FILED: NEW YORK COUNTY CLERK 10/21/ :20 PM INDEX NO /2016 NYSCEF DOC. NO. 52 RECEIVED NYSCEF: 10/21/2016

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1 FILED: NEW YORK COUNTY CLERK 10/21/ :20 PM INDEX NO /2016 NYSCEF DOC. NO. 52 RECEIVED NYSCEF: 10/21/2016 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK X AUDUBON TENANTS ASSOCIATION, MIRIAM ORTIZ, CARMEN BRAVO, DEBORA DEL ROSARIO, INES MARTINEZ, EVA GOMEZ, LESLIEANN CONCE, CARLA GONZALEZ, QUITERIA GUZMAN, ELBA PALAGUACHI, ADONIA JIMENEZ, IRIS RODRIGUEZ, ZOILA GRULLON, ALAN WEISSMAN, ROSA CABREJA, FERNANDO GARCIA, ERIDANIA ORTIZ, MARISOL POLANCO, ELADIA ROSARIO, PAULA RAMIREZ, RAFAELA HIDALGO, GUILLERMO POLANCO, DELTON Index No /2016 ARIAS, MARIA MARTINEZ, JACINTO CAMARILLO, YRENE ABREAU, CARMEN TAVERAS, MARIA de la ROSA, JOSE ANIBAL, MARCIA ROSA, and ERIKA SOTO, -against- Plaintiffs, AUDUBON REALTY, LLC, HAYCO CORPORATION, IRIS NIEVES, DANIEL GONZALEZ, FRED HAY, and ALEX HAY, Defendants X DEFENDANTS REPLY MEMORANDUM OF LAW 1 1 of 13

2 PRELIMINARY STATEMENT This Reply Memorandum of Law is submitted on behalf of Defendants Audubon Realty, LLC ( Audubon ), Hayco Corporation ( Hayco ), Iris Nieves, Daniel Gonzalez, Fred Hay, and Alex Hey (collectively Defendants ) is response to the Memorandum of Law in Opposition of Plaintiffs and in further support of Defendants motion to dismiss the Complaint and other relief. Defendants contend that Plaintiffs have failed to show that the four year statute of limitations for overcharge complaints and the six year statute of limitations for contracts do not bar their complaint for rent overcharges and breach of lease in their entirety. Defendants further contend that Plaintiffs have failed to show why the action should not be dismissed against the individual Defendants herein. Defendants also contend that Plaintiffs have failed to show why the Amended Complaint should not be dismissed for being so poorly drafted overly and unnecessarily prolix. SUMMARY OF ARGUMENT A cause of action for rent overcharge accrues when the rent overcharge first occurs and the passage of time will bar a rent overcharge claim the same as any other claim. Where a pleading, such as the complaint herein, is so poorly drafted and unnecessarily prolix, the complaint should be stricken in its entirety, rather than the court struggling with the defective complaint. Where a party amends a complaint that is defective on its fate with one as equally defective but even longer, striking of the complaint is the appropriate remedy. 2 2 of 13

3 Plaintiffs failed to show that the Complaint should not be dismissed as against the individual defendants who at all times acted as agents for disclosed principals and did not agree to substitute their liability for the principal. STATEMENT OF FACTS The facts are set forth in the Affidavits and Affirmation in support of the Motion to dismiss and the Court is respectfully directed thereto. Throughout this Reply Memorandum of Law, references and citations will be made to the facts as set forth in the papers in support of the motion to dismiss the Amended Complaint. 3 3 of 13

4 ARGUMENT POINT I A CAUSE OF ACTION FOR RENT OVERCHARGE OR BREACH OF CONTRACT ACCRUES WHEN THE FIRST ALLEGED OVERCHARGE OCCURS OF THE CONTRACT IS BREACHED In New York, a cause of action generally accrues when the alleged breach or wrongful action or omission to act occurred. CPLR 213-a specifically provides that: An action on a residential rent overcharge shall be commenced within four years of the first overcharge alleged and no determination of an overcharge and no award or calculation of an award of the amount of any overcharge may be based upon an overcharge having occurred more than four years before the action is commenced. This section shall preclude examination of the rental history of the housing accommodation prior to the four-year period immediately preceding the commencement of the action. In this instance, Plaintiffs are claiming rent overcharges that first commenced much more than four years ago. See, e.g., Direnna v. Christensen, 57 A.D.3d 408 (2d Dep t 2008) ( Plaintiff subtenant's action is time-barred since the first overcharge alleged by him occurred in April 2003 and this action was not commenced until September 2007 (citations omitted). Plaintiff may not avoid the applicable four-year statute of limitations by amending his complaint to withdraw his claim for earlier months of rent overcharge (citations omitted). ). Under CPLR 213-a, the overcharge complaints are clearly barred by the four year limitation period. 4 4 of 13

