Court Opinion

ID: 9916486
Source: CourtListenerOpinion
Date Created: 2024-01-10 01:07:52.209958+00
Date Added: 2024-06-11T13:25:30.028577
License: Public Domain

Matter of 10 W. 65th St. Tenants Assn. v New York
      State Div. of Hous. & Community Renewal
               2024 NY Slip Op 30005(U)
                     January 2, 2024
           Supreme Court, New York County
        Docket Number: Index No. 154859/2023
               Judge: Shahabuddeen Ally
Cases posted with a "30000" identifier, i.e., 2013 NY Slip
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                       publication.
                                                                                                                    INDEX NO. 154859/2023
  NYSCEF DOC. NO. 34                                                                                           RECEIVED NYSCEF: 01/02/2024

                                  SUPREME COURT OF THE STATE OF NEW YORK
                                            NEW YORK COUNTY

           PRESENT:             HON. SHAHABUDDEEN ABID ALLY                                      PART                         16TR
                                                                                     Justice
           ---------------------------------------------------------------------------------X    INDEX NO.         154859/2023
             In the Matter of the Application of                                                 MOTION DATE         9/11/2023
             10 WEST 55rH STREET TENANTS ASSOCIATION,

                                                         Petitioner,                             MOTION SEQ. NO.        001

                                                - V-

             NEW YORK STATE DIVISION OF HOUSING AND                                                DECISION + ORDER ON
             COMMUNITY RENEWAL and 10 WEST 55TH STREET LLC,                                              MOTION

                                                         Respondents.
            ---------------------------------------------------------------------------------X

            The following e-filed documents, listed by NYSC~F document number (Motion 001) 1-33
            were read on this motion to/for                                           ARTICLE 78 (BODY OR OFFICER)

                      Petitioner brings this Article 78 proceeding seeking to annul the administrative

           determination made by respondent the New York State Division of Housing and Community

           Renewal ("DHCR") dated March 31, 2023 ("Challenged Order") on the grounds that it was

           arbitrary and capricious and lacked a rational basis in fact and law. Respondents oppose. Upon

           the above cited papers and for the reasons set forth below, the petition is denied and this

            proceeding is dismissed.

                                                                        Background

                      Petitioner is an unincorporated, voluntary association of the tenants residing in the rent

            stabilized and rent controlled apartments at IO West 65 th Street, New York NY (the "Premises").

            Respondent IO West 65 th Street LLC ("Owner") is the owner of the Premises. The apartments

            located at the Premises are governed by the Rent Stabilization Law, the Rent Stabilization Code,

              154859/2023 10 WEST 65TH STREET TENANTS ASSOCIATION v NEW YORK STATE DIVISION OF                       Page 1 of 6
              HOUSING AND COMMMUNITY RENEWAL et al
              Motion No. 001

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  NYSCEF DOC. NO. 34                                                                      RECEIVED NYSCEF: 01/02/2024

           and related other City provisions and regulations. Respondent DHCR is the agency charged with

           the administration and enforcement of the relevant laws and regulations.

                  In April 2011, Owner filed an application for a Major Capital Improvement ("MCI")

           increase for the installation of a new boiler, security system, intercom, and fencing. Petitioner

           opposed the application, contending that the boiler had been installed more than two years prior

           to the application and that the intercom did not function. Petitioner also argued that an MCI

           application for the intercom was in contravention of a January 30, 20 13 DHCR order

           ("Modification Order," Petition, exhibit C) that granted Owner permission to change the

           intercom system at no cost to the tenants. Finally, petitioner contended that open hazardous

           conditions at the Premises and Owner' s allegedly false statements in Department of Buildings

           ("DOB") filings should preclude the MCI rent increase.

                  In an order dated February 11 , 2013, DHCR granted the MCI based on the results of a

           DHCR inspection, which revealed that the boiler, security system, and intercom were "new."

           (MCI Order, Petition, exhibit D, NYSCEF No. 6). The MCI Order included a rent increase of

           $8.98 based on the approved costs for the boiler and security and intercom systems but excluded

           the costs of the fencing (id.). Petitioner subsequently filed a petition for administrative review

           ("PAR").

