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Vacating a Housing Court Stipulation

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Vacating a Housing Court Stipulation

Postby TenantNet » Wed Jul 27, 2016 11:46 am

Judge Vacates Deal Accepted by Unrepresented Tenant
Sarah Betancourt, New York Law Journal
July 26, 2016

A tenant who agreed, when he didn't have a lawyer, to leave his apartment in a month now has a chance to make the arguments that may allow him to keep his home.

Brooklyn Housing Court Judge Marc Finkelstein vacated a stipulation of settlement between REDF Equities and at least five tenants in REDF Equities LLC v. John Doe & Jane Doe, L&T 083226/15.

Responding to an action brought by one tenant, the judge observed that the courts generally favor stipulations of settlement. Here, however, he said the stipulation is "unduly harsh and one-sided, it was signed inadvertently, without advice of counsel" and thus could not be enforced.

"Having just been evicted from his home of seven years without any advance warning and appearing pro se without being aware of any defenses he may have had, the respondent had little choice but to agree to a stipulation which at least allowed him a short time to be restored to possession, locate another apartment, and prepare to move," the judge said.

REDF Equities petitioned in October 2015 to evict the tenants, saying they did not have a current lease. After several protested they were locked out and evicted without notice, the parties signed the stipulation restoring them to their apartments until Dec. 31, 2015.

One of the tenants filed a court order to show cause and subsequently retained South Brooklyn Legal Services.

Chantal Johnson, the lawyer who is handling the tenant's case, said she sees cases like this all of the time. "It makes me wonder how many tenants are giving up rights they may have," she said.

Edward Hall of Balsamo & Rosenblatt represents REDF Equities. He did not respond to requests for comment.
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Re: Vacating a Housing Court Stipulation

Postby TenantNet » Wed Jul 27, 2016 12:41 pm

REDF Equities LLC v. Doe, L&T 083226/15
July 27, 2016

Cite as: REDF Equities LLC v. Doe, L&T 083226/15, NYLJ 1202763458008, at (Civ., KI, Decided July 13, 2016)

CASENAME

REDF Equities LLC, Petitioner-Landlord v. "John Doe" & "Jane Doe", Respondent-Occupants
L&T 083226/15
Judge Marc Finkelstein

Read Summary of Decision

Decided: July 13, 2016

ATTORNEYS
Attorneys for Petitioner: By Edward R. Hall, Esq., Balsamo & Rosenblatt, P.C.
Attorneys for Respondents: By Chantal V. Johnson, Esq., Brooklyn Legal Services.

Recitation, as required by CPLR 2219(a), of the papers considered in review of: Respondent's Order to Show Cause seeking an order vacating the October 8, 2015 default judgment and the November 20, 2015 stipulation of settlement

Papers Numbered
Notice of Motion and Affidavits Attached
Order to Show Cause and Affidavits Annexed 1
Answering Affidavits 2
Replying Affidavits 3
Exhibits
Other

DECISION/ORDER

Upon the foregoing cited papers, the Decision/Order on this Motion is attached as follows:

Redf Equities LLC, Petitioner-Landlord, v. "John Doe" & "Jane Doe", Respondent-Occupants.

This proceeding was brought by petitioner as what is commonly referred to as a "no grounds" holdover proceeding. The petition seeks possession of the second floor premises which are purportedly not subject to rent regulation with petitioner alleging that the building contains less than six apartments and the respondents do not have a current lease.

A default judgment was entered against John and Jane Doe on October 8, 2015. Subsequently, on or about November 18, 2015, an eviction took place by a city marshal. Various respondent-occupants promptly filed pro se orders to show cause seeking restoration to the premises, all alleging that they were evicted without any prior notice. On the November 20, 2015 return date five individuals, claiming to be individual and separate occupants of units on the second floor, appeared pro se. They signed a stipulation of settlement in which they consented to the jurisdiction of the court and were merely restored to possession until December 31, 2015 at which time petitioner had the right to re-execute the warrant if they failed to vacate. Unable to move out by December 31, 2015, one of the respondents filed a pro se order to show cause. On January 6, 2016, the court denied the order to show cause but stayed execution through January 20, 2016 for respondents to vacate.

Presently before the court is an order to show cause filed by South Brooklyn Legal Services on behalf of one of the respondent-occupants, Charles Jordan, Jr. The order to show cause seeks an order vacating the October 8, 2015 default judgment and warrant of eviction based upon excusable default and meritorious defense and vacating the November 20, 2015 stipulation of settlement as improvidently entered into by respondent without assistance of counsel.

