1505 Broadway Realty LLC v. Kahler

2024 NY Slip Op 31633(U)

• Court: Civil Court Of The City Of New York, Kings County
• Decided: May 8, 2024
• Status: Unpublished

Opinion

1505 Broadway Realty LLC v Kahler 2024 NY Slip Op 31633(U) May 8, 2024 Civil Court of the City of New York, Kings County Docket Number: Index No. 306116/22 Judge: Juliet Howard Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication. FILED: KINGS CIVIL COURT - L&T 05/08/2024 04:20 PM INDEX NO. LT-306116-22/KI NYSCEF DOC. NO. 39 RECEIVED NYSCEF: 05/08/2024

CIVIL COURT OF THE CITY OF NEW YORK COUNTY OF KINGS: HOUSING PART J ----------------------------------------------------------------------------X 1505 BROADWAY REAL TY LLC Index No. : 306116/22 Petitioner (Landlord) Seq. No. 002 -against- TODD KAHLER DECISION/ORDER JOSH DEMATTEO Respondents (Tenants) J.DOE I, I.DOE 2 Respondents (Undertenants) -----------------------------------------------------------------------------X Present: Hon. WLIET HOWARD Judge, Housing Court

Recitation, as required by CPLR § 2219[a] , of the papers considered in the review of respondent' s motion for leave for discovery pursuant to CPLR § 408.

PAPERS NYSCEFDOCS Notice of Motion & Affidavits Annexed ............. ......... . N otice of Cross-Motion & Affidavits Annexed .... ....... ... . 16 - -- Answering Affidavits ............ .... ...................................... . 28,29 Replying Affidavits .... .. .. .. .... ............................... ... .. .... .. .. . 38 Exhibits ........................ ........ .. ... ....... ........... ....... .......... ... . 17-22; 30-32; 33,34 Memorandum of law ....... .... ..... .. .......................... .. .... ... ... .

NYSCEF Documents # 16 to 38 reviewed.

Upon the foregoing cited papers, the decision and order of this motions is as follows:

Petitioner commenced this non-payment case on March 30, 2022. The petition states that

the apartment is not covered by the emergency protection act of 1974 as amended or the rent

stabilization code because it was substantially rehabilitated after January 1974. Respondent

retained counsel and interposed an answer which included a defense of improper regulatory

status. Respondent, who has been residing in the subject premises since July 2019, alleges that

the building is rent stabilized as it contains eight units, was constructed prior to 1974, and has not

been substantially rehabilitated. Respondent, by counsel, now moves for discovery related to the

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"improper regulatory status" defense pursuant to CPLR §408. In opposition, petitioner states

that respondent is not entitled to discovery and that discovery is barred by Matter of Regina

Metro Co, LLC v New York State Div of Haus & Community Renewal, 35 NY3d 332 [2020]

absent a showing or evidence of a fraudulent scheme to deregulate.

The petitioner in its opposition papers outlines the history and ownership of the subject

premises and explains that the building was a four-family building that was exempt from rent

stabilization and attaches a certificate of occupancy dated 2002. See, NYSCEF Doc# 31 . On or

around 2006 petitioner alleges that its predecessor began a complete gut renovation of the then

vacant building. See NYSCEF Doc #32, which is a copy of some of the permits issued to the

prior owner in a NYC Dept of Building work pennit data sheet. Per the work permit data sheet

renovation work was approved effective February 15, 2005. The petitioner represents that in the

middle of the renovation project the petitioner purchased the subject building on or around

August 2009 and annexes a deed showing its interest in the property. See, NYSCEF Doc# 33

which describes the property type, when purchased by petitioner, as a "4 family dwelling."

Petitioner alleges that after purchasing the property they attempted to obtain a J-51 to complete

the renovations and registered the rent and apartment as rent stabilized with DHCR in

anticipation of receiving J-51 benefits. However, the petitioner alleges they never received any J-

51 benefits and therefore stopped registering the building as rent stabilized. The petitioner

completed the substantial rehabilitation of the building and received a new certificate of

occupancy for the now 8 apartment residential building on or around May 3, 2012. Petitioner

annexes the current ce1tificate of occupancy for an 8-unit building. NYSCEF Doc# 34 Petitioner

asse1ts that due to the substantial rehabilitation the formerly free market building was never

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converted to a rent stabili zed building, despite registering the buildi ng as rent stab ilized for both

2010 and 2012 and despite li sting two separate rent stabilized tenants on the DHCR registration .

