Department of Housing Preservation and Development of City of New York v. Deka Realty Corp.

• Decision Date: 09 January 1995
• Citation: 620 N.Y.S.2d 837,208 A.D.2d 37
• Parties: In the Matter of DEPARTMENT OF HOUSING PRESERVATION AND DEVELOPMENT OF the CITY OF NEW YORK, Appellant-Respondent, v. DEKA REALTY CORP., Respondent-Appellant, et al., Respondents.
• Court: New York Supreme Court — Appellate Division

Page 837

620 N.Y.S.2d 837

208 A.D.2d 37

In the Matter of DEPARTMENT OF HOUSING PRESERVATION AND

DEVELOPMENT OF the CITY OF NEW YORK, Appellant-Respondent, v. DEKA REALTY CORP., Respondent-Appellant, et al., Respondents.

Supreme Court, Appellate Division,

Second Department.

Jan. 9, 1995.

Paul A. Crotty, Corp. Counsel, New York City (Leonard Koerner, Ronald E. Sternberg, Janessa C. Nisley, and Jerald Horowitz, of counsel), for appellant-respondent.

Lipsitz, Green, Fahringer, Roll, Salisbury & Cambria, New York City (Herald Price Fahringer and Diarmuid White, of counsel), for respondent-appellant.

Before MILLER, J.P., and JOY, ALTMAN and GOLDSTEIN, JJ.

GOLDSTEIN, Justice.

Several issues concerning the imposition of contempt sanctions and civil penalties are raised on this appeal: (1) whether civil contempt fines, assessed for a landlord's failure to remedy certain housing code violations on its premises, should properly be distributed to the Department of Housing Preservation and Development of the City of New York or to those tenants aggrieved by the existing violations; (2) whether contempt fines may be assessed, pursuant to a consent decree, based on a multiplication of individual housing code violations times the maximum statutory fine; (3) whether, and under what circumstances, the imposition of contempt fines and/or civil penalties may trigger a constitutional right to a jury trial; and (4) whether the requirement of a written waiver of the right to trial by jury under Article I, § 2 of the New York Constitution applies to a civil action in which punitive sanctions are imposed.

Appellant Deka Realty Corp. (hereinafter Deka) is the owner of a six-story, 133-unit, multiple dwelling, and was cited by the respondent Department of Housing Preservation and Development of the City of New York (hereinafter HPD) for numerous housing code violations. HPD commenced an enforcement proceeding seeking to compel Deka and its agents, Jesus Cortes and Anthony Kambouris, to cure all outstanding violations at the subject premises. The parties entered into a consent decree wherein Deka and its agents agreed to make the necessary repairs by certain fixed dates. The consent order also provided, inter alia, that each housing code violation which Deka was required to cure would be treated as the subject of a separate order of the court. Thus, for each day that Deka violated these discrete orders by not having made the necessary repairs, it was deemed to have committed a separate and distinct contempt of court. The time within which Deka was permitted to correct these violations was thereafter extended in a subsequent consent order. When Deka and its agents failed to comply with the subsequent order, HPD moved for an order assessing civil penalties and further sought to punish Deka and its agents for civil and criminal contempt.

Following a nonjury trial, Deka and its agents were adjudicated to be in civil and criminal contempt and, pursuant to the terms of the consent decree, fines were imposed for each day that each violation went uncorrected, for a total of $3,372,250 in criminal contempt fines, and $3,372,250 in civil contempt fines. Deka and its agents were also assessed $272,645 in civil penalties.

The Appellate Term reduced the criminal contempt fines to $1,000, and vacated the findings of civil contempt, fines, and civil penalties, remitting the matter to the Civil Court of the City of New York, Queens County, for a jury trial on those issues. With regard to the civil contempt sanction, the findings were vacated because the Civil Court failed to consider the tenants' actual damages. The Appellate Term further held that Deka was entitled to a jury trial on the civil contempt findings since the amount of the fine could easily exceed $100,000 in actual damages. With respect to the civil penalties, the findings were vacated to address Deka's claim that 27 violations were improperly considered by the Civil Court when it assessed those penalties.

Liability against Deka and its agents has clearly been established on this record (Department of Hous. Preservation & Dev. of City of N.Y. v. Mill Riv. Realty, 169 A.D.2d 665, 565 N.Y.S.2d 44, aff'd 82 N.Y.2d 794, 604 N.Y.S.2d 552, 624 N.E.2d 690; Gregori v. Ace 318 Corp., 134 Misc.2d 871, 513 N.Y.S.2d 620, mod. on other grounds 142 Misc.2d 1028, 540 N.Y.S.2d 636). We agree with the Appellate Term, however, that the multiple contempt fines imposed were neither authorized nor appropriate under the Judiciary Law.

