[*1]
Remie Realty Corp. v Rodríguez
2015 NY Slip Op 50036(U) [46 Misc 3d 1210(A)]
Decided on January 16, 2015
Civil Court Of The City Of New York, Bronx County
Vargas, 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This opinion is uncorrected and will not be published in the printed Official Reports.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 16, 2015
Civil Court of the City of New York, Bronx County


Remie Realty Corp., Petitioner-Landlord,

against

Digna Rodríguez, Respondent-Tenant.




L & T 020455/2014



Robert Farina, Esq.



875 East 219th Street



Bronx, New York 10467



Jeanne Schoenfelder, Esq.



The Legal Aid Society



Bronx Neighborhood Office



260 East 161st Street, 8th Floor



Bronx, New York 10451


Javier E. Vargas, J.

Order to Show Cause & Affidavit Annexed............................................1



Notice of Motion, Affirmation & Exhibits Annexed...............................2



Affirmation in Opposition, Affidavit & Exhibits Annexed.....................3



Affirmation in Reply, Affidavit & Exhibits Annexed..............................4



Upon the foregoing papers and for the following reasons, the motions by Respondent-Tenant Digna Rodríguez ("Tenant"), for, inter alia, vacatur of the parties' Stipulation of Settlement and Judgment of Possession, are granted and the proceeding is hereby dismissed.



I.



For over 36 years, Tenant, now a 74-year-old senior citizen, has been the rent-stabilized tenant-of-record of the subject Premises located at 108 Marcy Place, Apt. 4CD, in the Bronx, New York, owned and managed by Petitioner-Landlord Remie Realty Corp. ("Landlord"). The Premises, which are subject to the Rent Stabilization Laws of 1969 and have been duly registered with the New York State Division of Housing and Community Renewal ("DHCR"), consist of two combined apartments, Apartments 4C and 4D, with several rooms occupied beginning in 1978 by Tenant and five other persons, including her children. Since the 1978 inception of her tenancy, it is undisputed that each apartment had three rooms consolidated to create the six-room Premises, with only one kitchen and one operating entrance. Although the original 1978 Lease of Apartment refers only to occupancy of the "six-room" Apartment 4C, later Standard Forms of Apartment Lease executed by the parties comprise what is in reality called: Apartment "4CD."



In any event, apparently based on her financial and familial circumstances, Tenant has been enjoying a monthly preferential rent of only $796.63 for both apartments, essentially paying zero rent for Apartment 4D, as reflected by Landlord's and its predecessor's Renewal Leases and invoices for both apartments. It should be noted that Tenant currently subsists on a fixed income of $1,136 per month from Social Security Retirement and a $136 monthly pension, but is current with her rent payments for the Premises.



This notwithstanding, by Notice of Petition and Petition filed April 2, 2014, Landlord commenced the instant nonpayment summary proceeding against Tenant to recover over 13 months of rent arrears totaling $10,487.86, at $798.35 per month, for Apartment 4D only, possession of that apartment and reasonable costs and legal fees. Landlord alleged that Tenant was liable for the unpaid rent of Apartment 4D based on recently executed separate Renewal Lease Forms and invoices for each apartment since 2010. By Verified Answer dated April 15, 2014, Tenant answered the Petition pro se, generally denying the allegations of the Petition and raising as her sole Affirmative Defense that there were conditions at the Premises requiring repairs.



After two adjournments, on May 28, 2014, Landlord and Tenant entered into a "So-Ordered" Stipulation of Settlement with the assistance of this Court's Court Attorney, settling the proceeding with Tenant consenting to surrender possession of Apartment 4D and vacate the same by July 31, 2014, in exchange for the waiver of any and all rent arrears purportedly owed on said apartment, and agreeing to the issuance of a Final Judgment of Possession in favor of Landlord [*2]with execution of the warrant stayed until that date. Contradicting Tenant's assertions that she never paid rent for Apartment 4D, Landlord submitted to the Court Attorney the latest Lease Renewals showing separate rents for each apartment. With the Stipulation, Tenant additionally agreed to retain her tenancy in Apartment 4C and provide access to Landlord to separate and seal the openings combining both apartments. On the record in open court, this Court throughly allocuted Tenant as to her agreement with, and understanding of, the Stipulation as well as to the resulting ramifications for her failure to comply with its terms. She was an active participant in the negotiations and, at her insistence, a clause was added to the Stipulation requiring Landlord to cooperate with Consolidated Edison corporation to split up the electricity accounts for each apartment.



