ORDERED that the judgment is modified, on the law, by deleting the provision thereof granting that branch of the petition of Hillside Place, LLC, which was to annul so much of the determination dated September 30, 2020, as modified the determination dated January 19, 2016, by removing the $45 per month increase from the rent calculation, and to reinstate the $45 per month increase for the rent calculation, and substituting therefor a provision denying that branch of the petition of Hillside Place, LLC; as so modified, the judgment is affirmed insofar as appealed from, with costs to Younas Shahid.
Younas Shahid (hereinafter the tenant) was a tenant of a certain rent-stabilized apartment unit in a building owned by Hillside Place, LLC (hereinafter the owner). As relevant to this appeal, Rent Guidelines Board Order No. 40 (hereinafter RGB No. 40) applied to lease terms commencing October 1, 2008, through September 30, 2009, and permitted owners of certain rent-stabilized units to charge a rent increase of either 4.5% per month or $45 per month, whichever was [*2]greater, for a one-year lease renewal. In a lease renewal dated June 25, 2008 (hereinafter the 2008-2009 lease renewal), for the term commencing October 1, 2008, and terminating September 30, 2009 (hereinafter the 2008-2009 term), the owner calculated the legal regulated rent for the tenant's apartment using a rent increase of 3% per month. The 2008-2009 lease renewal was signed by the owner and the tenant in August 2008.
In November 2020, the tenant commenced a hybrid proceeding pursuant to CPLR article 78 to review a determination of a Deputy Commissioner of the New York State Division of Housing and Community Renewal (hereinafter the DHCR) dated September 30, 2020 (hereinafter the September 2020 determination), and action for declaratory relief. The
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owner commenced a separate proceeding pursuant to CPLR article 78 to review the September 2020 determination, which was later consolidated with the tenant's hybrid proceeding and action. In the September 2020 determination, the Deputy Commissioner found, inter alia, that a $45 per month rent increase should be removed from the rent calculation because the owner had not preserved its right to collect that amount in the 2008-2009 lease renewal, and modified accordingly a determination of a Rent Administrator dated January 19, 2016. In a judgment dated June 4, 2021, the Supreme Court, among other things, granted that branch of the owner's petition which was to annul that portion of the September 2020 determination, and to reinstate the $45 per month increase for the rent calculation, and denied the tenant's petition. The court held, inter alia, that an order of the Civil Court, Queens County, dated October 17, 2011 (hereinafter the October 2011 order), which was entered in a separate proceeding between the owner and tenant (hereinafter the Civil Court proceeding) and, among other things, granted the owner's motion for leave to amend the petition in that proceeding to include claims for rent increases based upon RGB No. 40, was law of the case in this matter. The tenant appeals.
"In reviewing a determination of the DHCR, the court must uphold the determination unless it is arbitrary and capricious and without a rational basis" (Matter of Parsons Manor, LLC v. New York State Div. of Hous. & Community Renewal, 219 AD3d 945, 946 [internal quotation marks omitted]; see CPLR 7803[3]; Matter of Pell v Board of Educ. of Union Free School Dist. No. 1 of Towns of Scarsdale & Mamaroneck, Westchester County, 34 NY2d 222, 230-231). "The court may not substitute its judgment for that of the DHCR" (Matter of Parsons Manor, LLC v New York State Div. of Hous. & Community Renewal, 219 AD3d at 946 [internal quotation marks omitted]). "Arbitrary action is without sound basis in reason and is generally taken without regard to the facts" (Matter of Pell v Board of Educ. of Union Free School Dist. No. 1 of Towns of Scarsdale & Mamaroneck, Westchester County, 34 NY2d at 231; see 57 Elmhurst, LLC v New York State Div. of Hous. and Community Renewal, 240 AD3d 685, 686).