                   In an order dated October 2, 2020 ("2020 PAR Order"), the Deputy Commissioner

           affirmed the MCI Order, finding: (1) that the Rent Administrator properly relied on the

           certificate to operate issued for the boiler in determining the completion date; (2) that the open

           violation did not justify delay of the MCI increase; (3) that the Modification Order did not

           preclude the MCI rent increase for the intercom; (4) that claims relating to Owner's DOB filings

           were outside DHCR's purview; (4) that petitioner's claim that the Owner created additional

            154859/2023 10 WEST 55TH STREET TENANTS ASSOCIATION v NEW YORK STATE DIVISION OF       Page 2 of 6
            HOUSING AND COMMMUNITY RENEWAL et al
            Motion No. 001

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  NYSCEF DOC. NO. 34                                                                       RECEIVED NYSCEF: 01/02/2024

           apartments and additional rooms at the Premises was unsubstantiated; and (5) that the Rent

           Administrator adequately set forth all findings (Petition, exhibit E, NYSCEF No. 7). Thereafter,

           petitioner commenced an Article 78 proceeding on January 1, 2020 (Index No. 160407/2020),

           which resolved in a stipulation to remit for further consideration and issuance of a new order and

           determination (Answer, exhibit D, NYSCEF No. 26).

                   After the remit, the Deputy Commissioner issued an order dated March 31, 2023

           ("Challenged Order"), which partially modified the 2020 PAR Order (Petition, exhibit A,

           NYSCEF No. 3). Specifically, the Deputy Commissioner found that that petitioner demonstrated

           that the completion date of the boiler work was more than two years prior to Owner's MCI

           application, and therefore any rent increase for that work should be disallowed pursuant to 9

           NYCRR 2522.4(a)(8) and 2202.4(c)(4)(vi) (id.). The Deputy Commissioner further found that

           the hazardous violation which existed at the time of the MCI application was not corrected until

           February 5, 2019 and altered the effective date of the MCI rent increase accordingly (id.). The

           Challenged Order left intact all other conclusions in the 2020 PAR Order (id.).

                                                         Discussion

                   In the context of an Article 78 proceeding, the court's function is to evaluate whether,

            upon the facts before an administrative agency, that agency 's determination had a rational basis

           in the record or was arbitrary and capricious (CPLR § 7803 [3]; see, e.g. Matter ofPell v Board

           ofEduc. of Union Free School Dist. No. 1 of Towns ofScarsdale & Mamaroneck, Westchester

           County, 34 NY2d 222 [1974]; Maller of E. G. A. Assoc. v New York State Div. ofHous. &

            Community Renewal, 232 AD2d 302 [l st Dept 1996]). The administrative determination will

           only be found arbitrary and capricious if it is " without sound basis in reason, and in disregard of .

            . . the facts" (see Matter ofCentury Operating Corp. v Popolizio, 60 NY2d 483,488 [1983],

             154859/2023 10 WEST 55TH STREET TENANTS ASSOCIATION v NEW YORK STATE DIVISION OF      Page 3 of 6
             HOUSING AND COMMMUNITY RENEWAL et al
             Motion No. 001

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  NYSCEF DOC. NO. 34                                                                       RECEIVED NYSCEF: 01/02/2024

           citing Matter ofPell, supra at 231 ). A reviewing court may not substitute its own judgment for

           that of the agency making the determination (see Partnership 92 LP v New York State Div. of

           Hous. & Community Renewal, 46 AD3d 425 [ I st Dept 2007]). If the administrative

           determination has a rational basis, there can be no judicial interference (Matter ofPell, supra at

           231 -232).

                   As the agency charged with administration of the Rent Stabilization Law, DHCR "has

           broad discretion in evaluating pertinent factual data and determining the inferences to draw from

           it" (Hawthorne Gardens, LLC v New York State Div. of Haus. & Community Renewal, 4 AD3d

           135 [1 st Dept 2004]). As such, DHCR is entitled to deference as to issues of credibility and the

           weight of evidence (Matter of Ansonia Residents Assn. v New York State Div. of Hous. &

           Community Renewal, 75 NY2d 206, 213 [1989); see Jane St. Co. v New York Stale Div. ofHaus.

           & Community Renewal, 165 AD2d 758 [1st Dept 1990)). On review of the parties ' submissions,

           the Court finds that petitioner has not demonstrated that the Challenged Order lacked a rational

            basis in the record or was arbitrary and capricious.

