Opinion
150023/10.
Decided July 9, 2010.
Defendants Haven Avenue Owner, LLC ("Owner") and John Does # 1-10 (the "Doe Defendants") (collectively, the "defendants") move to dismiss the Complaint of the plaintiffs Gil Nezry and Elias Garcia ("plaintiffs") pursuant to CPLR 3211 and the doctrine of primary jurisdiction. In the alternative, defendants seek a stay of these proceedings pursuant to CPLR 2201, pending the resolution of plaintiffs' administrative proceedings by the New York State Division of Housing and Community Renewal ("DHCR"), and/or pursuant to CPLR 3211(a)(7), dismissal of the third, fourth and fifth causes of action for failure to state a cause of action, dismissal of the Complaint in its entirety as against the Doe Defendants, and to strike plaintiffs' jury demand in the event the Court does not dismiss the Complaint in its entirety.
Factual Background
Plaintiffs are residential tenants in the building located at 227 Haven Avenue in New York, New York (the "Building") pursuant to a 2008 lease with the Owner. Plaintiffs commenced this action on behalf of "themselves and all others similarly situated" who have been and continue to be charged market rate rents for their rental units, although they were and are entitled to pay considerably lower rent stabilized rents as set forth in the Court of Appeals' decision in Roberts v Tishman Speyer Props., L.P. ( 13 NY3d 270, 890 NYS2d 388) (" Roberts"). In Roberts, the Court held that during the period in which an owner receives real estate tax benefits under New York City's J-51 property tax abatement/exemption program, all of the units shall remain subject to the Rent Stabilization Law ("RSL"). Plaintiffs allege that since 2001, the Owner unlawfully charged plaintiffs market rents in excess of rent stabilization rent levels while collecting benefits under the J-51 program.
New York City enacted the J-51 program to encourage residential renovations by providing partial property tax exemption and abatement benefits to buildings receiving renovation work.
Plaintiffs seek damages and attorneys' fees for the rent overcharges collected by the Owner (first cause of action), and a declaration that the units in the Building are subject to rent stabilization, that defendants are required to charge rent at rent stabilized rates instead of market rates, and "that their apartments will continue to be subject to [RSL] for the entire period during which Defendants receive J-51 . . . and until such time [in or about 2021] as said apartments may thereafter properly be deregulated . . ." (second cause of action). Plaintiffs also claim that defendants breached plaintiffs' leases by charging market rents prohibited by law and for failing to include a rider mandated by the RSL (third cause of action) and violated the General Business Law ("GBL") § 349 (fourth cause of action). Plaintiffs also claim unjust enrichment (fifth cause of action).
In support of dismissal of the first and second causes of action, or a stay of this action, defendants argue that plaintiffs failed to exhaust their administrative remedies before DHCR, which is vested with authority and possesses the experience and technical expertise to determine disputes over the RSL and complex rent regulation-related issues. The Court should stay or dismiss the litigation pursuant to the doctrine of primary jurisdiction, since the subject matter of this litigation is particularly within the area of DHCR's expertise. Otherwise, the Court would have to decide questions that DHCR routinely determines, including whether the 13 apartments at issue are subject to the RSL, the amount of rent that may be charged for such apartments, and whether there were any overcharges for each apartment. To resolve plaintiffs' claims, the Court would have to compute the allowable rent under the RSL for each year and for each apartment, had the apartment not been decontrolled, which is particularly within DHCR's expertise.
Defendants maintain that the doctrine of primary jurisdiction generally enjoins courts having concurrent jurisdiction to refrain from adjudicating disputes within an administrative agency's authority, particularly where the agency's specialized experience and technical expertise is involved. Under this doctrine, "a court normally should not act upon subject matter within an administrative agency's specialized field without taking into account what the agency has to offer." Courts often refrain from adjudicating matters within an administrative agency's area of expertise, or at least find that judicial intervention should await the agency's determination.
And, judicial economy is fostered by avoiding potential inconsistent, duplicative determinations in similar disputes that could result in needless motion practice and appeals, and by preventing the use of judicial resources over matters that are more easily addressed administratively.
