Pamela Equities Corp. v. Envtl. Control Bd. of N.Y.

• Decision Date: 12 October 2017
• Docket Number: 2015,162661
• Citation: Pamela Equities Corp. v. Envtl. Control Bd. of N.Y., 72 N.Y.S.3d 764, 59 Misc.3d 1007 (N.Y. Sup. Ct. 2017)
• Parties: In the Matter of the Application of PAMELA EQUITIES CORP., Petitioner v. ENVIRONMENTAL CONTROL BOARD OF the CITY OF NEW YORK and New York City Department of Buildings, Respondents
• Court: New York Supreme Court

59 Misc.3d 1007

72 N.Y.S.3d 764

In the Matter of the Application of PAMELA EQUITIES CORP., Petitioner

v.ENVIRONMENTAL CONTROL BOARD OF the CITY OF NEW YORK and New York City Department of Buildings, Respondents

162661

2015

Supreme Court, New York County, New York.

Decided October 12, 2017

Daniel E. Katz Esq., Rich, Intelisano & Katz. LLP, 915 Broadway, New York, NY 10010, For Petitioner

Pamela A. Koplik, Assistant Corporation Counsel, New York City Law Department, 100 Church Street, New York, NY 10007, For Respondents

Lucy Billings, J.

Petitioner, the owner of 132 East 45th Street, New York County, challenges an Appeal Decision and Order by respondent Environmental Control Board of the City of New York (ECB) imposing discretionary civil penalties of $1,000 per day for 45 days pursuant to New York City Administrative Code § 28–202.1. C.P.L.R. § 7803(3) and (4). ECB added these daily penalties totalling $45,000 to its non-discretionary, set civil penalties of $5,800 in the ECB Buildings Penalty Schedule, 1 R.C.NY § 102–1(g), for illegal conversion of apartments 4G and 9C in petitioner's building from permanent residences to transient use, in violation of Administrative Code §§ 28–210.3 and 28–301.1.

I. THE APPLICABLE STATUTES AND REGULATIONS

Administrative Code § 28–210.3 provides that:

It shall be unlawful for any person or entity who owns or occupies a multiple dwelling or dwelling unit classified for permanent residence purposes to use or occupy, offer or permit the use or occupancy or to convert for use or occupancy such multiple dwelling or dwelling unit for other than permanent residence purposes.

Administrative Code § 28–301.1 provides that: "The owner shall be responsible at all times to maintain the building ... in a safe and code-compliant manner ...."

Administrative Code § 28–201.2.1(16) classifies a "violation of section 28–210.3 that involves more than one dwelling unit or a second or subsequent violation of section 28–210.3 by the same person at the same dwelling unit or multiple dwelling" as a Class 1 immediately hazardous violation. See 1 R.C.NY § 102–01(b)(1). Administrative Code § 28–202.1(1) sets forth the civil penalties for immediately hazardous violations: "not less than one thousand dollars nor more than $25,000 ... for each violation. In addition ..., a separate additional penalty may be imposed of not more than $1,000 for each day that the violation is not corrected." 1 R.C.NY § 102–01(g)(1) specifies that the daily penalties:

will accrue at the rate of $1,000 per day for a total of forty-five days running from the date of the Commissioner's order to correct set forth in the NOV [Notice of Violation], unless the violating condition is proved ... at the hearing to have been corrected prior to the end of that forty-five day period, in which case the daily penalties will accrue for every day up to the date of that proved correction.

III. STANDARDS FOR JUDICIAL REVIEW

The court may overturn respondents' determinations only if they were arbitrary, lacked a rational basis in the administrative record, or lacked a basis in law. C.P.L.R. § 7803(3) ; Rossi v. New York City Dept. of Parks & Recreation , 127 A.D.3d 463, 467, 8 N.Y.S.3d 25 (1st Dep't 2015) ; Nestle Waters N. Am., Inc. v. City of New York , 121 A.D.3d 124, 127, 990 N.Y.S.2d 512 (1st Dep't 2014) ; 20 Fifth Ave., LLC v. New York State Div. of Hous. & Community Renewal , 109 A.D.3d 159, 163, 970 N.Y.S.2d 25 (1st Dep't 2013) ; Langham Mansions, LLC v. New York State Div. of Hous. & Community Renewal , 76 A.D.3d 855, 857, 908 N.Y.S.2d 10 (1st Dep't 2010). See London Terrace Gardens L.P. v. New York State Div. of Hous. & Community Renewal , 149 A.D.3d 521, 521, 52 N.Y.S.3d 319 (1st Dep't 2017). ECB's interpretation of the regulations and statutes governing the maintenance, use, occupancy, and safety of buildings in New York City that ECB is charged with enforcing, N.Y.C. Charter § 1049–a(c)(1), is entitled to deference as long as that interpretation is rational and consistent with governing law. Barenboim v. Starbucks Corp. , 21 N.Y.3d 460, 470–71, 972 N.Y.S.2d 191, 995 N.E.2d 153 (2013) ; Chesterfield Assoc. v. New York State Dept. of Labor , 4 N.Y.3d 597, 604, 797 N.Y.S.2d 389, 830 N.E.2d 287 (2005) ; Nestle Waters N. Am., Inc. v. City of New York , 121 A.D.3d at 127, 990 N.Y.S.2d 512. See Murphy v. New York State Div. of Hous. & Community Renewal , 21 N.Y.3d 649, 654–55, 977 N.Y.S.2d 161, 999 N.E.2d 524 (2013) ; Lighthouse Pointe Prop. Assoc., LLC v. New York State Dept. of Envtl. Conservation , 14 N.Y.3d 161, 176–77, 897 N.Y.S.2d 693, 924 N.E.2d 801 (2010) ; Roberts v. Tishman Speyer Props., L.P. , 13 N.Y.3d 270, 285–86, 890 N.Y.S.2d 388, 918 N.E.2d 900 (2009). Although the court need not defer to ECB's expertise or interpretation when discerning the plain meaning of a statute or regulation, ATM One v. Landaverde , 2 N.Y.3d 472, 476–77, 779 N.Y.S.2d 808, 812 N.E.2d 298 (2008) ; Rossi v. New York City Dept. of Parks & Recreation , 127 A.D.3d at 467, 8 N.Y.S.3d 25 ; Associated Mut. Ins. Co-op. v. 198, LLC , 78 A.D.3d 597, 598, 914 N.Y.S.2d 7 (1st Dep't 2010) ; Smith v. Donovan , 61 A.D.3d 505, 508–509, 878 N.Y.S.2d 675 (1st Dep't 2009), when the terms of the statute or regulation are ambiguous and susceptible to conflicting interpretations, the court will accord deference to ECB's interpretation and uphold it as long as it is reasonable. Golf v. New York State Dept. of Soc. Servs. , 91 N.Y.2d 656, 667, 674 N.Y.S.2d 600, 697 N.E.2d 555 (1998) ; Chin v. New York City Bd. of Stds. & Appeals , 97 A.D.3d 485, 487, 948 N.Y.S.2d 300 (1st Dep't 2012) ; Espada 2001 v. New York City Campaign Fin. Bd. , 59 A.D.3d 57, 64, 870 N.Y.S.2d 293 (1st Dep't 2008).

