Lester Complaint

At an IAS Part of the Supreme Court of the State of New York, held in and for the County of New York at the Courthouse thereof located at 60 Centre Street, New York, New York, on the day of March, 2009.

P R E S E N T : HON:

Justice of the Supreme Court

SUPREME COURT OF THE STATE OF NEW YORK 0 9 103299 COUNTY OF NEW Y O N

KENNETH M. CHANKO, BARBARA CHANKO, TIMOTHY McCANN, on behalf of themselves and all others similarly situated,

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Index No.

Petitioners, ORDER TO SHOW CAUSE

-against- . e2GW ,-& 02 ".m+ , %/, &D#

I".. I iR?C,@,,,> €&'. ~,.' * <hqfl+? PCV ST OWNER LP, L i I

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______________I______________________r__"-----------------------_" X,,<,",: '> ! i- ,: ,*. ' ;. , i f . * .* ($1 .. 'r'; ~ , 1 :$$

L.@ THE NEW YORK STATE DIVISION OF HOUSING AND COMMUNITY RENEWAL, TISHMAN SPEYER PROPERTIESy L.P. and

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Upon the Verified Petition of Barbara Chad& ddiTQ&thy F. McCann,

verified March 9, 2009; the exhibits annexed thereto; and the annexed Affirmation

of Jack L. Lester, Esq. dated March 9, 2009, the Affidavit of Barbara Chanko and

Timothy F. McCann,

'V, , ?

Let the Respondents or their attorneys, show cause before this Court at an

Individual Assignment Part of this Court at the Courthouse located at 60

Centre Street, Room -7 New York, New York on the - day of March, 2009

Supreme Court Records OnLine Library - page 1 of 23

at 9:30 a.m. in the forenoon of that day or as soon thereafier as counsel can be

heard, why an order should not be entered herein:

1) Compelling compliance with the Rent Stabilization Code of New

York and mandating renewal leases to Petitioners;

2) Enjoining Respondent, New York State Division of Housing and

Community Renewal (“DHCR”) from administering, enforcing or in any manner

applying the provisions of the High Income Rent Deregulation Statute of the State

of New York, Section 2520.1 1 against Petitioners;

3) Issuing a Preliminary Injunction enjoining and restraining the

Respondents, Tishman Speyer Properties, L.P. and PCV ST Owner LP from

prosecuting any eviction proceedings to terminate Petitioners’ occupancy during

the pendency of this proceeding or the related proceeding, Roberts, et al. v.

Tishman Speyer Properties, L.P., Index No. 100956/07; and

4) Granting such other and further relief as the Court deems just and

proper including class certification for petitioners, legal fees and costs.

ORDERED that personal service of this order to show cause and the papers

upon which it is granted and the Verified Petition be made upon defendants or their

attorneys on or before be deemed sufficient service.

ENTER:

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J.S.C.


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Petitioners,

-against-

THE NEW YORK STATE DIVISION OF HOUSING AND COMMUNITY RENEWAL, TISHMAN SPEYER PROPERTIES, L.P. and PCV ST OWNER LP,

Respondents.

Index No.

AFFIRMATION

JACK L. LESTER, an attorney duly admitted to practice in the Courts of

this State, hereby affirms that:

1.

2.

I am counsel for the petitioners in this

I submit this affirmation in support of

Order staying respondents from taking any action

residency and/or occupancy rights of petitioners.

3 . On March 5 , 2009, the Appellate Division, First Department

unanimously held that landlords may not decontrol or deregulate housing units if

they are subject to rent stabilization by virtue of New York City's J-51 tax


1 J.

abatement program (see Administrative Code Section 11-243). See Roberts, et al.

v. Tishman Speyer, L.P., et al., 2009 NY Slip Op 01595.

4. Petitioners all reside in units subject to rent stabilization by virtue of

respondents’ receipt of J-5 1 tax benefits.

5 . Despite this unanimous determination of the Appellate Court,

petitioners face the imminent loss of their homes and/or deregulation by virtue of

orders issued by DHCR andlor the Housing Part of the Civil Court of the City of

New York, New York County.

