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When Is a Settlement Binding?
On April 5, 2007, the Court of Appeals voided a decade-old court-ordered stipulation that had settled a contested litigation over a rent-stabilized apartment. The landlord in Riverside Syndicate Inc. v. Munroe, et al. 10 N.Y.3d 18, was allowed to renege on a settlement on the theory that the stipulation violated public policy and unlawfully waived the tenant's rights. The ramifications of this ruling are extraordinary. A party to a court ordered settlement can reap the benefits for as long as is opportune (the court ruled that there is no applicable statute of limitations). The abiding party is left to try to recoup those benefits that it gave under the agreement ' in the Riverside case a decade of rent and substantial improvements to the apartment. And both parties will be left to undo all that occurred based on a now voided settlement.
The Case
In 1995, Riverside sought to evict the tenants from a rent-stabilized apartment they were subletting, allegedly illegally. The apartment that was next door to tenants' rent-stabilized apartment, and tenants had been subletting this contiguous apartment for several years with the written permission of Riverside. When the legal sublet ended, Riverside let the tenants remain and took rent for another two years without objection. In response to landlord's petition, tenants moved for summary judgment, relying in part on the 'illusory tenant' doctrine and asserting a right to remain as rent stabilized tenants. While the motion was pending, the case was settled, in court, with counsel for Riverside and the tenants, and with the judge before whom the motion was pending so ordering the stipulation.
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