Highbridge House Ogden LLC v Del Valle

[*1] Highbridge House Ogden LLC v Del Valle 2017 NY Slip Op 50250(U) Decided on February 22, 2017 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 February 22, 2017
Civil Court of the City of New York, Bronx County

Highbridge House Ogden LLC, Petitioner-Landlord,

against

Doreen Del Valle, Respondent-Tenant.



5473/2015



Attorney for Petitioner:

Cullen & Associates, P.C.

2 Rector Street, Suite 903

New York, New York 10006

(212) 233-9772

Attorney for Respondent:

Sharone Miodovsky, Esq.

The Legal Aid Society

Civil Practice — Housing Help Program

1118 Grand Concourse, Room 250

Bronx, New York 10456

(718) 579-8942
Diane E. Lutwak, J.

Recitation, as required by CPLR Rule 2219(a), of the papers considered in the review of the Respondent's Motion to Vacate Stipulation of Settlement Dated April 13, 2016:

Papers Numbered

Order to Show Cause, Affirmation & Exhibits A-E 1

Affirmation in Opposition & Exhibits A-D 2

Affirmation in Reply 3

BACKGROUND & PROCEDURAL HISTORY

This is a nonpayment proceeding brought by petitioner-landlord Highbridge House Ogden against Rent Stabilized respondent-tenant Doreen Del Valle. The Petition, dated January 16, 2015, sought rent arrears at the rate of $1405.30 per month for the months of December 2014 and January 2015, plus a balance of $205.24 due for the month of November 2014. Respondent pro se used the court's form to file an Answer to the Petition on February 5, 2015 raising a "General Denial" and a defense of conditions in her apartment that needed to be repaired. [*2]Petitioner by counsel and Respondent pro se settled the case at the initial court appearance on February 10, 2015 in an agreement which awarded Petitioner a final judgment in the amount of $4279.64, with issuance of a warrant of eviction forthwith, execution stayed through March 27, 2015 for Respondent to pay the judgment. The agreement also included access dates for repairs.

Respondent took out an order to show cause seeking an extension of her payment deadline, which the court granted by order dated May 8, 2015 to the extent of staying execution of the warrant of eviction through June 8, 2015 for payment of $6808.04. Respondent took out a second order to show cause on June 18, 2015, supported by a letter from a Case Manager at "BronxWorks Home Base" which noted that Respondent had been issued a lease in 2014 with a monthly rent of $1405.30, that the rent registered with the DHCR (New York State Division of Housing and Community Renewal) in 2014 was $719.75 and that Respondent had been referred for legal assistance. Copies of two other documents pertaining to her tenancy supported Respondent's order to show cause: (1) the first and last pages of her lease dated April 11, 2014, running for a two-year term through March 31, 2016; and (2) the DHCR's rent registration statement as of June 12, 2015, reflecting that the apartment initially had been registered in 2005 in the name of tenant Dinah Owusu with a "Legal Regulated Rent" (LRR) of $591, that it was thereafter registered in the same tenant's name through and including 2012 when the LRR was $679.75, and that it then was registered in 2013 and 2014 with a LRR of $719.75 and an "Apartment Status" of "VA" (vacant).

Respondent retained counsel and, after several adjournments, her second order to show cause was settled in an agreement which vacated the February 10, 2015 stipulation of settlement, the May 8, 2015 court order and the judgment and warrant. Thereafter the proceeding was adjourned a number of times for settlement or trial until it was settled on April 13, 2016 in an agreement under which a final judgment in the amount of $18,186.84 — all rent due through April 30, 2016 - was entered in favor of Petitioner, with a warrant of eviction issued forthwith, execution stayed through May 29, 2016 for payment. The stipulation further provided that Respondent acknowledged a legal monthly Rent Stabilized rent of $1405.30, that Petitioner was permitted to register that rent with the DHCR and base all future increases on it, and that Respondent would be given a preferential monthly rent of $1050 for the two-year period running from May 1, 2016 through April 30, 2018.

Shortly prior to the payment deadline, Respondent's counsel filed an order to show cause returnable June 9, 2016 seeking to vacate the stipulation of April 13, 2016 or, in the alternative, to stay execution of the warrant of eviction to allow for a "FEPS" (Family Eviction Prevention Subsidy) application to be processed by the State. This motion was adjourned a number of times for briefing and possible settlement until, eventually, it was argued and deemed submitted on February 2, 2017.

