GC410608RT/GC510035RO
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. GC410608RT/
GC510035RO
Dennis Meyer, tenant : DRO DOCKET NO. CL510368R
and
Fred Leist, owner
PETITIONERS :
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ORDER AND OPINION REMANDING THE PROCEEDING FOR FURTHER PROCESSING
On February 27, 1992, the above-named petitioner-owner filed a Petition
for Administrative Review against an order issued on January 31, 1992,
by a Rent Administrator concerning the housing accommodations known as
612 West 144th Street, New York, New York, Apartment No. D9, wherein the
Rent Administrator determined that the owner had overcharged the tenant.
On March 2, 1992, the above-named petitioner-tenant filed a petition
against the same order.
The Administrative Appeal is being determined pursuant to the provisions
of Section 2522.4 of the Rent Stabilization Code.
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 appeals.
The tenant originally commenced this proceeding by filing a complaint of
rent overcharge on December 20, 1988. The tenant had assumed occupancy
of the apartment pursuant to a one year vacancy lease commencing on
October 27, 1987 and terminating on October 26, 1988 at a rent of
$540.03 per month. The complaint also charged that the subject
apartment and building were not registered with the DHCR and that the
owner had given the tenant a false apartment registration for 1988,
since it had a different identification number than the one in DHCR
records.
The owner was served with a copy of the complaint and was directed to
submit a complete rental history. The owner was advised that if it
claimed a rent increase for the installation of new equipment, it was
required to submit invoice(s) showing the cost and date of installation.
In an order issued on January 31, 1992 under docket number CL510368R,
the Administrator determined that the tenant had been overcharged in the
amount of $9,394.52, including treble damages and excess security. No
GC410608RT/GC510035RO
guidelines increase or vacancy allowance was granted for the tenant
immediately prior to the complainant because the tenancy lasted for less
than three months. The Administrator also approved the owner's claim
for new equipment which was installed prior to the complainant's
occupancy totalling $8,384.03.
In its petition, the owner contends, firstly, that the Administrator
erred by failing to grant the guidelines and vacancy allowance increases
for the prior tenant because the prior tenant's and the complainant's
leases were executed during successive guidelines periods, and that the
courts have found this sufficient to grant the increases,
notwithstanding the length of time of the prior lease; secondly, that
the Rent Calculation chart omitted part of an MCI increase; and finally,
that treble damages should not have been imposed because, in the first
place, the overcharges due to the guidelines and vacancy allowance -
which the owner does not concede were improper - were in the nature of
"piggybacking" overcharges (second increases during the same guidelines
period), and such overcharges are exempted from treble damages in Policy
Statement 89-2 and, secondly, because the owner was prevented from
voluntarily adjusting the rent prior to the issuance of the order-and
thereby avoid treble damages - because the DHCR did not inform him of
the lawful rent in time for the owner to benefit from making such an
adjustment.
The tenant's answer states that the denial of the vacancy and guidelines
allowances was consistent with DHCR and court decisions involving
extremely short term tenancies. The tenant also contends that
overcharges were not an "honest mistake" because the owner knew the
guidelines well enough to calculate everything it was entitled to to the
penny, but still managed to collect increases that were illegal, such as
for the two-month tenancy. The tenant also includes DHCR order
ZCL510196RV, which found that the owner improperly failed to provide the
tenant with a lease rider when he took occupancy, and contends that this
is further proof of the owner's "total disregard" for Rent Stabilization
Laws.
In his own petition, the tenant challenges the Administrator's grant of
the rent increase for new equipment, stating that the claimed
installations are false and calling for an inspection of the apartment.
The tenant states that the owner's method was also shown in the
apartment that was the subject of order number DK410171R, which also
dealt with a false equipment claim. Finally, the tenant contends that
DHCR records show that the apartment was not registered until 1988, but
that the order ignores this.
In its answer to the tenant's petition, the owner states that the owner
had established the cost of improvements to the apartment, in accordance
with DHCR's Policy Statement 90-10. The claimed sum of $8,384.03 is
fully documented with invoices and cancelled checks. The owner
completely denies the allegations that the improvements were never
actually made and notes that the tenant fails to specify any
particularly improvement it claims is false but only makes a "bald,
conclusory claim which is simply wrong."
Finally, the owner disputes the contention that the apartment was not
registered until December, 1988, saying that the owner had already
submitted copies of the initial and annual registrations for the
apartment to the DHCR, along with proof of service upon the tenant for
GC410608RT/GC510035RO
each. The owner also notes that the DHCR had ruled in another order,
under docket number DF530029RP, which had granted the owner an MCI
increase, that the building was registered in 1984.
