author: Graffeo, J.

text:
    [832 NE2d 1169, 799 NYS2d 753]
    In the Matter of Town of Riverhead, Appellant, et al., Petitioner, v New York State Board of Real Property Services et al., Respondents.
    Argued May 3, 2005;
    decided June 9, 2005

      POINTS OF COUNSEL

      Scott DeSimone, Peconic, for appellant.
    Appellant Town of Riverhead has capacity and standing to seek judicial review of respondent New York State Board of Real Property Services’ determination establishing a segment special equalization rate for the Town of Southampton segment of the Riverhead Central School District. (Matter of Graziano v County of Albany, 3 NY3d 475; City of New York v State of New York, 86 NY2d 286; Community Bd. 7 of Borough of Manhattan v Schaffer, 84 NY2d 148; Matter of City of New York v City Civ. Serv. Commn., 60 NY2d 436; Matter of Board of Educ. of Roosevelt Union Free School Disk v Board of Trustees of State Univ. of N.Y., 282 AD2d 166; Matter of Hellerstein v Assessor of Town of Islip, 37 NY2d 1; Matter of Colella v Board of Assessors of County of Nassau, 95 NY2d 401; Matter of Transactive Corp. v New York State Dept. of Social Servs., 92 NY2d 579; Matter of Schulz v State of New York, 81 NY2d 336; Boryszewski v Brydges, 37 NY2d 361.)

      Eliot Spitzer, Attorney General, Albany (Robert M. Goldfarb, Caitlin J. Halligan, Daniel Smirlock and Nancy A. Spiegel of counsel), for New York State Board of Real Property Services, respondent.
    I. RPTL 1218 governs judicial review of the New York State Board of Real Property Services’ determination of a segment special equalization rate. (Matter of Town of Greenburgh v New York State Bd. of Real Prop. Servs., 275 AD2d 787; Matter of Town of Middletown v State Bd. of Real Prop. Servs., 272 AD2d 657, 95 NY2d 761; Matter of Nolan v Lungen, 61 NY2d 788; Matter of Fry v Village of Tarrytown, 89 NY2d 714; Matter of Majestic Collectibles v Spitzer, 307 AD2d 296; Matter of Reitman v Sobol, 225 AD2d 823.) II. Petitioner Town of Riverhead lacks capacity and standing to sue under RPTL 1218 to challenge the New York State Board of Real Property Services’ determination of a segment special equalization rate for a different municipality. (Matter of Graziano v County of Albany, 3 NY3d 475; City of New York v State of New York, 86 NY2d 286; Community Bd. 7 of Borough of Manhattan v Schaffer, 84 NY2d 148; Patrolmen’s Benevolent Assn. of City of N.Y. v City of New York, 41 NY2d 205; People v Brancoccio, 83 NY2d 638; Matter of Colella v Board of Assessors of County of Nassau, 95 NY2d 401; Matter of City of New York v City Civ. Serv. Commn., 60 NY2d 436; Matter of Board of Educ. of Roosevelt Union Free School Dist. v Board of Trustees of State Univ. of N.Y., 282 AD2d 166; Society of Plastics Indus. v County of Suffolk, 77 NY2d 761; Matter of Axelrod v Sobol, 78 NY2d 112.)

      Eileen A. Powers, Town Attorney, Southampton, for Town of Southampton, respondent.
    Appellant Town of Riverhead lacks both capacity and standing to seek judicial review of respondent New York State Board of Real Property Services’ determination establishing a special segment equalization rate for that segment of the Town of Southampton which is located within the Riverhead Central School District. (Community Bd. 7 of Borough of Manhattan v Schaffer, 84 NY2d 148; County of Albany v Hooker, 204 NY 1; Matter of Colella v Board of Assessors of County of Nassau, 95 NY2d 401; Society of Plastics Indus. v County of Suffolk, 77 NY2d 761; Matter of Dairylea Coop, v Walkley, 38 NY2d 6; Matter of Axelrod v Sobol, 78 NY2d 112; Boryszewski v Brydges, 37 NY2d 361; Matter of Schulz v State of New York, 81 NY2d 336; Matter of Transactive Corp. v New York State Dept. of Social Servs., 92 NY2d 579.)

      Riverhead Central School District, respondent precluded.

      David O. Wright, Yorktown Heights, for Sheldon Feiner and others, amici curiae.
    I. One town has standing to challenge another town’s equalization rate under RPTL 1314. (Matter of Town of Smithtown v Moore, 11 NY2d 238; Matter of Wisseman v New York State Bd. of Equalization & Assessment, 212 AD2d 196, 87 NY2d 804; Matter of City of Oswego v New York State Bd. of Real Prop. Servs., 280 AD2d 99, 96 NY2d 711.) II. Individual taxpayers have standing. (Matter of Colella v Board of Assessors of County of Nassau, 95 NY2d 401; Matter of Dudley v Kerwick, 52 NY2d 542.) III. Not allowing standing in this, context raises constitutional questions. (Killeen v New York State Off. of Real Prop. Servs., 253 AD2d 792; Saratoga County Chamber of Commerce v Pataki, 100 NY2d 801; Stuart v Palmer, 74 NY 183; Foss v City of Rochester, 65 NY2d 247.)
   OPINION OF THE COURT

Graffeo, J.

We are asked in this case to determine whether a town that is part of a school district may contest the segment special equalization rate set by the State Board of Real Property Services for another municipality in the same school district. Based on our review of the relevant statutes, we conclude that the Town of Riverhead lacks capacity to bring this proceeding and therefore affirm the dismissal of the petition.

