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 S.J.R. NO.: 6462 (DEEMED DENIAL)
IN THE MATTER OF THE ADMINISTRATIVE : ADMINISTRATIVE REVIEW
APPEAL OF DOCKET NOS.: FK 410213-RO
: FK 410249-RO
JONATHAN WOODNER CO.,
RENT ADMINISTRATOR'S
PETITIONER : DOCKET NO.: ZDD-410188-R
------------------------------------X ZDI-410275-R
Tenants: Allan & Gail Abramowitz
Subsequent Tenant: Richard West
ORDER AND OPINION GRANTING PETITIONS FOR ADMINISTRATIVE REVIEW IN PART
On November 29, 1991 the above-named petitioner-owner filed a Petition for
Administrative Review (Docket No. FK 410213-RO) against an order (No. ZDD
410188-R) issued on October 29, 1991 by the Rent Administrator, 92-31 Union
Hall Street, Jamaica, New York concerning the housing accommodations known
as 888 8th Avenue, New York, New York, Apartment No. 5N wherein the Rent
Administrator determined that the owner had overcharged the tenants (Allan
& Gail Abramowitz).
Subsequent thereto, the tenants filed a petition in the Supreme Court
pursuant to Article 78 of the Civil Practice Law and Rules requesting that
the owner's petition be deemed denied. The proceeding was then remitted to
the DHCR for a determination of the petitioner's appeal.
On November 8, 1991 the owner filed a Petition for Administrative Review
(Docket No. FK 410249-RO) against an order (No. ZDI-410275-R) issued on
October 4, 1991 wherein the Rent Administrator determined that the owner
had overcharged the subsequent tenant (Richard West).
Because these appeals include common grounds of law or fact, they are being
merged and decided in one order and opinion.
The Administrative Appeals are being determined pursuant to the provisions
of Section 2526.1 of the Rent Stabilization Code.
The issue herein is whether the Rent Administrator's orders were warranted.
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 appeals.
Docket No. DD-410188-R was originally commenced by the filing in April,
1989 of a rent overcharge complaint by the tenants (Abramowitz), who stated
in substance that they had commenced occupancy pursuant to a lease
commencing May 1, 1987 at a rent of $1,433.00 per month, that electricity
was not included in the rent, and that they had lived in the apartment
through February 28, 1988.
ADMIN. REVIEW DOCKET NOS.: FK 410213-RO, FK 410249-RO
In answer to the complaint, the owner submitted leases from December 1,
1983, apartment registrations from 1985, and invoices for improvements and
new equipment installed in 1985 and 1987. On August 30, 1991 the owner
stated that it was still searching for the balance of the documentation and
would be forwarding it shortly.
In an order issued on October 29, 1991 the Administrator, disallowing any
claimed improvements because the owner had not submitted any cancelled
checks, found an overcharge of $13,232.10 as of February 29, 1988 including
treble damages.
In this petition, (Docket No. FK 410213-RO) the owner contends in substance
that new carpeting and fixtures were installed in 1985 immediately prior to
the tenancy of Cherian Koumbe; that substantial improvements, including the
installation of new kitchen cabinets, blinds and mirrors, were made
immediately prior to the occupancy by the tenants in May, 1987; that the
Administrator never requested submission of invoices and cancelled checks
substantiating the cost of renovating the apartment; that the owner
submitted to the Administrator what invoices it could find, although it
could not at the time locate any cancelled checks, as well as some other
documents relating to other improvements, due to the move of its corporate
headquarters in 1990; that cancelled checks have now been located and are
being submitted; that they should be accepted to increase the rent; that in
any event the DHCR may not require evidence dating back to more than four
years prior to June 29, 1991, the date of filing of the most recent
registration prior to the Administrator's August 12, 1991 notice requesting
evidence to rebut the presumption of willful overcharge; that the "tenant"
of the apartment consists of both Allan and Gail Abramowitz; that the
complaint was defective because it was signed only by the latter; and that
any overcharge was not willful, since the DHCR's determination of
overcharge would be based just on the owner's inability to present
documentation of improvements that neither the prior tenant nor the
complainants deny were made. With its petition the owner has enclosed
cancelled checks for furniture ($2,400.00), penny brown-carpet ($1,299.00),
the installation of kitchen cabinets ($500.00), furnishing and installing
a bevelled edge mirror ($125.41), and furnishing and installing Levolor
venetian blinds ($768.03).
