Pryor Cashman Wins Major Victory in Post-Roberts Class Action Lawsuit Over Lenox Terrace Apartments
Pryor Cashman and The Law Offices of Michael Kramer & Associates have achieved a major victory for landlords in the wake of the New York Court of Appeals decision Roberts v. Tishman Speyer.
In a case of first impression, Justice Ramos of the New York State Supreme Court for N.Y. County dismissed a putative class action lawsuit brought by a series of tenants in the Lenox Terrace apartment complex located in uptown Manhattan.
Following the decision in Roberts vs. Tishman Speyer, where the N.Y. Court of Appeals held that rent regulated tenants in buildings where the landlord is receiving J-51 tax benefits are not subject to luxury deregulation, tenants across the city have banded together to sue their landlords based upon alleged overcharges under the rent regulations and are seeking class action status so that they can act on behalf of all tenants in the particular apartment building(s) at issue.
The owners of the Lenox Terrace apartment complex, affiliates of the Olnick Organization, were sued by a group of tenants who, despite disparate factual issues, claimed to be acting on behalf of all current, past and future tenants in the complex containing over 1,000 apartments spread out in six buildings. Pryor Cashman and the Law Offices of Michael Kramer, representing the ownership, argued that the class action lawsuit brought on behalf of tenants must be dismissed for failure to meet the criteria for a class action, on two basis:
- Due to the disparate factual issues presented in each one of the tenant’s cases the plaintiffs could not represent the “class”; and
- Pursuant to CPLR 901(b), because the statute at issue – the rent overcharge statute – provides for statutory penalties in the form of treble damages, the case as a matter of statutory law can not qualify for class certification.
After extensive submissions to the Court and multiple oral arguments, Justice Ramos agreed with the Olnick Organization’s position and dismissed the case. The Court found that as a result of the statutory penalties imposed for willful rent overcharges under the rent regulatory scheme, and in accordance with CPLR 901(b), the case cannot qualify for class certification.
This is a major victory for landlords across New York City. Instead of facing wars of attrition by groups of tenants, some of whom may not have any real interest in litigating these claims, the landlords will now simply have to deal with the Roberts issues on a case by case basis, in the appropriate forum, as they arise in the ordinary course of business.
The Olnick Organization was represented by Pryor Cashman Litigation Partners Donald Zakarin, David Rose and Todd Soloway, and Michael Kramer of the Law Offices of Michael Kramer.
