# Matter of West 147th St. Equities LLC v. New York State Div. of Hous. & Community Renewal

> New York Supreme Court, New York County · March 29, 2024 · 2024 NY Slip Op 31099(U)

URL: https://www.frixlaw.com/law-library/cases/9958752

## Case

- **Court:** New York Supreme Court, New York County
- **Decided:** March 29, 2024
- **Citations:** 2024 NY Slip Op 31099(U)
- **Precedential status:** Unpublished
- **Opinion:** Opinion
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
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## Opinion text

Matter of West 147th St. Equities LLC v New York
State Div. of Hous. & Community Renewal
2024 NY Slip Op 31099(U)
March 29, 2024
Supreme Court, New York County
Docket Number: Index No. 159839/2023
Judge: Shahabuddeen Abid Ally
Cases posted with a "30000" identifier, i.e., 2013 NY Slip
Op 30001(U), are republished from various New York
State and local government sources, including the New
York State Unified Court System's eCourts Service.
This opinion is uncorrected and not selected for official
publication.
INDEX NO. 159839/2023
NYSCEF DOC. NO. 22 RECEIVED NYSCEF: 04/02/2024

SUPREME COURT OF THE STATE OF NEW YORK
NEW YORK COUNTY
PRESENT: HON. SHAHABUDDEEN ABID ALLY PART 16TR
Justice
--------------------------------------------------------------------------------- X INDEX NO. 159839/2023
In the Matter of the Application of
MOTION DATE 08/23/2023
WEST 147TH STREET EQUITIES LLC,
MOTION SEQ. NO. 001
Petitioner,

-v-
DECISION+ ORDER ON
NEWYORK STATE DIVISION OF HOUSING AND
COMMUNITY RENEWAL,
MOTION

Respondent.

---------------------------------------------------------------------------------X

The following e-filed documents, listed by NYSCEF document number (Motion 001) 1-21
were read on this motion to/for ARTICLE 78 (BODY OR OFFICER)

Petitioner brings this Article 78 proceeding seeking annulment of the final administrative

order issued by respondent DHCR on August 8, 2023 ('"Challenged Order"), which found that

petitioner owner had collected excess rent from its tenant and imposed treble damages based

upon petitioner's failure to establish that the overcharge was not willful. Respondent opposes.

Upon the above cited papers, the petition is denied.

Background

The undisputed facts are as follows: Petitioner is the owner and landlord of the building

known as and located at 522 West 14 7 th Street (the ··Building'"). which includes apartment 34

(the "'Apartment"). Respondent DHCR is the agency charged with the administration and

enforcement of the relevant laws and regulations.

On or about April 27, 2017, Jennifer Orellano (""Tenant"), who resided at the Apartment,

filed an overcharge complaint with DHCR, alleging that the Apartment had been illegally

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deregulated and her rent improperly increased in 2015. DHCR sent inquiry to petitioner, who

responded that the Apartment had been exempted from regulation prior to the Tenant's

occupancy. On or about February I 1, 2020, DHCR notified petitioner that a prior DHCR order

under docket TI410111 R ("Prior Order") had determined that the legal regulated rent for the

Apartment on May 1, 2006 was $537.00. Upon petitioner's reiteration that the Apartment had

been deregulated, DHCR again requested documents to substantiate the claim.

In an order issued May 22, 2023 ("'RA Order"), the Rent Administrator found that a rent

overcharge occurred subsequent to April 27, 2013 (the base date for the overcharge proceeding)

and imposed treble damages on the ground the petitioner did not establish that the overcharge

was not willful (Petition, exhibit B). The RA Order further directed petitioner to roll back the

rent to the legal regulated rent and to refund the excess rent paid (id.). Petitioner's total liability

was fixed at $261,960.60 (id.).

Petitioner then filed a Petition for Administrative Review ('"PAR"), contending that the

RA Order erroneously considered an overcharge order outside the four-year lookback period in

contravention of the Court of Appeals· decision in Matrer of Regina Metro. Co .. LLC v New York

State Div. of Haus. & Community Renewal, 35 NY3d 332 [2020]). The PAR was denied in the

Challenged Order (Petition, exhibit A). In the Challenged Order. the Deputy Commissioner

found that both petitioner and the former owner of the Building had an obligation to set the legal

regulated rent in accordance with the 2006 Order notwithstanding that more than four years

passed since the 2006 Order was issued (id.). The Challenged Order affirmed the RA Order in its

entirety (id.).

Petitioner thereafter commenced the instant petition.

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Discussion

In the context of an Article 78 proceeding. the court·s function is to evaluate \vhether,

upon the facts before an administrative agency, that agency's determination had a rational basis

in the record or was arbitrary and capricious (CPLR ~ 7803[3]; see. e.g. _Matter <~l Pell v Board

of Educ. of Union Free School Disl. 1Vo. I of Towns <~{Scarsdale & Mamaroneck, Westchester

County, 34 NY2d 222 [1974]; Matter <?f E.G.A. Assoc. v New York State Div. ,?fHous. &

Community Renewal, 232 AD2d 302 [1st Dept 1996]). lhe administrative determination will

only be found arbitrary and capricious if it is "without sound basis in reason, and in disregard of .

