Opinion
LT-900884/18
10-01-2018
ROBERT MARTKIN CO., INC., Petitioner, v. PAPOTE AUTO BODY REPAIR CORP., Respondent.
Attorney for Petitioner: Corrigan, Baker & Levine, LLC Attorney for Respondent: Jayson Blau & Associates
Attorney for Petitioner: Corrigan, Baker & Levine, LLC
Attorney for Respondent: Jayson Blau & Associates
Fidel E. Gomez, J.
In this commercial holdover summary proceeding, respondent moves seeking an order staying enforcement of the warrant of eviction issued June 17, 2018 on grounds of excusable default on the terms of the settlement stipulation giving rise to the warrant and the related judgment of possession. Respondent asserts that it has good cause for its failure to vacate the instant premises - the inability to find a new space for its business - by the date specified in the stipulation of settlement such that the Court can and should stay execution of the warrant pursuant to RPAPL § 749(3). Petitioner opposes the instant application, asserting that because respondent fails to demonstrate grounds sufficient to vacate the stipulation of settlement, the Court ought not find good cause sufficient to stay execution of the warrant. Petitioner also cross-moves for an order (1) awarding it damages for respondent's failure to surrender the premises as required by the stipulation at the holdover rate prescribed by the lease plus attorney fees, also prescribed by the lease; and (2) sanctioning respondent pursuant to 22 NYCRR 130-1.1, on grounds that the instant motion is frivolous. Respondent opposes petitioner's motion, asserting that the stipulation of settlement and its failure to mention use and occupancy at the holdover rate prescribed the lease or attorney fees upon respondent's default, precludes the damages sought. Respondent also oppose the portion of petitioner's cross-motion seeking sanctions because, respondent avers, the motion has merit.
While respondent's Order to Show Cause initially sought to vacate this Court's judgment and warrant, that relief has been stricken from the moving papers. The Court is unsure whether such relief was abandoned or stricken by another judge. Thus, the Court will also address the aforementioned portion of the instant application.
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For the reasons that follow hereinafter, respondent's motion is denied and petitioner's cross-motion is granted, in part.
The instant action is a commercial holdover summary proceeding. The petition alleges that pursuant to a written lease dated June 1, 2015, respondent leased commercial premises located at 1680B/1700B Carter Avenue, Bronx, New York, from petitioner. Pursuant to the lease, the monthly rent was $1160, the term of the lease was three years, expiring on May 31, 2018, and the holdover rent was $3,480. At the end of the lease term, respondent failed to surrender the instant premises and petitioner commenced this summary holdover proceeding as a result.
On June 21, 2018, upon respondent's failure to interpose an answer to the petition, this Court granted petitioner's application for a default judgment, issuing a judgment of possession and a warrant of eviction. On the foregoing date, respondent and petitioner settled the instant action by executing a so-ordered stipulation of settlement. Specifically, respondent agreed to the entry of a judgment of possession and issuance of a warrant of eviction. Petitioner agreed to stay execution of both the warrant and judgment provided that respondent paid use and occupancy of the premises through August 31, 2018, at which time respondent was to vacate the premises and surrender possession.
Respondent's Motion
Respondent's motion to vacate this Court's judgment and warrant is denied. Significantly, respondent fails to establish any legally cognizable grounds for vacatur of the judgment and warrant, including, as urged, that enforcement of the stipulation giving rise to the judgment and warrant, is inequitable and unjust. On this record, where respondent fails to identify all efforts undertaken to relocate its business prior to the vacatur date promulgated by the stipulation, the Court cannot hold - as urged - that enforcing the stipulation is unjust. For this reason, the Court must also deny respondent's application to stay enforcement of the warrant of eviction pursuant to RPAPL § 749(3). As more fully discussed below, under these circumstances, the Court holds that the failure to establish a basis for vacating the stipulation on which both the warrant and judgment are premised, precludes a finding of good cause, which is required for relief under RPAPL § 749(3).
