Scotia Associates v. Bond

• Citation: 484 N.Y.S.2d 479,126 Misc.2d 885
• Parties: SCOTIA ASSOCIATES, Petitioner-Landlord, v. Marion BOND, Respondent-Tenant.
• Decision Date: 14 January 1985
• Court: New York City Court

Page 479

484 N.Y.S.2d 479

126 Misc.2d 885

SCOTIA ASSOCIATES, Petitioner-Landlord, v. Marion BOND, Respondent-Tenant.

Civil Court of the City of New York,

Trial Term, New York County,

Part 53.

Jan. 14, 1985.

Ira H. Goldfarb, New York City, for petitioner.

Leonard L. Steinman, New York City, for respondent.

EDWARD H. LEHNER, Judge:

The legal issues presented here are i) whether legal fees have been "incurred" so as to enable a tenant, who succeeded in having a summary proceeding instituted against her dismissed, to recover counsel fees under Real Property Law § 234 when the tenant's attorney undertook the case without expectation of obtaining compensation from the tenant, and ii) whether such fees may be recovered when the dismissal was on procedural grounds.

FACTS

This proceeding was instituted to recover possession of a rent controlled apartment based on an alleged illegal subletting. Respondent's motion to dismiss was granted on October 11, 1984 by Judge Saxe who ruled that the petition was "jurisdictionally defective" because the landlord had not filed the notice required by Section 53 of the New York City Rent and Eviction Regulations with the District Rent Office. The order of dismissal also directed a "hearing on attorneys' fees," which was held on November 26 before this court.

Tenant's attorney testified that when he undertook to represent the tenant he understood that she lacked the means to pay a fee and that he would obtain compensation for his efforts only if he were successful in the litigation and could recover a fee from the landlord under RPL § 234.

THE LANDLORD'S DEFENSES

Landlord argues that tenant is not entitled to recover fees because i) the tenant's lease was executed prior to the enactment of RPL § 234, ii) the procedural dismissal was not a "successful defense," and iii) in light of the testimony, it cannot be said that the tenant has "incurred" legal fees.

RETROACTIVE APPLICATION OF REAL PROPERTY LAW § 234

In substance, RPL § 234 provides that if a lease contains a provision allowing the landlord to recover counsel fees in the event a summary proceeding is instituted against the tenant because of a default under the lease, then there shall be implied a covenant that the landlord shall "pay to the tenant the reasonable attorneys' fees and/or expenses incurred by the tenant" in the "successful defense" of a summary proceeding.

Although the section was enacted in 1966, and thus subsequent to the execution in 1962 of the last lease by respondent for this rent controlled apartment, the statute is nevertheless applicable. In College Properties, Inc. v. Bruce, 122 Misc.2d 766, 768, 473 N.Y.S.2d 906 (App.Term, 1st Dept.1984), aff'd 104 A.D.2d 1063, 481 N.Y.S.2d 935, 1984, it was held, under facts similar to those in the case at bar, that "in projecting the attorney's fee provision of tenant's 1962 lease into her statutory tenancy, the mutuality of obligation called for in section 234 must be incorporated into that statutory tenancy."

THE "SUCCESSFUL DEFENSE"

Although 45 days elapsed between the date of the dismissal and the hearing before the undersigned, the landlord had taken no steps to commence a new proceeding against the tenant. The landlord's attorney explained that such inaction was because the landlord was seeking to determine whether the tenant was still subletting in violation of the lease. Tenant's attorney maintained that there were now no unauthorized subtenants occupying the apartment.

The general criterion for determining whether a dismissal warrants a tenant being entitled to attorneys' fees under RPL § 234 can be said to be whether the dismissal is victory in a "battle" in a continuing "war" on the issue between the parties, or an end of the "war." Thus, in Elkins v In N.V. Madison, Inc. v. Saurwein, 103 Misc.2d 996, 998, 431 N.Y.S.2d 251 (App.Term, 1st Dept.1980), attorneys' fees were authorized even though the dismissal was on procedural grounds because the court found that "the landlord contemplates no further proceedings to determine the underlying merits." In Park South Associates v. Essebag, 126 Misc.2d 994, 487 N.Y.S.2d 252 (App.Term, 1st Dept.), where two years had elapsed since a procedural dismissal with the landlord having taken no steps to renew the litigation, the court found that the landlord had abandoned the proceeding and that it was therefore appropriate to then determine reasonable attorneys' fees. The court ruled that: "... the landlord should not be permitted to postpone indefinitely the 'ultimate outcome' of the lawsuit, effectively denying tenant statutory attorneys' fees in the situation where the petition is dismissed on motion and the merits are not addressed." (p. 995, 487 N.Y.S.2d 252).

Cinera Realty, Inc., 61 A.D.2d 828, 402 N.Y.S.2d 432 (2d Dept.1978), where two summary non-payment proceedings were dismissed on procedural grounds, but a third one was pending, the court denied fees pending the "ultimate outcome of the controversy". Accord: Teitler v. Feldman, N.Y.L.J., Oct. 10, 1984, p. 6, c. 1 (App.Term, 1st Dept.).

