Pinnacle Tenants Await Judge’s Decision on Proposed Settlement

On April 12, more than 150 Pinnacle Group tenants poured into federal court in Manhattan for a “fairness hearing” on a proposed settlement in their class-action suit against their landlord. 

The purpose of the hearing was to determine whether the terms and conditions of the proposed settlement, drafted by attorneys for the tenants and Pinnacle, are “fair, adequate and reasonable.” Sixty came up to the microphone to tell Judge Colleen McMahon that they opposed it.

Pinnacle, a private-equity firm that acquired hundreds of buildings in Harlem and elsewhere in the city, became notorious for harassing its tenants, for attempting to evict them on bogus grounds, charging illegally high rents, and failing to make repairs or provide adequate heat and hot water. In one two-year period, it tried to evict tenants from 5,000 apartments.

The lawsuit was initiated in 2007 by Buyers and Renters United to Save Harlem, a grass-roots organization. It charges that Pinnacle’s practices toward its tenants were criminal enough to qualify as illegal under the federal Racketeering Influenced and Corrupt Organizations (RICO) Act. 

The lawsuit was certified as a class action in April 2010. That meant it would affect Pinnacle’s over 60,000 tenants in New York City. It was also the first time a case against a landlord was certified as a class action under RICO.

The Pinnacle tenants who told the judge that the proposed settlement was not “fair, adequate or reasonable” included the four people named as “class representatives”: Kim Powell, Andres Mares Muro, and Ted and Marge Charron. Attorneys from the Northern Manhattan Improvement Corporation and the Urban Justice Center represented other tenants opposed to it.

Many tenants felt that the proposed settlement would not provide adequate oversight of Pinnacle. It does not provide for an independent investigator to do any random spot-checking of buildings. The settlement merely requires Pinnacle to give a self-evaluation to the claim administrator, who would not have power to subpoena tenant records from Pinnacle or any relevant state housing agency. 

One tenant testified that her research disclosed that the Pinnacle Group had been under investigation by the state Attorney General’s office and the Manhattan district attorney’s office on six different occasions over the last 30 years. Pinnacle, she said, failed to provide pertinent information during any of those investigations, and none of them produced an adequate mechanism to deter the company from continuing the potentially illegal practices it was accused of doing.

Some tenants felt that the monetary compensation the settlement would have Pinnacle pay to tenants and the community was inadequate. Others said their lawyers’ investigation was inadequate. Not a scintilla of information was received directly from Pinnacle, and few of its tenants outside the Harlem area were interviewed by the lawyers representing the class of tenants.

Tenants also question the choice of who will receive the $2.3 million earmarked in the settlement for organizations helping tenants. Some of it will go to legal-services groups, but tenants have expressed doubts about two of the three community-based organizations chosen. One, the Ridgewood Bushwick Senior Citizens Council, was barred last year by the state Attorney General’s office from collecting City Council funds for failing to disclose its expenses properly, and in 2010, the city Department of Investigation said that “a lack of oversight and internal controls” had enabled “fraudulent schemes to occur.” Another, the Metropolitan Council on Jewish Poverty, does not serve the areas where Pinnacle property is located, and one of its board members, Joseph Strasburg, is president of the Rent Stabilization Association, a landlord lobbying group that filed an amicus curiae brief in support of Pinnacle’s request to dismiss the tenants’ lawsuit. 

“Our own Class Counsel sheepishly admitted that they allowed defendant’s counsel to select the community-based organization to receive funding,” says Powell.

Judge McMahon is expected to make a decision within the next few weeks. 

Kim Powell is president of Buyers and Renters United to Save Harlem (BRUSH).