433 Sutton Corp. Appellant,v.Robert Broder, Respondent.BriefN.Y.March 26, 2014CANTOR, EpSTEI N & MAZZOLA, LLP ATTORNEYS AT LAW 49 WEST 37TH STREET NEW YORK, NEW YORK 100 18 (212) 768-4343 FACSIMILE (212) 719-0717 ROBERT I. CANTOR Email: Canlor@cem-Iaw.com Telephone Ext. 101 January 10,2014 State of New York Court of Appeals 20 Eagle Street Albany, New York 12207 Re: 433 Sutton Corp. v. Robert Broder APL-2013-00315 Rule 500.11 Letter Brief of Appellant 433 Sutton Corporation To this Honorable Court: This letter is an appeal from a 3-2 decision of the Appellate Division, First Department, dated June 27, 2013 [the "Decision"], which reversed a decision of the New York County Supreme Court, Eileen A. Rakower, J.S.C. [the "Motion Court"] and ordered a cooperative corporation (the "Co-op") to pay the attorneys' fees of a proprietary lessee ["Broder"]' Pursuant to Rule 500.II(f), the Co-op specifically incorporates by reference the arguments contained in its brief to the First Department dated January 30, 2013 and asks this Court to consider same as if they are set forth entirely below. The defined terms used herein are as set forth in the Appellate Division brief. STATEMENT OF ESSENTIAL FACTS The Co-op owns a building located on East 56th Street in Manhattan. [R. 21]. Redacted Broder, a tenant shareholder, resides in Unit II[R. 21]. On or around August 24, 2011, residents of the third floor notified the Co-op' s staff that for a week a putrid stench had been coming from the Apartment. [R. 7; R. 23] and that Broder had not been seen for weeks. [R. 194]. Upon smelling the odor, the Board president, David Grammas, thought that there might be a decomposing body inside the Apartment. [R. 190]. Because Broder had not left keys with the Co-op as required by the house rules [R. 188-190], on August 25th the Co-op's representatives entered the Apartment on an emergency basis pursuant to paragraph Twenty-Fourth of the proprietary lease which permitstheCo-opto···makeforcible·entryintoan apartment, without liability, if the entry "shall be necessary or permissible hereunder" and the lessee is not personally present. [R. 6; 70-71]. No human remains were discovered. [R. 6]. Broder had left his cat unattended and the Apartment was filthy, filled with garbage, mold and cat waste. [R. 6]. The Coop did not disturb the Apartment except to replace the kitty litter. [R. 191-193]. On August 26th, Grammas redoubled his efforts to find Broder. After searching the internet and learning that Broder was a member of a theater union, he 2 obtained Broder's contact information from the union. [R. 193]. Thereupon, he called Broder, learned that he was "upstate" and demanded that Broder return to correct the Apartment's condition. [R. 197-198]. On that same day, the Co-op's attorney caused a letter to be hand-delivered to the Apartment advising Broder that the Co-op intended to seek a mandatory TRO for permission to clean the Apartment to ensure the health and safety of the other tenants. [R. 89-90]. The letter also stated that "[w]e hope that your immediate attention [to] this matter will render such action unnecessary." [R. 89-90]. On August zi», Broder returned to the Apartment, removed the cat and two bags of garbage and returned upstate. [R. 225]. He subsequently testified that he , had "clean[ed] up anything that was out of order". [R. 225]. On or about August 31 st, Broder again returned to the Apartment but took no further steps to cure the nuisance. [R. 226-227]. Even though the cat had been removed, the stench still permeated the third floor hallways. [R. 27]. As a result, on September l " the Co-op filed a proposed order to show cause seeking a TRO to permit its agents to enter the Apartment to remove all odor-producing materials. [R. 17-20]. On September 6th, the application came before Justice Rakower. [R. 140]. Broder had been given notice of the hearing and chose not to appear. [R.236-237]. The Motion Court signed the order permitting the Co-op to enter the Apartment. [R. 17-20]. 3 On September 8th, twelve days after Broder's initial visit and half-heartened effort to cure, and thirteen day after written notice to Broder, the Co-op entered the Apartment with a professional cleaning service which videotaped and photographed the Apartment's conditions. [R. 207-209]. The crew found cat feces, mouse droppings, spilled baby food and mold, all of which contributed to the continuing stench. [R. 207-208]. The noxious matter was removed and disinfectant applied. [R.211]. On September 19thand 21S\ the Motion Court conducted hearings on the Co- op's pending motion for (i) a preliminary injunction granting the Co-op permission to enter the Apartment on a regular basis to maintain it; and (ii) an award of attorneys' fees. [R. 139-239]. At the conclusion of the September 2pt hearing, the Motion Court stated that it was not inclined to issue the preliminary injunction because "the cat has been removed, that organic matter has been removed pursuant to the T.R.O. and so, there is no reason to believe that odors will get worse and permeate the hallway the way they did." [R. 218]. The Motion Court scheduled a hearing on September 26th to allow Broder to testify, to finalize its decision regarding the preliminary injunction and to rule on the Co-op's application for attorneys' fees. [R. 218-219]. At