Landlord Didn't Properly Appeal Suspension of Rent Subsidy

Landlord sued NYCHA in 2010 for breach of contract and unjust enrichment because NYCHA stopped paying Section 8 tenant's rent subsidy for two years. NYCHA had stopped making payments due to a serious housing violation in the apartment, which had no bedroom window guard. NYCHA sent landlord notice of the violation in December 2004, with a warning that the subsidy would be suspended on Jan. 2, 2005, unless the condition was corrected. NYCHA then suspended the subsidy until June 2007. The subsidy was restored retroactively to February 2007, when the apartment passed inspection. NYCHA argued that landlord never filed an Article 78 appeal of the agency's suspension of the rent subsidy. Landlord claimed that such a proceeding was unnecessary because NYCHA breached its housing assistance payment (HAP) contract with landlord, and never held a hearing or otherwise formally notified landlord that it had violated the HAP contract. The court ruled for NYCHA and dismissed the case. NYCHA made a final determination when it revoked the Section 8 subsidy in January 2005. Landlord was then required to seek an appeal by starting an Article 78 proceeding within four months. Landlord couldn't bypass that requirement by its lawsuit, filed five years later.

Crespa LLC v. Rhea: Index No. 03779/10, 2010 NY Slip Op 51802(U) (Sup. Ct. Queens; McDonald, J; 10/1/10)