Opinion
15447 Index No. 157084/14 Case No. 2021–00706
03-03-2022
Stefan NIEBORAK et al., Plaintiffs–Respondents, v. W54–7 LLC, Defendant–Appellant.
Kucker Marino Winiarsky & Bittens, LLP, New York (Eric R. McAvey of counsel), for appellant. Rozen Law Group, New York (Jennifer A. Rozen of counsel), for respondents.
Kucker Marino Winiarsky & Bittens, LLP, New York (Eric R. McAvey of counsel), for appellant.
Rozen Law Group, New York (Jennifer A. Rozen of counsel), for respondents.
Renwick, J.P., Gesmer, Moulton, Rodriguez, Pitt, JJ.
Order, Supreme Court, New York County (Francis A. Kahn, III, J.), entered on or about February 10, 2021, which, to the extent appealed from, granted plaintiffs’ motion to enforce the terms of the parties’ settlement placed on the record on the day set for trial, and denied defendant's cross motion to vacate the stipulation or to renew a prior motion of plaintiffs for summary judgment on liability, unanimously affirmed, without costs.
"Stipulations of settlement are favored by the courts and not lightly cast aside. This is all the more so in the case of ‘open court’ stipulations within CPLR 2104, where strict enforcement not only serves the interest of efficient dispute resolution but also is essential to the management of court calendars and integrity of the litigation process" ( Hallock v. State of New York, 64 N.Y.2d 224, 230, 485 N.Y.S.2d 510, 474 N.E.2d 1178 [1984] [internal citations omitted]).
On March 2, 2020, the date of trial, the court facilitated settlement negotiations and the parties placed the material terms of their settlement on the record. "The in-court oral stipulation made here ... evidences [defendant]’s unconditional agreement, through authorized counsel, to settle" for a sum certain of $7.5 million, provide leases at specific monthly rents for plaintiffs still living in the building, and enter into a confidentiality agreement ( Public Adm'r of County of N.Y. v. Bankers Trust Co., 182 A.D.2d 592, 593, 583 N.Y.S.2d 367 [1st Dept. 1992] ). "[W]hen the transcript ... is read in its entirety, it is clear that what was spread upon the record was an oral stipulation and not simply an agreement to agree" ( Wilson v. Wilson, 35 A.D.3d 595, 596, 826 N.Y.S.2d 416 [2d Dept. 2006] ). "The fact that it is necessary for the parties to exchange general releases and execute a confidentiality agreement does not render the agreement invalid" ( Shah v. Wilco Sys., Inc., 81 A.D.3d 454, 455, 916 N.Y.S.2d 82 [1st Dept. 2011], lv dismissed 17 N.Y.3d 901, 933 N.Y.S.2d 650, 957 N.E.2d 1154 [2011] ), nor does the parties’ representation that they would "execute formal settlement papers" demonstrate that there was no agreement on material terms ( Trolman v. Trolman, Glaser & Lichtman, P.C., 114 A.D.3d 617, 618, 981 N.Y.S.2d 86 [1st Dept. 2014], lv denied 23 N.Y.3d 905, 2014 WL 2580146 [2014] ; accord Reyes v. Sequeira, 68 A.D.3d 526, 527, 889 N.Y.S.2d 451 [1st Dept. 2009] ; see also Thomas v. Slaton, 200 A.D.3d 546, 155 N.Y.S.3d 326 [1st Dept. 2021] ).
We reject defendant's contention that the decision of the Court of Appeals in Matter of Regina Metropolitan Co., LLC v. New York State Div. of Hous. & Community Renewal, 35 N.Y.3d 332, 130 N.Y.S.3d 759, 154 N.E.3d 972 (2020), issued one month afterwards, requires that the settlement be vacated. While that decision held that the retroactive application of the Housing Stability and Tenant Protection Act of 2019 (HSTPA) would violate due process ( id. at 372–383, 130 N.Y.S.3d 759, 154 N.E.3d 972 ), previous interpretations to the contrary constituted "a mistake as to the law," which is insufficient grounds for vacating a stipulation (see 64th St.–3rd Ave. Assoc. v. Wall, 257 A.D.2d 487, 488, 684 N.Y.S.2d 203 [1st Dept. 1999] ; compare Hallock, 64 N.Y.2d at 230, 485 N.Y.S.2d 510, 474 N.E.2d 1178 [relief from stipulation available for "cause sufficient to invalidate a contract, such as fraud, collusion, mistake or accident"]). It was also common knowledge that the retroactivity issue was under review when defendant agreed to "stipulate away ... [its] constitutional right[ ]" to due process ( 1420 Concourse Corp. v. Cruz, 135 A.D.2d 371, 372, 521 N.Y.S.2d 429 [1st Dept. 1987], appeal dismissed 73 N.Y.2d 868, 537 N.Y.S.2d 487, 534 N.E.2d 325 [1989] ; accord Trump v. Trump, 179 A.D.2d 201, 204, 582 N.Y.S.2d 1008 [1st Dept. 1992] ).
