Opinion
Index No. 652381/2023
10-20-2023
CAPRICE ASSOCIATES, Plaintiff, v. George MARTEL, Defendant.
Gary J. Wachtel, Esq., New York, NY, for plaintiff No appearance for defendant
Gary J. Wachtel, Esq., New York, NY, for plaintiff
No appearance for defendant
Gerald Lebovits, J. The court's order on this motion, entered September 26, 2023, is hereby vacated and replaced by the following amended order. In this action, plaintiff, Caprice Associates, has sued defendant, George Martel, for damages consisting of (i) rent allegedly owed by Martel under a residential lease between them; (ii) legal fees incurred by plaintiff in bringing a related Housing Court nonpayment eviction proceeding; and (iii) legal fees incurred by plaintiff in this action. Plaintiff now moves without opposition under CPLR 3215 for default judgment against Martel. The motion is granted in part and denied in part.
DISCUSSION
A plaintiff moving for default judgment must establish proper service on defendant; defendant's default; and the facts constituting plaintiff's claims. ( CPLR 3215 [f].) Plaintiff has shown that it properly served Martel. (See NYSCEF No. 2.) And Martel has not appeared in this action. With respect to plaintiff's claim for $120,975.02 in unpaid rent, plaintiff has sufficiently proven the facts constituting that claim for default-judgment purposes through the affidavit of its managing partner and the documents attached to the affidavit, including copies of the lease and renewal lease, and a rent ledger. (See NYSCEF No. 5 [affidavit]; NYSCEF No. 8 [leases]; NYSCEF No. 11 [rent ledger].)
In addition to unpaid rent, plaintiff seeks an award of attorney fees incurred in this action and in the related Housing Court proceeding. This court agrees with plaintiff that article 20 of the lease permits plaintiff to recover fees. (See NYSCEF No. 8 at 8.) But, as discussed further below, whether plaintiff may now recover fees incurred in the Housing Court proceeding, in particular, presents a more difficult question.
I. Whether Plaintiff's Claim for Attorney Fees Incurred in a Prior Housing Court Summary Proceeding is Subject to the Bar on Claim-Splitting
Plaintiff's claim for fees from the Housing Court proceeding would ordinarily be foreclosed by the bar on claim-splitting. Under that doctrine, a party must seek "attorneys’ fees within the action in which they were incurred, not a subsequent action." ( O'Connell v. 1205-15 First Ave. Assoc., LLC , 28 A.D.3d 233, 234, 813 N.Y.S.2d 378 [1st Dept. 2006].) A question exists here, however, whether plaintiff's claim for Housing Court fees is barred. The bar on claim-splitting is an aspect of the doctrine of claim preclusion. (See Sannon-Stamm Assoc., Inc. v. Keefe, Bruyette & Woods, Inc. , 68 A.D.3d 678, 678, 890 N.Y.S.2d 828 [1st Dept. 2009], citing Stoner v. Culligan, Inc. , 32 A.D.2d 170, 171-172, 300 N.Y.S.2d 966 [3d Dept. 1969].) And no claim-preclusion bar applies "where the remedy that the plaintiff seeks in the subsequent proceeding was unavailable to the litigant in the prior proceeding." ( Matter of Singh v. New York State Div. of Human Rights , 186 A.D.3d 1694, 1694, 132 N.Y.S.3d 42 [2d Dept. 2020], citing 172 Van Duzer Realty Corp. v. Globe Alumni Student Assistance Assn., Inc. , 24 N.Y.3d 528, 534, 2 N.Y.S.3d 39, 25 N.E.3d 952 [2014].) Thus, if plaintiff was foreclosed from obtaining an award of attorney fees in the Housing Court nonpayment proceeding, plaintiff may now seek those fees in this action. This court concludes that plaintiff was foreclosed, on two alternative, and independent, grounds: Real Property Actions and Proceedings Law (RPAPL) 702 (1) barred plaintiff from seeking attorney fees in the first place; and Real Property Law (RPL) § 234 barred plaintiff from recovering fees even had they been sought, because the Housing Court judgment was entered on default.
The Housing Court proceeding was litigated to a final judgment of possession. (See Caprice Assocs. v Martel , Index No. LT-3084549-22, NYSCEF No. 13 [judgment].)
A. Whether Plaintiff Was Barred from Seeking Attorney Fees in the Housing Court Proceeding
The prior Housing Court proceeding, brought in 2022, undisputedly "relat[ed] to a residential dwelling or housing accommodation." ( RPAPL 702 [1].) Section 702 (1), enacted as part of the Housing Stability and Tenant Protection Act of 2019 (HSTPA), defines "rent" as "the monthly or weekly amount charged in consideration for the use and occupation of a dwelling pursuant to a written or oral rental agreement." And it provides that "[n]o fees, charges or penalties other than rent may be sought in a summary proceeding pursuant to this article, notwithstanding any language to the contrary in any lease or rental agreement." The question, then, is whether this language prevented plaintiff from seeking attorney fees in Housing Court.
