Civil Court of the City of New York, New York County, December 1, 2017

Levy Tolman LLP (Noah Levenson of counsel) for petitioner.

Manhattan Legal Services (Thomas James Honan of counsel) for respondent.

The decision and order on this motion are as follows:

517 West 212 St. LLC, the petitioner in this proceeding, commenced this holdover proceeding against Isaiah Musik-Ayala, the respondent in this proceeding, seeking possession of 517 West 212th Street, apartment 3C, New York, New York (the subject premises) on the ground that respondent's lease expired and that no regulation requires petitioner to renew respondent's lease. Respondent interposed an answer that, inter alia, alleged that the subject premises are subject to the Rent Stabilization Law. Petitioner now moves for summary judgment in its favor and to dismiss respondent's counterclaims. Respondent cross-moves for summary judgment dismissing the petition, awarding attorneys' fees, or, alternatively, for relief to obtain discovery. The court consolidates these motions for resolution herein.

At the outset, petitioner opposes respondent's motion on the basis that respondent does not annex the pleadings to his motion.{**58 Misc 3d at 654} A motion for summary judgment "shall" be supported by, [*2]inter alia, a copy of the pleadings. (CPLR 3212 [b].) Accordingly, a failure to annex pleadings to a summary judgment motion warrants its denial (Washington Realty Owners, LLC v 260 Wash. St., LLC, 105 AD3d 675 [1st Dept 2013]) unless other parties annex copies of the pleadings to their motion papers. (Serowik v Leardon Boiler Works Inc., 129 AD3d 471, 472 [1st Dept 2015].) As petitioner annexes the pleadings to its motion, the court shall consider both summary judgment motions on their merits.

The parties essentially dispute the rent regulatory status of the subject premises, with petitioner claiming that the subject premises are unregulated and with respondent claiming that the subject premises are subject to the Rent Stabilization Law. As the expiration of a lease is not a ground for eviction pursuant to the Rent Stabilization Law (Administrative Code of City of NY § 26-511 [c] [4]), the resolution of the parties' dispute as such determines the outcome of their motions. The motion papers reveal no fact dispute between the parties concerning the material issues necessary to determine the rent regulatory status of the subject premises. The tenant before respondent (the prior tenant) was subject to the Rent Stabilization Law and petitioner duly registered the prior tenant's rents with the New York State Division of Housing and Community Renewal (DHCR) pursuant to 9 NYCRR 2528.3. The registration history and the prior tenant's leases show that the prior tenant entered into a one-year vacancy lease commencing in June of 2012, with a purported legal regulated rent of $2,015.76 and a preferential rent of $1,400;^[FN1] that the prior tenant entered into a one-year renewal lease commencing in June of 2013, with a purported legal regulated rent of $2,056.07 and a preferential rent of $1,425; that the prior tenant entered into a one-year renewal lease commencing in June of 2014, with a purported legal rent of $2,138.31 and a preferential rent of $1,500; and that petitioner subsequently treated the subject premises as exempt from the Rent Stabilization Law and entered into a{**58 Misc 3d at 655} one-year lease with respondent commencing on May 1, 2015, with a monthly rent of $1,650.

Petitioner argues that it was entitled to an increase of 18.25% over the previous legal regulated rent of $2,138.31 upon execution of a one-year vacancy lease with respondent, which would raise the rent to $2,528.55, above the threshold of $2,500 necessary to deregulate an apartment with a vacancy between June 24, 2011 and June 15, 2015. (Administrative Code § 26-504.3 [a] [3].) Twenty percent less 1.75%, the difference between an increase for a one-year and a two-year renewal lease for leases commencing in May of 2015 by Rent Guidelines Board (RGB) order No. 46,^[FN2] is indeed 18.25%. However, on a one-year vacancy lease, petitioner was entitled to a rent increase of 20% less the difference between an increase for a one-year and a two-year renewal applicable to the previous lease. (Administrative Code § 26-511 [c] [5-a]; 9 [*3]NYCRR 2522.8 [a] [2]; cf. Lirakis v 180 Seventh Ave. Assoc., LLC, 12 Misc 3d 1173[A], 2006 NY Slip Op 51211[U] [Civ Ct, NY County 2006] [applying the RGB guidelines for the lease previous to a tenant with a one-year vacancy lease].) The lease previous to respondent's first lease commenced in June of 2014. The difference between an increase for a one-year and a two-year renewal for leases commencing in June of 2014 is 3.75%. (RGB order No. 45.) Twenty percent less 3.75% is 16.25%. An increase of 16.25% over $2,138.31, the purported legal regulated rent from the last lease of the prior tenant before respondent's tenancy, is $2,485.79, less than the deregulatory threshold.

