Mohassel v. Fenwick
Decision Date | 16 June 2005 |
Citation | 832 N.E.2d 1174,5 N.Y.3d 44 |
Parties | Parviz Robert MOHASSEL, Respondent, v. Lila FENWICK, Appellant. |
Court | New York Court of Appeals Court of Appeals |
Ivan S. Feldman, New York City, for appellant.
Beranbaum Menken Ben-Asher & Bierman LLP, New York City (Mark H. Bierman of counsel), for respondent.
In this rent overcharge proceeding, the issue is whether a rent stabilized tenant was properly granted prejudgment interest on a treble damages award. We conclude that he was.
In 1984, Parviz Robert Mohassel commenced a rent overcharge proceeding with the Division of Housing and Community Renewal (DHCR) relating to his Manhattan apartment, alleging that building owner Lila Fenwick was collecting rent in excess of that authorized under the New York City Rent Stabilization Law. A co-tenant was also named in the petition. After the owner failed to comply with repeated agency requests for rent history documentation, in November 1989 the Rent Administrator issued a decision finding a rent overcharge in the amount of approximately $300 per month between 1984 and 1989, totaling $26,106.72. Because the violation was determined to be willful, the tenant was granted treble damages. Taking into account the treble damages award plus other related overcharges, the Rent Administrator ruled that Fenwick owed Mohassel $81,303.53. There was no reference to the co-tenant in the Rent Administrator's decision.
The owner challenged the award in an administrative appeal to DHCR by filing a petition for administrative review (PAR). In March 1997, DHCR upheld the Rent Administrator's decision and noted that the tenant was entitled to interest on the overcharge award from the date of the Rent Administrator's decision to the date of the DHCR determination.
Unsuccessful before the administrative agency, the owner commenced a CPLR article 78 proceeding against DHCR without naming the tenant as a party respondent. The article 78 petition was denied on the merits in May 1998. The owner apparently filed a notice of appeal but the appeal was never perfected.
In October 2001, DHCR notified the tenant that the owner's judicial challenge to the overcharge determination had been denied, forwarding a "Notice of Rent Stabilized Tenant Concerning Payment of Penalties Which Landlord Has Been Directed to Pay By An Administrator's Order." The notice advised the tenant of two options for collecting the rent overcharge: a deduction could be made from future monthly rent payments in an amount no greater than 20% of the overcharge or a judgment could be obtained against the owner by filing a notice with the County Clerk. Because Mohassel no longer resided in an apartment owned by Fenwick, his only available option was to obtain a judgment. Thus, Mohassel filed the necessary documentation with the County Clerk and a judgment was entered against Fenwick in April 2002. In the judgment, the clerk calculated prejudgment interest on the $81,303.53 overcharge from the date of the Rent Administrator's decision to the date of entry of the judgment. With interest, the judgment totaled $172,238.74.
Soon after entry of the judgment, the owner brought this CPLR 5015 motion to vacate the judgment in Supreme Court, obtaining a stay of enforcement pending the proceeding. Fenwick argued that Mohassel was not entitled to the full judgment because the overcharge proceeding had been initiated in the name of Mohassel and a co-tenant, contending that Mohassel's attempt to collect the entire overcharge himself amounted to "fraud." She also alleged that the judgment should be vacated under the equitable doctrine of laches due to the tenant's failure to enter it within a reasonable time period. Finally, she asserted that the tenant was not entitled to prejudgment interest on the rent overcharge because such interest is not appropriate when treble damages are awarded.
Supreme Court rejected the fraud and laches arguments and declined to vacate the judgment but concluded that the interest award should be reduced, although not on the grounds asserted by the owner. Noting that the DHCR determination explicitly directed interest from the date of the Rent Administrator's decision to the issuance of the determination, Supreme Court concluded that the tenant was not entitled to interest thereafter. In other words, Supreme Court interpreted DHCR's silence on the question of postdetermination interest as precluding such an award. The court therefore directed that the judgment be recalculated to delete the interest award covering the period from March 1997 to April 2002, and an amended judgment was entered.
On appeal, the Appellate Division modified by reinstating the original judgment.1 The Court noted that the tenant was entitled to postdetermination interest under the Rent Stabilization Law, declining to interpret DHCR's failure to address postdetermination interest as a finding that such interest was not warranted. The Appellate Division granted the owner leave to appeal to this Court and we now affirm.2
Although the owner raises a number of issues on appeal, we begin with the question of whether the tenant was entitled to prejudgment interest on the treble damages award. Our decision is informed by Rent Stabilization Law § 26-516(a) and the regulations promulgated thereunder. Although section 26-516(a) has been amended since the Rent Administrator issued its 1989 decision, the amendments have not substantively altered the provisions addressing prejudgment interest on rent overcharge awards. Under section 26-516(a), if DHCR finds that an owner has collected rent in excess of that authorized by statute, the owner "shall be liable to the tenant for a penalty equal to three times the amount of such overcharge," unless the owner demonstrates that the overcharge was not willful. In the absence of willfulness, DHCR "shall establish the penalty as the amount of the overcharge plus interest" (Rent Stabilization Law § 26-516[a]). The implementing regulation similarly authorizes either a treble damages award on the overcharge or interest "from the date of the first overcharge . . . at the rate of interest payable on a judgment pursuant to section 5004 of the [CPLR]" (Rent Stabilization Code [9 NYCRR] § 2526.1[a][1]). In addition, Rent Stabilization Law § 26-516(a)(4) states that an owner who is found to have overcharged rent "may be assessed the reasonable costs and attorney's fees of the proceeding and interest from the date of the overcharge at the rate of interest payable on a judgment pursuant to section five thousand four of the [CPLR]."
These provisions are designed to discourage violations of the Rent Stabilization Law and, where a violation occurs, to compensate the tenant, particularly when the violation is willful. Interest on a rent overcharge award is generally authorized from the date of the initial monthly overpayment, except when treble damages are warranted. In those circumstances, treble damages are imposed in lieu of interest from the date of the monthly overcharge to the date of the Rent Administrator's decision. But nothing in the rent stabilization scheme restricts the grant of interest from the date of the Rent Administrator's decision forward. To the contrary, section 26-516(a)(4) is openended, authorizing an interest award equivalent to that imposed in a civil action (see CPLR 5002, 5003).
Here, after determining that the owner's conduct was willful, the Rent Administrator imposed treble damages and did not grant the tenant interest from the date of each monthly rent overpayment. Because no interest was awarded for the five-year period prior to the Rent Administrator's 1989 decision, the interest calculation in the original judgment was in accord with ...
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