HB410082RO








                                    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 
            IN THE MATTER OF THE ADMINISTRATIVE :  ADMINISTRATIVE REVIEW
            APPEAL OF                              DOCKET NO.HB410082RO
                                                :  DRO DOCKET NO.EF410422R
            WENDY LYNN BERRA                       SUBTENANT: ANGELA M.         
                                                       MACROPOULOS       

                                  PETITIONER    : 
            ------------------------------------X                             
               ORDER AND OPINION DENYING PETITION FOR ADMINISTRATIVE REVIEW


                 On February 10, l992, the above-named petitioner-prime tenant 
            timely refiled a Petition for Administrative Review against an order 
            issued on December 1, 1992 by the Rent Administrator, 92-31 Union 
            Hall Street, Jamaica, New York concerning the housing accommodation 
            known as 326 West 77th Street, apartment no. 4, New York, NY, 
            wherein the Administrator determined that the prime tenant had 
            overcharged the subtenant.  
                 
                 The Administrative Appeal is being determined pursuant to the 
            provisions of Section 2525.6 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 issues raised by the administrative appeal.  

                 This proceeding was originally commenced on June 13,1990 when 
            the subtenant filed a complaint of rent overcharge (Docket No. 
            EF410422R), alleging that the prime tenant had collected overcharges 
            from October 1, 1987 through February 28, 1990, the subtenancy 
            period.  The subtenant stated that she had commenced occupancy of 
            the subject apartment on October 1, 1987  at an initial rent of 
            $525.00 which subsequently was increased to $700.00 while the prime 
            tenant's rent was only $390.00.    

                 In a letter received by the DHCR on August 15, 1990, the 
            subtenant advised that she wished to withdraw the complaint.  On 
            September 23, 1991, while the withdrawal request was still pending, 
            the subtenant filed the complaint anew ( Docket No.  FI 430457R).  
            Subsequently, in November, the subtenant resubmitted the complaint 
            of September 23, 1991, revising the section identifying the owner by 







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            substituting the words" prime tenant" for "owner".               

                 On September 16, 1992, the Rent Administrator, who had been 
            advised of the duplication of complaints, issued an order 
            terminating Docket No. FI430457R and as a corollary consolidating 
            that complaint with the original complaint filed in June 1990.    

                 In answer to the complaint,  the prime tenant questioned, since 
            she no longer had the subject leasehold, whether the DHCR had 
            jurisdiction over her and further questioned the validity of the 
            complaint since the parties had negotiated a verbal settlement 
            whereby the subtenant had agreed to release the prime tenant from 
            all claims. In a subsequent communication, the prime tenant stated 
            that the sublet had been an unwritten informal arrangement and that  
            she could neither affirm nor deny the allegations made in the 
            complaint but that the subtenant had unlawfully retained furniture 
            belonging to the prime tenant. In November 1992, the prime tenant's
            husband sent a letter to the subtenant, enclosing a check for the 
            amount of the overcharge (without interest) and said check was 
            returned uncashed by the subtenant.     In the order issued on 
            December 1, 1992, the Rent Administrator determined  that an 
            overcharge had occurred and directed the prime tenant to refund to 
            the subtenant an overcharge of $18,029.78 inclusive of interest on 
            the overcharge occurring from October 1, 1987 to June 30, 1988 and 
            treble damages on the overcharge from July 1,1988 through February 
            28, 1990.  

                 In this petition, the prime tenant contends in substance that 
            the Administrator's order should be revoked on the following 
            grounds:  

                      1)  because it was withdrawn, the 1990 complaint is 
                      ineffective;  
                      2)  the prime tenant's due process rights have been 
                      violated in that not one of the three complaints filed is 
                      valid:  a)  the 1990 complaint is invalid because it was 
                      not timely served.  Service must be effected within a 
                      reasonable time,  b) the 1991 complaint was defective, in 
                      that the prime tenant was named as owner, c) the revised 
                      complaint is invalid because:  there was not a valid 
                      amendment,  the revised complaint was not properly served, 
                      there was no application to amend the complaint;  
                      3)  the consolidation of the complaints is invalid because 
                      it was improperly initiated by ex parte communications, 
                      the prime tenant was not served with an application for 
                      consolidation, the subtenant did not provide a basis for 
                      activating the original complaint or consolidating the 
                      1991 complaint with the 1990 complaint, said consolidation 
                      was fraudulently induced, the notice of consolidation was 
                      defective on its face because it did not advise of the 
                      possible adverse effect on the prime tenant;
                      4)  treble damages are precluded by the statute of 
                      limitations, limiting any treble damages award to two 
                      years prior to  the complaint's filing. Treble damages 
                      should not predate by more than two years  the  filing of 
                      the second complaint in September 1991;  
                      5)  the complaint is precluded by the statute of 


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                      limitations which limits the filing of overcharge 
                      complaints to the four year period of the first overcharge 
                      alleged;  the claimed subtenancy began more than four 
                      years prior to the filing of the complaint.

