In the Matter of Brookford, LLC, Appellant,v.New York State Division of Housing and Community Renewal, et al., Respondents.BriefN.Y.May 2, 2018OFFICE SOKOLSKI & ZEKARIA, P.C. 305 Broadway- Suite 1004, New York, New York !0007 March 2017 John P. Asiello Chief Clerk and Legal Counsel to the Court State of New York Court of Appeals Eagle Street Albany, New York 12207 (21 email: LETTER BRIEF PURSUANT TO RULE OF PRACTICE §500.11 Re: Matter ofBrookford, LLC v. NYS DHCR APL-201 1 Client: Respondent lV1argaret Schuette Friedman . The Chief Clerk and the Honorable Justices ofthe s: Please permit this to the aforementioned appeal. COMMENTS AND ARGUMENTS This case concerns an attempt at high-rent/high income ""'"r'""r" controlled apartment occupied by the surviving wife of the u~..., ..... ,a.:)""u As noted in the RSA/CHIP amicus brief, this is not a rent controlled apartments left in existing stabilized units, only 3 are tenants earning $175,000 or more per year. 1 l J as the total household income threshold has 571-4079 a rent Issue. out o· smce OFFICE SOKOLSKI & ZEKARIA., P.C. March 27, 2017 State York of Appeals Page 2 on in their determinations of high-rent/high income enacted a policy set the date that the upon the tenant as date would be set. In other words, the income of those persons as a residence other than on a temporary basis IC was served are included in the two year look back deregulation. Otherwise, each deregulation spiral into a lengthy, disputed pnmary porentially variable dates throughout a two year look the next Spring the day an ICF is served. by DHCR helps and hurts tenants, and it helps mt~ome an occupant who was present during the vacates a housing accommodation before an serves an in an apartment on an IS 1s nm uded in household income, but the income of an occupant IS 1, 20 1 1, citation to the number of households earning over $1 · not helpfuL More importantly, the presented, · ized units occupied by households making more than $1 to eliminate J-51 4 21 a units and/ or units ization under Article 7-C ofthe Multiple Dwelling -none deregulated regardless of household income. 27,2017 State ofNew York Court of Appeals Page 3 OFFICE SOKOLSKI & ZEKARIA, P.C. apartment on the ICF service date is included, even if that apartment issue for any part of the two year moved in on the I CF service date itself, their income over included). noted before the Appellate Division, Petitioner's Carol M. Lutatti, a tax attorney, were never presented during the initial DHCR proceeding, the prior Article appeal or the remanded proceeding at DHCR. arguments had merit, which they do not, Petitioner clearly raise them below, and the presentation of these arguments for s Article 78 proceeding is patently improper. . Y.3d 424, 430, 911 N.E.2d 813 (2009)(" In addition, DHCR's lack of a specific definition for the term ' not raised before the Rent Administrator or at petitioner's time in the article 78 proceeding. As it is settled be raised for the first time before the courts in an article 78 "'1'"'"'"""'" Gardens Co. v. State of Y Div. of Hous. & 966,967,435 .Y.S.2d 706,416 N.E.2d 1041 [1 ), m past two m was not 5 not March 27, 2017 State ofNew York Court Appeals Page 4 properly before us. LAw OFFICE OF SOKOLSKI & ZEKARIA, P.C. fact, Petitioner's oqjection before DHCR was frivolous claim that . Friedman had not permanently long before ICF was served, when he clearly did. argument about joint taxation, the Appellate Division, an Department cases cited below) that for purposes ofluxury mcome a who does not reside in the apartment as a primary on to be considered. The arguments presented by Petitioner are erroneous. Gross income. Gross income is all income you money, goods, property, and services that is not [emphasis added]. If you are mmTied and live with community property state, half of any income defined community income may be considered yours. See, excerpts (pages IRS Publication 501, attached as Exhibit B to our March 21, response (R. 459). York is not a community property state. , at 7 York that are community property states). person m York is "all income [that as mcome i\1arch 27,2017 State ofNew York Court of Appeals Page 5 LAW OFFICE SOKOLSKI & ZEKARIA, P.C. no of the spouse's income. Finally, adjusted gross income is Clearly, there is no such thing as community income in l\;1oreover, to Petitioner's unsupported claims, · as IRS means income you receive" thus gross income · recipient of income shown on IRS tax ovvner of the income, for tax reporting purposes - necessarily come before this Court had Petitioner properly before DHCR, which it did as: the It bears emphasis luxury deregulation is based income tax returns as reported by the tenant/occupant taxpayer to the New State Finance. Again, the recipient of the income owner in1:ome for tax reporting purposes, according to the IRS. this case, the confidential backup documentation was intentionally and voluntarily submitted so that the recipient/owner each item of income for tax reporting purposes. no objection to Court's camera review of this infonnation. as 27,2017 