Tenant's Colorable Claim of Rent Fraud Warrants Pre-Trial Discovery
LVT Number: #33304
Landlord sued to evict tenant for nonpayment of rent. In response, tenant claimed rent overcharge. In May 2023 tenant asked for permission to amend her answer to plead a common law fraudulent scheme to deregulate the apartment. Tenant also requested pre-trial discovery concerning the apartment's rent history. Landlord objected, arguing that tenant hadn't sufficiently pleaded fraud or demonstrated the common law elements of fraud articulated in the 2020 Regina case and the 2023 Burrows case. The court also permitted the parties to address whether the "fraud exception" amendments to the Rent Stabilization Law enacted in late December 2023 and March 2024 had any effect on tenant's claim.
The court ruled for tenant, finding that she had properly raised a colorable claim of a fraudulent scheme to deregulate the apartment. Landlord violated the rent stabilization law by: (a) failing to file registrations consistent with the lease in effect at the time of the registrations; (b) failing to accurately reflect when the apartment was deregulated; and (c) failing to provide prior tenant with a lease rider explaining the first rent after deregulation and charging that tenant a rent of exactly half the amount that landlord claimed was the legal regulated rent and thus discouraging that tenant from challenging the deregulation. Tenant also submitted a detailed, credible statement that generally disputed the contractor's purported scope of work. The tenant's colorable claim of fraudulent deregulation also triggered the court's duty to investigate further to determine the propriety of the deregulation. The court granted discovery for tenant who narrowly tailored document demands. Because fraudulent overcharge must be accompanied by a fraudulent deregulation, tenant's demands also were limited to Sept. 1, 2015, through March 31, 2020, when tenant's lease commenced.
1532-1609 Ocean Ave LLC v. Herizan: Index No. 312517-23, 2024 NY Slip Op 24180 (Civ. Ct. Kings; 6/21/24; Bacdayan, J)