GE410070RO
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. GE410070RO
: DISTRICT RENT OFFICE
DOCKET NO. ZCD410120RP
227 East 57th Street Assoc., (TA11034, CTA04888)
TENANT: Judith Beardsall
PETITIONER :
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ORDER AND OPINION DENYING PETITION FOR ADMINISTRATIVE REVIEW
On May 4, 1992, the above-named petitioner-owner filed a Petition for
Administrative Review against an order issued on April 3, 1992, by the
Rent Administrator, 92-31 Union Hall Street, Jamaica, New York,
concerning the housing accommodations known as 227 East 57th Street,
New York, New York, Apartment No. 3B, wherein the Rent Administrator
affirmed its prior order issued October 18, 1985, which determined the
fair market rent pursuant to the special fair market rent guideline
promulgated by the New York City Rent Guidelines Board for use in
calculating fair market rent appeals.
Subsequent thereto, the petitioner-owner filed a petition in the Supreme
Court pursuant to Article 78 of the Civil Practice Law and Rules
requesting that the "deemed denial" of the petitioner's Administrative
appeal be annulled. This proceeding was then remitted to the Agency for
a determination of the petitioner's appeal.
The Commissioner notes that this proceeding was filed prior to April 1,
1984. Sections 2526.1 (a) (4) and 2521.1 (d) of the Rent Stabilization
Code (effective May 1, 1987) governing rent overcharge and fair market
rent proceedings provide that determination of these matters be based
upon the law or code provisions in effect on March 31, 1984. Therefore,
unless otherwise indicated, reference to Sections of the Rent
Stabilization Code (Code) contained herein are to the Code in effect on
April 30, 1987.
The Administrative Appeal is being determined pursuant to the provisions
of Section 26-513 of the Rent Stabilization Law.
The issue herein is whether the Rent Administrator's order was
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 appeal.
This proceeding was originally commenced prior to March 31, 1984 by the
filing of a fair market rent adjustment application (hereafter FMRA) by
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the tenant who took occupancy of the subject apartment on September 10,
1979 at a rental of $700.00 per month
The owner was served with a copy of the tenant's application and
afforded an opportunity to submit June 30, 1974 or post June 30, 1974
comparability data for determining the fair market rent of the subject
apartment and to submit proof of any improvements made in the subject
apartment.
In Order Number CTA0488 issued October 18, 1985, the Rent Administrator
adjusted the initial legal regulated rent by establishing a fair market
rent of $418.43 (excluding comparability or increases for improvements)
and directed the owner to refund $18,646.32 in excess rent covering the
period September 1, 1979 through August 31, 1984.
The owner filed a petition for administrative review under docket
ARL6350L which was rejected on February 27, 1986 citing the owner's
failure to submit an affidavit or other proof of service of the
petition. The owner instituted an Article 78 proceeding. However the
Commissioner reconsidered and reopened the owner's petition on May 28,
1987 prior to the court rendering a decision because the owner's
petition timely filed under ARL6350L was found to contain the proper
proof of service. On April 26, 1988, the Commissioner remanded the
proceeding to the Rent Administrator for reconsideration since all the
files could not be located.
After reopening notices and copies of the Commissioner's order of remand
were served on the tenant and the owner's attorney on January 6, 1992,
the Rent Administrator proceeded to reprocess the tenant's FMRA. Copies
of the FMRA notice advising the owner of comparability requirements for
FMRAs filed prior to April 1, 1984 were sent to the owner's prior
managing agent on February 5, 1992.
In response to a directive of the Court to issue an order by March 27,
1992, pursuant to an Article 78 mandamus proceeding initiated by the
tenant, the Rent Administrator sent a Final 10-day notice to submit
comparability data to the owner's prior managing agent on March 4, 1992,
and denied the request for an extension on March 26, 1992 by the owner's
current managing agent.
On April 3, 1992, the Rent Administrator issued the order appealed
herein which affirmed his prior determination of October 18, 1985.
The tenant purchased the subject apartment in August 1984 under a
cooperative ownership plan for the premises which was declared effective
June 27, 1983.