In his affirmation, Respondent's counsel argues that the stipulation should be vacated as it was based upon a mistake of law. Respondent's counsel asserts that neither he nor his client knew at the time of the settlement that there was a complaint pending at the DHCR which, approximately one month after the date of the settlement, resulted in the DHCR's issuance of an "Order Reducing Rent for Rent Stabilized Tenants" (copy attached to Respondent's moving papers as Exhibit B). The Order, issued on May 18, 2016, references a "decrease in services" complaint filed by various tenants on August 21, 2015. The Order notes that the DHCR conducted inspections on December 14, 2015 and January 6, 2016 and found that Petitioner had failed to maintain certain building-wide services: "lighting in stairs; doors at stairwells; janitor [*3]service bldg. wide; water leaks basement; baseboard public area; smoke detector; community room ceiling; playground area; storage service; compactor; security guard; door person." Based on these service reductions, the DHCR determined that, "The legal regulated rent is reduced to the level in effect prior to the most recent guidelines increase for the tenant's lease which commenced before the effective date of this Order," except for (1) Major Capital Improvement (MCI) increases which already were being collected before the issuance date (May 18, 2016) of the rent reduction order; and (2) Individual Apartment Improvement (IAI) increases which already were being collected before the effective date (October 1, 2015) of the Order. The Order states that no other rent increases may be collected until the DHCR issues a "rent restoration order", and directs the owner to restore the services within thirty days. Further, the Order directs the owner "to refund to the tenant(s) all amounts collected in excess of the reduced rent since the effective date of this rent reduction Order". The Order also instructs the parties of their appeal rights: if they "believe this order is based on an error in law and/or fact" they are permitted to file a Petition for Administrative Review (PAR) within 35 days after the issuance of the Order.

Respondent's attorney asserts that, "Had I known the existence of this complaint, I would have moved for a stay pending its determination," Attorney's Affirmation at ¶ 10, and that, "Petitioner knew of the existence of this complaint [b]ut it did not inform Respondent or Respondent's counsel." Id. at ¶ 11. Further, Respondent's attorney posits that the effect of the DHCR's Rent Reduction Order is to reduce Respondent's rent from $1405.30 to $719.75, the prior "legal registered rent", with a resulting significant decrease in the amount of Respondent's rent arrears.

In the alternative, Respondent seeks a further stay of execution of the warrant to allow for the processing of her pending FEPS application and related requests for additional charitable assistance to help pay her rent arrears.

Respondent's moving papers do not include an affidavit from Respondent, and include no assertions as to whether or not the conditions the DHCR found to exist at the premises and on which it based its rent reduction order have yet been corrected.

In opposition, Petitioner's counsel argues that the allegation that neither Respondent nor her attorney was aware of the DHCR complaint does not constitute a mistake of law and that Respondent's counsel "is responsible for being aware of all the facts and circumstances relevant to any action prior to entering into a settlement agreement ." Affirmation in Opposition at ¶ 7. Further, Petitioner's counsel attaches to his affirmation as Exhibit B a copy of the tenants' "Application for a Rent Reduction Based Upon Decreased Building-Wide Service(s)" and points out that Respondent's name and purported signature appear on one of the six pages of tenant names and signatures attached to that application, indicating that she must have known that the complaint had been filed and was pending.

Petitioner's counsel also asserts that Petitioner filed a PAR at the DHCR to challenge the Rent Reduction Order, attaches as Exhibit C a copy of the PAR's cover page and argues that the filing of the PAR stays the Order until the DHCR decides the PAR. Petitioner's opposition papers do not include an affidavit of any of Petitioner's employees, nor do they include any indication of the basis for the PAR, whether Petitioner has also filed a rent restoration request and whether or not the conditions the DHCR found to exist at the premises and on which it based its rent reduction order have yet been corrected.

Petitioner's counsel also argues that the alternative relief of a stay of execution of the warrant pending the processing of a FEPS application should be denied, in light of the [*4]significant amount of time that already has elapsed since the motion was filed in May 2016.

On reply, Respondent's attorney argues that the stipulation of settlement should be vacated because the court "must enforce a rent reduction order that is still in effect regardless of when it was issued." Reply Affirmation at ¶ 9. Further, Respondent argues that an agreement which waives Rent Stabilization rights is unenforceable.

