Opinion
29018/03.
Decided September 30, 2005.
By order to show cause plaintiff moves to substitute Matilda Cush, the adminstratrix of the estate of Leonard Cush, as plaintiff in the action and to compel specific performance of a so-ordered stipulation entered by all parties on July 17, 2004. By notice of cross-motion defendants, Beryl Webster and Keith Webster move to vacate the same stipulation and for other related relief. On February 27, 1987, Leonard Cush, Anita Adams and Beryl Webster became tenants in common of a three family property (hereinafter the subject property) located at 244 Linden Boulevard pursuant to a bargain and sale deed. This property is the subject of the instant action. On August 29, 1991, Anita Adams passed away. On May 7, 2003, Beryl Webster transferred her interest in the real property to her son, Keith Webster. On December 25, 2003, Leonard Cush passed away. On April 23, 2004, Circuit Judge Burton C. Connor, of the St. Lucie County Florida Circuit Court granted Matilda Cush letters of administration authorizing her acts as representative of Leonard Cush's estate. On August 20, 2004, the Surrogate of Kings County granted Matilda Cush ancillary letters of administration authorizing her acts as representative of Leonard Cush's estate. On November 10, 2004, all parties, through their respective counsel, signed a stipulation permitting the substitution of Matilda Cush, as adminstratrix of the estate of Leonard Cush, as plaintiff in the action. Michael J. Mordschein signed this stipulation in two places on behalf of Keith Webster and Beryl Webster.
On August 7, 2003, plaintiff commenced this action by filing a summons and verified complaint and notice of pendency with the King's County Clerk's office. The complaint pleads three causes of action and seeks an accounting; imposition of a constructive trust and a partition of the subject property. In September of 2003, defendant, Greenpoint Mortgage Corporation filed a verified answer, counterclaim and cross-claim. Also in September of 2003, defendants Keith and Beryl Webster through their counsel, Michael J. Mondschein, filed their verified answer and counterclaims. Plaintiff filed a verified answer to the defendants' counterclaims. The estate of Anita Adams has not answered the complaint but has appeared through counsel, John L. Sampson.
On November 13, 2003, pursuant to a court ordered stipulation of this court, Keith and Beryl Webster agreed to the following. They agreed to purchase plaintiff's interest in the subject property. If financing was necessary, they would obtain a firm commitment for financing by December 11, 2003. If they were unable to purchase plaintiff's interest or obtain financing by December 11, 2003, they would consent to a sale of the premises. All rents collected were to be applied to the existing mortgage held by Greenpoint Mortgage Corporation and would be paid off at the sale or purchase of the property.
On July 17, 2004, the plaintiff and each of the defendants, through their respective counsel signed a stipulation which was so ordered by this court. Michael J. Mordschein signed the stipulation in two places as attorney for Keith Webster and Beryl Webster. Among other things, the stipulation provided or stated, in pertinent part, the following. The plaintiff, the estate of Anita Adams and Keith Webster are each seized in fee and possess an undivided one third share of the property. The defendant, Beryl Webster, has no right, title or interest in the property. The defendants Keith and Beryl Webster breached the stipulation of November 13, 2003 by failing to either purchase the property or obtain a mortgage commitment before December 11, 2003. They also breached the stipulation by failing to apply collected rents to the mortgage. The property was to be sold to Keith Brawley for $225,000.00 unless Keith Webster obtained a legally binding mortgage commitment on or before August 7, 2004 with a closing date by October 1, 2004 at a purchase price of $350,000.00. If the Keith Webster rejected Keith Brawley's offer and failed to obtain a legally binding offer by August 27, 2004, the court was to appoint a referee to sell the property and take an accounting of rents collected by Keith and Beryl Webster.
The stipulation also set forth how the proceeds of the sale were to be distributed after paying off the mortgage held by Greenpoint Mortgage Corporation.
