Stuyvesant Town-Peter Cooper Vill. Tenants' Ass'n v. BPP ST Owner LLC

78 Misc.3d 309

184 N.Y.S.3d 538

The STUYVESANT TOWN-PETER COOPER VILLAGE TENANTS’ ASSOCIATION, Susan Steinberg, Beth Rosner, Steven Newmark, Rory O'Connor, Jodi Strauss, Plaintiff,

v.BPP ST OWNER LLC, BPP PCV Owner LLC, City of New York, New York City Housing Development Corporation, State of New York Homes and Community Renewal, Defendant.

Index No. 152397/2020

Supreme Court, New York County, New York.

Decided on January 4, 2023

Collins Dobkin & Miller LLP, New York City (Timothy Collins of counsel), for plaintiffs.

Kirkland & Ellis LLP, New York City (Aaron Marks of counsel), and Fried, Frank, Harris, Shriver & Jacobson LLP, New York City (Janice MacAvoy of counsel), for BPP ST Owner LLC and another, defendants.

Letitia James, Attorney General, New York City (Ester Murdukhayeva of counsel), amicus curiae.

Robert R. Reed, J.

This declaratory judgment action follows a heavily litigated 2007 rent overcharge action ("the Roberts action")¹ that was originally resolved by a judgment that this court (Lowe, J.) entered on April 10, 2013 ("the Roberts judgment") (see notice of motion, motion seq. no. 003, exhibit 11, NYSCEF doc. no. 52). That matter was subsequently restored to the calendar by an April 14, 2020 court order (Ostrager, J.), which directed that the two actions be heard jointly² (id., exhibit 15, NYSCEF doc. no. 56).

The Roberts judgment (entitled "Order and Final Judgment Approving Settlement and Payment of Administrative Fees and Costs and Awarding Attorneys’ Fees and Expenses and Incentive Awards") incorporated certain terms of a settlement agreement that parties to that action had previously reached ("the Roberts settlement") (see notice of motion, motion seq. no. 003, exhibit 11, NYSCEF doc. no. 52). Subparagraph (9) (j) of the Roberts judgment is relevant to this motion and provides as follows:

"A Unit shall not be subject to the RSL or RSC after the expiration of the lease for that Unit in effect when the Complex in which the Unit is located no longer receives benefits under the J-51 program (that is, June 30, 2020 or such earlier date as permitted by law ) regardless of whether any prior lease or lease renewal pertaining to the Unit contained a notice pursuant to RSL § 26-504 (c), known as a ‘J-51 Rider’ " (id. [emphasis added]).

Defendants BPP ST Owner LLC and BPP PCV Owner LLC (BPP) purchased the properties that are the subject of this action (the Stuyvesant Town and Peter Cooper Village complexes located at East 14th Street and First Avenue in the County, City and State of New York) on December 18, 2015, after their previous owners had lost them in foreclosure (see notice of motion, motion seq. no. 003, Kalish aff ¶¶ 2-4, NYSCEF doc. no. 39). The plaintiffs in this action are officers and members of the tenants’ associations of both complexes ("plaintiffs")(see verified complaint ¶¶ 20-24, NYSCEF doc. no. 1). They are distinct from the class of tenants who were the plaintiffs in the Roberts action.

Contemporaneous with their purchase of the complexes, BPP executed a regulatory agreement with the New York City Housing Development Corporation (HDC) that established an "Affordable Housing Regime" to govern the rental of certain apartments ("the BPP regulatory agreement")(see notice of motion, motion seq. no. 003, exhibit 1, NYSCEF doc. no. 40). Subparagraph 3.12 of the BPP regulatory agreement provides as follows:

"3.12 Applicability of Rent Stabilization. Any Affordable Units subject to Rent Stabilization on the date of this Agreement will continue to be subject to Rent Stabilization unless and until such Units are deregulated pursuant to the terms of applicable law. Once an Affordable Unit is deregulated pursuant to the terms of applicable law, HDC does not intend to subject such Affordable Unit to any regulation other than the restrictions contained in this Agreement (unless HDC, in HDC's discretion, and the Owner, in the Owner's discretion, enter into a future agreement providing for further affordability). If, at any time, applicable law would allow the deregulation of any Unit (including any Affordable Unit) from Rent Stabilization, then the Owner may elect to deregulate such Unit from Rent Stabilization, but if the Unit is an Affordable Unit, it shall remain subject to the restrictions of this Agreement " (id. [emphasis added]).

June 14, 2019 was the effective date of the Housing Stability and Tenant Protection Act of 2019 ("HSTPA"). Part D of the HSTPA repealed Rent Stabilization Law ("RSL") §§ 26-504.1, 26-504.2 and 26-504.3 -- the provisions of the RSL which had previously authorized "high-rent" and "high-income" luxury deregulation procedures for rent stabilized apartments.

