Opinion
LT 82056/10.
Decided August 31, 2011.
Glenn H. Spiegel and Jonathan H. Newman of Newman Farrara, LLP; Mark Jon Sugarman of Bryan Cave, LLP, Attorneys for Petitioner.
David Rozenholc and David H. Pritchard of David Rozenholc and Associates; Michael J. Roberts of Roberts Roberts, Attorneys for Respondent.
This action commenced as a summary holdover proceeding in which another judge of this court had rendered a decision/order granting judgment of possession to petitioner and directed "an inquest into all monetary issues, including rent, use and occupancy and attorney's fees" (order of Hon. Arthur Engoron dated December 21, 2010). Thereafter, an appeal was taken on said order and the proceeding was stayed. As a condition of the stay, by order dated February 10, 2011, Hon. Manuel Mendez of this court directed respondent to pay use and occupancy and to post an undertaking for additional rent and attorneys' fees as determined at a hearing on March 4, 2011.
At the hearing on March 4, which continued on May 12, 17, 24, and June 20, 2011, petitioner put forth its expert witness to establish that the best and highest use for the subject premises, a vacant lot, was a boutique hotel and determine the market rate for monthly use and occupancy therefor, pending the appeal. Subsequent to the hearing, the parties were directed to submit post-trial memoranda by July 18, 2011. Also after the hearing, petitioner submitted affirmations and supporting documents to establish an amount of the undertaking to be paid as additional rent and attorney's fees to which respondent submitted its opposition. Petitioner stated its case for an undertaking in the amount of $1,607,568.44 for use and occupancy, attorneys' fees and costs. Respondent figured its outstanding use and occupancy to be under $30.00 given the $775,000.00 line of credit from which petitioner had drawn.
Use and Occupancy
At the hearing, petitioner presented its witness, Jerome Haims, president of Jerome Haims Realty Inc. Mr. Haims was qualified as an expert as a real estate appraiser who had appraised small and large buildings, development sites and projects, parcels of land, improved and unimproved, and parking lots in various parts of Manhattan, including the neighborhoods of Chelsea, Gramercy Park, Battery Park, the east side, the west side, downtown, uptown, midtown, and the area of West 28th Street where the subject premises is located. Haims was called to establish the fair market rental value of the premises. Fair market rental value, he explained was the amount that "a willing lessor would pay to a willing lessee absent duress, fully knowledgeable about the market" (Tr. 3/4/11, p 41). He further explained that the fair market value of a vacant lot in Manhattan depends upon its highest and best use (Tr. 3/4/11, p 45).
Haims appraised five parcels of unimproved land in 2010 (Tr. 5/12/11, p 60).
Haims described his methodology, the sale comparison approach, in evaluating the subject premises, a vacant lot on 140 West 28th Street (between 6th and 7th Avenues, that was used as a parking lot). He used twelve properties within the area of the premises as comparables:
1) 325-329 West 33rd Street (between 8th and 9th Avenues)
2) 537-543 West 20th Street (between 10th Avenue and West Side Highway)
3) 552-554 West 24th Street (between 10th and 11th Avenues)
4) 45-47 West 38th Street (between 5th and 6th Avenues)
5) 60-62 West 36th Street (between 5th and 6th Avenues)
6) 30-32 West 31st Street (between 5th Avenue and Broadway)
7) 32-34 West 29th Street (between 6th Avenue and Broadway)
8) 516 West 27th Street (between 10th and 11th Avenues)
9) 415-419 Eighth Avenue (Southwest corner of West 31st Street)
10) 511-519 West 21st Street (between 10th and 11th Avenues)
11) 152-158 West 26th Street (between 6th and 7th Avenues)
12) 63-67 West 35th Street (between 5th and 6th Avenues)
Haims considered the size, zoning, the square foot of developable area or floor area ratio (FAR) of the premises and each of the twelve comparable properties. Also part of his calculation was the sale price and the proposed development, or whether it was undergoing construction or has completed construction, and demolition cost, as well as the type of structure whether it was built as a gallery or hotel. Haims adjusted the value per developable square foot upwards or downwards depending on various factors, i.e., access in front and back of building, shape of the lot, location of the lot, costs, etc., of each of the comparable properties. After testifying to some of the comparable properties as compared to the subject property, Haims concluded that the best use of the subject premises was a hotel, and as such, it commanded a price of $260.00 per square foot, and a monthly rent of $82,000.00 per month (Tr. 5/17/11, p 72).
Respondent's expert appraiser with vast experience in this field, Joel Leitner, also using a sales comparison approach, prepared an analysis on the subject property and five comparable properties:
1) 39-41 West 23rd Street (between Broadway and 6th Avenue)
2) 312-318 West 37th Street (between 8th and 9th Avenues)
3) 524-532 West 29th Street (between 10th and 11th Avenues)
4) 325-327 West 33rd Street (between 8th and 9th Avenues)
5) 537-543 West 20th Street (between 10th and 11th Avenues)
Additionally, Leitner made adjustments to the twelve comparable properties in Haims' report.
