EE 410137-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 NOS.:
                                        EE 410137-RO
         HERMANN KAPPEL,                EF 510040-RO
                                        DRO DOCKET NO.:
                        PETITIONER      AB 510320-R
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  ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW
       AND REMANDING PROCEEDINGS TO THE RENT ADMINISTRATOR
                                
                                
On  May  1,  1990,  the  above named petitioner-owner  refiled  a
Petition for Administrative Review against an order issued  under
Docket Number AB 510320-R on March 1, 1990, by the District  Rent
Administrator   concerning   housing  accommodations   known   as
Apartment  33  at  525  West 146th Street, New  York,  New  York,
wherein  the  District  Rent Administrator  determined  that  the
tenant had been overcharged in the amount of $3,843.56.

On  June  1,  1990,  the  above-named  petitioner-owner  filed  a
Petition  for  Administrative Review  against  an  amended  order
issued  under the above Docket Number AB 510320-R on May 3,  1990
concerning  the  same  parties  and  accommodations  wherein  the
District  Rent Administrator determined that the tenant had  been
overcharged in the amount of $22,149.34.

Insofar  as both petitions are concerned with the same underlying
order  and common issues, this Order and Opinion will consolidate
both proceedings herein.

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.

The  current  tenant took occupancy pursuant to a one-year  lease
commencing  August  1, 1984, and expiring July  31,  1985,  at  a
monthly rent of $260.00.

Although  the  instant Order and Opinion concerns the  proceeding
initiated  by the current tenant in her complaint of January  20,
1986,  the  ruling in that order is based upon an earlier  order,
resulting from the overcharge complaint of the prior tenant.  The
prior   tenant  had  taken  occupancy  of  the  subject-apartment
pursuant  to  a one-year lease commencing on August 1,  1982  and
expiring  on October 31, 1983 at a rental of $250.00  per  month.
The  lease was signed by the prior tenant, Miguel Garcia, and  by
Martin  Levine as 7A Administrator.  The prior tenant then  filed
an  overcharge complaint on September 7, 1983, which stated  that
the  tenant before him had paid only $66.00 per month, and  which
also cited numerous reductions in service.  The prior tenant also
listed the (then) current 7A Administrator as Luana Robinson.

The  complaint was given Docket No. TC 076261-G by the  New  York
City  Conciliation and Appeals Board (CAB), the  agency  formerly
charged with enforcing the Rent Stabilization Law, and was mailed
to Luana Anderson, as 7A Administrator, on October 17, 1983.

On  November  23,  1983, an answer signed by Luana  Anderson  was
received  at  the CAB office, which stated that the prior  tenant
had   vacated  the  premises  owing  $2,186.71  in   rent.    The
Administrator copied this answer form and sent it to  Mr.  Garcia
at the subject-apartment.

No   order  was  issued  or  other  action  taken  by  the   Rent
Administrator by the time the current tenant, Michelle  Scarlett,
took occupancy on August 1, 1984, pursuant to a one-year lease at
a  monthly  rent  of $260.00.  The current proceeding,  which  is
herein  appealed in this Order and Opinion, was commenced by  the
current  tenant by the filing of her own overcharge complaint  on
January  20,  1986.  The complaint mentioned that the  tenant  on
March 31, 1980 paid $68.66 per month, and that this was the  rent
immediately  prior to the current tenant's rent.   There  was  no
mention of the tenancy of Mr. Garcia.  The complaint also  listed
the current owner as: David Kennedy, 36 Convent Avenue, New York,
New York 10027.

A  copy  of  the current tenant's complaint was mailed  to  David
Kennedy, as then current 7A Administrator, on March 20, 1986.

Simultaneous   with  the  processing  of  the  current   tenant's
complaint,  the  prior tenant's overcharge  complaint  was  being
processed by a different Rent Administrator.  The record of  that
proceeding  contains  a letter from the DHCR  to  Miguel  Garcia,
which  is undated and unsigned, which requested an update of  the
tenant's situation since the filing of his complaint on September
7, 1983.  The letter was returned to the DHCR postmarked February
19,  1986, stating therein that the person with "present control"
of  the  building  was David Kennedy, at the same  address  cited
above.  There was no signature to this written response, but  the
return address of the letter was the subject-premises.

Subsequently,  on  June  26, 1986 a copy of  the  prior  tenant's
complaint   was   mailed  to  Mr.  Kennedy,   as   successor   7A
Administrator after the departure of Luana Robinson.  Mr. Kennedy
was therein advised to file an answer to the complaint within  20
days  of the mailing of the Notice, or he would be considered  in
default.