The levy and collection of school taxes for the support of public school districts is governed by the Real Property Tax Law. Where the boundaries of a school district are coterminous with a municipality, school authorities levy taxes based on the valuations of real property from the latest assessment roll of that city or town (see RPTL 1302 [l]). But most of the school districts in New York State include all or portions of several municipalities. Hence, these school districts collect taxes from municipalities or segments of municipalities that may have varying levels of assessments. To effectuate the fair allocation of taxes among these municipalities, the State Board of Real Property Services is required annually to establish a state equalization rate for each municipality in the state (see RPTL 202 [1] [b]). The state equalization rate is the ratio of the locally-determined assessed value of taxable real property within a municipality to the State Board’s estimate of the true market value of that property (see RPTL 102 [19]; 1202 [1] [a]). In other words, the state equalization rate represents the percentage of true market value at which a municipality assesses its real property.

In order to apportion tax levies for a school district encompassing more than one municipality, the Real Property Tax Law directs a district superintendent to determine the full valuation of real property for each segment of the municipalities included in the school district by dividing the taxable assessed valuation of the real property in that part of the municipality by the state equalization rate established for the entire municipality (see RPTL 1314 [1] [a]). Where a municipality’s state equalization rate does not accurately reflect the level of assessment within a particular segment of a school district (thereby resulting in a disproportionate tax burden), the State Board is authorized to calculate a special equalization rate for that segment (see RPTL 1226, 1314 [2]). The State Board may undertake such an adjustment only where there would “be at least a 10 percent change in the share of the levy of at least one segment of the taxing jurisdiction as the result of the use of the segment special equalization rate in place of the equalization rate which would otherwise be used for purposes of apportionment” (9 NYCRR 186-5.5 [a]).

In this case, the Riverhead Central School District is comprised of portions of the towns of Riverhead, Southampton and Brookhaven. In May 2002, the Town of Southampton applied to the State Board for a segment special equalization rate. In its application, Southampton indicated that residential property in other parts of the town had been assessed at a significantly lower percentage of market value than residential property in the Riverhead.school district segment. This disparity occurred because market values in the segment had not increased as dramatically as values in other parts of the town since Southampton’s previous reassessment in 1992. Southampton further explained that it was planning to conduct a reassessment for its 2004 assessment roll and that the requested segment special equalization rate would be a temporary measure to ensure equitable apportionment of school taxes until the reassessment process was completed.

The State Office of Real Property Services (ORPS) analyzed the application and agreed with Southampton, finding that “the ratio of assessed value to sales price for the residential property in the Riverhead School District segment of the town is significantly higher than the ratio in the town as a whole.” Recognizing that the state equalization rate for Southampton was 2.37% in 2001, ORPS recommended that the State Board establish a segment special equalization rate of 3.01% for that portion of Southampton in the Riverhead Central School District. ORPS found that application of the new segment special equalization rate would reduce the share of the tax levy for the Southampton segment of the school district by 17.9% thereby satisfying the 10% threshold. Concomitantly, the new rate would increase the revenue share to be raised from the Brookhaven and Riverhead portions of the school district by 4.3%. After providing Brookhaven and Riverhead with notice and an opportunity to be heard at State Board meetings held to consider Southampton’s application—during which Riverhead offered testimony and written submissions—the State Board approved the 3.01% special equalization rate for the Southampton segment.

In November 2002, the Town of Riverhead and Edward Densieski, an owner of real property in the Riverhead segment of the school district, commenced a CPLR article 78 proceeding in Supreme Court seeking to annul the State Board’s segment special equalization rate determination. The court dismissed the proceeding for lack of subject matter jurisdiction, concluding that the proceeding should have been initiated in the Appellate Division in accordance with RPTL 1218.®

Riverhead and Densieski then brought this article 78 proceeding in the Appellate Division. The State Board and Southampton opposed the petition, arguing that Riverhead lacked both capacity and standing to sue, and that Densieski lacked standing. The Appellate Division agreed and dismissed the proceeding. We granted Riverhead leave to appeal.

Capacity to sue is a threshold question involving the authority of a litigant to present a grievance for judicial review. The issue of capacity often arises when a governmental entity seeks to bring suit (see Matter of Graziano v County of Albany, 3 NY3d 475, 478-479 [2004]). “Being artificial creatures of statute, such entities have neither an inherent nor a common-law right to sue. Rather, their right to sue, if it exists at all, must be derived from the relevant enabling legislation or some other concrete statutory predicate” (Community Bd. 7 of Borough of Manhattan v Schaffer, 84 NY2d 148, 155-156 [1994]). An express grant of authority is not always necessary. Rather, capacity may be inferred as a necessary implication from the powers and responsibilities of a governmental entity, “provided, of course, that there is no clear legislative intent negating review” (id. at 156 [citation and internal quotation marks omitted]).

Relevant to this controversy, section 1218 of the Real Property Tax Law, the sole statute authorizing judicial review of equalization rates, provides, in part:

“A final determination of the state board relating to state equalization rates may be reviewed by commencing an action in the appellate division of the supreme court in the manner provided by article seventy-eight of the civil practice law and rules upon application of the county, city, town or village for which the rate or rates were established.”

Contrary to Riverhead’s contentions, we conclude that RPTL 1218 applies not only to state equalization rates but also to segment special equalization rates. Section 1218 broadly authorizes review of State Board determinations “relating to” state equalization rates. Segment special equalization rates are a subset of state equalization rates—both reflect the percentage of full value at which real property situated in a given locale is assessed. Furthermore, the statute contemplates review of “the rate or rates” established for a specific municipality. Inasmuch as each municipality is assigned a single state equalization rate, the reference to “rates” evinces an intent that section 1218 apply to all species of state equalization rates, including segment special equalization rates (see Matter of Town of Rye v New York State Bd. of Real Prop. Servs., 5 AD3d 783 [2d Dept 2004]; Matter of City of Oswego v New York State Bd. of Real Prop. Servs., 280 AD2d 99, 101 [3d Dept 2001], lv denied 96 NY2d 711 [2001]).

