Opinion
No. 7977/14.
04-14-2015
In the Matter of the Application of UNDERHILL–WASHINGTON EQUITIES, LLC, Petitioner, For a Judgment under Article 78 of the Civil Practice Law and Rules v. DIVISION OF HOUSING AND COMMUNITY RENEWAL and Michael Leeke, Respondents.
Opinion
Upon the foregoing papers in this Article 78 proceeding, petitioner, Underhill–Washington Equities, LLC (Underhill), the owner of the residential building at 209 Underhill Avenue in Brooklyn (Property), seeks an order reversing, aning and setting aside the April 4, 2014 order by respondent, Division of Housing and Community Renewal (DHCR), denying Underhill's Petition for Administrative Review (PAR) of the Rent Administrator's November 7, 2012 order declaring that the tenancy of respondent, Michael Leeke (Leeke), is governed by the New York City Rent and Eviction Regulations Rent Control Law (Rent Control Law).
Background
Leeke has resided in unit 6D at the Property with his sister and the rent-controlled tenant of record, Pearl Campell (Campbell), and her daughter since January 1972.Leeke, on August 15, 2011, commenced a proceeding before the DHCR seeking a determination that unit 6D is subject to the Rent Control Law and that he is entitled to succession rights as a rent-controlled tenant. Leeke documented his relationship with Campbell by submitting copies of their birth certificates reflecting that they are siblings. Leeke claimed that Campbell permanently vacated unit 6D on or about December 15, 2005. Leeke evidenced that he continuously resided in unit 6D since he immigrated to the United States in January 1972 by submitting copies of his passport, social security statements, New York State motor vehicle registrations, New York State driver's licenses and annual statements from the New York City employee's retirement system.
Three days later, on August 18, 2011, Underhill responded by commencing a non-primary holdover proceeding against Campbell and Leeke in New York City Housing Court.
See Underhill–Washington Equities, LLC v. Pearl Campbell (a.k .a Pearl Leeke) and Michael Leeke, N.Y. City Civ.Ct. L & T index No. 87832/11. The holdover proceeding was eventually dismissed on procedural grounds.
Underhill filed a November 2, 2011 answer with the DHCR requesting that it hold Leeke's succession application in abeyance pending the outcome of the holdover proceeding. Underhill argued that Campbell's pleading in the holdover proceeding contradicts Leeke's contention that Campbell vacated and surrendered possession of unit 6D in December 2005. Campbell's September 30, 2011 answer in the holdover proceeding inconsistently alleges that she and Leeke have resided in unit 6D from “on or about the year 1971 to the present ” (emphasis added). Underhill argued that Leeke's succession claim must be denied, as a matter of law, if Campbell never vacated and surrendered possession of unit 6D.
Consequently, the DHCR held Leeke's proceeding in abeyance until February 2012, at which time the Rent Administrator determined that the DHCR proceeding should resume. The Rent Administrator determined to proceed with the DHCR succession proceeding because it was commenced before Underhill's holdover proceeding and was never stayed.Leeke then submitted a March 5, 2012 affidavit from Campbell attesting that she permanently vacated unit 6D in December 2005 when she purchased a home in Florida. Campbell attests that she permanently relocated to Florida due to the deteriorating health of her daughter, who suffers from Lupus, kidney disease and is awaiting a liver transplant. Campbell submitted a copy of a December 15, 2005 General Warranty Deed reflecting her purchase of a Florida property.
Underhill, in response, contended that Leeke should be precluded from claiming that Campbell permanently vacated unit 6D in 2005 based on the doctrine of judicial estoppel. Underhill submitted a copy of Campbell's verified answer in the holdover proceeding alleging that she maintained unit 6D as her primary residence through September 2011. Underhill also submitted money orders reflecting that Campbell paid rent until July 2009. Underhill filed a May 3, 2012 affidavit from Nick Conway, its property manager, attesting that Campbell never provided him with notification that she was vacating unit 6D in 2005.
Leeke, in reply, argued that the doctrine of judicial estoppel was inapplicable because Campbell and Leeke did not receive a judgment in their favor in the holdover proceeding. Leeke's counsel also explained that Campbell and Leeke have sought leave to amend their verified answers in the holdover proceeding to correct certain scriveners' errors.
Underhill submitted responsive papers on October 3, 2012, arguing that Campbell maintained a nexus to unit 6D by paying rent and by appearing in the holdover proceeding. Underhill also asserted that Leeke cannot establish succession rights premised on the two-year period from 2003 to 2005 because Campbell resided in Florida since before 2003. Underhill submitted a copy of a default judgment entered against Campbell by the Dade County Circuit Court in June 1997, which listed a Miami Florida address for Campbell. Underhill also submitted a copy of a June 20, 2006 Warranty Deed reflecting that Campbell (under her maiden name “Pearl Leeke”) transferred property in Miami, Florida.
