Graham Court Owner's Corp., Appellant,v.Kyle Taylor, Respondent.

Brief

N.Y.January 14, 2015

To be Argued by: Mark H. Bierman, Esq. Court of Appeals No. 2014-00055 (Time requested: 30 minutes) Court of Appeals of the State of New York ______________________________________________ GRAHAM COURT OWNER’S CORP., Petitioner-Landlord-Appellant, -against- KYLE TAYLOR, Respondent-Tenant-Respondent. BRIEF FOR RESPONDENT-TENANT-RESPONDENT BIERMAN & PALITZ LLP Attorneys for Respondent-Tenant-Respondent 74 Trinity Place, Suite 1550 New York, New York 10006 Tel: (212) 232-2055 Fax:(212) 232-2056 mbierman@biermanpalitzllp.com Dated: June 26, 2014 Civil Court, New York County Clerk’s Index No. L&T 70520/2007 New York County Clerk’s Index No. 570661/2010 TABLE OF CONTENTS Table of Authorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i PRELIMINARY STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 The Proceedings Below. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 RPL § 234 and the Lease Between the Parties . . . . . . . . . . . . . . . . . . . . . . 5 RPL § 223-b and the Right to Attorneys’ Fees as Compensation for Damages. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 This Court Should Affirm the Award of Attorneys’ Fees Under RPL § 234 and Find that Such Fees Are Also Recoverable Under RPL § 223-b. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 STATEMENT OF FACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 The Tenant Files a Good-Faith Complaint With the State Agency Charged With Enforcing the Statutory Scheme of Rent Regulation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 The Landlord Retaliates Against the Tenant By Terminating His Tenancy and Commencing a Baseless and Vexatious Summary Holdover Proceeding. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 The Lease Provisions for Recovery of Attorneys’ Fees. . . . . . . . . . . . . . . 33 The Order and Judgment After Trial. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 The Trial Court’s Award of Attorneys’ Fees . . . . . . . . . . . . . . . . . . . . . . . 35 The Appeal and Cross-Appeal to the Appellate Term. . . . . . . . . . . . . . . . . 37 The Appellate Division’s Grant of Leave to Appeal . . . . . . . . . . . . . . . . . 38 The Order of the Appellate Division . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 The Appellate Division’s Grant of Leave to Appeal to the Court of Appeals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 POINT I: THE ORDER OF THE APPELLATE DIVISION HOLDING THAT TENANT IS ENTITLED TO AN AWARD OF ATTORNEYS’ FEES UNDER THE LEASE BETWEEN THE PARTIES AND THE PROVISIONS OF REAL PROPERTY LAW § 234 SHOULD BE AFFIRMED. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 A. Per Force of RPL §234 and the Plain Language of the Statute, Implied in the Lease is a Covenant for the Landlord’s Payment of the Tenant’s Attorneys’ Fees and Expenses. Under the Lease, the Landlord Has the Right to Recover Attorneys’ Fees Incurred in an Action or Summary Proceeding to Recover Possession Through an Action for Damages, From Rents Received Upon Reletting, or as Additional Rent, Thereby Clearly Triggering in Three Separate Ways the Implied Covenant of RPL §234 in Favor of the Tenant. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 B. Applicable Rules for Construing RPL § 234 . . . . . . . . . . . . . . . . . . . . . 44 1. The Landlord Can Recover Attorneys’ Fees Under the Lease Through Reletting or Direct Recovery From the Tenant In an Action for Damages. Under the Lease the Landlord has No Duty to Mitigate and the Tenant Under All Circumstances Remains Liable for Attorneys’ Fees. . . . . . . . . . 57 2. Under the Lease, the Landlord Has the Right to Recover Attorneys’ Fees Incurred in an Action or Proceeding to Recover Possession Through Additional Rent, Thereby Affording A Third Provision Triggering the Implied Covenant of RPL § 234 in Favor of the Tenant. . . . . . 71 POINT II: LANDLORD’S ARGUMENT THAT PLAINTIFF IS NOT ENTITLED TO ATTORNEYS’ FEES UNDER RPL §234 BECAUSE HE PURPORTEDLY BREACHED HIS LEASE IS IMPROPERLY RAISED AND OTHERWISE BASELESS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 A. Landlord Failed to Raise Any Claim in the Court Below that Tenant Is Precluded From Recovering Attorneys’ Fees Because he Breached the Lease. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 B. Nothing in the Facts of the Underlying Proceeding Supports Judicial Equitable Intervention to Deprive the Tenant of His Contractual and Statutory Rights to an Award of Attorneys’ Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 POINT III: TENANT IS ENTITLED TO AN AWARD OF ATTORNEYS’ FEES AND COSTS AS AN ELEMENT OF COMPENSATION FOR DAMAGES UNDER RPL § 223-B AND COMMON LAW . . . . . . . . . . . . . . 85 A. RPL § 223-b’s Broad Grant of Authority to Courts to Fashion Remedies for Damages, Authorized the Trial Court to Award the Tenant Attorneys’ Fees . . . . . . . . . . . . . . . . . . . . . . . . 85 B. The Trial Court’s Award of Attorneys’ Fees Was Otherwise Well Within the Broad Powers of the Courts to Fashion Remedies and Award Compensation, Including Awarding Attorneys’ Fees as an Element of Damages, Where the Litigation Is Brought with Retaliatory or Malicious Motives. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93 CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102 -i- Table of Authorities Cases 135 East 57th Street LLC v. Daffy's Inc., 91 A.D.3d 1, 934 N.Y.S.2d 112 (1st Dept. 2011). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 245 Realty Associates v. Sussis, 243 A.D.2d 29, 673 N.Y.S.2d 635 (1 Dept. 1998). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 333 East 49th Partners, L.P. v. 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New York State Div. of Housing and Community Renewal, 21 N.Y.3d 649, 977 N.Y.S.2d 161, 999 N.E.2d 524 (2013). . . . . . . . . . . . . . . . . . . . . . . . . . 54 N. & S. Decor Fixture Co., Inc. v. J. Enterprises, Inc., 57 A.D.2d 890, 394 N.Y.S.2d 278 (1st Dept. 1977). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 A.G. Ship Maintenance Corp. v. Lezak, 69 N.Y.2d 1, 511 N.Y.S.2d 216, 503 N.E.2d 681 (1986). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95 Kumble v. Windsor Plaza Co., 161 A.D.2d 259, 555 N.Y.S.2d 290 (1st -vi- Dept.1990). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91 Nesbitt v. New York City Conciliation and Appeals Bd., 121 Misc.2d 336, 467 N.Y.S.2d 528 (Sup. Ct., N.Y. Co., 1983). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 New Amsterdam Cas. Co. v. Stecker, 1 A.D.2d 629, 152 N.Y.S.2d 879 (1st Dept. 1956). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101 New York Telephone Co. v Supervisor of Town of Oyster Bay, 4 N.Y.3d 387, 392 n.2, 796 N.Y.S.2d 7, 9 n.2 (2005). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 Oxford Towers Co., LLC v. Wagner, 58 A.D.3d 422, 872 N.Y.S.2d 431 (1st Dept. 2009). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 O’Horo v. Kelsey, 60 App. Div. 604, 70 N.Y.S. 14 (4th Dept. 1901). . . . . . . 96, 97 Park South Associates v. Essebag, 126 Misc.2d 994, 487 N.Y.S.2d 252 (App. Term, 1st Dept., 1984). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96 Park West Village v. Lewis, 62 N.Y.2d 431, 477 N.Y.S.2d 124, 465 N.E.2d 844 (1984). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 Parochial Bus Systems, Inc. v. Board of Educ. of City of New York, 60 N.Y.2d 539, 470 N.Y.S.2d 564, 458 N.E.2d 1241 (1983). . . . . . . . . . . . . . . . . . . . . . . . . . 1 People v. Torres, 108 A.D.3d 474 969 N.Y.S.2d 462 (1st Dept. 2013). . . . . . . . 73 People v. Watson, 245 A.D.2d 87, 666 N.Y.S.2d 131 (1st Dept. 1997). . . . . . . . 73 Ram I, LLC v. Stuart, 248 A.D.2d 255, 668 N.Y.S.2d 888 (1st Dept. 1988). . . . 83 Render Trap, Inc. v. Town of Huntington, 100 Misc.2d 108, 418 N.Y.S.2d 537 (Sup. Ct., Nassau Co, 1979). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 Rios v. Carillo, 53 A.D.3d 111, 861 N.Y.S.2d 129 (2d Dept. 2008). . . . . . . . . . . 68 Robia Holding Corporation v. Walker, 257 N.Y. 431, 178 N.E. 747 (1931). . . . 56 -vii- Russian Church of Our Lady of Kazan v. Dunkel, 67 Misc.2d 1032, 326 N.Y.S.2d 727 (N.Y.Sup. 1971). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 Russo v. Valentine, 294 N.Y. 338, 62 N.E.2d 221 (1945). . . . . . . . . . . . . . . . . . 102 Schanbarger v. Kellogg, 43 A.D.2d 362, 365, 352 N.Y.S.2d 50, 53 (3d Dept. 1974), aff’d, Broughton v. State, 37 N.Y.2d 451, 459, 335 N.E.2d 310, 316, 373 N.Y.S.2d 87, 96 (N.Y. 1975) cert den. Schanbarger v. Kellogg, 423 U.S. 929, 96 S.Ct. 277, 46 L.Ed.2d 257 (1975). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98 Senfeld v. I.S.T.A. Holding Co., Inc. 235 A.D.2d 345, 652 N.Y.S.2d 738 (1st Dept. 1997) lv. dissms’d, 91 N.Y.2d 956, 671 N.Y.S.2d 717 694 N.E.2d 886 (1998); lv. appeal den. 92 N.Y.2d 818, 707 N.E.2d 444, 684 N.Y.S.2d 489 (1998). . . . . . . 75 Shindler v. Lamb, 25 Misc.2d 810, 211 N.Y.S.2d 762 (Sup Ct., NY Co., 1959), aff’d, 10 A.D.2d 826, 200 N.Y.S.2d 346, aff’d, 9 N.Y.2d 621, 210 N.Y.S.2d 226, 172 N.E.2d 79 (1960). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98 Solow Mgt. Corp. v. Lowe, 1 A.D.3d 135, 766 N.Y.S.2d 838 (1st Dept. 2003). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81 Stepping Stones Associates v. Seymour, 48 A.D.3d 581, 853 N.Y.S.2d 562 (1st Dept. 2008). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84 Symphony Space, Inc. v. Pergola Properties, Inc., 214 A.D.2d 66, 631 N.Y.S.2d 136 (1st Dept. 1995), aff’d, 88 N.Y.2d 466, 646 N.Y.S.2d 641, 669 N.E.2d 799 (1996). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 Town of Massena v. Niagara Mohawk Power Corporation, 45 N.Y.2d 482, 410 N.Y.S.2d 276, 382 N.E.2d 1139 (1978). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Underhill v. Collins 132 N.Y. 269, 30 N.E. 576 (1892). . . . . . . . . . . . . . . . . . . . 47 United Pickle Co., Inc. v. Omanoff , 63 A.D.2d 892, 405 N.Y.S.2d 727 (1st Dept. 1978). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93, 95, 96 -viii- Vermont Teddy Bear Co., Inc. v. 538 Madison Realty Co., 1 N.Y.3d 470, 775 N.Y.S.2d 765, 807 N.E.2d 876 (2004). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 Vucetovic v. Epsom Downs, Inc., 10 N.Y.3d 517, 860 N.Y.S2d 429 (2008). . . . 51 Wells v. East 10th Street Associates, 205 A.D.2d 431, 613 N.Y.S.2d 634 (1st Dept. 1994) lv. den. 84 N.Y.2d 813, 623 N.Y.S.2d 181,647 N.E.2d 453, (1995). . . . . 81 York v. Searles, 97 A.D. 331, 90 N.Y.S. 37 (2d Dept. 1904), aff’d, 189 N.Y.573, 82 N.E. 1134 (1907). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 State Statutes Labor Law §198 (1-a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 Real Property Actions and Proceedings Law (“RPAPL”) Article 7. . . . . . . . . . . 13 Real Property Law § 223-b. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 21, 36, 85-90 Real Property Law § 234. . . . . . . . . . . . . . . 2, 5, 7, 9-11, 15-17, 19, 20, 23, 33, 35-38, 43-47, 51, 53, 54, 56, 59, 64, 66, 67, 70, 72, 74, 77, 78 Statutes § 73. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101 Statutes § 92. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87 Statutes § 94. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87 Statutes § 95. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 Statutes § 96. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 Statutes § 111. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 -ix- Statutes § 114. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101 Statutes § 144. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 Statutes § 112. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 Statutes § 321. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 Statutes § 341. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 Local Laws Rent Stabilization Law of 1969 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Regulations Rent Stabilization Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Other Authorities and Sources Department of Homeless Services, About DHS (2014), http://www.nyc.gov/html/ dhs/html/home/home.shtml. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 City Officials Push for Providing Lawyers for Tenants Facing Eviction, NY Daily News, June 12, 2014. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Civil Court of the City of New York, Caseload Activity Report for 2013, Statistical Report of Activity L&T Clerk’s Office, All Counties (March 6, 2014). 13 Executive Memorandum on L. 1979, p. 1828, 1979 McKinney’s Session Law News of New York. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87, 88 Memorandum of State Senator John R. Dune, S. 1383, N.Y.S. Legislative Annual, 1969 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Michael D. Young, Executive Director, Legal Services NYC’s Interim Executive Director, Testimony Before Task Force (2010). . . . . . . . . . . . . . . . . . . . . . . . . . . 18 -x- New York County Lawyers Association, Report- The New York City Housing Court In the 21st Century: Can it Better Address the Problems Before It? (2005). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Office of the Administrative Judge of the Civil Court of the City of New York, Office of the Deputy Chief Administrative Judge for Justice Initiatives, and New York City Bar Association Committee on Legal Services to Persons of Moderate Means, Joint Report, Volunteer Lawyer for a Day Project Report (February 2008). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12, 14, 15 Office of the Deputy Chief Administrative Judge for Justice Initiatives, Expanding Access to Justice in New York State: A Ten-Year Report (2009). . . . . . . . . . . . . . 6 Task Force to Expand Access to Civil Legal Services in New York, Report to the Chief Judge of the State of New York (Nov. 2010). . . . . . . . . . . . . . . . . . . . . 13, 17 Vera Institute of Justice, Understanding Family Homelessness in New York City: An In Depth Study of Families’ Experiences Before and After Shelter (2005). . . . 6 -1- PRELIMINARY STATEMENT This brief is respectfully submitted on behalf of the Respondent-Tenant- Respondent Kyle Taylor (“Tenant”) in response to the brief of the Petitioner- Landlord-Appellant Graham Court Owner’s Corp. (“Landlord”) on this appeal by permission of the Appellate Division, First Department, dated March 11, 2014. (R. 581). For the reasons more fully set forth below, the order of the Appellate Division determining, as a matter of law, that the Tenant is entitled to an award of attorneys’ fees and costs under the terms of the lease and Real Property Law (“RPL”) § 234 is correctly decided and should be affirmed. The question as to whether the Appellate Term Order was properly modified to award the Tenant attorneys’ fees under RPL § 234 should be certified in the affirmative. This Court should also reinstate the holding of the Civil Court of the City of New York, Housing Part, (“Trial Court”) that the Tenant is entitled to compensation as an element of damages under RPL § 223-b and common law in the form of attorneys’ fees and costs. This issue, which was raised by Tenant in the Trial Court, the Appellate Term and the Appellate Division, is now properly before this Court. See Parochial Bus Systems, Inc. v. Board of Educ. of City of New York, 60 N.Y.2d 539, 545-546, 458 N.E.2d 1241, 124, 470 N.Y.S.2d 564, The agency has since been renamed the Division of Homes and Community Renewal.1 -2- 567 (1983); Town of Massena v. Niagara Mohawk Power Corporation, 45 N.Y.2d 482, 488, 410 N.Y.S.2d 276, 279, 382 N.E.2d 1139, 1142 (1978). The Proceedings Below. The circumstances underlying this proceeding embody the constellation of public policy concerns, litigation abuses and contractual inequities that precipitated the Legislature’s enactment of both Real Property Law § 234 and Real Property Law § 223-b and the remedial rights conferred by that legislation. Here, the Landlord brought a baseless, malicious, abusive and retaliatory summary holdover eviction proceeding to oust the Tenant from his apartment for having made a good-faith complaint to, and successfully established before, the New York State Division of Housing and Community Renewal (“DHCR” or “Agency”) , the agency charged with enforcing the Rent Stabilization Law of1 1969, as amended, (“RSL”) and the Rent Stabilization Code, as amended, promulgated thereunder (“RSC”). The Tenant’s complaint charged that the Landlord had attempted to unlawfully deregulate his apartment and to exact a rent far in excess of the legal regulated rent under the RSL and RSC. In those DHCR proceedings, the Landlord had tried to justify the deregulation and excessive rental and rent security charges -3- through fraud and misrepresentation, falsely claiming through perjurious affidavits that it had performed certain electrical work in the apartment, which in fact the Tenant had performed at his own expense with the Landlord’s express prior permission and consent before taking possession. The DHCR issued orders through both the Rent Administrator and the Rent Commissioner finding, inter alia, that the Landlord misrepresented the facts relating to such work, that the Landlord had unlawfully deregulated the Tenant’s apartment, that the Landlord had charged the Tenant far in excess of the legal rent and that the Landlord’s overcharges were willful. The DHCR imposed treble damages against the Landlord, ordered a large reduction of the rent and awarded the Tenant the sum of $138,373.57 in overcharges and penalties. (R. 33, 16-19, 440). Both the Supreme Court and this Court affirmed the DHCR’s determination. In retaliation, the Landlord, almost immediately after the DHCR’s determination, commenced the eviction proceeding against the Tenant. The Landlord made the fabricated and disingenuous claim in the holdover proceeding that the Tenant had breached a substantial obligation of the lease by having performed the very electrical work that the Landlord had granted the Tenant permission to perform and which the Landlord itself had claimed before the DHCR to have performed to bring the apartment into compliance with New York -4- City Building Code and eliminate antiquated and substandard electrical wiring. The Tenant prevailed at trial. The petition was dismissed with prejudice. The Trial Court found that the Landlord’s petition was without merit, that the testimony of its representative was “entirely incredible,” that the Landlord’s witness (a principal of the petitioner) “lied repeatedly and obviously,” that the proceeding had been brought in retaliation for the Tenant’s assertion of his rights before the DHCR and that the Landlord had given its express permission for the Tenant to perform the electrical work at the time of leasing. (R. 16-19). The Trial Court awarded the Tenant compensation for damages in the form of attorneys’ fees and costs on his counterclaim under RPL § 223-b. However, it denied Tenant attorneys’ fees on his counterclaim based on the lease between the parties (R. 427- 428) (“the Lease”) and RPL § 234, finding that RPL § 234 was not applicable to the attorneys’ fees provision in the Lease. The Landlord appealed the Trial Court’s finding and award of attorneys’ fees; the Tenant cross-appealed on the issue of his right to recover attorneys’ fees and costs under RPL § 234. The Appellate Term affirmed the Trial Court’s findings, dismissal of the petition with prejudice and denial of attorneys’ fees under RPL § 234 but modified the Trial Court’s order so as to delete the award of attorneys’ fees under RPL § 223-b. RPL § 234, when first enacted, applied only in the City of New York. (L. 1966, Ch. 286.) 