Defendants point out that the Roberts majority acknowledged the existence of many "issues yet to be decided, including retroactivity, class certification, the statute of limitations, and other defenses that may be applicable to particular tenants." Resolution of the issue as to whether its interpretation of the statute would be applied retroactively will determine whether landlords will suffer an unwarranted penalty for their good faith past reliance on DHCR and, similarly, whether tenants will enjoy huge financial windfalls for their landlords' purportedly "willful" rent "overcharges." Other issues that the Roberts Court left open include the preclusive effect of prior decisions and determinations of DHCR and the Courts with respect to the apartments at issue, whether such decisions are still "good law," and the application of the statute of limitations. DHCR can address and determine these critical questions by issuing new regulations to fill in the gaps in the Roberts decision. Otherwise, the Court will need to resolve questions on a unit by unit basis concerning the legal rent for the apartment, including application of the four year statute of limitations for rent overcharge complaints, the effect of improvements made to each unit, the effect of Major Capital Improvement ("MCI") orders issued during the period in question, the effect of non-registration of each apartment, if any, and whether plaintiffs were offered 2-year leases, as required by the RSL. Thus, DHCR should resolve plaintiffs' first and second causes of action.
The third cause of action alleging breach of contract should be also be dismissed as defendants did not breach any contract with plaintiffs, and plaintiffs have failed to allege a specific contractual provision that defendants breached. Plaintiffs are simply unhappy that they entered into their leases. Plaintiffs cannot "undo" their leases and compel the Owner to issue rent stabilized leases.
Plaintiffs' fourth cause of action alleging violation of GBL § 349, a statute that prohibits misleading or deceptive commercial activity aimed at the public at large, should be dismissed. The only "consumer-oriented conduct" that plaintiffs can allege is defendants' reliance on long-accepted industry practice concerning the deregulation of rent stabilized apartments pursuant to guidance from DHCR. Such reliance by DHCR in deregulating the apartments cannot in any way be considered deceptive or misleading. Moreover, caselaw expressly holds that GBL § 349 does not apply to private landlord-tenant disputes such as this one.
Plaintiffs' claim that defendants were unjustly enriched by deregulating apartments and executing free market leases (fifth cause of action) should also be dismissed. This quasi-contractual claim is inapplicable since a written lease is the source of the parties' dispute.
Defendants also argue that the Complaint fails to state a cause of action against the Doe Defendants because plaintiffs failed to allege any "corporate domination" by the Doe Defendants, nor any tortious conduct committed by any of the defendants.
Defendants also contend that should the Court decline to dismiss the Complaint in its entirety, the Court should enforce Article 27 of plaintiffs' lease, entitled "Waiver of Trial by Jury and Counterclaim," in the parties' lease waiving the right to a jury trial, and strike plaintiffs' improper jury demand. A party waives the right to a jury trial if it seeks equitable relief, and plaintiffs seeks the equitable reliefs of a declaratory judgment (second cause of action), and unjust enrichment (fifth cause of action). And, joining claims for legal and equitable relief constitutes a waiver of the right to demand a jury trial as a matter of law.
In opposition, plaintiffs argue this Court is the only forum to resolve the issues presented before a meaningful measure of damages, such as (1) the propriety of a class action, pursuant to Article 9 of the CPLR; (2) whether Roberts should be applied retroactively; (3) which statute of limitations applies; (4) resolution of a conflict between the DHCR and HPD and (5) the determination of rent overcharges, which Justice Lucy Billings, referring to a virtually identical motion before this court, described as "classically a judicial determination." Additionally, an almost identical case is presently before the Honorable Judith J. Gische in Borden v 400 East 55th Street Associates, L.P., Index No. 650361/2009 and an identical motion as the instant motion was brought by the Owner's attorneys, the same ones as in the instant case, Rosenberg Estis.
Plaintiff suggests that the instant motion should be referred to Justice Gische; this Court was directed to retain this action.
Even if the DHCR addresses plaintiffs' claims, all other affected co-tenants would still be without redress unless they brought their own independent actions. Further, courts are the final authorities on issues of statutory construction on issues of retroactivity and statute of limitations, and in such matters, need not defer to the agency's determination, even when that statute is within the special competence or expertise of the administrative agency. Although retroactivity is not presently at issue, the Owner maintains that it relied on the DHCR's guidance that luxury deregulation was permissible if apartments were already subject to rent regulation when the landlord first obtained J-51 benefits. Dismissing the instant case to the DHCR would usurp this Court of its traditional role to determine legal and statutory issues. Roberts held that deference to the DHCR was not appropriate and that since the issue of whether landlords had charged unlawful market rate rents was one of pure statutory analysis, dependent only on accurate apprehension of legislative intent, there is little basis to rely on any special competence or expertise of the administrative agency and its interpretive regulations.
