No Indicia of Fraud Found in Connection with Tenant's Dismissed Overcharge Claim

Rent-stabilized tenant sued landlord in 2018, claiming rent overcharge after living in the apartment for 30 years. Current landlord bought the building in 2005. Tenant claimed that a prior tenant who lived in the apartment before June 1, 1985, paid $704 per month in rent. The next tenant, who immediately preceded the complaining tenant, paid $1,600 per month. Tenant argued that this 200 percent rent increase demonstrated that his own 1988 vacancy lease was illegal. Landlord asked the court to dismiss the case. The court ruled for landlord.

Tenant appealed and, based on HSTPA amendments to the Rent Stabilization Law in June 2019, the appeals court found that tenant's claim for rent overcharge during the six years before starting the court action was timely. But, after the appeals court ruling, the court granted landlord's request to again dismiss the case based on the Court of Appeals April 2020 decision in Regina Metropolitan v. DHCR, which revoked application of an expanded base date (absent fraud) in overcharge claims made before June 14, 2019. The court rejected tenant's claim that the case involved fraud and therefore the court still could look back more than four years. 

Tenant appealed again and lost. The record didn't support tenant's claim that landlord engaged in a fraudulent overcharge scheme. Tenant was initially charged an unregulated rent of $1,800 per month but shortly thereafter landlord agreed to reduce tenant's rent to $1,200 per month and registered this rent with the DHCR in 1988. There was no proof that any subsequent increase was the result of fraud or was otherwise improper. A single increase in rent, without more, is insufficient to establish fraud warranting review beyond the lookback period.

Zitman v. Sutton LLC: Index No. 652015/18, App. No. 14017, Case No. 2020-04016 (App. Div. 1 Dept.; 6/8/21; Renwick, JP, Kern, Scarpulla, Mendez, JJ)