Of the subject property, Leitner concluded that the $570,000.00 rent per annum or $47,500.00 per month based on a long term lease for hotel development was the fair market value. He estimated that for a short term lease as a parking lot, the market rent was $360,000.00 per annum or $30,000.00 per month. All of Leitner's adjustments of the twelve comparables was less than Haims' evaluations, some by as much as 50%. Leitner testified that at the time the lease was made, the real estate market was at its peak, but then the market crashed with the fall of Lehman Brothers, Merrill Lynch, etc., in late 2008 causing the economy to collapse. With this economic crises, construction loans and land loans "came to a halt" (Tr. 5/24/11, p 9). Leitner also used the land-residual analysis to appraise the subject property. However, the basis of his costs for building a hotel was without reliance on anyone with expertise in building hotels, or determining occupancy rates, or architectural values. Mr. Leitner is an expert in appraising properties, but he is not an expert in developing or building hotels. His expert opinion without factual support is of little probative value. His testimony on land-residual analysis is therefore rejected ( see Shore Haven Apts. No. 6, Inc. v Commissioners of Fin. of City of NY, 93 AD2d 233, 236 [2d Dept 1983]).
While Haims and Leitner used the same sales comparison appraisal method, there were many differences in their assessments which yielded very different results. A major disagreement between the two appraisers is the location of the properties. Leitner had a more favorable view of properties in west Chelsea. He opined that the properties on the west side of Manhattan near Chelsea were more valued because of their proximity to the High Line Park, new art galleries, and the future Moynihan Station to be built on the present main Farley Post Office site (Tr. 5/24/11, p 64). Another significant difference between the two appraisers' respective approach is that Leitner's appraisal of the subject property was based on the property "as is" — a vacant lot, and he sees the highest and best use for the subject premises is as a parking lot for the short term, which he estimates the rental value to be $30,000.00 per month. Haims, on the other hand, sees the highest and best use for the subject premises as a boutique hotel at $82,000.00 per month. "The court is not bound to choose between these figures and select one of them based upon an evaluation of the capabilities or the character of the respective experts." ( Matter of City of New York [Lincoln Sq. Slum Clearance Project], 15 AD2d 153, 161 [1st Dept 1961], aff'd 12 NY2d 1086.) But "the court's ultimate conclusion of value, as well as its findings on the various components that go into the process . . . must fall within the range of the evidence." ( Blue Hill Plaza Assoc. v Assessor of the Town of Orangetown, 230 AD2d 846, 848 [2d Dept 1996]).
The Farley Post Office is located on 8th Avenue between West 31st and West 33rd Streets.
In urging the court to be guided by Mr. Leitner's appraisal, respondent would have the court ignore the monthly rent under the lease as a starting point. Mr. Leitner testified that the economic crisis, and the lack of willing lenders was a basis to reduce the monthly use and occupancy rates. Citing Eighteen Assoc. v Nanjim Leasing Corp., ( 257 AD2d 559 [2d Dept 1999]), respondent argued that "an occupant's duty to pay the landlord for its use and occupancy of the premises is predicated upon the theory of quantum meruit, and is imposed by law for the purpose of bringing about justice without reference to the intention of the parties'" ( id., internal quotations and citations omitted). In Eighteen Assoc., the issue was whether the occupant was required to pay use and occupancy when there was no privity between occupant and landlord. The theory of quantum meruit was applied for occupant's duty to pay landlord for use and occupancy, and not for the determination of the amount of use and occupancy. A lack of privity is not the case here. The main issue here concerns the different valuation to determine market rent for the use and occupancy for the subject premises now that respondent breached the lease and the lease was terminated.
In general, "the market value of real property is the amount which one desiring but not compelled to purchase will pay under ordinary conditions to a seller who desires but is not compelled to sell" ( Plaza Hotel Assoc. v Wellington Assoc., 37 NY2d 273, 277, rearg. denied 37 NY2d 924). While there are different ways to calculate market value, consideration must be given to the parties' intent as evidenced by the rent paid and the lease terms before the holdover period. In this case, the parties contemplated that respondent would use the premises to build a "first class, boutique hotel . . . with ancillary retail use" (Exh. 1, Lease, Art. 23 p 45) when they entered the lease on March 16, 2007, which term ends on January 31, 2056. The rent started at $775,000 per annum ($64,583.00 per month) with scheduled increases throughout the life of the lease starting on the sixth year of the lease, which would have brought it up to $852,500 per annum or $71,041.66 per month on March 16, 2013.
The court agrees with petitioner's argument that at the minimum, the use and occupancy does not start at a lower rate that the rent of the lease. Were that not the case, the holdover tenant gains from its breach of the lease ( see Chock Full O'Nuts Corp. v NRP LLC I , 47 AD3d 189 , 195 [1st Dept 2007]; Sakele Bros. v Safdie, 302 AD2d 20, 27 [1st Dept 2002]). Further, under the lease, the liquidated damages clause provided petitioner the right to recover from respondent the monthly rent pursuant to the lease term after the termination of the lease for use and occupancy ( see 19 Fifth Ave. Realty v 319 Smile Corp., 21 Misc 3d 139(A) [App Term, 1st Dept 2008]).
