CB 410029-RO;  CB 410031-RT
                                
                        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. 5966
IN THE MATTER OF THE ADMINISTRATIVE     ADMINISTRATIVE REVIEW
APPEALS OF                              DOCKET NOS.:
                                        CB 410029-RO;
ARGO REALTY CORP., Petitioner-Owner     CB 410031-RT;
                and
HENRY SIEGAL,     Petitioner-Tenant     DISTRICT RENT OFFICE
                                        DOCKET NO.:
                        PETITIONERS     L 3116185 R/T
----------------------------------x

 ORDER AND OPINION GRANTING PETITIONS FOR ADMINISTRATIVE REVIEW
                             IN PART
                                
                                
These  petitions  have been consolidated as they  involve  common
issues of law and fact.

The  above-named petitioners filed timely Petitions for  Adminis-
trative  Review against an order issued on December 31,  1987  by
the  Rent Administrator, 10 Columbus Circle, New York, New  York,
concerning housing accommodations known as Apartment 14-H at  360
Central  Park West, New York, New York, wherein the Rent Adminis-
trator determined that there had been an overcharge and ordered a
refund  of  $16,904.51,  including interest  on  the  overcharges
col-lected on or after April 1, 1984.

Subsequent  to the filing of this petition, the tenant  commenced
an Article 78 proceeding, seeking an order directing the Division
to  expedite  this  proceeding.  That proceeding  is  pending  in
Supreme Court, Queens (sic) County, before Justice Lonschein, and
has   Index   No.   18869/91.   However,  the  Division   retains
jurisdic-tion to issue the order herein.

The  Commissioner notes that this proceeding was initiated  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  Stabili-
zation Code (Code) contained herein are to the Code in effect  on
April 30, 1987.

The  Commissioner has reviewed all of the evidence in the  record
and  has carefully considered that portion of the record relevant
to the issues raised by the administrative appeal.

The  tenant commenced this proceeding on March 31, 1984 by filing
an  overcharge complaint with the New York City Conciliation  and
Appeals  Board (CAB), the agency formerly charged with  enforcing
the  Rent Stabilization Law, based in part on an alleged  failure
by the owner to provide a complete rental history.

In  answer  to  the  complaint, the  owner  stated  that  it  had
recalcu-lated  the  rents  and discovered  that  the  complaining
tenant's $887.46 rent for the two year lease commencing September
1, 1984 should have been $426.57.  The record shows that the rent
was    reduced   to   that   figure   on   November   1,    1985.
The  record further shows that the owner did not refund any over-
charges  collected  prior  to that rent  reduction  and  that  on
December  1,  1985  the  owner raised the rent  from  $426.57  to
$458.58 based on a sublet charge disputed by the tenant.
In  Order  No. CDR 32,215, herein under review, the Rent Adminis-
trator determined that the lawful rent for the 1984 - 1986  lease
was $526.64, i.e., $100.07 more than that found by the owner when
it  reduced the rent to $426.57 on November 1, 1985, but  $360.82
less  than  the rent charged prior to the reduction.   The  over-
charges were computed from a complete lease history submitted  by
the owner.

In its petition, the owner contends that the Rent Administrator's
Order  is  incorrect  and  should  be  modified  to  reduce   the
retroac-tive overcharge from $16,904.51 to $15,903.81 in order to
credit  the  owner  for the above-stated additional  $100.07  per
month which it was "entitled to collect" for the ten month period
from  November  1, 1985 to August 31, 1986.  (The Administrator's
order  held  that  the lawful stabilized rent became  $426.57  on
November  1,  1985, when the owner reduced the tenant's  rent  to
that  figure. This finding was based on the Collingwood principal
that where the actual rent charged is less than the rent with the
maximum permitted increase, the lawful stabilized rent is limited
to the actual rent charged.)