Respondent did not raise this argument in opposition to petitioner's summary judgment motion. However, as the proponent of a motion for summary judgment, petitioner bears the burden to tender sufficient evidence to eliminate any material issues of fact as to the claims at issue, regardless of the sufficiency of opposing papers. (Smalls v AJI Indus., Inc., 10 NY3d 733, 735 [2008]; People v Grasso, 50 AD3d 535, 545 [1st Dept 2008], affd 11 NY3d 64 [2008].) While the court will not, in essence, sua sponte dismiss the petition on this ground, as respondent has not put petitioner on notice as to this issue, the court still denies petitioner's summary judgment motion, as petitioner failed to affirmatively eliminate issues of material{**58 Misc 3d at 656} fact that it lawfully increased respondent's legal regulated rent above $2,500.

Respondent separately moves for summary judgment on the ground that the subject premises are subject to the Rent Stabilization Law. Respondent cites Administrative Code § 26-511 (c) (14) in support of his argument. Administrative Code § 26-511 (c) (14) provides that a landlord with a preferential rent may use the higher legal regulated rent, and not the lower preferential rent, as the basis for future rent increases when the tenant with a preferential rent vacates. However, upon a vacancy from such an apartment, Administrative Code § 26-511 (c) (14) further provides that the apartment

"shall be excluded from [the Rent Stabilization Law] pursuant to [Administrative Code § ] 26-504.2^[FN3] . . . when, subsequent to vacancy . . . such legal regulated rent prior to vacancy is [$2,500.00], or more, for any housing accommodation that is or becomes vacant after [June 24, 2011] but prior to [June 15, 2015]." (Emphasis added.)

As the legal regulated rent of the subject premises prior to the vacancy of the prior tenant was not $2,500 or more, respondent argues that Administrative Code § 26-511 (c) (14) precludes petitioner from availing itself of the deregulation provision of Administrative Code § 26-504.2.

Petitioner argues that Administrative Code § 26-511 (c) (14) merely spells out a specific exclusion to the Rent Stabilization Law when the tenant prior to the last vacancy received a preferential rent and the legal regulated rent was above the threshold at the time that tenant vacated, and that Administrative Code § 26-511 (c) (14) does not otherwise preclude a landlord from deregulating an apartment pursuant to Administrative Code § 26-504.2 (a). Petitioner's opposition as such raises a question about the purpose of the language of Administrative Code § 26-511 (c) (14) citing a rent of $2,500 for a prior tenancy, which the legislature had not [*4]added to the statute until an amendment effective on June 15, 2015.^[FN4]

{**58 Misc 3d at 657}[1] Administrative Code § 26-504.2 (a), both in the language after the legislature amended it in 2015 and in its language prior to the legislature's amendment, permits deregulation of apartments that are vacant with lawful rents of at least $2,500. If, as petitioner argues, the legislature only intended Administrative Code § 26-511 (c) (14) to state that a vacant apartment with a legal regulated rent exceeding $2,500 and a preferential rent would be deregulated, the legislature need not have amended Administrative Code § 26-511 (c) (14) to do so, as the plain language of Administrative Code § 26-504.2 (a) had already permitted such deregulation.