Respondent counters that the value of the premises cannot be based on "the projected value of a future hotel" (Resp's post-trial memo, p 8). Rather, it should be based on the land as it is in its present state. Respondent relies on Freidus v Eisenberg, 123 AD2d 174 [2d Dept 1986]) in asserting that "[t]he measure of the value of the use and occupancy is the rental value of the property, and not any profits which might be derived from its development" ( id., citing Worrall v Munn, 38 NY137 [1868]). In Freidus, the Appellate Division stated that "[a]t the outset of our analysis, it is important to note that the underlying action is in equity for specific performance of a contract . . . and the issue at the jury trial was the amount of damages flowing from the delay in complying with the contract" ( Freidus v Eisenberg, 123 AD2d at 177). The Court explained the difference between an action in equity and one in law: "In a breach of contract action, the purchaser is compensated for loss of bargain by recovering the difference between the value of the property and the contract price, together with such incidental damages as flow from the breach [citations omitted]. Here, with specific performance granted, the contract is being performed, and the purchaser has not lost the value of the bargain. Although legal damages are therefore inappropriate, equity will, so far as possible, place the parties in the same situation as they would have been in if the contract had been performed according to its terms [citations omitted]'" ( id.). As this is not an action in equity, respondent's reliance on Freidus v Eisenberg is misplaced.
As for the enhanced value of the subject premises, based on Mr. Haims' appraisal, the highest and best use is as a hotel and he set a market value at $82,000 per month while Mr. Leitner was of the mindset that it should stay as it is — a parking lot with a market rental value of $30,000 per month, or at most, $47,500.00 per month for a long term lease for hotel development. While the court is mindful of the real estate market collapse and the financial crisis that besieged this city and country in late 2008, the court does not agree with respondent's expert that the best use for a plot of land in or near mid-town Manhattan is to leave it vacant as a parking lot rather than building something thereon, be it a hotel, a mixed use building, a residential building, a office building, or a retail store. Mr. Leitner also opined that no buyer would construct a hotel on a short term fifty-year lease since it would take as much time to recoup the payments. Apparently, respondent intended to do exactly that when it entered into the lease in the first place.
After a review of both experts' respective analysis of the subject property as well as their comparable properties, it is evident that Haims and Leitner diverge on everything except one property — 537-543 West 20th St., which was one of only two comparable properties studied by both experts. Both Haims and Leitner reported 537-543 West 20th St. was to be developed as a gallery valued at $173.91 per square foot of a 46,000 square feet of developable area (Exh 5 and Exh D). Despite this concurrence, in Leitner's adjustments of Haims' twelve comparable properties (Exh O), even this gallery property had a final adjustment down to $147.82. The further adjustment from $173.91 to $147.82 was due to a deduction Leitner assigned for location. This downward adjustment by Leitner is in contrast to his own testimony that the West 20th Street property was superior because of its location near the High Line Park and art district (Tr. 5/24/11, pp 38-39). Given Leitner's enthusiastic view of the High Line Park and the art district in the West 20's to West 30's, it is unclear whether the downward adjustment was specific to the property or to Haims' entire report generally.
The second property analyzed by both experts was 325-327 West 33rd St.
Mr. Haims' consideration of twelve comparable properties for hotels in the area convinces this court that the best and highest use of the subject premise is a hotel and the fair market rental value for such is $82,000.00. Haims' assessment is also not so afar from the amount the parties had contemplated in the lease. Had the lease continued, the rent would have increased to $71,041.66 per month in 2013 from the recent $64,583.00 per month. While the lease is terminated, it nonetheless offers a fair insight as to the market rent for the subject property ( see Goelet v National Surety Co., 249 NY 287, 295 [1928]).
In any event, New York City, particularly the borough of Manhattan, is fortunate to have many sites that tourists enjoy visiting, whether it is the High Line Park, the Meat Packing district, art galleries in Chelsea or SoHo, Central Park, Hudson River Park, the Metropolitan Museum of Art, the Museum of Modern Art, The Frick Gallery, Radio City, Broadway, etc. The fact remains that in assessing the market rent, both experts used the sales comparison approach, which "is based on the principle of substitution. This principle implies that a knowledgeable investor will pay no more for a property than the price that would be paid for a substitute property of similar utility and desirability" (Exh D — Leitner's Appraisal Report). Given the location of the subject property on West 28th Street between 6th and 7th Avenues, Haims' comparable property number 11 on 152-158 West 26th Street between 6th and 7th Avenues offers the best information as to the market value in that specific and narrowed area. Comparable property number 11 was also developed as a boutique hotel with the same zoning and the same FAR. It's price per square foot was $284.97. Based thereon, petitioner's estimate for $260.00 per square foot is fairly on par and is more in line with what the market value for such a property is in that area. Therefore, based on the comparable property rental value, which is supported by the parties' intent as evidenced in the lease, petitioner's demand as additional rent in the amount of $82,000.00 per month is appropriate as fair market rent for the subject property.
