Richard Altman, Respondent,v.285 West Fourth LLC, Appellant.

Brief

N.Y.March 22, 2018

To be Argued by: LAWRENCE W. RADER, ESQ. (Time Requested: 30 Minutes) APL-2017-00054 New York County Clerk’s Index No. 155942/14 Court of Appeals of the State of New York   RICHARD ALTMAN, Respondent, – against – 285 WEST FOURTH LLC, Appellant. BRIEF FOR RESPONDENT LAWRENCE W. RADER, ESQ. 225 Broadway, Suite 400 New York, New York 10007 Tel.: (212) 791-5200 Fax: (212) 791-5400 Attorneys for Respondent Dated: July 13, 2017 TABLE OF CONTENTS TABLE OF AUTHORITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii PRELIMINARY STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 SUMMARY OF ARGUMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 QUESTIONS PRESENTED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 FACTS AND PROCEDURAL HISTORY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 POINT I: THE APARTMENT REMAINS RENT-STABILIZED, BECAUSE IT WAS NEVER VACANT AND THERE WERE NO IMPROVEMENTS.. . . . . . . . . . . 12 POINT II: THE ISSUES IN THIS APPEAL ARE SOLELY LEGAL QUESTIONS, AND THIS COURT NEED NOT DEFER TO THE DHCR. ITS RULINGS ARE NEITHER PERSUASIVE NOR CONTROLLING. . . . . . . . . . . . . . . . . . . . . . . . 22 POINT III: RECENT APPELLATE DIVISION DECISIONS HAVE NOT OVERRULED THIS CASE; THEY REACH CORRECT RESULTS ON COMPLETELY DIFFERENT FACTS. . . . . . . . . . . . . . . . . . . . . 24 POINT IV: THE LANDLORD’S DIRE PREDICTIONS SHOULD BE IGNORED. . . . . . . . 28 POINT V: THE 2015 AMENDMENTS TO THE RENT STABILIZATION CODE MAKE IT ABSOLUTELY CLEAR THAT THE “LEGAL REGULATED RENT” SUFFICIENT FOR DECONTROL IS THE RENT WHICH WAS BEING PAID BY THE DEPARTED TENANT, REGARDLESS OF ANY PERMITTED INCREASES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 -i- POINT VI: THE AMOUNT OF THE OVERCHARGE JUDGMENT IS CORRECT IN ALL RESPECTS. IT PROPERLY INCLUDES PRE-JUDGMENT INTEREST AND EXCLUDES ANY INTERIM RENT INCREASES. . . . . . . . . 35 1. The“legal regulated rent” is the last rent registered with the DHCR, because all subsequent increases were illegal. . . . . . . . . . . . . . . . . . . . . . . 36 2. In a rent overcharge case, the Court can look back beyond four years to determine the legal regulated rent, without needing evidence of fraud. . 37 3. The landlord submitted nothing to rebut the presumption of willfulness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 4. The judgment properly includes pre-judgment interest. . . . . . . . . . . . . . 46 5. The landlord is not entitled to any interim increases, but only to a 20% increase, and then only when it tenders a rent-stabilized lease and registers the apartment with DHCR. . . . . . . . . . . . . . . . . . . . . . . 48 CONCLUSION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 CERTIFICATE OF COMPLIANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 -ii- TABLE OF AUTHORITIES CASES 111 on 11 Realty Corp. v Norton, 189 Misc2d 389 (N.Y.Sup.Ct.2001) . . . . . . . . 18 132132 LLC v Strasser, 19 Misc3d 658, aff’d in part and mod. in part, 24 Misc3d 140(A)(App.T.1st Dept.2009) . . . . . . . . . . . . . . . . . . . . . . . 15, 16, 17 18 St. Marks Place Trident LLC v State of New York Div. of Hous. & Community Renewal, 149 AD3d 574 (1st Dept.2017) . . . . . . . . . . . . . . . . 25, 26 233 E. 5th St. LLC v Smith, 54 Misc3d 79 (App.Term 1st Dept.2016) . . . . . . . . . 27 233 East 5th St. LLC v Smith, 2017 NY Slip Op 69274 (1st Dept. Mar. 30, 2017) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 72A Realty Associates v Lucas, 101 AD3d 401 (1st Dept.2012). . . . . . . . . . . . . . 40 Aimco 322 E. 61st St. v Brosius, 50 Misc3d 10 (App.Term 1st Dept.2016) . . . . . 27 Altman v. 285 West Fourth LLC, 143 AD3d 415 (1st Dept.2016) . . . . . . 11, 22, 27 Altman v. 285 West Fourth LLC, 127 AD3d 654 (1st Dept.2015) . . . . . . . . passim Altman v. 285 West Fourth LLC, 2015 NY Slip Op 83701(U) . . . . . . . . . . . . . . . 10 Altman v. 285 West Fourth LLC 2017 NY Slip Op 62661(U). . . . . . . . . . . . . . . . 11 Altman v. 285 West Fourth LLC, 29 NY3d 903. . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Altschuler v Jobman 478/480, LLC, 2013 NY Slip Op 30208(U)(N.Y. Sup. Ct. Jan. 16, 2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17, 38, 39 Altschuler v Jobman 478/480, LLC, 135 AD3d 439 (1st Dept.2016), lv.dism. 28 NY3d 945 (2016); lv.den. 29 N.Y.3d 903(2017) . . . . . . . . . . . . . . . . . . . . . 38, 39 -iii- Borden v 400 E. 55th St. Assoc., L.P., 24 NY3d 382 (2014) . . . . . . . . . . . . . . . . . 47 Bradbury v 342 W. 30th St. Corp., 84 AD3d 681 (1st Dept.2011) . . . . . . . . . 42, 49 C.S.A. Contr. Corp. v N.Y. City Sch. Constr. Auth., 5 NY3d 189 (2005). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29, 45, 47 Cates-Reither v 160 E. 48th Street Owner II LLC, 2017 NY Slip Op 30809(U)(Sup.N.Y.Co. Apr. 18, 2017) . . . . . . . . . . . . . 22, 27 Conason v Megan Holding, LLC, 25 NY3d 1 (2015), reh.den. 25 NY3d 1193 (July 1, 2015). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Dixon v 105 W. 75th St. LLC, 148 AD3d 623 (1st Dept.2017) . . . . . . . . . . . . 25, 26 East Four-Forty Assocs v Ewell, 138 Misc2d 235 (App. Term 1st Dept. 1988). . 29 Ernest & Maryanna Jeremias Family Partnership, LP v Matas, 39 Misc3d 1206(A)(N.Y.Civ.Ct.2013) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 Excellus Health Plan, Inc. v Serio, 2 NY3d 166 (2004) . . . . . . . . . . . . . . . . . . . . 23 FAV 45 LLC v McBain, 42 Misc3d 1231(A)(N.Y.C. Civ.Ct. 2014) . . . . . . . . . . . 40 Grimm v DHCR, 15 NY3d 358 (2010). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40, 49 Higby v Mahoney, 48 NY2d 15 (1979) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Jazilek v Abart Holdings, LLC, 10 NY3d 943 (2008) . . . . . . . . . . . . . . . . . . . . . . 18 Jazilek v Abart Holdings, LLC, 41 AD3d 124 (1st Dept.2007). . . . . . . . . . . . . . . 18 Jazilek v Abart Holdings, LLC, 72 AD3d 529 (1st Dept.2010). . . . . . . . . . . . 21, 49 Jazilek v Abart Holdings, LLC, 2009 NY Slip Op 31847(U) (Sup.N.Y.Co.August 13, 2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19, 21, 42, 44 -iv- Knight-Ridder Broadcasting Co. v Greenberg, 70 NY2d 151 (1987) . . . . . . . . . 32 Koval v St. Nicholas One Seven Five Assoc. LLC, 2017 NY Slip Op 31156(U) (Sup.N.Y.Co. May 31, 2017) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 KSLM-Columbus Apts., Inc. v DHCR, 5 NY3d 303 (2005). . . . . . . . . . . . . . . . . . 23 Lerner v W7879 LLC, 2012 NY Slip Op 32402(U) (N.Y.Sup.Ct. Sept. 14, 2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 London Terrace Gardens L.P. v New York State Div. of Hous. & Community Renewal, 149 AD3d 521 (1st Dept.2017) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 Matter of Schmidt v Falls Dodge, Inc., 19 NY3d 178 (2012) . . . . . . . . . . . . . . . . 32 Matter of Smith v State of N.Y. Div. of Hous. & Community Renewal, 2010 NY Slip Op 31648(U)(N.Y.Sup.Ct. June 28, 2010) . . . . . . . . . . . . . . . . . 18 Mohassel v Fenwick, 5 NY3d 44 (2005), rearg.den. 5 NY3d 825 . . . . . . 46, 47, 48 Northrup v Northrup, 43 NY2d 566 (1978). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Palladino v CNY Centro, Inc., 23 NY3d 140 (2014). . . . . . . . . . . . . . . . . . . . . . . 33 Park v New York State Div. of Hous. & Community Renewal, 150 AD3d 105 (1st Dept.2017) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25, 26 People v Hobson, 39 NY2d 479 (1976) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Randall Associates, LLC v Davis, 20 Misc3d 1116(A) (Civ.Ct.N.Y.Co.2008) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17, 37 RKO-Keith-Orpheum Theatres, Inc. v New York, 308 NY 493 (1955) . . . . . . . . . 32 Roberts v Tishman Speyer Props., L.P., 13 NY3d 270 (2009) . . . . . . . . . . . passim Smith v Acquisition Am. VIII, LLC, 2017 NY Slip Op 31386(U) -v- (N.Y. Sup. Ct. June 28, 2017) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 St. Marks Place Trident LLC v State of New York Div. of Hous. & Community Renewal, 149 AD3d 574 (1st Dept.2017) . . . . . . . . . . . . . . . . 25, 26 Thornton v Baron, 5 NY3d 175 (2005) . . . . . . . . . . . . . . . . . . . . . . . . . . . 40, 41, 42 STATUTES CPLR 213-a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Rent Act of 2015. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3, 20, 31, 32, 34 RSL§ 26-512(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 REGULATIONS N.Y.C. Administrative Code § 26-504.2(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 9 NYCRR § 2520.11 (r)(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 OTHER AUTHORITIES Bailey, The New Rent Threshold Needs Two Tenants to Decontrol, available at www.huffingtonpost.com/adam-leitman-bailey/the-rent- law-of-2015_b_7772956.html . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Brett, “Post-Vacancy Deregulation In the Aftermath of “Altman,’” NYLJ, Dec. 22, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Brett, “In Rent Regulation Arena, ‘Altman’ Appears to Be in Flux,” NYLJ, June 1, 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 -vi- Estis & Turkel, “The Altman Conundrum: Rent Regulation,” NYLJ, Jan. 20, 2016. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Hershey-Webb, “Key Change in Rent Law Was Overlooked,” NYLJ, July 6, 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 -vii- PRELIMINARY STATEMENT Respondent-plaintiff-tenant Richard Altman, by his attorney, Lawrence W. Rader, respectfully submits this brief in response to the brief of the appellant- defendant-landlord, and in support of the affirmance of the two decisions of the Appellate Division, First Department (“Altman I” and “Altman II”). Using flawed logic, begging the questions to be addressed, asserting facts not in evidence and misstating the ones which are, painting dire scenarios of landlord bankruptcies and unfair disruption of decades of expectations, completely ignoring the strong and long-standing public policy in support of the preservation of affordable housing–and, most of all, appealing from a case other than the one which the Appellate Division actually decided–the landlord’s position is flatly wrong and its arguments should be rejected. More troubling, the landlord bar, including the appellant’s present counsel, has undertaken a concerted and unseemly campaign to attack the decisions in the press. See, e.g., Brett, “Post-Vacancy Deregulation In the Aftermath of “Altman,’” NYLJ, Dec. 22, 2015; Estis & Turkel, “The Altman Conundrum: Rent Regulation,” NYLJ, Jan. 20, 2016; Brett, “In Rent Regulation Arena, ‘Altman’ Appears to Be in Flux,” NYLJ, June 1, 2017. -1- The Appellate Division was correct twice, with a total of seven judges agreeing with the tenant’s arguments–and twice denying motions for reargument and leave– without dissent, and its rulings should be affirmed. This Court has heard similar arguments from the landlord lobby in other cases involving the rent stabilization laws, and has rejected them before. They are just as wrong now. SUMMARY OF ARGUMENTS The landlord here is appealing a case other than the one which the Appellate Division actually decided. In this case: 1. There was never an actual vacancy, i.e., an empty apartment. The word “vacancy” in the rent laws is not a term of art and is undefined anywhere in the statutes or regulations. “Vacant” means “devoid of an occupant; not taken up by any one” (Oxford English Dictionary). The regulations which govern removal of apartments from rent regulation apply only to vacant apartments, by their very words. Since there was never an actual vacancy, i.e., a hiatus in possession, or a reversion of possession to the landlord, the regulations cannot apply and the apartment remains rent-stabilized. 