OFFICE OF RENT ADMINISTRATION
                                   GERTZ PLAZA
                             92-31 UNION HALL STREET
                             JAMAICA, NEW YORK 11433

      APPEAL OF                              DOCKET NO. HF410003RO

                                          :  DISTRICT RENT OFFICE
                                             DOCKET NO. EJ410005RK
            Estate of Sol Goldman,                      (ZBE410164R)

                                             TENANTS: Jennifer &          
                                                      Calman Phillips
                            PETITIONER    : 


      On June 2, 1993 the above-named petitioner-owner filed a Petition for 
      Administrative Review ("PAR") against an order issued on April 28, 1993 
      by the Rent Administrator, 92-31 Union Hall Street, Jamaica, New York 
      concerning the housing accommodations known as Apartment 6B at 25 West 
      68th Street, New York, New York wherein the Rent Administrator 
      determined that the owner had collected excess rent from the tenants.

      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 in May, 1987 of 
      a rent overcharge complaint (Docket No. BE410164R) by the tenants, in 
      which they stated that they had commenced occupancy on September 1, 1986 
      at rent of $2,702.11 per month; that the previous tenant had been rent- 
      controlled at a rent of $604.00 per month ; that she had moved in March, 
      1986; that modernization probably costing less than $3,000.00 was done 
      during the vacancy; that they had never received DC-2A, RR-1, or RR-2A 
      forms; and that the "Status of Apartment and Last Tenant" section of the 
      rent stabilization rider was not completed by the owner.

      In an answer dated June 23, 1987 the owner asserted that the tenants had 
      signed a DC-2 form as part of the original lease document.  The owner 
      enclosed a copy of the front page of a DC-2 form formerly used by the 
      New York City Conciliation and Appeals Board. ("C.A.B.") In a blank area 
      at the bottom, not intended for a signature, is written "8/11/86" and 
      "Calman P. Phillips."  The apartment number is given as "9B," not 6B.  
      There is no indication in the file of this proceeding that this 
      submission was sent to the tenants by the DHCR.

      In an order issued on December 13, 1989 the Administrator denied the 
      fair market rent appeal since it had not been filed within 90 days of 
      service of the DC-2 notice.

      The tenants filed both a PAR (Docket No. EA410012RT) and a request for 
      reconsideration .  As a result of the request for reconsideration the 
      original December 13, 1989 order denying  the fair market rent appeal 
      was reopened by an order dated October 15, 1990.  In the new proceeding 
      (Docket No. EJ410005RK) the tenants contended among other things that 
      they did not see a copy of the owner's June 23, 1987 answer, including 
      the DC-2 notice, until the DHCR provided it on April 2, 1990; that the 
      DC-2 notice had the wrong apartment number; that Calman Phillips'name is 
      signed on the front of the notice even though there is no space for a 
      signature; that the back side of the notice was not made available to 
      the tenants, if indeed it was even submitted to the DHCR; and that in an 
      answer to the tenants' PAR No. EA410012RT the owner submitted another 
      copy of a DC-2 notice, identical in all ways to the earlier version 
      except for giving the apartment number as  "6B" rather than "9B," and 
      except for the absence of lines for signature of guarantors and 
      witnesses.  [The version submitted in 1987 was photocopied on a 
      reduction setting, and it is obvious that a 14-inch long lease form was 
      behind the 11-inch DC-2 notice and had the bottom portion show up on the 
      photocopy below the bottom edge of the DC-2 form.]

      The files were transferred to the DHCR's Enforcement Section for an 
      investigation of possible fraud on the part of the owner.  In response 
      to a subpoena the owner presented what appeared to be an original DC-2 
      notice signed by Calman Phillips in blue ink, although the apartment 
      number had obviously been changed to "6B" with the aid of correction 
      fluid.  Since Calman Phillips had claimed that he had never signed such 
      a notice or, if the owner somehow got his name on a DC-2 notice, that 
      the owner had not complied with the requirements of Rent Stabilization 
      Code 2523.1, the files were returned so the Rent Administrator could 
      determine the issue.

