NEW YORK STATE SUPREME COURT DENIES LANDLORD ARTICLE 78 CHALLENGE TO RENT REDUCTION ORDER WHERE LANDLORD DISCONTINUED ELECTRICAL INCLUSION WITHOUT FIRST SEEKING DHCR APPROVAL

In a decision dated December 2, 2013, 98 Riverside Drive v. DHCR and 98 Riverside Drive Tenants Association, Justice Cynthia S. Kern of the New York State Supreme Court dismissed the landlord’s Article 78 petition against a rent reduction order issued by the DHCR which was based upon the landlord’s unilateral discontinuance of electrical inclusion (electricity included in the rent). The tenants had always had their electricity included in their rent. The landlord converted the building from “master metering” to individual metering by installing individual meters in tenants’ apartments. The Rent Stabilization Law and Rent Control Law require that a landlord first apply to the DHCR for permission before discontinuing electrical inclusion.

After the installation of individual meters, the tenants received bills from Con Edison for electricity. The landlord argued that Con Edison sent bills to the tenants without its authorization and that it was unable to change the billing. The landlord also argued that having tenants pay for their own electricity, send the bills to the landlord and receive a rent credit was the same as having the electricity included in the rent. The DHCR rejected those arguments and the court found that the DHCR’s decision had a rational basis. “The decision hopefully will discourage other landlords from cavalierly disregarding the law,” said HMGJ partner David Hershey-Webb who represented the Tenants Association.