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STATE OF NEW YORK
DIVISION OF HOUSING AND COMMUNITY RENEWAL
OFFICE OF RENT ADMINISTRATION
GERTZ PLAZA
92-31 UNION HALL STREET
JAMAICA, NEW YORK 11433
------------------------------------X S.J.R. NO. 5400, 5406
IN THE MATTER OF THE ADMINISTRATIVE : ADMINISTRATIVE REVIEW
APPEALS OF DOCKET NO. AL 410101 RT
: AL 410160 RO
LYDIA HERMAN AND HENRY SCHREIBER D.R.O.DOCKET NO.TC-082399-G
PETITIONERS :
------------------------------------X
ORDER AND OPINION GRANTING PETITIONS FOR ADMINISTRATIVE REVIEW IN PART
AFTER RECONSIDERATION
On December 4, 1986, the above-named petitioner-owner and
tenant filed Petitions for Administrative Review against an order
issued on November 3, 1986, by the Rent Administrator, 10 Columbus
Circle, New York, New York, concerning the housing accommodations
known as 42 West 88th Street, New York, New York, Apartment No.
5R, wherein the Rent Administrator determined that the owner had
overcharged the tenant.
On September 24, 1990, the Commissioner issued an Order and
Opinion granting the petitions in part. Subsequent thereto, the
petitioner owner and tenant filed petitions in the Supreme Court
pursuant to Article 78 of the Civil Practice Law and Rules
requesting that the Order of the Commissioner be annulled (owner)
and modified (tenant). On December 21, 1990, the proceeding was
remitted to DHCR for further consideration.
The Commissioner notes that this proceeding was filed prior
to April 1, 1984. Sections 2526.1 (a) (4) and 2521.1 (d) of the
Rent Stabilization Code (effective May 1, 1987) governing rent
overcharge and fair market rent proceedings provide that
determination of these matters be based upon the law or code
provisions in effect on March 31, 1984. Therefore, unless
otherwise indicated, reference to Sections of the Rent
Stabilization Code (Code) contained herein are to the Code in
effect on April 30, 1987.
The issue in these appeals is whether the Rent
Administrator's order was warranted.
The Administrative Appeal is being determined pursuant to the
provisions of Section 2526.1 of the current Rent Stabilization
Code and Section 42A of the former Rent Stabilization Code.
The Commissioner has reviewed all of the evidence in the
record and has carefully considered that portion of the record
relevant to the issue raised by the administrative appeal.
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This proceeding was originally commenced by the filing in
February 1984 of a rent overcharge complaint by the tenant who
stated that she first moved to the subject apartment in October
1981 pursuant to a one year lease at a rental of $510.20 per
month and that a prior tenant had paid only $333.00 per month in
rent. In support of such contention, the tenant submitted a copy
of prior tenant Julia Holm's cancelled rent check dated in August
1981 for $333.00. Such check listed Julia Holm's address as the
subject apartment.
On August 10, 1984, the owner was served with a copy of the
tenant's complaint and an answer form directing him to submit a
complete rental history from the base date and advising that the
owner was subject to treble damages on rent overcharges collected
on and after April 1, 1984. No response was received from the
owner. Subsequently on July 10, 1986, the owner was served with
a Final Notice of Pending Default giving him a final opportunity
to submit the required rent records and stating that treble
damages will be imposed on any overcharge occurring after April 1,
1984 for which the owner fails to satisfy the Division that the
overcharge was not willful. In response to this notice, the owner
stated in substance that he had already submitted the requested
documents to the CAB (Conciliation and Appeals Board, the agency
formerly charged with enforcing the Rent Stabilization Law) and
was now submitting a copy of the annual apartment registration
showing that on April 1, 1985, the rent of the subject apartment
was $561.20 and that this was the lawful rent since it had not
been appealed within 90 days of the registration.
On September 26, 1985, the tenant's attorney submitted a
letter stating in substance that following the tenant's filing of
the overcharge complaint, the owner commenced a non payment
action against the tenant, that the tenant counterclaimed on the
basis among other things that the rent was paid and that the
matter was settled by a so ordered stipulation signed on January
31, 1985 under index number 42537/84. A copy of the stipulation
was also submitted by the tenant's attorney. It was stated in
the stipulation inter alia that commencing June 1, 1985, the
tenant would pay $480.00 per month for use and occupancy of the
subject apartment with an increase over $480.00 upon lease renewal
and that the tenant's complaint previously filed under docket TC-
082399-G would not be affected by the stipulation and would
continue to be processed.