With regard to Petitioner's filing of a PAR to challenge the DHCR's rent reduction order, Respondent's counsel argues that, "The filing of a PAR has no bearing on whether Petitioner must abide by the rent reduction order currently still in effect," Reply Affirmation at ¶ 16, and that, accordingly, Respondent's rent is frozen at $719.75 "until such time that Petitioner makes an application to restore the rent and DHCR issues an order restoring the rent." Id.

QUESTIONS PRESENTED

The questions presented by this case are (1) whether appropriate cause exists for vacating the April 13, 2016 stipulation where, at the time the stipulation was entered into, Respondent's counsel [FN1] did not know that a complaint based upon a decrease in building-wide services was pending which, approximately one month later, the DHCR granted by issuing a Rent Reduction Order; (2) what is the effect of that Rent Reduction Order on the amount of Respondent's rent and arrears; and (3) whether Petitioner's filing of a PAR to challenge that Order affects its implementation and, if so, in what manner. The applicable legal principles that provide answers to these questions are as follows.

APPLICABLE LEGAL PRINCIPLES

Standard for Vacating Stipulations

First, it is well-settled that stipulations of settlement "are favored by the courts and are not lightly case aside." Hallock v State of New York (64 NY2d 224, 230, 474 NE2d 1178, 485 NYS2d 510 [1984]). However, "where there is cause sufficient to invalidate a contract, such as fraud, collusion, mistake or accident," id., "[t]he 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]), quoting 1420 Concourse Corp v Cruz (135 AD2d 371, 373, 521 NYS2d 429 [1987], app dism'd 73 NY2d 868, 534 NE2d 325, 537 NYS2d 487 [1989]), citing Matter of Frutiger (29 NY2d 143, 150, 272 NE2d 543, 324 NYS2d 36 [1971]).

An agreement may be vacated on the basis of mutual mistake if a party can show that the mutual mistake existed at the time of the stipulation and that the mistake is so substantial that the stipulation does not represent a true meeting of the minds. Gould v Board of Education (81 NY2d 446, 453, 616 NE2d 142, 599 NYS2d 787, 790 [1993]). Even where both parties to a nonpayment eviction proceeding are represented by counsel, a court may decline to enforce a [*5]stipulation of settlement based on mistake if, for example, they were not aware at the time they entered into the agreement that the amount of monthly rent agreed upon did not comply with applicable statutes or regulatory agreements, Bridgeview II, LLC v Mars (51 Misc 3d 29, 29 NYS3d 83 [App Term 2nd Dep't 2015]); TDF 2000 Partners LP v Ewers (2005 NY Misc LEXIS 3453 [Civ Ct NY Co 2005]), or the respondent and her attorney mistakenly relied on erroneous information provided by the Department of Social Services, Ciuffetelli v Meginn (175 Misc 2d 527, 670 NYS2d 682 [App Term 2nd Dep't 1997]).

Even where a mistake is unilateral, there are situations where it may be appropriate to void a stipulation. As explained by the Hon. Gerald Lebovits in 104-106 E 81st St LLC v O'Brien (12 Misc 3d 1175[A], 824 NYS2d 764 [Civ Ct NY Co 2006]),

A stipulation may be voided on a unilateral mistake if (1) enforcement would be unconscionable; (2) the mistake is material and made despite the exercise of ordinary care by the party in error; (3) the innocent party had no knowledge of the error; and (4) it is possible to place the parties in status quo ante. Mazzola v CNA Ins Co (145 Misc 2d 896, 900-901, 548 NYS2d 610 [Civ Ct Qns Co 1989]). A stipulation will not be vacated where inquiry or ordinary care would have elicited the correct information and revealed the mistake. Matter of Jones (13 Misc 2d 678, 682, 177 NYS2d 307 [Surr Ct Nassau Co 1958]); Mazzola, supra (145 Misc 2d at 901), but it may be vacated on a unilateral mistake "if failing to do so would result in unjust enrichment of the [petitioner]." Weissman v Bondy & Schloss (230 AD2d 465, 469, 660 NYS2d 115 [1st Dep't 1997], appeal dismissed 91 NY2d 887, 691 NE2d 637, 668 NYS2d 565 [1998]).

