1050 Tenants Corp. v Lapidus
Annotate this CaseDecided on October 5, 2006
Civil Court of the City of New York, New York County
1050 Tenants Corp., Petitioner,
against
Steven R. Lapidus and Iris Lapidus, Respondents.
L&T 99547/04
Gallet Dreyer & Berkey, LLP, New York City (Beatrice Lesser of counsel), for petitioner.
Redniss Moody, LLP, New York City (Mark W. Moody of counsel), for respondent Steven R. Lapidus.
Gerald Lebovits, J.
A litigant who "asserts material factual statements that are false" engages in frivolous conduct and is subject to sanctions. (22 NYCRR 130-1.1 [c] [3].) The issue before the court is whether respondent Steven R. Lapidus, an attorney, testified falsely about material matters at his nonpayment trial on June 21, 2005, and if so, whether he should be sanctioned.
I. Background
At the parties' 2005 nonpayment trial, petitioner, a cooperative corporation, argued that Lapidus, a proprietary lessee, withheld rent, or maintenance, in violation of an April 20, 1999, stipulation that resolved a 1999 nonpayment proceeding between the parties. The 1999 stipulation outlined several pre-conditions that Lapidus had to meet before he could validly withhold rent. Lapidus was required to notify petitioner about any problem constituting a breach of the warranty of habitability. Petitioner was then required to cure the problem within a fixed [*2]time period. If petitioner did not cure the problem timely, Lapidus was entitled to begin an Housing Part (HP) proceeding to obtain repairs. Only if Lapidus would prevail in the HP proceeding could he withhold rent. The 1999 stipulation also provided that Lapidus would receive a $10,000 abatement and pay arrears he owed through April 1999.
Lapidus ultimately agreed at his 2005 trial that he did not comply with any pre-condition to withholding rent in the 1999 stipulation and that if the stipulation were binding, Lapidus had no abatement defense. But to defend himself against petitioner's argument that the stipulation was binding on him, Lapidus disavowed the stipulation. Lapidus testified at the 2005 nonpayment trial, as recounted at 1050 Tenants Corp. v Lapidus (12 Misc 3d 1118 passim [Hous Part, Civ Ct, NY County, 2006]), (1) that he did not see or even know about the 1999 stipulation until Robert N. Fass, Esq., his attorney for the 2005 trial, showed it to him several days before the trial—that Jeremy J. Krantz, Esq., Lapidus's attorney in the 1999 proceeding and a former associate at his law firm, Lapidus & Smith, LLP, did not show him the stipulation or tell him about its terms; (2) that he did not know about any of the pre-rent-withholding requirements outlined in the 1999 stipulation—that he knew only that his 1999 proceeding was resolved with his receiving a $10,000 abatement; and (3) that he did not authorize Krantz to execute the 1999 stipulation on his behalf—that Krantz signed the stipulation without his permission.
Contending that Lapidus lied about these three things—whether he saw the 1999 stipulation in 2005 or 1999, whether he knew about the terms of that stipulation before his 2005 trial, and whether he told his attorney to sign the stipulation—petitioner moved for sanctions. On April 19, 2006, this court granted petitioner's sanctions motion to the extent of ordered a hearing, as required by 22 NYCRR 130-1.1 (d), to consider the veracity of Lapidus's 2005 trial testimony. (See 1050 Tenants Corp. v Lapidus, Hous Part, Civ Ct, NY County, Index No. 99547/04.) This court had found in dictum in August 2005 in adjudicating the nonpayment trial that Lapidus's June 2005 testimony "defie[d] common sense" and was "false." (See 1050 Tenants Corp. v Lapidus, 9 Misc 3d 1108 [A], 2005 NY Slip Op 51455 [U], *2, 2005 WL 2242078, at *1, 2005 NY Misc LEXIS 1984, at *2, NYLJ, Sept. 14, 2005, at 18, col 1 [Hous Part, Civ Ct, NY County, Aug. 26, 2005].) Nevertheless, the court in directing a sanctions hearing gave Lapidus notice and an opportunity to be heard, as required by Subpart 130-1 the Rules of the Chief Administrator of the Courts (22 NYCRR 130-1.1 [d]), at a hearing in which the court would hear from Deborah E. Riegel, Esq., a partner at Rosenberg & Estis, P.C., petitioner's attorney during the 1999 proceeding; Krantz; and any other witness, including Lapidus himself, who had relevant testimony to offer. In that way the court would consider anew whether Lapidus's trial testimony was true or false and in making that assessment would consider exhibits and witnesses not offered at the 2005 trial.
