Allen v. WhidbeeAllen v. Whidbee
PO Box 2511
Briarcliff Manor, NY 10510
Lee J. Sauerhoff, Esq.
Legal Services of the Hudson Valley
30 South Broadway, 6th Floor
Yonkers, NY 10701
Ada D. Medina, J.
The following papers numbered 1-7 were read and considered on plaintiff‘s motion for summary judgment (
Papers Numbered
Notice of Motion and Affidavits Annexed 1
Affirmation/Affidavits in Opposition 2
Replying Affirmations/Affidavits 3
Summons and Verified Complaint 4
Answer 5
Filed Papers 6,7
Factual Background
On March 11, 2024, plaintiff filed a summons and verified complaint seeking $9,000.00 from defendant for non-payment of rent. On April 21, 2025, this Court granted, in part, plaintiff‘s motion for summary judgment (
The portion of plaintiff‘s summary judgment motion related to the applicable statutory interest rate for consumer debt and consumer credit transactions was held in abeyance (Romano, J.;
The Parties’ Arguments
Plaintiff asserts the statutory interest rate on a monetary judgment in this matter, if awarded, should accrue at 9% from June 1, 2022. Plaintiff contends recent changes in the law regarding consumer debt and consumer credit transactions, which reduce interest rates from 9% to 2%, do not apply to judgments related to residential rent. Specifically, plaintiff argues residential rent is not a consumer debt nor a consumer credit transaction subject to the new interest rate of 2%. Therefore, plaintiff argues “[j]udgments for rent should still be subject to the statutory interest rate of 9%” (plaintiff‘s mem of law ¶ 2).
In opposition, defendant relies on the “Fair Consumer Judgment Interest Act” which changed the interest rate on judgments for consumer debt and consumer credit transactions to 2% (
Fair Consumer Judgment Interest Act (“FCJIA“)
The Fair Consumer Judgment Interest Act (“FCJIA“) was amended and effective as of April 30, 2022. The FCJIA states “[i]nterest shall be at the rate of nine per centum per annum, except where otherwise provided by statute; provided the annual rate of interest to be paid in an action arising out of a consumer debt where a natural person is a defendant shall be two per centum per annum ” (emphasis added;
Consumer debt is defined as ” any obligation or alleged obligation of any natural person to pay money arising out of a transaction in which the money, property, insurance or services which are the subject of the transaction are primarily for personal, family or household purposes, whether or not such obligation has been reduced to judgment, including, but not limited to, a consumer credit transaction, as defined in subdivision (f) of section one hundred five of this chapter” (
A plain reading of the statute and definitions alone, as well as a prior decision by this Court, makes clear a consumer debt can include, but is not limited to, a consumer credit transaction (see Dionilda Bautista v Natividad Chun et al, CV-0627-17 [Yonkers City Court 2024] [Beltran, J.]). Therefore, a judgment for a consumer debt can receive a 2% interest rate without the debt also being deemed a consumer credit transaction. These definitions alone, however, do not provide guidance as to the types of debt which qualify under either definition.
Consumer Credit Fairness Act (“CCFA“)
More specific law applicable to this Court is the Consumer Credit Fairness Act
“a revolving or open-end credit transaction wherein credit is extended by a financial institution, which is in the business of extending credit, to an individual primarily for personal, family or household purposes, the terms of which include periodic payment provisions, late charges and interest accrual. A consumer credit transaction does not include debt incurred in connection with, among others, medical services, student loans, auto loans or retail installment contracts”
(
Consumer Credit Transaction
Plaintiff contends residential rent does not fit within the definition of a consumer credit transaction. Plaintiff argues a consumer credit transaction ” was not intended and should not be extended to apply to an action arising from a lease of real property” because a landlord does not “extend credit” to a tenant (53rd & 7th Corp. v Rossi, 85 Misc 2d 916, 918 [Civ Ct, New York County 1975]). The court in 53rd & 7th Corp. based its holding on dictionary definitions of consumer credit finding it only relates to “credit extended for buying goods and services for ones personal use through installment plans, charge accounts, short-term loans, etc.” (id. citing Webster‘s New World Dictionary of the American Language [2d ed, p 306]; see also State of New York v Monteleone, 138 AD2d 821, 822-823 [3d Dept 1988] [finding hospital operated by a New York State administrative agency was not involved in the business of providing credit to its citizens]).
