The defendant-intervenors Chase Group Alliance LLC, Vintage Ventures LLC, and Esquire Group Estates LLC (defendant-intervenors) move pursuant to CPLR 1015 (a), for an order staying this action pending the substitution of proper parties for those plaintiffs who have died; pursuant to CPLR 3022, for an order declaring the unverified amended complaint dated November 18, 2009 to be a nullity; for an order striking so much of the plaintiffs' amended complaint that is not in compliance with this court's decision and order dated October 29, 2009 ("the original decision"); pursuant to CPLR 3211 (a) (7), for an order striking the plaintiffs' third, fourth and fifth causes of action; pursuant to CPLR 3211 (a) (1) and (7), for an order striking the plaintiffs' sixth cause of action; and pursuant to CPLR 2221 (d) and (e), for an order granting reargument and renewal of this court's original decision to the extent it denied their request to dismiss the plaintiffs' claim for breach of warranty of habitability (sequence number 012) .

Defendants Ilan Zinnar, Isaac Neshalam, Royal Estate, 412 East 9th Street Realty Corp., 225 W. 146 St. Realty LLC, LKH Assets LLC and AI Holdings LLC (defendants) cross-move for similar relief.

Plaintiffs oppose the motion and cross motion and move for an order severing the claims of plaintiffs Irene Terrell, and George Madison, Louise McClemme and Altagracia Quesada, who are deceased ^[FN1] (sequence number 015). Plaintiffs also move for renewal of this court's order as to interposition of a claim for legal fees; granting further amendments of the complaint and caption to reflect agreements of counsel at conferences and subsequent narrowing of issues and changes in circumstances, including settlement of a portion of the claims raised. (sequence number 016).^[FN2] The defendant intervenors oppose plaintiffs' motions.

Plaintiffs are rent-regulated tenants in three buildings on West 146th Street in Manhattan. The defendants are the former landlords of the buildings. The defendants and defendant intervenors are the current landlords of the buildings. Since December 2007, the buildings have been managed by a 7-A Administrator.

The court will first address the threshold issue of whether this action should be stayed due to the death of four of the plaintiffs. In general, the death of a party divests the court of jurisdiction to conduct proceedings in an action, and "[t]he action is stayed as to him or her pending substitution of a legal representative, and any determination rendered without such a substitution is generally deemed a nullity" (Stancu v Cheon Hyang Oh, 74 AD3d 1322 [2d Dept 2010]; CPLR 1015, 1021; Lugo v GE Capital Auto Lease, 36 AD3d 409 [1st Dept 2007]).

However, when, as here, a cause of action in favor of a party survives the death of another party, and does not affect the merits of a case, the action can proceed without substitution of a [*2]representative for the deceased party; (CPLR 1015 [b]; see also, Paterno v. Cyc, 46 AD3d 788 [2d Dept 2007][plaintiff was not required to appoint a substitute for deceased co-plaintiff in an action for injury to property where the merits were not affected by the death of co-plaintiff]; Bon Temps Agency, Ltd v. Hickey, 5 AD3d 157 [1st Dept 2004][trial court erred in staying action upon death of defendant partner where his co-partner was also named a defendant and therefore the right sought to be enforced survived defendant's death]; Bova v. Vinciguerra, 139 AD2d 797 [3d Dept 1988][noting that "if the cause of action survives to a co-plaintiff... the action can proceed without a substitution with the death simply being noted on the record")].

Accordingly, the motion of the defendants and defendant intervenors to stay the action pending the substitution of a representative for the four deceased plaintiffs is denied, and the motion by plaintiffs to sever the claims of the four deceased plaintiffs is granted.

The court will next consider the motion to dismiss and/or to strike made by defendants and defendants' intervenors.

The defendants' and the defendant intervenors' motions are directed at the complaint dated November 18, 2009 (the first amended complaint). Faced with the motions, the plaintiffs have served a proposed complaint dated August 10, 2010 (second amended complaint). The defendants and the defendant intervenors, in reply, address the legal sufficiency of the second pleading. Therefore, the court will merely treat the motions to dismiss as if they were directed at the more recent August 10, 2010 complaint.

The first cause of action in the proposed second amended complaint seeks to recover damages for rent overcharges and to determine, as to each tenant, their lawful rent. The second cause of action is for conversion of the security deposits. The third cause of action seeks to recover money damages for breach of the warranty of habitability. The fourth cause of action alleges a violation of General Business Law (GBL) § 349, and seeks money damages and an injunction. The fifth cause of action seeks to pierce the corporate veil. The sixth cause of action alleges that the real estate was fraudulently transferred to avoid payment of a $50,000 judgment against the prior owners. Finally, the seventh cause of action seeks, pursuant to Real Property Law (RPL) § 234, to recover legal fees.

