Opinion
116433/2007.
Decided March 31, 2010.
DELOTTO FAJARDO, LLP, NEW YORK, NEW, Attorney for Plaintiff.
CALABRO ASSOCIATES, P.C., NEW YORK, NEW YORK, Attorney for Defendant.
This is a motion brought by defendant, 305 East 24th Owners, to restore the underlying action to the Court's calendar, granting it judgment on its counter claim and setting the matter down for a hearing on attorney's fees incurred in its defense of the underlying action. This action originally arose from the alleged breach of a lease agreement between plaintiff and defendant. Plaintiff commenced this action for declaratory judgment and also seeking a Yellowstone and preliminary injunction, pending the outcome of the case. Eventually, the action was dismissed without prejudice for reasons discussed at greater length below. Plaintiff opposes the motion for legal fees on the basis that the contractual provision defendant relies upon is inapplicable.
Arguments
Defendant owns the property at 305 East 24th Street. In addition to the residential units on the property, there are commercial spaces on the ground floor, which are rented to plaintiff. Since the inception of the lease on October 26, 1984, plaintiff sublets the commercial spaces to commercial tenants.
According to plaintiff's affirmation, it received a complaint from defendant that one of their tenants, Ole Restaurant (`Ole'), was creating a nuisance by creating excessive noise. Plaintiff promptly notified Ole that they were in default of the sublease and gave them until December 17, 2007, to remedy the issues.
On December 5, 2007, defendant served plaintiff with a five day Notice to Cure the noise violation and also alleged that plaintiff's tenant stores No. 1, 2, 4, and 7 were in violation of the use clause of the lease. Prior to the expiration of the cure period, plaintiff commenced an action seeking a Yellowstone injunction and a preliminary injunction, staying the defendant from commencing any action or proceeding to recover possession of the premises pending the outcome of the parties dispute about whether the claimed violations actually existed. This Court granted the preliminary injunctions on February 4, 2008.
According to the defendant's affirmation, after the Yellowstone and preliminary injunctions were granted, defendant began serving plaintiff with demands for discovery, with which they did not comply. This failure to comply resulted in the parties entering into a stipulation on September 10, 2009. The stipulation stated that if the plaintiff failed to comply with discovery, their complaint would be stricken. After the plaintiff failed to comply with defendant's discovery demands, the Court enforced the stipulation on October 15, 2009, by dismissing the complaint and vacating the injunctions as well. The dismissal of the complaint was made without prejudice, allowing plaintiff to assert the claims made in this case as defenses in any subsequently commenced summary proceeding.
The defendant contends it is entitled to attorney's fees pursuant to Article 49 of the lease agreement. The agreement provides as follows:
"Should either party hereto fail to perform any of the terms of this lease on its part to be performed within the time periods set forth herein, the other party may perform the same and shall recover any sum or sums paid or expended in such performance including reasonable attorney's fees incurred in connection therewith." Defendant claims that the legal fees provision is applicable because defendant initiated legal action against plaintiff by serving a five-day Notice to Cure its default under the lease. Additionally, defendant argues that as a result of the dismissal of the complaint, the removal of the injunctions and plaintiff's failure to receive a permanent injunction staying the termination of the commercial lease, defendant is the prevailing party.
Plaintiff contends that the defendant is not entitled to attorney's fees under the lease. Plaintiff claims that the article of the lease pertaining to attorney's fees is not applicable because it only permits the recovery of legal fees against a party that is in default of the lease. Plaintiff additionally claims that since the matter was not decided
on the merits, but dismissed without prejudice, the defendant was not the prevailing party and, therefore, is not entitled to attorney's fees.
Discussion
Under the general rule, attorney's fees may not be awarded except if authorized by agreement between the parties, statute or court rule. Hooper Associates, Ltd. v. AGS Computers, Inc., 74 NY2d 487, 491 (1st Dept. 1989). A Provision in an agreement allowing the recovery of attorney's fees should be strictly construed. Horwitz v. 1025 Fifth Ave., Inc. , 34 AD3d 248 (1st Dept. 2006).
Here, the contract provision only permits legal fees when a party to the lease is in default, and then only if the other party performs the obligation. There was no substantive finding by the court that the plaintiff was ever in default. After the Yellowstone injunction was vacated and the case dismissed, the way was cleared for the defendant to bring the holdover proceeding, which the defendant never did. In any event, the lease provision is limited to circumstances where landlord performs the default obligation itself, which was not done here.
Defendant has not shown it was the prevailing party entitled to legal fees. The determination of which party should be accorded the status of `prevailing party,' thereby allowing recovery of attorney's fees, requires an initial consideration of the true scope of the dispute litigated, followed by a comparison of what was achieved within that scope. Excelsior 57th Corp. v. Winters, 227 AD2d 146, 147 (1st Dept. 1996). It is settled that only a prevailing party is ordinarily entitled to attorney's fees and to be considered a prevailing party, there must be success with respect to the central relief sought. 25 East 83 Corp. v. 83rd St. Assoc., 213 AD2d 269 (1st Dept. 1995).
Defendant was not the prevailing party since the Court's decision was not made on the merits and the matter was dismissed without prejudice. Therefore, defendant's request for attorney's fees is denied.
Conclusion
It is hereby,
ORDERED that defendant's motion for restoration of the case for an award attorney's fees is hereby denied; and it is further,
ORDERED that any relief request that has not been addressed is hereby denied; and it is further,
ORDERED that this constitutes the decision and order of the court.