the close of testimony, the Motion Court denied the Co-op's preliminary injunction motion for the reasons previously elaborated and noted that the proprietary lease and house 4 rules provided mechanisms for future remedial action in the form of written notice with an opportunity to cure. [R. 236]. The Motion Court also denied the Co-op's application for attorneys' fees. [R. 238]. While accepting the emergency nature of the August 25th entry, it criticized the Co-op for not unequivocally stating in its TRO application that the cat had already been removed and, in passing, questioned whether the TRO application had been made prematurely without service of a written notice followed by a cure period. [R. 236]. On the other hand, the Court noted that Broder had chosen not to appear to correct the record or oppose the TRO. The Motion Court then issued its ruling regarding a central issue underlying the Appellate Division's Decision, i.e., whether a nuisance existed at the time the Co-op applied for the TRO even though the cat had been removed [R. 238]. It concluded that the nuisance was abated only after the Coop's removal of the noxious matter pursuant to the TRO. I find ... that there [is not] anything further that this Court should order because all organic material has been removed, because the cat has not been returned to the apartment and therefore, whatever is there to produce odor will dissipate. [R. 238]. The Motion Court issued a written decision on the 26th formally denying the Co-op's applications for a preliminary injunction and an award of attorneys' fees. 5 In this order, the Motion Court also dismissed the complaint, in its entirety, sua sponte. [R. 138]. On November 23rd, Broder filed a motion, pursuant to RPL §234, seeking an award of attorneys' fees as the prevailing party. [R. 9]. By a decision and order dated February 28, 2012, the Motion Court denied the motion and ruled that Broder, like the Co-op, was not the prevailing party. [R. 4-9]. The decision stated in pertinent part: The proprietary lease and house rules require tenants to maintain their units in a good state of preservation and cleanliness. Additionally, no animal shall be kept or harbored in the building unless expressly permitted in writing by the Lessor. It is clear from the testimony and evidence adduced at the hearing that Mr. Broder violated these provisions. [R.6]. [Emphasis added.] * * * The [Co-op] was forced to take action to protect complaining neighbors from what was described as "this stench [that] had started a week prior and had grown progressively worse during the course of that week." "The stench was overwhelming." ... "They had actually thought that there were human remains in the apartment at the time." [R. 7]. [Emphasis added.] This decision confirmed the Motion Court's conclusion that the Co-op had acted in good faith and that the remediation work performed pursuant to the TRO was essential in eliminating the odor: Credible testimony, however, revealed [the Co-op's] genuine concern that the uncleanliness of the apartment would continue to attract vermin and remain a source of 6 noxIOUS odors and nuisance, even after the cat was removed. The entry and cleaning of the unit was videotaped and preserved. The denial of the preliminary injunction was not a finding that [Broder] was in compliance with house rules and the proprietary lease, but that there was no demonstrated continuing harm. [R. 8]. [Emphasis added.] Broder subsequently appealed this decision to the First Department [R. 1], asserting several times that he was absent from the Apartment because he was "upstate" as a "first responder" aiding victims of Hurricane Irene, thus implying that such activity should relieve him of his responsibilities under the lease. But Broder also commenced a separate action against the Co-op and two board members alleging that the entries into the Apartment caused him physical and emotional damages in excess of $1.85 million and that his personal possessions worth $36,000 had been stolen (the "Second Action"). [R. 241-249]. At his deposition in the Second Action, Broder admitted that on August 25 and for the four or five previous days he was in Schenectady working on the production of a film called "A Place Beyond the Pines". By a decision dated June 27, 2013, a three member majority of the First Department reversed the Motion Court's decision denying Broder's motion for attorneys' fees and remanded the case to Supreme Court to determine the amount of said fees. Two Justices issued a dissenting opinion. By an order dated October 10,2013 the Appellate Division granted the Co-op's motion staying remand of the 7 matter to the Supreme Court pending disposition of this appeal to the Court of Appeals and certifying the question "Was the order of [the First Department], which reversed the order of the Supreme Court, properly made?" LEGAL ARGUMENTS The First Department Applied the Incorrect Standard of Review By Substituting its Own View of the Evidence to Contradict the Motion Court's Finding In 409-411 Sixth Street, LLC v. Mogi, 22 NY3d 875, 2013 NY Slip Op. 06604 (2013), this Court affirmed the long-standing legal principle that judicial review of a court's decision made after a bench trial should: Not be disturbed upon appeal unless it is obvious that the court's conclusions could not be reached under any fair interpretation of the evidence, especially when the findings of fact rest in large measure on considerations relating to the credibility of witness, citing Claridge Gardens v. Menotti, 160 AD2d 544, 544-545, 554 NYS3d 193 (1 st Dept. 1990). Accord: Thoreson v. Penthouse International, 80 NY2d 490,495,591 NYS2d 978 (1992). Here, the Appellate Division did not apply this standard of review. Instead, it substituted its own interpretation of the trial evidence to support its findings that Broder was the prevailing party. For example, the Decision stated that the odor was caused entirely by the presence of the cat and that the odor had dissipated once the cat was removed. 