Opinion
734/08.
Decided June 19, 2008.
Petitioner was self-represented. Respondent was represented by Dawn Ivy Schindelman, Esq. of counsel to Gary R. Connor, Esq.
Petitioner Mary Wesby seeks a judgment pursuant to Article 78 of the CPLR, vacating an Order and Opinion Granting Petition For Administrative Review dated November 8, 2007 of respondent New York State Division of Housing and Community Renewal ("DHCR"). The Petition for Administrative Review had been made by respondent Allstar Management Group, Inc., which has not answered Ms. Wesby's Petition or otherwise appeared. DHCR has answered, and opposes the Petition.
Ms. Wesby commenced the proceeding before DHCR with a Tenant's Complaint of Rent and/or Other Specific Overcharges in Rent Controlled Apartments dated August 3, 2006. She asserted that she moved into apartment 2 at 1055 Dean Street, Brooklyn, without a lease on February 18, 1967 at an initial rent of $91.30. She complained that the landlord, Allstar Management, had "[f]ailed to serve latest RN-26," and that "no MBR filing is on record." From January 2004 through July 2006, according to Ms. Wesby, she paid monthly rent of $300.00.
Allstar Management submitted an Answer to Notice And/Or Application dated October 16, 2006, in which it contended that Ms. Wesby "is not subject to rent control protection by virtue of the fact that she took occupancy of the subject apartment after July 1, 1971," and that "the evidence in the record disclose ( sic) that the subject apartment was decontrolled on 2-10-72 under docket no. 2DR37349 under section 2F17."
Allstar attached to its Answer a copy of a Landlord's Order of Maximum Base Rent issued May 25, 1972 with the notation "landlord failed to certify removal of violations — MBR withheld." The document shows the name of the tenant as Jackson, and the rent as of December 31, 1971 as $107.16. Next to the name Jackson is the handwritten notation "decontrolled," and further on the document is the handwritten notation "2DR37349-2F17-2/10/72."
Also attached to Allstar's Answer was a copy of an Application For Certification of Rent-Roll as of April 15, 1974, and an Order Denying Establishment of 1974-75 Maximum Base Rents issued October 15, 1974. The Rent Roll submitted showed the tenant of apartment 2 as Cordine Lewis, and the rent as $107.16. Ms. Wesby asserts that Cordine Lewis was her sister, with whom she resided until her sister's death in 1986.
With a Notice of Commencement of Administrative Proceeding dated February 27, 2007, the Rent Administrator advised Ms. Wesby and Allstar Management that a proceeding had been initiated to determine "the status of the subject apartment," and that Ms. Wesby's Overcharge Complaint had been consolidated in it. Allstar Management was directed to "[p]rovide evidence to support the decontrol report filed on February 10, 1972 under Docket No. 2DR37349." Ms. Wesby was advised that "a decontrol report was filed by the owner on February 10, 1972 indicating that the subject ( sic) is no longer rent controlled based on vacancy on or after July 1, 1971," and that "[t]o be rent controlled you must submit evidence of your occupancy prior to July 1, 1971."
Ms. Wesby responded on March 16, 2007 by providing copies of a union "member profile" and union membership cards for May 1968 and August 1968, each showing her address at 1055 Dean Street, but not indicating an apartment number. The Rent Administrator sent copies to Allstar Management with a request for Additional Information/Evidence dated April 6, 2007.
Allstar Management failed to respond to either the February 27 or the April 6 communication from the Rent Administrator.
On June 15, 2007, the Rent Administrator issued an Order Determining Facts or Establishing Maximum Rent. The Rent Administrator determined:
"Evidence in file indicates that the tenant has resided in the subject apartment since before July 1, 1971, and continues to reside there. The subject apartment is therefore subject to the Rent and Eviction Regulations. The decontrol report filed by the owner under Docket No. 2DR37349 is hereby void.
There is no evidence in the records to indicate that the owner has filed for and received a computed Maximum Base Rent for the subject apartment."