This court's research has not found any decision of the Appellate Division—or, for that matter, the Appellate Term—squarely addressing this issue. At most, in Beco v. Ritter , the Appellate Division, Third Department, stated that a landlord's proposed rental-payment schedule improperly "imposed a penalty that may not be sought in a summary proceeding," citing RPAPL 702. ( 190 A.D.3d 1150, 1152, 140 N.Y.S.3d 294 [3d Dept. 2021].) But that statement was made in the context of a declaratory-judgment action brought by the tenant in Supreme Court to challenge the legality of the proposed rental schedule, in which the availability of prevailing-party attorney fees was not at issue. This court is not persuaded that Beco should be treated as resolving that attorney-fee question.
Language in the 2021 Supplement to West's Practice Commentaries for RPL § 234 could be read to imply that the Appellate Division decisions discussed in that update treated RPAPL 702 (1) as not barring attorney-fee claims. But none of those decisions concerned an RPAPL article 7 summary proceeding brought after HSTPA's effective date.
Similarly, the undersigned held in 61 W. 62 Owners Corp. v. Pastena , 2023 N.Y. Slip Op. 50008[U], at *2, 2023 WL 116933 (Sup. Ct., N.Y. County Jan. 3, 2023), that a landlord's attorney-fee claim was partially barred by the claim-splitting doctrine. But the prior action in Pastena , brought years before the Legislature enacted HSTPA, was a plenary action brought by tenant against landlord, not a Housing Court summary proceeding brought by landlord against tenant. (See id. at *1.)
Considering the matter for itself, this court concludes that RPAPL 702 (1) bars attorney-fee claims from being asserted in RPAPL article 7 proceedings by prevailing parties.
The broad, categorical language of § 702 (1) would appear on its face clearly to preclude a landlord—or a tenant under the reciprocity language of Real Property Law (RPL) § 234 (1) —from asserting a claim for attorney fees in a Housing Court summary proceeding. And some lower trial courts have held as much. (See e.g. 744 E. 215 LLC v. Simmonds , 2019 N.Y. Slip Op. 51996[U], at *4, 2019 WL 6834987 [Civ. Ct., Hous. Part, Bronx County 2019] [holding that § 702 (1) "has made it clear that regardless of any statute or lease provision allowing for recovery of attorneys’ fees in a summary proceeding, parties may no longer seek such fees in housing court and are relegated to commencing a plenary action for same"]; Magnano v. Stewart , 2021 N.Y. Slip Op. 50466[U], at *3-4, 2021 WL 2069669 [Ossining Just. Ct. 2021] [same].)
Section 702 (1) does not, admittedly, expressly bar a court from awarding attorney fees in a summary proceeding. But it is difficult to see how fees could properly be awarded if they were not first sought by the prevailing party.
Reasons exist, though, to question this straightforward reading. Commentators have suggested, for example, that RPAPL 702 (1) ’s language was intended merely to prevent landlords from seeking eviction for nonpayment of non-rent fees, including attorney fees, rather than to prevent landlords (and tenants) from being awarded attorney fees in summary proceedings brought on other grounds. And this understanding draws some support from HSTPA's bill jacket: The Senate sponsor's memorandum summarizing the bill's (many) provisions describes the provision that became § 702 (1) as "defin[ing] ‘rent’ for the purposes of eviction proceedings to exclude extraneous fees and charges to protect tenants from eviction due to failure to pay fees." (Senate Introducer's Mem in Support, Bill Jacket, L 2019, ch 36 at 8.)
See e.g. Gerald Lebovits, John S. Lansden & Damon P. Howard, New York's Housing Stability and Tenant Protection Act of 2019: What Lawyers Must Know, 29 ABA J. Affordable Hous. & Cmty. Dev. L. 75, 118 (2020) (describing the different views on this issue).
Additionally, when the Legislature enacted HSTPA, RPL § 234 implied a reciprocal covenant in residential property leases that would permit a tenant to recover prevailing-party attorney fees when the lease provided for the landlord to recover those fees "in any action or summary proceeding. " ( RPL § 234 [1] [emphasis added].) Section 234 also implied an agreement between landlord and tenant that the tenant could bring a fee claim under § 234 "in an action commenced against the landlord or by way of counterclaim in any action or summary proceeding commenced by the landlord against the tenant." (Id. [emphasis added].) HSTPA, although amending § 234 (1) to bar landlords from recovering attorney fees on a default judgment, did not strike § 234 (1) ’s references to attorney fees being sought and obtained in summary proceedings. That omission might reflect a legislative intent to permit landlords and tenants to recover attorney fees in statutory proceedings.