An inter-agency conflict between the State DHCR and the New York City HPD constitutes another matter that this Court, and not the DHCR, must resolve, as it is not
within the province of the DHCR to review other agencies. While the DHCR condoned landlords' receipt of tax abatements for each J-51 building with deregulated units, the HPD then reduced the J-51 tax abatement proportionally for each unit deregulated. The DHCR and HPD are in disagreement over Sections 26-504.1 and 26.504.2 of the RSL (the language at issue in Roberts and RPTL Section 489 (requiring any building receiving J-51 tax benefits to remain rent regulated). Further, the Owner could argue that the HPD's reduction in tax abatements correspondingly reduces the damages it owes to tenants. Justice Billings found this inter-agency disagreement to be yet another reason to retain jurisdiction.
Out of the five issues to be decided by the Court, damages is the only one that may fall within the DHCR's expertise. New York State law authorizes a tenant to bring an action in this Court for damages equal to rent overcharges. Courts have long exercised concurrent jurisdiction with the DHCR over rent overcharges.
Fundamentally, this case is about whether Roberts controls and whether Roberts controls is a legal issue. The Owner does not dispute that plaintiffs have alleged a cause of action and admits that this Court has jurisdiction to hear plaintiffs' claims. With Roberts back before the Court, granting defendants' motion would be tantamount to an indefinite stay during which the Owner can continue to overcharge its tenants. Justice Billings denied a defendant/landlord's motion to remand to the DHCR two class actions brought by tenants alleging the landlord's charging its tenants market-rate rents despite receiving J-51 benefits. Defendants do not challenge this Court's jurisdiction, as Article VI § 7(a) of the State Constitution designates the Supreme Court as having "general original jurisdiction in law and equity. Further, while plaintiffs have not filed an action against the Owner with the DHCR, authority for the Court's jurisdiction over a tenant's overcharge claim is expressly provided in the Emergency Tenant Protection Act of 1974 ("ETPA"), as amended. And, the Supreme Court regularly hears and determines claims of rent overcharge by rent stabilized tenants in the first instance, without requiring an initial determination by the DHCR. Thus, plaintiffs need not exhaust their administrative remedies before seeking relief before this Court, as plaintiffs are free to bring their rent overcharge claim before either this Court or the DHCR.
Further, none of the eleven grounds under CPLR 3211 provides a ground for dismissal due to the fact that an administrative agency has concurrent jurisdiction. And, while CPLR 2201 permits the court to grant a stay of proceedings in a proper case, whether a case is "proper" for a stay is at the court's discretion. On Rule 2201 motions, courts explore their decisions' prejudicial impact, that is, the prejudice to the moving party by denying a motion balanced against the prejudice to the non-movant by granting the motion. Plaintiffs have not brought any action before the DHCR; even if plaintiffs do so, the DHCR, via press release, has flatly refused to hear such claims until a "final outcome" in Roberts, and when this "final outcome" will come about is unknown. It is unclear what a stay would accomplish except for prejudicing the tenants. If a stay is granted, these tenants could easily lose their apartments waiting on the DHCR to resume activity. Thus, defendants should not be allowed such an inequitable, indefinite stay. Further, forcing plaintiffs and the absent class members to await a judgment which may never come in an action in which they are not represented would be inequitable, and threatens plaintiff and such members' "fundamental right to a prompt and permanent adjudication" of their claims.
Plaintiffs also argue that they have not waived their constitutional right to a jury trial. Plaintiffs have not waived their rights to trial by jury under (1) a boilerplate jury waiver provision in a lease and (2) plaintiffs' incidental request for equitable relief. Defendants' request is premature and has no basis in law. Courts indulge every reasonable presumption against a finding of a waiver, and one of these "indulgences" is to allow for discovery of how the alleged waiver occurred. The party seeking to enforce a waiver must show that waiver was "clear, knowing and intelligent," as well as "'voluntary' and 'intentional.'" The Court must consider, 1) the negotiability of contract terms and negotiations between the parties concerning the waiver provision; 2) the conspicuousness of the waiver provision in the contract; 3) the relative bargaining power of the parties; and 4) the business acumen of the party opposing the waiver.'" Here, the Court cannot determine whether the right to a jury trial has been waived until there has been class-wide discovery regarding the leases. The single lease fails to establish anything about the alleged waiver, such as whether waiver was knowing or voluntary. Further, defendants' claim that a party cannot have a jury trial if it seeks equitable relief is in error. Rather, it must be determined whether the main thrust of the action is for legal damages or for equitable relief. CPLR 4101(a) provides that issues of fact shall be tried by a jury in "an action in which a party demands and sets forth facts which would permit a judgment for a sum of money only." "When the facts pleaded permit a judgment for a sum of money, the defendant's jury demand must be honored under CPLR § 4101. Plaintiffs seek primarily money damages for the overcharges; the thrust of the class action Complaint is to seek the legal damages to which tenants are entitled by statute, notwithstanding that plaintiffs also seek equitable relief to prevent the Owner from damaging them in the future.