Waiver of Rent Stabilization Provisions

With regard to Rent Stabilized apartments, under Section 2520.13 of the Rent Stabilization Code, "An agreement by the tenant to waive the benefit of any provision of the RSL [Rent Stabilization Law] or this Code is void ". Thus, for example, a landlord's agreement not to enforce the "primary residence" requirement of the Rent Stabilization Law in exchange for an illegal rent is void as against public policy. Riverside Syndicate, Inc v Munroe (10 NY3d 18, 882 NE2d 875, 853 NYS2d 263 [2008]). See also, e.g., Jazilek v Abart Holdings LLC (10 NY3d 943, 893 NE2d 1323, 862 NYS2d 854 [2008])(so-ordered stipulation which provided for a lease fixing the rent at an amount in excess of the legal limit under the Rent Stabilization Code found to be void as against public policy); Drucker v Mauro (30 AD3d 37, 814 NYS2d 43 [1st Dep't 2006])(declaring unenforceable a lease rider which incorporated the terms of a settlement agreement that did not comply with certain provisions of the Rent Stabilization Law); 153rd St Apt LLC v Alveranga (30 Misc 3d 129[A], 958 NYS2d 647 [App Term 1st Dep't 2010])(rejecting landlord's argument that tenant's overcharge and habitability claims were precluded by stipulations in prior proceedings, as "It is well settled that any agreement by a tenant to pay a sum in excess of the legal rent is void"); Second Lenox Terrace Assoc v Cuevas (24 Misc 3d 1217[A], 897 NYS2d 672 [Civ Ct NY Co 2009])(vacating two-attorney stipulation under which tenant forfeited any succession rights she may have had to Rent Stabilized apartment, finding agreement to be void as against public policy).

Rent Reduction Orders

Rent Stabilization Law § 26-514 addresses Rent Reduction Orders and states: "any tenant may apply to the [DHCR] for a reduction in the rent to the level in effect prior to its most recent adjustment and for an order requiring services to be maintained as provided in this section, and the [DHCR] shall so reduce the rent if it is found that the owner has failed to maintain such [*6]services. The owner shall also be barred from applying for or collecting any further rent increases. The restoration of such services shall result in the prospective elimination of such sanctions." The purpose of this section is "to motivate owners of rent-stabilized housing accommodations to provide required services, compensate tenants deprived of those services, and preserve and maintain the housing stock in New York City." Cintron v Calogero (15 NY3d 347, 356, 938 NE2d 931,935, 912 NYS2d 498, 502 [2010]), quoting Jenkins v Fieldbridge Associates, LLC (65 AD3d 169, 173, 877 NYS2d 375, 378 [2nd Dep't 2009]).

As explained by the Court of Appeals, "rent reduction orders impose a continuing obligation on a landlord" and "are in fact part of the rental history and, if still in effect during the four-year [statutory rent overcharge] period, are in fact part of the rental history which DHCR must consider [on a rent overcharge complaint]." Matter of Cintron v Calogero (15 NY3d 347, 356, 938 NE2d 931, 912 NYS2d 498, 502 [2010]). Thus, "a landlord is not entitled to collect vacancy increases while a rent reduction order is in effect." 130 E 18th, LLC v Mitchel (50 Misc 3d 55, 23 NYS3d 530 [App Term 2nd Dep't 2015]).

However, even though certain types of rent increases cannot be collected while a rent reduction order is in effect, others can. Section 2523.4(a) of the Rent Stabilization Code elaborates on the effect of a rent reduction order as follows: (1) A tenant may apply to the DHCR for a reduction of the legal regulated rent to the level in effect prior to the most recent guidelines adjustment, subject to the limitations of subdivisions (c) - (h) of this section, and the DHCR shall so reduce the rent for the period for which it is found that the owner has failed to maintain required services. The order reducing the rent shall further bar the owner from applying for or collecting any further increases in rent including such increases pursuant to section 2522.8 of this Title [vacancy and succession increases] until such services are restored or no longer required pursuant to an order of the DHCR. If the DHCR further finds that the owner has knowingly filed a false certification, it may, in addition to abating the rent, assess the owner with the reasonable costs of the proceeding, including reasonable attorney's fees, and impose a penalty not in excess of $ 250 for each false certification.(2) Where an application for a rent adjustment pursuant to section 2522.4(a)(2) of this Title [major capital improvement] has been granted, and collection of such rent adjustment commenced prior to the issuance of the rent reduction order, the owner will be permitted to continue to collect the rent adjustment regardless of the effective date of the rent reduction order, notwithstanding that such date is prior to the effective date of the order granting the adjustment. In addition, regardless of the effective date thereof, a rent reduction order will not affect the continued collection of a rent adjustment pursuant to section 2522.4(a)(1) of this Title [individual apartment improvements], where collection of such rent adjustment commenced prior to the issuance of the rent reduction order. However, an owner will not be permitted to collect any increment pursuant to section 2522.4(a)(8) that was otherwise scheduled to go into effect after the effective date of the rent reduction order.[FN2]

