[*1]
4298 Park LLC v Bracero
2015 NY Slip Op 50023(U) [46 Misc 3d 1209(A)]
Decided on January 6, 2015
Civil Court Of The City Of New York, Bronx County
Lehrer, J.
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and will not be published in the printed Official Reports.


Decided on January 6, 2015
Civil Court of the City of New York, Bronx County


4298 Park LLC, Petitioner - Landlord,

against

Dianilda Bracero, Respondent - Tenant, -and- NEW YORK CITY HOUSING AUTHORITY, Respondent.




12313/14
Andrew Lehrer, J.

Background

Petitioner 4298 Park LLC commenced this nonpayment proceeding against respondents Dianilda Bracero and the New York City Housing Authority ("NYCHA") in February 2014. NYCHA was named as a party because Ms. Bracero receives a Section 8 rental subsidy and NYCHA objected to the "Certification of Basis for Eviction Proceeding" served by petitioner pursuant to the Second Partial Consent Judgment in Williams v. New York City Housing Authority, 18 Civ 1801 (SDNY 1995).[FN1]

The petition dated February 21, 2014 alleges, among other things, that Ms. Bracero owed $13,236.25 in rent for December 2013. That claim echoes the written rent demand dated January 7, 2014, which states that Ms. Bracero owed $13,236.25 for rent "from December 1, 2013 to December 31, 2013." Neither the petition nor the rent demand provides details describing how the alleged arrears accrued.

In a stipulation of settlement dated September 12, 2014, Ms. Bracero agreed to a final judgment of possession and money judgment in the amount of $7,622.28, reflecting rent due from February 2013 through September 2014, and petitioner agreed to sever its claim for rent owed prior to February 2013 for a plenary action.

By notice of motion dated October 27, 2014 (but not served until November 13, 2014),[FN2] [*2]petitioner moves for an order vacating the September 12th stipulation. In support of its motion, it argues that at the time the stipulation was signed, Ms. Bracero owed over $13,000.00; that on September 12th, petitioner's attorney could not appear in court and hired a per diem attorney to handle the case; that the per diem attorney lacked sufficient knowledge about the case and about the prior cases between the parties; and that that attorney did not have authority to sever any of petitioner's claims for rent. Petitioner further alleges that while it received checks from the Department of Social Services totaling $7,622.28 (the amount due pursuant to the September 12th stipulation), Ms. Bracero owed $6,510.04 through October 2014.

Ms. Bracero, who is not represented by counsel, did not file written opposition to petitioner's motion. However, on the return date of the motion she appeared in opposition and stated that she had obtained funds to pay her stipulated arrears from public assistance.



Discussion

As noted by the Court of Appeals:



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 . . . 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. Only where



there is cause sufficient to invalidate a contract, such as fraud,



collusion, mistake or accident, will a party be relieved from the



consequences of a stipulation made during litigation.



(Hallock v. State of New York, 64 NY2d 224, 230 [1984]). That being said, "without a grant of authority from the client, an attorney cannot compromise or settle a claim . . . and settlements negotiated by attorneys without authority from their clients have not been binding." (Id.). Where an attorney lacks actual authority to settle a claim, however, his client may still be bound by a stipulation of settlement where the attorney had apparent authority (see id. at 231) or where the client later ratifies the settlement agreement (see e.g. 1420 Concourse Corp. v. Cruz, 175 AD2d 747, 750 [1st Dept 1991]).

"Essential to the creation of apparent authority are words or conduct of the principal, communicated to a third party, that give rise to the appearance and belief that the agent possesses authority to enter into a transaction." (Hallock v. State of New York, supra, 64 NY2d at 231). "The agent cannot by his own acts imbue himself with apparent authority." (Id.).

In determining whether an attorney had apparent authority to settle a claim, the appropriate inquiry is not whether his client authorized him to settle the case in any particular way, but whether he was authorized, expressly or otherwise, to settle the case at all. Thus, in



