Overcharge Complaint Treated as Fair Market Rent Appeal

Facts: Tenant filed a rent overcharge complaint and fair market rent appeal on March 30, 1984. Landlord submitted rent history records but had no proof that a DC-1 or DC-2 notice was ever sent to first rent-stabilized tenant. The DRA combined tenant's complaints into a rent overcharge complaint and ruled for tenant. The DRA found no willful overcharge and ordered landlord to refund $3,000. Tenant appealed, claiming that the overcharge was incorrectly calculated and was willful. The DHCR ruled for tenant in 1997, froze tenant's rent for 15 years, and ordered landlord to refund $33,000. Landlord appealed. The court ruled against landlord, and landlord appealed again. While landlord's appeal was pending, the DHCR decided that the rent freeze might be illegal and that the case should have been processed as a fair market rent appeal. The DHCR and landlord entered into a settlement agreement. The DHCR agreed to vacate the 1997 order and sent the case back for further processing. The DHCR issued a new decision in 2000, ordering a refund of $8,500 minus the $3,000 already refunded. Tenant appealed. The court ruled for tenant. Landlord and the DHCR then appealed. Court: Landlord wins. The DHCR's 1997 order was irrational and violated its own policy of treating overcharge complaints as fair market rent appeals when there was no proof that the first rent-stabilized tenant was sent a DC-1 or DC-2 notice. Landlord had submitted rent history records in response to tenant's original complaint. Tenant argued that he wasn't a party to the settlement agreement between the DHCR and landlord. But tenant was notified of landlord's appeal and chose not to intervene.

Verbalis v. DHCR: NYLJ, 11/10/03, p. 26, col. 1 (App. Div. 1 Dept.; Buckley, PJ, Rosenberger, Lerner, Friedman, Gonzalez, JJ)