Subtenant Sues Landlord and Tenant to Collect on $200K Overcharge Judgment

A subtenant sued landlord and the prime tenant of a rent-stabilized apartment for rent overcharge. Landlord and prime tenant had signed an initial lease in 1995 and then renewed the lease periodically through 2007. In December 2003, subtenant signed a two-month lease with prime tenant and then remained in the unit under renewal agreements between 2004 and 2009. In 2009, subtenant filed complaints of lease violation and rent overcharge with the DHCR. Subtenant claimed that prime tenant was an illusory tenant. Later in 2009, the DRA ruled that the prime tenant only had overcharged subtenant and ordered prime tenant to refund $201,593. The DRA also ordered landlord to give subtenant a vacancy lease. The DRA later reconsidered its order to rule that only the prime tenant's entity was responsible for the overcharge since the lease was in the entity name, not any individual's name.

But subtenant appealed, and the DHCR ultimately ruled that landlord, tenant's entity, and the individual were responsible for the overcharge. Landlord and prime tenant lost appeals filed against the DHCR's final order. The DHCR's final order in 2019 stated that subtenant could then file the order and enforce it as a judgment. Subtenant then sued landlord and prime tenant in court to collect on the DHCR judgment.

The court ruled for subtenant. The issues before the DHCR were fully litigated, and there were no defenses that landlord or tenant could raise at this point. The court granted a judgment against the landlord for $196,163 plus interest from Feb. 28, 2019, with a direction that the court clerk enter judgment. Tenant's request for a default judgment against the prime tenant was denied because tenant's delivery of the court papers to the tenant's doorman was insufficient absent an indication that the doorman refused to provide access to tenant's apartment. Tenant also didn't submit an affidavit concerning prime tenant's military status after tenant defaulted, and failed to otherwise show that he completed all legal service requirements. The court directed tenant to renew his motion against the tenant within 60 days or his claims against the prime tenant would be dismissed. 

Lombardo v. 333 E. 49th P'ship, LP: Index No. 160424/2020, 2022 NY Slip Op 30665(U)(Sup. Ct. NY; 33/22; Jaffe, J)