STATE OF NEW YORK
DIVISION OF HOUSING AND COMMUNITY RENEWAL
OFFICE OF RENT ADMINISTRATION
92-31 UNION HALL STREET
JAMAICA, NEW YORK 11433
IN THE MATTER OF THE ADMINISTRATIVE ADMINISTRATIVE REVIEW
APPEAL OF DOCKET NOS.:
HERMANN KAPPEL, EF 510040-RO
DRO DOCKET NO.:
PETITIONER AB 510320-R
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
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
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.