111 ON 11 REALTY v. Norton

• Citation: 191 Misc.2d 483,742 N.Y.S.2d 529
• Parties: 111 ON 11 REALTY CORP., Petitioner,<BR>v.<BR>WILLIAM NORTON et al., Respondents.
• Decision Date: 06 May 2002
• Court: New York Civil Court

191 Misc.2d 483

742 N.Y.S.2d 529

111 ON 11 REALTY CORP., Petitioner,

v.WILLIAM NORTON et al., Respondents.

May 6, 2002.

Silberman & Rhine, New York City (Arthur Rhine of counsel), for William Norton, respondent.

Kramer Roth & Rosenblum, LLP, New York City (Jeffrey Roth of counsel), for petitioner.

OPINION OF THE COURT

LOREN BAILY-SCHIFFMAN, J.

This court entered a decision and order in this holdover proceeding on September 20, 2001 in which the court found that the respondent is the prevailing party for the purposes of the parties' requests for attorneys' fees. Thereafter, the parties made written submissions and a hearing was held on the issue of attorneys' fees. Based upon the written submissions and the evidence adduced at hearing, the court makes the following decision and order.

Entitlement to Attorneys' Fees

Under New York law, the general rule or "American Rule" is that a party to a litigation ordinarily is responsible to pay his/her own attorneys' fees and will not recover such fees from the opposing party. (Alyeska Pipeline Serv. Co. v Wilderness Socy., 421 US 240 [1975].) Exceptions to this rule are where an agreement between the parties or a statute provides otherwise. (Solow v Risman, NYLJ, Feb. 6, 1997, at 29, col 6 [Civ Ct, NY County]; Hooper Assoc. v AGS Computers, 74 NY2d 487 [1989]; Friends of Yelverton v 163rd St. Improvement Council, NYLJ, Jan. 3, 1991, at 21, col 2 [App Term, 1st Dept].) Many leases for residential real estate provide that the landlord may recover attorneys' fees if he/she institutes litigation against a tenant for breach of the lease. Real Property Law § 234 was passed to "level the playing field" and provide a reciprocal entitlement to attorneys' fees where the tenant is the "prevailing party" in such litigation. Real Property Law § 234 provides the following:

"Whenever a lease of residential property shall provide that in any action or summary proceeding the landlord may recover attorneys' fees and/or expenses incurred as the result of the failure of the tenant to perform any covenant or agreement contained in such lease * * * there shall be implied in such lease a covenant by the landlord to pay to the tenant the reasonable attorneys' fees and/or expenses incurred by the tenant as the result of the failure of the landlord to perform any covenant or agreement on its part to be performed under the lease or in the successful defense of any action or summary proceeding commenced by the landlord against the tenant arising out of the lease."

Both landlord and tenant herein assert an entitlement to attorneys' fees. However, the landlord takes the position that Real Property Law § 234 does not apply to this proceeding and the tenant is, therefore, not entitled to fees. The court first addresses the lease provisions. Respondent relies on paragraphs 19 and 55 of the lease to support his attorneys' fees application. Paragraph 19 of the lease provides that if the tenant defaults in the performance of any term of the lease, and the owner incurs expenses, including attorneys' fees, in prosecuting or defending any action related thereto, then the tenant will reimburse the owner for such sums paid or which the owner is obligated to pay. Paragraph 55 of the lease rider provides as follows:

"Should it become necessary to send the Tenant a dispossess, then the tenant agrees to pay for this disposses [sic] in the minimum amount of $50.00. If Court action becomes necessary then the tenant agrees to pay a $350.00 minimum charge for legal fees of $500.00 which includes the making and serving of the above dispossess, and all other legal expenses."

While somewhat inartfully written, the court interprets this rider provision and the lease provision to come within the terms of Real Property Law § 234. The court has found that it was the intention of the parties to lease the premises for residential purposes. The lease terms provide for the payment of attorneys' fees by the tenant should "court action" become necessary or should the owner incur attorneys' fees in prosecuting or defending litigation related to a violation of the lease. Therefore, the reciprocal provisions of Real Property Law § 234 apply to entitle tenant to charge the landlord with his attorneys' fees when the tenant is the prevailing party in the "court action" referred to in the lease provision. (Minjak Co. v Randolph, 140 AD2d 245 [1st Dept 1988]; Feierstein v Moser, 124 Misc 2d 369 [Sup Ct, NY County 1984].)