In accordance with the Stipulation, a Final Judgment of Possession was duly signed by the undersigned on May 28, 2014, and a Warrant of Eviction was issued shortly thereafter. In order to prevent its pending execution, Tenant moves pro se, by Order to Show Cause dated July 30, 2014, for vacatur and a stay of execution of the Warrant of Eviction, alleging that she "was not able to move out [as] the door to Apartment C was locked" and because Landlord "has not installed a [separate] meter in Apartment D section."



Upon subsequently retaining the Legal Aid Society, Tenant also moves, by Notice of Motion, returnable November 6, 2014, for an order: (1) vacating the Stipulation of Settlement entered between the parties on May 28, 2014; (2) granting leave to amend her Answer in accordance with CPLR 3025(b), to add certain Affirmative Defenses; and (3) awarding summary judgment in her favor, pursuant to CPLR 3212(b), dismissing the proceeding on the grounds that Landlord is illegally altering the terms and condition of her original Lease Agreement and subsequent Lease Renewals. In support of her Motion, Tenant argues that she entered into the Stipulation pro-se without the advice of counsel, out of fear of Landlord, and without fully understanding its contents, ramifications and the availability of defenses against this proceeding. Claiming that she owes no additional rent but was "terrified of losing" her home, Tenant contends that the Stipulation was unfair and one-sided because Landlord cannot be permitted to arbitrarily start out charging separate rents for the two apartments when she has been paying only one monthly preferential rent for over 30 years, as reflected in prior Lease Renewals and the latest 2014 Renewal Lease Agreement, which contains a notation charging "$0.00" rent for Apartment 4D. Finally, she seeks leave to amend her Answer to add Affirmative Defenses claiming that Landlord illegally increased and overcharged for her rent in Apartment 4D, and served a defective rent demand.



In opposition, Landlord argues that Tenant's motions should be denied in their entirety not only because she entered into the Stipulation freely, knowingly and voluntarily after lengthy conferences with the Court, but because she was fully aware of the separate rents for each apartment and the ephemeral nature of her preferential rent. In support of its contentions, Landlord provides Renewal Lease Forms from 2010 to 2014, signed by Tenant for both apartments, reflecting separate rents for each apartment, and affirms that the 2014 Lease merely contained a typographical error in charging zero rent for Apartment 4D. This Court respectfully disagrees with Landlord's arguments.



II.



It is axiomatic that stipulations of settlement between parties on pending proceedings are [*3]binding contracts enforceable by the court and, as such, they are favored and "will not be lightly cast aside" (Hallock v New York, 64 NY2d 224, 230 [1984]; see Matter of Galasso, 35 NY2d 319, 321 [1974]; Kelley v Chavez, 33 AD3d 590 [2d Dept 2006]). Only where there is a legally sufficient cause to invalidate a contractual obligation, such as where it is manifestly unfair to one party because of the other's overreaching or where its terms are unconscionable or constitute fraud, collusion, mistake or accident, will a party be relieved from the consequences of the bargain struck with the stipulation (see Matter of Matinzi v Joy, 60 NY2d 835, 386 [1983]; Barzin v Barzin, 158 AD2d 769, 770 [1990], lv dismissed 77 NY2d 834 [1991]; 44 Wall Owner, LLC v Failla, 29 Misc 3d 133[A], 2010 NY Slip Op 51925[U] [AT 1st 2010]). "It is well settled that the court has the power to relieve a party from a stipulation in a situation which is harsh or unjust even when fully understood and authorized" (Solack Estates, Inc. v Goodman, 102 Misc 2d 504 [AT 1st Dept 1979], affd 78 AD2d 512 [1980], quoting Bond v Bond, 260 App Div 781 [1940]).



Applying the foregoing principles to the matter at bar, Tenant has demonstrated sufficient cause to invalidate the Stipulation of Settlement and vacate the Final Judgment and warrant of eviction, even though Tenant had been an astute, articulate and fully engaged participant of the negotiations. In open court, she reached an agreement with Landlord, which not only allowed her to remain at the combined Premises for two additional months while paying the low preferential rent, but also permitted her to retain her tenancy at Apartment 4C. As such, Tenant's counsel's painting of her as an frail, Spanish-speaking and feeble 74 year-old appears disingenuous. Nevertheless, her lack of legal counsel prevented her from articulating to this Court the threshold legal argument dispositive of this proceeding, to wit: that pursuant to Rent Stabilization Code (9 NYCRR) § 2522.5(g)(1), Landlord is mandated to provide a rent-stabilized Tenant with Renewal Leases which "shall be on the same terms and conditions as the expired lease, except where the owner can demonstrate that the change is necessary in order to comply with a specific requirement of law regulation applicable to the building or to leases for housing accommodations subject to RSL, or with the approval of DHCR" (Rosario v Diagonal Realty, LLC, 8 NY3d 755, 761 [2007]; see East Eleventh St. Assoc. v Breslow, 256 AD2d 110 [1998]). The failure of Landlord to comply with this regulation resulted in Tenant's execution of a one-sided and unfair Stipulation reflecting the disparity of legal knowledge and experience between the parties.



