HLH Realty v Wessel

[*1] HLH Realty v Wessel 2009 NY Slip Op 52671(U) [26 Misc 3d 1205(A)] Decided on December 24, 2009 Civil Court Of The City Of New York, Kings County Gonzales, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 24, 2009
Civil Court of the City of New York, Kings County

HLH Realty, Petitioner,

against

Michael Wessel, Respondent.



84323/08

Cheryl J. Gonzales, J.

Respondent moved by order to show cause for an order granting reargument of its motion to vacate the stipulation which was denied by this court in an order dated November 9, 2009. Respondent's original order to show cause, dated August 14, 2009, sought an order vacating the stipulation dated February 2, 2009, granting leave to file an amended answer and granting summary judgment. Respondent argues that the court overlooked respondent's reply papers on his original order to show cause as evidenced by the fact that the reply papers were not listed among the papers reviewed by the court on the motion.

In addition, respondent contends that the court overlooked matters of fact and law. In his order to show cause dated August 14, 2009, respondent argued that petitioner's DHCR filing for the subject apartment in May 2003, which stated that the apartment was exempt because there were only five apartments in the building, was insufficient to form a basis for the deregulation of the apartment.

Respondent settled the instant holdover proceeding on February 2, 2009. In the stipulation, respondent agreed to vacate the apartment on or before February 28, 2011, and pay $1600.00 per month in use and occupancy. The stipulation provides that petitioner waived $14,000.00 for use and occupancy for seven months at $2000.00 per month, and granted respondent a temporary reduction of the use and occupancy to $1600.00 per month on condition that respondent makes payment pursuant to the stipulation and timely vacates the apartment. The petition alleged that the subject building is a five-family house and is not subject to Rent Stabilization or Rent Control.

In opposition, petitioner argues that respondent was fully aware of his potential defense. Further, petitioner claims that respondent's argument based on RSC §2520.13 is misplaced since that section, which makes any waiver of the Rent Stabilization Law void, is not applicable under the facts of this case in which there was a so ordered, negotiated settlement between the parties. [*2]

Petitioner does not address respondent's claims as to the rent stabilized status of the apartment, and instead focuses on the fact that respondent was fully aware of his defenses. However, based on the DHCR registrations for the subject apartment through 2002, there is clearly an issue of fact with regard to the regulatory status of the apartment. As noted on the DHCR registration report, the statements are provided by petitioner, and they are not proof of the actual legal status of the apartment. The registration in 2003 lists the subject apartment as exempt, and states there are only five apartments in the building. As stated in 129 East 56 Street Corp. v. Harrison, 115 Misc 2d 506, 454 NYS2d 398 (1982) " Where there are six or more residential units in a building on the effective date of ETPA but they are subsequently reduced to fewer than six, the remaining units continue to be stabilized. Opinion 7590, 7591, 7933, and 18257, Conciliation and Appeals Board; See 123 E. 18 St. Corp. v. Gisler, supra . This is to prevent landlords in marginal situations from reducing the number of residential units in their buildings so as to escape rent stabilization."

Contrary to petitioner's assertion that RSC §2520.13 would not be applicable in this case since there was a negotiated agreement between the parties, the Court of Appeals in Riverside Syndicate v. Munroe, 10 NY3d 18, 853 NYS2d 263[2008] found that the aforementioned exception applied only to a complaint pending before DHCR. If it were found that the subject apartment was subject to rent stabilization, the stipulation in this case would be void as against public policy. Moreover, there would be no grounds for this proceeding, and to enforce the stipulation would make the court a party to the landlord's undermining of the law ( see 716 Lefferts LLC v. Goldstock, NYLJ, April 25, 2001, p.23, col. 1, aff'd 2001 WL 1792294). Further, as stated by the court in Riverside Syndicate, supra , agreements that waive the requirements of the rent stabilization law "distort the market without benefitting the people that the rent stabilization laws were designed to protect."

It is well settled that stipulations of settlement are favored by the courts, Hallock v. State of New York, 64 NY2d 224, (1984). However, the court may vacate a stipulation upon a showing of good cause, Matter of Frutiger, 29 NY2d 143, (1971). The discretion of the court to vacate a stipulation is not confined to instances of collusion, mistake, accident, fraud and surprise, Solack Estates v. Goodman, 102 Misc 2d 504, aff'd 78 AD2d 512 (1980). " [T]he court has the power to relieve a party from a stipulation in a situation which is unjust or harsh even when fully understood and authorized " Bond v. Bond, 260 A.D. 781, (1940), and the court should vacate the stipulation when the parties can be restored to their former status, ( 2 Carmody -Wait 2d, NY Prac 7:20).

As stated above, there are questions as to the regulatory status of the apartment, and consequently, petitioner's authority to maintain this proceeding. Therefore, the stipulation in this case must be vacated to restore the parties to the status quo in order to fully litigate the issues presented.

Accordingly, based on the foregoing, respondent's order to show cause seeking reargument is granted, and upon reargument the stipulation is hereby vacated.

Respondent is granted leave to serve and file an amended answer on or before January 15, 2010, [*3]and the matter is restored to the calendar in Part J on February 8, 2010.

This constitutes the decision and order of this court.

Dated: December 24, 2009

_________________________

Cheryl J. Gonzales, JHC