Greco v. GSL Enterprises, Inc.

• Decision Date: 02 December 1987
• Citation: 521 N.Y.S.2d 994,137 Misc.2d 714
• Parties: Daniel GRECO, et al., Petitioners, v. GSL ENTERPRISES, INC., Joe Baez, City of New York and Department of Housing Preservation and Development of the City of New York, Respondents. -L
• Court: New York City Court

Page 994

521 N.Y.S.2d 994

137 Misc.2d 714

Daniel GRECO, et al., Petitioners, v. GSL ENTERPRISES, INC., Joe Baez, City of New York and Department of Housing Preservation and Development of the City of New York, Respondents.

Civil Court of the City of New York New York County, Part 18-L.

Dec. 2, 1987.

Joel Bernstein, Solomon & Bernstein, New York City, for petitioners.

Jill A. Kanter, Glenn Kantor, New York City, for respondents GSL and Joe Baez.

LEWIS R. FRIEDMAN, Judge.

"In the United States, the prevailing litigant is ordinarily not entitled to collect a reasonable attorneys' fee from the loser" (Alyeska Pipeline Service Co. v. Wilderness Soc., 421 U.S. 240, 247, 95 S.Ct. 1612, 1616, 44 L.Ed. 141). The courts may not create a right to recover attorney's fees; the right must be statutory or contractual. In the federal jurisdiction alone there are currently well over 100 attorney's fee shifting statutes in areas as diverse as civil rights (42 U.S.C. § 1988), antitrust (15 U.S.C. § 15), Freedom of Information (5 U.S.C. § 552[a][4][E] ) and Truth in Lending (15 U.S.C. § 1640[a] ). There are some fee-shifting statutes in New York (e.g. CPLR 8303-a), but the most commonly seen form of fee shifting occurs by contract, as in commercial credit agreements and leases of real property.

Lease provisions authorizing payment by the tenant of the successful landlord's attorney's fees have long been upheld. (379 Madison Ave. v. Stuyvesant Co., 242 App.Div. 567, 569-570, 275 N.Y.S. 953, affd. 268 N.Y. 576, 198 N.E. 412, overruled on other grounds Columbia Corrugated Container Corp. v. Skyway Container Corp., 32 N.Y.2d 818, 819, 345 N.Y.S.2d 1012, 299 N.E.2d 257; cf. 930 Fifth Corp. v. King, 42 N.Y.2d 886, 397 N.Y.S.2d 788, 366 N.E.2d 875). The issues in the instant case concern the right of tenants to recover attorney's fees from a landlord in a proceeding under RPAPL Article 7-A.

The petitioning tenants brought a proceeding under RPAPL Article 7-A, which may be commenced by one-third or more of the tenants in a dwelling if there is "a lack of heat or of running water or of light or of electricity or of adequate sewage disposal, facilities, or any other condition dangerous to life, health or safety * * * " (RPAPL 770[1]; see Maresca v. 167 Bleecker, Inc., 121 Misc.2d 846, 849, 467 N.Y.S.2d 130; Lawrence v. Martin, 131 Misc.2d 256, 258, 499 N.Y.S.2d 835). After trial, an order was entered granting the relief. Thereafter, the respondent owner successfully moved pursuant to RPAPL 777 for an order allowing it to post a bond and remedy the conditions.

Petitioners now contend that Real Property Law Section 234 authorizes the recovery of attorney's fees. The reported cases have not discussed the application of RPL 234 to proceedings brought under RPAPL Article 7-A.

The enactment of RPL 234 in 1966 (L.1966, ch. 286) caused a substantial change in New York law. The legislation created a hybrid--a contract right to recover attorney's fees is implied by statute. The law provides:

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 * * *.

Petitioners contend that their leases meet the predicate of RPL 234 by providing that the landlord may recover attorney's fees. The lease of one of the petitioners, which is represented as typical of all petitioners' leases, is annexed to the moving papers. That lease, on the 1981 Standard Form of Apartment Lease of the Real Estate Board of New York, provides, in pertinent part:

You must reimburse owner for any of the following fees and expenses incurred by owner * * * (5) any legal fees and disbursements for legal actions or proceedings brought by owner against you because of a lease default by you or for defending lawsuits brought against owner because of your actions.

The first question is whether that language "triggers" RPL 234. There is little doubt that it does. The lease clause applies to any action or proceeding brought "because of a lease default"; that is broad enough to meet the statutory threshold that the lease provide for attorney's fees to be paid to the landlord for actions "incurred as the result of the failure of the tenant to perform any covenant or agreement in such lease." (See 119 Fifth Avenue Corp. v. Berkhout, 134 Misc.2d 963, 966-967, 513 N.Y.S.2d 642, rearg 135 Misc.2d 773, 516 N.Y.S.2d 877.) At least as to the tenants with leases on the same printed form as the one submitted, RPL 234 applies. Landlord argues that since several of the petitioners are rent controlled, not rent stabilized, RPL 234 is inapplicable to them. The law is, however, settled that an attorney's fees clause is carried forward into a statutory tenancy even if the lease was executed prior to the enactment of RPL 234 (College Props., Inc. v. Bruce, 122 Misc.2d 766, 473 N.Y.S.2d 906, affd. 104 A.D.2d 1063, 481 N.Y.S.2d 935; Deary v. Keith, 68 Misc.2d 110, 326 N.Y.S.2d 823; but see Cox v. First Natl. Realty & Constr. Corp., 50 A.D.2d 535, 375 N.Y.S.2d 135).

