Gerard Manor Corp. v Maria

[*1] Gerard Manor Corp. v Maria 2016 NY Slip Op 51799(U) Decided on December 19, 2016 Civil Court Of The City Of New York, Bronx County Lutwak, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 December 19, 2016
Civil Court of the City of New York, Bronx County

Gerard Manor Corporation, Petitioner-Landlord,

against

Maria Maria, Respondent-Tenant.



51645/2016



Attorney for Petitioner:

Novick Edelstein Lubell Reisman Wasserman & Leventhal PC

733 Yonkers Avenue

Yonkers, New York 10701

(914) 375-0100

Attorney for Respondent:

Andrew Jones, Esq.

BOOM! Health Legal Services

540 East Fordham Road

Bronx, New York 10458

(718) 295-5598
Diane E. Lutwak, J.

Recitation, as required by CPLR Rule 2219(a), of the papers considered in the review of the Respondent's Order to Show Cause to Vacate Stipulation of Settlement and Dismiss the Proceeding or, alternatively, to Stay Execution of the Warrant of Eviction:

Papers/Numbered

Order to Show Cause & Attached Affirmation, Affidavit & Exhibits A-G 1

Upon the foregoing papers, the Decision and Order on this Motion are as follows:

BACKGROUND & PROCEDURAL HISTORY

This is a nonpayment proceeding filed on August 31, 2016 by petitioner-landlord Gerard Manor Corporation against respondent-tenant Maria Maria seeking rent arrears of $2763.24. The Petition alleges that the subject premises are subject to Rent Stabilization with a current monthly rent of $898.14 which Petitioner demanded from Respondent by a written predicate three-day notice. The affidavit of service of the rent demand alleges that it was served on respondent, after a prior unsuccessful attempt at personal service on August 11, 2016 at 8:37 pm, [*2]by affixing a copy on the entrance door to the premises on August 12, 2016 at 12:20 pm and sending additional copies by certified and first-class mail. The affidavit of service of the Notice of Petition and Petition asserts that they were served on respondent, after a prior unsuccessful attempt at personal service on September 1, 2016 at 9:00 pm, by affixing a copy on the premises' entrance door on September 2, 2016 at 11:51 am.

The court assigned a return date of September 21, 2016 upon Respondent's filing of an answer on September 12, 2016. Respondent asserted a "general denial" and two specific defenses in her answer: (1) non-receipt of the Notice of Petition and Petition; (2) conditions in her apartment needing to be repaired. Respondent's answer also includes the statement: "Hardship unemployed/waiting for SSI assistance". Respondent pro se and Petitioner through its attorney entered into a Stipulation of Settlement on September 21, 2016, which was allocuted and "so-ordered" by the court on that day, which gave Petitioner a final judgment for $3447.18, with the warrant to issue forthwith and execution stayed until November 4, 2016 for Respondent to pay the judgment plus rent for October and November 2016. The Stipulation also included a list of repairs Respondent alleged to be needed, with access dates for inspection and repairs "as needed as required by law" on October 12 and 13, 2016 and on additional dates if necessary. The Stipulation of Settlement does not explicitly address the defense of non-receipt of the Notice of Petition and Petition that Respondent had raised in her answer.

After receiving a City Marshal's Notice of Eviction dated November 16, 2016, Respondent submitted an Order to Show Cause, through counsel whom she had retained on October 20, 2016, Respondent's Affidavit at ¶ 7 and Exhibit E, seeking to (1) vacate the Stipulation of Settlement she had entered into on September 21, 2016; and (2) dismiss the proceeding under CPLR 3211(a)(8) for lack of personal jurisdiction; or, alternatively, (3) grant her additional time to pay her rent arrears. Respondent alleges that she did not receive any copies of the Notice of Petition and Petition in any manner and only found about this proceeding when she received a postcard [FN1] in the mail which advised her to go to Bronx Housing Court. Respondent's Affidavit at ¶¶ 4 & 5. Further, Respondent alleges that she did not know that she was waiving her service defense when she signed the Stipulation and that, "If I had known that I was doing so, I would not have signed the stipulation and would have sought to have the case dismissed." Respondent's Affidavit at ¶ 6. Respondent also explains that she has a number of health problems, lives with her 67-year-old mother who also has a number of health problems [*3]and that she has applied for "SEPS"[FN2] assistance at BronxWorks [FN3] . Respondent's Affidavit at ¶¶ 2, 3 & 8. Petitioner did not submit any opposition papers, and on the return date of Respondent's Order to Show Cause Petitioner's counsel argued that, under the applicable case law, it should be denied to the extent it seeks vacatur of the Stipulation of Settlement and dismissal of the proceeding due to lack of personal jurisdiction and stated that if what Respondent needed was more time, Petitioner was willing to consent to an extension of the payment deadline.