Rent restoration following issuance of a rent reduction order is permitted only upon a determination by the DHCR that the owner is entitled to such restoration. Atsiki Realty LLC v Munoz (48 Misc 3d 33, 13 NYS2d 770 [App Term 1st Dep't 2015]); FIYA RSD Partners, LLC v Lee (51 Misc 3d 1225[A][Civ Ct NY Co 2016]). See also, e.g., 130 E 18th LLC v Mitchel (50 Misc 3d 55, 23 NYS2d 530 [App Term 2nd Dep't 2015]), citing DHCR Policy Statement 90-2 ("where DHCR determines that an owner has failed to maintain services, such owner shall not be entitled to a rent restoration until he or she has made an application and DHCR issues an order restoring the rent"). As set forth in RSC § 2523.3, which also prescribes the penalty for an owner's failure to file the annual certification of services required by RSC § 2523.2, "nor shall any owner be entitled to a rent restoration based upon a restoration of services unless such restoration of services has been determined by the DHCR in a proceeding commenced by an owner's application to restore rent or a proceeding commenced pursuant to section 2526.2 of this Title, or in another proceeding pursuant to this Code."

Effect of Filing a PAR to Challenge Rent Reduction Order

Finally, with regard to the effect of Petitioner's filing of a PAR to challenge the Rent Restoration Order, under RSC § 2529.12, "The filing of a PAR against an order, other than an order adjusting, fixing or establishing the legal regulated rent, shall stay such order until the final determination of the PAR by the commissioner." [Emphasis added.] This regulation goes on to state that "Notwithstanding the above," the stay does apply to the retroactive portion of certain orders that adjust the legal regulated rent, including rent reduction orders for a decrease in services pursuant to RSC § 2523.4, although "Nothing herein contained shall limit the [DHCR] from granting or vacating a stay under appropriate circumstances, on such terms and conditions as the commissioner may deem appropriate."

Neither party has cited and the court's own research has not turned up any cases discussing the interplay between a Rent Reduction Order under RSC § 2523.4 and the stay upon filing a PAR under RSC § 2529.12. However, a review of the plain language of RSC §§ 2523.4 and 2529.12 as well as decisions in analogous cases which discuss the applicability of RSC § 2529.12 to other orders affecting the amount of the legal regulated rent to be paid indicates that while any retroactive portion of a rent reduction order under RSC § 2523.4 is stayed by the filing of a PAR, the RSC § 2529.12 stay does not apply to the rent due for those months falling after the issuance of such an order. For example, in Matter of IG Second Generation Partners LP v New York State Div of Hous & Community Renewal, Off of Rent Admin (10 NY3d 474, 889 NE2d 475, 859 NYS2d 596 [2008]), involving a tenant's fair market rent appeal which the [*7]DHCR granted, the Court of Appeals cited RSC § 2529.12 and noted that the landlord's filing of a PAR automatically stayed that portion of the order directing a refund of overcharged rent but that, "The agency denied the owner's request for a stay of the remainder of the administrator's order, i.e., the prospective rent adjustment." See, also, e.g., Gelbart v Borglum (195 AD2d 416, 600 NYS2d 705 [1st Dep't 1993])("that portion of an order fixing a rent overcharge penalty shall be stayed by the filing of a [PAR]"); 176 West 87th Street Equities v Amador (151 Misc 2d 234, 573 NYS2d 221 [Civ Ct NY Co 1991])(in a nonpayment proceeding, noting that Petitioner's filing of a PAR stayed the DHCR rent overcharge order "but not the portion of the order decreasing the legal regulated rent"); 3410 Kingsbridge Assocs v Martinez (161 Misc 2d 163, 612 NYS2d 549 [Civ Ct Bx Co 1994])(in a nonpayment proceeding, court granted respondent's cross-motion to the extent of ordering payment of ongoing rent at the rate set by a DHCR rent overcharge order, noting that "petitioner's filing of the PAR stayed that portion of the DHCR order finding an overcharge and treble damages but not its determination as to the legal regulated rent"). Compare Noto v Bedford Apts Co (21 AD3d 762 [1st Dep't 2005])(citing RS § 2529.12, the court noted that the tenant's filing of a PAR to challenge a high income rent deregulation order stayed the effect of that order); Rhinelander Props, LLC v Sokolow (25 Misc 3d 1242[A](Civ Ct NY Co 2009])(same).