6. Clearly based upon the Appellate Court’s determination as set forth

above, petitioners have established that they will successfully maintain the rent

stabilized status of their apartments.

7. Moreover, if petitioners are evicted during the pendency of further

appellate litigation, they will suffer irreparable harrn.

PETITIONERS A R E ENTITLED TO A PRELIMINARY INJUNCTION

8. Petitioners have successfully established the grounds necessary for the

granting of a preliminary injunction in this petition.

9. A party seeking a preliminary injunction must establish all of the

following: a likelihood of success on the merits, irreparable injury if the relief is

not granted, and a balancing of the equities in its favor. State of New York v. Fine,

72 N.Y.2d 967,968,969 (1988); Grant Co. v. Sroai, 52 N.Y2d 496,517 (1981);

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Hoppman v. Stein, 141 A.D.2d 332 (1st Dep’t 1988); Merrill Lynch v. Burr, 140

A.D.2d 589,592 (2dDept 1988).

10.

1 1.

12.

Petitioner has met all the above requirements.

No prior application has been made for the relief set forth herein.

Petitioners’ counsel has notified Respondents of this proceeding,

however, a Temporary Restraining Order (“T.R.O.”) is not requested.

WHEREFORE, Petitioners respectfully pray that the relief requested in the

Order To Show Cause be granted.

Dated: New York, New York March 10,2009

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Index No.

Petitioners, VERIFIED PETITION

-against-


Respondents.

Petitioners, KENNETH M. CHANKO, BARBARA CHANKO, TIMOTHY

McCANN and THE STUYVESANT TOW-PETER COOPER VILLAGE

TENANTS’ ASSOCIATION on behalf of themselves and all other similarly

situated (the “Class”), by their attorney JACK L. LESTER, ESQ., as and for their

Class Action Petition against Respondents THE NEW YORK STATE DIVISION

OF HOUSING AND COMMUNITY RENEWAL, TISHMAN SPEYER

PROPERTIES, L.P. and PCV ST OWNER LP, set forth and allege as follows:

Preliminary Statement

1. This is a class action lawsuit brought on behalf of hundreds of current

Stuyvesant Town and Peter Cooper Village rent stabilized tenants wrongfully


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being evicted or denied renewal leases due to pending proceedings pursuant to the

High Income Rent Deregulation Statute of the State of New York.

2. Pursuant to the Rent Stabilization Code ((‘RSC”) Section 2520.1 1, an

Owner may deregulate an apartment if:

(a) the housing accommodation is subject to the Rent Stabilization

Law of 1969 andor the Emergency Tenant Protection Act of 1974 (the “Rent

Stab i 1 izat i on Law ”) ;

(b) the legal regulated rent for the apartment was more than

$2,000.00 per month; and

( c ) the tenants occupying the premises as their primary residence

maintained an annual income in excess of $175,000.00 in each of the two calendar

years preceding their lease renewal.

3. Stuyvesant Town and Peter Cooper Village (the “complex”)

encompasses 1 10 apartment buildings, containing 1 1,200 units with at least 20,000

residents located East of First Avenue between 14* Street and 23rd Street.

4.

5 .

The complex is subject to the Rent Stabilization Law (“RSL”).

Tishman and PCV have received real estate tax benefits under New

York City’s J-5 1 property tax abatement/exemption program.

6. Relevant and applicable state and local law mandates that, during the

period in which an Owner receives such real estate tax benefits, the units must

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remain subject to rent stabilization. Therefore, it is manifestly unlawful for

Petitioners units to be deregulated.

7, Petitioners, for themselves and all other current rent stabilized tenants

facing the loss of their rent regulatory protections seek a mandatory injunction

prohibiting their evictions and compelling the provision of a renewal lease

pursuant to the dictates of the RSL.

Parties

8. Plaintiffs Kenneth M. Chanko and Barbara Chanko (“Chanko”) are

rent stabilized tenants residing at 430 East 20th Street in the County, City and State

of New York. Plaintiffs reside in the complex.

9. Chanko’s rent stabilized lease has been terminated pursuant to an

Order issued by the Rent Administrator of DHCR dated October 1 1,2007.