Initially, regarding the October 2011 order issued in the Civil Court proceeding, the doctrines of law of the case, res judicata, and collateral estoppel are all inapplicable. "The doctrine of law of the case only applies 'to legal determinations that were necessarily resolved on the merits in [a] prior decision, and to the same questions presented in the same case'" (Newrez, LLC v City of Middletown, 216 AD3d 655, 656, quoting Foley v Foley, 190 AD3d 953). "The doctrine of res judicata, or claim preclusion, 'holds that, as to the parties in a litigation and those in privity with them, a judgment on the merits by a court of competent jurisdiction is conclusive of the issues of fact and questions of law necessarily decided therein in any subsequent action'" (Siddiqui v Smith, 207 AD3d 681, 683, quoting Gramatan Home Invs. Corp. v Lopez, 46 NY2d 481, 485). "Collateral estoppel, or issue preclusion, [is] a narrower species of res judicata"
(Jacob Marion, LLC v Jones, 168 AD3d 1043, 1044; see Carter v Nouveau Indus., Inc., 187 AD3d 705, 706). Collateral estoppel "permits in certain situations the determination of an issue of fact or law raised in a subsequent action by reference to a previous judgment on a different cause of action in which the same issue was necessarily raised and decided" (Gramatan Home Invs. Corp. v Lopez, 46 NY2d at 485; see Ryan v New York Tel. Co., 62 NY2d 494, 500). "It is evident that a general prerequisite to invocation of either res judicata or collateral estoppel is the existence of a final judgment, i.e., a final judicial determination which necessarily decided the very cause of action or issue that a party now seeks to litigate in a subsequent action or proceeding" (Siddiqui v Smith, 207 AD3d at 683 [internal quotation marks omitted]; see Ott v Barash, 109 AD2d 254, 262).
Here, the October 2011 order granted the owner's motion for leave to amend its petition to include increases allowed by RGB No. 40. "Leave to amend pleadings should be freely given provided that the amendment is not palpably insufficient, does not prejudice or surprise the opposing party, and is not patently devoid of merit" (Gitlin v Chirinkin,
60 AD3d 901, 901-902). In deciding a motion to amend the pleadings, "a court shall not examine the legal sufficiency or merits of a pleading unless such insufficiency or lack of merit is clear and free from doubt" (Faiella v Tysens Park Apts., LLC, 110 AD3d 1028, 1029; see Dray v Staten Is. Univ. Hosp., 227 AD3d 664, 666; Lucido v Mancuso, 49 AD3d 220,
229). Accordingly, the only necessary determination in the October 2011 order is the Civil Court's determination that the owner's proposed inclusion of the $45 per month rent increase authorized by RGB No. 40 was not palpably insufficient or patently devoid of merit and did not prejudice or surprise the tenant. Such a determination is not a determination on the merits of the issue of whether the owner was entitled to utilize the $45 per month increase authorized by RGB No. 40 in rent calculations (see James v R & G Hacking Corp., 39 AD3d 385, 386; Baskin and Sears v Lyons, 188 AD2d 307, 307-308).
Further, the DHCR's determination that the $45 per month increase should be removed from the rent calculation has a rational basis in the record and was not arbitrary and capricious (see 57 Elmhurst, LLC v New York State Div. of Hous. and Community Renewal, 240 AD3d at 686; Matter of Parsons Manor, LLC v New York State Div. of Hous. and Community Renewal, 219 AD3d at 946; Matter of 1437 Carroll, LLC v State Div. of Hous. and Community Renewal, 150 AD3d 1224, 1225; Matter of North Carolina Leasing Corp. v New York State Div. of Hous. and Community Renewal, 156 AD2d 452, 554). The 2008-2009 lease renewal calculated the legal regulated monthly rent for the 2008-2009 term by using a 3% increase over the previous legal regulated rent and contained no reference to the alternative minimum dollar amount of $45 per month that was authorized under RGB No. 40. Although an order of the Supreme Court, New York County, dated January 20, 2010, held that so much of RGB No. 40 as authorized the $45 per month increase was invalid, and that court's order was not reversed until March 24, 2011 (see Matter of Casado v Markus, 16 NY3d 329, 334), the 2008-2009 lease renewal was dated June 25, 2008, signed by the parties in August 2008, and the 2008-2009 lease term ended on September 30, 2009, which was all before the issuance of the order dated January 20, 2010, in Matter of Casado (see Matter of Casado v Markus, 27 Misc 3d 340, 343, amended 2010 WL 6571555, affd 74 AD3d 632, revd 16 NY3d 329). Accordingly, the DHCR's determination that the owner had failed to preserve its right to the $45 per month increase authorized by RGB No. 40 was not arbitrary and capricious (see Matter of 1437 Carroll, LLC v State Div. of Hous. and Community Renewal, 150 AD3d at 1225; Matter of North Carolina Leasing Corp. v New York State Div. of Hous. and Community Renewal, 156 AD2d at 554).
The parties' remaining contentions are either without merit or not properly before this Court. CONNOLLY, J.P., CHRISTOPHER, WARHIT and GOLDBERG VELAZQUEZ, JJ., concur.
ENTER:
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