Friday, October 14, 2011

Rent-stabilized tenants reject lawyers' settlement with Pinnacle Group


October 12, 2011 08:30AM

Tenants of Pinnacle Group buildings, largely in Northern Manhattan, want a judge to throw out a settlement their lawyers reached with the landlord for rent overcharges, the New York Daily News reported.

Five years ago tenants sued Pinnacle, one of the city's biggest rent-stabilized apartment owners, for illegal rent charges and harassing tenants in an effort to drive them out and increase rents. Lawyers found rent-stabilized tenants, whose rents are registered with the state, had been, in some cases, charged as much as $800 per month more than the state registry indicates.

As per the terms of the agreement reached by Pinnacle and the plaintiffs' lawyers, Pinnacle has hired a court administrator to settle the claims and award damages to the tenants.

However, many of the rents were set by the previous owners of the building, including notorious low-income housing owner Barry Singer, and merely continued by Pinnacle.

Under the agreement, Pinnacle is "not liable for any alleged rent overcharges for any rent set by a prior owner." That means many of the plaintiffs, who began renting before Pinnacle took control of the buildings, are not eligible for any award.

Plaintiffs will speak before a judge next week, urge him to toss the aforementioned settlement and seek damages that cover more tenants. [NYDN]

Tags: barry singer pinnacle group rent-stabilization

Furious tenants urge federal judge to toss rent deal with their hated landlord, Pinnacle

Wednesday, October 12th 2011

Tenants of one of the city's biggest owners of rent-stabilized apartments have asked a federal judge to reject a proposed deal their lawyers made with their landlord - Pinnacle Group.

"I'm one of the lead plaintiffs and I'm excluded from this settlement along with thousands of others," said tenant leader Andres Mares-Muro of the Mirabal Sisters Community Center.

In court papers filed last week, tenants called the deal "unreasonable, inadequate" and "extremely unfair" to a majority of more than 20,000 Pinnacle tenants.

They want Federal Magistrate Judge Ronald Ellis to delay or reject it when he holds a fairness hearing Oct. 20.

A five-year-old class-action suit alleges Pinnacle systematically engaged in illegal rent overcharges, massive harassment of tenants and "meritless evictions" - all aimed at driving out low-income tenants and sharply increasing rents for newcomers.

Under the proposed deal, all tenant claims would be quickly reviewed by a special court administrator, who would be paid for by Pinnacle. The administrator could award damages to tenants and additional financial penalties to the landlord.

Tenants are angry because the deal exempts the firm and its chief executive, Joel Wiener, from any claims for rent overcharges before 2004.

It also does not extend to overcharges instituted by a prior landlord, but never corrected by Pinnacle when it gobbled up thousands of run-down apartments a decade ago.

Take, for example, Hamida Moumouni, a Nigerian immigrant who rented an apartment on W. 141st St. in Harlem in 2003.

When Moumouni and his wife signed his original lease, their landlord was a notorious slumlord named Barry Singer, and their initial rent was $1,200.

Then Pinnacle bought the building, and Moumouni's rent increased steadily until it reached $1,419 in 2010.

By then, Moumouni had fallen behind in rent, and Pinnacle moved to evict him. That was when lawyers from the Northern Manhattan Improvement Corp. discovered the state's registered rent for the apartment back in 2003 had been just $460.

That means Singer overcharged Moumouni nearly $800 per month - and Pinnacle continued the illegal charges for years.

State law requires landlords to verify registered rents when they buy a rent-stabilized building, and it holds them liable for overcharges.

Last month, instead of being evicted, Moumouni won back rent and legal fees against Pinnacle in Housing Court worth nearly $100,000.

Yet the proposed class-action settlement would exclude people like Moumouni from the class of plaintiffs it covers.

"Pinnacle and the defendants shall not be liable for any alleged rent overcharge for any rent set by a prior owner of the building in question," the agreement specifies.

The angry tenants "are simply wrong and don't understand the facts," says Richard Levy, a lawyer for Jenner and Block. Levy filed the original case for the tenants and negotiated the settlement with Pinnacle.

At next week's hearing, Levy said, he and Pinnacle's lawyers will state unequivocally that the firm's tenants will still retain the right to ask the state housing officials to roll back illegal rent overcharges that occurred before 2004.

Matthew Chachere, a new lawyer the tenants asked to intercede for them, insists the deal "cuts out huge swaths of the class-action plaintiffs from any benefits under the settlement."

Next week, the judge will hear from the tenants themselves.

Tenant leaders bash deal with firm embroiled in class-action racketeering suit

Back in 2006, this column revealed that one of the city's fastest-growing owners of rent-regulated apartments had declared war on an astonishing number of its tenants.

Over two years, Pinnacle Group LLC, owner of some 20,000 units - mostly in upper Manhattan, the South Bronx and central Brooklyn - filed 5,000 eviction notices in Housing Court.

At some buildings, such as the historic Dunbar Houses, a 534-unit complex in Harlem, or a 300-unit complex on Morrison Ave. in the South Bronx, Pinnacle tried to evict half the tenants within months of buying the buildings.

In one case after another, the Daily News found evidence the company harassed tenants into leaving, then quickly renovated the units so it could double or triple the rents.

Those stories, along with repeated protests by Pinnacle residents, prompted several investigations by authorities of what housing advocates called "predatory equity buyers" - investment groups that gobbled up rent-stabilized units during the real estate boom to deregulate them.

In 2008, then-Attorney General Andrew Cuomo reached a settlement with Pinnacle, requiring it to pay $1 million in rent overcharges to more than 300 tenants.

By then, tenant leaders had filed a class-action racketeering suit against the firm and its chief executive Joel Wiener. Those tenants were elated when, last year, a federal judge certified the class-action suit to proceed.

