Babul et al v. Demty Associates Limited Partnership et al

Filing 59

MEMORANDUM DECISION & ORDER dated 9/3/18 granting The Hillcrest Defendants' 53 Motion for Summary Judgment; and the Senguptas' 54 Motion for Summary Judgment. ( Ordered by Judge Brian M. Cogan on 9/3/2018 ) (Guzzi, Roseann)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
----------------------------------------------------------- X
:
AHMED BABUL and NAFIEW AHMED,
:
:
Plaintiffs
: MEMORANDUM DECISION &
: ORDER
- against :
: 17-cv-5993 (BMC)
DEMTY ASSOCIATES LIMITED
:
PARTNERSHIP, FAHIM ROUFAIL,
:
ANDREW ROUFAIL, DANIEL ROUFAIL, :
HILLCREST OWNERS ASSOC. INC.,
:
BOARD OF HILLCREST OWNERS
:
ASSOC., REZAUL JAMEE, FAYEZULLA :
:
BABUL, MR. ALAM, SUBARMA
SENGUPTA and CHANDAN SENGUPTA, :
:
Defendants.
:
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COGAN, District Judge.
Plaintiffs Ahmed Babul and Nafiew Ahmed, father and son, respectively, brought this
lawsuit under the Fair Housing Act, the New York State Human Rights Law, and the New York
City Human Rights Law. Plaintiffs allege that defendants discriminated against Ahmed Babul
on the basis of his disability and age by refusing to sell Nafiew Ahmed either of two apartment
units for his father. Plaintiffs also claim that defendants breached the warranty of habitability
implied in the residential lease for the apartment unit that Ahmed Babul rented.
Plaintiffs’ claims are generally directed at three sets of defendants: (1) the “Demty
Defendants” (Demty Associates Limited Partnership, Fahim Roufail, Andrew Roufail, and
Daniel Roufail), who initially owned the disputed units; (2) the “Hillcrest Defendants” (Hillcrest
Owners Association, Inc., Board of Hillcrest Owners Association, Rezaul Jamee, Fayezulla
Babul, and Shake Ahmed (a/k/a “Mr. Alam”)), who, along with Fahim and Andrew Roufail,

comprised the cooperative corporation for the building containing the units; and (3) the
“Senguptas” (Subarna Sengupta and Chandan Sengupta), who eventually purchased one of the
units.
The Hillcrest Defendants have moved for summary judgment as to plaintiffs’ Fair
Housing Act (“FHA”), New York State Human Rights Law (“NYSHRL”), and New York City
Human Rights Law (“NYCHRL”) claims. The Senguptas have also moved for summary
judgment on the breach of the implied warranty of habitability claim. 1 Plaintiffs have not
opposed either motion but the Court has reviewed the record to determine if the motions are
meritorious. For the reasons that follow, both motions are granted.
DISCUSSION
A party is entitled to summary judgment if “there is no genuine dispute as to any material
fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). “A fact is
material if it ‘might affect the outcome of the suit under the governing law.’” Spinelli v. City of
New York, 579 F.3d 160, 166 (2d Cir. 2009) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 248 (1986)).
“Once the moving party demonstrates that there are no genuine issues of material fact,
the nonmoving party ‘must come forth with evidence sufficient to allow a reasonable jury to find
in [its] favor.’” Id. (quoting Brown v. Henderson, 257 F.3d 246, 252 (2d Cir.2001)); see also
Caldarola v. Calabrese, 298 F.3d 156, 160 (2d Cir. 2002). “In determining whether the moving
party is entitled to judgment as a matter of law, the court must resolve all ambiguities and draw
all justifiable factual inferences in favor of the party against whom summary judgment is

1

The Demty Defendants previously moved for summary judgment, which was granted in part and denied in part.
Their motion for reconsideration of the partial denial was denied.

