HD130053RO
STATE OF NEW YORK
DIVISION OF HOUSING AND COMMUNITY RENEWAL
OFFICE OF RENT ADMINISTRATION
GERTZ PLAZA
92-31 UNION HALL STREET
JAMAICA, NY 11433
------------------------------------x
IN THE MATTER OF THE ADMINISTRATIVE ADMINISTRATIVE REVIEW
APPEAL OF DOCKET NO.:
HD130053RO et al. (See
(attached Exhibits A,
B and C.)
Glen Oaks Village Owners, Inc.;
Glen Oaks Village Corp.;
Various Individual Owners
As Holders of Unsold Shares
RENT ADMINISTRATOR'S
DOCKET NO.:
FL130071B et seq.
through FL130192B
PETITIONERS
------------------------------------x
ORDER AND OPINION DENYING PETITIONS FOR ADMINISTRATIVE REVIEW
The above-named petitioner-owners filed timely petitions for
administrative review of various orders issued by the Rent
Administrator concerning the housing accommodations known
collectively as Glen Oaks Village located in Queens, New York,
wherein the Rent Administrator determined the tenants' complaint of
various decreased complex wide services.
The Commissioner has reviewed all the evidence in the record and
has carefully considered that portion of the record relevant to the
issues raised by the petitions.
On March 26, 1991, the Rent Administrator determined the complaints
of various tenants residing in the housing complex known as Glen
Oaks, located in Queens, New York. That determination under
EA110008RK found that playground and storage space facilities were,
in fact, base date services which, pursuant to the Rent
Stabilization Code, the owner was to provide to tenants. This
determination was affirmed by the Commissioner upon administrative
review in an order dated June 12, 1992, and by the Supreme Court
upon judicial review in a determination dated July 22, 1993. GOV
Corp. v Division of Housing, Index No. 29415/92, NYLJ Pg.24 Col.6
July 28, 1993 (Friedmann, J.). Said determination is set forth
herein, below.
The instant proceeding was commenced below by approximately 100
tenants of Glen Oaks similarly situated, seeking comparable relief,
HD130053RO
i.e. restoration of services and a rent reduction for owner's
failure to provide base date playgrounds, and elimination of
storage space facilities.
The facts as they pertain to the issues of reduction of services
are not in dispute to the extent that the owner removed 37
children's playgrounds, and that storage space facilities provided
by the owner prior to and subsequent to the May 31, 1968 base date,
are no longer provided.
The parties named as owners in the proceedings under review herein
were Glen Oaks Village Corp. (hereinafter GOV) and Glen Oaks
Village Owners, Inc. (hereinafter GOVO), care of Grenadier Realty
Corp.
GOVO is the cooperative corporation which owns the approximately
three thousand (3000) unit complex known as Glen Oaks Village.
Grenadier Realty Corp. was the managing agent for the entire
complex.
GOV is one of the owners and holder of the shares of stock
allocated to various apartments. They were the owners of the
apartments in the proceedings under EA110008RK. GOVO indicated in
their papers below that GOV is a nominee or a subsidiary of the
America Savings Bank, which held a security interest in various
stock and leases held by the sponsor of the cooperative concern,
and that American Savings Bank was taken over by the Federal
Deposit Insurance Corporation (hereinafter FDIC).
The Rent Administrator's Notice and Transmittal of Tenant's
Complaint, the copy of the complaint and answer forms were mailed
on January 22, 1992 to GOVO at their correct address.
GOVO filed an answer asserting the following:
In each of these proceedings GOVO is incorrectly
indicated as "owner". GOVO is a cooperative corporation
organized under the laws of the State of New York. The
shares for each of the subject apartments are owned by
someone or an entity other than GOVO. GOVO is not the
landlord in any of these proceedings.
The purpose of this letter is only to advise you of these
jurisdictional defects. Please take notice that GOVO,
for purpose other than advising you of jurisdictional
defects, does not appear in these proceedings and is not
a party thereto. Further, GOVO is not empowered to act
for or in place of any of the owners and landlords of the
apartments which are the subjects of the annexed copies
of Notice and Transmittal of Tenant's Complaint.