In Order Number CDR 25,786, the Rent Administrator determined
that based on the failure to submit a rental history, the initial
lawful stabilization rent was $375.00 per month and that the owner
had collected a rent overcharge of $9176.76 from October 15, 1981
through October 14, 1986 including interest on that portion of the
overcharge occurring on and after April 1, 1984. The tenant's
initial rent on October 15, 1981 was established at $375.00 by
using the lowest stabilized rent for the same size apartment as
the subject apartment. The lowest stabilized rent was the rent of
apartment 3R.
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In the owner's petition, the owner contends in substance that
he did submit copies of all required leases to the CAB proving
that the tenant was not overcharged, that the Rent Administrator's
order failed to take into account the fact that the tenant started
paying a rent of $480.00 as a result of the court stipulation,
that the owner thought the matter had been resolved by the court
settlement and that the owner did not collect $561.20 per month in
rent from the tenant from October 15, 1982 to October 14, 1985.
In answer to the owner's petition, the tenant stated in
substance that following her complaint of rent overcharge, the
owner refused to accept the tenant's rent checks and instead
instituted a non payment proceeding which was dismissed in court.
On October 4, 1989, the DHCR advised the owner that the DHCR
had no record of any prior leases submitted by the owner and
afforded the owner another opportunity to submit a complete rental
history and proof that such rental history had previously been
submitted to the CAB. In response to the DHCR directive, the
owner on October 31, 1989 submitted a copy of a stipulation
entered into between the parties to settle DHCR Enforcement Case
19746HL and stated that such stipulation would allow a close out
of the owner's and tenant's appeals herein. However an
examination of the November 15, 1988 enforcement stipulation
discloses that such stipulation has no bearing on the proceedings
herein and indeed contains a clause as follows: "(4) Tenant and
landlord reserve their rights to continue their respective claims
now being decided by the DHCR,".
On November 16, 1989, the owner submitted a statement to the
effect that in Housing Court under index number 102039/87, a
settlement was reached on January 20, 1989 in which a judge
reviewed the tenant's claims in the tenant's appeal herein and
dismissed them. The owner was then asked to submit a copy of the
January 20, 1989 stipulation. On December 29, 1989, the owner
submitted a copy of the January 20, 1989 stipulation. Such
stipulation stated that the tenant's counterclaims had been
dismissed by the court but that the owner was ordered to pay
$5,000.00 in attorney's fees for the tenant's defense of the
action. The tenant's attorney advised that this stipulation was
the settlement of a non payment proceeding brought by the owner's
attorney and had no effect on the tenant's overcharge complaint.
On January 31, 1990, the owner submitted a statement to the
effect that the tenant's 1984 rent was legally correct because the
tenant did not challenge it within the ninety day period. In
addition, the owner submitted a copy of prior tenant Julia Holm's
lease in effect from February 25, 1980 until February 24, 1982 at
a rental of $510.18 per month.
In his Article 78 Petition, the owner herein Henry Schreiber
claimed that "Westhattan Realty Corporation" should have been
listed as the owner rather than Henry Schreiber since Henry
Schreiber is only the President of Westhattan Realty Corporation
and not the actual owner. In addition, the owner stated that
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treble damages should not have been imposed because of the
stipulation entered into between the parties and in any event the
imposition of treble damages should have been limited to a two
year period.
On January 20, 1992, the owner submitted a copy of a rent
ledger showing that the tenant herein had not paid rent from
October 1984 up to June 1985 and stated that any overcharge
calculations by the DHCR must take this factor into account.
In the tenant's petition, the tenant contends in substance
that her initial legal regulated rent should have ben set at
$333.00 which was the last rent of prior tenant Holm rather than
$375.00 (lowest stabilized rent of same size apartment) and that
the imposition of treble damages was warranted. Subsequently, the
tenant submitted an affidavit from Julia Holm in which Ms. Holm
stated that she is now residing in California , that she occupied
the subject apartment from April 1974 through June 19, 1981, and
that her last rent for the subject apartment was $333.00.
