Department of Hous. Preserv. & Dev. (DHPD) v French Open LLC

[*1] Department of Hous. Preserv. & Dev. (DHPD) v French Open LLC 2009 NY Slip Op 51179(U) [23 Misc 3d 1138(A)] Decided on June 10, 2009 Civil Court Of The City Of New York, Kings County Heymann, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 June 10, 2009
Civil Court of the City of New York, Kings County

Department of Housing Preservation And Development (DHPD), Petitioner(s),

against

French Open LLC & Rahim Siunykalimi, Respondent(s).



HP 1313/08



The petitioner was represented by:

David Montminy, Esq., Of Counsel

Deborah Rand, Esq.

DHPD Litigation Bureau

100 Gold Street 3rd Floor

New York, New York 10038

212-863-8950

The respondents were represented by:

Ray A. Ammirati, Esq., Of Counsel

Wenig Saltiel LLP

26 Court Street, Suite 502

Brooklyn, New York 11242

718-797-5700

George M. Heymann, J.

In what appears to be a case of first impression, the Court must determine when a case is "settled" within the meaning of Civil Practice Law and Rules (CPLR) §6514(a) in order to cancel a Notice of Pendency (Lis Pendens).

FACTUAL BACKGROUND

DHPD commenced this proceeding on March 25, 2008 by filing a Notice of Petition and Verified Petition seeking an order directing the respondents to correct all violations of the Multiple Dwelling Law ( MDL) and the Housing Maintenance Code (HMC) existing at the subject premises, located at 65 South Portland Avenue, Brooklyn, New York 11217; directing the respondents to file a registration statement with DHPD; and a judgment for civil penalties. [*2]

Thereafter, on April 17, 2008, DHPD filed a Notice of Pendency with the Kings County Clerk regarding the relief sought in the Verified Petition.

On June 18, 2008, the respondents, by their attorney, filed a Notice of Appearance and Verified Answer.

The matter first appeared in court on April 29, 2008. After four adjournments, the parties entered into a two attorney Consent Order on September 5, 2008 which was "So Ordered" by Judge Maria Milin on September 8, 2008.

On January 5, 2009, the respondents' attorney sent a letter to the attorney representing DHPD in this action requesting that the Lis Pendens be removed within 10 days. That request was denied.

On April 3, 2009, the respondents moved for an order directing the County Clerk to cancel the Notice of Pendency and for awarding the respondents attorney's fees for the cancellation of said Notice of Pendency. The motion was adjourned to May 11, 2009 and thereafter submitted to the Court for decision.

THE CONSENT ORDER

In relevant part, the Consent Order between the parties contains the following provisions:

3) That the following conditions listed in the annexed computer printout/inspection report dated 8/22/08 ...are violations of the Housing Maintenance Code and/or Multiple Dwelling Law....

IT IS HEREBY ORDERED ON CONSENT that the respondent(s)....shall: correct all violations of record at the subject premises (including but not limited to those listed on the computer printout/inspection report dated 8/22/08 on the following schedule:

a) All violations classified as "C" (immediately hazardous) violations within 15 days of the date of signing of this Order, or be subject to civil penalties.....

b) All violations classified as "B" (hazardous) violations within 30 days of the date of signing of this Order, or be subject to civil penalties.....

c) All violations classified as "A" (non- hazardous) violations within 90 days of the date of signing of this Order, or be subject to civil penalties.....

12) The civil penalty claims contained in the Verified Petition / Notice of Petitiondated 3/25/08 in the above-entitled proceeding are settled upon the following terms andconditions:

a) The petitioner shall recommend .... approval of a settlement of the civil penaltyclaims .... against the respondent(s) .... for one thousand two hundred fifty ($1250.00/100)to be paid by respondent(s)....

13) Notwithstanding what has been consented to in the within Order, petitionerreserves its right to seek additional civil penalties on all violations listed in the databaseof inspection report dated 8/22/08 if there is any default in performance of any of theterms hereunder.

15) The Court shall retain continuing jurisdiction over this matter, HP 1313/08,regarding the subject premises.