GOV also filed an answer, asserting the following:
HD130053RO
It should be noted that the Order referred to in the
tenant's complaint is currently under appeal by the
owner. The appeal has been assigned Docket No.: FH-
130039-RO. The filing of the appeal renders the cited
order "non-final."
Accordingly, as the tenant is basing its claim upon a
"non-final" order, the appeal of that order must be
resolved before this complaint can be determined.
Therefore, we assume that no action will be taken in this
matter until the owner's PAR is resolved.
As an aside, it should also be noted that the complaining
tenant has not annexed any documentation which would
confirm their claim that any of them specifically had the
cited items as a service. At most, the tenant is
attempting to capitalize upon a finding for other,
unnamed units at the premises.
Another answer, filed on behalf of an individual owner of unsold
shares at the subject apartment under FL130125B, argued that this
tenant had not suffered a decrease in services, that this tenant
had not established having been entitled to or deprived of storage
space, that this owner could not have failed to maintain storage
space since the decision to redo the playgrounds and seal the
storage space was by the Board of Directors of the co-op
corporation which is not controlled by the individual owner of
unsold shares, and that if the co-op corporation does not restore
the services this owner will be made to suffer a permanent rent
freeze.
Thereafter, on August 21, 1992, and September 1, 1992, the DHCR
conducted inspections of the subject premises. The DHCR inspector
reported that, per the superintendent, no storage space was
provided. The inspector also reported that there were five (5)
playgrounds in the complex.
The Rent Administrator issued orders directing the owner to restore
services and further, ordered a reduction of the stabilization
rents. In addition to the inspection results, the Rent
Administrator's orders noted that the June 27, 1991 order under
EA110008RK, affirmed on administrative appeal, on June 12, 1992
found that the storage space was a base date service the owner is
required to provide, and that the replacement of 37 playgrounds
with five (5) is not an equivalent service.
In the consolidated petition for administrative review under
HD130053RO, GOVO points to the then pending Article 78 proceeding
commenced by GOV seeking to annul the Administrator's order under
EA110008RK affirmed by the Commissioner's June 12, 1992 under
FH130039RO, finding that storage space was a base date service that
had been eliminated and that five new large playgrounds did not
HD130053RO
provide equivalent services to the 37 playgrounds that had been
eliminated.
In the Article 78 proceeding, GOV had moved to join GOVO as a
necessary party because the services in question (playgrounds and
storage space) are common area services within the control of the
co-op corporation.
In response to said notice GOVO made a cross motion for an order
remitting the entire proceeding back to the DHCR so that GOVO could
be given an opportunity to present its case in those proceedings.
Anticipating a remand by the Court, GOVO reasons that since all the
orders under review were based upon the June 12, 1992 order, and as
those proceedings should be remanded pending a new determination
therein, the orders under review herein should be vacated.
A list of the orders issued in March and April 1993, which are the
subject of GOVO's petition for administrative review under
HD110053RO, is provided in the attached Exhibit A, and is fully
made a part of this order.
Thereafter, GOVO filed separate petitions for administrative review
with respect to orders issued later under FL130084B, FL130105B, and
FL130186B, assigned HF130096RO, HG130062RO and HH130039RO, setting
forth similar reasons.
GOV filed separate individual petitions for administrative review
requesting that the Rent Administrator's orders be revoked or be
held in abeyance pending the outcome of GOV's judicial appeal of
the order under EA110008RK, as affirmed in the June 12, 1992 order
under FH130039RO. GOV argued that as long as the Article 78
petition was pending, or if the matter was remanded for further
processing, the subject orders under appeal "herein must be deemed
to be based upon a `non-final' determination that's subject to
change".
A list setting forth the Rent Administrator's orders and GOV's
corresponding petitions for administrative review is set forth in
the attached Exhibit B, which is fully made a part of this order.
