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Overcoming Extremely Difficult Odds, Adam Leitman Bailey, P.C. Defeats Agency Governing Rent Deregulation, DHCR, Protecting Default Order of High-Income High-Rent Deregulation, Deregulating Apartment

This case highlights the mantra of never-ever giving up, believing in the case, and continuing to fight for our client’s rights to deregulate a rent stabilized apartment despite five years of delays and obstacles in multiple courts and agency proceedings. Finally, at the State Supreme Court, justice prevailed for our landlord-client who never stopped believing in Adam Leitman Bailey P.C.

After a five-year battle in multiple courts and at the Division of Housing & Community Renewal (DHCR), Adam Leitman Bailey, P.C. won a CPLR Article 78 proceeding, and obtained reinstatement of a 2013 DHCR order on default, which deregulated a rent stabilized apartment in a 2009 high-income, high-rent deregulation proceeding.

In 2009, the tenant failed to respond to the then owner’s DHCR petition for high-income high-rent deregulation of the rent stabilized apartment, located in a converted condominium building. In 2013, DHCR issued an order deregulating the apartment based on the tenant’s default in answering the petition. After offering the tenant a free market lease, which she refused, the then owner filed a holdover proceeding.

In 2015, two years after DHCR issued the deregulation order, the tenant filed a petition for administrative review (PAR), challenging the order. By that time, our client owned the apartment. We opposed the PAR arguing that the deadline to file is 35 days from the date of the order and that the law prevents DHCR from accepting for filing a late PAR. DHCR agreed and denied the tenant’s PAR.

We moved for and won summary judgment in the eviction proceeding and substituted the current owner into the case.

The tenant, represented by counsel, filed an Article 78 petition challenging DHCR’s rejection of her PAR. The tenant claimed that her income was always below the deregulation threshold and that her default in answering the deregulation petition should be excused because she was unable to timely respond to DHCR due to alleged psychological issues. Because tenant’s income may not have exceeded the required deregulation threshold ($175,000.00 per year in two consecutive years), it was crucial that the tenant’s default not be disturbed, since a review on the merits could sink any chances of deregulation. This stacked the odds against our client. Sympathizing with the tenant, and in a complete about face, DHCR appeared and cross-moved to remand the proceeding back to itself for a new determination. We opposed both applications. Concerning the tenant, we argued that her alleged excuse was fabricated after we located and demonstrated that she authored over 500 articles for a major newspaper during the time she claimed to lack the ability to submit an answer in the DHCR proceeding. We also argued that there was no basis for a remand, that DHCR’s initial determination was the correct one, and that remand would be futile because there is no basis to accept a late PAR. Over our opposition, a Supreme Court judge remanded the proceeding back to DHCR in 2016 on an “expedited basis.”

We sent multiple letters to DHCR requesting that it process the case. It did not. We then filed a new proceeding in Supreme Court seeking a writ of mandamus against DHCR to compel it to render a decision. DHCR agreed to issue a decision within 75 days.

Without any legitimate authority to do so, DHCR then revoked its own prior deregulation order and accepted for filing tenant’s PAR application. We filed an Article 78 proceeding. DHCR argued that we must first exhaust our administrative remedies by waiting for DHCR to rule on the PAR. We resolved the case reserving all rights and arguments until DHCR’s final determination.

In 2019, by order pursuant to remand, DHCR granted the tenant’s PAR and denied the underlying high-income high-rent deregulation proceeding. To exhaust all administrative remedies before returning to court, we immediately filed a PAR, which DHCR denied in 2020 without citing to any authority allowing the acceptance of the tenant’s untimely PAR.

We then commenced the Article 78 proceeding and argued that DHCR’s about face in accepting tenant’s late PAR was arbitrary and capricious and prohibited by applicable law. We researched and cited to applicable statutes and appellate court authority supporting our arguments, and cited DHCR’s own cases where DHCR argued (in other matters) that the late filing of a PAR is fatal.

The court agreed with our arguments, granted our Article 78 petition, found DHCR’s actions to be arbitrary and capricious, refused to remand the proceeding to DHCR again (given the tortured history of the proceedings), ordered that the original order of deregulation be reinstated, and declared the apartment to be decontrolled.

Vladimir Mironenko, partner in Adam Leitman Bailey, P.C.’s Landlord-Tenant and Litigation Departments represented the owner-landlord.

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