By order to show cause, Michael J. Mordschein sought an order permitting him to withdraw as counsel to defendants Beryl and Keith Webster pursuant to CPLR § 321(b)(2). By the instant order to show cause, plaintiff sought an order enforcing the aforementioned stipulation dated July 17, 2004. Both motions were heard on April 29, 2005. At that time, Nishani Naido appeared on behalf of Beryl and Keith Webster and consented to the withdrawal of Michael J. Mordshein and to replace him as substituted counsel. The court approved the substitution on consent pursuant to CPLR § 321(b)(1). The court gave the Webster defendants until May 6, 2005 to respond to plaintiff's order to show cause seeking enforcement of the stipulation and adjourned the matter to June 3, 2005.
On June 3, 2005, this court heard oral argument on the instant motion and cross motion and reserved decision. In support of the cross-motion to vacate the so-ordered stipulation, the Webster defendants submitted their respective affidavits and the affirmation of their new counsel, Nishani Naido. A review of the sworn allegations of fact therein reveal no dispute that Michael J. Mordeshein was their attorney from the date they answered the complaint through the date the stipulation was signed in July of 2004, and through the date this court permitted him to be substituted as counsel by Mr. Naido.
The primary issue is whether, Mr. Mordeshein, Keith and Beryl Webster's prior counsel, may bind them. A stipulation of settlement made by counsel in open court may bind his clients even where it exceeds his actual authority ( Hallock v. State, 64 NY2d 224 at 229). Stipulations of settlement are favored by the courts and not lightly cast aside ( DeGregorio v. Bender, 4 AD3d 385 at 389 [2nd Dept. 2004]). This is all the more so in the case of open court stipulations, where strict enforcement not only serves interest of efficient dispute resolution but also is essential to management of court calendars and integrity of litigation process ( Hallock v. State, supra, 64 NY2d at 232). Essential to the creation of apparent authority are words or conduct of the principal, communicated to a third party, that give rise to the appearance and belief that the agent possesses authority to enter into a transaction. "Moreover, a third party with whom the agent deals may rely on an appearance of authority only to the extent that such reliance is reasonable ( Hallock v. State, supra, 64 NY2d at 232; see also Merrell-Benco Agency, LLC v. HSBC Bank USA, 20 AD3d 605 at 608 [3rd Dept. 2005]). Here defendants' prior counsel represented the defendants at the time they answered the complaint. His participation in the stipulation of settlement in question was with the apparent and actual authority of the defendants. Plaintiff's reliance on the authority of defendants' counsel to bind them was reasonable. While both defendants suggest in their respective affidavits that Mr. Mordeshein did not show them the stipulation of settlement, they did not explicitly claim that his participation in the settlement agreement was without their consent. There is, therefore, no dispute that he possessed the actual authority to bind them. Indeed, the defendants do not oppose the stipulation in so far as it provides under certain conditions for a partition and sale of the subject property through a court appointed referee . Rather, they contest, the fairness of the stipulation terms pertaining to the allocation of their respective costs and interest in the sale and the proceeds therefrom. The defendants are therefore bound by the so-ordered stipulation of July 17, 2004, consented to by their prior counsel.
Only where there is cause sufficient to invalidate a contract, such as fraud, collusion, mistake or accident, will a party be relieved from the consequences of a stipulation made during litigation ( Hallock v. State, supra, 64 NY2d at 231; see also DeGregorio v. Bender, 4 AD3d 385 at 389 [2nd Dept. 2004]). The claims asserted by Keith and Beryl Webster in their respective affidavits do set forth allegations of fact which would be sufficient to invalidate a contract. The defendants are therefore bound by the so-ordered stipulation of July 17, 2004, consented to by their prior counsel.
For the foregoing reasons, plaintiff's motion seeking enforcement of the court ordered stipulation dated July 17, 2004 is granted and defendant's motion seeking to vacate the stipulation order is denied. The parties are directed to settle an order on notice for the relief granted to the plaintiff leaving solely the name of the referee for the court's selection.
The foregoing constitutes the decision and order of this court