Matter of 90-92 Baruch Corp. v. Berman, 46 N.Y.2d 781 (1978)
A rent control commissioner’s determination will be upheld if it is in accordance with the law, has a rational basis, and is not arbitrary or capricious.
Summary
This case concerns a landlord’s challenge to a determination by the Commissioner of the Department of Rent and Housing Maintenance regarding the maximum rents for two apartments. The landlord sought to annul the Commissioner’s decision that prior maximum rents remained applicable until new orders were issued. The court held that the Commissioner’s determination was rational and supported by evidence that the apartments were substantially the same as when the initial rents were set, that alterations were incomplete when tenants moved in, and that the certificate of occupancy was issued only on November 21, 1969. The court reversed the Appellate Division’s order and reinstated the Special Term’s judgment dismissing the petition.
Facts
The petitioner, 90-92 Baruch Corp. (landlord), owned a building containing two apartments in Manhattan. Prior to 1968, maximum rents of $41.90 and $48.99, respectively, had been established for these apartments. Tenants began occupancy of the apartments in 1968. At the time of occupancy and continuing until at least March 6, 1969 (when an inspection occurred), certain alterations to the building, including the apartments, were not completed. The Certificate of Occupancy was issued on November 21, 1969.
Procedural History
The landlord initiated a proceeding to annul the determination of the Commissioner of the Department of Rent and Housing Maintenance, which held that the previous maximum rents remained in effect until the district rent director established a new maximum rent of $150 per month for each apartment, effective November 21, 1969. Special Term dismissed the petition. The Appellate Division reversed. The Court of Appeals then reviewed the Appellate Division’s order.
Issue(s)
Whether the Commissioner’s determination that the previously established maximum rents remained applicable was arbitrary, capricious, or lacked a rational basis.
Holding
No, because the Commissioner’s determination was in accordance with the law, had a rational basis, and was not arbitrary or capricious, based on evidence that the apartments were substantially the same as when the prior rents were set, the alterations were incomplete at the time of occupancy, and the certificate of occupancy was issued on November 21, 1969.
Court’s Reasoning
The Court of Appeals found that the Commissioner’s determination was supported by the record. The apartments were materially the same as when the lower maximum rents were initially set. The alterations to the building had not been completed when the tenants began occupying the apartments in 1968, nor were they completed by March 6, 1969, the date of the inspection. The only evidence of completion was the certificate of occupancy issued on November 21, 1969. The court cited Administrative Code of the City of New York, § Y51-5.0, subd c, par [1]; § Y51-9.0, subd b; Matter of Colton v Berman, 21 NY2d 322, 329; CPLR 7803, subd 3; and Matter of Pell v Board of Educ. of Union Free School Dist. No. 1 of Towns of Scarsdale & Mamaroneck, Westchester County, 34 NY2d 222, 230-231, in support of its decision. The court in Pell established that administrative determinations should be upheld unless they are arbitrary and capricious or lack a rational basis. The court effectively deferred to the expertise of the rent control agency in administering rent control laws. There were no dissenting or concurring opinions noted.