Because RPTL 1218 specifically limits the capacity to challenge the State Board’s determination to the municipality “for which the rate or rates were established,” Riverhead necessarily lacks capacity to challenge the State Board determination granting Southampton a segment special equalization rate. “[W]here a law expressly describes a particular act, thing or person to which it shall apply, an irrefutable inference must he drawn that what is omitted or not included was intended to be omitted or excluded” (McKinney’s Cons Laws of NY, Book 1, Statutes § 240, Comment, at 411-412; see also Community Bd. No. 4 [Manhattan] v Board of Estimate of City of N.Y., 88 AD2d 832, 833 [1st Dept 1982], affd for reasons stated 57 NY2d 846 [1982]). In light of the express limitation set forth in RPTL 1218, the necessary implication doctrine advanced by Riverhead is not applicable.

Inasmuch as we conclude that Riverhead lacks capacity to challenge Southampton’s segment special equalization rate, we have no need to address whether Riverhead has standing under the facts and circumstances of this case.

Accordingly, the judgment of the Appellate Division should be affirmed, with costs.

Chief Judge Kaye and Judges G.B. Smith, Ciparick, Rosenblatt, Read and R.S. Smith concur.

Judgment affirmed, with costs.

      . In New York, each municipality is authorized to assess property at market value or at some fraction of market value. Regardless of the level of assessment a municipality chooses, all assessments within the municipality are required to be a uniform percentage of market value (see RPTL 305 [2]).

      . State equalization rates are used for purposes other than the determination of school taxes, such as the distribution of state aid and the establishment of debt limits (see Office of Real Property Services, Understanding the Equalization Rate <http://www.orps.state.ny.us/pamphlet/under_eqrates.pdf> [last updated Nov. 21, 2003], cached at <http://www.courts.state.ny.us/reporter/ wehdocs/under_eqrates.pdf>).

      . An aggrieved taxpayer or a municipality in which the segment lies may submit a request to the State Board for a segment special equalization rate (see 9 NYCRR 186-5.3 [b]). The request must contain, among other things, “information sufficient to support a determination that application of the State equalization rate for the prior roll or a special equalization rate for the current roll to the segment would be inequitable” (9 NYCRR 186-5.3 [b] [3]). The State Board may also initiate a review process to determine whether a segment special equalization rate is warranted (see 9 NYCRR 186-5.3 [a]).

      . ORPS is the agency that carries out the policies and programs of the five-member State Board (see RPTL 201 [1]). The State Board is authorized to delegate a number of its functions to ORPS, including the evaluation of a request for a segment special equalization rate (see RPTL 202 [2] [b]).

      . To illustrate, application of Southampton’s state equalization rate of 2.37% to a parcel situated in the school district segment assessed at $2,370 would indicate a market value of $100,000 ($2,370 divided by .0237). In contrast, utilization of the segment special equalization rate of 3.01% for the same property results in a market value of $78,737 ($2,370 divided by .0301).

      . Although Riverhead and Densieski filed a notice of appeal from this order, they failed to perfect the appeal.

      . Densieski did not seek leave to appeal to this Court. Hence, we have no occasion to address whether he had standing to commence this proceeding.

      . Section 65 of the Town Law also does not aid Riverhead. That statute generally provides a town with the capacity to bring a proceeding “for the benefit or protection of the town, in any of its rights or property” (Town Law § 65 [1]). Here, although application of Southampton’s segment special equalization rate will ultimately shift some of the overall tax burden to property owners in the Riverhead segment of the school district, no property or right of the town itself appears to be at stake (County of Albany v Hooker, 204 NY 1, 16-17 [1912]; People v Ingersoll, 58 NY 1, 29 [1874]; Matter of Esopus Prop. Holders Residing Within New Paltz Cent. School Disk v Potter, 60 AD2d 948 [3d Dept 1978]). In any event, RPTL 1218, the more specific statute, takes precedence over section 65 of the Town Law, a general provision.


source: Caselaw Access Project

license: Public Domain

text:
    [832 NE2d 1174, 799 NYS2d 758]
    Parviz Robert Mohassel, Respondent, v Lila Fenwick, Appellant.
    Argued May 5, 2005;
    decided June 16, 2005

      POINTS OF COUNSEL

      Ivan S. Feldman, New York City, for appellant.
    I. Prejudgment interest cannot be charged against a landlord (defendant-appellant) after a Division of Housing and Community Renewal treble damages award for rent overcharges. (Davis v Waidmann Realty Corp., 223 AD2d 453; Abend v Argo Corp., 208 AD2d 476, 85 NY2d 882; H & P Research, Inc. v Liza Realty Corp.,
      943 F Supp 328; Negron v Goldman, 195 Misc 2d 425; Gersten v Levin, 150 Misc 2d 594; Purpura v Purpura, 261 AD2d 595, 94 NY2d 850.) II. It is a violation of due process or equal protection under the law for an administrative statute or regulation or the enforcement thereof, in this case Division of Housing and Community Renewal rent overcharge matters, not to specify a statute of limitations or establish a laches period after which time a judgment cannot be entered. (Feldman v New York City Tr. Auth., 171 AD2d 473; Matter of Barabash, 31 NY2d 76; Matter of Lukin v New York State Div. of Hous. & Community Renewal, 264 AD2d 341; Matter of Windsor Place Corp. v State Div. of Hous. & Community Renewal, Off. of Rent Admin., 161 AD2d 279.) III. One cotenant (plaintiff-respondent) cannot get the benefit of a full Division of Housing and Community Renewal (DHCR) award that the DHCR had a duty, by law, to apportion between all cotenants and failed or neglected to do so and/or which award said cotenant knew or should have known did not fully belong to him; and this Court cannot permit entry of the resulting erroneous judgment or deny the landlord (defendant-appellant) the right to seek to overturn or modify said judgment. (Matter of Hoston v New York State Dept. of Health, 203 AD2d 826, 84 NY2d 803; Baker v Board of Educ., Hoosick Falls Cent. School Dist., 3 AD3d 678; Davidson Pipe Supply Co. v Wyoming County Indus. Dev. Agency, 156 Misc 2d 989, 196 AD2d 240, 85 NY2d 281; Society of Plastics Indus. v County of Suffolk, 77 NY2d 761; Matter of Jemrock Realty Co. v Roldan, 256 AD2d 122, 89 NY2d 804; Parker v Blauvelt Volunteer Fire Co., 93 NY2d 343; Ryan v New York Tel. Co., 62 NY2d 494.)