A default judgment may be vacated where the respondent demonstrates an excusable default and a meritorious defense. As a general matter, courts favor a disposition on the merits rather than a determination made upon the default of a party. Goldstein Affiliates, Inc v. Len Art Knitting Corp, 75 AD2d 551 (1st Dept 1980); Glass v. Janbach Properties, Inc. 73 AD2d 106 (2d Dept 1980). Thus, vacatur of default judgments and an opportunity to defend a summary proceeding on the merits will generally be liberally construed. The court finds that respondent Jordan has demonstrated excusable default. Even where service may be technically proper, the respondent may allege that he never actually received notice. That allegation, if credible, can be the basis for a finding of excusable default. A petitioner can take all proper steps to serve process, but the respondent may not actually receive process or be aware of the proceeding.

Here, the court finds credible the assertions by Mr. Jordan, as well as the other respondent-occupants who brought post-eviction orders to show cause, that they received no notice at all of this proceeding and only found out about it after the marshal had executed the warrant of eviction. Mr. Jordan's default was neither willful nor deliberate and only came about because he had no knowledge of this proceeding. This, together with a showing of meritorious defense to the proceeding, can be an independent basis to vacate a default judgment. Manocherian v. Soffer, NYLJ, May 26, 1983, p 14, col 4 (App Term, 1st Dept); Oppenheim v. Spike, 107 Misc 2d55(App Term, 1st Dept 1980).

The court also finds that respondent Jordan has established a meritorious defense. A respondent needs only to set forth a prima facie showing of a meritorious defense to have a default judgment vacated. An affidavit by a person with personal knowledge alleging facts constituting a meritorious defense is sufficient to have the default judgment vacated and the matter determined on the merits. Tat Sang Kwong v. Dudge-Wood Laundry Service, Inc, 97 AD2d 691 (1st Dept 1983); Cervino v. Konsker, 91 AD2d 249 (2d Dept 1983).

Respondent Jordan submits his affidavit as well as that of the co-occupant of his unit on the second floor as well as two affidavits of individuals who indicate they occupy separate units in the basement. All the affidavits aver that this two family house has been converted into eight separate rental units; specifically three units in the basement, one unit on the first floor and four units on the second floor.1 The basement has been subdivided into three separate rooms where three distinct households reside. The basement units have their own separate entrance and there is a shared bathroom and kitchen in the basement. The second floor contains four individual dwelling units, each with its own external deadbolt lock and there is a shared kitchen and bathroom on the second floor. Respondent also submits photographs that show the four separate apartments on the second floor and the three separate apartments in the basement. The affidavits allege that the tenants in the basement and second floor all separately and individually rented their individual units from Avagal Hudgins, the niece of the former owner of the building who lives on the first floor. Pursuant to their separate oral agreements, they each pay their rent separately.2

Respondent is correct that the factual allegations raised in the affidavits on behalf of respondent establish a colorable meritorious defense in accordance with the recent decision in Robrish v. Watson, 2015 NY Slip Op 51299(U) (App Term, 2d Dept, September 2, 2015).3 The court therein held that ten different tenancies in a two family house (here, allegedly eight different tenancies in a two family house) entered into by the landlord with ten different individuals for ten different rooms in his house rendered the house subject to rent stabilization. Citing the Code definition of a housing accommodation as "[t]hat part of any building or structure, occupied or intended to be occupied by one or more individuals as a residence, home, dwelling unit or apartment", the court determined that an individually rented room in a rooming house is a housing accommodation, and therefore, a building with six or more individually rented rooms, regardless of any illegal use, is subject to rent stabilization. As a result, the court found that the petition should have been dismissed on the ground that the landlord failed to serve therequired rent stabilization notices. Moreover, given that the building would be subject to stabilization, the respondent could not be evicted except for one of the grounds enumerated in the Code. Here, the matter was brought as a "no grounds" holdover proceeding.

An additional meritorious defense relates to the description of the subject premises. Again, the affidavits presented allege there are four separate and individual units on the second floor, each occupied by a separate household. However the petition describes the premises as containing one apartment on the second floor. Thus respondent has presented a prima facie defense that the petition fails to properly describe the premises as required by RPAPL §741(3) and case law pursuant thereto. See, Papacostopulos v. Morrelli, 122 Misc 2d 938 (Civ Ct, Kings Cty 1984). If proven, a petition with an inaccurate description of the premises must be dismissed. As a result of respondent Jordan having presented a colorable excusable default and meritorious defenses, the default judgment and warrant entered herein are hereby vacated.

Respondent Jordan also seeks an order vacating the November 20, 2015 stipulation as improvidently entered into by respondent without assistance of counsel. Stipulations are highly favored by the courts and should not be easily cast aside. Once a tenant receives the full benefit of a not unduly harsh or one sided stipulation with ample consideration, the court is well within its discretion to refuse to vacate the stipulation. On the other hand, and contrary to petitioner's argument in opposition, good cause for granting relief from the terms of a stipulation, which is essentially a contract, is not limited to only collusion, fraud, duress or mistake:

…the discretion of a court is not that closely confined. The court should act if it appears that the stipulation is unduly harsh or unjust and the parties may be returned to their former status. (Solack Estates, Inc. v. Goodman, 102 Misc 2d 504, 506, 425 NYS 2d 906, aff'd 78 AD2d 512, 432 NYS 2d 3). Amsterdam Co. v. Levy, NYLJ, March 9, 1987, p 14, col 3 (App Term, 1st Dept).

