STATE OF NEW YORK
DIVISION OF HOUSING AND COMMUNITY RENEWAL
OFFICE OF RENT ADMINISTRATION
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
ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW
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
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
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.
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.
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
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
indicates that the overcharge was willful," but without further
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
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.
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.
JOSEPH A. D'AGOSTA