Matter of Acerno v New York City Dept. of Fin.

[*1] Matter of Acerno v New York City Dept. of Fin. 2020 NY Slip Op 50138(U) Decided on February 3, 2020 Supreme Court, Queens County Weiss, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 February 3, 2020
Supreme Court, Queens County

In the Matter of the Application of John Acerno, Petitioner, For a Judgment Pursuant to Article 78 of the Civil Motion Seq. No. 1 Practice Law and Rules,

against

New York City Department of Finance ("DOF") and Jacques Jiha, as Commissioner of DOF, Respondents.



2949/19
Allan B. Weiss, J.

The following papers read on this Article 78 proceeding by petitioner John Acerno for a judgment directing respondents to grant his benefit takeover application and continue his mother's Senior Citizen Rent Increase Exemption (SCRIE) freezing the rent at $555.16 per month, retroactive to May 2016 and thereafter going forward; granting his landlord the associated tax abatement for the period of May 2016 to the present; and awarding costs.

Papers Numbered

Order to Show Cause-Verified Petition-Affidavits-Exhibits 1-5

Verified Answer-Exhibits 6-8

Memorandum of Law

Reply Memorandum of Law

Upon the foregoing papers the petition is determined as follows:

Petitioner John Acerno commenced the within action Article 78 proceeding on May 14, 2019, and challenges respondents' determination dated January 18, 2019, which denied his appeal of his SCRIE benefit takeover application for the apartment known as 47-30 59th Street, Flushing, New York.

Petitioner's mother Claire Acerno was the long term tenant of the rent-stabilized apartment known as 47-30 59th Street, Apartment 6K, Flushing, New York, and had received SCRIE benefits for numerous years. Her last two-year lease ran from May 1, 2014 to April 30, 2016, at which time she received a SCRIE benefit that froze her monthly rent at $555.16 for the entire two year lease term. In March 2014, prior to said lease taking effect, Ms. Acerno had filed a SCRIE renewal application form with the Department of Finance (DOF), at which time she did not list any other person as living in her apartment, as she then lived alone.

Petitioner alleges that on May 27, 2014, he relocated to New York and moved into the subject apartment with his mother, who was then in the early stages of Alzheimer's disease. [*2]Petitioner and his mother lived together for over a year until May 30, 2015, when Claire Acerno moved to nursing home. Petitioner alleges that pursuant to the Rent Stabilization Code, he had a legal right to succeed to his mother's apartment once she moved to the nursing home, as he was over the age of 62 when he moved into the apartment and he lived with his mother for over a year. It is alleged that the landlord, Sky View Towers Holding Company LLC, delayed recognizing petitioner's successor rights to the apartment, although it has now done so.

In February 2016, the DOF sent an application form for renewal of Ms. Acerno's SCRIE benefits to the subject apartment. In his mother's absence, petitioner signed the renewal application on February 14, 2016 and presented it to the DOF, at a walk-in office. Said renewal form identified John Acerno as Ms. Acerno's son and household member at the subject apartment. Petitioner alleges that the DOF rejected the renewal application, as Mr. Acerno's landlord had not yet formally recognized his right to succeed to his mother's apartment as the tenant of record.

In a letter dated May 31, 2016 and addressed to Claire Acerno, the DOF informed the tenant that the agency had not received her SCRIE renewal application; that a renewal application had been mailed to her on March 1, 2016; that her SCRIE benefit ended on April 30, 2016; and that she could submit the renewal application and the supporting documents in order to continue the SCRIE benefit. The DOF also informed Ms. Acerno that she could obtain a new application if she lost or misplaced the form. An identical letter dated May 31, 2016, was addressed to Christine Acerno at an address in Long Beach, New York, as Ms. Acerno had listed her as her third party representative for SCRIE notifications.

In July 2016, the DOF received an Initial Application for SCRIE benefits for the subject apartment from John Acerno, dated June 16, 2016. Attached to said application was a renewal lease form for the subject apartment identifying Claire Acerno as the tenant, dated February 15, 2016, and signed by John Acerno, with a notation "subject to SCRIE's approval. This renewal lease form identified the owner as Sky View Towers Holding LLC, and the handwritten notation "signed by landlord on file Pistelli Realty" appears below the owner's signature line. The DOF in a letter dated July 28, 2016, denied Mr. Acerno's application for SCRIE benefits as "Evidence indicates that Applicant is not tenant of record". Mr. Acerno did not administratively appeal the DOF's denial of his Initial Application.

