Matter of 202 St., Inc. v New York State Div. of Hous. & Community Renewal 2013 NY Slip Op 31742(U) June 10, 2013 Supreme Court, Queens County Docket

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1 Matter of 202 St., Inc. v New York State Div. of Hous. & Community Renewal 2013 NY Slip Op 31742(U) June 10, 2013 Supreme Court, Queens County Docket Number: 13576/11 Judge: Timothy J. Dufficy Republished from New York State Unified Court System's E-Courts Service. Search E-Courts ( for any additional information on this case. This opinion is uncorrected and not selected for official publication.

2 [* 1] MEMORANDUM SUPREME COURT : QUEENS COUNTY IAS PART 35 HON. TIMOTHY J. DUFFICY x In the Matter of the Application of 202 ST., INC., Petitioner, Index No /11 Mot. Seq. 1 for an oer pursuant to Article 78 of the New York Civil Practice Law and Rules -against- THE NEW YORK STATE DIVISION OF HOUSING AND COMMUNITY RENEWAL; RUSSELL SMITH, RAUL TRIMINO, PATRICIA DACRES, ERNESTO DEFRETAS and PIERRE THOMAS, Respondents. Dated: June 10, x In this Article 78 proceeding, petitioner 202 St. Inc. seeks a judgment annulling and vacating the decision and oer issued by respondent New York State Division of Housing and Renewal (DHCR) dated April 8, 2011 which denied its petition for administrative review (PAR) and upheld oers issued by the Rent Administrator which denied the owner s applications for a restoration of the rent; and remanding the matter to the Rent Administrator with instructions to grant the PAR; or in the alternative remanding the matter to the Rent Administrator with instructions to hold a hearing to determine the scope of the restoration required, with a limitation that the restorations may not interfere with the recoed easements of thi parties. In August 2005, petitioner 202 Street Inc., purchased a housing complex known as Hollis Court Gaens which is occupied, in part, by rent stabilized tenants. Some after August 2005, separate certificates of occupancy were obtained for each unit in the gaen complex, and in 2010, petitioner, or another entity, sold some of the vacant housing units in the complex to co-respondents Russell Smith, Raul Trimino, Patricia Dacres, Ernest Defretas, and Pierre Thomas and granted them a horizontal easement allegedly obtained in

3 [* 2] 2005, across the green space for purposes of pedestrian and motor vehicle traffic. A vertical easement, dated 1947, created a paved alleyway for ingress and egress of passenger vehicles nd from 202 Street to 203 Street. The question of whether these housing units were properly removed from rent regulation and sold to thi parties was not before the DHCR in the proceedings under review. In August 2006, petitioner filed an application with the DHCR to convert the existing recreational area and open court ya space located between three main buildings in the complex into install individual driveways, with and fences or gates between rows of housing. The owner s application to reduce services included three blueprints, one of which showed the location of the proposed driveways, parking spaces, and the location of the two easements. The 1947 vertical easement running at the edge of the back courtya between the buildings situated along 109 Street, and the 2005 easement which runs horizontally across a portion of the center courtya. The Rent Administrator, in an oer issued on May 11, 2007 granted the owner s application. On June 15,2007 over half of the rent stabilized tenants of Hollis Court Gaens, under the auspices of a tenant representative filed a PAR, challenging the Rent Administrator s determination. The tenants asserted that the proposed conversion of the recreational and play area for children and adults in the complex decreased the amenities that have been in place since the construction of the complex. The Deputy Commissioner of the DHCR, in a decision and oer dated October 10, 2007 granted the tenants PAR and reversed the Rent Administrator s oer of May 11, The Deputy Commissioner determined that the open air recreational area is a required service which the owner must maintain, and directed the owner to restore the backya area. The property owner did not seek judicial review of the oer of October 10, Therefore, said oer, as well as the Deputy Commissioner s finding that the existing recreational/green space area between the buildings is a required service that the owner is required to provide and maintain, is binding on the petitioner and subsequent owners. In July 2008,various tenants filed complaints with the DHCR alleging reductions in services. Some complaints pertained to the tenant s individual units, while others were complex-wide. Following an inspection of the premises on October 31, 2008, the Rent Administrator in individual oers, issued on December 1, 2008, determined that the owner 2