Before the hearing began, petitioner served a subpoena ad testificandum on Krantz, and Lapidus moved to quash it. On June 23, 2006, this court found under CPLR 4503 (a) (1) that Lapidus waived his attorney-client privilege by raising at his 2005 trial otherwise-protected communications central to his defense of disavowing the 1999 stipulation. (See 1050 Tenants Corp. v Lapidus, 12 Misc 3d at 1125-1126.) On July 13, 2006, the Appellate Term declined to [*3]sign Lapidus's order to show cause to stay the hearing (see 2006 NY Slip Op 71828 [App Term 1st Dept, Motion No. 570331/05]), and on August 14, 2006, the Appellate Term denied Lapidus's motion to stay the hearing (see 2006 NY Slip Op 73660 [App Term 1st Dept, Motion No. 570673/05]). The sanctions hearing thus went forward with Krantz's testimony. At the hearing, the court directed Krantz not to testify to anything that might implicate any privilege, and Krantz did not disclose anything privileged, except in response to Lapidus's own questions. Therefore, despite the court's June 2006 decision and order finding that Lapidus waived his attorney-client privilege, Krantz testified to nothing privileged, save a few answers that Lapidus himself elicited.
II. Findings of Fact
The sanctions hearing required five afternoons of testimony and oral argument. Riegel, Krantz, and Lapidus testified. The court fully credits Riegel's and Krantz's testimony and rejects Lapidus's testimony.
A. Credibility
Riegel and Krantz testified that Lapidus approved the 1999 stipulation and knew about its terms. This court believes them. While they portrayed a picture of the events from different perspectives, their testimony had a consistent theme: Lapidus, a seasoned real-estate litigator, was so immersed in every detail of his litigation with his cooperative that he knew about and approved his 1999 stipulation. Both Riegel and Krantz testified, in particular, that Lapidus approved the stipulation during a telephone call Krantz had with Lapidus on the day Krantz signed the stipulation. The manner in which Riegel and Krantz testified shows that they described events through which they lived, and they were never impeached.
Lapidus argues that Riegel testified dishonestly to obtain revenge for a disciplinary complaint Lapidus's spouse made against a partner in Riegel's law firm during one of Lapidus's nonpayment cases with his cooperative. Insufficient evidence was adduced to explain what happened with that disciplinary complaint. The court is satisfied in any event that Riegel did not know about any complaint and accordingly could not have been motivated by revenge. Riegel did display slight hostility toward Lapidus, but that hostility did not affect the integrity of her testimony. Her slight hostility was justified, moreover, by Lapidus's discourteous litigation tactics against her personally and against the cooperative—litigation one judge described as Lapidus's attempt "to economically force the Coop to its knees." (1050 Tenants Corp. v Lapidus, Civ Ct, NY County, Oct. 3, 1996, Shulman, J., Index No. 93096/92, at 7.)
Lapidus argues also that Krantz testified dishonestly to defend himself against a possibly forthcoming malpractice action or disciplinary proceeding. In testifying that Krantz signed the 1999 stipulation without Lapidus's permission and without telling Lapidus about its contents, Lapidus accused Krantz of misconduct. Lapidus now contends that Krantz lied to protect his reputation. Yet Krantz displayed no animus toward Lapidus. He did not accuse Lapidus. Krantz went out of his way not to say anything negative about Lapidus. If anything, he held back, if not [*4]to help Lapidus, then not to hurt him. Krantz did not defend himself vigorously. He simply gave answers to questions he was asked.
