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
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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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