. . the facts" (see Mauer of Century Operating Cmp. \' Popolizio, 60 NY2d 483, 488 [1983],

citing Matter of Pell, supra at 231 ). A reviewing court may not substitute its own judgment for

that of the agency making the determination (see Partnership 92 LP v New York State Div. of

Haus. & Community Renewal, 46 AD3d 425 [1st Dept 2007]). If the administrative

determination has a rational basis, there can be no judicial interference (Matter c~f Pell, supra at

231-232).

On review of the parties· submissions, the Court finds that petitioner has not

demonstrated that the Challenged order lacked a rational basis in the record or was arbitrary and

capricious. The Challenged Order relied in part on the decision of the Supreme Court. Kings

County in Renaissance Equity Holdings, LLC v New York State Div. of Hous. & Community

Renewal (2022 WL 1100982 [Sup Ct, Kings County 2022]), wherein the court extended to the

Court of Appeals decision in Cintron r Calogero ( 15 NY3d 34 7 [201 O] [holding that DHCR may

consider a rent reduction order issued outside the four-year look back period as part of reviewable

rental history]) to a prior overcharge order issued by DHCR. Such reliance was not arbitrary and

capricious, as the case remains good law and reasonably extends Cintron to include prior DHCR

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orders based upon the reasoning set forth in the relevant footnote in Regina (see Regina, 35

NY3d at n. 6). The Prior Order, as with the overcharge order in Renaissance and the rent

reduction order in Cintron, imposed a continuing obligation on the petitioner which remained in

effect through the lookback period. Nothing in Regina compels the interpretation that Cintron

applies only to rent reduction orders and not to other orders of which DHCR can be held to take

notice (id.).

Further, the detem1ination made in the Challenged Order had a rational basis in the

record. As the agency charged with administration of the Rent Stabilization Law, DHCR "has

broad discretion in evaluating pertinent factual data and determining the inferences to draw from

it" (Hawthorne Gardens, LLC v New York State Div. of Haus. & Community Renewal, 4 AD3d

135 [l st Dept 2004]). As such, DHCR is entitled to deference as to issues of credibility and the

weight of evidence (}i1a1!er ofAnsonia Residents Assn., 75 NY2d 206, 213 [1989]; see Jane St.

Co. v New York State Div. (?f'Hous. & Community Renewal, 165 AD2d 758 [l st Dept 1990]).

Here, the evidence in the record supports DHCR·s finding that petitioner failed to meet

its burden to establish that the Apartment was properly deregulated prior to the Tenant"s

occupancy. The Deputy Commissioner reasonably concluded based on the documents submitted

that based upon the Prior Order, the legal rent had not reached the level of the deregulation

threshold as of May 1, 2013. Further, the Deputy Commissioner reasonably found that

petitioner's contention that it did not receive rental records before purchasing the building and

had no knowledge of any overcharge was not sutlicient to establish by a preponderance of the

evidence that the overcharges were not willful. Accordingly, the imposition of treble damages

had a rational basis (see A4o!ler of" l 25 St. James Place LLC i· A'ew York S'tate Div. rdHous. &

Community Rene.val, 158 AD3d 417 [ I st Dept 20181: Rent Stabilization Law§ 26-516[a]).

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Based on the foregoing, the Court finds that petitioner has not met its burden to show that

the Challenged Order was arbitrary and capricious nor that it lacked a rational basis in fact or

law. Accordingly, it is hereby:

ORDERED and ADJUDGED that the petition is denied and this proceeding is

dismissed; and it is further

ORDERED that petitioner shall serve a copy of this order upon respondent and upon the

Clerk of the General Clerk's Office with notice of entry v,;ithin twenty days thereof; and it is

further

ORDERED that such service upon the Clerk shall be made in accordance with the

procedures set forth in the Protocol on Courthouse and county Clerk Procedures for

Electronically Filed Cases (accessible at the "£-Filing" page on the court's website at the address

W\vw.nvcourts.gov/supctmanh); and it is further

ORDERED that any requested relief not expressly addressed herein has been considered

and is denied.

This constitutes the decision and order of the Court.

03/29/2024
DATE

~ CASE DISPOSED

~
CHECK ONE: NON-FINAL DISPOSITION

GRANTED 0 DENIED GRANTED IN PART □ OTHER
APPLICATION: SETTLE ORDER SUBMIT ORDER

CHECK IF APPROPRIATE: INCLUDES TRANSFER/REASSIGN FIDUCIARY APPOINTMENT □ REFERENCE

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/9958752. Public record. Not legal advice.