Torres Apts. HDFC v Mays

[*1] Torres Apts. HDFC v Mays 2018 NY Slip Op 50886(U) Decided on June 12, 2018 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 June 12, 2018
Civil Court of the City of New York, Bronx County

Torres Apartments HDFC, Petitioner-Landlord,

against

Rose Mays, Respondent-Tenant.



23480/2017



Attorney for Petitioner:

Jason D. Boroff & Associates PLLC

349 East 149th Street, Suite 703, Bronx, New York 10451

(718) 475-7888

Attorney for Respondent:

Rochelle R. Watson, Esq.

Mobilization for Justice, Inc.

100 William Street, 6th floor, New York, New York 10038

(212) 417-3700
Diane E. Lutwak, J.

Recitation, as required by CPLR Rule 2219(a), of the papers considered in the review of Respondent's Order to Show Cause to Vacate Judgment Based Upon Failure to Comply With a Stipulation and Petitioner's Cross-Motion to Vacate Judgment and Stipulations of Settlement:

Papers/Numbered

Respondent's Order to Show Cause with Supporting Affidavit & Documents 1

Petitioner's Cross-Motion with Supporting Affirmation, Affidavit & Exhibits A-K 2

Respondent's Attorney's Affirmation in Opposition to Cross-Motion and in Support of Order to Show Cause & Exhibits A-J 3

Respondent's Memorandum of Law 4

Petitioner's Reply Affirmation with Supporting Exhibits A-B 5

BACKGROUND & PROCEDURAL HISTORY

This is a nonpayment proceeding brought by petitioner-landlord Torres Apartments HDFC against Rent Stabilized respondent-tenant Rose Mays. The petition, dated April 11, 2017, seeks rent arrears of $2,685.66, comprised of rent at the monthly rate of $895.22 for February [*2]2017 through April 2017. The petition is predicated upon a written rent demand dated March 24, 2017 seeking two months' rent, for February and March 2017, at the monthly rate of $895.22. Respondent pro se used the court's form to file an Answer to the Petition on May 5, 2017 raising a "General Denial" and a defense and counterclaim based on her need for repairs. The case first appeared on the court's calendar on May 11 and was settled by petitioner through counsel and respondent pro se in a stipulation that awarded petitioner a judgment for $3580.88 as all rent owed through May 31, 2018, warrant to issue forthwith, execution stayed through June 21, 2017 for respondent to pay the judgment plus rent for June. The stipulation also required petitioner to inspect and repair "according to law" the conditions respondent alleged to exist in her apartment (kitchen floor, oven knob, closet door knobs).

Respondent pro se then submitted and the court signed a series of four Orders to Show Cause seeking stays of execution of the warrant of eviction. All were settled by stipulations extending respondent's payment deadlines and addressing her need for repairs, petitioner by counsel and respondent pro se until she retained counsel as of October 10, 2017, as follows:

•June 26, 2017 Stipulation: execution of the warrant of eviction stayed through June 30, 2017 for respondent to pay $3580.55 and then through July 17, 2017 for respondent to pay $895.22 plus use and occupancy for July; regarding repairs, "kitchen is being currently repaired";•July 31, 2017 Stipulation: execution of the warrant of eviction stayed through August 14, 2017 for respondent to pay $2921.32; regarding repairs, "petitioner is currently fixing the kitchen floor";•August 28, 2017 Stipulation: execution of the warrant of eviction stayed through September 18, 2017 for respondent to pay $3816.54; regarding repairs, "No repairs alleged";•October 10, 2017 Stipulation: execution of the warrant of eviction stayed through October 31, 2017 for respondent to pay $5174.88; regarding repairs, respondent alleged a list of conditions (broken windows in the back bedroom, bathroom and living room; bathroom light socket; paint and plaster kitchen wall; install stove; paint and plaster apartment) with access for petitioner to inspect and repair as required by law on October 24-26.

On November 6, 2017, respondent took out her fifth Order to Show Cause [FN1] , the one which is now before the Court. Again, respondent sought a stay of execution of the warrant of [*3]eviction; in her sworn supporting affidavit she stated that she was "waiting for the one shot deal & HomeBase" and she attached copies of documents from the City's Human Resources Administration and HomeBase Homeless Prevention Network. Notations on the court file indicate that, after several adjournments, the parties through their attorneys set up a briefing schedule for petitioner to interpose a cross-motion; on May 17, 2018 they extended their briefing schedule and adjourned the case to June 7, 2018 for petitioner to submit reply papers and for argument.