In answer, the tenants assert in substance that the owner failed to submit
leases, proper registrations and proof of mailings as requested; that the
complaint was properly signed by "a tenant"; that the tenants never had an
opportunity to dispute the alleged improvements because they were not made
aware of the fact, until the owner's appeal, that the owner was claiming
that improvements had been made; that the owner has not overcome the
presumption of willful overcharge; that the tenants are entitled to
interest on the treble damages award; that no improvements appear to have
been made to the subject apartment prior to their occupancy in May, 1987;
that the mirror affixed to part of a living room wall was severely cracked
in one area, and the section was replaced a few months later; that the
apartment contained no carpeting, brown or otherwise; that the tenants
therefore installed their own blue carpeting, as evidenced by an attached
photograph; that it does not matter that the prior tenant (Koumbe) did not
ADMIN. REVIEW DOCKET NOS.: FK 410213-RO, FK 410249-RO
object to his rent; that the owner is incorrect in contending that the DHCR
did not at least implicitly request documentation to prove the cost of
improvements and new equipment; that the owner, which owns many buildings,
is well aware of DHCR requirements; that the owner was informed as early as
May, 1989 of the possibility of treble damages; that the owner moved at
least seven months after receiving that notice and yet did not submit
anything at all from their old office during that time; that the owner was
apparently basing the rent of the prior tenant (Koumbe) on renting the
apartment as a furnished, not renovated, unit; that the tenants were not
renting the apartment as a furnished one and none of the items were in the
apartment; that the owner, while submitting invoices for furniture and
carpeting allegedly installed in the apartment, has not submitted any
cancelled checks showing payment for them; that even if all the items had
been placed in the apartment there is no way that the prior tenant's rent
of $1,200.00 would have represented a lawful increase from the previous
rent of $726.11; that the owner has still not submitted proof of mailing of
the apartment registrations; that the owner, while submitting a $500.00
invoice for the installation of kitchen cabinets, has submitted no invoice
for their cost and has therefore not proven that they were ever installed,
particularly since the owner has claimed that it again renovated the
apartment after the tenants' 10-month occupancy; that the April 1, 1988
registration attempts to legitimatize the supposed legal rent of $1,620.00
by claiming a $410.33 increase over the April 1, 1987 rent of $1,209.12,
effective in February, 1988 even though that is the month that they moved
out of the apartment; that they were in fact paying a rent of $1,433.00
before this February, 1988 increase supposedly took effect; that the owner
has not given an explanation as to why it did not submit cancelled checks
until the appeal proceeding; that the checks should therefore not be
considered; and that CPLR Section 5001(b) provides for interest to be
awarded on top of the treble damages.
In response the owner contends in substance that the 1988 registration
reflects improvements made both in April, 1987, prior to the time that the
tenants moved in, as well as in March, 1988, after they moved out; that
they admit that the owner installed new kitchen cabinets, new blinds, and
a new mirror at a total cost of $1,393.44; and do not deny that it made
other improvements; that invoices establish that carpeting and furniture
were installed in the apartment, although it is possible that the tenants
removed them without notifying the owner; that the Rent Stabilization Code
does not contemplate the submission of every conceivable piece of related
evidence in answer to an overcharge complaint, especially where, as here,
the complaint alleges only that the proceeding was commenced for the sole
purpose of following through on a threat to the owner to file a complaint
because the owner had not responded to their complaint about another
apartment where they were living at the time; and that the owner is
entitled to a hearing on the issue of willfulness, at which its employees
with knowledge of the apartment renovation and of how the rent for the
apartment was computed may testify, where adverse witnesses may be cross-
examined, and where oral argument may be heard.