The DOF in a letter dated August 1, 2016 and addressed to Claire Acerno at the subject apartment, informed her that her SCRIE benefit had ended. The DOF stated that as her SCRIE benefit had expired on April 30, 2016, and as a renewal application with supporting documents was not received, said benefit terminated effective May 1, 2016. However, DOF stated that she had the opportunity to renew her benefit back to May 1, 2016, with no changes to the frozen rent amount, provided that she met the eligibility requirements. Ms. Acerno was directed to submit the renewal application along with all documentation by October 31, 2016. Said letter further provided that if the tenant was deceased, a household member who meets the SCRIE qualification requirements and has been granted succession rights from the landlord could submit a Benefit Takeover Application. An identical letter was addressed to Christine Acerno at the Long Beach address.

In a letter dated January 19, 2017, and addressed to Claire Arceno at the subject address, the DOF informed the tenant in the event that if she needed more time to restore her SCRIE [*3]benefit due to disability or physical or mental impairment, she may be entitled to restore her SCRIE benefit back to the previous frozen amount.

John Acerno filed a Benefit Takeover Application, dated September 6, 2018, with the DOF in which he sought to o take over his mother's SCRIE benefit for the subject apartment. In a letter dated September 17, 2018, DOF's SCRIE Processing Unit denied said application, stating that "[o]ur records indicate that you were never listed as a household member on any prior applications."

On November 6, 2018, Mr. Acerno administratively appealed the DOF's denial of his Benefit Takeover Application, and submitted various documents in support of his appeal. He stated that in March 2014, he could not have been listed on his mother's SCRIE renewal application as he was not living with her at the time; that his mother did not receive a SCRIE renewal form while she was still living in the apartment with him, and that she could not have reliably complied with the paperwork requirements and add him as a household member. He also stated that neither he nor his family members were aware of the need to supply his name on a new SCRIE document.

Mr. Acerno stated that he is 69 years old, and that on May 27, 2014, he moved to New York from Florida and resided with his mother Claire Acerno in the subject apartment, at which time she was suffering from the effects of Alzheimer's disease. Acerno stated that his mother moved to a nursing home on May 30, 2015, and he and his family members later determined that his mother would not be unable to return to the subject apartment. He stated that in May 2014, his mother was receiving SCRIE benefits, freezing her monthly rent at $555.16, and that said benefits remained in place until April 30, 2016.

Mr. Acerno stated that as he was over 62 years of age when he moved into the apartment, and lived there for more than a year, he was eligible to succeed to his mother's tenancy and that he is now listed as the tenant on the lease, as reflected in both the 2016-2018 lease and the landlord's Annual Apartment Registration form for 2018. He stated that in prior years, after his mother moved out of the apartment, he tried to get his name put on the lease but that the landlord was not cooperative, preventing him from obtaining SCRIE benefits based upon his mother's benefit, his age and his low income. Mr. Acerno stated that after his mother moved to the nursing home, he continued to pay the monthly frozen rent, although the landlord usually did not accept said payments. He argued that in view of his taking over his mother's lease and his eligibility for the continuation of SCRIE benefits, any technical defects in the SCRIE paperwork that existed after he moved into the apartment should be excused.

The DOF, in a letter dated January 18, 2019, denied his appeal, stating that he was "not eligible to take over the SCRIE benefits of your mother Claire Acerno. To be considered for a SCRIE benefit takeover one must be listed as a household member on prior SCRIE applications or have submitted written notice informing the department that a new member has moved into the apartment prior to filing a Benefit Takeover Application. Therefore, unfortunately, your appeal is denied". The DOF stated that Acerno could apply as a new applicant for SCRIE benefits if he believed he could qualify for the program.