In its cross-motion, petitioner seeks vacatur of "the Judgment and Stipulations in this proceeding," a new final judgment "in the correct amount," or, in the alternative, an order "amending the existing judgment to include the correct amount." Petitioner also asks the Court to deny respondent's Order to Show Cause.

Petitioner supports its cross-motion with its attorney's affirmation, its agent Sandra Bernard's affidavit and copies of the following documents:

•the notice of petition, petition and rent demand;•seven Stipulations of Settlement: the five referenced above, a sixth with a briefing schedule and one from a prior proceeding;•a rent ledger dated 10/6/17 [FN2]showing unpaid rent of $895.22 billed on 7/1/16, an "Arrears balance on property takeover" of $1436.32 as of 7/12/16 and a total due as of 10/1/17 of $5196.98 based on rent billed at monthly rates of $895.22 from July 2016 through September 2017 and $935.22 as of October 2017, minus payments made; •three two-year Renewal Lease Forms: one dated 1/31/13 for the term of 4/1/13-3/31/15 (raising the rent from $895.22 to $935.22), and two dated and signed on 9/8/17, stating terms and monthly rental amounts of, respectively, 4/1/15-3/31/17 for $960.94 (based on a prior rent of $935.22 with a 2.75% increase) and 4/1/17-3/31/19 for $980.16 (based on a prior rent of $960.94 with a 2.00% increase);•an undated chart of rents due and paid [FN3]for the period of January 2017 through April 2018 showing: an opening balance of $6357.86; a closing balance of $9863.96; rent billed at the rate of $960.94 for the months of February and March 2017; rent billed at $980.16 for the months of April 2017 through April 2018; credit for various payments made with the most recent being for $1900 in March 2018.

Petitioner argues that the judgment and stipulations should be vacated as they are based on a mutual mistake as to the monthly amount of respondent's rent. Petitioner points to the three two-year renewal leases attached to its cross-motion and asserts that, "Unfortunately, Petitioner's prior management company incorrectly charged Respondent from the inception of Lease 1 in April 2013 through June 2016, when the current management company took over the Building (the owner remained the same). Unfortunately, the current management did not realize the [*4]mistake and continued charging Respondent the incorrect rental rate of $895.22 from July 2016." Affirmation in Support of Cross-Motion at ¶¶ 27 and 28; Bernard Affidavit at ¶¶ 25 and 26. Petitioner also points to language in the October 10, 2017 stipulation stating that the payment amount agreed upon - $5174.88 — "is without prejudice to any renewal lease or other legal rent increases."

Petitioner asserts that the current management company only learned of the mistake in November or December 2017, Affirmation at ¶ 30; Bernard Affirmation at ¶ 28, and that "neither party realized that Respondent was not being charged the correct amount until months after this proceeding commenced." Affirmation at ¶ 43. Petitioner argues that even if the court finds the mistake to be unilateral, it is a "material" one, the stipulations should be vacated to prevent a windfall to respondent and it "would be unconscionable" to enforce them against petitioner, a nonprofit provider of affordable housing. Affirmation at ¶¶ 52 and 54. Alternatively, petitioner argues that the judgment should be amended to reflect that the correct amount of arrears is $9863.96.

As for respondent's Order to Show Cause seeking a further stay of execution of the warrant of eviction and time to pay her arrears, petitioner argues that it should be denied as respondent has repeatedly defaulted on her payment obligations in this proceeding and has failed to demonstrate an ability to pay either the outstanding arrears or the ongoing rent.

In opposition, respondent's attorney provides copies of five rent ledgers which reflect various monthly rent rates as follows: (1) dated June 30, 2016 (7 pages), listing a "move-in" date of April 1, 1997 and a "base charge" of $895.22 under a lease with a term of 4/1/2011 through 11/30/2014; also, in a "Tenant History Summary" and "Tenant Detail History" for the period of 12/2012 through 5/2016, reflecting rent charged at the monthly rate of $895.22 in and for each month from September 2013 through and including June 2016;(2) dated October 6, 2017 (1 page, identical to petitioner's Exhibit H), reflecting rent charged at the monthly rate of $895.22 in and for each month from July 2016 through and including September 2017 and at $935.22 for October 2017;(3) dated November 17, 2017 (1 page), reflecting rent charged at the monthly rate of $935.22 for July 2017 through November 2017;(4) dated December 18, 2017 (1 page), reflecting rent charged at the monthly rate of $960.94 for July 2016 through March 2017, at $980.16 for April 2017 through December 2017 and an additional rent charge of $774.95 on December 7, 2017;(5) dated March 15, 2018 (1 page), similar to ledger (4) above but with rent of $960.94 billed for the subsequent months of January through March 2018 and handwritten notations changing the rent charged for July 2016 through January 2017 to $895.22; further, at the bottom of the page is a handwritten ledger [FN4]for the period of July 2016 through March 2018.

