STATE OF NEW YORK
DIVISION OF HOUSING AND COMMUNITY RENEWAL
OFFICE OF RENT ADMINISTRATION
92-31 UNION HALL STREET
JAMAICA, NY 11433
----------------------------------x S.J.R. No.: 6252
IN THE MATTER OF THE ADMINISTRATIVE ADMINISTRATIVE REVIEW
APPEAL OF DOCKET NO.:
AXELROD MANAGEMENT CO., INC.
c/o FINKELSTEIN, BORAH, et al. RENT ADMINISTRATOR'S
PETITIONER DF 530032-B
ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW
On October 2, 1991, the above-named owner filed a petition for
administrative review of an order issued on August 28, 1991, by
a Rent Administrator concerning the building known as 2300
Fifth Avenue, New York, New York, wherein rents were reduced due
to a diminution of services.
Subsequent thereto, the petitioner, deeming its petition denied,
commenced a proceeding in the Supreme Court, New York County,
pursuant to Article 78 of the Civil Practice Law and Rules. The
matter was remitted to the Division of Housing and Community
Renewal (DHCR) based upon a stipulation of settlement entered
into on April 6, 1992.
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 by the petition for review.
On June 9, 1989, various tenants of the subject building filed an
application for rent reductions based on the owner's alleged
failure to maintain services alleging a multiplicity of defic-
iencies in the subject building.
On July 19, 1989, the owner interposed an answer to the tenant's
complaint wherein it alleged that there was no diminution of
services in the building.
On December 7, 1989, a physical inspection of the subject
building was carried out by the Division of Housing and Community
Renewal. The inspector, in his report, noted that many of the
alleged service deficiencies did not exist or had already been
cured and that certain others did exist and had not been cured.
On May 9, 1990, the Rent Administrator informed the owner that
the DHCR inspection had revealed five items which were not being
maintained. The owner was directed to repair or cure these con-
ditions and to submit proof thereof to the Rent Administrator.
The five cited conditions were:
1. Third floor stair railing was loose.
2. The side entrance vestibule door was missing a
3. The ledge inside the main entrance door was
broken and door does not lock.
4. The building's address is missing a number on both
sides of the building.
5. The playground had large cracks in the ground,
swings were missing and see-saws were missing
On May 21, 1990, the owner informed the Rent Administrator that
these cited items had been corrected.
On July 5, 1990, the owner by its attorneys submitted a Stipula-
tion of Settlement which had been "So Ordered" by Judge Gould on
March 2, 1990 and signed by both parties' counsels. The owner
stated that twenty-eight of the tenants who were parties to the
DHCR complaint had signed the Stipulation of Settlement.
On January 23, 1991 a physical inspection of the subject prem-
ises was carried out by the DHCR. The inspector in his report
noted inter alia that the entrance door top left pane was cracked
and that the lower right pane was missing, that the vestibule
door top right pane was cracked. The inspector further noted
that the beam in front of the northeast vestibule door was
plastered but not painted and that there was "evidence of the
building address of the northeast side was not legible."
On August 28, 1991, the Rent Administrator issued the order here
under review finding that a diminution of services had occurred
and reducing the tenants' rents to the levels in effect prior to
the last rent guidelines increases which commenced before the
effective date of the rent reductions.
In its petition for administrative review the owner requests
reversal of the Rent Administrator's order alleging it to be
arbitrary and capricious in that it failed to consider a valid
and binding Stipulation of Settlement entered into by 28 of the
complainants and these 28 tenants should not have been included
in the proceeding. The owner alleges, inter alia,
The "defective" services were either not
part of the original complaint and were
therefore erroneously included in the order,
were deminimus (sic) in nature and not war-
ranting of a rent reduction, or were not
listed as "defective" on a prior DHCR in-
spection report, and therefore occurred only
after the complaint was filed.
In answer to the owner's petition the tenant of apartment 17-N
contends, in substance, that the tenants are entitled to relief
from both the DHCR and the Court and requests that the owner's
petition be denied.
In reply to the tenant's answer the owner submitted the tenant's
affidavit, dated September 11, 1991, in support of a motion for
relief in the Housing Court pursuant to the Stipulation of
After careful consideration the Commissioner is of the opinion
that this petition should be granted.
The Commissioner notes that the Stipulation of Settlement which
was "So Ordered" by Judge Gould on March 2, 1990 settled all
claims between the parties to date, encompassed the issues of
rent abatements and repairs, and provided that the proper forum
for relief regarding repair issues was to be the Housing Court.
This Stipulation was valid and binding and effectively settled
this controversy between the owner and the twenty-eight tenants
who were parties to it. Accordingly, the Commissioner finds that
the Rent Administrator's order should be revoked as to the
tenants of apartments: 1F, 2D, 3E, 3S, 5C, 5F, 5J, 6B, 6J, 6M,
6N, 7F, 7J, 8E, 8F, 10M, 11E, 11S, 12D, 12M, 14D, 14F, 15H, 15P,
16A, 16E, 16P and 17N.
In regard to the remaining tenants who were not parties to the
aforementioned Stipulation of Settlement the Commissioner finds:
a) The tenants' complaint made no mention of any
deficiencies in regard to any unpainted ceiling
beams in front of the northeast vestibule door.
Accordingly, it was a violation of due process for
the Rent Administrator to base rent reductions
thereupon in the absence of notice to the owner
and an opportunity to correct the condition or
interpose an answer regarding this item.
b) The inspection report of December 7, 1989 cited
five items found to be deficient (cf.supra). No
mention was made in this report of any cracked or
missing window panes in the entrance or vestibule
door. The Rent Administrator's notice to the
owner of May 9, 1990 did not direct the owner to
repair any cracked or missing panes. In the
opinion of the Commissioner a reasonable owner
acting to effectuate repairs would not, relying on
the Rent Administrator's directives based on the
inspection report, be on notice as to these items.
Since, therefore, missing and cracked panes were
not cited in the December 7, 1989 inspector's
report or in the May 9, 1990 Rent Administrator's
notice, these conditions must have occurred or
recurred subsequent to those dates and the owner
was not on notice. Accordingly, it was a viola-
tion of due process to issue rent reductions based
c) The remaining item cited by the Rent Administrator
"the building address on the northeast side of the
premises is not legible," is, in the opinion of
the Commissioner an insufficient basis for the
building-wide rent reductions which were ordered
because the scope and extent of the cited condi-
tion does not amount to a diminution of service
within the meaning of the Rent Stabilization Code.
Accordingly, for all of the hereinabove-mentioned reasons the
Commissioner finds that the Rent Administrator's order can not be
sustained and should be revoked.
This Order and Opinion is without prejudice to the tenants'
rights to refile an application for rent reductions based on a
diminution of services if the facts so warrant. This Order and
Opinion is issued without prejudice to the rights of the parties
in regard to the Housing Court proceeding.
THEREFORE, in accordance with the Rent Stabilization Law and
Code, it is,
ORDERED, that this petition be, and the same hereby is, granted
and that the Rent Administrator's order be, and the same hereby
JOSEPH A. D'AGOSTA
Acting Deputy Commissioner