Docket Number: AH 410009-RO
STATE OF NEW YORK
DIVISION OF HOUSING AND COMMUNITY RENEWAL
OFFICE OF RENT ADMINISTRATION
92-31 UNION HALL STREET
JAMAICA, NEW YORK 11433
IN THE MATTER OF THE ADMINISTRATIVE ADMINISTRATIVE REVIEW
APPEAL OF DOCKET NO.: AH 410009-RO
RENEE TEITELBAUM, DISTRICT RENT ADMINISTRATOR'S
DOCKET NOS.: L-3110637-R,
OWNER-PETITIONER CDR 19,868
----------------------------------X Tenant: Phillip Block
ORDER AND OPINION GRANTING IN PART PETITION FOR ADMINISTRATIVE
On or about August 22, 1986, the above-named petitioner filed a
Petition for Administrative Review against an order issued on July
29, 1986 by the Rent Administrator, 10 Columbus Circle, New York,
New York concerning the housing accommodation known as 245 East
30th Street, New York, New York, Apartment No. 62 wherein the
Administrator established the lawful stabilization rent and
directed the owner to roll back the rent and to refund overcharges
of $4,802.78 inclusive of excess security and treble damages on
the overcharge occurring on or after April 1, 1984.
When the owner's petition was reached in chronological order for
active consideration the relevant file could not be located.
Although efforts were made to locate the record, it became
necessary to reconstruct the record. Notices, which provided the
opportunity to submit copies of all documents previously submitted
or received, were sent to both the owner and the tenant on August
22, 1991 and on September 4, 1991.
Only the tenant responded.
The Commissioner has reviewed all of the available evidence based
on the reconstruction of the record and has carefully considered
that portion of the available record relevant to the issues raised
in the administrative appeal.
The tenant commenced this proceeding by filing an overcharge
complaint with the former New York City Conciliation and Appeals
Board, the predecessor agency of the DHCR. The tenant, who stated
he had taken occupancy of the subject apartment on June 15, 1982
pursuant to a two-year sublease terminating June 15, 1984, alleged
that the prime tenant from whom he was subleasing was fictitious.
The owner was served with a copy of the tenant's complaint and was
requested to submit complete copies of all leases or rent records
pursuant to Code Section 42A.
The owner failed to provide a full rental history for the subject
Docket Number: AH 410009-RO
In Order Number CDR 19,868, the Rent Administrator established the
lawful stabilization rent based on the owner's failure to submit a
complete rental history for the subject apartment and directed a
refund of $4,802.78.
In this petition, the owner contends that the complainant occupied
the subject premises without the owner's knowledge and is not the
tenant of record. Therefore, the claim brought against the owner
should be set aside as not against the proper party. In the
alternative, should the owner be found to be the proper party, the
owner requests the opportunity to submit a lease history. The
petitioner asserts that any overcharges to be refunded should be
reduced by reimbursements previously made. Moreover, the owner
contends that treble damages should be waived as the occurrence of
any overcharge was inadvertent and unintentional.
In reply to the petition, the tenant contends that the owner's
position vis-a-vis the tenant's occupancy and tenancy of the
subject premises has been contraverted in a holdover proceeding
brought by the owner against the tenant in the Civil Court, City
of New York where the court, finding that the owner had engaged in
a pattern of creating illusory tenancies to subvert the Rent
Stabilization Law, granted the complainant all rights reserved to
a tenant under the Rent Stabilization Law. Ress Properties Inc.
v. Evone Rivera and John and Jane Doe, N.Y. Civ. Ct. Index No.
Subsequent thereto, on September 16, 1988, based on the Court's
findings, the tenant filed a request for reconsideration, alleging
that but for the owner's fraudulent conduct, the legal
stabilization rent would have been established at a lower amount.
Since the rent paid by the prior tenant was unknown, that figure
was not used in the application of Section 42A default procedures.
The tenant submitted copies of leases of purported prior tenants
to show that if the rent paid by the prior tenant had been known,
a much lower rent would have been established.
