BH 410300 RT; BH 410140 RO
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
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IN THE MATTER OF THE ADMINISTRATIVE
APPEAL OF ADMINISTRATIVE REVIEW
DOCKET NOS.: BH-410300-RT
BH-410140-RO
ELYSE RABINOWITZ-TENANT
AND
MICHAEL LINDER-OWNER, DRO DOCKET NOS.: TC-70794-G
PETITIONER
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ORDER AND OPINION DENYING OWNER'S
AND
GRANTING TENANT'S PETITION FOR ADMINISTRATIVE REVIEW
The above-named petitioner-owner and petitioner-tenant filed
Petitions for Administrative Review against an order issued on
July 27, 1987 concerning the housing accommodations known as
Apartment 4-R at 313 West 78th Street, New York, New York wherein
the Rent Administrator determined that the owner had overcharged
the tenant in the amount of $9,871.59, including excess security
and interest since April 1, 1984.
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
provision 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 applicable sections of the Law are Section 26-516 of the Rent
Stabilization Law and Section 2526.1(a) of the current 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
BH 410300 RT; BH 410140 RO
issue raised by the administrative appeals.
This proceeding was originally commenced by the filing on March 4,
1983 of a rent overcharge complaint by the tenant with the NYC
Conciliation and Appeals Board, one of the predecessor agencies to
the DHCR. In her complaint the tenant stated that she had
commenced occupancy in December, 1982 at a rent of $450.00 per
month.
In its answer the owner submitted a complete rental history for the
apartment since the date of decontrol on April 25, 1972. The owner
also enclosed numerous bills and statements to document the cost of
work performed in the subject apartment in 1981 and 1982 including
bathroom walls, repair of fireplace walls, the replacement of a
bathroom door and the resurfacing of the terrace.
In Order No. 40,033 issued on July 27, 1987, the District Rent
Administrator determined that the tenant had been overcharged in
the amount of $9,871.59 including excess security and interest
since April 1, 1984, and directed the owner to refund such
overcharge to the tenant as well as to reduce the rent. Affixed to
the order was a rent computation chart which detailed the amount
and reason for the overcharges. Overcharges were initially
determined for the prior tenant's lease term for the period from
June 1980 through May 1981, and were computed in all subsequent
lease terms thereafter. The Administrator further determined to
deny the owner's claim for the cost of the above-cited
installations since they constituted no more than normal
maintenance and repair of the premises and did not qualify under
Section 20(C)(1) of the former Code.
In her petition dated August 19, 1987, the tenant contends that the
Administrator failed to apply treble damages, which are required
under the law unless the owner proves that the overcharge was not
willful. Since the owner never even alleged that overcharge was
not willful, treble damages should have been imposed. The tenant
also contends that the owner's attempt to represent repairs as
improvements is actually an attempt to justify the overcharges.
In his petition dated August 26, 1987, the owner contends that the
Administrator erred in calculating the legal stabilized rent,
although the petition did not specify any particular computational
error in the chart. The owner also states that the Administrator
wrongfully denied an increase for the installment of new equipment
based on the determination that the items in question constituted
normal maintenance or repair. Finally, the owner claims that the
tenant's overcharge complaint was "untimely" as it was filed in
excess of the statutory period within which the complaint must be
filed and also because the tenant had made no timely objection to
the owner's duly filed annual Registration Statements.
The owner submitted an answer to the tenant's petition on January
BH 410300 RT; BH 410140 RO
8, 1988. The owner contends therein that the determination not to
impose treble damages was correct because there was no such penalty
in existence at the time the tenant filed the complaint with the
Conciliation and Appeals Board. Furthermore, even if there was
such penalty, it could not be applied in this case because the
owner was never given notice of it, or of the opportunity to
prevent it by refuting the presumption of willfulness.
The tenant submitted a reply to the owner's answer on January 30,
1992 wherein the tenant reiterated that treble damages should be
imposed based on the owner's attempt to represent repairs as
improvements to justify the overcharge.
The tenant submitted an answer to the owner's petition on September
25, 1988. The tenant therein asserts that her complaint was
timely, filed and that it was unnecessary for her to challenge the
registration statements as her complaint was on record before
Registration Statements were ever issued.
In a supplemental answer dated January 2, 1989 the tenant referred
to a case in the Supreme Court, King County, Simon v. DHCR, in
which the tenant states the DHCR's application of treble damages
was sustained.
The owner's reply submitted March 27, 1989 is almost exclusively
devoted to a discussion of that case, which according to the owner,
is wholly distinguishable from the instant proceeding. The owner's
main point is that the nature of the determined overcharges in its
own case precludes the imposition of treble damages as a matter of
DHCR policy.
