Opinion
603022/04.
Decided September 12, 2005.
Plaintiff moves for an order granting leave to partially reargue the Decision/Judgment of this Court dated April 25, 2005 which denied plaintiff's motion for summary judgment, granted defendants' cross-motion for summary judgment, and ordered the escrow agent to remit to defendant Owners Corp the amount of $22,476.05, which was the subject of this controversy. Plaintiff's motion for reargument is granted, and, upon reargument, the Court adheres to its original decision.
This decision was edited for publication.
This case stems from a prior dispute between the parties whereby, pursuant to a Settlement and Escrow Agreement ("the agreement") in August 2004, they deposited in escrow $22,476.05 in legal fees and disbursements incurred by defendants in defending and counterclaiming against plaintiff in a prior lawsuit. Plaintiff had sued her neighbors because of their alleged excessive noise and the Owner's Corp. for breach of the warranty of habitability. Eventually, plaintiff discontinued the action and opted to move. The Owner's Corp., however, would not allow her to close on the sale of her apartment until she paid the Owner's Corp. its legal fees incurred in the defense of the litigation, which the Owners Corp. had already paid to its attorneys. The parties settled the matter by executing the agreement and depositing the fees in escrow. The agreement required plaintiff to commence an action in Supreme Court after the closing "for a declaratory judgment with respect to the disposition of the Escrow Funds" (Agreement at 2).
While plaintiff still disagrees with the Court's original decision that defendants are entitled to the escrow funds under the Court's interpretation of Paragraph 28 of the proprietary lease between the parties, plaintiff, in reargument and relying upon Solow Management Corp. v. Tanger, 19 AD3d 225 (1st Dept. 2005), contends that the Court is nevertheless required to hold a hearing to determine the reasonableness of the attorneys fees. The Court disagrees.
The parties are in agreement that the interpretation of Paragraph 28 of the Proprietary Lease executed by the parties determines who gets the funds. Paragraph 28 reads as follows: "If the lessee should at any time be in default hereunder and the Lessor shall incur any expenses (whether paid or not) in performing acts which the lessee is required to perform, or in instituting any action or proceeding based on such default, or defending, or asserting a counterclaim in any action or proceeding brought by the lessee, the expense thereof to the lessor, including reasonable attorney's fees and disbursements, shall be paid by the lessee to the lessor, on demands, as additional rent.
A court is required to hold an evidentiary hearing to determine the reasonableness of attorneys fees when questions of fact exist related to the reasonableness of the fees charged. Kumble v. Windsor Plaza Co., 128 AD2d 425 (1st Dept. 1987) appeal dismissed, 70 NYS2d 693. When a party legitimately challenges the amount claimed and the legal services performed, a court's award of counsel fees may only occur following an adversarial hearing where counsel fees must be proved and the opposing party may assert the right to cross-examine. Weinberg v. Weinberg, 95 AD2d 828 (2nd Dept. 1983); Badenhop v. Badenhop, 84 AD2d 773 (2d Dept. 1981).
However, the converse is also true: a court is not required to hold an adversarial hearing when no legitimate dispute exists regarding the attorneys fees in question. Old Paris, Inc. v. G.E.B.M. Intern., Inc., 170 AD2d 392 (1st Dept. 1991) (IAS court did not abuse its discretion in awarding attorneys fees without first conducting an evidentiary hearing where the amount of fees sought was not challenged).
Plaintiff's contentions notwithstanding, the Court finds that plaintiff waived the issue of the adequacy of the legal fees by settling the prior action and agreeing to seek a declaration from this court "with respect to the disposition of the Escrow Funds" (The Agreement, Paragraph 3), without reserving the right to challenge the agreed upon amount of $22,476.05. Although plaintiff initially opposed the legal services in question, she ultimately relented and settled the matter except with respect to the issue of entitlement to the funds.
Plaintiff's reliance in Solow Management Corp. v. Tanger, 19 AD3d 225 (1st Dept. 2005) is misplaced. Solow does not stand for the proposition, as plaintiff posits, that an evidentiary hearing is always required, particularly when the court finds no legitimate dispute. In Solow the Appellate Division merely held that attorneys fees should not be awarded without a hearing when there is no relation between the work performed and the amount charged and such amount is being challenged. However, the facts are different in the instant case. Plaintiff admittedly executed the agreement settling the amount in dispute and placing the monies in escrow; she now wants a second opportunity to challenge it. Old Paris, Inc. v. G.E.B.M. Intern., Inc., 170 AD2d 392 (1st Dept. 1991).
