GE410259RO; GF410594RT
                                  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    SJR6234/6425
          IN THE MATTER OF THE ADMINISTRATIVE :    ADMINISTRATIVE REVIEW
          APPEALS OF                               DOCKET NOs.GE410259RO
                   Isolino Fernandez          :               GF410594RT
                   & Marlyn Braccia                DRO DOCKET NOs.BK410511R
                   a/k/a Marlon Braccia                          GC410015RP
                              
                               PETITIONERS    :
          ------------------------------------X

            ORDER AND OPINION DENYING OWNER'S PETITION FOR ADMINISTRATIVE 
           REVIEW AND GRANTING TENANT'S PETITION FOR ADMINISTRATIVE REVIEW 
                                       IN PART

          On May 29, 1992, the above-named petitioner-owner filed a petition 
          for Administrative Review against an order issued on April 28, 1992 
          by the Rent Administrator, 92-31 Union Hall Street, Jamaica,  New
          York concerning the housing accommodation known as 23 Grove Street, 
          apartment 3C,  New  York,  New  York  wherein  the  Administrator
          determined on remand that the tenant had been overcharged.

          On June 1, 1992, the above-named petitioner-tenant filed a petition 
          for Administrative Review against the afore-mentioned order.

          The petitioner-owner brought two separate petitions  pursuant  to
          Article 78 of the Civil Procedure Law and Rules, seeking, in  the
          first to enjoin  the  DHCR  from  acting  on  the  tenant's  Rent
          application and requesting, in the second, an order consolidating 
          the owner's and the tenant's PARS.

          On April 5, 1993, by order of Judge Parness of the Supreme Court, 
          New York County, the owner's petition to enjoin the DHCR was denied 
          and dismissed but the owner's application to consolidate the  two
          pending PAR's was granted.  Accordingly, the two PAR's are herein 
          consolidated.

          This proceeding was commenced on November 20, 1987 when the tenant 
          filed an overcharge complaint.

          Subsequent thereto, the owner brought  a  non-payment  proceeding
          against the tenant in the Civil Court of the City of New York. 
          Said proceeding was settled by stipulation dated June 26, 1989 and 
          "so ordered" by the court.

















          Based upon the  afore-mentioned  stipulation,  the  Administrator
          terminated the tenant's overcharge complaint.  Subsequently,  the
          tenant filed a Petition for Administrative Review and brought  an
          Article 78 proceeding seeking a "deemed denial" ruling in order to 
          have her PAR decided expeditiously on the merits.  The owner  was
          not joined in this proceeding. 

          The Article 78 petition was withdrawn pursuant to  a  stipulation
          between the tenant and the DHCR.  By  order  of  the  court,  the
          proceeding was remanded to the  DHCR  for  determination  of  the
          tenant's PAR and consequently remanded to the Administrator for a 
          determination of the overcharge complaint on the merits.

          In the order here under review (Docket Number  ZGC410015RP),  the
          Administrator revoked the order issued on August 17, 1990 which had 
          terminated the tenant's complaint and determined that the Division 
          was bound by the 1989 settlement which established the lawful rent 
          at $628.07 as of July 1, 1989 but  found,  nevertheless,  a  rent
          overcharge based upon the owner's failure to  substantiate  prior
          rent increases  and  directed  the  owner  to  refund  $17,998.98
          including treble damages.

          In his appeal, the owner contends that the order should  be revoked 
          and that the order of August 17, 1990 be reinstated.   The  owner
          asserts that the order was improperly issued due to the occurrence 
          of a number of procedural irregularities:
          1) the owner was not made a party to nor put  on  notice  of  the
          Article  78  proceeding  whose  discontinuance  resulted  in  the
          proceeding's remand and thus was unable to voice his objection;
          2) the owner was first apprised of the stipulation by the  remand
          order which erroneously referenced a Civil Court Order and misnamed 
          the parties.  The Administrator failed to reply  to  the  owner's
          request for an extension, requiring the owner to  make  a  second
          request whose denial prevented the owner from  timely  submitting
          required proof;
          3) there is no basis for the finding of a willful overcharge.  The 
          order does not state the evidentiary basis for the finding.   The
          owner has not been served with evidence submitted by the tenant in 
          support of the finding, although the tenant submitted documentation
          which had originated  with  the  owner;  this  failure  to  serve
          prevented the owner  from  determining  whether  the  tenant  had
          submitted a full documentation;