2. There were no improvements made to the apartment at any time, and the regulations which permit rent increases for improvements cannot apply. Obviously, there can be no improvements to an occupied apartment when a tenant is in -2- possession without the tenant’s consent. During the term of the leasehold, the tenant has sole and exclusive possession by definition, and absent an emergency the landlord has absolutely no right to enter, let alone make improvements. Therefore the issue of improvements is not part of this case. 3. The 20% vacancy allowance (the phrase is misleading) is always permitted when there is new lease, but the allowance does not require that there be an actual vacancy, only that a new lease be issued to a new tenant. That could be, and often is, a roommate, a relative or a subtenant in possession. But the vacancy allowance cannot alone effectuate decontrol of the apartment, and the cases uniformly so hold. 4. Even if the actual facts of this case were to be construed as a “vacancy,” the apartment is still subject to rent stabilization, because the facts do not satisfy either of the two applicable statutes. Regardless of the landlord’s exhaustive–and irrelevant–examination of the legislative history, their plain language does not apply to the facts. 5. In the Rent Act of 2015, the New York State Legislature positively affirmed the holding of Altman I, and added a provision which makes clear that it is always the rent being paid by a departing tenant which governs decontrol, and not the rent which can be charged to a new tenant. By the presumptions which determine legislative -3- intent and awareness of relevant court decisions, the provision must be deemed a restatement of existing law, not a revision of it. 6. The past rulings by the DHCR have no significance or relevance here, because the questions before this Court are solely legal ones. 7. The illegal agreement which the landlord insisted that Mr. Altman sign as a condition to a lease renewal is itself sufficient proof of willfulness to justify the award of treble damages. When there is an overcharge, the tenant is entitled to pre- judgment interest on the overcharge amount, whether it be trebled or not. Thus the amount of the judgment affirmed in Altman II is correct. QUESTIONS PRESENTED Appellant’s Questions Presented provide no guidance to the Court in framing the real issues. They are tendentious instead of neutral, and beg the questions to be answered. We present ours here: 1. If a New York City residential tenant whose apartment is subject to rent stabilization (a) voluntarily surrenders his lease in 2005, and (b) his legal regulated rent at that time is less than $2000 per month, and (c) the premises are not left vacant, but (d) are already occupied at that time for more than one year by a lawful subtenant with a valid sublease, and (e) the landlord voluntarily accepts the surrender and offers the subtenant a prime lease in his own name; -4- Do the premises remain subject to rent stabilization, and is the subtenant entitled to a rent stabilized lease? The Appellate Division ruled that the apartment remained rent-stabilized, and that the subtenant was entitled to a rent stabilized lease once the landlord agreed to accept him as a prime tenant. 2. Is a contract between a landlord and tenant valid and enforceable which, as a condition to the landlord’s issuance of a decontrolled market-rent lease to the tenant, (a) purports to prohibit absolutely the tenant’s ever bringing a legal challenge to the rent-stabilization status of the premises, and (b) provides that any such challenge shall be deemed a conclusive presumption of the tenant’s having committed fraud in the inducement, and (c) declares that if he brings such a challenge, that all moneys previously paid as rent would instead be deemed use and occupancy, and (d) declares that the tenant will then be conclusively presumed a licensee and not a tenant? The Appellate Division ruled that the contract was void as against public policy. 3. Is a landlord’s requiring a tenant to enter into such a contract as a condition to a lease renewal evidence of willfulness, so as to support an award of treble damages for a rent overcharge? -5- The Appellate Division ruled that it was evidence of willfulness, and upheld an award of treble damages for a rent overcharge. 4. Where an owner improperly deregulates a rent-stabilized apartment, thereby entitling the tenant to a judgment for an overcharge, is the last legal regulated rent registered with the DHCR the correct basis for calculation of the overcharge, even if that rent was registered more than four years ago? The Appellate Division ruled that it was. 5. When a rent overcharge is calculated, is the tenant entitled to prejudgment interest on the overcharge at the rate of 9%, calculated on a monthly basis? The Appellate Division ruled that the tenant was so entitled. FACTS AND PROCEDURAL HISTORY The landlord’s summary of the facts in its brief is incomplete and contains several errors. We submit a more complete version here. In January 2004, plaintiff-appellant-tenant Richard Altman entered into possession ofœœœœœœœœœœœœœœœ at 285 West 4th Street in Manhattan, and he has been in sole and exclusive possession continuously since then (R. 21)1. Two months earlier, in November 2003, he had entered into a sublease agreement with the tenant of record, one Keno Rider. Mr. Rider had occupied the apartment for the prior ten years, 1 Numbers in parentheses refer to pages in the Record on Appeal. -6- since November 1993, pursuant to a rent-stabilized lease with Equity Properties, the prior owner of the building, and the apartment had been registered with the Department of Housing and Community Renewal (DHCR)(57-59). At the time of the sublet, Rider’s monthly rent was $1829.49 (22, 59). In the sublease agreement between them, Mr. Altman agreed to pay that rent plus an additional 10% to Rider, solely because the apartment was furnished (22). They sent a signed copy of the proposed sublease to Equity Properties, the former owner and landlord, for its approval in November 2003. However, they received no response. After 30 days they deemed the sublet consented to, pursuant to R.P.L. § 226-b(2)(c). Mr. Rider then vacated the apartment and Mr. Altman took possession in January 2004. Thereafter, he paid the rent plus the additional 10% to Mr. Rider, who in turn paid his stabilized rent of $1829.49 to the landlord (22). Eleven months later, in December 2004, Equity Properties commenced a summary non-payment proceeding against both, seeking an additional 10% of the rent, solely because of the sublet (20, 34-37). The petition alleged that the apartment was subject to Rent Stabilization (21, 36). In March 2005, the proceeding was settled by a so-ordered stipulation, in which Mr. Rider agreed to vacate and surrender the apartment, and Equity Properties agreed to issue a prime lease to Mr. Altman (40-43). That prime lease (44-50) was for a term -7- from March 15, 2005 until October 31, 2006. The monthly rent was set at $2482.62 from April 1, 2005 until October 31, 2005, and was then reduced to $2261.25 for the one-year term from November 1, 2005 until October 31, 2006 (29). There were no capital improvements made to the apartment. The prime lease stated that the apartment was no longer subject to Rent Stabilization (48). However, thereafter the landlord brought other summary proceedings, and in two of those proceedings alleged that the apartment were subject to Rent Stabilization (52, 55). In 2006, Equity Properties sold the building to 285 West Fourth LLC, the present owner and appellant (21). In February 2007, after the original lease had expired, the appellant insisted that Mr. Altman sign a separate agreement as a requirement for entering into a renewal lease (58-62), and he did so. The agreement recited that the apartment was not rent stabilized, and it contained an in terrorem provision, purporting to punish Mr. Altman severely if he ever challenged the rent- stabilized status of the apartment (59-60; emphasis added): 6. As a material inducement to Landlord to enter into this Agreement and as a material inducement to Landlord to agree to enter into a Renewal Lease with Altman, Altman specifically acknowledges that the Subject apartment is a free market apartment and is not subject to rent regulation of any kind, including Rent Stabilization. Accordingly, Altman agrees to refrain from filing or making any claim of rent overcharge, fair market rent appeal, and any and all other conceivable -8- judicial or administrative proceedings challenging the non regulated status of the Subject Premises or the rent set forth in the Lease or Renewal Lease. 