Court Opinion

ID: 9958752
Source: CourtListenerOpinion
Date Created: 2024-04-09 20:10:50.413683+00
Date Added: 2024-06-11T08:15:48.750850
License: Public Domain

Matter of West 147th St. Equities LLC v New York
      State Div. of Hous. & Community Renewal
               2024 NY Slip Op 31099(U)
                     March 29, 2024
           Supreme Court, New York County
        Docket Number: Index No. 159839/2023
               Judge: Shahabuddeen Abid Ally
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                                                                                                                      INDEX NO. 159839/2023
  NYSCEF DOC. NO. 22                                                                                            RECEIVED NYSCEF: 04/02/2024

                                   SUPREME COURT OF THE STATE OF NEW YORK
                                             NEW YORK COUNTY
            PRESENT:             HON. SHAHABUDDEEN ABID ALLY                                      PART                          16TR
                                                                                       Justice
            --------------------------------------------------------------------------------- X   INDEX NO.          159839/2023
             In the Matter of the Application of
                                                                                                  MOTION DATE        08/23/2023
             WEST 147TH STREET EQUITIES LLC,
                                                                                                  MOTION SEQ. NO.         001
                                                         Petitioner,

                                                 -v-
                                                                                                    DECISION+ ORDER ON
             NEWYORK STATE DIVISION OF HOUSING AND
             COMMUNITY RENEWAL,
                                                                                                          MOTION

                                                         Respondent.

            ---------------------------------------------------------------------------------X

            The following e-filed documents, listed by NYSCEF document number (Motion 001) 1-21
            were read on this motion to/for                                           ARTICLE 78 (BODY OR OFFICER)

                      Petitioner brings this Article 78 proceeding seeking annulment of the final administrative

           order issued by respondent DHCR on August 8, 2023 ('"Challenged Order"), which found that

           petitioner owner had collected excess rent from its tenant and imposed treble damages based

           upon petitioner's failure to establish that the overcharge was not willful. Respondent opposes.

           Upon the above cited papers, the petition is denied.

                                                                        Background

                     The undisputed facts are as follows: Petitioner is the owner and landlord of the building

           known as and located at 522 West 14 7 th Street (the ··Building'"). which includes apartment 34

           (the "'Apartment"). Respondent DHCR is the agency charged with the administration and

           enforcement of the relevant laws and regulations.

                     On or about April 27, 2017, Jennifer Orellano (""Tenant"), who resided at the Apartment,

           filed an overcharge complaint with DHCR, alleging that the Apartment had been illegally

             159839/2023 WEST 147™ STREET EQUITIES, LLC v NEW YORK STATE DIVISION OF HOUSING                          Page 1 of 5
             AND COMMUNITY RENEWAL
             Motion No. 001

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  NYSCEF DOC. NO. 22                                                                           RECEIVED NYSCEF: 04/02/2024

           deregulated and her rent improperly increased in 2015. DHCR sent inquiry to petitioner, who

           responded that the Apartment had been exempted from regulation prior to the Tenant's

           occupancy. On or about February I 1, 2020, DHCR notified petitioner that a prior DHCR order

           under docket TI410111 R ("Prior Order") had determined that the legal regulated rent for the

           Apartment on May 1, 2006 was $537.00. Upon petitioner's reiteration that the Apartment had

           been deregulated, DHCR again requested documents to substantiate the claim.

                   In an order issued May 22, 2023 ("'RA Order"), the Rent Administrator found that a rent

           overcharge occurred subsequent to April 27, 2013 (the base date for the overcharge proceeding)

           and imposed treble damages on the ground the petitioner did not establish that the overcharge

           was not willful (Petition, exhibit B). The RA Order further directed petitioner to roll back the

           rent to the legal regulated rent and to refund the excess rent paid (id.). Petitioner's total liability

           was fixed at $261,960.60 (id.).

                   Petitioner then filed a Petition for Administrative Review ('"PAR"), contending that the

           RA Order erroneously considered an overcharge order outside the four-year lookback period in

           contravention of the Court of Appeals· decision in Matrer of Regina Metro. Co .. LLC v New York

           State Div. of Haus. & Community Renewal, 35 NY3d 332 [2020]). The PAR was denied in the

           Challenged Order (Petition, exhibit A). In the Challenged Order. the Deputy Commissioner

           found that both petitioner and the former owner of the Building had an obligation to set the legal

           regulated rent in accordance with the 2006 Order notwithstanding that more than four years

           passed since the 2006 Order was issued (id.). The Challenged Order affirmed the RA Order in its

           entirety (id.).

                   Petitioner thereafter commenced the instant petition.