                      6)  DHCR has no jurisdiction in this matter - Code Section 
                      2525.6 applies only to overcharges collected from 
                      subtenants - the complainant stated that her occupancy was 
                      illegal.  Definitionally, the complainant was not a 
                      subtenant but was only an occupant not protected by the 
                      Code.  
                      7) the order appealed was the result of illegality, 
                      irregularity and fraud as follows:  the complainant 
                      submitted forged evidence, i.e., the complainant forged 
                      the prime tenant's signature on two money orders;  the 
                      complainant misappropriated evidence- submission by the 
                      complainant of a Board of Elections notice addressed to 
                      the prime tenant shows that the complainant 
                      misappropriated mail, a possible federal crime;  the 
                      complainant fraudulently induced the consolidation of the 
                      withdrawn complaint to establish an earlier date for 
                      purposes of receiving treble damages; the complainant's 
                      affirmation is false in that she falsely stated that her 
                      occupancy began October 1, 1987 when it actually began on 
                      September 21, 1987; the complainant's   statements are 
                      inconsistent - in one instance, the complainant stated 
                      that she had notified the prime tenant by mail, then she 
                      said notification was by telephone.  
                      8)  the order incorrectly applied Code Section 2520.13 to 
                      the verbal agreement as the settlement occurred before the 
                      complaint was filed and after the cessation of the 
                      subtenancy.  The waiver agreed to did not require that the 
                      complainant give up any rights to gain occupancy of the 
                      subject apartment.  

                 In her response to the appeal, the subtenant contends in 
            substance that the Administrator's order was correct and should be 
            sustained.  The subtenant denies all allegations of fraud or 
            wrongdoing.  

                 Subsequently in additional submissions, the prime tenant raised 
            supplementary issues in arguing against the Rent Administrator's 
            findings, including the following additional contentions: 1)  the 
            order incorrectly stated that the petitioner had alleged a verbal 
            agreement with the subtenant as the basis  for the subtenant to 
            withdraw the original complaint; 2)the DHCR failed to rebut the 
            petitioner's denial of service and to hold a traverse hearing on the 
            issue; 3) the Rent Administrator issued an order consolidating the 
            withdrawn complaint before the petitioner's time to answer said 
            complaint had expired; 4) an incorrect Code section was cited as the 
            basis of the overcharge award;  5) since the subject apartment was 
            not the complainant's primary residence during the alleged 
            overcharge period, the complainant was not entitled to the 
            protection of the Rent Stabilization Law or Code  and was not 
            entitled to bring the complaint;  6)  service of the 1991 complaint 
            was defective in that a binder incorporated in the complaint was not 
            served with the complaint; 7) the petitioner is not subject to the 







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            jurisdiction of the DHCR in that having relinquished a leasehold 
            interest in the subject apartment before the complaint was filed, 
            she is not a current owner (Code Section 2526.1 ascribes liability 
            for overcharges to current owners); and 8)  treble damages are also 
            precluded due to the offer of refund by the prime tenant. 

                 After careful consideration, the Commissioner is of the opinion 
            that this petition should be denied.

                 In explication, with respect to the validity of the complaints, 
            the Commissioner finds that the complaint filed June 13, 1990 is 
            valid and effective.  The Rent Administrator was not compelled to 
            terminate the proceeding. The facts in docket no. AJ410571RO, Matter 
            of Sulzberger-Rolfe, which concerned a tenant's withdrawal submitted 
            by the owner, as  cited by the prime tenant, are inapposite to the 
            instant proceeding where the subtenant requested a withdrawal 
            unbeknownst to the prime tenant and the subtenant could always 
            revoke the withdrawal.  Since the Rent Administrator had not yet 
            acted upon the complainant's withdrawal request, the complaint 
            remained viable, notwithstanding the request.  The filing in 
            September 1991 effectively negated or revoked the withdrawal and in 
            essence ratified and supplemented the original complaint.  Although 
            the complaints were initially served on the owner of the subject 
            building (a party not charged in the proceeding) , the record 
            reveals that  the complaints were served on the prime tenant, who, 
            the Commissioner notes, meets the Code's definitional criteria of 
            owner.  Section 2520.6(i) of the Rent Stabilization Code 
            specifically includes in the definition of owner " a fee owner, 
            lessor, sublessor, assignee,net lessee."  Hence, identifying the 
            prime tenant as such is not a fatal defect in the September 1991 
            complaint.  Each of the complaints stated clearly who was the party 
            to be charged and under what circumstances the overcharge had been 
            collected.  The so-called "revision", allegedly amending the 
            complaint filed by the complainant in November 1991  was never 
            docketed, did not change the previously filed complaints in any 
            material way, was not necessary to the Administrator's determination 
            and was merely a duplication of the previously filed complaints.  
                 