Moreover, plaintiff relies heavily on Rhumb W 21 LLC v Wolfe, a civil action for unpaid rent and breach of a written lease agreement (2023 WL 3851935 at *2 [Sup Ct, New York County 2023]). In Rhumb W 21 LLC, defendant raised an affirmative defense that the matter was not a “consumer debt transaction governed by a three-year statute of limitations” (id.). The New York County Supreme Court found the matter “which concern[ed] unpaid rent, [was] not a consumer debt transaction matter” (id.). The court based its finding on the definition of consumer credit transaction (
This Court agrees with the holding in Rhumb W 21 LLC to the extent that rent does not fall within the definition of a consumer credit transaction. However, this Court does not interpret Rhumb W 21 LLC to also hold that rent does not fall within the more general definition of consumer debt since there, the court did not rely on
Based on the foregoing caselaw and statutes, this Court agrees with plaintiff that a landlord does not “extend credit” when entering into lease agreements with a tenant. Therefore, since a landlord does not “extend credit” to a tenant, unpaid rent does not meet the statutory definition of a consumer credit transaction (
Consumer Debt
The failure of residential rent to satisfy the definition of a consumer credit transaction does not preclude this Court from finding unpaid rent falls within the more general definition of consumer debt. Consumer debt can include ” any obligation or alleged obligation of any natural person to pay money arising out of a transaction in which the money, property, insurance or services which are the subject of the transaction are primarily for personal, family or household purposes ” (
Plaintiff disagrees with this interpretation of
Furthermore, the instant matter is not a foreclosure action whereby the Westchester County Supreme Court has found “a foreclosure action is not an ‘action arising out of a consumer debt‘” therefore “[t]he interest rate remains at nine per cent” (Community Loan Fund of New Jersey, Inc. v Riedel, 2022 WL 22954410 at *2 [Sup Ct, Westchester County 2022]). The court in Community Loan Fund of New Jersey justified its holding stating ” foreclosures are not debt collection actions but are instead actions to enforce mortgage liens” and enforcing liens is distinguishable from actions seeking unpaid rent since an individual with a mortgage has a “security interest in [the] property, rather than [] collect[ing] money directly from a debtor [i.e. landlord]” (id. at 1; citing Citibank, N.A. v Yanling Wu, 199 AD3d 48, 52 [2d Dept 2021]).
Moreover, plaintiff relies on the court‘s statement in Community Loan Fund of New Jersey that “[a] review of the legislative history of [
Turning to federal law, the definition of consumer debt under the Fair Debt Collection Practices Act (“FDCPA“) tracks the definition of consumer debt under
Despite the same definition, plaintiff contends this Court should first determine whether a landlord is a creditor or debt collector subject to the FDCPA before determining whether the unpaid rent seeking to be collected is a consumer debt or consumer credit transaction (plaintiff‘s mem of law ¶ 7). Plaintiff contends “landlords are generally not considered to be debt collectors when seeking rental arrears” (plaintiff‘s mem of law ¶ 7; see Missionary Sisters of the Sacred Heart, Inc. v Dowling, 182 Misc 2d 1009 [Civ Ct, New York County 1999] [finding a landlord is not a creditor subject to the FDCPA;
Based on the foregoing, plaintiff is correct that a demand for rent may be deemed a debt collection notice depending on who sends out the rent demand. However, plaintiff‘s reliance on the FDCPA on these grounds is misplaced. The FDCPA does not directly relate to the applicable interest rate for unpaid rent, therefore, this Court does not need to render a determination in the instant matter as to whether an individual landlord or a law firm is subject to the FDCPA. As such, this Court declines to assess matters for unpaid rent on this ground since violations of the FDCPA are not before this Court nor are dispositive of determining whether rent falls within the definition of consumer debt (
This Court will however look to the FDCPA for the sole purpose of interpreting the definition of consumer debt. It is sufficiently clear the definition of consumer debt under
Conclusion
Based on the foregoing, this Court determines residential rent arrears/unpaid rent is deemed a consumer debt pursuant to