      Because of the October 15, 1990 order reopening Docket No. BE410164R and 
      processing it as Docket No. EJ410005RK, the PAR No. EA410012RT was 
      terminated on November 19, 1991 as being premature.  A Notice of 
      Commencement of Proceeding to Reconsider Previous Order was sent to the 
      parties on November 21, 1991.  On that date the owner was also sent a 
      Fair Market Rent answering package, since the owner had not submitted a 
      certified mail receipt to prove service of the DC-2 notice.  On January 
      22, 1992 the owner was sent a Summary Notice stating that the Fair 
      Market Rent would be determined on the basis of the 1984 Maximum Rent 
      increased by the Special Guidelines Order.  (The owner contends in its 
      PAR that it never received any Summary Notice or Final Notice.)

      In a February 10, 1992 submission the owner enclosed an affidavit from 
      real estate agent Frank Bevilacqua, who stated that on August 11, 1986 
      the tenants signed both a lease and a DC-2 Notice; and that on or about 
      September 1, 1986 he met the tenants at their apartment and personally 
      handed them a fully executed lease and a fully executed DC-2 Notice.  
      With the submission was included a copy of a C.A.B. DC-2 Notice with 
      "8/11/86" and "Calman P. Phillips" for apartment "6B".

      On November 12, 1992 the owner was afforded an opportunity to submit a 
      copy of an Amended RR-1 Notice as well as proof of service on the 
      tenants.  The file of Docket No. EJ410005RK does not contain any 
      evidence of the service of the Amended RR-1 notice.

      In an order issued on April 28, 1993 the Administrator establish a Fair 
      Market Rent of $703.74 per month effective September 1, 1986, and froze 
      it at that amount due to an outstanding rent reduction order (Docket No. 
      CB410492S).  A total refund due of $181,920.74 was calculated from 

      September 1, 1986 through April 30, 1993.

      In this petition, the owner contends in substance that there was no 
      valid basis for revoking the order in Docket No. BE410164R, since no 
      fraud was ever determined and since no irregularity was ever noted or 
      given as a reason for reconsideration and revocation of the prior order; 
      that the reopening and reconsideration was the result of improper ex 
      parte communications by the tenants' attorney, without notice to the 
      owner and an opportunity to be heard on the merits; that, despite 
      protests regarding the processing of the matter as a fair market rent 
      appeal, and requests that the owner's attorney be notified if additional 
      information was required, an order was issued without first sending the 
      owner a Summary Notice or Final Notice giving a final opportunity to 
      submit any other documentation and/or comparability data; that, based 
      upon the affidavit of an independent licensed real estate agent, as well 
      as the tenants' acknowledgement of receipt signatures on the DC-2 Notice 
      itself, which signatures have been proven to be proper and valid as a 
      result of a hearing conducted by the DHCR, it is clear that the tenants 
      personally received the DC-2 Notice on or about September 1, 1986; that 
      the tenant's May 20, 1987 complaint was therefore untimely; that it has 
      long been the policy of the DHCR and its predecessor C.A.B. to fully 
      honor personal service and receipt of a DC-2 Notice as valid and proper; 
      that even in Alcoma Corp. v. DHCR, 566 N.Y.S.2d 254 (App. Div. 1st 
      Dept., 1991), cited by the Administrator, the DHCR conceded that its 
      established policy and practice had been to accept proof of the actual 
      receipt of the DC-2 Notice as satisfactory compliance with the 
      requirements of the statute, even if there had been no service by 
      certified mail; that even if, as a result of the 1991 Alcoma case, the 
      DHCR now requires service of the DC-2 Notice only by certified mail, in 
      view of the past policy and procedure detrimentally relied upon by the 
      petitioner, such new policy and procedure should not be retroactively 
      applied to the owner.

