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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