140 A.D.2d 351, 527 N.Y.S.2d 841

Supreme Court, Appellate Division, Second Department, New York

In the Matter of HYDE PARK GARDENS, etc., Petitioners-Respondents-Appellants,
v.
STATE of New York, DIVISION OF HOUSING AND COMMUNITY RENEWAL, OFFICE OF RENT ADMINISTRATION, Respondent-Respondent-Appellant. 
(Proceeding No. 1)

In the Matter of HYDE PARK ASSOCIATES, Petitioner-Appellant-Respondent,
v.
NEW YORK STATE DIVISION OF HOUSING AND COMMUNITY RENEWAL, etc., Respondent-Respondent-Appellant.
(Proceeding No. 2)

May 2, 1988

Richard M. Creditor, Forest Hills, for petitioners-respondents-appellants.
Dennis B. Hasher, Bronx (Richard Hartzman, of counsel), for respondent- respondent-appellant.

Before BRACKEN, J.P., and LAWRENCE, RUBIN and KOOPER, JJ.

MEMORANDUM BY THE COURT.

In two proceedings pursuant to CPLR article 78 for review of a determination of the New York State Division of Housing and Community Renewal (hereinafter DHCR), which found that the landlord, Hyde Park Associates, the petitioner in proceeding No. 2, had failed to maintain required services, but declined to order a rent reduction, (1) Hyde Park Associates, the petitioner in proceeding No. 2, appeals from (a) so much of a judgment of the Supreme Court, Queens County (Lonschein, J.), dated November 13, 1986, as dismissed its petition, denied its motion to intervene in Proceeding No. 1 and granted the petition of the tenants in Proceeding No. 1 and (b) so much of an order of the same court dated April 10, 1987, as, upon reargument, adhered to the original determination; (2) the DHCR cross-appeals from so much of the judgment as (a) granted the petition in proceeding No. 1 to the extent of determining that it erred in not ordering a rent reduction and (b) remitted the proceeding to the DHCR for a determination of the rent reduction; and (3) The Tenants of Hyde Park Gardens, the petitioners in the first proceeding, cross- appeal from so much of the judgment as denied their application to intervene in Proceeding No. 2. The appeals of DHCR and Tenants from the judgment brings up for review the order dated April 10, 1987 (see, CPLR 5517[b]).

ORDERED that the appeal and cross appeals from the judgment dated November 13, 1986, are dismissed, without costs or disbursements, as that judgment was superseded by the order of the same court dated April 10, 1987, made upon reargument; and it is further,

ORDERED that the order dated April 10, 1987, is affirmed insofar as appealed from and reviewed, without costs or disbursements.

The principal issue determined by the DHCR was whether the tenants of Hyde Park Gardens had sustained a reduction in a “required service” as defined by the Rent Stabilization Law of 1969 (Administrative Code of City of New York § 26-514). Specifically, the issue determined by the agency was whether there had been a reduction in security caused by the landlord’s implementation of a new overall security system. “The question of what constitutes a required service presents a factual issue which is to be determined by the * * *
administrative agency” (Fresh Meadows Assoc. v. New York City Conciliation & Appeals Bd., 88 Misc.2d 1003, 1004, 390 N.Y.S.2d 351, affd. 55 A.D.2d 559, 390 N.Y.S.2d 69, affd. 42 N.Y.2d 925, 397 N.Y.S.2d 1007, 366 N.E.2d 1361). The DHCR made its determination after a hearing held at the request of the parties, pursuant to § 26-514 of the Administrative Code of the City of New York. Upon our review of the record, we find that the determination of the DHCR was supported by substantial evidence at the hearing. We further find that the determination had a rational basis and was not arbitrary and capricious (see, Matter of Bambeck v. State Div. of Hous. & Community Renewal, Off. of Rent Admin., 129 A.D.2d 51, 55, 517 N.Y.S.2d 130; Villas of Forest Hills v. Lumberger, 128 A.D.2d 701, 703, 513 N.Y.S.2d 116; Matter of Plaza Realty Investors & Queens Blvd. Props. Co. v. New York City Conciliation & Appeals Bd., 111 A.D.2d 395, 396, 489 N.Y.S.2d 603). Clearly the enumerated factors considered by the agency establish that a rational basis existed for its determination which accordingly should not be disturbed (see, Matter of Bambeck v. State Div. of Hous. & Community Renewal, Off. of Rent Admin., supra; see also, Mid-State Mgt. Corp. v. New York City Conciliation & Appeals Bd., 112 A.D.2d 72, 491 N.Y.S.2d 634, affd. on opn. below 66 N.Y.2d 1032, 499 N.Y.S.2d 398, 489 N.E.2d 1300).

Nor was the agency’s determination barred by res judicata or collateral estoppel by the prior decision of the New York City Civil Court. There was not an identity of issues as the Civil Court’s determination focused on habitability within the complex generally, whereas the DHCR’s decision turned on the determination that there had been a diminution in a specific “required service”. As previously noted this matter was precisely within the jurisdiction of the DHCR (see, Fresh Meadows Assoc. v. New York City Conciliation & Appeals Bd., supra ). Moreover, the Civil Court’s decision expressly provided it was “without prejudice to the rights of the parties in their present pending proceedings before other tribunals”. [3] Finally, the Supreme Court was correct in remitting the matter of a rent reduction to the DHCR for a computation of the appropriate amount thereof. The agency’s determination not to order a rent reduction constituted an exercise of discretion which that agency did not possess based upon the mandatory nature of the language in the Rent Stabilization Law of 1969 (Administrative Code § 26-514). When the agency determines that there has been a diminution of a “required service”, “the commissioner shall so reduce the rent” (Administrative Code § 26-514 [emphasis supplied] ).

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