Petitioner thereafter commenced the within Article 78 proceeding and asserts that his SCRIE Benefit Takeover Application was wrongly denied, and that the DOF's determination of January 18, 2019, denying his appeal was arbitrary and capricious and erroneous as a matter of [*4]law. Acerno alleges that he was a household member eligible for SCRIE, and therefore he had a legal right to have his mother's SCRIE benefit transferred to him after his mother permanently left the apartment and moved to a nursing home, pursuant to RPTL 467-b(3)(a), 467-b(4-a) and Administrative Code of the City of New York §§ 26-405(m)(2) and 26-509(b)(2). He also alleges that contrary to respondents' determinations denying his Takeover Application and his appeal of said denial, he was listed as a household member and resident of the apartment in his February 2016 and June 2016 applications.

Petitioner alleges that the claimed requirement that a person seeking to take over a SCRIE benefit must have been identified as a household member on a prior application, or otherwise in writing, is a violation of lawful procedure. It is alleged that the provisions of RPTL 467-b do not require that a successor SCRIE beneficiary to be listed as a household member on a prior SCIRE application. It is further asserted that imposing such a requirement is arbitrary and capricious, as it would arbitrarily require a successor SCRIE beneficiary to have been a household member at a time when the original benefit holder was required to file an application either to commence or renew benefits, and could thereby arbitrarily exclude persons who would otherwise be appropriate, eligible and entitled to take over SCRIE benefits. Petitioner also asserts that RPTL 467-b does not require that a SCRIE successor to provide the DOF with any written notice of having moved into the apartment before filing a Benefit Takeover application.

Petitioner argues that respondents' denial of petitioner's SCRIE Benefit Takeover Application is at odds with the purposes of SCRIE, which is to protect low-income elderly tenants from unaffordable rent increases that would expose them to the risk of eviction and other hardships. Petitioner alleges that he is within the class of persons SCRIE is intended to protect, as he is 69 years old and subsists on disability benefits of $820 per month and food stamps. He asserts that his landlord has commenced numerous non-payment proceedings against him and in the most current non-payment proceeding the landlord claims rent arrears of $1.109. 52 per month for 2016-2018, and $1039.91 per month for 2019, totaling more than $23,000. Petitioner alleges that in the event that the monthly SCRIE benefit is not continued, he cannot afford the unfrozen rent and will face eviction.

Petitioner asserts that he and his sisters tried in good faith to secure his takeover of his mother's SCRIE benefits so that he can remain in the subject apartment; that they applied three times for SCRIE benefits on his behalf, and were wrongly denied, due to the landlord's delay in recognizing his succession rights, and then due to the DOF's errors and arbitrary requirements. It is further asserted that petitioner made no misrepresentations or concealed any information in connection with his tenancy, and that even if the DOF was unaware of his presence in the apartment the agency was not prejudiced in any manner. Petitioner requests that this court order respondent to grant his Benefit Takeover Application retroactively to April 30, 2016, the date his mother's benefit ended; that the landlord be granted a tax abatement from May 2016 to the present; and seeks an award of costs.

Respondents in their answer have interposed four affirmative defenses and allege that the denial of petitioner's SCRIE Benefit Takeover Application was rational and reasonable and was not arbitrary, capricious, an error of law, or in violation of lawful procedure. It is noted that respondents' opposing memorandum of law raise the same arguments set forth in their affirmative defenses. In their first affirmative defense, respondents assert that under DOF [*5]guidelines, set forth in the NYC Rent Freeze Program Guide for Tenants, a surviving household member may qualify for a transfer of SCRIE benefits if the member qualifies for SCRIE; the member is the primary tenant listed on the lease or rent order or granted succession rights to the apartment by the landlord; and the member's name and source of income was previously listed on the head of household's application or renewal form.

It is asserted that DOF's requirement that individuals who are applying to take over a SCRIE benefit be listed as a household member on the previous application of the beneficiary serves to prevent individuals who are not members of a household from falsely claiming receipt of another's SCRIE benefits upon termination of the benefit due to the beneficiary's death or permanently leaving the household.

