CF410027RT, CF410053RO
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 : ADMINISTRATIVE REVIEW
APPEAL OF DOCKET NOS. CF410027RT
CF410053RO
Lori Segal Oppenheimer, tenant,: DISTRICT RENT OFFICE
and DOCKET NO. L3116481R,
G.P. Associates, owner, CDR33340 As Amended
PETITIONER :
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ORDER AND OPINION GRANTING TENANT'S PETITION FOR ADMINISTRATIVE REVIEW
IN PART AND DENYING OWNER'S PETITION FOR ADMINISTRATIVE REVIEW
On June 24, 1988 the above-named petitioners filed Petitions for
Administrative Review against an order issued on May 20, 1988 by the
Rent Administrator, 10 Columbus Circle, New York, New York concerning
the housing accommodations known as 1470 First Avenue, New York,
New York, Apartment No. 5J wherein the Rent Administrator determined
that the owner had overcharged the tenant.
The Administrative Appeal is being determined pursuant to the provisions
of Sections 2522.5(e)(4) and 2526.1 of the Rent Stabilization Code.
The issue herein is whether the Rent Administrator's order was
warranted.
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.
This proceeding was originally commenced by the filing in March, 1984 of
a rent overcharge complaint by the tenant, who stated in substance that
she had commenced occupancy on June 1, 1980 at a rent of $461.47 per
month, and that the owner had collected additional charges and increases
in 1981 and 1982.
In answer to the complaint, the owner submitted the 1978 lease for the
prior tenant, which was the first one after the building was constructed
with the help of benefits pursuant to Real Property Tax Law ("RPTL")
Section 421-a.
In an order issued on May 20, 1988 the Administrator found an overcharge
of $1,388.10 as of March 31, 1986 (including excess security, although
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the tenant had vacated).
In its petition (Docket No. CF410053RO), the owner contends in substance
that the base rent must be increased by an additional 2.2% per year
pursuant to RPTL Section 421-a, and that interest should not have been
assessed against overcharges.
In answer, the tenant makes arguments herein set forth in the
description of her petition, infra.
In response the owner further contends that it is not required to keep
or maintain records to 1980, but only for four years, pursuant to the
Omnibus Housing Act of 1983.
In her petition (Docket no. CF410027RT), the tenant contends in
substance that the Administrator ignored the rents paid during her
second lease, set forth in her complaint and now evidenced by cancelled
rent checks, and instead just used the rents set forth in the lease;
that treble damages should be imposed, both because the lease rents were
unlawful and because the owner arbitrarily charged amounts above the
rent recited in her second lease; that the Administrator incorrectly
added two RPTL Section 421-a increases on June 1, 1985 although they had
previously been credited; and that the interest calculated is less than
the applicable 9%.
The owner's former attorney initially contended that the tenant's
petition, date-stamped by the DHCR on June 27, 1988, was untimely, and
requested an opportunity to address it on the merits if the DHCR chose
to accept it despite its untimeliness. On April 21, 1993 the owner was
informed that the petition had been mailed on June 24, 1988, and was
given an opportunity to respond to it.
In its subsequent answer, the owner asserts in substance that the
tenant's petition is untimely since it may have had a private postage
meter postmark [the owner was subsequently sent a copy of the mailing
envelope date-stamped by the U.S. Postal Service on June 24, 1988, the
same date that the owner's petition was mailed in an envelope hand-
stamped by the Postal Service, although the owner's envelope also has a
postage-meter date of June 23, 1988]; that the Commissioner abused his
discretion under current Rent Stabilization Code Section 2529.7 by
failing to determine within a reasonable amount of time whether or not
the petition was timely, thus prejudicing the owner; that this
constitutes laches; that the tenant is attempting to use separate and
legal charges for which she may have been in arrears to allege that she
was being overcharged; that she was charged pursuant to her lease
agreement; that treble damages should not be imposed in the case of
hypertechnical computation errors such as the inclusion of the 2.2%
increases in the base rent on and after November 19, 1982; and that no
interest should be imposed in light of the DHCR's five year delay in
processing the tenant's petition.
The Commissioner is of the opinion that the tenant's petition should be
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granted in part, and that the owner's petition should be denied.
It is unclear why the owner contends that the Administrator's order
failed to afford the owner the full amount of the RPTL Section 421-a
increases, since $7.37 (2.2% of the initial rent) was added on each
anniversary date of the initial lease. [Pursuant to Section
2522.5(e)(4) of the current Rent Stabilization Code, any 2.2% increases
which become effective on and after November 19, 1982 do not become part
of the legal regulated rent, but are a separate charge not included in
the base rent when calculating Guideline increases.] Regarding interest,
in the absence of the imposition of treble damages the DHCR was required
by Section 2526.1(a)(1) to impose interest on overcharges occurring on
and after April 1, 1984.
The Administrator's rent calculation chart did contain several errors.
For June 1, 1980 the chart calculated a Guidelines and vacancy increase
on the 1979 2.2% increase of $7.37, although that increase was not in
effect on June 30, 1979. For June 1, 1982 the chart removed the 1981
2.2% increase, not in effect on September 30, 1981, before applying the
Guidelines increase, but forgot to add it back in afterwards. For June
1, 1985 the chart calculated the increase on the basis of the September
30, 1983 rather than September 30, 1984 rent. However, the tenant is
incorrect about duplication of two 2.2% increases on that date, since
the fact that Guidelines increases did not apply to the 1983 or later
2.2% increases meant that the 2.2% increases have to first be subtracted
out, and then added back in after the Guideline is applied.