10. Petitioner, Timothy McCann resides at 360 First Avenue, Apt. 7C, in

the County, City and State of New York and entered into an unlawful agreement

forfeiting his rent stabilized lease.

11, Petitioner’s rent stabilized lease has been terminated pursuant to an

Order of DHCR issued on June 1,2008.

12. The plaintiff Class, on whose behalf this action is brought, consists of

all tenants of the complex who are currently being evicted by the Owner or

prosecuted by the Owner in pending proceedings before DHCR pursuant to the


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high income rent deregulation statute Section 2520.1 1 of the RSC. The members of

the Class face the loss of their homes and/or will suffer monetary damages as a

result of the actions of Respondent set forth herein.

13. DHCR is the State agency responsible for interpreting, applying and

enforcing the provisions of the RSC pursuant to Omnibus Housing Act of 1983,

14. DHCR is the agency responsible for issuing orders of deregulation

pursuant to the RSC.

15. Upon information and belief, Tishman is a New York limited

partnership with its principal place of business in the County, City and State of

New York.

16, PCV ST OWNER LP is and at all times relevant hereto a Delaware

limited partnership with its principal place of business in the County, City and

State of New York.

17.

18.

PCV ST OWNER LP is the current owner of the complex.

Tishman is the general partner of PCV ST OWNER LP.

Factual Background

19. Upon information and belief, on or about June 1, 1943, Metropolitan

Life Insurance Company (“MetLife”) and Stuyvesant Town Corporation entered

into an agreement with the City of New York with respect to the acquisition of real

property for and the financing, construction, operation, and supervision of the


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redevelopment project known as Stuyvesant Town. The agreement was made

pursuant to the provisions of the Redevelopment Companies Law, which was

subsequently incorporated into Article V of the Private Housing Finance Law.

20. Pursuant to the aforedescribed agreement, Stuyvesant Town

Corporation (as the redevelopment company and owner of the Stuyvesant Town

complex) received a real estate tax exemption for a period of twenty-five (25)

years.

21. In or about late 1952, Stuyvesant Town Corporation entered into a

further agreement with MetLife and the City of New York, pursuant to which

Stuyvesant Town Corporation assigned to MetLife all of its rights under the

existing agreement with New York City. MetLife thus received the benefit of the

remainder of the twenty-five (25) year real estate tax exemption for Stuyvesant

Town.

22. Upon information and belief, in or about the late 1940s, MetLife

entered into an agreement with the City of New York with respect to the

acquisition of real property for and the financing, construction, operation and

supervision of the redevelopment project known as Peter Cooper Village.

23. The said agreement was made pursuant to the provisions of the

Redevelopment Companies Law and, upon information and belief, provided


*

MetLife, as the redevelopment company and owner of Peter Cooper Village, with a

real estate tax exemption for a period of twenty-five (25) years.

24. In or about 1974, New York State enacted an amendment to the

Redevelopment Companies Law which provided, in relevant part, that upon the

expiration of the twenty-five (25) year tax exemption granted to redevelopment

projects, the real property taxes payable on such projects would be phased in over a

ten (1 0) year period, at the end of which time such projects would be fully taxable.

25. Pursuant to the terms o f the aforesaid tax benefits in 1974, the Rent

Stabilization Laws of New York were applied to residents of the complex.

26. In or about 1992 the prior Owners of the complex applied for tax

benefits pursuant to the 5-5 1 tax relief program.

27. The J-51 tax abatement program provides incentives for Owners to

rehabilitate and improve their buildings.

28. A provision of the J-51 tax abatement prohibits the rent deregulation

of residential units receiving J-5 1 tax abatement.

29. Petitioners and members of the Class are all residents of units

receiving J-5 1 tax benefits.

30. The City of New York adopted Administrative Code Section 551-2.5

(now Administrative Code Section 11-243) in 1960.


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3 1. The objective was to reward residential major capital improvement,

moderate rehabilitation and conversion projects with real property tax exemption

and abatement benefits.

32. The Rules of the City of New York mandates that a building receiving

J-51 benefits be subject to rent regulation for the duration of the period in which

such benefits are received (28 NYCRR 5-03[f1[1]).