                 The Commissioner finds that the consolidation of the September 
            1991 and June 1990 complaints is valid. Section 2527.5 of the Rent 
            Stabilization Code provides, inter alia, that the DHCR may, at any 
            stage of a proceeding, consolidate two or more applications, 
            complaints or proceedings which have at least one ground in common.  
            The complaints filed in June 1990 and in September 1991 were 
            essentially the same, involving the same premises and parties and 
            covering the same rental period at the same rent.  Pursuant to the 
            Code, no formal application to consolidate the proceedings was 
            required.   The complainant's bringing  the duplicate complaints to 
            the attention of the tenant counselor and ultimately to the 
            attention of the Administrator was not fraudulent.  Tenants are 
            routinely questioned as to other filed complaints.  This permits the 
            Administrator to clear unnecessary dockets.  The termination of  the 
            second docket number with the attendant consolidation was 
            essentially a ministerial task, adding no possible adversity to  the 
            petitioner herein and in no way interfered with the prime tenant's 
            ability to answer the complaint.    


          HB410082RO



                 Part 2527 of the Rent Stabilization Code governs the 
            administration of proceedings before the DHCR. Section 2527.3, cited 
            by the prime tenant for the proposition that service of the 1990 
            complaint was untimely, provides in pertinent part that the DHCR 
            shall serve all parties adversely affected with a copy of such 
            application, complaint, answer or reply but the section articulates 
            no standard of how or when service shall be effected.  The complaint 
            filed on June 13, 1990 was  served on the prime tenant on September 
            11, 1992.  The September 1991 complaint was served at the time of 
            its filing and was re-served with all attached materials on November 
            6, 1992.  The Commissioner finds that  service of the complaints 
            pursuant to Code Section 2527.3 was made. 

                 The Rent Stabilization Code contains no provision for a 
            traverse hearing.  In instances where there is an allegation that 
            service has not been made, the defect is remedied by re-serving, 
            e.g. the complaint and materials were re-served on November 6, 1992. 
            The granting of hearings is discretionary and a hearing will not be 
            ordered where oral testimony is not required, where the matter can 
            be dealt with solely on the papers as here.  Accordingly, the 
            Administrator was correct in not granting a hearing.  
             
                 Due process requires that notice and the opportunity to be 
            heard must be afforded to one who may be deprived of property by 
            governmental action prior to the deprivation.  Review of the record 
            reveals that full compliance with Code Section 2527.3 was effected, 
            providing adequate notice to the petitioner who was afforded ample 
            opportunity to respond.   The prime tenant has had the opportunity 
            to examine the entire record and to make comment thereon.  In the 
            interest of due process protection, the Commissioner has considered 
            all of the prime tenant's submissions in this appeal.  The 
            Commissioner finds that the petitioner's due process rights have not 
            been violated.  

                 The Commissioner finds that the DHCR has jurisdiction in this 
            matter.  The misconduct covered in the order herein appealed is the 
            very activity proscribed by Section 2525.6 of the Rent Stabilization 
            Code and the proscribed behavior cannot act to remove the parties or 
            the premises from the protection of the Code.  The evidence confirms 
            that a subtenancy existed, that there was a sublessor-sublessee 
            relationship.  The prime tenant was paying rent for a leased 
            apartment in which she no longer resided  and was  collecting rent 
            from another who resided therein with the permission of the prime 
            tenant.  Any alleged illegality arose from the prime tenant's 
            failure to get the lessor's authorization  and the subsequent 
            overcharge by the prime tenant.   Issues of primary residency are 
            determined by a court of competent jurisdiction after application by 
            the "owner" for a ruling of non-primary residence and such 
            application not having been sought, the issues are not germane to 
            the instant proceeding.  The record discloses that the prime tenant 
            has relinquished the leasehold and that the subtenant herein is the 
            current lessee of the subject apartment.  The DHCR retains 
            jurisdiction of the parties and the subtenancy even though the 
            subtenancy had been terminated when the subtenant filed the 
            overcharge complaint against the prime tenant.








          HB410082RO


                 Code Section 2526.1(f) provides for apportionment of liability 
            for overcharges collected between a current owner and prior owners.  
            Apportionment is not an issue in the instant proceeding since there 
            was only one prime tenant and one subtenant and Section 2526.1(f) is 
            inapplicable.  The prime tenant, therefore, has sole liability for 
            the overcharges collected.      