2 Given its importance to the State’s public policy objectives and the similar threats to tenants outside of the City of New York, it was expanded to apply statewide in 1969. (L. 1969, Ch. 297.) “[G]iven the disparity of bargaining power normally existing between the parties, it has3 become common practice for landlords to prepare leases and present them to tenants on a take-it or leave-it basis ... The proposed legislation will cure this inequity and insure uniform treatment of all tenants residing in New York State” (Mem of Senator John R. Dunne, on L. 1969, ch. 297 -5- The Appellate Division, after granting the Tenant leave to appeal on the issue of his entitlement to attorneys’ fees under RPL § 223-b and RPL § 234, modified the order of the Appellate Term to grant the Tenant’s claim for attorneys’ fees under RPL§ 234. The Appellate Division correctly held that the Lease provisions relating to attorneys’ fees fall within the scope of RPL § 234. Having so found, the Appellate Division decided that it was not necessary to reach the issue of the Tenant’s entitlement to compensation in the form of attorneys’ fees and expenses under RPL § 223-b. The Appellate Division granted leave to the Landlord to appeal to this Court. RPL § 234 and the Lease Between the Parties. RPL § 234, first enacted in 1966, reflected a recognition by the New York2 State Legislature that few tenants facing eviction proceedings could afford legal representation, while most landlords could, since most leases authorize landlords to recover attorneys’ fees from tenants with tenants having no such right due to the tenants’ lack of bargaining power in a contracted housing market. The inequities3 1969, N.Y. Legis. Ann. at 357). “No issue is more fundamental to the courts’ constitutional mission than ensuring equal4 justice for all. The availability of affordable legal representation for low-income New Yorkers is indispensable to our ability to carry out that mission.” Chief Judge Jonathan Lippman, as quoted in the Report of the Task Force to Expand Access to Legal Services in NY appointed by Chief Judge Lippman in 2010. “This increasing inequality of income, combined with greatly reduced access to legal resources, has threatened the very basis of equal justice under the law. When some citizens have vastly more resources than others, the ability of the courts to act as fair referees is compromised, particularly in our common-law adversary system where litigants are responsible for developing facts and presenting issues and law to the courts.” Expanding Access to Justice in New York State: A Ten-Year Report, Office of the Deputy Chief Administrative Judge for Justice Initiatives (2009). According to a September 2005 report of a study by the Vera Institute of Justice, almost5 one half of the families entering the homeless shelter system did so after experiencing a formal or informal eviction. See Understanding Family Homelessness in New York City: An In Depth Study of Families’ Experiences Before and After Shelter, Vera Institute of Justice (2005). New York City’s Department of Homeless Services’ website reports a current budget of approximately one billion dollars. About DHS, Department of Homeless Services (2014), http://www.nyc.gov/html/dhs/html/home/home.shtml. DHS Census Report for June 6, 2014 reports 53,352 individuals in New York City’s shelter system, of which 23,012 are children. Due to severity of the disparity of legal representation and the social and economic strain on the City of New York, the Mayor, consistent with the proposal of Chief Judge Lippman’s 2011 judiciary budget recommendation, has expressed support for a bill introduced in the New York City Council in June 2014 that would cost approximately one hundred million dollars for legal representation of tenants to fight evictions. See City Officials Push for Providing Lawyers for Tenants Facing Eviction, NY Daily News (June 12, 2014). -6- of this imbalance and its impact on access to justice for so many could no longer4 be ignored, especially where the stakes are so high for tenants, the risk of loss so great, the social costs to the State so severe and the economic burden on the State and city growing. The statute also reflects the recognition that justice cannot be5 meaningfully pursued in our courts without access to counsel. As the sponsor of Memorandum of State Senator John R. Dune, S. 1383, N.Y.S. Legislative Annual, 1969,6 p. 356. -7- the 1969 amendment to RPL § 234 wrote: Such [tenant] harassment [by landlords] has often resulted in the bringing of unwarranted judicial proceedings with the net result that the tenant of modest or little means must either hire and pay for his own counsel or vacate the subject premises. For such a tenant, the opportunity to compel the landlord to pay the tenant’s attorneys’ fees will frequently be the determinative factor in influencing a decision to defend. (Bold supplied)6 As the Legislature well understood, conversely, the determinative factor for landlords, in deciding whether to bring a proceeding with no genuine legal or factual merit, is whether there exists a risk that the tenant will be able to recover attorneys’ fees. As this Court recognized and held almost a quarter of a century ago: The overriding purpose of Real Property Law § 234 was to level the playing field between landlords and residential tenants, creating a mutual obligation that provides an incentive to resolve disputes quickly and without undue expense. The statute thus grants to the tenant the same benefit the lease imposes in favor of the landlord. An additional purpose, particularly relevant in cases in which the tenancy is governed by the emergency rent laws, is to discourage landlords from engaging in frivolous litigation in an effort to harass tenants, particularly tenants without the resources to resist legal action, into terminating legal occupancy ( see, Mem. of Senate Sponsor Harrison Goldin, Bill Jacket, L.1966, ch. 286, at 1; Mem. of N.Y. St. Dept. of Social Welfare, op. cit., at 5; see also, Maplewood Mgt. v. Best, 143 A.D.2d 978, 533 N.Y.S.2d 612; Cier Indus. Co. v. Hessen, 136 A.D.2d 145, 150–151, 526 N.Y.S.2d 77). Duell v. Condon, 84 N.Y.2d 773, 780, 622 N.Y.S.2d 891, 893 - 894, 647 N.E.2d 96, 98-99 Id. 7 -8- (1995). Thus, RPL§234 was designed to help remedy this serious public policy crisis, increase tenant representation by attorneys by creating a mechanism for tenants to recover such fees where the lease afforded the landlord any right to recover attorneys’ fees and to discourage ill-motivated or baseless eviction proceedings brought by landlords. The statute, intended to have broad application to remedy these inequities, 7 provides that “whenever” a landlord can recover attorneys’ fees and/or expenses under a residential lease in connection with a tenant’s failure to perform a covenant or agreement in the lease incurred in any action or summary proceeding or that such amounts may be collected as additional rent, a covenant shall be implied by the landlord to pay the tenant’s attorneys’ fees and expenses incurred as the result of the landlord’s failure to perform any covenant or agreement under the lease or in the successful defense of any action or summary proceeding commenced by the landlord against the tenant. As is more fully discussed below, the Lease provisions at issue here plainly provide for the unilateral right of the Landlord to recover attorneys’ fees incurred as the result of 1) a default under the lease, 2) the taking back of possession through eviction proceedings, and/or 3) as additional rent (Lease, ¶¶ 15(C)-(D) (R. -9- 428)), and, as such, “literally” fall within the plain and unambiguous language of RPL § 234 and the well-expressed legislative intent and purpose as the Appellate Division found below, and consistent with what the Second Department found in Casamento v. Juaregui, 88 A.D.3d 345, 353, 929 N.Y.S.2d 286 (2d Dept. 2011). Indeed, in the simplest and most fundamental of terms, the covenant in the lease between the parties is firmly and directly implicated in the literal expression of the statute’s command. Thus, the application of RPL § 234 under the terms of the Lease should not be a controversial one, and the statute requires little interpretation to reach that conclusion as the Appellate Division below correctly found. The Lease allows for the Landlord’s right of recovery of attorneys’ fees incurred by it in recovering possession of the apartment in at least three ways: 1) as additional rent if the tenant remains (Lease, R. 428, ¶3 and ¶15. C. and D.); 2) through rents received in the reletting of the apartment (Lease ¶15. D. (3)), and/or 3) through recovery as damages in the courts, (Lease, ¶15.D. (4)). Under the lease, the Landlord has no obligation to relet to recover its attorneys’ fees. (Lease ¶15.D.