Post-Roberts J-51 Deregulations: Totality-of-Circumstances Fraud Can Be Resolved on Summary Judgment; Pre-Roberts Requires Trial Where Intent Is Disputed

1. Introduction

This appeal concerns 31 apartments in a Manhattan building (260 Convent Avenue) that were concededly deregulated while the owner received J-51 tax benefits—an arrangement that, after Roberts v Tishman Speyer Props., L.P. (13 NY3d 270 [2009]), is incompatible with luxury deregulation. The plaintiffs-tenants sought summary judgment on liability for a “fraudulent scheme to deregulate” under the 2024 amendments to the Rent Stabilization Law and Code (L 2024, ch 95) (the “2024 Legislation”).

The key issue was not whether deregulation was improper (it was uncontested), but whether, under the 2024 Legislation’s “totality of the circumstances” standard, the record established (as a matter of law) that the landlord knowingly engaged in a fraudulent scheme—especially distinguishing apartments deregulated after Roberts (8 units) from those deregulated before Roberts (23 units).

2. Summary of the Opinion

3. Analysis

3.1. Precedents Cited (and How They Shape the Decision)

• Roberts v Tishman Speyer Props., L.P. (13 NY3d 270 [2009])
  Roberts is the doctrinal anchor: it established that owners receiving J-51 benefits “were not entitled to take advantage of the luxury decontrol provisions” of the RSL. The First Department treats post-Roberts deregulation during J-51 as especially probative of knowing wrongdoing because the governing rule was already settled.
• Vega v Restani Constr. Corp. (18 NY3d 499 [2012])
  This provides the summary judgment framework: evidence must be viewed most favorably to the nonmovant; movant must make a prima facie showing; burden then shifts to show triable issues. The court uses Vega to justify granting summary judgment for the eight post-Roberts units where defendants offered no meaningful evidentiary rebuttal.
• 435 Cent. Park W. Tenant Assn. v Park Front Apts., LLC, 235 AD3d 568 (1st Dept 2025)
  Cited for the proposition that changed rent laws can justify revisiting issues and that appellate rulings on prior motions (e.g., renewal) may not constitute “law of the case” barriers when the governing legal framework has shifted.
• Gersten v 56 7th Ave. LLC, 88 AD3d 189 (1st Dept 2011), appeal withdrawn 18 NY3d 954 (2012)
  Gersten is used to clarify that Roberts was later applied retroactively, but the court emphasizes that retroactivity disputes do not excuse prospective, post-Roberts deregulations. In other words: whatever uncertainty existed about backward-looking consequences is “inconsequential” for apartments deregulated forward in time after 2009.
• Montera v KMR Amsterdam LLC, 193 AD3d 102 (1st Dept 2021)
  Quoted for the principle that owners may not “flout the teachings of Roberts.” It supports the court’s unwillingness to accept generalized “post-Roberts confusion” as a substitute for evidence negating knowing misconduct.
• Kreisler v B-U Realty Corp., 164 AD3d 1117 (1st Dept 2018), lv dismissed 32 NY3d 1090 (2018)
  Reinforces that reliance on a “pre-Roberts framework” cannot justify conduct occurring after Roberts. The court uses it to reject defendants’ argument that industry confusion after Roberts excuses their later deregulations.
• Gomes v Vermyck, LLC, 238 AD3d 26 (2d Dept 2025)
  This is the key comparator under the 2024 Legislation. Gomes cautions that post-Roberts deregulation, belated re-registration, or even re-registration at improper rents “does not necessarily establish” a fraudulent scheme; a “good faith mistake” is not enough for fraud. But Gomes also recognizes that “willful ignorance” (especially by sophisticated owners) may indicate fraud. The First Department distinguishes Gomes on proof: there the owner submitted evidence of confusion and later learning of Roberts; here, plaintiffs offered testimony indicating knowledge and understanding of Roberts at the time.
• Grady v Hessert Realty L.P., 178 AD3d 401 (1st Dept 2019)
  Cited (via Montera) for the idea that “assumptions” about regulatory status by sophisticated owners may amount to “willful ignorance,” supporting an inference of willful conduct. This strengthens the court’s conclusion that sophisticated actors face greater difficulty characterizing post-Roberts deregulation as innocent error.
• Alekna v 207-217 W. 110 Portfolio Owner LLC, 241 AD3d 414 (1st Dept 2025)
  Used to deny summary judgment for pre-Roberts deregulations where the plaintiff relies mainly on delayed re-registration and/or improper re-registration rents. Alekna also supplies the articulation of “fraud in the regulatory context” as “consciously and knowingly” charging improper rent—aligning with the legislature’s intent to deter fraud on the system and tenants.

3.2. Legal Reasoning

The court’s reasoning turns on how the 2024 Legislation reframes the inquiry: courts must assess whether “the totality of the circumstances” shows a landlord’s knowing engagement in a fraudulent scheme to deregulate—whether the deregulation occurred before or after Roberts. The “totality” framing does not erase the need to prove knowledge; it changes how knowledge may be inferred (i.e., from a pattern and surrounding facts rather than a single “smoking gun” act).

(a) The eight post-Roberts apartments: summary judgment warranted.

Plaintiffs’ prima facie case relied on multiple categories of proof: (i) DHCR rent histories showing unexplained rent behavior and deregulation timing; (ii) a “deregulation rider” representing the apartments as wholly unregulated; (iii) counsel’s affirmation that such riders were routinely given to incoming tenants before June 8, 2016; and (iv) deposition testimony from a managing agent’s manager (Mitchel Rothken) in Jekielek v 260 Partners, LP acknowledging awareness of Roberts when it “came out,” and stating that “everybody in this business” was familiar with it.