The oldest of the five rent ledgers ends with a balance due as of May 2016 of $1436.32 and the other four indicate an "Arrears balance on property takeover" charged on 7/12/2017 of $1436.32.

Respondent's attorney argues that respondent reasonably relied in both this proceeding and the prior proceeding on petitioner having charged her rent at the monthly rate of $895.22 since 2011, which is confirmed by the rent ledgers and stipulations of settlement. Accordingly, there was no mutual mistake warranting vacatur of the stipulations and judgment.

Respondent's attorney also provides a DHCR (New York State Division of Housing and Community Renewal) rent registration history confirming respondent's tenancy since 1997 with a "Legal Registered Rent" of $895.22 in and for each of the five years from 2013 through 2017.[FN5] Respondent argues that, under Rent Stabilization Law § 26-517(e) and Rent Stabilization Code § 2528.4, petitioner is barred from collecting more than the amount registered with the DHCR and that if petitioner subsequently files late registration statements any higher legal rent may be collected prospectively only. Respondent argues that "any so-called windfall is attributable to Petitioner's negligent accounting practices," Respondent's Memorandum of Law at p. 5, as evidenced by the five different rent ledgers.

Further, respondent points to petitioner's predicate rent demand, a copy of which is attached to the petition and incorporated therein by reference at paragraph 5, which seeks unpaid rent at the monthly rate of $895.22. As rent demands are not amendable, respondent argues that the relief petitioner seeks should be denied.

Finally, as to her arrears, which respondent asserts total $4344.44 through May 31, 2018 after deducting undisputed payments made of $1900 in March 2018 and $5196.98 on May 14, 2018, respondent asks the court to exercise its discretion to stay execution of the warrant and grant her additional time to bring her rent account down to zero given that she is a long-term, rent-regulated tenant.[FN6]

On reply, petitioner highlights the absence of an affidavit from respondent and argues that she "knew the monthly rent should have been $960.94 from April 2015 through March 2017 and $980.16 from April 2017 to date, as she executed two-year renewal leases in those amounts, for those time periods." Reply Affirmation at ¶ 4. Petitioner also reiterates the language in the October 10, 2017 stipulation that the amount agreed upon "is without prejudice to any renewal lease or other legal rent increases." Petitioner notes that it does not seek to recover the "corrected rent" back to April 2013, but only as of February 2017, as a prior nonpayment proceeding resolved all rent owed through January 2017.

Alternatively, petitioner notes that the DHCR rent registration history reflects that the most recently registered monthly rent is $935.22 (2017 registration), and that, if the Court is not inclined to allow the requested amendments to the judgment and stipulations at a monthly rent of $980.16, at a minimum the court should amend them to reflect a monthly rent of $935.22. Petitioner also asserts that it has submitted an application to the DHCR to amend the registrations.

As to the rent demand, petitioner asserts that the only months listed were February and March 2017, that as to those months petitioner in good faith sought rent at a monthly rate of $895.22, that it "only discovered months later that it was actually entitled to seek $960.94 for those 2 months," and that the difference of $131.44 between the amount sought and the amount "it should have demanded" is "such a minor error" as to be "insufficient as a matter of law to find that the rent demand did not contain a good faith approximation of the total rent due", Reply Affirmation at ¶¶ 57-58.

As to respondent's order to show cause seeking a further stay, petitioner argues that it should be denied as respondent has failed to show the ability to pay the arrears regardless of which monthly rates they are calculated upon.[FN7]

DISCUSSION

The court will address petitioner's cross-motion first. It is well-settled that stipulations of settlement "are favored by the courts and are not lightly cast 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 [1st Dep't 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 if a party can show that there existed a mutual mistake at the time of the stipulation that 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]). Where both parties to a nonpayment eviction proceeding are represented by counsel, a court may decline to enforce a 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 the monthly rent 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 agreement was based 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 [*5]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]).

