Barry Fox’s penthouse apartment is located at 12 East 88th St. Photo: Courtesy of the New York Daily News

Lawyer Barry Fox of New York could be in danger of losing his penthouse apartment after an appellate court ruled he isn’t entitled to rent-stabilization protections.

Fox, senior counsel with Cleary Gottlieb Steen & Hamilton, who lived in the Upper East Side building since 1975, never knew his former landlord was getting tax benefits for his apartment being rent-stabilized. He was paying market rent—$25,000 per month—and it wasn’t until 2014, when his building changed hands and a new landlord said it wasn’t going to renew his lease, that he learned he might have protections against eviction.

His hopes were dashed Tuesday when the Appellate Division, First Department ruled in Fox v. 12 East 88th that the apartment lost its rent-stabilization protections in 2008 because Fox changed his lease to name a corporate entity he owned, without naming himself as an individual.

The majority opinion by Justice David Friedman was joined by Justices Marcy Kahn, Cynthia Kern and Peter Moulton. Justice Ellen Gesmer dissented.

Fox will petition for leave to appeal to New York’s Court of Appeals, said his attorney, Richard Emery. He said landlords might attempt to use Fox’s case as a “roadmap” to exempt their apartments from rent stabilization.

“The incentive to get apartments out of rent stabilization is enormous,” said Emery, founding partner in Emery Celli Brinckerhoff & Abady in New York. “The case is a potential disaster for the rent-stabilized stock of apartments.”

The lawyer for 12 East 88th, Paul Coppe, an associate with Rose & Rose in New York, said he will oppose Fox’s attempt to appeal.

“We think the result is correct and reflects the current state of the rent-stabilization law,” Coppe said.

Fox leased a rent-stabilized penthouse apartment from Nostra Realty Corp. in 1975, according to the decision. In 1996, another rent-stabilized apartment next door became vacant, and Fox and Nostra agreed to combine the two units and enter a market-rate lease. Fox never knew Nostra was getting tax benefits for the building’s rent-stabilized apartments. From 1996 on, he was paying market rates.

In 2008, Fox suggested a renewal lease with different details. He would keep living there, but the leasee and tenant of record would be MBE Ltd., an entity wholly owned by Fox.

Trouble started in 2014, when 12 East 88th bought the building and told Fox it wouldn’t renew his lease.

Under New York law, a corporation might get rent-stabilization protections as long as that lease named an individual.

The panel ruled Fox wasn’t entitled to renew the lease because MBE was listed as the tenant—not an individual, who would have a right to demand a lease renewal.

Gesmer wrote Fox didn’t know in 2008 that he had rent-stabilization protections, nor that his landlord was receiving tax benefits for it. If Fox had known he had rent-stabilization protections, he could have addressed it in 2008 when MBE signed the lease by listing himself as the occupant.

Fox’s landlord withheld crucial information, and Fox shouldn’t be penalized for it, Gesmer wrote.

“It is unfair to find that, by executing a lease in the name of his corporation, he waived rent stabilization protections he did not even know he had at the time,” Gesmer wrote.

Fox had MBE take over the lease in 2008 because he had retired from his law firm and he was running a consulting business out of his home office, Emery said. Fox still lives in the apartment today, and his landlord is still trying to evict him.

“Barry paid huge overcharges for 18 years when he could have had rent-stabilization status,” he said.

Coppe claimed Fox hasn’t paid his rent since shortly after the litigation began in 2014.

“We’re exploring all our options but there’s also a pending nonpayment proceeding which we are going to pursue. Mr. Fox owes over $1 million in rent,” Coppe said.

Angela Morris is a freelance reporter.