5 Plaintiffs are aware that their overcharge claims are barred and seek to avoid both the four year limitations period and the four year look back period of CPLR 213-a by making nonspecific allegations of fraud. Plaintiffs reliance on Conason (Conason v. Megan Holding, LLC, 25 N.Y.3d 1 [2015]), Thorton (Thornton v. Baron, 5 N.Y.3d 175 [2005]) and Grimm (Grimm v. State of N.Y. Div. of Hous. & Cmty. Renewal, 68 A.D.3d 29 [1 st Dep t 2009], aff d, 15 N.Y.2d 358[(2010]) is misplaced since those cases are not applicable to the facts in the instant case. For example, in Thornton, there was an illusory tenancy and a prohibited lease requiring the named tenant to not maintain the apartment as his primary residence. In Thornton, the plaintiff brought his action against the illusory prime tenant within the four year time period provided by CPLR 213-a. The only issue was whether the landlord should be added as a party after the four years had expired. In Thornton, since there was collusion between the landlord and the prime tenant, the Court permitted the landlord to be made a party for purposes of the rent overcharge. No such factors are present in the case at bar. Rent overcharge complaints for an alleged rent overcharge that first started more than four years are barred by the applicable statute of limitations for rent overcharge claims. CPLR 213-a. Clearly, Plaintiffs recognize that their rent overcharge complaints are barred by the applicable statute of limitations and are attempting to evade the bar of that statute of limitations by claiming fraud. There are two flaws with this reasoning. Case law is clear that where a claim of fraud is duplicative of a claim for breach of contract, the fraud claim must be dismissed. In this instance, the alleged fraud claim, not 5 5 of 13

6 properly articulated or specified as required by CPLR 3014 and 3016, is merely duplicative of the rent overcharge claims. See, e.g., Assured Guar. Mun. Corp. v. DLJ Mortg. Capital, Inc., 44 Misc.3d 1206(A) (Sup. Ct. N.,Y. Cty. 2014) ( Fraud claims, like all tort claims, are not viable when they arise from the same facts and implicate the very same duties governed by the contract. ). Second, under Grimm, cited by Plaintiffs, actual proof of a fraudulent scheme to evade the rent laws has to be demonstrated; mere suspicion is insufficient. In Conason, the landlord filed fictitious registration statements for non-existent prior tenants in order to get vacancy increases and other increases in the rent. Plaintiffs have failed to show (or even to claim) that there were any fictitious filings for non-existent tenants. Thus, Conason is not relevant in this case and should not be considered. In reality, Plaintiffs have shown nothing. Plaintiffs merely allege that their respective rents are higher than they should be. There is no proof (or even any claim) that there was any attempt to fraudulently remove the apartments from rent regulation. Plaintiffs have failed to establish any facts or circumstances which give rise to Plaintiffs claims, beyond bare-boned, self-serving conclusory statements, alleging a fraudulent scheme to collect rent in excess of the legal regulated rent for any of the alleged affected Plaintiffs. The law has been clearly set forth evidencing that more than a mere claim of fraud is needed in order to look back beyond the four-year rule normally employed in rent overcharge claims; similarly, more must be claimed in order to pierce the corporate veil in order to make a finding that an individual to whom the rent is neither being paid nor whom is exercising his or her sole discretion for his or her benefit. Case law has consistently held that, in the absence of any actual indicia of a fraudulent scheme to deregulate, simply claiming fraud is insufficient to 6 6 of 13

7 warrant this agency looking at the rent history more than four-years prior to the filing of a proceeding. Matter of Grimm v. State of New York State DHCR, 15 N.Y.3d 358, 912 N.Y.S.2d 491, 938 N.E.2d 924 (2010); Matter of Boyd v. New York State DHCR, 23 N.Y.3d 999, 993 N.Y.S.2d 764, 16 N.E.3d 1243 (2014). See, also, Thornton v. Baron, 5 N.Y.3d N.E.2d N.Y.S.2d 118 (2005). A colorable claim of fraud requires that the tenant present something more than a mere allegation of fraud. It requires some evidence that the owner engaged in a fraudulent act or scheme more than four (4) years prior to the tenant's filing of the rent overcharge claim, justifying the agency's examination of the entire rent history. Boyd, supra. The Plaintiffs herein have in no way set forth any such evidence. Thus, the four year statute of limitation under CPLR 213-a bars this action. 7 7 of 13

8 POINT II WHERE A PLEADING, AS THE COMPLAINT HEREIN, IS SO POORLY DRAFTED AND UNNECESSARILY PROLIX, THE COMPLAINT SHOULD BE STRICKEN IN ITS ENTIRETY Plaintiffs allege that there is no prohibition against a 491-page Complaint, notwithstanding the explicit language in CPLR 3014, which clearly mandates that a complaint must consist of plain and concise statements in consecutively numbered paragraphs. Each paragraph shall contain, as far as practicable, a single allegation. It is apparent that there are few, if any, paragraphs in the Complaint which conform to the requirements of the CPLR; the Complaint contains an enormous number of paragraphs that make legal arguments, assumptions, and generalized statements which have no bearing on the actual facts, but are merely interposed in order to establish a narrative which obfuscates the lack of legal standing and legal precedent upon which this action is purportedly based. 8 of 13