      In answer, the tenants asset in substance that they have steadfastly 
      contended that they never received a copy of the DC-2 Notice; that the 
      owner, incorporating as a major portion of its PAR the dissenting 
      opinion in the Appellate Division ruling in Alcoma, does not mention the 
      fact that the Court of Appeals affirmed the majority opinion at 580 
      N.Y.S.2d 181; that there were no ex parte communications with the DHCR; 
      that the irregularity that resulted in the order reopening the 
      proceeding was the same as in Alcoma, namely that "service of the DC-2 
      notice was not made in the statutorily mandated manner"; that neither 
      the tenants nor their attorney heard of the alleged proof of personal 
      service of the DC-2, submitted on February 10, 1992, until the owner 
      filed its PAR; that the owner in Alcoma alleged service of the DC-2 in 
      1982, whereas in the present case the owner alleges that service was 
      made in 1986; and that, unlike Alcoma, where the DHCR found that the 
      tenant had actually received a DC-2 notice but where the Court of 
      Appeals held that the statutory requirement of certified mailing was 
      still not satisfied, in the present case the tenants did not even 
      receive a DC-2.

      The Commissioner is of the opinion that this petition should be denied.

      It was proper to reopen the proceeding based on denial of due process to 
      the tenants, even though the reopening order neglected to give a 
      specific reason.  There is no transmittal letter in the file of Docket 
      No. BE410164R to indicate that the owner's June 23, 1987 submission, 
      which included the signed DC-2 for apartment 9B [not for 6B, the subject 
      apartment], which DC-2 was the basis of the Administrator's order, was 

      sent to the tenants.  In addition, the Progress Sheet of Examiner does 
      not list any mailings other than the initial one of June 16, 1987 
      whereby the complaint and answer forms were sent to the owner and a 
      confirmation of the filing of the complaint was sent to the tenants.

      The Commissioner does not consider the owner to have been denied due 
      process.  On November 21, 1991 the owner was sent a Fair Market Rent 
      answering package which included instructions and forms for submitting 
      comparability data.  Contrary to the owner's assertions, two months 
      later on January 22, 1992 a Summary Notice was sent to the owner, 
      stating that the Fair Market Rent would be determined on the basis of 
      the 1984 Maximum Rent of $586.45 increased by the appropriate Special 
      Fair Market Guidelines Order.  (The file contains a copy of the letter 
      to the owner, with a copy to be sent to the tenants; the Progress Sheet 
      of Examiner states "Served Owner's estate with Summary Notice   cc:  
      Tenant's Attorney" on January 22, 1992;  and the tenants enclosed their 
      copy of the Summary Notice with a February 5, 1992 submission.)  The 
      order was not issued until April 28, 1993, more than 15 months after the 
      owner was sent the Summary Notice.  The owner had adequate notice and 
      opportunity to submit any documentation it desired, including 
      comparability data.

      The various courts in Alcoma found that the DHCR's order was rational in 
      finding that statutory requirements had not been met where a DC-2 was 
      not served by certified mail.  This is not a new standard being 
      retroactively applied to the present case.  The tenant in Alcoma had 
      commenced occupancy in 1982, and allegedly received a DC-2 by regular 
      mail shortly thereafter.  She filed a fair market rent appeal in 
      January, 1984.  It was initially denied as untimely in October 1986.  
      After various permutations in the proceeding the DHCR granted the PAR in 
      May, 1989, requiring certified mailing.  Supreme Court, Appellate 
      Division and Court of Appeals decisions were issued in 1990, 1991 and 
      1992.  In the present case the tenants commenced occupancy in 1986, and 
      filed a complaint in May, 1987.  The Administrator in December, 1989 
      denied their fair market rent appeal as untimely even though the 
      Commissioner had earlier, in May, 1989, found in the case of the Alcoma 
      tenant that certified mailing was required.  The Administrator's April 
      28, 1993 decision in Docket No. EJ410005RK, citing Alcoma, was not 
      retroactively applying a new standard, but was just applying a standard 
      that the courts had in the recent orders in the Alcoma cases recognized 
      as applying to a DC-2 served in 1982, four years prior to the alleged 
      service of a DC-2 in the present case.

