930-940, LLC v. Farley

930-940, LLC v Farley (2021 NY Slip Op 50634(U)) [*1] 930-940, LLC v Farley 2021 NY Slip Op 50634(U) [72 Misc 3d 130(A)] Decided on July 2, 2021 Appellate Term, Second 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 July 2, 2021 SUPREME COURT, APPELLATE TERM, SECOND DEPARTMENT, 2d, 11th and 13th JUDICIAL DISTRICTS PRESENT: : THOMAS P. ALIOTTA, P.J., DAVID ELLIOT, WAVNY TOUSSAINT, JJ 2018-2215 K C 930-940, LLC, Appellant, against Sheila Farley and Lawrence Ellington Farley, Respondents. Butnick & Levenson, LLP (Joshua Butnick of counsel), for appellant. Himmelstein, McConnell, Gribben, Donoghue & Joseph, LLP (Ron Languedoc of counsel), for respondents. Appeal from a final judgment of the Civil Court of the City of New York, Kings County (Laurie Lynne Lau, J.), entered August 27, 2018. The final judgment, insofar as appealed from as limited by the brief, after a nonjury trial, awarded tenants on their counterclaim for overcharge to the extent that overcharges were collected by landlord's predecessors, in a nonpayment summary proceeding. ORDERED that the final judgment, insofar as appealed from, is affirmed, without costs. In their answer to this nonpayment proceeding, tenants interposed, insofar as is relevant to this appeal, a counterclaim for overcharges collected by landlord as well as by landlord's predecessors. Following a nonjury trial, the Civil Court dismissed the petition and awarded tenants the principal sum of $120,677.72, finding that tenants had been overcharged and that landlord was responsible for all overcharges, including those collected by landlord's predecessors. As limited by its brief, landlord appeals from so much of the final judgment as awarded tenants overcharges collected by landlord's predecessors. It is undisputed that a Division of Housing and Community Renewal rent reduction order, effective July 1, 1993, reduced the legal rent of the apartment to $381.80 per month, and that an order restoring the rent was not issued until June 20, 2013, effective March 1, 2013. Tenants took possession of the apartment in 2008, and landlord does not argue on appeal that there was no rent overcharge. Rather, landlord argues that it took title to the building on June 6, 2013 [*2]under circumstances triggering the carryover liability exemption (see Rent Stabilization Code [9 NYCRR] § 2526.1 [f] [2] [i]), noting that it had no relationship with the "prior owner," it did not collude with the "prior owner," and "no records sufficient to establish the legal regulated rent were provided at a judicial sale, or other such sale effected in connection with . . . a bankruptcy proceeding." It is clear from the record that landlord was on notice of the rent overcharge (see Matter of Gaines v New York State Div. of Hous. & Community Renewal, 90 NY2d 545, 551 [1997]; Matter of Goldstein v New York State Div. of Hous. & Community Renewal, Off. of Rent Admin., 226 AD2d 722 [1996]; Ouziel v Brito, 176 Misc 2d 216, 218 [App Term, 2d Dept, 2d & 11th Jud Dists 1998]). Landlord's witness, Seth Miller, testified that he is "effectively" half-owner of the building. Tenants submitted evidence that, prior to June 6, 2013, Miller had personal knowledge of a rent restoration application filed in February 2013 which resulted in the June 20, 2013 restoration order. Tenants also demonstrated that, in March 2013, Miller, as the agent of a named party in a Supreme Court action, had acknowledged receipt of a complaint filed by tenants in that action in which it was alleged that there was a rent overcharge based upon, among other things, the 1993 rent reduction order. While Miller denied knowledge of any relevant information, the Civil Court did not credit his testimony. Thus, the record supports both the Civil Court's finding that the carryover liability exemption had not been established and its award of damages for overcharges collected by the prior owners of the property (see Matter of Goldstein, 226 AD2d 722). Accordingly, the final judgment, insofar as appealed from, is affirmed. ALIOTTA, P.J., ELLIOT and TOUSSAINT, JJ., concur. ENTER: Paul Kenny Chief Clerk Decision Date: July 2, 2021