GK510038RO
                                  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    SJR No.:6870
          IN THE MATTER OF THE ADMINISTRATIVE :    ADMINISTRATIVE REVIEW
          APPEAL OF                                DOCKET NO. GK510038RO
                                              :    DRO DOCKET NO.GF510008RP
             Sherman Associates,                   TENANT:Winston Tinson

                               PETITIONER     :
          ------------------------------------X

            ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW
                                       IN PART
               

          On November 9, 1992  the  above-named  Petitioner-owner  filed  a
          Petition for Administrative Review against  an  order  issued  on
          October 6, 1992, by a Rent Administrator, concerning the  housing
          accommodations known as 211 Sherman Avenue, New York,  New  York,
          Apartment No.5F, wherein the Rent Administrator determined that the 
          owner had overcharged the tenant.

          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.   The  proceeding  was  then
          remitted to the DHCR for  a  determination  of  the  petitioner's
          appeal.

          The Administrative appeal is being  determined  pursuant  to  the
          provisions of Section 2526.1 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 appeal.

          This proceeding was originally commenced by the filing of a  rent
          overcharge complaint by the tenant on October 4, 1988.




















          GK510038RO

          In an order issued on April 5, 1991, under Docket Number CF510107R, 
          the Administrator determined that the tenant had been overcharged 
          in the amount of $36,073.99, including treble  Damages.   It  was
          found that the owner had failed to substantiate the cost of alleged 
          improvements, resulting in the denial  of  the  entire  claim  of
          $12,500.00, and that the failure to register the apartment in 1987 
          and 1988 precluded the collection of rent increases subsequent to 
          the 1986 registered rent.

          The owner filed a  petition  for  administrative  review  of  the
          Administrator's order.  In an order issued on December  20,  1991
          under Docket Number FE510017-RO, the  Commissioner  remanded  the
          proceeding to the  Rent  Administrator  for  further  processing.
          Specifically, the Commissioner's opinion directed a determination 
          of the extent and the actual cost of improvements to the apartment 
          immediately prior to the complaining tenant's occupancy in February 
          1988.  The opinion further stated that the owner should be afforded 
          another opportunity to document the nature and cost of  the  work
          performed.  The Administrator was also directed  to  make  a  new
          determination on whether the owner had timely filed registrations 
          for the apartment in 1987 and 1988.

          In an Order pursuant to Remand issued on October  6,  1992  under
          Docket Number GF510008-RP, the Administrator granted an  increase
          for the upgrading of the  kitchen  and  bathroom  at  a  cost  of
          $1,875.00, but denied the claims for  electrical  wiring  in  the
          amount of $2,625.00 and for the re-surfacing of all interior walls 
          in the  amount  of  $8,000.00  as  these  items  were  considered
          maintenance and repair.

          In its petition, the owner disputes the Administrator's denial of 
          the claims for electrical wiring  and  the  re-surfacing  of  the
          interior walls as being inconsistent with prior  rulings  of  the
          Commissioner.  The petition cites orders ARL04413-L and BD210245-RO 
          as cases  where  the  Commissioner  granted  rent  increases  for
          electrical wiring and associated wall repairs that were necessary 
          as a result of the rewiring.  The owner also  contends  that  the
          Commissioner had demonstrated "a clear tenant bias" in his earlier 
          opinion by remanding the case for proof that the improvements were 
          actually performed since this was based solely, and unreasonably, 
          on  the  tenant's  unsupported  assertion  that  the  claim   was
          fraudulent.  Since the veracity of such claims "has never been made 
          subject  to  tenant  corroboration,"  the  remand   was   totally
          unwarranted and further  evidence  of  the  Commissioner's  bias.
          Petitioner then strongly contests the finding of willfulness  and
          contends that the record does not support such an interpretation. 


          The owner states that, even if the claim for the rewiring and the 
          wall resurfacing is denied, the owner clearly had a "legitimate and 
          supportable belief" that he was entitled to an increase for them. 







          GK510038RO

          The petition cites Matter of Kraus Management (ALR #ARL-13096-Q), 
          which removed treble damages where the owner could not substantiate 
          the cost of improvements and Matter of Shore Lane Arms, Inc. (#ARL 
          13023-K), which was also based on  unsubstantiated  improvements.
          Finally the owner protests the entire proceeding because the tenant 
          had previously withdrawn the complaint, as documented in the record 
          by a letter, dated February 28, 1991, wherein the  tenant  states
          that he is withdrawing "...with prejudice any and all  complaints
          with all city agencies...."

          The Commissioner is of the considered opinion that this  petition
          should be granted in part.

          Section 2522.4(a)(1)  of  the  current  Rent  Stabilization  Code
          provides, in part that an owner is entitled to  a  rent  increase
          where there has been a substantial increase of dwelling space or an 
          increase in the services, or installation  of  new  equipment  or
          improvements, or new furniture or furnishings, provided in or  to
          the tenant's housing accommodation.  An owner may  not,  however,
          collect  a  rent  increase  for  work  that  constitutes   normal
          maintenance, painting or repairs.

          Insofar as the overcharges that are specifically challenged in the 
          owner's petition result from the denial of the major part of  the
          owner's claim for new equipment, it  is  useful  to  compare  the
          determinations on the claim in the two administrative orders issued 
          below.  It was the tenant who first raised the issue of whether all 
          of the improvements claimed by the owner had actually been  made.
          When requested to submit documentation, the  owner  submitted  an
          invoice which broke down the $12,500.00 total claim as follows:
               Adequate wiring                         $ 2,625.00
               Re-Surfacing of all Interior walls      $ 8,000.00
               Upgrading of kitchen and bathroom       $ 1,875.00
                                                       $12,500.00
                                                            
          Page two of the invoice added the following.
               "Substantial renovation of the apartment
               consisting of adequate wiring, re-surfacing
               of all interior walls, new kitchen and
               scraping and polishing of floors and
               painting of entire apartment.
                         TOTAL PRICE $12,500.00"





          The owner also submitted a copy of the cancelled check for the full 
          amount of the claim.  In explaining  the  denial  of  the  entire
          amount, the first order stated  that  the  owner  had  failed  to
          substantiate the cost of the improvements.  Treble  damages  were
          imposed  on  all  post-4/1/84  overcharges  "...because  evidence












          GK510038RO

          indicates that the overcharge was willful," but  without  further
          specificity.