It is well settled that stipulations of settlement are to be set aside "only where there is cause sufficient to invalidate a contract, such as fraud, collusion, mistake or accident" ( Hallock v. State , 64 NY2d 224, 230 [1984] ; Binensztok v. Bello , 285 AD2d 619, 621 [2d Dept. 2001] ), or "where to enforce a stipulation would be unjust or inequitable or permit the other party to gain an unconscionable advantage, courts will afford relief" ( Yeun-Ah Choi v. Shoshan , 136 AD3d 506, 506 [1st Dept. 2016] ; Weitz v. Murphy , 241 AD2d 547, 548 [2d Dept. 1997] ; Bank of New York v. Forlini , 220 AD2d 377, 378 [2d Dept. 1995] ; Hyman Embroidery Works, Inc. v. Action House, Inc. , 89 AD2d 515, 515 [1st Dept. 1982] ; Goldstein v. Goldsmith , 243 App. Div. 268, 272 ; 272 [2d Dept. 1935]; Dubor Assoc. v. Richburg , 50 Misc. 3d 13, 15 [App. Term 2015] ). The rationale being, that a stipulation of settlement is a contract, which when unambiguous, must be enforced according to its terms ( Bethea v. Thousand , 127 AD3d 798, 799 [2d Dept. 2015] ; Alshawhati v. Zandani , 82 AD3d 805, 807 [2d Dept. 2011] ).
Significantly, when a Court relieves a party from the consequences of a stipulation because its enforcement would be inequitable or unjust, there should be a conclusion by the court that strict enforcement of the stipulation would be both a detriment to the person seeking relief - generally because the default was inadvertent - and a windfall to the opponent of such relief. To be sure, in Weitz the Appellate Division reversed the trial court's denial of defendant's motion to vacate a judgment premised on a stipulation of settlement ( id. at 548 ). Specifically, the Court held that enforcing the judgment based on a technical breach of the stipulation of settlement would "enforce a technical default to obtain the unwarranted payment of additional moneys beyond that agreed to in the stipulation" ( id. at 549 ). In Weitz , an action for breach of contract and to recover on a promissory note, the parties entered into a stipulation settling the action for $125,000, said sums payable in three monthly installments of $25,000 ( id. at 548 ). While defendant made all payments as agreed upon, plaintiff entered judgment because despite accepting all payments, part of the first payment - a check for $10,400 had been dishonored (id. ). Never apprising the defendant that the foregoing check had been dishonored, plaintiff cashed all checks tendered by defendant, including one covering the amount of the check that was initially dishonored (id. ). Based on the foregoing, where plaintiff had been made whole, defendant had never been apprised of his unintentional default, and where enforcing the stipulation of settlement would have awarded defendant sums beyond that agreed to in the stipulation, the court - holding such result unjust - vacated the judgment ( id. at 549 ).
In Bank of New York , an action to recover funds advanced to defendant, the court vacated a judgment premised on a breach of a stipulation of settlement (id. at 377). Significantly, the court held that strict enforcement of the stipulation of settlement would be unjust when "defendants' default was inadvertent and minor in nature when measured against the harsh result which would obtain upon literal enforcement of the default provision in the stipulation" (id. at 378). In Bank of New York , the parties settled the action via stipulation requiring defendant to pay plaintiff $24,260 over the course of time at a rate of $250 per month (id. at 377). If defendant failed to tender payments when due, plaintiff could then, upon defendant's failure to cure, enter a judgment (id. ). After making 10 timely payments, defendant inadvertently defaulted when a payment was dishonored for insufficient funds (id. ). Because defendant did not become aware of the default until after the cure period prescribed by the stipulation, plaintiff rejected defendant's payment for the dishonored check, entering a judgment for the amount in the complaint rather than the lower amount for which the case settled (id. at 378). Concluding that plaintiff's were seeking "to enforce a technical default to obtain payment of the far greater sum which the plaintiff had originally sought, but agreed to forgo as part of the settlement" (id. at 378), the court vacated the judgment and refused to enforce the stipulation on grounds that to do so would be unjust (id. ).
In the context of a landlord/tenant summary proceeding, RPAPL § 749(1), requires - upon a final judgment - that "the court ... issue a warrant ... describing the property, and commanding the officer to remove all persons ... to put the petitioner into full possession." Pursuant to RPAPL, however, the court retains "the power to vacate such warrant for good cause shown prior to the execution thereof." Significantly, it is well settled that vacatur of a warrant of eviction requires a showing of good cause ( Harvey 1390 LLC v. Bodenheim , 96 AD3d 664 [1st Dept. 2012] ; Brusco v. Braun , 84 NY2d 674, 682 [1994] ; New York City Hous. Auth. v. Torres , 61 AD2d 681, 683 [1st Dept. 1978] ), and whether to vacate the warrant is within the court's discretion (Harvey 1390 LLC , at 664). Indeed, whether good cause exists requires "[a] determination ... entrusted to the sound discretion of the court upon review of the particular facts and circumstances presented" ( id. at 664 ). Moreover, in exercising its discretion, the court must "weigh the possible harm engendered or benefit derived by the exercise of that discretion" (Torres at 683).