The tenant is correct about the chart ignoring the actual rents paid
during her second lease. She specified them in her complaint, but the
Administrator ignored the contention and, without asking the tenant for
further evidence, assumed that the rent specified in the lease was paid.
The cancelled checks submitted by the tenant show that she was correct
in her contention that the owner charged more than $461.47. However,
the tenant is incorrect in asserting that the additional amounts (being
$10.15, $18.15, $26.15 or $28.30 more than the lease rent in various
months) were arbitrary. The owner, at least during the second year of
the tenant's initial lease, considered the 2.2% increase to be based on
$461.47, resulting in an increase of $10.15. There was also an $8.00
temporary fuel cost adjustment beginning on the first anniversary of the
lease and lasting until its expiration. The additional charges from
July, 1981 through May, 1982 represented various combinations of zero,
one or two of one or both of those amounts, with the net effect being
the addition of $10.15 and $8.00 for each month between June, 1981 and
May, 1982. While the owner may be correct that these are lawful
charges, the Administrator included the increases in the lawful rent
while failing to include them in the rent collected [although the amount
of the 2.2% increase included was $7.37 rather than $10.15], thus
incorrectly reducing the amount of overcharge calculated. Taking these
factors into account, the Commissioner has recalculated the lawful
stabilization rents and the amount of overcharge. They are set forth on
an amended rent calculation chart attached hereto and made a part
hereof.
CF410027RT, CF410053RO
The Commissioner considers treble damages to be appropriate for
overcharges occurring on and after April 1, 1984. During the second
year of the tenant's initial lease the owner calculated the 2.2%
increase on the tenant's $461.47 vacancy rent rather than on the initial
stabilized rent of $335.00. The owner therefore charged a $10.15 rather
than $7.37 increase from June 1, 1981 through May 30, 1982. The $557.22
rent in the tenant's second lease also reflected a 1981 2.2% increase of
$10.15 rather than $7.37. There is no indication that the owner took
the 1982, 1983 or 1984 2.2% increases, other than adding $7.37 (only) to
the 6% Guidelines increase over the June 1, 1982 lease rent to get the
June 1, 1985 rent. (This means the owner did not include the 2.2%
increase in the base rent on or after November 19, 1982.) The net
result of this is that approximately $3.00 per month in the second year
of the tenant's initial lease, and approximately $6.00 per month
thereafter, is attributable to errors in calculating and applying 2.2%
increases. The overcharge in the tenant's vacancy lease was $28.65 per
month, before the owner began making the errors of approximately $3.00
and $6.00 involving the 2.2% increases. Because the owner has not given
any reason for the majority of the overcharges, the Commissioner does
not consider that the presumption of willfulness has been rebutted.
Laches is an equitable defense based on a party's claimed harmful change
of condition resulting from the unreasonable delay in another party's
assertion of its rights. In the present case the DHCR is not a party,
and the tenant did not unreasonably delay, since the owner was required
at the time that the tenant filed her complaint to retain rent records
from the base date, and no delays in the earlier proceeding or on appeal
are attributable to the tenant. Furthermore, the owner's argument about
a five year delay refers just to the fact that the DHCR, after accepting
the tenant's appeal as timely, took that long to inform the owner that
it was in fact incorrect in its (rather weak) argument that an appeal
received on Monday, June 27, 1988 must have been mailed after Friday,
June 24. In addition, any hypothetical discarding or loss of records by
the owner would have been at the risk of its own pending appeal, whether
or not the tenant had one pending. Also, the owner did not initiate a
mandamus proceeding to have either or both appeals decided
expeditiously. The Commissioner also notes that there was not, at least
recently, any knowing reliance on the DHCR's failure to respond to the
owner's assertion that the tenant's appeal was untimely, since the
owner's current attorney did not even have copies of the tenant's or the
owner's petitions until being sent them in response to the attorney's
requests of May 3 and June 6, 1993 respectively.
Regarding the owner's contention that it is not required to keep or
maintain rent records for more than four years prior to the most recent
registration, the Commissioner notes that the requirement relates to the
time prior to the filing of a complaint, which in this case was in
March, 1984, so the owner would be obligated to furnish the lease prior
to the tenant's vacancy lease commencing June 1, 1980; that such prior
lease in this instance happens to be the first lease after the building
was constructed; and that in any event the Appellate Division, First
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Department in Lavanant v. DHCR, 148 A.D.2d. 185, 544 N.Y.S.2d 331
affirmed that Section 2526.1(a)(4) of the current Rent Stabilization
Code means that the former Rent Stabilization Code, requiring a rental
history from the base date, applies to First Department overcharge cases
filed prior to April 1, 1984.
The Commissioner notes that the 1992 registration shows the subject
apartment as being exempt from rent regulation as of June 30, 1989,
although in 1990 a tenant was registered with a stabilized lease
beginning September 16, 1989.
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 in the same manner as a judgment.
THEREFORE, in accordance with the Rent Stabilization Law and Code, it is
ORDERED, that the tenant's petition be, and the same hereby is, granted
in part; that the owner's petition be, and the same hereby is, denied;
and that the Rent Administrator's order be, and the same hereby is,
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 total overcharge is $2,805.12.
ISSUED:
JOSEPH A. D'AGOSTA
Deputy Commissioner
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