9 POINTII WHERE A PARTY AMENDS A COMPLAINT THAT IS DEFECTIVE ON ITS FATE WITH ONE AS EQUALLY DEFECTIVE BUT EVEN LONGER, STRIKING OF THE COMPLAINT IS THE APPROPRIATE REMEDY Whether a complaint is amended and the amended complaint is even lengthier than the excessively prolix complaint it seeks to replace, or is the original excessively prolix complaint itself, a motion to dismiss the complaint should be granted. As the Appellate Division, Fourth Department, held in Isaacs v. Washougal Clothing Co., Inc., 233 App.Div. 568, 572 (4 th Dep t 1931), The court should not be compelled to wade through a mass of verbiage and superfluous matter in order to pick out an allegation here and there, which, pieced together with other statements taken from another part of the complaint, will state a cause of action. The time of the court should not be taken in a prolonged study of a long, tiresome, tedious, prolix, involved and loosely drawn complaint in an effort to save it. See, also, Barsella v. City of New York, 82 A.D.2d 747 (2d Dep t 1981) (unnecessarily prolix complaint with excessively numerous irrelevant or unnecessary allegations unrelated to the claims alleged is properly dismissed, citing Isaacs, supra). Neither this Court nor Defendants should be forced to engage in a prolonged study of a long, tiresome, tedious, prolix, involved and loosely drawn complaint in an effort to save it. Isaacs, supra. Plaintiffs have failed to justify why either of these complaints (original or amended) contain so much irrelevant matters or why Plaintiffs could not have pruned the Complaint when preparing the equally egregious Amended Complaint. The Amended Complaint should be dismissed in its entirety. 9 9 of 13

10 Since Plaintiffs have not cross-moved for leave to re-plead the Amended Complaint if this motion is granted, Plaintiffs are not entitled to such relief from this Court at this time of 13

11 POINT VI PLAINTIFFS FAILED TO SHOW THAT THE COMPLAINT SHOULD NOT BE DISMISSED AS AGAINST THE INDIVIDUAL DEFENDANTS WHO AT ALL TIMES ACTED AS AGENTS FOR DISCLOSED PRINCIPALS AND DID NOT AGREE TO SUBSTITUTE THEIR LIABILITY FOR THE PRINCIPAL Again, it is well-settled that the that an agent for a disclosed principal is not bound by a contract entered into on behalf of a disclosed principal unless there is clear and explicit evidence of the intention of the agent to be so bound. Mencher v. Weiss, 306 N.Y. 1, 114 N.E.2d 177 (1953). See, also, Savoy Record Company, Inc. v. Cardinal Export Corp., 15 N.Y.2d 1, 2013 N.E.2d 206, 254 N.Y.S.2d 521 (1964) (an agent for a disclosed principal will not be personally bound unless there is clear and explicit evidence of agent s intention to substitute his personal responsibility for that of the principal). Plaintiffs have provided no evidence that there has been any personal gain by any of the individual agents, nor any evidence that the agents signed any of the lease agreements or other relevant documents regarding the running of the day-to-day operations of the subject premises with the intention of being held personal liability for the rights and obligations thereof. Plaintiffs are attempting to get around both the four-year rule and the law regarding agents and principals in order to attempt to hold the individual officers or agents of the owner of the subject premises liable for their contrived claims. Other than the mere allegations involving what the Plaintiffs allege to be questionable increases in the rent, nothing even remotely resembling a prima facie showing of fraud has been shown which would mandate a departure from the applicable four-year and principal-agency laws by which the parties are bound of 13

12 Plaintiffs couch their breach of contract claims in tort solely for the purpose of circumventing the well-settled and generally accepted tenets of the laws involving principals and agents without any justification in law or fact. In the nearly 500 paragraphs of the Complaint, Plaintiff cannot spell out a single valid claim against the individual defendants. The striking lack of any factual allegations concerning the individual defendants is telling by its absence. There is no valid Such blatant attempts to evade such long-standing precedents should not be countenanced of 13

13 CONCLUSION Plaintiffs have failed to demonstrate any reason why Defendants motion to dismiss should not be granted. Plaintiffs have failed to show any reason to justify the abusively lengthy and prolix Amended Complaint containing irrelevant matters and self-serving statements having no bearing on the underlying claims. Plaintiffs have failed to show any valid reason why this Court should ignore the four year statute of limitation for a rent overcharge complaint under CPLR 213-a and have failed to show any actual evidence of fraud that would justify ignoring CPLR 213-a. Under the circumstances, Plaintiffs Amended Complaint should be dismissed in its entirety. Dated: October 21, of 13