SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK In the Matter of the Application of 1326-1338 RIVERSIDE DRIVE LLC, Index No.152132/2017 Petitioner, For a Judgment Pursuant to Article 78 REPLY AFFIMATION of the Civil Practice Law and Rules,.and- -against- (To Be Referred to Hon. Edwards, J.S.C) NEW YORK STATE DIVISION OF HOUSING AND COMMUNITY RENEWAL, Respondent, GUNNAR JAECK and SARAH WElL, Respondents. RE: DHCR Docket No. ES-410055-RO. PHILLIP L. BILLET, an attorney duly admitted to practice before the courts of the State of New York, hereby affirms the following to be true under the penalties for perjury pursuant to CPLR 2106: 1. I am associated with the law firm of Belkin Burden Wenig 8 Goldman, LLP, attorneys for the petitioner in this proceeding, 1326-1338 Riverside Drive LLC (" Petitioner" ("Petitioner"). I am fully familiar with the facts and circumstances hereinafter set forth. 2. This affirmation is respectfully submitted in reply to the "Affirmation in Opposition" submitted by counsel for respondent New York State Division of Housing and Community Renewal ("DHCR") in response to Petitioner's instant motion for an 1 1 of 11
order: (a) granting Petitioner leave to reargue its "Article 78 Petition," which was dismissed by this Court in a Decision and Order dated October 30, 2017; and (b) upon reargument, granting Petitioner's petition upon the grounds that this Court misapprehended or overlooked relevant facts and controlling law. 3. As set forth in Petitioner's motion, Petitioner, as the current owner of "Building" the building known as 1332 Riverside Drive, New York, New York (the "Building"), had sought judicial review of DHCR's "Administrative Appeal Order," in which DHCR's Deputy Commissioner affirmed a prior DHCR Order (hereinafter the "Rent Overcharge Order" Order"), which ruled that co-respondents Gunnar Jacek and Sarah Weil (the "Apartment" "Complainants"), the former tenants of apartment 33E of the Building (the "Apartment"), had been overcharged and were entitled to recover $33,866.27, which constituted the amount of the overcharge, plus treble damages and interest. 4. In so ruling, DHCR determined that: (a) Petitioner's predecessor-in-interest, 1326 Riverside Drive Owner" LLC (the "Former Owner"), had failed to produce evidence rent" of the "base date of the Apartment, i.e., the rent being date" charged for the Apartment on the "base of the proceeding, which was June 26, 2010, four years prior to the date the Complainants filed their complaint; and (b) A punitive "default formula" should be used to calculate the legal rent of the Apartment during the term of the Complainants' initial lease for the Apartment and the "frozen" default rent should be for the entirety of Complainants' tenancy at the Apartment. 5. As further set forth in Petitioner's motion, this Court, in affirming the Administrative Appeal Order, disregarded or misconstrued the conclusive evidence of the base date rent which was submitted by the Former Owner and Petitioner, ruling 2 2 of 11
instead that the Former Owner had "failed to provide the applicable base date lease' or sufficient documents to support the legal regulated rent, including its renovation claim." 6. As demonstrated in Petitioner's petition and as more fully demonstrated below, Petitioner (as conceded by DHCR's Deputy Commissioner), submitted competent evidence to establish the base date rent (albeit in the form of a prior lease and rent registration statement rather than the base date lease) such that the default formula and treble damages on the amount resulting from the application of the default formula, should not have been imposed. (See the Administrative Appeal Order, a copy of which was annexed to Petitioner's motion as Exhibit D, at page five, paragraph one.) 7. Now, in her affirmation in opposition to Petitioner's motion, counsel for DHCR makes various arguments, none of which demonstrate that Petitioner's motion should not be granted. 8. At paragraphs 8 and 9 of her affirmation, counsel argues that Petitioner failed to demonstrate that this Court overlooked or misapprehended the facts or law; and in support of this argument, she claims that in its motion, Petitioner simply "rehashed" it's argument that, although it did not submit a copy of the Apartment's "base date lease," it did submit a copy of the lease which was in effect during the term Lease" immediately prior to the base date (hereinafter the "Prior Lease"); and that this Lease, together with rent registration statements on file with DHCR, were sufficient to establish the base date rent of the Apartment. ' i.e., the lease in effect on the base date of the proceeding. 3 3 of 11
