EJ 410392 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     S.J.R. 6194 (MANDAMUS)
          APPEAL OF                               ADMINISTRATIVE REVIEW
                                                  DOCKET NO.:  EJ 410392-RO
                
                                                  DRO DOCKET NOS.: ZBI-510616-R
               GEORGE A. BOWMAN, INC.,                                            
                                                  TENANT: LEONARD A. KISKO
                                                          
                                 PETITIONER              
          ----------------------------------X


               ORDER AND OPINION DENYING PETITION FOR ADMINISTRATIVE REVIEW


          On October 15, 1990 the above named petitioner filed  a  Petition
          for Administrative Review against  an  order  (No.  ZBI-510616-R)
          issued on September 21, 1990 by  the  Rent  Administrator,  92-31
          Union  Hall  Street,  Jamaica,  New   York   concerning   housing
          accommodations known as Apartment  4E at 504  West  44th  Street,
          New York, New York wherein the Rent Administrator determined that 
          the owners had overcharged the tenant.

          Subsequent thereto,  the  petitioner  filed  a  Petition  in  the
          Supreme Court pursuant to Article 78 of the  Civil  Practice  Law
          and Rules  requesting  that  the  Court  mandate  an  expeditious
          determination of its Petition  for  Administrative  Review.   The
          petition is herein decided on the merits.

          The issue in this appeal  is  whether  the  Rent  Administrator's
          order was warranted.

          The applicable sections of the Law are Section 26-516 of the Rent 
          Stabilization Law and  Section  2526.1(a)  of  the  current  Rent
          Stabilization Code.

          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.

          This  proceeding  was  originally  commenced  by  the  filing  in
          September, 1987 of a rent overcharge complaint by the tenant,  in
          which he stated that he had commenced occupancy  on  November  1,
          1986 at a rent of $908.48 per month.

          The  named  owners,  Dana  Fisher  and  Michael  Olivas,  with  a
          Sarasota, Florida  address,  were  served  with  a  copy  of  the
          complaint and  requested  to  submit  an  answer.   In  response,






          EJ 410392 RO
          Frederick Sasse, Jr, President of George A. Bowman, Inc., replied 
          that the named owners purchased the subject building  on  October
          21, 1982; that  Mr.  Fisher  then  occupied  the  vacant  subject
          apartment; that it was therefore  owner-occupied;  and  that  the
          lawful rent was confirmed in Dock t  Nos.  ZL-002031-S  and  ZAL-
          410022-OR.  [Note:  These involved a rent reduction  for  service
          decreases, and did not purport to determine the validity  of  the
          underlying rent.]  Mr. Sasse later stated that the first lease on 
          the apartment after the owner vacated was one with  Michael  Gnat
          commencing January 1, 1985 at a rent of $850.00.  He  enclosed  a
          lease made December 28, 1984 between Michael Gnat and the owners, 
          whose address was given in care of George A.  Bowman,  Inc..   He
          also  enclosed  a  lease  made  October  30,  1986  between   the
          complainant and the owners, who had a Sarasota, Florida address.

          In  reply,  the  tenant  contended  that  the  owners  were   not
          previously living in the  subject  apartment,  but  were  instead
          renting it without a lease to Richard Winsor and Vincent Errante, 
          whose mail he had been receiving.

          Mr. Sasse subsequently submitted a copy of an order in Docket No.
          AG-510069-R, wherein the $850.00 rent charged  the  prior  tenant
          Michael Gnat when he commenced occupancy on January 1,  1985  was
          found to be lawful, because the subject apartment was  registered
          as exempt on April 1, 1984 and because he was  the  first  tenant
          thereafter.

          In the order under appeal herein the Administrator used the April 
          1, 1984 rent of $208.75 established for the  prior-prior  tenants
          Richard Winsor and Vincent Errante as  a  result  of  their  Fair
          Market Rent Adjustment Application ("fair market rent appeal") in 
          Docket No. TA 11739, and found an overcharge of $90,349.28 as  of
          October 31, 1990, including treble damages.

