In re Hicks

• Decision Date: 11 May 2010
• Citation: 75 A.D.3d 127,901 N.Y.S.2d 186,2010 N.Y. Slip Op. 04062
• Parties: In re Victoria HICKS, Petitioner–Respondent,v.NEW YORK STATE DIVISION OF HOUSING AND COMMUNITY RENEWAL, Respondent–Appellant.
• Court: New York Supreme Court — Appellate Division

75 A.D.3d 127

901 N.Y.S.2d 186

2010 N.Y. Slip Op. 04062

In re Victoria HICKS, Petitioner–Respondent,

v.NEW YORK STATE DIVISION OF HOUSING AND COMMUNITY RENEWAL, Respondent–Appellant.

Supreme Court, Appellate Division, First Department, New York.

May 11, 2010.

Gary R. Connor, New York (Aida P. Reyes of counsel), for appellant.Victoria Hicks, respondent pro se.PETER TOM, J.P., RICHARD T. ANDRIAS, EUGENE NARDELLI, LELAND G. DeGRASSE, HELEN E. FREEDMAN, JJ.TOM, J.P.

In this article 78 proceeding, Supreme Court determined that the four-year statute of limitations under CPLR 213–a applies to a rent overcharge proceeding brought by a rent-controlled tenant, and held that respondent DHCR impermissibly examined the rental history of the premises covering more than four years prior to the filing of tenant's rent overcharge complaint. We conclude that CPLR 213–a does not apply to rent-controlled apartments or to administrative proceedings before DHCR. Furthermore, DHCR's determination had a rational basis, was not arbitrary or capricious or an abuse of discretion, and did not include an error of law. The agency ruling should have been confirmed.

On September 13, 2004, petitioner, a rent-controlled tenant, filed a rent overcharge complaint with DHCR asserting that her $739.15 monthly rent exceeded the maximum collectible rent for the apartment. In support of her complaint, she argued that the landlord's failure to serve her with notice of increased heating fuel costs for the years 2002 through 2005 precluded the owners from adjusting her rent to reflect fuel cost increases for those years. The owners responded that they had not collected a fuel surcharge since 1992, rendering notice of heating fuel costs immaterial. They further submitted a rent calculation chart to justify the amount tenant was being charged. Petitioner, in reply, urged DHCR to “review all fuel cost adjustment increases and the RA–33.10 [Fuel Cost Adjustment] Reports after 1980 to ensure a current rent amount that is accurate under the law.”

Based on the documentary evidence, the Rent Administrator determined that there was no merit to petitioner's assertions concerning the lack of notice of fuel cost adjustments. However, from an examination of the rental history of the premises, he concluded that the monthly rent for the apartment should be reduced to $688.34. The owners then filed a timely Petition for Administrative Review (PAR) asserting that the rent reduction was based on an incorrect calculation. In support of their application, the owners submitted copies of various DHCR rent records, including orders setting the maximum base rent (MBR).

In April 2006, respondent issued an order that granted, in part, the owners' PAR. The order noted that several final rent orders had been overlooked in calculating the MBR. When the orders affecting the biennial periods commencing with 1988 through 1993 and 1998–1999 were included in the calculation, the monthly rent was determined to be $852.97.

Petitioner in this article 78 proceeding argued that the administrative determination was in violation of lawful procedure, erroneous on the law, arbitrary, capricious and an abuse of discretion (CPLR 7803[3] ) because DHCR had examined the rental history of the premises dating back to April 1, 1978, transgressing the limitations contained in the Rent Regulation Reform Act of 1997 (RRRA, L. 1997, ch. 116). That legislation, petitioner maintained, bars “examination of the rental history of a housing accommodation for more than four years prior to the filing of an overcharge complaint.” She further argued that the proceedings before DHCR were subject to the limitations of CPLR 213–a which, she contended, were amended by the RRRA to include a “four-year restriction for examination of the rental history of a housing accommodation.”

Supreme Court agreed and granted the petition, vacating DHCR's determination and remanding the matter for further administrative proceedings. While acknowledging that “a two year statute of limitations applies to recovery of overcharges,” the court construed this petition as “not seeking to recover an overcharge. Rather, she is seeking a review in the nature of declaratory relief.” The court concluded that

the four-year statute of limitations in CPLR 213–a applies to proceedings before the DHCR pertaining to rent controlled housing accommodations and that respondent's failure to limit its review of the rental history of the subject apartment to the period of four years prior to the filing of the overcharge complaint was arbitrary and capricious and an abuse of discretion.

DHCR contends on appeal that no statute, regulation or policy prohibits the agency from examining the rental history of rent-controlled apartments without regard to limitations as to time. In addition, it argues that its calculation of the MBR is rationally based on both the law and the record.