Respondents assert that the DOF found, and petitioner acknowledged, that he was not listed on any of the tenant's SCRIE applications. It is further asserted that petitioner failed to inform the DOF that he was a household member of the subject apartment prior to submitting the Benefit Takeover Application. Respondents allege that the DOF has no record of the Tenant's renewal application that petitioner alleges he submitted in March 2016. It is asserted, however, in both the Tenant's renewal application and the June 2016 Initial Application, petitioner claimed to be the tenant in the subject apartment without any documentation confirming his tenancy, and that the lease submitted with the June 2016 Initial Application did not list him as a tenant. Respondents thus assert that the DOF's determination was consistent with SCRIE program requirements and policy aims. It is further asserted that said determination does not undermine or conflict with state or local laws relating to the SCRIE program, which do not address benefit transfer requirements.

Respondents in their second affirmative defense assert that petitioner's request to takeover the Tenant's SCRIE benefits must fail because he did not timely submit the Benefit Takeover Application within six months after the beneficiary permanently left the household, pursuant to RPTL 467-b (4-a). It is further alleged that assuming arguendo that petitioner's June 2016 initial application could be considered a Benefit Takeover Application, it is also untimely. The third affirmative defense alleges that petitioner's request to take over the tenant's SCRIE benefit has been rendered moot, as said benefit ended in April 2016. Respondents' fourth affirmative defense alleges that to the extent that petitioner is challenging the denial of his June 2016 Initial Application, said claim should be dismissed as petitioner failed to exhaust his administrative remedies with respect to said determination.

Finally, in the fifth affirmative defense alleges that petitioner is not entitled to recover attorney's fees or costs incurred in the within Article 78 proceeding.

Petitioner, in his reply memorandum of law, asserts that judicial review is limited to the grounds cited by the DOF in its administrative denial of his appeal, and therefore all other grounds cited by respondent in its answer, including that of timeliness, have been waived. Petitioner further argues that the DOF's requirement that a SCRIE takeover applicant have been listed as a household member in a prior SCRIE application is not set forth, or based upon, any statute, administrative code or regulation. It is asserted that only source cited for this requirement is a bullet point contained in an informational "Guide for Tenants" issued by the DOF, and that as said Guide is not a legislative enactment, it usage violates of RPTL 467-b(5)(d) and relevant case law. It is further asserted that said publication was not enacted in compliance [*6]with the requirements of the New York City Administrative Procedure Act. Petitioner also asserts that the DOF's requirement that it be given written notice of a new member of a tenant's household prior to filing a benefit takeover application is not included in said Guide, and also violates RPTL 467-b(5)(d) and relevant case law.

In a proceeding in which the petitioner challenges an agency determination that was not made after a quasi-judicial hearing, the court must consider whether the determination was made in violation of lawful procedure, was affected by an error of law, or was arbitrary and capricious or an abuse of discretion (see CPLR 7803[3]; see also Pell v Board of Educ. of Union School District No.1 of the Towns of Scarsdale and Mamaroneck, Westchester County, 34 NY2d 222, 230-231[1974]). In such a proceeding, courts "examine whether the action taken by the agency has a rational basis," and will overturn that action only " where it is taken without sound basis in reason 'or regard to the facts'" (Matter of Wooley v New York State Dept. of Correctional Servs., 15 NY3d 275, 280 [2010], quoting Matter of Peckham v Calogero, 12 NY3d 424, 431 [2009]), or where it is "arbitrary and capricious" (Matter of Deerpark Farms, LLC v Agricultural & Farmland Protection Bd. of Orange County, 70 AD3d 1037, 1038 [2d Dept 2010]). "In applying the 'arbitrary and capricious' standard, a court inquires whether the determination under review had a rational basis." (Halperin v City of New Rochelle, 24 AD3d 768, 770 [2d Dept 2005]; see Pell v Board, of Educ. of Union Free School Dist., 34 NY2d at 231).

The DOF in its January 18, 2019 denial of petitioner's appeal, stated that Mr. Acerno was not eligible to takeover his mother's SCRIE benefit, and stated that "to be considered for a SCRIE benefit takeover one must be listed as a household member on prior SCRIE applications or have submitted proof of written notice informing the department that a new member has moved into the apartment prior to filing a Benefit Takeover Application".No other grounds were stated for the denial of said appeal.