33. The Rent Stabilization Law (“RSL”) was enacted by the New York

City Council in 1969.

34. In 1993 the legislature amended the RSL which provided for the

deregulation of units with a rent of $2,000.00 or more per month and an income of

$175,000.00 or more for two consecutive years (RSL Section 26-504 1) -

(“deregulation statute”).

35. The high income deregulation statute, however, does not apply to

housing units receiving the benefits of J-5 1 tax abatement program.

36. In or about March 5 , 2009 the Supreme Court, Appellate Division lSt

Department unanimously held that apartment Owners receiving J-5 1 tax benefits

may not deregulate those units. Specifically, the high income deregulation statute

does not apply to units occupied by petitioners and members of the Class. (See

Court decision annexed as Exhibit “A”).


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37. Any agreement, contract or stipulation which resolved a high income

rent deregulation proceeding thereby eliminating rent regulatory protections would

therefore be illegal.

Class Action Allegations

38. This action is brought and may properly be maintained as a class

action under the provisions of Article 9 of the C.P.L.R.

39. The Class, is so numerous that joinder of all members of the Class,

whether otherwise required or permitted, is impracticable.

40. Petitioners’ Class are all current rent stabilized tenants that may be

evicted , are being prosecuted, or were evicted pursuant to the high income rent

deregulation statute of the State of New York.

41.

the Class.

42.

Petitioners’ claims are typical of the claims of the other members of

Petitioners have no interests antagonistic to the other members of the

Class. There is no conflict between Petitioners and any other members of the Class

with respect to this action or the claims for relief herein.

43. Petitioners are committed to the prosecution of this action and have

secured competent counsel.

44. Petitioners are adequate representatives of the Class and will fairly

and adequately protect the interests of the Class and its members.


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45. A class action is superior to other available methods for the fair, just

and efficient adjudication of the claims asserted herein. Joinder of all members of

the Class is impracticable and, for financial and other reasons, it would be

impractical for individual members of the Class to pursue separate claims.

Prosecution of separate actions by individual members of the Class would create

the risk of varying and inconsistent adjudications and would waste scarce judicial

resources,

AS AND FOR A FIRST CAUSE OF ACTION

46.

47.

Petitioners repeat and reallege paragraphs “1” through “45”.

Petitioners are residing in apartments subject to the provisions of the

RSC.

48. Respondents are nonetheless seeking to evict petitioners and

unlawfully deregulate petitioners’ apartment.

49. As a result of unlawful eviction proceedings pending against

petitioners, petitioners are entitled to mandatory injunctions compelling the

provision of rent stabilized renewal leases.

50. Petitioners have no adequate remedy at law.

AS AND FOR A SECOND CAUSE OF ACTION

5 1. Petitioners repeat and reallege paragraphs “1” through “50”.

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52. By virtue of unlawful eviction proceedings pending against

petitioners, petitioners are entitled to injunctive relief staying and enjoining all

pending DHCR high-income rent deregulation proceedings and any proceedings

currently pending in any Court of competent jurisdiction in the County, City and

State of New York that seeks to terminate the rent stabilized status of petitioners.

bL 93 5 3 . Petitioners repeat and reallege paragraphs 1 through “52”.

54, As a direct and proximate result of the acts of respondents, petitioners

have absorbed legal fees, increased rents and the expense of seeking alternate

housing. ~

5 5 . As a result of the foregoing, petitioners and members of the Class

have suffered monetary damages, in an amount to be determined at trial but in no

event less than $10,000,000.00.

AS AND FOR A THIRD CAUSE OF ACTION

WHEREFORE, Petitioners, on behalf of themselves and all other members

of the Class, respectfully request Judgment against Respondent as follows:

(1) On the First Cause of Action compelling the provision of rent

stabilized renewal leases to all members of the Class;

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(2 ) On the Second Cause of Action enjoining the prosecution of

proceedings to deregulate or otherwise evict Petitioners;

(3) On the Third Cause of Action awarding Monetary Damages and Legal

Fees in an amount to be determined by the Court;

(4) On all Causes of Action declaring that this proceeding shall be

maintained as a class action pursuant to Article 9 of the C.P.L.R.;

( 5 ) Awarding to the Class attorney fees pursuant to the provisions of

Article 9 of the C.P.L.R.;

(6 ) Awarding Petitioners and other members of the Class such other and

further relief including costs and disbursements, as this Court finds just and proper.