Petitioner's opposition papers assert that respondent's motion fa il s to offer any indicia of

fraud. The court agrees and notes there is no allegation of fraud here, only a challenge to th e rent

regulatory status of the subject building and un it is at issue in this d i covery motion. Petitioner

alleges they were required to registe r the unit with DHCR when attempting to obtain J5 l benefits

and since they never received J5 I benefits, they argue that the registration of the un it as rent

stabilized with DHCR did not actually make the apartment rent stabilized. It is not unreasonable

for respondent to challenge the rent regulatory status after reviewing the DHCR printout which

registered the unit as rent stabilized in two different (non-consecutive years), 2010 and 2012

respectively.

Contrary to petitioner's argument, the decision in Regina did not affect the look back

period for determining an apartment's regulato ry status. The court ca n consider an apartment' s

rental history beyond four years to determine whether an apartme nt i rent regu lated. The comt

in Diagonal Realty, LLC v Linares, 135 NYS3d 750 [App Tenn 1st Dept 2020], confirmed that

Regina kept a tenant's right to examine all of the apartment's rental history in order to determine

the apartment 's regulatory status. The court relied on footnote 4 in Regina. (See Matter of

Ko tic v New York State Div of Haus & Community Renewal 188 AD3d 569 [l st Dept 2020]

[" Regardl ess of its age, an apartment s rent history is always subject to review to detem1ine

whether a unit is rent stabili zed"] ["except as to limit rent overcharge claims, the Legi slature has

not imposed a limitations period for determining the rent regulatory tan.is of an apaiiment."

Gersten v 56 7th Ave, LLC, 88 AD3d 189, 201 [Pl Dept 2011] ; East W. Renovating Co v New

York State Div of Hous & Commun ity Renewal, 16 AD3d 166 [2005]). Nor was th e tenant

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required to allege any colorable claim of fraud (see Gersten v 56 7th Ave. LLC, 88 AD3d at 199

[2012] ["a tenant should be able to challenge the deregulated status of an apartment at any time

during the tenancy"]; 72A Realty Assoc. v Lucas, 101 AD3d 401,402 [2012] ["(A)s we explained

in Gersten, tenant's challenge to the deregulated status of her apartment, which presents a

'continuous circumstanc e ', is not ban-ed by the six-year statute of limitations" ]). Under the

Housing Stabilizatio n and Tenant protection Act of 2019 (HSTPA), courts of competent

juri diction and DHCR can consider "all available rent history which is reasonably necessary" to

decide the legality of the rent. See L 2019, ch 36, Section I (HSTPA).

Discovery in summary proceedings is available only by leave of court upon a showing of

"ample need." Mautner-G lick Corp. v Higgins, 64 Misc 3d 16, 18, 101 NYS3d 810 (App Term,

1st Dept 2019); CPLR 408. Among the factors a court is to consider in detennining whether a

pa11y in a summary proceeding obtains discovery are whether the party has established facts to

tate a cause of action; whether there is a need to detem1ine infomrntion directly related to the

cause of action; whether the request is carefully tailored and is likely to clarify the disputed facts;

whether prejudice will result from the granting of an application for disclosure; and whether the

prejudice can be alleviated by a Court order. Matter of Georgetow n Unsold Shares, LLC v.

Ledet, 130 A.D .3d 99, l 06 (2nd Dept. 2015); New York University v. Farkas, 121 Misc.2d 643,

647 (Civ. Ct. .Y. Co. 1983 ).