Accordingly, respondent is to pay $82,000.00 per month for use and occupancy from the date the lease was terminated to present. Pending appeal of the December 21, 2010 order (Hon. Arthur Engoron), and pursuant to the order dated February 10, 2011 (Hon. Manuel Mendez), respondent is directed to post an undertaking in the amount of $82,000.00 for each month it was in possession post termination of the lease.
Attorneys' Fees
"[T]he award of reasonable counsel fees is within the sound discretion of the trial court" ( Ebrahimian v Long Island Railroad, 269 AD2d 488, 489 [2d Dept 2000]; see also Matter of Massey , 73 AD3d 1179, 1179 [2d Dept 2010]). The court's authority, and the factors that guide the exercise of discretion, extend to the enforcement of contractual provisions that require the payment of attorneys' fees by one of the parties ( see 515 Ave. I Corp. v 515 Ave. I Tenants Corp. , 29 Misc 3d 1228(A) [Sup Ct, Kings Cty 2010] citing First National Bank of East Islip v Brower, 42 NY2d 471, 474 [Ct App 1977]; Miller Realty Assocs. v Amendola Indus., 51 AD3d 987, 990 [2d Dept 2008]; M. Sobol, Inc. v Wykagyl Pharmacy, Inc., 282 AD2d 438, 439 [2d Dept 2001]; Orix Credit Alliance, Inc. v Grace Industries, Inc., 261 AD2d 521, 521-22 [2d Dept 1999]).
At the onset, it is noted that instead of conducting an attorneys' fees hearing, the parties were directed to submit their claims and opposition. The reasons for addressing the attorneys' fees by way of submission rather than a hearing is three-fold: judicial resources; scheduling six attorneys from four firms during the summer months; and the attorneys' overly irascible conduct in the preceding hearing on use and occupancy. Due to the extreme discourtesy and disturbingly acrimonious manner in which the attorneys treated each other, as evidenced by the transcripts, it became evident that submission was the best and most time-efficient method to determine this issue.
Respondent, by its attorney David Rosenholc, raises in its opposition, an objection to having the attorneys' fees claim done on submission and argues that "appellate courts are quick to reverse and remand for a hearing" particularly when they dispute the petitioner's attorneys' claims (Opp. p 4). Respondent's courtroom tactics and behavior by its attorneys are major contributing factors for the court to take the attorneys' fees issues on submission. Further, respondent raised its objection for the first time in its opposition. It did not mention its opposition at anytime prior to its submission of its opposition papers even though it sought a clarification of the submission dates. Further, respondent's attorneys had written a letter dated July 18, 2011 to the court and copied to petitioner's attorneys, regarding Environmental Control Board issues regarding the property. But, there was no request of a hearing on attorneys' fees or objection to having it done by submission. Thus, respondent waived the hearing on attorneys' fees ( see Goldman v Shapiro, 251 AD2d 372 [2d Dept, 1998]).
Respondent also argued that an attorneys' fees determination is premature pending appeal. It stated that staying the attorneys' fees determination "conserves judicial resources" (Opp. p 6) and cited the following cases: "Graham Ct. Owners v Taylor, 2010 NY Slip Op 84262U [ sic.](App Term 1st Dept, 2010); SP 10 Downing LLC v Yee, 2010 NY Slip Op 83641U [ sic.](App Term 1st Dept 2010); Mangano v Mantell, 2009 WL 5225191 (Sup. Ct. NY Co. 2009); 72A Realty Assoc. v Lucas, 2010 NY Slip Op 74900U [ sic.](App. Term 1st Dept, 2010) "(Resp's post-trial memo, p 6). Petitioner claims that three of the above cited cases are non-existent. Petitioner is mistaken. The three cases do exist, but not under respondent's citations. However, respondent need not be concerned about the incorrectly cited cases as they are irrelevant to the proposition respondent advances — that "appellate courts do not hesitate to stay legal fees hearings pending the outcome of an appeal" (Resp's post-trial memo, p 6). None of the above-cited cases spoke to how appellate courts are quick to stay a attorneys' fees hearing pending an appeal.
Graham Court Owners v Taylor involves treble damages imposed by State Division of Housing and Community Renewal on owner ( 71 AD3d 515; 2010 NY Slip Op 02023 [1st Dept 2010])
The only issue discussed in SP 10 Downing, LLC related to service of subpoenas in a holdover proceeding ( 21 Misc 3d 1107(A); 2008 NY Slip Op 52005(U) [Civ Ct, NY Cty 2008])
In Mangano v Mantell, plaintiff sued his former attorney for legal malpractice, the attorney's fees issue came up twice: once with the court opining that it may have been prudent for defendant to obtain the lease before making a demand on attorney's fees rather than relying on standard boiler plate language in most leases; and the second time the court addressed plaintiff's claim that defendant negligently failed to apprise him of the possibility he may have to pay the prevailing party's attorney's fees in the underlying case ( 2009 WL 5225191 [Sup Ct, NY Cty 2009]).