DISCUSSION

It is axiomatic that stipulations of settlement between parties on pending proceedings are favored by the courts and are "not lightly cast aside." Hallock v State of New York (64 NY2d 224, 230, 485 NYS2d 510 [1984]). Matter of Galasso (35 NY2d 319, 321, 361 NYS2d 871 [1974]); 1420 Concourse Corp v Cruz (135 AD2d 371, 521 NYS2d 429 [1st Dep't 1987], app dism'd, 73 NY2d 868, 537 NYS2d 487 [1989]). As explained by the Court of Appeals, "strict enforcement not only serves the interest of efficient dispute resolution but also is essential to the management of court calendars and integrity of the litigation process." Hallock, supra. While the court does have "control over stipulations and power to relieve from the terms thereof the stipulation will not be destroyed without a showing of good cause therefor, such as fraud, collusion, mistake, accident, or some other ground of the same nature." In Re Estate of Frutiger (29 NY2d 143, 149-50, 324 NYS2d 36 [1971])(quoting Campbell v Bussing (274 AD 893, 82 NYS2d 616 [2nd Dep't 1948]). Thus, where an agreement is incomplete, Matter of Galasso, supra, or the court finds there to be other good cause such that "it appears that either party has inadvertently, unadvisably or improvidently entered into an agreement which will take the case out of the due and ordinary course of proceeding in the action, and in so doing may work to his prejudice", a court may vacate a stipulation and restore the pre-stipulation status quo "in order to promote justice and prevent wrong," In re Estate of Frutiger (29 NY2d 143, 150, 324 NYS2d 36 [1971]).

Thus, the court "possesses the discretionary power to relieve parties from the consequences of a stipulation effected during litigation upon such terms as it deems just and, if the circumstances warrant, it may exercise such power if it appears that the stipulation was entered into unadvisedly or that it would be inequitable to hold the parties to it." Genesis Holding, LLC v Watson (5 Misc 3d 127[A], 798 NYS2d 709 [App Term 1st Dep't 2004])(upholding lower court's vacatur of stipulation of settlement in non-primary residence holdover proceeding, where respondent, whom the court found to be suffering from a mental health impairment warranting the appointment of a guardian ad litem, forfeited a "properly pleaded and potentially meritorious succession defense for no real consideration"). See also, e.g., 2701 Grand Ass'n LLC v Morel (50 Misc 3d 139[A], 31 NYS3d 924 [Table][App Term 1st Dep't 2016])(in a nonpayment proceeding, vacating stipulation entered into by previously unrepresented tenant where "[t]enants, now represented by counsel, have submitted documentary evidence showing the existence of an arguably meritorious rent overcharge claim"); Crenulated Co. Ltd. v Purvis (50 Misc 3d 1203(A), 28 [*4]N.Y.S.3d 647 [Civ Ct Bx Co 2015])(in a pet holdover proceeding, granting motion of mentally disabled respondent-tenant to vacate stipulation of settlement she had entered into, with the assistance of a guardian ad litem, under which she had agreed to give away her pet dog upon whom she relied for emotional support); 275-277 Realty LLC v Lawrence-Harris (45 Misc 3d 910, 913-914, 994 NYS2d 248, 250 [Civ Ct Kings Co 2014])(in a nonpayment proceeding, vacating stipulation entered into by unrepresented tenant which converted the proceeding to a holdover and required respondent "to vacate her home of the past 19 years" and forfeit "her low-cost rental apartment").

