DOC. NO.: DJ 210321-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


         ------------------------------------X
         IN THE MATTER OF THE ADMINISTRATIVE :  ADMINISTRATIVE REVIEW
         APPEAL OF                              DOCKET NO. DJ 210321-RO
                        PREMIER ASSOCIATES,  :  DRO ORDER NO.: CDR 18,410
                               PETITIONER    :                 AS MODIFIED
         ------------------------------------X   TENANT: JUDITH KAMEN

            ORDER AND OPINION DENYING PETITIONS FOR ADMINISTRATIVE REVIEW

         On October 27, 1989, the above named petitioner-owner filed two 
         Petitions for Administrative Review against two orders issued on 
         October 6, 1989, by the Rent Administrator, 92-31 Union Hall Street, 
         Jamaica, New York, concerning housing accommodations known as 
         Apartments 7E and 7F at 1401 Ocean Avenue, Brooklyn, New York, wherein 
         the Rent Administrator determined that there had been overcharges and 
         ordered refunds.  Both orders had the CDR docket number captioned 
         above.  One order found an overcharge of $8,143.98 for Apartment 7E, 
         the other found an overcharge of $4,454.36 for Apartment 7F.  Each 
         order included treble damages and excess security.

         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 in the administrative appeal.

         These proceedings were originally commenced on March 22, 1984, by the 
         filing of two complaints of rent overcharge with the former New York 
         City Conciliation and Appeals Board (CAB) by the tenant.

         One complaint concerned apartment 7-E, the other apartment 7-F.  In 
         each complaint the tenant indicated that she was filing complaints for 
         both apartments 7-E and 7-F, which the tenant occupied simultaneously, 
         and that these complaints should be consolidated.  Both complaints 
         were assigned Docket Number K3103882R.

         On March 26, 1984, the owner was informed of the filing of the 
         complaint and further advised that it would subsequently be served, at 
         which time it would be directed to produce leases from the base date.  
         On October 3, 1984, the owner was served and directed to produce 
         leases from the base date, as well as to complete a rental history 
         form.  In both letters, the subject apartment was indicated as 7-F, 
         i.e., apartment 7E was not mentioned.

















          DOC. NO.: DJ 210321-RO

         In the original order number CDR 18,410, issued June 13, 1986, the 
         Administrator calculated overcharges for Apartment 7F only.

         On June 25, 1986 and July 14, 1986, the owner and the tenant, 
         respectively, filed Petitions for Administrative against the June 13, 
         1986 order, resulting in a consolidated Administrative Review order 
         with docket numbers ARL 11302-K and ART 11776-K, issued August 10, 
         1988, which remanded the proceedings to the Administrator for a new 
         order encompassing both apartments.  On remand, the proceedings 
         received docket number CH 210053-RP.

         On remand the Administrator issued the two above-described orders 
         numbered CDR 18,410, as modified, herein under appeal.  In both orders 
         the overcharges were computed from complete rental histories submitted 
         by the owner.

         In these petitions, identical except for the apartment numbers, and in 
         an addendum thereto, the owner contends that the Administrator's 
         orders are incorrect and should be modified because the Administrator 
         incorrectly calculated the overcharges and because treble damages were 
         inappropriate.  In addition, the owner argues that the amended Rent 
         Stabilization Code, effective May 1, 1987, explicitly deleted all 
         sections of the prior Code in their entirety.  Accordingly, the owner 
         asserts that the Administrator's reliance on the prior Code rendered 
         the orders herein under review "without legal basis."  Furthermore, 
         the owner contends that by citing such deleted sections of the former 
         Code in the orders the Administrator "deprive[d] the owner of any 
         notice as to how the proceedings were lawfully determined" and such 
         deprivation constituted a denial of due process.

         The specific error in the Administrator's calculations is alleged to 
         be as follows:  the vacancy leases for apartment 7E and 7F had stated 
         terms from May 15, 1977 through May 31, 1979, and were described in 
         the first sentence of the lease as having a term of two years and one- 
         half month (hereinafter "two years").  However, the leases also 
         provided that the tenant had the option to renew the leases "after two 
         years" for an additional year at the same rental, which option was 
         exercised on April 9, 1979.  In calculating the overcharges the 
         Administrator treated the lease as a two year lease, allowing the 
         owner an 8% Guidelines increase pursuant to Guidelines Order Number 
         Eight.  Accordingly, the $464.00 and $244.00 rents for apartments 7E 
         and 7F were found to be overcharges of $20.50 and $11.22, 
         respectively, for the three year period covered by the leases and 
         their extensions.  On appeal, the owner argues that those leases







         should have been treated as three year leases and therefore the 




          DOC. NO.: DJ 210321-RO

         Administrator should have used the 11% Guidelines increase allowed for 
         three year leases when computing the overcharges.

