FF 410344 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

      ------------------------------------X  SJR No. 6592
      IN THE MATTER OF THE ADMINISTRATIVE :  ADMINISTRATIVE REVIEW
      APPEAL OF                              DOCKET NO. FF 410344 RO

                                          :  DISTRICT RENT OFFICE
           Jacob M. Weinreb,                 DOCKET NO. ZBK 410361 R
                                            
                                             TENANT: Christian Maynaud &      
                                                     Hillary Burnett
                            PETITIONER    : 
      ------------------------------------X                             


           ORDER AND OPINION DENYING PETITION FOR ADMINISTRATIVE REVIEW


      On June 24, 1991, the above-named petitioner-owner filed a Petition for 
      Administrative Review against an order issued on May 23, 1991, by the 
      Rent Administrator, 92-31 Union Hall Street, Jamaica, New York, 
      concerning the housing accommodations known as 255 West 88th Street,
      New York, New York, Apartment No. 12D, wherein the Administrator 
      determined that an overcharge had occurred and directed the owner to 
      refund overcharges of $88,297.81 inclusive of treble damages and excess 
      security.

      Subsequent thereto, the tenant initiated a mandamus proceeding in the 
      Supreme Court pursuant to Article 78 of the Civil Practice Law and Rules 
      requesting that the DHCR issue a determination of the Petition for 
      Administrative Review.

      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 tenants commenced this proceeding on October 22, 1987 by filing a 
      complaint of rent overcharge.  The tenants stated that the rent being 
      collected was based upon an illegal rent as had been determined by the 
      DHCR in a previous proceeding brought by the prior tenant.

      In answer to the complaint, the owner asserted that he had appealed the 
      Rent Administrator's prior determination and had not adjusted the rent 
      while awaiting the determination of his appeal.  The owner also asserted 
      that the prior tenant had agreed pursuant to a stipulation of settlement 
      to withdraw the claim and that the current tenant had agreed, with 
      advice of counsel, to the terms of a new lease and to a rent which was 
      based upon the rent agreed to by the prior tenant.  The owner, 
      therefore, requested dismissal of the complaint.



      On February 14, 1991, in a Final Notice, notifying the owner of the 
      imposition of treble damages, the owner was afforded a final opportunity 







          FF 410344 RO

      to submit evidence to rebut the finding of willful overcharge.  
      Additionally, the owner was informed that notwithstanding any 
      stipulation of settlement with the prior tenant, the legal stabilization 
      rent had been established in the prior order.

      In a letter dated March 13, 1991, the owner notified the Administrator 
      that he had refunded the total overcharges, as calculated in the Final 
      Notice, plus interest in the belief that by doing so, he had avoided the 
      penalty of treble damages.  As proof of the refund, the owner submitted 
      a copy of a letter to the tenant and a copy of a check for $31,567.

      In the order issued on May 23, 1991, the Administrator established the 
      lawful stabilization rent at $744.81 as of April 1, 1984 and directed 
      the owner to refund $88,297.81 inclusive of treble damages and excess 
      security.  It was stated in said order that if the tenant accepts the 
      remittance of $31,567.08, the total overcharge amount would be reduced 
      by $31,567.08.

      In his appeal, the owner contends that the Administrator erred in not 
      considering DHCR Policy Statement 89-2 before imposing treble damages.  
      If the Administrator had correctly applied the policy, no treble damages 
      would have been imposed.  The owner further contends that the 
      Administrator failed to consider that the facts and circumstances (as 
      cited herein) under which the overcharge arose evidence that any 
      overcharge was not willful: 1) the sole basis for the tenant's 
      overcharge complaint was the Administrator's determination that the 
      prior tenant had been overcharged; 2) the resolution of the correct rent 
      depended upon the determination of the owner's appeal of the prior 
      order; 3) the owner notified the DHCR that pursuant to a "So-Ordered" 
      Stipulation of Settlement the prior tenant and the owner had settled 
      their differences and the prior tenant had agreed to withdraw all 
      pending complaints; 4) prior to the issuance of the Order in the prior 
      tenant's overcharge proceeding, the complainants, who were illegal 
      subtenants, were given their own lease in which the owner charged only 
      permitted vacancy and guidelines increases; 5) after the owner's appeal 
      was denied, the owner relied in good faith on the "So-Ordered" 
      stipulation; 6) the owner was first made aware that the DHCR would not 
      honor the stipulation when he received the Final Notice; 7) thereupon, 
      before the order here under review was issued, the owner tendered a full 
      refund of the overcharge plus interest and reduced the tenant's rent.  
      The owner further contends that treble damages are unwarranted because 
      the refund was tendered prior to the issuance of the order here under 
      review and within the time afforded to interpose an answer.