See The Public Health Trust of Dade County Florida d/b/a Jackson Memorial Hosp. v. Pearl Leeke, Circuit Court, Dade County, Florida, index No. 97–8773 CA11.
The Rent Administrator subsequently issued a November 7, 2012 order based on a “preponderance of evidence” determining that unit 6D is subject to the Rent Control Law, Leeke is the rightful successor to unit 6D and is, therefore, entitled to the rights and protections under the Rent Control Law. The Rent Administrator noted that Leeke provided sufficient evidence documenting his continuous occupancy of unit 6D from 1972 to the present and his familial relationship with Campbell, who submitted an affidavit attesting that she permanently vacated unit 6D in December 2005.
Underhill, on December 12, 2012, filed its PAR seeking administrative review of the Rent Administrator's determination that unit 6D was subject to the Rent Control Law. Underhill contended that the Rent Administrator should have held the DHCR proceeding in abeyance pending the Housing Court's adjudication of the non-primary residence issue because Campbell's residency must be resolved before deciding Leeke's right to succession. Underhill argued that the Rent Administrator erred in awarding Leeke succession rights without determining that unit 6D was Campbell's primary residence for the two-year period preceding her move to Florida in December 2005. Underhill further contended that the finding that Campbell vacated unit 6D in December 2005 was not supported by the record.
Underhill claimed that Campbell failed to satisfy her burden of proof and that she is judicially estopped from asserting that she permanently vacated unit 6D in December 2005.
Leeke answered the PAR, contending that the Rent Administrator's order was correct and should be upheld based on the DHCR's expertise in adjudicating succession claims. Regarding the issue of Campbell's residence, Leeke argued that evidence of dual residence is not a dispositive finding of non-primary residence.
DHCR's April 4, 2014 Order
The DHCR issued an April 4, 2014 order denying Underhill's PAR and upholding the Rent Administrator's order granting Leeke succession rights as a rent-controlled tenant.
As a preliminary matter, the DHCR determined that the Rent Administrator did not abuse his discretion when he determined to move forward with the proceeding in February 2012 after it was held in abeyance for several months because “no court order was issued directing a stay of the AD proceeding, and there was no resolution of the holdover case.” Regarding the merits, the DHCR concluded that the record established Leeke's familial relation to Campbell and that the documentary evidence “conclusively revealed that Michael Leeke had been residing in the subject apartment continuously since 1972.” Importantly, the DHCR determined that Campbell's affidavit testimony sufficiently established that she permanently vacated unit 6D in December 2005 upon moving to Florida. DHCR also determined that the minimal two-year co-residency requirement in Rent and Eviction Regulations § 2204.6(d) was satisfied because “[t]he evidence established that Michael Leeke had resided with Pearl Campbell in the subject apartment as a primary residence for an extended period of time, back to 1972.”
DHCR rejected Underhill's claim that Campbell was residing in Florida since 1997 as “speculative,” since “the record is devoid of any additional evidence showing that this [Florida] home was something other than a summer home or an investment property.” Similarly, DHCR held that Campbell's affidavit is not barred by judicial estoppel because “[t]he evidence of record establishes that there was no final determination by the [Housing] Court which was predicated upon Ms. Campbell's statements in her pleadings.”
DHCR determined that Leeke's succession rights under the law were unaffected by the fact that Campbell paid rent for several years after she vacated unit 6D in 2005, since the Appellate Division has broadly defined the legal term “tenant” under the Rent Control Law.
DHCR also clarified that “the Rent Control Laws indicate that whenever a prime-tenant permanently vacates, a successor family member who has met the two-year co-residency requirement may avail him-herself of succession rights at any point thereafter.”
The Instant Article 78 Proceeding
Underhill commenced this Article 78 proceeding by filing a verified petition on June 18, 2014 seeking a judgment reversing, annulling and setting aside DHCR's April 4, 2014 order and opinion denying Underhill's PAR on the ground that it was “arbitrary, capricious and in violation of law and not in accordance with the facts and evidence presented.”
See Underhill's May 19, 2014 Notice of Petition at page 1.
