Opinion
54567/2015
11-19-2018
1242 SUPERIOR APARTMENTS, LLC, Petitioner, v. Isidoro RODRIGUEZ ; Lourdes Rodriguez, Respondents.
Lazarus, Karp & Kalamotousakis, LLP, by Samantha Sumilang, Esq., for the Petitioner Mobilization for Justice, by Alberto Gonzalez, Esq., for the Respondent-Lourdes Rodriguez
Lazarus, Karp & Kalamotousakis, LLP, by Samantha Sumilang, Esq., for the Petitioner
Mobilization for Justice, by Alberto Gonzalez, Esq., for the Respondent-Lourdes Rodriguez
Karen May Bacdayan, J.
Recitation, as required by CPLR 2219 (a), of the papers considered in review of this motion.
Papers Numbered
Notice of Motion and Affidavits Annexed 1
Notice of Cross-Motion and Affidavits Annexed 2
Petitioner's Affirmation in Opposition and in Reply 3
Respondent's Affirmation in Reply 4
Exhibits 5
After oral argument and upon the foregoing cited papers, the decision and order on this motion is as follows:
BACKGROUND AND PROCEDURAL POSTURE
This is a nonpayment proceeding originally commenced in 2015. Respondent-Lourdes, Rodriguez is represented by Mobilization for Justice. Respondent-Isidoro Rodriguez is not represented by counsel. On October 27, 2016, in a two-attorney stipulation, Respondent-Lourdes Rodriguez, consented to a final judgment in the amount of $16,000 as all rent due through October 31, 2016. In that stipulation, Petitioner agreed to give Respondent a one-year preferential rent of $1,268 per month with a term commencing November 1, 2016 and ending October 31, 2017, and Respondent agreed to sign a renewal lease.
The October 27, 2016 stipulation states that "LL agrees to give Resp a 1 yr pref rent of $1,268/month commencing 11/1/16 ending 10/31/17. Resp to sign renewal lease which will state pref rent and legal rent — to be sent/given to Resp by 10/31/16. Resp will pick up renewal at office."
The renewal lease which was offered to Respondent contained the option of a one- or two-year preferential rent for $1,268 (legal regulated rent of $1,991) and $1,307.82 (legal regulated rent of $2,030.82), respectively. Both Respondents signed the lease on November 7, 2016, choosing the two-year term, and returned the renewal lease to the Petitioner. That renewal lease has now expired.
In a January 18, 2017 decision, the Court granted Respondent's order to show cause seeking a stay of the execution of the warrant to enable her to pay $19,804 as all rent due through January 2017. Thereafter, on February 23, 2018, the proceeding was unequivocally discontinued by a stipulation in which Respondent paid $21,147.60 in satisfaction of all arrears to date, having obtained the arrears from the Human Resources Administration on the basis of the renewal lease offer she signed.
Petitioner's attorney claims in its reply papers that, because the stipulation did not contemplate Respondent's application for CityFeps, it should not be estopped from enforcing the October 27, 2016 stipulation on the basis that it accepted CityFeps monies to discontinue the proceeding and has accepted ongoing CityFeps payments to date. The Court does not reach the issue of estoppel, but finds Petitioner's statement to be disingenuous. In both the order to show cause returnable on January 18, 2017, and the February 23, 2017 order to show cause which resulted in the discontinuance of this proceeding, both Respondent and her attorney averred that Respondent was applying for CityFeps. In the latter order to show cause, Respondent attached a copy of the renewal lease accepted for a two-year preferential rent of $1,307.82 upon which her preliminary approval for CityFeps was based.
On August 9, 2018, more than a year and a half after the proceeding was discontinued, Petitioner filed this motion which seeks an order (1) restoring the proceeding to the court's calendar; (2) holding Respondents in civil contempt of court for violation of the so-ordered stipulation dated October 27, 2016; and (3) "for Respondents' civil contempt of Court directing Respondents Isidoro Rodriguez and Lourdes Rodriguez to sign the renewal lease for a term commencing November 1, 2016, and expiring October 31, 2017, at the legal rent of $1,991.00 as agreed upon in Court." Petitioner now claims that the renewal lease with a two-year option was a "mistake," was "inadvertently generated," and is not binding.
Respondent opposes the motion on the grounds that (1) there was no service on Respondent as required by Section 761 of the Judiciary Law ; (2) there is no unequivocal order which Respondent disobeyed and, thus, failure to sign a one-year renewal lease is not punishable as contempt; and (3) that the procedural posture of the proceeding, i.e., it was discontinued, relegates Petitioner to seeking relief in a plenary proceeding. Respondent also cross-moves for a finding that the renewal lease, signed on November 7, 2016 for a two-year preferential rent in the amount of $1,307, is binding.