4 [* 3] had failed to maintain building wide services, as the janitorial service was inadequate and no playground was provided, and granted the tenants a rent reduction until such time as the owner corrected the enumerated conditions and restored the playground. The Rent Administrator s oers made no reference to any easements on the subject property. The owner did not file a PAR with respect to the December 1, 2008 oers, and its time in which to do so has long expired. On February 18, 2009, 202 St. Inc. filed an application with the DHCR to restore the st rent to apartment 51C, 1 Floor, located at Street, and asserted that it had fully restored services by installing heavy duty playground equipment including slides and two custom-made picnic tables. The owner filed similar rent restoration applications for the following apartments : 35C, Street; 50C, Second Floor, Street; 48C Second Floor, Street; 47C First Floor, Street ; and 42C Second Floor, Street. On August 15, 2010, the Rent Administrator requested that a building-wide inspection be conducted and directed the inspector to determine, among other things, if the entrance, hallway and stairways needed sweeping or mopping; if there a playground was provided and if there were picnic tables in the backya; if the tenants had access to the backya; and if each area was outlined and landscaped. Similar inspection requests were made with respect to other buildings in the complex. The DHCR inspector visited the subject property on April 22, 2010, took photographs and filed a report. The inspector found that the janitorial service in the complex s entrances and stairways was inadequate; that these areas needed sweeping and mopping; that there was no playground; that the play area was 24' x 24' with a swing and slide with wood chips; that there were only two picnic tables in an area approximately 24' x 24' with wood chips; that only the first floors of the buildings have access to the play area and only when the gate was not locked; that the picnic and play areas are outlined with wood; that most of the courtya is not landscaped and there are weeds, broken pavement and uneven areas. On June 24, 2010 the Rent Administrator issued an oer denying the owner s application for a rent restoration, stating that there was inadequate janitorial services in the stairways and entrances which needed sweeping and mopping; that the owner had installed a small play area and some picnic tables, which was inadequate for a complex the size of Hollis Court Gaens; that there was little evidence that landscaping or repairs were 3

5 [* 4] performed to the remainder of the recreation area, although the owner was previously directed to restore the area; and that there was evidence of motor vehicle parking near the recreational area which was inconsistent with recreational use by all residents of the complex. The Rent Administrator determined that the owner had not restored the required services. The owner timely filed PARs on July 23, 2010 for each of the oers issued by the Rent Administrator on June 4, 2009, and asserted that the Rent Administrator had erroneously assumed that the scope of the playground area and/or recreational services had been defined. The owner asserted that it had completely restored the playground area to six tenants by installing a playground consisting of a swing and slide set and a separate picnic area with tables and chairs. It was asserted that the Rent Administrator s assumption that the playground/recreation area constituted the entire area behind the tenants apartments, to the exclusion of parking use, was incorrect as said assumption was overly broad, unsupported by the reco, in excess of the DHCR s jurisdiction and contrary to a publically recoed easement. In support of its PAR, the owner submitted a copy of the 1947 easement and related plot plan showing said easement. The tenants were notified of the owner s PAR and did not file a response. The Deputy Commissioner of the DHCR, in a decision and oer dated April 8, 2011 consolidated and denied the owner s PARs. The Deputy Commissioner stated that [t]he question of whether the landscaping and maintenance of the green space in the courtya of the subject complex is a required service has already been addressed by the Division. In this respect, the Rent Administrator s express reliance on the prior PAR Oer and Opinion under VF RT, issued on October 10, 2007, was proper. The Deputy Commissioner further determined that: The reco in the proceeding below establishes that an inspection was conducted on April 22, 2010 and the inspector reported that janitor service was inadequate, as mopping and sweeping was needed in the stairway areas. The inspector also reported that no playground equipment was provided by the owner, and that the only recreational areas provided were in the form of two wood-chipped areas, both 24' x 24' in dimension, one containing a swing and slide, and the other containing two picnic tables. The inspector further noted in the report that both areas were outlined with wood and that most of the courtya is not landscaped and 4