In a petition for administrative review under HD130193RO, the
individual owner of unsold shares reiterates this owner's arguments
set forth under FL130125B that there had been no reduction of
playground services, or that this tenant had not established
having been entitled to or deprived of storage space, or that this
owner could not have failed to maintain services, since the
decision to redo the playground and seal the storage area was by
the Board of Directors of the co-op corporation, which is not
controlled by an individual owner of unsold shares. The owner
speculates that if the co-op corporation does not restore services
the owner will be made to suffer a permanent rent freeze; and would
HD130053RO
constitute a taking of property without compensation. For the
first time on appeal, the owner also points to a General Release
signed by the tenant allegedly precluding the tenant therein from
any relief based upon the Rent Administrator's order.
Various individual owners of unsold shares filed individual
petitions for administrative review. They also argued the fact
that an Article 78 proceeding was pending in Supreme Court seeking
to vacate the June 12, 1992 Commissioner's order as erroneous.
They also asserted that as they and/or GOVO had not been parties to
the proceedings resulting in the June 12, 1992 order or been given
an opportunity to be heard and to present a case below, they had
been denied due process, and requested that GOVO be given further
opportunity to present its case.
A list of the administrative appeals filed by these individual
owners of unsold shares is provided in the attached Exhibit C, and
is fully made a part of this order.
On July 22, 1993, the Court issued a determination in the Article
78 proceeding which: a) denied GOV's motion to join GOVO as a party
to the Article 78 proceeding; b) denied GOVO's cross-motion to
remit back to the DHCR the proceedings relating to the June 12,
1992 order and; c) dismissed the Article 78 petition. The Court
set forth the following:
The [GOV] motion by petitioner to join GOVO as a
necessary party is denied. In making a determination as
to whether a missing party is necessary, the court must
consider whether those who are already parties will be
given complete relief without joinder and whether the
missing party will be inequitably affected by the
judgment. (CPLR 1001 [a]; see, Joanne S. v Carey, 115
AD2d 4, 7.) Here, petitioner seeks a judgment vacating
respondent's determination that it is not entitled to a
restoration of rents. The determination rejecting
petitioner's PAR was based upon respondent's finding that
petitioner had failed to adequately restore certain
required services to its tenants, including playgrounds
and storage space. Petitioner claims that since GOVO is
ultimately responsible for these services, it is a
necessary party. The argument is without merit. First,
the existing parties will be given final relief by a
judgment herein. It is apparent that petitioner seeks to
make GOVO a party so that it will be collaterally
estopped in a future action to impose liability upon GOVO
for the decrease in required services. The purpose of
this Article 78 proceeding is not to determine the
responsibilities of petitioner and GOVO with respect to
the common areas, but rather, to determine whether
respondent's challenged order is proper. Second, GOVO,
which opposes any joinder, will not be inequitably
HD130053RO
affected by any judgment if not joined. Responsibility
for the common areas and any potential liability as
between GOVO and petitioner in the event of a rent
reduction is a separate matter presumably governed by the
agreements between them. In addition, petitioner's claim
that GOVO may be liable to provide the aforementioned
services to all rent stabilized tenants in the complex as
a result of respondent's determination is unfounded.
Since GOVO was not a party to any of the proceedings, it
is not bound thereby.
The cross motion by GOVO to remit this matter to
respondent is denied. GOVO contends that it should be
given an opportunity to present its case at the
administrative level since it may be adversely affected
by respondent's determination. 9 NYCRR 2527.3 of the
Rent Stabilization Code requires respondent to give
notice to anyone adversely affected by any application or
answer before it. However, the application to restore
rent and the answer thereto, did not, on their face,
adversely affect GOVO. Furthermore, respondent's
determination to proceed solely against petitioner, the
owner of the units which was responsible to provide the
required services to the rent stabilized tenants and
which received rents therefrom, was completely within
their discretion.