The Rent Administrator further determined the Maximum Collectible Rent to be $107.16 per month effective January 1, 1972, exclusive of fuel costs adjustments.
The Rent Administrator's Order was accompanied by a DHCR Rent Control Rent History Report. The Report indicates under Docket No. 2DR37349, effective date February 10, 1972, "A Decontrol Report Under the Appropriate Section 2F17 Has Been Accepted Pending Further Examination and Review." The Report also shows the "Current MCR" as $107.16, and that the "MCR Amount" was $107.16 from January 1, 1972 through 2006.
Allstar Management's Petition for Administrative Review (PAR) was received by DHCR on July 9, 2007. Other than asserting that it was not properly served with the tenant's evidence of occupancy, the sole basis for the Petition was the period of time that had elapsed since the filing of the 1972 decontrol report. According to Allstar, "the courts have previously held as invalid a collateral attack on a report of statutory decontrol filed over 20 year ( sic) ago." Subsequently, Allstar supplemented its Petition with copies of four "prior DHCR's ruling ( sic) relevant to the issue raised by the PAR."
With a Notice dated July 11, 2007, Ms. Wesby was advised of the Petition for Administrative Review, and given the opportunity to respond. Similarly, with a Notice dated September 10, 2007, she was given the opportunity to respond to Allstar's supplemental submission. With an Answer to Notice And/Or Application received by DHCR on October 9, 2007, Ms. Wesby responded, "I need and ( sic) exstantian ( sic) of 30 days to see a lawyer."
On November 8, 2007, having not received anything further from Ms. Wesby, the Commissioner issued the Order and Opinion Granting Petition for Administrative Review that is the subject of this Article 78 review. The Commissioner determined that "based upon the particular facts in this case, it was unreasonable for the Rent Administrator to void the 1972 owner's decontrol report and to determine that the tenant-complainant was rent-controlled." Rather, "the tenancy of Mary Wesby has been and continues to be subject to the New York City Rent Stabilization Law and Code." The Commissioner's reasoning for these determinations is found in three paragraphs:
"The Division's records show that in 1984 an initial rent registration for the subject apartment was filed with the Division; that such initial registration stated that Mary Wesby was a rent-stabilized tenant whose April 1, 1984 rent was $325.00 per month; that every year since 1984, an annual rent registration was filed with the Division; and that such annual rent registrations stated that Ms. Wesby's tenancy was rent-stabilized.
Prior to April 1, 1984, the New York City Rent Control Law was administered by the New York City Department of Housing Preservation and Development (HPD). HPD's records show that in 1972 a prior owner filed with HPD a vacancy-decontrol report for the subject apartment; and that such filing had not been investigated or challenged by the tenant for the twelve years that HPD continued to administer the New York City Rent Control Law. The 1975 rent roll does not bear the tenant's name.
Given these records, and given the fact that the tenant did not challenge the decontrol report for twenty-two years after the filing of the 1984 initial rent registration, which identified her as a rent-stabilized tenant, the tenant's evidence of occupancy of the apartment prior to July 1, 1971, her union-membership card, was insufficient proof to permit the Rent Administrator to void the 1972 decontrol report and find that the apartment is rent-controlled."
Although the Commissioner's Order and Opinion will be discussed more fully below, it is important to note that neither the "Division's records," nor the "initial rent registration," nor the "annual rent registrations," to which the Commissioner refers have been made part of the record before DHCR, and none is included in the agency's Return in this review proceeding. At no point prior to the Commissioner's Order and Opinion is there any mention of any of those records or documents such that the tenant would have been alerted to their apparent significance or given an opportunity to comment.
After determining that Ms. Wesby's tenancy was subject to rent stabilization rather than rent control, the Commissioner established the collectible rent at $300.00 per month, subject to increase when the owner offers the tenant a rent-stabilized renewal lease. The Commissioner noted, however, that even if the tenancy had been found subject to rent control, the Maximum Collectible Rent would have been set at $300.00 per month.
