Triple Damages Revoked Upon Reconsideration by DHCR

(Decision submitted by David B. Cabrera of the Manhattan law firm of Borah Goldstein Altschuler Nahins & Goidel, P.C., who represented the landlord.)

Rent-stabilized tenant complained of rent overcharge. The DRA ruled for tenant and ordered landlord to refund $129,000, including triple damages. Landlord appealed, and the DHCR reduced the total overcharge to $115,000. Landlord then filed an Article 78 court appeal, claiming that there was no willful overcharge. The case was sent back to the DHCR for reconsideration. The DHCR reduced the overcharge finding to $26,000 after revoking the triple damages and giving landlord a credit for $27,750 in unpaid rent. Tenant then appealed, claiming that the DHCR's decision was arbitrary and unreasonable.

The court ruled against tenant since the DHCR's decision had a rational basis. The DHCR found that landlord's calculation of the legal rent was the result of technical errors. Although incorrect, landlord reasonably believed that the base rent was a preferential rent given notations on the 2002 annual rent registration. Landlord also incorrectly calculated an 11-year longevity increase by adding a full year's increase for a partial year. It was also unclear what the legal garage rent included in tenant's rent-stabilized rent should be when tenant switched garage spaces. Landlord also had attempted to refund overcharges with interest while the case was pending before the DHCR.

Schwartz v. DHCR: Index No. 1185/14 (Sup. Ct. Nassau; 10/23/14; Winslow, J) [8-pg. doc.]