Hallock the Court of Appeals found that where an attorney accepted a settlement which his client had expressly instructed him to reject, the client would nevertheless be bound because, "as a matter of law," he had "clothed [his attorney] with apparent authority to enter into the settlement." (Id.). The court found that the attorney had apparent authority because he had represented his client throughout the litigation, engaged in prior settlement negotiations, and appeared at the final pretrial conference, "his presence there constituting an implied [*3]representation by [the client] to defendants that [the attorney] had authority to bind him to the settlement." (Id. at 231-232). Additional factors cited in Hallock or by other courts in determining whether an attorney had apparent authority to settle a case include whether the stipulation was made in open court (see Hallock, 64 NY2d at 232; 1420 Concourse Corp. v. Cruz, supra, 175 AD2d at 749; Matter of Gordon v. Town of Esopus, 107 AD2d 114, 116 [3d Dept 1985]; 208 Ave. A Assoc. v. Calanni, 2014 NY Slip Op 51761[U][App Term, 1st Dept 2014]; 7 E. 75 LLC v. Bekuraidze, 45 Misc 3d 127[A], 2014 NY Slip Op 51481[U][App Term, 1st Dept 2014]; whether the client promptly objected to the settlement agreement (see Berwin v. National Railroad Passenger Corp., 152 F2d 917 [2d Cir 1998]; Hallock, 64 NY2d at 232; Colonie Hill v. Duffy, 114 AD2d 879, 880 [2d Dept 1985]); 1420 Concourse Corp. v. Cruz, supra, 175 AD2d at 749); and whether the other party to the settlement agreement relied to his detriment on its terms (see Hallock, 64 NY2d at 232; Colonie Hill v. Duffy, supra, 114 AD2d at 880).

Applying the above factors, the Court finds that while petitioner's per diem attorney did not have actual authority to sever petitioner's pre-February 2013 rent claims, he did have apparent authority to settle this nonpayment proceeding. The September 12th stipulation was made in open court in a Resolution Part of the Housing Court. Such parts were created for the express purpose of settling cases. (See Civil Court of the City of New York Directive DRP-150, effective December 24, 1997 and last amended October 5, 2001). Thus, much like pretrial conferences in Supreme Court, where only attorneys who are authorized to enter into binding settlement agreements may appear (see e.g. 22 NYCRR § 202.26[e]; Hallock, 64 NY2d at 231-232; Davidson v. Metropolitan Tr. Auth., 44 AD3d 819 [2d Dept 2007]), it is presumed that any attorney who appears in a Resolution Part has authority to settle a case. Consequently, it fell to petitioner to reveal any restrictions on the per diem attorney's authority. (See Hallock, 64 NY2d at 232).

Here, without explanation, petitioner failed to object to the September 12th stipulation for two months. While its motion papers allege that it did not authorize the per diem attorney to sever its pre-February 2013 rent claims, they do not state that he lacked authorization to settle the case. Moreover, it appears that Ms. Bracero, in reliance on the stipulation, sought and obtained the agreed upon rent arrears from public assistance, and that petitioner brought this motion after it received payment of those arrears.

Given that the September 12th stipulation was made in open court; that Ms. Bracero relied on the stipulation in seeking funds to pay the agreed-upon arrears from public assistance; that petitioner failed to move promptly to vacate the stipulation and, in fact, did so after receiving payment of the stipulated arrears; and that petitioner does not even allege that its per diem attorney lacked authority to settle the case, the Court finds that that attorney had apparent authority to enter into the stipulation. It also finds that by accepting the more than $7,600.00 in checks paid on Ms. Bracero's behalf by public assistance, petitioner ratified the stipulation. (See Dinhofer v. Medical Liab. Mut. Ins. Co., 92 AD3d 480, 481 [1st Dept 2012]; IRB-Brasil Resseguros, S.A. v. Inepar Invs., S.A., 83 AD3d 573, 575 [1st Dept 2011]; Goldston v. Bandwidth Tech. Corp., 52 AD3d 360, 363-364 [1st Dept 2008]). Consequently, petitioner is bound by its terms and its motion to vacate the stipulation is denied.

Quoting the Appellate Division's dissenting opinion in Hallock, the Court of Appeals noted that setting aside the settlement stipulation in that case



invites destruction of the process of open-court settlements, for



every such settlement would be liable to subsequent rescission



by the simple expedient of a litigant's self-serving assertion,



joined in by his attorney and previously uncommunicated to



either the court or others involved in the settlement, that the



litigant had limited his attorney's authority.



(Hallock, 64 NY2d at 232, quoting 98 AD2d 856, 858-859 [3d Dept 1983]). The same applies to open court settlements made in Resolution Parts of the Housing Court, whose very purpose is to settle cases. Given that concern, a motion to vacate a stipulation based on an attorney's lack of authority must be made promptly, and certainly before the party seeking vacatur obtains the benefits of the agreement it seeks to disavow. That did not happen here.

The Court notes that the September 12th stipulation does not waive petitioner's claim against Ms. Bracero for rent owed prior to February 2013. Thus, petitioner may assert those claims in another forum.

This constitutes the decision and order of the Court.



Dated:January 6, 2015

Bronx, NY

________________________________________

Hon. Andrew Lehrer

Judge, Housing Court

Footnotes


Footnote 1:The copy of the "Certification of Basis for Eviction Proceeding" annexed to the petition appears to be an incomplete copy of the one served on NYCHA, since it does not include the "Schedule A" rent breakdown referred to therein.

Footnote 2:It appears that the date of the notice of motion is in error, since the motion papers include an affidavit which was sworn to on November 4, 2014.