(5)). If the Landlord recovers possession of the apartment and does elect to relet, it has no duty under the Lease to collect the rent to offset attorneys’ fees owed. (Lease, ¶15.D. (5)). In any event, and regardless of what manner of recovery -10- of attorneys’ fees the Landlord may elect under the Lease, the Tenant remains fully liable to pay those attorneys’ fees for which the Landlord may, at any time, maintain an action for damages if the Tenant’s lease obligation is not fully satisfied. (Lease, ¶15.D. (4) and (5)). The “bottom line” is that under the Lease, the Landlord has the right to recover its attorneys’ fees incurred as the result of the Tenant’s default or in recovering possession of the apartment, and the provisions are one-sided, affording the Tenant no such right. RPL § 234, then, is plainly applicable. The Landlord’s argument that RPL § 234 is not applicable because it has no actual right to recover attorneys’ fees under the lease is false, and one that this Court should quickly dispose of. Aside from inaccurately describing and obfuscating the rights conferred under ¶15.D.(3) of the Lease for the purpose of trying to avoid the liability imposed by RPL § 234, throughout its forty page brief, it deliberately avoids any discussion or even mention of ¶¶15. D. (4) and (5) of the Lease, which afford the Landlord additional remedies of recovery of such fees. The Landlord remains unrepentant for its mendacious, malicious, vexatious and retaliatory litigation practices and for its brazen perjury before the DHCR and at trial to further advance its retaliatory objectives. Undaunted, it now disingenuously argues for an interpretation of RPL § 234 that ignores or As is discussed further in Argument Point I, it is submitted that the call by the Landlord8 and dissent for a strict construction of the statute is the product of a misunderstanding and missatement of the rules of statutory construction. In any event, even under a strict construction -11- mischaracterizes both the plain language of the Lease and the statute, that would suffocate the legislative intent and spirit and would narrow the reach of the statute so as to choke off its remedial and salutary purpose and effects and unravel decades of jurisprudence in this area. This in order to i) defeat or seriously impair the ability of the Tenant, and thousands like him, to secure legal representation that might otherwise afford tenants with the ability to have a fair and meaningful opportunity to be heard and defend their homes and rent regulatory rights, and that will likely be determinative in deciding whether to defend at all, and 2) remove what has served as a substantial deterrent to landlords from bringing inappropriate and harassing proceedings. The Landlord’s real goal in advancing such a construction is to displace the tenant, regardless of any actual lease default, or to otherwise actualize its retaliatory scheme unimpeded by the risk of liability for the Tenant’s costs of defending, and thereby distort and abuse the State’s laws, courts and justice system. While, as is discussed below, RPL § 234 is clearly and literally triggered under the Lease, when also viewed through the prism of the legislative history and purpose and the rules of construction for remedial legislation, as is required, the8 of the statute, the Lease provisions fall literally within the statute’s embrace. The present cost for commencing a summary eviction proceeding in the Civil Court of9 the City of New York is $45.00. As was concluded in the Joint Report by the Office of the Administrative Judge of the10 Civil Court of the City of New York, Office of the Deputy Chief Administrative Judge for Justice Initiatives, and New York City Bar Association Committee on Legal Services to Persons of Moderate Means; Volunteer Lawyer for a Day Project Report (February 2008): “For tenants, an eviction proceeding may place them and their families at severe risk of becoming homeless since the lack of affordable housing in New York City is at an all time crises. Clearly, the stakes are extremely high for many litigants. Moreover, approximately half of the litigants appearing in Housing Court do not have an attorney, this is a staggering statistic. At least ninety percent of the tenants and fifteen percent of the landlords are self-represented. Not only are these litigants disadvantaged by lack of counsel but the court is burdened trying to administer justice with large numbers of litigants who are unversed in court procedure and the law.” -12- conclusion that the statute was intended to apply under the circumstances here presented is beyond peradventure. New York has long been faced with a judicial and housing crisis. Tenants in New York City and other parts of this state, unrepresented by legal counsel, are chronically at risk of being drawn into a judicial eviction system designed to afford a quick and relatively inexpensive avenue for landlords to try to recover9 possession of property, which most tenants are ill-equipped to negotiate pro se and thereby face displacement or even homelessness in a housing market plagued by pervasive shortages of affordable housing. 10 The numbers are astonishing. Each and every year in the City of New York alone, more than 250,000 summary eviction proceedings are commenced under Civil Court of the City of New York, Caseload Activity Report for 2013, Statistical11 Report of Activity L&T Clerk’s Office, All Counties (March 6, 2014). L. 1820, Ch. 194.12 Ibid. FN. 11. 13 “Outside of New York City, 98 percent of tenants do not have representation in eviction14 cases; in New York City, 99 percent of the tenants are unrepresented when faced with eviction and homelessness.” Report to the Chief Judge of the State of New York, Task Force to Expand Access to Civil Legal Services in New York (Nov. 2010), p. 17 citing to The Chief Judge’s Hearing on Civil Legal Services, Second Dep’t, Oct. 7, 2010, testimony of Hon. Fern Fisher, Deputy Chief Administrative Judge for New York City Courts and Director of the New York -13- Real Property Actions and Proceedings Law (“RPAPL”) Article 7, a statutory11 scheme that, in derogation of tenants’ common law rights, sharply abbreviates and truncates judicial proceedings while severely restricting traditionally available judicial procedures, including all but eliminating tenants’ right of discovery. RPAPL Article 7, which has its foundation in the Laws of 1820, is intended to12 achieve an expeditious process for evicting tenants, and thereby affords little time for tenants to develop legal defenses and secure necessary evidence. Beyond RPAPL Article 7 proceedings, thousands more judicial proceedings to recover possession are brought in the form of ejectment actions. More than 130,000 warrants for the forcible eviction of tenants are issued each year in the City of New York alone.13 Most landlords filing these proceedings are represented by attorneys. Shockingly, more than 98% of tenants are unrepresented. Consequently, most14 State Courts Access Justice Program, at 117:17-19. As the Joint Report by the Office of the Administrative Judge of the Civil Court of the15 City of New York, Office of the Deputy Chief Administrative Judge for Justice Initiatives, and New York City Bar Association Committee on Legal Services to Persons of Moderate Means; Volunteer Lawyer for a Day Project Report, February 2008, found: “It is well documented that the majority of housing cases result in settlements that are negotiated by an attorney on one side and a self-represented litigant on the other side. Many of these settlement negotiations take place out of the presence of Court personnel. Even when a Court Attorney is present for the settlement negotiations, the Court Attorney is not permitted to give legal advice to the self-represented litigant.” As the Chief Judge’s Task Force reported in its 2012 Report:16 “For example, because summary proceedings represent a relatively small portion of individual Town and Village Courts’ dockets, Justices are often unfamiliar with the substantive and procedural law that applies and, as a result, courts rely heavily on attorneys for knowledge about the process. Many practitioners report that, in cases where one or both parties are unrepresented, the Town and Village Court is significantly more likely to proceed based on an erroneous understanding of the law.” (FN omitted) -14- tenants have no legal representation, for example, when they enter into binding stipulations prepared by landlords’ attorneys. Due to this massive imbalance,15 outside of the City of New York, Town and Village Justices unversed in housing law are often forced to rely on the landlord’s attorneys for an explication of the law and procedure.16 The New York State Legislature, well aware that this crisis had become especially acute in areas of the State where residential rental units are subject to rent regulation and that proceedings by landlords to remove regulated tenants had metastasized, and deeply concerned with the detrimental impact on the public Legislative Resolution: Senate No. 6368, adopted June 29, 2010; Assembly No. 1621,17 adopted July 1, 2010. The Joint Resolution in reflecting the recognition