8 [Decision p. 12]. However, the record unequivocally demonstrates, and the Motion Court found, that the removal of the cat did not eliminate the repugnant odor or cure the nuisance and that the odor did not dissipate until the Co-op cleaned the Apartment after obtaining the TRO. [R. 6, R. 8 and R. 238]. From its own fact finding, the Appellate Division determined that there was insufficient evidence that Broder was in breach of his lease after removal of the cat. [Decision p. 15]. But the Motion Court found to the contrary: that Broder's conduct had breached his lease obligations [R. 6 and 8]. Another misstatement in the Decision was the Court's finding that the Motion Court dismissed the action and denied the preliminary injunction motion because the Co-op "had in fact breached the lease by failing to give [Broder] the requisite notice and opportunity to cure before resorting to self-help." [Decision p. 15]. However, the Motion Court did not find that the Co-op was in breach and did not refer to the lease in denying the injunction. [R. 237-238]. It simply was not convinced that there was anything further for it to do because all organic material had been removed pursuant to the TRO. [R.238]. We respectfully submit that there is no credible argument that the Motion Court's conclusions "could not [have been] reached under any fair interpretation of the evidence, especially when the findings of facts rest in large measure on considerations relating to the credibility of witnesses." Moreover, in the fact- 9 sensitive area of determining prevailing party status to determine an award of attorneys' fees, the findings of a motion or trial court should only be disturbed in compelling circumstances. The Appellate Division's erroneous review of the record in the Decision and the substitution of its findings of relevant facts for those of the Motion Court is sufficient cause to warrant a reversal of the Decision and adoption of the dissenting opinion of the two Appellate Division Justices. The Decision Exceeds the Legislative Intent of Section 234 to Level the Playing Field and to Discourage Untoward Legal Action RPL §234 was enacted in 1966 and governed leases of residential property in New York City. It was amended in 1969 to encompass residential leases in the entire State. It is well-settled that RPL §234 is also applicable to co-ops and their proprietary lessees. This Court discussed the genesis and legislative purpose of §234 in Matter of Duell v. Condon, 84 NY2d 773, 783, 622 NYS2d 891 (1995) and noted that "the remedial nature of the Legislature's action to equalize the power of landlords and tenants is evident from both the language of the statute as well as historical documents," citing Bill Jacket, L. 1966, ch. 286. In recommending passage, the State Department of Social Welfare stated it would discourage landlords from taking advantage of low income individuals who cannot afford to bear the legal fees and expenses necessary to protect their right[s]. See Bill Jacket, L. 166 ch. ]0 286, p. 5. The Co-op's acts at bar were not done to take advantage of Broder. Nor was the Co-op seeking to terminate Broder's lease. To the contrary, the Co-op was compelled to institute litigation because Broder himself created an emergency situation through the combination of a weeks-long absence during which he left his cat unattended and his failure to adequately address the nuisance after receiving notice of the circumstances. He merely removed the cat and returned upstate, leaving the Apartment in the same deplorable condition to the continued detriment of the Co-op' s other tenants. Clearly, this is not a situation where a landlord harassed a tenant or bullied him by engaging in frivolous litigation. Instead, the "landlord" was a co-operative corporation - - of which Broder is a shareholder - - which was, as the Motion Court noted, "forced to take action to protect complaining neighbors from ... [a] stench that had started a week prior and had grown progressively worse during the course of the week." To penalize the Co-op by making it pay Broder's legal fees in a judicial action instituted in good faith when confronted by an emergency situation of Broder's own making does not comport with the remedial statute's purpose described in its legislative history. Indeed, there is a danger that such an interpretation of §234 may have a chilling effect on a co-op's ability to protect other shareholders against a nuisance. J 1 The threat of having to bear a tenant's legal fees, which can be substantial, could deter it from seeking judicial redress when confronted with an