The court must presume that each word used in a statute expresses a distinct and different idea (Matter of Tonis v Board of Regents of Univ. of State of N.Y., 295 NY 286, 293 [1946]), and that the legislature inserted every provision of a statute for some useful purpose. (McGowan v Mayor of City of N.Y., 53 NY2d 86, 95 [1981]; Matter of Albano v Kirby, 36 NY2d 526, 530 [1975].) Conversely, the court cannot conclude that the legislature deliberately placed a phrase in the statute which was intended to serve no purpose. (Matter of Rodriguez v Perales, 86 NY2d 361, 366 [1995]; Matter of Smathers, 309 NY 487, 495 [1956]; People v Dethloff, 283 NY 309, 315 [1940]; see also Matter of New York County Lawyers' Assn. v Bloomberg, 95 AD3d 92, 101 [1st Dept 2012] [courts must avoid a construction rendering statutory language to be superfluous].) The court must further presume that the legislature knows what statutes are in effect when enacting new laws. (Matter of Gerald T., 211 AD2d 17, 21 [1st Dept 1995].) Accordingly, the court does not construe Administrative Code § 26-511 (c) (14) to redundantly restate what Administrative Code § 26-504.2 (a) already provided for. Canons of statutory construction compel the finding that Administrative Code § 26-511 (c) (14) must have a distinct purpose.

The statute states that apartments with preferential rents shall be subject to vacancy deregulation when the legal regulated rent "prior to vacancy" is at least $2,500. A fundamental principle of statutory construction requires that the court give effect to every word, if possible, and presume that every{**58 Misc 3d at 658} word, phrase, clause, or paragraph has some meaning. (Matter of Tristram K., 36 AD3d 147, 151 [1st Dept 2006].) Giving effect to the words "prior to vacancy" in Administrative Code § 26-511 (c) (14) means that a landlord may deregulate an apartment occupied by a tenant with a preferential rent when the legal regulated rent of that tenant exceeds $2,500. Moreover, where a law expressly describes a particular thing to which it shall apply, the court must draw an "irrefutable inference" that the legislature intended to omit or exclude what the legislature omitted or excluded. (Myers v Schneiderman, 30 NY3d 1, 12 [2017]; Matter of Shannon, 25 NY3d 345, 352 [2015]; Matter of Raynor v Landmark Chrysler, 18 NY3d 48, 56 [2011]; Matter of Town of Riverhead v New York State Bd. of Real Prop. Servs., 5 NY3d 36, 42-43 [2005].) The legislature's specific mention of the necessity that a tenant with a preferential rent have a legal regulated rent above $2,500 in order to subsequently deregulate the unit therefore compels the [*5]conclusion that apartments with tenants with preferential rents and legal regulated rents of less than $2,500 are ineligible for subsequent deregulation. As the legal regulated rent of the prior tenant never exceeded $2,500 "prior to vacancy" and as the prior tenant had a preferential rent, the conditions stated in Administrative Code § 26-511 (c) (14) for deregulation do not apply to the subject premises. Thus, the subject premises would remain rent-stabilized through respondent's tenancy.

Petitioner argues that such an interpretation of Administrative Code § 26-511 (c) (14) contradicts Administrative Code § 26-504.2 (a). The court must consider a statute as a whole, reading and construing all parts of an act together to determine legislative intent possible, and should harmonize all parts of a statute with each other and give effect and meaning to the entire statute and every part and word thereof (Friedman v Connecticut Gen. Life Ins. Co., 9 NY3d 105, 115 [2007]; Rangolan v County of Nassau, 96 NY2d 42, 48 [2001]), thus construing statutes in a way that renders them internally compatible. (Yatauro v Mangano, 17 NY3d 420, 427 [2011].) Insofar as rent-stabilized apartments in New York City do not have preferential rents or, if they do, they have legal regulated rents exceeding $2,500, amendments to Administrative Code § 26-511 (c) (14) discussed above have no effect on Administrative Code § 26-504.2 (a). Thus, the court can harmonize Administrative Code § 26-504.2 (a) with Administrative Code 26-511 (c) (14): Administrative Code § 26-504.2 (a) articulates the general rule {**58 Misc 3d at 659}permitting deregulation of certain vacant apartments, and Administrative Code § 26-511 (c) (14) states an exception for apartments with preferential rents for which the legal regulated rent does not exceed $2,500. A general statute, particularly a prior general statute, yields to a later specific or special statute. (People v Zephrin, 14 NY3d 296, 301 [2010]; Matter of Dutchess County Dept. of Social Servs. v Day, 96 NY2d 149, 153 [2001].) Where, as here, a special statute is in conflict with a general act covering the same subject matter, the special statute controls the case and repeals the general statute insofar as the special act applies. (Velez v Port Auth. of N.Y. & N.J., 111 AD3d 449, 450 [1st Dept 2013].)

