Article 78
PRELIMINARY STATEMENT
Petitioner Vanessa Harrison brings this proceeding pursuant to CPLR § 7803(3) to challenge the arbitrary, capricious, and retaliatory actions of Respondent RUPCO, Inc., a publicly funded nonprofit housing organization. RUPCO’s conduct—including negligent property management, misrepresentation, concealment of material facts, and a retaliatory eviction executed contrary to judicial order—violated due process, equitable principles, and multiple provisions of New York law.
The record demonstrates a continuous pattern of bad faith, fraud, and administrative abuse resulting in the destruction of Petitioner’s small business, Meraki, the loss of her livelihood, and the infliction of lasting economic and emotional harm. RUPCO’s actions also undermined its nonprofit obligations and eroded public trust by prioritizing profit over duty, culminating in the sale of the property for substantial private gain.
I. Overview and Timeline
- March 1, 2020: Petitioner leased retail space at 86 Partition Street, Saugerties, operating her boutique Meraki.
- March 19, 2020: Store was forced to close due to the statewide COVID-19 shutdown.
- June 1, 2020: A catastrophic flood originating from a defective water heater in the apartment above destroyed over $60,000 in merchandise.
- July 1, 2020: Store reopened following costly repairs and restocking.
- April 16, 2021: A second flood, from the same location, again destroyed equivalent inventory.
Over a 13-month tenancy, Meraki was operational for only eight months due to RUPCO’s repeated negligence.
Despite at least five separate flooding incidents affecting multiple tenants, RUPCO failed to correct the root cause. Instead, it later sold the building—after Petitioner’s eviction—for $1.125 million to the Corcoran Group, a luxury real estate firm based on Park Avenue in New York City. This transaction yielded a profit of approximately $1 million. RUPCO publicly justified the sale by citing “the housing crisis,” yet by evicting Petitioner and transferring ownership to a luxury brokerage, it directly contributed to that crisis. The property remained vacant for months after the eviction, evidencing that the removal was retaliatory and profit-motivated, not necessity-based.
II. Procedural Violations and Illegal Eviction
On or about December 12, 2021, RUPCO publicly posted an eviction notice nineteen (19) days before it was legally executable, despite a judicial order expressly stating that the warrant was “not to be executed in any event before December 31.”
This premature posting violated RPAPL §§ 749(2) and 749(3) and denied Petitioner her due process rights. The unlawful public posting caused humiliation, reputational damage, and severe emotional distress. Moreover, the month of December was wrongfully added to the total amount owed.
The eviction was wholly unnecessary: the parties had reached a stipulated court agreement intended to resolve the matter. Executing the warrant in defiance of that stipulation constitutes retaliation and abuse of discretion.
III. Estoppel, Misrepresentation, and Nonprofit Misconduct
Throughout 2020–2021, RUPCO engaged in misrepresentation, omission, and deceptive conduct, invoking the doctrines of equitable and promissory estoppel (Kosowsky v. Willard Mtn., Inc., 90 A.D.3d 1127 [3d Dept 2011]; Matter of Daleview Nursing Home v. Axelrod, 62 N.Y.2d 30 [1984]).
Assurances and Inducement of Reliance
From the earliest months of the pandemic, multiple RUPCO employees communicated assurances that Petitioner could rely upon continued support, stability, and eventual resolution.
On March 19, 2020, Petitioner emailed Jess Nagy, Property Manager, explaining that she had been forced to close her boutique due to COVID-19 and was concerned about rent. Ms. Nagy replied:
“Hi Vanessa, thanks for reaching out. We completely understand that these aren’t normal circumstances—keep yourself healthy, and we’ll be in touch when all of this blows over.”
Shortly thereafter, Jake Michaels, Petitioner’s original RUPCO contact, responded to a similar inquiry:
“Please, no need to apologize… this is crazy. Our hope is that you get up and running and have a strong summer. If that happens, I am confident you will be able to sustain yourself and be successful. So just keep me in the loop and we are here with you.”
Nearly a year later, RUPCO’s Chief Operating Officer, Sheila Kilpatrick, wrote:
“The series of events that you have experienced since moving into your location back in March of 2020 is so upsetting… I am open and willing to continue our dialogue in the hopes of coming to a resolution that makes you whole, while still keeping our not-for-profit agency afloat… I want you to feel heard… I am confident that as we continue the conversation that we will be able to come to an agreeable solution to this unfortunate matter.”
These written assurances—from multiple levels of RUPCO management—constitute affirmative conduct inducing reliance. They show RUPCO’s acknowledgment of its role in Petitioner’s hardship, its stated commitment to resolution, and its implied promise of non-enforcement. Petitioner reasonably relied on these representations by continuing to operate and invest in her business. RUPCO’s sudden reversal—terminating the tenancy and pursuing eviction—constitutes affirmative misconduct, satisfying all conditions for equitable estoppel.
Unconscionable Lease Provisions
The lease governing Petitioner’s tenancy contained multiple provisions that are unlawful and against public policy under New York law.