7. In the event Altman shall make any complaint or do anything whatsoever in contravention of the foregoing paragraph or Agreement, then and in that event it shall be conclusively presumed that he entered into this Agreement and the Renewal Lease referred to herein with the present intention of making such complaint and that he has therefore obtained the benefits of this Agreement and such Renewal Lease by fraud in the inducement. Accordingly, in the event of such a breach, the Renewal Lease shall be deemed null and void ab initio, any monies paid by Altman to Landlord pursuant to this Agreement and the Renewal Lease shall be deemed use and occupancy and not rent and Altman shall be conclusively presumed to be a licensee and not a tenant. Several years later, Mr. Altman learned that both this provision and the 2005 stipulation were illegal and unenforceable to the extent they purported to decontrol the apartment or punish him for asserting his rights, that the apartment remained rent- stabilized after Mr. Rider’s surrender, that the status of the apartment could not be waived by any agreement between the parties, and that he was being grossly overcharged.2 He determined to take action to protect his rights, retained counsel, and commenced this action on June 17, 2014 (19-31). The landlord answered and asserted counterclaims (65-71), and the parties thereafter moved for summary judgment and for dismissal. By decision dated October 2 The lease rent was increased every year after 2005. It was $3800 per month from October 2013 until November 2014, when it increased to $4100. The rent history is set out in the verified complaint (27). -9- 9 and entered October 16 (4-18), the lower court granted summary judgment in landlord’s favor, dismissing the two causes of action in the complaint, and granted Mr. Altman’s motion in part, dismissing the two counterclaims. Mr. Altman then appealed the dismissal of his complaint to the Appellate Division, First Department (2), and the landlord cross-appealed from the dismissal of its counterclaims (172). In April 2015, the Appellate Division reversed the lower court, ruled that the 2005 stipulation and the 2007 agreement were void as against public policy, that the apartment remained rent stabilized, and that Mr. Altman was entitled to a rent-stabilized lease and to damages for a rent overcharge. It remanded the matter back to the lower court to calculate the damages and to enter an appropriate judgment. Altman v. 285 West Fourth LLC, 127AD3d 654 (1st Dept.2015)(“Altman I”).3 The landlord moved for reargument or for leave to appeal to the Court of Appeals, which was denied, 2015 NY Slip Op 83701(U). Following the remand, both parties submitted proposed judgments and memoranda to the lower court, which entered a judgment on February 23, 2016 (181- 184). The judgment declared that the apartment was rent-stabilized, directed the 3 By an interim order after the appeal was filed, the Appellate Division ordered Mr. Altman to pay ongoing rent at the last lease rate to his attorney to hold in escrow during the pendency of the appeal, as a condition to staying a Civil Court proceeding which the landlord had commenced. Mr. Altman did so. Following the successful appeal, the funds in escrow were ordered released, 2015 NY Slip Op 76540(U). -10- landlord to register it with DHCR and to tender a rent-stabilized lease to Mr. Altman, and entered a money judgment for the rent overcharge in the amount of $165,363.80. The lower court also referred the issue of attorney’s fees to a Special Referee, but the parties stipulated to postpone the hearing pending the determination of the appeal that the landlord intended to take. The landlord then appealed from this judgment to the Appellate Division, First Department (also posting an undertaking to stay enforcement)(179). In its decision, Altman v. 285 West Fourth LLC, 143 AD3d 415 (1st Dept.2016)(“Altman II”), the Appellate Division affirmed the judgment in all respects, holding that lower court had correctly used the last registered rent, even though it was more than four years earlier, that the calculation of the money judgment correctly included treble damages and pre- judgment interest, that the landlord had not rebutted the presumption of willfulness, that the lower court had correctly fixed the rent at the last regulated rent, namely $1829.49, and that the landlord was not entitled to any longevity or other increases, but only to a vacancy increase of 20%. The landlord again moved for leave to appeal to the Court of Appeals, but the Appellate Division denied the motion on January 5, 2017, 2017 NY Slip Op 62661(U). The landlord then moved this Court for leave to appeal, which granted it on March 30, 2017 (29 NY3d 903). -11- POINT I THE APARTMENT REMAINS RENT-STABILIZED, BECAUSE IT WAS NEVER VACANT AND THERE WERE NO IMPROVEMENTS. There are two and only two ways to remove an otherwise covered apartment in the City of New York from the protections of the Rent Stabilization Code and Regulations. The second one, the high-income deregulation, does not apply to this case. Under the first way, there are only two questions which determine the outcome: 1. Was the legal regulated rent more or less than $2000 when Rider vacated the apartment? 2. Was the apartment left vacant when he did so, or was it occupied? The controlling regulation is N.Y.C. Administrative Code § 26-504.2(a) (emphasis added): a. “Housing accommodations” shall not include: any housing accommodation which becomes vacant on or after April first, nineteen hundred ninety-seven and before the effective date of the rent act of 2011 and where at the time the tenant vacated such housing accommodation the legal regulated rent was two thousand dollars or more per month; or, for any housing accommodation which is or becomes vacant on or after the effective date of the rent regulation reform act of 1997 and before the effective date of the rent act of 2011, with a legal regulated rent of two thousand dollars or more per month. To the same effect is the Rent Stabilization Code, 9 NYCRR § 2520.11 (r)(4), which excludes housing accommodations which: “(4) became or become vacant on -12- or after June 19, 1997 but before June 24, 2011, with a legal regulated rent of $ 2,000 or more per month.” Thus, these two sections set out two requirements before a housing accommodation can be removed from rent stabilization: (1) It must become actually vacant between 1997 and 2011, and (2) at the time the tenant vacates, the monthly legal regulated rent paid by that tenant must be $2000 or more, regardless of the rent paid by a subsequent tenant. Any other interpretation is contrary to both the plain language and the case law. The second part of the regulation over which the landlord makes so much exempts a “housing accommodation which is or become vacant...with a legal regulated rent of two thousand dollars or more per month.” This must mean the rent at the moment of the vacancy. It makes no provision for individual apartment improvements (“IAI’s”), vacancy increases, longevity increases, or any other possible additions to the rent at that time. No Governor’s Memorandum or other evidence of legislative intent can change this simple conclusion based solely on the language. If the Legislature had intended the landlord’s interpretation, they could have made it absolutely clear. But they did not. In Roberts v Tishman Speyer Props., L.P., 13 NY3d 270 (2009), this Court confirmed this interpretation: -13- In 1993, the Legislature enacted the Rent Regulation Reform Act (RRRA) (L 1993, ch 253), which provided for the luxury decontrol or deregulation of certain rent-stabilized apartments. The RRRA identified two circumstances in which deregulation was warranted: (1) in vacant apartments where the legal regulated rent was $2,000 per month or more; and (2) in occupied apartments where the legal regulated rent was $2,000 per month or more and the combined annual income of all occupants exceeded $250,000 per year. 13 NY3d at 280 (emphasis added)4. To say that “the legal regulated rent was $2000 per month or more” must mean the rent that the departed tenant was paying at the time he left, not what the landlord might be entitled to charge a new tenant after taking any permissible increases. If a tenant leaves a covered apartment vacant, there is by definition no new tenant who can be charged an increased rent at that time, and the legal regulated rent must remain the same unless and until there is a new tenant. The rent does not automatically increase the moment that the prior tenant leaves. Any other interpretation makes no sense. Thus, neither provision applies here, because the apartment here was not vacant when Rider moved out in March 2005. According to the DHCR record (57- 59), the apartment was never vacant at any time from 1990 until it was removed from registration. First, the apartment had by then been occupied by Mr. Altman for over 4 In the Courts below, the landlord repeatedly cited to the Appellate Division’s ruling in Roberts, not this Court’s. But this Court’s view of the law controls. -14- a year, since January 2004, pursuant to a legal sublease. Second, the legal regulated rent which Rider was paying when he vacated was $1829.49, which is less than $2000. Thus, neither of the two prerequisite facts for decontrol existed, and the apartment remains rent-stabilized. By contrast with the landlord’s cases, the cases with similar facts fully support the holdings here. In 132132 LLC v Strasser, 19 Misc3d 658, aff’d in part and mod. in part, 24 Misc3d 140(A)(App.T.1st Dept.2009), a case squarely on point, the landlord and tenant had entered into a two-year rent-stabilized lease in 2001, with a monthly rental of $2,174.27. During the term of that lease, the parties entered into a new five-year lease which added a co-tenant, and increased the monthly rent to $2,200. The new lease specifically stated that the apartment was not subject to rent stabilization. It was undisputed that Strasser knew he was getting an unregulated lease, and that he had agreed to add the co-tenant. The landlord argued that the addition of the co-tenant to the lease permitted it to take a lawful vacancy increase on the rent, which then qualified the apartment for deregulation, because the new lease had a monthly rental exceeding $2,000. The Housing Court rejected the landlord’s argument, and ruled that the apartment was still rent-stabilized: -15- Luxury decontrol under the Rent Regulation Reform Act of 1997 provides for the deregulation of certain vacant rent-stabilized apartments with a legal regulated rent of $2,000 or more per month on or after June 19, 1997...It is clear from the aforementioned that a vacancy increase may be permissible even when there is no hiatus in the tenant of record’s occupancy; however, this increase, in and of itself, does not remove the apartment from rent stabilization. Quite the contrary, where there is no hiatus in possession or actual physical vacancy of the premises by the original tenant, vacancy decontrol cannot apply. 