      Beranbaum Menken Ben-Asher & Bierman LLP, New York City (Mark H. Bierman of counsel), for respondent.
    I. The sole issue that this Court should address within its proper constitutional authority is whether the Appellate Division’s modification of the Supreme Court’s order reinstating interest from the date of the final agency order to the date of the judgment was correct. (Price v Price, 69 NY2d 8; Mohrmann v Kob, 291 NY 181.) II. This Court should certify in the affirmative the question of the Appellate Division as to whether it properly modified the order of the Supreme Court by reinstating prejudgment interest for the period from the final agency order until entry of the judgment, and requiring that postjudgment interest be included. (Abend v Argo Corp., 208 AD2d 476, 85 NY2d 882; Davis v Waidmann Realty Corp., 223 AD2d 453; Love v State of New York, 78 NY2d 540; Matter of Aurecchione v New York State

      Div. of Human Rights, 98 NY2d 21; Spodek v Park Prop. Dev. Assoc., 96 NY2d 577; J.B. Preston Co. v Funkhouser, 261 NY 140; Miner v City of Glens Falls, 999 F2d 655; McMahon v New York & Erie R.R. Co., 20 NY 463; Matter of State Div. of Human Rights v Gissha White Plains Corp., 107 AD2d 750; Matter of Lian [First Asset Mgt.], 273 AD2d 163.) III. This Court should certify in the affirmative the question of the Appellate Division as to whether it properly modified the order of the Supreme Court by reinstating interest from the date that the first judgment was entered to the date of the amended judgment. (Majid v Commissioner of Social Servs., 244 AD2d 187; Purpura v Purpura, 261 AD2d 595, 94 NY2d 850.) IV Defendant’s constitutional arguments are not properly raised on this appeal and are entirely without merit. (Tumolillo v Tumolillo, 51 NY2d 790; Bingham v New York City Tr. Auth., 99 NY2d 355; Matter of Jemrock Realty Co. v Roldan, 256 AD2d 122; Matter of Plaza Realty Invs. v Aponte, 198 AD2d 164; Matter of David Frankel Realty Co. v New York State Div. of Hous. & Community Renewal, 176 AD2d 617, 79 NY2d 754; Matter of Sea New Rochelle Assoc. v State of N.Y. Div. of Hous. & Community Renewal, Off. of Rent Admin., 140 AD2d 610; Melahn v Hearn, 60 NY2d 944; Parker v Blauvelt Volunteer Fire Co., 93 NY2d 343; O’Brien v City of Syracuse, 54 NY2d 353; Matter of McGee v Korman, 70 NY2d 225.) V Defendant lacks standing to challenge a judgment entered in the amount stated in a final agency award on the ground that it does not include a second individual, and defendant is otherwise barred from raising that argument. (Society of Plastics Indus. v County of Suffolk, 77 NY2d 761; Tennessee Power Co. v Tennessee Val. Auth., 306 US 118; Association of Data Processing Serv. Orgs., Inc. v Camp, 397 US 150; Matter of Dairylea Coop. v Walkley, 38 NY2d 6; Schlesinger v Reservists Comm. to Stop the War, 418 US 208; Cuomo v Long Is. Light. Co., 71 NY2d 349; Becarie v Union Bank of Switzerland, 272 AD2d 162.)
   OPINION OF THE COURT

Graffeo, J.

In this rent overcharge proceeding, the issue is whether a rent stabilized tenant was properly granted prejudgment interest on a treble damages award. We conclude that he was.

In 1984, Parviz Robert Mohassel commenced a rent overcharge proceeding with the Division of Housing and Community Renewal (DHCR) relating to his Manhattan apartment, alleging that building owner Lila Fenwick was collecting rent in excess of that authorized under the New York City Rent Stabilization Law. A cotenant was also named in the petition. After the owner failed to comply with repeated agency requests for rent history documentation, in November 1989 the Rent Administrator issued a decision finding a rent overcharge in the amount of approximately $300 per month between 1984 and 1989, totaling $26,106.72. Because the violation was determined to be willful, the tenant was granted treble damages. Taking into account the treble damages award plus other related overcharges, the Rent Administrator ruled that Fenwick owed Mohassel $81,303.53. There was no reference to the cotenant in the Rent Administrator’s decision.

The owner challenged the award in an administrative appeal to DHCR by filing a petition for administrative review (PAR). In March 1997, DHCR upheld the Rent Administrator’s decision and noted that the tenant was entitled to interest on the overcharge award from the date of the Rent Administrator’s decision to the date of the DHCR determination.

Unsuccessful before the administrative agency, the owner commenced a CPLR article 78 proceeding against DHCR without naming the tenant as a party respondent. The article 78 petition was denied on the merits in May 1998. The owner apparently filed a notice of appeal but the appeal was never perfected.