First, the lease restricted any potential remedies available to the tenant solely to “equity in the building” or “proceeds from RUPCO’s insurance.” This provision is facially unconscionable because it attempts to bar lawful compensation for negligence or breach, limiting recovery to assets wholly controlled by the landlord. By conditioning redress on access to its own insurance—while concealing insurance information and filing false claims—RUPCO constructed a self-protective contractual shield to evade accountability.
Second, another clause—explicitly acknowledged by Petitioner’s attorney during proceedings as being “against public policy”—was never presented to the court as a defense. Despite recognizing the clause’s illegality, counsel refused to raise it, stating it “wasn’t worth mentioning.”
Such terms violate the principles of contractual fairness and due process (Gillman v. Chase Manhattan Bank, N.A., 73 N.Y.2d 1 [1988]; Matter of Friedman, 64 A.D.3d 539 [2d Dept 2009]; Lobel v. Maimonides Med. Ctr., 39 A.D.3d 275 [1st Dept 2007]). Together, these clauses and counsel’s failure to invoke them demonstrate both the unconscionable nature of the lease and the malpractice that followed, further supporting Petitioner’s claim that the eviction and judgment were arbitrary and contrary to law.
IV. Insurance Fraud and Misrepresentation
Insurance Misrepresentation and Unauthorized Claim Filing
RUPCO ignored Petitioner’s formal written requests for maintenance records, incident reports, and proof of licensure for contractors performing work above her retail unit. Rather than respond transparently or provide the requested documentation, RUPCO, without Petitioner’s knowledge, authorization, or consent, opened a new insurance claim in her name with Erie Insurance—nearly three years after the incident and in direct response to her inquiries about liability and maintenance records.
RUPCO ignored formal written requests for maintenance records, incident reports, and proof of licensure for contractors performing work above Petitioner’s unit, and instead, without Petitioner’s knowledge or consent, replied by opening an insurance claim in her name with Erie Insurance, after having already filed a false statement that “there was a small drip that went down into the retail unit below to an unknown extent and damaged some ceiling tiles” despite photographic and video proof of catastrophic flooding—and despite there being no ceiling tiles in the structure.
Erie processed RUPCO’s claim without inspection, and later denied Petitioners on contradictory and false grounds and invented technicalities (“5:00 PM cutoff,” “dropbox link didn’t work with their internal software”),constitutes bad faith insurance conduct (Bi-Economy Market, Inc. v. Harleysville Ins. Co., 10 N.Y.3d 187*). Petitioner did not learn of Erie’s claim that the Dropbox link was “inaccessible” until the company responded to her formal complaint to the New York State Department of Financial Services (DFS), belatedly asserting this purported technical issue as the third, inconsistent justification offered for denying the unauthorized claim RUPCO had opened in her name. These acts amount to insurance fraud and collusion, violating Insurance Law § 403 and the duty of good faith recognized in Bi-Economy Market v. Harleysville Ins., 10 N.Y.3d 187 (2008).
The act of filing inconsistent claims for the same event—one minimizing the damage to protect RUPCO’s own interests, and another opened in Petitioner’s name years later to feign good faith—constitutes insurance fraud and a breach of public trust. Under N.Y. Penal Law § 176.05, a person commits insurance fraud when they knowingly present or cause to be presented a written statement in support of a claim that contains materially false information. By submitting a fabricated description of the flood and later manipulating Petitioner’s identity to create a contradictory claim, RUPCO engaged in conduct that violates this statute and potentially rises to insurance fraud in the fourth degree under § 176.20, as the value in question exceeded $1,000.
RUPCO’s conduct also constitutes a violation of N.Y. Insurance Law § 403, which prohibits false statements and misrepresentations made in connection with insurance claims, and Penal Law §§ 175.10 and 175.35, concerning falsification of business records and offering a false instrument for filing. Moreover, by opening a claim in Petitioner’s name without consent, RUPCO usurped her legal identity and deprived her of the right to manage her own claim and supporting evidence—a gross abuse of authority and breach of fiduciary duty.
This pattern of concealment and manipulation demonstrates deliberate bad faith. The unauthorized claim was not a legitimate effort to compensate Petitioner but a performative act designed to obscure the falsity of RUPCO’s prior claim and to create the appearance of compliance. The insurer, Erie Insurance, compounded this misconduct by issuing baseless denials citing non-existent deadlines and trivial technical excuses (“documentation not received by 5:00 p.m.” or “Dropbox link could not be opened”)—further evidence of coordination or willful negligence between the parties.
As a tax-exempt 501(c)(3) organization, RUPCO’s actions also violate Treas. Reg. § 1.501(c)(3)-1(c)(2), which prohibits a nonprofit from operating for the benefit of private interests. Filing fraudulent claims and diverting or concealing funds derived from insurance constitutes private inurement and self-enrichment, directly contrary to the requirements of its charitable status. Such conduct is both IRS-reportable and grounds for revocation of its federal tax exemption under 26 U.S.C. § 6033(j) and § 4958.
In sum, RUPCO’s dual insurance filings—one false, one unauthorized—form a clear pattern of deceit designed to conceal negligence, deflect liability, and preserve its own financial and reputational interests at the expense of Petitioner’s livelihood. This misconduct directly contributed to Petitioner’s loss of business, income, and stability, and constitutes actionable fraud, misrepresentation, and abuse of nonprofit authority under both New York and federal law.
