Montera v. KMR Amsterdam LLC, 193 A.D.3d 102 (2021)

Citation: Montera v. KMR Amsterdam LLC, 193 A.D.3d 102 (2021)
Parent Document: Montera v. KMR Amsterdam LLC, 193 A.D.3d 102 (2021)
Jurisdiction: New York (state)
Effective Date: 2021-02-09
Original Source: https://www.courtlistener.com/opinion/4855109/montera-v-kmr-amsterdam-llc/ ↗

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The dissent ignores our recent decision in 435 Cent. Park W. Tenant Assn v Park Front Apts., LLC (183 AD3d 509 [1st Dept 2020]).Citing to Regina,we stated that the fraud exception to the four-year lookback period applied both to a fraudulent scheme to deregulate and to a fraudulent overcharge scheme (id. at 510-511). Here, the dissent summarily concludes on an incomplete and pre-discovery record that there was no fraudulent scheme to deregulate. We disagree. Regina notes that "[f]raud consists of evidence [of] a representation of material fact, falsity, scienter, reliance and injury" (Regina, 35 NY3d at 356 n 7 [internal citations omitted]). The Regina court explains that in the regulatory context "willfulness means 'consciously and knowing charg[ing] . . . improper rent'" (id., quoting Matter of Levanant v State Div of Hous. & Community Renewal, 148 AD2d 185, 190 [1st Dept 1989]).This rule is well-settled in our case law. Assumptions regarding the regulatory status of an apartment may amount to "willful ignorance, which constitutes willful conduct, particularly since defendants are sophisticated property managers and owners" (Grady v Hessert Realty L.P., 178 AD3d 401, 405 [1st Dept 2019]; see also Crockett v 351 St. Nicholas Ave. LLC, 179 AD3d 486, 487 [1st Dept 2020] [owner failed to rebut presumption of willfulness as to rent overcharge by claiming that it believed its predecessor's J-51 application had been withdrawn and that the court could disregard DHCR's rent reduction order]; Smoke v Windermere Owners, LLC, 173 AD3d 500, 501 [1st Dept 2019] [owner failed to overcome the presumption of willfulness arising from rent overcharges and [*4]removal of the plaintiffs' apartments from rent regulation]).

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