Four-Year Rule Applies Based on Prior Rent Reduction Order

Facts: Tenant sued landlord for rent overcharge, and sought triple damages plus attorney's fees. In 1994, the DHCR had reduced tenant's rent based on a finding of a reduction in services. Tenant claimed that he never received a copy of the DHCR's order and that landlord never reduced his rent. Since the DHCR never restored the rent, tenant also said that his rent should have been frozen at a reduced rent of $690 since that time. Tenant claimed that he was entitled to a refund of all overcharges since 1994. Landlord argued that a refund was owed, but argued that the rent should be frozen at the amount being collected four years before tenant filed his overcharge claim. Landlord, who bought the building from prior landlord some time after 1994, also claimed that there was no willful overcharge. The court ruled that the amount of tenant's overcharge refund was limited by the four-year rule. But the court could also look back to the DHCR's 1994 order and lease documents to determine the rent reduction set by the DHCR order. This amount would be the base rent amount that landlord was allowed to collect four years before tenant filed his overcharge complaint. Landlord appealed.

Court: Landlord wins. The base rent upon which a refund must be calculated is the rent actually paid by tenant on the date four years prior to the filing of an overcharge complaint. CPLR 213-a and RSL 26-516(a)(1) preclude court or DHCR examination of the rental history prior to the four-year cut-off. This rule applied, even if the prior rent history clearly showed that an unauthorized rent increase had been collected. Notably, the First Department appeals court ruling is contrary to a ruling last year by a Second Department appeals court in

Jenkins v. Fieldbridge Associates.

Rich v. East 10th St. Assoc. LLC: NYLJ, 7/29/10, p. 43, col. 1 (App. Div. 1 Dept.; Tom, JP, Friedman, Sweeny, Nardelli, Abdus-Salaam, JJ)