Tenants are seeking class-action status in a lawsuit alleging that Carnegie Management engaged in unfair and deceptive business practices at four of its Brooklyn buildings.
Five tenants at 345 Eldert Street allege that in retaliation for their organizing and not paying rent, Carnegie reported the unpaid debts and fees to debt collectors and credit bureaus. The case, filed Wednesday, argues that tenants at 342 Eldert Street, 586 Hart Street, 248 McKibbin Street and 15 Judge Street in Bushwick experienced the same treatment.
The debt which Carnegie allegedly reported included late fees and penalties, inflating the totals that marred the tenants’ credit histories. The lawsuit alleges that the “inaccurate” reporting of rental arrears, a practice barred by New York’s general business law, caused “lasting and permanent financial consequences.”
The tenant’s argument relies in part on an executive order Gov. Andrew Cuomo penned last spring after the state legislature gave him new authority to combat the pandemic. The May 7 order mandated that no landlord or landlord agent could solicit or receive fees for late payment of rent from March 20 to Aug. 20.
From mid-May to July, the plaintiffs allege, Carnegie Management repeatedly threatened to report their rental arrears to credit bureaus. A damaged credit report, the tenants point out, can impair their financial future, such as by hindering their ability to buy a house or get a job. (A 2015 city law prevents employers from seeking or using workers’ or job applicants’ credit histories, except in very limited circumstances.)
The suit asserts that Carnegie Management emailed one of the plaintiffs, promising “distasteful” legal action and spelling out how damaging a bad credit report could be.
“We will litigate till judgement and full recovery of our justified rent, legal fees and potentially taking back possession of our apartment,” the email allegedly read. “It will undoubtedly adversely affect your credit rating for a long time, which is pretty costly in the process of life.”
After Carnegie Management’s collection attempts failed, tenants received notices from third-party collection agency NCSPlus Incorporated, their lawsuit claims.
Carnegie Management’s Isaac Jacobowitz said the firm has worked with tenants and offered financial relief during the pandemic.
Some tenants, he said, were not satisfied with the relief offers, and are attempting to leverage the state’s eviction protections to their advantage. Jacobowitz said one of the plaintiffs vacated the building more than a year ago, sublet the apartment, but has not been paying rent, while another tenant was able to pay but chose not to.
“Those tenants who steadfastly refused to pay or negotiate and/or ignored communications, were sent to a collection agency,” said Jacobowitz. “It is standard practice of landlords to refer tenants who owe arrears to collection agencies, but we only do it as a last resort, if we are unable to reach an amicable agreement with a tenant or former tenant.”
Jack Lester, the attorney representing the plaintiffs, said that even before Covid, retaliating against tenants for organizing is illegal.
“The tenants got together to communicate, organize and bargain collectively with the landlord,” said Lester. “Rather than engage them that way, and negotiate, he’s seeking to ruin their lives.”
In 2019, the state legislature banned so-called tenant blacklists, which landlords use to see housing court records of people seeking apartments. However, the law is enforced only by the attorney general’s office and there is no way to tell if a landlord uses a blacklist to reject a potential tenant.
Credit reports can also lead landlords to turn away rental applicants. Lester said he hopes lawmakers such as state Sen. Julia Salazar will take up the issue and beef up enforcement of the 2019 law, which he likened to “Swiss cheese.”
“The legislature has provided tenants with the right to withhold rent [in some cases] but leaves tenants vulnerable to having their credit destroyed,” said Lester. “It’s a right with no means to carry out that right.”