Moreover, contrary to the trial court in Solow, this Court is not holding that the reasonableness of the attorneys fees in escrow is "irrelevant" in view of a prior appellate order. Rather, this Court holds that, subject to the Court's authority and responsibility to determine the ultimate reasonableness of the attorney fees, and given the courts traditional deference to parties to chart their own course in litigation, parties have a right to stipulate to an amount for legal services expended in litigation. This is an agreement which this Court is bound to enforce absent a conflict with public policy, including the Courts ultimate responsibility to ascertain a relationship between the amount agreed upon and the legal services actually performed. See Matter of Malloy, 278 NY 429 (1938) ("parties by their stipulations may in many ways make the law for any legal proceeding to which they are parties, which not only binds them, but which the courts are bound to enforce"); First National Stores Inc. v. Yellowstone Shopping Center Inc., 21 NY2d 630, 638 (1968) (Where the parties obligations are clear, courts should enforce the contract terms in the interest of not undermining the "stability of contract obligations").
To be sure, while this Court will jealously guard its traditional authority to "supervise the charging of fees for legal services under the courts' inherent and statutory power to regulate the practice of law" ( Solow at 226, citing Matter of First Natl. Bank of E. Islip v. Brower, 42 NYS2d 471, 474 (1977)), the Court is also cognizant of the traditional deference given to parties to chart their own course in litigation absent a conflict with public policy. See W.W.W. Associates, Inc. V. Frank Giancontiery et al., 77 NY2d 157 (1990); Matter of Malloy, 278 NY 429 (1938).
Therefore, the escrow agreement between the parties here will be given proper deference. As the Court of Appeals has noted, "a familiar and eminently sensible proposition of law is that, when parties set down their agreement in a clear, complete document, their writing should as a rule be enforced according to its terms." W.W.W. Associates, Inc. V. Frank Giancontiery et al., 77 NY2d 157, 162 (1990).
Holding plaintiff to the agreement stipulating the amount of fees is particularly appropriate in this case where the parties were ably represented by counsel and plaintiff has shown an unusual propensity to induce defendants to unnecessarily incur legal fees. Moreover, the $22,476.05 agreed upon by the parties is a reasonable value for the legal services rendered by defendant's counsel and in good faith paid by the defendants. To hold an unnecessary evidentiary hearing will continue to waste the Court's valuable time, as well as unfairly increase defendant co-op's legal fees beyond the amount they are trying to collect, a result of apparent little concern to plaintiff.
The Court has examined the retainer agreement between defendants and their counsel which calls for an hourly rate of $275.00. Counsel has submitted evidence in admissible form related to inter alia the nature of the litigation and the necessity of the time expended in defending and counterclaiming against plaintiff's marginal action.
The Court finds the fees incurred by defendants to be reasonable based on the evidence in admissible form submitted by the parties in support of the motion and cross-motions for summary judgment and the instant motion for reargument. Defendants were required to defend and counterclaim against what in essence was a marginal claim by plaintiff which she chose not to seriously prosecute. Plaintiff not only failed to serve discovery demands, but also increased defendant's legal expenses by not complying with defendant's discovery requests, including not appearing for a properly noticed deposition. Additionally, plaintiff's and her counsel's conduct caused unnecessary motion practice by serving a notice of issue without completing discovery and only later, after a motion to strike the note of issue, informing defendant's counsel that it had not been accepted for filing by the Clerk of the Court. Under these circumstances, plaintiff should not be heard to complain about the number of hours defendant's counsel was required to expend. The fees in question are reasonable and directly related to the necessary work performed by defendant's counsel in litigating the underlying matter.
Finally, the Court notes that none of the legal fees incurred by defendant in the instant action, including two significant motions and cross-motion for summary judgment and reargument, as well as numerous appearances, are included in the monies in escrow; nor is the pending appeal before the Appellate Division, First Department.
Accordingly, plaintiff's motion for partial reargument is granted and, upon reargument, the Court adheres to its original decision denying plaintiff's motion for summary judgment, granting defendant's cross-motion for summary judgment, and ordering the monies in escrow to be turned over to defendants.
This constitutes the Decision and Order of the Court.