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sought.” Major League Baseball Properties, Inc. v. Salvino, Inc., 542 F.3d 290, 309 (2d Cir.
2008) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d
202 (1986)).
The Hillcrest Defendants and the Senguptas have each submitted Local Rule 56.1
statements, which contain the material facts they contend are undisputed. Plaintiffs did not
oppose either motion, and as a result, they have not contested any of these facts. However,
several of the purportedly undisputed facts in the Hillcrest Defendants’ statement are not
supported by citations to admissible evidence. Accordingly, the Court accepts only those
statements in defendants’ rule 56.1 submission that are supported by evidence in the record. See
Giannullo v. City of New York, 322 F.3d 139, 140 (2d Cir. 2003).
In conjunction with Demty Associates Limited Partnership’s (“DALP”) sale of the
building and underlying property located at 70-35 Broadway in Jackson Heights, New York to
Hillcrest Owners Association, Inc. (“Hillcrest”), DALP and Hillcrest executed a Cooperative
Offering Plan, pursuant to which Hillcrest sold its shares in the building to DALP in order to
fund its purchase of the building. Under the Offering Plan, the building’s then-current tenants
were offered the opportunity to purchase shares of stock that were allocated to the apartments
they leased.
DALP is defined as the “Sponsor” in the Offering Plan. At closing, the Sponsor (or
financially responsible individuals or entities produced by the Sponsor) had to acquire all
“Unsold Shares.” “Unsold Shares” are defined as “any shares not subscribed to and fully paid
for prior to closing.”
The Holders of Unsold Shares have special rights under the Offering Plan. Specifically,
“Unsold Shares . . . may be transferred, and the appurtenant Proprietary Lease assigned, or the

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Apartment to which they are allocated subleased, without the consent of the Board of Directors,
the Tenant-Shareholders, or the Managing Agent.” The Offering Plan reasserts that “[t]hese
special rights . . . include the right to assign the shares allocated to the Apartment, or sublease the
Apartment without the consent of [Hillcrest], and without having to pay transfer fees or charges
imposed by [Hillcrest]. Holders of Unsold Shares other than Sponsor will also have the same
rights as the Sponsor to sell the shares allocated to their Apartments.”
The Offering Plan also references the restatement of these rights in the building’s
Proprietary Lease. Specifically, under a section titled “Subletting Apartment and Sale of
Shares,” the Proprietary Lease provides: “Neither the subletting of the apartment from time to
time nor the assignment of this lease by the holder of Unsold Shares allocated to the apartment
nor the posting of signs in connection with such subletting, assignment or sale shall require the
consent of the Directors or shareholders.” The Proprietary Lease further states that “Unsold
Shares retain their character as such (regardless of transfer) until an Individual purchases same
for use and occupancy by himself or a member of his family.” The Offering Plan similarly
provides that Unsold Shares cease to be Unsold Shares when a Holder of Unsold Shares or a
person related by blood or marriage to the Holder of Unsold Shares takes occupancy of the
apartment as a bona fide resident.
The Demty Defendants held apartments D-23 and E-7 as “Unsold Shares.” The Demty
Defendants sold apartment E-7 to an unrelated third party on May 18, 2017. The Demty
Defendants sold apartment D-23 to the Senguptas on October 6, 2015. At that time, plaintiff
Ahmed Babul was the tenant in D-23. Because apartment D-23 was not for occupancy by the
Senguptas or their families, the Senguptas remain Holders of Unsold Shares. Subarna Sengupta

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is the landlord and current owner of apartment D-23. The Demty Defendants did not seek the
Hillcrest Defendant’s consent to sell either of these apartments.
On May 4, 2018, plaintiff Ahmed Babul filed a Verified Petition in Support of an Order
to Show Cause in the Civil Court of the City of New York, County of Queens: Housing Part C.
That document contains the following allegations concerning apartment D-23: “broken cabinet,
lead paint, stove not working, window broke, mouse hold everywhere, dirty everything,
bathroom flush not working, bathtub very bad, whole apt is dirty.” Apartment D-23 was
inspected on May 21, 2018. Following a conference with the parties, the housing court issued a
Consent Order and Notice of Violation, which is dated May 30, 2018. The Consent Order
required the Senguptas to correct all violations listed on an inspection report reviewed by the
housing court or be subject to daily financial penalties. Plaintiff Ahmed Babul, the Senguptas’
attorney, and the Honorable Lydia Lai J.H.C signed the Consent Order.
I.

