Matter of Noto v New York State Div. of Hous. & Community Renewal
Annotate this CaseDecided on December 19, 2002
Supreme Court, New York County
In the Matter of the Application of NOTO, Petitioners, For a Judgment Pursuant to Article 78 of the CPLR
against
NEW YORK STATE DIVISION OF HOUSING AND COMMUNITY RENEWAL and BEDFORD APTS. CO., Respondents.
106117/02
Eileen Bransten, J.
In this CPLR Article 78 proceeding, petitioner Katherine Noto seeks an Order and Judgment setting aside the determination of respondent New York State Division of Housing and Community Renewal ("DHCR") that deregulated her rent based on luxury decontrol. Respondent Bedford Apts. Co. ("Bedford") cross-moves for dismissal of the petition.
Background
Katherine Noto, her husband William Wachtell and their children resided in a building addressed at 168 West 86th Street in Manhattan. Noto was the named lessee for apartment 15B and her husband was the named lessee of apartment 15C. Although Noto and her husband paid rent separately, the wall between the two apartments was removed thereby adjoining the premises. Significantly, after Noto and her husband renovated the premises the two apartments became a combined living space: there was only one kitchen (located in 15C), a master bedroom suite (in 15B) and other bedrooms (in 15C). The building's Certificate of Occupancy, however, was never amended to reflect the merger of the apartments.
In 1998, respondent Bedfordthe owner of the buildingfiled a petition for high income rent deregulation of apartment 15B.[FN1] The owner alleged that the legal rent for the apartment was over [*2]$2,000 and requested verification of the household income in order to establish that it exceeded $175,000 in each of the two preceding years.
Noto responded that she alone leased apartment 15B and that her husband separately leased and occupied the adjacent apartment 15C.
DHCR notified Bedford and Noto that the Department of Taxation and Finance ("DTF") found that the household income for the Noto/Wachtell family exceeded $175,000 in both 1996 and 1997. Verified Petition, Ex. C, at 2.
Additionally, a DHCR inspector investigated and explained that the center wall separating the units had been removed so that the apartments were accessible to one another without use of the public hallway. The inspector diagramed the floor plans of the apartments, which revealed that the entrance to unit 15C was the main entry from the public hallway and that an entrance to the same hallway through apartment 15B had been sealed. The inspector further pointed out that apartment 15B had no kitchen.
Based on the DHCR inspector's report and the DTF's findings, the Rent Administrator found that the apartment in question should be deregulated at the expiration of the current lease. The Rent Administrator noted that William Wachtell, among others, was an "occupant" of the residence.
Noto filed a petition for administrative review ("PAR"). In her PAR she argued that she, Wachtell and the landlord all agreed that the apartments would not be deregulated, otherwise, she would not have signed the lease. She stated that: "The two apartments have been and continue to be maintained pursuant to the New York State Division of Housing and Community Renewal's regulations and rent stabilization law and code, as two separate units as evidenced by separate registrations, separate leases with different terms, different rent checks for each one paid by different parties and different occupants.* * *"It is respectfully submitted that the only basis for the determination and order reached by the Rent Administrator is an inspection, which led to an arbitrary application of a subjective standard for who is the occupant of Apartment 15B. In effect, the order of the DHCR deregulating Apartment 15B, based on information with respect to the tenant in Apartment 15C, should not be allowed to stand." Verified Petition, Ex. B.
The Commissioner of DHCR disagreed and denied the PAR. The agency determined that pursuant to Operational Bulletin 95-3, which provides that the degree of physical integration between apartments and nature of their usage is relevant to assessing whether apartments should be deemed combined for luxury decontrol purposes, the units in question were properly deemed integrated. DHCR explained that "the fact that the apartments have separate renewal leases, are registered separately, and have their rents paid separately is not relevant to the issue of whether the two apartments should be considered combined for purposes of luxury decontrol. Likewise, neither is the fact that the owner never amended the Certificate of Occupancy to reflect changes made to the apartments." Verified Petition, Ex. C, at 3. DHCR further statedbased primarily on the inspection [*3]resultsthat "the evidence of record establishes that the subject apartment and Apartment 15C are physically integrated into one combined housing unit which is used by the tenant's family as their residence. * * * As a result, the tenant's entire family should be considered to be occupants of the subject apartment as well as apartment 15C, and all of their incomes, including the tenant's husband's despite the fact that he was not the official tenant of record of the subject apartment, should be included in the relevant household income of the subject apartment in determining whether it qualifies for high income rent deregulation." Id., at 4.
DHCR also noted that the tenants' alleged agreement with their landlord was irrelevant to the rent decontrol determination and was not binding on the agency. Id.
