By Robert Spolzino
Court of Appeals denies retroactive effect to part of Housing Stability and Tenant Protection Act of 2019
The Court of Appeals held Thursday in Matter of Regina Metropolitan Co., LLC, v. New York State Division of Housing and Community Renewal, by a vote of four to three, that the provisions of the Housing Stability and Tenant Protection Act of 2019 (HSTPA) that extends the “lookback” period for treble damages for rent overcharge claims to six years and allows courts to consider “all available rent history” do not apply to rent overcharge claims commenced prior to the adoption of the statute with respect to New York City apartments that were improperly removed from rent stabilization while receiving J-51 benefits.
Prior to HSTPA, the Rent Stabilization Law limited the damages that can be recovered for a rent overcharge claims to overcharges during the four years immediately before the claim was interposed. It also precluded evidence of rental history prior to that time and permitted landlords to dispose of rent records after four years. The only limited exception endorsed by the Court of Appeals was where the landlord had fraudulently deregulated the apartment. The HSTPA extended the four year limitations period to six years and abolished the rule prohibiting evidence of rental history more than four years old. The question before the Court here was whether the new statutory language applied to calculating the overcharge in those cases.
Normally, an appellate court applies the law at the time the appeal is heard, based upon the presumption that in the absence of “a clear expression of legislative purpose,” statutes apply prospectively only. Here, HSTPA provided that the portion of the statute in issue provided that the changes were effective immediately. Retroactive application is limited, however, by the constitutional requirement of substantive due process of law. Due process requires that if a statute would have potentially harmful impacts if applied retroactively, there must be a “persuasive reason” for retroactive application. The Court of Appeals held that there was no such reason here, holding that the significant increase in liability to landlords that would result from permitting recovery of treble damages for two years of overcharges for which a landlord could not have been held liable when the claim was brought and allowing introduction of evidence that was not previously admissible, and that the statute previously authorized the landlord to dispose of, would alter established contract rights in a way that would potentially impact the landlord’s constitutionally-protected right to a reasonable return on their investment. The Court illustrated its point by noting that in one of the cases before it, the $10,271.40 recovery would be turned into $285,390.39 by application of new law.
Should you have any questions on this decision or any appellate issue, please contact Judge Robert Spolzino (ret.) at RSpolzino@abramslaw.com or (914) 607-7010.