Underhill's verified petition alleges that “there is simply nothing in the record to support the conclusion that Campbell permanently vacated the premises or the conclusion that Campbell had been primarily residing in the premises with Leeke” (see Petition at ¶ 5). The petition further alleges that “[t]he determination of the Agency was arbitrary and capricious since it fails to identify any evidence in the record which supported its conclusion that Campbell permanently vacated the premises in 2005” (id. at ¶ 80). While Underhill contends that “Leeke did not produce any evidence” (id. at ¶ 11), Underhill simultaneously argues that the Rent Administrator erred when it relied on Campbell's affidavit testimony “and seemingly ignored” Underhill's October 3, 2012 evidentiary submission (id. at ¶ 15). Essentially, Underhill complains that the DHCR found the Campbell affidavit to be credible evidence that Campbell surrendered her primary residence and vacated unit 6D in 2005. Underhill alleges that the finding was arbitrary and capricious because “the weight of the evidence does not support a finding that Campbell permanently vacated in December 2005 ...” (id. at ¶ 87).
Underhill also argues that the DHCR lacked subject matter jurisdiction to determine Leeke's succession rights once Underhill challenged Campbell's primary residence. Underhill alleges that the DHCR failed to address a critical element of a succession claim because it made no findings regarding Campbell's primary residence from 2003–2005, despite Underhill's production of documents reflecting that she maintained a Florida address.
Underhill also contends that Campbell was judicially estopped from asserting that she vacated the premises in December 2005 based on her pleadings in the holdover proceeding.
The DHCR answered Underhill's petition on or about November 25, 2014, denying the allegations contained therein and asserting that its determination should be upheld since it “was rationally based upon the relevant law, regulations and the facts in the record.”
See the November 25, 2014 Affirmation in Opposition of Jack Kuttner, Esq. (Kutter Opposition Affirmation) at ¶ 23.
The DHCR notes that the standard for judicial review is governed by CPLR 7803(3), rather than the “substantial evidence” test set forth in CPLR 7803(4), as Underhill seemingly asserts. The DHCR also contends that it had subject matter jurisdiction to determine Leeke's application for succession “because DHCR and the courts share concurrent jurisdiction ...” (Kutter Opposition Affirmation at ¶ 27), yet asserts that the DHCR is entitled to deference where, as here, the issues fall within its expertise and are fact-intensive.
CPLR 7803(3) provides, in pertinent part, that “the only questions that may be raised in a proceeding under this article are ... whether a determination was made in violation of lawful procedure, was affected by an error of law or was arbitrary and capricious or an abuse of discretion ...”
Regarding the issue of Campbell's primary residence, the DHCR clarifies that “[t]his was an application to determine whether or not the tenant [Leeke] was entitled to succeed to the protections of the City Rent Control Law ... [t]his was not a proceeding to determine the primary residence of the original tenant of record and whether she was subject to eviction.” The DHCR contends that “there is no requirement that the tenant of record maintain a primary residence in the case of family succession,” as a matter of law, citing the Appellate Term's holding in Mexico Leasing v. Jones, 45 Misc.3d 127(A) (App Term 1st Dept 2014). The DHCR also asserts that the term “primary residence” in Section 2204.6(d)(3) of the City Rent and Eviction Regulations refers to the residence of the person seeking succession.
See the DHCR's November 25, 2014 Memorandum of Law (DHCR Memorandum) at page 10.
See DHCR Memorandum at page 13.
Section 2204.6(d)(3) defines “family member” as “a spouse, son, daughter, stepson, stepdaughter, father, mother, stepfather, stepmother, brother, sister, grandfather, grandmother, grandson, granddaughter, father-in-law, mother-in-law, son-in-law, or daughter-in-law of the tenant; or any other person residing with the tenant in the housing accommodation as a primary residence who can prove emotional and financial commitment, and interdependence between such person and the tenant ....“ (see 9 NYCRR § 2204 .6[d][3] [emphasis added] ).
Regardless, the DHCR asserts that it evaluated the evidence, including Campbell's “cogent” affidavit detailing the date and circumstances of her departure, and rationally determined from the record that Campbell permanently vacated unit 6D in December 2005. The DHCR also argues that its was not judicially estopped from considering Campbell's affidavit testimony, since Campbell did not succeed on the merits in the holdover proceeding.
Underhill, in reply, reiterated its argument that the DHCR's determination was arbitrary and capricious because there was no record evidence that Campbell primarily resided in unit 6D for the two years prior to her permanent vacatur in December 2005. Underhill contends that the DHCR's determination conflicts with the Appellate Division, First Department's holding in Third Lenox Terrace Assoc. v. Edwards, 91 AD3d 532 (2012).
Discussion
In an Article 78 proceeding, the court's review of an administrative action is limited to a determination of whether that administrative decision was made in violation of lawful procedures, whether it is arbitrary or capricious, or whether it was affected by an error of law (In re Pell v. Board of Educ., 34 N.Y.2d 222, 231 [1974] ). “An action is arbitrary and capricious when it is taken without sound basis in reason or regard to the facts” (Matter of Peckham v. Calogero, 12 NY3d 424, 431 [2009] ). If the determination has a rational basis, it must be sustained, even if a different result would not be unreasonable (id. ). Stated simply, this court cannot substitute its judgment for that of the agency, so long as the agency's decision is rationally based in the record (Colton v. Berman, 21 N.Y.2d 322 [1967] ).