2A Realty Associates does discuss the issue of attorneys' fees, which the Appellate Term found that imposition of attorney's fees against landlord under the particular circumstances of the case was unfair where its claim, though unsuccessful, was colorable at the commencement of the holdover proceeding given the confusing Rent Stabilization Law ( 2011 WL 2135625; 2011 NY Slip Op 21188 [App Term, 1st Dept 2011]).
In any event, petitioner, in its rebuttal, informs that respondent had used the pending attorneys' fees determination (and the use and occupancy market value determination) as a reason for having yet to perfect its appeal of the December 21, 2010 order. This reason was offered to the Appellate Term, First Department, in respondent's opposition to petitioner's motion to dismiss the appeal or compel respondent to perfect the appeal (Pet's rebuttal, Exh A). Respondent's argument is not only circular, it is also misleading. If respondent had a genuine objection to the hearing on attorneys' fees, it should have raised it following the February 10, 2011 order directing such a hearing.
Petitioner was represented by Bryan Cave LLP ("Bryan Cave") and Newman Ferrara LLP ("Newman Ferrara"). As petitioner is the prevailing party (order dated December 21, 2010, Hon. Arthur Engoron), the issue is to determine the amount due from respondent. Bryan Cave and Newman Ferrara each submitted an affirmation in support of its respective claims.
Bryan Cave's claim: Mark Sugarman of Bryan Cave affirmed that he graduated from Rutgers University of Law in 1979 and was a partner at Robinson Silverman Pearce Aronsohn Berman, LLP (the Robinson firm) in 1987 specializing commercial litigation, real estate litigation and arbitration, and intellectual property litigation. When the Robinson firm merged with Bryan Cave in September 2004, he became a partner at Bryan Cave and continued in his specialties.
As to petitioner, it was a client of the Robinson firm, and became a client of Bryan Cave after the merger. Sugarman described himself as the "relationship partner" as to petitioner. As such, he was responsible for reviewing and preparing all invoices sent to petitioner. Transactional work, such as drafting of the lease, was performed by his partner, Steven Bloom, and Linda Herman, counsel to the firm, both of whom are with Bryan Cave. Attorneys and paralegals working on this matter reported to him and they entered their time records detailing the amount of time and a brief description of work each day.
Sugarman recounted the procedure and background of the holdover matter which stemmed from respondent's failure to cure the defaults described in the notices sent to it by petitioner. Sugarman referred to the parties' lease which provided tenant to pay landlord all costs and expenses, including attorneys' fees for, inter alia, proceedings brought to enforce the lease, or brought by reason of act or omission by tenant. Section 26.12 of the lease reads as follows:
Tenant shall pay to the Landlord all costs and expenses, including attorneys' fees, paid orincurred by Landlord in any action or proceeding to which Landlord may be made a party by reason of any act or omission of Tenant. Tenant shall also pay to Landlord all costs and expenses, including attorneys' fees, paid or incurred by Landlord in enforcing any of the covenants and provisions of this Lease and paid or incurred in any action brought by Landlord against Tenant on account of the provisions hereof, and all such costs, expenses, and attorneys' fees may be included in and form a part of any judgment entered in any proceeding brought by Landlord against Tenant or under this Lease. All of the sums paid or obligations incurred by Landlord as aforesaid, and costs shall be paid by Tenant to Landlord, with interest (at the Premium Rate) within ten (10) days of the rendition by Landlord to Tenant of any bill or statement therefor.
Sugarman submitted detailed invoices his firm sent to his client. The total amount, with downward adjustments made by Sugarman for unrelated work or discounts, totaled $233,049.92.
Newman Ferrara's claim: Jonathan Newman, the managing partner, submitted an affirmation in support of its claim of $401,958.41 for attorneys' fees, costs and disbursements. Newman stated that as the managing partner, he supervised the cases litigated by the firm's attorneys. He was actively involved in this particular case.
Newman explained that Newman Ferrara's billing records are produced by a legal billing software known as "TABS". The firm's attorneys, who bill hourly, input their time with a brief description of the work done. A draft invoice is sent out to the attorneys at the end of each month. After the attorneys' review of their respective bills, Newman and his partner, Lucas Ferrara, review them before they are sent out to their clients. Newman submitted the firms' invoices to petitioner which covered the period from July 1, 2010 to May 31, 2011.
The submissions by both Bryan Cave and Newman Ferrara raise two issues — whether the attorneys' fees are reasonable; and which fees are applicable. The order of Hon. Arthur Engoron called for an inquest "into all monetary issues, including rent, additional rent, use and occupancy, and attorney's fees" (order dated December 21, 2010). As such, the time frame for attorneys' fees is from the preparation of the holdover proceeding to the attorneys' fees application on submission. The court disagrees with respondent's argument that the time spent on the hearing on use and occupancy should be excluded because it is part of the pending appeal. Respondent's appeal is from the December 21, 2010 order. The hearing on monetary issues was part of said order. And as discussed supra, respondent is using this hearing to stay the appeal and attempting to use the appeal to stay this case. However, the court agrees with respondent's argument that the preceding holdover petition, which was withdrawn, should not be included in the time frame for calculating attorneys' fees. Therefore, the proceeding commenced in July 2010 is excluded. Yet, as there was preparation work done for the July 2010 proceeding that was necessary to commence the instant September proceeding, the invoices of said work will be reviewed.