Plaintiffs also argue that their third, fourth and fifth causes of action are properly stated. As to the third cause of action, defendants had an obligation pursuant to the RSL to include a rider to the subject leases and incorporate the terms of the rider into the lease. Defendants do not deny their obligation to incorporate the RSL rider into leases protected by this statute. With a liberal construction in favor of plaintiffs, plaintiffs' allegations are not vague and set forth, with precision, the specific statute relied upon for their claim.
As to plaintiffs' fourth cause of action pursuant to GBL § 349, plaintiffs allege that "[t]he actions of the Defendants are unfair and deceptive or misleading in a material respect and have a
broad impact on consumers at large pursuant to Gen. Bus. Law § 349." The Appellate Division only cursorily held that the plaintiff alleged only a "private" dispute between a landlord and tenant and not "consumer-oriented conduct aimed at the public at large, as required by the statute" and, therefore, was not actionable. This case and Roberts clearly have a broad impact on the public at large. Defendants claim that since they followed "long standing practice", this practice cannot be deemed "misleading" or "deceptive" defies logic; defendants cannot rely on longevity or a long standing practice of committing an unfair act for a long time as a defense.
Further, argue plaintiffs, their unjust enrichment claim states a cause of action. Defendants' failure to abide by the RSL and incorporate its terms into a rider as required gives rise to the equitable relief sought. The failure to include the RSL mandated rider prevents the parties from having an "express agreement" and, thus, plaintiffs have properly set forth a cause of action which must be maintained.
And, the Complaint against the Doe Defendants should not be dismissed until after the completion of discovery.
In reply, defendants argue that should this Court dismiss, or at a minimum, stay this action pending DHCR's ruling of the issues presented, such action would not deprive plaintiffs of their right to judicial review of any DHCR determination. DHCR, through its subpoena power, can direct the production of all documents it sees fit, thus obviating costly discovery. Further, DHCR can establish industry-wide policy with respect to any number of rent regulatory issues left open by the Court of Appeals in Roberts. By contrast, there are numerous putative class actions in addition to this one currently pending in the Supreme Court of New York County, and the parties to the putative class actions bear the risk of inconsistent rulings from the many judges who must feel their way forward in this unsettled area of the law.
Plaintiffs' declaratory judgment action is exactly the type of case where the doctrine of primary jurisdiction should apply. The Supreme Court may also retain jurisdiction and direct DHCR to determine such legal, factual, operational, and policy issues as this Court deems are warranted. DHCR has the experience necessary to perform the task of fashioning post- Roberts relief appropriate to all parties that may be affected in New York City.
Defendants add that DHCR was clearly indicating that it would await a ruling from the Court of Appeals on the threshold issue therein — the availability of luxury deregulation in J-51 buildings before determining tenant complaints that would be affected by that ruling. The Court of Appeals has now finally determined that issue. Further, DHCR is in fact processing cases involving Roberts-type issues. In various pending luxury deregulation cases that DHCR is actively processing, DHCR is identifying directing owners of buildings currently receiving J-51 benefits to confirm receipt of such benefits. Moreover, DHCR's 2010 Income Certification Form and Petition by Owner for High Income Rent Deregulation have both been amended to warn owners that they cannot apply for high income luxury deregulation where the building is currently receiving J-51 or 421-a tax benefits.
The issue this case raises is how to implement the statutory interpretation adopted by the Court of Appeals. Plaintiffs' complaint does not question whether Roberts "controls," but asks this Court to declare that the apartments in the Building are subject to the RSL, calculate their legal rent, calculate the amount of any rent overcharge, assess treble damages against defendants, and adjudicate their breach of contract, GBL § 349, and unjust enrichment causes of action. Even as to any "purely legal" issues, the doctrine of primary jurisdiction still applies and authorizes courts to consider the views of the expert administrative agency as to the proper interpretation and application of the governing statute.
Defendants have never asserted that this Court does not have jurisdiction to consider the issues raised in the complaint. Thus, plaintiffs' "expansive jurisdiction" claim is not basis to deny this motion. Plaintiffs concede that whether a particular apartment in the Building is subject to the RSL is an issue for DHCR to determine. The question of whether Roberts should be applied retroactively turns on the kind of fact-gathering that DHCR is best equipped to carry out. Further, to impose treble damages, the agency must find that the owner acted willfully pursuant to RSL § 26-516(a), and such factual finding or non-finding of willfulness is entitled to deference from the Courts. There is no reason why DHCR, in the first instance, should not determine how to apply the four-year statute of limitations on rent overcharge claims.
