Landlord Must Pay Relocation Stipends to Estates of Tenants Who Died After Demolition Ruling

Landlord asked the DHCR for permission not to renew rent-stabilized leases and to demolish a rent-stabilized building. In 2010, the DRO ruled that landlord must pay stipends to eight displaced tenants. DOB had ordered the building demolition in 2009 based on landlord's neglect and deterioration of the building. By January 2010, the building had been demolished, before the DHCR decided landlord's application. Landlord appealed the DHCR's decision and lost. But the case was reopened to determine whether landlord had to pay stipends for three tenants who had died.

The DHCR ruled against landlord [see LVT #28140]. Rent Stabilization Code (RSC) Section 2524.5(a)(2)(ii)(d) states that, if a tenant dies before the DHCR issues a final order granting a demolition application, no stipend is required. But, in this case, the DHCR's final order was issued in 2013, followed by court appeals. The three tenants died in 2015 or 2016. The building was demolished due to landlord's malfeasance long before any of the tenants died, so all the tenants were displaced while still alive. Therefore, the tenants' estates were entitled to the stipends due to tenants as of the date of their displacement.

Landlord filed an Article 78 court appeal of the DHCR's final decision. The court ruled against landlord in 2020. Landlord then appealed and lost. Landlord's continued challenge to tenants' eligibility to recover stipends, and any claimed failure of due process predating the DHCR's earlier 2013 order, was barred by res judicata in connection with the tenants still living. The new appeal was barred by collateral estoppel as to the tenants who died before the court issued a decision in a prior Article 78 appeal. Landlord argued that the prior orders couldn't stand because the tenants' attorney may not have actually represented any of the tenants. But a sworn statement by the living tenants showed the attorney's continued representation of them. And landlord was given due process in the DHCR proceeding in which the amount of stipends due under DHCR Operational Bulletin 2009-1 was calculated.  

128 Hester, LLC v. DHCR: Index No. 15032/18, NYLJ 3/25/22, p.18, col. 1 (App. Div. 1 Dept.; 3/10/22; Manzanet-Daniels, JP, Mazzarelli, Gonzalez, Shulman, Rodriguez, JJ)