Earlier this month, Pinnacle and the firm representing the tenants suddenly announced a proposed settlement. Tenant leaders who spearheaded the suit immediately denounced the deal and are organizing tenants to ask a federal judge to reject it.

"This is a sham settlement," Ted Charron, a lead plaintiff, said. "Pinnacle conspired to harass and cheat tenants out of millions of dollars and our own lawyers turned this into just a rent overcharge case."

Charron and other tenant leaders say Jenner and Block, the firm that represented them pro bono, just didn't want to go to the expense of a full trial.

Richard Levy, the lead lawyer for the tenants, disagreed.

"We could never have done better," Levy said.

Under the deal, Pinnacle agreed to have a court-appointed administrator review all tenant claims of past overcharges, harassment and other rent-law violations and award individual damages with no cap.

The firm agreed to a series of procedures to protect tenant rights and to submit to a two-year period of monitoring.

In addition, Pinnacle would pay $2.5 million into a fund to finance legal representation for those tenants and up to $1.4 million for the tenants' law firm.

"This is a very good settlement," said Ken Fisher, a lawyer for Pinnacle. "You've got a claims administration process that will be done in an expedited process.

"We always said we made mistakes and certainly took responsibilities for those mistakes."

Pinnacle chose to settle the case to avoid spending millions on a drawn-out trial, he added.

"This is a complete whitewash of Pinnacle's responsibilities," said another lead plaintiff, Kim Powell. She is organizing fellow tenants to oppose the deal.

As in so many class-action suits, the biggest winners end up being the lawyers.

Deal Would Settle Tenants’ Harassment Suit

NEW YORK TIMES By A settlement deal has been reached between lawyers for a large New York City landlord and its rent-regulated tenants, who claimed in a class-action lawsuit that they had been subjected to harassment, unlawful rent increases and aggressive eviction attempts during the real estate boom.

Under the terms of the deal, the landlord, the Pinnacle Group, will pay $2.5 million to legal and tenant-rights groups to help current and former tenants make legal claims for damages. The $2.5 million is separate from any damage awards. A court-appointed claims administrator will hear the complaints and decide whether to award compensation.

The Pinnacle Group, which owns about 15,000 apartment units citywide, must also set up a help line and follow new protocols like carefully notifying tenants of plans to increase rents or start evictions.

Tenant advocates and housing experts hailed the settlement deal, which was reached in early August and announced last week, for strengthening tenants’ legal rights in cases claiming harassment and unlawful evictions.

“This settlement seems to be a significant admission of wrongdoing by Pinnacle,” said Benjamin Dulchin, executive director of the Association for Neighborhood and Housing Development, which represents housing groups. He added that the deal confirmed tenants’ assertions that Pinnacle’s “misbehavior, harassing” and causing tenants to overpay their rents “was a key part of their business model.”

But Kenneth K. Fisher, a lawyer for Pinnacle, said the company had settled to avoid the cost of a potentially long trial. “The company has been proud of its record of providing housing for thousands of New York families,” he said, “and never felt the allegations had merit.”

Advocates for residents’ and tenants’ rights have long claimed that people in rent-regulated apartments owned by the Pinnacle Group were widely intimidated as part of the owner’s efforts to empty its buildings to make way for higher-paying tenants.

During the housing boom, scores of apartment buildings in far-flung pockets of the city were bought by what housing advocates described as predatory equity buyers, who paid more than what the buildings’ rent rolls could support. Tenants routinely found themselves showered with eviction notices, and new owners often ended up walking away from buildings after defaulting on their mortgages.

The Pinnacle Group, which spent hundreds of millions of dollars buying hundreds of apartment buildings from May 2004 to May 2006, has consistently denied any wrongdoing, saying it was trying to improve conditions in deteriorating buildings. Yet its practices were scrutinized by lawmakers and law enforcement.

In 2006, Pinnacle and the state attorney general’s office reached a settlement in which a forensic auditor examined rents for each of Pinnacle’s rent-stabilized units. As a result, Pinnacle paid $1 million in rent overcharges and interest to about 300 tenants.

In the class-action case, the plaintiffs claimed that Pinnacle had schemed to harass them. They also said Pinnacle had skirted the state’s rent regulation and other housing laws and had violated federal racketeering laws. In 2010, a federal judge granted the class-action status without addressing whether Pinnacle had violated the racketeering statute. But the judge said that if the tenants’ claims were true, racketeering could indeed have happened.

“It means that if you conspire to violate New York laws and displace tenants from a place you are running, you are subject to violating federal RICO conspiracy laws, and you can be sued,” said Andrew Scherer, author of “Residential Landlord-Tenant Law in New York” and a consultant to the plaintiffs.

News of the deal, which is expected to be completed at a fairness hearing in October, drew mixed reactions from tenants.

Bobby Jones, president of the tenant association at Dunbar, a large complex in Harlem that Pinnacle recently lost to foreclosure, said that the deal was “better than nothing,” but that Pinnacle had wrought lasting damage on the place. About 45 percent of Dunbar’s tenants left their homes or were forced out during Pinnacle’s five-year ownership, he said. Mr. Fisher said that the claim was “factually inaccurate,” and that during Pinnacle’s ownership no units were removed from rent stabilization and that turnover averaged 6 percent a year.

Kim Powell, a tenant leader at an existing Pinnacle building, said she and other named plaintiffs were “totally disappointed” with the deal. Among the issues it left unclear, she said, was who would be eligible for compensation. “The two attorneys may be happy with it, but we’re not,” Ms. Powell said.

Yet Richard F. Levy of the firm Jenner & Block, the plaintiffs’ lawyer, said the deal was in the best interest of the estimated 22,000 people who could be affected. “Certain matters needed to be compromised,” he said, “but this is a very good compromise.”