Before ordering one party to pay another party's attorneys' fees, the court always has the authority and responsibility to determine that the claim for fees is reasonable. The attorneys' fees recoverable under a lease must also be reasonable ( see Solow Mgmt. Corp. v Tanger , 19 AD3d 225 , 227 [1st Dept 2005]). Using the lodestar method to determine the reasonableness of attorney fees, the court will take into account the issues in the proceedings, the attorneys' skill and experience, the amount of time and labor involved, the results obtained, and the customary fee for similar services ( see Morgan Finnegan v Howe Chem. Co., Inc., 210 AD2d 62, 63 [1st Dept 1994]; Ross v Congregation B'Nai Abraham Mordechai , 12 Misc 3d 559 , 566 [Hous Part, Civ Ct, NY Cty 2006]). In determining what is reasonable, no single factor is dispositive. Duplicative work, work done once, but billed twice will be reduced. Unnecessary, unrelated work, or work outside the scope ( i.e. settlement or purchase option of the lease) of this proceeding — from the preparation and institution of the petition to the hearing on use and occupancy and time spent on the attorneys' fees issue — will be excluded.
A deduction is warranted where there is insufficient evidence as to the identity of, the nature and extent of experience of petitioner's attorneys ( Jordan v Freeman, 40 AD2d 656 [1st Dept 1972][party seeking fees must prove entitlement by demonstrating inter alia professional standing of counsel]; 76th Street Owners' Corp. v Elshiekh , 29 Misc 3d 1225 (A) [Hous Ct, NY Cty 2010]). Here, while Mark Sugarman of Bryan Cave detailed his experience, none was provided for other members whose bills were submitted as well. Although Bryan Cave is a well known firm, there is insufficient information as to the other members of the firm. Therefore, only Mr. Sugarman's time is credited. As for Newman Ferrara, this firm provided no background of any of the participating attorneys. Nonetheless, a court "may consider its own knowledge and experience concerning reasonable and proper fees" and be guided thereby in making a determination of the value of the attorneys' services ( Jordan v Freeman, 40 AD2d at 657). Both Jonathan Newman and Glenn Spiegel appeared at all the hearings in this matter before this court. Both Newman and Spiegel were actively involved in the proceedings before Judge Engoron on traverse issues and on their motion for summary judgment. Finally, they were involved in the pending appeal brought by respondent. Having reviewed their motions and the extensive court file in this case, and having observed first hand their trial skills, there is no doubt that they are both highly experienced attorneys in commercial landlord/tenant litigation matters. Furthermore, it is common knowledge, at least in this courthouse, that Newman Ferrara, LLP is a real estate litigation and trial law firm for many, many years. Considering Newman is a name partner of the real estate litigation and trial law firm, it can be said that he has more experience than most in this field. However, this cannot be said of the other members of the firm and therefore, their charges are excluded.
A further deduction is in order as neither of Bryan Cave nor Newman Ferrara gave any indication of the customary fee for similar services. Mr. Sugarman's fee is $745.00 per hour and Mr. Newman's fee is $475.00 as is Mr. Spiegel's. Given the court's "knowledge and experience" concerning the fees charged in holdover cases, the fee for all three attorneys is set at $475.00. This amount is supported by both attorneys from Newman Ferrara, a law firm that focuses on commercial landlord and tenant litigation.
For a lack of a simpler method, the excluded rates will not be mentioned — only those hours that are credited from each invoice will be listed. Thus, the parties' invoices are adjusted as follows:
Bryan Cave's invoices:
01/27/10 bill for services rendered through 12/09 for $ 3,228.85 is excluded.
03/23/10 bill for services rendered through 02/10 for $19,343.83 is excluded.
04/13/10 bill for services rendered through 03/10 for $ 8,681.25 is excluded.
05/14/10 bill for services rendered through 04/10 for $33,173.57 is excluded except
$2,421.25 on 4/16, $1,490.00 on 4/17. Total for May 2010 bill is $3,911.25.
06/10/10 bill for services rendered through 05/10 for $12,830.06 is excluded.
07/08/10 bill for services rendered through 06/10 for $19,725.73 is excluded.
08/09/10 bill for services rendered through 07/10 for $17,964.37 is excluded except
$1,117.50 on 7/20 and $1,490.00 on 7/22; $745.00 on 7/28 and $1,303.75 on 7/29, $372.50 on 7/30. Total for August 2010 bill is $5,028.75.
09/22/10 bill for services rendered through 08/10 for $20,472.50 is excluded except $1,117.50 on 8/3, $745.00 on 8/4, $1,117.50 on 8/5, $372.50 on 8/25 and 8/26, $186.25 on 8/27, 8/30 and 8/31. Total for September 2010 bill is $4,283.75.
