Klingsberg v River Terrace Apts.

[*1] Klingsberg v River Terrace Apts. 2005 NY Slip Op 50808(U) Decided on May 2, 2005 Supreme Court, Bronx County Renwick, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on May 2, 2005
Supreme Court, Bronx County

Garry Klingsberg and SUSAN KLINGSBERG, Plaintiffs,

against

River Terrace Apartments, Defendant.



24634/2000

Dianne T. Renwick, J.

In 2000, plaintiffs Garry Klingsberg and Susan Klingsberg (hereinafter referred to as "tenant-shareholders") commenced this action against the cooperative corporation of River Terrace Apartments (hereinafter referred to as "cooperative,") challenging, inter alia, the cancellation of a parking license issued to plaintiffs as tenants-shareholders. On July 29, 2001, the parties entered into a stipulation settling this action, concomitantly with the action the cooperative corporation had commenced in the New York City Civil Court (Housing Part), against the tenant-shareholders, for nonpayment of common charges. Plaintiffs tenant-shareholders now move by Order to Show Cause for a court order compelling defendant cooperative to comply with the aforementioned stipulation of settlement.

Discussion

As a preliminary matter, this Court finds that plaintiffs, tenant-shareholders, were not required to commence a plenary action to enforce the subject stipulation of settlement. Although a plenary suit is required where a stipulation relates to an action which has previously terminated, see, Yonkers Fur Dressing Co. v. Royal Ins. Co., 247 NY 435 (1928), the rule only applies in situations where the parties have unequivocally terminated their lawsuit. See, Teitelbaum Holdings Ltd. v. Gold, 48 NY2d 51, 56 (1979). An action is not automatically terminated by agreement unless there has been a showing "that the parties have executed an express, unconditional stipulation of discontinuance." Teitelbaum Holdings v. Gold, supra, at 56. The presumption is that an action is not automatically terminated merely because a settlement has been reached, and this "presumption may be overcome only upon a showing that the parties have executed an express, unconditional stipulation of discontinuance, or have entered judgment in [*2]accordance with the terms of the settlement." Teitelbaum Holdings v. Gold, 48 NY2d 51, 56.

Here, contrary to defendant cooperative's contention, the record demonstrates that the stipulation of settlement did not unconditionally terminate the action. Absent such an unconditional stipulation of discontinuance, plaintiffs tenant-shareholders are entitled to seek enforcement of the stipulation of settlement by motion in the underlying action. See, Teitelbaum Holdings v Gold, supra; HCE Assocs. v. 3000 Watermill Lane Realty Corp., 131 AD2d 543 (2nd Dept. 1987); Smith v. Smith, 128 AD2d 768 (2nd Dept. 1987); Baumis v. General Motors Corp., 102 AD2d 961 (3rd Dept. 1984). Accordingly, this Court must examine the merits of plaintiffs tenant-shareholders' motion seeking to compel defendant cooperative's compliance with the subject stipulation of settlement.

The gravamen of plaintiffs, tenant-shareholders' motion is that the defendant cooperative did not fully and adequately adjust the maintenance charges in accordance with paragraph one of the stipulation of settlement, by which the cooperative waived all past and future legal fees accruing from this action and the housing matter. The pertinent clause states that "[a]ll legal fees incurred in the action pending in the housing part . . . and [current matter] that are currently due and owing from plaintiff and that may become due and owing from plaintiff through the conclusion of these litigated matters shall be waived and not collectible from plaintiff." Defendant cooperative waived the right to past and future legal fees in exchange for the tenant-shareholders' waiver of the right to appeal these actions and their cancellation of the lease to a parking space on the property.

Defendant cooperative, however, argues that this waiver agreement was subject to a separate agreement it had entered into with ABN Mortgage Company (hereinafter referred to as "ABN"), pursuant to a recognition agreement signed by the cooperative and the lender (ABN) when the tenant- shareholders obtained a loan to procure their shares. When a cooperative shareholder pledges his shares as security for a loan, a recognition agreement is signed in the form of a contract between the cooperative and the lender, which usually provides a mechanism for the lender's notification of any default by the shareholder in the payment of maintenance so that the lender can protect its security interest by paying the shareholder's default or taking other legal action. See Cooperative Sec. 6.02.N.12; Slove Associates v. Bordouris, 156 Misc 2d 165 (NYC Civ. Ct. 1992). See also, UCC §9-316. Defendant cooperative contends that, prior to the signing of the legal fees waiver agreement in this case, the lender had exercised its contractual right to pay the maintenance arrears in the form of the legal fees owed prior to the settlement of this action in the amount of $7,664.00.