By letter dated November 27, 2007, and with the assistance of the Kings County Tenant's Coalition, Inc., Ms. Wesby requested reconsideration of the Commissioner's Order and Opinion. The request was based primarily on additional documentation that Ms. Wesby had located to establish her occupancy of the subject apartment prior to July 1, 1971. Specifically Ms. Wesby offered documentation that she received unemployment benefits in June 1971, and that her benefits book shows her address as "1055 Dean St-2."
Ms. Wesby's request for reconsideration was denied in a letter dated December 12, 2007 on behalf of DHCR's Deputy Counsel. Counsel maintained that "[t]he Commissioner's authority to reopen an administrative appeal is . . . strictly limited by Section 2529.9 of the Rent Stabilization Code (RSC), and by Section 2208.13 of the Rent and Eviction Regulations (R E Regulations), to situations where such order was the result of illegality, irregularity in vital matters or fraud.'" Counsel stated, moreover, that "scope of review prohibits consideration of the evidence submitted with your request for the first time at this stage of the proceeding."
Substantively, Counsel confirmed the Commissioner's grounds for reversing the Rent Administrator:
"The PAR order correctly determined that the subject tenant is rent-stabilized because a vacancy-decontrol report for the subject apartment was filed with HPD in 1972 and was not challenged by the tenant for 34 years, because an initial rent registration was filed in 1984 for the subject apartment stating that the tenant is a rent-stabilized tenant, and because an annual rent registration has been filed with the Division every year since 1984, each one stating that Ms. Wesby is a rent-stabilized tenant.
In the Matter of Anthony Olszewski v DHCR, 717 NYS2d 196 {277 AD2d 386} (App.Div. 2d Dept 2000), the court held that the tenant waited more than 14 years before asserting her claim for possession of the rent-controlled apartment . . . [t]he tenant's unreasonable delay precludes her from raising the claim that her apartment is subject to rent control.' Here, the tenant waited far longer than 14 years to assert her claim that the apartment is rent-controlled. The tenant's long delay in asserting rent-control status, especially in light of the 1972 decontrol-report, and in light of the fact that the parties have been treating the apartment as rent-stabilized since 1984 without the tenant raising any objection, likewise precludes the tenant from asserting rent-control status now."
The Court must note that Counsel's statement that "the parties have been treating the apartment as rent-stabilized since 1984" is, at best, an overstatement of the evidence in the record and the Commissioner's Order and Opinion. Nothing in the Return establishes that Ms. Wesby received a copy of either the 1984 initial rent registration or any of the subsequent annual rent registrations, and the Commissioner does not say that she did, or describe any other basis for finding that "the parties have been treating the apartment as rent-stabilized since 1984."
The Return does include a copy of a record (designated "rent registration card") of the Temporary State Housing Rent Commission for apartment 2 at 1055 Dean Street. The record shows the Maximum Rent from April 1951 until May 1969, with the name Jackson appearing with entries from May 1967 until May 1969. The record also shows Docket No. 2DR37349, the date February 10, 1972, and the statement, "A Decontrol Report under the appropriate Section . . . 2 f17 has been accepted pending further examination and review." The name Lewis is written next to this entry. There is also an entry for an order dated August 18, 1971, which is the only entry after May 22, 1969 and before February 10, 1972, with the notation "Form R-5 Completed," but the entry is not explained. Indeed, this record does not appear to have been before either the Rent Administrator, Commissioner, or Counsel.
"[T]he scope of review here is whether DHCR's determination was arbitrary and capricious and without a rational basis." ( Matter of Rego Estates v Division of Hous. Community Renewal , 20 AD3d 539, 540-41 [2d Dept 2005]; see also Matter of Khan v New York State Div. of Hous. Community Renewal, 292 AD2d 609, 609 [2d Dept 2002] ["arbitrary or capricious"].) "The limited purpose to judicial review of agency determinations pursuant to CPLR article 78 is not to substitute judicial conclusions for those of the agency, but simply to assure that the agency's determinations are rationally supported." ( Matter of Rozmae Realty v State Div. of Hous. Community Renewal, 160 AD2d 343, 343-44 [1st Dept 1990]; see also Matter of Horowitz v New York Div. of Hous. Community Renewal, 277 AD2d 382, 383 [2d Dept 2000] ["rational basis"].)