In  a  supplement to its petition, the owner cites J.R.D. Manage-
ment  v.  Eimicke,  539 N.Y.S. 2d 667, for the proposition  that,
although  the tenant's complaint was filed before April 1,  1984,
since  the Administrator's order was issued after that date,  the
owner was only required by the current Code to submit leases from
December 31, 1983, i.e., from four years prior to the issu-
ance of the Administrator's order.  Accordingly, even though  the
owner  submitted a lease history from June 30, 1974, pursuant  to
the  former  Code, the Administrator should have considered  only
the leases from December 31, 1983.

In  his  petition, the tenant seeks (a) treble damages for  those
overcharges  collected on or after April 1, 1984, (b)  reasonable
costs  and  attorney  fees in the amount  of  $3,000.00  and  (c)
interest  of  9% on the overcharge until such time as  the  owner
repays the total overcharge.  The tenant cites Chapter 403 of the
Laws  of 1983 (the Omnibus Housing Act) in support of his claims.
The  tenant  further  contends that the 1980 rent  increase  from
$282.20  to $600.00, coupled with the fact that the owner  waited
eighteen months from the filing of the tenant's complaint  before
admitting  the overcharge and reducing the rent, shows  that  the
overcharge was willful and therefore subject to treble damages.

Neither  party answered the petition of the other party, although
each was given the opportunity to do so.

The Commissioner is of the opinion that these petitions should be
granted in part.

At the outset the Commissioner notes that the owner's reliance on
the  JRD case is misplaced.  JRD was decided in the Second  Judi-
cial Department.  However, since the issuance of the decision  in
JRD,  the  Appellate Division, First Department, in the  case  of
Lavanant v. DHCR, 148 A.D.2d 185, 544 N.Y.S.2d 331 (App. Div. 1st
Dep't  1989), has issued a decision in direct conflict  with  the
holding  in JRD.  The Lavanant court expressly rejected  the  JRD
ruling,  finding that the DHCR may properly require an  owner  to
submit  complete rent records, rather than records for just  four
years,  and that such requirement is both rational and  supported
by the law and legislative history of the Omnibus Housing Act.

Because  the subject building is located in the First Department,
Lavanant  rather  than  JRD is applicable.  Parenthetically,  the
Commissioner notes that under JRD the base date would be April 1,
1980, not December 31, 1983 as argued by the owner. Had the owner
only  submitted leases from April 1, 1980, the October, 1980 rent
increase  of over 100% would have resulted in the same overcharge
as found by the Administrator, subject to the modifications to be
discussed below.

The owner contends in its petition that it should have been able,
in  effect,  to retroactively charge $526.64, which the  Adminis-
trator determined to be the lawful rent for the September 1, 1984
-  August  31,  1986 lease, for the period November  1,  1985  to
August  31,  1986, even though the owner had voluntarily  reduced
the rent to $426.57 for that period.

As  noted  above,  under the Collingwood principle  an  owner  is
deemed  to  have waived any lawful rent in excess of  the  amount
actually charged.  However, the Commissioner finds, based on  the
special  circumstances of this proceeding, that the owner  should
not  be deemed to have waived the $100.07 difference between  the
$426.57  charged  and  the $526.64 which it could  lawfully  have
charged from November 1, 1985 to August 31, 1986.

The  owner submitted a rent calculation chart with its answer  to
the  tenant's complaint, wherein the owner attempted to recompute
the  rents  so as to eliminate the overcharge which commenced  in
October  of  1980.   The  Administrator's chart  shows  the  same
calcu-lations as the owner through the 1980-1981 lease for  which
both  calculated  a  lawful  rent of  $341.46  pursuant  to  Rent
Guidelines  Board Order No. 12.  However, for the next  lease,  a
vacancy lease commencing September 1, 1981, the owner incorrectly
used Guide-lines Order 12 again.  In an apparent attempt to avoid
"piggy-backing" (the unlawful compounding of Guidelines increases
during  a single Guidelines period) the owner merely added  a  5%
vacancy  allowance.   The  Administrator,  on  the  other   hand,
computed the increase under Guideline Order 12a, which governs  a
distinct  Guidelines  period  and  therefore  the  "piggybacking"
problem  does  not  arise, and correctly used  the  26%  increase
allowed  thereunder  (11% Guidelines plus 15% vacancy  allowance)
for  a lawful September 1, 1981 rent of $430.24, rather than  the
$358.53 recom-puted by the owner.  (The owner had charged $725.00
for  that  lease.)   This  error led to  the  $426.57  -  $526.64
discrepancy for the 1984 - 1986 lease.