            15983912023 WEST 147'~ STREET EQUITIES, LLC v NEW YORK STATE DIVISION OF HOUSING         Page 2 of 5
            AND COMMUNITY RENEWAL
            Motion No. 001

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  NYSCEF DOC. NO. 22                                                                          RECEIVED NYSCEF: 04/02/2024

                                                        Discussion

                  In the context of an Article 78 proceeding. the court·s function is to evaluate \vhether,

           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 <~l Pell v Board

           of Educ. of Union Free School Disl. 1Vo. I of Towns <~{Scarsdale & Mamaroneck, Westchester

           County, 34 NY2d 222 [1974]; Matter <?f E.G.A. Assoc. v New York State Div. ,?fHous. &

           Community Renewal, 232 AD2d 302 [1st Dept 1996]). lhe administrative determination will

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

           . . the facts" (see Mauer of Century Operating Cmp. \' Popolizio, 60 NY2d 483, 488 [1983],

           citing Matter of Pell, 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

           Haus. & Community Renewal, 46 AD3d 425 [1st Dept 2007]). If the administrative

           determination has a rational basis, there can be no judicial interference (Matter c~f Pell, supra at

           231-232).

                  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. The Challenged Order relied in part on the decision of the Supreme Court. Kings

           County in Renaissance Equity Holdings, LLC v New York State Div. of Hous. & Community

           Renewal (2022 WL 1100982 [Sup Ct, Kings County 2022]), wherein the court extended to the

           Court of Appeals decision in Cintron r Calogero ( 15 NY3d 34 7 [201 O] [holding that DHCR may

           consider a rent reduction order issued outside the four-year look back period as part of reviewable

           rental history]) to a prior overcharge order issued by DHCR. Such reliance was not arbitrary and

           capricious, as the case remains good law and reasonably extends Cintron to include prior DHCR

            159839/2023 WEST 147m STREET EQUITIES, LLC v NEW YORK STATE DIVISION OF HOUSING         Page 3 of 5
            AND COMMUNITY RENEWAL
            Motion No. 001

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  NYSCEF DOC. NO. 22                                                                           RECEIVED NYSCEF: 04/02/2024

           orders based upon the reasoning set forth in the relevant footnote in Regina (see Regina, 35

           NY3d at n. 6). The Prior Order, as with the overcharge order in Renaissance and the rent

           reduction order in Cintron, imposed a continuing obligation on the petitioner which remained in

           effect through the lookback period. Nothing in Regina compels the interpretation that Cintron

           applies only to rent reduction orders and not to other orders of which DHCR can be held to take

           notice (id.).

                   Further, the detem1ination made in the Challenged Order had a rational basis in the

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

           weight of evidence (}i1a1!er ofAnsonia Residents Assn., 75 NY2d 206, 213 [1989]; see Jane St.

            Co. v New York State Div. (?f'Hous. & Community Renewal, 165 AD2d 758 [l st Dept 1990]).

                   Here, the evidence in the record supports DHCR·s finding that petitioner failed to meet

           its burden to establish that the Apartment was properly deregulated prior to the Tenant"s

           occupancy. The Deputy Commissioner reasonably concluded based on the documents submitted

           that based upon the Prior Order, the legal rent had not reached the level of the deregulation

           threshold as of May 1, 2013. Further, the Deputy Commissioner reasonably found that

           petitioner's contention that it did not receive rental records before purchasing the building and

           had no knowledge of any overcharge was not sutlicient to establish by a preponderance of the

           evidence that the overcharges were not willful. Accordingly, the imposition of treble damages

           had a rational basis (see A4o!ler of" l 25 St. James Place LLC i· A'ew York S'tate Div. rdHous. &

           Community Rene.val, 158 AD3d 417 [ I st Dept 20181: Rent Stabilization Law§ 26-516[a]).

             159839/2023 WEST 14rH STREET EQUITIES, LLC v NEW YORK STATE DIVISION OF HOUSING         Page 4 of 5
             AND COMMUNITY RENEWAL
             Motion No. 001

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  NYSCEF DOC. NO. 22                                                                             RECEIVED NYSCEF: 04/02/2024

                     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 petitioner shall serve a copy of this order upon respondent and upon the

           Clerk of the General Clerk's Office with notice of entry v,;ithin 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 "£-Filing" page on the court's website at the address

           W\vw.nvcourts.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.

                     03/29/2024
                       DATE

                                     ~ CASE DISPOSED

                                                                        ~
            CHECK ONE:                                                       NON-FINAL DISPOSITION

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

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

            159839/2023 WEST 147m STREET EQUITIES, LLC v NEW YORK STATE DIVISION OF HOUSING            Page 5 of 5
            AND COMMUNITY RENEWAL
            Motion No. 001

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