DHCR Properly Relied on 1989 Rent Reduction Order to Find Rent Overcharge

Rent-stabilized tenant complained of rent overcharge. The DRA ruled for tenant and ordered landlord to refund $35,517, including interest. Landlord appealed to the DHCR and lost. Landlord then filed an Article 78 court appeal of the DHCR's decision. The court ruled against landlord, who appealed further and lost. 

Tenant moved into the apartment in 2013. The overcharge finding was based on a rent freeze resulting from a prior DHCR rent reduction order issued in 1989. The rent wasn't restored until 2016. Landlord argued that in a 2016 court case, NAPA Partners, LLC v. DHCR, the Queens Supreme Court had ruled that a Court of Appeals decision in Cintron v. Calogero was no longer controlling and that to enforce an old rent reduction order when there was no proof that the conditions underlying that order still existed was arbitrary and unreasonable. But the NAPA Partners decision cited by landlord was incorrect and was later reversed on appeal. The appeals court found that the DHCR's decision was not made in violation of lawful procedure, affected by an error of law, arbitrary and capricious, or an abuse of discretion. The DHCR's interpretation of RSC Section 2526.1(a)(2)(v) as simply a codification of the Cintron decision wasn't irrational or unreasonable. And even if the RSC provision added discretion to the DHCR to not consider old, but still effective, rent reduction orders in calculating rent overcharges, the DHCR's consideration here of the 1989 rent reduction order wasn't an abuse of such discretion.

88-05 171, LLC v. DHCR: Index No. 4446/19, 2023 NY Slip Op 01086 (App. Div. 2 Dept.; 3/1/23; Barros, JP, Brathwaite Nelson, Ford, Warhit, JJ)