STATE OF NEW YORK
DIVISION OF HOUSING AND COMMUNITY RENEWAL
OFFICE OF RENT ADMINISTRATION
92-31 UNION HALL STREET
JAMAICA, NEW YORK 11433
IN THE MATTER OF THE ADMINISTRATIVE : ADMINISTRATIVE REVIEW
APPEALS OF DOCKET NO. HD410088RO, DG410067RT
: DISTRICT RENT OFFICE
Empire Associates Realty Co., DOCKET NO. EG410031RK, BB410359R
Robert Shaw, tenant,
ORDER AND OPINION TERMINATING TENANT'S PETITION AND DENYING OWNER'S
PETITION FOR ADMINISTRATIVE REVIEW
On April 30, 1993, the above-named owner filed a Petition for
Administrative Review against an order of a Rent Administrator issued on
March 26, 1993, concerning the housing accommodations known as Apt. 4B
at 33 East 65th Street, New York, New York, in which the Administrator
ordered the payment to the tenant of $69,430.90, due to overcharges by
the owner. Previously, the tenant had filed a similar petition for
review of an Administrator's order issued on June 15, 1989, wherein it
was determined that the same accommodations were not subject to the Rent
The pertinent facts -- as documented, or alleged and not disputed -- are
A. The Certificate of Occupancy for the aforementioned building permits
"One (1) Doctor's Apartment and office" in the basement, "Two (2)
Doctors' Apartment [sic] and offices" on the first story, and 4
"apartments" in the rest of the building; it also provides that
"[d]octors using offices must reside in this building."
B. In a petition filed in the Civil Court seeking the tenant's eviction,
the owner alleged that said building was not subject to rent regulation.
In 1985 the court dismissed that petition for the reason that the
building was indeed subject to Rent Stabilization.
The same case was then set on for hearing on the tenant's motion for
attorney's fees (the owner having meanwhile filed another eviction
petition that did allege the building was "stabilized," but which had
been discontinued for another reason). At the time set for the hearing
on fees (August 28, 1986), the parties settled the "above entitled
proceeding ... on the following terms:
"Respondent owes rent for the period November 1984 through August 1986
in the total amount of $18,123.66.
"Respondent will pay $6,686.56 in full satisfaction of all rent due ....
This figure accounts for a 30% abatement ... [for] breach of warranty of
habitability ... and payment of attorneys fees in the amount [of]
$6,000.00. Respondent shall pay the full $6,686.56 upon the execution
of a proper renewal lease at a monthly rental of $863.32." The
settlement was then signed as "so ordered" by Judge Dankberg.
In February of 1987 the tenant commenced the instant proceeding by
filing an overcharge complaint with this Division ("the DHCR"). In 1989
the Rent Administrator denied the requested relief, stating that the
subject building was not subject to the Rent Stabilization Code. The
DHCR subsequently granted the tenant's request for reconsideration,
ruling in the order appealed herein that the premises were indeed
subject to the Code. In arriving at the aforementioned refund figure,
the Administrator imposed treble damages (for willfulness) for
overcharges collected from March 15, 1985 through March 14, 1991, except
for those collected between June 15, 1989 and November 15, 1990, the
Administrator stating that fairness precluded a finding of willfulness
for the period between the issuance of the first Administrator's order
(declaring the premises to be unregulated) and the order reopening the
matter for reconsideration.
In this petition the owner attacks that order as follows.
(1) The sole basis thereof is the 1985 order of the Civil Court, holding
that the subject premises are subject to rent stabilization. The
subsequent 1986 court order in the same matter, however, superseded the
first order or revoked it by implication, leaving the second order as
the final and binding one in the parties' litigation. That second order
states that the tenant owes a sum for rent that "represents the actual
lease rent due and owing * * * [; and] the parties further agreed to
enter into a renewal lease in the amount of $863.32 ... ." The 1986
order, then, "by upholding the prior lease rents ... implicitly upholds
the lack of rent stabilization coverage for this apartment," and the
Administrator's order here appealed, based solely on a superseded court
order, must be revoked.
(2) Because the owner was never served with a notice of entry of that
first order, "it never became a final and binding order upon the
Petitioner." Therefore it does not bind the DHCR through collateral
estoppel or as res judicata.
(3) If (in the alternative) the first court order is binding as to rent-
stabilization coverage, the second one remains "fully binding upon the
tenant and the DHCR with respect to the legal lease rent and renewals
for the subject apartment."
(4) The Administrator erred in trebling the refund herein, in view of
the second court order.
