Court Approves Settlement of Class Action Claim for Habitability Issues

Tenants sued landlord of a building complex for breach of the warranty of habitability, unjust enrichment, and injunctive relief. They claimed that there were defects in the windows, insulation, and heating/cooling units that resulted in uninhabitable temperatures. They also claimed that a faulty electrical submetering system caused excessive electricity costs for tenants. The case was certified as a class action. Tenants later withdrew the unjust enrichment claim, and the parties eventually submitted a proposed settlement to the court.

The court approved the settlement agreement. Landlord and tenants agreed that landlord would provide a $10 million recovery fund, to be divided pro rata among class members who submitted claim forms based on total rent paid during the class period and to be paid either in cash for former tenants or otherwise in rent abatements. Landlord also paid $18-$20 million for capital improvements, including a complete replacement of all PTAC units, electrical submeters, and window systems in tenants' apartments. Landlord also replaced roof air units to help regulate the flow and temperature of air in the buildings. And while existing rent stabilization protections for tenants expired in June 2020, the parties agreed to a two-year contractual limitation on future rent increases, capped at 5 percent per year. The court found the settlement agreement to be fair, reasonable, and in the best interests of tenants. The court also awarded attorneys' fees of $3.5 million to tenants. This amount represented 8 percent of the overall value of the settlement or 35 percent of the Cash Settlement Fund.

Matter of Gateway Plaza Residents Litig.: Index No. 651023/2014, 2020 NY Slip Op 30890(U)(Sup. Ct. NY; 3/29/20; Crane, J)