by the Legislature of the continuing crises of imbalanced access of to counsel states “Millions of New Yorkers annually find themselves having to go to court and to navigate our complex court system” and “The fair administration of justice requires that every person who must use the courts have access to adequate legal representation.” -15- well-being, enacted RPL § 234 and later RPL § 223-b to try to, at least in part, stem the flood of eviction proceedings. Then, and now, a significant portion of these eviction lawsuits are brought with the goal of evading rent regulation to obtain higher rents than the law would otherwise allow by evicting those whose rents are regulated at lower levels and to facilitate more equitable judicial proceeding by better enabling tenants to secure counsel. See Matter of Duell v. Condon, supra. Aware of this unabated crisis and the deleterious effects on the justice system itself, and reaffirming its underlying concerns and intent to expand access to legal representation in eviction cases, in 2010, forty-four years after the enactment of RPL § 234, the New York State Senate and Assembly issued a Joint Resolution requesting that the Chief Judge submit an annual report to the Legislature and the Governor with recommendations for addressing this serious public crisis.17 As the Second Department noted in Casamento, 88 A.D.3d at 355, 929 N.Y.S.2d at 293, citing to this Court’s holding in Duell v. Condon, “It is no secret -16- that landlords have a financial motivation to terminate a tenancy where the possibility exists of re-renting the premises at a higher rate. (see Matter of Duell v. Condon, 84 N.Y.2d at 781, 622 N.Y.S.2d 891, 647 N.E.2d 96 [‘the landlords had an obvious incentive to terminate a rent-controlled tenancy’] ).” Most tenants who are represented by private attorneys in eviction proceedings or ejectment actions are able to secure such representation largely because RPL § 234 enables attorneys representing tenants to charge reduced fees and carry substantial fee balances during the pendency of the litigation, knowing that they will be able to recover their fees if the tenant is successful in defeating the landlord’s claims. See Maplewood Management, Inc. v. Best, 143 A.D.2d 978, 978, 533 N.Y.S.2d 612, 613 (2d Dept. 1988). Tens of thousands of tenants have been able to secure legal representation in eviction proceedings and actions in this State only because of the implied covenant imposed by RPL § 234, preventing countless evictions. In many of these cases, the widely-used lease provisions allowing landlords to recover attorneys’ fees, such as the provisions contained in the Lease, have encouraged lawyers to take up the defense of tenants facing eviction proceedings and actions. RPL § 234 has therefore accomplished, at least in some measure, what it was enacted to achieve. Any efficacy of the statute is due, at least in part, to the The Chief Judges Task Force on Access reported in its 2010 Report that:18 “Judges also testified about the difficulty of having to remain neutral while unrepresented parties go up against able counsel and lose cases they should win because of their inability to introduce into evidence a decisive document or even ask the right question. Such situations are truly miscarriages of justice —all the more so when what is at stake is the loss of one’s home...” -17- courts, including this Court, giving recognition and meaning to the Legislative history, goal, spirit and intent, recognizing and applying the broad language of the statute and correctly applying rules of statutory construction required for remedial legislation, interpreting RPL § 234 liberally and broadly to carry out its beneficial purpose as widely as possible. It is therefore understandable why the Landlord and others of its ilk, would like to see the statute interpreted by this Court into impotency. It can generally be concluded that the more an unduly restrictive interpretation is given to RPL § 234, the less the legislative goal and purpose can be advanced, thereby reducing the number of tenants having meaningful access to legal representation in the courts. The ineluctable result will be that the legislative intent will be thwarted while unscrupulous landlords, such as the Landlord in this proceeding, continue to exploit this severe imbalance in legal representation and liability for fees and the unfair advantages to landlords that it fosters, to misuse eviction actions and18 proceedings and to press to evict unrepresented tenants. These dynamics of As noted in the New York County Lawyers Association, Report- The New York City19 Housing Court In the 21st Century: Can it Better Address the Problems Before It? (2005): “Professor Baldacci [of Cardozo Law School] in a report commissioned by the New York County Lawyers Association characterizes the pro se litigant as systematically silenced by an adversarial system he/she does not understand procedurally or substantively. Several factors contribute to this silencing—a lack of understanding about defenses and claims, an inability to present them effectively and the strictures on the appropriate role of the judge in an adversarial system.” As Legal Services NYC’s Interim Executive Director Michael D. Young 20 testified before the Task Force appointed by Chief Judge Lippman to make recommendations on solutions to this crisis: “We as a society pay an enormous social and fiscal price for failing to provide counsel. The inequity created because of lack of access to the courts breeds, at best, a lack of faith in the justice system and, at worst, contempt for the system because it simply doesn’t work for those who are forced to rely on it to adjudicate matters of basic survival. ...Providing counsel when needed not only saves people from immediate trauma and long term hardship, it also saves public dollars.” -18- inequity and inequality are inescapable and their impact undeniable.19 20 Indeed, there should be little doubt that the Tenant would never have been able to sustain his defense in this protracted battle to protect his home through years of court proceedings, motion practice, trial, post-trial proceedings, and now three appeals and the attendant massive legal expense, absent having an attorney willing to work with little or no contemporaneous compensation and to absorb large losses for years (now seven and running) without “the light at the end of the tunnel”, i.e., ultimate recovery that RPL § 234 provides. Because of RPL § 234 this case and thousands like it, have been made more just, fairer, and more legally -19- balanced, thereby bettering our judicial system, while thousands of undeserved evictions have been avoided, precisely the objective of the statute. The linkage between the twin public policy objectives of RPL§ 234 to the Lease and the circumstances of the underlying proceedings is strong, compelling and ultimately inescapable. The statute’s command is plain; unclouded by ambiguity or uncertainty of objective or purpose. Thus, both the First and Second Departments correctly cited to this Court’s holding in Duell v. Condon, 84 N.Y.2d at 783, in finding such lease provisions to fall within the remedial ambit of RPL § 234. As the Appellate Division held in quoting from Duell: Thus, Section 234 ‘contains no limitation, stating that its terms apply ‘[w]henever a lease of residential property ‘ includes an attorneys’ fees and expense clause in favor of the landlord’(id [84 N.Y.2d] at 783, 622 N.Y.S.2d 891, 647 N.E.2d 96. Casamento v. Juargegui, 88 A.D.3d 345 at 353, 929 N.Y.S.2d 286 at 292. The soundness of the remedial purpose of the statute, the clear expression of Legislative intent and the central public policy objectives sought to be advanced strongly resonate in the circumstances of the underlying case and like proceedings, and the statute plainly applies to leases of the type entered into between the parties here. Indeed, this case presents exactly the type of circumstances the Legislature was concerned with when it enacted RPL § 234: a Because most landlord attorneys, unlike tenant’s attorneys, handle cases on a volume21 basis, landlord’s costs for retaining legal counsel tend to be relatively cheap, with typical appearances in New York City costing around $100.00 or less. -20- landlord’s use of its superior resources to force the eviction of a regulated tenant merely because he or she stood up and successfully asserted his or her rights under emergency housing legislation. The statute, through its broad application, has thereby helped to preserve the integrity of the courts and of the statutory scheme of rent regulation, has afforded a genuine opportunity to be heard for tenants and has promoted a higher quality of justice in the courts of this State. The harsh reality, as the Legislature aptly recognized, is that the economic equation of a tenant defending his or her home in most cases is financially untenable if there is no chance that the tenant could recover attorneys’ fees and the tenant risks having to pay the landlord’s attorneys’ fees. Without RPL § 234, landlords would have no risk of financial exposure to a tenant fee award in bringing a meritless proceeding, thereby making it worthwhile for the landlord to spend the de mimimis fee of $45.00 to commence such baseless proceedings to21 try to force the tenant’s surrender through a legal war of attrition, hoping the tenant will feel