This is a plenary action in which the plaintiff Isabelle Lirakis ("Lirakis") alleges that defendant 180 Seventh Avenue Associates LLC ("180 Seventh Avenue") charged her an excessive rent during the term of her lease in 2003-2004. The Court held a non-jury trial on February 27, 2006, at which the following testimony was elicited:

Lirakis testified that she moved into apartment 1D at 180 Seventh Avenue (the "subject apartment") on April 1, 2003 and moved out on April 30, 2004. Her monthly rent, as reflected in her lease (in evidence), was $1,435.00. Lirakis testified that the apartment was subject to rent stabilization, and that she had no knowledge of any repairs performed in the apartment prior to her lease term. On her direct case Lirakis moved into evidence certified DHCR records concerning the registered rent for the subject apartment during the time period relevant to this action.

On its direct case, 180 Seventh Avenue presented the testimony of Jeffrey Pikus, a representative from managing agent Blue Star Properties. Pikus stated that 180 Seventh Avenue purchased the building located at 180 Seventh Avenue in 2001. At that time, non-party Thomas Shields occupied the subject apartment. Shields vacated the apartment in early 2002, before his lease term ended. Pikus testified that Shields had lived in the apartment for either 17 or 18 years, and that the rent for the subject apartment as of April 2001 was $706.12.

Pikus testified that after Shields vacated the apartment, 180 Seventh Avenue renovated the apartment. Pikus stated that Blue Star Properties had a separate company, [*2]IFR, which performed a gut renovation of the apartment. Pikus testified that at the time of the gut renovation, he was the "overseer" of jobs performed by IFR and that he received a percentage of amounts paid for renovations.

Pikus claimed that the renovations to the subject apartment cost $37,500. 180 Seventh Avenue submitted into evidence a check for $37,500 dated April 17, 2001, made out to IFR from Blue Star Properties. However, the check from Blue Star Properties to IFR does not make reference to any renovations, and has no indicia linking it to the subject apartment. No other Blue Star records concerning the renovation were moved into evidence. Also, no one from IFR testified concerning the renovation, nor were any IFR records concerning the renovation moved into evidence.

Pikus testified that after the renovation, 180 Seventh Avenue raised the rent on the subject apartment by adding: (1) a long-term vacancy increase; (2) a regular vacancy increase; and (3) an increase of 1/40th of the cost of renovations to the subject apartment.

The next tenant who occupied the subject apartment was Elizabeth Kaplan. 180 Seventh Avenue moved Kaplan's lease into evidence, and the lease shows that Kaplan began renting the subject apartment as of March 1, 2001. In a rider to the Kaplan lease, 180 Seventh Avenue disclosed that it had raised the rent of $706.12 previously paid by Shields by the following amounts: $28.24 for a rent guidelines increase; $112.98 for a vacancy allowance; and $817.50 for renovations to the apartment. 180 Seventh Avenue thus listed the new legal registered rent at $1,664.84 per month.

When Kaplan renewed her lease for one year, 180 Seventh Avenue raised the rent to $1,731.43 per month. Pikus testified that when Kaplan vacated the apartment in 2003, 180 Seventh Avenue increased the rent of the subject apartment by a regular vacancy increase, thus the rent for the subject apartment rose to $2,008.46 per month. Pikus testified that at this point the subject apartment was no longer subject to rent regulation, and it was registered with DHCR as high rent/high income.

When Lirakis moved into the apartment, 180 Seventh Avenue did not charge her the legal registered rent and instead charged her rent in the amount of $1,435.00 per month.

Discussion

At the close of testimony, Lirakis first asked the Court to disregard Pikus' testimony concerning any alleged renovations to the subject apartment because 180 Seventh Avenue had not pled its renovations as an affirmative defense to Lirakis' rent overcharge claim. In opposition, 180 Seventh Avenue argued that it did not need to plead the renovations as an affirmative defense, as it was free to use the evidence of the renovations to disprove Lirakis' overcharge claim.

In her complaint, which comprises only eleven paragraphs, Lirakis simply alleges that "[t]he rent history of this apartment reveals that in March of 2001, the defendant and/or its predecessor in interest imposed a rent increase from $692.28 to $1,664.84. This increase exceeds that which is allowable under the rent stabilization law." Lirakis further [*3]alleges that "[d]efendant and its predecessors have charged plaintiff in excess of the rent allowable under the Rent Stabilization Law from April 2003 to present." In neither of these allegations does Lirakis explain the underlying basis for her allegation that 180 Seventh Avenue raised the rent for the subject apartment in 2001 more than was legally allowable.

In its answer, 180 Seventh Avenue denied Lirakis' allegations concerning the alleged illegality of the 2001 rent increase, and also denied that it had overcharged her in 2003. Like Lirakis, 180 Seventh Avenue did not explain the underlying basis for its denial of these allegations.