V. Tax-Filing Irregularities and Nonprofit Abuse
IRS records show RUPCO failed to file Form 990 returns for 2020, 2022, 2023, and 2024, and filed duplicate 2021 returns (October 24 2022 and January 5 2024). Under IRC § 6033(j), failure to file for three consecutive years automatically revokes tax-exempt status. The duplicate filings appear intended to evade that revocation and conceal misuse of nonprofit privileges, raising serious questions of integrity and oversight.
VI. Attorney Malpractice and Judicial Misconduct
Petitioner’s attorney, Mr. Bruno, who simultaneously serves as a town judge, engaged in gross negligence, conflicts of interest, and ethical violations, including:
- Ignoring Petitioner’s PTSD and denying reasonable accommodations;
- Identifying but failing to raise an illegal lease clause as a defense;
- Stating that Petitioner “had no rights” and RUPCO “owed her nothing”;
- Conducting an ex parte conversation with the presiding judge;
- Failing to assert valid defenses such as constructive eviction, estoppel, mitigation of damages, and RPAPL § 749(3);
- Allowing a $47,000 judgment to stand.
This conduct constitutes malpractice under Rudolf v. Shayne, 305 A.D.2d 465 (2d Dept 2003), aff’d 8 N.Y.3d 438 (2007), and violates 22 NYCRR § 1200.0 (Rules 1.1, 1.3, 1.7, and 8.4).
VII. Judicial Errors and Denial of Due Process
The presiding judge:
- Ignored four separate orders, including three emergency stays of eviction and one motion to vacate judgment;
- Ignored a hand-delivered letter notifying him of an abusive relationship and the danger eviction posed;
- Allowed an ex parte exchange between counsel and the court.
These actions constitute abuse of discretion reviewable under CPLR § 7803(3) and violate due-process guarantees articulated in Matter of Pell v. Board of Educ., 34 N.Y.2d 222 (1974).
VIII. Trespass and Licensing Violations
On October 19 at 12:05 PM, an unknown individual unlawfully entered Petitioner’s store, triggering the alarm. Police were dispatched; RUPCO refuses to identify the intruder. This incident constitutes criminal trespass (Penal Law § 140.10) and a violation of Petitioner’s right to quiet enjoyment.
Contractors performing work in the building were required to be licensed in the Village of Saugerties for both general contracting and their specific scope of work. RUPCO has failed to provide any proof of compliance. The contractors are not on the list of licensed workers – both plumbing and electric – on the Village of Saugerties website.
IX. Business Collapse and Quantifiable Damages Resulting from Respondent’s Conduct
As a direct result of Respondent’s negligence, concealment, and retaliatory eviction, Petitioner suffered a complete collapse of her business infrastructure.
Proof of Rapid Business Growth and Financial Reliability via Square Capital
Over two years, Petitioner’s boutique Meraki showed strong financial growth verified by Square Capital’s progressive loan approvals—from an initial $2,000 to $25,000 within two years—based on proven repayment reliability and consistent revenue.
This trajectory demonstrates robust performance and credibility prior to RUPCO’s interference. When the store was forced to close, revenue ceased overnight, preventing repayment of a $1,700 balance and resulting in:
- Permanent loss of Square Capital eligibility;
- Revocation of marketing-tool and customer-database access;
- Destruction of business credit;
- Loss of recovery mechanisms essential to relaunch.
Collateral Losses
- Wholesale Vendor Accounts – Loss of 100+ vetted vendor relationships, termination of Faire account with $18 K Net-90 terms, and destruction of sourcing history.
- Email Marketing Database – Loss of thousands of customer contacts built over years.
- Google Business Page & SEO Ranking – Removal of verified listing and collapse of visibility.
- Website and Domain – Abandonment of e-commerce platform and digital assets.
- Social Proof and Public Trust – Disappearance of 5-star reviews, press, and credibility.
- Brand Equity – Erasure of Meraki’s curated identity, reputation, and clientele.
These are quantifiable business losses, not abstract damages. Each took years to build and was destroyed through RUPCO’s negligent and retaliatory acts.
X. Pattern of Bad Faith and Abuse of Public Trust
RUPCO’s acts—property neglect, insurance deception, retaliatory eviction, and profiteering—form a consistent pattern of bad faith and unjust enrichment by a nonprofit chartered to serve the public good. Under the clean-hands doctrine (National Distillers v. Seyopp Corp., 17 N.Y.2d 12 [1966]) and this Court’s equitable authority, Respondent’s conduct bars equitable relief and warrants annulment of its actions.
XI. Relief Requested
Petitioner respectfully requests that this Court:
- Annul and vacate the unlawful eviction and judgment;
- Direct a full investigation into RUPCO’s misuse of nonprofit status and insurance fraud;
- Refer the matter to the Attorney Grievance Committee and Judicial Conduct Commission regarding attorney and judicial misconduct;
- Award damages and equitable relief restoring Petitioner’s business and access to property records; and
- Grant such other and further relief as the Court deems just and proper.
Be the first to comment