IV. THE UNDISPUTED FACTS DICTATE A REDUCTION OF THE DISCRETIONARY PENALTIES .

Following petitioner's administrative appeal of the ECB hearing officer's recommended Decision and Order, respondents' Appeal Decision and Order imposed three non-discretionary, set civil penalties totalling $5,800. Of that amount, $3,200 was for petitioner's violation of Administrative Code § 28–210.3, $1,000 for its violation of Administrative Code § 28–301.1, and $1,600 for its violation of New York City Building Code § 907.2.8, which specifies requirements for fire alarm systems in buildings occupied by transients. Thus only one violation was of Administrative Code § 28–210.3, an immediately hazardous violation subject to the additional discretionary daily penalties if it involved "more than one dwelling unit or a second or subsequent violation of section 28–210.3 by the same person at the same dwelling unit or multiple dwelling." N.Y.C. Admin. Code § 28–210.3.

The parties do not dispute that petitioner's violations involved more than one dwelling unit, apartments 4G and 9C, but no evidence indicates that the violations were second or subsequent violations. The parties agree further that "the date of the Commissioner's order to correct set forth in the NOV" citing Administrative Code § 28–210.3 was October 23, 2014. 1 R.C.NY § 102–01(g)(1). Thus the 45 days of potential daily penalties ran until December 7, 2014. Respondents also admit that petitioner showed at the ECB administrative hearing that by November 30, 2014, the tenant and occupants of apartment 4G had vacated the apartment, so that the transient use was corrected. At least by that point, the immediately hazardous violation of Administrative Code § 28–210.3 no longer involved "more than one dwelling unit," nor was the violation ever "a second or subsequent violation of Administrative Code § 28–210.3 by the same person at the same dwelling unit or multiple dwelling." N.Y.C. Admin. Code § 28–210.3.

Consequently, pursuant to 1 R.C.NY § 102–01(g)(1), petitioner proved at the hearing that the violating condition involving "more than one dwelling unit," N.Y.C. Admin. Code § 28–210.3, had been corrected seven days before the end of 45 days from October 23, 2014, the date of the order to correct in the NOV. Based on these facts, 1 R.C.NY § 102–01(g)(1) further dictates that the daily penalties may accrue only up to the date of that proved correction. ECB's determination that petitioner did not prove that the violating condition had been corrected before February 10, 2015, when the tenants and occupants of apartment 9C vacated that apartment, is inconsistent with Administrative Code § 210.3 and 1 R.C.NY § 102–01(g)(1) and thus arbitrary. C.P.L.R. § 7803(3). Therefore petitioner is entitled at minimum to a $7,000 reduction in the $45,000 discretionary penalties.

V. PETITIONER'S ADDITIONAL CLAIMS

A. Enforcement Against the Owner Versus Enforcement Against the Tenants

In a nutshell, petitioner insists that no discretionary penalties were warranted because it showed its unawareness of its tenants' unlawful subleasing for transient use and that even penalties of $38,000 are disproportionate to its unknowing violation. Petitioner emphasizes that Administrative Code § 28–210.3 prohibits "any person or entity who owns or occupies a ... dwelling unit classified for permanent residence purposes to use or occupy, offer or permit the use or occupancy or to convert for use of occupancy such ... dwelling unit for other than permanent residence purposes." N.Y.C. Admin. Code § 28–210.3 (emphasis added). Thus the prohibition extends to tenants subleasing their apartments for transient use and to their subtenants occupying the apartments for transient use.

The fact that other violators might be penalized, however, does not absolve apartment owners of their affirmative obligation to "be responsible at all times to maintain the building ... in a ... code-compliant manner." N.Y.C. Admin. Code § 28–301.1. The prospect of daily penalties even for unknowing violations encourages owners' proactive efforts to know what is occurring in their buildings, to assure compliance with the Administrative Code, and to discover and correct immediately hazardous violations promptly. Contrary to petitioner's suggestion...