Kushner to Pay Tenants $88K to Resolve Class Action Lawsuit
The preliminary outcome of a class action lawsuit filed against Kushner Companies back in August 2017 on behalf of five former tenants of 89 Hicks Street over the illegal deregulation of rent-stabilized units in the building has finally been announced. The watchdog group Housing Rights Initiative (HRI) alleged that when Kushner Companies bought the building in 2014 (previously owned by Jehovah’s Witnesses followed by Brooklyn Law School), it was legally obligated to make the apartments rent-stabilized. HRI based this on the fact that the Hicks Street building dates back to before 1974 and had more than six units. Yet, the development company only registered 10-percent of the units as rent-stabilized.
The class action suit further alleged Kushner Companies underwent a “deceptive, systematic and pervasive pattern of misconduct to skirt rent stabilization laws,” according to court documents, and may have successfully gotten its tenants to pay as much as $1 million in overcharged rent payments.
The tenants have been awarded $88,419 total in damages, which is an average of $17,684 per defendant, along with interest. HRI says it believes the tenants affected by the overpayments are owed over $1 million in rent reductions and refunds, and that Kushner Companies neglected to provide rent refunds to former tenants as required by law. “Therefore, the case will proceed,” according to HRI.
HRI founder, Aaron Carr, calls Kushner’s actions “bare-faced greed,” and a “sordid attempt to avert accountability and get a rapid return on its investment.”
“Kushner Companies is engaged in a process I call the ‘weaponization of construction,’” added 15th District of the New York City Council member Ritchie Torres, a Democrat. “There is a straight line that runs from falsified building permits to harassment of tenants to the loss of affordable housing units.”
Shortly after the case was filed last year, Kushner Companies took action to address the allegations at the building by re-stabilizing all of the illegally deregulated units and issuing more than $100,000 in refunds to class representatives, while providing reductions averaging several hundred dollars per month.
“Once the issue was brought to my client’s attention, it immediately and voluntarily acted in good faith to address the issue,” said Deborah Riegel, an attorney at Rosenberg and Estis who is representing Kushner in the case. “Not only did my client make refunds to the existing tenants, and in some cases former tenants, but it also registered the units as rent stabilized. Rather than wait for an adjudication, as some owners have chosen to do, my client proceeded expeditiously to remedy the issues raised.”
Following the recent announcement and preliminary resolution of the case, Carr stated, “Kushner Companies giving back some of what it stole is an admission of guilt and its failure to give back everything it stole is an admission of greed…Kushner Companies got caught with two hands in the cookie jar and responded to the lawsuit by taking only one hand out. The good news is, we are half way there.”