Responden t's second defen e (NYSCEF # 4, paragraph l 0 through 12) sufficiently sets

forth a good faith challenge to the regulatory status of the subject premises. Responden t ' s answer

states the building at issue was constructed prior to 1974 and contains 8 dwelling units pursuant

to the certificate of occupancy. The I-Card submitted in support respondent 's discovery motion

confirms the building was built before .January 1, 1974. See, NYSCEF Doc. #18 . Courts have

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regularly granted di sclosure in eviction proceedings when there are disputes as to whether an

apartment is subject to Rent Stabilization. As such, this court finds that the respondent is entitled

to discovery as to their challenge to the rent regulatory status. Discovery is appropriate under

these circumstances solely to determine the regulatory status of the premises, as respondent is

not alleging fraud, but whether the subject building and unit at issue is rent stabilized. Much of

the information sought, the prior rent history, renovations, substantial rehabilitation, are in the

hands of petitioner and/or its predecessor. Accordingly, respondent's motion for discovery is

granted and the court finds that respondent has met the ample need standard set in New York

Univ v Farkas, 121 Misc2d 643 [Civ Ct , NY Co 1983].

Respondent's defense and motion for discovery relating to the rent regulat01y status of the

unit is supported by documentary evidence in the form of a DHCR rent history printout.

(NYSCEF Doc. # 19) The DHCR printout shows "registrations not found" from 1984 through

2009 and then registrations not found from 2011 and consecutively from 2013 through 2020.

However, the subject unit is listed as RS (rent stabilized) for 2010 and 2012 with two different

tenants listed for each year. The subject unit was registered as a rent stabilized apartment with a

monthly rent of $1250 from June 1, 2010 through May 31, 2011 (registered on July 27, 2012) to

Shawn McAllister and then again registered as a rent stabilized apartment from September 1,

2011 through August 31 , 2012 (registered on August 6, 2012) to Nathaniel Tigley for a monthly

rent of $1300. See NYSCEF Doc. 19 DHCR apartment registration . The 20 l 0 registration is

listed with an "I" as an initial rent registration for the subject unit. Respondent asserts that the

DHCR rent history does not reflect a substantial rehabilitation registration. Respondent, in

support, also provides a certificate of occupancy for the subject building that lists the number of

units as 8 and this document states the effective date is May 3, 2012 and the building type is

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listed as "altered." The second page of this document indicates there are two apartments on each

of the four floors and there is also a storage room and boiler room in the cellar. See, NYSCEF

Doc. #22. The DHCR printout, at minimum, shows that Respondent has a good faith challenge to

the regulatory status of the apartment. Whether the building was substantially rehabilitated and

thereby is exempt from rent stabilization and in compliance with DHCR Operational Bulletin 95-

2 as to substantial rehabilitation cannot be determined solely from the documents presented thus

far. See, ESP 1908 Belmont 1 LLC v. Tavarez, 2018 NY Misc Lexis 3008 (Bronx Cty, NY)

Respondent seeks to determine whether petitioner has satisfied the criteria listed in the DHCR

Operational Bulletin 95-2 in support of pe6tioner's claims that the subject building was

substantially rehabilitated and therefore exempt from rent regulatory status.

Here respondent has shown ample need for limited discovery relating to the apartment

improvements that were the basis for the purported substantial rehabilitation. The petitioner puts

forth sufficient documentation showing the subject building was originally a four-unit building.

See Ce1iificate of occupancy dated August 9, 2002. NYSCEF Doc. # 31. Thereafter petitioner

alleges the building went under gut rehabilitation on or around 2006 and submits limited work

permit data in suppo1i. See NYSCEF #32. Petitioner purchased the subject building in 2009 and

alleges they filed for 151 status during the period petitioner intended to complete the gut

rehab ilitation and at that point in time registered the building for J5 l benefits and registered it as

rent stabilized in hopes they would get J51 benefits. However, the petitioner alleges they never

received approval for J-51 benefits and thus did not continue to register the apartment as rent

stabilized. As such petitioner asse1ts the building was never rent stabilized, despite being

registered as rent stabilized with DHCR for a limited period for 2010 and 2012. While petitioner

has provided compelling arguments as to why the building was briefly registered as rent

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stabilized, the court is unable to make a determination of the rent regulatory status based on

documentation submitted but will substantially limit the period sought for discovery.