9. This argument however, completely ignores the record in this proceeding. While Petitioner did demonstrate that the Former Owner submitted conclusive evidence of the base date rent of the Apartment in the form of the Prior Lease and the 2010 rent registration statement, Petitioner did not simply argue that these documents were together sufficient to establish the base date rent. Rather: (a) Petitioner demonstrated that: (1) each document was Apartment;2 sufficient to prove the base date rent of the Apartment; and (2) moreover, the record before DHCR contained additional evidence of the base date rent, including: (i) the Deputy Commissioner's concession that the Prior Lease "would corroborate a (base date) rent of $914.70 per month," Complainants' and (ii) the statement during the administrative review proceeding, that the Former Owner demonstrated that the base date rent of the Apartment was $914.70 per month; and (b) Most significantly, Petitioner demonstrated that this Court overlooked or misapprehended the relevant facts or law in reaching its decision (see the affirmation of Petitioner's counsel in support of Petitioner's motion, par. 37-45). 10. Next, at paragraph 10 of her affirmation, counsel claims that Petitioner "conceded... that DHCR may apply the default formula... where 'a full rental history from the base date is not provided.'" 11. This argument, however, likewise fails to demonstrate that Petitioner is not entitled to the relief sought herein because, as Petitioner demonstrated during the course of the DHCR proceedings and in its Article 78 petition, a full rental history of the Apartment from the base datewas provided.3 2 See Petitioner's affirmation in support of its motion, paragraphs 18 and 19. 3 affirmation" See also Petitioner's "reply submitted during the course of the Article 78 proceeding (at paragraph 30, et. seq.) in which Petitioner argued that the Former Owner was not required to submit a copy of the base date lease or rent ledgers in order to demonstrate the base date rent. 4 4 of 11
12. Next, beginning at paragraph 11 of her affirmation, counsel, in a misleading attempt to characterize Petitioner's claim as a claim that it should not be responsible for the Former Owner's failure to submit a copy of the Apartment's base date lease or the Former Owner's failure to provide DHCR with evidence of post-base date renovations to the Apartment, argues that an owner "'stands' in the shoes of its predecessor in interest." 13. This argument, however, completely misses the entire point of Petitioner's Article 78 petition and instant motion. First, regarding the Former Owner's failure to submit a copy of the base date lease, it was not necessary for the Former Owner to have submitted a copy of said Lease because it submitted other evidence of the base date rent of the Apartment; evidence which was legally sufficient, and even recognized as such by the Complainants and the Deputy Commissioner.4 14. As to the Former Owner's failure to submit evidence of post-base date renovations, such failure, as demonstrated above, was completely irrelevant to the legality of the base date rent inasmuch as said rent did not rely on any apartment improvements. Counsel's improvement claim is a complete red herring because the improvements all post-dated the base date rent. 15. Finally, beginning at paragraph 16 of her affirmation, counsel attempts to justify DHCR's application of the default formula and assessment of treble damages; however, as was the case with her answer to Petitioner's Article 78 petition, 4 Also, as Petitioner noted in its reply affirmation submitted during the Article 78 proceeding (at paragraph 60), the First Department, at least in cases where DHCR has calculated the rent of an apartment by use of its default formula, has indicated the validity of an apartment owner's excuse for its inability to submit rent records. See Matter of Bondam Realty Assoc., LP v DHCR, 71 A.D.3d 477, 898 N.Y.S 2d. 9 (1" Dep't 2010), 5 5 of 11
