Landlord v. Tenant: August 2014

Primary Residence: Tenant Must Submit to Independent Medical Exam

Landlord sued to evict rent-stabilized tenant based on nonprimary residence. Landlord claimed that tenant lived in New Jersey and sublet the apartment without landlord’s permission. Tenant claimed that he was away from the apartment temporarily for medical reasons and that landlord was retaliating against him based on tenant’s rent overcharge complaint. Landlord asked the court for permission to conduct an independent medical exam of tenant. The court ruled for landlord. Tenant had put his medical condition at issue in the case, and landlord therefore was entitled to information before trial that was related to tenant’s defense.

• Windsor Plaza v. dePinies: Index No. 84063/13, NYLJ No. 1202649641023 (Civ. Ct. NY; 5/29/14)

Rent Overcharge: Tenant’s Fraud Claim Insufficient to Thwart Four-Year Rule

Tenant complained to the DHCR of rent overcharge. Landlord claimed that the apartment was unregulated, but the DHCR found that tenant was rent stabilized because the building was receiving J-51 benefits. However, the DHCR found no overcharge. Tenant filed an Article 78 appeal, arguing that the DHCR should look back more than four years.

The court ruled against tenant, who appealed further and won. The appeals court ruled that tenant made a sufficient showing of fraud to require the DHCR to investigate the legality of the base date rent. A prior tenant paid $572 per month when he moved out in July 2004. The next tenant paid $1,750 per month starting in October 2004, and landlord needed to spend $39,000 on apartment renovations to justify an individual apartment improvement rent increase supporting the new rent. The complaining tenant moved into the apartment in 2007 and paid over $2,000 per month. Tenant claimed that landlord couldn’t possibly have spent $39,000 based on the condition of the apartment in 2007. Two of the five judges disagreed with the appeals court’s decision, so the DHCR appealed to New York’s highest court.

The Court of Appeals ruled for the DHCR and reinstated the lower court’s decision upholding the agency’s decision. The DHCR’s decision wasn’t arbitrary or capricious. Tenant failed to show sufficient indications of fraud that would warrant consideration of the rent history predating the four-year look-back period in a rent overcharge proceeding.

• Boyd v. DHCR: 2014 NY Slip Op 04806, 2014 WL 2883894 (Ct. App.; 6/26/14)

Security Deposits: Landlord Must Refund Commingled Security Deposit

Landlord sued tenant for breach of lease. Tenant counterclaimed for return of his security deposit. Landlord and tenant had signed a one-year lease commencing on Aug. 1, 2011, for a house. By letter dated Sept. 4, 2011, tenant advised landlord that he was moving out. Both sides asked the court to rule without a trial. The court ruled that a trial was needed to determine whether tenant had breached the lease but that tenant was entitled to immediate refund of his security deposit because landlord had commingled the security deposit with other funds.

Landlord appealed and lost. Commingling a security deposit with personal funds is a violation of General Obligations Law Section 7-103(1) and, by law, tenant is entitled to immediate refund even if he breached the lease. Landlord showed that tenant breached the lease by failing to pay rent for October 2011. But tenant showed that landlord accepted a return of the keys after tenant moved out in September and immediately put the house on the market for sale. Landlord also didn’t demand rent payment from tenant until late November 2011. So there was a question of fact as to whether the landlord-tenant relationship ended and the lease was terminated by the time rent became due on Oct. 1, 2011.

• Solomon v. Ness: 987 NYS2d 220, 2014 NY Slip Op 04185 (App. Div. 2 Dept.; 6/11/14)