Saturday, June 05, 2010

Tenant Lawsuit Against Mega-Landlord Gains Steam

By Samia Shafi
Tuesday, Jun 1, 2010

Marc Fader/City Limits

Kim Powell is one of the nine original plaintiffs who filed suit against Pinnacle in 2007.
Morningside Heights — When The Pinnacle Group purchased the building where Kim Powell and her family were living in 1997, she and her family hoped their 19 years of housing woes might finally come to an end. Their dispute with the building's former owner had ended with a victory: a judge ordered their rent reduced $53 per month until necessary repairs were made. All they needed now was for Pinnacle to comply with that order, which is exactly what Powell says the company didn't do.
Not only would Pinnacle resist the order for the next 12 years – raising her rent to $705 and suing her for failing to pay it – they would also delay repairs and frequently fail to supply heat and hot water, according to a lawsuit that Powell and eight fellow tenants filed against the company in 2007. The company even installed three feet from Powell's door a device, Powell believed, to spy on her. The device consisted of an electrical junction box with a hole drilled in the face place.
More Tenants“It leaves a bitter taste on my family’s mouth since we had to deal with this so long," Powell says. "We spent a lot of mental energy in them coming to us and saying can we start anew and us extending our hand to them, only to be slapped one more time.”
Powell’s experience was not a series of isolated incidents, advocates say, but a classic case of predatory equity, a common landlord scheme that they hope will soon be restricted by the Pinnacle tenants' landmark lawsuit. In the scheme, real estate investors buy rent-controlled or stabilized buildings, then pressure the tenants – primarily through harassment and failing to make repairs – to vacate them. After a tenant leaves, the landlord rents or sells the vacant unit at a higher price.
"These hedge-fund backed landlords that acquired huge numbers of subprime apartments gambled on their ability to raise rents and evict low-income tenants," says Edward Josephson, director of litigation at South Brooklyn Legal Services. "Either the gamble pays off and they displace tenants or they don't succeed and their business model collapses."
The crash of the housing market in 2007 has already reduced the prevalence of predatory equity in New York City, but a tenant victory in the Pinnacle lawsuit would help ensure that when the market rebounds, the practice doesn’t. And this month, the prospect of such a victory grew brighter when a judge granted the plaintiffs class action status. Pinnacle owns over 420 apartment buildings in New York City, containing more than 21,000 apartments and 60,000 tenants. Gaining class action status will enable potentially thousands of current and former Pinnacle tenants to join the plaintiffs' case.
The Rent Stabilization Association, which represents property owners, said it’s too early to comment on the significance of the case. “It’s way too soon to know what impact it has” says spokesperson Frank Ricci. “We have to see the merits of the case. Right now it’s a very esoteric case, a very specific fact pattern with a very specific owner.”
Indeed, the case could drag on for several more years while the tenant’s attorneys labor to prove their case. The lawsuit alleges that Pinnacle and its chief executive Joel Weiner not only violated the New York Consumer Protection Act and rent stabilization laws and codes, but acted as a “criminal enterprise” under the Federal Racketeer Influenced and Corrupt Organizations Act (RICO), a law enacted to fight organized crime. That law applies to landlords who engage in predatory equity because, similar to an organized crime syndicate, they scheme to violate the law to make a profit, says Sateesh Nori, an attorney with the Legal Aid Society who has clients residing in Pinnacle buildings.
Proving that Pinnacle violated RICO will be the most difficult part of the case, because it will require plaintiffs to show that the company and Weiner engaged in a deliberate pattern of racketeering by violating over a 10 year period at least two of 35 crimes under the statute.
The other problem plaintiffs might face is convincing more tenants to participate, Powell says. In 2006, Pinnacle filed eviction proceedings against about 5,000 tenants. Since the plaintiffs filed suit, Powell contends, Pinnacle’s harassment and intimidation of tenants has worsened. “The massive fear that is being kicked out of your home,” says Powell. “What is perturbing to me even today, I have reason to believe, despite the signing of the settlement agreement they continued to conduct illegal practices.”
But if the plaintiffs succeed in obtaining an adverse judgment against Pinnacle, the company could lose billions of dollars. The judge could order the company to reimburse up to three times the rent it overcharged. Additionally, the state’s Division of Housing and Community Renewal can penalize landlords $250 for deliberate violations of rent regulations and $2,500 when it finds them guilty of harassing tenants to vacate apartments.
“I think if the plaintiffs prevail in Pinnacle, the precedent will create a strong additional disincentive for landlords to engage in broad predatory practices," says Josephson. "In fact, just the fact that the Pinnacle case has progressed as far as it has, has probably given landlords some food for thought."
The case is not the first to allege that landlords violated RICO laws, nor is it the first filed since the City Council passed the tenant anti-harassment law in 2008. But Josephson believes it could be the first time in New York City history that tenants have won class action status in a case filed under RICO.
Attorneys for the plaintiffs have set up a hotline for tenants with complaints against Pinnacle, and the Manhattan Borough President’s Office is recruiting tenant advocates in the 194 Pinnacle buildings in Manhattan to get more tenants involved in the lawsuit.
Powell recalls that when tenants in her building, 706 Riverside Drive in West Harlem, first began to realize that their problems with Pinnacle were systemic, their only option was to file a complaint with DHCR.
Now the court will have the opportunity to consider the impact on every alleged Pinnacle victim, Powell says. “While I sat back there in 1997, while I saw what I saw, I wasn’t able to articulate it 'til 2005, other than to say I saw something that was potentially terribly wrong,” she says. “I just needed to get someone to listen. I think we have that now.”