compelled to simply surrender. In those proceedings that do have some authentic underlying basis, tenants who are benefitted by RPL§ 234 are better able to interpose and advance defenses, ferret out falsehoods and legal -21- deficiencies in the landlord’s claims, and competently defend at trial, adding balance and fairness into the litigation. The finding below of the statute’s application to the Lease was reasonable, correct and in alignment with the statute and its purpose and should be affirmed. RPL § 223-b and the Right to Attorneys’ Fees as Compensation for Damages. The second statute enacted to address this serious crisis is RPL § 223-b. Enacted into law in 1979 ( L. 1979, Ch 693, § 1), it was designed to afford tenants with a defense against landlords who use eviction proceedings as a weapon of retaliation against tenants who seek to enforce their legal rights and to provide compensation to tenants for their losses when they are made the victims of landlord retaliation, including through the common law right of compensation for damages for malicious litigation in the form of attorneys’ fees. This appeal raises important legal issues relating to attorney fee awards in retaliatory eviction cases. In such cases, by the very nature of the proceedings, tenants’ principal damages are the legal costs of defending. The Trial Court held that awards of attorneys’ fees are properly made under the broad statutory authority given to the courts under the anti-retaliatory eviction statute, RPL§ 223- b. Consistent with its legislative intent and purpose, this statute contains a far- -22- ranging provision for courts to fashion awards of damages, compensation and equitable remedies intended to make whole tenants who are the victims of retaliatory evictions and to deter the use of the courts as weapons of retaliation against tenants who seek to enforce their rights. That remedial statute expansively authorizes actions “for damages and other appropriate relief, including injunctive and other equitable remedies as may be determined by a court of competent jurisdiction” to be brought against a party that has engaged in retaliatory conduct. Moreover, as is discussed below, the right to such compensation under these circumstances as an element of damages is recognized at common law. There exists no language, statutory intent, legislative history or legal authority supporting the Appellate Term’s “carve out” of a specific exclusion of the right of compensation in the form of attorneys’ fees under the statute. The Appellate Term engrafted a limitation on the statute through an improper methodology of statutory construction, and, in direct opposition to the statutory language and legislative intent, denied any right of compensation for damages involving attorneys’ fees, even for that which is recoverable under the common law. This Court should determine that attorneys’ fees and costs are recoverable as an element of compensation for damages pursuant to RPL § 223-b through its broad grant of authority to courts to fashion remedies and/or under the common law. -23- This Court Should Affirm the Award of Attorneys’ Fees under RPL § 234 and Find that Such Fees Are Also Recoverable Under RPL § 223-b. The proceedings below are emblematic of the most extreme types of abuses by landlords that the Legislature sought to ameliorate through remedial legislation. The Landlord essentially asks for a statutory interpretation that will leave it unshackled by RPL § 234 and RPL § 223-b to be able to continue to risk free exercise its superior resources to use unfounded actions and proceedings and contrived or retaliatory claims to destroy tenants’ rights in their homes, as well as to circumvent emergency rent regulatory statutes and regulations. The Landlord seeks to have RPL § 234 interpreted in a manner that will facilitate avoiding not only the statute’s legislative intent and remedial purpose, but its plain meaning. Indeed, the Landlord invites this Court to construe RPL § 234 in a manner that favors landlords, as if the true statutory intent was to protect landlords from their own lease-drafting choices. This Court should soundly reject the Landlord’s arguments, affirm the order of the Appellate Division, but modify to also recognize the right of tenants to recover compensation as damages in the form of attorneys’ fees under RPL §223-b. -24- STATEMENT OF FACTS Background Tenant is the tenant of Apartment REDACTED Avenue, New York, N.Y. (the “Apartment”) regulated under the Rent Stabilization Law of 1969, as amended, (“RSL”) and the Rent Stabilization Code (“RSC”) promulgated thereunder. Tenant had initially spoken to Josh Frankel (“Frankel”), one of the principals of the Landlord and manager of the subject building, on or about February 4, 2004 about leasing an apartment. (R. 17.) Tenant was shown two apartments, one of which was the Apartment. Tenant viewed the Apartment on several occasions before leasing it. Tenant liked the apartment but observed that the kitchen had one outlet that the refrigerator and stove were plugged into and no other outlets. There was only an old pull string light on the kitchen ceiling and no wall switch. The apartment had an antiquated fuse box fed by fraying wiring and was not up to Code. (R. 16-19, 121, 204-07). Tenant was concerned that the electrical service in the apartment, being old and antiquated, was unsuitable and presented safety issues, as it would cause him to enter through a long, dark hallway before having to find a pull string in the dark apartment, and presented a potential fire hazard. (R. 133-134) The rent was high, -25- and the Tenant was only interested in the apartment if the electrical service could be upgraded. (R. 17.) In late April, 2004, Tenant went to Frankel’s office. He discussed with Frankel, at length, the electrical improvements that would have to be made to the apartment as a condition of the leasing. Tenant detailed the electrical work he required in order for him to lease the apartment. Tenant wrote on the lease application specifically what electrical work requirements he had as a prerequisite to leasing the apartment– changing the distribution panel, installing air conditioner units and having electrical work done in the kitchen. Frankel told Tenant he could go into the apartment before the lease began and perform the agreed-upon work and that he should make arrangements for access through the building’s superintendent, Jose Cruz. (R. 17.) Based upon Frankel’s agreement, Tenant signed the Lease at a rent of $2,200 per month for a term of one year that was to commence on May 15, 2004.(R. 427-428) Mr. Cruz then gave access to the Tenant to the Apartment before the lease commencement date, as Frankel had promised, beginning about May 1, 2004. Mr. Cruz worked with Tenant and his electrician by turning off the electrical system from the main shut-off in the basement so that the electrical work could be done. (R. 17.) -26- Tenant had the electrician perform the work that Frankel had agreed to and none other. Tenant did not ask the electrician to remove anything from the apartment, and all of the original wiring remained in the walls. The electrician used easily removable wire molds to run new wires and install new switches and outlets on the outside of the walls. Nothing was done to the walls except that a few small screws were inserted to attach the wire mold. (R. 124.) Tenant then wrote to the Landlord after the work was completed, included the electrical bill invoices, and requested reimbursement and a five-year lease extension on account of the work the Tenant had to perform to bring the apartment’s electrical service to code. (R. 451-452) In response, Sam Becker (“Becker”), who represents Graham Court and is an officer of the corporate owner, came to the Apartment on June 9, 2004 and viewed the electrical work. Becker told Tenant and his co-occupant that while the Landlord would not reimburse Tenant for the electrical work, it would agree to extend the lease for an additional two years for a total term of three years. (R. 17-18, 128-130.)Tenant confirmed this agreement by letter dated July 7, 2004. (R.130, 448.) The landlord confirmed the lease extension on its records. (R. 17.) Thereafter, Tenant paid all rent as it came due on the first of each month. None of the Tenant’s rent tenders were rejected; no claim of a lease violation was made by the Landlord. (R. 131, 418, -27- 432, 440-441). The Tenant Files a Good-Faith Complaint With the State Agency Charged With Enforcing the Statutory Scheme of Rent Regulation. Tenant filed a rent overcharge complaint with the DHCR on or about October 17, 2005. (R. 16, 32; 138, 417-426, 431, 437.) In response, the Landlord alleged that it increased the rent, supposedly as a result of having made improvements to the apartment. (R. 19, 32; 85-92, 437-438.) In that proceeding, the Landlord claimed that it had completely rewired the kitchen and performed other electrical replacement work, submitting a sworn affidavit to the agency in support of that claim. (R. 16-17, 85-92, 438.) The Tenant demonstrated that the Landlord’s claims and affidavits that it had performed the electrical work were false. (R. 16-17, 89-92, 440-441). The Tenant further maintained that, in any event, the Landlord was not entitled to any increase as a result of an existing Rent Reduction Order. (R. 139-141, 435-443) On or about June 5, 2006, the