APPLICABLE STATUTES

CPLR §6501. Notice of pendency; constructive notice.

A notice of pendency may be filed in any action in a court of the state or of the United [*3]States in which the judgment demanded would affect the title to, or the possession, use or enjoyment of, real property, except in a summary proceeding brought to recover the possession of real property. The pendency of such an action is constructive notice from the time of filing of the notice only, to a purchaser from, or incumbrancer against, any defendant named in a notice of pendency.... A person whose conveyance or incumbrance is recorded after the filing of the notice is bound by all proceedings taken in the action after such filing to the same extent as a party.

CPLR §6514. Motion for cancellation of notice of pendency.

(a) Mandatory cancellation. The court, upon motion of any person aggrieved and upon such notice as it may require, shall direct any county clerk to cancel a notice of pendency,.... if

the action has been settled, discontinued or abated... (Emphasis added)

DISCUSSION

The Consent Order entered into between the parties is a contract that sets forth the obligations that must be met in order to fulfill its intent.

A stipulation concerning any matter in an action is binding when it is made in open court between counsel, contained in a writing subscribed by the party or his attorney, or reduced to the form of an order and entered. (Citation omitted) A stipulation is a contract and is governed by general contract principles for its interpretation and effect. (Citations omitted)

The Court must look to the intent of the parties with respect to the terms of the stipulation, as well as the identity of the parties to it. In searching for the probable intent of the parties, the Court must accord the words their fair and reasonable meaning, and take into account whatever may be reasonably implied from the language used. (Citation omitted) 450 Park, LLC v. Star TV USA, Inc., NYLJ, 8/21/02, p.18, col.3.

The Court must further distinguish between an agreement that accepts a promise to do something as satisfaction of its terms and an agreement to accept the performance of a promise as satisfaction. In the latter case, there is no satisfaction until all the terms are completed. See, CJS, Compromise & Settlement §64.

As can be seen from the terms of the Consent Order, the respondents were required to not only pay a civil penalty by a date certain, but to correct all outstanding violations within the time frames for class A, B and C violations respectively. Thus, this was an agreement that required performance of a promise in order for it to be satisfied.

Since the outside date for repairs is 90 days for A violations, all violations should have been corrected no later than December 7, 2008 (90 days after the Consent Order was "So Ordered" on September 8, 2008).

In its January 5, 2009 letter to DHPD the respondents' attorney stated that the "Respondent satisfied the civil penalty with check [ ] dated September 22, 2008.... As payment has been made please file the necessary paperwork with the court to remove the Lis Pendens within 10 days."

Respondents argue that "CPLR §6514 allows any aggrieved party to move for a court order to vacate a Notice of Pendency" citing Sealy v. Clifton LLC, 21 Misc 3d 1124(A), 2008 [*4]NY SlipOp 52165(U). (Resp Atty Aff ¶ 9)[FN1]

Although the respondents emphasize that the civil penalty was paid almost immediately after the Consent Order was entered into, no reference whatsoever is made regarding the correction of violations.

Petitioner maintains that the Notice of Pendency should not be cancelled as the payment of the civil penalty was only one aspect of the terms of the Consent Order and there remains outstanding violations that must be corrected.

Subsequent to the request to cancel the Lis Pendens, DHPD reinspected the premises and allege that the respondents failed to correct twenty two (22) of the original violations that respondents agreed to correct. In addition, thirty seven (37) new violations were issued.[FN2]

In reply to the petitioner's contentions, the respondents aver that:

3. It is well established that strict compliance with the statutory requirements' of CPLR §6501 and §6514 is a condition precedent to a valid Lis Pendens'. See Skolar v. Rimberg, 20 AD2d 280[sic][FN3]

4. CPLR §6514(a) explicitly provides for the cancellation of the Lis Pendens if the underlying action has been settled. Here, it is undisputed that on September 8, 2008 Petitioner executed a Consent Order with Respondent that constitutes a settlement which conforms to the statutory requirement. Notably, Petitioner does not dispute that this Consent Order is, in fact, a settlement between the two parties of the underlying action. (Emphasis in original) [*5]

5. Notwithstanding, Petitioner posits the novel proposition that Respondents' alleged failure to comply with the September 2008 Consent Order .... settling the underlying complaint somehow defeats CPLR §6514(a) which mandates that this Court cancel the Notice of Pendency if the action has been settled'. (Emphasis in original)

6. Opportunely, Petitioner failed to offer one single authority in support of its assertion that, for the action to be settled' pursuant to CPLR §6514, there is an additional requirement that Respondents must fully comply with the terms of the Consent Order.

