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Appellate Victory for Brooklyn SRO Tenants Suing Landlord & Counseling Center

Weil and MFY Legal Services Persuade NY Appellate Division to Reinstate Class Action
Attorneys from Weil, Gotshal & Manges LLP and MFY Legal Services obtained a significant victory for their pro bono clients on January 16, 2013, when a New York state appellate court reversed the trial court and reinstated a class action lawsuit against the clients’ landlord and a counseling center that was the purported prime tenant of the premises.

Weil and MFY represent a putative class of tenants in a single-room occupancy hotel in Brooklyn that is covered by the rent stabilization laws. The tenants allege that their landlord and the other defendants tried to evade rent stabilization, and profiteer, by turning half of the hotel into a so-called “three-quarter house” – an unlicensed purported “sober-living” facility – at the expense of people who are struggling with illness, addiction, or homelessness. Under the alleged scheme, the counseling center doubled up the residents into the tiny rooms and obtained the full rent for each resident from New York City’s Department of Human Services; illegally evicted residents; harassed the residents in various ways, including removing room door locks; and forced the residents to attend treatment sessions at the counseling center in violation of New York’s Mental Hygiene law and in disregard of whether the treatment was needed or was being given elsewhere, and then billed Medicaid for each of the unlawfully coerced treatment sessions.

its January 16, 2013 decision, the New York Supreme Court, Appellate Division, Second Department, reversed the trial court’s dismissal of the complaint, reinstated the vast majority of plaintiffs’ claims, and remanded the matter to a different trial court judge due to the “bias” against plaintiffs shown by the original judge. The Appellate Division held, in sum, that plaintiffs had adequately stated claims for declaratory relief based on the building’s rent-stabilized designation, plaintiffs’ status as permanent tenants, tenant harassment, and violations of the Mental Hygiene Law. The court also reinstated claims that the residency agreements plaintiffs were compelled to sign were void on numerous grounds, and that the defendants had created an unlawful “illusory tenancy” to evade the rent stabilization laws. The Appellate Division’s ruling came just weeks before the landlord was due to seek warrants of eviction against the plaintiffs in housing court based on the trial court’s (now-reversed) ruling.

The case is DiGiorgio v. 1109-1113 Manhattan Avenue Partners, LLC, 8235/11 (App. Div. 2nd Dep’t). The full decision is available here.

The Weil team was led by partner Richard Levine and included associates Justin Wagner, Eric Hawkins, and Joshua Ray.

Justin Wagner

Justin Wagner

Eric C. Hawkins

Eric Hawkins