What is more, it does not appear "that the stipulation was entered into inadvisedly or that it would be inequitable to hold the parties to it" ( Matter of Frutiger, 29 N.Y.2d 143, 150, 324 N.Y.S.2d 36, 272 N.E.2d 543 [1971] [internal quotation marks omitted]). In the order granting plaintiffs summary judgment, entered August 31, 2018, Supreme Court (Bannon, J.) found that defendant's predecessor engaged in a fraudulent scheme to deregulate by falsely exempting some apartments as condos or coops and others for high rent vacancy, as the allowable increases did not reach the luxury deregulation threshold and defendant effectively conceded the lack of improvements warranting an increase (see Nolte v. Bridgestone Assoc. LLC, 167 A.D.3d 498, 498–499, 90 N.Y.S.3d 159 [1st Dept. 2018] ; Altschuler v. Jobman 478/480 , LLC., 135 A.D.3d 439, 440, 22 N.Y.S.3d 427 [1st Dept. 2016] ). Contrary to defendant's contention, the Court of Appeals did not hold that this type of conduct is not fraudulent (see Matter of Regina, 35 N.Y.3d at 356 n. 7, 130 N.Y.S.3d 759, 154 N.E.3d 972, quoting Matter of Lavanant v. State Div. of Hous. & Community Renewal, 148 A.D.2d 185, 190, 544 N.Y.S.2d 331 [1st Dept. 1989] ["willfulness means ‘consciously and knowingly charg[ing] ... improper rent’ "]).
Plaintiffs’ November 2018 calculation of damages in the record, totaling more than $5 million excluding attorneys’ fees — which defendant asserts was based on the mistaken premise that the HSTPA applied retroactively — begins the overcharge calculation four years before this action was commenced, and treble damages two years beforehand, using the default formula due to the prior finding of a fraudulent scheme to deregulate ( Matter of Regina, 35 N.Y.3d at 354–355, 362, 130 N.Y.S.3d 759, 154 N.E.3d 972 ; accord Matter of Grimm v. State of N.Y. Div. of Hous. & Community Renewal Off. of Rent Admin., 15 N.Y.3d 358, 366 n. 1, 912 N.Y.S.2d 491, 938 N.E.2d 924 [2010] ; Thornton v. Baron, 5 N.Y.3d 175, 180 n. 1, 800 N.Y.S.2d 118, 833 N.E.2d 261 [2005] ; 435 Cent. Park W. Tenant Assn. v. Park Front Apts., LLC, 183 A.D.3d 509, 510, 125 N.Y.S.3d 85 [1st Dept. 2020] ; see also former CPLR 213–a ; former Administrative Code of City of N.Y. § 26–516[a][2]; 9 NYCRR 2526.1 [g]). The passage of 20 additional months after those calculations were made, until the settlement was reached, belies the notion that the agreed-upon sum was "manifestly unfair" to defendant or "unconscionable" ( Rogers v. Malik, 126 A.D.3d 874, 875, 5 N.Y.S.3d 525 [2d Dept. 2015] ; see generally CPLR 5004 ).
Defendant's argument that Supreme Court impermissibly set a 30–day limit after execution of releases by plaintiffs for its attorney to make the first payment to plaintiffs’ attorney, instead of 120 days as stipulated in open court, is moot. The record in Supreme Court shows that defendant posted a bond in excess of the settlement amount pending appeal, such that "the rights of the parties will [not] be directly affected and the interest of the parties [will not be] an immediate consequence" of any decision by this Court to modify that time frame ( City of New York v. Maul, 14 N.Y.3d 499, 507, 903 N.Y.S.2d 304, 929 N.E.2d 366 [2010], quoting Matter of Hearst Corp. v. Clyne, 50 N.Y.2d 707, 714, 431 N.Y.S.2d 400, 409 N.E.2d 876 [1980] ).
Similarly, Supreme Court providently denied leave to renew the original grant of partial summary judgment as moot, due to the settlement (see Ayoub v. Ayoub, 14 N.Y.3d 921, 922, 905 N.Y.S.2d 125, 931 N.E.2d 94 [2010] ; Gold Fields Am. Corp. v. Aetna Cas. & Sur. Co., 295 A.D.2d 289, 290, 744 N.Y.S.2d 395 [1st Dept. 2002] ).
We have considered defendant's remaining contentions and find them unavailing.