In reply, the tenants assert in substance that they in fact denied that new
cabinets were installed, and would have no way to know if the blinds were
ADMIN. REVIEW DOCKET NOS.: FK 410213-RO, FK 410249-RO
new; that it is the owner's burden to prove, and not the tenants' burden to
disprove, that improvements were installed; that the owner, which noted the
existence of furnishings on the prior tenant's lease, would surely have
done the same on their lease, or even charged an additional increase for a
furnished apartment, if the furnishings had actually been in the apartment
when they rented it; that the owner was on notice both of the need to
submit documents to substantiate the lawfulness of the rent charged as well
as of the possibility of treble damages; and that the owner is not entitled
to a hearing on the issue of willfulness because there are no property
rights involved and because the owner has not alleged any real facts that
would require a hearing.
The proceeding (Docket No. DI-410275-R) involving the subsequent tenant
(Richard West) was commenced by his filing an overcharge complaint in
September, 1989 in which he stated that he had commenced occupancy on March
1, 1989 at a rent of $1,500.00 per month, and that electricity was not
included in his rent. The owner's responses were similar to those in the
proceeding concerning Allan and Gail Abramowitz. In reply, Richard West's
contentions regarding alleged improvements were, among others, that there
were venetian blinds when he moved in, but they were yellowed and decayed
and one pull cord was considerably frayed; that there was more than one
mirror in the apartment; that there were kitchen cabinets, but he did not
know their age; and that there was neither any carpet nor any furniture
when he moved in.
In an order issued on October 4, 1991 the Administrator found an overcharge
of $21,337.56 from March 1, 1989 to February 28, 1991, including treble
damages.
In its appeal (Docket No. FK 410249-RO) against that order, the owner
contends in substance that the order incorrectly recomputes duly registered
and unchallenged rents, and incorrectly terminates a major capital
improvement ("MCI") increase; that it unlawfully computes treble damages
for a retroactive period in excess of the period permitted in view of duly
registered unchallenged rents; that, at the time the renovations were made,
the DHCR would have accepted paid bills as sufficient proof; that the DHCR
should not now require more proof than it would have at that time,
particularly since the DHCR's current policy permits various forms of
proof; that in any event the fact of the undisputed renovation disproves
willfulness, so the mere technical failure to prove the cost of renovations
does not warrant treble damages; that the Administrator failed to give the
owner adequate opportunity to produce the records of the renovation, since
Ian Woodner, the owner's only principal, died during the time period when
the DHCR was requesting cancelled checks, since that resulted in the new
management's dismissal of a number of staff involved in the assembly of
management files, and since such files had been shipped to a new location
about that time due to the movement of the owner's office; and that the old
cancelled checks have finally been located, are enclosed, and should be
accepted.
In answer, Richard West asserts in substance that the DHCR received the
owner's appeal on November 18, 1991, 45 days after the Administrator's
ADMIN. REVIEW DOCKET NOS.: FK 410213-RO, FK 410249-RO
order; that the apartment contained no furniture or carpet when it was
rented to him; that there is no proof of payment for those items; that
willfulness has been shown since the owner knew that the apartment was
unfurnished and had no carpeting; that the owner's many claims that the
renovation charges are "undisputed" is incorrect since both he the prior
tenants have disputed them; that even if all of the owner's claimed
improvements of $5,092.44 were accepted, whether or not supported by proof
of payment, there would still be an overcharge of $172.45 per month; that
the owner had initially offered the apartment at a rent of $1,600.00 per
month, before finally agreeing to $1,500.00; and that this again shows a
willingness to overcharge.
Because of Mr. West's statement about yellowed and decaying blinds, a DHCR
staff member visited the subject apartment on November 16, 1992. He stated
that "[t]here are in this one bedroom apartment a total of 5 blinds
(levolor) 3 double and 2 single covering 8 windows." He also reported that
the blinds were in good condition and that the tenants indicated that they
belonged to the owner.
The Commissioner is of the opinion that these petitions should be granted
in part.