6 [* 5] has weeds and broken pavement and uneven areas. The accompanying pictures that are included in the report reveal, consistent with the inspectorial findings, that much of the courtya was found to be in a barren condition. Based upon this evidence -which confirmed the owner s failure to landscape and otherwise maintain the green space within the courtya of the subject complex, as previously directed-the Commissioner finds that the Rent Administrator properly determined that the owner failed to restore or correct the defective conditions and correctly denied the owner s applications for a restoration of rent. While the petitioner wishes to re-litigate the general issue of landscaping versus parking space in the courtya area of the complex, the Division s recos do not reflect that the owner ever sought review of the prior PAR Oer under VF RT by way of an Article 78 proceeding. At this point, the prior PAR Oer is now final and not subject to collateral attack in the instant administrative review proceeding, which is strictly limited to the issue of owner-compliance with the underlying rent-reduction oers issued in December It will be notes as well that the owner s arguments and supporting documents about an alleged easement recoed back in 1947, as summarized above, were not even raised or presented before the Rent Administrator in the proceeding below. Therefore, these claims and evidence would not be reviewable by the Commissioner due to the Scope-of-Review doctrine pursuant to RSC Section ". Lastly, the petitioner does not dispute the Rent Administrator s finding as to inadequate janitorial service. Petitioner thereafter timely commenced the within Article 78 proceeding and seeks a judgment vacating the Deputy Commissioner s oer of April 8, 2011 on the grounds that it is wrong, affected by an error of law, irrational, and arbitrary and capricious. Petitioner claims that although it is bound by the October 2007 oer, it is not barred from challenging the agency s reinterpretation of said oer, or from arguing that the agency is estopped from reinterpreting its prior oer. Petitioner asserts that the term playground was not mentioned in either the October 2007 oer or in the tenants complaints that resulted in said oer. It is asserted in December 2008 the DHCR inspector interpreted the October 2007 oer so as to require a playground, despite the fact that said oer required the restoration of a green space that was previously used as a recreational area. Petitioner claims it was induced it to install a playground, and that in June 2010, the Rent Administrator once 5

7 [* 6] again reinterpreted the October 2007 oer and rejected the playground for reasons including an entirely new requirement that no parking was permitted anywhere in the backya area. Petitioner asserts that the Commissioner improperly affirmed this new requirement while refusing to consider evidence it submitted that parking uses had existed in the area since 1947, and that the DHCR should be estopped from claiming that petitioner s installation of a playground is insufficient to satisfy the October 2007 oer and the subsequent oers. Petitioner further asserts that the DHCR misapplied its own rules and refused to consider relevant evidence with respect to the issue of parking in the subject area. Petitioner asserts that the issue of no parking in the backya area first arose in the June 2010 oer and was not included in the Commissioner s October 2007 oer. It is asserted that the prior administrative proceedings did not involve the same factual question of whether parking was historically permitted in any portion of the backya, and therefore the agency s attempt to rely upon principles of res judicata is unavailing. Petitioner, therefore, asserts that it properly and timely challenged the no parking issue in its PAR and that the Commissioner s refusal to review this new requirement was improper. Finally, petitioner asserts that the DHCR acted beyond its jurisdiction by entering oers that adversely affected the vested property rights of the individual respondents who each purchased a two-family home together with the easements running through the backya. Respondent DHCR, in opposition, asserts that its determination of April 8, 2011 is neither arbitrary nor capricious, nor an abuse of discretion and is supported evidence in the reco and the law. The court's power to review an administrative action is limited to whether the determination was warranted in the reco, has a reasonable basis in law and is neither arbitrary nor capricious (Matter of Heintz v Brown, 80 NY2d 998, 1001 [1992]; Matter of Colton v Berman, 21 NY2d 322, [1967]; Matter of Queens Realty v New York State Div. of Hous. and Community Renewal, 222 AD2d 440 [1995]). An agency's interpretation of its own regulations is entitled to deference if that interpretation is not irrational or unreasonable (Matter of Gaines v New York State Div. of Hous. & Community Renewal, 90 NY2d 545, 549 [1997]; see Samiento v World Yacht Inc., 10 NY3d 70, 79 [2008]). Put another way, the courts will not disturb an administrative agency's determination unless it 6

8 [* 7] lacks any rational basis (see Matter of IG Second Generation Partners L.P. v New York State Div. of Hous. & Community Renewal, 10 NY3d 474 [2008]; see also Matter of Gilman v New York State Div. of Hous. & Community Renewal, 99 NY2d 144, 149 [2002]). Moreover, [j]udicial review of administrative determinations is confined to the facts and reco adduced before the agency (Featherstone v Franco, 95 NY2d 550, 554 [2000], quoting Matter of Yarbough v Franco, 95 NY2d 342, 347[2000], quoting Matter of Fanelli v New York City Conciliation & Appeals Bd., 90 AD2d 756, 757 [1982], affirmed 58 NY2d 952 [1983]). Here, the DHCR s determination of April 8, 2011 is neither arbitrary nor capricious, nor an abuse of discretion, and is supported by the evidence in the reco and the law. The DHCR s oer of October 2007 and December 2008 constitute final oers and are no longer subject to judicial review. Petitioner, therefore, may not re-litigate or collaterally attack, the DHCR s prior finding that the back courtya and its amenities are required ancillary services that must be maintained for use by the rent stabilized tenants. It is undisputed that the DHCR determined that petitioner had failed to maintain the open air recreational area or green space back courtya and that it was directed to restore said space. The rent reduction oers were based upon the petitioner s failure to provide adequate janitorial services and its failure to restore the recreational area. Contrary to petitioner s claims, the DHCR did not direct that it create a playground by installing playground or picnic equipment. Nor is there any evidence that petitioner was induced to install such equipment. Rather, petitioner in its application to restore the rent claimed that it had complied with the DHCR s prior oers to restore the recreational area by installing a slide and swing and two picnic tables. The Deputy Commissioner, in reviewing the Rent Administrator s oer was entitled to rely upon the report and photograph s of its inspector which revealed that the janitorial services remained inadequate, and that the open recreational area in the back courtya had not been restored. The Deputy Commissioner s determination that the installation of a single slide and swing and two picnic tables, each contained within a 24' x 24' area with wood chips and wooden outlines, did not constitute a restoration of the open recreational area or green space in the back courtya, was rational, supported by the evidence in the reco, and 7

