Summary
involving a post-trial hearing on an application for attorneys' fees
Summary of this case from Lehman Bros. Holdings, Inc. v. Gateway Funding Diversified Mortg. Servs., L.P.Opinion
No. L & T 71456/12.
07-24-2014
737 PARK AVENUE ACQUISITION, LLC, Petitioner–Landlord, v. Robert B. JETTER, M.D., PLLC, Respondent–Tenant.
Ephyron–Mandel & Howard, LLP, Melissa Ephron–Mandel, Esq., New York, for Petitioner, 737 Park Avenue Acquisition LLC. Law offices of Joseph M. Heppt, Joseph M. Heppt, Esq., New York, for Respondent, Robert B. Jetter, M.D., PLLC.
Ephyron–Mandel & Howard, LLP, Melissa Ephron–Mandel, Esq., New York, for Petitioner, 737 Park Avenue Acquisition LLC.
Law offices of Joseph M. Heppt, Joseph M. Heppt, Esq., New York, for Respondent, Robert B. Jetter, M.D., PLLC.
Opinion
JAMES E. D'AUGUSTE, J.
This Court issued a decision and order after trial dated August 6, 2013 (“Trial Decision”), familiarity with same is assumed. Thereafter, on November 13, 2013, this Court conducted a post-trial hearing to consider 737 Park's application to recover attorneys' fees from Jetter. After taking testimony and considering the credible evidence, the totality of the circumstances, and the parties' post-hearing briefs on the issue of prevailing party status, the Court finds that the mixed outcome of the litigation precludes either side from emerging as the prevailing party. Accordingly, 737 Park's application for attorneys' fees is denied.
Capitalized or abbreviated names and terms shall be the same as defined in the Trial Decision.
This Court reserved decision on Jetter's pre-hearing motion for summary judgment seeking dismissal of 737 Park's claim for attorneys' fees. That motion is denied as academic.
FACTS
Jetter leases a ground floor commercial space located at 737 Park Avenue, New York, New York. A major construction project performed on the building in which the leased premises is located negatively impacted Jetter's plastic-surgery practice. Jetter withheld rent and, thereafter, 737 Park commenced a commercial property non-payment proceeding against Jetter. The petition sought a judgment of possession and a money judgment for approximately 3 months of rent, additional rent, and late fees that accrued during March, April, May, and June 2012. The non-payment petition alleged arrears of $82,698.29 together with interest and attorneys' fees.
On February 20, 2013, this Court commenced a four-day bench trial during which it considered the parties' claims and defenses. After hearing the testimony of witnesses, weighing the evidence presented at trial, and considering post-trial briefs of counsel, the Court awarded 737 Park a money judgment, net of abatements, for $111,293.02. Although 737 Park's building renovation project negatively impacted Jetter's intended use of the rented premises, the Court found that Jetter could not overcome exculpatory provisions contained within the governing lease. This Court, however, awarded Jetter a rent abatement of $16,334.73 on its counterclaim for constructive eviction during three separate weeks when it sustained flooding caused by water pipes in adjacent units that had been broken during petitioner's construction activities.
The issue of 737 Park's potential entitlement to have its attorneys' fees paid by Jetter was severed from the main trial for later consideration. On November 13, 2013, this Court conducted a post-trial hearing to consider the attorneys' fees issue. This Court heard testimony and accepted post-hearing briefs on the issue of prevailing party status. This decision follows.
DISCUSSION
A party prevailing in real estate litigation may seek an award for attorneys' fees if allowed, as in this litigation, by the terms of the lease. Mighty Midgets v. Centennial Ins. Co., 47 N.Y.2d 12, 22 (1979). When deciding a question of prevailing party status, the Court should consider whether the outcome of the litigation is substantially favorable to either party. See Lynch v. Leibman, 177 A.D.2d 453, 456 (1st Dep't 1991) ; Walentas v. Johnes, 257 A.D.2d 352 (1st Dep't 1999). To determine which party should be accorded prevailing party status “requires an initial consideration of the true scope of the dispute litigated, followed by a comparison of what was achieved within that scope.” Excelsior 57th Corp. v. Winters, 227 A.D.2d 146, 147 (1st Dep't 1996).