19 Misc3d at 659-60 (citations omitted; emphasis in original). On appeal to the Appellate Term, that Court reversed that portion of the lower Court’s opinion which denied the tenant’s attorney’s fees, reinstating the claim for them, and also affirmed that the apartment remained rent-stabilized: Deregulation under the Rent Stabilization Law occurs only by two means: (1) where a housing accommodation becomes vacant on or after April 1, 1997 and at the time of the tenant(s)’ vacatur, the monthly legal regulated rent was $2,000 or more or (2) for an occupied housing accommodation, by order of DHCR, where the tenant’s annual income exceeds $175,000 and the legal regulated rent is $2,000 per month or more. Neither statutory criterion was established here. 24 Misc3d 140(A)(citations omitted; emphasis added). In Strasser, moreover, the legal regulated rent was over $2000 at the time the co-tenant was added to the lease. Yet, said the trial court, that was not determinative. What mattered was that there was “no hiatus in possession or actual physical vacancy of the premises by the original tenant.” Furthermore, said the Appellate Term, even assuming that the landlord may have been entitled to a rent increase upon adding the co-tenant, that “would not have served to automatically exempt the apartment from -16- regulation.” Id. Thus, it is not the amount of the rent alone, but an actual hiatus in possession which is required. Putting it another way, the prior tenant must leave behind an empty apartment. If it is occupied, and the prior tenant was paying less than $2000, the apartment remains rent-stabilized. That is the present case. Moreover, Strasser said that the fact that the prime tenant did not vacate the apartment did not matter, because even if the landlord was entitled to a rent increase for adding a co-tenant, vacancy decontrol did not apply. Since there was no hiatus in possession, i.e., the apartment was never actually vacant, there could be no vacancy decontrol. There are many other cases from lower courts to the same effect. See Altschuler v Jobman 478/480, LLC, 2013 NY Slip Op 30208(U), *7 (N.Y. Sup. Ct. Jan. 16, 2013): In 1993, the Legislature enacted the Rent Regulation Reform Act....which provided that certain rent-stabilized units could be deregulated if one of two circumstances apply: (1) in vacant apartments where the legal rent is $2,000 per month or more, or (2) in occupied apartments where the legal rent is $2,000 per month or more, and the combined annual income of all occupants exceeded $250,000 per year (emphasis added). Randall Associates, LLC v Davis, 20 Misc3d 1116(A) (Civ.Ct.N.Y.Co.2008): For an apartment to come under the high-rent-vacancy exemption, Rent Stabilization Code (9 NYCRR) § 2520.11 (r)(2) requires the apartment to become vacant on or after April 1, 1994, but before April 1, 1997, -17- with a “legal regulated rent” of $2000 or more a month. The legal regulated rent for a housing accommodation subject to the Rent Stabilization Law (RSL) is the rent registered under section 26-517. (See RSL [Administrative Code of City of NY] § 26-512 [e].) “The new sections of the Rent Stabilization Law provided for the deregulation of residential units that became vacant with a legal regulated rent of $2,000 or more per month.” Lerner v W7879 LLC, 2012 NY Slip Op 32402(U)(N.Y.Sup.Ct. Sept. 14, 2012)(emphasis added); Matter of Smith v State of N.Y. Div. of Hous. & Community Renewal, 2010 NY Slip Op 31648(U)(N.Y.Sup.Ct. June 28, 2010) (same); 111 on 11 Realty Corp. v Norton, 189 Misc2d 389 (N.Y.Sup.Ct.2001) (“only after a regulated apartment that rents for more than $2,000 is vacated does the unit become decontrolled”). In other words, the cases are uniform that it is the rent being paid by the departing tenant which determines decontrol, not the rent charged a new tenant. Finally, and most important, there is the authoritative and determinative case of Jazilek v Abart Holdings, LLC, 10 NY3d 943 (2008). Just as here, the case was originally commenced in New York County Supreme Court by the tenant, who sought a declaratory judgment that his apartment was rent-stabilized. The landlord’s motion to dismiss was denied by the Supreme Court, but reversed by the Appellate Division, Jazilek v Abart Holdings, LLC, 41 AD3d 124 (1st Dept.2007). Jazilek then appealed -18- the dismissal to this Court, which reversed the Appellate Division, reinstated his complaint, and remitted the case to the Supreme Court. This Court said, in language squarely on point: After tenant-of-record surrendered possession of a rent-stabilized apartment, landlord entered into a so-ordered stipulation with tenant, who had been subletting the apartment, for an unregulated lease purporting to fix rent at a sum that exceeded the legal limit under the Rent Stabilization Code. Although tenant was not “of-record” upon entering the agreement, the so-ordered stipulation violates the Rent Stabilization Code and is void as against public policy. 10 NY3d at 944 (citations omitted). Upon remand, the Supreme Court granted summary judgment to Jazilek. The facts are set out thoroughly in the decision on remand (2009 NY Slip Op 31847(U)[Sup.N.Y.Co.August 13, 2009]). Jazilek had been a subtenant of the tenant of record, one Brindisi. The landlord served a termination notice, claiming that the subtenancy was illegal. Brindisi then agreed to surrender the premises, but the landlord brought a holdover proceeding against Jazilek in the Civil Court. That proceeding was settled by a stipulation, in which the landlord agreed to give Jazilek a prime unregulated lease for two years, at a market rent. The essential facts of Jazilek were undisputed. They are identical in all particulars to the facts in the present case: ● The prior tenant had been a rent-stabilized tenant for several years. -19- ● The prior tenant had an unexpired rent-stabilized lease in effect when the landlord brought a summary proceeding, and the rent was less than $2000. ● The subtenant was lawfully occupying the premises before the proceeding was commenced, and the prime tenant thereafter surrendered the premises. ● The landlord brought a proceeding against both tenant and subtenant, and then settled the proceeding, accepting the subtenant as the prime tenant. ● The subtenant then received a prime lease, which was stated to be unregulated, at a rent much greater than the prior tenant had been paying. ● There were no renovations or capital improvements made to the premises, which could have permitted lawful rent increases. ● The sole basis for the increased and deregulated rent was the landlord’s acceptance of the subtenant as a prime tenant, and the resolution of the summary proceeding. In granting summary judgment to Jazilek after the remand, the Supreme Court said: [W]when Brindisi surrendered the apartment, but Jazilek remained as an occupant, the landlord had two choices. It could either challenge Jazilek’s right to stay in the apartment and try to evict him, or it could accept him as a new tenant and offer him a rent stabilized lease in his own name. The landlord decided to accept Jazilek as a tenant, however, it did not offer him a rent stabilized lease. It offered Jazilek a non- regulated lease as if the apartment had been destabilized. There was no -20- legal basis for charging Jazilek a rent higher than allowed under the rent stabilization laws...These circumstances alone justify a determination that there was an overcharge. 2009 NY Slip Op 31847(U) at *9 (citations omitted). The Supreme Court then determined that Jazilek was entitled to a rent- stabilized lease, that the base rent was the last rent paid by Brindisi, and entered judgment in favor of Jazilek for three times the amount of the overcharge, covering a period of five and one-half years, plus the amount of the overcharge not subject to treble damages, plus his legal fees. The landlord again appealed the judgment to the First Department, but this time it was affirmed, ending the litigation. Jazilek v Abart Holdings, LLC, 72 AD3d 529 (1st Dept.2010). Just as in Jazilek, the landlord here could have sought to recover possession from both Mr. Rider and Mr. Altman. Mr. Rider had already agreed to surrender his leasehold, and Mr. Altman’s rights as a subtenant would have terminated automatically at that point, inasmuch as a subtenant has no greater right to possession than the tenant. Had the landlord done so, he would have had a vacant apartment. But that is not what he chose to do; instead he accepted Mr. Rider’s surrender and offered to give Mr. Altman a prime lease in his own name. And just as the Supreme Court said in Jazilek after this Court remanded the case, once the landlord there agreed to -21- give Jazilek a prime lease in his own name, that lease had to be rent-stabilized. That is the correct result here. More recent cases have followed Altman I. See Cates-Reither v 160 E. 48th Street Owner II LLC, 2017 NY Slip Op 30809(U)(Sup.N.Y.Co. Apr. 18, 2017)5(“This court, however, is bound by the First Department's first decision in Altman, holding that a 20% vacancy increase may not be considered for the purposes of establishing a legal rent that is above the threshold for luxury deregulation”)(emphasis in original); Koval v St. Nicholas One Seven Five Assoc. LLC, 2017 NY Slip Op 31156(U), 2 (Sup.N.Y.Co. May 31, 2017)(“A vacant apartment is not decontrolled unless the rent of the outgoing tenant prior to the vacancy exceeds the decontrol threshold”)(citing Altman I). POINT II THE ISSUES IN THIS APPEAL ARE SOLELY LEGAL QUESTIONS, AND THIS COURT NEED NOT DEFER TO THE DHCR. ITS RULINGS ARE NEITHER PERSUASIVE NOR CONTROLLING Some time after filing its brief, the landlord filed an untimely and unrequested “Compendium,” containing copies of DHCR rulings concerning deregulation of rent- stabilized apartments and other materials. Apart from the untimeliness of this document, which is sufficient for it to be stricken, it offers nothing of value. As this 5 Respondent’s counsel is counsel for the plaintiff in this case. -22- Court has held repeatedly, rulings of administrative agencies are entitled to deference when the issue is a technical one, within the agency’s expertise. But when the issue to be determined is solely a legal one, as it is here, the Court will not defer at all, and will make its own decision on the law. See Excellus Health Plan, Inc. v Serio, 2 NY3d 166, 171 (2004)(“although an agency’s rational construction of a statute is normally entitled to deference, a determination by the agency that runs counter to the clear wording of a statutory provision is given little weight”)(citation and quotation marks omitted); and see Roberts, supra, 13 NY3d at 285 (citations and quotation marks omitted): Nor