Petitioner also correctly states that the amendment to Administrative Code § 26-511 (c) (14) adding language about deregulation of apartments for which the rent prior to a vacancy exceeded $2,500 took effect on June 15, 2015, after the commencement of respondent's tenancy, such that the court must apply Administrative Code § 26-511 (c) (14) retroactively to award respondent the relief he urges. Courts do not favor retroactive operation of legislation and will only construe a statute retroactively if the statutory language expressly or by necessary implication requires it (Matter of St. Clair Nation v City of New York, 14 NY3d 452, 456-457 [2010]; Matter of Gleason [Michael Vee, Ltd.], 96 NY2d 117, 122 [2001]; Majewski v Broadalbin-Perth Cent. School Dist., 91 NY2d 577, 584 [1998]) or if the legislature's preference for retroactivity "plainly manifest[s]." (Matter of Marino S., 100 NY2d 361, 370-371 [2003], cert denied 540 US 1059 [2003].)

Laws regulating rents are "remedial" (Federal Home Loan Mtge. Corp. v New York State Div. of Hous. & Community Renewal, 87 NY2d 325, 332 [1995]; 459 W. 43rd St. Corp. v New York State Div. of Hous. & Community Renewal, 152 AD2d 511, 514 [1st Dept 1989]), a factor weighing in favor of a retroactive application of Administrative Code § 26-511 (c) (14). (Matter of Marino S., 100 NY2d at 370-371; Gleason, 96 NY2d at 122; Majewski, 91 NY2d at 583-584; Allstate Ins. Co. v Belt Parkway Imaging, P.C., 33 AD3d 407, 408 [1st Dept 2006].) The court must also consider what, if any, intent the legislature had to apply a statute retroactively. ([*6]Matter of Duell v Condon, 84 NY2d 773, 783 [1995].)

The court finds significantly revealing of the legislature's intent that the legislature's amendments to Administrative Code § 26-511 (c) (14), although effective June 15, 2015,{**58 Misc 3d at 660} explicitly exempt from the Rent Stabilization Law certain classes of apartments that become vacant "prior to the effective date of the rent act of 2015" (Administrative Code § 26-511 [c] [14]), i.e., June 15, 2015. If this amendment to Administrative Code § 26-511 (c) (14) could not be applied retroactively, then this provision is wholly without effect, an impermissible construction.

A similar reference to a past ascertainable date in a statute imparts a legislative intention to retroactively apply the statute. (Matter of OnBank & Trust Co., 90 NY2d 725, 730-731 [1997] [finding that a portion of Banking Law § 100-c (3) would be meaningless if applied prospectively only, given the statute's reference to EPTL 11-2.2 (b) (1), which contains a specific date, thus warranting a retroactive application of the statute].) Even more oblique statutory references to past time frames demonstrate an intention to retroactively apply a statute. (See e.g. Duell, 84 NY2d at 783 [as the legislature imputed upon tenants a reciprocal entitlement to a judgment for attorneys' fees "(w)henever" a lease of residential property includes an attorneys' fees clause in favor of the landlord, the use of the word "whenever" evinced a legislative intention to retroactively apply Real Property Law § 234 to a lease executed before the enactment of the statute].) The legislature's application of Administrative Code § 26-511 (c) (14) to apartments becoming vacant before the effective date of the statute is, if anything, more explicit than the reference to another statute in Banking Law § 100-c (3) or the use of the word "whenever" in Real Property Law § 234 that showed a legislative intention to retroactively apply a statute.

