Judge Kevin McClanahan
A prior court granted respondents’ cross-motion for summary judgment dismissing the petition. The court found the premises were rent-stabilized and respondents were entitled to a lease renewal at a “correctly determined rent stabilized rent.” Yet, the court concluded there were issues of fact on respondents’ counterclaim for rent overcharge, including the calculation to be used in deciding the correct rent for the premises. This court found Rent Stabilization Code §2526.1(a)(3)(i) was inapplicable here as the prior court found the non-stabilized leases between the parties contravened the RSC, thus the leases could not serve as a basis to establish a negotiated first rent. The court also noted the law of the case doctrine precluded applicability of §2526.1(a)(3)(iii). As such, this court concluded that the only available basis to calculate the rent overcharge was under the Default Formula employed by the Department of Housing and Community Renewal (DHCR). The court noted it was not fraud that invoked the default formula, but the unreliableness or non-existence of the rental history. The court ruled petitioners established the overcharge was not willful, determining the proper basis for determination of the overcharge was the default formula.
