Diagonal Realty, LLC v. Estella

Diagonal Realty, LLC v Estella (2021 NY Slip Op 51117(U)) [*1] Diagonal Realty, LLC v Estella 2021 NY Slip Op 51117(U) [73 Misc 3d 137(A)] Decided on November 26, 2021 Appellate Term, First Department Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports. Decided on November 26, 2021 SUPREME COURT, APPELLATE TERM, FIRST DEPARTMENT PRESENT: Edmead, P.J., Hagler, Silvera, JJ. 570110/21 Diagonal Realty, LLC, Petitioner-Landlord-Respondent, against Francisco Estella, Respondent-Tenant, and Luis Reinoso and Geanette Compres, Respondents-Tenants-Appellants. Tenants Luis Reinoso and Geanette Compres appeal from an order of the Civil Court of the City of New York, New York County (Elizabeth J. Yalin Tao, J.), dated August 12, 2020, which denied their motion for summary judgment dismissing the petition and on the counterclaims, and from an order (same court and Judge), dated April 14, 2021, which denied their motion to reargue the prior order. Per Curiam. Order (Elizabeth J. Yalin Tao, J.), dated April 14, 2021, reversed, with $10 costs, and tenants' motion granted to the extent of awarding them summary judgment dismissing the petition and partial summary judgment on the counterclaims on the issue of liability, and the matter remanded to Civil Court for an assessment to determine the amount of the overcharge, as well as the treble damages to be awarded thereon, and the reasonable value of the attorneys' fees due tenants. Appeal from order (same court and Judge), dated August 12, 2020 dismissed, without costs, as superseded by the order on reargument. While the motion court in its April 14, 2021 order purported to deny tenants' motion for reargument, the merits of the motion were addressed and the court, in effect, granted reargument, even though it ultimately adhered to its original determination. Therefore, the April 14, 2021 order is appealable (see Jackson v Leung, 99 AD3d 489, 490 [2012]; Matter of State Farm Mut. Auto Ins. Co. v King, 304 AD2d 390 [2003]). Pursuant to rent reduction orders issued in 1989 and 1991, DHCR found that the prior owner failed to provide certain required services and reduced the legal regulated rent (which was then less than $300 per month) for the subject stabilized premises. This order was a continuing obligation upon the owner and its successors (see Matter of Cintron v Calogero, 15 NY3d 347 [2010]; Jenkins v Fieldbridge Assoc., LLC, 65 AD3d 169, 172-173 [2009], appeal dismissed 13 NY3d 855 [2009]) and barred landlord from collecting any further increases in rent including vacancy increases and increases for individual apartment improvements "until the DHCR finds that all required services are being provided and a rent restoration order is issued authorizing the owner to charge and collect the actual legal regulated rent" (Atsiki Realty LLC v Munoz, 48 Misc 3d 33 [App Term, 1st Dept 2015]; see PWV Acquisition, LLC v Paradise, 59 Misc 3d 130[A], 2018 NY Slip Op 50430[U] [App Term, 1st Dept 2018]; 130 E. 18th, L.L.C. v Mitchel, 50 Misc 3d 55 [App Term, 2d Dept, 2d, 11th & 13th Jud Dists 2015]; Rent Stabilization Code [9 NYCRR] § 2523.4[a][1]). Since it is undisputed that DHCR has not issued a rent restoration order, the subject apartment did not become exempt from stabilization due to any high rent vacancy that allegedly occurred before tenants entered into possession (see PWV Acquisition, LLC v Paradise, 59 Misc 3d 130[A]), and the petition alleging that the apartment is exempt from coverage should have been dismissed on tenants' summary judgment motion. The record also conclusively establishes that tenants were overcharged, paying a monthly rent far in excess of the reduced rent. Moreover, treble damages are warranted, because landlord failed to establish by a preponderance of the evidence that the overcharge was not willful (see Altschuler v Jobman 478/480, LLC., 135 AD3d 439, 441 [2016], lv dismissed 28 NY3d 945 [2016], lv denied 29 NY3d 903 [2017]; Matter of Hargrove v Division of Hous. & Community Renewal, 244 AD2d 241, 242 [1997] [an overcharge is presumed willful, and warrants a treble damage award unless the owner establishes by a preponderance of the evidence that the overcharge was not willful]). Landlord's unfounded contention that the rent reduction orders were resolved in a 2000 Housing Court stipulation did not rebut the presumption of willfulness (see Crockett v 351 St. Nicholas Ave. LLC, 179 AD3d 486 [2020]; PWV Acquisition, LLC v Paradise, 59 Misc 3d 130[A]). Inasmuch as tenants are the prevailing parties in this litigation, they are entitled to attorneys' fees pursuant to the lease and the reciprocal provisions of Real Property Law § 234, and Rent Stabilization Code § 2526.1(d). THIS CONSTITUTES THE DECISION AND ORDER OF THE COURT. I concur I concur I concur Decision Date: November 26, 2021