The legislature's intent to retroactively apply its amendment to Administrative Code § 26-511 (c) (14) to apartments becoming vacant before the effective date of the statute together with the remedial nature of the Rent Stabilization Law outweigh any presumption that the statute only apply prospectively. As the court applies Administrative Code § 26-511 (c) (14) to the subject premises, as the prior tenant had a preferential rent, and as the prior tenant's rent did not exceed $2,500 prior to his vacancy during the time frame set forth in Administrative Code § 26-511 (c) (14), the court finds that the subject premises do not qualify for deregulation. The court therefore finds that respondent is subject to the Rent Stabilization Law and that petitioner's cause of action against respondent sounding in expiration of respondent's lease does not lie. The court{**58 Misc 3d at 661} therefore grants respondent's motion for summary judgment and dismisses petitioner's case against respondent. The court denies petitioner's motion to dismiss respondent's defenses as moot.

[2] Petitioner also moves to dismiss respondent's counterclaims sounding in rent overcharge. The legal regulated rent for the purposes of determining an overcharge shall be deemed to be the rent charged on the base date, plus in each case any subsequent lawful increases or adjustments. (9 NYCRR 2526.1 [a] [3] [i].) The base date is four years prior to the filing of a rent overcharge claim. (9 NYCRR 2520.6 [f] [1].) Respondent's answer is dated August 15, 2017, the date the rent overcharge claim is interposed for purposes of determining the base date. (Auto Park, Inc. v Bugdaycay, 7 Misc 3d 292, 297 [Civ Ct, NY County 2004], citing 78/79 York Assoc. v Rand, 180 Misc 2d 316 [App Term, 1st Dept 1999].) Four years before August 15, 2017, is August 15, 2013. There is no issue of material fact on this motion practice that the prior tenant's preferential rent as of August 15, 2013 was $1,425 and that petitioner registered $2,056.07 with DHCR pursuant [*7]to 9 NYCRR 2528.3 as a legal regulated rent. As the only lease in evidence with a rent for respondent is less than the legal regulated rent on the base date, respondent has not stated a prima facie case for rent overcharge.

Respondent argues that an impermissibly large rent increase prior to the base date comprises the basis for his counterclaim. In order for the court to consider rent increases prior to the base date, respondent must prove that petitioner has engaged in a fraudulent scheme to deregulate the subject premises. (Thornton v Baron, 5 NY3d 175 [2005].) An increase in the rent alone does not suffice to establish a "colorable claim of fraud." (Matter of Grimm v State of N.Y. Div. of Hous. & Community Renewal Off. of Rent Admin., 15 NY3d 358, 366-367 [2010].) The registration histories on the record on this motion practice show that petitioner consistently registered both the legal regulated rent and the preferential rents. Respondent thus fails to make a prima facie showing of a fraudulent scheme of petitioner sufficient to warrant an examination of the rent history before the base date. (Compare Matter of Pehrson v Division of Hous. & Community Renewal of the State of N.Y., 34 Misc 3d 1220[A], 2011 NY Slip Op 52487[U] [Sup Ct, NY County 2011], with 560-568 Audubon Realty Inc. v Rodriguez, 54 Misc 3d 1226[A], 2017 NY Slip Op 50323[U] [Civ Ct, NY {**58 Misc 3d at 662}County 2017] [examination of a rent history before the base date warranted when, inter alia, a landlord did not properly register the apartment with DHCR, including failing to correctly register both purported legal regulated rents and preferential rents].)

