Deciding Whether to Try or Settle a Nonpayment Case

Q: I recently filed a nonpayment proceeding against a tenant who now claims he’s applying for public assistance. I’m not sure how long the application process takes or whether he’ll even qualify for the assistance. But I suspect this may just be a delaying tactic. Under these circumstances, would I be better off going to trial or working out a settlement agreement with the tenant?

A: Many owners have been confronted with the situation where a tenant, behind in the payment of rent, seeks the assistance of social service agencies, governmental and private, to obtain funds to pay the arrears, says Paul N. Gruber, partner at Borah, Goldstein, Altschuler, Nahins & Goidel, P.C. “Where a nonpayment proceeding has been commenced, the tenant may use delays in the processing of these requests for assistance as a basis to forestall execution of a warrant of eviction. Housing court judges will often find such delays to constitute ‘good cause’ and will give the tenant additional time to obtain funds,” he says.

A recent decision, however, suggests that the court’s ability to give a tenant additional time to obtain funds from a social service agency may be limited—at least in the case where the owner has secured a judgment against the tenant after a trial as opposed to one entered pursuant to a stipulation of settlement, says Gruber. “This gives owners a valuable tool for use in an appropriate case where it doesn’t want to give a tenant potentially multiple opportunities to abide by a judgment,” he says.

Ordinarily, issuance of a warrant of eviction after a judgment of possession has been entered after a trial should not be stayed for more than five days. In this recent case, however, the tenant made three post-trial applications for additional time to satisfy the judgment, all of which were granted by housing court judges.

The Appellate Term reversed these orders and permitted the warrant of eviction to be executed. The court found the award of post-judgment relief to be an “abuse of discretion” even though an application for rental assistance was being processed, based upon “prolonged delay” and the absence of a commitment of funds by the agency. That the tenant’s application for assistance was ultimately approved—a circumstance raised months after the trial verdict—did not warrant a different outcome. The Appellate Term observed that “the entry of a final judgment in favor of the landlord upon the trial of a nonpayment summary proceeding should not serve as a gateway to further litigation concerning a tenant’s ability to satisfy the judgment amount” [Paskal I LLC v. Ferreira, November 2013].

How might this case affect your decision how to proceed against a tenant who seeks public assistance after you’ve started a nonpayment proceeding against him?

There are several factors to consider, says Gruber. First, legal expenses are a concern. Ordinarily, although not always, a trial is more expensive than a settlement, especially when it’s necessary to wait for a trial part to become available, he explains. Moreover, while a settlement eliminates the need for an owner to prove the underlying basis for its claim, that’s not the case where a case is tried before a judge. The owner will be expected to establish its interest in the premises, the tenant’s interest, the regulatory status of the tenancy, whether or not the premises are located in a multiple dwelling, and, if so, its registration and a proper demand for rent. The owner may also be required to establish proper service of the petition and respond to the tenant’s defenses at trial, all of which entails expenses for preparation, document acquisition, and court time, he says.

But for those tenants who are frequently in court or who present other challenges to the management of the property (disruptive conduct, for example), an owner may find it a good business decision to seek a trial rather than to settle, says Gruber. While a court may encourage a settlement, it cannot force parties to settle. And if the owner wins the case, the decision discussed above makes it less likely that the tenant will be able to delay eviction on the basis of his public assistance application, he says.

In evaluating whether to try a case or settle it, the circumstances of the case and tenancy should always be considered. An attorney experienced in the nuances of housing court litigation can advise you concerning the best way to proceed in a particular case.

Insider Source

Paul N. Gruber, Esq.: Partner, Borah, Goldstein, Altschuler, Nahins & Goidel, P.C.; PGruber@borahgoldstein.com.