Opinion
Index No. 652861/2022
03-11-2024
Carlos David Pettinari, Plaintiff, v. JMA Property Services, LLC, MELVIN JOHNSON, and CATHY JOHNSON, Defendants.
Lee & Lum, LLP, New York, NY (Robert J. Lum of counsel), for plaintiff.
Lee & Lum, LLP, New York, NY (Robert J. Lum of counsel), for plaintiff.
No appearance for defendants.
Gerald Lebovits, J.
The following e-filed documents, listed by NYSCEF document number (Motion 002) 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39 were read on this motion to/for JUDGMENT - DEFAULT.
Plaintiff, Carlos David Pettinari, seeks a default judgment against defendant JMA Property Services LLC under CPLR 3215. Plaintiff is a resident of Singapore and owns property at 75 Wall Street in Manhattan. Defendant JMA is a Florida limited-liability company. Defendants Melvin Johnson and Cathy Johnson are residents of Florida and managing members of JMA.
In motion sequence 001, plaintiff sought default judgment against the defendants. This court denied the motion as to the individual defendants for lack of personal jurisdiction due to improper service. (See Pettinari v JMA Prop. Servs., LLC, 2023 NY Slip Op 50743[U], *1-2 [Sup Ct, NY County 2023].) With respect to JMA, the court granted the default-judgment motion in part and denied it in part. Plaintiff provided proper proof of the allegations supporting the first cause of action (breach of contract) and fourth cause of action (breach of fiduciary duty). This court thus awarded plaintiff $24,986.08 against JMA, plus interest. This court denied the motion as to plaintiff's remaining claims because the proof in support of those claims was a complaint verified only by counsel. (See NYSCEF No. 6.) In renewing his motion, plaintiff has provided a party-verified complaint. (See NYSCEF No. 33 at 16.)
In this renewed motion, plaintiff seeks default judgment against JMA on the remaining six causes of action. These include claims for breach of contract, conversion, unjust enrichment, and fraud. Additionally, plaintiff seeks damages against JMA on account of its alleged violation of Real Property Law (RPL) § 440-a and General Business Law (GBL) § 349. Plaintiff claims that JMA entered into a property-management agreement with plaintiff without a New York real-estate broker's license. Plaintiff also seeks a declaratory judgment that the agreement is null and void, as well as attorney fees. Plaintiff's motion is granted in part and denied in part.
I. Plaintiff's Claims for Damages
1. On the prior motion, plaintiff sought $28,789.86 in damages on his cause of action for breach of contract (first cause of action). This court awarded $24,526.93 (plus interest). (See Pettinari, 2023 NY Slip Op 50743[U], *1-2.) Plaintiff now argues that JMA owes him an additional $6,200 for one month's rent and the security deposit, minus $1,776.22 in condominium association dues, totaling $4,423.78. (NYSCEF No. 24 at 3.) This court agrees.
2. With respect to plaintiff's claims for conversion (second cause of action) and unjust enrichment (third cause of action), the court concludes that these claims duplicate plaintiff's breach-of-contract claim. A claim "for conversion cannot be predicated on a mere breach of contract." (Fesseha v TD Waterhouse Inv. Services, Inc., 305 A.D.2d 268 [1st Dept 2003].) And the claim for unjust enrichment is likewise duplicative given "the disputed terms and conditions fall entirely within the... contract." (Goldman v Metro. Life Ins. Co., 5 N.Y.3d 561, 572 [2005].) Plaintiff's motion for default judgment on these causes of action is denied.
3. On plaintiff's fifth cause of action, he argues that JMA violated RPL § 440-a because JMA and Ms. Johnson assertedly engaged in business with and collected fees from him, and held themselves out as licensed, although they were not. (See NYSCEF No. 7 at ¶ 68.) This argument is persuasive.
