Beverly Kessler v HFZ 90 Lexington Avenue Owners LLC, Carnegie Park Associates, L.P.

Rosenberg & Estis, P.C. prevailed over a group of plaintiffs seeking rights afforded to non-purchasing tenants in an "eviction plan" in a class action against the owners of several Manhattan residential buildings that were converted to cooperatives or condominiums pursuant to "non-eviction" plans.

Notwithstanding the clear statutory distinction between the rights of such tenants in eviction and non-eviction plans, Plaintiffs asked that the Court hold that eligible senior citizens and disabled persons are afforded the same rights under either conversion scheme.

Plaintiffs sought to obtain never-before-granted non-purchasing tenant status in connection with the conversion of the subject buildings, under non-eviction plans, claiming that they were "eligible senior citizens" or "eligible disabled persons" entitled to greater rights than other tenants under the General Business Law ("GBL"). The Appellate Division's decision rejected this argument.

Adopting R&E's arguments in full, the Appellate Division held that pursuant to the GBL's plain language, "eligible senior citizens" and "eligible disabled persons" only have greater rights in the context of eviction plans under GBL § 352-eeee(2)(d). The offering plans for the conversions at issue, however, were indisputably non-eviction plans under GBL § 352-eeee(2)(c). The plaintiffs also pointed to regulations issued by the New York State Department of Law that they claimed supported their position, but the court held that the regulations were prospective only and did not apply during the relevant time period. Accordingly, the court held that the plaintiffs were not entitled to "eligible senior citizen" or "eligible disabled person" status in connection with the conversions.

The Appellate Division further held that the plaintiffs lacked standing to commence an action in the first instance, since it was undisputed that no plaintiff ever resided in any of the owners' buildings or had any dealings with the owners concerning any cooperative or condominium conversion.

R&E's victory is an important win for New York City's real estate industry as a whole. The win reaffirms that owners can rely on clear, statutory language in making investment and development decisions.