In this petition, the owner contends in substance that the Rent
Administrator arbitrarily denied the owner's request for an extension to
respond to the March 4, 1992 Final notice to submit comparability data;
that the notice had been addressed to the prior agent (Sulzberger -
Rolfe) and not forwarded to them until March 12, 1992; that the February
5, 1992 notice of reopening with the FMRA notice was also sent to
Sulzberger - Rolfe; that the proceeding was remanded by the Commissioner
in his prior order dated April 26, 1988 but that no processing was
initiated until January 1992 and then processed with undue haste; that
not withstanding the denial for an extension the owner had previously
submitted comparability data which was in the file in connection with
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the owner's prior administrative review and Article 78 proceeding; that
neither the January 17, 1992 nor the February 5, 1992 notice of
reopening with the FMRA notice were received by the current managing
agents; that the comparability submission was sent on April 3, 1992 but
that the order was issued the same day without considering the owner's
April 3, 1992 submission which is being resubmitted with the instant
petition; that in DHCR's March 26, 1992 denial of the owner's request
for extension the owner had been advised to make a submission "as soon
as possible"; that the owner received the DHCR denial on April 1, 1992
and complied by submitting the comparability data on April 3, 1992 which
was "as soon as possible"; that due to the extensive amount of time to
process the instant case, the owner was compromised by having to
research records going back to 1979, a period of 13 years, in only 10
days from the Rent Administrator's notice of March 4, 1992; that this
delay and subsequent denial deprived the owner of due process; that
treble damages may not be found in the proceeding because the complaint
is a FMRA for which it is well settled in law that no treble damages may
be imposed and that if there is any question as to the fact that a fair
market rent was charged for the subject apartment in September 1979,
then a hearing should be held by the Agency. The owner's comparability
submission was included with its petition containing various leases for
apartments 3D, 5B, 3C, 6H, 2C, 2B, 5B, 4B, 8B and 11B, a DC-2 for 3C and
a floor plan of the 2nd thru 9th floors indicating apartment layout for
the various lines.
In answer to the owner's petition, the tenant stated in substance that
the owner's petition is without merit; that the procedural history of
this case is almost 10 years old during which time the owner was given
ample time and opportunity to respond; that the owner has participated
fully in this proceeding; that due to the owner's subsequent actions
challenging the 1985 order granting her fair market rent adjustment, she
has extensive legal fees for which she should be reimbursed and that new
material submitted should not be considered on appeal.
In reply to the tenant's answer, the owner contends that the initial
determination was improperly issued and therefore remanded; that clearly
the owner was not afforded ample time to respond nor was there adequate
consideration of the matter; that the tenant failed to contest the
owner's comparability submission on the merits and that an award of
legal fees to the tenant is not warranted because it is apparent that
the tenant was not represented by an attorney in the DHCR proceedings
but only in an action to collect monies from the owner based on a
judgment pursuant to an order wrongfully granted by DHCR.
The Commissioner is of the opinion that this petition should be denied.
Section 26-513 of the Rent Stabilization Law provides, in pertinent
part, that fair market rent adjustment applications are to be determined
by the use of special fair market rent guidelines orders promulgated by
the New York City Rent Guidelines Board and by the rents generally
prevailing in the same area for substantially similar housing
accommodations. In order to determine rents generally prevailing in the
same area for fair market rent appeal cases filed prior to April 1,
1984, it is DHCR procedure to allow owners to submit June 30, 1974 fair
market rental data for complete lines of apartments, beginning with the
subject line. The average of such comparable rentals will then be
updated by annual guidelines increases. Alternatively, DHCR procedure
allows owners to have comparability determined on the basis of rents
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charged after June 30, 1974. In order to use this method, owners were
required prior to November 1, 1984 to submit rental history data for all
stabilized apartments in the subject premises and subsequent to November
1, 1984 to submit such data for complete lines of apartment beginning
with the subject line. Post June 30, 1974 rent data will be utilized if
the comparable apartment was rented to a first stabilized tenant within
one year of the renting of the subject apartment and if the owner
submits proof of service of a DC-2 Notice or apartment registration form
indicating that the rent is not subject to challenge.
An examination of the record in this case discloses that the January 17,
1992 reopening notice served on the owner's attorney was mailed to a
former address (70 Lafayette Street) and was returned by the USPS; that
the reopening notice along with the FMRA notice was sent to the owner's
prior managing agent on February 5, 1992; that a copy of the March 4,
1992 final notice which was also addressed to the prior agent was
forwarded to the current managing agent, as admitted in the March 12,
1992 request for an extension and a copy of a comparability submission
date-stamped as received by DHCR on April 7, 1992 was found in the case
folder.