RPL § 440-a provides that "[n]o person, co-partnership, limited liability company or corporation shall engage in or follow the business or occupation of, or hold themselves or itself out or act temporarily or otherwise as a real estate broker or real estate salesperson in this state without first procuring a license therefor as provided in this article." On motion sequence 001, this court denied plaintiff's request for default judgment motion because failed to provide a "basis to conclude that the individual defendants were not licensed real estate brokers." (Pettinari, 2023 NY Slip Op 50743[U], *3.) On this motion, plaintiff's counsel represents in an affirmation that the attorney investigated whether JMA and Ms. Johnson held broker licenses and found that they were not listed in the New York State Occupational Licensing Management System. (See NYSCEF No. 33 at ¶ 16.) That representation is sufficient to establish for default-judgment purposes that defendant is liable on plaintiff's fifth cause of action.
RPL § 442-e (3) provides that a party that violates a provision of RPL article 12-a, including § 440-a, is liable to pay to any person aggrieved by the violation a "penalty of not less than the amount of the sum of money received by him as such commission, compensation or profit and not more than four times the sum so received by him." Plaintiff has established that he is entitled to recover $43,533.45 in management fees and commissions that he paid to JMA from January 30, 2013, to February 28, 2022. Plaintiff also seeks a discretionary award of quadruple damages. In considering this request, this court is mindful that such an award is a "heavy penalty," reflecting "the punitive nature" of § 442-e (3) (2 Park Ave. Assocs. v Cross & Brown Co., 36 N.Y.2d 286, 290-291 [1975]); and that courts rarely award exemplary damages under this section (see e.g. Snyder v Pleasant Val. Finishing Co., Inc., 756 F.Supp. 725, 732 [SD NY 1990] [discussing this point]). At the same time, this court takes judicial notice of court records reflecting that this action is one of five suits brought in the past three years against these defendants for violating RPL § 440-a, among other claims-and that defendants have not prevailed in any of those actions. Given defendants' repeated violation of § 440-a, the court awards plaintiff $21,766.73 as additional exemplary damages under § 442-e (3).
4. With respect to plaintiff's claim that JMA violated GBL § 349 (sixth cause of action), plaintiff has provided evidence demonstrating that JMA "engaged in (1) consumer-oriented conduct, that is (2) materially misleading, and that (3) plaintiff suffered injury as a result of the allegedly deceptive act or practice." (Koch v Acker, Merrall & Condit Co., 18 N.Y.3d 940, 941 [2012] [internal quotation marks omitted].) The compensatory damages that plaintiff would be entitled to collect on this claim (i.e., the fees and commissions he paid to JMA) would duplicate the damages awarded under RPL § 442-e (3). The court therefore does not award plaintiff any compensatory damages on his GBL § 349 claim. The court does exercise its discretion, though, to award plaintiff $1,000 in exemplary damages under GBL § 349 (h). (See Stutman v Chemical Bank, 95 N.Y.2d 24, 28-29 [20002] [discussing criteria for awarding exemplary damages under this subsection].)
5. With respect to plaintiff's fraud claim (seventh cause of action), the court concludes that this cause of action is based on the same facts, and seeks the same damages, as plaintiff's RPL § 440-a/442-e (3) claim. Plaintiff has alleged that JMA falsely advertised itself as a licensed real-estate management company and thus induced plaintiff to acquire JMA's services (see NYSCEF No. 24 at ¶ 7; NYSCEF No. 33 at 7); and again seeks to recover the fees and commissions he paid to JMA. (NYSCEF No. 33 at 8.) The court concludes that the request for default judgment on plaintiff's cause of action for fraud must be denied as duplicative. (See Kilpatrick v Rose, 197 Misc. 911, 912 [Sup Ct, Queens County 1950] [holding that RPL § 442-e (3) provides the exclusive remedy for recovery of real-estate commissions paid to parties who were not licensed real-estate brokers]; Zhu v Beacon Intl., 2013 WL 12188097, at *12-13 [Sup Ct, Westchester County June 3, 2013] [same].)
6. With respect to his cause of action for declaratory judgment (eighth cause of action), plaintiff seeks a declaratory judgment that defendant is no longer "entitled to enforce the [property management] Agreement and receive fees and commissions for its Services." (NYSCEF No. 33 at ¶ 29.) The court concludes that plaintiff is entitled to a declaration that JMA "cannot enforce the agreement to the extent that [it] seek[s] commissions" and fees. (Kucher v Sohayegh, 182 A.D.3d 523, 523-524 [1st Dept 2020].)
