Aras v. B-U Realty Corp., 2023 NY Slip Op 04917 (2023)

Citation: Aras v. B-U Realty Corp., 2023 NY Slip Op 04917 (2023)
Parent Document: Aras v. B-U Realty Corp., 2023 NY Slip Op 04917 (2023)
Jurisdiction: New York (state)
Effective Date: 2023-10-03
Original Source: https://www.courtlistener.com/opinion/9430365/aras-v-b-u-realty-corp/ ↗

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Footnote 13: Even if the tenants were required to prove each element of fraud as between the landlord and themselves, the landlord has argued only that plaintiffs have failed to demonstrate scienter. I would find that the plaintiffs-appellants have, at a minimum, raised questions of fact requiring a trial as to scienter, given defendant Bogoni's deposition testimony in Pascaud.
Defendants do not dispute that plaintiffs-appellants have made out a prima facie showing of the other elements of common-law fraud and do not rebut those showings except for claiming that any improper acts they made were "mistakes." This claim is only relevant to the element of scienter, and is undermined in any event by defendant Bogoni's testimony. Accordingly, I would find that the landlord's proffer of non-rent-stabilized leases during the J-51 period constitutes the representation of a material fact which is false; the tenants' sworn statements that they entered into non-rent-stabilized leases and only learned later that their apartments were subject to rent stabilization fulfills the reliance requirement; and the landlord's denial to tenants of the protections of rent stabilization, including failing to provide them with rent stabilized leases on the statutorily required forms, and subjecting them to rent overcharges resulting from the landlord's acts, constitute injury. I would remand for a trial on the question of scienter and whether the landlord engaged in a fraudulent scheme tainting the base date and requiring application of the default formula (see Hess, 217 AD3d 542).

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