That said, one should not overread this language. The agreement implied by § 234 (1) permitting a tenant to bring a fee claim against a landlord permits fees to be recovered only "as provided by law"—and thus potentially limited by RPAPL 702 (1) ’s restrictions on the permissible relief in summary proceedings.
These objections to the no-attorney-fees reading of RPAPL 702 (1) are not without force. But the objections cannot overcome the clarity of § 702 (1) itself. Again, the statute provides that "[n]o fees, charges or penalties other than rent may be sought in a summary proceeding pursuant to this article." This language is well-chosen if the no-attorney-fees reading of the statute is correct. Conversely—and tellingly—it would be ill- chosen if the narrower alternative reading ("eviction for nonpayment of attorney fees may not be sought in a summary proceeding") were correct.
In these circumstances, construing § 702 (1) to permit attorney-fee claims in article 7 summary proceedings would require this court essentially to disregard the language that the Legislature enacted, and give legal effect instead to ambiguous contextual hints that the Legislature might have meant to do something different. This court declines to take that step.
The court recognizes the undesirable practical consequences that might result in many cases from applying the interpretation of RPAPL 702 (1) that this court reaches here. Among other things, doing so will end up requiring prevailing parties in Housing Court to bring separate plenary actions to recover attorney fees to which they are contractually or statutorily entitled, an inefficiency with obvious costs and few discernable benefits. Indeed, given the reciprocal covenant of RPL § 234 (1), the burdens of this inefficiency will in many cases fall on the backs of tenants—litigants who are frequently unrepresented, of limited means, or both. But these practical policy problems are the result of the statute the Legislature enacted. They are problems for the Legislature, not this court, to solve.
This court concludes, therefore, that notwithstanding the language of the parties’ lease, plaintiff was statutorily barred from seeking attorney fees in the prior Housing Court proceeding. (Id. )
B. Whether Plaintiff Was Otherwise Barred From Recovering Attorney Fees in the Housing Court Proceeding
The lease in this case undisputedly pertained to "residential property." ( RPL § 234 [1].) Section 234 (1) provides that in actions or summary proceedings relating to residential property, a "landlord may not recover attorneys’ fees upon a default judgment." In the prior Housing Court proceeding here, the court found for plaintiff (there, petitioner), and entered a judgment of possession, upon the "failure to answer" of defendant (there, respondent). (See Caprice Assocs. v Martel , Index No. LT-3084549-22, NYSCEF Nos. 14 [decision and order], 13 [judgment].) Because the prior Housing Court judgment was entered on default, § 234 (1) barred plaintiff from recovering attorney fees, even if plaintiff could have sought them in its petition. This separate statutory bar on plaintiff's obtaining attorney fees in the Housing Court proceeding provides an alternative basis for this court's conclusion that the claim-splitting doctrine does not foreclose plaintiff's current request for its attorney fees incurred in that proceeding.
II. Whether Plaintiff is Entitled to its Claimed Amount in Attorney Fees
Plaintiff claims entitlement to $11,026.78 in attorney fees incurred in the Housing Court proceeding. (See NYSCEF No. 5 at ¶ 11.) But plaintiff neither explains nor justifies that figure, for example through the submission of time records or invoices. Plaintiff thus has not proven the facts constituting its claim for attorney fees incurred in the other proceeding. Plaintiff may still do so, however, through a motion on notice supported by appropriate documentation.
With respect to plaintiff's claim for attorney fees incurred in this action, plaintiff does not claim a specific amount in fees. Instead, it asks the court to "set[ ] this matter down for an inquest for reasonable attorneys’ fees," as claimed in plaintiff's second cause of action. (Id. at 5.) Plaintiff may establish on papers the amount of its reasonable attorney fees incurred in this action. This court does not at this time perceive a need also to hold an inquest.
Accordingly, it is
ORDERED that the branch of plaintiff's motion seeking default judgment with respect to unpaid rent (excluding attorney fees) is granted, and plaintiff is awarded a judgment against defendant for $120,975.02, with interest running from April 1, 2023; and it is further
ORDERED that the branches of plaintiff's motion seeking default judgment with respect to attorney fees incurred in the related Housing Court proceeding, and attorney fees incurred in this action, are granted only to the extent that plaintiff may seek an award of those two increments of attorney fees through a motion on notice, supported by appropriate documentation, and otherwise denied;
ORDERED that upon this court's determination of any motion by plaintiff for the award of attorney fees, plaintiff may enter a supplemental judgment for the amount that this court determines to be plaintiff's reasonable attorney fees.