9 [* 8] neither arbitrary nor capricious (see Matter of Joralemon Realty NY, LLC v State of NY Div. of Hous. & Community Renewal, 102 AD3d 965 [2d Dept 2013]). Although the DHCR s prior oers did not define the size of the recreational area, the oer of October 10, 2007 described an open green space where communal recreational games such as tag and pick up ball games were a regular part of the complex s daily life and had diminished over time due to the neglect of the property owner. The Deputy Commissioner s determination that the two 24' x 24' spaces provided by petitioner were inadequate, therefore, is supported by substantial evidence in the reco. The Deputy Commissioner s scope of review when conducting a PAR is limited to the facts and evidence before the Rent Administrator as raised in the petition (see 9 NYCRR ). New facts or evidence can be admitted only in narrow circumstances--where petitioner submits with the petition certain facts or evidence which he or she establishes could not reasonably have been offered or included in the proceeding prior (id.). When the petitioner establishes good cause to consider the new evidence, DHCR may remand the matter for redetermination to allow the Rent Administrator to consider the new evidence (see id.). The Court of Appeals has also recognized that similar good cause provisions in the Rent Stabilization Code permit DHCR to accept late filings for good cause shown at any stage of a proceeding --that is, at any point before the Commissioner has entered a final oer (Matter of Dworman v New York State Div. of Hous. and Community Renewal, 94 NY2d 359, [1999]; see also G ilman v N.Y. State Div. of Hous. & Cmty. Renewal, 99 NY2d 144, 150 [ 2002]). Here, petitioner did not submit any evidence pertaining to the 1947 easement in its application to restore the rent. Therefore, as this evidence was submitted for the first time in its PAR, and as petitioner did not present any reason for the failure to submit such evidence in the proceeding before the Rent Administrator, the Deputy Commissioner was not required to consider this evidence. Furthermore, the 1947 easement was not relevant, as the issue before the Deputy Commissioner was whether petitioner had established that it was providingadequate janitorial service and had restored the recreational area in the rear courtya. The DHCR, in its prior oer did not oer petitioner to restore the recreational area within area of the paved easement, and petitioner did not claim that the 1947 easement encompassed the entire back courtya. The Deputy Commissioner made no determination 8

10 [* 9] as to whether parking in the was prohibited in the entire area behind the buildings, and petitioner was not directed to remove the concrete car pads. Petitioner did not submit any evidence with respect to the 2005 easement in its application to restore the rent or in its PAR. Therefore, the documentary evidence presented by the petitioner in this proceeding pertaining to the 2005 easement constitutes evidence outside of the administrative reco and will not be considered (Featherstone v Franco, 95 NY2d at 554 [2000]). Finally, the individual co-respondents were not parties to the administrative proceeding and have not appeared in this proceeding. Petitioner and the individual corespondents are in an adversarial position and petitioner may not advance any claims on behalf of the individual co-respondents. Furthermore, contrary to petitioner s assertions, the individual co-respondents did not sustain any injury in fact as a result of the Deputy Commissioner s oer of April 8, 2011, which denied the PAR and upheld the Rent Administrator s denial of petitioner s application to restore the rent (see generally MFY Legal Services, Inc. v Dudley, 67 NY2d 706 [1986]). Accoingly, the petitioner s request to vacate the DHCR s oer of April 8, 2011 is denied in its entirety, and the petition is dismissed. Settle Judgment. TIMOTHY J. DUFFICY, J.S.C. 9