Numerous cases have held that RPL 234 is designed to create a "reciprocal" right to tenants recovery of attorney's fees where a landlord has a contractual right to such fees. (See, e.g., Haberman v. Wassberg, 131 A.D.2d 331, 333-334, 516 N.Y.S.2d 925; N.V. Madison, Inc. v. Saurwein, 103 Misc.2d 996, 431 N.Y.S.2d 251; Eleven Waverly Assoc. v. Waering, 134 Misc.2d 1093, 515 N.Y.S.2d 381; Satraj Props. v. Toral, N.Y.L.J. Feb. 10, 1987, p. 5, col. 1 [App.Term, 1st Dept.]; Herrick v. Debard, N.Y.L.J. Feb. 18, 1987, p. 13, col. 4; Scotia Assoc. v. Bond, 126 Misc.2d 885, 484 N.Y.S.2d 479.) It was "the obvious intent of the Legislature to balance the rights of landlord and tenant in the context of what had been the standard attorney's fee provision contained in the standard form lease" (College Props., Inc. v. Bruce, supra 122 Misc.2d at 768, 473 N.Y.S.2d 906; McMahon v. Schwartz, 109 Misc.2d 80, 82, 438 N.Y.S.2d 215).

Without doubt, RPL 234 creates a "mutuality of obligation" since it applies only where the landlord has a lease-given right to attorney's fees. Yet, once the applicability threshold is met, the substance of the tenant's rights may differ from the landlord's. The landlord's right to attorney's fees is based on the language of the lease, while the tenant's is based on the language of the statute.

An analysis of the language of RPL 234 establishes its applicability to Article 7-A proceedings. It is now beyond question that the warranty of habitability is an implied covenant in every residential lease (RPL 235-b). Indeed, in the commonly used standard form lease annexed to the moving papers, the landlord specifically represented "[o]wner agrees that the Apartment and the Building are fit for human habitation and that there will be no conditions which will be detrimental to life, health or safety." The existence of an Article 7-A "condition dangerous to life, health or safety" (RPAPL 770[1] ) is obviously a breach of that warranty and, therefore, constitutes a "failure of the landlord to perform any covenant or agreement on its part to be performed under the lease" (RPL 234). It follows that a proceeding under RPAPL Article 7-A brought as a result of a breach of the expressed and implied warranty of habitability may properly invoke RPL 234. "[W]here the statutory language is clear and unambiguous, the court should construe the statute to give effect to the plain meaning of the words used." (Eaton v. New York City Conciliation & Appeals Bd., 56 N.Y.2d 340, 345, 452 N.Y.S.2d 358, 437 N.E.2d 1115; Bender v. Jamaica Hosp., 40 N.Y.2d 560, 562, 388 N.Y.S.2d 269, 356 N.E.2d 1228.)

Sound policy reasons support that result. Article 7-A is designed for the case where the landlord has so allowed the premises to deteriorate that outside administration of the building is appropriate. Tenants should be encouraged to resort to Article 7-A when other means of redress have been ineffective. It is, therefore, reasonable to make them whole and award them the costs of their action when they have prevailed. The addition of RPL 234 was to redress in a limited way the imbalance between the bargaining positions of landlord and tenant. The proven failure of the landlord to maintain basic conditions at the building strongly suggests that the balance need be corrected. Awarding attorney's fees is one of those ways.

Some cases appear to hold that attorney's fees are not recoverable where the proceeding involved is not a traditional landlord-tenant proceeding based on a breach of a specific lease provision. (East 55th Street Joint Venture v. Litchman, 126 Misc.2d 1049, 1051, 487 N.Y.S.2d 256; Matter of Chessin v. New York City Conciliation & Appeals Bd., 100 A.D.2d 297, 305-306, 474 N.Y.S.2d 293; Taylor v. Haddad Corp., 118 Misc.2d 253, 460 N.Y.S.2d 886.) An analysis of the records on appeal in those cases shows that their authority is weak (119 Fifth Avenue Corp. v. Berkhout, supra, 134 Misc.2d at 964-965, 513 N.Y.S.2d 642). However, the Appellate Term, First Department has recently held that "non-primary residence" cases do not arise under a lease provision and, therefore, attorney's fees are not payable to successful landlords (Cier Indus. Co. v. Hessen, N.Y.L.J. Jan. 13, 1987, p. 6, col. 3); similarly fees are not...