DK 420087-RT
                        STATE OF NEW YORK
                           GERTZ PLAZA
                     92-31 UNION HALL STREET
                     JAMAICA, NEW YORK 11433
----------------------------------x     S.J.R. 5678
APPEALS OF                              DOCKET NOS.:
                                        DK 420087-RT
       DAVID CORBIN,  Tenant,           DK 420014-RO
                      Landlords,        ADMINISTRATOR'S DOCKET
                        PETITIONERS     AK 420018-AD

On  November  3,  and  November 9, 1989, the above-named  parties
filed Petitions for Administrative Review against an order issued
on  October  19,  1989 by the Rent Administrator of  the  Jamaica
District  Rent  Office,  concerning the  housing  accommoda-tions
known as the second floor apartment, 631 Park Avenue,
New York, New York.

Subsequently the landlords filed a petition in the Supreme  Court
pursuant  to  Article  78 of the Civil Practice  Law  and  Rules,
requesting  that  the  "deemed denial"  of  their  administrative
appeal   be  annulled.   The  proceeding  was  remitted  to   the
above-referenced Division (also "DHCR" herein) pursuant to  court
order. After consolidating the two appeals, on February 19, 1991,
the  Commissioner issued an order denying the landlords' petition
(also  "PAR"  herein), granting the tenant's, and  remanding  the
proceeding  to the Administrator for determination of  the  legal
regulated rent of the subject accommodations.  The landlords once
more  sought Article-78 relief in the Supreme Court, and on  July
26, 1991, Justice Parness granted the Division's motion to remand
the proceeding for reexamination.

This  proceeding commenced on November 26, 1986, when the  tenant
requested  the Division to determine that the premises were  sub-
ject to the New York City Rent Regulations because the landlord
had  filed  a  fraudulent application for decontrol  thereof  and
because they had never been vacant since June 30, 1971.   In  the
tenant's  application and amendments thereof, the tenant alleged:
that he occupied the front half of the second-floor apartment  in
the  subject  building;  that the entire  second  floor  was  one
apart-ment  which had never been vacant since coming  under  rent
control in 1943; that the current Certificate of Occupancy listed
the  second floor as a single floor-through apartment; that, when
registered in 1943, the second-floor apartment had been  occupied
by  Ethel  Cramer  and Dorothea Fischer; that the  landlords  had
sought  to treat this apartment as two units and to collect  sep-
arate  rents from the original tenants; that in 1974,  under  DRO
Docket  Nos. 2AD 37833/37834, the landlords had tried  to  obtain
rent  increases from each tenant because each tenant had a  bath-
room and kitchenette; that that application had been denied in an
order  issued on September 30, 1974, with a finding that  "...the
subject accommodation is legally a self-contained unit registered
in  1943  with  the  present tenants as occupants...";  that  the
address  of the tenants had been "apartment 2nd floor";  that  on
August  12,  1976,  the  landlord had  filed  an  application  to
decontrol  the subject apartment, alleging that Dorothea  Fischer
was no longer occupying it as her primary residence; that in that
application the landlord had failed to disclose that Ethel Cramer
was  still in occupancy; that for Item 7 of the applica-tion, "Is
the  housing accommodation occupied by any other party  than  the
tenant  specified in Item 2 above?", the box "No" had been filled
in; that the landlord had never disclosed that Ethel Cramer still
occupied  the  apartment; that, as a result  of  that  fraudulent
application, the apartment had been decontrolled; that the  order
should be declared ineffective because of the land-lords' failure
to  disclose the occupancy of Ethel Cramer; that the landlord had
illegally sealed the separation between the front and rear halves
of the second floor apartment; that the tenant had moved into the
front  half  in  February, 1981, at which time Ethel  Cramer  was
occupying the rear half; and that at no time since 1943  had  the
second-floor apartment been vacant.

In answer to the tenant's application, the landlords contended in
substance:  that the second-floor apartment had been decontrolled
because  it  was  not the primary residence of Dorothea  Fischer;
that  thereafter  Ethel Cramer had negotiated  a  lease  for  her
portion  of  the  second  floor; that the  issue  of  non-primary
residence  decontrol  had  been the subject  of  an  unsuccessful
Administrative  Appeal before the Office of  Rent  Control  (CPTA
17,019);  that  the present proceeding represented  a  collateral
attack  on  the prior determination and should be rejected;  that
attempts to obtain a copy of the order issued in CPTA 17,019  had
been  unsuccessful; and that the DHCR had refused to  reopen  the
prior  decision  in an order issued on September 3,  1985,  under
CPTA 21,406.