Krantz was credible because he was an unwilling witness. Krantz challenged petitioner's subpoena to appear in court. During the hearing, he volunteered no information about Lapidus, his former employer, even when petitioner and the court questioned him. At times, Krantz asked whether the court was ordering him to answer the question. When he answered questions, he divulged no confidential communications, except when Lapidus sought the information.
One way to know whether Riegel and Krantz testified honestly is to determine whether Lapidus testified honestly. They could not all have been telling the truth, for Riegel's and Krantz's testimony differed from Lapidus's testimony as night differs from day. By that yardstick, Riegel and Krantz were honest, because Lapidus was not. Lapidus's testimony was not credible. His answers were often nonresponsive and evasive, and often they were absurd.
Lapidus's testimony at the sanctions hearing was consistent with his testimony at his 2005 trial—consistently false. At the sanctions hearing, as at trial, he testified that he did not see the 1999 stipulation until his attorney showed it to him several days before the 2005 trial; that he did not authorize Krantz to sign the stipulation; that Krantz did not show him the stipulation or tell him about its terms; and that he did not know about the provision requiring him to win an HP proceeding before he withheld rent. Lapidus testified that he knew only that his 1999 nonpayment proceeding ended with petitioner's giving him a $10,000 abatement.
Three lines of inquiry demonstrate that Lapidus was not forthcoming. The first concerned Lapidus's testimony that he did not know about the 1999 stipulation until several days before his 2005 trial. Lapidus explained that he believed he received a $10,000 abatement without anything having been memorialized in writing; and that was why, he said, he did not think to ask Krantz for a written agreement: Lapidus testified that he assumed that the agreement settling his 1999 case was made orally. On its face, that testimony, from an experienced real-estate litigator who had been litigating with his cooperative for nearly two decades, is unbelievable, as the court noted in its August 2005 trial decision. (See 1050 Tenants Corp. v Lapidus, 9 Misc 3d 1108 [A], 2005 NY Slip Op 51455 [U], *2, 2005 WL 2242078, at *1, 2005 NY Misc LEXIS 1984, at *2, NYLJ, Sept. 14, 2005, at 18, col 1.) But objective evidence, not merely what is evident on its face, disproves Lapidus's denial.
The objective evidence includes a sworn statement from Lapidus that he had read the 1999 stipulation months before the 2005 trial. Although Lapidus denied that he saw the 1999 stipulation until June 2005, he signed an affidavit dated March 23, 2005, in Handler v 1050 Tenants Corp. & Lapidus (Sup Ct, NY County, Diamond, J., Index No. 109702/01) in support of his motion to vacate and modify the court's order and judgment. (See Petitioner's Exhibit 5.) In that affidavit, Lapidus swore that he read all the papers, which included as an exhibit the 1999 stipulation, submitted in connection with the motion. Despite that affidavit, Lapidus testified at the sanctions hearing that he had read only the reply affirmation of Robert Fass, his then-[*5]attorney. Lapidus said that he had not read the affirmation of David L. Berkey, Esq., petitioner's attorney, which referenced the 1999 stipulation as an exhibit. Lapidus offered the improbable explanation that although he swore that he read petitioner's papers, it was his attorney's job to read petitioner's papers, not his.
The court is dissatisfied with that explanation. The same documents—Lapidus's affidavit, Fass's affirmation, the 1999 stipulation, and Berkey's affirmation—were later compiled in a joint appendix for the Appellate Division, First Department. Lapidus therefore lied either in his affidavit to Supreme Court and to the Appellate Division in averring that he had read the 1999 stipulation as of March 2005, or he lied during his 2005 nonpayment trial and at this sanctions hearing when he testified that he had not seen the 1999 stipulation as of June 2005. Because he had no motive to lie to Supreme Court or the Appellate Division but has a motive to do so now, the court believes that Lapidus was honest when he swore in March 2005 that he had read all the papers, including the 1999 stipulation, but dishonest in June 2005 and again now in testifying that he was unaware of the 1999 stipulation.