Essentially, however, the same cited comparable apartments and
comparability data submitted on April 7, 1992 was also submitted with
the owner's instant petition and had been submitted with the owner's
previous petition (ARL6350L) which was in the record before the Rent
Administrator during the processing of the order appealed herein. It is
unclear from the record whether the Rent Administrator considered the
comparability submission in the file prior to the April 3, 1992
affirmation of his prior determination issued October 18, 1985.
Therefore, the Commissioner is of the opinion that it is appropriate to
consider the owner's comparability submission included with both the
instant petition and the prior petition dated November 19, 1985.
A review of the comparability data submitted by the owner with its
petition dated November 19, 1985 and the instant petition discloses that
the apartments cited (3D, 3C, 5B, 2C and 6H) fail to meet the criteria
for post-June 30, 1974 comparability in the following ways, any one of
which would be a sufficient reason to disallow the submission:
A) No proof of service of either a DC-2 notice or a RR1 forms was
submitted for the cited apartments.
B) The owner's citation of the rents contained in the leases for the
cited apartments failed to disclose if these rents were pursuant to
initial leases commencing one year before or after the initial
lease for the subject apartment.
C) No copy of either a DC-2 or RR1 was submitted for the cited
apartments with the exception of apartment 3C for which the owner
did submit a DC-2 form. However, the DC-2 notice reveals that
apartment 3C was first rented in December 1980 to a rent stabilized
tenant which is more than the permissible one year after the
initial lease for the subject apartment which commenced September
1, 1979.
D) The owner failed to submit the rent history of all stabilized
apartments in the "comparable "H", "D" and "C" lines although the
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complete subject "B"line was submitted.
E) The rent of comparable apartment 3D, is currently pending
Commissioner's review under docket AL410334RO pursuant to a DHCR
order which reduced the lawful rent of the subject apartment,
therefore because it is not a final rent, it may not be considered
in a comparability study.
The owner has not submitted complete June 30, 1974 rental data for
comparability purposes. Accordingly, the Rent Administrator correctly
did not consider comparability data in determining the initial legal
regulated rent.
The Commissioner rejects as without merit the owner's contention that it
was afforded insufficient time to respond. The owner was served with a
copy of the reopening notice and FMRA package at the last address and
agent registered with DHCR prior to the issuance of the April 3, 1992
order (although the 1992 registration lists Omma Properties rather than
Sulzberger - Rolfe, who is listed in registrations as the owner from
1985 - 91, DHCR records indicate that information was received June 30,
1992 after the issuance of the order). Further, as the owner's
attorneys have stated, they were forwarded the final notice of March 4,
1992 by Sulzberger - Rolfe and it would be reasonable and consistent
procedure for Sulzberger - Rolfe to have also forwarded the Rent
Administrator's notice of February 5, 1992. Moreover, the submission
dated April 3, 1992, received on April 7, 1992, was untimely since it
was sent in excess of 21 days from the date of March 12, 1992, the date
on which the owner contends it received the Rent Administrator's final
notice dated March 4, 1992.
Moreover, the Commissioner notes that the owner's submission of
comparability data both below and on appeal was not useable, for reasons
cited previously, and therefore the Rent Administrator properly did not
use the cited apartments in a comparability study.
As to the owner's contention that treble damages are not warranted and
that a hearing is, the Commissioner rejects both contentions as not
pertinent because treble damages were in fact properly not imposed by
the Rent Administrator as inapplicable to a FMRA and no allegation as to
the facts in the case are in dispute which require adjudication in a
hearing.
With regard to the tenant's contention that she should have been awarded
attorney's fees, it is noted that pursuant to Section 2526.1(d) of the
Rent Stabilization Code, the assessment of attorney's fees is
discretionary. Under the circumstances of this case, including the
arguments raised by the parties in support of their contentions, the
Commissioner deems it inappropriate to award attorney's fees. Further,
the tenant did not raise the issue of attorney's fees in the proceeding
before the Rent Administrator and did not file her own petition so that
this matter cannot properly be considered for the first time on
administrative appeal in a proceeding brought by the owner.
Accordingly, the Rent Administrator's order was warranted.
In the event the owner does not take appropriate action to refund the
excess rent, as shown in the Administrator's order, within 60 days from
the date of this order, the tenant may seek to satisfy her claim in a
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court of competent jurisdiction.
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
Deputy Commissioner
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