Stipulations -- agreements reached within the context of litigation -- are much like any other contract and are governed by many of the same legal precepts and principles. In summary nonpayment and holdover proceedings, for example, stipulations are frequently used to resolve those disputes and outline the parties' respective performance obligations, payment requirements, and any other pertinent terms and conditions.*
Once signed, will a court allow a participant to withdraw from the deal if it is later determined that the party was misinformed or in error as to an operative fact?
The answer will depend on a variety of factors, including whether the litigant was represented by counsel at the time the agreement was made. Harmless or inconsequential mistakes have been excused, as have errors which cause "prejudice" or harm. But if the decision was the result of "negligence or carelessness," relief will likely be denied, as was demonstrated in the case of Waterside 1 LLC v. Christian.
In that particular dispute, the landlord sued its tenant in the Queens County Civil Court for all unpaid rent that had accrued from November 2002 through April 2003 (in the amount of $554.33 per month). On December 29, 2003, the tenant agreed to settle the matter by paying $5,474.74.
After that agreement was reached, Waterside discovered that the State Division of Housing and Community Renewal (DHCR) had increased the tenant's rent and that the amount reserved in the parties' stipulation did not accurately reflect the full legal rent due. When Waterside returned to the Queens County Civil Court to correct the error, that effort was rebuffed.
On appeal, the Appellate Term, 2nd and 11th Judicial Districts, offered further resistance and chastised Waterside for its "carelessness." The appellate court noted in its decision as follows:
Where a mistake of fact is attributable to the negligence or carelessness of the party seeking to vacate a stipulation, and there has been no fraud or deceit on the part of the other party thereto, such a mistake will not constitute a basis to set aside the agreement … Since landlord had an opportunity to ascertain whether the rent had been restored prior to the commencement of the proceeding and the execution of the stipulation of settlement, it cannot avoid the consequences of its own carelessness by seeking to have the stipulation vacated. Accordingly, the order of the court below is affirmed.
That wasn't very Christian, now was it?
For a copy of the Appellate Term's decision in Waterside 1 LLC v. Christian, please click on the following link: http://www.nycourts.gov/reporter/3dseries/2006/2006_52229.htm
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*For our other blog posts on stipulations, please click on the following link: http://www.nyrealestatelawblog.com/search/mt-search.cgi?IncludeBlogs=4&search=stipulations