In its reply papers, Petitioner claims that (1) the contempt motion was properly served pursuant to Judiciary Law Section 761 ; (2) that the October 27, 2018 stipulation is "clear and unambiguous" and "reasonably susceptible of only one meaning" and should be enforced as against Respondent; and (3) that Respondent has cited no legal authority to support its argument that the two-year preferential rent renewal lease is binding.
PETITIONER'S MOTION FOR CONTEMPT
Judiciary Law Section 761 — "Notice to Accused; service"
In 1977, amendments to the Judiciary Law expanded the methods by which applications to punish for civil contempt may be made to allow for commencement by motion on notice, in addition to order to show cause. Section 756 of the Judiciary Law, which was added in 1977, provides that "[a]n application to punish for a contempt punishable civilly may be commenced by notice of motion returnable before the court or judge authorized to punish for the offense, or by an order of such court or judge requiring the accused to show cause before it ...." ( Judiciary Law § 756, as added by L 1977, ch 437, § 2.) Prior to the 1977 amendments, a motion to punish for contempt could only be made by order to show cause, which had to be served on the alleged contemnor unless the court saw fit to order otherwise. (See Continental Bank v. Moscatiello , 115 Misc 2d 617, 618 [Sup Ct, Queens County 1982].)
The former iteration of Section 761 of the Judiciary Law was titled "Order to show cause defined; service" and provided that "[a]n order to show cause is equivalent to a notice of motion; and the subsequent proceedings thereupon are taken in the action or special proceeding, as upon a motion made therein. In a civil contempt proceeding such order to show cause shall be served upon the accused, unless service upon the attorney for the accused be ordered by the court or judge." (Former Judiciary Law § 761, as amended by L 1977, ch 437 § 4.)
Section 761 of the Judiciary Law governs service of applications to punish a party for contempt within a civil proceeding and its language is quite clear. It provides that any "application to punish for contempt in a civil contempt proceeding shall be served upon the accused ." ( Judiciary Law § 761 [emphasis added].) The sole exception to that rule is where "service upon the attorney for the accused [is] ordered by the court or judge." ( Judiciary Law § 761.)
Petitioner's reliance on Hudson St. Owner Equities LLC v. Escoffier (36 Misc 3d 127[A], 2012 NY Slip Op 51167[U] [App Term, 1st Dept 2012] ) for the proposition that the "service of a motion for contempt upon a tenant's attorney is sufficient" within the First Department is therefore misguided, as the application for contempt in that case was made by order to show cause and not, as here, by motion on notice. (Reply affirmation of Petitioner's attorney at 22; see generally CPLR 2214 [d] [granting courts discretion to determine the time and manner of service orders to show cause].)
The importance placed upon service directly upon the accused is reflective of the severity of the penalties available to a court in contempt proceedings. Accordingly, it is "the clear intent of the statute not to allow the moving party to decide for himself whether or not to serve the alleged contemnor, but to reserve all discretion on this point to the court." ( Moscatiello , 115 Misc 2d at 618.)
Section 770 of the Judiciary Law provides, in pertinent part, that "[i]f it is determined that the accused has committed the offense charged; and that it was calculated to, or actually did, defeat, impair, impede, or prejudice the rights or remedies of a party to an action or special proceeding, brought in the court, or before the judge or referee; the court, judge, or referee must make a final order directing that he or she be punished by fine or imprisonment, or both, as the nature of the case requires."
Here, it is undisputed that service of Petitioner's application was only made upon Respondent's counsel. Such service is defective under Section 761 of the Judiciary Law and Petitioner's motion is rightly denied on that basis alone.
Effect of Discontinuance on Petitioner's Motion
Regardless of whether this Court has the power to enforce the terms of a stipulation by civil contempt, when a proceeding has been terminated or discontinued, and no future act is contemplated by the parties, the proper vehicle for enforcement of a stipulation is a plenary proceeding. ( Teitelbaum Holdings, Ltd. v. Gold , 48 NY2d 51 [1979] [holding that where a lawsuit has not been "unequivocally terminated" by discontinuance, enforcement of settlement by motion rather than plenary action is warranted]; Hollander v. Fasano , 35 AD3d 210 [1st Dept 2006] [holding that any enforcement of a stipulation must be by separate plenary action where proceeding was discontinued by court orders entered contemporaneous with stipulation]; One York Prop. LLC v. Vista Media Group, Inc. , 12 Misc 3d 1155[A], 2006 NY Slip Op 50899[U] [Civ Ct, NY County 2006] [holding that the court retains jurisdiction to enforce a stipulation by motion where discontinuance is conditioned on future payment and clear language of the stipulation provides that the court retains "jurisdiction to enforce the terms of the stipulation in the event of a default by either party."].)
