IN RE COFFINA
v.
NY STATE DIV OF HOUS COMMUNTY

This case is not covered by Casetext's citator
Supreme Court of the State of New York, New York CountyDec 12, 2007
2007 N.Y. Slip Op. 34106 (N.Y. Misc. 2007)

0119191/2006.

December 12, 2007.


In this Article 78 proceeding, petitioner Edward Coffina ("Mr. Coffina") seeks to annul the November 1, 2006 determination of the New York State Division of Housing and Community Renewal ("DHCR"), which upheld the rent administrator's decision that there was no rent overcharge. DHCR opposes the petition as does the owner of the apartment Champion Properties, LLC ("the Owner"), which intervened in this proceeding.

Background

On March 1, 1994, Mr. Coffina rented apartment 1R at 77 Christopher Street in Manhattan pursuant to an eight-year lease that ended on February 28, 2002. Petition, Ex. A, at 1; Answering Affirmation ("Answer"), Ex. A, at 1. The initial lease provided that monthly rent would be $564.05 through February 28, 1996. Answer, Ex. A, at 2. For the periods between March 1, 1996 and February 28, 1998 and from February 28, 2000 to February 28, 2002, the rent was to be "adjusted in accordance with rent stabilization guideline increases for two-year renewal leases." Answer, Ex. A, at ¶ 33. The initial lease does not provide that Mr. Coffina was receiving a "preferential rent."

In 2000, on the "Apartment Registration Listing," the Owner indicated that the legal rent for the apartment was $1074.80 and that the actual rent paid was $619.22. Return, at A-2.

In December 2001, Mr. Coffina and the Owner executed a two-year renewal lease, which provided that "the legal rent on Sept. 30th preceding commencement date of this renewal lease" was $1074.80 and that the new rent to be charged was $1117.79 for the first year and 1139.29 for the second. Return, at A; Petition, at ¶ 7. The lease further set forth that a "lower rent" was to be charged in the amount of $656.37. Id.

Approximately two years later, the Owner provided Mr. Coffina with a lease (dated January 12, 2004) stating that the "legal rent on Sept.30th preceding commencement date of this renewal lease was $1139.29" and offering new rent of $1190.55 for the first year and $1224.73 for the second year. Significantly, the lease did not allow for any "lower rent to be charged." Return, at A-2.

Mr. Coffina executed the renewal lease.

On March 12, 2004, however, he filed an overcharge complaint with DHCR. Mr. Coffina asserted that the "owner is terminating a preferential rent that was not a preferential rent." Record, at A. He urged that "the owner has been entering my rent as a preferential rent and listing a higher rent as the legal rent on the annual apartment registrations. There is nothing to support the owner's representations." Id.

In opposition, the Owner urged that it was entitled to revert to a higher legal rent if it was "`previously established' that there was a legal rent higher than the preferential rent being paid." Return, at A-2. Based on the 2000 apartment registration, the executed 2002-2004 renewal lease and the executed 2004-2006 lease, the Owner argued that it established entitlement to collect the legal rent established by the history. Id.

On November 4, 2005, a DHCR rent administrator found:

"The record shows that the owner has timely filed the apartment registrations from the year 2000 through 2004 listing both the legal regulated rent and the preferential rent each year. Further, the tenant signed the renewal lease for the period 3/01/02-2/28/04 on December 19, 2001 which listed both the legal and preferential rents to which the tenant raised no objection. The tenant filed the complaint only when the owner offered the renewal lease at the legal rent for the period commencing 3/01/04.

"Pursuant to Section 2521.2 of the Rent Stabilization Code ("RSC") as amended on October 12, 2005, the legal regulated rent shall be `previously established' where for a vacancy lease or renewal lease which was in effect on or before June 19, 2003 and the legal regulated rent was not set forth in either such vacancy lease or renewal lease, the legal regulated rent was set forth in an annual rent registration served upon the tenant in accordance with the provision of law.

"Based on the above provision of the RSC, as amended, the legal regulated rent of the subject apartment was established prior to the owner's removal of the preferential rent, and therefore, the owner is entitled to remove the preference and request the legal regulated rent upon renewal in the lease commencing March 1, 2004.

"Therefore, the tenant's complaint is denied."

Return, at A-18.

Mr. Coffina filed a petition for administrative review ("PAR"), arguing, among many other things, that his initial lease did not contain any rider indicating that the rent charged was preferential. He further contended that he had no obligation to challenge the improper apartment registrations or leases since he was not being overcharged and because they were illegal, fraudulent and should not have been given any weight. Petition, Ex. A, at 3-4.