emergency affecting other tenants who are not in breach of their leases. Requiring the co-op to bear the litigating tenant's costs would, in essence, be penalizing the non-breaching tenants twice. Moreover, tenant shareholders are frequently afforded protections by the terms of their proprietary leases regarding a co-op' s authority to collect attorneys' fees. Many proprietary leases, including the one at bar, do not allow a co-op to recover legal fees from a tenant shareholder who is a losing litigant if the tenant shareholder is not also in breach of the lease. I Thus, for example, in the Second Action Broder alleges that the Co-op caused him physical and emotional damages in excess of $1.85 million and that his personal possessions worth $36,000 had been stolen. Even if the Co-op gets this matter dismissed, it would not be able to recover its legal fees. The Outcome of the Motion Court's Decisions Was Mixed and Therefore Neither Party is the Prevailing Party Whether a tenant should be accorded the status of "prevailing party" requisite for an award of attorneys' fees pursuant to RPL §234 requires "an initial consideration of the true scope of the dispute litigated, followed by a comparison See, proprietary lease, Paragraph Twenty-Seventh, [R. 72]. 12 Wellner, 205 AD2d 339, 340, 613 NYS2d 163, 164-165 (1st Dept. 1994), aff'd 86 of what was achieved within that scope." Excelsior 57th Corp. v. Winters, 227 AD2d 146, 146-147, 641 NYS2d 675, 676 (1st Dept. 1996) (citing Solow v. NY 582,635 NYS2d 132 (1995)). New York Courts have held that where the results of litigation are mixed and are not substantially favorable to one side, neither party will be found to be "prevailing" and neither side will be awarded attorneys' fees, J.J. & P. Corp. v. Dune Deck Owners Corp., 10 Misc. 3d 129 (A), 809 NYS2d 481,481 (1st Dept. 2005) ("In light of the mixed result reached below, the court correctly ruled that neither side was a 'prevailing party' entitled to attorneys' fees."); PeW v. Connors, 7 AD3d 464, 777 NYS2d 805 (l stDept. 2004). Here, the Co-op achieved the primary relief it sought by successfully obtaining and executing the TRO which then abated the nuisance. Although the Motion Court subsequently denied the Co-op's application for a preliminary injunction and dismissed the complaint, this does not vitiate the fact that the Co-op obtained the relief it needed. Broder's Breach of the Lease Precludes an Award of Attorneys' Fees Pursuant to RPL §234 Even when a tenant succeeds in having an action dismissed, courts routinely decline to reward the tenant with attorneys' fees in cases where the tenant's conduct was in breach of the lease, Stepping Stones Associates v. Seymour, 48 I3 A.D.3d 581, 853 N.Y.S.2d 562 (2nd Dep't., 2008); Ram 1, LLC v. Stuart, 248 AD2d 255, 668 NYS2d 888 (1 st Dept. 1998). Here, the Motion Court - - in denying Broder's motion for attorneys' fees- expressly found that Broder had breached his lease [R. 7] and expressly found that its denial of the preliminary injunction was not a finding that Broder was in compliance with the house rules and lease. [R. 9]. Instead, the Motion Court simply noted that after the Court granted the Co-op access to clean the apartment there was nothing further for the Court to do. [R. 238]. The Appellate Division Relied on an Erroneous Interpretation of the Proprietary Lease Regarding the Service of A 10-Day Notice The Court maintained that the Co-op wrongfully failed to give Broder notice and an opportunity to cure before resorting to "self-help" in entering the Apartment [Decision pp. 12 and 14-15], referencing paragraph Nineteenth of the proprietary lease. [R. 14-15]. However, when the Co-op entered the Apartment on August 25th it did so under paragraph Twenty-Fourth which allows entry in an emergency situation without notice if the lessee is not present [R. 70-71]. Other than the Co- op's initial emergency entry, it never sought to exercise self-help but rather applied to the Court for relief. As the Motion Court correctly stated at the close of testimony on September 26th, the proprietary lease and house rules provided 14 mechanisms for future remedial action III the form of written notice with an opportunity to cure [R. 236]. Assuming arguendo that paragraph Nineteenth was applicable to the Co- Op's entry to remove the cause of the offensive stench, the letter from the Co-Op's attorney threatening action unless Broder rendered it unnecessary by curing the nuisance was served on Broder at the Apartment on August 26th, prior to his arrival at 3:00 A.M. on August 27th to remove the cat. Thirteen days intervened before the cleaning crew actually arrived pursuant to the TRO. Thus, Broder had more than the requisite period to take curative action. 15 CORPORATE DISCLOSURE STATEMENT Counsel for the Co-op certifies that said defendant (a private non- governmental party), has no corporate parents, affiliates and/or subsidiaries which are publicly held. CONCLUSION The Coop respectfully requests that this Court reverse the Decision and remand the matter to the Appellate Division to enter judgment consistent with the dissenting opinion. CANTOR, PSTEIN&M ZOLA,LLP Attorney, lfor th~OOP!Jt By:.--:.- =--y_'f-I-;t__l.~~ _ Robert . Cantor Brett L. Carrick 49 West 37th Street, 7th Floor New York, New York 10018 212-768-4343 16