Specifically, the 1978 original Lease Agreement between Landlord's predecessor and Tenant charged her only one rent-stabilized, preferential rent per month for the combined Premises, requiring subsequent Lease Renewals "on the same terms and conditions." Landlord's predecessors had offered and executed prior one-form Lease Renewals since the early 1980s and so forth, indicating only one rent for the combined Premises. Consistent with that, Landlord continued charging and collecting from her only one stabilized rent until what appears to be 2010 to 2013, when Landlord began sending, and Tenant executing, separate Renewal Leases with separate rent provisions for each apartment, despite the prior course of conduct. However, that Tenant executed these separate Renewal Leases does not change the fact that Landlord illegally and arbitrarily modified the "terms and conditions as the expired lease" by separating each apartment and its Renewal Leases (id.).



Nor can her execution of these latest Lease Renewals constitute an intelligent and voluntary waiver by Tenant of her favorable single preferential rent for the combined Premises. [*4]Courts have repeatedly held that a stipulation of settlement signed by a tenant agreeing to a rent in excess of the legal rent-controlled or rent-stabilized rates is not binding on the tenant since any purported waiver of his or her statutory rights "is invalid as a matter of public policy" (Cvetichanin v Trapezoid Land Co., 180 AD2d 503, 504 [1992] ["any purported waiver of rent stabilization rights in a settlement agreement is invalid as a matter of public policy"]; see Estro Chemical Co. v Falk, 303 NY 83, 86-87 [1951]; Norms Realty Corp. v Rodríguez, 108 Misc 2d 124 [Bronx Civ Ct 1981] [no waiver of legal maximum rent allowed under rent control statute]). Here, Tenant's rent for the Premises will, if permitted, increase from $796.63 per month to an astronomical and unaffordable $1,594.98, without any explanation or reason given by Landlord! There is no showing that Tenant had a full opportunity to read and understand the implications of the signed Renewals, and Landlord never sought— and Tenant never paid — that additional rent for Apartment 4D prior to the instant proceeding.



Landlord cannot legally modify those Lease terms and conditions any more that in the case of First Lenox Terrace Assoc. v Hill (13 Misc 3d 488 [NY Civ Ct 2006]), where the landlord-petitioner sought to have the respondent-tenant execute separate lease agreements for the living quarters and other for its correspondent parking spot, despite having combined both under one agreement with one rent provision for several years (see id. at 489). The Civil Court ruled there, with equal application here, that the landlord violated Rent Stabilization Code § 2522.5(g) by "not offer[ing to tenant] a renewal lease on the same terms and conditions as the expiring lease" (id. at 490; see Matter of Sugihara v State of New York Div. of Hous. & Community Renewal Office of Rent Admin., 13 Misc 3d 1239[A], 2006 NY Slip Op 52186[U] [NY Sup Ct 2006] [renewal lease must contain same preferential rent as a term & condition of tenancy]).



By executing the unadvisable Stipulation here, Tenant effectively forfeited half of her rent-stabilized Premises under threat of eviction for arrears, which were not owed, for an apartment, which in fact did not exist. In reality, there was not an actual Apartment 4D in existence when the Lease Renewals were executed or at the time of the Stipulation — or even at this time — as it is undisputed that Apartment 4C does not have a functioning entrance and Apartment 4D lacks a working kitchen. Landlord cannot charge a separate rent amount for an apartment without a kitchen or an operating entrance under the Rent Stabilization Laws. Tenant's execution of such a biased Stipulation merely means that the threatened eviction by Landlord in this proceeding was unquestionably a terrifying prospect for an elderly woman on a fixed income who has lived at her Premises for over 30 years.