In a decision dated November 1, 2006, DHCR denied the PAR, concluding:

"Pursuant to the 2003 amendment to the Rent Stabilization Law, Section 26-511(c)(14) provides that an owner may charge the legal regulated rent upon the renewal of the lease of a tenant who was paying a preferential rent or when that tenant vacates the apartment. This change in the law has been implemented by amendment to Section 2521.2 of the Rent Stabilization Code. Section 2521.2(a) states that where the amount of rent charged to and paid by the tenant is less than the legal regulated rent for the housing accommodation, such rent shall be known as the `preferential rent.' The amount of rent for such housing accommodation which may be charged upon renewal or vacancy thereof may, at the option of the owner, be based upon either such preferential rent or an amount not more than the previously established legal regulated rent, as adjusted by the most recent applicable guideline increases or other increases authorized by law. Section 2521.2(b)(1) states that such legal regulated rent shall be `previously established' where * * * for a vacancy lease or renewal lease which set forth a preferential rent and which was in effect on before June 19, 2003, and the legal regulated rent was not set forth in either such vacancy lease or renewal lease, the legal regulated rent was not set forth in either such vacancy lease or renewal lease, the legal regulated rent was set forth in an annual rent registration served upon the tenant in accordance with the applicable provisions of law except that the rental history of the housing accommodation prior to the four-year period preceding the filing of a complaint pursuant to Section 2526.1 (rent overcharge) * * * of this Title shall not be examined.

"Section 2521.2 as amended applies to all pending cases and therefore must be applied in the instant case. DHCR records in this case indicate that the owner filed apartment registrations for the subject apartment for the years 2000 through 2003 that listed the actual rent paid by the tenant as a preferential rent and also listed a higher legal rent. Whether or not the tenant's leases in effect on or after the March 12, 2000 base date listed the legal regulated rent, pursuant to Section 2521.2(b)(2) of the Rent Stabilization Code, which by its terms applies to leases in effect on or before June 19, 2003, since the higher rent was set forth in apartment registrations during the applicable four-year review period, the higher rent was established as the legal regulated rent upon which subsequent guidelines and other lawful increases could be based. The tenant has not asserted that he was not served with the registrations. * * *

" * * * The Commissioner finds that the owner in this case has met the statutory requirements to terminate a preferential rent and that the Rent Administrator properly determined that the owner was entitled to charge the legal regulated rent for the tenant's March 1, 2004 renewal lease."

Petition, Ex. A; Answer, Ex. A.

Mr. Coffina now seeks a judgment annulling DHCR's determination. He argues that "the only predicate for the true lawful rent for the unit was the original lease, which was in effect on the base date of this overcharge complaint and, thus, was subject to review by [DHCR. If DHCR] had merely examined the original lease, it would have recognized that there was no justification for the Landlord's entering on its apartment registration for 2000 a legal rent of $1139.29 per month. Petition, at ¶ 11. Mr. Coffina urges that the "legal rent" listed on the 2000 apartment registration was "plucked from the ether" was fraudulent and entirely unjustified. Id., at ¶ 10.

Mr. Coffina also asserts that it was error for DHCR to apply the "four-year rule." Petition, at ¶ 17. He maintains that application of the rule under these circumstances "permits the landlord to commit a fraud in violation of the Rent Stabilization Law and Code." Id., at ¶ 19. Mr. Coffina further desires a declaratory judgment against [DHCR] requiring it to desist from interpreting the `four-year rule' so as not to impair lawful contractual arrangements between landlords and tenants in regulated tenancies." Petition, at22.

DHCR counters that because Mr. Coffina's overcharge proceeding was commenced on March 12, 2004, the base rent date is March 12, 2000 (four years prior to filing the complaint). See, Rent Stabilization Law ("RSL") § 26-516(a). Because between 2000 and 2003 the apartment registrations for Mr. Coffina's residence listed the actual rent paid as a preferential rent and included a higher legal rent, DHCR asserts that regardless of what was contained in Mr. Coffina's original lease, the higher legal rent amount was "previously established" and that upon renewal of the lease could be charged. Answer, at ¶ 9. According to DHCR, "the annual rent registrations filed since 1995 have stated both a preferential and a higher legal rent. The tenant has not asserted that he was not served with the registrations for 2000 through 2003, nor has he asserted that he was not served with the earlier registrations." Id., at ¶ 10.

The Owner further emphasizes that the "controlling statute and its interpretive case-law are clear: a claim of rent overcharge cannot be predicated on events occurring more than four years prior to the filing of the complaint." Owner's Affirmation in Opposition ("Owner Opp."), at ¶ 24.