the only item of evidence she addresses is the 2010 rent registration statement. Once again, she does not address: - The probative value of the Prior Lease and the Deputy Commissioner's concession that the Prior Lease "would corroborate" the base date rent; - Petitioner's argument that the Deputy Commissioner's rejection of the Prior Lease notwithstanding the abovereferenced concession, was arbitrary and capricious; - Complainants' The concession that the Former Owner had substantiated the base date rent; and - Petitioner's argument that, in considering the evidence before it, DHCR improperly failed to apply the "substantial evidence" standard mandated by SAPA and failed to consider the equities of the proceeding as required by the Code.5 16. Most significantly, counsel does not address Petitioner's argument that this Court improperly based its affirmance of Administrative Appeal Order in part upon the Former Owner's failure to submit evidence of renovations to the apartment, notwithstanding the fact that: (a) the default formula may only be used to calculate the base rent of an apartment where there is no evidence of such rent; (b) any evidence of renovations would only have affected rents charged for the Apartment after the base date; and (c) the default formula may not be used to calculate post-base date rents. 5 Given counsel's failure on two occasions to address all relevant evidence, the only logical conclusion is that counsel realizes that the Administrative Appeal Order was in fact, arbitrary and capricious. 6 6 of 11
WHEREFORE, based upon the foregoing, it is respectfully requested that Petitioner's motion be granted in its entirety and this Court grant such other and further relief deemed just and proper. Dated: New York, New York January 2, 2018 Phillip L. illet (Rule 130-1.1-a) 7 PBILLET/6812,0308/2235779 7 of 11
d Il I 'NVNGlOO NVNGIOO V4 OIN3hh. NGGK18 NdCM18 NDI NIM38I'38 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK INDEX NO.: 152132/2017 In the Matter of the Application of 1326-1338 RIVERSIDE DRIVE LLC, Petitioner, For a Judgment Pursuant to Article 78 of the Civil Practice Law and Rules, NEW YORK STATE DIVISION OF HOUSING AND COMMUNITY RENEWAL, Respondent, -against- -and- GUNNAR JAECK and SARAH WEIL, Respondents. RE: DHCR Docket No. ES-410055-RO. REPLY AFFIRMATION BELKIN BURDEN WENIG & GOLDMAN, LLP Attorney(s) forpetitioner 270 Madison Avenue NEW YORK, N.Y. 10016 (212) 867-4466 FAX (212) 867-0709 To Service of a copy of the within is hereby admitted. PBILLET/6812.0308/2223843 Dated: 8 of 11
SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK In the Matter of the Application of 1326-1338 - RIVERSIDE DRIVE LLC, Petitioner, Index No. 152132/2017 For a Judgment Pursuant to Article 78 of the Civil Practice Law and Rules, AFFIDAVIT OF SERVICE BY -against- FEDERAL EXPRESS NEW YORK STATE DIVISION OF HOUSING AND COMMUNITY RENEWAL, Respondent,.and- GUNNAR JAECK and SARAH WEIL, Respondents. RE: DHCR Docket No. ES-410055-RO. STATE OF NEW YORK ) COUNTY OF NEW YORK ) : ss.: TIMOTHY SANABRIA, being duly sworn, deposes and says: The deponent is not a party to this action, is over 18 years of age and is employed at 270 Madison Avenue, New York, New York 10016. That on January 2, 2018, deponent served a true copy of a REPLY AFFIRMATION herein upon: GUNNAR JAECK and SARAH WElL Respondents pro se 6318 N 50th St WA 98407 Tacoma, 9 of 11
by depositing the papers in properly addressed wrappers into the custody of Federal Express employee for overnight delivery, prior to the latest time designated by Federal Express for overnight delivery. / TI OTH SANABRIAN Sworn to before me this 2nd day of January 2018 THOMAS J. BANNON Notary Public, State of New York No. 01BA4870695 0 lefified in Queens County ~ 1 OTARY PUElo[gnission Expires Seotember 8, 202.. PBILLET/6812.0308/2240062 10 of 11
Phillip Billet From: Sarah Weil <sjweil@gmail.com> Sent: Saturday, December 23, 2017 5:56 PM To: Phillip Billet Cc: Gunnar Jaeck Subject: 1326-1338 Riverside Dr LLC v DHCR et al Hello, My partner and I are respondents in a case BBWG has with the DHCR (Index No 152132/17). We request that you update our address in your records to: 6318 N 50th St Tacoma, WA 98407 Please confirm receipt of this email and that future correspondence will be sent to the address listed above. Thank you, Sarah Weil and Gunnar Jaeck 1 11 of 11