         On the issue of treble damages the owner argues, in substance, that 
         even if the Commissioner finds that the leases in question were 
         properly limited to the two year Guidelines increase, treble damages 
         should not be imposed since the overcharges were not willful.  The 
         owner contends that it "reasonably ... treated its 1977 leases with 
         [the tenant] as relating to three year lease terms.  The tenant had 
         complete control over the term of the lease and the rental under the 
         lease."  (Emphasis in original.)  Therefore, this error should be 
         treated as akin to a hypertechnical rent computation as described in 
         DHCR Policy Statement 89-2 and therefore not subject to treble 
         damages.  Since the tenant could, by exercising the renewal option, 
         hold her rent constant for three years "it is only a hypertechnical 
         interpretation by DHCR which could transform a three year reservation 
         of the same lease rental into anything but a three year lease term."

         In answer to these petitions the tenant contends that the Rent 
         Administrator's order was correct and should be affirmed.  On the 
         procedural level, the tenant argues that since the appealed orders 
         themselves "result[ed] from a previous petition," i.e., were pursuant 
         to the remand order (ARL 11302-K, ART 11776-K), they are not subject 
         to a further administrative review and could only be appealed through 
         the filing of a timely Article 78 proceeding.  "The tenant further 
         argues that the owner's positions regarding the applicability of the 
         former Rent Stabilization Code [is] an improper request for 
         reinterpretation of standing law and regulations."

         On the substantive level the tenant contends that the owner's argument 
         that her initial lease should be considered a three year lease is an 
         "unsupportable, creative reinterpretation."

         Finally, the tenant argues that treble damages were properly imposed 
         "as the owner submitted no contrary evidence throughout the six year 
         proceeding."

         The Commissioner is of the opinion that the owner's petitions, hereby 
         consolidated herein, should be denied.










         At the outset, the Commissioner notes that Code Section 2529.1(a) 
         allows a petition to be filed against any order of a Rent 
         Administrator, even an order issued pursuant to a remand following a 












          DOC. NO.: DJ 210321-RO

         prior petition.  This has always been Division policy.  Accordingly 
         Section 2530.1 limits judicial review to a final order of the 
         Commissioner (as well as certain Harassment Enforcement Orders and so- 
         called "deemed denials").  Thus a Petition for Administrative Review 
         was the only remedy available to appeal CDR 18,410 as modified.

         In addition, while it is true that Section 2520.2 states that the 
         prior Code is "further amended by deleting [all sections thereof]", 
         Section 2526.1(a)(4) provides that overcharge complaints filed prior 
         to April 1, 1984 shall be determined pursuant to the prior Code, 
         except that treble damages may be imposed on those overcharges 
         collected on or after April 1, 1984.  Accordingly, the owner's 
         contentions that the Administrator's order was "without legal basis" 
         and that the owner was deprived of due process thereby are without 
         merit.

         Regarding the substance of the owner's petitions, the Commissioner 
         finds that the Administrator properly treated the leases as two year 
         leases when determining the proper Guidelines increase.  The leases 
         describe themselves as two year leases.  Had the tenant vacated before 
         exercising her renewal options the owner would have had no cause of 
         action against the tenant for the third year covered by the options.

         Further, the Commissioner notes with interest that the owner itself 
         did not treat the leases as three year leases eligible for a 11% 
         Guidelines increase.  The $464.00 rent of apartment 7E exceeded by 
         $9.08 the lawful increase over the prior rent of $380.69 for a three 
         year vacancy lease (11% Guidelines, 5% vacancy allowance, 3 1/2% 
         electrical inclusion since none had previously been collected for that 
         apartment).  Instead, the owner imposed a 21.9% increase.

         For apartment 7F, the owner imposed only a 3% increase over the prior 
         rent, which was itself a $17.11 per month overcharge.  Thus it is 
         clear that in neither apartment did the owner base the complaining 
         tenant's initial rent on the 11% Guidelines increase allowed for three 
         year leases.

         Based on the foregoing, it is also clear that overcharges would have 
         existed for both apartments even if the owner had imposed the 11% 
         Guidelines increase for three year leases.  In apartment 7F such a 
         Guideline increase would have increased the initial  overcharge from





         $11.22 per month to $30.34 per month; in apartment 7E the initial 
         overcharge would have been reduced from $20.50 per month to $9.08 per 
         month (if the owner would have limited itself to the assumed lawful 
         rent increase rather than the 21.9% increase actually taken).  Thus, 
         the total overcharge would have been greater had the owner used the 
         three year rate, e.g., $11.22 plus $20.50 increased to $30.34 plus 




          DOC. NO.: DJ 210321-RO

         $9.08 for the initial leases.  In short, the overcharges were not the 
         result of the owner's use of a three year Guidelines rate.

         Finally, the Commissioner finds that the treatment by the 
         Administrator of the two year leases with option to renew for one year 
         as two year leases was clearly correct and certainly not 
         "hypertechnical."  As stated above, the leases described themselves as 
         two year leases and the tenant had the absolute right to vacate after 
         two years.  Accordingly, both the Administrator's calculations and the 
         imposition of treble damages were correct.

         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 these consolidated petitions be, and the same hereby 
         are, denied and the Rent Administrator's October 6, 1989 orders be, 
         and the same hereby are, affirmed.

         ISSUED:

                                                                              
                                                 ELLIOT SANDER
                                                 Deputy Commissioner








    

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