In Harvey 1390 LLC , the parties executed a stipulation, wherein respondent - the tenant - acknowledged rental arrears totaling $2252.06, agreed to pay the foregoing sum by December 11, 2009, and which settled the nonpayment summary proceeding (brief for respondent-tenant-appellant, available at 2012 WL 13013786, *2 ). Respondent, however failed to pay the foregoing sums and as a result, twice moved to stay enforcement of the warrant of eviction and vacatur of the judgment which had issued pursuant to the stipulation (id. ). Significantly, respondent indicated that he had failed to comply with the stipulation because he was trying to obtain funds to pay the arrears from several charities and the Human Resources Administration (id. at *3). Because, by March 2010, respondent had paid virtually all rental arrears due under the stipulation (at that point he only owed $757.06), the trial court granted respondent's motion to stay the execution of the warrant through March 24, 2010 (id. at 4). After several levels of appellate review, the Appellate Division, concluded that the trial court properly exercised its discretion in staying enforcement the warrant because "[t]he tenant demonstrated that he approached charities and agencies to obtain assistance, tendered almost all of the payment due, and showed that he would soon receive enough charitable assistance to satisfy the arrears" (Harvey 1390 LLC at 665). This, the court held, coupled with the fact that "the tenant did not sit idly by or fail to appear, resulting in entry of judgment by default" ( id at 665 ), was, along with the respondent's partial payments, good cause warranting a stay of the execution of the warrant ( id. at 665 ).
In Pasargad Carpets, Inc. v. A & R Real Estate, Inc. (272 AD2d 76 [1st Dept. 2000] ), the court also vacated a warrant of eviction issued after a money judgment ( id. at 77 ). Significantly, the court held good cause to vacate the warrant was extant when plaintiff had escrowed money sufficient to satisfy the judgment and had paid defendant use and occupancy during the pendency of the action (id. ). While not expressly stated, the court so held on grounds that enforcing the warrant under those circumstances would deprive plaintiff of its leasehold, despite the fact that it had been made whole by the sums in escrow and the use and occupancy payments made by plaintiff (id. ).
In support of the instant motion, respondent submits an affidavit by Genaro Gomez (Gomez), respondent's President, wherein he states that while he has remained in possession of the instant premises beyond the date prescribed by the stipulation, he has tendered all sums for use and occupancy required by the stipulation. Gomez has also attempted to tender $1,160 to petitioner, representing use and occupancy for September. Gomez states that he has been unable to vacate the instant premises because despite diligent efforts, he has been unable to find new premises for his business. Gomez, has, however, procured a new space, located at 1154 Intervale Avenue, Bronx, NY, which will not be ready for occupancy until October 15, 2018. Gomez states that if the instant application is denied and he is forced to vacate the premises, he will be prejudiced insofar as such denial will negatively impair his business.
Respondent also submits a letter from Joseph Asafo (Asafo), which indicates that respondent has executed a written lease with 1154 Intervale LLC but that the premises will not be ready for occupancy until October 15, 2018.
Based on the foregoing, respondent's application must be denied. First, with respect to the application seeking vacatur of the judgment and warrant of eviction issued on June 21, 2018, respondent fails to demonstrate - as it must - entitlement to vacatur of the stipulation of settlement which gave rise to both the judgment and warrant. As noted above, stipulations of settlement should only be set aside "where there is cause sufficient to invalidate a contract, such as fraud, collusion, mistake or accident" (Hallock at 230; Binensztok at 621), or "where to enforce a stipulation would be unjust or inequitable or permit the other party to gain an unconscionable advantage, courts will afford relief" (Yeun-Ah Choi at 506; Weitz at 548; Bank of New York at 378; Hyman Embroidery Works, Inc. at 515; Goldstein at 272; Dubor Assoc. at 15). When a court relieves a party from the consequences of a stipulation because its enforcement would be inequitable of unjust, there should be a conclusion by the court that strict enforcement of the stipulation would be both a detriment to the person seeking relief - generally because the default was inadvertent - and a windfall to the opponent of such relief (Weitz at 548-49; Bank of New York at 377-78).
