Maddicks v. 106-108 Convent BCR, LLC

Summary

The Appellate Division, First Department affirmed the denial of plaintiffs' motion seeking a finding that defendants engaged in a methodical rent overcharge scheme and requesting appointment of a special referee. The court held that plaintiffs had not submitted sufficient underlying leases and other records to establish entitlement to summary judgment, while permitting them to renew their motion after discovery. The court also addressed the evidentiary requirements and statutory standard for proving that an owner knowingly engaged in a fraudulent scheme to deregulate rent-stabilized units.

Holdings

1. CPLR 906(1) is not a vehicle for determining the disputed rent-overcharge issue as a matter of law. The motion court properly treated plaintiffs' motion as one for summary judgment rather than deciding the issue under CPLR 906(1).
2. Plaintiffs failed to establish prima facie entitlement to summary judgment because they did not submit the leases and other underlying documents necessary to perform a complete documentary analysis of individual apartment improvements, determine the legal regulated rent on the base date, and evaluate the applicable rent increases.
3. An affidavit by a tenant is not necessarily required to establish a fraudulent scheme claim on summary judgment, particularly after the 2024 statutory amendment clarifying that the court must consider the totality of the circumstances and need not require proof of the elements of common-law fraud.
4. Plaintiffs must establish that defendants knowingly engaged in a fraudulent scheme to deregulate a unit.

Questions Presented

1. Whether CPLR 906(1) provided a vehicle for determining, as a matter of law, that plaintiffs were victims of a rent overcharge scheme.
2. Whether plaintiffs established their prima facie entitlement to summary judgment by eliminating all possible bases for deregulation and establishing the impropriety of rent increases for individual apartments.
3. Whether affidavits from tenants or other persons with personal knowledge were necessarily required to establish a fraudulent rent-regulation scheme on summary judgment.
4. Whether the 2024 amendments require plaintiffs to establish that an owner knowingly engaged in a fraudulent scheme to deregulate a unit.

Disposition

affirmed