The Rent Is Too Damn High

Frightened woman in fashionable, white apartment. copyright: PlusONE/Shutterstock.com

The tenant lived in an apartment building in Brooklyn for several years. She dutifully paid her rent to her landlord. After several years, she discovered that the rental amount she was paying exceeded the legally-allowed amount for her rent-stabilized apartment according to New York State law.

DHCR Rent Overcharge

After the tenant realized that she was paying higher-than-permitted rent, she filed a Rent Overcharge Application with the NYS Division of Housing and Community Renewal (DHCR). The DHCR, a State agency, enforces the regulations as to how much rent a landlord may legally charge a tenant. (Point in fact: A tenant may also commence a court case for rent overcharge or assert the claim as a defense in a Housing Court proceeding brought by the landlord). In this case, the tenant proved to the Rent Administrator that there was a rent overcharge by the landlord which exceeded the legal regulated rent.

Penalty phase

Once the DHCR determined that the tenant was overcharged for rent, an appropriate penalty was to be assessed against the landlord. Sometimes, the penalty is merely the amount above the legal regulated rent plus accrued interest. Other times, as in this case, the penalty for a willful overcharge equals three times the amount of the overcharge (treble damages) for two years prior to filing the complaint. In this case, the landlord was penalized with treble damages as detailed in the Final Order.

The Final Order of the Rent Administrator was timely challenged by the landlord through its filing of a Petition for Administrative Review (PAR) with the DHCR Commissioner (which had to be done within 35 days of the Order to stop the tenant from collecting the penalty). After the landlord’s PAR was decided and the landlord lost again, the landlord timely filed a court proceeding known as an “Article 78” to further challenge the DHCR’s Final Order and Order after the PAR (which had to be done within 60 days after the PAR Order). The state court judge determined in the Article 78 proceeding that the DHCR acted appropriately and sustained the treble damage award.

Enforcement of the DHCR Final Order

Now that the DHCR Order was final, the tenant needed to collect the money from the landlord. She retained Richard A. Klass, Your Court Street Lawyer, to collect the debt.

Under DHCR rules, a tenant may enforce the rent overcharge order either through certain deductions from current rent due to the landlord or through entering a money judgment with the County Clerk’s Office (this option is usually selected when the amount is very large or the tenant has moved from the apartment already). Here, the Judgment was entered against the landlord and enforcement measures were immediately taken to collect the Judgment, including docketing a lien against the landlord’s apartment building and issuing an Execution to the Sheriff to levy upon the landlord/judgment debtor. After the full-court press by Richard A. Klass, the Judgment was collected and the tenant received payment pursuant to the DHCR Rent Overcharge finding.

by Richard A. Klass, Esq.

R. A. Klass
Your Court Street Lawyer

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Appointment to Grievance Committee: Richard Klass

Richard A. Klass, has been appointed to serve a 4-year term on the Grievance Committee for the Appellate Division Second Department for the Second, Eleventh and Thirteenth Judicial Districts.

Members of the Grievance Committee serve to maintain the honesty, integrity and professional competence of the legal profession and protect the general public by enforcing the Rules of Professional Conduct.


R. A. Klass
Your Court Street Lawyer

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Ninth Incarnation of Trade Brooklyn Largest Ever

This past April, the Law Firm of Richard A. Klass was pleased to participate in Trade Brooklyn. This year’s show, with the theme “Year of the Entrepreneur,” was focused on the interests of small business owners. Over 150 New York City businesses were present. Jonathan Levin of Cardinal Trade Group helped produce the show which included over 18 seminars on topics such as search engine optimization, marketing and social media.

The Brooklyn Bar Association (“BBA”) hosted a continuing legal education (“CLE”) course entitled “The Importance of Legal Counsel for Small Businesses” presented by lawyers Richard A. Klass, Gregory S. Lisi and Jeffrey R. Miller. BBA’s CLE Director Danielle Levine described the course as being “crafted specifically so that it would appeal to lawyers and give non-lawyers valuable information too.”

Rob Abruzzese, with the Brooklyn Daily Eagle, wrote an article about the Trade Brooklyn show which you can find by following this link.