Where a subsequent proceeding is commenced but sets forth a different basis for recovery from that set forth in the dismissed proceeding, it has been held that the tenant is entitled to counsel fees for successfully defending the original proceeding (the original "war" in effect having been terminated and a new one commenced). McMahon v. Schwartz, 109 Misc.2d 80, 438 N.Y.S.2d 215 (Civil Ct., Bronx Co.1981); Dowling v. Yamashiro, 116 Misc.2d 86, 455 N.Y.S.2d 231 (Civil Ct., N.Y.Co.1982).

The issue presented to this court is whether at the date of the hearing (45 days after the dismissal), the time was ripe for a determination of counsel fees. There being no binding precedent stating when a proceeding should be deemed abandoned, the court holds that the rule to be applied is whether a reasonable time has passed, considering all of the circumstances, without the landlord taking any steps to reactivate litigation with respect to the claim made in the dismissed proceeding.

This proceeding was commenced on June 25, 1984. The answer served on July 5 contained many affirmative defenses, including that which resulted in the dismissal. The landlord's attorney indicated that he was aware of the likelihood of the proceeding being dismissed for failure to file the requisite notice. With knowledge for over four months of the likelihood of the proceeding being dismissed, and with 45 days having elapsed since dismissal, the court finds that a sufficient time passed to enable the landlord to ascertain whether the lease violation claimed in its June petition persisted. Therefore, since the landlord has not in any manner asserted that such violation continues, the court finds that for the purposes of dealing with the application for counsel fees, the prior proceeding has been abandoned, and the court will deal with tenant's application on the merits.

HAVE LEGAL FEES BEEN INCURRED?

Petitioner claims that no award should be made because the tenant did not undertake to pay a fee to her attorney (who, in a sense, acted pro bono on her behalf) and hence cannot be considered to have "incurred" counsel fees.

Initially the court observes that it has been held that an attorney who acts pro se is entitled to recover fees under RPL § 234 on the theory that he diverted professional time to his personal litigation when he could have been engaged in other pursuits. Parker 72nd Associates v. Isaacs, 109 Misc.2d 57, 436 N.Y.S.2d 542 (Civil Ct., N.Y.Co.1980); McMahon v. Schwartz, supra.

The term "incurred" is defined in Webster's New Collegiate Dictionary as "to become liable or subject to."

Various courts have considered the meaning of "incurred" in several contexts. For example, with respect to provisions in insurance policies for payment of medical expenses, courts have generally required that a liability be created. E.g. Rubin v. Empire Mutual Insurance Company, 25 N.Y.2d 426, 306 N.Y.S.2d 914, 255 N.E.2d 154 (1969); Whittle v. Government Employees Insurance Co., 51 Misc.2d 498, 273 N.Y.S.2d 442 (App.Term, 2nd Dept.1966); Farr v. Travelers Indemnity Co., 84 Misc.2d 189, 375 N.Y.S.2d 229 (Sup.Ct.Erie Co.1975).

Both the federal Freedom of Information Act (FOIA) and the Equal Access to Justice Act (EAJA) contain attorneys' fee provisions in which the successful litigant's entitlement to a fee has hinged upon the meaning assigned to the term "incurred".

In Ceglia v. Schweiker, 566 F.Supp. 118 (E.D.N.Y.1983), where plaintiff sought attorneys' fees pursuant to the EAJA, defendant argued that plaintiff had not "incurred" any fees since she was represented free of charge by legal services. The court held that such fees were available despite the pro bono nature of the services rendered, based on both the legislative history of the statute and on the public policy of providing a strong incentive for legal services and other pro bono counsel to represent indigent claimants. In so holding, the court stressed the remedial purpose of the statute. 566 F.Supp. at 123 n. 4. See also: Chee v. Schweiker, 563 F.Supp. 1362 (D.Ariz.1983); Watkins v. Harris, 566 F.Supp. 493 (E.D.Pa.1983); Contra, Cornella v. Schweiker, 553 F.Supp. 240 (D.S.D.1982) (requiring actual liability for fees).

The same result has been achieved by judicial interpretation of the word "incurred" in the fee provisions of the FOIA. Crooker v. United States Dept. of Treasury, 634 F.2d 48 (2d Cir.1980); Cunningham v. F.B.I., 664 F.2d 383, 385 (3d Cir.1981); Contra, Crooker v. United States Dept. of Justice, 632 F.2d 916, 922 (1st Cir.1980); Burke v. United States Dept. of Justice, 559 F.2d 1182 (10th Cir.1977).

However, the foregoing federal precedent is not relevant here as the purpose of RPL § 234 is not similar to the purpose behind the inclusion of the attorneys' fee provisions in the aforesaid federal acts. In the latter, a party who has been denied rights by government is enabled...