Petitioner's petition to vacate respondent's order is
denied and the proceeding is hereby dismissed. An agency
determination may not be disturbed upon review by a court
unless that determination is arbitrary, capricious and
constitutes an abuse of discretion, or is not supported
by substantial evidence. (CPLR 7803; see, Matter of Pell
v Board of Educ., 34 NY2d 222.) Upon review of
respondent's determination, this court finds that it is
not arbitrary and capricious and is supported by
substantial evidence in the record. The determination
was entirely discretionary and this court may not
substitute its judgment for that of respondent. (See,
Matter of Consol. Edison Co. of New York v New York State
Div. of Human Rights, 77 NY2d 411, 417.) Finally, even
if respondent's inspection of the premises while the
action was proceeding was improper, it is without legal
effect. Clearly, with respect to the playgrounds issue,
respondent based its determination, inter alia, upon its
view that the five larger playgrounds were inadequate
when compared to the prior thirty-seven smaller ones.
The determination would have been the same without the
inspection.
There is no record that either GOV or GOVO pursued appellate review
of the Court's determination and the time to do so has expired.
HD130053RO
In light of the Court's decision, GOVO amended its administrative
appeals filed prior to the Court's determination, to request that
the proceedings below be reopened and/or that the rent reduction be
stayed and the matter be remanded to the Rent Administrator. GOVO
contends that this will provide it a full and fair opportunity to
present its case in these proceedings, a right GOVO alleges it has
been unlawfully and unjustly denied to date.
In addition, GOVO's application, to amend its PARs, also indicates
that GOVO negotiated a purchase and took title on September 21,
1993 of 134 cooperative apartments previously controlled by
Resolution Trust Company (RTC), and was negotiating a purchase of
apartments controlled by the FDIC. Also noted was that GOVO had
filed applications on September 21, 1993 seeking to substitute new
services, for the services deemed reduced under the June 12, 1992
order.
After careful consideration the Commissioner is of the opinion that
the owners' petitions should be denied.
Tenants residing in rent stabilized apartments located in premises
converted to cooperative or condominium ownership are entitled to
the same rights and protection as are afforded to all other rent
stabilized tenants, as required by the Rent Stabilization Law and
Code.
The basis for imposing responsibility upon co-op property lessees,
co-op sponsors or holders of unsold shares, co-op corporations or
associations and their managing agents lies in General Business Law
(hereinafter GBL) Sections 352-eee and eeee, subdivision 3, read in
conjunction with the definitions of an "owner" as contained in
Section 2520.6(r) of the Rent Stabilization Code (hereinafter
Code).
Subdivision 3 of both GBL Sections 352-eee and 352-eeee, provides
that:
All dwelling units occupied by non-purchasing tenants
shall be managed by the same managing agent who manages
all other dwelling units in the building or group of
buildings or development. Such managing agent shall
provide to non-purchasing tenants all services and
facilities required by law on a non-discriminatory basis.
The offeror shall guarantee the obligation of the
managing agent to provide all such services and
facilities until such time as the offeror surrenders
control to the board of directors or board of managers,
at which time the cooperative corporation or the
HD130053RO
condominium association shall assume responsibility for
the provision of all services and facilities required by
law on a non-discriminatory basis.
Section 2520.6(r) of the Rent Stabilization Code defines the
"owner" to include:
. Fee owners (includes co-op corporations)
. Proprietary lessees
. Condo unit owners
. Co-op or condo sponsors (i.e., holders of unsold shares or
units)
. Any person or entity entitled to receive rent
. An agent of any of the foregoing (includes managing agents and
their co-op corporation and condo association guarantors for
services pursuant to GBL Section 352-eeee[3])
From the definition of owner in the rent regulations as well as
from GBL Sections 352-eee and 352-eeee, quoted above, all owners,
including managing agents, have overlapping virtually concurrent
responsibility to provide base date required services.
GBL Sections 352-eee(3) and 352-eeee(3), quoted above, under
"Ownership Entities," require compliance, by the single managing
agent, with laws on maintenance of services, including building-
wide services and certain services within individual apartments.
If such agent does not provide the required services,
responsibility lies with the sponsor, co-op corporation/condo
association, as well as the proprietary lessee/condo unit owner.
DHCR may determine that the failure of the single managing agent to
provide services, on a nondiscriminatory basis, is a reduction in
services which are required by law; in this case, the GBL and the
Rent Stabilization Law (hereinafter RSL). Where the DHCR finds a
failure to maintain services, the rent shall be reduced pursuant to
the relevant provisions of the Rent Stabilization Law and Code,
regardless of which ownership entity or entities caused such
failure.
