Summary
This Appellate Division, First Department opinion affirms the lower court's denial of a landlord's motion for summary judgment in a rent overcharge action. The court found a colorable claim of fraud regarding the apartment's 2009 deregulation, creating an issue of fact as to whether the landlord engaged in a fraudulent scheme to manipulate the base date rent. Consequently, the record does not preclude the tenant from pursuing treble damages under the Rent Stabilization Law.
Topics
Practice areas
Questions Presented
- Whether the fraud exception to the four‑year lookback rule applies to the rent‑overcharge claim
- Whether the landlord is entitled to summary judgment on the damages claim
Holdings
- The landlord failed to meet its burden for summary judgment because a colorable claim of fraud regarding the 2009 deregulation creates a genuine issue of fact as to whether overcharges were willful and treble damages are available.
Key quotations
“The pattern of raising the rent above the deregulation threshold and then lowering it significantly below the threshold can indicate fraud.”
Factual background
The landlord deregulated a rent‑stabilized apartment in 2009 and subsequently entered unregulated leases with rents well below the deregulation threshold. The tenant alleges the landlord fraudulently raised the rent to meet the deregulation threshold and then lowered it, creating a colorable claim of fraud and a genuine issue of fact as to willful overcharges.
Procedural history
The landlord moved for summary judgment seeking to limit damages to non‑trebled overcharges under the four‑year lookback rule. The trial court denied the motion. The landlord appealed, arguing the fraud exception to the lookback rule did not apply.