By Sabina Mollot
Lawyers who waged a six year battle over Stuyvesant Town rents turned a courtroom slugfest into a lovefest Tuesday.
Approving a $68.75 million settlement in the Roberts v Tishman Speyer lawsuit, Justice Richard B. Lowe congratulated attorneys for the tenants and keyholder CWCapital for turning what had been a drawn out battle into a landmark settlement.
“What started as a slug fest has emerged into a love fest,” joked Lowe.
“There was contentious discussion to the extent that I pulled people back to the table. That’s my job, but the fact is that everybody stayed in.”
The settlement came after a 2009 Court of Appeals ruling establishing that apartments in Stuyvesant Town and Peter Cooper Village had been wrongly deregulated, with thousands of tenants being overcharged as result.
Lowe, the first presiding justice of the Appellate Term, First Division of the State Supreme Court, added that it was the longest running litigation he’s been involved with.
“And those who know me know that I do not permit litigation to drag on, but… if this wasn’t settled, we would have major obstacles to overcome.”
What the justice said also factored into his decision to agree with the terms was knowing that the state housing agency was okay with the deal. Speaking at the hearing was an attorney from the Division of Housing and Community Renewal, Gary Connor, who confirmed, “The division is on board. (The settlement) is fair and reasonable.”
The DHCR, which once famously erred in its opinion that landlords could deregulate properties receiving J-51 tax breaks, like Stuyvesant Town, is now part of an umbrella agency called Homes and Community Renewal (HCR).
If the housing agency had to individually litigate each case, “It would be in litigation for the next 15 years,” said Lowe.
The settlement, which was first announced last November, means that once approved, 27,500 current and former market rate tenants will get a total of $68.75 million in damages, which when combined with savings from already made rent reductions, which also came as a result of “Roberts,” would bring the total take to $146.85 million. Tenant settlement checks ranging from $150 to more than $100,000 for some tenants will be sent out later this year.
The settlement is by many magnitudes the largest tenant settlement in United States history. It also continues rent stabilization through June 2020 for the 4,311 formerly decontrolled Stuyvesant Town and Peter Cooper Village apartments.
Stuy Town tenants attorney Alex Schmidt admitted he was relieved the case was over. “This is a genuinely historic and well-deserved outcome, not only for the nine brave tenants who risked losing their homes when they stepped forward to challenge a longstanding practice of deregulating rent stabilized apartments while simultaneously receiving New York City J-51 tax breaks, but for all residents of the truly special and unique Stuyvesant Town-Peter Cooper Village community,” said Schmidt of Wolf Haldenstein, one of the plaintiffs’ lead attorneys.
“I am grateful I had the opportunity to help these courageous individuals right the wrong that had been done to them,” he added.
“The fact that there were ultimately no objections to the settlement and only five tenants among the 27,500 class members who opted out of it attests to how fair and reasonable the settlement was for the class as a whole,” noted his partner, Daniel Krasner. “I have been litigating class actions for 35 years, and I have never seen a settlement affecting so many people be opposed by no one,” he said.
“This settlement is an extraordinary recovery for our clients and we couldn’t be happier for them,” Ronald Aranoff of Bernstein Liebhard, another of the plaintiffs’ lead attorneys said.
As to future rents, the settlement provides for a “Preferential Rent” formula that will save tenants at least another $20 million, and potentially up to $300 million, over the next eight years, Aranoff added.
The settlement also continues rent stabilization through June 2020 for each of the 4,311 formerly decontrolled Stuyvesant Town and Peter Cooper Village apartments at issue in the suit. June 2020 is when the residential complexes’ New York City “J-51” tax benefits expire.
The current owners of the complexes contributed $58.25 million of the $68.75 million cash component provided by yesterday’s agreement. Metropolitan Tower Life Insurance Company, the owner until mid-November 2006, contributed $10.5 million.
Greg Cross, an attorney for CWCapital, the debt collector servicing the debt on Stuy Town since the previous owners handed back the keys, said he too was relieved by the court’s decision. “We have no interest in litigating with the tenants,” he said.
The company has been accused of dragging its heels in the drive to find a new owner for the complex. In January, tenant representatives said, “People are increasingly anxious that we get a true and real owner and not just a custodian for the bond holders.ˮ
Tenants have partnered with Brookfield Asset Management to put together their own multi-billion-dollar bid to buy the 11,000 apartments and convert them to condos.