      The tenants contend that the imposition of treble damages is appropriate 
      and correct because the record is uncontroverted that the owner failed 
      to submit any evidence that the overcharge was not willful but that the 
      facts and circumstances do in fact indicate the willfulness of the 
      overcharge.  With respect to the owner's reliance on Policy Statement 
      89-2, the tenants assert that the owner's tardy offer of reimbursement 
      for overcharges was insufficient to defeat the treble damages penalty.  
      The tenants further contend that the owner's assertion that the 
      negotiated lease agreement between the parties excused the owner from 
      complying with the Rent Stabilization Code is without any merit pursuant 
      to Section 2520.13 of the Rent Stabilization Code which also limits the 
      effect of the prior tenant's stipulation of settlement on the 
      complainants.



          FF 410344 RO

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

      Section 2526.1(a)(1) of the Rent Stabilization Code provides:

           Any owner who is found by the DHCR, after a reasonable 
           opportunity to be heard, to have collected any rent or other 
           consideration in excess of the legal regulated rent shall be 
           ordered to pay to the tenant a penalty equal to three times 
           the amount of such excess,. . .  If the owner establishes by 
           a preponderance of the evidence that the overcharge was not 
           willful, the DHCR shall establish the penalty as the amount of 
           the overcharge plus interest . . . 

      The Code creates a presumption of willfulness subject to rebuttal by the 
      owner showing non-willfulness of the overcharge by a preponderance of 
      the evidence.  Where an owner submits no evidence, or where the evidence 
      is equally balanced, the overcharge is deemed to be willful.

      Review of the record reveals that the owner herein has not established 
      that the overcharge was not willful.  DHCR has determined that the 
      burden of proof in establishing lack of willfulness shall be deemed to 
      have been met and therefore, the treble damage penalty is not 
      applicable, in some situations, where it is apparent or where it is 
      demonstrated that an overcharge occurred under certain specified 
      circumstances. e.g.  Where an owner adjusts the rent on his or her own 
      within the time afforded to interpose an answer to the proceeding and 
      submits proof to the DHCR that he has tendered, in good faith, to the 
      tenant a full refund of all excess rent collected, plus interest.  The 
      owner's reliance on this policy is misplaced.  The owner's belated (more 
      than three years after his receipt of the complaint and nearly two years 
      after the denial of his appeal of the prior proceeding) offer of rent 
      adjustment and refund fails to satisfy the requirements enunciated in 
      Policy Statement 89-2.

      The owner's reliance on the prior tenant's stipulation of settlement and 
      on the negotiated lease agreement is also misplaced.  Section 2520.13 of 
      the Code provides in pertinent part that an agreement by the tenant to 
      waive the benefit of any provision of the RSL or the Code is void; 
      except, that based upon a negotiated settlement between the parties and 
      with the approval of the DHCR, or a court of competent jurisdiction a 
      tenant may withdraw, with prejudice, any complaint pending before the 
      DHCR.  Such settlement shall not be binding upon any subsequent tenant.  
      Pursuant to Section 2520.13, the owner knew or should have known that 
      any settlement reached with the prior tenant would not affect the 
      complainants.  There is no evidence that the complainants' lease 
      agreement satisfies the condition expressed in Code Section 2520.13 for 
      withdrawal of the complaint.  Moreover, any other waiver of benefit is 
      expressly negated.

      The owner's contention that his appeal of the prior order permitted him 
      to stay the rent adjustment ordered is incorrect.  Pursuant to Code 
      Section 2529.12, only the penalty portion of the prior order was stayed 
      by the appeal.  The record contains no request by the owner for any 
      additional stay.  Accordingly, the owner was not justified in continuing 
      to collect the illegal rent.  Based upon consideration of the entire 
      evidence of record, the Commissioner finds that the owner has not proved 
      non-willfulness of the overcharge by a preponderance of the evidence and 
      that treble damages are warranted.







          FF 410344 RO


      Therefore, the Commissioner directs the owner to refund overcharges of 
      $88,297.81 inclusive of treble damages and excess security.  The record 
      indicates that the owner has remitted the sum of $31,567.08 to the 
      tenant.  If the tenant has accepted the remittance, the total overcharge 
      to be refunded will be diminished by $31,567.08.

      This order may, upon the expiration of the period in which the owner may 
      institute a proceeding pursuant to Article 78 of the Civil Practice Law 
      and Rules, be filed and enforced in the same manner as a judgment or not 
      in excess of twenty percent per month thereof may be offset against any 
      rent thereafter due the owner.

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

      ORDERED, that this petition for administrative review be, and the same 
      hereby is, denied, and, that the order of the Rent Administrator be, and 
      the same hereby is, affirmed.

      ISSUED:





                                                                    
                                      JOSEPH A. D'AGOSTA
                                      Acting Deputy Commissioner
    

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