On October 19, 1989, the Rent Administrator revoked the decontrol
order of February 11, 1977, based on the owner's failure to  have
advised  the  Office of Rent Control, on Application  Form  A-16,
that  co-tenant E. Cramer was still residing in a section of  the
subject apartment.  The Administrator further stated: that Cramer
had  remained  in  occupancy until January  21,  1982;  that  the
present tenant had occupied the premises since February of  1981;
that  said  tenant  was  not related to either  of  the  previous
rent-controlled  tenants; that the apartment  was  therefore  not
subject  to the Rent and Eviction Regulations as far as  concerns
said  tenant;  and  that the landlords might  therefore  file  an
Owner's Report of Vacancy Decontrol.

In  his PAR the tenant contended: that vacancy decontrol does not
attach unless there is a physical vacancy of an apartment;  that,
in  this  proceeding,  the  subject apartment  had  never  become
vacant;  that  the  certificate of  occupancy,  issued  in  1937,
showing the second floor to be a single unit, is controlling; and
that the illegal separation of the subject accommodation into two
units  had no effect on the controlled status of the second floor
as a single floor-through apartment.

The  landlords'  PAR stated in substance: that the  Administrator
had erroneously revoked the order of decontrol issued on February
11,  1977; that this issue had been raised in two prior  proceed-
ings   before  the  Commissioner  and  determined  therein;  that
collat-eral  estoppel  required that DHCR  adhere  to  its  prior
decision;  that  the Administrator's order effectively  gave  the
estate  of  Cramer,  rights  that  it  had  been  denied  by  the
Commissioner  in  prior proceedings; that  vacancy  decontrol  is
automatic  by opera-tion of law upon the vacancy of  the  tenant,
and that Cramer is admittedly deceased; that it was erroneous for
the  Administrator to state that "the owner failed to advise  the
Office that the co-tenant, Ethel Cramer was still in occupancy of
a  section  of  the subject apartment"; that it  had  never  been
established  that the 1977 decontrol had been based on  incorrect
information;  that,  at  that late date,  it  was  impossible  to
determine the actual circum-stances that had led to decontrol  of
the  apartment; that it could just as easily have been speculated
that  Cramer  had agreed to the decontrol and to  the  subsequent
division of the second floor into two apartments; and that Corbin
was  not  a  tenant in 1977 and had no standing  to  contest  the
decontrol order issued in that year.

The  aforementioned  Commissioner's order of  February  19,  1991
ensued,  and  as mentioned above the matter is again  before  the
Commissioner  for  reconsideration pursuant to  Justice  Parness'

Having  carefully considered the record herein, including  papers
submitted  to  the  Supreme Court, the  Commissioner  is  of  the
opinion  that  that order of February 19, 1991  should  be  reaf-

The owners contend that it was erroneous for the Administrator to
revoke  the 1977 decontrol order, since this issue had  been  the
subject  of two administrative appeals.  The owner's reliance  on
the  doctrines of res judicata and collateral estoppel,  however,
is  misplaced.  Pursuant to Section 2207.8(a) of the Rent Regula-
tions,  the  Division "may not modify, supersede  or  revoke  any
order  issued  under  these or previous regulations  unless  [it]
finds  that such order was the result of illegality, irregularity
in  vital  matters, or fraud...".  Where one of  those  predicate
conditions  is  found, the regulation supersedes common-law  doc-
trines precluding reexamination of decided cases and issues.  Its
very  purpose is to set forth those occasions when --as here--  a
final  order, too old to be appealed, can be upset.  If the alle-
gation  of  fraud had been litigated and decided previously,  res
judicata would be a pertinent doctrine; but as there is no  claim
that  any tribunal has previously considered that allegation  and
no  evidence  of such consideration in the record,  the  relevant
question is simply whether the 1977 decontrol order resulted from
illegality,  irregularity in vital matters, or  fraud.  And  that
question must be answered affirmatively, for the order would  not
have been issued but for the landlords' fraud.

For  fraud to be found herein, (1) the owner must have intention-
ally  misrepresented the facts in his application for  decontrol,
(2)  he  must  have made that misrepresentation  with  intent  to
defraud,  (3) the misrepresented fact must have been material  to
the agency's issuance of its decontrol order, (4) that order must
have  been issued and (5) that issuance must have operated  to  a
tenant's  detriment.  The question is whether  the  Administrator
committed error in finding that those elements existed here.  Let
us  examine the evidence as to those elements which, for  conven-
ience and clarity, will be discussed in reverse order.