Agency conducted an inspection of the Apartment. The Agency’s inspection confirmed Tenant’s representations and disproved the Landlord’s claims concerning the conditions at the apartment. While that overcharge proceeding was pending, on or about August 28, 2006, the Landlord filed an Owner’s Application to Restore Rent, to which the Agency -28- assigned Docket No. UH410082OR. The Agency inspected the apartment on October 23, 2006 and determined that the Apartment continued to be marred by various conditions that precluded the Agency from terminating the Rent Reduction Order. Accordingly, on November 15, 2006, the Agency issued an order denying the Landlord’s application and terminating that proceeding. (R. 16-17, 89-92, 139- 141, 439-441.) On January 4, 2007, the Agency’s Rent Administrator (“RA”) issued the Overcharge Order. The RA specifically found that the Landlord’s evidence “is not credible,” as the scope and extent of work claimed was not adequately documented, and further that the Landlord’s bill misrepresented the items claimed as installed. (R. 16-17, 89-92, 431.) The Owner not only failed to establish its entitlement to remove the apartment from Rent Stabilization or to charge the rent charged to the Tenant, but also the Landlord actively and intentionally attempted to perpetrate a fraud on the Agency. As the Agency concluded, contrary to the Landlord’s claim as was supported by a perjurious submission and affidavit of its alleged contractor that it had installed “new electric in the kitchen”, the Landlord had not performed any of that work but was trying to take credit for the work that the Tenant had paid for. (R. 16-17, 85-92, 437-438.) The DHCR awarded the Tenant rent overcharges and -29- imposed treble damages totaling $138,373.57 plus interest and attorneys’ fees (R. 440). The Landlord filed a petition for administrative review (“PAR”) which the Tenant opposed. The Commissioner’s order on the PAR upheld the Rent Administrator’s determination, finding that the Landlord undisputedly attempted to claim that it had performed work that the Tenant had actually performed, and that treble damages were appropriate due to the Landlord’s failure to submit credible documentation of claimed improvements, failure to comply with a prior order freezing the rent, and failure to properly register the apartment. (R. 16-17, 440-441.) The Landlord subsequently challenged portions of the PAR Order in an Article 78 Proceeding which was dismissed. (R. 17) The Supreme Court (Stone, J.) (Index No. 103432/12), in dismissing the Article 78 Petition, held that: [I]t is...clear that if challenged before the DHCR, an owner has the burden to establish the amount expended for capital improvements by credible evidence. Here, Graham’s evidence came from its statements and those of APT, both of whose statements had already been found to be false and fraudulent with respect to material matters. It was in light of such fraud that DHCR credited Taylor’s evidence that certain of Graham’s other costs which were in fact incurred for material used in certain of the other improvements, were untrue. -30- The Supreme Court went on to hold that: While a finder of fact must weigh all credible evidence presented in reaching a determination, it is also clear that where a witness in the proceeding had knowingly submitted false evidence relating to a material matter at issue, the finder of fact may at its discretion either reject such witnesses’ factual statements or accept as much of such statements as the finder deems truthful and accurate. In the proceeding before the DHCR, the material falsehoods perpetrated by Graham and APT, its contractor, were found to have been extensive and material. As such findings of material misstatement was not challenged in Graham’s petition, such finding must be deemed established for the purpose of this proceeding. * * * Graham intentionally sought to remove the Apartment from RSA Regulations through false representations and to hide the result by not registering the Apartment, hoping to slide by. Graham got caught and this Court finds no basis for protecting Graham from the statutorily intended harsh result of treble damages for such behavior. The Appellate Division affirmed, holding, inter alia, that “DHCR's discrediting of the owners' documentation for some of the claimed improvements permissibly tainted its view of others.” See Graham Court Owners Corp. v. Division of Housing and Community Renewal, 71 A.D.3d 515, 899 N.Y.S.2d 7 (1st Dept. 2010). The Landlord Retaliates Against the Tenant By Terminating His Tenancy and Commencing a Baseless and Vexatious Summary Holdover Proceeding. Furious at Tenant’s successful and continuing assertion of his Rent -31- Stabilized rights at the DHCR, Landlord initiated the underlying retaliatory holdover eviction almost immediately after losing before the agency both in its efforts to illegally deregulate the apartment, charge an unlawful rent, and restore the rent under the rent reduction order, the Landlord served a Notice to Cure dated March 30, 2007 and then a Lease Termination Notice purporting to cancel the Tenant’s Lease. (R. 27-28, 141.) Thus, a little more than four weeks after the tenant filed with the agency its opposition to the landlord’s PAR and further complained of the Landlord’s unlawful conduct and a little more than two months after the agency found for the Tenant, the Landlord acted to evict the Tenant. The Landlord cited in the Termination Notice the same electrical work in the kitchen (that the landlord had claimed responsibility for before the DHCR as a necessary improvement that brought the Apartment’s electrical service to code) as the basis for terminating the Tenant’s tenancy under the RSC. (R. 27-28.) In the verified holdover petition, the Landlord itself sought judgment under the Lease for its attorneys’ fees and costs, in the amount of $3,000.00 or such other amount as the court awarded. (R. 25). The eviction proceeding, purportedly brought by the Landlord under Rent Stabilization Code (“RSC”) § 2524.3 relating to a breach of a substantial obligation of the tenancy, was commenced in a bad faith, ill-motivated and a -32- malicious effort to harass and cause harm and loss to the Tenant. It attempted to terminate the tenancy and take back the apartment based on Tenant’s performance of the same electrical work that the Landlord had tried to take credit for before the DHCR to support deregulation of the apartment and a rent increase that would more than triple the legal rent. (R. 16-19.) The eviction proceeding was itself based on the Landlord’s fraudulent claim that Tenant had breached a substantial obligation of his tenancy by performing the electrical work that the Landlord has authorized three years earlier and prior to the Tenant even moving into the apartment. (R.16-19.) Of course, the Landlord was really using the eviction proceeding as a weapon in order to retaliate against and punish the Tenant for having successfully asserted his right to Rent Stabilized protections and benefits and for having secured a large overcharge award. Landlord used the summary proceedings to embroil the Tenant in years of litigation and subject him to the burdensome cost of defending against the petition in order to protect himself against eviction. In answering the holdover petition, Tenant asserted various defenses, including the defense of retaliatory eviction under RPL §223-b. (See Tenant’s Fourth Affirmative Defense, R. 32-34.) Tenant also asserted two counterclaims. Tenant’s First Counterclaim was for attorneys’ fees pursuant to Real Property Law -33- §234. (R. 36.) Tenant’s Second Counterclaim sought compensation for damages related to the retaliatory eviction pursuant to RPL §223-b. (R. 36.) The Lease Provisions for Recovery of Attorneys’ Fees. The Lease contains unilateral provisions for the Landlord’s right to attorneys’ fees and costs. Paragraph 15. C. and D. of the Lease provides in relevant part as follows with regards to defaults under the lease: C. If 1) the Lease is cancelled; or 2) rent or added rent is not paid on time; or 3) Tenant vacates the Apartment, Landlord may: (a) peacefully enter the Apartment and remove Tenant and any person or property, and (b) use eviction or other lawsuit method to take back the Apartment. D. If this Lease is cancelled or Landlord takes back the Apartment, the following takes place: (1) Rent and Added rent for the unexpired term is due and payable. (2) Landlord may relet the Apartment and anything in it. The reletting may be for any term. Landlord may charge any rent or no rent and give allowances to the new tenant. Landlord may at Tenant’s expense, do any work Landlord reasonably feels needed to put the Apartment in good repair and prepare it for renting. Tenant stays liable and is not released except as provided by law. (3) Any rent received by Landlord for rerenting shall first be used first to pay Landlord’s expenses and second to pay any amounts Tenant owes under this Lease. Landlord’s expenses include the costs of getting possession and re-renting the Apartment, including, but not only reasonable legal fees, brokers fees, cleaning and repairing costs, decorating costs and advertising costs. (4) From time to time Landlord may bring actions for damages. Delay or failure to bring an action shall not be a waiver of landlord’ rights.... (5) ...Money received by Landlord from the next