After careful consideration, the Commissioner is of the opinion
that this petition should be granted in part.
The petitioner's contention that it was not the proper party to be
charged in this proceeding was thoroughly discredited by the court
which found that in violation of the provisions of the Rent
Stabilization Law, an illusory tenancy was used as a means to
collect overcharges. Under the doctrine of collateral estoppel,
the judgment rendered in the civil action is conclusive as to this
Docket Number: AH 410009-RO
issue. Accordingly, the Commissioner finds that the petitioner is
the proper party and is responsible for any overcharges to be
The Commissioner notes that the petitioner had ample opportunity
to submit a lease history to the Administrator but failed to do so
and has not submitted such history even in this appeal.
Therefore, the Commissioner finds that the Administrator
appropriately defaulted the petitioner.
However, the owner's assertion regarding a reimbursement and rent
adjustment has been confirmed by the tenant who advises that in
February 1983, the rent was reduced from $675.00 to $588.50 and
that the owner tendered a reimbursement for the difference
collected since the inception of the tenancy. As a result, the
overcharge should be recomputed as follows:
Rent collected $588.50, Legal Stabilization Rent $514.80
Overcharge per month $73.70
Pre April 1, 1984 overcharge:
$73.70 x 21.57 mos. = $1,589.71
Post April 1, 1984 overcharge tripled:
$73.70 x 2.43 mos. x 3 = $ 537.27
Excess Security $ 73.70
Total Overcharge $2,200.68
Code Section 2526.1(a)(1) provides a penalty of treble damages for
willful overcharges and creates a presumption of willfulness
subject to rebuttal by the owner showing non-willfulness of the
overcharges by a preponderance of the evidence.
Review of the evidence in the available record in the instant case
reveals that the owner did not submit any proof demonstrating that
the overcharge was not willful but in fact, the available record
discloses that the overcharge was willful. Therefore, the
Commissioner finds that the imposition of treble damages was
With respect to the tenant's request for reconsideration, the
Commissioner notes that the granting of the request is
discretionary and that an Administrator's order is properly
challenged by means of a timely Petition for Administrative
Review. Accordingly, the new evidence submitted by the tenant on
appeal is beyond the scope of review.
Furthermore, the Commissioner notes that the Section 42A default
procedure utilized herein has been repeatedly approved by the
courts. The procedure establishes the complaining tenant's
initial rent as the lowest of the following three figures: a) the
final rent of the prior tenant, b) the complaining tenant's
Docket Number: AH 410009-RO
initial rent minus the appropriate Guidelines increase and vacancy
allowance, and c) the lowest rent in the building or complex for a
comparable apartment. This method attempts to protect a
complaining tenant's right to a lawful rent when an owner
defaults. The method is necessarily not exact, the actual lawful
rent could be either higher or lower than the rent as established
pursuant to Section 42A, even if all three figures used in the
method are before the Administrator. Nevertheless, the courts
have found the method to be a rational one, given an owner's
default. The method is applied for all defaulting owners, without
an inquiry as to whether the default was due, e.g., to a negligent
loss of rent records or to an intentional withholding of records.
Accordingly, the tenant's untimely discovery of prior rent records
does not require reconsideration - the default procedure was
designed both for the case when records are lost or misplaced and
the case when records have been deliberately withheld. (The fact
that the tenant has submitted a prior lease does not in itself
prove whether the owner's default was intentional or not.)
Finally, the Commissioner notes that the imposition of treble
damages, as was done in this proceeding, adds a further measure of
protection to the tenant in a default case.
Upon the expiration of the period in which the owner may institute
a proceeding pursuant to Article 78 of the Civil Practice Law and
Rules, this order may be filed and enforced as judgment, or the
tenant may offset against any rent thereafter due the owner not in
excess of twenty percent per month of the remaining overcharge.
THEREFORE, in accordance with the Rent Stabilization Law and Code,
ORDERED, that this petition be, and the same hereby is, granted in
part, and the Rent Administrator's order be, and the same hereby
is, modified in accordance with this order and opinion.