985 Fifth Ave. Inc. v. State Div. of Housing & Community Renewal

• Decision Date: 26 March 1991
• Citation: 171 A.D.2d 572,567 N.Y.S.2d 657
• Court: New York Supreme Court — Appellate Division
• Parties: 985 FIFTH AVENUE INC., Petitioner-Respondent, v. STATE DIVISION OF HOUSING & COMMUNITY RENEWAL, Respondent-Appellant.

Page 657

567 N.Y.S.2d 657

171 A.D.2d 572

985 FIFTH AVENUE INC., Petitioner-Respondent, v. STATE DIVISION OF HOUSING & COMMUNITY RENEWAL, Respondent-Appellant.

Supreme Court, Appellate Division First Department.

March 26, 1991.

Before MURPHY, P.J., and MILONAS, ELLERIN, ROSS and RUBIN, JJ.

MEMORANDUM DECISION.

Judgment of the Supreme Court, New York County (Beatrice Shainswit, J.), entered on December 26, 1989, which granted petitioner's application pursuant to Article 78 of the CPLR to the extent of remanding the matter to respondent agency for further findings, is unanimously reversed on the law and the petition denied and dismissed, without costs or disbursements.

Petitioner, the owner and landlord of the premises at 985 Fifth Avenue in Manhattan, was the subject of a rent overcharge complaint by the tenant of apartment 16B. The tenant had taken occupancy pursuant to a three year lease commencing on October 1, 1982 at a monthly rental of $2,851.00. On February 4, 1985, respondent State Division of Housing and Community Renewal (DHCR) informed the landlord of the pendency of the complaint and advised it of the right to respond. In addition, the agency's notice stated that "[f]or increases based on new equipment or services, you must attach invoice(s) showing costs and date(s) of equipment provided or services installed", and the answer form sent to petitioner specifically provided that it had the right to document its alleged improvements. However, petitioner failed to submit any such invoices or other material relating to the tenant's contention that he had paid the full purchase price for the stove, refrigerator, dishwasher and that, moreover, the landlord had not paid for the original painting of the apartment.

On April 18, 1985, DHCR again requested proof of purchase and installation of the appliances. This time, the landlord replied to the communication, admitting that it had neither installed the appliances nor paid for the painting; it claimed to have refunded the tenant for his expenditures with respect to these items. Subsequently, the agency issued two further demands for bills, invoices and cancelled checks for the purported improvements but, while petitioner repeated that it had reimbursed the tenant, no documentation was forthcoming. It should be noted that while the tenant was, indeed, refunded the cost of the appliances, this was not done until approximately a year after he had filed his complaint against the landlord.

The absence of invoices or bills for the stove, refrigerator and dishwasher rendered it impossible for DHCR to calculate what portion of the rent increase charged was for the painting of the apartment, something which respondent characterizes as a mere decoration that cannot legally constitute a basis for a raise in rent. Consequently, the Administrator, having examined the rental history of the apartment, disallowed an additional rent increase charged by the landlord pursuant to section 20(C)(1) of the Rent Stabilization Code, then in effect, and directed a substantial refund to the tenant, including an excess security deposit and treble damages, as well as a reduction in the monthly rental. The landlord filed a Petition for Administrative Review (PAR) in which it alleged heretofore unclaimed expenditures, as described by the Commissioner of respondent agency, in the following manner:

In its petition, the owner contends, in pertinent part, that the October 1, 1982 increase from $2,425.00 per month to $2,851.00 included additional charges representing 1/40th of the cost of equipment supplied to the subject apartment as follows:

$119.00 per month for air conditioning;

$15.00 per month for shades;

$49.48 per month for other new equipment;

The owner submits with its petition an invoice, dated August 28, 1981, from Ice-Cap Incorporated for twenty air-conditioners shipped to the subject building. The owner also submits a letter from its own office, addressed to a Mark Williams, dated June 6, 1986, which lists seven air-conditioners having been delivered to the subject apartment.

The Commissioner found that the serial numbers of the air conditioners referred to in the invoices provided by the landlord to show their cost did not match the serial numbers listed in the letter intended to prove that seven units had been installed in the tenant's apartment. Moreover, the Commissioner noted that the documentation should have been supplied during the administrative proceeding and did not have to be considered on appeal. According to the Commissioner, the landlord had conceded that it had not paid for the new stove, refrigerator or dishwasher and had not painted the apartment. He also observed that no documentation had been furnished to substantiate the cost of shades or other new equipment purportedly installed. Consequently, he upheld the determination of the Administrator and...