PNL Phx., LLC v. Janton Indus. Inc.
| Decision Date | 13 April 2015 |
| Docket Number | No. 506225/2014.,506225/2014. |
| Citation | 16 N.Y.S.3d 794 (Table) |
| Parties | PNL PHOENIX, LLC, Plaintiff, v. JANTON INDUSTRIES INC., Designcore Ltd., Allboro Maint. Corp., and Joseph F. Ianno, Defendants. |
| Court | New York Supreme Court |
Robert A. Abrams, Esq., Katsky Korins LLP, New York, NY, Attorneys for Plaintiff.
Paul Golden, Esq., Hagan, Coury & Associates, Brooklyn, NY, Attorney for Defendants.
The following papers read on this motion (index no. 506225/2014):
| Papers | Numbered |
| Notice of Motion/Order to Show Cause/Petition/ Cross Motion and Affidavits(Affirmations)Annexed | 72–87, 89 |
| Opposing Affidavits (Affirmations) | 91–96 |
| Reply Affidavits(Affirmations) | 98–104 |
| Affidavits(Affirmations) | |
| Other Papers (Memoranda of Law) | 88, 90, 98 |
The following papers read on this motion (index no. 507092/2014):
| Papers | Numbered |
| Notice of Motion/Order to Show Cause/Petition/ Cross Motion and Affidavits(Affirmations)Annexed | 97–112, 114 |
| Opposing Affidavits (Affirmations) | 115 |
| Reply Affidavits(Affirmations) | 117–123 |
| Affidavits(Affirmations) | |
| Other Papers (Memoranda of Law) | 113, 116 |
Plaintiff PNL Phoenix, LLC (“PNL”), seeks an order awarding plaintiff all of the legal fees and expenses it actually incurred in connection with two separate but related actions before this Court, a replevin action under index number 506225/2014 (the “Replevin Action”), and a foreclosure action under index number 507092/2014 (the “Foreclosure Action”).
In March 2012, plaintiff acquired two loans by assignment from Sovereign Bank. The first loan was made by defendants Janton Industries, Inc. and Designcore Ltd. (“Janton” and “Designcore”, collectively the “Borrowers”), in the principal sum of $1,200,000 (the “First Loan”), and was evidenced by a mortgage note, dated May 11, 2001 (the “Mortgage Note”). The First Loan was secured by a leasehold mortgage on a property known as Unit A, Bush Terminal, 13 42nd Street, Brooklyn, New York (the “Leasehold Mortgage”), a real estate mortgage on commercial property known as 269 41st Street, Brooklyn, New York (the “41st Street Mortgage”), an assignment of leases and rents, and the personal guaranty of defendant Joseph Ianno (“Ianno”). The second loan acquired by plaintiff was a $750,000 line of credit loan made by Janton and Designcore (the “Second Loan”), which was evidenced by a Line of Credit Note, dated October 1, 2008 (the “Line of Credit Note”). The Second Loan is secured by a lien on all of the assets of Janton, Designcore, and Allboro Maintenance Corp. (“Allboro”), including their accounts receivable, equipment, and inventory, and the commercial guaranties of Ianno and Allboro. Plaintiff claims that defendants were in default under both the First Loan and the Second Loan at the time that plaintiff acquired these loans.
Plaintiff claims that it engaged in negotiations with the Borrowers which resulted in a Forbearance and Amendment Agreement, dated September 30, 2012 (the “Forbearance Agreement”). The Forbearance Agreement provided that Borrowers would seek to refinance one of the mortgaged properties and would pay all of their obligations to plaintiff by September 30, 2013. As additional security for the Forbearance Agreement and the First Loan, an affiliate of the Borrowers, 2032 Bath Avenue Realty Corp., granted to plaintiff a mortgage on its commercial real property (the “Bath Mortgage”). Plaintiff claims that Borrowers failed to refinance and failed to pay off their obligations by September 30, 2013.
Plaintiff states that it postponed initiating litigation immediately because of assurances from the defendants that they were continuing to seek refinancing and that plaintiff would be paid imminently. However, due to Borrowers' continued failure to pay off its obligations pursuant to the Forbearance Agreement, plaintiff commenced two separate proceedings against the Borrowers. The first proceeding, commenced on July 9, 2014, under index number 506225/2014, was a replevin action seeking to obtain an order of seizure to recover the collateral that secured the Second Loan, as well as a money judgment against the Borrowers for any deficiency. The second proceeding, commenced on August 1, 2014, under index number 507092/2014, was a foreclosure action to foreclose on the Leasehold Mortgage, the 41st Street Mortgage, and the Bath Mortgage, as well as to obtain a money judgment against Borrowers for any deficiency.
