In the Matter of the Application of James A. POWER and Richard D. Hastings, Petitioners,
NEW YORK STATE DIVISION OF HOUSING AND COMMUNITY RENEWAL and East 77th Realty, LLC, Respondents. For an Order Pursuant to Article 78 of the Civil Practice Law and Rules, No. 100152/13.
This decision has been referenced in a table in the New York Supplement.
CYNTHIA S. KERN, J.
Petitioners James A. Power (" Mr. Power" ) and Richard D. Hastings (" petitioner" or " Mr. Hastings" ) bring the instant proceeding pursuant to Article 78 of the Civil Practice Law and Rules (" CPLR" ) seeking to reverse, annul, revoke and/or vacate respondent New York State Division of Housing and Community Renewal's (the " DHCR" ) (1) November 21, 2012 Order and Opinion denying petitioner's Petition for Administrative Review; (2) March 1, 2006 Order and Opinion Remanding Proceeding on Appeal; and (3) November 17, 2011 Order of Deregulation. For the reasons set forth below, the petition is denied.
The relevant facts are as follows. Mr. Power was and still is a rent-stabilized tenant of 500 East 77th Street, Apartments 2017 and 2018, New York, New York (the " Apartment" ). This proceeding was commenced on May 4, 2004 when respondent East 77th Realty, LLC (" Owner" ) filed a petition for high rent/high income rent deregulation for the Apartment (the " Deregulation Petition" ) alleging that the legal rent for the Apartment was $2,000 or more per month and requested a verification of the household income in order to establish that the total annual income of the household was in excess of $175,000.
On June 23, 2004, the DHCR served a copy of the Deregulation Petition upon Mr. Power. In response, Mr. Power listed Mr. Hastings on the answer form as an occupant who was residing in the Apartment as his primary residence. Mr. Power subsequently submitted another answer form, but did not list Mr. Hastings as any type of occupant. In subsequent submissions, Mr. Power asserted that Mr. Hastings had not resided in the Apartment at specified times during the applicable two-year period and submitted various documents in support of this assertion. On April 28, 2005, the DHCR sent to Mr. Power's attorney a copy of the Owner's submission dated April 20, 2005 in which the Owner claimed that Mr. Hastings was a primary resident of the Apartment. The DHCR's notice asked Mr. Power to provide photocopies of the page of Mr. Hastings' 2002 and 2003 New York State Income Tax returns (with social security number and income figures deleted) or submit documentary evidence that substantiates the claim that Mr. Hastings was not a primary resident of the Apartment on March 16, 2004, the date the Income Certification Form (" ICF" ) was served on the tenant. Mr. Power's attorney responded to the notice and attached a photocopy of Mr. Hastings' Florida drivers license; a copy of a sublease for a premises in Florida entered into between sublessor Janet L. Hastings and sublessee Richard D. Hastings for a term commencing January 1, 2002 and expiring December 31, 2004; and a photocopy of a mailing envelope addressed to Mr. Hastings at the Florida address postmarked April 2, 2005.
By Notice dated July 13, 2005, the DHCR sent to Mr. Power's attorney a letter submitted by Owner's attorney, dated June 29, 2005, urging the DHCR to include the income of Mr. Hastings in the verification by the Department of Taxation and Finance (" DTF" ) of the total household income. Attached to the letter was a copy of an application form signed by Mr. Power, dated October 31, 1992, in which Mr. Power stated that " Dan Hastings" would occupy the Apartment with Mr. Power as well as affidavits from three building employees each stating that for several years Mr. Hastings has resided in the Apartment with Mr. Power and enters and leaves the building nearly everyday. On or about July 21, 2005, Mr. Power's attorney submitted a letter and an affidavit sworn to July 20, 2005 by his neighbor, Ms. Katia Grossman, who stated that she and Mr. Power and Mr. Hastings have been neighbors in the subject building for more than 15 years and that in 2002, Mr. Hastings made a decision to relocate to Florida and that " Mr. Hastings returned to live with Mr. Power in 2003 and that he presently resides at 500 East 77th Street."
Both the Owner and Mr. Power were notified that the DHCR had forwarded income tax verification information to the DTF, that Mr. Power's information was matched to his tax returns for both 2002 and 2003 and that DTF found that the relevant household income, based on Mr. Power's income alone, did not exceed $175,000 in 2002. By Order issued July 28, 2005, the Rent Administrator denied Owner's Deregulation Petition based on the DTF's finding that the total household income did not exceed $175,000 in 2002. The Rent Administrator's order also found that Mr. Hastings was " not an occupant of the apartment for Luxury Decontrol purposes" .
