THE APPELLATE TERM REVERSES TRIAL COURT’S VACATURE OF STIPULATION OF SETTLMENT “INADVISEDLY” ENTERED INTO BY OCCUPANT OF RENT STABILIZED APARTMENT
DNCT represented a landlord in a holdover proceeding commenced to recover possession of a rent-stabilized apartment on the ground that the tenant of record was not using the apartment as her primary residence. The tenant never appeared, but the occupant appeared by counsel and asserted her right to succeed to the tenancy as a nontraditional family member. The landlord and occupant entered into a so-ordered stipulation whereby the landlord agreed to permit occupant to remain in possession of the apartment for six months and, in exchange, the occupant agreed to pay arrears in use and occupancy as well as use and occupancy for six months, and to vacate at the end of the six months. Soon after entering into the stipulation, the occupant moved to vacate the stipulation on the ground that she had not understood that she was waiving her succession claim. The trial court granted occupant’s motion, finding that she had “inadvisedly” entered into the stipulation, that the stipulation was unduly harsh and that occupant allegedly had a colorable succession claim.
Significantly, following multiple pre-trial conferences, the attorneys for the parties in the presence of their clients entered into the stipulation which resolved the proceeding. Throughout the negotiation of the stipulation, a court interpreter was present to aid counsel with discussion of the merits of the case and the potential pitfalls of trial with the occupant. Once the parties had an agreement, the Civil Court, with the assistance of an official interpreter, spoke with the occupant in open court. The court informed occupant that “she was agreeing to vacate the apartment and she stated that she understood the content of the stipulation and entered into it voluntarily.” The occupant made one payment in accordance with the stipulation. It was not until after speaking with a tenant organizer in the building that the occupant retained new counsel and moved to vacate the stipulation.
On appeal, the Appellate Term, Second Department in Shalimar Leasing, LP v Medina (October 8, 2021) reversed the trial court’s order and denied the occupant’s motion to vacate the stipulation of settlement. The Appellate Term held that the occupant’s “…bare, self-serving assertions that she lacked understanding and, this, that she inadvisedly entered into the stipulation, are simply not enough to invalidate her agreement…” The Appellate Terms saw “… no basis to unravel a binding, written stipulation subscribed by both parties, their attorneys, the official court interpreter, and the court…”
Perhaps most significant is the concurring opinion joined in by two of the Appellate Term Judges which stated, in relevant part that:
“To set aside a stipulation under these circumstances not only undermines our longstanding jurisprudence favoring two-attorney stipulations, but ‘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 . . .’ (citation omitted). Stipulations of settlement should rarely be disturbed, as they encourage the swift resolution of cases and ease the burden on our already strained court system. To vacate the stipulation in this case as “ill-advised” effectively closes the door on a party’s ability to participate in negotiations with the expectation and understanding that their agreement will be upheld (citation omitted). Moreover, it subjects even the most ironclad stipulations – such as this one – to the whims of a client and the unfettered discretion of the court. In the absence of any proof that [occupant’s] agreement was the product of mistake, fraud, collusion, accident or other grounds sufficient to invalidate a contract, the agreement is enforceable.”
This case will be the new blueprint for ensuring that stipulations of settlement are as ironclad as possible to ensure that they are upheld and enforceable.