Dated: New York, New York March 10,2009

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J&K L. LESTER, ESQ. Attorney for Petitioners 29 Broadway, gfh Fl. New York, NY 10006

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(212) 832-5357


VERIFICATION

STATE OF NEW YORK 1 ) ss.:

COUNTY OF NEW YORK )

BARBARA CHANKO, being duly sworn, deposes and says:

1. Deponent is one of the petitioners in the above-captioned action.

2 . Deponent has read the foregoing Verified Petition and knows the

contents thereof; and the same is true to deponent’s own knowledge, except as to

the matters therein stated to be alleged upon information and belief and as to those

matters, deponent believes them to be true.

+do+ BARBARA CHANKO

Sworn to before me on this 7?k day of March, 2009.

~n

HARMON L FIELDS Notary Public, State of New York

No. 02F16109487 Qualified in New York Coun

Commission hpires 4

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VEFUFIC ATION

STATE OF NEW YORK 1 ) ss.:

COUNTY OF NEW YORK )

TIMOTHY McCANN, being duly sworn, deposes and says:

1. Deponent is one of the petitioners in the above-captioned action.

2. Deponent has read the foregoing Verified Petition and knows the

contents thereof; and the same is true to deponent’s own knowledge, except as to

the matters therein stated to be alleged upon information and belief and as to those

matters, deponent believes them to be true.

Swam to before me on this

HARMON L. FIELDS Notary Public, State of New York

No. 02F16109487 Qualified in New York County

Commission Expires

14


SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK


Index No.

Petitioners, AFFIDAVIT

-against-


Respondents.

STATE OF NEW YORK )

COUNTY OF NEW Y O N ) ) ss.:

BARBARA CHANKO, being duly sworn, deposes and says the following

statement to be true:

1. I currently reside with my husband, Kenneth, and two children at 430

East 20* Street, Stuyvesant Town, in the County, City and State of New York.

2. DHCR issued an Order destabilizing my apartment on October 11,

2007.

3. DHCR is reviewing this matter based upon a Petition For

Administrative Review ("PAR") filed on October 12,2007.


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4. DHCR determination if not stayed by this Court will result in my

imminent eviction and force me to vacate my home of 23 years.

BARBARA CHANKO

Sworn to before me on this gfh day of March, 2009.

HARMON L. FIELDS Notary Public, State of New York

NO. 02F16109487 Ouallfled in New York Coun

Commission E x p i r e s 4

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Index No.

Petitioners, AFFIDAVIT

-against-


Respondents.

STATE OF NEW YORK )

COUNTY OF NEW YORK ) ) ss.:

TIMOTHY F. McCANN, being duly sworn, deposes and says the following

statement to be true:

1. I currently reside with my wife, Francesca, and two children at 360

First Avenue, Apt. 7C, Peter Cooper Village, in the County, City and State of New

York.

2. My apartment was deregulated pursuant to the High Income Rent

Deregulation Statute on or about June 1, 2008.


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3. Respondents served me with an eviction proceeding as a result of the

DHCR Order on or about July 1,2008.

4. I thereafter entered into a Stipulation in order to settle the eviction

proceeding which the landlord commenced based upon the DHCR deregulation

Order.

5 . The Stipulation required that I sign a fiee market lease for a rent of

$4,750.00 per month which commenced May 20, 2008 and terminates the lgth day

of June, 2009. I understand that based upon the decision in Roberts, et al. v.

T i s h a n Speyer Properties, L.P., Index No. 100956/07 it is unlawful for the

landlord to deregulate my apartment.

6 . If the Court does not issue a stay in this proceeding, I will be forced to

vacate my home of 24 years. My daughter and son are 13 and 9, respectively, and

will be forced to leave their schools if I am unable to remain in my apartment.

Sworn to before me on this day of March, 2009.

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Lester Complaint