HPD has withdrawn from consideration its argument that it is entitled to collect both per diem civil and criminal contempt fines, and it has decided to forego reliance upon any of the 27 disputed violations in connection with the fines for civil and criminal contempt. ¹ HPD maintains, however, that the Civil Court correctly assessed the contempt fines in accordance with the number of individual violations existing on the subject premises. HPD argues that the Appellate Term erroneously rejected the Civil Court's reliance upon, and implementation of, the consent orders entered into by the parties. The orders specifically provided that "each violation * * * ordered to be corrected constitutes * * * a separate and distinct Order of this Court". According to HPD, the parties intended that each failure to complete a required repair constituted a separate and distinct contempt of a separate and distinct order. While not disputing this interpretation, the Appellate Term concluded that enforcement of the order, as so interpreted, would confer upon the courts subject matter jurisdiction which they do not possess.

HPD maintains that the Appellate Term's analysis is erroneous in that the consent order constituted nothing more than the parties' attempts to seek a nonjudicial resolution of the enforcement proceeding. According to HPD, the signing of the consent orders was voluntary and calculated, with each party determining that its best interests would be served by so terminating the litigation. Pursuant to the consent order, Deka agreed to cure the outstanding violations and thereby avoid the substantial penalties which had accrued. HPD relinquished its rights to seek those penalties in exchange for Deka's agreement to make all repairs by a date certain, and Deka's further acknowledgement that each failure to correct a violation would represent a separate offense for which the sanction of contempt could be imposed. According to HPD, the consent decree was no different than any other binding stipulation--a contract between parties which, unless unreasonable or violative of public policy, is worthy of enforcement. HPD maintains that in executing the consent orders, the parties simply "placed their own gloss" on the statutory words "a [criminal] contempt", and that the law has traditionally acquiesced in the right of parties to so order their affairs.

There now exist 53 uncorrected violations which HPD contends constitute 53 separate contempts of court. HPD contends that, pursuant to the consent decree, a fine of $13,250 should be imposed for civil contempt which amount represents the maximum statutory fine of $250 (see, Judiciary Law § 773) multiplied by the 53 violations, and a fine of $53,000 should be imposed for criminal contempt, representing the maximum statutory fine of $1,000 (see, Judiciary Law § 751) multiplied by the 53 violations.

We find that HPD's analysis is neither authorized nor appropriate concerning the imposition of civil contempt or criminal contempt sanctions, and we therefore decline to adopt their position. A stipulation entered into between parties is incapable of expanding a court's power to impose punishments for civil and criminal contempt pursuant to the provisions of Judiciary Law § 753 and § 750 respectively. "[T]he two types of contempt serve separate and distinct purposes" (Matter of Department of Envtl. Protection of City of N.Y. v. Department of Envtl. Conservation of State of N.Y., 70 N.Y.2d 233, 239, 519 N.Y.S.2d 539, 513 N.E.2d 706). Civil contempt seeks vindication for individuals who have been injured or "harmed by [a] contemnor's failure to obey a court order" (Matter of Department of Envtl. Protection of City of N.Y. v. Department of Envtl. Conservation of State of N.Y., supra, at 239, 519 N.Y.S.2d 539, 513 N.E.2d 706). A civil contempt penalty is imposed "not to punish but, rather, to compensate the injured private party or to coerce compliance with the court's mandate" (Matter of Department of Envtl. Protection of City of N.Y. v. Department of Envtl. Conservation of State of N.Y., supra, at 239, 519 N.Y.S.2d 539, 513 N.E.2d 706). Criminal contempt, on the other hand, involves vindication of an offense against judicial authority and is utilized to protect the integrity and dignity of the judicial process and to compel respect for its mandates (see, King v. Barnes, 113 N.Y. 476, 21 N.E. 182).

The rather simplistic formula for contempt sanctions proposed by HPD, to wit multiplying the number of individual housing violations by the maximum statutory fine, fails to serve either the goals and purposes underlying a criminal contempt or those of a civil contempt.

Insofar as civil contempt is concerned, the purpose of a fine is to compensate. The fines that may be imposed for a civil contempt are found in Judiciary Law § 773. The statute provides for two types of awards: one where actual damage has resulted from the contemptuous act in which case an award sufficient to indemnify the aggrieved party is imposed, and one where the complainant's rights have been prejudiced but an actual loss or injury is incapable of being established. In that situation, the fine is limited to $250, plus the complainant's costs and expenses (Judiciary Law, § 773, as amd. by L.1977, ch. 437, § 8).

"In either case, unlike fines for criminal contempt where deterrence is the aim and the State is the aggrieved party entitled to the award (e.g., Matter...