Regarding the timeliness of the appeal in Docket No. FK 410249 RO:
Although it has a DHCR date stamp of November 18, 1991, it came in an
envelope with a U.S. Postal Service postmark of November 8, 1991, which is
the 35th day after the October 4, 1991 order in Docket No. DI-410275-R, so
the appeal is timely.
It is noted that the owner submitted invoices in the proceeding before the
Rent Administrator and that the cancelled checks submitted on appeal
confirm the information contained in the invoices. While the invoices, as
confirmed by the cancelled checks, are being considered, the $125.41 check
to pay for "Mirror furnished and installed with beveled edges as directed"
does not result in a rent increase, as a mirror is not new equipment or an
improvement that would warrant one. [Also, while the invoices for the
blinds and cabinets are dated February 12, 1987 and March 2, 1987
respectively, the invoice for the mirror is dated June 23, 1987, which is
7 1/2 weeks after the Abramowitzes commenced occupancy, which suggests that
this invoice is for the replacement of the cracked mirror mentioned by the
Abramowitzes.] An increase is allowed for the $500.00 cost of kitchen
cabinets, since there is no good evidence to controvert the invoice and
cancelled checks. An increase is allowed for the $768.03 cost of
furnishing and installing five Levolor venetian blinds, since an inspection
has confirmed that they are being furnished by the owner. However, since
their cost is now reflected in the permanent rent, and since the owner is
therefore obligated to maintain them and to continue to furnish them unless
it receives authorization from the DHCR to remove them as a service in
exchange for reducing the rent, the owner should file an amended 1988
registration specifying that $19.20 of the claimed increase was due to new
blinds.
ADMIN. REVIEW DOCKET NOS.: FK 410213-RO, FK 410249-RO
The lease of Cherian Koumbe for $1,200.00 per month commencing September 1,
1985 stated that the apartment was furnished, and that electricity was
included in the rent. Neither the Fallek lease before this nor the
Abramowitz lease after it mention either of those. Owner-provided
electricity is not registered as either a building or apartment service.
Furniture is not registered either as an apartment service, or as a reason
for a rent increase. In addition, the Abramowitzes have denied that there
was any furniture or carpet in the apartment. If furnishings and
electricity were indeed ever provided, it was apparently only for the
Koumbe tenancy, and no increase is the permanent rent should have resulted.
For these reasons, as well as the fact that there is no proof of payment of
the invoices for carpet and furniture, no rent increase is allowed for
them.
The 1985 registration listed a rent of $726.11 in a lease expiring November
30, 1985. The 1986 registration showed a rent of $1212.96 in a lease
commencing September 1, 1985, with the only reasons for a $486.85 increase
being a vacancy lease [16 1/2% of $726.11] and a Major Capital Improvement
[Docket No. LS-000611-OM: 0.76% of $726.11, which became effective only
after the owner was already charging a lease rent of $1,200.00]. There was
therefore an increase of approximately $360.00 that the owner did not even
attempt to justify on the registrations [although the owner would now claim
a $92.48 increase for $3,699.00 spent on furnishings before the Koumbe
tenancy. However, this order would disallow them, if they ever existed,
for subsequent tenancies because it is doubtful that they remained in the
apartment beyond the Koumbe tenancy.] This resulted in substantial
overcharges in the subsequent Abramowitz and West leases. Because those
overcharges occurred as the result of a large unjustified increase in the
Koumbe lease, the owner has not rebutted the presumption of willfulness
that arises when there is an overcharge, so the Commissioner, similarly to
the Administrator in both cases under appeal, has imposed treble damages on
overcharges. Taking these above-mentioned factors into account, the
Commissioner has recalculated the lawful stabilization rents and the amount
of overcharge. They are set forth on an amended rent calculation chart
attached hereto and made a part hereof.
Regarding the Abramowitzes' contention that interest should be imposed on
top of treble damages, that may not be considered since they did not appeal
the Administrator's order on that issue but merely raised it in answer to
the owner's appeal. This order is, however, issued without prejudice to
any rights the tenants may have to pursue their claim in a court of
competent jurisdiction.