This question is examined at length in Morningside Partners LP v. Fofanah (15 Misc 3d[A], 2007 NY Slip Op 50953[U] [Civ Ct, NY County 2017] ), where the court held that it did not have the equitable or injunctive power to punish failure to comply with a stipulation as civil contempt. Therein, the parties to a commercial nonpayment proceeding in housing court agreed that the tenant would remove an exhaust and flue from a restaurant rented from the landlord and the landlord could "enforce the proceeding as an order of the Court." (Id. ) The landlord moved to hold the tenant in contempt for failure to remove the exhaust and flue. The court held that because the "Civil Court was without jurisdiction to order the injunctive relief directed in the ... stipulation, respondent's failure to adhere to the stipulation is not punishable by contempt." (Id. ) Parties may not expand a court's power to impose punishments for contempt by stipulation. (Id. )
Petitioner fails to address Respondent's argument that, because this nonpayment proceeding was discontinued in February 2017 with the full payment of arrears, any enforcement of this stipulation should be sought in a plenary proceeding.
As in Teitelbaum Holdings , the parties herein "unequivocally terminated" this proceeding by stipulation on February 23, 2017. Therefore, any enforcement of the October 27, 2016 agreement must be sought in a separate action, and, accordingly, Petitioner's motion is denied on this basis as well.
Paragraphs 3 and 4 of the parties' February 23, 2017 stipulation read: "The sum tendered above represents full satisfaction of arrears owed through 2-28-2017. Judgment and warrant to be vacated and this matter shall be deemed discontinued."
Petitioner's Other Obstacles
The Court notes that even if this motion had been properly served, and even if the proceeding were in a tenable procedural posture (such that dismissal on those grounds were not warranted), Petitioner would face many challenges.
For example, enforcement of the stipulation against Lourdes Rodriguez, but not Isidoro Rodriguez (who is a party to the lease and a co-respondent in this proceeding, but who was not a signatory to the subject stipulation), would be unsustainable. As another example, enforcing the agreement in the manner requested by Petitioner would arguably contravene the proscription against the waiver of any benefits conferred by the Rent Stabilization Code ("RSC"). The RSC entitles Respondent to the option of a one- or two-year renewal term ( Rent Stabilization Code [9 NYCRR] § 2522.5 [b] ["the tenant shall have the right of selecting at his or her option a renewal of his or her lease for a one- or two-year term ...."].) Any agreement by a tenant to waive a benefit of the RSC is void. ( Rent Stabilization Code [9 NYCRR] § 2520.13 ; Jazilek v. Abart Holdings LLC , 893 NY3d 943 [2008]; see also Drucker v. Mauro , 30 AD3d 37 [1st Dept 2006] [holding that an agreement in a settlement which waives a benefit of the Rent Stabilization Code is "unenforceable as a matter of public policy, even if it benefits the tenant."].)
Chief among the hurdles before Petitioner would be establishing that Respondent's actions rise to the level of contempt. The elements of civil contempt were set forth by the Court of Appeals in McCormick v. Axelrod (59 NY2d 574, 583 [1974] [internal citations omitted] ):
"In order to find that contempt has occurred in a given case, it must be determined that a lawful order of the court, clearly expressing an unequivocal mandate, was in effect. It must appear, with reasonable certainty, that the order has been disobeyed. Moreover, the party to be held in contempt must have had knowledge of the court's order, although it is not necessary that the order actually have been served upon the party. Finally, prejudice to the right of a party to the litigation must be demonstrated."
Citing to McCormick v. Axelrod , Petitioner contends that "each element necessary for a finding of civil contempt is blatantly obvious." (Petitioner's attorney's affirmation at 12).
However, it does not appear with any certainty, let alone a reasonable certainty, that an unequivocal order has been "disobeyed." (See n 1, supra .) The stipulation merely required Respondent to sign a renewal lease that recited a preferential and a legal regulated rent; it did not foreclose Respondent from accepting any other offered term or rate. Petitioner offered a one-year renewal lease option as set forth in the stipulation, and also offered a two-year renewal lease option, an option which the stipulation did not preclude and which Petitioner is required by the RSC to do. ( Rent Stabilization Code [9 NYCRR] § 2522.5 [b].) Respondent, in turn, did exactly what the stipulation required: She signed a renewal lease which stated both a preferential rent and a legal rent.