Here, because respondent never seeks to vacate the underlying stipulation on grounds of fraud, collusion, mistake, or accident in its execution and because respondent argues the prejudice that would befall it were the Court to hold it to its bargain, it is clear that respondent seeks relief on grounds of injustice and inequity. Unfortunately, on this record, the Court concludes that if, in fact, respondent is prejudiced by the enforcement of the instant stipulation, it is prejudice of respondent's own making. This proceeding was initiated on June 4, 2018 at which time respondent was aware that its lease had expired, that eviction was imminent, and that it should, therefore, find a new place to house its business. Moreover, on June 21, 2018, when the stipulation of settlement was executed, respondent knew and agreed to vacate the instant premises by August 31, 2018. Despite having more than two months to relocate its business respondent failed to do so. While Gomez asserts that he made diligent efforts to obtain a new space for respondent's business, he fails to apprise the Court what those efforts were. Accordingly, on this record the Court cannot conclude that the failure to comply with the stipulation was inadvertent and further concludes that if anyone has been prejudiced by the breach of the stipulation it is petitioner, who per the petition, forewent rent at the holdover rate because it thought respondent would vacate the premises by August 31, 2018.
Respondent's motion to stay enforcement of the warrant of eviction pursuant to RPAPL § 749(3) is also denied. It is well settled that vacatur of a warrant of eviction requires a showing of good cause (Harvey 1390 LLC at 664; Brusco at 682; New York City Hous. Auth. at 683. Whether to vacate the warrant is within the court's discretion requiring "[a] determination ... entrusted to the sound discretion of the court upon review of the particular facts and circumstances presented (Harvey 1390 LLC , at 664). Here, contrary to respondent's position, relief pursuant to RPAPL § 749(3) hinges on whether respondent is entitled to vacatur of the underlying stipulation of settlement. Denial of the latter motion requires denial of the former. To be sure, in New York City Hous. Auth. , the court in determining whether to vacate the warrant of eviction pursuant to RPAPL § 749(3), noted that the requisite good cause hinged on whether there was a grant of respondent's application to vacate the underlying default judgment which gave rise to the warrant (id. at 683). Specifically, the Court stated:
In 1975, subdivision 3 of section 749 of the Real Property Actions and Proceedings Law was amended to reflect this case-law gloss, and the statute now provides that a court has the power to vacate such warrant for good cause shown prior to the execution thereof. It was well recognized, however, both in the preceding cases construing the statute and in the language of the amendment, that the vacatur requires an exercise of judicial discretion. The court must therefore weigh the possible harm engendered or benefit derived by the exercise of that discretion. In the case at bar, there is an additional ingredient to be considered in the court's exercise of its discretion. The final judgment in favor of the landlord was obtained by default, and vacatur of that default must therefore be based upon both a showing of underlying merit and a reasonable excuse for the default
( 61 AD2d at 683 ). Thus, because the court found no basis to vacate the underlying judgment, it found no good cause to vacate the warrant pursuant to RPAPL § 749(3) ( id. at 684 ["We conclude that there was insufficient basis for vacatur of the default judgment. The nonpayment proceeding was initiated on August 1, 1976. The tenant, via orders to show cause and requests for adjournments, frustrated execution of not one but two default judgments and warrants issued thereon, and successfully avoided payment of the initial $504 due through December, 1976. There was no denial by the tenant that the rent was due. The payment of that rent after issuance of the warrant does not result in automatic vacatur of the warrant and, in the absence of good cause shown, the court should not effectuate vacatur" (internal citations omitted).] ).
Accordingly, having denied respondent's application to vacate the judgment and warrant upon vacatur of the stipulation, the Court cannot find good cause to vacate the warrant pursuant to RPAPL § 749(3). Notably, for the very same reasons upon which the Court denied respondent's application to vacate the judgment and warrant - the absence of any legally cognizable reason, including the absence of injustice or inequity - the Court would have also independently denied respondent's application pursuant to RPAPL § 749(3). Clearly, respondent's failure to establish inequity and injustice if forced to comply with the settlement stipulation is also a failure to establish good cause sufficient to stay the execution of the warrant pursuant to RPAPL § 749(3).