In October 2001, DHCR notified the tenant that the owner’s judicial challenge to the overcharge determination had been denied, forwarding a “Notice of Rent Stabilized Tenant Concerning Payment of Penalties Which Landlord Has Been Directed to Pay By An Administrator’s Order.” The notice advised the tenant of two options for collecting the rent overcharge: a deduction could be made from future monthly rent payments in an amount no greater than 20% of the overcharge or a judgment could be obtained against the owner by filing a notice with the County Clerk. Because Mohassel no longer resided in an apartment owned by Fenwick, his only available option was to obtain a judgment. Thus, Mohassel filed the necessary documentation with the County Clerk and a judgment was entered against Fenwick in April 2002. In the judgment, the clerk calculated prejudgment interest on the $81,303.53 overcharge from the date of the Rent Administrator’s decision to the date of entry of the judgment. With interest, the judgment totaled $172,238.74.

Soon after entry of the judgment, the owner brought this CPLR 5015 motion to vacate the judgment in Supreme Court, obtaining a stay of enforcement pending the proceeding. Fen-wick argued that Mohassel was not entitled to the full judgment because the overcharge proceeding had been initiated in the name of Mohassel and a cotenant, contending that Mohassel’s attempt to collect the entire overcharge himself amounted to “fraud.” She also alleged that the judgment should be vacated under the equitable doctrine of laches due to the tenant’s failure to enter it within a reasonable time period. Finally, she asserted that the tenant was not entitled to prejudgment interest on the rent overcharge because such interest is not appropriate when treble damages are awarded.

Supreme Court rejected the fraud and laches arguments and declined to vacate the judgment but concluded that the interest award should be reduced, although not on the grounds asserted by the owner. Noting that the DHCR determination explicitly directed interest from the date of the Rent Administrator’s decision to the issuance of the determination, Supreme Court concluded that the tenant was not entitled to interest thereafter. In other words, Supreme Court interpreted DHCR’s silence on the question of postdetermination interest as precluding such an award. The court therefore directed that the judgment be recalculated to delete the interest award covering the period from March 1997 to April 2002, and an amended judgment was entered.

On appeal, the Appellate Division modified by reinstating the original judgment. The Court noted that the tenant was entitled to postdetermination interest under the Rent Stabilization Law, declining to interpret DHCR’s failure to address postdetermination interest as a finding that such interest was not warranted. The Appellate Division granted the owner leave to appeal to this Court and we now affirm.

Although the owner raises a number of issues on appeal, we begin with the question of whether the tenant was entitled, to prejudgment interest on the treble damages award. Our decision is informed by Rent Stabilization Law § 26-516 (a) and the regulations promulgated thereunder. Although section 26-516 (a) has been amended since the Rent Administrator issued its 1989 decision, the amendments have not substantively altered the provisions addressing prejudgment interest on rent overcharge awards. Under section 26-516 (a), if DHCR finds that an owner has collected rent in excess of that authorized by statute, the owner “shall be liable to the tenant for a penalty equal to three times the amount of such overcharge,” unless the owner demonstrates that the overcharge was not willful. In the absence of willfulness, DHCR “shall establish the penalty as the amount of the overcharge plus interest” (Rent Stabilization Law § 26-516 [a]). The implementing regulation similarly authorizes either a treble damages award on the overcharge or interest “from the date of the first overcharge ... at the rate of interest payable on a judgment pursuant to section 5004 of the [CPLR]” (Rent Stabilization Code [9 NYCRR] § 2526.1 [a] [1]). In addition, Rent Stabilization Law § 26-516 (a) (4) states that an owner who is found to have overcharged rent “may be assessed the reasonable costs and attorney’s fees of the proceeding and interest from the date of the overcharge at the rate of interest payable on a judgment pursuant to section five thousand four of the [CPLR].”

These provisions are designed to discourage violations of the Rent Stabilization Law and, where a violation occurs, to compensate the tenant, particularly when the violation is willful. Interest on a rent overcharge award is generally authorized from the date of the initial monthly overpayment, except when treble damages are warranted. In those circumstances, treble damages are imposed in lieu of interest from the date of the monthly overcharge to the date of the Rent Administrator’s decision. But nothing in the rent stabilization scheme restricts the grant of interest from the date of the Rent Administrator’s decision forward. To the contrary, section 26-516 (a) (4) is open-ended, authorizing an interest award equivalent to that imposed in a civil action (see CPLR 5002, 5003).

Here, after determining that the owner’s conduct was willful, the Rent Administrator imposed treble damages and did not grant the tenant interest from the date of each monthly rent overpayment. Because no interest was awarded for the five-year period prior to the Rent Administrator’s 1989 decision, the interest calculation in the original judgment was in accord with Rent Stabilization Law § 26-516 (a) and 9 NYCRR 2526.1 (a) (1).

The owner does not dispute that prejudgment interest is authorized when there is no treble damages award but asserts that, even though more than 15 years have elapsed and the tenant has yet to collect any of the rent he overpaid, the 1989 treble damages order in this case forever prohibited subsequent prejudgment interest. We are unpersuaded. To interpret the Rent Stabilization Law as the owner suggests—authorizing prejudgment interest in cases where treble damages are not awarded (because the overcharge was not willful) but precluding it when the overcharge was willful—would turn the statutory scheme on its head, allowing willful violators to delay paying meritorious claims while enjoying interest-free use of tenants’ money. Such an analysis would be inconsistent with the purpose of overcharge proceedings to fully compensate tenants when owners fail to comply with rent stabilization requirements, especially when noncompliance is willful. The imposition of prejudgment interest ensures that injured tenants will be made whole and encourages both willful and nonwillful violators to make prompt repayment.