DISCUSSION

Returning now to the three questions raised by the motion now before the court, first is the question of whether there is appropriate cause to vacate the April 13, 2016 stipulation. Respondent asks the court to vacate the stipulation based upon mistake of law: Respondent's attorney settled the case without knowledge of the fact that his client was a party to a complaint of decrease in building-wide services that was pending at the DHCR; lacking this knowledge, he mistakenly failed to include a provision in the stipulation of settlement addressing the effect of a possible future Rent Reduction Order on the settlement. Petitioner argues that this is not a mistake of law. Whether the mistake was one of law or fact, whether it was a mutual mistake or a unilateral one, whether or not Respondent's counsel should have known about the order — whether he exercised ordinary care in signing the stipulation without first making a timely inquiry into the possible pendency of any parallel proceedings — and whether or not Petitioner's counsel should have mentioned the DHCR complaint are all questions that need not be decided. Rather, it is RSC § 2520.13 which dictates the answer to this question, as that provision of the Code renders void as against public policy "an agreement by the tenant to waive the benefit of any provision of the RSL or this Code". Jazilek v Abart Holdings LLC (10 NY3d 943, 893 NE2d 1323, 862 NYS2d 854 [2008]); Riverside Syndicate, Inc v Munroe (10 NY3d 18, 882 NE2d 875, 853 NYS2d 263 [2008]). To the extent the stipulation of settlement results in a waiver of the benefits of RSL § 26-514 and RSC § 2523.4 it is void.

The court is inclined therefore to vacate the stipulation. However, certain key facts — specifically, the dates of the stipulation and the Rent Reduction Order, and the filing by Petitioner of a PAR challenging the Order — have an impact on this analysis. In chronological order, the operative dates are the following:

October 1, 2015 — effective date of DHCR Rent Reduction Order (issued, as set forth below, on May 18, 2016).April 13, 2016 — date of settlement agreement under which the parties acknowledged a legal regulated rent of $1405.30, entered a judgment for Petitioner of $18,186.84 as all [*8]rent due through April 30, 2016 [FN3]and provided Respondent a two-year preferential rent of $1050. May 18, 2016 — issuance date of DHCR Rent Reduction Order.June 22, 2016 — filing date of Petitioner's PAR at the DHCR.

Seven months (October 2015 through April 2016) of the approximately nineteen months (October 2014 through April 2016) of rent arrears comprising the judgment amount are covered by the Rent Reduction Order. However, under RSC § 2529.12, Petitioner's filing of a PAR [FN4] with the DHCR on June 22, 2016 effected a stay of that component of the Order which covers the eight-month retroactive period of October 2015 through May 2016. Given the timing of the Order — it was issued slightly over one month after the case was settled — the rent arrears the parties agreed to in the April 13, 2016 Stipulation of Settlement all fall within the retroactive portion of the Order, which has been stayed. Accordingly, at the present time the amount of the judgment the parties agreed upon does not result in a waiver of any benefit under the Rent Stabilization Code.

Petitioner argues that the Order has no effect on this proceeding at all as it is stayed by the filing of the PAR. Respondent argues that the PAR has no effect, and the Order reduces her collectible rent to $719.75, the amount registered with the DHCR as the legal regulated rent on April 1, 2014 [FN5] , just prior to the commencement of her tenancy.