do we owe deference to DHCR’s reading, for this appeal does not call upon us to interpret a statute where specialized knowledge and understanding of underlying operational practices or…an evaluation of factual data and inferences to be drawn therefrom is at stake such that we should defer to the administrative agency's interpretation unless irrational or unreasonable. Rather, where the question is one of pure statutory reading and 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 … And, of course, if the regulation runs counter to the clear wording of a statutory provision, it should not be accorded any weight. Ironically, the landlord’s counsel here made the exact same argument to this Court–that no deference need be given to the DHCR’s rulings–in KSLM-Columbus Apts., Inc. v DHCR, 5 NY3d 303 (2005). There the argument succeeded, and the -23- principle that this Court need not defer to an agency in a case which involves purely legal questions is well established. But now that the shoe is on the other foot, suddenly we are told that the DCHR’s rulings are binding authority, that the Appellate Division must have erred in ignoring them, and that this Court has no choice but to follow the DHCR’s interpretations and rulings. This Court should reject the landlord’s efforts to have it both ways, depending on which way its interests may lie. The principle is a universal one, and this Court should ignore what the DHCR may have ruled in other cases, and decide solely on the legal issues presented. Its erroneous interpretations were rejected in deciding the central issue in Roberts, supra, and the result should be the same here. POINT III RECENT APPELLATE DIVISION DECISIONS HAVE NOT OVERRULED THIS CASE; THEY REACH CORRECT RESULTS ON COMPLETELY DIFFERENT FACTS. Landlord argues that three First Department rulings after Altman I have overruled it sub silentio. The argument is mere wishful thinking. Apart from the improbability of such a scenario–in which the Appellate Division would in no less than three unrelated occasions implicitly overrule a case which it had decided less than two years earlier without saying so, or even attempting to distinguish it–the most cursory review of the cases shows the absurdity of the argument. -24- The Appellate Division rulings after Altman I did not overrule it sub silentio. They are all readily harmonized, simply because all of them involved improvements, not just vacancy increases. There is no dispute that valid improvements to a vacant apartment can increase the rent by 1/40 or 1/60 of the cost. But there were no improvements made to the apartment here. If there is an actual vacancy, then a landlord can make IAI’s But that is only possible because there was an actual vacancy, and a landlord always has the absolute right to improve its own property while it has possession. That is not this case, however, and the landlord’s repeated citation of cases involving improvements after vacancies has no application here. The cases which supposedly demonstrated the Appellate Division’s ignoring the most basic principles of stare decisis are Dixon v 105 W. 75th St. LLC, 148 AD3d 623 (1st Dept.2017);18 St. Marks Place Trident LLC v State of New York Div. of Hous. & Community Renewal, 149 AD3d 574 (1st Dept.2017); and Park v New York State Div. of Hous. & Community Renewal, 150 AD3d 105 (1st Dept.2017). In Dixon, the landlord had converted one vacant apartment into two, and done extensive improvements to both. The conversion and the improvements entitled the landlord to decontrol the apartment, but the apartment here is exactly the same -25- configuration as it has always been, and unlike in the present case, there were extensive improvements. In 18 St. Marks Place Trident LLC, the Court said that, allowing for both a vacancy increase and 1/40 of “the total costs of improving the apartment after the 2008 vacancy,” the legal regulated rent was over $2000, and therefore the apartment was deregulated. In the present case, the apartment was never vacant and there were no improvements. In Park, the apartment had been rent-controlled, and had reverted to rent- stabilized status after the death of the tenant in 2004 created a vacancy. Thereafter the landlord undertook significant renovations to the vacant apartment, and the tenant who challenged the apartment’s status moved in a year later. Thus the apartment had been vacant for a year, unlike the apartment here, and the combination of permitted increases for improvements and the vacancy brought the rent over the luxury decontrol threshold. All three of these cases involved IAI’s, made to vacant apartments, and in one case, the conversion of one apartment into two. The present case does not have a single one of these controlling facts, including that the apartment here was never vacant. The landlord’s argument that they overruled Altman I without saying so, and -26- that Altman I must therefore be some sort of aberration, cannot be advanced seriously, and should be rejected. Landlord also attempts to create a conflict between the rulings in this case and other cases from lower Courts. In particular, landlord argues that an Appellate Term decision, Aimco 322 E. 61st St. v Brosius, 50 Misc3d 10 (App.Term 1st Dept.2016), conflicts with Altman. But Aimco involved improvements as well. Landlord also cites the decision of the Appellate Term, First Department in 233 E. 5th St. LLC v Smith, 54 Misc3d 79 (App.Term 1st Dept.2016), in which that Court flatly–and in direct violation of its obligation to follow binding precedent of a superior Court–refused to recognize Altman I, saying: we do not interpret the contents of a single sentence in the decision in [Altman I] so broadly as to effectuate a sea change in nearly two decades of settled statutory and decisional law - that allowed an owner to deregulate an apartment after a vacancy, if the legal rent plus any lawful increases and adjustments to the rent, such as the vacancy allowance, exceeded $2,000 particularly given the absence of any expressed intention by the Altman Court to do so. 54 Misc3d at 81 (citation omitted)6 Further evidence that the Appellate Division decisions are distinguishable is the recent case of Smith v Acquisition Am. VIII, LLC, 2017 NY Slip Op 31386(U), 3-4 (N.Y. Sup. Ct. June 28, 2017), in which the Court said: 6 The Appellate Division, First Department has granted leave to appeal this decision. See 2017 NY Slip Op 69274 (1st Dept. Mar. 30, 2017). -27- [T]he Altman I decision only dealt with a vacancy increase and did not address the effect of IAI increases on the deregulation of an apartment. A deregulation based solely on a vacancy increase, as in Altman I is factually distinct from a vacancy based on IAIs. A recently decided First Department case (decided after this motion was submitted) 18 St. Marks Place Trident LLC v. State of New York Div. of Hous. & Community Renewal, Off. of Rent Admin. (149 A.D.3d 574, 50 N.Y.S.3d 273(Mem) [1st Dept 2017]), held that an apartment could be deregulated after a vacancy by adding increases for a vacancy and for improvements. Based on this ruling, an IAI increase can deregulate an apartment even if the rent at the time of the vacancy is less than $2,000. In 18 St. Marks, the rent prior to the vacancy was $1,264.48 and the combination of the vacancy and improvement increases pushed the rent above $2,000 (id.). Here, the IAIs increase alone might justify increasing the rent above the $2,000 threshold. Therefore, plaintiffs' motion is denied because the IAIs, if substantiated, could serve to deregulate the apartment. Thus, there is no basis to suggest, let alone conclude, that these three subsequent decisions of the Appellate Division overruled Altman I sub silentio. The argument is frivolous. POINT IV THE LANDLORD’S DIRE PREDICTIONS SHOULD BE IGNORED. This Court has on occasion been warned by the New York City real estate industry of dire financial consequences if it dares to rule in favor of tenants and advance the public policy in favor of the preservation of affordable housing. This Court has rejected such predictions, saying that if a statute has negative -28- consequences, the change must come from the Legislature. For example, in Roberts, supra, 13 NY3d at 287, this Court said: Defendants predict dire financial consequences from our ruling, for themselves and the New York City real estate industry generally. These predictions may not come true; they depend, among other things, on issues yet to be decided, including retroactivity, class certification, the statute of limitations, and other defenses that may be applicable to particular tenants. If the statute imposes unacceptable burdens, defendants’ remedy is to seek legislative relief. Moreover, the dissent predicts that our decision will cause “years of litigation over many novel questions to deal with the fallout from today’s decision” (dissenting op at 295). That the courts and litigants may experience some additional burden, however, is no reason to eschew what we view as the only correct interpretation of the statute (emphasis added). In East Four-Forty Assocs v Ewell, 138 Misc2d 235, 248 (App. Term 1st Dept. 1988), the Court said: The Legislature has shown itself fully capable of amending the Rent Stabilization Law when it deems it appropriate to ameliorate the consequences of opinions of the Court of Appeals, and it has speedily acted in the past to safeguard the rights of persons in possession..such consequences as may be occasioned by enforcing the Rent Stabilization Law as it has been construed...are fully capable of being addressed by the Legislature, which is not inexperienced in reconciling competing interests and making difficult choices (citations omitted). See also C.S.A. Contr. Corp. v N.Y. City Sch. Constr. Auth., 5 NY3d 189, 193 (2005)(“we decline plaintiff's invitation to engraft such a provision onto that statute. Any such change should come from the Legislature”); Higby v Mahoney, 48 NY2d 15, 19 (1979)(“under our polity of government and distribution of powers, -29- responsibility for making the policy decisions inherent in the adoption of the original legislative provision was, by its very nature, vested in the legislative branch”); Northrup v Northrup, 43 NY2d 566, 572 (1978)(“Change, if deemed advisable, must come from the Legislature”) If the Appellate Division’s interpretation of the controlling statute in Altman I truly had such dire consequences, the landlord lobby had ample opportunity to urge its arguments upon the Legislature. However, as we argue in the next