The pleading of affirmative defenses is governed by CPLR 3018, which provides, in part, that " [a] party shall plead all matters which if not pleaded would be likely to take the adverse party by surprise or would raise issues of fact not appearing on the face of a prior pleading . . ." CPLR 3018 lists a number of defenses which must be plead as affirmative defenses, including statute of fraud, statute of limitations, and res judicata. CPLR 3018 makes clear that only matters which would surprise the other party or would raise new issues must be pled as affirmative defenses. The CPLR 3018 list is not exhaustive, and other matters must be considered on a case by case basis.

With these guidelines in mind, the Court finds that 180 Seventh Avenue was not required to plead renovations to the subject apartment as a separate affirmative defense. Lirakis pled in her complaint and has the burden to prove that the rent charged by 180 Seventh Avenue was greater than the amount allowable under the rent regulations. Once 180 Seventh Avenue denied that it had overcharged Lirakis, she was on notice that 180 Seventh Avenue planned to submit evidence justifying its rent increases. Also, Lirakis raised the alleged excessiveness of 180 Seventh Avenue' s rent increase in her complaint. Thus, 180 Seventh Avenue's justification for its rent increase was not a new issue of fact requiring a separate affirmative defense. Accordingly, Lirakis' request that 180 Seventh Avenue's evidence concerning renovations to the subject apartment be stricken from the record is denied.^[FN1]

Lirakis next contends that she has proven her rent overcharge claim by a preponderance of the evidence, by showing that the rent for the subject apartment went from $692.28 in 2000 to $1,664.84 in 2001, and that there was no justification for this increase. In opposition, 180 Seventh Avenue argues that it has shown, by a preponderance of the evidence, that it took proper statutory increases in rent for that year, including a large increase for renovation to the subject apartment.

The Rent Regulation Reform Act of 1997, codified at 9 NYCRR §2522.8[a], sets forth the rent increases a landlord may claim for a rent stabilized apartment which [*4]becomes vacant. Pursuant to the statute, an owner of a rent stabilized apartment, upon the vacancy of the apartment, is entitled to increase the rent by a vacancy increase which, for a one year lease, amounts to an increase of twenty percent of the previous legal regulated rent less a sum equal to the difference between the two year renewal lease guideline percentage increase and the one year renewal lease guideline percentage increase, as promulgated by the New York City Rent Guidelines Board. An owner is also entitled to a longevity increase whenever there has not been a vacancy increase with respect to the apartment for eight years or more, which is an increase of the previous legal regulated rent by the product of .6 percent multiplied by the number of years since the imposition of the last vacancy increase.

180 Seventh Avenue bases its rent increase calculations on the information set forth in Kaplan's lease agreement, which indicates that the last registered rent for the subject apartment was $706.12 per month as of April 1, 2000. However, the DHCR certified records show that Thomas Shields' tenancy lasted 17 years, his lease term ended in April 2001, and at that time his registered rent was $692.28 per month. The Court will use the certified DHCR rent records rather than Pikus' testimony and the information in the Kaplan lease to determine the appropriate rent increase.

First, in calculating the vacancy increase, the Court notes that the difference between the two year renewal lease guideline increase and the one year renewal lease guideline increase promulgated by the Rent Guidelines Board for leases entered into in March 2001 is 2 percent. Thus, 180 Seventh Avenue was entitled to a vacancy increase in the amount of $124.61, which is 18 percent of $692.28.

Second, 180 Seventh Avenue was entitled to a longevity increase in the amount of $70.61, which is 10.2 percent (17 years multiplied by .6 percent) of $692.28. Thus, not taking into account the alleged improvements increase, after Thomas Shields vacated the subject apartment, 180 Seventh Avenue was entitled to increase the rent for the subject apartment to $887.50.

As stated above, 180 Seventh Avenue also claimed a large rent increase ($817.50) due to alleged improvements to the subject apartment in 2001. A landlord has the burden of proof based on the preponderance of the credible evidence to establish the existence of improvements justifying a 1/40th rent increase under 9 NYCRR 2522.4(a)(1). See 212 W. 22 Realty, LLC v. Fogarty, 1 Misc 3d 905A (NY Civ. Ct. 2003). Specifically, a landlord must: (1) prove that there was a vacancy to a rent stabilized apartment prior to the commencement of the new tenancy; (2) prove that it installed new equipment and/or completed work which constituted improvements and it did not amount to normal maintenance, ordinary repair and decorating; (3) specifically itemize the nature and scope of the new equipment installed and/or the work completed; and (4) confirm the costs by adequate documentation. See 212 W. 22 Realty, LLC v. Fogarty, 1 Misc 3d 905A (NY Civ. Ct. 2003).

A landlord will be denied a rent increase for vacancy improvements if it fails to [*5]present adequate documentation in support of its claimed improvements, including detailed invoices, bills, and/or proof of payment. See Yorkroad Assocs. v. NY State Div. of Hous. & Cmty. Renewal, 19 AD3d 217 (1st Dept. 2005); Matter of Pechock v. New York State Div. of Hous. & Cmty. Renewal, 253 AD2d 655 (1st Dept. 1998); Pierce v. NY State Div. of Hous. Cmty. Renewal, 8 Misc 3d 1030A (NY Sup. Ct. 2005).