The court finds that Petitioner is correct only with regard to the retroactive component of the Order, as described above. However, the Order does affect the amount of rent to be charged to Respondent for the months beginning with June 2016 (the first month following the date of the Order) and continuing thereafter until such time as the DHCR either grants Petitioner's PAR or otherwise issues a Rent Restoration Order. The agreement acknowledges a current legal regulated rent of $1405.30 and provides Respondent with a preferential rent of $1050 beginning May 2016. Thus, clearly the parties must have resolved any claim of rent overcharge with regard to the $1405.30 figure, and the difference between the previously registered rent of $719.75 and Respondent's first rent of $1405.30 must be due to a combination of a vacancy increase and other permissible increases. However, facts not presently before the court [*9]regarding the reasons for that increase will need to be examined to determine at what rate the rent should be set for June 2016 forward under the Rent Reduction Order. For example, if the calculation of the rent of $1405.30 included MCIs and/or IAIs that were already being collected prior to the effective and/or issuance date of the Rent Reduction Order, pursuant to RSC § 2523.4(a) and the DHCR's Operational Bulletin 2014-2 those increases — as opposed to vacancy increases - will be unaffected by the Rent Reduction Order.

CONCLUSION

For the reasons set forth above, Respondent's motion to vacate the stipulation of settlement dated April 3, 2016, and the judgment and warrant based thereon, is granted. The case is restored to the calendar for settlement or trial on March 30, 2017. This constitutes the Decision and Order of this Court.

Dated: February 22, 2017

Bronx, New York

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

Footnote 1:While Respondent's counsel avers that neither he nor Respondent knew of the existence of the complaint, this statement is belied by the copy of the complaint that Petitioner provided with its opposition papers, which includes Respondent's name and what appears to be her signature on the list of complaining tenants. Further, Respondent herself did not submit a sworn affidavit addressing this issue one way or the other. Accordingly, the court's analysis of the question is based on the assumption that Respondent did know of the complaint but did not mention it to her attorney.

Footnote 2:The DHCR also has set forth its general policies regarding the collectability of Major Capital Improvement (MCI) and Individual Apartment Improvement (IAI) rent increases in an Operational Bulletin (number 2014-2, replacing Operational Bulletin 95-1), issued pursuant to RSC § 2527.11. The Operational Bulletin explains that, based on the Rent Stabilization Code Amendments of 2014, RSC § 2523.4 is to be effectuated in the following manner: A. Where an MCI rent increase application was granted and collection of the increase commenced prior to the issuance of a rent reduction order, the owner will be permitted to continue to collect the MCI increase regardless of the effective date of the rent reduction order, even if such date is prior to the effective date of the order granting the MCI increase. However, pursuant to the Rent Code Amendments of 2014, an owner cannot collect the portion of an MCI rent increase, permanent or temporary, that is scheduled to become collectible after the issuance date of the DHCR rent reduction order. It will become collectible, prospectively only, from the effective date of a DHCR Rent Restoration Order. B. In addition, the collectability of IAI increases has been changed. If a DHCR rent reduction order is issued after the collection of an IAI increase has commenced, and the effective date of the order precedes the collection of the IAI, the IAI increase can no longer be collected. Any increase collected after the effective date of the rent reduction order will need to be refunded to the tenant and the IAI increase cannot be collected until the effective date of a DHCR Rent Restoration Order.

Footnote 3:While the Stipulation of Settlement does not indicate how long of a time period prior to April 2016 it covers, Petitioner's "Resident Ledger" for Respondent's apartment, attached as Exhibit D to its opposition papers, begins with the commencement of Respondent's tenancy in April 2014 and last lists a zero balance on September 10, 2014. Accordingly, the period covered by the judgment appears to be the nineteen months of October 2014 through April 2016.

Footnote 4:The Order on its face (top of page 6) advises the parties of their right to file a PAR if they "believe this order is based on an error in law and/or fact". And while the court cannot ascertain the basis for the PAR (neither party included a copy of it with their papers) — that is, what legal or factual error Petitioner believes the DHCR made in issuing its Order - nevertheless, RSC § 2529.12 makes clear that "that portion of an order resulting in a retroactive rent abatement pursuant to section 2523.4 of [the RSC]" is stayed by the filing of a PAR.

Footnote 5:The DHCR Rent Registration history attached to Respondent's moving papers is dated July 16, 2015 and ends with the 2014 Registration Year. The rent in effect on April 1, 2014, according to the 2014 Rent Registration filed on July 30, 2014, was $719.75. A more recent version of the Rent Registration history presumably would include the registrations filed in and for 2015 and 2016.