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Court Vacates Stip - Fundamental Mistake

NYC Housing Court Practice/Procedures

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Court Vacates Stip - Fundamental Mistake

Postby TenantNet » Wed Sep 19, 2012 1:37 pm

Landlord-Tenant—Rent Stabilization—Court Vacates So Ordered Stipulation of Settlement on Grounds That It Took Proceeding Out of Its Due and Ordinary Course and Was Based on a Fundamental Mistake
New York Law Journal
September 19, 2012

This case involved a nonpayment proceeding relating to a rent stabilized apartment. The landlord had served a rent demand in November 2011 and commenced the proceeding against the tenant-of-record "A," the following month. However, "A" had died on Oct. 9, 2011. On the proceeding's first return date, the landlord entered into a stipulation of settlement (stipulation) with "B." "B" had appeared pro se and was "A's" daughter. However, she was not a signatory to the lease. The landlord and "B" agreed that the proceeding would be discontinued against "A," "B" "would be added as a 'respondent-occupant,' that there were $7,860.75 in rent arrears and that a judgment for this amount would be entered against her, that a warrant might issue but that its execution would be stayed so that all arrears and accruing rent might be paid by January 31, 2012, that the rent was $1,064.82 per month, that to pay the rent ['B'] was counting on assistance from the City of New York's Department of Social Services (DSS), and that upon payment of all arrears petitioner would give ['B'] a lease in her own name. ['B'] was unable to obtain assistance from DSS and the rent arrears were not paid."

A marshal thereafter served a notice of eviction. "B," now represented by counsel, moved to vacate the stipulation. The court granted the motion and dismissed the proceeding.

The court explained that "RPAPL §711(2) provides in pertinent part that '[w]here a tenant dies during the term of the lease and rent due has not been paid and no representative or person has taken possession of the premises and no administrator or executor has been appointed, the proceeding may be commenced after three months from the date of death of the tenant by joining the surviving spouse or if there is none, then one of the surviving issue or if there is none, then any one of the distributees.'"

Here, the petitioner had commenced the proceeding less than three months after the death of "A" and "at a point when no administrator or executor had been appointed and no representative or person had taken possession of the premises." Thus, the proceeding was a nullity when it was brought.

The landlord argued that the stipulation should be upheld because "B" "freely agreed to become a respondent thereunder and to pay the rent arrears" and that the stipulation "supersedes or cures any deficiencies that might have existed at the commencement" of the proceeding.

The court then explained that "courts uphold stipulations of settlement, especially those made in open court, because doing so promotes justice and the administration of justice. However, a court may vacate a stipulation where there is a showing of fraud or illegality or fundamental mistake sufficient to void a contract…, or where the stipulation takes the proceeding out of its due and ordinary course…."

Here, the court found that "the stipulation took the proceeding out of its due and ordinary course, and rested on a fundamental mistake. Respondent was pro se when the stipulation was made; the stipulation was made on the proceeding's first return date, i.e., at a time when a request to retain counsel would have been routinely granted; and the stipulation rested on the assumption that ['B'] would, somehow, be able to secure assistance from DSS to pay the rent arrears which assumption was a fundamental mistake. The stipulation,… took the proceeding out of its due and ordinary course because it required ['B'] to pay rent arrears that she was not under any legal obligation to pay." Accordingly, the court granted "B's" motion, vacated the stipulation and judgment and dismissed the proceeding.

Dorchester Road Assoc. v. David, 108067/11, NYLJ 1202560835344, at *1 (Civ., KI, Decided June 4, 2012), Marton, J.
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