This Court finds that defendant cooperative's contention is inapposite on the facts and the law. First, this Court finds that defendant cooperative has failed to establish to this Court's satisfaction that its agreement with the lender was in fact entered into before the cooperative agreed to waive its rights to legal fees in this action. The only evidence presented by defendant cooperative to substantiate such allegation was a letter dated June 27, 2001, by which the cooperative corporation reportedly informed ABN of the tenant-shareholders' default in the payment of maintenance in the form of legal fees. In this Court's view, such letter, in itself, fails to establish that ABN ever received such notification by June 28, 2001, let alone that ABN agreed to take care of the legal fees. Indeed, the evidence suggests the contrary. In fact, plaintiffs, tenant-shareholders, have submitted a letter written by ABN indicating that it first [*3]received notification of the outstanding legal fees on August 7, 2001. Thus, defendant cooperative's contention that, prior to the settlement of this action on June 28, 2001, ABN had agreed to pay the maintenance arrears in the form of legal fees is a mere chimera.

Secondly, even if this Court were to find that ABN had agreed to pay the outstanding legal fees at the time defendant cooperative waived the same, this Court finds that such an agreement would have been superseded by the legal fees waiver agreement. In cases of contract interpretation, it is well settled that "'when parties set down their agreement in a clear, complete document, their writing should . . . be enforced according to its terms.'" Vermont Teddy Bear Co., Inc. v. 538 Madison Realty Co., 1 NY3d 470, 475, quoting W.W.W. Assoc. v. Giancontieri, 77 NY2d 157, 162 (1990). "The settlement stipulation is an independent contract, subject to the principles of contract interpretation, including the rule requiring [the court]" to ascertain 'the intent of the parties . . . from within the four corners of the instrument, and not from extrinsic evidence'" when the language of the stipulation is unambiguous. Keith v. Keith, 241 AD2d 820, 822 (1st Dept. 1997), quoting Rainbow v. Swisher, 72 NY2d 106, 109 (1988); see McCoy v. Feinman, 99 NY2d 295 (2002).

In this case, there is no ambiguity. By its express language, the waiver agreement unambiguously provides a waiver of all past and future legal fees incurred in this litigation and the housing matter. Nowhere in the agreement drafted by counsel for the cooperative is there any language indicating that it was subject to the lender's contractual right under the recognition agreement to pay the maintenance arrears in the form of legal fees. Inasmuch as the legal fees remained unpaid, the steps taken by the cooperative in this case constituted an unequivocal act to forego its rights to legal fees. The promise of the cooperative to forego its rights for legal fees is sufficient consideration for the promise of the tenant shareholders to forego their rights. See Restatement of Contract, §406. Comment A. Under the circumstances, the waiver of past and future legal fees was valid and binding upon the cooperative irrespective of the lender's alleged promise to pay them on behalf of the tenant-shareholders, pursuant to the recognition agreement. Cf. Credit Suise First Boston Corp. v. Pitofsky, 4 NY3d 149 (2005) (employment agreement between a broker-dealer and its registered representative employees superseded the arbitration provision of an earlier agreement between the employees and the New York Stock Exchange) (2005).

Conclusion

For the foregoing reasons, plaintiffs, tenant-shareholders (Garry Klingsberg and Susan Klingsberg), are granted this motion seeking to compel defendant cooperative's (River Terrace Apartments) compliance with the stipulation of settlement entered into between the parties in 2001, requiring the cooperative to waive all past and future legal fees incurred by the tenant-shareholders in this action and the housing matter. Accordingly, it is hereby

Ordered that River Terrace Apartments shall reimburse to ABN AMRO Mortgage Group [*4]the amount of $7,664.00, which was paid to River Terrace Apartments, as maintenance arrears in the form of legal fees due from Garry Klingsberg and Susan Klingsberg.

This constitutes the Decision and Order of this Court.

Dated: May 2, 2005 ___________________________

Bronx, New York Hon. Dianne T. Renwick, J.S.C.