point, the Legislature had the opportunity to consider those arguments only two months later, and definitively rejected them. POINT V THE 2015 AMENDMENTS TO THE RENT STABILIZATION CODE MAKE IT ABSOLUTELY CLEAR THAT THE “LEGAL REGULATED RENT” SUFFICIENT FOR DECONTROL IS THE RENT WHICH WAS BEING PAID BY THE DEPARTED TENANT, REGARDLESS OF ANY PERMITTED INCREASES. In June 2015, in the Rent Act of 2015, Ch. 20, Laws of 2015, the Legislature not only increased the rent threshold for deregulation to $2700, but made it absolutely clear that it is the rent which was being paid by the prior tenant which is determinative, not the rent which can legally be charged to a new tenant after addition of permitted increases. See Hershey-Webb, “Key Change in Rent Law Was Overlooked”, NYLJ, July 6, 2015 at 6, col. 4: “The new law provides that a rent -30- stabilized apartment cannot be deregulated unless the prior tenant’s legal regulated rent is $2,700.” See also Bailey, The New Rent Threshold Needs Two Tenants to Decontrol, available at www.huffingtonpost.com/adam-leitman-bailey/the-rent- law-of-2015_b_7772956.html: Prior to the Rent Law of 2015, many but not all experts believed that the crossing of the $2,500 threshold that was then in effect would only decontrol the apartment for the tenant after the one who crossed the threshold. The Rent Law of 2015 appears to lock in that interpretation and to extend it to the new $2,700 threshold. Example: A tenant rents an apartment at $2,400 and moves out. A 20% vacancy increase takes the apartment to $2,880 for the next tenant. That tenant is still rent stabilized. However, at the end of that tenancy, the next tenant will be unregulated, regardless of what improvements the landlord effects to the apartment and regardless of if that next tenant is actually charged less than $2,700. (emphasis added). The text of the new provision is Section 7 of the Rent Act of 2015. It adds a third provision to the two decontrol provisions in existing law, and reads as follows (emphasis added): or, any housing accommodation with a legal regulated rent that was two thousand seven hundred dollars or more per month at any time on or after the effective date of the rent act of 2015, which becomes vacant after the effective date of the rent act of 2015, provided, however, that starting on January 1, 2016, and annually thereafter, the maximum legal regulated rent for this deregulation threshold, shall also be increased by the same percentage as the most recent one year renewal adjustment, adopted by the applicable rent guidelines board. -31- In other words, in the 2015 Rent Act, the Legislature unquestionably established that (1) the departing tenant’s rent must have exceeded $2700 at the time he vacated; and (2) the $2700 threshold itself would increase every year by the same percentage as the one year renewal adjustment set by the Rent Guidelines Board. When this provision was enacted in June 2015, the Legislature was presumed to be aware of the then-recent April 2015 decision in Altman I, just as it is presumed to be aware of all relevant court decisions when it enacts any legislation. See, e.g.,Knight-Ridder Broadcasting Co. v Greenberg, 70 NY2d 151, 157 (1987): [T]he legislative history of a particular enactment must be reviewed in light of the existing decisional law which the Legislature is presumed to be familiar with and to the extent it left it unchanged, that it accepted...Especially is this so where the Legislature has acted upon a statute with knowledge of uniform judicial decisions interpreting the statute as then existing, a proposal is offered to rebut the interpretation, and the actions taken do not alter the judicial interpretation, for then the Legislature must be regarded as having legislated in the light of, and as having accepted, such interpretation. (citations omitted). See also Matter of Schmidt v Falls Dodge, Inc., 19 NY3d 178, 184 (2012) (“Because the Legislature is presumed to be aware of the decisions...and as it did not comment on or make any change to blunt the effects of these decisions, it must be assumed that it intended to incorporate the holdings...into the existing law”)(citations omitted); and RKO-Keith-Orpheum Theatres, Inc. v New York, 308 NY 493 (1955): -32- That the Legislature so intended is indicated by the circumstance that the enabling act was amended in other respects after the practice had become general...If that practice had been considered to have been contrary to the original legislative mandate, the Legislature might well have said so while making amendments...If the practical construction of a statute is well known, the Legislature is charged with knowledge and its failure to interfere indicates acquiescence therein...[A]nd then the Legislature did not disavow but confirmed this interpretation. 308 NY at 500 (citations omitted). Most recently, in Palladino v CNY Centro, Inc., 23 NY3d 140 (2014), this Court said: Precedents involving statutory interpretation are entitled to great stability. After all, in such cases courts are interpreting legislative intention and a sequential contradiction is a grossly arrogated legislative power. Moreover, if the precedent or precedents have “misinterpreted” the legislative intention, the Legislature’s competency to correct the “misinterpretation'”is readily at hand. 23 NY3d at 150-51, quoting People v Hobson, 39 NY2d 479, 489 (1976)(quotation marks omitted). Given that the New York City real estate interests who are vigorously litigating this case were a major lobbying force in Albany at the time of the enactment of the Rent Law of 2015–as they always are when the rent laws come up for renewal–we can assume that the positions they advance before this Court now were equally vigorously advanced to the Legislature in June 2015.7 Yet their interpretation was rejected. Had the Legislature deemed Altman I to have been wrongly decided, it could 7 See Roberts, supra, 13 NY3d at 293: “As plaintiffs themselves put it, ‘[b]attles over rent stabilization are among the fiercest in Albany’” (Reed, J., dissenting)(brackets in original). -33- have drafted an appropriate corrective or limiting provision to make that clear. If it had not amended the regulation at all, the intention might not have been so clear. But it actually affirmed and adopted the Appellate Division’s holding in Altman I. Therefore, it is a reasonable assumption–if not a conclusion–that the Legislature deemed the decision to be correct, and thus this Court should affirm Altman I. In any event, regardless of the presumptions regarding the Legislature’s view of Altman I, the case’s holding is the law as it exists today. Landlord’s brief does not address the 2015 Rent Act amendment at all, but the interpretation it urges would lead to absurd consequences. The landlord’s position is that decontrol occurs whenever any apartment’s rent, whether vacant or occupied, after adding IAI’s, vacancy increases and other permissible increases, becomes over $2000, $2500 or $2700, depending upon when the vacancy occurs. But after June 2015, those increases cannot result in decontrol, by definition, because the prior tenant’s legal regulated rent is the only number which matters. Rather, that rent must already exceed the applicable threshold when the tenant vacates the apartment, and if it does not, the apartment remains rent-stabilized. The landlord’s argument would create two distinct classes of apartments, depending on whether the tenant vacated before or after June 2015. Apartments vacated by the former whose rents were close to the threshold could be decontrolled, -34- but the latter could not. This would be so even if two tenants were paying the same rent but vacated at different times. This is illogical, a recipe for chaos, and cannot be what the Legislature intended in setting–and now having thrice increased–the threshold amounts for deregulation (including the new provision increasing the present $2700 in step with Rent Guidelines Board increases). These actions show an intent to advance and expand the public policy to protect affordable housing, not to restrict it. Plainly the intention was to reject the landlord’s arguments, in both this Court and in the Legislature, to establish the correct view of the law and to slow the removal of housing from the protections of rent stabilization. In doing so, the Legislature eliminated any argument about the correctness of the decision in Altman I, and it is now unquestionably the law that the sole determinant of when a rent- stabilized apartment is decontrolled is the rent being paid by the departing tenant. POINT VI THE AMOUNT OF THE OVERCHARGE JUDGMENT IS CORRECT IN ALL RESPECTS. IT PROPERLY INCLUDES PRE-JUDGMENT INTEREST AND EXCLUDES ANY INTERIM RENT INCREASES. The landlord argues that the judgment for the overcharge is erroneous, because: 1. The lower court looked back beyond four years in calculating the overcharge, although there was no evidence of fraud. -35- 2. There should not have been treble damages because there was no showing of willfulness, because the landlord believed in good faith that its decontrol of the apartment was proper. 3. There should not have been an award of pre-judgment interest. 4. The Court should have awarded allowable vacancy increases, Rent Guidelines Board increases and a longevity increase to arrive at the legal regulated rent. None of these arguments has merit. The judgment is correct to the dollar, and should be affirmed in all respects. 1. The“legal regulated rent” is the last rent registered with the DHCR, because all subsequent increases were illegal. Once a Court determines that a tenant has been overcharged, the tenant becomes entitled to damages. The damages are based upon the difference between the rent which the tenant actually paid and the “legal regulated rent,” i.e., the rent which the landlord was legally entitled to charge. The statute of limitations for a rent overcharge claim is four years from the commencement of the action, CPLR 213-a. But the four-year statute is only a limitation on how far back damages can be awarded, and not a limitation on the time to determine the base amount. -36- The first step in calculating the overcharge is to determine the legal regulated rent. The “legal regulated rent” is not automatically the rent which a tenant was paying four years prior to bringing an overcharge action. Rather, the Court must examine the entire rental history of an apartment, so long as it is available and reliable. RSL§ 26-512(e) reads: “Notwithstanding any contrary provisions of this law, on and after July first, nineteen hundred eighty-four, the legal regulated rent authorized for a housing accommodation subject to the provisions of this law shall be the rent registered pursuant to section 26-517 of this chapter subject to any modification imposed pursuant to this law.” “The legal regulated rent for a housing accommodation subject to the Rent Stabilization Law (RSL) is the rent registered under section 26-517.” Randall Associates, LLC, supra. 