Defendants further add that plaintiffs have not moved for class certification, defendants reserve the right to challenge class certification, and plaintiffs are unlikely to meet the requirements of class certification. CPLR 901(b) provides that "an action to recover a penalty," i.e., treble damages, "may not be maintained as a class action." And, as to tenants who have not filed a complaint, DHCR may vindicate the rights of any other tenant in the building by instituting proceedings on its own initiative.
DHCR is no longer refusing to process Roberts-style cases and the claim that unnamed tenants are being evicted or are losing their rights is simply untrue. Further, plaintiffs' interest in prosecuting this action is questionable, in light of adjournments requested by plaintiffs to submit pleadings and papers.
Defendants further add that the doctrine of primary jurisdiction, if it does not constitute a failure to state a cause of action, is a common law rule of comity between administrative agencies and the courts under which a Court may dismiss a complaint or stay a proceeding. Nor must the Court referee any dispute between DHCR and HPD; defendants are not asking DHCR to decide whether HPD's issuance of partial J-51 benefits was proper. DHCR will have to determine whether any apartment for which defendants received no corresponding J-51 benefit should be rent stabilized in light of Roberts. Nor is Justice Billings's anticipated refusal to invoke the doctrine of primary jurisdiction binding on this Court.
As to the third cause of action, defendants argue that plaintiffs' claim that defendants failed to include a RSL rider in the parties' leases somehow breached the terms of the leases is insufficient to stave off dismissal of this cause of action.
It is also argued that plaintiffs also failed to provide any authority in opposition to dismissal of its fourth cause of action, and failed to adequately distinguish controlling caselaw warranting dismissal of this claim.
As to the unjust enrichment claim, defendants add that plaintiffs have an adequate remedy at law with respect to their alleged damages, as they have asserted precisely the same allegations in support of their first cause of action alleging violation of the RSL, their third cause of action alleging breach of contract, and their fourth cause of action alleging violation of GBL § 349. Thus, plaintiffs' fifth cause of action for unjust enrichment should be dismissed.
As to the Doe Defendants, defendants maintain that plaintiffs failed to cite any authority in support of their position, serve any discovery demands, or show that there is any basis to pierce the corporate veil against the Doe Defendants. Thus, the conclusory claim that plaintiffs need unspecified discovery prior to dismissal of their complaint against the Doe Defendants is insufficient.
And, plaintiffs' reliance to federal caselaw to maintain their right to a jury trial is misplaced, and ignores settled New York caselaw enforcing lease provisions waiving any right to a trial by jury. Furthermore, the second cause of action seeking a declaratory judgment is a necessary predicate to granting any damages on plaintiffs' first cause of action because damages cannot be awarded absent a finding that plaintiffs are protected by the rent stabilization laws. Thus, the equitable relief requested is not merely "incidental" to the legal relief sought so as to find that plaintiffs have not waived the right to a jury trial. Even should the Court dismiss the unjust enrichment claim, the waived right to a jury trial cannot be revived.
Discussion
It is uncontested that the Supreme Court and DHCR have concurrent jurisdiction over the rent overcharge claims contained in the first and second causes of action ( see Bridgeview Garden Apartments LLC v New York State Div. of Housing and Community, 4 Misc 3d 1023, 798 NYS2d 343 [Sup Court Richmond County 2004] (DHCR does not have exclusive jurisdiction to entertain rent overcharge complaints); Vazquez v Sichel, 12 Misc 3d 604, 814 NYS2d 482 [NY City Civ. Ct. 2005] (When a tenant incurs an expense, by paying excessive rent or otherwise, due to the landlord's noncompliance with legal requirements, such as the formulae for calculating rent increases, the tenant may sue to recover that expense either in an independent action in Civil Court, or by a counterclaim in an action or proceeding for rent) citing Missionary Sisters of Sacred Heart v Meer, 131 AD2d at 397, 517 NYS2d 504 {131 AD2d 397} [1st Dept 1987]). Notably, New York City's rent control laws do not give DHCR the authority to issue an order in overcharge cases that can be entered as a judgment ( Westmoreland Associates, LLC. v Kispert, 2002 WL 31777885 [NY City Civ. Ct. 2002]). For rent controlled apartments, DHCR may only issue an order determining the maximum rent; damages cannot be awarded (id., citing 9 NYCRR § 2202.22(a)). Therefore, in order to obtain complete relief, the tenant must commence an action in a court of competent jurisdiction to recover damages ( Westmoreland Associates, LLC v Kispert).