For instance, the landlord in Excelsior was found to be the prevailing party after it obtained a judgment to recover tenant's non-payment of 54 months rent despite a 4½ month rents abatement to the tenant. Yet in Walentas, where the landlord was awarded rent increases for all of the 10 years for which rent arrears were sought and the tenant was awarded $7,835.02 rent abatement for breach of warrantee of habitability, the outcome was not found substantially favorable for either side to be considered the prevailing party.
During the four months before this proceeding began, Jetter withheld rent payments to 737 Park because it experienced significant disruptions to its intended use of the subject premises. 737 Park was ultimately entitled to judgment for much of the unpaid rent because waiver provisions in the lease blocked recovery for Jetter's business disruptions caused by the building's renovation work. Yet, 737 Parks's claim was hardly free from any doubt. Jetter was able to substantiate recoverable damages due to flooding suffered over a meaningful portion of three months. In this Court's view, after litigating valid claims, the outcome was not substantially favorable to either side. Neither party can claim to have prevailed in this litigation, just as neither can claim to have been merely the hapless victim of the other's combative claims or defenses. See Walentas, 257 A.D.2d at 354.
The Appellate Term, First Department, also considered the dollar percentage outcome of the litigation. For example, where a landlord was awarded $32,054.51 and the tenant was granted a 10% rent abatement, the Appellate Term found that the mixed outcome was not substantially favorable to award either side the status of a prevailing party. See Perevoski v. Sadoff, 1 Misc.3d 137(A) (App Term, 1st Dep't 2004). In a subsequent case where the tenant, before trial, tendered the entire $10,125.00 of the rent arrears sought in the litigation, an 11% abatement for 18 months awarded to the tenant on one of its counterclaims resulted in a mixed outcome to preclude the award of attorneys' fees. See 339–347 E. 12th St. LLC v. Ling, 31 Misc.3d 48, 49 (App Term, 1st Dep't 2011) ; SohoVIL. Realty v. Gaffney, 188 Misc.2d 261, 262 (App.Term, 1st Dep't 2001), quoting Elkins v. Cinera Realty, 61 A.D.2d 828, 828 (2d Dep't 1978) (“An attorneys' fees award may be based on the ultimate outcome of the controversy,' whether or not such outcome is on the merits.”).
After trial, the Court found 737 Park entitled to arrears, late fees, and interest, amounting to $127,627.75. The Court also found that Jetter suffered constructive eviction due to flooding of its premises for one week during each of three separate months and was thereby entitled to a full abatement of rent and extra rent for those periods, amounting to $16,334.73. After deducting Jetter's abatement, 737 Park was awarded judgment for $111,293.02. The result in this case was an abatement of approximately 12.8% of the total arrears, or approximately 14.7% of the final award achieved by 737 Park. Applying the cases that considered the dollar percentage outcome of the litigation precludes finding either side in this dispute to be a prevailing party.
The Court does not consider the amount in controversy to include Jetter's payments, amounting to $129,346.96, that became due during the litigation and that were paid to the landlord or placed into escrow, either pursuant to use and occupancy or other stipulations. See Lynch, 177 A.D.2d at 456.
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CONCLUSION
Since the Court finds that neither side in this dispute has emerged as the prevailing party, 737 Park's petition for attorney's fees is denied. Accordingly, it is hereby;
ORDERED, that petitioner 737 Park Avenue Acquisition LLC's application for attorneys' fees is denied and that branch of the petition seeking attorneys' fees is denied with prejudice; and it is further.
ORDERED, that respondent Robert B. Jetter, M.D., PLLC's motion for summary judgment is denied as academic.
This constitutes the decision and order of this Court.