The court can and should exercise its discretion to set aside a stipulation, especially where the tenant was without legal representation, had defenses and was unaware of his rights, if it is "unduly harsh or unjust" (Amsterdam v. Levy, id.), its terms are "unduly one-sided or unfair" (144 Woodruff Corp. v. Lacrete, 154 Misc 2d 301 [Civ Ct, NY County 1992]), it was signed "inadvertently, inadvisably or improvidently" in a manner which "works to [a litigant's] prejudice" (Cabbad v. Melendez, 81 AD2d 626 [2d Dept, 1981]), it was signed "under circumstances which suggest that [the tenant] did not comprehend the possible alternatives to signing the stipulation or the consequences of the stipulation" (Swett v. Jackson, NYLJ, August 11, 1987, p 5, col 6 (App Term, 1st Dept), and/or if relief from the stipulation should be granted in order to prevent injustice (Matter of Frutiger, 29 NY2d 143 [1971]). The court concludes that it should exercise its discretion to set aside the stipulation herein on the basis of all these criteria.

Respondent Jordan and other occupants of the second floor units came to court on November 20, 2015 having just been evicted on November 18, without having any prior notice of this proceeding, without counsel and without knowledge of the significant rent stabilization defenses. Petitioner's claim to the contrary, the November 20, 2015 stipulation was not the result of "extensive negotiation" nor was it the result of an arms length transaction between parties of equal bargaining power. See, 144 Woodruff Corp. v. Lacrete, supra. Rather, having just been evicted from his home of seven years without any advance warning and appearing pro se without being aware of any defenses he may have had, respondent had little choice but to agree to a stipulation which at least allowed him a short time to be restored to possession, locate another residence and prepare to move.

Even if this were a valid "no grounds" holdover proceeding, RPAPL §753(1) would have allowed for a stay of issuance of the warrant for up to six months. Instead, the only consideration Mr. Jordan received in exchange for agreeing to the court's jurisdiction and agreeing to vacate, was a waiver of a mere one month use and occupancy (he avers he paid rent of $200 per week) and a stay of eviction for a little over one month.

The stipulation herein is unduly harsh and one-sided, it was signed inadvertently, inadvisably and improvidently, without advise of counsel, which works to the prejudice and detriment of respondent, and relief from it should be granted in order to prevent injustice and detriment to respondent. This is especially the case, as stated in Amsterdam v. Levy, supra, in that both parties can be restored to the status quo ante.

The court also finds that there was no unreasonable delay in respondent asserting his challenge to the default judgment and stipulation on February 2, 2016. Up until then respondents had been proceeding pro se. Relatively little time passed after the November 18, 2015 eviction, the November 20 stipulation, the December 31 stay of re-execution, respondent's December 29 pro se order to show cause to extend the stay and the court's January 6, 2016 order extending the stay through January 20, 2016. It was only after consulting with counsel that respondent realized that he could challenge the default judgment and stipulation and quickly thereafter respondent filed the instant order to show cause by counsel. Any detriment experienced by petitioner, if in fact there is any, is far outweighed by the detriment that would be experienced by the eviction of the then unrepresented respondent from his seven year residence, with his having had the opportunity to present his substantive defenses relating to rent stabilization status and protection.

Based on the above, respondent's order to show cause is granted. The default judgment of October 8, 2015 and the warrant issued pursuant thereto are vacated as is the November 20, 2015 stipulation of settlement entered into between petitioner and respondent Charles Jordan, Jr. Accordingly, respondent is hereby permitted to interpose an answer which is to be served and filed within two weeks of the date of this decision. The matter is restored to the Part H calendar on August 25, 2016 at 9:30 A.M.

This constitutes the decision and order of the Court.

Dated: Brooklyn, New York

July 13, 2016

1. As in the present proceeding where a single proceeding has been brought against the allegedly four separate units on the second floor, a single holdover proceeding has been commenced against the occupants of the allegedly three separate basement units (Index No. 83225/15).

2. Having just purchased the subject building in March 2015, petitioner may not have been aware of the conversion of this two family house into more than six separate rental units. Nevertheless petitioner stands in the shoes of the prior owner if the conversion is proven.

3. In opposition to the motion, the affidavit of petitioner's managing member states nothing in response to the allegation that there are presently three separate units in the basement (except to state that in 2005 the Department of Buildings issued a violation for two illegal apartment units in the basement), and, in response to the allegation that there are presently four separate units on the second floor, merely makes the bald, conclusory statement that "there is only one apartment on the second floor".
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