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Apartment buildings line Park Avenue and Fifth Avenue on the Upper East Side of Manhattan, NY, Tuesday, February 25, 2014. Photograph: Victor J. Blue Apartment buildings in New York City. (Photo: Victor J. Blue/Bloomberg)

This article is the third in a series examining developments in rent overcharge litigation over the past 10 years in the Appellate Division, First Department. It reviews the Department’s many rulings in Article 78 proceedings that challenged orders of the New York State Division of Housing and Community Renewal (DHCR). The frequency of these rulings indicates that the First Department was often dissatisfied with the DHCR’s performance of its duty as the enforcer and arbiter of the Rent Stabilization Code (RSC). Normally, in Article 78 proceedings, “judicial review of an administrative determination is limited to whether such determination was arbitrary or capricious or without a rational basis in the administrative record.” Matter of Partnership 92 LP & Bldg. Mgt. Co., Inc. v. DHCR, 46 A.D.3d 425 (1st Dep’t 2007), aff’d 11 N.Y.3d 859 (2008). However, in the context of DHCR rent overcharge rulings, it was noted that “[a] decision of an administrative agency which neither adheres to its own prior precedent nor indicates its reason for reaching a different result on essentially the same facts is arbitrary and capricious” Matter of London Leasing L.P. v. DHCR, 153 A.D.3d 709 (2d Dep’t 2017). More importantly, “where the question is one of pure statutory reading and analysis, dependent only on accurate apprehension of legislative intent, there is little basis to rely on any special competence or expertise of the administrative agency and its interpretive regulations.” Matter of Regina Metro. Co. v. DHCR, 164 A.D.3d 420 (1st Dep’t 2018). This is significant because it suggests a policy that the courts should only defer to the DHCR on questions of fact finding or the application of rent regulations, but that they need not defer to the agency’s interpretation of statutes such as the Rent Stabilization Law (RSL) or the Real Property Tax Law (RPTL). This reasoning policy was followed in Jemrock Realty Co. v. Krugman, 72 A.D.3d 438 (1st Dep’t 2010), which applied the Court of Appeals’ holding that, when reviewing a rent overcharge claim, a court should resolve issues of proof “based on the persuasive force of the evidence,” and not by applying the DHCR’s documentary evidence rules. Further, the First Department recognizes that Supreme Court has concurrent jurisdiction with the DHCR over rent overcharge claims (Downing v. First Lenox Terrace Assoc., 107 A.D.3d 86 (1st Dep’t 2013)), but also that it may invoke the doctrine of primary jurisdiction to transfer them directly to the agency (Olsen v. Stellar W. 110, 96 A.D.3d 440 (1st Dep’t 2012)). Older precedent appeared to favor this, since the DHCR’s mission includes any “questions relating to rent regulation.” Davis v. Waterside Hous. Co., 274 A.D.2d 318 (1st Dep’t 2000). However, recent decisions deemed it proper for Supreme Court to retain jurisdiction over class action overcharge suits (Maddicks v. Big City Props., 163 A.D.3d 501 (1st Dep’t 2018); Roberts v. Ocean Prime, 148 A.D.3d 525 (1st Dep’t 2017); Gerard v. Clermont York Assoc., 143 A.D.3d 478 (1st Dep’t 2016)), and claims alleging fraud (Kreisler v. B-U Realty, 164 A.D.3d 1117 (1st Dep’t 2018)).

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