No demonstration is required for the proposition that the type of
order involved here -- removing a housing accommodation from rent
control - works to the detriment of present and future tenants of
that accommodation (element 5).  As to element (4), the decontrol
order  for the subject accommodation is of course in the  record.
Turning  to  (3),  there is no dispute that if a  rent-controlled
co-tenant  ceases  to  occupy  an  apartment,  leaving  a   rent-
controlled  tenant  still in occupancy, that apartment  does  not
lose  its  rent-controlled status.  The presumption of regularity
of official

acts  would  therefore dictate a finding that if the  agency  had
been  made  aware of the continued presence of such a tenant,  it
would  not  have  decontrolled the accommodation.   The  fact  in
question,  then, was highly material to the agency's issuance  of
the decontrol order.

Elements  (1)  and (2) are best discussed together.   There  must
first  of  all  have  been  an inaccurate representation  in  the
decontrol  application.  The face of that document  reveals  that
only  the  nonprimary resident is mentioned thereon, as the  only
tenant  in  the  subject accommodation.  The inaccuracy  of  that
representation  is shown by, inter alia:  a 1937  Certificate  of
Occupancy from the Department of Buildings and the 1943 Notice of
Maximum Rent, both indicating that the entire second floor of the
building  in question had been rent-controlled as one  apartment;
the  Office  of  Rent  Control's  Order  Denying  Application  or
Terminating Proceeding of September 30, 1974 and the 1976  Master
Building  Rent Schedule, which show that that classification  was
still  in effect when the application in question was filed;  the
affidavit  of  Rose  Lanzolla,  former  managing  agent  of   the
building,  which shows, along with the last two documents  listed
above,  that  there  were  two rent-controlled  tenants  in  that
apart-ment;  and  the  lease of June 1,  1977,  with  the  tenant
Cramer,  which shows, along with the Lanzolla affidavit,  that  a
rent-con-trolled tenant still lived in the subject premises  when
the decontrol application was filed.

Elements (1) and (2) require, of course, not simply an inaccurate
representation,  but  one  made  intentionally,  with  intent  to
defraud.   In  the absence of an admission, intent  can  only  be
proven  circumstantially.   Given  the  facts  that  as  late  as
September,  1974, the premises had been officially reaffirmed  as
constituting  a  single rent-controlled apartment,  that  at  all
times that apartment had had two tenants (one of whom kept living
there even after the decontrol application had been granted)  and
that  the  form for that application was clear in requesting  all
affected tenants' names, and given the reasonable assumption that
a  landlord knows the identities of his rent-controlled  tenants,
it  was logical for the Administrator to infer that the landlords
knew their representation to be false.  Given that knowledge, the
next  question is why they made that representation.  Because  of
the  obvious  benefit to a landlord when an apartment  is  decon-
trolled, the Administrator was again reasonable in inferring that
their  intent  was  to  defraud the agency and/or  the  remaining
tenant  and/or succeeding tenants, by falsely asserting that  all
rent-controlled  tenants  had ceased to  reside  in  the  subject
accommodation.   There  was  thus substantial  evidence  for  the
Administrator's finding of fraud.

It should be noted that despite the clarity with which the tenant
has,  from the inception of these proceedings, repeatedly alleged
the  existence of those elements, and despite the seriousness  of
such  allegations, the landlord did not address them  during  the
entire  period  of  this Division's jurisdiction.   Only  in  the
aforementioned Article-78 petition did the landlord  see  fit  to
tell  the  court: that "given that DHCR was not the  agency  that
initially  issued the decontrol order," the finding of fraud  "is
without  any  factual or evidentiary basis;"  that  none  of  the
elements   of   fraud  has  been  established;   and   that   any
misrepresen-tation  was not material to the  proceedings  because
"[t]he fact that there was not a vacancy on the second floor  was
not  material to the decontrol of the proceedings based  on  non-
primary resi-dence."