In response to the tenant's petition, the owner stated in
substance that the imposition of treble damages was not warranted
because the tenant's complaint was filed prior to April 1, 1984
and the overcharge was not willful. In support of his
contentions, the owner cited DHCR Order Number CDR 13,370 and DHCR
Order BG 410232-RT.
In her Article 78 Petition, the tenant contended in substance
that the last rent of prior tenant Holm - $333.00 - should have
been used as the initial rent of the tenant herein; that the
tenant should have been awarded attorney's fees, that the
calculation of the excess security to be refunded was incorrect
because although the owner reduced the rent to $480.00 effective
June 1, 1985, he did not reduce the tenant's security at that
time; and that the tenant should have been awarded interest as
well as treble damages.
It is noted in the Commissioner's September 24, 1990 Order,
that although treble damages were imposed, the initial rent of the
tenant herein was determined to be $375.00 - the lowest
stabilized rent for an apartment in the subject building with the
same number of rooms. Prior tenant Holm's last rent was not used
because the evidence submitted by the parties as to the amount of
such rent was inconclusive. However upon remit, a hearing was
held on October 7, 1991 to determine the last rent paid by the
prior tenant Julia Holm. At such hearing, the owner and tenant
appeared and were represented by counsel. In addition Julia Holm
appeared and testified as to the rent she paid. The owner and the
owner's son also testified. The Administrative Law Judge who
presided at the hearing found that Julia Holm's testimony that her
last rent for the subject apartment was $333.00 was credible and
noted that the owner and owner's son were unable to submit
original leases and rent cards for the subject apartment.
The Commissioner is of the opinion that these petitions
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should be granted in part.
At the outset, an examination of the court and enforcement
stipulations and other evidence submitted by the parties discloses
that such stipulations did not decide the tenant's overcharge
complaint herein and that the tenant never waived her right to
have her overcharge complaint determined.
Turning to the merits, Section 42A of the former Rent
Stabilization Code provides in pertinent part that an owner is
required to retain complete rent records for each stabilized
apartment from June 30, 1974 and produce them to the DHCR upon
demand. If the apartment was decontrolled from the Rent Control
Law after June 30, 1974, the owner must provide satisfactory
documentary evidence of the apartment's date of decontrol.
In cases where the owner has not produced the required rental
history, DHCR has adopted a method to compute an apartment's
legal regulated rent. Such rent is computed at the lowest of the
following three amounts:
1) the lowest stabilized rent for an apartment in the
subject building with the same number of rooms.
2) the current tenant's initial rent minus any allowance for
the tenant's initial lease.
3) the prior tenant's last rent, if known.
In the instant case, the owner failed to submit a rental
history although given several opportunities to do so. Based on
the testimony taken at the October 7, 1991 hearing and the
findings of the Administrative Law Judge with regard to
credibility, the initial legal regulated rent of the tenant herein
is established by using amount (3) the prior tenant's last rent
of $333.00. In addition, the Rent Administrator incorrectly did
not freeze the rent for the entire period of the overcharge as is
mandated by DHCR policy when an owner fails to supply a complete
rental history. This error is being corrected herein.
The Commissioner further notes that the owner is correct in
his contention that as a result of the January 31, 1985 court
stipulation the tenant started paying $480.00 per month in rent
effective June 1, 1985 and that this factor was not taken into
account in the Rent Administrator's order. This error is also
being corrected herein. The Commissioner also notes that the
owner has not submitted any timely evidence to support his
contention that the tenant did not pay $561.20 per month in rent
from October 15, 1982 to June 1, 1985. It is noted that the
owner's January 20, 1992 submission of a copy of a rent ledger was
not submitted either in the proceeding before the Rent
Administrator nor on the original appeal nor in the Article 78
Petition. It cannot be considered for the first time in this
proceeding which is not de novo since the owner has given no
explanation or excuse for the late submission. In addition, it is
noted that although the owner reduced the rent to $480.00 per
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month effective June 1, 1985, there is no evidence to show that
the tenant's security was also reduced.
The owner's contention that the tenant's overcharge complaint
must be dismissed because it was not filed within 90 days of the
1984 apartment registration is without merit. The tenant's
overcharge complaint herein was filed prior to April 1, 1984, and
may not be dismissed because the owner registered the apartment
rent subsequent to the filing of the tenant's complaint.