7. Thus, since compliance with the Consent Order is unnecessary to fulfill the strictures of CPLR §6501 and §6514, the plain language of the statute requires this Court to cancel the Notice of Pendency. (Resp. Aff. in Reply)

The Court disagrees with the respondents assessment of the mandatory provision of CPLR §6514(a) with regard to its use of the word "settle". According to the respondents, merely entering into a "So Ordered" Consent Order, without more, is sufficient to qualify as a settlement to require cancellation of the Notice of Pendency. If that be so, then the respondents' payment of the civil penalty was merely superfluous to the request for cancellation, as the moment the parties put their signatures to paper the instant proceeding was "settled" rendering all its conditions- subsequent meaningless with regard to the relief sought herein.

The respondents have made no affirmative representations that any of the violations set forth in the inspection report of 8/22/08, annexed to the Consent Order, have been corrected as agreed upon.

The purpose of the instant Lis Pendens is to give notice to potential purchasers, etc., that the petitioner is seeking, inter alia, an order to correct pending Housing Maintenance Code violations.

The burden is on the respondents to prove that said violations have been corrected. Until such proof has been forthcoming, it is the opinion of this Court that cancellation of the Notice of Pendency is not mandated. The Court is not persuaded by the fact that there has been a change of ownership subsequent to the commencement of this proceeding but prior to the entry of the Consent Order. The fact remains that the purpose of this proceeding and the Notice of Pendency (i.e.: outstanding violations) have not been resolved and the Court declines to grant the relief sought at this juncture.

Accordingly, the Court concludes that this matter has not been "settled" as prescribed in CPLR §6514(a) and the motion to cancel the Notice of Pendency is denied without prejudice to renew upon proof that all outstanding violation contained in the inspection report dated 8/22/08 have been certified as corrected. The second branch of the motion for the award of attorney's fees is denied as academic.

This constitutes the Decision and Order of the Court.

Dated: June 10, 2009___________________________

GEORGE M. HEYMANN, JHC Footnotes

Footnote 1: Respondents' reliance of this case is misplaced as none of the factors in CPLR §6514(a) were applicable in that case that would mandate cancellation of the Notice of Pendency. There, the court dealt with its discretionary powers pursuant to CPLR §6514(b) and under the facts therein declined to exercise its discretion to cancel the Notice of Pendency.

Footnote 2: As the new violations were not part of the instant proceeding, they have no bearing upon the resolution of this matter.

Footnote 3: The correct citation is 20 AD2d 580. Here, too, the respondents misapply the court's reasoning in an attempt to support its position that the Lis Pendens must be cancelled. In Skoler the Appellate Division reversed the lower court's denial of cancellation on the limited ground that "the notice of pendency is effective only when it has been properly filed" and that it is a "nullity" when it fails "to comply with the mandate of the statute." Id. at 581. In that case, the summons had not been served within 60 days after filing of the Lis Pendens as required by the statute then in effect.

In the case at bar, there is no evidence that the Notice of Pendency was not properly filed with the Clerk of the County. The Notice of Petition and Verified Petition were filed on March 25, 2008 and the Notice of Pendency was filed on April 17, 2008. The Notice of Petition and Verified Petition were conspicuously served on April 9, 2008. Although CPLR §6512 provides that "a notice of pendency is effective only if, within thirty days after filing, a summons is served upon the defendant..." the statute is silent as to its effectiveness if filed after the service of the summons. As both occurred within thirty days of each other, the Court does not find any impediment to its effectiveness herein.