Editor's Note: City Limits has learned that the following article contains an inaccuracy, a mischaracterization and an omission. Pinnacle does not stand to lose "billions" in this case, in which it has moved for leave to appeal. Attorney Sateesh Noori did not assert--as the article might suggest--that he knows of any instances in which Pinnacle violated laws in a manner that could fall under the federal RICO law. Pinnacle, which through a reporting error was not contacted for this article, asserts that "it does not have any hedge fund backers." An article exploring the case more deeply is forthcoming.

Friday, May 14, 2010

Judge allows tenant lawsuit against hated Pinnacle Group landlord for harassment

Thursday, May 13, 2010

Judge allows tenant lawsuit against hated Pinnacle Group landlord for harassment

Thursday, May 13th 2010, 4:00 AM

Landlord Joel Weiner, owner of Pinnacle Group Corp, accused in a Manhattan Federal Court lawsuit of 'corporate slumlording.'

A federal judge has allowed thousands of tenants to sue one of the city's most hated landlords for trying to strong-arm them out of their apartments.
Manhattan Federal Judge Colleen McMahon granted current and former tenants the right to file a class-action suit against notorious landlord Joel Weiner. Damages could run into the millions.
Weiner and his Pinnacle Group are linked to 420 city buildings with at least 60,000 tenants across the city, according to Buyers and Renters United to Save Harlem, a plaintiff.
Tenants have long charged that Pinnacle launched harassment campaigns to drive them from their rent-regulated apartments.
"They placed a surveillance camera at my door when I complained about conditions," said Kim Powell, 48, who has lived in a Pinnacle apartment on Riverside Drive for 28 years.
"They held my [rent] checks and claimed I didn't send them. They have denied tenants heat and hot water, and when repairs are done, the work is invariably substandard."
McMahon's decision expands a suit filed by Powell and 10 other tenants in 2007 claiming Weiner inflated rents, failed to make repairs and systematically evicted tenants to raise rents.
In her April 27 order, McMahon wrote that if the allegations are true, "all of [Pinnacle's] rent-regulated tenants either have been subjected to or are at risk of being subjected to the same pattern of racketeering."
Any big payoffs could take years. Tenants first have to prove that Pinnacle violated federal racketeering laws by plotting to oust them from the cheap flats. If they succeed, they can then sue individually for damages.
The city Department of Housing Preservation and Development has cited many Pinnacle apartments for inadequate fire exits, lack of heat and hot water and lead paint. Some hazardous conditions have not been corrected for years.
The suit is open to current and former tenants who have rented from Pinnacle since 2004. Many vowed to add their names to the plaintiff list at a meeting held Wednesday by Manhattan Borough President Scott Stringer.
"Count me in," said Kahn Hightower, 42, who said he staved off attempts to evict his family from a Riverside Drive apartment. "Those people at Pinnacle almost made me homeless," he added.
Weiner's lawyer, former City Councilman Kenneth Fisher (D-Brooklyn), dismissed the allegations as "overblown."
"In an organization that manages as many properties as they do, they will make mistakes from time to time," Fisher said. "But that is a far cry from a claim that this was a vast conspiracy."Read more:

Judge Grants Class Action Status in Tenant-Pinnacle Suit

Globe St. com
May 13, 2010

By John Jordan

New York City-The five West Harlem tenants that are suing New York City landlord the Pinnacle Group LLC are asking for tenants in Pinnacle buildings across New York City to submit evidence that will substantiate their charges.
A press conference was held on Wednesday at The Dunbar where the five West Harlem tenants, Manhattan Borough president Scott M. Stringer, several members of the City Council and the group Buyers and Renters United to Save Harlem (Brush) spoke of the importance of a recent decision by US District Court Judge Colleen McMahon in granting class action status to the case originally filed in 2007 against Pinnacle and its CEO Joel Weiner. The tenants charge the Pinnacle Group fraudulently inflated rents, failed to make needed repairs and groundlessly harassed tenants out of rent-regulated apartments throughout New York City.
Ken Fisher, an attorney representing Pinnacle in the case, says that it has filed for leave to appeal the class action status ruling rendered by Judge McMahon on April 27 with the US Court of Appeals.
Supporters of the tenants in their case against Pinnacle term the class action ruling as "one of the most far-reaching court decisions in New York City’s history that could potentially benefit thousands of tenants in rent-regulated apartments across the city." The decision certifies that the class consists of all persons who are rent regulated tenants in Pinnacle properties as of April 27, 2010 and a liability class for rent regulated tenants who lived in Pinnacle properties between July 11, 2004 and April 27, 2010.
Pinnacle’s Fisher, a member of the law firm Cozen, O’Connor, says, "three years into the litigation it is the same group of five tenants that are plaintiffs, which speaks for itself. Pinnacle is proud of its record of providing safe and affordable housing to thousands of New York families and is confident that at the conclusion of the case the allegations will be found to be baseless." He adds that four other tenants who had originally been part of the case have since settled and that no other Pinnacle tenants have come forward to join the lawsuit.
Representatives of the tenants state that Pinnacle and Weiner are linked to more than 420 apartment buildings that contain more than 21,000 apartment units and approximately 60,000 tenants throughout the five boroughs.
"This lawsuit is a huge victory for all working people in New York City and retired and elderly tenants, too," states Andres Mares-Muro, one of the five tenants that filed the lawsuit against Pinnacle. "At a time when we are all living on less and less and terrified of losing our jobs, this...suit is the first step in protecting us from losing our homes. It sends a [resilient] message to flippers and speculators..."
Stringer adds, "This lawsuit constitutes an unprecedented fight against [these] corporate landlords and a powerful show of resistance for middle- and low-income residents throughout the city who believe that illegal tactics are being used to drive them out."
Fisher said, in response to some politicians' comments, "It is disappointing that grandstanding politicians chose to involve themselves in this, rather than trying to come up with real solutions to New Yorkers' housing needs."
In December 2006, Pinnacle Group, LLC, while admitting no wrongdoing, reached an agreement with then New York State attorney general Eliot Spitzer in regards to alleged overcharges in some of its rent stabilized apartments that had recently become vacant and required repair. Fisher says that the overcharges centered on about 300 of the 9,000 vacant apartments in its portfolio and that Pinnacle sent refunds to the affected tenants who later took occupancy of the renovated apartments totaling about $900,000 and about $100,000 in interest.
A meeting described as "a class action classroom" has been scheduled on May 23 from 1 p.m. to 3 p.m. at the Oberia Dempsey Center on 127 West 127th St., by Stringer, the plaintiffs and BRUSH to provide Pinnacle rent regulated tenants with information concerning the litigation and provide the opportunity for tenants to submit evidence in the case.

