Matter of Grutman v. New York City Conciliation and Appeals Board, 60 N.Y.2d 836 (1983)

A stipulation entered into by parties represented by counsel, even in the context of rent control, is binding and enforceable absent a showing of fraud, collusion, mistake, accident, or other similar grounds, and the proper forum for challenging such a stipulation is the court that issued the order.

Summary

This case addresses the enforceability of stipulations in landlord-tenant disputes, particularly concerning rent-controlled apartments. The tenant, Grutman, challenged a 1979 order decontrolling his apartment, alleging fraud. While this challenge was pending, Grutman, represented by counsel, entered into a stipulation with the landlord to withdraw his answer in a dispossess action and surrender possession. The court “So Ordered” the stipulation. Subsequently, Grutman sought to annul the decontrol order. The Court of Appeals held that the stipulation was binding because Grutman was aware of the alleged fraud when he signed it and failed to demonstrate sufficient grounds (fraud, collusion, mistake, etc.) to set it aside. The proper venue to challenge the stipulation was the Civil Court that issued the order.

Facts

1. In 1979, the Office of Rent Control ordered Grutman’s apartment decontrolled, and no appeal was taken.
2. In 1982, Grutman challenged the 1979 decontrol order, alleging it was procured by fraud.
3. The district rent director dismissed Grutman’s challenge.
4. While Grutman’s administrative appeal was pending, the landlord initiated a dispossess action in Civil Court.
5. Grutman, represented by counsel, stipulated to withdraw his answer with prejudice and surrender possession; the court “So Ordered” the stipulation.
6. The deputy commissioner affirmed the district rent director’s order.
7. Grutman then brought an Article 78 proceeding to annul the decontrol of his apartment.

Procedural History

1. The district rent director dismissed Grutman’s challenge to the 1979 decontrol order.
2. The deputy commissioner affirmed the district rent director’s order.
3. Grutman initiated an Article 78 proceeding seeking annulment of the decontrol of his apartment.
4. The Appellate Division’s order was appealed to the Court of Appeals.

Issue(s)

1. Whether a stipulation entered into by a tenant, represented by counsel, to surrender possession of a rent-controlled apartment is binding when the tenant was aware of alleged fraud related to the apartment’s decontrol before signing the stipulation.
2. Whether an Article 78 proceeding is the proper vehicle to challenge a stipulation “So Ordered” by a Civil Court.

Holding

1. Yes, because no showing was made of fraud, collusion, mistake, accident, or other such ground to set aside the stipulation, and the tenant was aware of the alleged fraud before signing the stipulation.
2. No, because the appropriate vehicle to challenge the stipulation is an application to the Civil Court seeking relief from its order.

Court’s Reasoning

The Court of Appeals reasoned that stipulations are binding agreements and can only be set aside for specific reasons like fraud, collusion, or mistake. Since Grutman was aware of the alleged fraud when he entered into the stipulation, and no other valid grounds for setting aside the stipulation were demonstrated, the stipulation was enforceable. The court emphasized that the proper forum for challenging a court-ordered stipulation is the court that issued the order (here, the Civil Court), not an Article 78 proceeding. The court cited Matter of Frutiger, 29 NY2d 143, 150, for the principle that a stipulation may be set aside because of fraud, collusion, mistake, accident or other such ground. The court also cited Siegel, NY Practice, p 242, regarding the appropriate vehicle for seeking relief from a court order. The court distinguished the case from situations where tenants waive the benefit of the rent law, noting that the stipulation was an agreement to surrender possession and resolve incidental differences, which is permissible. As the court noted, “Petitioner was aware of the alleged fraud before he signed the stipulation, that being the basis for his challenge to the 1979 order of decontrol.” Given the binding nature of the stipulation surrendering possession, the court found it unnecessary to address the request for a remand to determine issues of fraud. This highlights the strong policy favoring the enforcement of stipulations, especially when parties are represented by counsel.