          In this  petition  Mr.  Sasse  contends  in  substance  that  the
          Administrator's order, while based on the August 27,  1985  order
          in Docket No. TA 11739, ignored the February 29,  1988  order  in
          Docket No. AG-510069-R, which found that  the  subject  apartment
          was exempt on April 1, 1984 and that  the  rent  charged  Michael
          Gnat was a lawful  "first  rent";  that  such  order  was  proper
          because Dana Fisher, one of  the  owners,  occupied  the  subject
          apartment at the time he took title to the building and lived  in
          the apartment except for a period when he sublet the  unit;  that
          the order under appeal must therefore be set aside; and  that  in
          any event treble  damages  would  be  inappropriate  because  the
          owner's good-faith belief that Michael Gnat's rent (on which  the
          complainant's rent was based) was lawful  was  confirmed  by  the
          receipt of the February 28, 1988 order terminating Michael Gnat's 
          complaint.  

          In answer, the tenant  asserts  in  substance  that  tere  is  no
          evidence that Dana Fisher ever occupied Apartment 4E at the  time
          that he took title to the building; that the tenant has witnesses 
          and records showing that Mr. Fisher occupied  Apartment  4W;  and
          that treble damages were properly imposed.

          The Commissioner is of the opinion that this petition  should  be
          denied.







          EJ 410392 RO
          The order in Docket No. AG-510069-R, relating to the prior tenant 
          Michael Gnat, was based on the April 1, 1984 registration of  the
          subject apartment as being exempt from rent regulation because of 
          occupancy by the owner Dana Fisher.  However, it is now  apparent
          that that order was incorrect.  This can be seen by examining the 
          files for Docket Nos. TA 11739 and ARL  05481-L  (Richard  Winsor
          and Vincent Errante,  in  occupancy  from  April  1,  1983  until
          September, 1984), AG-510069-R (Michael Gnat,  in  occupancy  from
          January 1, 1985  to  October  31,  1986),  and  BI-510616-R  (the
          complainant Leonard Kisko, in occupancy since November 1, 1986).

          On August  1,  1986  in  No.  AG-510069-R  Frederic  Sasse,  Jr.,
          President of George A. Bowman, Inc., stated that:

               We are managing agents for the owners  Mr.  Dana  Fisher
               and Mr. Michael Olivas who bought  the  above  mentioned
               property on October 21, 1982,  to  live  in  since  they
               wanted  to  be  near  their  clothing  store  which  was
               located on Ninth Avenue between 42nd and 43rd Street.

               Apartment No. 4E was occupied by Mr. Dana  Fisher  until
               April 1, 1983.  At that time Mr.  Fisher  subletted  his
               apartment  (owners)  to  Mr.  Richard  Winsor  and   Mr.
               Vincent Errante, for a period of one year  ending  March
               31, 1984.

               When Mr. Michael Gnat leased this apartment  on  January
               1, 1985 the  rent  established  was  $850.00  per  month
               which  was  the  first  rent  stabilized  rent  on   the
               apartment  after  the  owner  relinquished   possession.
               When the apartment was subletted by Mr.  Richard  Winsor
               and   Mr.   Vincent   Errante    the    apartment    was
               decontrolled.

          On October 15, 1985 in No. ARL 05481-L Mr. Sasse stated that:

               This order should be reversed as this  apartment  is  an
               owner  occupied  apartment  by  Dana  Fisher   and   was
               subleased from  Mr.  Fisher  for  a  period  of  1  year
               commencing April 1, 1983 to Richard Winsor  and  Vincent
               Errante.  Mr. Winsor  and  Mr.  Errante  were  only  the
               subtenants of the apartment while Mr.  Fisher  was  away
               in Florida.

          In his cover letter to that petition Mr. Sasse stated that:

               There  is  no  overcharge,  since  this  apartment   was
               decontrolled apartment occupied by the owner Mr.  Fisher
               who recently bought the building.

          On January 12, 1988 in No. AG-510069-R, Mr. Sasse stated that:

               From March  31,  1984  to  January  1,  1985,  apartment
               remained in the landlord's name  for  his  own  use  and
               occupancy.   Mr.   Dana   Fisher   (landlord),   vacated
               apartment 4E in December 1984 and apartment  was  rented
               to Mr. Michael Gnat on January 1, 1985.