Nevertheless, none of these cases, and none of the cases cited by Respondent's attorney, involve circumstances like those presented to the court here, where the tenant seeks to vacate a stipulation of settlement she had entered into without legal counsel solely based on the defense of lack of personal jurisdiction, which, although not expressly waived in the agreement clearly was known to the tenant who had raised it as a defense in her answer. Rather, those cases involve proceedings in which stipulations of settlement were vacated because the tenants had substantive defenses on the merits to the landlords' claims for rent that had not been addressed in the settlement agreements. For example, in both Tabak Associates, LLC v Vargas (48 Misc 3d 143[A], 20 NYS3d 294 [Table] (App Term 1st Dep't 2015]), and Berto Realty LLC v Thiombiano (45 Misc 3d 129[A], 999 NYS2d 796 [Table] [App Term 1st Dep't 2014]), the Appellate Term affirmed the lower courts' orders vacating stipulations entered into by previously unrepresented tenants where "tenant, now represented by counsel, has demonstrated that she has a potentially meritorious rent overcharge claim", Tabak Associates, supra, and "Tenant, now represented by counsel, has submitted documentary evidence which shows the existence of an arguably meritorious rent overcharge claim", Berto Realty, supra. In Dearie v Hunter (183 Misc 2d 336, 705 NYS2d 519 [App Term 1st Dep't 2000]), the Appellate Term affirmed the lower court's order vacating a stipulation entered into by a previously unrepresented tenant based upon the "prima facie showing of a defense under section 143-b(5) of the Social Services Law".[FN4] See also, e.g., 2701 Grand Assn LLC v Morel (50 Misc 3d 139[A], 31 NYS3d 924 [App Term 1st Dep't 2016])(similar holding as in Tabak and Berto); Clermont York Assoc LLC v Zgodny (42 Misc 3d 143[A], 988 NYS2d 522 [App Term 1st Dep't 2014])(same); 2722 8th LLC v Watson (10 Misc 3d 140[A], 814 NYS2d 565 [App Term 1st Dep't 2006])(reversing lower court which had denied tenant's motion to vacate a stipulation where tenant, "now represented by counsel, has submitted documentary evidence which shows the existence of possible defenses to landlord's rent claim" and finding that "the judgment should have been vacated and the stipulation set aside to allow tenant to defend the nonpayment proceeding on the merits"); Striver 140 LLC v Cruz (1 Misc 3d 29, 770 NYS2d 814 [App Term 1st Dep't 2003])(affirming lower court's order "insofar as it vacated the stipulation executed by pro se tenants and permitted them to defend the nonpayment proceeding on the merits" where the tenants had "made a prima facie showing of defenses based upon breach of the warranty of habitability and rent overcharge"); and compare 2345 Crotona Gold v Dross (50 Misc 3d 143[A], 31 NYS3d 924 [App Term 1st Dep't 2016](upholding lower court's [*5]denial of tenant's motion to vacate so-ordered stipulations settling a nonpayment proceeding where there was no showing of a potential rent overcharge claim or that "the stipulations were tainted by mistake, fraud, or any other basis for voiding a contract [citations omitted] or that it would be inequitable to hold the parties to their bargain").

Further, lack of personal jurisdiction based upon defective service of process is a defense that may be waived "by appearance, by failure to plead such defense, by failure to move to dismiss upon such basis, or by stipulation." Biener v Hystron Fibers, Inc (78 AD2d 162, 165-66, 434 NYS2d 343, 346 [1st Dep't 1980]). Where a party consents to personal jurisdiction in a stipulation of settlement which awards judgment to the other party, a subsequent motion to vacate that judgment will be denied, "[g]iven that stipulations of settlement are favored by the courts and are not lightly case aside." 34 Funding Assoc., Inc v Pollak (26 AD3d 182, 811 NYS2d 352 [1st Dep't 2006]).

In Biener, the parties stipulated to the entry of a judgment and to the submission to the court of a liability determination with regard to one defendant's obligation to indemnify another. While the Stipulation did not contain an express provision waiving the defense of lack of personal jurisdiction, the court noted that "the form of the stipulation plainly indicated that there was no intent to preserve the jurisdictional issue", that it was "manifest that the parties wished to settle the case and were waiving any challenge to the court's jurisdiction" and held that "the stipulation here took the issue of jurisdiction over [defendant] out of the case." (78 AD2d at 166-67, 434 NYS2d at 346-47.) See also Lomando v Duncan (257 AD2d 649, 684 NYS2d 569 [2nd Dep't 1999])("A defect in personal jurisdiction may be waived where a party submits to the court's jurisdiction by, inter alia, stipulating to settle an action"); Manufacturers Hanover Trust Co v Porcelli (121 AD2d 384, 503 NYS2d 404 [2nd Dep't 1986])(upholding lower court's holding "that by entering into a stipulation settling the underlying action, the appellants waived any objections they had to the alleged defective service").

Based on these principles, the question presented by the case now before this court is whether this court should find there to be good cause to vacate a stipulation as inadvisably entered into by an unrepresented tenant where the agreement took the tenant's financial problems into consideration by providing her with a significant period of time to satisfy the judgment and avert eviction (over six weeks' time), and further addressed the tenant's sole substantive defense of breach of warranty of habitability by requiring the landlord to inspect the alleged conditions and repair them as required by law, but which implicitly waived the tenant's defense of lack of personal jurisdiction due to alleged defective service of process. While the tenant — now represented by counsel — now claims that she did not know she was waiving her defense of defective service, the fact is that she did raise this defense in her answer and is not challenging the sufficiency of the court's allocution of the Stipulation of Settlement. Were the court to grant this motion, the next step would be to set the case down for a traverse hearing, the outcome of which, at best for Respondent, would result in the case being dismissed without prejudice and, if the alleged rent arrears had not yet been paid, Petitioner then commencing another, similar proceeding, in which, presumably, Petitioner would take steps to ensure that Respondent receives the Notice of Petition and Petition and that service of process is properly effectuated.