In this petition, Noto argues that (1) the units were not occupied as one integrated housing unit based on marital difficulties between herself and William Wachtell, and (2) DHCR "exceeded its jurisdiction and issued a decision based on an excess of authority which is both arbitrary and capricious, in arriving at its determination." Verified Petition, at ¶¶ 7-8. Noto maintains (without really explaining why) that the inspection and determination were "outside [DHCR's] relevant authority" and that removal of the wall was part of an agreement with her landlord. She also rehashes the arguments presented to DHCR that the apartments were separate with separate occupants based on, among other things, the different leases, the building's Certificate of Occupancy and the separate rent checks.
DHCR and Bedford counter that the agency's determination must be upheld based on its rationality. Under the circumstances, this Court readily agrees; therefore, the petition will be denied and the proceeding will be dismissed.
Analysis
Judicial reversal of an administrative order pursuant to CPLR Article 78 is limited to instances where the agency acted arbitrary or capriciously. Matter of Pell v. Board of Educ., 34 NY2d. 222, 231-232 (1974); see also, Matter of Arrocha v. Board of Educ., 93 NY2d 361, 363 (1999); Matter of Nick v. DHCR, 244 AD2d 299 (1st Dep't 1997); Greystone Management Corp. v. Conciliation and Appeals Board of City of New York, 94 AD2d, 614, 616-617 (1st Dep't 1983), aff'd 62 NY2d 763 (1984). So long as there is a rational basis supporting an administrative order, judicial review is narrowly circumscribed and the agency's decision must be upheld. See, Matter of Pell v. Board of Educ., supra, 34 NY2d, at 231; Matter of Guzman v. Safir, 293 AD2d 281 (1st Dep't 2002), lv. denied __ NY2d __ (Oct. 15, 2002).
Additionally, DHCR's reasonable interpretation of the statutes and regulations it administers is entitled to substantial deference. Matter of Salvati v. Eimicke, 72 NY2d 784, 791 (1988), rearg. denied 73 NY2d 995 (1989); see also, Matter of McMurray v. DHCR, 135 AD2d 235, 240 (1st Dep't 1988), aff'd 72 NY2d 1022 (1988), rearg. denied 73 NY2d 918 (1989).
Rent Stabilization Law § 26-504.1 exempts from rent stabilization housing accommodations which: "(1) are occupied by persons who have a total annual income in excess of one hundred seventy-five thousand dollars per annum for each of the two preceding calender years * * *; and (2) have a legal regulated rent of two thousand dollars or more per month."[*4]
Here, based on the DHCR inspection, which was perfectly proper (see, Rent Stabilization Code § 2527.5 [authorizing "investigations of the facts" and "inspections" at any stage of a DHCR proceeding]), and the DTF findings it was infinitely rational to conclude that Mr. Wachtell was an occupant of apartment 15B. Unquestionably, the apartments had been joined and were used by the entire Wachtell/Noto family. That Wachtell and Noto are now divorcinga fact that apparently was not raised in the PAR and cannot be considered in this petition is irrelevant. Apartments 15B and 15C were merged into one large residence, and therefore, both lessees (who the evidence shows also occupied the joined apartments) could reasonably and rationally be deemed occupants.
That the building's Certificate of Occupancy was wrong, that the parties had separate leases and paid separate rents, and that there may have been a private arrangement with the landlord is also immaterial. The law is explicit. If an apartment's occupants' income exceeds $175,000 in the preceding two years and the rent charged is $2,000 a month or more, there is no entitlement to rent stabilization. The evidence unambiguously supports DHCR's decontrol determination based on Mr. Wachtell's occupancy of apartment 15B, the apartment occupants' total income as confirmed by DTF and the apartment's monthly rent.
In addition, this Court must defer to DHCR's analysis of whether the apartments were physically integrated and should be deemed combined for luxury decontrol purposes. Here, again, the evidence clearly supports DHCR's determination as the units had one door leading outside and one kitchen.
There is not a scintilla of evidence indicating that DHCR exceeded its authority. Nor has there been any showing whatsoever of irrationality. Because DHCR's determination is reasonableindeed, the record establishes that the decision was well-supported by the evidence and that a contrary conclusion would have been completely irrationalit will be upheld.
Accordingly, it is
ORDERED AND ADJUDGED that the petition is denied and the proceeding is dismissed; it is further
ORDERED AND ADJUDGED that Bedford's cross-motion is granted in its entirety.
This constitutes the decision and judgment of the Court.
Dated: New York, New York
December 19, 2002
E N T E R
Hon. Eileen Bransten
Footnotes
Footnote 1: Noto argues that Bedford's income certification form was untimely. Because the argument was not raised below before DHCR, this Court will not entertain it in this Article 78 proceeding. See, e.g., Matter of 985 Fifth Ave. Inc. v. DHCR, 171 AD2d 572, 575 (1st Dep't 1991), lv. denied 78 NY2d 861 (1991); see also, Fanelli v. NYC Conciliation and Appeals Bd., 90 AD2d 756 (1st Dep't 1982), aff'd 58 NY2d 952 (1983) . In any event, record evidence indicates that Bedford sent Noto an income certification form before the May 1 deadline in Rent Stabilization Law § 26-504.3.
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