The owner cites Sections from the Court's decision wherein it is
recognized that the DHCR does not normally impose treble damages
when the overcharges are based solely on the failure to establish
the value of 20(C)(1) (currently Section 2522.4(a)(1)) increases.
The owner contends that the present situation falls clearly within
that policy and that the action of the owner that the Simon Court
cited as warranting the treble damages penalty-the failure to
submit records, the inadequacy of the documentation that was
submitted, and the failure to prove that the work was actually
performed - are all absent from the instant case. The owner also
disputes the failure to grant a rent increase for the work
performed in the apartment, especially the resurfacing of the
terrace and the replacement of the bathroom door, since, the owner
asserts, these were actual improvements and not merely maintenance
and repair.
The Commissioner is of the opinion that the owner's petition should
be denied, and that the tenant's petition should be granted.
Sections 20C(1) of the former Code and 2522.4(a)(1) of the current
Code provide that where there had been an installation of new
equipment in a stabilized apartment, the monthly stabilization rent
BH 410300 RT; BH 410140 RO
for said unit may be increased by 1/40th the cost of such equipment
provided the tenant then in occupancy has consented thereto in
writing. In addition, the courts have ruled that an increase for
new equipment installed during a vacancy prior to the commencement
of a new tenancy or upon the commencement of a new tenancy and
reflected in the lease rent, may be collected without the new
tenant's consent to pay such increase. (Matter of LeHavre Corp. v.
Gribetz, et. al., N.Y.L.J., January 20, 1971, p. 19, col. 8 (Sup.
Ct., Queens Co., Crisona, J.); Matter of Morton I. Hamberg v. CAB,
N.Y.L.J., November 9, 1972, p. 18, col. 8, (Sup. Ct., N.Y.Co.,
Sarafite, J.).
Regarding, the owner's contention that the work performed in the
apartment amount to improvements to the premises for which a rent
increase should be granted, the Commissioner finds that, of the
work performed, only replacement of the bathroom door constitutes
an improvement within the meaning of Section 20C(1) of the Rent
Stabilization Code. All other work was in the nature of normal
maintenance or repair. However, it is noted as well that, although
not expressly stated in the order, all the work, including the
replacement of the bathroom door, was completed within the tenancy
of the former tenant. Written consent by that tenant was required
for a rent increase. The proposed increase does not meet this
requirement. Although the work was completed by March, 1982, the
owner did not obtain the written consent of the tenant then in
occupancy. Instead, the owner chose to include the increase in the
complainant's vacancy lease commencing in December, 1982, as if the
work had been performed during the vacancy period, when the new
tenant's consent is not required. Under these facts, no Section
20C(1) increase is warranted.
Section 26-516 of the Rent Stabilization Law provides that any
owner who is found by the DHCR to have collected an overcharge
shall be liable to the tenant for treble damages unless the owner
establishes by a preponderance of the evidence that the overcharge
was not willful, in which case interest shall be imposed. Section
26-516 also provides that treble damages shall be applied only to
overcharges occurring on or after April 1, 1984.
Regarding the tenant's assertion that the owner's representation of
the repairs as improvements was merely an attempt to justify the
overcharge, the Commissioner finds that this case is clearly
distinct from those cases where the Commissioner has found a lack
of willfulness where overcharges were due solely to unsubstantiated
20(C)(1) rent increases. In the instant case, most of the work was
clearly repairs, the work was performed during the prior tenant's
occupancy of the apartment and the increase attributable to the
BH 410300 RT; BH 410140 RO
work performed constituted only a third of the total overcharge to
the complainant. Accordingly, the Administrator's failure to
impose treble damages, as required under the above provision of the
law, was incorrect. The Commissioner hereby modifies the
Administrator's order to include treble damages for overcharges
collected on or after April 1, 1984, and the removal of interest
for that period, as follows:
Pre - April 1, 1984 overcharges: $2,570.56
(unchanged)
Overcharges April 1, 1984 to July 31, 1987 -
$6,637.40 x 3
(trebled) + $171.10
(excess security) =
$20,083.30
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TOTAL OVERCHARGES = $22,653.86
This order may, upon the expiration of the period in which the
owner may institute a proceeding pursuant to Article Seventy-Eight
of the Civil Practice Law and Rules, be filed and enforced by the
tenant in the same manner as a judgment or not in excess of twenty
percent thereof per month may be offset against any rent thereafter
due the owner.
THEREFORE, in accordance with the Rent Stabilization Law and Code,
it is
ORDERED, that the owner's petition be, and the same hereby is,
denied; that the tenant's petition be, and the same hereby is,
granted; and that the Administrator's order be, and the same hereby
is, modified in accordance with this Order and Opinion.
ISSUED:
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JOSEPH A. D'AGOSTA
Acting Deputy Commissioner
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