The Hillcrest Defendants’ Motion for Summary Judgment
The Hillcrest defendants move for summary judgment on plaintiffs’ FHA, NYSHRL, and

NYCHRL claims.
Under the burden-shifting framework of McDonnell Douglas Corp. v. Green, 411 U.S.
792 (1973), plaintiffs must establish a prima facie case of housing discrimination. See Mancuso
v. Douglas Elliman LLC, 808 F. Supp. 2d 606 (S.D.N.Y. 2011). To do so, a plaintiff must show
“(1) that they are members of a protected class; (2) that they sought and were qualified to rent or
purchase the housing; (3) that they were rejected; and (4) that the housing opportunity remained
available to other renters or purchasers.” Mitchell v. Shane, 350 F.3d 39, 47-48 (2d Cir. 2003).
Defendants must then assert a legitimate, nondiscriminatory rationale for the challenged
decision. Id. at 39. If defendants are successful in so showing, then “the burden shifts back to

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the plaintiff to demonstrate that discrimination was the real reason for the defendant’s action.”
Id.
The FHA “applies broadly to ‘any notice, statement, or advertisement, with respect to the
sale or rental of a dwelling that indicates’ a discriminatory preference on prohibited grounds.”
United States v. Space Hunters, Inc., 429 F.3d 416, 424 (2d Cir. 2005) (citing 42 U.S.C. §
3604(c)). Further, the statute’s reach is not limited “to statements that directly affect a housing
transaction.” Id
Here, the building’s governing documents – specifically, the Offering Plan and the
Proprietary lease – make clear that the Holders of Unsold Shares may sell those Unsold Shares
without the approval or consent of the Hillcrest Defendants. The Demty Defendants held the
shares allocated to apartments D-23 and E-7 as “Unsold Shares.” As a result, the Demty
Defendants were not required to consult the Hillcrest Defendants before selling the shares
allocated to either of those units.
Although the Demty Defendants were not required to consult the Hillcrest Defendants,
plaintiffs nevertheless allege in the complaint that they did. As noted above, even indirect
statements made to affect a housing sale could still be actionable under the FHA – thus, had this
type of informal consultation occurred, plaintiffs might have a leg to stand on. However,
plaintiffs have not brought forward any evidence suggesting that the Demty Defendants
consulted with the Hillcrest Defendants, and the Hillcrest Defendants’ affidavits state that the
Demty Defendants did not consult them about either the sale of apartment D-23 or apartment E7. Although plaintiff’s counsel seems to be of the view that allegations in a complaint are
sufficient to raise issues of fact, that is wrong. See St. Pierre v. Dyer, 208 F.3d 394, 404 (2d Cir.

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2000). Therefore, the Hillcrest Defendants are entitled to judgment as a matter of law on
plaintiffs’ federal, state, and city housing discrimination claims.
II.

The Senguptas’ Motion for Summary Judgment
The Senguptas move for summary judgment on the breach of the implied warranty of

habitability, arguing that this claim is barred by the doctrine of res judicata. 2
Under New York law, every residential lease contains an implied warranty of
habitability, which covenants that “(1) that the premises are fit for human habitation, (2) that the
premises are fit for the uses reasonably intended by the parties, and (3) that the occupants will
not be subjected to conditions that are dangerous, hazardous or detrimental to their life, health or
safety.” Newkirk v. Scala, 935 N.Y.S.2d 176, 177-78 (N.Y. App. Div. 2011) (internal quotation
marks and citations omitted). The implied warranty is implicated if the premises contain
conditions that “materially affect the health and safety of tenants,” or if the premises contain
deficiencies that “in the eyes of a reasonable person deprive the tenant of those essential
functions which a residence is expected to provide.” Id. at 178 (internal quotation marks and
citations omitted).
“Under the doctrine of res judicata, or claim preclusion, ‘[a] final judgment on the merits
of an action precludes the parties or their privies from relitigating issues that were or could have
been raised in that action.’” EDP Med. Computer Sys., Inc. v. United States, 480 F.3d 621, 624
(2d Cir. 2007) (quoting St. Pierre v. Dyer, 208 F.3d 394, 399 (2d Cir. 2000)). “Thus, the
doctrine bars ‘later litigation if [an] earlier decision was (1) a final judgment on the merits, (2) by
a court of competent jurisdiction, (3) in a case involving the same parties or their privies, and (4)

2

Plaintiffs withdrew their claim for breach of the implied warranty of habitability against the Hillcrest Defendants.
The Court dismissed this claim as to the individual Demty Defendants, Fahim Roufail, Andrew Roufail, and Daniel
Roufail, but not as to DALP.

