Class Action Sent Back for Recalculation of Rent Overcharges Based on 2019 Rent Law Amendments

Tenants sued landlord in a 2009 class action, claiming rent overcharge and wrongful deregulation of apartments while landlord received J-51 tax benefits starting in July 2003, and for failing to return previously deregulated apartments to rent stabilization when the J-51 benefits commenced. Both sides appealed the court's initial ruling, which set forth a rent overcharge calculation methodology.

The appeals court rejected landlord's due process violation claim and further found that, under the Housing Stability and Tenant Protection Act (HSTPA), because tenants' overcharge claims were pending on June 14, 2019, the changes made to the rent stabilization laws applied to this case. The appeals court noted that "courts must examine all available rent history necessary to determine the legal regulated rent," including the "most recent reliable" rent registration statement that was not only filed but also "served upon the tenant" "six or more years" before the most recent statement. The appeals court vacated that part of the order setting forth the methodology for calculating the legal rents and the amount of any overcharges, and remanded the case to set forth a methodology and overcharge findings consistent with the HTSPA. The appeals court rejected landlord's claim that amended Rent Stabilization Law Section 26-516 and CPLR 213-a violated due process, finding that, "absent deliberate or negligent delay, where a statute has been amended during the pendency of a proceeding, the application of that amended statute to the pending proceeding is appropriate and poses no constitutional problem."

Dugan v. London Terrace Gardens, LP: 2019 NY Slip Op 06578 (App. Div 1 Dept.; 9/17/19; Richter, JP, Gische, Kern, Oing, Moulton, JJ)