ofNew York Court of Appeals Page 6 LAW OFFICE OF SOKOLSKI & ZEKARIA, P.C. information is confidential, and Petitioner has no right to respectfully declined consent for provision of this · ARGUMENT I. DHCR PROPERl,Y APPLIED THE LUXURY DECONTROL PROVISIONS. question is not "whether" allocation of "permissible", because the income allocation is tenants and occupants occupy the subject premises as a than on a temporary basis on the ICF service date are high-income deregulation. The Appellate mcome of spouses and family members ac~:ommodation prior the ICF service date may not be · 'household' income verification. A.J. Clarke Real 841, 763 N.Y.S.2d 577 (1st Dept. 2003); see v. DHCR, 12 A.D.3d 289, 785 N.Y.S.2d 65 (1st left prior to service of ICF properly DHCR); 315 72nd, Street Owners, Inc. v. DHCR, S 39 (1st Dept 2012)(income of daughter, who our cl s mcome 1s mcome 3 8 SOKOLSKI & ZEKARIA, P.C* March 27, 2017 State of New York Court of Appeals Page 7 apartment in two look-back years, but vacated prior to service not have been considered in the calculation of mcome omitted]. Chatsworth Realty Corp. v. .Y.S.2d 18 (1st Dept. 2008). Moreover, whether the rule helps or hurts the occupant is present on the lCF service date, but did not during part or all of the two year look-back period, their income is has strictly adhered to the rule. Doyle v. Calogero, 178 (1st Dept, 2008)("That the application co of a new occupant's income as part proceedings is not a basis for us to revisit the issue. 544-45, 878 N.Y.S.2d 682 (1st Dept. m determining household income deregulation, DHCR may rationally take into consideration occupants who reside in the apartment on the date the income is served, even if the occupant did not occupy the preceding service thereof.") 56 d 371' d mcome the two OFFICE SOKOLSKI & ZEKARIA, P.C. March 27, 2017 of New Court of Appeals Page 8 The issue of how to allocate the tenant's mcome tenant permanently vacated the apartment prior to succeeded to the apartment as the tenant of record), Stabilization Law §26-504.3 clearly states "annual federal adjusted gross income as reported on the New return." This definition accords with New York State's income required and/or calculated the taxpayers , defined above. There is no dispute that the ICF was served and that Mr. Friedman had permanently vacated March 21, 2005, more than a year prior to service the ICF. regulated tenant relocated to a nursing home or medical facility the tenant has permanently vacated the apartment must be based on an analysis of to return apartment, which depends of the tenant being able to return. See, e.g, 65 127 Misc.2d , 486 N.Y.S.2d 668 1 v. Joy, I 05 Misc.2d 291, 432 N.Y.S.2d 58 as s spouse mean the state income tax on on a rent v. ); March 27, 2017 State ofNew York of Appeals Page 9 SOKOLSKI & ZEKARIA, P.C. DHCR correctly excluded Mr. Friedman's income income for 2004 and 2005, as the facts in the agency's established that Mr. Friedman had annual and was therefore no longer a pnmary resident thereof, long before se v1ce the ICF on April 2006. Petitioner produced no finding. It is axiomatic that a court may not disturb an s on 78 review so long as there is substantial evidence ag,~ncy's detennination must be upheld so long as it is neither· capricious. Pell v. Bd. Education, 34 .Y.2d 833 ( 1979); Purdy v. Kreisberg, 47 N.Y.2d 354, 354, 418 Here, there 1s no legal dispute that the required mcome ve. m with luxury decontrol petitions is to two (2) years ali persons occupying the residence on the ICF service date. The facts and the record Ms. Friedman was only occupant of the subject premises on the ICF service date (ii) that, correctly, only her income was income computation, and (iii) that her annual income was under $1 OFFICE OF SOKOLSKI & ZEKARIA, P.C. 27,2017 State New York Court of Appeals Page 10 and/or 2005. Accordingly, the only appropriate course Petitioner's appeal. It was abundantly clear from all documentation that it was income, to the exclusion of Mr. Friedman's, that was under $1 t\\ calendar years, that high income deregulation was a 2 ac , while DHCR also argued for remand on s income was purportedly calculated by as income for the relevant years, instead of the 34% reported s purported "error" by DHCR was wholly irrelevant. income was $205,185 for 2004 and $232,844 for 2005 or 34% of both those totals amount to under for both 2004 and 2005. determination by DHCR was rationally based and documentation provided by the parties. It is correct outcome was reached-the evidence the """"""""r! noted by Ms. Friedman her prior submission, and imputed to herself a few items income prove belonged only to her late husband. calculations actually resulted in a lower percentage to s s 2 s SOKOLSKI & ZEKARIA, P.C. 27,2017 State ofNew York Court of Appeals Page 11 determination that Ms. Friedman was the only occupant of service date, that Ms. Friedman's on two (2) years, and that Ms. Friedman's mcome was under $175 one or both those years. Any other finding precedent the Appellate Division, First pr,Jperly promulgated to effectuate