Petitioner's Cross-Motion
Petitioner's cross-motion seeking damages and sanctions granted solely to the extent of ordering respondent to pay use and occupancy at the rate of $1,160 per month until the marshal evicts it or it surrenders possession, whichever comes first. Significantly, because the stipulation of settlement is silent on the issue of the legal fees and holdover rent sought, petitioner is precluded from recovering the same. That said, petitioner is entitled to use and occupancy at in the amount stipulated by the parties until petitioner regains possession of the instant premises. Moreover, on this record, while respondent's motion has been denied, it cannot be said that respondent's motion has no basis in law or fact so as to warrant a finding that respondent's motion is frivolous.
It is well settled that generally, in the absence of an agreement, contract, or statute, a party involved in litigation is responsible for all legal fees and costs incurred in the defense or prosecution of the action and cannot recover the same from an opposing party ( Chapel v. Mitchell , 84 NY2d 345, 348 [1994] ; Hooper Associates, Ltd. v. AGS Computers, Inc. , 74 NY2d 487, 491 [1989] ; A.G. Ship Maintenance Corp. v. Lezak , 69 NY2d 1, 5 [1986] ; Mighty Midgets, Inc. v. Centennial Ins. Co. , 47 NY2d 12, 21—22 [1979] ). Indeed,
[t]he rule is based upon the high priority accorded free access to the courts and a desire to avoid placing barriers in the way of those desiring judicial redress of wrongs
(A.G. Ship Maintenance Corp. at 5).
Even when legal fees are recoverable, however, they are waived if not expressly reserved in a stipulation of settlement ( Gaisi v. Gaisi , 48 AD3d 744, 745 [2d Dept. 2008] ; J.D. Realty Assoc. v. Shanley , 288 AD2d 27, 28 [1st Dept. 2001] ["Accordingly, since the lease attorney fee provision is not directly implicated and the stipulation itself does not provide for an award of attorneys' fees in the event of a dispute over its terms, defendant's counterclaim for attorneys' fees was properly denied."]; Harmir Realty Co. v. Tesa , 2003 WL 139568, at *1 [App. Term Jan. 9, 2003] ).
Sanctions pursuant to 22 NYCRR 130-1.1 are generally awarded when the behavior alleged to be worthy of sanctions has an element of frivolity, or if a party against whom sanctions is sought engages in frivolous conduct, such as advancing arguments devoid of legal merit, using legal procedures to delay the resolution of an action, or using the legal process as a means to harass another party ( Good Old Days Tavern, Inc. v. Zwirn , 261 AD2d 288, 289 [1st Dept. 1999] [Court imposed a sanction of $1000 upon defendant for making a frivolous and meritless motion. Amount was meant to compensate plaintiff for having to oppose motion.]; Corto v. Lefrak , 203 AD2d 94, 96 [1st Dept. 1994] ; [Court imposed sanction upon plaintiff when evidence demonstrated that the action therein was frivolous, vexatious, and initiated to harass the defendant.] ). In assessing whether to award sanctions, the threshold inquiry is whether the action is "completely without merit in law and cannot be supported by a reasonable argument for an extension, modification or reversal of existing law" ( Wagner v. Goldberg , 293 AD2d 527, 528 [2d Dept. 2002] ; Felix v. Herby Realty Corp. , 287 AD2d 683, 685 [2d Dept. 2001]. When awarding sanctions, the court must issue a written decision detailing the offending conduct, why said conduct was deemed frivolous, and why the amount awarded is appropriate ( 22 NYCRR 130—1.1 [d]; Breslaw v. Breslaw , 209 AD2d 662, 663 [2d Dept. 1994] ). Once the Court concludes that an action is frivolous, it can award costs amounting to actual attorney fees incurred ( Mascia v. Maresco , 39 AD3d 504, 506 [2d Dept. 2007] ; Heilbut v. Heilbut , 18 AD3d 1, 7 [1st Dept. 2005] ).