Moreover, absent from Petitioner's submissions is any explanation regarding how, by accepting Petitioner's offer to pay $1,307 a month for two years instead of $1,268 a month for one year, Respondent has defeated, impaired or impeded Petitioner's rights. ( Judiciary Law § 753.) In fact, Petitioner discontinued this proceeding almost two years ago by accepting more than $21,000 from Respondent, primarily in checks issued by the Department of Social Services, monies which were obtained on the basis of a lease which it now seeks to rescind. (Respondent's affidavit at 6; Respondent's attorney's affirmation at 23.) To date, Petitioner has collected shelter payments from DSS made on the basis of the two-year renewal lease for a higher preferential rent than that which it seeks to enforce.
Ironically, it would seem that Petitioner is in a better position if it adheres to the two-year preferential rent of $1,307 rather than by being bound to a one-year preferential rent of $1,268. If this court were to order Respondent to now sign a one-year renewal lease which expired a year ago, Petitioner would be likely be obliged (depending on Respondent's choice) to charge the lower one-year renewal lease amount of $1,268 per month from November 1, 2017 until some time in the future. This is because (1) no proper renewal offer was made for a lease commencing November 1, 2017, (2) renewal leases cannot be deemed ( Samson Management, LLC v. Hubert , 92 AD3d 932 [2012] ); and (3) once properly offered, Respondent will have the option of commencing the renewal lease either on November 1, 2017, or on the first rent payment date not less than three months from the date of the proper renewal lease offer. ( Rent Stabilization Code [9 NYCRR] § 2523.5 [c] [1].)
RESPONDENT'S MOTION TO FIND THE RENEWAL LEASE BINDING
By offering Respondent a renewal lease which Respondent executed and returned, Petitioner created a binding lease agreement. Rent stabilized renewal lease offers are required to be binding. ( Rent Stabilization Code [9 NYCRR] § 2523.5 [a] ; Matter of East 56th Plaza v. New York City Conciliation & Appeals Board , 56 NY2d 544, 546 [1982] ["The fact that the landlord may not have intended the proposed lease ... to constitute a binding offer is immaterial because the statute requires that the offer be binding."]; Jacreg Realty Corp. v. Barnes, 284 AD2d 280, 280-81 [1st Dept 2001] ["Although there was no requirement that petitioner offer a lease renewal to respondents, once it did, respondents' execution and delivery of the renewal lease resulted in a binding bilateral contract ...." ]; see also Hakim v. Muller , 2002 NY Slip Op 50339[U] [App Term, 1st Dept 2002] ["The failure of landlords to deliver an executed lease form did not deprive the tenant of her right to renew under the Rent Stabilization Code."].)
Moreover, owners are required to return signed renewal lease offers to tenants within 30 days of receipt. ( Rent Stabilization Code [9 NYCRR] § 2523.5 [a] ). "Upon failure of the owner to deliver a copy of the fully executed renewal lease form to the tenant within 30 days from the owner's receipt of such form signed by the tenant, such tenant shall not be deprived of any of his or her rights under the RSL and this Code ...." (Id. )
Here, Respondent signed the renewal lease in Petitioner's office on November 7, 2016. Not until February 21, 2017, three and a half months later, did Petitioner contact Respondent to inform her of its "mistake." (Affidavit of Charity Cintron at 5.) Respondent's rights under the lease and the RSC had vested, and Petitioner was foreclosed from reneging the offer, even if it was made inadvertently.
Two days later, on February 23, 2017, Petitioner accepted $21,147.60 in open court and discontinued the proceeding. Most of the $21,147.60 was issued by DSS based upon the two-year renewal lease at a preferential rent of $1,307.82. (Respondent's affidavit at 6; Respondent's attorney's affirmation at 23.) Not until 17 and one half months later did Petitioner bring this motion.
As held by the Hon. David Cohen in Kokot v. Barton , (12 Misc 3d 614, 616 [Civ Ct, NY County 2006] [internal quotation marks and citation omitted] ):
"A rent-stabilized lease renewal offer, sent by the owner, is binding upon the owner even where the owner claims that it was sent unintentionally. Petitioner is not saved by his assertion that the tender of a lease renewal offer to respondent tenant was a mere clerical error, and thus by the implication that he did not intend to offer respondent tenant a renewal of the lease for the subject premises. The fact that the landlord may not have intended the proposed lease ... to constitute a binding offer is immaterial because the statute requires that the offer be binding. Accordingly, notwithstanding petitioner's claim of clerical error, petitioner's offer of a lease renewal to respondent is binding upon the petitioner."
Accordingly, notwithstanding Petitioner's claim that the renewal lease offer was made by mistake, the offer, as accepted, is binding upon the Petitioner.
CONCLUSION
For the foregoing reasons, Petitioner's motion for contempt is denied, and Respondent's motion to find the two-year preferential rent lease renewal offer binding is granted. This constitutes the Decision and Order of this Court. Copies of this Decision and Order will be mailed to the parties.