Petitioner has not demonstrated that there was a mutual mistake evidenced by the absence of a true meeting of the minds at any time during the course of this proceeding. All relevant documents — the petition and predicate rent demand; petitioner's rent ledgers dated 6/30/16 and 10/6/17; the DHCR rent registration history - reflect a monthly rent of $895.22. Petitioner admits that it was only upon review by its attorneys in November or December 2017 that it learned of the alleged mistake as to the amount of respondent's rent. The only mistake petitioner describes is its own, based upon its discovery that it missed opportunities to raise respondent's rent after the expiration of her lease for $895.22 through the issuance of timely and proper renewal leases followed by the billing of and demand for rent increases permitted by those renewal leases.

Nor has petitioner met the standard for showing a unilateral mistake warranting vacatur of the stipulations and judgment as it has not shown how it exercised ordinary care, not only when the stipulations of settlement were entered into, but also at the time it prepared its predicate rent demand and authorized its attorneys to prepare a nonpayment petition based on that rent demand. It is not unconscionable to hold petitioner to its own business practices and to enforce the stipulations and judgment that its attorneys prepared based on its own records.

Petitioner points to the fifth Stipulation of Settlement dated October 10, 2017, which states that the arrears amount agreed upon "is without prejudice to any renewal lease or other legal rent increases." However, petitioner provides no explanation for how it came about that, on September 18, 2017, more than four months after this proceeding was first on the court's calendar and before respondent retained counsel, the parties signed two successive, back-dated renewal leases purporting to raise respondent's rent retroactively. Neither of these renewal leases complies with Rent Stabilization Code § 2523.5, which requires a landlord to offer a renewal lease "not more than 150 days and not less than 90 days prior to the end of the tenant's lease term" and, where the landlord fails to do so, inter alia, delays the effective date of the increased rent under the renewal lease until "the first rent payment date occurring no less than 90 days after such offer is made by the owner". The third, older of the three renewal leases (commencing April 1, 2013) also does not comply with RSC § 2523.5, although to a lesser extent, as it is dated January 31, 2013 and provides 60 days' advance notice as opposed to the minimum 90-day requirement. And while petitioner now labels it a mistake that it continued to charge respondent rent at the monthly rate of $895.22 after the lease for this amount ended, without further evidence it cannot be determined that $895.22 was in fact charged mistakenly for [*6]so many years, as opposed to intentionally as a preferential rent [FN8] with the right to charge a higher rent having been waived, Park Holding Co v Power (161 AD2d 143, 554 NYS2d 861 [1st Dep't 1990]), or barred by the doctrine of laches, 1515 Macombs, LLC v Jackson (50 Misc 3d 795, 20 NYS3d 869 [Civ Ct Bx Co 2015]) and cases cited therein.

Further, petitioner cannot amend its predicate rent demand nunc pro tunc. Chinatown Apts v Chu Cho Lam (51 NY2d 786, 787, 412 NE2d 1312, 433 NYS2d 86 [1980]); Cypress Ct Assoc v McLauren (33 Misc 3d 1203[A], 938 NYS2d 226 [Civ Ct Kings Co 2011]); Vartarian v Brady (184 Misc 2d 333, 707 NYS2d 285 [Civ Ct NY Co 1999]); Parkchester Apts Co v Walker (1995 NY Misc LEXIS 738, 213 NYLJ 123 [Civ Ct Bx Co 1995]). A proper rent demand is a condition precedent to a nonpayment proceeding which the petitioner must plead and prove along with the other elements of its case. RPAPL § 711(2). See, e.g., JDM Washington St, LLC v 90 Washington Rest Assoc, LLC (36 Misc 3d 769, 950 NYS2d 647 [Civ Ct NY Co 2012])("the service of a valid predicate notice is a condition precedent for a nonpayment proceeding, and nothing in the RPAPL precludes respondents from raising the issue at trial"); Zenila Realty Corp v Masterandrea (123 Misc 2d 1, 472 NYS2d 980 [Civ Ct NY Co 1984])(a proper rent demand is "a long-established prerequisite to the maintenance of a summary proceeding"). The predicate rent demand required by RPAPL § 711(2) must "clearly inform the tenant of the particular period for which a rent payment is allegedly in default and the approximate good faith sum of rent assertedly due for each such period." Schwartz v Weiss-Newell (87 Misc 2d 558, 561, 386 NYS2d 191 [Civ Ct NY Co 1976]), quoted in 542 Holding Corp v Prince Fashions, Inc (46 AD3d 309, 848 NYS2d 37 [1st Dep't 2007]).