Saturday, May 08, 2010

Pinnacle Group Hit with Class-Action Suit

The Real Deal

May 04, 2010 10:00AM

A class-action lawsuit that accuses controversial landlord Pinnacle Group NY and its CEO, Joel Weiner, of harassing rent-regulated tenants and evading New York's rent regulation laws has been certified to proceed in federal district court. Pinnacle, which controls or owns more than 400 apartment buildings throughout the city, was also accused of violating the federal racketeering statute, RICO, and the New York Consumer Protection Act. An attorney for Pinnacle called the allegations "baseless" and said the company plans to appeal. This isn't the first time Pinnacle has gotten into legal trouble. The company previously repaid more than $1 million to tenants after coming under intense pressure from the New York attorney general's office. [Crain's]

Big Residential Landlord faces Class-Action Suit

By James Comtois
Published: May 3, 2010 - 2:21 pm

A federal district court judge has given the go-ahead for a class-action lawsuit to proceed against landlord Pinnacle Group NY and its chief executive, Joel Weiner.
Plaintiffs Marjorie and Theodore Charron, Andres Mares-Muro, Raymond Andrew Stahl-David, and Kim Powell allege that Pinnacle and Mr. Weiner have engaged in a wide ranging scheme to harass and intimidate its tenants and evade New York's rent regulation laws with its properties. In addition, the plaintiffs charge that Pinnacle's conduct violates the federal racketeering statute, RICO, and the New York Consumer Protection Act.
In her April 27 opinion, which did not address whether or not Pinnacle had violated RICO or the New York Consumer Protection Act, Judge Colleen McMahon of the U.S. District Court for the Southern District of New York certified two overlapping classes to proceed against Pinnacle. She stated that if the plaintiffs' allegations are true, then all of Pinnacle's rent-regulated tenants “either have been subjected to, or are at risk of being subjected to the same general course of allegedly fraudulent and harassing conduct, the same pattern of racketeering.”
According to Jenner & Block, the law firm appointed to serve as lead counsel for the plaintiffs, the court certified a class comprised of all persons who, as of April 27, 2010, are tenants in rent-regulated apartments in New York City directly or indirectly owned in whole or in part by the Pinnacle Enterprise. The company controls or owns over 400 apartment buildings across the city.
The court also certified a liability class so that those tenants seeking damages for Pinnacle's conduct will have the opportunity to prove that Pinnacle and Mr. Weiner violated RICO and state consumer protection laws. The liability class is comprised of anyone who was a tenant in a rent-regulated apartment in the city directly or indirectly owned by Pinnacle at any time between July 11, 2004, and April 27, 2010.
Ms. McMahon directed Jenner & Block to submit a proposed method of notifying all members of the liability class of the suit to the court within 14 days.
Pinnacle's conduct has previously been the subject of an enforcement action by the New York attorney general's office, which resulted in Pinnacle repaying over $1 million to tenants.
Ken Fisher, the attorney representing Pinnacle, said in a statement that the landlord is "in the process of reviewing the court's procedural decision" to determine its rights for an appeal, adding that the firm believes the suit's allegations are "baseless and that will be proven if and when this matter goes to trial."