The owner also argues that the prejudgment interest award should be vacated because it punishes her for the delay in entry of the judgment, which she attributes to DHCR’s failure to timely resolve the administrative appeal and the tenant’s failure to timely enter a judgment. This contention misapprehends the purpose of interest in the context of a lump sum compensatory damages award against a private party.

“Specifically, interest is not a punishment arbitrarily levied upon a culpable party. Instead, an award of interest is simply a means of indemnifying an aggrieved person. It represents the cost of having the use of another person’s money for a specified period” (Matter of Aurecchione v New York State Div. of Human Rights, 98 NY2d 21, 27 [2002] [citation and internal quotation marks omitted]).

As of November 1989, the owner owed the tenant $81,303.53. Instead of paying the tenant at that time, the owner pursued an administrative appeal and a judicial challenge, both of which were unsuccessful. Although the owner was certainly entitled to chart this course, the fact remains that she had the use of the tenant’s money during this time period while the tenant was deprived of it. The owner,

“has presumably used the money to its benefit and, consequently, has realized some profit, tangible or otherwise, from having it in hand during the pendency of the litigation. There is thus nothing unfair about requiring the [owner] to pay over this ‘profit’ in the form of interest to the . . . party who was entitled to the funds from the date . . . liability was fixed” (Love v State of New York, 78 NY2d 540, 545 [1991]).

This rationale applies regardless of whether the delay was attributable to the party who had use of the money. For example, in Aurecchione, we. rejected the notion that an agency’s 11-year administrative delay in resolving a controversy between an employee and a private employer relieved the employer of its obligation to pay predetermination interest on a back pay award.

Although the owner claims that the tenant was guilty of laches for failing to enter the judgment at an earlier point in the process, that argument finds no support in the record. Mohassel sought entry of the judgment within six months of being informed by DHCR that the article 78 challenge had concluded. Since he was not a party to the judicial proceeding, the tenant cannot be faulted for awaiting word from DHCR before obtaining a judgment. Indeed, the tenant’s conduct was consistent with DHCR’s written instructions, which indicate that a judgment should not be filed until DHCR certifies “that the owner has not filed a PAR or a proceeding for judicial review, or, if filed, that those proceedings have concluded.” (DHCR Fact Sheet No. 16, Collecting Overcharges in Rent Stabilized Apartments in New York City.) Under these circumstances, the courts below properly rejected the owner’s laches claim.

In sum, nothing in the governing rent stabilization provisions prohibited the grant of prejudgment interest in this case. We agree with the Appellate Division’s conclusion that DHCR’s silence on the question of postdetermination interest should not have been interpreted as precluding it. DHCR’s failure to address the issue in its March 1997 determination is understandable since it had no reason to presume that the owner would commence a judicial proceeding rather than paying what was owed at that time. Had the owner repaid the tenant when the administrative appeal was denied, there would have been no occasion for postdetermination interest.

None of the owner’s remaining arguments are reviewable in this Court. Fenwick’s due process claim that the statutory scheme is flawed because it fails to restrict the time frame for entry of a judgment on an overcharge award is unpreserved for review because she failed to raise the issue in Supreme Court. The argument that DHCR erred, or that Mohassel engaged in fraud, when the overcharge award was granted in Mohassel’s name alone without joinder of the cotenant should have been asserted in the administrative appeal from the Rent Administrator’s decision—at a time when the underlying circumstances could have been explored and any apportionment error timely corrected.

Accordingly, the order of the Appellate Division should be affirmed, with costs, and the certified question answered in the affirmative.

Chief Judge Kaye and Judges G.B. Smith, Ciparick, Rosenblatt, Read and R.S. Smith concur.

Order affirmed, etc.

      . The Appellate Division also clarified that the tenant was entitled to postjudgment interest during the pendency of the appeal. The owner has not contested the propriety of postjudgment interest and it is clearly authorized under the rent stabilization scheme (see Rent Stabilization Law [Administrative Code of City of NY] § 26-516 [a] [5]; 9 NYCRR 2526.1 [e]) and CPLR 5003.

      . In granting leave, the Appellate Division certified the question: “Was the order of this Court, which modified the order of the Supreme Court, properly made?” The tenant contends that this was a limited certification, authorizing this Court to review only the propriety of the appellate court’s interest modification. We interpret the question as broadly certifying the entire case to this Court for review.

      . As noted in Matter of Gilman v New York State Div. of Hous. & Community Renewal (99 NY2d 144, 152 n 1 [2002] [Graffeo, J., dissenting]), during the period this administrative appeal was pending, DHCR had a substantial backlog of cases.

      . The record does not reveal why the cotenant was not named in the Rent Administrator’s decision. While the cotenant is named on the lease for the relevant time frame, rent registration documents suggest that she may not have resided in the apartment in 1986, 1987, 1988, or 1989. Mohassel vacated the apartment in late 1989, which marked the end of the overcharge period reflected in this judgment. At oral argument, his counsel asserted that Mohassel and the cotenant were a married couple who separated and later divorced. Counsel further represented that Mohassel had paid all the overcharged rent. Had the owner timely raised the issue before DHCR, these facts could have been clarified and made part of the administrative record.


author: Read, J.

text:
    [832 NE2d 707, 799 NYS2d 433]
    George Kralik et al., Appellants, v 239 East 79th Street Owners Corp., Respondent.
    Argued May 5, 2005;
    decided June 16, 2005

