Matter of Sandow v State of New York Div. of Hous. & Community Renewal

[*1] Matter of Sandow v State of New York Div. of Hous. & Community Renewal 2009 NY Slip Op 51046(U) [23 Misc 3d 1132(A)] Decided on May 26, 2009 Supreme Court, New York County Figueroa, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on May 26, 2009
Supreme Court, New York County

In the Matter of the Petition of Danielle Sandow and Judith Stollerman, Petitioners,

against

State of New York Division of Housing and Community Renewal, Respondent.



108898/08



Appearances: Cardozo Bet Tzedek Legal Services, by Leslie Salzman, Esq., NY NY, for petitioners

Gary R. Connor, Esq., General Counsel, NYS Division of Housing and Community Renewal, by Sandra A. Joseph, Esq., of counsel, for respondent

Nicholas Figueroa, J.

This Article 78 proceeding is brought by two tenants occupying separate rent-regulated apartments. Petitioners seek a judgment annulling respondent's determinations that their tenancies cannot eventually return to the City's rent control law. On January 29, 2009, the current landlord was given leave to intervene.

In August 2006, petitioners' then landlord formally notified them, invoking the City's rent stabilization law (NYC Administrative Code 26-501 et seq.), that he intended to use their units for his private residence and accordingly was not renewing their leases upon their expiration on November 30, 2006. Under the City's rent stabilization law, tenants of petitioners' advanced ages may be evicted upon such notice, provided that they are offered comparable units at no higher rents (Administrative Code 26-511[c][9][b]). In view of their long tenancies as well as their ages, petitioners could not be evicted if their units were governed by the City's rent control laws under the Local Emergency Housing Rent Control Act (NY Unconsol. Laws 8601 et seq.).

In September 2006, each petitioner filed with respondent a written request for a "formal determination of my rent control status, along with any appropriate reduction in my monthly rent." During March 2007, respondent's Rent Administrator ruled that petitioners' apartments were instead governed by the rent stabilization law. Petitioners filed administrative appeals. Respondent denied their Petitions for Administrative Review (PARs) on April 30, 2008, and [*2]subsequently denied their requests for reconsideration.

While petitioners' administrative appeals were pending, a new landlord offered to renew their leases. Petitioners' legal argument has changed accordingly, from asserting that their apartments are covered by the rent control law to conceding that they are presently under the rent stabilization law, but subject to a reversion to the rent control law. Petitioners' present theory is based on the identical terms of two orders issued by respondent's predecessor agency in 1957, several years before petitioners' tenancies began and after petitioners' current units were converted from rooming house accommodations to single family occupancies. Issued pursuant to the State's Rent and Eviction Regulations (9 NYCRR 2100.11) then in effect under the State's Emergency Housing Rent Control Law, each of the 1957 Orders declared that the converted apartment was "decontrolled," i.e., returned to the free market. By its express terms, however, each such Order further provided that it was to be "effective only so long as the [subject unit is] rented for single family occupancy." Petitioners maintain that, if their current landlord had not retracted their former landlord's non-renewal notices, each Order by its terms would have become ineffective and, in consequence, their units would have reverted to regulation under the rent control law.

Respondent for its part denied petitioners' PARs on two separate grounds. First, in view of the current landlord's renewal of the leases, respondent concluded that the PARS were moot. Secondly, respondent rejected petitioners' position on the merits. In other words, respondent did not accept petitioners' theory that, under the 1957 Orders and relevant statutes, the previously decontrolled units could eventually revert from rent stabilization to rent control.

Although petitioners dispute respondent's assessment of the merits, they argue that respondent should not have proceeded to address those merits once it had concluded that the matter was moot. From respondent's perspective, however, the broader question was, and remains, whether the rent stabilization law, which both sides now agree currently governs petitioners' apartments, allows for the possibility that petitioners' units may eventually revert to rent control. Since such issue affects among other things the present value of the landlord's interest in those apartments, it is of immediate import notwithstanding that renewed leases have been granted and petitioners' eviction is no longer imminent. Accordingly, this matter presents an "actual controversy between [the] litigants before [the court]" Matter of Schulz v State of New York, 182 AD2d 3, 4), and it is therefore ripe for adjudication.

Moreover, despite respondent's arguments to the contrary, petitioners are not collaterally estopped by the disposition of an issue that one of the petitioners had raised years ago against the then landlord concerning the regulated status of her apartment. Such issue was resolved by a District Rent Administrator's order, dated April 14, 1986, granting the petitioner's administrative complaint, which had sought a renewed lease on the basis of the rent stabilization law. The complaint did not, however, raise the reversion question that is central to the instant petition. Accordingly, the 1986 Order clearly can have no preclusive effect here.

The principal question is whether the subject apartments may ultimately revert to coverage by the rent control law or whether, to the contrary, they will remain subject to the rent stabilization law even if the current landlord eventually tenders a non-renewal notice.

The answer requires reference to two parallel, but disparate, regulatory regimes. For instance, the rent control law, when compared to the rent stabilization law, affords considerably [*3]greater advantages to tenants and, inversely, greater restraints on landlords. Among the other substantial differences between the two systems, the rent control law provides for periodic adjustments to rents via statutory formulae, whereas the rent stabilization law allows for periodic adjustments via lease renewals. Moreover, as indicated above, the rent control law forbids eviction of tenants under certain limited circumstances, whereas the rent stabilization law would allow evictions on a broader scale.

In assessing petitioners' reversion claims, it is useful to review briefly the historical background of rent regulation as variously expressed in State and local enactments.