On  August  5, 1987, the Rent Administrator processing the  prior
tenant's  complaint sent Mr. Kennedy a Final  Notice  of  Pending
Default  which  stated that if a complete lease history  was  not
submitted, the Rent Administrator would hold the owner in default
and  determine  the tenant's lawful rent in accordance  with  the
procedures upon default outlined therein.  This notice, which was
unanswered,  as were all of the notices sent to Mr.  Kennedy,  is
the  last communication by the DHCR concerning the prior tenant's
complaint prior to the issuance of the Adminis-trator's order  in
that proceeding on May 18, 1988.

On  April 3, 1986, the Hon. Judge Ralph Sparks of the Civil Court
of  New  York  County granted the petition of the  owner  of  the
subject-building,  and  petitioner in  this  proceeding,  Hermann
Kappel, for the removal of David Kennedy as 7A Administrator  and
for  the  reassumption  of his control of  the  subject-building.
Although a copy of this civil order is stamped as received by the
DHCR on May 1, 1990, along with the owner's petition of the order
of March 1, 1990, it is not established that it was ever known to
the Rent Administrator processing the prior tenant's complaint.

On  May  18,  1988, the Rent Administrator issued an order  under
Docket  No.  TC 076261-G concerning the overcharge  complaint  of
Miguel Garcia wherein it was determined that the tenant had  been
overcharged   in  the  amount  of  $1,752.00,  including   excess
security, for the period from August 1, 1982 through October  31,
1983.   This order established a lawful rent for that  period  of
$140.50 per month by procedures utilized upon the default of  the
owner.   The  order  was  mailed to the owner  of  record,  David
Kennedy, who did not file a petition for administrative review.

The  petitioner in the instant proceeding, Hermann Kappel,  began
to  file  annual registration statements for the subject-building
and  apartment  beginning in 1985 and each year  thereafter.   On
January  25,  1987  the  petitioner filed an  owner's  report  of
statutory  decontrol for the subject-apartment,  stating  therein
that  the  rent-controlled tenant , Pauline Beasley, had  vacated
the premises on August 1, 1984 and had been paying rent of $68.66
per  month at that time.  The decontrol form stated that the  new
tenant  was  the complainant, Michelle Scarlett, who had  assumed
occupancy on August 1, 1984, at a monthly rent of $260.00.


On  October  14,  1987  the Rent Administrator  for  the  instant
proceeding mailed a Request for Additional Information  to  David
Kennedy,  directing that he submit proof of the initial apartment
registration  in 1984 and proof of service.  A subsequent  notice
was  mailed  on September 7, 1988.  As no answer was received,  a
notice   of  non-compliance  to  the  initial  rent  registration
requirements  was  mailed to Mr. Kennedy  on  February  2,  1989,
wherein  he  was  informed  of  the penalties,  including  treble
damages  for  overcharges collected since April 1, 1984,  if  the
owner failed to submit the requested documentation.

On  June  1,  1989  the tenant requested that the Administrator's
determination be expedited since she was in the process of  being
evicted  from the subject-premises by the owner, Hermann  Kappel,
in a civil court proceeding.  Aside from the annual registrations
that  had  been  filed since 1985, this is  the  first  and  only
communication to the DHCR in the records of both proceedings that
mentions the petitioner as owner of the subject-building.

In  an  order  issued  on March 1, 1990, the  Rent  Administrator
determined  that  the  complainant had been  overcharged  in  the
amount of $3,843.56, including treble damages and excess security
through July 31, 1985.  The order stated that the lawful rent had
been  determined in the order based on the complaint of the prior
tenant,  Miguel Garcia, in the amount of $140.50 per  month,  and
that  since no petition for administrative review had been filed,
that  rent  would  be  the base rent in effect  for  the  present
tenant's  order.   As  a result, the lawful rent  became  $156.12
after  the  addition of a 4% guideline increase for  a  one  year
vacancy  lease  under Guideline 15 and an additional  $10.00  for
rents under $200.00.  The order was mailed to the petitioner   as
current owner of the subject-premises.

A  petition  to this order was filed by the owner  on  March  12,
1990,  but  was  rejected by the Commissioner  in  an  Order  and
Opinion  issued under Docket No. EC 410106-RO on May 1, 1990,  as
insufficient because it failed to mention the name of the subject-
tenant  affected by the order, or to submit a copy of  the  order
with the petition.  The owner was advised that the petition would
be reconsidered if amended and refiled within 35 days.

On  April  16,  1990, the current tenant's attorney  requested  a
modification of the Administrator's order to extend it to include
the  complainant's  present  two-year  tenancy,  which  commenced
effective  October 1, 1988, explaining that the  tenant  did  not
have  a  written  lease at the time she filed  the  complaint  on
January 20, 1986.

In an amended order issued on May 3, 1990, the Rent Administrator
calculated  total  overcharges in the amount  of  $22,149.34,  as
based upon the extension of the previous order through April  30,
1990.   A  lawful rent of $170.17 was determined for the two-year
lease  commencing on October 1, 1988.  The Administrator assessed
treble damages for the entire period of the extension.