The Commissioner hereby finds, because the owner recalculated the
rent  solely  in contemplation this DHCR proceeding, because  the
owner made a mistake of law in doing so, and because that mistake
was  obvious  on the face of the owner's answer, that  the  owner
should not be deemed to have waived the $526.64 rent when it
incorrectly  reduced  the rent to $426.57 on  November  1,  1985.
Accordingly,  the Commissioner hereby finds that  the  owner  was
entitled to have charged $526.64 for the duration of the  1984  -
1986  lease. However, this figure should be increased to  $551.25
as of December 1, 1985 because of a sublet allowance.  Therefore,
the lawful base rent for the September 1, 1986 lease is hereby
recomputed  to  be  $560.87, increased by a sublet  allowance  to
$600.37.   The sublet allowances are not part of the  base  rent.
Subsequent  increases  should  be computed  from  $560.87.   (The
sublet  allowances,  using  vacancy allowances  of  5%  and  7.5%
respectively, were recomputing the respective renewal lease rents
as if those leases had been vacancy leases.  See Section 21(b) of
the former Code.  Accordingly, the then-current base


rents  were increased by 5%, and 7 1/2% of their respective prior
rents.   The  owner apparently used the current rents to  compute
the sublet allowances.)

The  Commissioner hereby finds that the tenant  is  correct  that
treble  damages should have been imposed.  The owner  admits  the
1980 rent increase of over 100% was an overcharge and has offered
no  excuse  therefore.  The fact that the record  indicates  that
ownership  and/or  management of the building  may  have  changed
since  that  overcharge is irrelevant. See Administrative  Review
Docket  No.  ARL 13024-K.  The Rent Stabilization  Law  and  Code
require the imposition of treble damages unless the owner  proves
by  a  preponderance of the evidence that the overcharge was  not
willful.  The owner has clearly failed to meet that burden.

The  fact  that the owner lowered the rent does not preclude  the
imposition of treble damages because the rent reduction  was  not
accompanied  by  a refund of all the overcharges.   Accord:   ARL
05516-L.  Compare:  Policy Statement 89-2.

The  tenant's undocumented request on appeal for reasonable costs
and  attorney  fees was not previously made to the  Administrator
and  is  therefore beyond the scope of review. See  Code  Section
2529.6.  Accordingly, that request is hereby denied.

Code  Section 2526.1(a)(1) provides for interest only when treble
damages  are not imposed.  Accordingly, the tenant's request  for
interest is also hereby denied.

Based on the foregoing, the overcharges are hereby recomputed  as
follows:

     Overcharges prior to April 1, 1984
     remains the same:
     $3,537.12 + $3,890.88 + $2,360.47       =    $  9,788.47
     
     
     Overcharges on or after April 1, 1984,
     without interest, are trebled:
     $ 337.21 x  5 mos. x 3                            =        $
                                        5,058.15
     $ 360.82 x 13 mos. x 3                  =      14,071.98
     
                              Sub Total      =    $ 28,918.60
     Minus amount improperly deemed waived   =      -1,000.70
     
                                  TOTAL      =    $ 27,917.90
                                                    =========
                                                  
                                                  
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.

The   record   indicates  that  no  arrears  other   than   those
specific-ally  requested  herein  by  the  owner  (the  $1,000.70
deducted  above)  are now due.  However, if as a  result  of  the
instant determina-tion, there are arrears due to the owner, these
may be deducted from the overcharge.


THEREFORE,  in  accordance with the Rent  Stabilization  Law  and
Code, it is

ORDERED,  that  these  petitions be, and  the  same  hereby  are,
granted  in part and the Rent Administrator's order be,  and  the
same  hereby  is,  modified in accordance  with  this  Order  and
Opinion.


ISSUED:




ELLIOT SANDER
                                         Deputy Commissioner
    

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