Matter of Appl. Gilman v. Nys Div. Hous.
| Decision Date | 15 January 2002 |
| Docket Number | 1,5315 |
| Parties | In re Application of Anne Gilman, Petitioner-Respondent, v New York State Division of Housing and Community Renewal, Respondent-Appellant, -and- Marcid Realty Company, Respondent. 5315 SUPREME COURT OF THE STATE OF NEW YORK APPELLATE DIVISION: FIRST JUDICIAL DEPARTMENT Decided on |
| Court | New York Supreme Court — Appellate Division |
Robert E. Levy - for petitioner-respondent,
Nava Listokin - for respondent-appellant.
For an Order, etc.,
Order and judgment (one paper), Supreme Court, New York County (Michael Stallman, J.), entered July 17, 2000, which granted the petition in this Article 78 proceeding, vacated a determination of the Deputy Commissioner of respondent Division of Housing and Community Renewal (DHCR) dated December 16, 1999, which had modified its Rent Administrator's finding of excess rent and instead ruled in respondent landlord's favor on the basis of comparability data previously precluded as unqualified, and remanded the matter to DHCR for reconsideration, reversed, on the law, without costs, the petition denied, and the Deputy Commissioner's determination reinstated and confirmed.
Petitioner moved into a recently decontrolled apartment on Manhattan's Upper West Side in May 1990, at the newly stabilized rate of $2,075 per month. On notice of her right to challenge this initially stabilized rent, petitioner filed a fair market rent appeal (FMRA) with DHCR in June of that year. The agency failed to notify the landlord of this complaint until May 1992. At this point, the landlord, noting that the rent had already been adjusted downward to $1,900 in May 1991, requested a FMRA "answering package" and sought an extension of time to permit it to demonstrate justification for the initial stabilized rent based upon rent charged for comparable apartments nearby. After further delay of 21 months, petitioner brought an Article 78 proceeding to hasten a determination of her fair market rent. That proceeding was resolved in May 1994 by a stipulated order that DHCR issue its ruling by July of that year. One result of that order was that DHCR finally sent the landlord the FMRA answering package with comparability forms. The landlord thereupon requested a six-month extension to compile its data, but was ultimately granted only an additional three-and-a-half months. Before the landlord could submit the data, the Rent Administrator issued an order, on July 22, 1994, establishing the fair market rent at $1,011.12 per month, and ruling that the landlord owed petitioner excess rent of $50,115.40 for the period since May 1990. The landlord immediately filed a petition for administrative review (PAR), citing the agency's failure to consider recently submitted evidence of expenditures for maintenance and improvements, and its refusal to grant adequate time for the submission of comparability data. Petitioner answered the PAR, but again the agency delayed in resolving this matter.
Two-and-a-half years later, the Rent Regulation Reform Act (RRRA) of 1997 took effect, limiting examination of rental history on overcharge complaints to the four years preceding the filing of the complaint (see, Rent Stabilization Law § 26-516[a]). In June 1999, DHCR finally offered the landlord the opportunity to submit comparability data, pursuant to the guidelines of the 1997 enactment. Within three weeks, the landlord submitted the data; petitioner contested the comparability of the data, and argued that its submission was far too late. On December 16, 1999, the Deputy Commissioner finally ruled on the PAR, partially granting it based on some of the comparables and some of the documented improvement expenditures. The net result was that the Rent Administrator's award was wiped out and the initial stabilized rent as of May 1, 1990, was established at $1,754.64.
Petitioner thereupon commenced the instant Article 78 proceeding, challenging the Deputy Commissioner's acceptance of the landlord's comparability data on the grounds of lateness and qualification. The IAS court granted the petition and rescinded the Deputy Commissioner's ruling, citing "the extreme nature of the delay which resulted in gross and unfair prejudice to petitioner" and concluding that "DHCR was negligent" in handling this matter in such a protracted manner.