While the Stipulation of Settlement does not specifically provide that Respondent consents to the jurisdiction of the court, it cannot be disputed that Respondent knew she had the defense of defective service — she raised it in her answer — and knew that the settlement agreement did not address this issue. Further, Respondent does not allege that she did not understand or participate in the settlement negotiations which resulted in an agreement that provided her with slightly over six weeks' time to pay the judgment and avoid eviction and further addressed her one substantive defense of breach of the warranty of habitability. Respondent does not allege that the Stipulation was not conferenced with a Housing Court Attorney and/or not properly allocuted by the court or that there were any other circumstances surrounding the signing of the Stipulation that interfered with her ability to understand its terms or what her options were other than signing the agreement. Thus, her claim now that she did not know that she was waiving her service defense when she signed the Stipulation and that, "If I had known [*6]that I was doing so, I would not have signed the stipulation and would have sought to have the case dismissed" rings hollow. Under the circumstances presented in this case, Respondent's actions fit within the definition of a waiver as "the voluntary abandonment or relinquishment of a known right." Jefpaul Garage Corp v Presbyterian Hosp in NY (61 NY2d 442, 446, 474 NYS2d 458, 459 [1984]).

It does give the court pause that the cases discussed above which stand for the proposition that personal jurisdiction may be waived by entering into a stipulation of settlement — Biener, Lomando and Porcelli — for the most part appear to involve sophisticated parties, represented by counsel and engaged in commercial disputes, as opposed to the unrepresented tenant in the nonpayment eviction proceeding now before this court. However, based on the facts and circumstances presented to the court in this case, and the fact that, on its face, the Stipulation's "uncomplex and unremarkable terms represented an equitable and balanced surrender of interests," Poplar Realty v Po (3 Misc 3d 22, 778 NYS2d 832 [App Term 2nd Dep't 2003])(affirming lower court's denial of motion to vacate stipulation), the stipulation herein does not appear to be one that "it would be inequitable to hold the parties to". Genesis Holding, LLC v Watson (5 Misc 3d 127[A], 798 NYS2d 709 [App Term 1st Dep't 2004]). The agreement which the parties entered into is simply not one "which will take the case out of the due and ordinary course of proceeding in the action", and vacatur of the Stipulation is not needed in this case "in order to promote justice and prevent wrong," In re Estate of Frutiger (29 NY2d 143, 150, 324 NYS2d 36 [1971]).

CONCLUSION

Accordingly, Respondent's motion is denied to the extent it seeks to vacate the Stipulation of Settlement of September 21, 2016. However, to prevent prejudice to Respondent in light of her undisputed assertions that she is disabled, lives with her elderly and disabled mother and is in the process of applying for the "SEPS" rent subsidy program to pay her arrears and to assist with ongoing rent payments, the court finds that Respondent has shown sufficient "good cause" under RPAPL § 749(3) for the court to exercise its discretion to stay execution of the warrant of eviction through and including January 20, 2017 for payment of the judgment of $3447.18 entered on September 21, 2016 along with all rent that has subsequently accrued. See, e.g., Harvey 1390 LLC v Bodenheim (96 AD3d 664, 948 NYS2d 32 [1st Dep't 2012]); 2203 Belmont Realty Corp. v. Gant (51 Misc 3d 140[A], 36 NYS3d 410 [App Term 1st Dep't 2016]).

This constitutes the Decision and Order of this Court.

Dated: December 19, 2016

Bronx, New York

_________________________

Diane E. Lutwak, Hsg. Ct. J. Footnotes

Footnote 1:Under the Uniform Civil Rules for the New York City Civil Court (22 NYCRR § 208.42[i]), the clerk of this court is required to mail respondents in nonpayment and holdover proceedings a postcard, provided by petitioners upon the filing of a notice of petition with proof of service, advising them that papers have been served and filed against them and that "if you do not appear in court, you may be evicted." The court is not permitted to enter a default judgment for failure to answer unless there has been compliance with this rule.

Footnote 2:It is common knowledge in the New York City Housing Courts that "SEPS" - "Special Exit and Prevention Supplement" - is one of the City's Rent Supplement Programs for low-income tenants.

Footnote 3:It is common knowledge in the Bronx County Housing Court that "BronxWorks" is a multi-service, not-for-profit organization which provides economic and social services to Bronx residents.

Footnote 4:Respondent's counsel did not provide a copy of the unreported decision it cites to and quotes from in the matter of Eastern Estates v McPherson (NYLJ, May 19, 1999 at 30 [Civ Ct Kings Co]), which is not available on Lexis or Westlaw. The text quoted by Respondent's counsel consists of general language about the standard for vacatur of a stipulation entered into by a pro se litigant, Affirmation in Support of Order to Show Cause at ¶ 16, and none of the examples listed of situations where it is appropriate for a court to vacate a stipulation involves the one presented by the case now before this court, where the tenant had raised a defense of improper service of the Notice of Petition and Petition in her answer and then implicitly waived it in a settlement agreement that provided the tenant more than six weeks to satisfy the judgment and addressed her one other defense on the merits.