2. In a rent overcharge case, the Court can look back beyond four years to determine the legal regulated rent, without needing evidence of fraud. Even though the calculation of the overcharge is limited to the four years prior to bringing the claim, the case law holds that the Court can look back more than four years to determine the last legal regulated rent, The apartment here was registered with DHCR continuously from 1992 until August 2005, when the landlord removed it from registration, claiming “High Rent Vacancy” (58). This was shortly after the landlord issued the first deregulated lease -37- to Mr. Altman. However, the Appellate Division held that the removal from registration was illegal and that the initial rent in that lease was also illegal. All subsequent lease rents were also illegal. Thus, the “legal regulated rent” is the last rent shown on the DHCR registration in 2005, namely $1829.49. In Altschuler v Jobman 478/480, LLC, 2013 N.Y.Misc.LEXIS 388 at 9-13 (N.Y.Sup.Ct. Jan. 16, 2013), the Court explained the relevant provisions: “where an owner improperly deregulated a unit and the record fails to establish the validity of the rent increase that brought the rent-stabilized amount above the regulated threshold amount, the court must disregard the free market lease amount in effect on the four-year base date and must instead review any available record of rental history necessary to set the proper base date rate.” The Appellate Division then affirmed the lower court’s ruling in all respects, including a money judgment in tenant’s favor of over $800,000, Altschuler v Jobman 478/480, LLC, 135 AD3d 439 (1st Dept.2016), and this Court twice denied leave to appeal, lv.dism. 28 NY3d 945 (2016); lv.den. 29 N.Y.3d 903(2017). The Appellate Division said that the landlord’s illegal deregulation of the apartment when the tenant first took possession in 2000, executing market rent leases without the required rent stabilization lease rider, and failing to file annual registrations, alone amounted to sufficient evidence of fraud to justify disregarding the four-year limitation, and -38- required examination of the entire rent history to determine the legal base rent. The Appellate Division also held that the legal regulated rent was that shown in the last registration, from 1995. Thus, although the tenant in that case could only recover the overcharge for the four years preceding his commencement of an action in 2013, the calculation of the overcharge was based upon the last legal regulated rent from 1995. Altschuler is squarely on point with the present case. The landlord here improperly deregulated the apartment, executed market rent leases without the required rent stabilization riders and failed to file annual registrations. This is sufficient indicia of fraud, and the “legal regulated rent” is therefore that rent last registered in 2005. Moreover, the blatantly illegal 2007 agreement (60-64), which purported to convert the tenant into a licensee if he ever dared to challenge the rent-stabilized status of the apartment, and said that if he ever asserted his legal rights, he would be automatically guilty of “fraud in the inducement” (62), is egregious evidence of landlord’s fraudulent intent. Even if we assume that the landlord deregulated the apartment in good faith in 2005 (which is still not an excuse), the demand that a tenant sign such an in terrorem agreement, as a condition to an unregulated renewal lease, conclusively refutes any such assumption. Why demand it if the landlord already believed that the apartment was deregulated? Moreover, it was by then long- -39- established that any agreement purporting to waive rent-stabilization status violated public policy and was absolutely unenforceable. So the illegality was deliberate. Again demonstrating its penchant for circular reasoning, the landlord here argues that the agreement did not actually decontrol the apartment but only recognized a status which had already occurred by operation of law. So then what would be the purpose of the in terrorem provision, since, by the landlord’s argument, the decontrolled status existed already, and therefore a challenge could not possibly succeed? It is a far more plausible interpretation that this landlord (who acquired the building in 2006) had doubts about the legality of the actions of its predecessor the prior year, and wanted to discourage any possible challenge to them. The lower court therefore correctly disregarded the illegal free-market 2010 lease rent of $2895, and used the last legal regulated rent of $1829.49 as the baseline for calculation of the overcharge. See also 72A Realty Associates v Lucas, 101 AD3d 401 (1st Dept.2012); FAV 45 LLC v McBain, 42 Misc3d 1231(A)(N.Y.C. Civ.Ct. 2014), both of which require the last legal regulated rent to be used. This Court’s cases of Conason v Megan Holding, LLC, 25 NY3d 1 (2015), reh.den.25 NY3d 1193 (July 1, 2015); Grimm v DHCR, 15 NY3d 358 (2010) and Thornton v Baron, 5 NY3d 175 (2005), cited by the landlord, are not to the contrary. In those cases, there had been no established legal regulated rent in effect. This Court -40- set a formula to determine that rent, because in each of those cases there had been illusory tenancies, fraud and other misconduct by the landlord, which rendered the registered rent history inaccurate. Because of that, said this Court, the statute of limitations does not automatically bar examination of the rental history more than four years earlier, because to so limit it would reward a landlord’s illegal conduct and result in permanent removal from rent regulation. This is precisely the case here. The landlord here claims that the legal regulated rent was $2895, just because that was the lease rent in June 2010. But if that were correct, then the apartment would be immediately removed from rent stabilization once Mr. Altman’s tenancy terminates, because the rent would already be over the present threshold of $2700. This would frustrate the principal purpose of rent stabilization, namely to preserve affordable housing. As this Court said in Thornton, supra, rejecting the identical argument, “[t]he dissent would ignore defendants’ fraudulent conduct and fix the rent at an amount likely soon to result in the apartment’s permanent removal from rent stabilization, thereby rewarding the owner’s wrongdoing.” 5 NY2d at 181. The present case is much simpler. In Altman I, the Appellate Division held that the apartment was illegally removed from rent stabilization in 2005, that the first rent charged to Mr. Altman was illegal, and that the first lease “was void at its inception.” -41- 127 AD3d at 655. But landlord has not suggested, nor is there any indication, that the DHCR’s rent history from 1992 to 2005 is inaccurate. Rather, there was no rent registration at all following the parties’ 2005 lease; the apartment was simply removed and never registered thereafter. Therefore, the legal regulated rent is that shown in the last registration statement. The rule is now clearly established: “The courts now follow the holdings in Thornton and Jazilek, and calculate the rent based on the last proper registration in effect, even if the rent reverts back to a period in excess of four years prior to the date of the claim.” Ernest & Maryanna Jeremias Family Partnership, LP v Matas, 39 Misc3d 1206(A)(N.Y.Civ.Ct.2013)(“In determining the date of the last vacancy for purposes of computing the longevity increase, DHCR properly relied on the date of the earliest registered rent for the prior tenant”). See also Bradbury v 342 W. 30th St. Corp., 84 AD3d 681 (1st Dept.2011). Just as with Thornton, supra, the landlord’s interpretation here would reward it for the five years of overcharges between 2005 and 2010. The four-year statute of limitations already bars any recovery of those overcharges. That in itself is a reward for the landlord, who gets to keep those overcharged amounts. But the landlord’s interpretation would not only reward it for past overcharges, but for the four years of overcharges within the limitations period as well. -42- The illegal lease rent of $2895 was the result of landlord’s having (I) illegally removed the apartment from rent stabilization, and (ii) taken arbitrary and substantial increases between 2005 and 2014. By the time Mr. Altman brought this case, the lease rent was $4100. Just as the rent-stabilized status of an apartment cannot be altered by any agreement between a landlord and a tenant, regardless of the passage of time, an illegal rent does not become legal with the passage of time either. To accept the landlord’s argument would reward it for its own wrongful conduct. In Altman I, the Appellate Division said, “the 2005 stipulation purported to fix rent at a sum that exceeded the legal limit under the Rent Stabilization Code (RSL), since the monthly rent of $2,488.62 exceeded the maximum allowable rent” (127 AD3d at 655 (citation and quotation marks omitted)), and that both the 2005 stipulation and the 2007 agreement were “void and unenforceable as a matter of public policy.” Id. In other words, the first rent which Mr. Altman was charged–and paid–when he first became a prime tenant was illegal. Therefore, none of the rents which he was charged–and paid–thereafter can be the “legal regulated rent.” The “legal regulated rent” is the last rent registered with the DHCR, namely $1829.49, and it is that rent which the lower court correctly applied to calculate the overcharge. -43- 3. The landlord submitted nothing to rebut the presumption of willfulness. Following the Appellate Division’s remand in Altman I, the parties submitted spreadsheets to the lower court with their respective calculations of the overcharge (R. 52-53). In Jazilek, supra, the Court set out in detail the procedure to be followed: Where a landlord is found to have collected an overcharge above the legal rent for an apartment, the landlord “shall be ordered to pay to the tenants a penalty equal to three times the amount of such overcharge...” RSC § 2526.1. A rent overcharge is presumed willful unless a landlord proves “by a preponderance of the evidence” that it was not. see, 9 NYCRR § 2506.1; Millerv.Div.of Hous. &Community Renewal, 289 A.D.2d 20, 733 N.Y.S.2d 860 (1st Dept 2001). The statute of limitations applicable to a rent overcharge complaint is four years. RSL § 26-516 [a][2]; Thornton v. Baron, 4 AD3d at 259 affirm'd 5 NY3d 175 at 180, 833 N.E.2d 261, 800 N.Y.S.2d 118. RSL § 26-516 [a] [I] provides that the legal regulated rent for purposes of determining an overcharge is the rent indicated in the annual registration statement filed four years prior to the most recent registration statement plus any subsequent lawful increases and adjustments. Jazilek filed his complaint on July 20, 2005. Therefore, the legal rent for the apartment is established by examining the rental history for the four year period prior to that filing which is July 20, 2001, provided those records are reliable. Once an overcharge is established, it is presumed to have been willful...The burden then shifts to the landlord who must submit evidence rebutting the tenant's allegations that the overcharge was willful. RSC § 2526.1. If that burden is not met, and the overcharge is found willful, then treble damages may be imposed. Treble damages are, however, available only for the two years preceding the filing of the complaint. RSL § 26-516[a][2][I] ....Prejudgment interest is also available at the rate set forth in CPLR § 5004 from the date of the first overcharge. 