The owner Henry Schreiber's contention in his Article 78
Petition that he should not have been listed as the owner of the
subject premises is without merit. The evidence of record
discloses that Henry Schreiber was listed as the owner on the
initial lease for the tenant herein and that Henry Schreiber filed
a Petition for Administrative Review listing himself as the owner.
Moreover, Henry Schreiber never contested that he should not have
been considered the owner of the subject premises either in the
proceeding before the Rent Administrator nor on appeal.
With regard to the tenant's contention that the imposition of
treble damages was warranted, Section 2526.1 of the current Rent
Stabilization Code provides in pertinent part that any owner who
is found by the DHCR to have collected a rent or other
consideration in excess of the legal regulated rent on and after
April 1, 1984 shall be ordered to pay to the tenant a penalty
equal to three times the amount of such excess. If the owner
establishes by a preponderance of the evidence that the overcharge
was not willful, the DHCR shall establish the penalty as the
amount of the overcharge plus interest from the date of the first
overcharge on or after April 1, 1984.
In the instant case, the owner has not submitted any evidence
to substantiate his claim that the overcharge was not willful.
Further, the evidence of record discloses that the owner was
notified on August 10, 1984 and July 10, 1986 of the possible
imposition of treble damages. It is noted that the cases cited
by the owner in his answers to the tenant's petition dealt with
situations where an owner was not informed of the possibility that
treble damages would be imposed and therefore such cases are not
relevant to the proceeding herein where the owner was duly
notified of such possibility prior to the issuance of the Rent
Administrator's order. In addition, the owner's contention that a
stipulation entered into between the parties should have barred
the imposition of treble damages is without merit since the
stipulations between the parties as previously explained were
irrelevant to the overcharge proceeding herein and do not
establish that the overcharges found herein were not willful.
Further, contrary to the owner's contention, treble damages may be
imposed for a period in excess of two years. Accordingly, the
imposition of treble damages was warranted.
With regard to the tenant's contention in her Article 78
Petition that the tenant should have been awarded attorney's fees,
it is noted that pursuant to Section 2526.1(d) of the current Rent
Stabilization Code, the assessment of attorney's fees is
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discretionary. Under the circumstances of this case including the
arguments raised by the parties in support of their contentions,
the Commissioner deems it inapproriate to award attorney's fees.
Further, it is noted that at no time during the administrative
proceedings either before or after the filing of the Article 78
Petition did the the tenant make a request for attorney's fees.
With regard to the tenant's contention that interest as well
as treble damages should have been imposed, it is noted that CAB
practice did not allow for the imposition of interest on
overcharges occurring prior to April 1, 1984, and that the current
Rent Stabilization Code precludes the imposition of interest on
overcharges occurring on and after April 1, 1984 where treble
damages have already been assessed.
Taking the above factors into account, the Commissioner has
recalculated the lawful stabilization rent and amount of rent
overcharge for the subject apartment, including treble damages on
the overcharge occurring on and after April 1, 1984. The lawful
stabilization rents and amount of rent overcharge are set forth on
the amended rent calculation chart attached hereto and made a part
hereof.
Because this determination concerns lawful rents only through
October 14, 1986, the owner is cautioned to adjust subsequent
rents to an amount no greater than that determined by this order
plus any lawful increases, and to register any adjusted rents with
this order and opinion being given as the explanation for the
adjustment.
This order may 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, be filed and enforced as a judgment
or not in excess of twenty percent per month thereof may be offset
against any rent thereafter due the owner.
THEREFORE, in accordance with the provisions of the Rent
Stabilization Law and Code, it is
ORDERED, that these petitions for administrative review be,
and the same hereby are, granted in part, and, that the order of
the Rent Administrator and the Commissioner's prior order and
opinion issued on September 24, 1990, be, and the same hereby are,
modified in accordance with this order and opinion. The lawful
stabilization rents and the amount of the rent overcharge are
established on the attached chart which is fully made a part of
this order. The amount of the rent overcharge through October 14,
1986 is $23,209.00.
ISSUED
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JOSEPH A. D'AGOSTA
Deputy Commissioner
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