Regarding fact-based inquiries, an administrative agency may determine the type of documentation necessary or appropriate (see Greystone Mgt. Corp. v. Conciliation & Appeals Bd., 94 A.D.2d 614, 616 [1983], affd 62 N.Y.2d 763 [1984] ; Matter of 2084–2086 Bronx Park East, LLP v. DHCR, 303 A.D.2d 315, 316 [2003] ). Importantly, “an agency has great discretion in deciding which evidence to accept and how much weight should be accorded particular documents or testimonial statements, and its determination in that respect is subject only to the legal requirement that the administrative finding be rationally based” (Kogan v. Popolizio, 141 A.D.2d 339, 344 [1988] ). “Moreover, where, as here, the determination of the agency involves factual evaluations in the area of the agency's expertise and is supported by the record, we must accord such determination great weight and judicial deference” (Palmer v. New York State Dept. of Envtl. Conservation, 132 A.D.2d 996, 997 [1987] ). Thus, “in an Article 78 proceeding, the reviewing court may not weigh the evidence, choose between conflicting proof, or substitute its assessment for that of the administrative fact finder” (Matter of Porter v. New York City Hous. Auth., 42 AD3d 314, 314 [2007] ).
Here, the court finds that the DHCR's determination affirming the Rent Administrator's order is rationally based in the record and is neither arbitrary nor capricious. While Underhill contends that the record before the DHCR does not evidence that Campbell vacated unit 6D in December 2005, the DHCR accepted and specifically relied upon Campbell's affidavit testimony in the administrative record as sufficient proof of that fact. This court cannot find that the DHCR's determination that this record evidence was sufficient to establish that Campbell permanently vacated the subject apartment in December 2005 is without a rational basis or otherwise constitutes an “error of law.”
Underhill's contention that the DHCR lacked subject matter jurisdiction to determine Leeke's succession claim once it raised the issue of Campbell's primary residence is rejected. It is well-established that the DHCR and the courts have concurrent jurisdiction to determine succession rights (Misthopoulos v. Ruhl, 183 A.D.2d 651, 652 [1992] ; see also Golden Mountain Realty Inc. v. Severino, 40 Misc.3d 67, 68 [App Term, 1st Dept 2013] [holding that administrative proceedings before the DHCR are not the exclusive remedy in disputes regarding succession rights because courts presiding over holdover proceedings have traditionally exercised concurrent jurisdiction] ).
Similarly unavailing is Underhill's contention that the DHCR was judicially estopped from considering Campbell's affidavit regarding the date she permanently vacated the unit, since she did not prevail on the merits in the holdover proceeding based on her residence (Kalikow 78/79 Co. v. State of New York, 174 A.D.2d 7, 11 [1992] [holding that “judicial estoppel may not be asserted as a defense unless it can be shown that the party against whom the estoppel is sought procured a judgment in its favor as a result of the inconsistent position taken in the prior proceeding”] ).
Underhill's reliance on the First Department's holding in Third Lenox is misplaced. In that 2005 holdover proceeding, respondent's affirmative defense for succession rights to the rent-stabilized tenancy of her sister was rejected because her sister, who resided elsewhere since 1998, had a two-year renewal lease for the apartment that was still in effect. In light of the renewal lease extending her tenancy, the court could not find that the tenant of record had vacated the apartment prior to the commencement of the holdover proceeding. The court held that the tenant of record “cannot be found to have permanently vacated the apartment at any time prior to the expiration of the last lease renewal on November 30, 2005” (Third Lenox, 91 AD3d at 533 ). Here, in contrast to Third Lenox, Campbell never formally extended her tenancy beyond December 2005 by executing a renewal lease with Underhill.
Contrary to Underhill's contention, the succession provision under the Rent Control Law “does not mandate, or even allow, a finding of nonentitlement to succession rights solely on the ground that the tenant of record has not maintained her primary residency in the stabilized apartment during the two-year period prior to her permanent vacating ...” (Mexico Leasing, 45 Misc.3d 127[A] [emphasis added] ). Instead, the Rent Control Law “focuses on the remaining family members having resided in the apartment as a primary residence' within the two-year period prior to the tenant's permanent vacating of the apartment ...” (id. ).
In conclusion, this court cannot substitute its judgment for that of the DHCR because the determination to grant Leeke succession rights as a rent-controlled tenant was rationally based on the administrative record. Accordingly, it is ordered that the instant Article 78 petition is denied and this proceeding is dismissed.
This constitutes the decision, order and judgment of the court.