                 The complaint was not precluded by the statute of limitations.  
            The limitation imposed by Code Section 2526.1 (a)(2) requires that 
            a complaint be filed within four years of the first overcharge 
            alleged. The relevant dates in the instant case are October 1, 1987, 
            the first overcharge alleged, and June 13, 1990, the date the 
            initial complaint was filed, well within the limitations.  Likewise 
            the 1991 refiled complaint was within the four year period.  The 
            Administrator did not err in the time constraints with respect to 
            treble damages, assessing interest on the overcharge from October 1, 
            l987 to June 30, 1988, a period more than two years before the 
            filing of the complaint and treble damages thereafter.  The 
            allegation that the subtenant may actually have moved to the subject 
            apartment in late September 1987 has no relevance;  the subtenant 
            paid no rent for any period prior to October 1, 1987 and no 
            overcharge was found for any earlier period.  

                 The Commissioner finds that treble damages were appropriately 
            imposed.  Code Section 2525.6(b) provides in pertinent part that   
            where a tenant charges more than the legal regulated rent, the 
            subtenant shall be entitled to treble damages (emphasis added).    
            The cases cited by the petitioner, Matters of Milford Management, 
            Rose, and Green do not involve overcharges by the prime tenant but 
            do concern instances where a conventional owner attempted to 
            establish that an overcharge was not  willful.  Pursuant to Code 
            Section 2526.1, where an owner [here not including a tenant who 
            sublets since that is specifically covered by Code Section 
            2525.6(b)] is found to have overcharged, said owner will be ordered 
            to pay treble damages unless it can establish by a preponderance of 
            the evidence that the overcharge was not willful.   Policy Statement 
            89-2 articulates the reasoning and standard to be applied to 
            determine willfulness.   Since the Rent Stabilization Code's treble 
            damages provision in subletting cases is non-discretionary, the 
            Administrator was correct in not weighing the evidence and equities 
            to the "willfulness" standard on the overcharges collected herein.  
            Accordingly, the refund tendered by the prime tenant does not 
            mitigate against  the assessment of treble damages.  Further, it is 
            noted that the prime tenant's tendered refund did not include 
            interest so that in any event said refund did not meet the 
            requirements of Policy Statement 89-2 to establish non-willfulness.  
                           

                 The typographical error which misstated the applicable Code 
            section on p. 2 of the rent calculation chart in the Rent 
            Administrator's order is hereby corrected to read Section 2525.6(b).
                      
                 Pursuant to Section 2520.13, an agreement by a tenant to waive 
            the benefit of any provision of the RSL or the Code is void.  
            However, based upon a negotiated settlement between the parties and 
            with the approval of the DHCR or a court of competent jurisdiction 
            where a tenant is represented by counsel, a tenant may withdraw, 


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            with prejudice, any complaint pending before the DHCR.  Since the 
            alleged verbal agreement (whose existence was challenged by the 
            subtenant) did not meet the requirements of the referenced section 
            of the Code, the Administrator did not err in discounting the 
            allegation.  Nor was the order in error in citing to the section.  

                 The Commissioner finds that it is unnecessary to investigate or 
            discuss the prime tenant's various allegations of fraud and 
            illegality which have not previously been dealt with in this opinion 
            as the alleged instances of fraud or illegality are collateral 
            issues and are not germane to the complaint or its proper 
            determination.  The evidence of  record shows that the tenant 
            collected an overcharge from the subtenant and that such collection 
            has not been denied.  

                 The Commissioner has determined in this Order and Opinion that 
            the prime tenant collected overcharges of $18, 029.78.  This order 
            may, upon the 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 subtenant 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.  

                 While determination of this proceeding was pending, the 
            petitioner requested time extensions in order to complete various 
            responses.  On May 23, 1994, the Commissioner received a letter 
            dated May 16, 1994, an extension date previously requested by the 
            prime tenant to submit her final response (which was originally due 
            in February 1994), in which the prime tenant indicated her 
            understanding that all orders had been stayed,  that therefore it 
            was unnecessary for her to complete her final response and that if 
            her understanding was incorrect, she required written notice of 
            such, giving her an additional 45 days to complete her response.  
            The petitioner's request for a stay beyond that which is provided by 
            Code Section 2529.12 was never granted.  The petitioner cannot 
            assume that her requests for time extensions or stays are 
            automatically granted without some affirmative action on the part of 
            the Commissioner.  The prime tenant was given every possible 
            consideration and several extensions of time to prepare answers and 
            submit additional evidence during the PAR proceeding, including a 
            chance to examine the voluminous files(both the Rent Administrator's 
            file and the file in the PAR proceeding) in person pursuant to a 
            F.O.I.L. request and a chance to submit additional comments after 
            such examination.
                 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 as modified to 
            correct a typographical error.  
                 
            ISSUED








            HB410082RO



                                                                          
                                            JOSEPH A. D'AGOSTA
                                            Deputy Commissioner




                       






























    

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