      POINTS OF COUNSEL

      Finder Novick Kerrigan LLP, New York City (Thomas P. Kerrigan and Christina DeVillacian of counsel), for appellants.
    I. The sponsor disclosure obligations promulgated by the New York State Attorney General in 13 NYCRR 18.3 may not be used to create additional substantive obligations for entitlement to holder of unsold share status in cooperative apartment buildings. (Council for Owner Occupied Hous. v Abrams, 133 Misc 2d 574, 125 AD2d 10, 72 NY2d 553; Matter of Whalen v Lefkowitz, 36 NY2d 75; Matter of 44 W 96th St. Assoc. v Abrams, 85 AD2d 563, 56 NY2d 649; People v Lexington Sixty-First Assoc., 38 NY2d 588; All Seasons Resorts v Abrams, 68 NY2d 81; Clark v Cuomo, 66 NY2d 185; Pacella v 107 W. 25th St. Corp., 271 AD2d 342; Riggin v Balfour Owners Corp., 137 AD2d 799; Craig v Riverview E. Owners, 156 AD2d 157; Thompson v 490 W. End Apts. Corp., 252 AD2d 430.) II. The sponsor disclosure regulations promulgated in 13 NYCRR 18.3 may not be used by a private party to avoid contractual obligations since enforcement of the regulations is vested solely in the office of the New York State Attorney General. (CPC Intl, v McKesson Corp., 70 NY2d 268.) III. Even if 13 NYCRR 18.3 (w) is held to properly create additional requirements for holder of unsold share status and the corporation is held to have the power to enforce such regulations, the corporation cannot void George and Sara Kralik’s rights as holders of the unsold shares under the proprietary lease since the Kraliks are in fact in compliance with all applicable regulations.

      Gallet Dreyer & Berkey, LLP, New York City (David L. Berkey, Morrell I. Berkowitz, Beatrice Lesser and Michelle P. Quinn of counsel), and Rosenberg & Pittinsky, LLP (Laurence D. Pittinsky of counsel) for respondent.
    I. The proprietary lease must be interpreted to give effect to the cooperative’s and George and Sara Kralik’s reasonable expectations in light of the law that existed when the contract was made. (Fe Bland v Two Trees Mgt. Co., 66 NY2d 556; Mionis v Bank Julius Baer & Co., 301 AD2d 104; Corhill Corp. v S.D. Plants, Inc., 9 NY2d 595; Trump-Equitable Fifth Ave. Co. v H.R.H. Constr. Corp., 106 AD2d 242, 66 NY2d 779; Sutton v East Riv. Sav. Bank, 55 NY2d 550; Goldfarb v Goldfarb, 86 AD2d 459; Dolman v United States Trust Co. of N.Y., 2 NY2d 110; CPC Intl. v McKesson Corp., 70 NY2d 268; 511 W. 232nd Owners Corp. v Jennifer Realty Co., 98 NY2d 144; Craig v Riverview E. Owners, 156 AD2d 157.) II. George and Sara Kralik failed to show that they complied with any of the obligations required of a holder of unsold shares; basic principles of contract law and equity bar them from enjoying the benefits of a holder of unsold shares. (Williams v Fitzhugh, 37 NY 444; Westwood v Cole, 66 Misc 53; Pacella v 107 W. 25th St. Corp., 271 AD2d 342; Spiegel v 1065 Park Ave. Corp., 305 AD2d 204; Fe Bland v Two Trees Mgt. Co., 66 NY2d 556.) III. The decision below should be affirmed because the express wording of the proprietary lease shows that George and Sara Kralik were never holders of unsold shares. (Mionis v Bank Julius Baer & Co., 301 AD2d 104.) IV George and Sara Kralik’s complaint should have been dismissed because the claims were barred by the statute of limitations. (Merritt Hill Vineyards v Windy Hgts. Vineyard, 61 NY2d 106; Boyce v Rinehart, 263 AD2d 377; Town of Massena v Niagara Mohawk Power Corp., 45 NY2d 482.)

      Eliot Spitzer, Attorney General, New York City {Michelle Aronowitz and Julie M. Loughran of counsel), amicus curiae.
    I. The courts below misapplied 13 NYCRR 18.3 (w) to George and Sara Kralik. (Council for Owner Occupied Hous. v Abrams, 72 NY2d 553; Vermeer Owners v Guterman, 78 NY2d 1114; Craig v Riverview E. Owners, 156 AD2d 157; Gorbatov v Gardens 75th St. Owners Corp., 247 AD2d 440; Pacella v 107 W. 25th St. Corp., 271 AD2d 342; Riggin v Balfour Owners Corp., 137 AD2d 799.) II. The Court should employ ordinary contract principles to resolve the parties’ dispute, without resort to 13 NYCRR 18.3. (Fe Bland v Two Trees Mgt. Co., 66 NY2d 556; 511 W. 232nd Owners Corp. v Jennifer Realty Co., 98 NY2d 144; Ludwig v 25 Plaza Tenants Corp., 184 AD2d 623; Brickman v Brickman Estate at Point, 6 AD3d 474; Greenfield v Philles Records, 98 NY2d 562; Vermont Teddy Bear Co. v 538 Madison Realty Co., 1 NY3d 470; R/S Assoc. v New York Job Dev. Auth., 98 NY2d 29; Matter of Wallace v 600 Partners Co., 86 NY2d 543; Vanderveer v Callanan Indus., 97 AD2d 916; Matter of Siwek v Mahoney, 39 NY2d 159.)
   OPINION OF THE COURT

Read, J.

Defendant owns the building located at 239 East 79th Street in Manhattan, which was converted to cooperative ownership in 1983. This appeal stems from a longstanding dispute over the rights of plaintiffs George and Sara Kralik as proprietary lessees and owners of the shares of the corporation purchased from the cooperative’s sponsor as unsold shares. We conclude that whether plaintiffs are holders of unsold shares should be determined solely by applying ordinary contract principles to interpret the terms of the documents defining their contractual relationship with the cooperative corporation.

I.