However, where the tenant has filed a complaint with DHCR in the first instance, then the DHCR has "primary jurisdiction" ( Gardner v Division of Housing and Community Renewal of State of NY, 166 Misc 2d 290, 632 NYS2d 744 [Sup Ct Bronx County 1995]). Thus, dismissal or a stay of an overcharge action brought in Supreme Court is warranted where the issue before such Court is already pending before the administrative agency ( see e.g., Eli Haddad Corp. v Cal Redmond Studio, 102 AD2d 730, 476 NYS2d 864 [1st Dept 1984] (upholding stay of action pending determination by the Loft Board on the issue of coverage); Davis v Waterside Housing Co., Inc., 274 AD2d 318, 711 NYS2d 4 [1st Dept 2000] (dismissing the complaint where proceedings were before DHCR)). As it is uncontested that plaintiffs have not filed an overcharge complaint with the DHCR, this is not an instance wherein this action would be stayed or dismissed, and plaintiffs need not exhaust any administrative remedies before seeking relief before this Court.
Contrary to defendants' contention, plaintiffs' first and second causes of action alleging a violation of the RSL, and seeking a declaration that plaintiffs are entitled to protections of the RSL, need not first be resolved by DHCR, where plaintiffs have not commenced any proceeding before the DHCR. The doctrine of primary jurisdiction does not preclude a plaintiff from seeking relief from the courts prior to instituting an overcharge complaint with the DHCR ( Dabalsa v Crino, 143 Misc 2d 480, 541 NYS2d 144 [NY Civ. Ct. Queens County 1989] (denying motion to dismiss the complaint pursuant to CPLR 3211 for citing State of New York v Winter, 121 AD2d 287, 503 NYS2d 384]). Further, that plaintiffs' claims require the Court to determine, inter alia, whether each apartment at issue was subject to the RSL at any time during the landlord's receipt of J-51 benefits and, if so, the legal rent for each such apartment for each year at issue, and the amount of rent increases/adjustments available to defendants for each of the relevant years, such as increases permitted for capital improvements is no bar to this proceeding ( see Vazquez v Sichel, 12 Misc 3d 604, 814 NYS2d 482 [NY City Civ. Ct. 2005] (denying defendant's motion to dismiss the complaint on subject matter jurisdiction grounds, and retaining jurisdiction over plaintiff's rent overcharge claim based on defendant's" Individual Apartment Improvement" increase, noting that ascertaining and applying the formula to calculate plaintiff's rent increase based on improvements to his apartment requires an evaluation of those improvements to it, and such formula is not complicated and does not require expertise or resources beyond the court's competence)). Also, issues as to the applicable statute of limitations and how such statute of limitations should be applied in light of Roberts and whether to apply Roberts retroactively may properly be decided by this Court as well ( see e.g. 72A Realty Associates v Lucas, 2010 WL 2105452 [Civil Court, City of New York, New York County 2010] (noting that the retroactive application of Roberts "creates no inequity," holding that the "four-year statute of limitations in CPLR 213-a does, however, apply to tenant's overcharge claim," and setting the matter down for trial on tenant's rent overcharge claim)).
Therefore, the branch of defendants' motion to dismiss or stay this action under the doctrine of primary jurisdiction, on the ground that plaintiffs should first be required to exhaust their administrative remedies before DHCR, is unwarranted.
As to plaintiffs' third cause of action for breach of contract based on the alleged failure to attach a Rider pursuant to the RSL, such claim is dismissed. To state a cause of action for breach of contract, the proponent of the pleading must specify the making of an agreement, the performance by that party, breach by the other party, and resulting damages ( Volt Delta Resources LLC v Soleo Communications Inc., 11 Misc 3d 1071, 816 NYS2d 702 [Supreme Court New York County 2006], citing Furia v Furia, 116 AD2d 694, 695 [2d Dept 1986]). The essential terms of the parties' purported contract, including the specific provisions of the contract upon which liability is predicated, must be alleged (( Volt Delta Resources LLC v Soleo Communications Inc., 11 Misc 3d 1071 citing Sud v Sud, 211 AD2d 423, 424 [1st Dept 1995]; and Caniglia v Chicago Tribune-New York News Syndicate Inc., 204 AD2d 233, 234 [1st Dept 1994]). A complaint alleging breach of contract must set forth the terms of the agreement upon which liability is predicated by making specific reference to the relevant portions of the contract or by attaching a copy of the contract to the complaint ( Atlantic Veal Lamb, Inc. v. Silliker, Inc., 11 Misc 3d 1072, 816 NYS2d 693 (Supreme Court New York County 2006] citing Chrysler Capital Corp. v Hilltop Egg Farms, Inc., 129 AD2d 927, 928 and accord Valley Cadillac Corp. v Dick, 238 AD2d 894, 894).