On March 6, 2020, plaintiffs commenced this action by filing a summons and complaint that sets forth causes of action for: 1) a declaratory judgment; and 2) a permanent injunction (see complaint, NYSCEF doc. no. 1). On July 8, 2020, BPP filed an answer with affirmative defenses and an undesignated counterclaim³ for declaratory relief (see answer, NYSCEF doc. no. 28). Discovery ensued. On March 22, 2021, the court (Ostrager, J.) granted a motion to dismiss this action against the co-defendants City of New York, New York City Housing Development Corporation and the New York State Division of Housing and Community Renewal i/s/h/a State of New York Homes and Community Renewal on consent (motion seq. no. 001, NYSCEF doc. no. 110).

On August 20, 2020, BPP submitted the instant motion for summary judgment on their undesignated counterclaim for declaratory relief (see notice of motion, NYSCEF doc. no. 37). Plaintiffs submitted a cross motion for summary judgment on the entire complaint on October 15, 2020 (see notice of cross motion, NYSCEF doc. no. 61). On December 2, 2020, the court (Ostrager, J.) issued a decision granting the New York State Attorney General's (AG) motion for leave to file an amicus curiae brief in opposition to BPP's summary judgment motion (motion seq. no. 004, NYSCEF doc. no. 89).

DISCUSSION

A party moving for summary judgment bears the burden of proving, by competent, admissible evidence, that no material and triable issues of fact exist (see e.g. , Winegrad v. New York Univ. Med. Ctr. , 64 N.Y.2d 851, 853, 487 N.Y.S.2d 316, 476 N.E.2d 642 [1985] ; Sokolow, Dunaud, Mercadier & Carreras v. Lacher , 299 A.D.2d 64, 70, 747 N.Y.S.2d 441 [1st Dept. 2002] ). Once the moving party does so, the burden shifts to the party opposing the motion to produce evidentiary proof, in admissible form, sufficient to establish the existence of material issues of fact which require a trial of the action (see e.g. , Zuckerman v. City of New York , 49 N.Y.2d 557, 562, 427 N.Y.S.2d 595, 404 N.E.2d 718 [1980] ; Pemberton v. New York City Tr. Auth. , 304 A.D.2d 340, 342, 758 N.Y.S.2d 29 [1st Dept. 2003] ). As noted, BPP seeks summary judgment on its undesignated counterclaim, while plaintiffs cross-move for summary judgment on both causes of action in their complaint. The court will consider each claim in turn.

Plaintiffs’ First Cause of Action

Declaratory judgment is a discretionary remedy which may be granted "as to the rights and other legal relations of the parties to a justiciable controversy whether or not further relief is or could be claimed" ( CPLR 3001 ; see e.g. , Jenkins v. State of N.Y., Div. of Hous. & Community Renewal , 264 A.D.2d 681, 695 N.Y.S.2d 563 [1st Dept. 1999] ). Here, BPP moves for a declaration "to Enforce [the Roberts ] Judgment Approving the Roberts Settlement Agreement" (see notice of motion, NYSCEF doc. no. 37). Plaintiffs cross-move for a declaration that "the RSL and ETPA [Emergency Tenant Protection Act of 1974] will continue to apply to all apartments within ST-PCV so long as they were recognized as being subject to the RSL and ETPA on June 14, 2019 by virtue of the HSTPA [Housing Stability and Tenant Protection Act of 2019]" (see complaint, ¶ 66, NYSCEF doc. no. 1). Both proposed declarations seek determinations regarding the rent regulated status of the apartments located in the Stuyvesant Town and Peter Cooper Village building complexes. It has long been the rule that, in an action for declaratory judgment, the court may properly determine respective rights of all affected parties under a lease (see e.g. , Leibowitz v. Bickford's Lunch Sys. , 241 N.Y. 489, 150 N.E. 525 [1926] ). Because this case presents just such a scenario, declaratory judgment is the appropriate vehicle for resolving the parties’ dispute.

BPP raises two arguments to justify the declaration that it requests, one contractual/statutory and the other constitutional. The former asserts that BPP "may deregulate the Roberts units pursuant to this court's order and final judgment approving the settlement agreement," i.e., the Roberts judgment (see defendants’ memorandum of law at 8-14, NYSCEF doc. no. 38). BPP specifically avers that (1) the Roberts judgment "is enforceable and requires that the Roberts units ‘shall’ be deregulated"; and (2) that "no contrary authority compels this court to disregard" the Roberts judgment (id. ). Plaintiffs respond that "the plain text and intent of the HSTPA continues protections for all units at the complexes that were subject to stabilization on June 14, 2020," and that the Roberts judgment "does not preclude the application of future rent and eviction protections" (see plaintiffs’ memorandum of law at 8-14, NYSCEF doc. no. 64). The AG further argues that the Roberts judgment "contemplated future deregulation pursuant to then-existing law but did not contain an independently enforceable agreement to deregulate" and that "there is no statutory authority for the deregulation of the subject apartments" (see amicus curiae memorandum at 9-16, NYSCEF doc. no. 83). Having reviewed these arguments, the court concludes that BPP's arguments are based on a misconception of the law, while the other parties correctly interpret the applicable statutory and contractual provisions.

Subparagraph (9) (j) of the R...