Plaintiffs became the proprietary lessees of apartment 16E on May 16, 1985 by an assignment of proprietary lease from the cooperative’s sponsor. According to plaintiffs, they purchased apartment 16E for investment purposes, understanding that they were holders of unsold shares exempt from some of the restrictions applicable to residential tenants—most relevantly, a restriction on sublets without approval or fee. Consistent with this status, plaintiffs apparently sublet apartment 16E from June 1, 1986 through May 31, 1988 without approval of the cooperative’s Board of Directors or payment of a sublet fee. In June 1988, however, the Board insisted that plaintiffs pay a sublet fee “under threat of exclusion” of their second subtenant. Plaintiffs paid this fee and another fee in 1989 “under duress,” and then stopped paying. In 1992, plaintiffs received a notice of default from the Board, which threatened lease termination.

After a six-year standoff, in 1998 plaintiffs acted to resolve their dispute with the Board by commencing this lawsuit. Plaintiffs asked for a declaration that they were holders of unsold shares and therefore entitled to sublet apartment 16E without obtaining the Board’s consent or paying a sublet fee. They also sought damages for breach of fiduciary duty and lost rental income allegedly caused by defendant’s interference with their right to sublet.

After issue was joined, defendant moved for summary judgment on the ground that, as a matter of law, plaintiffs were not holders. Specifically, defendant claimed that this was so because plaintiffs failed to comply with various requirements of 13 NYCRR part 18 (“Occupied Cooperatives”). Defendant did not dispute that plaintiffs never intended to occupy and never actually resided in apartment 16E.

Supreme Court granted defendant summary judgment and declared that plaintiffs were not holders because neither “they [n]or the sponsor complied with a number of. . . prerequisites for acquiring that status,” including 13 NYCRR 18.3 (w) (3) and (4) (sponsor must guarantee payment of all maintenance charges and assessments and make certain financial representations with respect to unsold shares) and 13 NYCRR 18.3 (w) (11) (holder must amend the cooperative’s offering plan to provide specified information). Supreme Court cited Pacella v 107 W. 25th St. Corp. (271 AD2d 342 [1st Dept 2000]) and Gorbatov v Gardens 75th St. Owners Corp. (247 AD2d 440 [2d Dept 1998]) to support the proposition underpinning its holding— that plaintiffs were not holders, regardless of their rights under the cooperative’s governing documents, unless they also complied with regulations promulgated by the Attorney General under article 23-A of the General Business Law (the Martin Act) and codified at 13 NYCRR part 18.

The Appellate Division affirmed, holding that, “as a matter of law,” plaintiffs never became holders (4 AD3d 144 [1st Dept 2004]). The Court determined that, contrary to plaintiffs’ contentions, they were not holders merely by virtue of their compliance with paragraph 38 (a) of the proprietary lease. “[S]uch a provision, alone, ‘does not create rights ... it merely extinguishes them’ ” (id. [quoting Craig v Riverview E. Owners, 156 AD2d 157, 158 (1st Dept 1989)]). “There must also be compliance with regulatory requirements pertaining to such holders” {id. [citing Pacella}), some of which plaintiffs concededly did not fulfill. We subsequently granted leave to appeal, and now reverse.

II.

The Martin Act governs the offer and sale of securities in and from New York State, including securities representing “participation interests” in cooperative apartment buildings. The Attorney General bears sole responsibility for implementing and enforcing the Martin Act, which grants both regulatory and remedial powers aimed at detecting, preventing and stopping fraudulent securities practices (see CPC Intl. v McKesson Corp., 70 NY2d 268 [1987]). According to the Attorney General, who filed an amicus brief in this case, his duties under the Martin Act with respect to cooperative apartments are twofold. First, he reviews the disclosures required by General Business Law § 352-e for sufficiency. Second, he may investigate and initiate civil or criminal actions where he believes there is fraud (see General Business Law §§ 352, 352-c, 353, 354).

To carry out his responsibilities under section 352-e, the Attorney General has promulgated 13 NYCRR part 18 {see General Business Law § 352-e [6] [b] [empowering Attorney General to “adopt, promulgate, amend and rescind suitable rules and regulations” relating generally to General Business Law § 352-e]). Because section 352-e is “a disclosure statute, designed to protect the public from fraudulent exploitation in the sale of real estate securities” (Council for Owner Occupied Hous. v Abrams, 72 NY2d 553, 557 [1988]), part 18 is similarly limited and only applies to disclosures made in a public offering. Thus, part 18 does not apply to plaintiffs unless and until they offer apartment 16E’s shares for sale to the public, and, in that event, only the Attorney General may enforce part 18’s requirements (see Vermeer Owners v Guterman, 78 NY2d 1114 [1991] [no private cause of action under General Business Law § 352-e]).

In short, the terms of the controlling documents—not part 18—determine whether plaintiffs are holders of unsold shares. Plaintiffs’ status must be decided by applying the usual rules of contract interpretation to those documents (see e.g. Fe Bland v Two Trees Mgt. Co., 66 NY2d 556, 563 [1985] [“The relationship between the shareholder/lessees of a cooperative corporation and the corporation is determined by the certificate of incorporation, the corporation’s bylaws and the proprietary lease under which a particular apartment is occupied, subject, of course to applicable statutory and decisional law”]).

Accordingly, the order of the Appellate Division should be reversed, without costs, and the case remitted to Supreme Court for further proceedings in accordance with this opinion.

Chief Judge Kaye and Judges G.B. Smith, Ciparick,' Rosenblatt, Graffeo and R.S. Smith concur.

Order reversed, etc.

      . Plaintiffs are also proprietary lessees and shareholders of apartments 11N (their residence) and 1A (where plaintiff George Kralik conducts his dental practice).

      . Craig, Gorbatov, Pacella and any other decisions relying on them are incorrect to the extent they suggest that the requirements of 13 NYCRR part 18 apply where no shares are offered for sale.