The subject Rider "generally informs tenants and owners about their basic rights and responsibilities under the Rent Stabilization Law, which protects tenants by regulating rents, services and evictions" ( J. T. L. Associates v Fred, 112 Misc 2d 742, 447 NYS2d 337 [N Y City Civ Ct 1981]). "The Rider does not contain every rule applicable to rent stabilized apartments. The appendix lists organizations which can provide assistance to tenants and owners who have inquiries, complaints or requests relating to subjects covered in this Rider. The Rider is only informational. Its provisions are not part of the lease." A landlord's failure to comply with provisions contained in the Rider constitutes a violation of the RSL and the RS Code, results in discipline such as a fine or sanction as may be determined by the Board of Directors of the Industry Association or the Conciliation and Appeals Board. Section 8 RS Code ( J. T. L. Associates v Fred). However, the duty to attach such a Rider arises from statute, and not from any agreement between the parties. Therefore, plaintiffs' reliance on defendants' alleged failure to include the Rider as part of the parties' leases is misplaced, and cannot form the basis, in and of itself, of a breach of contract action. Accordingly, the branch of defendants' motion to dismiss the third cause of action is warranted.
Plaintiffs' fourth cause of action, alleging violation of New York General Business Law ("GBL") § 349, is also dismissed because private landlord-tenant disputes such as this one do not fall within the ambit of GBL § 349 as a matter of law. In Aguaiza v Vantage Properties, LLC,
2009 WL 1511791 [Supreme Court, New York County]), ten plaintiffs-tenants who reside/resided in five different buildings, commenced an action against defendants-landlords alleging that the latter engaged in deceptive or misleading actions against plaintiffs in violation of GBL § 349(a). Plaintiffs alleged that they were "low-income, Spanish speaking immigrants with limited English proficiency and/or persons of color" and that since the inception of their respective rent stabilized tenancies, the prior owner never sued any plaintiff for non-payment of rent or sought to terminate Plaintiffs' tenancies based upon lease defaults or non-primary residency. It was further alleged that the subject buildings were "part of a substantial portfolio of Queens, New York properties Vantage acquired in 2006" and to "generate a return on their substantial investment, viz., maximize the vacancy rate and profits via luxury deregulation, Vantage" pursued a scheme to displace rent stabilized tenants from their buildings. On appeal from dismissal of plaintiffs' GBL claim, the First Department held that this claim was properly dismissed as plaintiffs' allegations of unlawfully deceptive acts and practices under GBL § 349 "presented only private disputes between landlords and tenants, and not consumer-oriented conduct aimed at the public at large, as required by the statute."
Here, plaintiffs' GBL claim is likewise a private dispute between a landlord and its tenants, and thus, fails to state a claim under the GBL. Therefore, dismissal of the fourth cause of action is warranted.
Plaintiffs' fifth cause of action, alleging unjust enrichment, is likewise dismissed because where a written contract, such as plaintiffs' leases, governs the dispute, quasi contract claims such as unjust enrichment are barred. A cause of action for unjust enrichment arises when one party possesses money or obtains a benefit that in equity and good conscience they should not have obtained or possessed because it rightfully belongs to another ( see, Parsa v State of New York, 64 NY2d 143, 148, 485 NYS2d 27). However, dismissal of unjust enrichment claim is warranted where there is an enforceable agreement between the parties ( Accurate Copy Serv. of America, Inc. v Fisk Bldg. Assocs. L.L.C., 72 AD3d 456, 899 NYS2d 157 [1st Dept 2010] citing Singer Asset Fin. Co., LLC v Melvin, 33 AD3d 355, 358, 822 NYS2d 68), and here, it cannot be contested that plaintiffs' remaining claims arise from the parties' enforceable leases. In light of the discussion above, indicating that the Rider does not give rise to a contract claim in any event, that the leases did not include a Rider as required by the RSL does not render the leases any less enforceable; plaintiffs' rights stem from the leases, as they are read and interpreted under the RSL. Therefore, dismissal of the fifth cause of action is likewise warranted.