The second line of inquiry concerned Lapidus's testimony that he withheld rent, not to receive an abatement, but to force petitioner to cure conditions in his apartment, including exterminating for rats, eliminating soot, repairing leaks, reducing noise from an upstairs neighbor, and failing to install window guards. Lapidus testified at the sanctions hearing that had he known he had to prevail at an HP proceeding, he would have brought one. The proof, Lapidus explained, that he did not know about the 1999 stipulation is that if he had known about it, he would not have withheld rent but would instead have first brought an HP proceeding to obtain repairs. But when the court asked Lapidus why he never brought an HP proceeding to cure the conditions in his apartment, he testified that his attorney told him not to bring one. Once again Lapidus blamed his attorney. If, as Lapidus put it, his Park Avenue cooperative apartment between 86th and 87th Streets "resembled something out of Beirut in the 1980s," and all he had wanted were repairs, Lapidus's explanation is unsatisfactory. Lapidus cannot have it both ways: Had he known about the stipulation he would have brought an HP proceeding but that he would not bring one because his attorney told him not to. That testimony is diametrically inconsistent.
And unbelievable. Lapidus is an experienced litigator who has been practicing real-estate law for over 25 years. Even if Lapidus had not known—and he did know—about the provision in the 1999 stipulation requiring him to begin an HP proceeding before withholding rent, he should have begun an HP proceeding to secure repairs. An experienced landlord-tenant attorney would have known to do that. For Lapidus to withhold rent, face another nonpayment case, and then disavow the 1999 stipulation to compel petitioner to do repairs is incredible.
The third line of inquiry concerned Lapidus's contempt adjudications. When petitioner questioned Lapidus about whether he had ever been held in contempt, Lapidus did not give honest or direct answers. The Honorable Marylin G. Diamond had held Lapidus in contempt three times—on February 4, 2003, on October 29, 2004, and again on May 19, 2006. (See 1050 Tenants Corp. v Lapidus, 12 Misc 3d 1196 [A], 2006 NY Slip Op 51593 [U], *3, 2006 WL [*6]2367490, at *2 , 2006 NY Misc LEXIS 2195, at *6-7, NYLJ, May 15, 2006, at 18, col 1 [Sup Ct, NY County 2006] [noting history of Lapidus's contempt findings]; Handler v Lapidus & 1050 Tenants Corp., Civ Ct, NY County, May 19, 2006, Diamond, J., Index No. 109702/01, at 1.) Lapidus, however, could not remember whether Justice Diamond had held him in contempt once or more than once and if she had done so, whether she had done so a year ago or more than ten years ago. He admitted after a few questions that he was aware of one contempt finding, but then he denied ever seeing the decision or making an effort to get a copy of the decision. Nor could he recall whether he had appealed any contempt findings or whether any of those contempt findings were affirmed—and one was affirmed. (See Handler v 1050 Tenants Corp. & Lapidus, 24 AD3d 231 [1st Dept 2005, mem] [affirming Justice Diamond's October 29, 2004, contempt finding against Lapidus.) One would imagine that a lawyer adjudicated in contempt who appealed his contempt adjudication and lost before the Appellate Division would recall something about that. For the purpose of this sanctions motion, the court will not hold it against Lapidus that he has been held in contempt. But the court finds it troubling that Lapidus would be so reticent to admit to the details of his contempt adjudications. His reticence shows a lack of candor.
B. The Facts the Court Credits
Given Riegel's and Krantz's testimony, the court credits the following facts.
Krantz worked on Lapidus's personal law suits from 1995 to 2002. During those years, he spent about 2000 hours on Lapidus's personal cases and represented Lapidus in several nonpayment proceedings that petitioner brought against Lapidus. Some of these nonpayment proceedings were settled by stipulation; others were resolved after trial. Krantz also worked on Lapidus's appeals. Lapidus directed all these law suits, down to the last detail. Krantz always followed Lapidus's instructions. Krantz would do nothing without Lapidus's express authorization. Krantz would not agree to adjourn a case, enter into a stipulation, or begin a trial without Lapidus's being present or without Lapidus's express consent.