The Commissioner does not consider it necessary to hold a hearing on the
issue of willfulness. The owner was requested several times during the
course of the earlier proceedings to document the lawfulness of the rents
charged. On August 12, 1991 (in Docket No. DD-410188-R), and on July 15,
1991 and August 13, 1991 (in Docket No. DI-410275-R) the owner was given
final notices to submit evidence to rebut the presumption of willfulness
ADMIN. REVIEW DOCKET NOS.: FK 410213-RO, FK 410249-RO
and avoid treble damages. The owner has had adequate opportunity to submit
evidence on the issue, and has simply failed to submit sufficient evidence
to justify the rent increases.
Regarding the owner's contention that the DHCR may not require the
submission of documents from a period more than four years prior to the
June 29, 1991 filing date of the most recent registration prior to the
Administrator's treble damages notice in Docket No. DI-410275-R, that the
DHCR may not recompute registered and unchallenged rents, and that treble
damages were unlawfully computed for an excessive retroactive period: The
four-year limitation in Section 2526.1(a) of the Code counts time from the
filing of the complaint, not from a request for information. It does not
matter (except in the case of the initial registration, where there is a 90
day limitation on filing an objection to the registration) that several
registrations may occur without a complaint being filed. Once a complaint
is filed, the lawfulness of all rents beginning four years prior to the
most recent registration is in question (being measured from April 1st and
not from the date that the registration was submitted). In the present
case the Abramowitzes filed a complaint in April, 1989, so the owner was
obligated to produce records from April 1, 1985. The passage of time
during the course of the proceeding did not change the owner's obligation
to produce records from that date. Section 2526.1(a)(2)(i) of the Code
provides that treble damages may not be imposed on overcharges occurring
more than two years before the complaint is filed. The Abramowitzes filed
their complaint in April, 1989; treble damages were imposed beginning May
1, 1987, one year and 11 months prior to the filing of the complaint.
It is not clear what the owner means in contending that the order in Docket
No. DI-410275-R "incorrectly terminates an MCI increase," unless it is
referring to the temporary rent increase of $2.32 per month ending January
31, 1987, which is proper since the temporary rent increase just
represents the collection of a specific amount of arrears resulting from
the fact that the rent increase in Docket No. LS-000611-OM was effective
September 1, 1985 yet the owner was not able to actually begin billing for
it until February 1, 1986.
The Abramowitz complaint was properly signed by "a tenant"; since Gail
Abramowitz is jointly and severally liable for paying the rent stated in
the lease that she signed, she is entitled to file an overcharge complaint
whether or not it is also signed by the other person on the lease.
However, the Administrator's order should be modified to state "Gail
Abramowitz", rather than "A & G Abramowitz," as the person entitled to a
refund.
The owner is directed to reflect the findings and determinations made in
this order on all future registration statements, including those for the
current year if not already filed, citing this Order as the basis for the
change. Registration statements already on file, however, should not be
amended to reflect the findings and determinations made in this order. The
owner is further directed to adjust subsequent rents to an amount no
greater than that determined by this order plus any lawful increases.
ADMIN. REVIEW DOCKET NOS.: FK 410213-RO, FK 410249-RO
This order may, 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, be filed and enforced by Gail Abramowitz and by
Richard West in the same manner as a judgment with respect to the amount of
refund due to each of them respectively.
THEREFORE, in accordance with the Rent Stabilization Law and Code, it is
ORDERED, that these Petitions be, and the same hereby are, granted in part
and that the Rent Administrator's orders be, and the same hereby are,
modified in accordance with this order and opinion. The lawful
stabilization rents and the amounts of overcharge are set forth on the
attached rent calculation chart, which is fully made part of this order.
The total overcharge of Gail Abramowitz is $12,281.10. The total
overcharge of Richard West is $17,223.12. The lawful stabilization rent is
$1,260.79 per month in the lease from March 1, 1989 to February 28, 1991.
ISSUED:
JOSEPH A. D'AGOSTA
Deputy Commissioner
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