On reply, Mr. Coffina acknowledges that he received the 2000 Annual Apartment Registration. Reply Affirmation ("Reply"), at ¶ 8. He contends, however, that he should be permitted to challenge the "honesty and correctness" of the registration because the Owner should not be permitted to "unilaterally alter the lease." Id., at ¶ 10. Mr. Coffina contends that according to the terms of his lease, he was charged $595.41 as monthly rent and that increasing his monthly payments to $1033.45 is "an unlawful act and should not be permitted to stand." Reply, at ¶ 13. Mr. Coffina further points out that before codification of RSL § 26-511(c)(14) [ 9 NYCRR 2521.2], the amounts listed in an apartment registration could not be used to establish a legal rent. Thus, up until "DHCR decided that it would no longer treat registrations as merely ministerial,"a tenant had no reason to challenge that which was set forth on a registration. Reply, at ¶ 7.

Analysis

Judicial reversal of an administrative order pursuant to CPLR Article 78 is limited to instances where the agency acted arbitrary or capriciously. Matter of Pell v. Board of Educ., 34 N.Y.2d. 222, 231-232 (1974); see also, Matter of Arrocha v. Board of Educ., 93 N.Y.2d 361, 363 (1999); Matter of Nick v. DHCR, 244 A.D.2d 299 (1st Dept. 1997). So long as there is a rational basis supporting an administrative order, judicial review is narrowly circumscribed and the agency's decision must be upheld. See, Matter of Pell v. Board of Educ., 34 N.Y.2d, at 231; Matter of Guzman v. Safir, 293 A.D.2d 281 (1st Dept. 2002), l v. denied 98 N.Y.2d 614 (Oct. 15, 2002). In the context of Article 78 proceedings, the law is well settled:

"`Where the interpretation of a statute or its application involves knowledge and understanding of underlying operational practices or entails an evaluation of factual data and inferences to be drawn therefrom, the courts regularly defer to the governmental agency charged with responsibility for administration of the statute. If its interpretation is not irrational or unreasonable, it will be upheld.'"

Matter of Ansonia Residents Assn. v. DHCR, 75 N.Y.2d 206, 213 (1989) (quotations and citations omitted); see also, Howard v. Wyman, 28 N.Y.2d 434, 438 (1971), rearg. denied 29 N.Y.2d 749 (1971).

DHCR's determination that the Owner was within its rights in offering Mr. Coffina a lease that set rent at the "previously established legal regulated rent, as adjusted by the most recent applicable guidelines increases" ( see, 9 N.Y.C.R.R. 2521.2[a]), is not irrational and must be upheld. Rent regulations provide that:

"Such legal regulated rent shall be `previously established' where * * * for a * * * renewal lease which set forth a preferential rent and which was in effect on or before June 19, 2003, and the legal regulated rent was not set forth in either such vacancy lease or renewal lease, the legal regulated rent was set forth in an annual rent registration served upon the tenant in accordance with the applicable provisions of law, except that the rental history of the housing accommodation prior to the four-year period preceding the filing of [an overcharge] complaint shall not be examined."

9 N.Y.C.R.R. 2521.2(b)(2).

Additionally, where "the amount of rent set forth in the annual rent registration statement filed four years prior to the most recent registration statement is not challenged within four years of its filing, neither such rent nor service of any registration shall be subject to challenge at any time thereafter." Administrative Code of City of N.Y. § 26-516(a).

Significantly, all of the relevant apartment registrations indicated that Mr. Coffina was paying a preferential rent. Thus, the higher legal rent listed in the apartment registration was "previously established" and could be used in a renewal lease. In fact, Mr. Coffina's unchallenged 2002 renewal lease unmistakably set forth that he was paying a rent that was lower than the legal rent. In the end, Mr. Coffina's opposition to the genesis of his "preferential rent" comes way too late. He had notice that the Owner treated his rent as a "preferential rent" for at least four years and cannot challenge that treatment or the amount listed now.

As DHCR found, Thornton v. Baron, 5 N.Y.3d 175 (2005), a case in which the Court of Appeals authorized looking beyond four years to establish the legal regulated rent for an apartment, is unavailing. In Thornton, unlike here, the lease "was void at its inception" and the rent registration was "also a nullity." Id., at 181. The Court of Appeals, moreover, indicated that the landlord's fraud there had gone undetected for four years.

Here, in contrast, the record establishes that Mr. Coffina was well aware of the Owner's treatment of his rent; thus, nothing should have gone undetected. There is also no evidence that the renewal lease he signed in 2001 (or any other lease, for that matter) was fraudulent or void.

Accordingly, it is ORDERED AND ADJUDGED that the petition is denied and the proceeding is dismissed.

This constitutes the Decision and Judgment of the Court.