With respect to plaintiff's damages claims, plaintiff does not request interest on this motion; no interest on those damages is awarded.
II. Plaintiff's Claim for Attorney Fees
This court held on motion sequence 001 that plaintiff has established a contractual entitlement to attorney fees as the prevailing party, but not the amount in fees to which he is entitled. (See Pettinari, 2023 NY Slip Op 50743[U], at *3.) Plaintiff now renews his request for an award of fees, relying on an affirmation of counsel and an attached spreadsheet reflecting hours billed by counsel on this action. Plaintiff's request is granted in part and denied in part.
Plaintiff argues that this court should award fees in an amount that would reimburse plaintiff for the fees owed under the terms of its retainer agreement with its counsel-namely, a $5,000 up-front retainer plus a 1/3 contingent share of any recovery. (See NYSCEF No. 33 at 8-9.) This court disagrees. The retainer agreement concerns the attorney-fee obligations running between a party and its counsel. But the question when a party moves for an award of attorney fees as the prevailing party is the proper amount that the party should receive in fees from its adversary. For that purpose, the question is the amount in fees that its counsel reasonably incurred, not necessarily what party and counsel agreed that counsel would receive. Thus, that a "retainer agreement provides for counsel to receive a fee award that is a fixed percentage of the total recovery does not itself establish that the amount of that award is reasonable." (Wang v JMA Prop. Servs., LLC, 2023 NY Slip Op 50742[U], at *2 [Sup Ct, NY County 2023], citing Prince v Schacher, 125 A.D.3d 626, 627, 627-628 [2d Dept 2015].) Rather, reasonableness is considered in terms of (i) the total hours reasonably billed by plaintiff's counsel in the action and (ii) the customary rates "charged for similar services by lawyers in the community with like experience and of comparable reputation to those by whom the prevailing party was represented." (Gamache v Steinhaus, 7 A.D.3d 525, 527 [2d Dept 2004].)
As between client and counsel, absent contrary provision in the retainer agreement, the attorney is entitled to collect from the client the amount in reasonable fees awarded under a fee-shifting provision, or the amount to which the attorney would be entitled in contingency, whichever is greater. (See Albunio v City of New York, 23 N.Y.3d 65, 68, 73-76 [2014].)
Applying those criteria, the court determines as follows. The court is satisfied that counsel's billing rate, $450/hour is reasonable. Counsel claims 43.6 hours billed at that rate. (See NYSCEF No. 39.) Of that total, the court concludes that 3.5 hours are not compensable because they were incurred in preparing plaintiff's fee request (so-called fees on fees) (see id.); and the parties' agreement does not manifest an unmistakably clear intent to permit recovering fees on fees, as the governing caselaw requires. (See IG Second Generation Partners, L.P. v Kaygreen Realty Co., 114 A.D.3d 641, 644 [2d Dept 2014].) And the court reduces the hours claimed by a further four hours to reflect the dismissal of the action as against the individual defendants and the partial denial of plaintiff's first default-judgment motion as against JMA. The court therefore awards plaintiff $16,245 in attorney fees, reflecting 36.1 hours billed at $450/hour.
Accordingly, it is
ORDERED that plaintiff's renewed default-judgment motion is granted in part and denied in part as set forth above; and it is further
ORDERED, ADJUDGED, AND DECLARED that JMA is no longer entitled to enforce the property management agreement as against plaintiff, nor to receive fees and commissions from plaintiff for JMA's services; and it is further
ORDERED that plaintiff is awarded a supplemental judgment against JMA for (i) $70,723.96 in compensatory and exemplary damages; plus (ii) $16,245 in attorney fees; plus (iii) costs and disbursements as taxed by the Clerk upon the submission of an appropriate bill of costs; and it is further
ORDERED that plaintiff serve a copy of this order with notice of its entry on defendants by certified mail, return receipt requested, directed to their respective last-known addresses; and on the office of the County Clerk (by the means set forth in the court's e-filing protocol, available on the e-filing page of the court's website, https://ww2.nycourts.gov/courts/1jd/supctmanh/E-Filing.shtml), which shall enter judgment accordingly.