"It is the settled rule that judicial review of an administrative determination is limited to the grounds invoked by the agency" (Matter of Scherbyn v Wayne-Finger Lakes Bd. of Coop. Educ. Servs., 77 NY2d 753, 758 [1991]; Matter of Ignaczak v Ryan, 79 AD3d 881, 882 [2d Dept 2010]; Matter of Anayati v Bd. of Zoning Appeals of Town of N. Hempstead, 65 AD3d 681, 683 [2d Dept 2009]). Although respondents now assert in their second, third and fourth affirmative defenses that petitioner did not timely submit the Benefit Takeover Application, that his request to takeover the SCRIE benefit is moot as his mother's benefit ended in April 2016, and that he failed to exhaust his administrative remedies with respect to June 2016 denial of his Initial Application, none of these grounds were cited by the in its January 18, 2019 determination. Therefore, these defenses are not properly before the court and will not be considered. The court further notes that the within petition does not challenge the agency's denial of petitioner's 2016 application

R PTL 467—b authorizes New York City to allow eligible low-income senior citizens, who live in rent-stabilized housing, a specified calculated exemption from rent increases. Pursuant to the statute, the City enacted the Senior Citizen Rent Increase Exemption (SCRIE) program (see Administrative Code of the City of New York§ 26—509; see also Nunez v Giuliani, 91 NY2d 935, 937 [1998]). The SCRIE program exempts an eligible head of household sixty-two years of age or older, residing in an rent-stabilized apartment and whose total household income is less than $50,000 per year, from subsequent rent increases that would otherwise [*7]require said person to pay more than one-thirds of their combined household income in rent (RPTL 467-b [3]; Administrative Code of the City of New York §§ 26-509(b), 26-405[m][2]).

The New York City Department of Finance (DOF) administers the SCRIE program for rent-stabilized apartments pursuant to Section 467-b of the New York Real Property Tax Law (RPTL) and Section 26-509(a) of the Administrative Code of the City of New York.

Section 26-509 (a) (3) of the Administrative Code provides that the DOF and "such other agency as the mayor shall designate may promulgate such rules and regulations as may be necessary to effectively carry out the provisions of this section". Once the DOF processes a SCRIE application, the SCRIE order will take effect on the first day of the first month after receipt of such application by the DOF, and is valid for the period of the lease or renewal lease upon application of the tenant (RPTL 467-b; Administrative Code of the City of New York § 26-509 [b][5]). When an exemption is granted, the landlord concurrently receives a real estate tax abatement credit in an amount equal to the rent increase exemption (Administrative Code of the City of New York § 26-509[c]).

Section 26-509(b)(6) of the Administrative Code provides, in pertinent part, that "A rent exemption order shall be valid for the period of the lease or renewal thereof upon application by the tenant, provided, that upon any such renewal application being made by the tenant, any rent exemption order then in effect with respect to such tenant shall be deemed renewed until such time as the department of finance or such agency as the mayor shall designate shall have found such tenant either eligible or ineligible for a rent exemption order but in no event for more than six additional months. If such tenant is found eligible, the order shall be deemed to have taken effect upon expiration of the exemption."

RPTL 467-b (4-a) provides as follows: "Notwithstanding any other provision of law to the contrary where a head of household who holds a current, valid tax abatement certificate dies or permanently leaves the household as specified in rules promulgated by the administrative agency, a surviving member of the household who is eligible under this section may apply to transfer the rent increase exemption from the head of the household who has died or permanently left the household into their name and continue the exemption as the new head of household. The option to transfer the rent increase exemption shall be available for a period of six months after the head of household dies or permanently leaves the household or ninety days after the date of notice from the administrative agency informing the household that the rent increase exemption has expired upon the death of the head of household, whichever is later. Such notice shall include an explanation of the process to transfer the exemption to an eligible surviving household member and the time period to do so, accompanied by the form necessary to transfer the exemption."

RPTL 467-b (1)(f) defines "Members of the household" as "the head of the household and any person, other than a bona fide roomer, boarder or subtenant who is not related to the head of the household, permanently residing in the dwelling unit."