          Based on the  contradictory  positions  of  the  parties  on  the
          improvements claim and the  lack  of  dispositive  evidence,  the
          Commissioner ordered an investigation of the claim on remand, and 
          even suggested an inspection if it were thought necessary.

          Although an inspection was not ordered on remand, the  owner  was
          requested to submit proof  that  the  claimed  improvements  were
          actually completed.  The owner only submitted a copy of the  same
          invoice it had submitted previously.   In  response,  the  tenant
          stated that he "...had no knowledge of these list of items.   All
          these are lies."   

          In the order on remand, the Administrator granted an increase based 
          only on the kitchen and bathroom improvements; the  Administrator
          denied the rest of the claim as unqualified as it was merely  for
          normal maintenance and repair.  Treble damages were then  imposed
          based on the willfulness of all determined overcharges.

          The Commissioner finds that the record supports the denial of the 
          major portion of the claim as maintenance and repairs, but does not 
          support a finding of willfulness.  It is noted  that  the  tenant
          failed to appeal the Administrator's order, that many of the items 
          performed by the owner such  as  rewiring  would  not  be  easily
          observed by the tenant and that the owner  submitted  documentary
          evidence for the work done.  The  Commissioner  thus  accepts  as
          proven that all of the items in the owner's claim  were  actually
          performed, and that their stated cost was  accurate,  neither  of
          which were established in the earlier order and which were  major
          reasons for the remand of the case.














          Since the determinations in the order not challenged in the owner's 
          petition cannot be reviewed here, the granting of an increase based 
          on $1875.00 for the kitchen and bathroom equipment  need  not  be
          discussed.  As to whether the  denial  of  an  increase  for  the
          electrical re-wiring and the resurfacing of the walls was a proper 
          determination, the Commissioner relies on the same evidence  that






          GK510038RO

          was seen and evaluated by the Administrator, and  must  therefore
          affirm the order.  The cases cited by the owner where an increase 
          was granted based on the cost  of  electrical  rewiring  and  the
          attendant repair of the walls subsequent to the rewiring are  not
          applicable here because the documentation of the work performed in 
          each of the cited cases was far more detailed and informative.  In 
          the instant case, the items are not so specific that merely listing 
          them on the invoice gives a clear indication of the exact nature of 
          the work performed.  The owner could just as easily  have  listed
          cases where such items were rejected as mere maintenance and repair 
          (ARL04966-R, ART05064-L: repairs of ceilings, walls, bathroom wall 
          and crotons: ARL02944-L: denial of "electrical work"; ART00719-L: 
          denial of "new  electric  wires";  ARL09794-L:  no  increase  for
          plastering, resurfacing and painting of walls and ceilings).  The 
          owner submitted no additional evidence on remand that might  have
          given the items  greater  specificity,  such  as  a  contractor's
          affidavit.  The Commissioner believes that when the documentation 
          is unnecessarily ambiguous and vague so that the items listed may 
          just as easily be found to be repairs as improvements, then it is 
          proper to deny the rent increase.

          However, under the circumstances of this case, the question of the 
          willfulness  of  overcharges  should  only  be  considered  while
          recognizing the same ambiguity that defeated the  claim  for  new
          improvements.  As a rule, overcharges resulting from the  finding
          that claims for new equipment are mere repairs have not been exempt 
          from the treble damages penalty.  The facts in this case, however, 
          are sufficient to remove the presumption of willfulness, and it was 
          thus inappropriate for the Administrator to impose treble damages 
          in that the nature of the work performed for which a rent increase 
          was not allowed was ambiguous from the record and cannot clearly be 
          considered repairs and maintenance.  It appears  that  the  owner
          believed in good faith that he was eligible for a  rent  increase
          covering the full amount of the improvement claim  and  that  his
          documentation was sufficient.  The Commissioner finds, therefore, 
          that the overcharges resulting mainly  from  the  denial  of  the
          improvement claim are not considered willful.







          Further the owner's contention that  the  Commissioner's  earlier
          remand of the case showed a "clear tenant bias" is without merit.

          Finally, the claim that the  tenant  withdrew  the  complaint  is
          without  merit,  since  the  letter  of  February  28,  1991  was
          exclusively concerned with service-related matters, and  did  not
          include the instant overcharge complaint among the listed dockets 
          that the tenant was allegedly withdrawing.  












          GK510038RO


          Insofar as treble damages  are  removed,  total  overcharges  are
          reduced to $15,154.89.  However, the lawful stabilized rent and all 
          calculations remain as stated in the administrator's order.

          This order may, upon the 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 the 
          tenant in the same manner as a judgment or not in excess of twenty 
          percent thereof per month may be offset against any rent thereafter 
          due the owner.

          THEREFORE, pursuant to the Rent Stabilization Law and Code, it is

          ORDERED, that the Petition be, and the same hereby is granted  in
          part; and that the Administrator's order be, and the same hereby is 
          amended in accordance with this order and opinion.


          ISSUED:
                                               


                                                    JOSEPH A. D'AGOSTA    
                                                    Deputy     Commissioner
                                                              


    

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