In  its  petition to the amended order, dated June  1,  1990  the
owner  states  that the apartment had been rented  to  the  prior
tenant, Miguel Garcia, on August 1, 1982, by Martin Levine, 7A
Administrator,  for  $250.00 per month;  that  the  prior  tenant
caused  extensive damage requiring a renovation of the  apartment
after  he  was evicted for non-payment of rent; that the  present
tenant  assumed occupancy on August 1, 1984, pursuant to  a  one-
year  lease,  at  a  rent of $260.00 per month,  which  had  been
executed  with  Luana Robinson, as 7A Administrator;  that  David
Kennedy  served  as 7A Administrator from March  27,  1985  until
April  1, 1986, when petitioner reassumed control of the property
pursuant  to an Order of the Civil Court.  Finally the petitioner
challenges  the Administrator's order as "based on  an  error  of
law."

On  July  2,  1990, the tenant submitted a reply to  the  owner's
petition  of March 12, 1990, stating therein that it was  proced-
urally  improper  and  also failed to  state  a  reason  why  the
Administrator's order should be reversed.

After being served with the owner's petition of June 1, 1990, the
tenant  restates the contention that the petition fails to  state
any error of fact or law which constitutes sufficient grounds for
the  appeal.  The tenant contends that the owner's attack on  the
prior order fails to cite any evidence to establish it as in-
valid, or to justify reopening the proceeding.

The  Commissioner  is  of the opinion that the  owner's  petition
should be granted, and the instant proceeding be remanded to  the
Rent  Administrator  for a redetermination.  Additionally,  since
the earlier order provides the basis for the present one, and  is
itself  improper, the order in the proceeding instituted  by  the
prior tenant under Docket No. TC 076261-G must be revoked.

The  record  in  this  case must be considered  as  two  distinct
proceedings  which,  by  their common  affinities,  constitute  a
single administrative action.  It is also apparent that the order
under immediate review, being totally and fatally dependent  upon
the  earlier  order  concerning the same premises,  is  similarly
defective  in that both exact the most extreme penalties  without
satisfying the basic requirements of due process.

The Commissioner relies upon the extensively detailed history  of
these  cases, as summarized above, to find that the orders should
be   revoked   and   the  proceeding  be  redetermined   by   the
Administrator.   It  need  only be emphasized  that  the  use  of
default  procedures  to  formulate a  lawful  rent  can  only  be
justified  when  an owner is unwilling or unable to  provide  the
complete  rent  history, as required under the Rent Stabilization
Code.  However, when the record fails to establish that the owner
was  properly  afforded  the opportunity to  prevent  this  harsh
result,  it  cannot  be allowed to survive  on  appeal.   In  the
present  case,  the actual lack of proper notice is  complete  in
that  the  petitioner  was  not only  never  served  with  either
complaint,  but  was never in fact notified by the Administrator,
directly or indirectly, that such complaints had even been filed.
Furthermore,  the problem cannot be solved by holding  either  or
both   of  the  7A  Administrators  who  knew  of  these  actions
responsible  as  owners-in-place, or substitute  owners,  because
both had long ceased to function in that capacity by the time the
first  order had been issued.  As a result, their culpability  is
nullified by the lack of notice to the only other party who could
have done anything to prevent the finding of default in the first
place, the real owner.  In this regard, it must be noted that the
petitioner had declared his connection to the building by  filing
annual  registrations  with the DHCR since  1985,  but  this  was
apparently unnoticed by both of the Administrators.

Given  the  allegations  that the prior tenant  had  vacated  the
apartment  owing a substantial amount of rent, and the fact  that
his  whereabouts are unknown, the Administrator's order based  on
his  complaint must be revoked in its entirety and the proceeding
be  terminated.  As a result, the Administrator on remand  should
process  the  current tenant's complaint as a  fair  market  rent
appeal  and  determine  whether the prior tenant's  initial  rent
exceeded the fair market rent.




THEREFORE,  in  accordance with the Rent  Stabilization  Law  and
Code, it is



ORDERED, that the petition be, and the same hereby is granted  to
the  extent  of  remanding this proceeding to the  District  Rent
Administrator  for  further processing in  accordance  with  this
Order and Opinion.  In addition, the Administrative Order No.  TC
072261-G  is revoked in its entirety and the proceeding initiated
under that docket number is terminated.  The automatic stay of so
much  of  the District Rent Administrator's orders as directed  a
refund is hereby continued until a new order is issued upon
remand.   However, the Administrator's determination  as  to  the
rent  is  not  stayed and shall remain in effect except  for  any
adjustments  pursuant to lease renewals, until the  Administrator
issues a new Order upon remand.


ISSUED:



ELLIOT SANDER
                                         Deputy Commissioner
    

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