RPTL 467-b(5)(d) provides that "[a]n entity administrating this program shall not consider any eligibility criteria that are not contained in this section in determining whether to approve or deny an application for the tax abatement program". This section, when read together with RPTL 467-b(4-a) limits the takeover of SCRIE benefits to a household member who is either senior citizen or a person with a disability who is entitled to the possession or the [*8]use or occupancy of the dwelling unit, and whose household income falls within the parameters of the statute.

Respondents' reliance on Rebecca v City of NY (280 AD2d 283, 283-284 [1st Dept 2001]), in support of their claim that the DOF's determination of the appeal was neither arbitrary and capricious and was rationally based, is misplaced. At the time Rebecca was decided, SCRIE benefits were administered by the New York City Department of Aging (DFTA). The court therein upheld as rational a DFTA policy pertaining to the transfer of SCRIE benefits at a time when RPTL 467-b did not provide for the transfer of SCRIE benefits.

After Rebecca was decided the legislature amended RPTL and added the benefit takeover provision set forth in RPTL 467-b(4-a) , effective December 22, 2015 ( L. 2015 c. 508 §1). The DOF has not established that it has promulgated rules or regulations that are applicable to benefit takeover applicants pursuant to RPTL 467-b(4-1). The fact that the legislature specifically charged the administrative agency with promulgating such rules, militates against the DOF's imposition of additional requirements on such applicants based upon either an informative tenants' guide or an unpublished policy. RPTL 467-b (4-a) does not, on its face, restrict takeover benefits to eligible household members who were listed on the SCRIE beneficiary's initial or renewal applications. Nor does the statute required that written notice be given to the agency that a new member has moved into the apartment prior to the filing of a benefit takeover application. Therefore, this court finds that the DOF's rationale for denying petitioner's benefit takeover appeal was arbitrary and capricious and lacks a reasonable basis in law, as it constitutes an improper enlargement of the statutory eligibility requirements for taking over SCRIE benefits.

Petitioner seeks to have this court direct respondents to grant his SCRIE benefit application retroactive to April 30, 2016, and to grant the landlord a corresponding tax benefit. The extraordinary remedy of mandamus will lie only to compel the performance of a ministerial act, and only where there exists a clear legal right to the relief sought (see Matter of Legal Aid Socy. of Sullivan County v. Scheinman, 53 NY2d 12, 16 [1981]; D & G Constr. Dean Gonzalez, LLC v Capetola, — AD3d &mdash, 2020 NY Slip Op 00271, 113 NYS3d 908 [2d Dept 2020]). This court finds that petitioner has failed to demonstrate a clear legal right to the relief sought, as he has not demonstrated that he met all of the statutory requirements for taking over his mother's SCRIE benefits. RPTL 467-b(4-a) requires that head of household hold a current valid tax abatement certificate. The statute further provides that the option to transfer the rent increase exemption from the head of household to the household member's name and continue the benefit "shall be available for a period of six months after the head of household...permanently leaves the household...". Here, it is undisputed that Claire Acerno moved to a nursing home on May 30, 2015 and that her SCRIE benefit expired on April 30, 2016 and was not renewed thereafter. Petitioner has not established the date his mother permanently left the household, although he concedes that some time after she moved to the nursing home it became apparent that she could not return to the subject apartment. Thus, even if the date Claire Acerno permanently left the apartment was later than six months after May 30, 2015, at the time he applied to takeover her benefit on September 9, 2018, her SCRIE benefit had long expired. As the provisions of RPTL 467-b(4-a) do not permit this court to retroactively reinstate Ms. Acerno's expired SCRIE benefit, petitioner cannot establish a clear right to the relief sought.

Accordingly, it is hereby ADJUDGED that petitioner's request to vacate respondents' [*9]determination of January 18, 2019 is granted, and the matter is remanded to the respondent for further proceedings, and it is further ADJUDGED that petitioner's request that this court direct respondents to grant his benefit takeover application is denied; and it is further ADJUDGED that petitioner's request for an award of costs is denied.

This constitutes the JUDGMENT of this court.

Dated: February 3, 2020

HON. ALLAN B. WEISS

J.S.C.