Krantz had the authority to sign the April 20, 1999, stipulation. Before April 20, Krantz spoke to Lapidus about the stipulation's parameters. On April 20, Krantz appeared in Civil Court on Lapidus's behalf. The Honorable Bruce M. Kramer, who was presiding over the proceeding, suggested some ways in which the parties could settle their dispute amicably. Krantz went into the hallway outside the courtroom to discuss the stipulation with Lapidus by cellular telephone; not only Krantz testified to that telephone call but so did Riegel, who overheard Krantz speaking to "Steve" and who testified that Krantz told her and Judge Kramer right after that telephone call that "Steve" needs "changes." To satisfy Lapidus's requests, Riegel and Krantz made handwritten changes to the typewritten stipulation and placed their initials near the changes. Lapidus's defense on this point—that perhaps Krantz was speaking to or about a different "Steve"—is a feeble, indeed sad, attempt to alter reality. Lapidus agreed with every paragraph and editorial change that Krantz and Riegel negotiated with Judge Kramer. Riegel and Krantz signed the stipulation, Judge Kramer so-ordered it, and Krantz took it back to Lapidus's office [*7]and placed it on an uncluttered part in the middle of Lapidus's desk.
After April 20, 1999, Krantz had several conversations with Lapidus and Wayne R. Smith, Esq., Lapidus's then-law partner and now Krantz's law partner, about the stipulation. These conversations continued through July 2002, making it impossible for Lapidus not to have known about the stipulation.
III. Conclusions of Law
The court finds that Lapidus made material statements that were false at his 2005 nonpayment trial. The evidence is overwhelming that Lapidus saw the 1999 stipulation when Krantz put it on his desk and talked to him about it long before his 2005 trial. Lapidus authorized Krantz to execute the 1999 stipulation. Lapidus knew about the pre-rent-withholding requirements in the 1999 stipulation. It is incredible to believe that Lapidus knew that his case had been resolved with a $10,000 abatement but that he did not ask Krantz what happened in court on April 20, 1999. Lapidus's testimony that he did not look at his stipulation defies logic and the expected behavior of someone in Lapidus's position—a proprietary lessee who had endured contentious litigation with petitioner for almost 20 years; who had appealed some of the adverse decisions; and who was an experienced real-estate attorney. The court concludes beyond a reasonable doubt, not merely to a preponderance of the evidence, that Lapidus lied at his 2005 trial and again at this sanctions hearing. (See Matter of Capoccia, 272 AD2d 838, 844 [3d Dept 2000, per curiam] [noting that burden of proof to sustain finding of frivolous conduct and to sustain finding of professional misconduct is the same: preponderance of evidence], lv dismissed 95 NY2d 887 [2000], citing Matter of Capoccia, 59 NY2d 549, 551 [1983].)
Initially, in opposing petitioner's motion for sanctions, Lapidus argued that he timely withdrew his alleged false statements and that, having withdrawn them, he should not be punished. An affirmative defense to perjury exists when an individual retracts a false statement "in the course of the proceeding in which it was made before such false statement substantially affected the proceeding and before it became manifest that its falsity was or would be exposed." (Penal Law § 210.25.) Because Lapidus tried to disassociate himself from the stipulation by not mentioning that dissociation after the 2005 trial in his post-trial brief, this court found that he had abandoned that argument. (See 1050 Tenants Corp. v Lapidus, 9 Misc 3d 1108 [A], 2005 NY Slip Op 51455 [U], *2, 2005 WL 2242078, at *1, 2005 NY Misc LEXIS 1984, at *2, NYLJ, Sept. 14, 2005, at 18, col 1.) But abandoning an argument is different from withdrawing a false statement affirmatively. Lapidus never withdrew his statements before his lies were revealed or exposed—that is, before this court issued its decision of August 26, 2005, exposing his testimony as false.