Lastly, Landlord's reasoning for changing the Lease does not fall under any of the exceptions to Rent Stabilization Code § 2522.2(g). Landlord's recent offer of separate Renewal Leases is neither a lawful exception nor allowed subject to DHCR approval, pursuant to the Rent Stabilization Code (see First Lenox Terrace Assoc. v Hill, 13 Misc 3d at 490). In fact, Landlord has no offered any reason — valid or otherwise — for the Lease modifications. Therefore, per the "terms and conditions" of the longstanding tenancy, Landlord cannot longer offer two Renewal Leases separating the rent for the combined Premises, but only a preferential rent for Apartment "4CD."



Based on the extant circumstances, this Court grants Tenant's motions and hereby vacates the Stipulation of Settlement, Judgment and Warrant of Eviction.



III.



Turning then to that portion of the motions to amend her Verified Answer, it is well-settled that leave to amend a pleading may be granted "at any time by leave of court [and] shall be freely given upon such terms as may be just" (CPLR 3025[b]; see Civil Court Act § 909). "In the absence of prejudice or surprise to the opposing party, leave to amend a pleading should be freely granted unless the proposed amendment is palpably insufficient or patently devoid of merit" (Lucido v Mancuso, 49 AD3d 220 [2008], appeal withdrawn 12 NY3d 804 [2009], quoting G.K. Alan Assoc., Inc. v Lazzari, 44 AD3d 95, 99 [2007]; see Trataros Constr., Inc. v New York City Hous. Auth., 34 AD3d 451, 452-453 [2006]). Here, in light of the allegations and the possible forfeiture of the Premises herein, Tenant must be permitted to raise all applicable defenses which are not "palpably insufficient or patently devoid of merit." Nor can Landlord claim any prejudice or surprise by Tenant's challenge to the rent charged for Apartment 4D, since she expressly challenged that in Court based on the fact that Landlord had not charged any such rent in several years and its own 2014 Renewal Lease — upon which this proceeding was based — reflects a zero rent for this year. Accordingly, this Court also grants Tenant's motion for leave to deem the proposed Answer filed nunc pro tunc to add Affirmative Defenses of illegal increase of the rent and defective rent demand.



These defenses, in turn, have been sufficiently established herein and provide the basis for a summary judgment of dismissal in Tenant's favor pursuant to CPLR 3212. Summary judgment is only appropriate when the movant meets its initial burden of making "a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to eliminate any material issues of fact from the case" (Winegrad v New York Univ. Med. Ctr., 64 NY2d 851 [1985]; see Zuckerman v City of New York, 49 NY2d 557, 562 [1980]), and there are no defenses to those established claims as a matter of law (see Gilbert Frank Corp v Federal Ins. Co., 70 NY2d 966, 967 [1988]).



Particularly here, the 1978 original Lease Agreement between Landlord's predecessor and Tenant charged her a preferential rent of $255 per month for the combined Premises, requiring subsequent Lease Renewals "on the same terms and conditions." Consistent with that, in 1989 and for several years thereafter, she paid a legal rent increase of $350.97 per month for Apartment "4CD," and in 1999, she paid $462.71 for Apartment 4C and nothing for 4D, when Landlord initiated separate accountings for the units. In 2004, Landlord registered the rent as $556.44 for Apartment 4C, and a preferential rent of zero for 4D, and Tenant has continued to pay legal rent increases for the ensuing years. The new 2014 Lease Renewal concordantly reflects a $796.63 rent per month for Apartment 4C, but no rent charged for Apartment 4D, thus keeping with the same terms of Tenant's longstanding tenancy in the combined Premises.



Tenant further supports her arguments by providing numerous undisputed rent receipts showing that she has been continuously paying only one rent for the Premises "4CD" between 1980 to 1989, and rent invoices from Landlord's predecessor billing her "$.00" for Apartment 4D between 1999 to 2000. Tellingly, Landlord has not explained how the rent could legally be increased to more than double or $1,567.98 for the combined Premises beginning in 2010, nor does it provide any Lease Renewals prior to 2010 so showing. As such, this nonpayment proceeding which merely seeks rent arrears of over $10,487.86 for a nonexistent Apartment 4D must fail.



[*5]VI.


In accordance with the foregoing, Tenant's motions for vacatur of the Stipulation of Settlement, leave to amend her Answer and for summary judgment of dismissal in her favor are granted in their entirety, and the proceeding is hereby dismissed. The foregoing constitutes the decision, order and judgment of the Court.

E N T E R:



Dated: January 16, 2015

Bronx, New YorkJ.H.C.