Mlotok v. 63 Co. LLC
2024 NY Slip Op 31190(U)
N.Y. Sup. Ct., New York Cty.2024Background
- Plaintiff Bianca Mlotok brought an action against 63 Company LLC and Digby Management LLC regarding her apartment at 200 East 63rd Street, New York, seeking a declaration that it was subject to rent stabilization and damages for alleged rent overcharge due to improper deregulation.
- Mlotok asserted the apartment was improperly deregulated despite the building’s receipt of J-51 tax benefits, and that landlords engaged in a scheme to evade rent stabilization laws.
- Defendants moved for summary judgment to dismiss the first (declaratory judgment of rent stabilization status) and second (rent overcharge) causes of action, to amend their counterclaim to reflect rent owed of $9,040, and to obtain judgment for rent owed.
- Defendants relied on documentation showing deregulation triggered in 2001 based on reaching the high rent vacancy threshold and expiration of the J-51 benefits in 2009, before Mlotok became a tenant in 2014.
- The DHCR’s certified rent registrations since 2001 classified the apartment as exempt from rent stabilization, and no administrative appeal or Article 78 proceeding had been filed to overturn this determination.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Was the apartment properly deregulated? | Deregulation was improper due to issues with J-51 benefits and lack of proper notice. | Apartment deregulated in 2001 after reaching high rent threshold and J-51 benefits expired. | Apartment was lawfully deregulated and not subject to rent stabilization. |
| Is the rent overcharge claim timely? | Defendants' deregulation scheme entitles plaintiff to look back further for overcharges. | Claim is time-barred by four-year statute of limitations under pre-HSTPA law. | Rent overcharge claim is time-barred; no fraud is pled to apply extended rule. |
| Should defendants be allowed to amend their counterclaim? | No prejudice; should not be allowed. | Amendment reflects accrued rent and no prejudice exists. | Amendment granted—no surprise or prejudice to plaintiff. |
| Should summary judgment be awarded for rent owed? | Defendants' claim should be stayed due to unresolved issues with deregulation and J-51 history. | Plaintiff owes contracted rent; all evidence supports entitlement to judgment. | Summary judgment for rent owed granted in favor of defendants. |
Key Cases Cited
- Alvarez v. Prospect Hosp., 68 N.Y.2d 320 (party must show entitlement to judgment as a matter of law for summary judgment)
- Matter of Peckham v. Calogero, 12 N.Y.3d 424 (final administrative determinations are entitled to res judicata if not appealed)
- Matter of Pantelidis v. New York City Bd. of Stds. & Appeals, 10 N.Y.3d 846 (remand not appropriate where only a second chance is sought to relitigate the merits)
- Gersten v. 567 7th Ave. LLC, 88 A.D.3d 189 (DHCR has discretion to reconsider determinations in limited circumstances, but not routinely)