Even if petitioner is correct — which this Court does not decide - that it is permitted to charge respondent not $895.22 as stated in the rent demand but either $935.22 or $960.94 for February and March 2017 and $980.16 for April 2017 and subsequent months, the Court cannot overlook petitioner's alleged mistake in the drafting of its rent demand, even though the dollar difference is relatively small. First, petitioner's own records show that it had never charged respondent anything but $895.22 for a period of over four years not just up to the date of the rent demand but all the way through to at least September 2017. Second, the higher rate petitioner now demands is based on purportedly retroactive, unregistered renewal leases signed five months after this case began, the legality of which is questionable.

As for respondent's Order to Show Cause seeking an extension of her payment deadline for the fifth time since the case first settled in May 2017, after a review of all of the circumstances, Harvey 1390 LLC v Bodenheim (96 AD3d 664, 666, 948 NYS2d 32, 34 [1st Dep't 2012]), and taking into consideration that this is a long-term (21 years), Rent Stabilized tenancy, that respondent did not have the benefit of legal counsel from May 11, 2017 until the October 10, 2017 court appearance, that respondent had an ongoing need for repairs which is reflected in four out of the five settlement stipulations up to and including October 10, 2017, and that the delays in this proceeding since that date eight months ago were due to negotiations between the parties and then motion practice stemming from the alleged "mistake" petitioner learned of "sometime in November or December 2017," Petitioner's Attorney's Affirmation at ¶ 30, the [*7]court exercises its discretion to grant a further stay of execution of the warrant to provide respondent a final opportunity to bring her rent account down to zero.

CONCLUSION

For the reasons set forth above, respondent's Order to Show Cause is granted to the extent of staying execution of the warrant of eviction through and including June 29, 2018 for respondent to pay $3301.76 [FN9] as all rent due through and including June 2018 without prejudice to petitioner's right to seek a higher rent, if legally permissible, in an appropriate proceeding. In the event of default, the City Marshal may proceed with an eviction after service of a 6-Day Notice of Eviction which may be served by first-class mail. Petitioner's cross-motion to vacate the judgment and stipulations of settlement is denied. This constitutes the Decision and Order of this Court.

Dated: June 12, 2018

Bronx, New York

_________________________

Diane E. Lutwak, HCJ Footnotes

Footnote 1:For reasons that are not apparent from the record, the Court signed and calendared this fifth Order to Show Cause even though it was prepared and submitted by respondent pro se after she had retained counsel. While petitioner notes that respondent "obtained an improper pro-se OSC," Attorney's Affirmation at ¶ 15, petitioner does not argue that it should be denied for this reason. In any event, it was subsequently supplemented by respondent's counsel's submission of an Affirmation, Memorandum of Law and supporting documents. As there is no indication that a substantial right of a party was prejudiced and so as not to delay the resolution of this proceeding further, the court disregards the irregularity, see CPLR § 2001, and decides the Order to Show Cause as if it had been submitted by respondent's attorney.

Footnote 2:Petitioner's attorney refers to this document as "Respondent's unadjusted rent history," Affirmation in Support of Cross-Motion at ¶ 24.

Footnote 3:Petitioner's attorney refers to this document as "the corrected rent history," Affirmation in Support of Cross-Motion at ¶ 61.

Footnote 4:At oral argument petitioner's attorney stated that the handwriting on this ledger was hers.

Footnote 5:The same amount, $895.22, is also listed in the rent registration history as the "Actual Rent Paid" for the years 2011 and 2012.

Footnote 6:Respondent's attorney in her memorandum of law also states that respondent explained to her that "the rent had been unpaid due to a family emergency that had resulted in a financial hardship." Memorandum of Law at ¶ 12. As this statement is not supported with a sworn statement by someone with personal knowledge, it cannot be considered.

Footnote 7:Petitioner has prepared a chart with three different sets of calculations resulting in totals due through June 2018 of (1) $4707.30 if based on monthly rents of $960.94 and $980.16; (2) $3981.76 if based on a monthly rent of $935.22; and (3) $3301.76 if based on a monthly rent of $895.22.

Footnote 8:Under the Rent Stabilization Code, "Where the amount of rent charged to and paid by the tenant is less than the legal regulated rent for the housing accommodation, such rent shall be known as the 'preferential rent.'" 9 NYCRR § 2521.2.

Footnote 9:This figure comes from the "At $895.22/mo" section near the bottom of the chart petitioner's attorney prepared and attached to her Reply Affirmation, see fn 7, supra, and is subject to modification if other payments have been made that have not been accounted for.