While co-op corporations or condominium associations and their
individual proprietary lessees or unit owners may have entered into
agreements making the corporation/association primarily responsible
for building-wide services and proprietary lessees/unit owners
primarily responsible for individual apartment services, pursuant
to the rent laws and regulations and the single managing agent rule
of the GBL, all of these entities share responsibility for ensuring
that each and every service is provided.
Rules of co-op corporations and condo associations cannot diminish
the rights of stabilized tenants to continue to receive required
base date services or other protection under the rent laws.
HD130053RO
Rent reduction orders may be imposed where a co-op/condo board has
eliminated services in whole or in part. However, upon
application, the DHCR may approve a modification or decrease of
services; the latter may be linked to a permanent proportionate
decrease in rent.
GOVO is correct to the extent that the Supreme Court ruled that, as
GOVO was not a party to any of the proceedings before the DHCR that
culminated in the June 12, 1992 order, GOVO was not bound by it,
except insofar as the responsibility for the common areas and
potential liability as between GOVO and GOV, or any other holder of
unsold shares, is presumably governed by agreements between them.
However, GOVO's further argument, that GOVO was not afforded the
opportunity to present a case in the proceedings resulting in the
orders under review herein, is without merit. Copies of the
tenants' complaint naming GOV and GOVO as owners, care of the
managing agent, Grenadier Realty Co., were served on GOVO. Rather
than taking the opportunity to raise objections and to present its
case, GOVO's response, detailed above, set forth that GOVO would
not appear in the proceeding and was not a proper party thereto as
it was not an "owner," and that the purpose of its letter was only
to advise the agency of the alleged jurisdictional defect.
Thereafter, the complaints were processed in accordance with the
Division's procedures, and based upon pertinent evidence, including
the findings culminating in the June 12, 1992 determination, and
then current facts, including further inspections, the Rent
Administrator issued the orders under review herein.
Accordingly, there is no merit to GOVO's assertion that it was not
afforded the opportunity to present its case, and its claims of
lack of due process must therefore be rejected. Furthermore, the
scope of review of an administrative appeal is limited to a review
of the facts or evidence before the Rent Administrator as raised in
the petition. Insofar as GOVO attempts to raise new facts or
evidence that were not before the Rent Administrator, such matters
must likewise be rejected.
GOVO's assertion that it is not an owner is rejected by reason of
the provisions of the Code and GBL noted above. They affirm that
control of the cooperative is placed in the hands of the member
shareholders of the co-op corporation, and that it acts through the
Board of Directors (Board), the entity charged with maintaining the
base date services which are the subject of these proceedings.
The Commissioner previously rejected the arguments that the five
(5) new larger playgrounds provide an adequate substitute for the
37 smaller playgrounds previously provided on the base date, and
that the GOV tenants had not submitted proof or established that
the leases provided storage space as a service. The determination
was based upon evidence, including the leases and tenants'
HD130053RO
testimony that all the leases provided for storage of luggage and
baby carriages, and that the storage spaces were utilized for the
storage of personal items not limited to carriages and luggage for
many years with the knowledge of the prior owner, without
objection. These services had been provided on a complex wide
basis on the base date and as such were required to be provided
thereafter to all stabilized tenants.
The Court affirmed the Commissioner's June 12, 1992 determination
that storage space was a service provided to all tenants, which had
been eliminated, and that the five larger playgrounds were
inadequate substituted services when compared to the thirty-seven
smaller ones previously provided, and removed by the owner.
The Commissioner now points to the fact that the circumstances have
not changed from those which culminated in the June 12, 1992 order
and that the Court dismissed the same arguments presented by the
owner in those proceedings. It is also noted that no evidence was
submitted below by any owner that any tenant had failed to avail
himself or herself of the right to storage space.
