CL 110106 RO
                                  STATE OF NEW YORK
                            OFFICE OF RENT ADMINISTRATION
                                     GERTZ PLAZA
                               92-31 UNION HALL STREET
                              JAMAICA, NEW YORK  11433

          ------------------------------------X   SJR No. 4591
          APPEAL OF                               DOCKET NO. CL 110106 RO

               Argo Corporation,                  DISTRICT RENT OFFICE
                                                  DOCKET NOS. TC 081809 G/
                                                              CDR 34162     
                                                  Tenant: Joan M. McNulty


          This order and opinion is issued after an order of the Supreme 
          Court, Queens County, Justice Joan Marie Durante, dated May 17, 
          1990, ordered remit of an Article 78 proceeding directing the 
          Division to reconsider its former order and opinion issued on 
          September 29, 1989, on the basis of the decision in J.R.D. Mgmt. v. 
          Eimicke 148 A.D.2d 610, 539, N.Y.S. 2d 667 (App. Div. 2d Dept., 
          1989) (hereafter JRD).

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

          This proceeding was originally commenced on January 27, 1984 by the 
          filing of a rent overcharge complaint concerning the housing 
          accommodation known as apartment 4T, 65-65 Wetherole Street, Rego 
          Park, New York.

          In the order issued on October 26, 1988, the Rent Administrator, 
          92-31 Union Hall Street, Jamaica, New York, established the Legal 
          Stabilized Rent and directed the owner to refund $5,729.69, 
          including interest on the overcharge from April 1, 1984.

          On December 5, 1988, the above-named petitioner-owner filed a 
          Petition for Administrative Review against the Administrator's 
          order.  Subsequently, by an order issued on January 19, 1989, said 
          petition was dismissed as untimely filed.  Thereafter, the 
          petitioner filed a petition in Supreme Court, Queens County, 
          requesting that the dismissal of the petitioner's administrative 
          appeal be annulled.

          CL 110106 RO

          Thereafter, with the consent of the parties, the proceeding was 
          remitted by Court order to the Division for a new determination.  
          Argo Corp v.  DHCR, index no. 19665/89 (Sup. Ct., Queens County, 
          Durante, J. 5/17/90).

          In its petition, the owner contends that the Administrator erred in 
          calculating the rent by failing to acknowledge that:

          1)   the Administrator's determination contravenes an order issued 
               on August 29, 1986 under Docket #Q3121005 R in which the 
               Administrator dismissed an earlier rent overcharge complaint 
               on the basis of an Assurance of Discontinuance entered into 
               between the owner and the New York State Attorney General; 

          2)   the tenant vacated in April 1985; and 

          3)   the order provides for a refund of excess security of $159.95 
               but this security was previously adjusted when the tenant 

          Although afforded the opportunity to do so, the tenant did not 
          interpose an answer to the owner's petition.

          The Commissioner is of the opinion that this petition should be 
          granted in part.
          The Commissioner finds that it cannot be said that the instant 
          complaint was barred by the order issued on August 29, 1986 since 
          the validity of that order is in serious doubt.

          That order purports to have been based upon an Assurance of 
          Discontinuance entered into between the owner and the Attorney 
          General of the State of New York.  An Assurance of Discontinuance 
          provides only that the Attorney General will cease proceeding 
          against the other party.  Neither the Division nor the tenant was 
          party to the proceeding in which the Assurance of Discontinuance 
          was issued; therefore, the Administrator was in error in relying 
          Accord: ART 10040 Q, AL 410421 RO.  Nevertheless, as the owner 
          pointed out in its most recent Article 78 proceeding, it appears 
          that the tenant did not appeal the determination dismissing the 

          The Commissioner notes that in its Article 78 petition of November 
          8, 1989, the owner argued at length to the effect that an 
          administrative agency "only has the power to reopen a previously 
          decided case on the ground of illegality, irregularity in a vial 
          matte or fraud when that power or authority is contained within the 
          Agency's enabling statute and therefore, the Commissioner was bound 
          by the August 29, 1986 order.

          CL 110106 RO

          The Commissioner finds that the Rent Stabilization Code effective 
          May 1, 1987 was amended, pursuant to Chapter 888 of the Laws of 
          1985, Section 26-511 [of the Rent Stabilization Law] McKinney's 
          Unconsolidated Law, volume 65) to provide at Section 2527.8 that 

               the DHCR, on application of either party, or on its own 
               initiative, and upon notice to all parties affected, may 
               issue a superseding order modifying or revoking any order 
               issued by it under this or any previous Code where the 
               DHCR finds that such order was the result of illegality, 
               irregularity in vital matters, or fraud.

          The Commissioner, therefore, concludes that it is within the 
          Division's power to so act, in accordance with the regulations it 
          has promulgated and which have the force of law until amended or 
          set aside by judicial action.  Given that neither the tenant nor 
          the DHCR was a party to the Assurance of Discontinuance and nothing 
          therein may be construed to deprive the tenant of pursuing any 
          right in a Court of competent jurisdiction or before the DHCR, the 
          Commissioner finds that the order dismissing the complaint was 
          based upon an error in law and should be set aside pursuant to 
          Section 2527.8 of the Rent Stabilization Code as a result of an 
          irregularity in a vital matter.

          Accordingly, the Commissioner determines that order no. 21,648 
          issued on August 29, 1986 should be vacated and its underlying 
          overcharge complaint should be reinstated and consolidated with the 
          complaint filed in this proceeding.

          The Commissioner notes that the record contains a letter from the 
          tenant dated April 18, 1985 in which the tenant advised the 
          Division that she had a new address.  Accordingly, the Commissioner 
          finds that the owner's allegation that it did not collect any 
          overcharges for the months of April through September 1985 is 

          Since it is common practice to return a security deposit when the 
          tenant vacates and since the tenant herein has remained silent on 
          the issue, the Commissioner determines that the excess secuirty has 
          already been returned to the tenant.

          In accordance with the foregoing the Commissioner finds that the 
          Administrator's order should be modified reducing the amount of the 
          overcharge to $4,547.03.

          This figure is arrived at by deducting from the overcharges found 
          by the Administrator, $5,729.69, the portion thereof generated by 
          the overcharges, including interest, erroneously assessed for the 
          months of April through September 1985 ($1022.71) and the excess 
          security ($159.95).  Further the lawful stabilization rent for the 
          subject apartment is $391.25 as of October 1, 1984.

          CL 110106 RO

          It is noted that pursuant to the JRD decision for apartments in the 
          Second Department, DHCR could not require an owner to produce more 
          than four years of rent records.

          In the instant case JRD limits the requirement for rent records to 
          April 1, 1980.  An examination of the rent records from April 1, 
          1980 discloses there was no rent overcharge until September 15, 
          1982 and thereafter and that the overcharge from September 15, 1982 
          until the tenant vacated was $4,547.03 as previously mentioned.  
          Therefore JRD did not preclude the finding of a rent overcharge in 
          this case.

          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.

          If the owner has already complied with the Administrator's order 
          and there are arrears due to the owner as a result of the instant 
          determination said arrears shall be payable immediately.  A copy of 
          this order is being sent to the current occupant of the subject 

          THEREFORE, pursuant to the Rent Stabilization Law and Code, it is

          ORDERED, that the Petition be, and the same hereby is granted in 
          part; and that the Administrator's order be, and the same hereby is 
          amended in accordance with this order and opinion.


                                             Joseph A. D'Agosta
                                             Acting Deputy Commissioner

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