The Owner filed a Petition for Administrative Review (" PAR" ) to challenge the Rent Administrator's order. In its PAR, the Owner asserted that the evidence of record established that Mr. Hastings occupied the Apartment as his primary residence at the relevant time period and thus that Mr. Hastings' income should have been included in the total household income and that Mr. Hastings' name should have been sent to the DTF as part of the income verification inquiry. The Owner further argued that a hearing should have been conducted with respect to the issue of Mr. Hastings' occupancy and that the Rent Administrator's order failed to adequately specify the legal and factual basis upon which it was issued, thereby violating the State Administrative Procedure Act (the " SAPA" ). On or about October 17, 2005, Mr. Power's attorney submitted an answer recounting Mr. Power's earlier submission of copies of Mr. Hastings' Florida drivers license and sublease for a premises there and stated that " Mr. Hastings relocated to Florida in 2002 due to problems with his personal relationship with Mr. Power and that Mr. Hastings did not return to the subject housing accommodation until sometime in 2003" but did not address where Mr. Hastings resided in March 2004.
By Order and Opinion issued on March 1, 2006, DHCR's Deputy Commissioner revoked the Rent Administrator's order and remanded the proceeding to the Rent Administrator with the direction that Mr. Hasting's name be reported to the DTF for verification of his income and that Mr. Hastings' income be included in the calculation of the relevant total household income for determination of whether the Apartment qualifies for high rent/high income rent deregulation. The March 1, 2006 Order found that the relevant date for determining occupancy for the purposes of luxury decontrol is the date that the ICF is served on the tenant of record, which in this case was March 16, 2004 and that the evidence clearly establishes that Mr. Hastings was residing at the Apartment as his primary residence when the ICF was served. The Order further found that the place where Mr. Hastings was living in 2002 is not relevant to the issue of whether the Apartment qualifies for luxury deregulation, that submissions by Mr. Power showing that Mr. Hastings had a Florida drivers license and leased a residence there where he received at least some mail was not dispositive and did not establish that Mr. Hastings resided in Florida as his primary residence. Moreover, the Order noted that the documents did not address the issue of where Mr. Hastings was residing in March 2004, that Mr. Power acknowledged to the Rent Administrator and again in the PAR proceeding that Mr. Hastings was residing in the Apartment in March 2004, that the July 20, 2005 affidavit of Ms. Grossman also stated that " Mr. Hastings returned to live with Mr. Power in 2003 and that he presently resides at 500 East 77th Street" and that the three building employees affirmed in their affidavits that they each had seen Mr. Hastings entering and exiting the building on a nearly daily basis.
By Notice dated March 8, 2006, the Rent Administrator informed the parties that the matter had been reopened for the purpose of additional processing of Owner's Deregulation Petition. Mr. Power and Mr. Hastings then brought an Order to Show Cause and Petition to prevent DHCR from processing Owner's Deregulation Petition and to halt DCHR's alleged intrusion into the " private and secret income tax information of ... [Mr.] Hastings for the year 2002 ..." A temporary restraining order was granted by this court on May 1, 2006. DHCR filed a cross-motion to dismiss the Order to Show Cause and Petition. The Supreme Court granted the DHCR's cross-motion to dismiss and denied the petition stating that the relief requested would serve only to prevent DHCR from investigating Owner's request for high rent/high income rent deregulation and that DHCR's request for copies of redacted tax statements from petitioners is within DHCR's jurisdictional authority and is directly related to the processing of an application for high rent/high income rent deregulation of a rent stabilized apartment. The Supreme Court further held that as the DHCR's March 1, 2006 Order remanding the proceeding to the Rent Administrator for further consideration and investigation of Owner's Deregulation Petition was not a final determination, the cross-motion to dismiss must be granted.
Petitioners appealed the court's order to the Appellate Division, First Department, which affirmed the Supreme Court's denial of the petition and stated, in pertinent part,
[I]n determining household income for purposes of luxury deregulation, DHCR may rationally take into consideration the income of occupants who reside in the apartment on the date the income certification form is served, even if the occupant did not occupy the apartment during the two years preceding service thereof.
Petitioners were then denied leave to appeal to the Court of Appeals. On April 6, 2011, the DHCR notified the parties of the reopened 2004 deregulation proceeding. Mr. Power submitted a new version of the answer to Owner's Deregulation Petition dated April 15, 2011, in which Mr. Hastings was listed in " Item 2" as an occupant of the Apartment at the time the ICF was served. Mr. Power described Mr. Hastings as " Status b" meaning a person who occupied the Apartment as other than a primary residence as of the date the ICF was served. Accompanying Mr. Power's answer was an affidavit sworn to by Mr. Hastings on April 15, 2011 in which Mr. Hastings stated " I was staying with James A. Power on a temporary basis in 2003 through 2004, including the date the ICF was served."
DHCR again forwarded income tax verification information to the DTF and that information was matched for petitioners for both 2002 and 2003. DTF then determined that the relevant total household income exceeded $175,000 in both 2002 and 2003, the two tax years relevant in this proceeding. Both parties were afforded an opportunity to provide further information concerning DTF's findings. In an Order issued on November 17, 2011, the Rent Administrator, upon reconsideration of the matter as remanded by DHCR's March 1, 2006 Order, ordered that the Apartment be deregulated upon the ...