ADM. REVIEW DOCKET NO.: FG 410356 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 6063
IN THE MATTER OF THE ADMINISTRATIVE : ADMINISTRATIVE REVIEW
APPEAL OF DOCKET NO.:
FG 410356 RO
:
DRO DOCKET NO.:
ZCE 410418 R
JONATHAN WOODNER COMPANY
Tenants - Allan & Gail
Abramowitz
PETITIONER :
------------------------------------X
ORDER AND OPINION DENYING PETITION FOR ADMINISTRATIVE REVIEW
On July 24, 1991, the above-named petitioner-owner filed a
Petition for Administrative Review against an order issued on
June 20, 1991 by the Rent Administrator, 92-31 Union Hall Street,
Jamaica, New York, concerning the housing accommodation known as
888 Eighth Avenue, Apartment No. 10F, New York, New York wherein
the Administrator determined that an overcharge had been
collected and directed the owner to refund overcharges of
$67,572.13 inclusive of treble damages and excess security.
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 "deemed denial" of his
administrative appeal be annulled.
Pursuant to a stipulation, dated February 13, 1992, the
matter was remitted for an expeditious determination of the
petitioner's appeal.
The Commissioner has reviewed all of the evidence in the
record and has carefully considered that portion of the record
relevant to the issues raised in the administrative appeal.
A review of the record indicates that on May 31, 1988, the
tenants filed a complaint of rent overcharge wherein they stated
that they had moved into the subject apartment on March 1, 1988
pursuant to a lease commencing March 1, 1988 and terminating on
February 28, 1990 at a monthly rent of $1988.00, and that they
believed the prior tenants had paid a much lower rent.
ADM. REVIEW DOCKET NO.: FG 410356 RO
On June 15, 1988, a copy of the complaint and answer forms
to fill out were served on the owner.
In response, the owner submitted a lease history commencing
August 1, 1984 and stated that the complainant's rent included
all allowable guidelines increases. The owner asserted that the
subject apartment had been totally renovated at a cost of
$25,134.00 and that the rent included 1/40th of the cost.
Although the owner did not submit substantiating documentation at
that time, subsequently, on January 2, 1991, the owner submitted
invoices and cancelled checks which it alleged substantiated
$15,630.89 of the claimed total cost.
In reply, the tenant disputed that all of the claimed
improvements had been made and further disputed the validity of
the submitted documents.
In the order here under review, the Administrator found that
the owner had established its entitlement to a rent increase of
only $130.48 for claimed improvements or 1/40th of $5219.10. The
owner was directed to refund overcharges of $67,572.13 inclusive
of treble damages and excess security.
In its appeal, the owner seeks to modify the
Administrator's order and raises the following issues:
1) Although the owner submitted evidence of
$25,135.00 in expenditures, the
Administrator incorrectly disallowed all
but $5,219.10.
2) The Administrator determined that the
owner had willfully overcharged and
assessed treble damages without any
evidence that the overcharge was
willful. The owner contends that it
established by a preponderance of the
evidence, i.e. the submission of
documents in support of the renovation
expenditures, that the overcharge was
not willful; therefore, the DHCR should
not have imposed treble damages without
a hearing on the issue of willfulness.
Since the finding of willfulness affects
the owner's property rights, the owner
believes it is entitled to a trial type
hearing on this issue.
3) The Administrator erroneously concluded
that the tenant had filed a PAR against
an order granting an MCI increase and
disallowed the collection of the
retroactive portion of the increase.
ADM. REVIEW DOCKET NO.: FG 410356 RO
The owner concedes that it did not submit substantiating
evidence of the installation of a parquet floor at a cost of
$9,494.86 and therefore acknowledges an overcharge of $10,224.46.
However, as the inclusion of the floor's cost was based upon
advice from its superintendent that the installation had been
completed, the owner denies that the overcharge was willful. The
owner thus requests that the order be modified to find an
overcharge of only $10, 224.46 and to eliminate the finding of
willfulness and the assessment of treble damages.
The tenants contend that the owner is submitting fraudulent
and falsified information in an effort to delude the DHCR and to
justify the unlawful rent it collected; the owner never submitted
substantiating documents of the cost alleged, $25,135.00, did not
make all the improvements alleged to have been made, did not
install a parquet floor, and did not employ outside labor as
alleged in the appeal. Since the owner has failed to meet its
burden to prove that it did not act willfully, no hearing is
required and the treble damages which were awarded should be
sustained. The tenants also contend that they filed a PAR
against the MCI increase as members of the tenants association.
After careful consideration, the Commissioner is of the
opinion that this petition should be denied.
An owner is entitled to a rent increase pursuant to Code
Section 2522.4(a)(1) where there has been a substantial increase
of dwelling space or an increase in the services, or
installation of new equipment or improvements, provided in or to
the tenant's housing accommodation, on written tenant consent to
the increase. In the case of vacant housing accommodations,
tenant consent shall not be required. Where the rent has been
challenged, as in the instant case, an owner must establish that
the claimed improvement has actually been made at the cost
alleged. The owner has the burden of preserving its business
records and submitting proof in the form of contemporaneous
invoices and cancelled checks. Approval of the claimed
improvement for a rent increase is subject to evaluation by the
Rent Administrator. After evaluating the submitted evidence, the
Administrator determined that only $5,219.10 of the amount
claimed qualified for a rent increase pursuant to Code Section
2522.4(a)(1).