10/15/10 bill for services rendered through 09/10 for $ 3,653.94 is excluded except $372.50 on 9/1, 9/8, 9/21, and 9/23 and $186.25 on 9/24. Total for October 2010 bill is $1,676.25.
11/23/10 bill for services rendered through 10/10 for $12,172.54 is excluded except $186.25 on 10/1, $372.50 on 10/4, 10/5, 10/12, $745.00 on 10/11, $1,117.50 on 10/13, $1,676.25 on 10/14, $745.00 on 10/19, $186.25 on 10/20, 10/28 and 10/29. Total for November bill is $6,146.25.12/09/10 bill for services rendered through 11/10 for $21,040.69 is excluded except $558.75 on 11/3, $1,862.50 on 11/4, $1,862.50 on 11/8, $1,117.50 on 11/17, $558.75 on 11/18. Total for December 2010 bill is $5,960.00.
01/28/11 bill for services rendered through 12/10 for $10,680.44 is excluded except $2,235.00 on 12/13, $372.50 on 12/14, and 12/28, $745.00 on 12/29. Total for January 2011 bill is $3,725.00.
03/14/11 bill for services rendered through 02/11 for $33,836.37 is excluded except $1,155.00 on 1/3; $557.50 on 1/4; $770.00 on 1/12; $1,540.00 on 1/13; $385.00 on 1/14; $1,540.00 on 1/17; $2,695.00 on 1/18; $1,347.50 on 1/19; $770.00 on 1/20; $385.00 on 1/24; $770.00 on 1/25; $1,155.00 on 1/26; $192.50 on 1/31; $385.00 on 2/1, and 2/22; $770.00 on 2/23; $385.00 on 2/28. Total for March 2011 bill is $15,187.50.
04/08/11 bill for services rendered through 03/10 for $34,154.30 is excluded except $385.00 — as reduced; $962.50 — as reduced — on 3/2; $4,235.00 on 3/4. Total for April 2010 bill is $5,582.50.
05/11/11 bill for services rendered through 04/10 for $6,359.09 is excluded except $385.00 on 4/25; $770.00 on 4/27. Total for May, 2010 bill is $1,155.00.
The total amount in attorney's fees for Bryan Cave is $52,656.25 at the rate of $745.00 per hour. The fee, as reduced to $475.00 per hour, is $33,572.77. Costs relevant to the instant proceeding, less transportation charge are $1,599.89.
Newman Ferrara invoices:
08/01/10 bill for services rendered through 07/10 for $3,258.25 is excluded except $1,947.50 on 7/20. Total for August 2010 bill is $1,947.50.
09/01/10 bill for services rendered through 08/10 for $11,917.65 is excluded except $2,185.00 on 8/6; $190.00 on 8/9; $1092.50 on 8/11; $902.30 on 8/13; $1,068.75 on 8/23; $356.25 on 8/25; $380.00 on 8/26; $356.25 on 8/27; $237.50 on 8/30. Total for September 2010 bill is $6,768.55.
10/01/10 bill for services rendered through 09/10 for $56,695.09 is excluded except $190.00 on 9/7; $712.50 on 9/8; $356.25 on 9/13; $665.00 and $617.50 on 9/14; $190.00 on 9/15; $1,662.50 on 9/17; $855.00 on 9/20; $514.58 and $950.00 — as reduced — on 9/24; $1,900.00 on 9/27; $1,187.50 on 9/28; $285.00 on 9/29. Total for October 2010 bill is $10,085.83.
11/01/10 bill for services rendered through 10/10 for $41,191.51 is excluded except $1,562.50 on 10/1; $1,092.50 on 10/6; $190.00 on 10/8; $760.00, $1,076.67 — as reduced — on 10/11; $1,710.00 on 10/12; $237.50 on 10/13; $2,422.50 on 10/14; $1,235.00 on 10/15; $665.00, $427.50 on 10/20; $475.00 on 10/21. Total for November 2010 bill is $11,854.17.
12/01/10 bill for services rendered through 11/10 for $45,310.00 is excluded except $95.00 on 11/1; $380.00 and $380.00 on 11/3; $1,852.50 on 11/4; $570.00 on 11/5; $665.00 and $95.00 on 11/08; $855.00 and $380.00 on 11/11; $1,567.50 and $855.00 on 11/12; $1,045.00 on 11/15; $1,472.50 and $380.00 on 11/16; $475.00 and $427.50 on 11/17; $2,612.50 and $1,330.00 on 11/18; $1,235.00 on 11/22; $427.50 on 11/23; $380.00 on 11/29. Total December 2010 bill is $17,480.00.
01/01/11 bill for services rendered through 12/10 for $25,628.75 is excluded except $118.75 on 12/1; $855.00 on 12/3; $1,187.50 on 12/10; $950.00 on 12/11; $1,805.00 and $1,900.00 on 12/13; $2,612.50 and $2,375.00 on 12/14; $190.00 and $126.67 — as reduced — on 12/15; $1,045.00 and $712.50 on 12/21; $356.25 on 12/29; $356.25 on 12/31. Total January 2011 bill is $14,590.42.