          4) the  Administrator  incorrectly  denied  the  owner  any  rent






          GE410259RO; GF410594RT

          increases between April 1, 1984 and September 29, 1987 on the claim 
          that the owner had failed to furnish leases and other rent records. 
          The owner did submit copies of the 1986 and 1987 annual apartment 
          registrations and in the possession of the agency were rent records 
          for the period 1984-87 which would have verified the accuracy  of
          rent increases;

          5) the Administrator incorrectly reopened the overcharge complaint. 
          Any tenant claim for prior years is barred by the preclusive effect 
          of principles of res judicata and collateral estoppel.  Despite the 
          absence  of  specific  language,  the  court-ordered  stipulation
          resolved all issues between the parties;
          6) lastly, the owner asserts that a great deal of work  occurred,
          which does not require a tenant's consent  because  it  was  done
          during the vacancy period  immediately  before  the  tenant  took
          occupancy as well as during other vacancy periods.  When the tenant 
          took possession, she consented to the rent as charged and has  no
          right to complain about the rent which is properly charged  under
          the provisions of Section 2522.4(a)(1).

          In response, the tenant contends that there is no  merit  to  the
          owner's PAR which should be denied.  The tenant  asserts  in  her
          answer and in her own  PAR,  incorporated  by  reference  in  the
          tenant's answer, that no weight should be given to the stipulation 
          of settlement executed in Civil Court and that the doctrine of res 
          judicata/collateral estoppel is inapplicable because the issues in 
          contention were never presented to the court nor  were  documents
          substantiating the rent presented.  There was no intent to settle 
          the overcharge complaint pending before the DHCR which was not at 
          issue in the non-payment proceeding.  The stipulation of settlement 
          was formulated and executed in the hallway of the court; there is 
          no language in the stipulation indicating an agreement to withdraw 
          the overcharge complaint.  The tenant further contends that treble 
          damages are appropriate as the record and the rent history of the 
          subject apartment evidence an unwarranted doubling  of  the  rent
          whose legality has never been justified by the owner.

          In her appeal, the tenant requests that the order be modified for 
          the following reasons;
          1) since the determination of the legal regulated rent was not at 
          issue in the non-payment proceeding, the Administrator should not 
          have found that the legal regulated rent was set by the stipulation 
          of settlement; 2) the rent calculation chart is incorrect as to the 
          rent actually paid for the period covered by the stipulation which 
          should be corrected to include  $1848.00  paid  pursuant  to  the
          stipulation and to find an even greater overcharge.




          In reply, the owner  asserts  that  the  Civil  Court  settlement
          resolved all issues between the parties; that it would  not  have












          GE410259RO; GF410594RT

          settled with the  tenant  unless  the  overcharge  complaint  was
          withdrawn, that the tenant is confused as to the meaning  of  the
          doctrine of res judicata which states that when suing, a party must 
          include all claims especially when the claims arise out of the same 
          facts and circumstances.  By virtue of the counterclaim in the non- 
          payment  proceeding,  the  tenant  settled  all  her  claims   by
          stipulation.  The Civil Court which has  concurrent  jurisdiction
          with the DHCR set the rent in an order finalized by the  tenant's
          paying the rent  and  never  appealing  the  order.   The  tenant
          misunderstands the Administrator's  order  which  is  correct  in
          stating the amount of rent paid by the tenant.

          After careful consideration, the Commissioner is of  the  opinion
          that the owner's petition be denied, and  the  tenant's  petition
          should be granted in part.