The current system of City rent regulation has its roots in federal laws initially enacted during World War II to address nation-wide housing shortages. By the Federal Housing and Rent Act, Congress authorized the various States to implement rent controls on their own. In 1946, New York State was the first to accept such invitation(see McPherson, Note, "It's the End of the World as We Know It ... : Rent Regulation in New York City and the Unanswered Questions of Market and Society," 72 Fordham L. Rev. 1125, at 1147), enacting the Emergency Housing Rent Control Law (L.1946, ch 274), and establishing a Temporary State Housing Commission to enforce curbs on rent gouging in the face of a continuing housing shortage (see id.).

In 1962, New York State authorized large cities to regulate and administer their rent control regimes locally. In that year, the city council enacted the City Rent and Rehabilitation Law, applicable to housing stock existing prior to 1947 and to "housing accommodations" converted to single-family occupancy thereafter, with the following proviso:

[A]ny housing accommodations created as a result of any such conversion

on or after [5/1/50]... shall continue to be subject to rent control ... unless the

state rent commission, prior to [5/1/62], issued an order decontrolling them...;

and provided further, that any such order of decontrol ... shall remain effective after [4/30/62] only so long as the housing accommodations are not occupied

for other than single family occupancy....

(Administrative Code 26-403[e][2][i][2]).

As commentators have noted, rent regulation within New York City and elsewhere in the State was intended as a temporary cure to a problem that was perceived as transitory (see, e.g., "The New York Rent Stabilization Law of 1969," 70 CLMLR 156, at 162; Willis, 57 YLJ 351, "State Rent-Control Legislation, 1946-47," at 356, 364; Hess, Note,"Federal Preemption of Rent Regulation under FIRREA," 20 F. Urb. L.J. 939, n. 30). Although City rent regulation continues up to the present, its history has been characterized by periodic statutory expirations, followed by renewals, and a combination of various decontrols, some brief, others sustained.

Two competing forces underlie this erratic history. On the one hand, the city council hoped to insulate tenants from their landlords' overheated pursuit of profit in a tight housing market. On the other hand, the legislators also were concerned that regulation, among other things, could have a counter-productive "chilling effect" on new construction (see 8200 Realty Corporation v Lindsay, 27 NY2d 124, 138). Spurred by such considerations, in 1969 the council chose to enact the Rent Stabilization Law (Administrative Code 26-501 et seq.) as a deliberately "less onerous form of rent control" (200 Realty Corporation v Lindsay, supra, at [*4]137). However, to avoid "dislocation and hardship" to tenants in rent-controlled units ("The New York Rent Stabilization Law of 1969," supra, at 162), the council initially limited the rent stabilization law to post-1946 buildings.

Between 1969 and 1974, the city council ventured to deregulate large numbers of housing units through the Vacancy Decontrol and Urstadt Laws (see McPherson, Note, supra, at 1137-39). The results of that experiment (coupled with certain troublesome economic developments) persuaded the legislators to enact the Emergency Tenant Protection Act of 1974 (id., at 1137-38), which left then-rent-controlled units unaffected, but extended the rent stabilization law to previously decontrolled or exempt units. Thus, units "decontrolled" by orders such as the 1957 Orders were nevertheless re-regulated by being made subject to the new stabilization laws. At the same time, the legislature was content to retain vacancy decontrols for the units that had remained under the rent control law, with vacated units automatically defaulting either to coverage by the rent stabilization law or, in some limited circumstances, to deregulation (see Administrative Code 26-403(e)(9) et seq.).

Although petitioners now concede that their apartments are currently governed by the rent stabilization law, they nevertheless maintain, in effect, that the rent stabilization law is intended to cover their units only so long as the "decontrol" declared by the 1957 Orders itself remains in effect. This position does not withstand scrutiny.

When the Act of 1974 extended the rent stabilization law to previously decontrolled and exempt units, it was not intended that only some of its provisions would be applicable to such units. That is, nothing in the statute's language or legislative history suggested that, for example, its provisions concerning eviction were not intended to apply to apartments such as petitioners'. Indeed, the full applicability of such provisions was consistent with the general legislative intent underlying the Act of 1974, as described above.

Moreover, the 1957 Orders, while "decontrolling" these units, clearly did not bar the legislature from proceeding to institute new "controls"on such units (see Zeitlin v New York City Conciliation and Appeals Bd., 46 NY2d 992, 994; 8200 Realty Corporation v Lindsay, supra, at 137). In exercising its legislative prerogative, the city council was constrained solely by considerations of public policy. Thus, the council was free to render such orders in effect irrelevant, issued as they had been by an agency whose only mandate was to implement the legislative will. Conversely, even if the 1957 Orders by their own terms eventually became "ineffective," that development could not effect a reversion of the subject apartments to the rent control law contrary to the legislature's intent in enacting the rent stabilization law.

Furthermore, the rent control law itself offers no support to petitioners' position. To the contrary, reference to the above-quoted provisions of Code section 26-403(2)(i)(2) confirms that the terms of the statute do not contemplate restoring rent control to a unit when the landlord sends the type of notice their former landlord gave petitioners. Instead, such provisions assure that a "decontrolled" unit may become re-controlled only if it is "used for other than single family occupancy." Simply put, such precondition to re-control is not met where the landlord reclaims a unit for his personal residence.

In light of the foregoing, there is no need to consider respondent's laches argument.

Accordingly, it is ADJUDGED that the petition is denied and the proceeding is

dismissed. [*5]

This constitutes the decision and Judgment of the court.

Dated: May 26, 2009

ENTER:

________________________J.S.C.