Opinion
96 Civ. 5147 (GEL)
June 6, 2001
Richard B. Feldman, Feldman Markman, LLP, New York, N.Y. for plaintiff Melvin N. Klein.
Robert H. Goldberg, Goldberg Carlton, Esqs., New York, N.Y. for defendant Southgate Owners Corp.
OPINION AND ORDER
Defendant Southgate Owners Corp. a cooperative corporation organized under the laws of New York. is the owner of an apartment building located at 424 East 52nd St. in Manhattan. Plaintiff Melvyn N. Klein, a Texas resident, owns 220 shares of Southgate and holds a proprietary lease for apartment 12E in that building In 1989, Klein brought suit in New York State Supreme Court alleging multiple theories of liability and seeking damages caused by a leak into his apartment. The parties settled the matter in 1994 under terms requiring Southgate to use its "best efforts" to cure the leak in question and to prevent future leaks In 1996, Klein commenced the instant action, under this Courts diversity jurisdiction, based on Southgate's purported failure to abate chronic water leaks into his apartment, alleging negligence, breaches of the warranty of habitability, the duty to repair, the leasehold covenant of quiet enjoyment and common law nuisance.
At the final pre-trial conference. Klein agreed to dismiss all claims other than Southgate's alleged breach of its obligation to use its "best efforts" to cure the leak in Klein's apartment, to which it had agreed in the stipulation of settlement. On May 9, 2001, a jury found that Southgate had not breached its duty, and returned a verdict for defendant Following the verdict, Southgate moved for attorneys' fees, citing both a provision of the lease and a New York statute. The motion will be denied, since neither source cited by Southgate authorizes departing from the normal rule that parties to litigation bear their own attorneys' fees.
Under New York law, attorneys' fees are not ordinarily recoverable by prevailing parties absent express statutory or contractual authority. See Klein v. Sharp, 343 N.Y.S.2d 1014, 1015 (1st Dep't 1973); Piaget Watch Corp. v. Audemars Piguet Co., 316 N.Y.S.2d 104, 105 (1st Dep't 1970). In moving for an award of attorney's fees, Southgate first relies on a clause in the proprietary lease that it quotes as providing that
If the Lessee shall at any time be in default hereunder and the Lessor shall incur any expense (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 attorneys' fees and disbursements, shall be paid by the Lessee to the Lessor, on demand, as additional rent.
(Lease ¶ 28, as quoted in D. B.R. 4, emphasis added) As Klein (who quotes the provision in essentially identical terms), correctly points out. under the plain terms of this provision, an award of attorneys' fees is only authorized in the event of the tenant's default of obligations contained within the lease. The quoted language clearly provides for an award of expenses incurred, including attorneys' fees where the landlord resorts to self-help or litigation in curing the tenant's defaults In the present action. Southgate did not seek recovery for default or breach of any of Klein's contractual obligations, but rather defended against allegations that it breached an obligation that it owed to Klein. The lease as quoted by both parties plainly does not authorize an award of attorneys' fees under the circumstances presented here.
Curiously, however, the parties appear to misquote the actual lease between Klein and Southgate. which provides in ¶ 28 that.
If 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 any default by Lessee, or in defending, or in asserting a counterclaim in any action or proceeding brought by the Lessee, the expense thereof to the Lessor, including reasonable attorneys' fees and disbursements, shall be paid by the Lessee to the Lessor, on demand, as additional rent.
(Goldberg Aff. Ex C ¶ 28, emphasis added) This language significantly differs from that quotes by both parties. By omitting the critical introductory language emphasized in the version quoted in the text, the actual lease is susceptible to the interpretation (reading only the portions emphasized in the version quoted in this footnote) that the landlord may recover attorneys' fees in any litigation between the landlord and the tenant. This interpretation is rejected, however, for four reasons: First, a literal reading of the emphasized language in the actual lease would entitle the landlord to attorneys' fees in any such litigation, without reference to whether it prevailed. Since such a reading is plainly unsupportable. some limitation must be supplied. Second, all the other clauses in the paragraph refer to situations in which the tenant is in default of his obligations, suggesting that the clause referring to defending or countersuing in actions brought by the tenant should be read in pari passu. Third, since both parties quote a completely different text than that in Klein's actual lease, it is reasonable to conclude that they are quoting from a form, perhaps the current version of Southgate's proprietary lease, that may have been adopted to clarify the language used in the 1987 version signed by Klein. Fourth, and most importantly, provisions with this sort of ambiguity are insufficient to alter the clear common-law rule on attorneys' fees. If the parties wanted to provide that Southgate will recover its attorneys' fees when it prevails in any litigation with its shareholder-tenants, they could easily so provide in sample. explicit terms — particularly as the lease is presumably drafted by Southgate.
Nor is there any statutory basis for an award of attorneys' fees. Southgate unaccountably relies on New York Real Property Law § 234, which provides in relevant part that
Whenever a lease of residential property shall provide that in any action or summary proceeding the landlord may recover attorneys' fees and/or expenses incurred as a result of the failure of the tenant to perform any covenant or agreement contained in such lease, or that amounts paid by the landlord therefore shall be paid by the tenant as additional rent, there shall be implied in such lease a covenant by the landlord to pay the tenant the reasonable attorneys' fees and/or expenses incurred by the tenant as the result of the failure of the landlord to perform any covenant or agreement on its part to be performed under the lease or in the successful defense of any action or summary proceeding commenced by the landlord against the tenant arising out of the lease, and an agreement that such fees and expenses may be recovered as provided by law 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
(Emphasis added.) This provision expressly provides attorneys' fees only to the tenant. It was intended to level the playing field between landlords and tenants by giving prevailing tenants a reciprocal statutory right to recover attorneys' fees where the landlord has inserted into the lease a provision authorizing it to do so. See Jocar Realty Co. v. Galas, 673 N.Y.S.2d 836, 839 (1998); 245 Realty Assocs. v. Sussis, 673 N.Y.S.2d 635, 637 (1st Dept. 1998). Because the proprietary lease in this case permits Southgate to collect attorneys' fees in certain situations, the statute would permit Klein to collect fees in the event that he won a lawsuit to enforce his rights under the proprietary lease. However, the statute plainly does not authorize an award of attorneys' fees to a landlord defending an action such as this one for negligence or breach of obligations arising out of a settlement agreement.
Conclusion
For the foregoing reasons, defendant's motion for attorneys' fees and expenses is denied, and the Clerk is respectfully directed to enter a judgment for the defendant, in accordance with the jury's verdict.
SO ORDERED;