          The Commissioner notes that there  is  no  requirement  that  the
          Division make the owner/tenant a party to any Article 78 certiorari 
          review of final administrative orders.  As a  general  rule,  the
          agency does not do so in either mandamus or deemed denial cases, as 
          these generally involve only the time frame in which the Division 
          must complete processing of a case- as in the instant case.   Judge 
          Sherman ordered on December 6, 1991 that a determination  of  the
          tenant's PAR  be  rendered  within  ninety  (90)  days  and  such
          determination did not involve review of the merits.

          Further, it is noted that Judge Parness denied and dismissed  the
          owner's petition to enjoin the DHCR from acting on  the  tenant's
          rent application.

          The Commissioner's order  of  January  31,  1991,  remanding  the
          proceeding, does contain a misstatement in that the tenant and not 
          the owner had filed the  "deemed  denied"  Article  78  petition.
          However, this error did not affect the outcome of  the  case  nor
          infringe the owner's due process rights.  The proceeding would have 
          been remanded for processing on the merits even if the parties had 
          been correctly identified as to which was the owner and which the 
          tenant.   Although the clerical error continued to occur during the 
          course of processing until April 23, 1992,  the  owner  was  kept
          apprised  of  the  ongoing  processing  and  was  afforded  ample
          opportunity to submit evidence.  Neverthless, the owner failed to 
          provide any documentation.  






          Turning to the merits of the case, the major point of contention in 
          this proceeding is the effect of the settlement  reached  by  the
          parties in the non-payment proceeding which was  "so-ordered"  by
          Judge Dubinsky on June 28, 1989, establishing the rent at $628.07 






          GE410259RO; GF410594RT

          per month for the period July 1, 1989 through September 30, 1989. 
          Although the courts have concurrent jurisdiction with the Division 
          to establish rents, the Commissioner notes that  the  non-payment
          proceeding was not judicially determined on the merits nor does the 
          stipulation make any mention of the  overcharge  proceeding  then
          pending before the agency.  Moreover, the rent established is not 
          designated the legal stabilization rent but was merely denoted  a
          recalculated amount.  For the so-ordered stipulated rent to  bind
          the Division, the stipulation should have stated clearly that  it
          was establishing the legal regulated rent and that the tenant was 
          withdrawing her overcharge complaint with prejudice.  Accordingly, 
          the  Commissioner  grants  the  tenant's  appeal  in   part   and
          recalculates the legal stabilization rent in the rent calculation 
          chart attached hereto and made fully a part of this order.   

          Further, the Commissioner finds that the tenant's overcharge claim 
          is not barred by the doctrines  of  res  judicata  or  collateral
          estoppel.  The doctrine of res judicata gives binding effect to a 
          final judgment, preventing parties from  relitigating  previously
          determined causes of action.   Two  actions  or  proceedings  are
          considered to be based upon the same cause of action where the two 
          have such a measure of identify that a different judgment in  the
          second would impair or destroy rights or interests established by 
          the judgment in the first.  The instant matter concerns a cause of 
          action distinct from the cause of action resolved by the settlement 
          in the summary proceeding.  The overcharge claim, the first to be 
          instituted, rests upon evidence, i.e  the  rent  history  of  the
          subject accommodation to establish the lawful rent.  The rent  in
          the non-payment proceeding was called a recalculated rent and was 
          listed only for the purpose of such proceeding.  

          With regard to the imposition of treble damages, Section 26-516(a) 
          of the Rent Stabilization Law, as amended by the Omnibus  Housing
          Act of 1983, provides in pertinent part that any owner who is found 
          to have collected an overcharge shall be liable to the tenant for 
          a penalty equal to three times the amount of the overcharge.   If
          the owner establishes by a preponderance of the evidence that the 
          overcharge was not willful, the penalty will be the amount of the 
          overcharge plus interest.  The Rent  Stabilization  law  assesses
          treble damages where the overcharge is willful.  