Review of the record reveals that the owner submitted
invoices with a value of $15,639.14 not $25,134.00 as alleged by
the owner in the appeal. The difference, $9494.86, is accounted
for by the alleged installation of a parquet floor which the
owner concedes it cannot substantiate. Of the total submitted,
only the following items were found qualified by the
Administrator for a rent increase: 1) refrigerator, dishwasher,
range and hood in the amount of $1261.56, 2) marble top and
medicine chest in the amount of $611.61, 3) kitchen cabinetry for
$2,348.14, and 4) venetian blinds in the amount of $997.79. The
Administrator correctly denied amounts covered by the following
invoices: 1) Paniflex - $65.17, 2) Paniflex - $501.14, 3) Grand
Lumber $227.33, 4) Grand Lumber - $117.72, 5) Grand Lumber -
ADM. REVIEW DOCKET NO.: FG 410356 RO
$684.68, 6) Best Plumbing specialties - $36.55, 7) Ty & Co.
$142.94, 8) J & D Communication $88.77, 9) Tudor Electric Supply
$110.96 and 10) 22" Milano cabinet for $194.85 since physical
inspection conducted at subject apartment on February 20, 1991
disclosed that this item had not been installed in the subject
apartment. These amounts were denied on the grounds that the
documents submitted failed to substantiate the claimed
improvements in the subject apartment. An owner must submit
clear evidence of the claimed improvement and its cost in the
form of an itemized invoice which specifies the given apartment
and a cancelled check signifying payment. In the absence of such
clear proof, the Administrator correctly disallowed the amounts
claimed.
Rent increases for the following items were also correctly
disallowed:
1) Painting costs of $100.00 and $645.00.
Painting is considered normal maintenance
and thus ineligible for a rent increase.
2) $692.26 for a chateau oven allegedly
installed in February 1986 during a
prior tenancy. The owner did not submit
that tenant's consent. Moreover, since
the owner did not take the increase at
that time, the owner is deemed to have
waived it.
3) $6,804.42 for labor costs. The owner
submitted no documentation to establish
that any work in the subject apartment
was performed by "outside" workers or
by its own employees outside the normal
course of their duties.
In addition, the owner did not submit copies of cancelled
checks to substantiate its claimed labor costs but merely
submitted a statement of "labor calculation" showing a total cost
of $22,681.39 of which 30% - $6804.42 was apparently attributed
to renovations in the subject apartment and also submitted
employee earnings records. Accordingly, labor costs were
properly disallowed.
The Commissioner finds no error in the Administrator's
determination that only $5219.10 of claimed improvements
qualified for a rent increase.
The Commissioner notes that since the prior tenant has not
had the benefit of the improvements, a rent increase for
improvements made during a vacancy period are added to the rent
after computing guidelines increases.
Pursuant to Section 26-516 of the Rent Stabilization Law, an
owner who is found to have collected an overcharge shall be
ADM. REVIEW DOCKET NO.: FG 410356 RO
liable to the tenant for a penalty equal to three times the
amount of the overcharge. The statute creates a presumption of
willfulness subject to rebuttal by the owner. The owner must
prove by a preponderance of the evidence that the overcharge was
not a willful act. Where an owner submits no evidence or where
the evidence is equally balanced, the overcharge is deemed to be
willful and treble damages shall be imposed. The owner herein
failed to satisfy its burden to establish lack of willfulness.
It is noted that the owner has submitted questionable documentary
evidence during the course of this proceeding especially with
respect to the alleged installation of the parquet floor. In
addition, a physical inspection disclosed that an item claimed to
be installed by the owner was in fact not installed.
Accordingly, the Commissioner finds that application of the
treble damages penalty was appropriate.
Due process requires full consideration of all issues raised
by the parties to the administrative proceeding. However, the
resolution of these issues does not necessarily require an oral
hearing which is discretionary and not mandated by law. Where a
finding can be made upon the record before the agency, such a
hearing is not mandated. It is noted that the owner had ample
opportunity to submit evidence. The Commissioner finds that the
evidence and written submissions in the record are sufficient to
render an administrative determination.
An examination of Division records reveals that a Petition
for Administrative Review against Order Number ZCF 430104 OM,
which granted a rent increase for Major Capital Improvements
(MCI), was filed. Since there is a pending appeal against the
MCI, it was appropriate to stay the collection of the retroactive
portion of the increase until the issuance of the PAR
determination.
Upon the expiration of the period in which the owner may
institute a proceeding pursuant to Article Seventy-Eight of the
Civil Practice Law and Rules, this order may be filed and
enforced by the tenant in the same manner as a judgment.
THEREFORE, in accordance with the Rent Stabilization Law
and Code, it is
ORDERED, that this petition be, and the same hereby is,
denied, and the Rent Administrator's order be, and the same
hereby is, affirmed.
ISSUED:
ADM. REVIEW DOCKET NO.: FG 410356 RO
JOSEPH A. D'AGOSTA
Acting Deputy Commissioner
|