A trial court has broad discretion to grant or deny disclosure requests and must balance

the needs of the party seeking discovery against such opposing interests as

expedition. Chinatown Preserv. HDFC v. Yu Hua Chen, 27 Misc .3d 1213(A) (Civ. Ct. N.Y. Co.

2010), citing Town of Pleasant Valley v. New York State Bd. of Real Property Services, 253

A.D.2d 8, 16 (2nd Dept 1999). Here this Court does take issue with the time period sought in the

proposed Demand for Discovery. NYSCEF Document #17 . Respondent seeks documents dating

back to January 1, 1974. The court finds this period requested burdensome, onerous, and overly

broad, particularly considering supporting documentation provided by both sides. Respondent in

its reply papers notes that it seeks discovery regarding petitioner's claim that the apartment has

been deregulated through substantial rehabilitation and respondent seeks information outlined in

the DHCR Operational Bulletin 95-2. The petitioner states the substantial rehabilitation occurred

over a multi-year period, beginning with petitioner's predecessor, from on or around 2006

through 2012. The respondent, in its reply papers, states that he seeks documents to show

whether or not the building was substantially rehabilitated during the relevant period. The

updated certificate of occupancy confirms that effective May 3, 2012 the building was registered

as an eight-unit building.

Accordingly, discovery is granted, but limited to the period of February 15, 2005 (per

NYSCEF Doc #32 NYC Dept of Buildings Work Data Permit this was the effective dates a work

permit was approved for the subject building) and through August 31 , 2012 and solely to the

extent those documents are in the custody and control of petitioner. This limited time frame of

February 15, 2005 through May 12, 2012, includes the two non-consecutive years (2010 and

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2012) when the subject apa1tment was registered as rent stabilized with DHCR. The last rent

stabilized lease registered with DHCR ends on August 31 , 2012. See, NYSCEF Doc. # 19 and the

cuJTent certificate of occupancy lists an effective date of May 3, 2012, when the building was

registered as an 8-unit building. The documents are to be forwarded to respondent 's counsel

within 45 days. If any of the documents are not within the petitioner's custody and control, then

Petitioner shall forward a suppo1ting explanatory affidavit informing respondent's counsel what

documents are not within their custody and control and are to only provide documents that are

within their custody or control.

Furthermore, respondent is granted leave to depose petitioner and to demand documents

listed in the proposed discovery demand attached as Exhibit " A" to respondent' s motion (NYSCEF

# 17) and limited to the relevant timeframe for discovery as outlined above from February 15,

2005 through August 31 , 2012. Specifically, this court strikes all requests for discovery or

production of documents prior to February 15 , 2005 (the effective approval date per work permit

data) as overbroad and onerous to the petitioner and strikes any request for documents prior to

February 15, 2005. See, Grotallio v. So[t Drink Leasing Corp. 97 A.D . 383,468 .Y.S.2d 4 (1st

Dept. 1983). Discovery and all related inquiries shall be focused and narrowly tailored on the

limited issue of whether the building and subject unit was substantially rehabilitated so as to be in

compliance with DHCR Operational Bulletin #95-2 during the relevant time frame ordered by this

court.

Accordingly, the petitioner is to provide documents sought in the annexed Notice to

Produce Documents (Respondent's Ex hibit A) but limited to the time frame set forth above

within 45 days of the date of this decision. Upon completion of the document production the

parties are to schedule a deposition of petitioner. The proceeding is adjourned to July 31, 2024 at

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9:30am in Part J room 502 as a control date for all purposes. ff the pa1iies seek additional time to

comply with the terms of this order it i without prejudice to both sides right to seek an extension

of time. Alternatively, if discovery is completed prior to the control date, the return date can be

accelerated by either two attorney stipulation or by motion on notice to this court.

Accordingly, respondent's motion for discovery is granted as outlined above and the

underlying proceeding is adjourned to July 31, 2024 at 9:30am in Part J.

This is the Decision and Order of the court to be uploaded to NYSCEF .

Dated: May 8, 2024 Brooklyn, New York Juliet P. Howard, JHC

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