Deference to DHCR's determinations may be particularly appropriate where they relate to "fact-intensive issue[s] falling within the area of [the agency's] expertise." ( See Matter of Brusco W. 78th St. Assocs. v State Div. of Hous. Community Renewal, 281 AD2d 165, 165 [1st Dept 2001].) The agency may generally determine the type of documentation to be necessary or appropriate on fact-based inquiries ( see Greystone Mgt. Corp. v Conciliation Appeals Bd., 94 AD2d 614, 616 [1st Dept 1983], aff'd 62 NY2d 763; Matter of 2084-2086 Bronx Park East, LLP v New York State Div. of Hous. Community Renewal, 303 AD2d 315, 316 [1st Dept 2003]); and may generally allocate burdens of proof and create evidentiary presumptions ( see Matter of Howard-Carol Tenant's Assoc. v New York City Conciliation Appeals Bd., 64 AD2d 546, 547 [1st Dept 1978], aff'd 48 NY2d 768.) To the extent, however, that the agency adopts judicial authority and functions, the degree of deference for its determinations must be affected by the strength of relevant agency expertise.
As DHCR recognizes, "[t]he law is clear that any person who is entitled to the use and occupancy of a rent controlled apartment, and who was in continuous occupancy since June 30, 1971, is statutorily subject to rent control." (Respondent New York State Division of Housing and Community Renewal's Memorandum of Law, at 7-8.) It appears as clear that if, as Ms. Wesby contends, she occupied the apartment with her sister since prior to July 1, 1971, then upon her sister's death Ms. Wesby was entitled to continued occupancy as a rent-controlled tenant, assuming that at least her sister benefitted from that status. ( Id. at 12; see also Matter of Herzog v Joy, 53 NY2d 821.)
In concluding that Ms. Wesby is not a rent-controlled tenant, DHCR appears to have adopted and applied the equitable principle of laches; to have given presumptive effect to statements made by the landlord in filings with DHCR or a predecessor agency; and to have placed the burden of proving the factual predicates for rent-controlled status on Ms. Wesby, either generally or because of the presumptive effect given to the landlord's filings. As will appear, however, DHCR misapplies the laches doctrine, and fails to articulate any basis for its apparent allocation of the evidentiary burden or its creation of an evidentiary presumption.
The Court notes in the first instance that, at the least, the Court could require that the agency submit for review copies of those records that the agency relied upon its making the challenged determination, but which are not included in the Return — specifically, the 1984 initial rent registration and subsequent annual registrations. ( See CPLR 7804 [e].) The omission is more glaring when the agency submits to the Court a record that is not mentioned, and presumably not relied upon, by the Commissioner or Counsel — namely, the rent registration card.
In Matter of Olszewski v Commissioner of the New York State Div. of Hous. Community Renewal ( 277 AD2d 386 [2d Dept 2000]), the Second Department annulled DHCR's determination that the petitioner's property was subject to rent control. There, the tenant had moved into her mother's rent-controlled apartment in January 1971. The month after the mother's death in August of that year, "the then-landlord served the tenant with a report of vacancy decontrol, which designated her as the legal tenant and raised her rent." ( See id. at 386.) The tenant commenced the proceeding before DHCR with an overcharge complaint in 1986.
The appellate court first held that the tenant was precluded from seeking succession rights as a rent-controlled tenant because she did not live in the apartment for the period of time required to qualify. ( See id.) The court stated further, however, that "[t]he tenant's unreasonable delay precludes her from raising the claim that her apartment is subject to rent control." ( See id. at 386-87.)
The court cited Skrodelis v Norbergs ( 272 AD2d 316 [2d Dept 2000]) in support, a ruling that involved a motion for costs and an attorney's fee in a matrimonial action.
