This entire episode could have been prevented. The most likely reason for the problem is that the landlord purchased the building at a foreclosure sale and never became aware that the prior owner had entered into a stunning stipulation. Beyond that mere fact, it is true that ancient SRO regulations on the UWS created a morass.
JMW 75 LLC v Belkin Burden Wenig & Goldman, LLP 2018 NY Slip Op 31945(U) August 10, 2018 Supreme Court, New York County Docket Number: 156352/2017 Judge: Shlomo S. Hagler reaffirms the widely understood principle that subsequent attorneys may not be held responsible for acts of prior attorneys.
“Plaintiff is the owner and landlord of a building located at 166 West 75th Street, New York, New York 10023 (“the Building”) where tenants Claude Debs (“Debs”) and Violaine Galland (“Galland”) (collectively, “the tenants or the respondents”) reside. In 2008, plaintiff’s predecessor-in-interest, 166 West 75th Street LLC (“the Prior Owner”), commenced a summary holdover proceeding in Housing Court against the tenants (166 West 75′” Street LLC v Claude Debs Galland a/k/a Claude Debs and Violaine Debs Galland a/k/a Violaine Galland, Civ Ct, Housing Part, NY County, Nov. 10, 2008, Lebovits, J., Index No. L&T 91914/08). The parties settled the litigation, pursuant to a stipulation dated November 10, 2008, which was “so-ordered” by Hon. Gerald Lebovits (“the Stipulation”) (NYSCEF Doc. No. 9, exhibit C). The Stipulation established Debs and Galland as rent stabilized single room occupancy (“SRO”) tenants (id. 3-4), and provided the landlord with an option to terminate the tenancy in exchange for the payment of $3 .5 million (id., 5-7). In addition, the parties stipulated to include a liquidated damages clause under the following circumstances:
8. In the event that Landlord brings an action under paragraph 7 (for nonpayment of rent, nuisance or breach of the lease] and fails, the Landlord will pay the Tenant $250,000, irrespective of whether Tenant chooses to vacate the:apartment for the Payment. The Payment shall be as and for liquidated damage’s, it being agreed that Tenants’ damages in such event, would be impossible to’ ascertain, and that the Payment constitutes a fair and reasonable amount under the circumstances and· is not a penalty.
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“12. This Stipulation shall be binding against and shall inure to the benefit of the parties, their agents and successor in interest and shall survive any transfer of title.”
In 2016, plaintiff commenced a holdover summary proceeding (“the Underlying Holdover Proceeding”} against Debs and Galland seeking possession of one of respondents’ SRO units based upon a claim that respondents-were violating a substantial obligation of the lease and the Housing Maintenance Code by allowing the premises to be occupied by two children (JMW 75 LLC v Claude Debs and Violaine Galland, and “John Doe” and “Jane Doe;” Civ Ct, Housing Part, NY County, Oct.1 i, 2016, Schreiber, J, Index No. L&T61276/16)
Simultaneously; JMW 75 commenced two non-primary residence holdover proceedings with respect to other SRO units occupied by respondents. At the time of the comencement of this proceeding in Housing Court, plaintiff was represented by Kaplain & Duval LLP.
On May -18, 2016, a Consent to Change Attomey form was filed with the Housing Court substituting _Belkin Burden as attorneys of record for petitioner in place and stead of Kaplain & Duval LLP (NYSCEF Doc. No. 9, Exhibits P and 2). On October 11,2016, the Hon. Michelle D. Schreiber granted, in relevant part, respondents’ motions for summary judgment and counterclaim for liquidated damages in the sum of $250,000, pursuant to the Stipulation (NYSCEF Doc. No. 9, Exhibit E).”
“‘The common thread in both Wielaard and the Underlying Holdover Proceeding is one
simple fatal flaw in plaintiffs cause of action. Plaintiff is missing evidence of a violation having
been placed against the premises necessary to warrant any likelihood of success of its argument.
As such, it is beyond cavil that plaintiff knowingly commenced the meritless Underlying
Holdover Proceeding against Debs and Galland which directly precipitated the adverse
determination and ultimately resulted in the triggering of its liability to pay the liquidated
damages of $250,000.00. Simply stated, if plaintiff had not pursued the fatally flawed claitns in
the Underlying Holdover Proceeding, plaintiff would not have faced any liability whatsoever. It
was plaintiffs actions, and not the defendant’s, that caused its own damages.
If plaintiff possessed viable grounds for Underlying Holdover Proceeding, it would not
have subjected itself to liability under the Stipulation’s liquidated damages clause. It is not so
much the alleged ignorance of the existence of the Stipulation and the provision relating to the
trigger of the liquidated damages language as the lack of viability of the proceeding itself that
caused injury to plaintiff. Any argument claiming ignorance would not have changed the course
of the proceeding. Plaintiff would not have prevailed in the Underlying Holdover Proceeding
with the proposed alternative arguments. “