          The statute creates  a  presumption  of  willfulness  subject  to
          rebuttal by the owner showing non-willfulness by a preponderance of 
          the evidence.  In the absence of such affirmative  proof  by  the
          owner or after the submission of inadequate proof, treble damages 
          shall be assessed where an overcharge determination is made.  Where 
          an owner submits no evidence, the  overcharge  is  deemed  to  be












          GE410259RO; GF410594RT

          willful.

          Pursuant to Section 2523.7 of the Rent Stabilization Code, an owner 
          is required to maintain and produce records of a duly  registered
          housing accommodation for four years prior  to  the  most  recent
          registration for such accommodation.  In the  instant  case,  the
          owner was requested to submit a lease history from April 4,  1984
          along with an explanation for any rent increase during the period 
          in order to establish the legitimacy of the  rent  charged  in  a
          request dated July 11, 1990 when the case  was  originally  being
          processed under docket number BK401511R.  The owner opted to submit 
          copies of the 1986 and 1987 registrations but failed to produce the 
          required records.  The submission of registration forms is not  a
          substitute for the lease history which the owner was required  to
          produce.

          Although the DHCR maintains records of duly filed  registrations,
          there is no competent evidence to suggest that the agency had under 
          its dominion and control, as is alleged by the owner,  the  lease
          history and other rent records which the owner  was  required  to
          maintain.   Accordingly,  the   Commissioner   finds   that   the
          Administrator correctly denied the owner any rent increases for the 
          period between April 1, 1984 and September 29, 1987.

          On March 23, 1992, the owner was requested to submit evidence.  
          Despite the opportunity to do so, the owner failed to submit  any
          documentation.  The granting of time extensions is discretionary. 
          The Administrator's lack of response to a request does not excuse 
          the  owner's  failure  to  provide   requested   material.    The
          Commissioner finds that the overcharge  collected  was  correctly
          deemed willful and treble damages were appropriately assessed  on
          that part of the overcharge collected before the settlement in the 
          non-payment  proceeding.   As  for   the   overcharge   collected
          subsequently, the Commissioner finds that since the  owner  could
          have  reasonably  believed  that  the  rent  established  by  the
          stipulation was  the  legal  rent,  the  owner  has  shown  by  a
          preponderance of the evidence that that portion of the overcharge 
          was not willful.  Accordingly, only interest will be  imposed  on
          overcharges collected from July 1, 1989 through April 24, 1992.





          The Rent Stabilization Law does not impose any burden on the tenant 
          with respect to treble damages.  Nor is the  tenant  required  to
          produce evidence to justify the rent that the owner is charging.

          With regard to the tenant's contention that the overcharge should 
          have included $1848.00 paid  pursuant  to  the  stipulation,  the
          Commissioner notes that it is unclear from the stipulation exactly 
          why the amount was paid.  Accordingly it cannot be included in the 






          GE410259RO; GF410594RT

          overcharge determination herein.

          The owner is directed to refund to the tenant  an  overcharge  of
          $32,643.97 inclusive  of  treble  damages,  interest  and  excess
          security as determined in this order and opinion.

          The  owner  is  also  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.

          This order may, upon the expiration of the period  in  which  the
          owner may institute a proceeding pursuant to Article  78  of  the
          Civil Practice Law and Ruled, be filed and enforced in  the  same
          manner as a judgment or not in excess of twenty percent per month 
          thereof may be offset against any rent thereafter due the owner.

          THEREFORE,  in  accordance  with  the  provisions  of  the   Rent
          Stabilization Law and Code, it is

          ORDERED, that the owner's petition be  and  the  same  hereby  is
          denied, the tenant's petition be, and the same hereby is granted in 
          part, and the Rent Administrator's order be, and the same  hereby
          is, modified in accordance with this order and opinion.

          ISSUED:




                                                                            
                                                JOSEPH A. D'AGOSTA
                                                Deputy Commissioner















          GE410259RO; GF410594RT








          GE410259RO; GF410594RT














          GE410259RO; GF410594RT



    

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