Landlord's position that the tenant, although the prevailing party,^[1] is not entitled to attorneys' fees is premised on the commercial form of the lease. While Real Property Law § 234 applies only to the lease of residential premises, where, as here, the intention of the parties was to enter into a lease for residential premises, Real Property Law § 234 applies to this lease. (Feierstein v Moser, supra; Dewy v Keith, 68 Misc 2d 110; Barrow Realty Corp. v Village Brewery Rest., 272 App Div 262; see also Taylor v Haddad Corp., 118 Misc 2d 253 [Sup Ct, NY County 1983].) Moreover, the Second Department has determined in 640 Broadway Renaissance Co. v Rossiter (256 AD2d 568 [2d Dept 1998]) that where the lease of a loft tenant is converted into a statutory tenancy, the provisions of the lease, including the attorneys' fees provisions, carry over into the statutory tenancy, thus triggering the reciprocal provision of Real Property Law § 234. This court finds that the Second Department's holding is applicable to the facts of the case at bar where the tenants have been found by the court to be entitled to continued occupancy pursuant to the Rent Stabilization Law.

Landlord also asserts that because his case was dismissed on procedural grounds and not on the merits, tenant is not entitled to fees. Landlord relies on Elkins v Cinera Realty (61 AD2d 828 [2d Dept 1978]) and Scotia Assoc. v Bond (126 Misc 2d 885 [Civ Ct, NY County 1985]) for this proposition. Elkins concerns three successive nonpayment proceedings. The first two were dismissed on procedural grounds (the nonappearance of the landlord and a defective verification). The third was brought while a Supreme Court declaratory judgment action between the parties was pending. The Appellate Division upheld the dismissal of the declaratory judgment action and the referral of the attorneys' fees application to the housing court. The court held that an attorneys' fees determination should be made only after the "ultimate outcome of the controversy, whether or not such outcome is on the merits." (Id. at 828.)

Scotia Assoc. v Bond (supra) involves a proceeding to evict a rent controlled tenant for alleged illegal subletting. The case was dismissed on tenant's motion because the landlord failed to file the notice required by New York City Rent and Eviction Regulations § 53 with the District Rent Office. The landlord argued on the application for attorneys' fees that the tenant was not entitled to fees because the dismissal on procedural grounds was not a "successful defense" pursuant to Real Property Law § 234. The court held that because the landlord did not serve the required notice or otherwise proceed against the tenant in the 45 days that elapsed between the dismissal of the action and the hearing before the court on attorneys' fees, the landlord had abandoned the action and the issue of attorneys' fees was ripe for determination. In its analysis of whether a dismissal warrants a tenant's entitlement to attorneys' fees, the court distinguished a situation where "the dismissal is a victory in a `battle' in a continuing `war' on the issue between the parties, or an end of the `war'" (supra at 886-887, citing Elkins v Cinera Realty).

The holding in Elkins v Cinera is clearly distinguishable on its facts from the case at bar. Here, the ultimate outcome has been determined. The landlord's summary proceeding was dismissed after a full trial and substantial posttrial briefing. This court does not interpret the Appellate Division's decision in Elkins to require the trial court to await a decision on appeal before considering an attorneys' fees application. While this court has been informed that an appeal has been filed in this case, the "ultimate outcome" of the case before this court has been reached and the application for attorneys' fees is, therefore, ripe for determination.

While the landlord may consider this court's decision after trial to be merely the determination of one "battle" in a continuing "war" because there is pending litigation (not assigned to this Judge) involving other tenants in the building, as far as the respondent, William Norton, is concerned, the war is over. This court finds no support for landlord's position in the holding in Scotia Assoc. v Bond (supra). Applying that holding to the facts of the case at bar leads to a finding that the attorneys' fees issue is now ripe for determination.

Award of Reasonable Fees

In determining what is a reasonable attorneys' fee, the court looks to federal precedent applying the Civil Rights Attorney's Fees Awards Act of 1976 (42 USC § 1988) and the attorneys' fees provision of title VII of the Civil Rights Act of 1964 (42 USC § 2000e-5 [k]) as the most complete and most relevant case law on the subject of attorneys' fees. This federal precedent utilizes the concept of "prevailing party" as does Real Property Law § 234 to determine a reasonable attorneys' fee with an eye towards "leveling the playing field" of litigation. This court believes that the federal case law analyzing attorneys' fees in the civil rights context is the most appropriate precedent to apply to the analysis of attorneys' fees in landlord/tenant cases, given the dearth of state court decisions analyzing this issue. This is particularly so as the Hensley approach has been applied to other federal statutes where Congress authorized an award of attorneys' fees to a "prevailing party." (Hensley v Eckerhart, 461 US 424, 433; Bleecker...