In support of their motion to dismiss, the defendants and the defendant-intervenors make the following arguments. The complaint must be verified because it alleges fraud. The complaint improperly re-pleads usury, attorneys' fees, and breach of warranty of habitability claims. The GBL § 349 claim should be dismissed as against the defendant-intervenors. The sixth cause of action for fraudulent conveyance is moot as, pursuant to an order of the Civil Court, the prior owners have posted a bond with the Clerk, in order to secure the $50,000 judgment. The 7-A proceeding and the plaintiffs' third cause of action for breach of the warranty of habitability are identical, and this court misapprehended the law concerning whether the 7-A proceeding is derivative in nature.

On a motion pursuant to CPLR 3211 (a) (7) to dismiss a pleading for legal insufficiency, the court "accept[s] the facts alleged as true and determine[s] simply whether the facts alleged fit within any cognizable legal theory" (Morone v Morone, 50 NY2d 481, 484 [1980] [citation omitted]). The pleading is to be liberally construed, accepting all the facts alleged therein to be true, and according the allegations the benefit of every possible favorable inference (Goshen v Mutual Life Ins. Co. of NY, 98 NY2d 314 [2002]). "Whether a plaintiff can ultimately establish [*3]its allegations is not part of the calculus in determining a motion to dismiss" (EBC I, Inc. v Goldman, Sachs & Co., 5 NY3d 11, 19 [2005]). "[A]ny deficiencies in the complaint may be amplified by supplemental pleadings and other evidence" (AG Capital Funding Partners, L.P. v State St. Bank and Trust Co., 5 NY3d 582, 591 [2005]; Rovello v Orofino Realty Co., 40 NY2d 633 [1976]). The credibility of the parties is not under consideration (S.J. Capelin Assoc. v Globe Mfg. Corp., 34 NY2d 338 [1974]). Where the allegations are ambiguous, the court resolves the ambiguities in plaintiff's favor (Snyder v Bronfman, 13 NY3d 504 [2009]). However, claims consisting of bare legal conclusions, with no factual specificity, are insufficient to survive a motion to dismiss (Godfrey v Spano, 13 NY3d 358 [2009]). On a motion to dismiss pursuant to CPLR 3211 (a) (1), "a dismissal is warranted only if the documentary evidence submitted conclusively establishes a defense to the asserted claims as a matter of law" (Leon v Martinez, 84 NY2d 83, 87-88 [1994]).

The motion to dismiss the complaint for the failure to verify is denied. Contrary to the defendants' and defendant intervenors' argument, CPLR 3020 (b) (1), by its terms, does not mandate verification of the initial pleading. CPLR 3020 (b) (1) mandates verification of the answer when the complaint charges the defendant with having transferred property with intent to defraud creditors (Connors, Practice Commentaries, McKinney's Cons Laws of NY, Book 7B, CPLR C3020:5).

The motion to dismiss on the ground that the complaint improperly pleads a usury claim is denied, as it does not plead a usury claim.

However, the proposed fourth cause of action for deceptive acts and practices (General Business Law § 349) must be dismissed as it stems from a "private contractual dispute between the parties without ramification for the public at large" (Merin v Precinct Devs. LLC, 74 AD3d 688, 689 [1st Dept 2010]).

The motion to dismiss the sixth cause of action is denied, as this claim can be interpreted as seeking a judgment declaring that the tenants are entitled to collect under the bond.

The proposed seventh cause of action seeks attorneys' fees. Plaintiffs previously sought to add a claim for attorneys' fees, and in its original decision, the court denied this request based on plaintiffs' failure to submit a copy of a lease to support a right to such fees under Real Property Law (RPL) § 234, which gives a tenant a right to recover attorneys' fees based on a lease provision giving the landlord such a right. The denial was without prejudice to renewal based on sufficient proof.

Plaintiffs now move for renewal. The proposed amended seventh cause of action alleges that plaintiffs are entitled to attorneys' fees from defendants pursuant to RPL § 234 and based on a provision "in most or all of the leases between Plaintiffs and Defendants... permitting the landlord, if successful in an action or proceeding to recover legal fees from tenants" (Proposed amended complaint ¶'s 144-147). Plaintiffs also submit copies of leases between certain of the plaintiffs and defendants which provide, in pertinent part, under the paragraph 23, entitled "Tenant's default," that if the lease is cancelled," [a]ny rent received by the Landlord for the re-renting shall be used first to pay the landlord's expenses and second to pay any amounts owed by tenant under lease. Landlord's expenses include the costs of getting possession and re-renting the apartment, including, but not only, reasonable attorneys' fees."

Attorneys' fee provisions within a lease are enforceable (Matter of Duell v Condon, 84 [*4]NY2d 773 [1995]), and where the lease provides for the landlord's recovery of legal fees, RPL § 234 imposes reciprocal obligations. Here, the leases submitted by plaintiffs provide a sufficient basis for the proposed attorneys' fees claim. Therefore, plaintiffs' motion to renew is granted, the motion to dismiss or strike this claim is denied, and the proposed seventh cause of action for attorneys' fees may be added.

