Matter of Shernon v New York State Div. of Hous. & Community Renewal
Annotate this CaseDecided on September 9, 2005
Supreme Court, Kings County
In the Matter of the Application of Susan Shernon, Petitioner, For a Judgment Pursuant to Article 78 of the Civil Practice Law and Rules,
against
New York State Division of Housing and Community Renewal, Respondents.
12518/05
Theodore T. Jones, J.
Upon the foregoing papers, petitioner Susan Shernon seeks judicial review, under article 78 of the CPLR, of an order issued by respondent New York State Division of Housing and Community Renewal (DHCR), dated February 17, 2005, which granted, in part, petitioner's petition for administrative review.
This matter ensued from the issuance of a building-wide rent reduction order by the DHCR on January 13, 1986 for 26 rent controlled tenants and 33 rent stabilized tenants [*2]residing in the owner's building at 2234 Ocean Avenue in Brooklyn based on a determination that six services were not being maintained. The owner subsequently filed a rent restoration application for 25 of the 26 rent controlled tenants affected by the rent reduction order. An inspection was conducted which found that all six conditions giving rise to the rent reduction order had been corrected. Accordingly, the Rent Administrator granted the application for a rent restoration order.
On October 1, 1993, the owner filed a second rent restoration proceeding with respect to petitioner's apartment, one of the 33 rent stabilized affected by the prior rent reduction order. Pursuant to the second rent restoration proceeding, a new inspection of the building was performed on May 31, 1995. This time, the inspection revealed electrical wiring in the basement and laundry room and cracks and peeling paint in the lobby ceiling. Based on the second inspection, the rent restoration application was denied by order dated June 14, 1995. On August 29, 2002, a representative of the owner contacted the DHCR complaining that the two rent restoration determinations were contradictory. The matter was reopened by the DHCR "based upon fraud, illegality, or irregularity in a vital matter" and by order dated December 12, 2002, the Rent Administrator revoked the May 31, 1995 order and restored the rent for petitioner's apartment effective October 1, 1993. The Rent Administrator stated that any arrears due as a result of the order may be paid to the owner in equal monthly installments equal to the monthly rent reduction. Petitioner filed a PAR on January 14, 2003. By order dated November 7, 2003, the Deputy Commissioner denied petitioner's PAR, stating that "[t]he rent for apartment B1 was properly restored based on the 1991 inspection which found the services at issue were restored. If the conditions listed in the tenant's PAR have recurred since the 1991 inspection, the tenant may file a new complaint, if the facts so warrant."
An article 78 proceeding was thereafter commenced by petitioner challenging the Deputy Commissioner's order of November 7, 2003. By order dated May 14, 2004, the court (Hon. Gerard H. Rosenberg) vacated the Deputy Commissioner's order and remanded the proceeding to the DHCR for further development of the record and reconsideration.
On remand, following the submissions of additional documentation by petitioner and the owner, the Deputy Commissioner found that the Rent Administrator lacked the authority to reopen the 1995 order based on fraud, illegality or an irregularity in a vital matter, since the request for reconsideration was not made within the 95 day limitations period articulated in DHCR Policy Statement 91-5. However, the Deputy Commissioner found that owner could have filed a request to restore the rent based on the Rent Administrator's error in failing to consider the 1991 inspection. The Deputy Commissioner stated: The Administrator should have treated the owner's August 29, 2002 letter, not as a request to reopen the 1995 order since such reconsideration was time barred, but as a new request to restore the rent based on the old error. That the Administrator converted this letter to a request to reopen, in essence prevented [*3]the owner from filing a rent restoration application. In the reconsideration proceeding processed under docket number QI210009-RK, the tenant was given notice of the proceeding and had a full and fair opportunity to contest the owner's contention that the rent should be restored, just as would have been given had this been a rent restoration proceeding. As the tenant was served with notice of the reopening proceeding on October 3, 2002, it is determined that rent should be restored as of November 1, 2002, the month following notice to the tenant, in accordance with Policy Statement 90-2.
In the instant article 78 petition, petitioner contends, in essence, that since the DHCR found that unsafe conditions existed in 1995, the DHCR should not have granted a rent restoration without conducting a new inspection.
A court's function in an article 78 proceeding is to determine, upon the proof before the administrative agency, whether the determination had a rational basis in the record or was arbitrary and capricious (Pell v Bd. of Educ., 34 NY2d 222, 230-231 [1974]). "Arbitrary action is without sound basis in reason and is generally taken without regard to the facts" (id. at 231).
DHCR's Policy Statement 90-2 states, in part:
As rents are reduced when there is a failure to maintain required services, likewise, DHCR will issue orders to restore those rents after required services as specified in the rent reduction order have been restored. The rent restoration proceeding is initiated when an owner files an application affirming that the required services have been restored. If the tenant confirms the owner's statement, then the rent is restored. Otherwise, an inspection is made to determine if the required services have been restored. If the tenant denies access for the DHCR inspection, then the rent will be restored. (emphasis added).
The DHCR's policy statement clearly contemplates that unless the tenant confirms the owner's statement an inspection will be performed upon an owner's application for a rent restoration. While an agency is generally entitled to due deference in its interpretation and/or application of its regulations (Matter of Ansonia Residents v DHCR, 75 NY2d 206, 213 [1989]), such deference is not without limits. The court has an obligation to scrutinize agency determinations and proceedings to ensure due process and fundamental fairness (see Barrett v Lubin, 188 AD2d 40, 45 [1993]). The court sees no problem in the DHCR's treatment of the owner's request for reconsideration of the 1995 order as a new request for [*4]a rent restoration. However, the court finds the DHCR's decision to grant a rent restoration based upon an inspection performed nearly fourteen years prior is irrational, particularly since petitioner was not a party to the first 1991 rent restoration proceeding and a subsequent inspection in 1995, albeit made in conjunction with a proceeding later nullified, revealed that some services had either not been restored or had since been reduced.
As a result, petitioner's article 78 proceeding is granted, the Deputy Commissioner's order of February 7, 2005 is vacated, and this matter is remanded to the DHCR for redetermination of the owner's rent restoration request, which only shall be issued subsequent to and based upon a new inspection of the subject property.
The foregoing constitutes the decision and order of the court.
E N T E R,
J. S. C.
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.