Critically, defendants did not meet the shifted burden under Vega: they offered no substantive evidentiary response tailored to why these apartments were deregulated after Roberts. Rothken’s affidavit (submitted again) addressed re-registration “methodology” and asserted “good faith,” but did not explain the initial post-Roberts decision to treat units as deregulated. With the rule already established by Roberts, and with testimony supporting contemporaneous knowledge of its import, the court found no triable issue of fact and granted summary judgment on liability.

(b) The 23 pre-Roberts apartments: triable issues require trial.

For units deregulated before 2009, plaintiffs’ proof of fraud depended largely on later conduct: failure to return units to stabilization until 2016 (even after Gersten applied Roberts retroactively in 2011), and registrations in 2016 that sometimes exceeded actual rent paid (contrary to DHCR’s J-51 initiative guidance). The court held that these facts, standing alone, did not eliminate triable questions of whether the initial pre-Roberts deregulations were done knowingly as part of a fraudulent scheme. That conclusion tracks Alekna, which similarly refused summary judgment where the record did not resolve intent.

The court also found that credibility issues—Rothken’s explanation of waiting for “transitional rules” and his affidavit claiming good-faith understanding—underscore why the pre-Roberts apartments require trial. Importantly, the court rejected defendants’ broader legal defense that pre-Roberts reliance on DHCR guidance is categorically exculpatory: consistent with Gomes, even before Roberts some owners may have deregulated as part of fraud; good faith is possible, but not presumed as a matter of law.

(c) Law of the case: not a bar after the 2024 Legislation.

Supreme Court treated prior appellate rulings (including a 2023 order and a 2024 denial of renewal) as binding “law of the case.” The First Department held that, given the intervening change in law created by the 2024 Legislation, those prior rulings did not impede reconsideration. The court cited 435 Cent. Park W. Tenant Assn. v Park Front Apts., LLC as an example of allowing the motion court to address issues arising from new rent laws rather than treating earlier rulings as dispositive.

3.3. Impact

• Sharper post-Roberts exposure on summary judgment: Where plaintiffs can show (1) post-2009 deregulation during J-51 and (2) evidence supporting knowledge (e.g., admissions of awareness, systemic use of “deregulation riders,” unexplained rent behavior), courts may resolve fraudulent-scheme liability without trial—especially if defendants respond with argument rather than evidence.
• Pre-Roberts cases will turn on intent evidence, not just late “cleanup”: Delay in re-registration and imperfect DHCR registrations, by themselves, may be insufficient for summary judgment under the 2024 Legislation. Plaintiffs litigating pre-2009 deregulations will likely need direct or circumstantial proof tied to the owner’s knowledge and decision-making at the time of deregulation.
• “Totality of circumstances” is not a shortcut; it is a framework: The decision reinforces that the standard expands the evidentiary lens but does not eliminate the core requirement of “knowing” fraud.
• Law-of-the-case arguments weaken in the face of statutory change: Parties should expect courts to revisit prior motion outcomes when intervening rent-law amendments materially alter the governing legal standard.
• Sophistication matters: Echoing Gomes, Montera, and Grady, courts may be more willing to infer willful ignorance (and thus fraud) where owners/managers are sophisticated and operating in a regulated market.

4. Complex Concepts Simplified

• J-51 benefits: A New York City tax incentive program for certain building renovations. While receiving J-51 benefits, buildings (and often apartments within them) are generally required to comply with rent stabilization rules.
• Rent stabilization / deregulation (“luxury decontrol”): Rent-stabilized units have regulated rents and renewal rights. “Deregulation” removes units from that system. After Roberts, owners receiving J-51 cannot lawfully deregulate units via luxury decontrol.
• DHCR registration and “legal regulated rent” vs. “preferential rent”: Owners register units annually with DHCR. “Legal regulated rent” is the maximum lawful regulated rent; a “preferential rent” is a lower rent actually charged. DHCR cautioned (per the J-51 initiative) that the registered legal rent “cannot exceed the actual rent being paid” in that re-registration context.
• Fraudulent scheme to deregulate (2024 Legislation): Not every violation is fraud. The inquiry is whether the landlord knowingly engaged in a scheme—evaluated under the “totality of the circumstances,” meaning the full pattern of conduct and context, not a single isolated act.
• Willful ignorance: Deliberately avoiding learning what the law requires. Courts may treat this as evidence of willfulness, especially for sophisticated property actors.
• Summary judgment / prima facie case / triable issue: Summary judgment is a pretrial ruling that no trial is needed. The movant must show entitlement as a matter of law (prima facie case). The opponent must then show a genuine factual dispute (triable issue) requiring trial.
• Law of the case: A doctrine that generally discourages relitigation of issues previously decided in the same case. It is less rigid where intervening changes in law alter the governing standard.

5. Conclusion

Najera-Ordonez v. 260 Partners L.P. operationalizes the 2024 Legislation’s “totality of the circumstances” test in the J-51/Roberts context by drawing a practical line: post-Roberts deregulations—when paired with evidence of knowledge and systemic deregulation conduct—can support summary judgment on fraudulent-scheme liability, while pre-Roberts deregulations often require trial unless plaintiffs can eliminate factual disputes about knowing intent. The decision also signals that intervening rent-law amendments can defeat “law of the case” objections, ensuring that fraud determinations are made under the current legislative framework rather than frozen by prior motion history.