Further, the entire Complaint is dismissed against the Doe Defendants. It is alleged that the Doe Defendants are members of Owner, a limited liability company. Limited Liability Company Law § 609(a) provides that neither a member, manager, or agent of a limited liability company "is liable for any . . . liability of the limited liability company . . . whether arising in tort . . . or otherwise, solely by reason of being such member, manager or agent or acting . . . in such capacities or participating in the conduct of the business of the limited liability company." Thus, members of an LLC, such as the alleged Doe Defendants, are insulated from liability unless they personally participated in the commission of a tort ( Alpha Funding Group, Inc. v Aspen Funding LLC, 17 Misc 3d 1126, 851 NYS2d 67 [Sup Ct New York 2007] citing Retropolis, Inc. v 14th St. Dev., LLC., 17 AD3d 209, 211). The Complaint fails to sufficiently allege specific allegations against the Doe Defendants other than in their capacity as members, and there are also no allegations pleaded to pierce the "corporate veil." Further, plaintiffs' claim that discovery is necessary "is unavailing where the nonmoving party has failed to produce some evidence indicating that further discovery will yield material and relevant evidence'" ( Heritage Hills Soc., Ltd. v Heritage Development Group, Inc., 56 AD3d 426, 427 [2d Dept 2008], quoting Fleischman v Peacock Water Co., Inc., 51 AD3d 1203, 1205 [3d Dept 2008]); Hayden v City of New York, 26 AD3d 262 [1st Dept 2006]; Pro Brokerage, Inc. v Home Ins. Co., 99 AD2d 971 [1st Dept 1984] ["The plaintiff's later assertion that further discovery was necessary, not only was set forth in mere conclusory terms, but no attempt was made to explain what further discovery was necessary and to what extent such further discovery would overcome the legal insufficiency of the complaint."]). Here, plaintiffs provided no evidence or articulated any facts indicating how further discovery will yield material and relevant evidence.
Therefore, dismissal of the Complaint as against the Doe Defendants is warranted
Finally, as to defendants' request that plaintiffs' jury demand be stricken, Article 27 of plaintiffs' lease, entitled "Waiver of Trial by Jury and Counterclaim," provides:
"Tenant and Owner agree to give up the right to a trial by jury in a court action, proceeding or counterclaim on any matters concerning this Lease, the relationship of Tenant and Owner as tenant and landlord, Tenant's use or occupancy of the Apartment or any claims for personal injury or property damage."
Plaintiffs' leases contain a clear jury trial waiver. Where parties to a lease have voluntarily waived their right to trial by jury, such an agreement will be honored by the Court. Here, Article 27 of plaintiffs' lease contains a clear and unambiguous waiver of any right to a jury trial ( see Paralegal Institute. Inc. v. Big Sol Mfg., Inc., 190 AD2d 595, 593 NYS2d 797, 798 [1st Dept 1993] (holding the "IAS court properly struck the jury demand because the plaintiff had waived its right to a jury trial by virtue of the mutual waiver clause in paragraph '26' of the parties' lease")). "It is a court's task to enforce a clear and complete written agreement according to the plain meaning of its terms, without looking to extrinsic evidence to create ambiguities not present on the face of the document" ( 150 Broadway NY Assoc., L.P. v Bodner, 14 AD3d 1, 6). There is no basis for this Court to go beyond the simplicity of the language of the parties' lease. Therefore, the branch of defendants' motion to strike the jury demand is granted.
Conclusion
Based on the foregoing, it is hereby
ORDERED that the branch of defendants' motion to dismiss this action, including the first and second causes of action, pursuant to CPLR 3211 and the doctrine of primary jurisdiction is denied; and it is further
ORDERED that the branch of defendants' motion for a stay of these proceedings pursuant to CPLR 2201, is denied; and it is further
ORDERED that the branch of defendants' motion to dismiss the third cause of action for breach of contract pursuant to CPLR 3211(a)(7) is granted, and the third cause of action is severed and dismissed; and it is further
ORDERED that the branch of defendants' motion to dismiss the fourth cause of action alleging violation of GBL § 349 pursuant to CPLR 3211(a)(7) is granted, and the fourth cause of action is severed and dismissed; and it is further
ORDERED that the branch of defendants' motion to dismiss the fifth cause of action alleging unjust enrichment pursuant to CPLR 3211(a)(7) is granted, and the fifth cause of action is severed and dismissed; and it is further
ORDERED that the Complaint as against the Doe Defendants is severed and dismissed in its entirety as to said defendants; and it is further
ORDERED that the branch of defendants' motion to strike plaintiffs' jury demand is granted, and said jury demand is hereby stricken; and it is further
ORDERED that defendants serve a copy of this order with notice of entry upon plaintiffs within 20 days of entry; and it is further
ORDERED that the parties appear for a preliminary conference on August 31, 2010, 2:15 p.m.; and it is further
ORDERED that the Clerk may enter judgment accordingly.
This constitutes the decision and order of the Court.