Defendants claim that at the time plaintiff initiated the Replevin Action, defendants had been making continuous monthly payments of principal and interest to the plaintiff and the outstanding principal balance of the Second Loan was only $185,000. Defendants further claim that at the time the Foreclosure Action was commenced, defendants had been making monthly payments on the First Loan and the outstanding principal balance was only $276,963.48. Defendants claim that the assurances they made to plaintiff that they would refinance and repay their entire indebtedness were made in good faith, and that defendants were finally able to refinance and pay all principal and interest on the two loans on October 16, 2014. The only remaining dispute between the parties is the issue of attorneys fees.
Based on the affirmation of Robert A. Abrams, Esq. (“Abrams”), a partner at the firm Katsky Korins LLP, who served as lead counsel for the plaintiff in both the Replevin Action and the Foreclosure Action, plaintiff is seeking to recover a total of $90,969.75 in attorneys fees and expenses for the period June 1, 2014 through November 5, 2014. In his affirmation, Abrams discusses his qualifications and experience, attaches a document list of the papers and motions that have been filed in both actions, and recites the work performed on each separate action. Abrams provides contemporaneous time records that demonstrate the time billed by his firm and the work performed on both the Replevin Action and the Foreclosure Action. Abrams also annexes additional time logs that segregate the time billed specifically on the Replevin Action and the time billed relating to the Foreclosure Action.
Abrams states that his standard hourly rate is $620 but that plaintiff received a twenty percent discount such that Abrams charged $496 per hour in this matter. Other attorneys who performed work on the Replevin Action and the Foreclosure Action included Steven Newman, a partner at the firm, who billed at $504 per hour, and George Stavis, of counsel to the firm, who billed at $395 per hour. These billing rates also reflect the twenty percent discount afforded to the plaintiff. The time records indicate that a total of 75.5 hours were billed for work on the Replevin Action between June 5, 2014 and October 15, 2014, which included 70.15 hours billed by Abrams, 3.85 hours billed by Steven Newman, and 1.5 hours billed by George Stavis, for a total sum of $37,327.30. Plaintiff also claims $1,167.09 for disbursements relating to the Replevin Action, for a total of $38,494.39. For the Foreclosure Action, the time records show that a total of 78.9 hours were billed between June 5, 2014 and October 13, 2014, including 78.6 hours billed by Abrams and 0.3 hours billed by Steven Newman, for a total sum of $39,136.80. Plaintiff also claims $3,840.16 for disbursements relating to the Foreclosure Action, for a total of $42,976.96. Plaintiff further seeks attorneys' fees for work performed in connection with the instant application, for which time records are also provided, totaling 19.15 hours billed for the period October 16, 2014 through November 5, 2014, resulting in the sum of $9,498.40.
Section 16.9 of the Forbearance Agreement provides:
Upon demand therefor by Lender, the Obligors shall pay all costs and expenses, including, without limitation, reasonable attorneys' fees and costs, hereafter incurred by Lender in administering, enforcing or effectuating any of the terms of this Agreement and the other Loan Documents, whether or not any legal proceedings are instituted by Lender. Without limiting the generality of the immediately preceding sentence, such costs and expenses shall include all attorneys' fees and costs now or hereafter incurred by Lender in connection with the loan, any refinancing by Borrowers, any workout, and the enforcement of any of Lender's rights, including, without limitation, the preparation of a foreclosure complaint, and otherwise in connection with the prosecution of a foreclosure action, any federal or state bankruptcy, insolvency, reorganization, foreclosure, or other similar proceeding by or against the Borrowers which in any way relates to or affects Lender's exercise of its rights and remedies under any or all of the Loan Documents.
“An award of attorneys' fees pursuant to such a contractual provision may only be enforced to the extent that the amount is reasonable and warranted for the services actually rendered” (Kamco Supply Corp. v. Annex Contracting, Inc., 261 A.D.2d 363, 365 [2d Dept 1999] ). Defendants do not dispute plaintiff's right to attorneys' fees under the terms of the Forbearance Agreement, but rather argue that the amount demanded is unreasonable and inflated, and that plaintiff engaged in frivolous and unnecessary litigation in light of Borrowers' assurances and attempts to refinance.
It is well settled that attorneys' fees are subject to review and must be reasonable (see Matter of Freeman, 34 N.Y.2d 1, 9–10 [1974] ). The amount recoverable for counsel fees is the reasonable value of the services required (see Breidbart v. Wiesenthal, 117 AD3d 766, 767 [2d Dept 2014] ). In deciding an application for counsel fees the Court must consider “the following factors: time and labor required, the difficulty of the questions involved, and the skill required to handle the problems presented; the lawyer's experience, ability and reputation; the amount involved and benefit resulting to the client from the services; the customary fee charged by the Bar for similar services; the contingency or certainty of compensation;...
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