"The doctrine of laches is an equitable doctrine which bars the enforcement of a right where there has been an unreasonable and unexcusable delay that results in prejudice to a party . . . The mere lapse of time without a showing of prejudice will not sustain a defense of laches . . . In addition, there must be a change of circumstances making it inequitable to grant the relief sought . . . Prejudice may be established by a showing of injury, change of position, loss of evidence, or some other disadvantage resulting from the delay." ( Id. at 316-317.)
"[L]aches must be pleaded and proved by the party asserting it." ( Matter of Linker v Martin, 23 AD3d 186, 190 [1st Dept 2005].)
The Court will assume that the assessments implicated by a claim of laches sufficiently call upon agency expertise to require judicial deference to the agency's determinations on the claim. There must, nonetheless, be agency attention to the essential components of the doctrine if its application is to have foundation in law. Prejudice, clearly, is such a component, and, as will appear, so is knowledge or notice of the facts that make for "unreasonable and unexcusable delay" ( see Skrodelis v Norbergs, 272 AD2d at 316.)
Nowhere in the record does Allstar Management claim prejudice as a result of the allegedly-late date of Ms. Wesby's assertion of rent-controlled status before the agency, nor does the Commissioner or Counsel articulate any. Whether or not prejudice would result to a new owner by reason of the tenant's payment of a higher rent for a period of time ( see Matter of Olszewski v Commissioner of the New York State Div. of Hous. Community Renewal, 277 AD2d at 386-87) depends upon the circumstances of the particular case. In any event, any such prejudice would appear to be addressed by precluding a challenge to the amount of the rent, and would not necessarily require preclusion of a challenge as to rent control status. Indeed, here, the Commissioner stated that Ms. Wesby's rent would initially be established at the same amount whether she was deemed a rent-controlled or rent-stabilized tenant.
Perhaps more importantly on the facts here, however, the doctrine of laches has no application unless it is shown that person against whom the doctrine is asserted knew or should have known the facts that would have prompted prudent action. ( See Kraker v Roll, 100 AD2d 424, 432 [2d Dept 1984]; see also Pravato v M.E.F. Builders, Inc., 217 AD2d 654, 655 [2d Dept 1995]; 27A Am Jur 2d Equity § 172.) In Matter of Olszewski, the then-landlord had served the tenant with the report of vacancy decontrol. Here, there is nothing in the record to suggest that Ms. Wesby was served with the 1972 decontrol report or the 1984 and later rent registration statements, or that she otherwise knew or should have known of their contents. In applying the laches doctrine, neither the Commissioner nor Counsel indicate that knowledge or notice is an essential component.
The significance of notice in the area of rent regulation is reflected in the regulations governing rent-stabilized apartments, such that where the landlord fails to properly serve the first stabilized tenant with a notice of the initial stabilized rent registered with DHCR, and of the tenant's right to challenge it, "the right to challenge the initial stabilized rent passes to subsequent tenants until the initial, lawful (fair market) stabilized rent is ultimately established by DHCR." ( See Matter of Verbalis v New York State Div. of Hous. Community Renewal , 1 AD3d 101 , 102-03 [1st Dept 2003].)
On this record, therefore, applying the doctrine of laches to preclude Ms. Wesby from asserting rent control status must be considered arbitrary and capricious, and without rational basis. It is unclear whether DHCR's determination on the Petition for Administrative Review would have been the same without application of the laches doctrine.
The Commissioner's Order and Opinion appears also to give presumptive effect to the statements made by the owners in the 1972 decontrol report and the 1984 and later rent registration statements; and, for that reason or generally, to place the burden on Ms. Wesby to establish her rent control status. The Order and Opinion cites to no regulation and articulates no rationale for such a presumption or allocation of the evidentiary burden. Rent regulation in New York City has had a long and complex history. ( See generally 8200 Realty Corp. v Lindsay, 27 NY2d 124, 129-31; Matter of Verbalis v New York State Div. of Hous. Community Renewal, 1 AD3d at 102-04; Matter of Windsor Park Tenants' Assn. v New York City Conciliation and Appeals Board, 59 AD2d 121, 122-26 [2d Dept 1977].) It is not self-evident that, throughout that history, the filings of landlords should be presumed correct, or that it is otherwise appropriate to place the burden of proof on the tenant. At least at one time, "the Rent Stabilization Law establishe[d] a self-regulating and self-policing system which [gave] the owner the responsibility of calculating the lawful rent and maintaining the necessary records." ( See Matter of VR Equities v New York City Conciliation Appeals Bd., 118 AD2d 459, 463 [1st Dept 1986]; see also Greystone Mgt. Corp. v Conciliation Appeals Bd., 94 AD2d 614, 616 [1st Dept 1983], aff'd 62 NY2d 763.)