In support of its cross-motion, petitioner submits the lease governing the instant leasehold. As relevant here, page one of the lease states that
[i]f at the end of the lease (or renewal period) the Tenant does not vacate, or holds over in the space, the Tenant will pay the landlord three times the current lease rent due the Landlord
Page 5 of the lease states:
[i]n case suit should be brought for recovery of the premises, or for any sum due hereunder ... the prevailing party shall be entitled to all costs incurred in connection with such action, including a reasonable attorney's fee.
Based on the foregoing, petitioner's motion seeking legal fees and holdover rent at the holdover rate specified by the now expired lease is denied. As noted above, while legal fees are generally not recoverable in the absence of an agreement, contract, or statute, such that a party involved in litigation is responsible for all legal fees and costs incurred in the defense or prosecution of the action and cannot recover the same from an opposing party (Chapel at 348; Hooper Associates, Ltd. at 491; A.G. Ship Maintenance Corp. at 5; Mighty Midgets, Inc. at 21—22), where a lease authorizes the recovery of attorney fees, the prevailing party is entitled to the same ( Graham Ct. Owner's Corp. v. Taylor , 115 AD3d 50, 55 [1st Dept. 2014], affd , 24 NY3d 742 [2015] ; Cier Indus. Co. v. Hessen , 136 AD2d 145, 149 [1st Dept. 1988] ). However, it is equally well settled that the failure expressly reserve attorney fees in a stipulation of settlement precludes their recovery (Gaisi at 745; J.D. Realty Assoc. at 28; Harmir Realty Co. at *1). Here, while pursuant to the lease, petitioner could, if deemed the prevailing party, recover its attorney's fees, the stipulation of settlement dated June 21, 2018, is bereft of any language related thereto, let alone language whereby petitioner reserves such right.
For the same reason, petitioner's motion seeking use and occupancy at the holdover rate prescribed by the lease beyond August 31, 2018 - the date by which respondent was to vacate - at the holdover rate prescribed by the lease is also denied. To be sure, the stipulation is bereft of any use and occupancy at the foregoing rate, limiting the same to the monthly rent prescribed by the lease instead. Indeed, had the parties intended to triple the use and occupancy pursuant to the lease in the event if the instant default, they would have incorporated the same into the stipulation of settlement.
Notwithstanding the foregoing, it is well settled that a tenant who remains in possession of a premises after a lease expires is liable to the landlord for use and until the tenant vacates the premises ( Towne Partners, LLC v. RJZM, LLC , 79 AD3d 489, 490 [1st Dept. 2010] ( 501 E. 87th St. Realty Co., LLC v. Ole Pa Enterprises Inc. , 304 AD2d 310, 311 [1st Dept. 2003] ["Finally, the court properly awarded use and occupancy for the entire holdover period, i.e., from the expiration of the last lease through the time the apartment was finally vacated."]; Rose Assoc. v. Lenox Hill Hosp. , 262 AD2d 68, 69 [1st Dept. 1999] ). Accordingly, petitioner is entitled to use and occupancy at the stipulated rate of $1,160 beyond August 31, 2018 and until petitioner regains possession of the instant premises.
Petitioner's motion seeking sanctions against respondent is denied. Sanctions pursuant to 22 NYCRR 130-1.1 are generally awarded only when the behavior alleged to be worthy of sanctions has an element of frivolity, or if a party against whom sanctions is sought engages in frivolous conduct, such as advancing arguments devoid of legal merit, using legal procedures to delay the resolution of an action, or using the legal process as a means to harass another party (Good Old Days Tavern, Inc. at 289; Corto at 96). In assessing whether to award sanctions, the threshold inquiry is whether the action is "completely without merit in law and cannot be supported by a reasonable argument for an extension, modification or reversal of existing law" (Wagner at 528; Felix at 685). Here, contrary to petitioner's assertion, respondent's motion, while having been denied, is not devoid of law nor fact. Indeed, respondent's motion was made pursuant to well settled law and had it been more specific on its claim of an inability to procure a new space of its business, would have been granted. It is hereby
ORDERED that all stays be hereby lifted. It is further
ORDERED that respondent pay petitioner use and occupancy at the rate of $1,160 per month until the marshal evicts it or it surrenders possession, whichever comes first.
ORDERED that petitioner serve a copy of this Order with Notice of Entry upon respondent defendants within ten days (10) hereof.
This constitutes this Court's decision and Order.