Prevailing rental rates in comparable accommodations constitute one of the key considerations in determining fair market rent. The evaluation process depends, in large measure, on the landlord supplying that data. The IAS court acknowledged that the landlord had a right to submit this data in conjunction with the guidelines of the RRRA of 1997, but erroneously concluded that DHCR was ousted of jurisdiction because of administrative delay. Such a conclusion could only be based upon a showing that delay resulted from negligence or willful conduct on the agency's part (Matter of Schutt v New York State Div. of Hous. & Community Renewal, 278 A.D.2d 58, lv denied 96 N.Y.2d 715; Matter of Goldman v New York State Div. of Hous. & Community Renewal, 270 A.D.2d 169; Matter of LaValle v Scruggs-Leftwich, 133 A.D.2d 313, 316). This record does not support any finding of neglect.
A party complaining of delay must demonstrate substantial and actual prejudice by reason of the delay. Prejudice is not presumed by the mere passage of time, nor by the prospect that petitioner may end up indebted to her landlord (see, One Three Eight Seven Assoc. v Commissioner of Div. of Hous. & Community Renewal, 269 A.D.2d 296).
We further note that any delay here was attributable solely to the administrative agency, for which a "heavy caseload" (Matter of Jahn v Div. of Hous. & Community Renewal, 140 A.D.2d 193) and "lack of resources" (see, Matter of Harris & Assocs. v deLeon, 84 N.Y.2d 698, 704, citing Matter of Cortlandt Nursing Home v Axelrod, 66 N.Y.2d 169, 181, cert denied 476 US 1115) can be considered as competent explanations. On the other hand, respondent landlord, the real party in interest here, was diligent in moving this proceeding along at every stage. It timely requested the forms to be able to answer the complaint and submit comparables, and it did submit those comparables and evidence of financial outlay for improvements in a timely fashion. (Cf., Matter of Mahoney v New York State Div. of Hous. & Community Renewal, 283 A.D.2d 329, involving an "inordinate and highly prejudicial" 14-year delay, portions of which were attributable to the landlord.)
The advent and impact of new legislation during the pendency of administrative consideration was fortuitous, and not the result of deliberate conduct by any party to this litigation. On this record, the court should not have substituted its judgment for a rationally based administrative determination (Matter of Colton v Berman, 21 N.Y.2d 322; Matter of Mid-State Mgt. Corp. v New York City Conciliation & Appeals Bd., 112 A.D.2d 72, 76, affd 66 N.Y.2d 1032).
At issue on this appeal is whether a landlord should be permitted to cure its default in submitting evidence to an administrative agency by offering the material for the first time on administrative appeal. Appellant agency has identified no statutory or regulatory provision that would condone its receipt of new evidence nearly five full years after issuance of the determination appealed from.
Appellant, Division of Housing and Community Renewal (DHCR), instead of passing on the validity of the initial determination made by the District Rent Administrator, improperly made a de novo determination upon the merits of respondent tenant's original petition based on newly submitted evidence. Consideration of this evidence, belatedly solicited by the Commissioner for the first time on administrative appeal, is without justification and, thus, the Commissioner's ruling offends both well-settled principles of procedural due process as well as the procedural rules governing the operation of appellant DHCR.
There would seem to be little question that basing the determination on evidence that was not before the District Rent Administrator resulted in substantial prejudice to the tenant. The administrative order issued in July 1994 determined that she was entitled to a refund of excess rent in the amount of $50,115.40. The order deciding the administrative appeal, ultimately issued by respondent agency in December 1999, determined that the tenant owed the landlord rent arrears totaling almost $47,000, hardly an insignificant difference.
The underlying administrative proceeding was commenced in June 1990, challenging the amount of the initial stabilized rent established for respondent tenant's apartment by Marsid Realty Company, the landlord, which is not a party to this appeal. No ruling by DHCR was forthcoming until July 22, 1994, when the District Rent Administrator issued the initial determination in settlement of a CPLR article 78 proceeding, commenced by the tenant in March 1994, to compel the agency to decide her Fair Market Rent Appeal. While the matter was originally misconstrued by DHCR as a rent overcharge proceeding, the tenant's mandamus petition prompted DHCR to send the landlord notice and forms to expedite the submission of data in connection with the Fair Market Rent Appeal. Therefore, DHCR cannot contend that...
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