State v. Solil Management Corp.

128 Misc. 2d 767, 491 N.Y.S.2d 243, 1985 N.Y. Misc. LEXIS 2993
CourtNew York Supreme Court
DecidedJune 7, 1985
StatusPublished
Cited by16 cases

This text of 128 Misc. 2d 767 (State v. Solil Management Corp.) is published on Counsel Stack Legal Research, covering New York Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
State v. Solil Management Corp., 128 Misc. 2d 767, 491 N.Y.S.2d 243, 1985 N.Y. Misc. LEXIS 2993 (N.Y. Super. Ct. 1985).

Opinion

OPINION OF THE COURT

Ira Gammerman, J.

This is a special proceeding commenced by the Attorney-General, pursuant to Executive Law § 63 (12), which seeks an order permanently enjoining respondent Solil Management Corp. (Solil) from engaging in fraudulent and illegal practices consisting of alleged rent overcharges and directing respondent to make full restitution to injured consumers. The Attorney-General has also instituted an action for specific performance of an assurance of discontinuance, which respondent is alleged to have breached.

In the fall of 1982, the Attorney-General commenced an investigation of Solil’s rental practices. Thereafter, petitioner and respondent entered into an agreement, the assurance of discontinuance dated May 13,1983 (the Assurance). The Assur[768]*768anee required Solil to calculate and refund rent overcharges and to reduce to lawful levels rents of all rent-stabilized tenants residing in 77 buildings owned by respondent located in New York City, in exchange for the Attorney-General foregoing a statutory proceeding against Solil. Payments to tenants were to be made in accordance with a schedule embodied in the Assurance. Solil paid refunds in excess of $3,000,000 to tenants in 63 buildings prior to April 1, 1984. These payments were based upon the provisions of the Code of the Rent Stabilization Association of New York City, Inc. (Code), which had no Statute of Limitations for such claims, and utilized base dates of 1968 and 1974 for rent calculations. On April 1, 1984, the Omnibus Housing Act of 1983 (L 1983, ch 403) became effective and superseded many of the provisions of the Rent Stabilization Law (Administrative Code of City of New York § YY51-1.0 et seq.) and Code. The Omnibus Housing Act contained a four-year Statute of Limitations on rent overcharge claims. After April 1, 1984, respondent reduced its refund payments to tenants for overcharges applying a four-year Statute of Limitations to those claims. Thus, April 1, 1980, rather than 1968 or 1974 became the base date for the landlord’s computation of rentals. The refunds and rent rollbacks of approximately 880 tenants in 14 buildings were adversely affected by the revised overcharge formula.

Petitioner contends that the post-April 1, 1984 payments to the tenants are not in compliance with the Assurance since they were not calculated from an appropriate base date as defined in the Rent Stabilization Law in force at the time of the execution of the Assurance and that this breach of the Assurance is prima facie evidence of fraudulent and illegal practices under Executive Law § 63 (15) sufficient to warrant the issuance of a permanent injunction to bar such practices. It is also alleged by petitioner that the Assurance is, in reality, a stipulation of settlement, a contract between the parties, and that petitioner is, therefore, entitled to specific performance of its agreement with respondent. In addition, petitioner seeks treble damages from April 1,1984 to date under the Omnibus Housing Act § 14.

Respondent’s arguments can be summarized as follows: (1) The New York State Division of Housing and Community Renewal (DHCR) has exclusive jurisdiction over rent overcharge complaints under the Omnibus Housing Act of 1983, and thqt therefore, the Attorney-General lacks authority to function in this area; (2) the petitioner has not established a violation of Executive Law § 63 (12) in that respondent’s conduct is in accordance with the current Rent Stabilization Law and thus [769]*769not violative of the Assurance, nor illegal or fraudulent; (3) respondent’s conduct was not in any event persistent or repeated, but rather a single policy decision respecting all apartment rentals that were to be recalculated after April 1, 1984; and (4) the Executive Law does not provide a cause of action for breach of contract seeking specific performance nor does it permit punitive or treble damages.

Respondent’s contention that the Attorney-General lacks jurisdiction to pursue rent overcharges under the Omnibus Housing Act of 1983 is without merit. Under Executive Law § 63 (12), the Attorney-General is given broad authority to investigate and prosecute repeated or persistent illegal acts or fraud. This is an action under that provision and not under the Omnibus Housing Act. Further, the action arises out of an Assurance entered into by the parties pursuant to Executive Law § 63 (15). To the extent that respondent entered into that agreement it waived any objection it might have had to the Attorney-General’s jurisdiction to investigate rent overcharge complaints.

The Omnibus Housing Act does not invest the DHCR with authority to adjudicate persistent or repeated fraud or illegality. The right of the Attorney-General to exercise his powers under Executive Law § 63 (12) over such activities engaged by those who own, operate and manage residential buildings as a business is well established (see, Matter of People v Ackerman, 24 Misc 2d 83; State of New York v Spodex, NYLJ, Mar. 16,1982, p 6, col 2, mod 89 AD2d 835; Matter of Wiener v Abrams, 119 Misc 2d 970). Moreover, there is nothing in the Omnibus Housing Act which prevents or conflicts with the Attorney-General’s enforcement prerogatives. To this extent it appears that the court’s deference to DHCR in State of New York v Winter (NYLJ, Mar. 6, 1985, p 6, col 3) was not statutorily mandated but rather a discretionary declination of jurisdiction. Such procedure is not appropriate here where respondent by executing the Assurance acknowledged the Attorney-General’s interest and jurisdiction in landlord-tenant matters involving repeated and persistent fraudulent or illegal conduct.

Respondent’s contention that no underlying illegality or fraud is presented because its method of dealing with the overcharge claims after April 1, 1984 is in full compliance with the Rent Stabilization Law as amended is likewise without merit.

Respondent maintains that the four-year Statute of Limitations of the Omnibus Housing Act was intended to have a retroactive effect, as can be seen from its grandfathering of only those claims brought prior to the statute’s effective date. Stat[770]*770utes of Limitation normally operate prospectively. However, where the Legislature clearly shows its intent that the provision should be applied retroactively, the courts will do so. (McKinney’s Cons Laws of NY, Book 1, Statutes §§ 51, 59.) Here the Legislature appears to have intended to limit tenants’ rights to maintain proceedings to the four-year period preceding the effective date of the statute. This is not, however, an action by tenants to recover rent overcharges. Rather, it is a proceeding under Executive Law § 63 (12) commenced by the Attorney-General and as previously indicated there is nothing contained in the Omnibus Housing Act that limits the ability of the Attorney-General to pursue his remedial functions under the Executive Law. Further, these are not really new claims of overcharges but settlements that respondent seeks to modify. As such, they do not come within the intended purview of the Omnibus Housing Act’s retroactive Statute of Limitations.

The Assurance, like its Federal counterpart, the consent decree (see, e.g., United States v ITT Cont. Banking Co., 420 US 223), is a stipulation of settlement, which binds the parties. (Cf. Schweber v Berger, 27 AD2d 840; CPLR 2104.) Stipulations of settlement made in writing and subscribed to by the parties will not be set aside or departed from absent a showing of such good cause as would invalidate a contract.

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Cite This Page — Counsel Stack

Bluebook (online)
128 Misc. 2d 767, 491 N.Y.S.2d 243, 1985 N.Y. Misc. LEXIS 2993, Counsel Stack Legal Research, https://law.counselstack.com/opinion/state-v-solil-management-corp-nysupct-1985.