The Commissioner is of the considered opinion that this proceeding be
remanded for further investigation and that a new determination be made.
An examination of the record fails to disclose sufficient evidence to
either sustain or refute the Administrator's determination to grant the
entire amount claimed by the owner for new equipment that was allegedly
installed prior to the complainant's occupancy of the apartment on
October 27, 1987. The record contains a single page barely legible
invoice on which the letterhead reads "Paul Perez, Painter and
Contracting" as well as a copy of both sides of a cancelled check to Mr.
Ruiz in the amount of $8,057.60. The invoice lists various improvements
to the kitchen and bathroom in a single paragraph, but there is no
breakdown of costs for each item, and most of the items themselves are
indecipherable. The Administrator later requested an itemized breakdown
of the cost of the equipment in a notice to the owner, dated September
30, 1991. On October 16, 1991, the Administrator wrote a progress note
in the file which stated that the owner's answer containing the itemized
breakdown of costs had been received. However, no such submission from
the owner is to be found anywhere in the file.
It is apparent, however, that the issues raised in the tenant's
petition, and which were addressed by the tenant below in repeated
submissions to the Administrator, are not likely to be satisfied merely
by finding the answer from October 16, 1991. The record contains a July
11, 1990 letter from the tenant which expresses considerable doubt as to
the bathroom and kitchen renovations. It claims, for instance, that the
kitchen cabinet/countertop and stainless steel sink installation
probably cost no more than $169.99, as based on a recent advertisement
for a "better quality set-up," that the stove was a used one and was
later replaced by a new one, at no charge to the tenant and that the
refrigerator also did not work properly, but was later replaced by a
used one. As for the bathroom, the only new item was "a painted
pressed-wood cabinet-vanity" for which the tenant cites a retail price
of $49.95 to $59.95. The tenant included with the letter the vacancy
lease rider explaining how the vacancy rent was increased from the prior
tenant's rent. This form is left blank in all spaces reserved for the
calculations except the last, listed as "other" in which the owner put
in "kitchen and bathroom modernization," next to which the vacancy rent
of $540.03 was listed. The tenant also states that the owner only gave
him the lease rider after being served with the tenant's overcharge
complaint.
None of these items is sufficient to cast doubt on the claim by itself,
but taken in totality, they render it impossible to accept the claim
solely on the basis of documentation. And certainly, with the discovery
that an important document that was relied on by the Administrator is
missing from the record, it becomes clear that the record must be re-
opened to receive additional evidence.
An examination of the record reveals that the Administrator properly
calculated the MCI increases granted in order DF530029RP, as fully
documented in the rent calculation chart. Contrary to the owner's
claim, the $11.95 per moth MCI increase was included on page 4 of the
calculation chart, such increase being the third and final part of the
permanent MCI increase of $40.12 per month ($14.29, effective 9/1/89,
GC410608RT/GC510035RO
$14.29, effective 9/1/90 and $11.95, effective 9/1/91). It is noted
that the administrative order granting the MCI has been appealed, but no
opinion has been issued as of yet. Therefore, the calculation of the
MCI rent increase included in the order, herein affirmed by the
Commissioner, remains subject to the outcome of that appeal.
The Commissioner notes that it is a long established Division policy
that an owner is not entitled to calculate a subsequent tenant's rent
based on the rent charged under a prior tenant's lease if that prior
tenant had vacated within three months of the commencement of said lease
term. (Accord: AJ410604RO). Therefore, the Administrator correctly
omitted the guidelines increase and vacancy allowance for the tenancy
commencing on August 30, 1987 when calculating the vacancy lease rent of
the complainant because the tenancy was terminated only two months
later.
The Commissioner denies the tenant's claim that the owner did not
register the subject apartment and building until December 1988, since
DHCR records confirm that all registrations have been filed.
Finally, in conjunction with the redetermination on the owner's claim
for the new equipment, the Administrator shall make a new finding on the
issue of treble damages, basing its determination on whether the owner
has established by a preponderance of the evidence that any overcharge
was not willful.
THEREFORE, in accordance with the Rent Stabilization Law and Code, it is
ORDERED, that this petition be and the same hereby is granted to the
extent of remanding this proceeding to the District Rent Administrator
for further processing in accordance with this order and opinion. The
automatic stay of so much of the District Rent Administrator's order as
directed a refund is hereby continued until a new order is issued upon
remand. However, the Administrator's determination as to the rent is
not stayed and shall remain in effect, except for any adjustments
pursuant to lease renewals, until the Administrator issues a new Order
upon remand.
ISSUED:
JOSEPH A. D'AGOSTA
Deputy Commissioner
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