The tenant's answer to the petition makes the following points:
(a) The judge (Dankberg) who issued the second order, had authority only
to decide the issue of attorney's fees, as the first order -- dismissing
the case because the apartment was rent-stabilized -- was already "'law
of the case'."
(b) It is "absurd" to say that "every tenant who settles a nonpayment
proceeding by agreeing to pay rent, waives the right to challenge that
rent at the DHCR."
(c) The first court order, which the owner has not appealed and by which
it has in fact abided for nine years, is binding on the DHCR.
(d) Even without that order, the merits herein require the Commissioner
to determine that the subject accommodations have at all relevant times
(e) Treble damages must be upheld in view of the owner's deceitful
arguments in this proceeding.
(f) "Tenant has now moved from subject apartment."
The Commissioner is of the opinion that the owner's petition should be
denied, and the tenant's, terminated as moot.
The argument that the second court order, by adopting the previous
rental levels stipulated to by the parties, thus revoked the holding
that the accommodations were regulated, is frivolous; the Commissioner
will therefore reject it summarily and will move on to the question of
whether the second order is binding as to the lawful rent.
The order in question, settling litigation in which the issues were
whether the tenant could be evicted, whether the warranty of
habitability had been breached, and how much rent was owed, ratified a
stipulation as to arrears, providing for their payment upon execution of
a lease in a certain amount. It made no pretense, however, of
determining the lawful stabilization rent. Thus the issue settled in
that litigation is not identical to the overcharge issue herein, so that
the stipulation has no res-judicata or collateral-estoppel effect
thereon. The Administrator was therefore not precluded from determining
said lawful rent and consequent overcharge.
The Commissioner will specifically decline to rule on the question of
whether the absence of a notice of entry thereof, renders nonbinding the
first court order (a decision rendered unnecessary by the following
determination on the merits).
The above-described Certificate of Occupancy clearly provides that the
physicians occupying apartment offices in the subject building must
reside therein. And the Rent Stabilization Code clearly provides that
units used as residences are subject thereto, even if also used for
other purposes. Thus the certificate permits the required number of
apartments (at least six) to render the building "stabilized" (and any
changes the owner might have made to later decrease that number must be
viewed as unlawful ones from which it cannot be allowed to profit). In
sum the building was "stabilized" at the commencement of this tenancy,
and because, as discussed above, no judicial decision has changed that
status, it remains stabilized. The Administrator's finding of
overcharge will therefore be upheld, leaving the propriety of treble
damages as the only outstanding issue.
With regard to the issue of treble damages, the Commissioner is of the
opinion that a preponderance of the evidence in the record does not show
a lack of willfulness by the owner, and therefore the imposition of
treble damages as imposed by the Rent Administrator was warranted. The
evidence of record including the decision in the first court proceeding
clearly discloses that the subject apartment was rent stabilized. Yet
the owner failed to produce a complete rental history although given
ample opportunity to do so and continued to allege the subject apartment
was exempt from rent stabilization. The second court proceeding dealt
with attorney's fees, witheld rent and a rent abatement for breach of
the warranty of habitability, and clearly had nothing to do with the
issue of whether the subject apartment was rent stabilized or the amount
of the lawful stabilization rent. An owner cannot avoid the penalty of
treble damages by bringing a nonpayment proceeding in court and settling
such proceding with a tenant.
The tenant's petition, finally, must be terminated in view of the
Administrator's reconsideration and second order, which obviously render
that petition moot.
The Commissioner has determined in this Order and Opinion that the owner
collected overcharges of $69,430.90. This order may, upon expiration of
the period for seeking review of this Order and Opinion pursuant to
Article Seventy-eight of the Civil Practice Law and Rules, be filed and
enforced as a judgment. Where the tenant files this order as a
judgment, the County Clerk may add to the overcharge, interest at the
rate payable on a judgment pursuant to section 5004 of the Civil
Practice Law and Rules, from the issuance date of the Rent
Administrator's order to the issuance date of the Commissioner's order.
A copy of this order is being sent to the current occupant of the
subject apartment. The lawful stabilization rent as of March 14, 1991
The owner is 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
THEREFORE, in accordance with the Rent Stabilization Law and Code, it is
ORDERED, that the petition docketed at number DG410067RT be, and the
same hereby is, terminated, and that the petition docketed at number
HD410088RO be, and the same hereby is, denied, the Rent Administrator's
order being thus affirmed.
JOSEPH A. D'AGOSTA