Landlord Didn't Disclose Relationship with Contractor

(Decision submitted by David Hershey-Webb of the Manhattan law firm of Himmelstein McConnell Gribben Donoghue & Joseph, attorneys for the tenants.) Landlord applied for MCI rent hikes based on an elevator upgrade and the installation of intercom and lobby doors. The DRA ruled for landlord. Tenants appealed, claiming that landlord had a duty to fully disclose its relationship with its primary contractor but failed to do so. Tenants said that the owner and CEO of the contractor company was employed by landlord, and that another employee of landlord had an interest in the contractor company. Landlord argued that it properly explained its relationship with the contractor to the DRA. The DHCR ruled for tenants and revoked the MCI rent hikes for the door installation. On its MCI application form, landlord answered "no" to the question asking whether it had a relationship, financial or otherwise, with the contractor that performed the work. But tenants submitted a copy of Department of State (DOS) records showing landlord listed as the party to receive legal papers on the contractor's behalf. And landlord's vice president also signed as vice president of the contractor company on papers filed with DOS. Landlord's vice president claimed that it merely acted as the contractor's attorney for corporate filings with DOS and provided bookkeeping services to the contractor as a courtesy. But tenants also showed that the owner and CEO of the contractor company was listed as the building's managing agent on a 1999 DHCR rent registration statement and on some HPD forms in 1999.

Jadam Equities Ltd/Tenants of 514 West 110th Street: DHCR Adm. Rev. Docket Nos. QI430048RT, QJ430063RO (7/3/08) [7-pg. doc.]