In regard to the argument that an individual owner of unsold shares
does not control the Board of the co-op corporation (GOVO) that
decided to redo the playgrounds and eliminate the storage space, it
is noted that pursuant to the Code and GBL, owners of unsold shares
are considered owners since they collect rent and are obligated to
secure compliance by the appropriate party, with the directive to
restore services. Moreover, owners of unsold shares were aware, or
should have been aware, upon acquiring an interest, that such
owners could not directly control the Board, but would be
accountable for the action taken by or on behalf of the co-op
corporation. Nor can such claims deprive the tenants of their
rights under the Rent Stabilization Law and Code.
As to GOV, the Division's finding in the underlying proceedings
under EA110008RK, affirmed upon administrative and judicial review,
is given collateral estoppel effect in the cases under review
herein as to GOV's petitions under various docket numbers (per
Exhibit B).
Assertions below and on appeal that other services have been
provided which were not previously provided to the tenants prior to
the cooperative are not relevant to the issue in these proceedings
regarding the storage space and playgrounds previously provided.
Concerning GOVO's claim in its amended petitions, indicating that
GOVO filed two separate applications on September 21, 1992
requesting the Rent Administrator's permission to substitute new
services for the playground and storage space services deemed to
have been reduced, the Commissioner notes that since scope of
review is limited to a review of the facts and evidence before the
HD130053RO
Administrator such claims may not be considered for the first time
on appeal. The Commissioner further notes that Section 2522.4(e)
of the Code permits an owner to substitute an equivalent service
upon application by the owner, and that no such modification or
substitute shall take place prior to the approval of the owner's
application. The fact that the applications were filed subsequent
to the Rent Administrator's findings of decreased services fails to
raise any issue regarding the correctness of the orders being
appealed.
Concerning the claim of the owner of unsold shares in the
proceedings under HD130193RO, appealing the order under FL130125B,
that the tenant signed a General Release dated January 21, 1992
precluding the tenant from any relief based upon the Rent
Administrator's order, the Commissioner notes that Section 2520.13
of the Code provides that "An agreement by the tenant to waive the
benefit to any provision of the RSL or the Code is void provided
however that .... the tenant may withdraw any complaint pending
before the DHCR". Also, there is no record that the tenant did
withdraw in the proceeding, or that the Rent Administrator had
notice of this agreement. Insofar as the owner attempts to raise
new facts or evidence that were not before the Rent Administrator,
the claim is beyond the scope of review.
GOV and GOVO as well as several individual owners of unsold shares,
requested the Commissioner to vacate the orders below as premature,
in light of their anticipation that the June 12, 1992 order under
review would be set aside and the proceeding remitted to the agency
for further consideration. In fact, the Court affirmed the
Commissioner's determination. GOVO's request to amend its petition
for administrative review has been granted herein. There is no
indication that GOV and the various individual owners of unsold
shares sought to amend their administrative appeals (per attached
Exhibit B and C). The requests to vacate the orders below on the
ground that there was an Article 78 petition seeking revocation or
modification of the June 12, 1992 order, failed to raise any issue
regarding the correctness of the order being appealed. Moreover,
they have been rendered moot by the Court's judgment. The
Commissioner finds, insofar as this argument is raised, it is
without merit, and therefore, the GOV petitions (per Exhibit B)
should be dismissed, and that the petitions of the owners of unsold
shares (per Exhibit C) should be denied.
The automatic stay of the retroactive rent abatements that resulted
by the filing of these petitions are vacated upon issuance of this
order and opinion.
THEREFORE, pursuant to the Rent Stabilization Law and Code and
Operational Bulletin 84-1, it is
ORDERED, that the GOVO petitions, under the docket numbers set
forth in Exhibit A and the petitions of the individual owners of
HD130053RO
unsold shares under docket numbers set forth in Exhibit C, be and
the same hereby are, denied. It is further
ORDERED, that the GOV petitions under docket numbers set forth in
Exhibit B, be and the same hereby are, dismissed for mootness and
for failure to state a cause of action. It is further
ORDERED, that the Rent Administrator's orders be and the same
hereby are affirmed.
ISSUED:
JOSEPH A. D'AGOSTA
Deputy Commissioner
|