Here, the Court finds that 180 Seventh Avenue has failed adequately to substantiate its claim for improvements to the subject apartment. Pikus did testify that 180 Seventh Avenue performed a "gut renovation" to the subject apartment, including installing a new bathroom, a new kitchen, new windows and electric work. However, 180 Seventh Avenue did not move into evidence any documentation substantiating the work that was allegedly done, e.g., it did not move any paid invoices into evidence, nor did it move into evidence any plans or other architectural or engineering documents to substantiate Pikus' testimony.

Moreover, no one from IFR, the company that allegedly performed the renovations, testified at trial, nor was 180 Seventh Avenue able to move into evidence any IFR records concerning the alleged improvements. The only documentary evidence 180 Seventh Avenue moved into evidence concerning the alleged renovations was a check dated April 17, 2001 for $37,500 from 180 Seventh Avenue to IFR. The check, however, does not have any indication which would link it to the renovation of the subject apartment. The check moved into evidence is simply a check from Blue Star Properties to IFR with no notations or notes on its face.

Not only did 180 Seventh Avenue fail to adequately document its claimed improvements, the rent increase due to improvements it claimed at trial differs from the rent increase due to improvements it claimed in Kaplan's lease. In the rider to Kaplan's lease, 180 Seventh Avenue claimed a rent increase due to improvements of $817.50. An improvement increase of $817.50 corresponds to improvement costs of $32,700 ($32,700 x 1/40 = $817.50). In fact, the Kaplan lease rider contains an unidentified handwritten notation of $32,700. As stated above, at trial Pikus testified that 180 Seventh Avenue's improvement costs were $37,500 which would correspond to an improvement increase of $937.50. The discrepancy between Pikus' testimony and the Kaplan lease in evidence renders Pikus' testimony concerning the improvements suspect^[FN2] [*6]

Given the paucity of documentary evidence 180 Seventh Avenue produced at trial, together with the conflicts in the documentary evidence and Pikus' testimony, the Court finds that 180 Seventh Avenue has not shown, by a preponderance of the credible evidence, that it was entitled to a rent increase for improvements done to the subject apartment in 2001. Thus, the only rent increase 180 Seventh Avenue is able to substantiate in 2001 is from $692.28 to $887.50.

In 2002, 180 Seventh Avenue and Kaplan signed a one year renewal lease. Assuming that the legal regulated rent was $887.50 in 2001, the renewal lease rate in 2002 should have been $923.00. (In 2002, the Rent Guidelines Board set the one year renewal lease increase at 4%). When Lirakis moved into the subject apartment in 2003, her vacancy lease rent should have been $1,089.14, which equals the legal regulated rent in 2003 of $923.00 x 18% vacancy increase (20% minus the difference between the 2003 two year renewal lease increase (4%) and the one year renewal lease increase (2%)). Instead, Lirakis was charged $1,435.00 and was overcharged $345.86 per month on her lease. Over the course of her one year lease plus one month, the overcharge amounted to $4,496.18.

New York City Administrative Code §26-516(a) provides that an owner found to have collected a rent overcharge will be liable to the tenant for a penalty equal to three times the amount of the overcharge unless the owner establishes by a preponderance of the evidence that the overcharge was not willful. See Draper v. Georgia Properties, Inc., 230 AD2d 455 (1st Dept. 1997) affd 94 NY2d 809 (1999); Matter of Wai Leung Chan v. NY State Div. of Hous. & Cmty. Renewal, 207 AD2d 552 (2nd Dept. 1994). DHCR Policy Statement 89-2 sets forth examples of non-willful overcharges, such as where an overcharge is caused by the hyper-technical nature of the rent computation, or where an owner has, in good faith, remedied an overcharge. Here, 180 Seventh Avenue has not proven by a preponderance of the evidence that the rent overcharge was not willful as that term is illustrated in DHCR Policy Statement 89-2. Accordingly, 180 Seventh Avenue is liable to Lirakis for treble damages in the total amount of $13,488.54.

Finally, pursuant to the parties' lease, 180 Seventh Avenue is liable to Lirakis for her attorneys fees in prosecuting this action. Lirakis is directed to submit to the Court and to 180 Seventh Avenue, within twenty days of the date of this order, a letter request for attorneys fees together with documentation supporting the fee request. In the event that 180 Seventh Avenue does not object to the fee request within ten days of receipt, the Court will issue an order directing the Clerk to enter judgment in the amount set forth above together with the attorneys fees. In the event that 180 Seventh Avenue objects to the attorney fee request, the Court will schedule a hearing to determine appropriate [*7]attorneys fees.

This constitutes the decision and order of the Court.

Dated: New York, New YorkE N T E R

May 2, 2006

Hon. Saliann Scarpulla