Coney Island

Trump stopped from challenging Coney Island tenant rent reduction

August 4, 2014 By Charisma L. Miller, Esq. Brooklyn Daily Eagle
Donald Trump, seen here in Central Park. Photo by Diane Bondareff/Invision for Chronicle of the Horse/AP Images
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A Brooklyn judge has stopped the real estate magnate Donald Trump from challenging a rent reduction order for tenants in the Coney Island complex Trump Village Apartments. 

Trump Village, located throughout Coney Island and Brighton Beach, was opened in 1964 and built by Donald Trump’s father Fred C. Trump. With modest rents, a number of the buildings’ units are rent-regulated apartments. In 2006, the building owners, Trump One, expressed interest in moving tenants to a submetering system for electrical usage, allowing each individual tenant to pay for their direct electrical usage.  Under the prior metering system, master metering, electric utility payments were included in the rent.

In moving from a master meter system to a submeter structure, Trump One was required to reduce tenants’ rent to reflect the removal of included electric utility payments.  Tenants challenged the new rent rates arguing that Trump One used an outdated 2003 formula to determine rent reductions for electrical conversions.  In an Article 78 proceeding—brought by Michael Knee and the Concerned Tenants for Equitable Submetering (CTES) — the tenants asserted that updated conversion tables were available as of 2005 and showed the median monthly cost of electricity in 2002 at $47 per month, while the median for 2005 was $59 per month.  The 26 percent increase made a difference in rent reductions, the tenants further argued.

In 2008, assigned Brooklyn judge Arthur Schack issued an order requiring the Division of Housing and Community Renewal (DHCR) and Trump One to use the most updated conversion table, and in 2011, the Rent Administrator (RA) seconded Schack’s order. Curiously, Schack requested that the RA’s order only include named plaintiff tenant Michael Knee’s name in the caption or title of the order — omitting the tenant group CTES.  

Looking for a way around the Schack and RA orders for updated rent conversion rates, Trump One challenged arguing that the order only applied to tenant Michael Knee as he was the only tenant named in the order’s caption.  

Schack was again assigned the case and sternly noted in his recent July 2014 ruling on the matter that “[m]y Nov. 14, 2008, order amending the caption to leave Michael Knee as the sole petitioner was merely procedural. If I had intended to so limit my determination in the Nov. 14, 2008, order I would have clearly spelled out such intent in the order.”

In addition, Schack determined, Trump One was collaterally estopped from brining a further challenge to the 2008 order. 

Collateral estoppel — a legal term for issue preclusion—is invoked when an issue has already been litigated and adjudicated thus preventing a party from rehashing the same points of issue again.

“Trump One had the opportunity to fully argue the issue” of rent reduction rates, Schack pointed out.  “[T]his issue was determined by this court in my Nov. 14, 2008, order.”  

Given that the issue of rent conversion tables had been brought up in 2006 and again in 2008 concerning Trump Village’s change to a submetering electric system and ruled on in an Article 78 proceeding as well as an order by the RA, Schack held that Trump One was estopped from brining a further challenge. “Trump One is precluded from now challenging this determination,” Schack ruled.

Randi G. Gilbert of Horing Welikson and Rosen, PC. argued on behalf of Trump One.

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