He did not withdraw them afterward, either. Instead of withdrawing his statements, Lapidus continued to lie at the sanctions hearing. One factor to consider in determining whether Lapidus's conduct was frivolous and thus sanctionable is "whether or not the conduct was continued when its lack of legal or factual basis was apparent, should have been apparent, or was [*8]brought to the attention of counsel or the party." (22 NYCRR 130-1.1 [c] [3].) The lack of a factual basis for his testimony was clear to Lapidus as he was testifying in June 2005. That is why he did not advance in his post-trial brief the argument that he was unaware of the stipulation. Lapidus would be in a stronger position if he had not repeated his untruths at the sanctions hearing.
Respondent next argues in the alternative that even if his 2005 testimony is false, his testimony was not material. Lapidus's argument is based on this court's August 26, 2005, decision, in which this court wrote that he lied but that he had to lose even if he told the truth. (See 1050 Tenants Corp. v Lapidus, 9 Misc 3d 1108 [A], 2005 NY Slip Op 51455 [U], *2, 2005 WL 2242078, at *1, 2005 NY Misc LEXIS 1984, at *2, NYLJ, Sept. 14, 2005, at 18, col 1.) Whether Lapidus testified honestly about knowing of the stipulation's existence or about instructing Krantz to sign the stipulation was irrelevant to the court for the 2005 trial; thus, the court's statements that Lapidus lied were dictum. The court found the stipulation binding because Lapidus had never moved to vacate it and because Krantz had the apparent authority to sign it. (Id.) Lapidus, however, never knew how the court would rule. He believed that his testimony was essential even though this court found it inconsequential.
His false trial testimony was material even though this court discussed its falsity only in dictum. Under Penal Law § 210.15, a person commits Perjury in the First Degree, a class "D" felony, when "he swears falsely and when his false statement (a) consists of testimony, and (b) is material to the action, proceeding or matter in which it is made." Under the Rules of the Chief Administrator of the Courts (22 NYCRR 130-1.1 [c]), a litigant who "asserts material factual statements that are false" engages in frivolous conduct and is subject to sanctions. A statement is material to support a perjury charge if it " reflect[s] on the matter under consideration.'" (People v Davis, 53 NY2d 164, 171 [1981], quoting People v Stanard, 42 NY2d 74, 80 [1977] [alteration in Davis].) Lapidus's statements are material because he made them material. His testimony did not simply "reflect" on the nonpayment case: It was central to it. At his 2005 trial, Lapidus's central defense, until he abandoned it by not repeating it in his post-trial brief, was that because he was unaware of the 1999 stipulation, he was not bound by it. Having disavowed the stipulation, he made it material to his case.
IV. The Court's Order
This court sanctions Lapidus $10,000, the maximum allowed under 22 NYCRR 130-1.2 for a single occurrence of frivolous litigation. As an attorney, Lapidus knows better; he must be held to ethical standards. He lied repeatedly and without shame at his trial and again at the sanctions hearing. What began as one simple prevarication about not seeing a stipulation mushroomed into a web of deceit. He lied about things he thought would affect the outcome of his trial. In lying, he falsely blamed one attorney of committing misconduct, and he further falsely accused that attorney and another attorney of perjury for their testimony at this hearing.
Lapidus must deposit the $10,000 with the Lawyers' Fund for Client Protection by [*9]November 15, 2006, and inform the court by affirmation that he has done so. (See 22 NYCRR 130-1.3.) This court will send a copy of this decision to the Lawyers' Fund for Client Protection at 119 Washington Avenue, Albany, New York 12210, to notify the fund of this sanctions award.
This court also awards petitioner costs and attorney fees under 22 NYCRR 130-1.1 (a) and 130-1.2 and adjourns this matter to Part O on Wednesday, November 8, 2006, at 9:30 a.m. for a hearing to determine the amount of costs and attorney fees.
Lapidus, who maintains a law office in the First Department, engaged in frivolous conduct by making false and material misstatements. This court must, under the Rules Governing Judicial Conduct (22 NYCRR 100.3 [D] [2]), refer him to the Departmental Disciplinary Committee of the First Judicial Department at 61 Broadway, Second Floor, New York, New York 10006.
This opinion is the court's decision and order.
Dated: October 5, 2006
J.H.C.
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