argues that Respondent fails to set forth facts establishing common-law fraud, including scienter and reliance. The elements of common-law fraud are not required to show indicia of fraud for purposes of invalidating the base date in an overcharge claim. Ch. 760 of the 2023 Session Law as amended by Ch. 96 of the 2024 Session Law unequivocally modified prior law governing the fraud exception under pre-HSTPA law by rejecting footnote 7 of the decision in Matter of Regino Metro. Co., LLC v. New York State Div. of Hous. & Community Renewal, 35 N.Y.3d 332 (Ct App 2020) and any inference that a common law fraud standard is required by providing that “there need not be a finding that all of the elements of common law fraud…were satisfied.” L. 2023, c. 760, Amended §4, L. 2024, c. 95. Instead, the new law requires a court to review the “totality of the circumstances” to determine whether a landlord knowingly engaged in a fraudulent scheme to deregulate. Id. Based upon the foregoing, the Court grants Respondent’s discovery demand (nyscef 21) and directs Petitioner to provide documents responsive thereto within 60 days of the date this Order is uploaded to NYSCEF. The proceeding is adjourned to December 16, 2024, at 9:30 in Part F, Room 523. This constitutes the decision and order of the Court. A copy will be uploaded to NYSCEF. Dated: October 11, 2024