The remaining issue concerns the breach of warranty claim. In its original decision the court granted plaintiffs' motion to amend to add a cause of action for breach of warranty of habitability. In permitting the amendment that court rejected defendants' arguments that res judicata precluded plaintiffs from asserting a breach of warranty claim, since the identical conditions of the subject buildings provided the basis for a 7-A and HP proceedings in Civil Court.

Defendants and defendants intervenors now seek reargument, asserting that plaintiffs' third cause of action for breach of the warranty of habitability is identical to the 7-A proceeding and that the court misapprehend the law concerning whether the 7-A proceeding is derivative in nature. This position is unavailing.

As noted in the original decision, the purposes behind a plenary action and a 7-A proceeding "are quite different as ...7-A proceedings are derivative in nature in terms of the role played by the tenant, as opposed to a plenary action where tenants assert direct claims on their own behalf for damages (original decision, at 5).RPAPL article 7-A provides a legal means of remedying dangerous conditions in multi-dwelling apartment buildings. When a court determines that a dangerous condition exists, it is authorized to appoint an Administrator to oversee rehabilitation of the building. Under article 7-A, one-third of the tenants in a given building or the Commissioner of HPD can bring a special proceeding against an owner of a multi-dwelling apartment building alleging the existence of a dangerous condition (RPAPL 770). Upon finding that a condition "dangerous to life, health or safety" exists, a judge can appoint a 7-A Administrator who, in essence, becomes responsible for rehabilitating the building (RPAPL 776). Subject to the court's direction, the 7-A Administrator is empowered to order "the necessary materials, labor and services to remove or remedy the [dangerous] conditions," demand, collect and receive rents from the tenants, institute all necessary legal proceedings and rent or lease space in the building (RPAPL 778; Rosenbaum v City of New York, 96 NY2d 468 [2001]).

On the other hand, to establish a cause of action for breach of the warranty of habitability, the tenant must show that the premises were not "fit for human habitation and for the uses reasonably intended by the parties" through the existence of conditions which were "dangerous hazardous or detrimental to [the occupants'] life, health or safety" (RPL § 235-b [1]). A non-waivable warranty of habitability and reasonable fitness for use is part of every written or oral lease or rental agreement for residential purposes (RPL § 235-b). A claim for breach of the warranty of habitability may be asserted as a defense or counterclaim in an action or summary proceeding for the nonpayment of rent, or in a plenary action. The "proper measure of damages for breach of the warranty is the difference between the fair market value of the premises if they had been as warranted, as measured by the rent reserved under the lease, and the value of the premises during the period of the breach," (Park W. Mgt. Corp. v Mitchell, 47 NY2d 316, 329 cert denied 444 US 992 [1979]). Moreover, "punitive damages may be awarded in breach of [*5]warranty of habitability cases where the landlord's actions or inactions were intentional and malicious" (Minjak Co. v Randolph, 140 AD2d 245, 249-250 [1st Dept 1988]). Therefore, under all of the circumstances, the plaintiffs' breach of warranty of habitability claims are not barred.

Accordingly it is

ORDERED that the defendant-intervenors Chase Group Alliance LLC, Vintage Ventures LLC, and Esquire Group Estates LLC's motion, and the defendants Ilan Zinnar, Isaac Neshalam, Royal Estate, 412 East 9th Street Realty Corp., 225 W. 146 St. Realty LLC, LKH Assets LLC and AI Holdings LLCs' cross motion (sequence number (012) to strike, for a stay, and to renew and reargue, is granted only to the extent that the proposed fourth cause of action for relief under General Business Law § 349 is stricken; and it is further

ORDERED that the plaintiffs' motion (sequence number 015) for an order severing the claims of Irene Terrell, George Madison, Louise McClemme and Altagracia Quesada is granted and the request by defendants and defendant intervenors for a stay of ths action pending the substitution of a personal representative for these plaintiffs is denied; and it is further

ORDERED that the plaintiffs' motion (sequence number 016) for renewal of this court's order as to interposition of a claim for legal fees, granting further amendments of the complaint and caption to reflect agreements of counsel at conferences and subsequent narrowing of issues and changes in circumstances, including settlement of a portion of the claims raised, is granted to the extent that the second amended complaint dated August 10, 2010, with the fourth cause of action stricken, is deemed served, and it is further

ORDERED that within 20 days of the date of this decision and order, a copy of which is being mailed by counsel for the parties by my chambers, the defendants, and the defendant intervenors are directed to serve and file a responsive pleading; and it is further

ORDERED that the parties shall appear in Part 11, room 351, 60 Centre Street, for a conference before the Special Master on May 19, 2011 at 10:00 am.

Dated: April 12, 2011

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J.S.C.