Respondent also avers in support of his motion that his evaluation of the condition of the subject premises led him to the conclusion that petitioner could not have engaged in individual apartment improvements necessary to increase the rent. However, such a non-expert assessment is insufficient to raise an issue of material fact that petitioner has engaged in fraudulent conduct. (Matter of Boyd v New York State Div. of Hous. & Community Renewal, 23 NY3d 999, 1000-1001 [2014]; 1290 Ocean Realty LLC v Massena, 46 Misc 3d 1223[A], 2015 NY Slip Op 50256[U] [Civ Ct, Kings County 2015].)

The court notes that petitioner predicated its motion to respondent's rent overcharge counterclaim on the proposition that the subject premises are not subject to the Rent Stabilization Law, not that the rent increase respondent objected to predated the interposition of respondent's claim by more than four years. However, respondent moved for leave to obtain discovery on his rent overcharge cause of action, requiring, inter alia, that respondent establish facts necessary to state a cause of action (Matter of Lonray, Inc. v Newhouse, 229 AD2d 440, 440-441 [2d Dept 1996]; New York Univ. v Farkas, 121 Misc 2d 643, 647 [Civ Ct, NY County 1983]) and, in that context, the parties briefed this issue. Under these circumstances, summary judgment on this ground cannot prejudice respondent. (Compare D&M Concrete, Inc. v Wegmans Food Mkts., Inc., 133 AD3d 1329, 1330 [4th Dept 2015], lv denied 27 NY3d 901 [2016], with Weinstock v Handler, 254 AD2d 165, 166 [1st Dept 1998].) The court therefore grants petitioner's motion to dismiss respondent's counterclaim sounding in rent overcharge.

Petitioner also moves to dismiss respondent's counterclaim sounding in attorneys' fees. Both parties show a lease between the parties with an attorneys' fees clause that purports to give petitioner an option to waive both parties' claim to attorneys' fees. The lease indicates that petitioner did not exercise this option. If petitioner does not exercise this option, the lease purports to give petitioner an exclusive right to collect attorneys' fees against respondent in the event that petitioner incurs legal fees in the enforcement of petitioner's rights.{**58 Misc 3d at 663} Regardless of the [*8]option the lease purports to create, the lease still permits petitioner to recover fees that result from respondent's breach, and therefore entitles respondent to a cause of action for attorneys' fees. (Graham Ct. Owners Corp. v Taylor, 24 NY3d 742, 745 [2015].)

[3] As the court dismisses petitioner's cause of action for possession, the central relief sought in a holdover proceeding, respondent has a prima facie cause of action for attorneys' fees. (542 E. 14th St. LLC v Lee, 66 AD3d 18, 24 [1st Dept 2009]; Cassorla v Foster, 2 Misc 3d 65, 67 [App Term, 1st Dept], lv denied 2004 NY App LEXIS 8905 [1st Dept, June 22, 2004]; MEP Realty Ltd. v Herman, 240 NYLJ 61, 2008 NY Misc LEXIS 7406, 19-20 [Civ Ct, Kings County, Aug. 21, 2008, index No. 103210/07, Kraus, J.]; Nestor v McDowell, 81 NY2d 410, 415-416 [1993].) However, as the court also dismisses respondent's rent overcharge counterclaim, the outcome of this proceeding is mixed to the point that neither party is the prevailing party for purposes of determining which party may be entitled to attorneys' fees. (12-14 E. 64th Owners Corp. v Hixon, 38 Misc 3d 135[A], 2013 NY Slip Op 50130[U] [App Term, 1st Dept 2013]; 339-347 E. 12th St. LLC v Ling, 31 Misc 3d 48, 49 [App Term, 1st Dept 2011].) Accordingly, the court grants petitioner's motion to dismiss respondent's counterclaim sounding in attorneys' fees and denies respondent's motion for attorneys' fees.

The court also denies respondent's motion for discovery as moot.

"Where, subsequent to vacancy, such legal regulated rent, as adjusted by the most recent applicable guidelines increases and any other increases authorized by law . . . for any housing accommodation which is or becomes vacant on or after [June 24,] 2011, is two thousand five hundred dollars or more per month, such housing accommodation shall be excluded from the provisions of this law pursuant to [Administrative Code §] 26-504.2."