          On May 4, 1990 in No. BI-510616-R Mr. Sasse stated that:






          EJ 410392 RO

               The first  lease  on  this  apartment  after  the  owner
               vacated the apartment was with Michael  Gnat  commencing
               January 1, 1985.  I am enclosing all  subsequent  leases
               as requested.  Please note that the initial rent on  the
               apartment was $850.00 but  was  reduced  to  $779.81  as
               outlined in my  letter  to  the  rent  commission  dated
               November 10, 1987.

          In addition, all building registrations from  1984  through  1991
          listed the owners,  Dana  Fisher  and  Michael  Olivas,  with  an
          address at the subject building, with no apartment specified, and 
          the manager as George A. Bowman,  Inc..   Taken  together,  aside
          from the date of purchase given in No. AG-510069-R,  these  could
          convey an impression that Dana Fisher occupied the  apartment  as
          his primary residence, that he subleased it for a  year  with  an
          intention to return for the rest of his lease or for a new lease, 
          that he bought it together with  Michael  Olivas  shortly  before
          October 5, 1985 ["recently"], that he again occupied it on  April
          1, 1984 when the subtenants vacated, and that he later vacated it 
          before Michael Gnat commenced occupancy on January 1, 1985.

          However, in No. TA-11739, a fair market rent appeal in which they 
          alleged that they had never been served with a DC-2 Notice  Form,
          Richard Winsor and Vincent Errante alleged that  a  Mr.  Anderson
          and a woman had lived in the subject apartment before them;  that
          the owners lived next door in Apartment 4W [The 1984 registration 
          lists both Apartment 4W and Apartment 4E  as  being  occupied  by
          Dana Fisher.  Apartment 4W was not registered again  until  1989,
          at which time  it  had  a  $990.24  rent  identical  to  that  of
          Apartment 4E]; that there was no reason for a sublease; and  that
          the owners were  engaging  in  an  illusory  prime  tenancy.   On
          February 21, 1985 and May 30, 1985 those prior tenants gave a Key 
          West, Florida address for Dana Fisher, and stated that they  were
          given no renewal lease, that the managing agent  did  not  accept
          any rent checks after March, 1984,  that  they  were  evicted  in
          September, 1984, and that:

               The landlord sued us before your agency could  act  upon
               our case, the holding was highly irregular:   There  was
               no  evidence  that  the  landlord  is  not  a  permanent
               resident of  the  State  of  New  York.   In  fact,  the
               landlord (Fisher) admitted under oath and on  tape  that
               he does not pay NY State and  City  taxes,  never  votes
               and    "guesses"    that    his    residence    is    in
               Florida...[a]lthough  the  landlord  claimed   that   he
               wanted to reoccupy "his"  apartment,  he  re-rented  our
               apartment  immediately  without   ever   occupying   the
               premises!!!

          Their sublease listed "Tenant Mr. Dana Fisher", with  an  address
          at the subject building with no apartment  number  (although  Mr.
          Sasse has stated that Dana Fisher  was  in  Florida  during  that
          "sublease").  The lease of Michael  Gnat  commencing  January  1,
          1985 listed Dana Fisher and Michael Olivas  as  the  owner,  with
          their address "c/o George A. Bowman, Inc.."  The lease of Leonard 
          Kisko commencing November 11, 1986 listed the owners in  care  of
          LIDO in Sarasota, Florida.  Other than contentions by Mr.  Sasse,
          there is no evidence in any of the proceedings  concerning  three






          EJ 410392 RO
          different tenancies that Dana Fisher  (or  Michael  Olivas)  ever
          lived in the subject apartment.  Because the  Commissioner  finds
          plausible the statement by Richard  Winsor  and  Vincent  Errante
          that they resided in  the  subject  apartment  until  evicted  in
          September, 1984, although Mr.  Sasse  did  not  cash  their  rent
          checks after March, 1984; because  there  is  no  evidence  of  a
          lease, whereby Dana Fisher rented the apartment  even  though  he
          owned the building, to warrant a "sublease" to Richard Winsor and 
          Vincent Errante; and because of  the  Florida  addresses  on  the
          Winsor/Errante and Kisko leases, the Commissioner finds that:



               1)   the owners were engaged in  an  illusory  prime
                    tenancy scheme;

               2)   the Winsor/Errante sublease was an  attempt  to
                    deny   them   the   benefits   of   the    Rent
                    Stabilization  Law  and  Code,  including   the
                    right to a renewal lease and the right  to  pay
                    only lawful stabilized rents; and

               3)   the registration of  the  apartment  as  exempt
                    because  of  owner   occupancy,   even   though
                    Richard  Winsor  and   Vincent   Errante   were
                    residing there  on  April  1,  1984,  and  even
                    though (as shown by the  Florida  addresses  on
                    the  April  1,  1983  and  November   1,   1986
                    leases,  the  immediate   re-renting   of   the
                    apartment  upon  the  eviction  of  Winsor  and
                    Errante, and the other factors  cited  earlier)
                    it   appears   unlikely   that   either   owner
                    intended to  resume  occupancy  or  had  indeed
                    ever been in occupancy after  they  bought  the
                    building, was  a  deliberate  misrepresentation
                    made to evade the Rent  Stabilization  Law  and
                    Code.

          Because of this, and because of its inconsistency with the  order
          in  Docket  No.  TA  11739,  the  Commissioner  finds  that   the
          Administrator's order in Docket AG-510069-R was incorrect.    The
          Commissioner declines to follow it.    The  lawful  stabilization
          rent in Docket  No.  BI-510616-R,  the  proceeding  under  appeal
          herein, was correctly determined by the  Administrator  based  on
          the Initial Legal Regulated Rent  determined  in  Docket  No.  TA
          11739.

          Section 2526.1(a)(1) of the Rent Stabilization Code  provides  in
          pertinent  part  that  treble  damages  shall   be   imposed   on
          overcharges occurring on and after April 1, 1984 unless an  owner
          establishes  by  a  preponderance  of  the  evidence   that   the
          overcharges were not willful.  In addition to the illusory  prime
          tenancy/sublease scheme, and the misrepresentation  in  the  1984
          registration, both previously mentioned, the  Commissioner  notes
          that the owners did not (other than for a  reduction  ordered  as
          the result of an order finding a  service  decrease)  reduce  the
          rent after the August 27, 1985 order,  which  became  final  upon
          dismissal of the owner's appeal on December 13, 1985, until after 
          the September 21, 1990 issuance of  the  order  appealed  herein,






          EJ 410392 RO
          even though the 1985 order directed  the  owners  to  recalculate
          subsequent lawful rents.  Until the February 29, 1988 issuance of 
          the order in No. AG-510069-R the  owners  did  not  even  have  a
          legally colorable argument against following the August 27,  1985
          order.  The February 29, 1988 order does  not  endow  the  owners
          with "good faith" lack of willfulness for  overcharges  occurring
          after that date, since that order was issued  accepting  as  true
          what was actually a mispresentation by the  owners  in  the  1984
          registration.  For all of the  above  reasons,  the  Commissioner
          does not consider that the presumption of  willfulness  has  been
          rebutted.  The treble damages imposed  by  the  Administrator  on
          overcharges of the tenant herein are affirmed.

          The owner is cautioned to adjust the rent, in leases after  those
          considered in  this  order,  to  amounts  no  greater  than  that
          determined by this  order  plus  any  lawful  increases,  and  to
          register any adjusted rent, with this order being  given  as  the
          reason for the adjustment.  Because of the possibility  that  the
          tenant  herein  may  have  vacated  by   the   time   that   this
          determination is issued, a copy of this  determination  is  being
          mailed to the tenant-in-occupancy.

          This order may, upon the expiration of the period  in  which  the
          owners may institute a proceeding pursua t  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 owners.

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

          ORDERED, that the owner's petition be, and the  same  hereby  is,
          denied and that  the  Administrator's  order  be,  and  the  same
          hereby is, affirmed.   The  total  overcharge,  including  excess
          security of $647.36, is $91,260.35 as of October 31, 1990.






          ISSUED:
                                                  ------------------------
                                                  JOSEPH A. D'AGOSTA
                                                  Acting Deputy Commissioner
           
             
    

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