Tenants are seeking class action status in a lawsuit alleging that Carnegie Management engaged in unfair and deceptive business practices in four of its Brooklyn buildings.
Five tenants at 345 Eldert Street allege that in retaliation for their organization and non-payment of rent, Carnegie reported unpaid debts and charges to debt collectors and credit bureaus. The case, filed Wednesday, claims tenants at 342 Eldert Street, 586 Hart Street, 248 McKibbin Street and 15 Judge Street in Bushwick suffered the same treatment.
The debt Carnegie allegedly reported included late fees and penalties, inflating totals that plagued tenants’ credit histories. The lawsuit alleges that the “inaccurate” reporting of rent arrears, a practice prohibited by general New York business law, caused “lasting and permanent financial consequences.”
The tenant’s argument rests in part on an executive order from Governor Andrew Cuomo drafted last spring after the state legislature gave him new authority to fight the pandemic. The May 7 ordinance required that no landlord or landlord agent may solicit or receive fees for late payment of rent from March 20 to August 20.
From mid-May to July, complainants say, Carnegie Management repeatedly threatened to report their rent arrears to the credit bureaus. A damaged credit report, tenants point out, can harm their financial future, for example by hampering their ability to buy a home or find a job. (A 2015 municipal law prevents employers from researching or using the credit histories of workers or job seekers, except in very limited circumstances.)
The lawsuit claims Carnegie Management emailed one of the plaintiffs promising an “unpleasant” legal action and explaining how damaging a bad credit report could be.
“We will plead until the judgment and the full recovery of our justified rent, legal costs and possibly the repossession of our apartment”, the email would have indicated. “It will undoubtedly affect your credit rating for a long time which is quite expensive in the process of life.”
After Carnegie Management’s failed collection attempts, tenants received notices from third-party collection agency NCSPlus Incorporated of their legal claims.
Isaac Jacobowitz of Carnegie Management said the company has worked with tenants and offered financial assistance during the pandemic.
Some tenants, he said, were not happy with the relief offers and are trying to leverage the state’s eviction protections to their advantage. Jacobowitz said one of the plaintiffs left the building over a year ago, sublet the apartment, but failed to pay rent, while another tenant was able to pay but chose not to.
“Those tenants who stubbornly refused to pay or negotiate and / or ignored communications, were sent to a collection agency,” Jacobowitz said. “It is a common practice of landlords to refer tenants who are in arrears to collection agencies, but we only do this as a last resort, if we cannot come to an amicable agreement with a tenant. or a former tenant. “
Jack Lester, the lawyer representing the plaintiffs, said that even before Covid, retaliation against tenants for organizing was illegal.
“The tenants have come together to communicate, organize and bargain collectively with the landlord,” Lester said. “Rather than hire them this way and negotiate, he’s looking to ruin their lives.”
In 2019, the state legislature banned so-called tenant blacklists, which landlords use to view housing court records of people seeking apartments. However, the law is only enforced by the Attorney General’s office and there is no way to know if a landlord is using a blacklist to reject a potential tenant.
Credit reports can also cause landlords to turn down rental applicants. Lester said he hoped lawmakers like State Senator Julia Salazar would take up the issue and strengthen enforcement of the 2019 law, which he compared to “Swiss cheese.”
“The legislator has granted tenants the right to withhold rent [in some cases] but leaves tenants vulnerable to the destruction of their credit, ”Lester said. “It is a right which has no way of exercising this right.”