Landlord Sanctioned by Court for Late-Date Claim Regarding Plaintiffs' Attorneys

Tenants sued landlord in 2016, claiming rent overcharge and improper deregulation of their apartments while landlord received tax benefits under RPTL Section 421-g. In 2017, the court ruled that tenant's units were subject to rent stabilization and that the matter of overcharge per tenant would be submitted to a Special Referee for individual rulings. In 2018, the First Dept. appeals court reversed and declared that the apartments were properly deregulated. But New York's highest court ruled in 2019 that the apartments were not subject to deregulation due to the 421-g tax benefit status. Landlord then asked the U.S. Supreme Court to find that the NY ruling constituted an unconstitutional taking under the Fifth and Fourteenth Amendments, but SCOTUS denied landlord's petition. Meanwhile, the lower NY court issued an order in 2019 again referring overcharge issues to a Special Referee. The First Department added a ruling in 2021 that the default formula didn't apply to calculation of rent overcharges and that the 2020 Regina decision should be applied. In November 2021, landlord filed a motion seeking leave to renew prior requests by both sides. Landlord claimed there was newly discovered evidence exchanged during pre-hearing conferences before the Referee. Landlord argued that the attorneys claiming to represent all tenants in this matter only actually represented tenant Kuzmich. Therefore, landlord claimed that the attorneys weren't authorized to act on behalf of tenants and their actions had been null and void. 

The court ruled against landlord, finding that landlord hadn't satisfied its burden in demonstrating entitlement for leave to renew the parties' prior motions. Landlord claimed it hadn't seen the engagement letter between Kuzmich and his attorneys until the conference before the referee, but this wasn't a sufficient explanation for why landlord couldn't have brought the matter to the court's attention earlier. Landlord could have requested production of the engagement letter at any point during the discovery stages of this now six-year-old proceeding, and has provided no explanation for why it didn't do so. Tenants' original court papers in fact sought attorneys' fees, and landlord would have been well entitled to see any documentation relating to tenants' legal representation. In addition, landlord didn't show that the tenants' attorneys had no authority to commence this action or move for summary judgment on behalf of all the named tenants. Finally, the court granted tenants' request for sanctions against landlord for seeking renewal of the prior motions, and awarded tenants all costs and fees incurred in connection with landlord's motion for renewal.

Kuzmich v. 50 Murray St. Acquisition LLC: Index No. 155266/2016, 2022 NY Slip Op 30689 (U)(Sup. Ct. NY; 3/4/22; Edmead, J)