Mid-State Management Corp. v. New York City Conciliation and Appeals Bd.

• Decision Date: 11 July 1985
• Docket Number: MID-STATE
• Citation: 112 A.D.2d 72,491 N.Y.S.2d 634
• Parties: In re Application ofMANAGEMENT CORP., Petitioner-Respondent, For a Judgment etc., v. NEW YORK CITY CONCILIATION AND APPEALS BOARD, Respondent-Appellant.
• Court: New York Supreme Court — Appellate Division

Page 634

491 N.Y.S.2d 634

112 A.D.2d 72

In re Application of MID-STATE MANAGEMENT CORP., Petitioner-Respondent For a Judgment etc., v. NEW YORK CITY CONCILIATION AND APPEALS BOARD, Respondent-Appellant.

Supreme Court, Appellate Division First Department.

July 11, 1985.

W.E. Rosen, New York City, for petitioner-respondent.

I.J. Korman, New York City, for respondent-appellant.

Before SULLIVAN, J.P., and CARRO, FEIN, KASSAL and ROSENBERGER, JJ.

MEMORANDUM DECISION.

Judgment, Supreme Court, New York County, entered March 12, 1984, which granted a petition pursuant to Article 78 of the CPLR by the owner of a rent stabilized building and annulled an order and opinion of the New York City Conciliation and Appeals Board (CAB), unanimously reversed on the law, without costs, the order of the CAB is reinstated and the petition is dismissed.

This proceeding arises out of the closing of a swimming pool located on the premises or adjacent to the petitioner's building at 2750 Homecrest Avenue, Brooklyn, New York, managed by Mid-State Management Corp. (Mid-State). New York State Division of Housing and Community Renewal (Division), which assumed the responsibilities of the CAB effective April 1, 1984 pursuant to Chapter 403, Laws of 1983, appeals from a judgment of Supreme Court, New York County annulling an order of the CAB which found that pursuant to Rent Stabilization Code (RSC) Sec. 2(m)(1), swimming pool services for the tenants of the subject building are a required service and that the charge for such service is subject to regulation under the Rent Stabilization Law and Code (RSL).

The record before the CAB contained substantial evidence demonstrating that the use of the swimming pool adjacent to the building had been continuously provided for tenants of the premises since the base date May 31, 1968. The evidence was sufficient to support the CAB finding that the owner or a corporation controlled by the owner was (1) the holder of title in fee to the property on which the pool facilities were constructed, (2) the lessee of the pool facilities, (3) the managing agent for both the building and the pool simultaneously, and (4) actively and directly involved in the day-to-day operation and maintenance of the pool. The owner declined to produce documentary evidence bearing upon the legal relationship between the owner and the pool operator.

It is plain that a rational basis supports the CAB's order finding that there was common ownership directly or indirectly between the owner and the pool operator and that, therefore, the use of the pool is a required base date service, which the owner was required to continue.

Special Term, ignoring the abundance of evidence which supported the CAB's determination, made its own determination of the factual questions and vacated the CAB's order by reason of an alleged deficiency in the record which was patently due to the owner's refusal to submit documentation in its possession.

As the owner of a building subject to the Rent Stabilization Law, not only may the owner not raise rents or other charges above levels established under the RSL, it may not curtail any "required service". Sec. 2(m)(1) of the RSC defines required services as those services which were provided on the base date applicable to the subject premises.

Sec. 2(m)(1)(a) provides that where there was a separate charge for a required service on the base date, and there is "a common ownership directly or indirectly between the operator of any such services and the owner, any such charge shall be within the limitations of the RSL."

The CAB found, and its finding is reasonably supported by the record, that on the base date in 1968, the premises and the others sharing the swimming pool were all under Lefrak ownership, albeit different corporations were involved. The record showed that the pool was directly adjacent to the building. The building was owned by Hollywood Leasing Co. (Hollywood). The property on which the pool is situated is owned by Arcadia Leasing Corporation (Arcadia). The pool premises are leased to Malibu Leasing Corp. (Malibu). The principal stockholder of Hollywood, Arcadia and Malibu is Samuel J. Lefrak.

The pool itself was subleased and operated by an independent membership corporation, as required by law and zoning regulations, namely, Arcadia Sun & Swim Club, Inc., a non-profit corporation. However Lefrak designated its directors and its operators. Mid-State, the managing agent for the Arcadia Sun & Swim Club, is a licensed real estate broker managing the premises for Hollywood. All problems relating to the pool were handled by an employee of Mid-State, and maintenance of the pool and surrounding premises was by employees of Mid-State wearing "Lefrak" uniforms.

Based upon this evidence, CAB found that (1) on May 31, 1968, the base date, and thereafter, the building and the pool were owned or leased by corporations with the same principal stockholder; (2) the building, pool and pool operator shared common managing agent and offices; (3) solicitations for membership in the pool were through the owner's office; (4) security for the pool was performed by the same guards as patrolled the other premises; (5) maintenance of the pool was performed by the building...