high-rent/high-income U. DHCR HAD THE AUTHORITY AND RESPONSIBILITY TO EXCLUDE THE INCOME OF THE TENANT'S NON- RESIDENT HUSBAND IN ACCORDANCE THE ALLOCATION OF INCOME PROVIDED BY THE As noted in DHCR's brief, the Tenant, not DHCR, mcome herself and Mr. Friedman in response she also voluntarily provided the back-up documents apportionment was accurate. J\;1s. Schuette Friedman a a tax transcript requested by DHCR. the issue authority to direct a tenant's production of such documents detennination o a high income/high rent deregulation proceeding is not properly because Ms. Schuette Friedman did so voluntarily, in an to a (1 she reported (34% ). SOKOLSKI & ZEKARIA, P.C. l\1arch 27, 2017 State ofNew of Appeals Page 12 over the s deregulation proceeding. Petitioner and amici attempt cherry pick Regulation Refonn Act 1993 RRRA") to redefine own that forces the inclusion mcome for consideration m a high rent/high income the Act make clear that who reside in the apartment as a primary basis on a m; considered deregulation purposes. s plain language and the legislative deregulation provisions of the 1993 RRRA, as well as pr~cedent of the Appellate Division, which requires the exclusion permanently vacated the apartment before the was Respondent's husband vacated the subject premises more than one service of the and it is undisputed that his vacatur was . Friedman was placed in hospice care before ICF was DHCR, the 1993 RRRA permitted and to enter into an inter-agency agreement in order to effectuate never 1993 s to IV1arch 27, 2017 State New York Appeals Page 12 OFFICE SOKOLSKI & ZEKARIA., P.C. rent/high income deregulation proceedings. Tax §17 The commissioner is authorized and to enter into an agreement with the commissioner of the division community renewal verifY the income tenants accommodations subject to rent regulation. The rules and regulations to effect the provisions of this department, when requested by the community renewal, shall verifY the total annual residing housing accommodations as rent and shall notifY the commissioner division of housing and community whether the total annual income exceeds the income threshold in each of the two preceding [emphasis added]. No other information regarding of such persons shall be provided. very provision that directs DTF to respond income exceeds the applicable deregulation income the two preceding calendar years makes clear that annual income of all persons residing in housing pr[mary residence". In other words, the very Tax responsibility of DTF to verity annual incomes DHCRmakes not include or verifY as part of the "total annual income" mcome does m the housing argument by Petitioner that it does flies in states: m OFFICE SOKOLSKI & ZEKARIA, P. March 27,2017 State of New York Court of Appeals Page 13 enabling statute. Pursuant to the 1993 RRRA, DHCR and DTF of Understanding which, at Part I (B)( 4) to be used by a tenant who in: orne tax a spouse who does not · m 1s~ ue. forms designed by DTF and are clearly authorized and required by §28 of state: ''[a]ny rule or regulation or form necessary for th's act, or any section of this act, is authorized and co 180 after the date on which this fonns and procedures are a rational, · to the letter intent of the luxury deregulation Court should strongly reject Petitioner's that attack not only the plain wording and intent intome deregulation procedures in the 1993 RRRA, but which clearly prohibit consideration of a non-resident purposes ofhigh rent/high income deregulation. Just into l to not mcomt' OFFICE SOKOLSKI & ZEKARIA, P.C. March 27, 17 York Appeals Page 14 v. 130 A.D.3d 453 (201 case. Divis1on Court found a rent a housing accommodation as a business expense claiming he maintained the apartment as his primary dedaration which Respondent has made that is · taken m this proceeding. Perhaps, this does landlord-tenant to include, as dispositive, to do New York's rent regulated State tax can and shall be imported into rent Most 's high rent/high income deregulation b:y tenants without legal representation. The entire scheme State Legislature was intended to be inexpensive, s attempts to torture highly technical federal s gam m deregulation proceedings before DHCR where, as here, the result sought of wording and intent of the 1993 RRRA and Division. no to 1s no March 27, 2017 ofNewYork of Appeals 15 SOKOLSKI & ZEKARIA, P.C. For the foregoing reasons, and the reasons m Respondent Margaret Schuette Friedman below, Respondent rDCY\O,C'TTl this Comi Decision and Order of the Supreme entered on August 4, 2016. the Court for consideration the Niles Welikson, Esq., Horing, Welikson & Rosen, Jeffrey Turkel, Esq., Rosenberg & Estis, Sandra Joseph, Esq., New York State Department of Renewal, Attorneys for Respondent Printing Specifications Statement I, DAPHNA ZEKARIA, ESQ., attorney for the hereby as follows: 1. the within brief was generated on a computer; 2. the margins are ( 1) inch on all sides; 3. type face is Times New Roman, 14 4. line is double space; the word count (including cover, contents is 3 7 March 27, 2017 York, York 1