02/01/11 bill for services rendered through 01/11 for $61,818.75 is excluded except $593.75 and $593.75 on 1/3; $427.50 and $1,045.00 on 1/4; $855.00 and $1,140.00 on 1/5; $1,520.00 and $1,781.25 on 1/6; $884.00 — as reduced on 1/7; $2,090.00 and $1,995.00 on 1/10; $831.25 on 1/12; $2,612.50 and $1,425.00 on 1/13; $1,995.00 on 1/17; $3,087.00 and $1,140.00 on 1/18; $617.50 and $1,282.50 on 1/19; $332.50 and $2,375.00 on 1/20; $950.00 on 1/21; $1,425.00 on 1/24; $332.50 on 1/25; $760.00 and $831.25 on 1/26; $950.00 and $902.50 on 1/27; $190.00 on 1/28. Total February 2011 bill is $34,964.75.
03/01/11 bill for services rendered through 02/11 for $18,533.75 is excluded except $1,068.75 and $855.00 on 2/2; $1,068.75 on 2/3; $332.50 on 2/7; $237.50 on 2/8; $760.00 on 2/10; $380.00 on 2/14; $237.50 on 2/17; $2,042.50 on 2/18; $1,187.50 on 2/24; $2,256.25 on 2/25. Total for March 2011 bill is $10,426.25.
04/01/11 bill for services rendered through 03/11 for $31,045.75 is excluded except $1,757.50 on 3/1; $1,187.50 and $3,325.00 on 3/3; $3,562.50 on 3/4; $2,850.00 and $1,377.50 on 3/7; $1,615.00 on 3/8. Total April 2011 bill is $15,675.00.
05/01/11 bill for services rendered through 04/11 for $17,385.00 is excluded except $475.00 on 4/5; $2,422.50 on 4/8; $760 on 4/11; $2,850.00 on 4/21; $2,090.00 on 4/22; $570.00 on 4/25; $1,330.00 on 4/26; $1,140.00 and $760.00 on 4/27; $950.00 on 4/29. Total May 2011 bill is $13,347.50.
06/01/11 bill for services rendered through 05/11 for $70,215.75 is excluded except $380.00 on 5/2; $142.50 on 5/5; $831.25 and $570.00 on 5/6; $855.00 on 5/10; $2,565.00 on 5/11; $3,800.00 on 5/12; $475.00 on 5/13; $712.50 on 5/15; $831.25 on 5/16; $3,087.50 on 5/17; $2,137.50 on 5/18; $1,140.00 on 5/19; $1,187.50 on 5/20; $831.25 and $1,425.00 on 5/23; $3,443.75 and $3,800.00 on 5/24; $95.00 on 5/31. Total June 2011 bill is $28,310.00.
The total amount of attorneys' fees for Newman Ferrara is $165,449.97; costs and disbursements less meals and transportation is $25,094.44.
The sum of both Bryan Cave and Newman Ferrara's attorneys' fees is $199,022.75. While the attorneys' fees are still impressive despite the exclusions and reductions, the court notes that the vehemence with which the attorneys for respondent acted on this case added to the time, labor, and complexity of the proceeding. Indeed, proof of service of process required much more than an affidavit of the process server. As underscored by Judge Engoron "[b]ut what most interests this Court in this case in respondent's desperate grasp for the holy grail: a traverse hearing" despite the several services caught on camera. "In sum, we have reached the stage where the service of process contest' has gone beyond what could be call a game' and into the realm of what could be called farce'"(order dated December 21, 2010). Hence, despite the service done with impeccable proof, respondent sought to contest it to add to the litigation. The hearings on the use and occupancy were rife with similar overly aggressive and fairly unnecessary tactics, such as serving the petitioner's witness with subpoenas in the courtroom, at the conclusion of the day. Hence, petitioner's attorneys had more to do in this case than in most other similar litigations.
Accordingly, petitioner is awarded $82,000 for use and occupancy for each month respondent is in possession on the premises after the lease was terminated. Thus, pending appeal, respondent is directed to post an undertaking in the amount of $738,000.00 for use and occupancy (for the nine months it was in possession post lease termination). Petitioner is also awarded $224,116.69 ($119,022.25 + $25,094.44) for attorneys' fees and costs, and interest thereon from the date of entry of this order and decision. As stated supra, the attorneys' fees determined herein encompasses only the legal services through the hearing on use and occupancy, and the attorneys' fees by submission. Hence, as respondent has clearly indicated that it will appeal the use and occupancy and the attorneys' fees determination — thus, this order, the determination herein does not consider any substantive work done on the pending unperfected appeal, and the likely forthcoming appeal of this decision and order. Pending appeal, respondent is directed to post an undertaking in the amount of $224,116.69.
The issue of the Environmental Control Board violations is severed from this decision and order, and will be addressed separately.
This constitutes the decision and order of the court.