It is well recognized that DHCR has a broad mandate to administer the rent regulatory system (see Rent Stabilization Assn. of N.Y. City v. Higgins, 83 N.Y.2d 156, 165, 608 N.Y.S.2d 930, 630 N.E.2d 626 [1993] ), and courts regularly defer to its interpretation and application of the laws it is responsible for administering, so long as its interpretation is not irrational ( Matter of Gaines v. New York State Div. of Hous. & Community Renewal, 90 N.Y.2d 545, 548–549, 664 N.Y.S.2d 249, 686 N.E.2d 1343 [1997] ). We agree with DHCR's interpretation of CPLR 213–a that it does not apply to housing accommodations subject to the rent control law. The statute provides:

An action on a residential rent overcharge shall be commenced within four years of the first overcharge alleged and no determination of an overcharge and no award or calculation of an award of the amount of any overcharge may be based upon an overcharge having occurred more than four years before the action is commenced. This section shall preclude examination of the rental history of the housing accommodation prior to the four-year period immediately preceding the commencement of the action.

While CPLR 213–a applies to “residential rent overcharge” and does not make a distinction between rent-stabilized and rent-controlled apartments, the legislative history makes clear that it applies only to rent-stabilized dwellings. The four-year statute of limitations was introduced in 1984, in the Emergency Tenant Protection Act (ETPA) amendments,¹ with the simultaneous enactment of CPLR 213–a (L. 1983, ch. 403, § 35) and the predecessor to what is now Rent Stabilization Law (N.Y. City Admin. Code) § 26–516(a)(2) (former Code § YY51–6.0.5[a][2], L. 1983, ch. 403, § 14). Significantly, none of the rent-control statutes of limitations under the New York City Rent and Eviction Regulations applicable to rent-control-related actions were amended by this legislation.²

In 1997, the Legislature enacted RRRA in part to clarify the limitations period contained in the Rent Stabilization Law. Simultaneous amendments were made to CPLR 213–a (L. 1997, ch. 116, § 34) and the Rent Stabilization Law § 26–516(a) ³ (ch. 116, § 33). Both the amended CPLR 213–a and the RRRA reflect a clear legislative intent to curb the judicial practice of reviewing the rental history of an apartment prior to the four-year limitations period (see L. 1997, ch. 116, § 32). Again, there were no changes made to the Rent Control statutes of limitations.

The Rent Control Law and the Rent Stabilization Law were enacted as separate and distinct systems to address different problems in the housing market, even though each was primarily directed at ameliorating the effects of the shortage of housing accommodations (see 8200 Realty Corp. v. Lindsay, 27 N.Y.2d 124, 313 N.Y.S.2d 733, 261 N.E.2d 647 [1970], appeal dismissed 400 U.S. 962, 91 S.Ct. 367, 27 L.Ed.2d 381 [1970]; Matter of Chessin v. New York City Conciliation & Appeals Bd., 100 A.D.2d 297, 474 N.Y.S.2d 293 [1984] ). The procedures enacted under the two systems of rent regulation do not allow for indiscriminate interchange. Therefore, neither the OHA nor any subsequent amendment to the Rent Stabilization Law can be deemed to amend the Rent Control Law by implication.

Had the Legislature intended the four-year limitations period to extend to rent-controlled dwellings, it would have been a simple matter to do so, such as it did with enactment of “luxury decontrol,” which specifically included application for both systems of regulation (see L. 1997, ch. 116, § 7–11). As the Court of Appeals has observed, “[T]he failure of the Legislature to include a substantive, significant prescription in a statute is a strong indication that its exclusion was intended” ( People v. Finnegan, 85 N.Y.2d 53, 58, 623 N.Y.S.2d 546, 647 N.E.2d 758 [1995], cert. denied 516 U.S. 919, 116 S.Ct. 311, 133 L.Ed.2d 214 [1995] ). Here, the failure of the Legislature to incorporate CPLR 213–a into the Rent Control Law was a clear indication that it was not intended to apply to rent-controlled apartments. If such application was contemplated, the Legislature would not have left intact two inconsistent limitations periods without making appropriate legislative amendments to the Rent Control Law.

The time within which the tenant of rent-controlled premises must seek recovery of an overcharge is provided by a particular statute and by regulations governing the operation and management of rent-controlled accommodations. With respect to amounts collected in excess of the established maximum rent, any refund is limited to the two-year period preceding the filing of the overcharge complaint or the commencement of an administrative proceeding, whichever is earlier, whether recovery of the overpayment is sought before DHCR (N.Y. City Rent and Rehabilitation Law [Admin. Code] §§ 26–412 [a], 26–413[c][3]; N.Y. City Rent and Eviction Regulations [9 NYCRR] 2202.22[b] ) or before the courts (Admin. Code § 26–413[d][2][a]; Matter of Christy v. Lynch,...