On this Petition, DHCR asserts a "presumption of regularity" for the rent registration card, and presumably other agency records, stating that "[t]he official entries found on the card are prima facie evidence of the facts stated therein," and citing CPLR 4520 and 4521 in support. (Respondent New York State Division of Housing and Community Renewal's Memorandum of Law, at 11.) But neither provision goes so far as to give any presumptive weight to the statements of persons other than specified public officials. CPLR 4520 concerns certificates and affidavits made by a public officer as to facts ascertained and acts performed by the officer, and says nothing about facts asserted in filings made by others. CPLR 4521 concerns signed statements of a public officer as to the results of a search made of official records, and gives no evidentiary value to facts asserted in the records.
On this record, therefore, the Court cannot say that to the extent DHCR has placed the burden on Ms. Wesby to establish her rent control status, or has given presumptive effect to statements made in owner filings with the agency, the agency has proceeded with a rational basis.
Finally, the Court has noted Counsel's position that agency regulations precluded consideration of the further evidence Ms. Wesby submitted to establish the length of her tenancy in the subject apartment; and acknowledges that deference is owed to DHCR's "construction and interpretation of its own regulations" ( see Matter of El-Kam Realty Co. v New York State Div. of Hous. Community Renewal, 180 AD2d 412, 412-13 [1st Dept 1992]; see also Matter of Cale Dev. Co. v Conciliation Appeals Bd., 94 AD2d 229, 232 [1st Dept 1983], aff'd 61 NY2d 976.) The Court is also aware of authority that "DHCR may consider untimely filings at any stage of the administrative proceedings upon good cause shown ( see, 9 NYCRR 2527.5 [d])." ( Matter of Horowitz v State of NY Div. of Hous. Community Renewal, 277 AD2d 382, 383 [2d Dept 2000].)
In any event, the Court of Appeals has noted that, although generally "[i]n reviewing orders of the DHCR, courts are limited to the factual record before the agency when its determination was rendered," a provision of the New York City Administrative Code, § 26-411 (a) (2), "carves a narrow exception to the general rule." ( See Matter of Rizzo v New York State Div. of Hous. Community Renewal , 6 NY3d 104 , 110.) The court may order the agency to consider "additional evidence which was either offered [to the agency] and not admitted or which could not reasonably have been offered or included in [the] proceeding" before the agency. ( See id.)
The difficulty in retrieving evidence of matters over a 40 year period is illustrated by the agency's experience with the rent registration card, which was apparently not found in time to assist the Rent Administrator, the Commissioner, or Counsel. No justification is given for asking this Court to rely on the record in allowing the agency's determination to stand, even though the agency would not give the same consideration to Ms. Wesby. After all, one of the purposes of the statutory rent-regulation scheme is "to protect elderly, long-term and disabled tenants from the hardships of eviction." ( See Matter of McMurray v New York State Div. of Hous. Community Renewal, 72 NY2d 1022, 1024.)
"[A] court may remit an administrative determination . . . for further proceeding, including reconsideration," and should remit where "factual issues are to be initially determined by the administrative agency." ( See Matter of Plaza Co. v New York City Conciliation Appeals Bd., 104 AD2d 886, 889 [2d Dept 1984].)
The Petition is granted, and judgment is awarded to Petitioner, annulling the Order and Opinion Granting Petition for Administrative Review dated November 8, 2007, and remitting the matter for reconsideration.