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copyr. 2015 Richard A. Klass, Esq.
The firm’s website: www.CourtStreetLaw.com
Richard A. Klass, Esq., maintains a law firm engaged in civil litigation in Brooklyn Heights, New York. He may be reached at (718) COURT-ST or e-ml to RichKlass@courtstreetlaw.com with any questions.
Prior results do not guarantee a similar outcome.

R. A. Klass
Your Court Street Lawyer

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A Man’s House is (Not Always) His Castle

© Thomas Wolf, www.foto-tw.de. CC BY-SA 3.0 de. The photo shown here is a low resolution version of the original photo.A New York City college bought an old garage on a residential street with the intention of eventually tearing it down and using the vacant lot in the development of a 17-story building. The owner of the adjacent apartment building was more than glad to have the college demolish the garage, which had become an eyesore. In order to demolish the garage, however, the college needed to enter the adjacent property to erect bridge scaffolding around the apartment building. But the college offered little protection to the owner other than promising to pay for any damage it might cause to the apartment building during the demolition.

Alleging that the apartment building owner refused to consent, the college brought a petition for a court order to allow its contractor to enter upon the adjacent property to erect the scaffolding. The adjacent apartment building owner retained Richard A. Klass, Esq., Your Court Street Lawyer, to oppose the petition and negotiate a license agreement with the college to grant access, but only upon meeting certain, reasonable conditions.

In the current economic and political climate in New York City, which encourages building more and more housing units for the multitudes, it is not surprising that current property owners are experiencing “growing pains.” Among those “growing pains” are the inconvenience and annoyance they experience when a developer buys land next to their property, seeking to build on that land, and needs to gain access to the neighboring property to do the work. Such access may be needed to move equipment, build up to the property line, or deliver material to the building site.

RPAPL 881 grants a license to enter property

New York law seeks to find middle ground between the property developer and the neighboring owner so that the developer may build its structure while the neighbor can be left relatively undisturbed. Real Property Actions and Proceedings Law (RPAPL) Section 881 provides as follows:

When an owner or lessee seeks to make improvements or repairs to real property so situated that such improvements or repairs cannot be made by the owner or lessee without entering the premises of an adjoining owner or his lessee, and permission so to enter has been refused, the owner or lessee seeking to make such improvements or repairs may commence a special proceeding for a license so to enter pursuant to article four of the civil practice law and rules. The petition and affidavits, if any, shall state the facts making such entry necessary and the date or dates on which entry is sought. Such license shall be granted by the court in an appropriate case upon such terms as justice requires. The licensee shall be liable to the adjoining owner or his lessee for actual damages occurring as a result of the entry.

Essentially, if a developer must gain access to the adjacent property, it must first make a request upon that property owner. If turned down, the developer can then file a petition to ask the court to grant a license to enter the premises for a reasonable period of time.

Courts apply a ‘balancing test’

The court must balance the competing interests of the parties and should grant the issuance of the license when necessary, under reasonable conditions, and where the inconvenience to the adjacent property owner is outweighed by the hardship of its neighbor if the license is refused. In Rosma Development LLC v. South, the court granted a developer a license to enter the adjacent property, recognizing that the developer’s property interests in completing its project (and as quickly as possible in order to avoid unnecessary delay and expense) outweighed the temporary inconvenience to the neighbor.

Provisions of a license agreement

Courts have held that reasonable conditions of a license agreement under RPAPL 881 may include:

  1. Providing the owner with the details and schedule of the work to be done;
  2. Conducting pre-construction inspections and monitoring for cracks, vibrations, and noise during construction;
  3. Paying the owner’s fees for engineers, attorney’s fees, and other expenses;
  4. Imposing penalties in the event of noncompliance with the license, including the failure to complete the work in a timely fashion;
  5. Taking steps after construction is complete to close up lot-line windows or resolve any structural wall issues; and
  6. Ensuring that an adequate liability insurance policy is in effect in the event that actual damages occur.

In resolving the college’s petition, the parties negotiated an extensive agreement that ultimately allowed the judge to approve the license to enter the adjoining property.

by Richard A. Klass, Esq.

R. A. Klass
Your Court Street Lawyer

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Stone Cold

The business idea was a good one: one partner, we’ll call him “Salesman,” was experienced in the stone business. He would bring his knowledge and talents. The other partner, we’ll call him “Moneybags,” would bring his cash. Together, they would launch a business to import and distribute stone material from China. The plan was for Moneybags to invest money into the newly-formed corporation to be used to purchase the stone material, and Salesman was going to make profitable deals, moving the product to market through wholesalers.