      Further, in the instant case the Commissioner does not consider that the 
      owner has shown that the tenants actually received a DC-2.  It appears 
      that one of the tenants, at the time on August 11, 1986 that he filled 
      out an application, and signed a lease, to rent Apartment 6B, also 
      signed his name at the bottom of a DC-2 form in an area not meant for a 
      signature.  This was a C.A.B. form, revised in 1979, which among other 
      things offered the possibility of applying to the C.A.B. for a rent 
      reduction, even though the C.A.B. had gone out of existence more than 
      two years prior to the time the tenant signed the DC-2.  The owner 
      initially submitted a copy of this form, which named Apartment 9B, as 
      evidence that the DC-2 had been personally served on August 11, 1986.  
      The owner later submitted an affidavit from the rental agent that he had 
      actually personally served the DC-2 at the subject 
      apartment on or about September 1, 1986.  It is not clear exactly what 
      version that alleged DC-2 might have been, since the DC-2 copy submitted 
      with the affidavit named Apartment 6B, rather than 9B.  In comparing the 
      two copies it can be seen that all handwriting on them  is identical in 

      the minutest detail, other than a "6" replacing a "9," indicating that 
      one is a photocopy of the other.  In fact, the original presented at the 
      Enforcement Bureau had clearly been altered.  It is also interesting 
      that the owner possesses the original.  The fact that a tenant signs a 
      document on August 11, 1986, which original document the owner retains, 
      does  not constitute proof that such tenant received his own copy of the 
      document on that date, and certainly does not constitute proof that he 
      received his own copy of an altered document at a later date.  It is 
      proof only that his pen briefly touched the front of the document before 
      the rental agent took it back.

      In fact, there is no proof that the tenants received, prior to filing 
      their complaint, any documents relating to their being the first 
      stabilized tenants and having a right to appeal the initial stabilized 
      rent to the DHCR or even the C.A.B.  The rent stabilization rider is not 
      filled out regarding the prior tenant.  While the Fair Market Rent 
      answering package sent to the owner on November 21, 1991 offered the 
      opportunity to submit proof of service of an RR-1 Initial Apartment 
      Registration on the first stabilized tenant, and while the owner was 
      specifically requested on November 12, 1992 to submit proof of service 
      of an Amended RR-1 Notice on the tenants, the owner did not do so, and 
      DHCR registration records do not indicate that the owner made this 
      required registration at all.  [At the top of page 5 of the 1986 
      Instructions for Rent Registration, it was stated that "[i]f a rent 
      controlled apartment was vacant on or after April 1, 1986 and has since 
      been rented to a decontrolled (stabilized) tenant, you must file an initial 
      registration immediately."  The apartment is registered as vacant on April 
      1, 1986, and the next registration is for April 1, 1987.]  DHCR records 
      also do not contain an R-42V Report of Statutory Decontrol for the 

      While the lawful permanent stabilization rent is $933.82 per month in 
      the lease from September 1, 1992 to August 31, 1993, the Commissioner 
      notes that the collectible rent remains frozen at $703.74 until the 
      owner obtains orders restoring the rents that were frozen because of 
      service decreases.

      The owner is directed to roll back the rent to the lawful stabilized 
      rent consistent with this decision and to refund or fully credit against 
      future rents over a period not exceeding six months from the date of 
      receipt of this order, the excess rent collected by the owner.

      In the event the owner does not take appropriate action to comply within 
      sixty (60) days from the date of this order, the tenant may credit the 
      excess rent collected by the owner against the next month(s) rent until 
      fully offset.

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

      ORDERED, that this petition for administrative review be, and the same 
      hereby is, denied and that the order of the Rent Administrator be, and 
      the same hereby is, affirmed.  The total refund due is $181,920.74 as of 

      April 30, 1993, including excess security of $2,651.69.  


                                      JOSEPH A. D'AGOSTA
                                      Deputy Commissioner

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