GD 420073 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
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IN THE MATTER OF THE ADMINISTRATIVE ADMINISTRATIVE REVIEW
APPEAL OF DOCKET NO.: GD 420073 RO
Melohn Properties, DRO DOCKET NO.: FE 420392 R
TENANT: Martin Oltarsh
PETITIONER
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ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW
On April 8, 1992, the above-named owner filed a Petition for
Administrative Review against an order issued on March 16, 1992, by a
Rent Administrator, concerning the housing accommodations known as 100
Riverside Drive, New York, New York, Apartment No. 17A, wherein the
Administrator determined that the tenant had been overcharged.
This proceeding originated with the tenant's overcharge complaint of May
20, 1991. The tenant there indicated: that the last change in his rent
had occurred on October 1, 1989, when it had been raised to $787.36;
that his lawful rent was $578.96; and that he had paid the higher amount
until he had "discovered [he] was overpaying in Dec. 1990."
In response the owner stated that it had, before the complaint was
filed, lowered the rent to $578.96, that at the time it had given the
tenant a "credit" of $694.82, and that before its answer was due it had
sent the tenant a check in the amount of $12,106.08, representing the
entire overcharge plus interest, less the aforementioned credit.
The above-referenced Administrator's order, here appealed, followed. It
states in pertinent part that because the evidence showed the overcharge
to have been willful, the damages due to the tenant would be trebled,
adding:
The owner's representative submitted a sworn affidavit along
with a $12,106.08 check that was offered to the tenant. The
record failed to show that the check was cashed. * * *
Therefore, treble damage is assessed.
The instant petition asks that the Rent Administrator's order be
modified to eliminate treble damages. The argument is that because the
rent was reduced to its correct level before the tenant filed his
complaint, and the overcharge repaid (with 9% interest thereon) before
the owner's answer was due, DHCR policy precludes imposing treble
damages (regardless of whether the refund check was cashed).
The tenant's representative responds to the petition by arguing (a) that
the owner's acts, in the course of this tenancy and these proceedings,
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offer abundant evidence of willfulness, (b) that no $694.82 credit
should be deducted from the overcharge repayment herein, (c) that
Division policy does not invariably preclude treble damages where an
owner has timely adjusted the rent and tendered a refund in good faith,
and (d) that at any rate those criteria were not met in the instant
case. (The tenant does not address the issue of whether cashing of the
refund check is one of those criteria.)
Having carefully reviewed the pertinent portions of the record herein,
the Commissioner is of the opinion that this petition should be granted.
In Policy Statement 89-2 the Commissioner promulgated the rule that
the treble damage penalty is not applicable . . . where . . .
an overcharge occurred under certain specified circumstances.
Examples of such circumstances are as follows:
* * *
2. 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 or she has tendered, in good
faith, to the tenant a full refund of all excess rent
collected, plus interest.
In this case, the owner adjusted the rent before the tenant filed his
complaint, and delivered a refund check (dated August 29, 1991) to the
tenant after the 20-day period for filing its answer had expired, but
before the expiration of requests to extend that period duly filed by
the owner and not explicitly granted or denied by the Administrator.
The disputed issues are whether the owner made the rent adjustment "on
[its] own," whether the refund was (a) "tendered," (b) "during the time
afforded to interpose an answer," (c) "in good faith," and (d)"a full
refund," and whether, assuming all those conditions were met, the
Commissioner should nevertheless impose treble damages in the instant
circumstances.
The tenant asserts that the rental adjustment was only made under
pressure that his agent was then exerting upon the owner. The rent was
nevertheless lowered before the complaint was filed; since the Policy
Statement allows an owner to avoid treble damages by a rental adjustment
made after such filing, and since a complaint exerts more pressure than
the mere remonstrances of a tenant, the rollback herein must be deemed
to have been done "on [the owner's] own" within the meaning of the
Statement. And although the ensuing refund was sent after the complaint
had been filed, liability therefor was tacitly admitted, and the
imminence thereof implied, by the aforementioned rental adjustment. The
Commissioner therefore concludes that the owner's ameliorative steps
were taken "on [its] own" within the meaning of the Statement.
The Administrator concluded that there was no refund under the Statement
because the tenant had not cashed the owner's check. The Statement only
requires, however, that the refund be "tendered," i.e., presented or
proffered, which it certainly was.
Did that tender come too late? The answer turns on the application of
the phrase "time afforded to interpose an answer." The time was
"afforded" to the owner, in that the Administrator accepted the
subsequent answer of the owner during the period in which the owner had
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requested an extension and had not been informed by the DHCR that the
extension had been denied or granted. In the absence, therefore, of any
indication that "time afforded" can only mean the time granted the owner
in the notice accompanying service of the complaint upon him, the
Commissioner determines that the rollback and refund were made during
the time "afforded" to answer the tenant's complaint, and were therefore
timely under Policy Statement 89-2.
The next issue is whether the refund was tendered "in good faith." The
relevant question is whether the refund was intended to compensate the
tenant for the overcharges herein, or was instead made for the purpose
of defrauding, or in a manner calculated to defraud, the tenant or this
Division. As the record will not justify a conclusion that the refund
tendered was in any way fraudulent, the "good faith" requirement of the
Policy Statement was met thereby.
The tenant would argue that notwithstanding all of the above, the
Statement does not apply because the owner did not make a "full" refund
of "all" the excess rent collected, plus interest. The tenant
specifically points to the owner's deduction from the refund, of the
aforementioned $694.82 "credit" it had announced when the rent was
reduced, as unwarranted; it would follow that the refund was $694.82 too
small and thus not "full" as required by the Policy Statement. This
might indeed be true if the owner had properly calculated the refund; as
of the end of August, 1991, however, the overcharge -- as found by the
Administrator (who correctly declined to go back more than four years
before the date of the complaint) -- plus interest thereon, came to only
$8,457.74. Since this is less than the $12,106.08 tendered to the
tenant, the refund clearly was a full one within the meaning of the
Policy Statement.
The tenant argues, finally, that even if the instant circumstances match
those quoted above from the Statement, the Commissioner should find
willfulness -- and hence treble the overcharge refund herein -- based on
the owner's entire course of conduct vis-a-vis this tenant. However,
the language of Policy Statement 89-2 is mandatory: "[T]he burden of
proof shall be deemed to have been met" under certain circumstances,
"examples" of which are then given. Thus while there may be discretion
to entertain other circumstances as showing nonwillfulness, there is no
discretion to find willfulness where, as here, one of the given examples
applies. The Administrator, in sum, erred in assessing treble damages.
The Commissioner has recalculated the refund herein, based on the
Administrator's findings of monthly overcharges of $99.30 from 4/1/87
through 9/30/87, $143.39 from 10/1/87 through 9/30/89 and $208.40 from
10/1/89 through 11/30/90. With interest to the date of the
Administrator's order, a total refund of $8,822.87 should have been
ordered.
This order may, upon the expiration of the period within 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
for $8,822.87, or not more than 20 percent per month thereof may be
offset against any rent thereafter due the owner.
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If on the other hand the owner has already complied with the Rent
Administrator's order and there are arrears due to the owner as a result
of the instant determination, the tenant is permitted to pay off the
arrears in 24 equal monthly installments. Should the tenant vacate
after the issuance of this order or have already vacated, said arrears
shall be payable immediately.
THEREFORE, in accordance the Rent Stabilization Law and Code, it is
ORDERED, that this petition be, and the same hereby is, granted as set
forth above, and that the Rent Administrator's order be, and the same
hereby is, modified in accordance with this order and opinion.
ISSUED:
JOSEPH A. D'AGOSTA
Acting Deputy Commissioner
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