The  first  of those arguments, based on the fact that  the  1977
order issued from the New York City Office of Rent Control (ORC),
is  frivolous in view, inter alia, of the statement in  the  same
petition that in 1984, pursuant to state law, "DHCR succeeded the
ORC  as the agency responsible for administering the rent control
laws."  The second argument, a general declaration that fraud has
not been proven, is as close as the landlord has come to denying:
that  the  entire second floor was rent-controlled as one  apart-
ment; that that classification had never changed through the time
of  the  application for decontrol; that the apartment  had  been
occupied by two rent-controlled tenants; that at the time of  the
decontrol  application  based  on non-primary  residence  of  one
tenant,  the other (Cramer) continued to reside there;  that  the
aforesaid  application  mentioned only the  non-residing  tenant;
that  the landlords indicated thereon that the latter tenant  was
the  only party occupying the subject housing accommodation; that
the  applicants  were  then aware that  that  representation  was
false;   that  if  the  agency had been  apprised  that  a  rent-
con-trolled   tenant   continued  to  occupy   the   second-floor
apartment, it could not legally have decontrolled same; and  that
the  agency  decontrol  order operated to the  detriment  of  the
remaining tenant and all succeeding tenants.

Because all the above were alleged herein and none have ever been
denied by the landlords (represented throughout by counsel),  the
Commissioner did not need to review the Administrator's  findings
pertaining thereto on this appeal.  Nevertheless the Commissioner
has done so, above, out of abundant caution.

The  Landlord also argues that because its application for decon-
trol was on the basis of nonprimary residence and not vacancy, it
should  not  have  been denied on the basis  that  there  was  no
vacancy.  There is no merit to this argument.
The  Commissioner  recognizes that the  owner's  application  for
decontrol  was based on nonprimary residence rather than  vacancy
decontrol.  Nonetheless, the issuance of the 1977 decontrol order
was  not appropriate since the owner did not establish that  both
tenants did not occupy the apartments as primary resi-dents.  Had
the tenant's (Cramer's) name been properly noted by the owner  on
the  decontrol application, the second floor apart-ment would not
have  been decontrolled based on a finding regarding only one  of
the tenants.

The  record indicates that there was no administrative determina-
tion made of the Cramer residency by the agency prior to the 1977
decontrol  order,  due to the owner's failure  to  disclose  that
Cramer  was  still  a tenant in the apartment.  Accordingly,  the
residency of the tenant Cramer in the subject apartment  in  1977
renders the issuance of an administrative order premised  on  the
nonprimary occupancy of another tenant (Fisher) inappropriate.

The  Commissioner therefore determines that the Administrator did
not  err in revoking the decontrol order.  The owner's contention
as to the present tenant's standing to contest the decontrol
order  is  not  to  the  point.  The previous  determinations  of
admin-istrative appeals do not bar the Administrator's ruling  in
view of the owners' fraud.

The present tenant was an occupant of the subject apartment while
the  original  1943 registered tenant was also residing  therein.
Since  the  1937 certificate of occupancy is still in effect  and
calls  for a single apartment on the second floor, and since  the
1974  order,  supra,  found that the second floor  apartment  was
sub-ject   to   rent   control   as   a   single   self-contained
accommodation,   the   subject  apartment   remains   under   the
jurisdiction  of DHCR as a rent-controlled apartment  until  such
time  as  there is a physical vacancy thereof.  The  Commissioner
notes  the  absence  of any claim by the landlords,  and  of  any
evidence in the record, that the Office of Rent Control  or  this
Division  ever  authorized the splitting of the subject  premises
into  two  apartments. The Admin-istrator clearly  did  not  err,
therefore,  in  determining that the  accommodation  is  still  a
single unit.

The  landlords'  contention that a physical vacancy  is  not  re-
quired,  since the 1943 tenant is deceased, is without merit.  It
has  been held that vacancy decontrol is applicable only when  an
apartment  has  been physically vacated by a tenant  who  was  in
possession thereof.

Regarding  the landlords' statement in their petition,  that  "it
can  just  as  easily  be speculated that Cramer  agreed  to  the
decon-trol...", the Commissioner notes that a tenant cannot waive
any rights or benefits granted by the rent laws.

This  proceeding  is remanded to the Rent Administrator  for  the
sole  purpose  of  determining the legal regulated  rent  of  the
second-floor apartment as one housing accommodation. (The  tenant
now occupies the entire floor.)

THEREFORE,  in  accordance with the provisions of  the  Rent  and
Evictions Regulations for New York City, it is

ORDERED, that the owner's petition for administrative review  be,
and the same hereby is, denied, and it is further
ORDERED,  that the tenant's petition be, and the same hereby  is,
granted, and that the order of the Rent Administrator be, and the
same  hereby is, modified by deleting all reference to the  Divi-
sion's lack of jurisdiction over the tenant, and it is further

ORDERED,  that  this proceeding be, and the same hereby  is,  re-
manded  to  the Administrator for the determination of the  legal
regulated rent of the second floor apartment.


                                         Deputy Commissioner

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