2009 NY Slip Op 31847(U) at *17-20. -44- The landlord here argues that tenant is not entitled to an overcharge, because it was not willful. But this is exactly backwards. In every overcharge case, there is a presumption of willfulness, which the landlord has the opportunity to overcome by a preponderance of the evidence. This landlord submitted no evidence on the point to the lower court, by anyone with knowledge of the facts. There were no affidavits from the landlord or its counsel, explaining the basis for their belief that the removal from rent stabilization, and the overcharge, were not willful. There was nothing but counsel’s argument that it was all done in good faith, which is not evidence. Moreover, even if this assertion of good faith had been submitted in admissible form by a party with knowledge, it would plainly fail, considering landlord’s other actions, namely conditioning its granting of a lease to tenant under both the illegal 2005 stipulation and the egregious and overreaching 2007 agreement. And the landlord’s telling the lower court on remand after Altman I that the Appellate Division was wrong and that its ruling shouldn’t be followed (241; “this Court is not bound by the Altman decision”) is an astonishing argument for any litigant to make. Plainly, the assertion of good faith is disingenuous and unsupported, and the presumption of willfulness stands unrebutted. The calculation in the spreadsheet which was adopted by the lower court (228- 29) is based upon the difference between the legal regulated rent of $1829.49 and the -45- rent which tenant actually paid, on a month by-month basis, from June 2010 until May 2015, the first month following the decision in Altman I. The amounts shown in the spreadsheet are the actual differences for the twenty-four months from June 2010 through May 2012. Those differences are trebled for the twenty-four months from June 2012 through May 2014. The spreadsheet also includes simple interest at the legal rate of 9%, accruing on a month-by-month basis. It also provides for a deduction for the rent which tenant was obliged to pay while the appeal in Altman I was pending, at the legal regulated rent of $1829.49. The lower court considered both parties’ calculations, and correctly considered the facts and applicable law in adapting the tenant’s. 4. The judgment properly includes pre-judgment interest. Landlord next argues that the lower court erred in awarding prejudgment interest on the treble damages portion of the overcharge, and cites Mohassel v Fenwick, 5 NY3d 44 (2005), rearg.den. 5 NY3d 825 as authority.8 But the first sentence of that case says precisely the opposite: “In this rent overcharge proceeding, the issue is whether a rent stabilized tenant was properly granted prejudgment interest 8 There is no dispute that the tenant is entitled to post-judgment interest, and that it continues to accrue at 9% until the judgment is final and paid. -46- on a treble damages award. We conclude that he was.” 5 NY3d at 547. This Court then said (5 NY3d at 51): To interpret the Rent Stabilization Law as the owner suggests– authorizing prejudgment interest in cases where treble damages are not awarded (because the overcharge was not willful) but precluding it when the overcharge was willful--would turn the statutory scheme on its head, allowing willful violators to delay paying meritorious claims while enjoying interest-free use of tenants’ money. Such an analysis would be inconsistent with the purpose of overcharge proceedings to fully compensate tenants when owners fail to comply with rent stabilization requirements, especially when noncompliance is willful. The imposition of prejudgment interest ensures that injured tenants will be made whole and encourages both willful and nonwillful violators to make prompt repayment. In Borden v 400 E. 55th St. Assoc., L.P., 24 NY3d 382 (2014), this Court reaffirmed its holding in Mohassel, and stressed the public policy behind its interpretation: This Court has already found the same provision of the RSL to provide compensatory forms of relief—the provision serves to make the tenant whole, in addition to granting a separate punitive award of treble damages. As we stated in Mohassel v Fenwick, the provisions of RSL § 26-516 (a), which establish the penalty as the amount of the overcharge plus interest...are designed...to compensate the tenant. There, we held that [t]he imposition of prejudgment interest ensures that injured tenants will be made whole. Reading the interest provision as punitive would be inconsistent with the purpose of overcharge proceedings to fully compensate tenants when owners fail to comply with rent stabilization requirements. We emphasized that the award refunded the tenant since the landlord had the use of the tenant's money...while the tenant was deprived of it. -47- 24 NY 3d at 397 (citations and quotation marks omitted; brackets and ellipses in original). Therefore, that portion of the judgment which awards pre-judgment interest on both the treble and single damage portions is correct. See London Terrace Gardens L.P. v New York State Div. of Hous. & Community Renewal, 149 AD3d 521, 522 (1st Dept.2017)(“DHCR’s assessment of interest on overcharge amounts–including periods in which the tenant respondents paid the excessive rent into escrow, rather than to the owner–was consistent with the statutory purposes of discouraging overcharges and encouraging prompt repayment of overcharge amounts”)(citing Mohassel, supra). 5. The landlord is not entitled to any interim increases, but only to a 20% increase, and then only when it tenders a rent-stabilized lease and registers the apartment with DHCR. The landlord argues that, despite its having illegally removed the apartment from rent stabilization in 2005, it is nonetheless entitled to the interim increases permitted under the Rent Stabilization Code for registered apartments. But it is not so entitled, because the apartment was not registered with DHCR after 2005, when it was improperly deregulated, and it remains unregistered until now. The failure to register bars any increases other than the vacancy allowance of 20% for a new tenant. -48- As the Appellate Division held in Jazilek, supra, when it affirmed the lower court’s calculations: In calculating the amount of the rent overcharges, the motion court correctly declined to apply any periodic or other rent increases, other than a vacancy increase of 20% (see RSC § 2522.8 [a] [1]), which the parties agreed applied. A landlord’s failure to file a “proper and timely” annual rent registration statement results in the rent being frozen at the level of the “legal regulated rent in effect on the date of the last preceding registration statement” (Rent Stabilization Law [Administrative Code of City of NY] § 26-517 [e]; see RSC § 2528.4 [a]). 72 AD3d at 531. This holding was followed in Bradbury, supra, 84 AD3d at 683-684: An owner’s failure to file a “proper and timely” annual rent registration statement bars the owner from collecting “any rent in excess of the legal regulated rent in effect on the date of the last preceding registration statement” until such time as a proper registration is filed (Admini- strative Code § 26-517 [e]; see also 9 NYCRR § 2528.4 [a]). Where an owner fails to file a “proper and timely” registration, until such registration is filed, the rent is frozen at the legal regulated rent listed in the preceding registration statement. In this case, the legal regulated rent is frozen at $1829.49 until such time as the landlord tenders a rent-stabilized lease and registers the apartment with DCHR. When both are done, the rent can be increased by 20%, but not by more and not until then. Therefore, there is no entitlement to Rent Guidelines Board or longevity increases, and the overcharge was correctly calculated based upon the frozen rent of $1829.49. The landlord is trying to have it both ways, still arguing that the apartment cannot -49- possibly be rent-stabilized, but just in case it might be, the rent should still increase as if it had always been, even though it wasn' t registered. The Court should reject this disingenuous argument. CONCLUSION The Court should affirm the holdings of the Appellate Division, First Department in Altman I and Altman II in all respects, and should award costs, disbursements, interest, and such other relief as may be just. Dated: New York, New York July 13, 2017 Respectfully submitted, LA WREN CE W. RADER Attorney for Plaintiff-Respondent 225 Broadway, Suite 400 New York, New York 10007 212.791.5200 larry@lawrader.com -50- CERTIFICATE OF COMPLIANCE Lawrence W. Rader, attorney for the plaintiff-respondent Richard Altman, hereby certifies that this brief is in compliance with Rule 500.13(c)(l). The brief was prepared using WordPerfect X8. The typeface is Times New Roman. The main body of the brief is in 14 point type. Footnotes and Point Headings are in compliance with Rule 500 .1. The body of the brief contains 12,210 words as counted by the word processing program. Dated: New York, New York July 13, 2017 LAWRENCE W. RADER -51-