In anticipation of launching the business, and in order to buy the stone material, Moneybags gave Salesman more than $250,000, a bit at a time. Every time Moneybags invested a chunk of money, Salesman gave him an “IOU” for the money. After a while, and after a series of exchanges which raised his suspicions, Moneybags became convinced that Salesman was diverting the seed money from the stone business and was using it instead for personal purposes. Thinking he had been defrauded, Moneybags began an action to recoup whatever he could of his original investment. The situation was dire and complicated, but it got worse. During this period, Salesman went on a business trip to Africa and died.

Substitution of wife/administrator as defendant

Before learning that Salesman had died, Moneybags had already brought a lawsuit against Salesman, through counsel other than Richard A. Klass, Your Court Street Lawyer, for breach of contract and embezzlement. After Salesman died, Moneybags’ lawsuit was “stayed” or stopped from proceeding. According to law, when a defendant dies, there is a stay of the legal proceeding until someone is appointed to represent the estate of the deceased. CPLR 1015 (“If a party dies and the claim for or against him is not thereby extinguished the court shall order substitution of the proper parties.”). Salesman’s widow was appointed as the administrator of his estate. At this point, Moneybags sought help from Richard A. Klass. The first step was to substitute the wife/administrator as the defendant in place of her deceased husband.

Elements of Fraud and Conversion

The next, important, step was to amend the Complaint in the action to include various causes of action, including fraud and conversion against the estate of the defendant. To allege fraud, the Complaint contained the essential elements that (a) Salesman made representations to Moneybags about investing the money into buying stone material; (b) those representations were false and misleading; (c) that Salesman made those representations knowingly and with the intent and purpose of inducing Moneybags to invest the money; (d) that Moneybags justifiably relied on those representations to his detriment; and (e) he sustained damages. The Complaint also alleged that Salesman wrongfully took and converted the investment moneys for his own purposes and in derogation of Moneybags’ rights.

Rights as a Shareholder in the Corporation

Aside from alleging that Salesman was a fraudster who diverted his investment moneys into his own pocket, Moneybags also pursued rights afforded to him as a shareholder in a New York State corporation. New York Business Corporation Law Section 717 states that “A director shall perform his duties as a director, including his duties as a member of any committee of the board upon which he may serve, in good faith and with that degree of care which an ordinarily prudent person in a like position would use under similar circumstances.” (Similarly, Business Corporation Law Section 715(h) provides “An officer shall perform his duties as an officer in good faith and with that degree of care which an ordinarily prudent person in a like position would use under similar circumstances.”)

Aiding and Abetting Breach of Fiduciary Duty

Unless some “bite” could be put into the Complaint to allege that the wife and son may have some personal liability, Moneybags realized he was nearly certain to lose his entire $250,000 investment. Richard A. Klass amended the Complaint to allege numerous causes of action against not only the estate of Salesman but also his wife/administrator of the estate and son, including fraud, conversion, constructive trust, accounting, breach of fiduciary duties, aiding and abetting breach of duties, and unjust enrichment. Under New York law, a claim for aiding and abetting breach of fiduciary duty consists of the following elements: (1) a breach of fiduciary duty, (2) that the defendant knowingly induced or participated in the breach, and (3) that the plaintiff suffered damages as a result of the breach. See, S&K Sales Co. v. Nike, Inc., 816 F2d 843 [2 Cir. 1987]. In this case, Moneybags alleged that the wife and son should be held liable to him, and not only Salesman’s estate.

The amendment of the Complaint to include numerous allegations against the several defendants pushed them to immediately settle the case for a substantial percentage of Moneybag’s initial investment.

by Richard A. Klass, Esq.

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copyr. 2013 Richard A. Klass, Esq.
The firm’s website: www.CourtStreetLaw.com
Richard A. Klass, Esq., maintains a law firm engaged in civil litigation in Brooklyn Heights, New York.
He may be reached at (718) COURT-ST or e-ml to RichKlass@courtstreetlaw.com with any questions.
Prior results do not guarantee a similar outcome.

R. A. Klass
Your Court Street Lawyer

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