                   Petitioner's first contention is that the Owner created additional apartments and therefore

           additional rooms at the Premises. Both the 2020 PAR Order and the Challenged Order found that

           the evidence presented by petitioner was insufficient to establish that the apartments have been

           altered, and nothing in the record before the Court indicates that the DHCR' s conclusions are

            "without sound basis in reason and in disregard of ... the facts" (see Matter of Century

            Operating Corp. v Popolizio, 60 NY2d 483 , 488 [1983], citing Matter of Pell, supra at 23 I).

            Accordingly, this Court may not disturb the agency's assessment of the evidence before it (see

            Matter ofAnsonia Residents Assn. v New York State Div. ofHous. & Community Renewal, 75

            NY2d 206, 213 [ 1989)).

             154859/2023 10 WEST 65™ STREET TENANTS ASSOCIATION v NEW YORK STA TE DIVISION OF     Page 4 of 6
             HOUSING AND COMMMUNITY RENEWAL et al
             Motion No. 001

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  NYSCEF DOC. NO. 34                                                                       RECEIVED NYSCEF: 01/02/2024

                   Second, petitioner argues that Owner should be precluded from seeking an MCI rent

           increase based on the intercom installation by the prior Modification Order. 9 NYCRR 2522.4(f)

           provides that an owner may apply to modify or substitute required services at no change to legal

           rent on the grounds that such modification is consented to, is required for the operation of the

           building in accordance with the law, or is not inconsistent with the RSL or the New York City

           Administrative Code. Pursuant to this provision, no such modification or substitution may take

           place prior to receiving approval for such by DHCR (id.). However, nothing in the provision nor

           in any authority provided by petitioner precludes an owner from subsequently seeking an MCI

           rent increase for such modification or substitution so long as the work otherwise satisfies the

           requirements for an MCI.

                   To the extent that petitioner contends that DHCR erroneously found that the installation

           of the security and intercom systems meet MCI requirements, the Court again defers to the

           credibility and factual determinations made by DHCR as set fo11h in the Challenged Order, as

           nothing in the record before the Court demonstrates that the conclusions therein had no rational

           basis in fact or law, particularly where the security and intercom systems concededly monitored

           all entrances and exits to the Premises and therefore were to be utilized by all residents.

                   Petitioner' s final argument that the MCI rent increases should be precluded based upon

            allegedly false statements made in DOB filings in unavailing, as petitioner' s recourse regarding

            such allegations lies with that agency. This Court cannot find that DHCR's determination that it

            lacked jurisdiction to make findings on the propriety of filings made with another agency was

            arbitrary and capricious or lacked rational basis.

             154859/2023 10 WEST 65TH STREET TENANTS ASSOCIATION v NEW YORK STATE DIVISION OF     Page 5 of 6
             HOUSING AND COMMMUNITY RENEWAL et al
             Motion No. 001

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  NYSCEF DOC. NO. 34                                                                            RECEIVED NYSCEF: 01/02/2024

                                                          Conclusion

                     Based on the foregoing, the Court finds that petitioner has not met its burden to show that

           the Challenged Order was arbitrary and capricious nor that it lacked a rational basis in fact or

           law. Accordingly, it is hereby:

                     ORDERED and ADJUDGED that the petition is denied and this proceeding is

           dismissed; and it is further

                     ORDERED that respondents shall serve a copy of this order upon petitioner and upon

           the Clerk of the General Clerk's Office with notice of entry within twenty days thereof; and it is

           further

                     ORDERED that such service upon the Clerk shall be made in accordance with the

           procedures set forth in the Protocol on Courthouse and county Clerk Procedures for

           Electronically Filed Cases (accessible at the "E-Filing" page on the court' s website at the address

           www.nycourts.gov/supctmanh); and it is further

                     ORDERED that any requested relief not expressly addressed herein has been considered

           and is denied.

                     This constitutes the decision and order of the Court.

                     01/02/2024
                       DATE                                                  SHAH

                                                                        ~
            CHECK ONE:                    CASE DISPOSED                      NON-FINAL DISPOSITION

                                          GRANTED         0    DENIED        GRANTED IN PART         □ OTHER
            APPLICATION:                  SETTLE ORDER                       SUBMIT ORDER

            CHECK IF APPROPRIATE:         INCLUDES TRANSFER/REASSIGN         FIDUCIARY APPOINTMENT   □ REFERENCE

            154859/2023 10 WEST 65TH STREET TENANTS ASSOCIATION v NEW YORK STATE DIVISION OF          Page 6 of 6
            HOUSING AND COMMMUNITY RENEWAL et al
            Motion No. 001

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