Consumer protection lawsuit is settled out of court
Paula Serrano has lived with her nine-year-old son in a fifth story walk-up on East 106th Street in Spanish Harlem for more than 10 years. She works as a babysitter, earning $200 a week — just enough to cover her monthly rent.
But in 2007, a series of strange fees began to appear on her monthly rent bill. “We were being charged for repairs for the apartment floors, but they were never fixed,” said Serrano. The repair fees and subsequent late fees eventually added up to more than $5,000.
Serrano is just one of hundreds of tenants who were charged fictitious fees by the Dawnay, Day Group in what advocates say was a widespread policy of harassment. A group of tenants pursued what housing lawyers called an innovative lawsuit against the the firm, framing the actions as a violation of consumer rights as opposed to housing rights.
The group reached a settlement last month, and it may have important implications for future housing lawsuits.
The British investment firm Dawnay, Day entered the East Harlem real estate market in March 2007, paying more than $250 million for 47 buildings between East 100th Street and East 120th Street. The announcement of their arrival on the local real estate scene alarmed local housing advocates, who feared that the company would attempt to force out tenants in rent stabilized apartments.
Dawnay, Day director Phil Blakely suggested in an interview with the Times of London in March 2007 that the firm’s goal was to vacate the apartments, saying that after taking vacant possession of the apartments rents would typically rise 17 percent when re-let.
Claudia Wilner, an attorney at the Neighborhood Advocacy Project, believes that Dawnay, Day was betting on Harlem’s gentrification. “Their goal was to turn over the tenants and raise the rents tenfold, and that’s how they were going to make a profit.”
Dawnay, Day did not respond to repeated requests for comment.
Shortly after Dawnay, Day took ownership of the buildings in March 2007, tenants began receiving suspicious additions to their rent bills — late fees for payments that had been submitted on time, invoices for repairs that were never made, charges for washing machines that did not exist. While tenants objected, the fees continued — and compounded — often exceeding a tenant’s salary.
“Here are low-income, predominantly immigrant tenants, who are being charged and harassed for charges they don’t owe,” said Chaumtoli Huq, a lawyer for Manhattan Legal Services, which helped bring the lawsuit against Dawnay, Day. “It is a tremendous burden on low-income tenants.”
Lawyers from Manhattan Legal Services and the Neighborhood Advocacy Project pursued a consumer protection lawsuit against Dawnay, Day on behalf of 16 tenants. The lawsuit alleged that by issuing false charges to customers, Dawnay Day had violated a statute in the New York General Business Law that forbids false and deceptive business practices.
The case was settled out of court last month. Plaintiffs will receive compensation for damages, while Dawnay, Day will be subject to stricter guidelines, including a new 3 percent cap on late fees.
All of Dawnay, Day’s 47 buildings in East Harlem are currently in foreclosure — victims of the economic recession that has swept the country since they were purchased.
The settlement doesn’t necessarily set a legal precedent, lawyers familiar with the case say, but advocates believe it will encourage other tenants to use consumer-protection laws against abusive landlords.
“Our hope is that the settlement sends a clear message to other large landlords in the city that the kinds of abusive practices that Dawnay, Day engaged in violate New York’s Consumer Protection Law ,” said Wilner. “Tenants now have another legal tool that they can use to enforce their rights.”
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