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involving the same cause of action.’” Id. (quoting In re Teltronics Servs., Inc., 762 F.2d 185,
190 (2d Cir. 1985)). Res judicata serves several important interests “for both the litigants and for
society,” because it “reliev[es] parties of the cost and vexation of multiple lawsuits, conserve[s]
judicial resources, and, by preventing inconsistent decisions, encourage[s] reliance on
adjudication.” Id. (quoting Allen v. McCurry, 449 U.S. 90, 94 (1980)).
The Court finds that each factor of res judicata is satisfied here. Turning to the first
factor, the Consent Order constitutes a final judgment on the merits. See Monahan, 214 F.3d at
286 (“The entry of a consent judgment has a preclusive effect not simply because it is an
exercise of judicial power entitled to appropriate respect, but because of the policy favoring
finality of judgments.”) (citing 1B J. Moore, Moore’s Federal Practice, ¶ 0.409(5), p. 1030 (2d
ed. 1965) (“[A consent] judgment is not an inter partes contract; the court is not properly a
recorder of contracts, but is an organ of government constituted to make judicial decisions and
when it has rendered a consent judgment it has made an adjudication.”)).
As for the second factor, the Queens housing court is a court of competent jurisdiction.
Plaintiff, as a tenant, could rightfully bring an action against his landlord in housing court, and
that court could properly issue the Consent Order.
With respect to the third factor, plaintiffs’ lawsuit involves the same parties as the
Consent Order – plaintiff Ahmed Babul and defendant Subarna Sengupta (and their privies,
plaintiff Nafiew Ahmed and defendant Chandan Sengupta, respectively). See Monahan v. New
York City Dep’t of Corr., 214 F.3d 275, 285 (2d Cir. 2000) (noting that literal privity is not
required, and instead, “a party will be bound by the previous judgment if his ‘interests were
adequately represented by another vested with the authority of representation’”).

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Finally, as to the fourth factor, the instant lawsuit and the Consent Order involve the
same cause of action. “Whether or not the first judgment will have preclusive effect depends in
part on whether the same transaction or series of transactions is at issue, whether the same
evidence is needed to support both claims, and whether the facts essential to the second were
present in the first.” NLRB v. United Technologies Corp., 706 F.2d 1254, 1260 (2d Cir. 1983)
(citations omitted).
In the complaint, plaintiffs allege that the conditions in apartment D-23 “are not safe,
livable, and clean,” and that these “conditions include broken windows, broken locks, peeling
paint, broken kitchen cabinet, and mold.” Plaintiffs further allege that the Senguptas own
apartment D-23, the Senguptas had actual knowledge of the conditions, and have “refused to
rectify the situation, despite being given notice of the same.” The allegations contained in the
housing court documents are virtually identical, if not more extensive.
The Consent Order indicates that apartment D-23 was inspected, and pursuant to an
inspection report, certain violations were found to exist in that unit. This investigation into D-23
concerned precisely the same offenses at issue in the instant lawsuit – namely, whether a discrete
set of conditions existed in apartment D-23 and whether those conditions require the landlord’s
attention. Thus, the Consent Order rests on the exact same set of facts as the instant lawsuit, and
the Court would rely on similar evidence to reach a decision on the merits as to plaintiffs’
implied warranty of habitability claim here. As a result, the doctrine of res judicata bars
plaintiffs’ claim in this case as against the Senguptas.

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CONCLUSION
The Hillcrest Defendants’ motion for summary judgment [53] and the Senguptas’ motion
for summary judgment [54] are GRANTED.
SO ORDERED.

Digitally signed by Brian M.
Cogan

___________________________________
U.S.D.J.

Dated: Brooklyn, New York
September 3, 2018

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