A New York appellate court recently ruled on a significant case involving rent overcharges and tenant rights. The decision, made on August 26, 2026, affects tenants of an apartment building in Flushing, New York, who allege they were victims of illegal rent increases. The ruling clarifies the legal standards for proving fraudulent rent deregulation and addresses the issue of attorney fees in such disputes.
The case, titled Sczesnik v. MB Landau, LLC, originated when tenants, led by Gary Sczesnik, filed a class action lawsuit against their landlord, MB Landau, LLC, and its predecessors. The tenants claimed they were overcharged for rent in violation of the Rent Stabilization Law of 1969. This law is designed to protect tenants from excessive rent increases and ensure that apartments remain affordable.
The dispute began in May 2018 when the plaintiffs alleged that their landlord had failed to properly register their apartments as rent-stabilized, despite the building participating in a tax benefit program. The tenants argued that this failure was part of a fraudulent scheme to deregulate their apartments and charge higher rents. The case was filed in Queens County and eventually included multiple owners of the property as defendants.
As the case progressed, the plaintiffs sought summary judgment, which is a legal ruling made by a court without a full trial. They wanted the court to rule in their favor on the issue of liability and to dismiss the defendants' counterclaim for attorney fees and several affirmative defenses. However, the Supreme Court of Queens County denied these requests in an order dated August 15, 2023, prompting the plaintiffs to appeal the decision.
In its ruling, the Appellate Division of the Supreme Court of New York addressed the key issues raised by the plaintiffs. The court noted that the plaintiffs needed to establish that the defendants knowingly engaged in a fraudulent scheme to deregulate the apartments. The judges, including Colleen D. Duffy, Paul Wooten, Carl J. Landicino, and Susan Quirk, concluded that the plaintiffs had not met this burden.
The court stated, "the plaintiffs failed to establish, prima facie, that the defendants knowingly engaged in a fraudulent scheme to deregulate the apartments in the premises."
As a result, the court upheld the lower court's decision to deny the plaintiffs' request for summary judgment on the issue of liability. The court also affirmed the denial of the plaintiffs' motion to dismiss the defendants' affirmative defenses.
However, the court did modify the lower court's ruling regarding the defendants' counterclaim for attorney fees. The Appellate Division ruled that the plaintiffs had demonstrated there was no legal basis for the defendants to claim attorney fees, even if they were to prevail in the case. The court highlighted that the lease agreements did not provide a valid basis for such claims in this specific context.
The court explained, "the plaintiffs demonstrated, prima facie, that there was no agreement, statute, or court rule that would entitle the defendants to an award of attorneys' fees."
This ruling is significant for tenants in New York, as it clarifies the standards required to prove claims of fraudulent rent deregulation under the Rent Stabilization Law. It also sets a precedent regarding the limits of attorney fee claims in similar disputes, reinforcing the protections afforded to tenants against unlawful rent increases.
The impact of this ruling extends beyond the immediate parties involved. It serves as a reminder of the legal protections available to tenants and the importance of adhering to the Rent Stabilization Law. The decision may influence how landlords approach rent increases and compliance with registration requirements in the future.
Looking ahead, the plaintiffs in the Sczesnik case may consider further legal options, including the possibility of appealing the ruling to a higher court. However, details on any potential appeal or related cases were not available in the court filing. The outcome of this case could shape future litigation involving rent regulation and tenant rights in New York.