tenant other than the monthly rent shall not be considered as part of the rent paid to Landlord. -34- Landlord is entitled to all of it. If Landlord relets the Apartment the fact that all or part of the next tenants’ rent is not collected does not affect the Tenant’s liability. Landlord has no duty to collect the next tenants’ rent. Tenant must continue to pay rent, damages, losses and expenses without offset. (Italics supplied)(R. 427-28). Paragraph 3. of the Lease provides, inter alia, that: Tenant may be required to pay other charges to Landlord under the terms of his Lease. They are called “added rent”...If Tenant fails to pay the added rent on time, Landlord shall have the same rights against tenant as if tenant failed to pay the rent. (R. 427.) The Order and Judgment After Trial. Tenant ultimately proved at trial that Landlord’s claims were retaliatory and malicious in nature. (R. 16-19.) Tenant demonstrated that Landlord had in fact agreed to Tenant’s demand that, before he moved into the $2,200.00 per month one-bedroom apartment in North Harlem, he must be allowed to perform certain basic electrical work to make the existing antiquated, inadequate and potentially hazardous electrical service to make it suitable for occupancy. (Id.) Tenant also proved at trial that during the proceedings before the DHCR, Landlord itself had claimed (albeit falsely), inter alia, that it had performed the very electrical work that it used as a basis to terminate Tenant’s tenancy and bring the underlying holdover proceeding against Tenant. (Id.) Tenant established that the Landlord had even asserted before the DHCR in sworn affidavits that that same electrical work was required to bring what it itself acknowledged to be antiquated electrical -35- service into compliance with the New York City Building Code. (Id.) The Tenant also established that the Landlord’s aim in bringing the summary proceeding was to not only threaten his tenancy and ability to remain in his home, but to force the Tenant to suffer the enormous cost, hardship and inconvenience connected with such litigation for having had the temerity to seek to enforce his rights under the RSL and RSC. The Tenant sought recovery of attorneys’ fees and costs on its counterclaims under RPL § 234 and RPL §223-b. The trial court also found that Landlord’s representative’s testimony was entirely incredible, that he had “lied repeatedly and obviously” during his testimony and that the underlying proceedings in this case had been initiated for the sole purpose of retaliating against Tenant for complaining to the DHCR about Landlord’s substantial, bad-faith and willful rent overcharge and deregulation scheme. (Id.) This finding that Landlord offered fabricated evidence at trial echoed the DHCR’s finding that the Landlord had offered fabricated evidence in that proceeding, a finding that was upheld by both the Supreme Court and the Appellate Division. The Trial Court’s Award of Attorneys’ Fees. Landlord’s malevolent, malicious and abusive conduct has subjected Tenant -36- to years of intensive litigation (seven and running, not including the DHCR proceedings) and has forced the Tenant to incur large amounts of attorneys’ fees and costs in connection with such proceedings. Upon dismissing the Petition on the grounds that it was retaliatory and without merit, the trial court awarded Tenant attorneys’ fees on his counterclaim under RPL §223-b, finding that the proceeding was used as a weapon to retaliate against the Tenant for enforcing his statutory tenancy rights. (R. 16-19.) The Trial Court award is consistent with its authority under the provisions of RPL § 223-b, which gives courts broad authority to fashion damages and compensation awards for tenants where a landlord has been found to have retaliated against the tenant and pursuant to the inherent authority of the courts to award attorneys’ fees as a remedy in maliciously brought, retaliatory or abusive litigation. The Trial Court held that: “respondent is entitled to collect attorneys’ fees as part of his damages for retaliatory eviction.” (R. 19). However, the trial court declined to grant Tenant attorneys’ fees on his counterclaim pursuant to RPL § 234, holding that “petitioner correctly points out that the attorneys’ fees clause in the lease between the parties is not enforceable under current case law.” (R. 19). -37- The Appeal and Cross-Appeal to the Appellate Term. Landlord appealed the Trial Court’s decision dismissing the Petition and granting Tenant attorneys’ fees under RPL § 223-b, and Tenant cross-appealed the Trial Court’s denial of, inter alia, attorneys’ fees under RPL § 234. The Appellate Term affirmed the Trial Court’s holding dismissing the Petition with prejudice and its failure to award attorneys’ fees pursuant to RPL § 234, but modified the trial court’s order to delete the award of attorneys’ fees under RPL § 223-b. (R. 9)The Appellate Term found that the Trial Court had correctly held that the Landlord was estopped from enforcing the “no alterations” provision of the lease “based upon the tenant’s persuasive showing that landlord’s authorized agents expressly consented to the electrical work now complained of and the undisputed evidence that landlord, in connection with prior proceedings before the DHCR, (falsely) asserted that its own contractors had effectuated the electrical work.” The Appellate Term further held in affirming the decision and order of the Trial Court that: “On a bench trial, the decision of the fact-finding court should not be disturbed on 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 witnesses,” quoting Claridge Gardens v. Menotti, 160 A.D.2d 544, 544-545, 554 -38- N.Y.S.2d 193 (1st Dept. 1990). Id. In so holding, the Appellate Term failed to discuss or address the legislative history, language or purpose of the broad remedial civil action provision of RPL § 223-b and ignored the well-established case law authority in this State recognizing courts’ inherent authority to award attorneys’ fees as an element of damages under appropriate circumstances. The Appellate Division’s Grant of Leave to Appeal. The Tenant sought leave to appeal to the Appellate Division on the issue of his entitlement to attorneys’ fees under RPL § 234, RPL § 223-b and common law. The Appellate Division by order dated August 14, 2012 granted the Tenant leave to appeal to that court. The Order of the Appellate Division. The Appellate Division modified the order of the Appellate Term to the extent of granting the Tenant attorneys’ fees under RPL § 234.(R. 556-580.) In so doing, the Appellate Division held that such ruling made it unnecessary for that court to reach the issue of the Tenant’s right to compensation under RPL § 223- b.(R. 574); Taylor v. Graham Court Owners Corp., 115 A.D. 3d 50, 61, 978 N.Y.S.2d 213, 220 (1 Dept., 2014).st -39- The Appellate Division found that the Tenant having prevailed in his defense, is entitled to an award of attorneys’ fees pursuant to RPL § 234.The court held citing to Duell, that the overriding purpose of the statute is to level the playing field between landlords and tenants. The court held, consistent with Duell, that as a remedial statute, RPL § 234 “should be accorded its broadest protective meaning consistent with legislative intent. The court found that the Landlord commenced the underlying proceeding claiming a default under the Lease, and that the Lease afforded the Landlord the right to recover its expenses, including attorneys’ fees incurred in taking back possession, and that the Tenant remains liable for such fees under the lease. Focusing on the off-set provision of the Lease, the court held: “We interpret the remedial scheme of paragraph 15 to permit the landlord, in the event of a lease default by the tenant, to cancel the lease and regain possession of the premises via the means of a summary holdover proceeding, and then recoup the attorneys' fee incurred in the litigation by re-renting the premises.” Graham Court Owner's Corp. v. Taylor , supra., 115 A.D.3d 50, 57. The court therefore held that the Lease “literally fits within the language of Real Property Law § 234.” Id. The court held: [W]hat is significant for purposes of Real Property Law § 234 is -40- whether the landlord's right to attorneys' fees is triggered by the tenant's failure to perform a covenant in the lease (see Duell, 84 NY2d 773 [since eviction based upon nonprimary residence implicated a lease provision requiring the tenant to vacate upon the expiration or termination of the lease, the tenants were entitled to fees]). In this case, the dissent cannot seriously dispute that the subject lease provision, paragraph 15, would be triggered by a breach of the lease covenants. Nor can it be disputed that, had the landlord prevailed in the instant holdover proceeding, it would have been entitled to get possession and re-rent the apartment, and thereby collect its costs, including, but not limited to, reasonable legal fees pursuant to paragraph 15 (D) (3). Indeed, the landlord itself reads this provision as including the right to recover legal fees within the costs of the holdover proceeding as demonstrated by the landlord's inclusion of the relief of attorneys' fees in its petition. Id. 115 A.D.3d 50, 57-58. The Court also noted that its holding was consistent with its prior ruling in Bunny Realty v. Miller,180 A.D.2d 460, 579 N.Y.S.2d 952 (1st Dept. 1992)) as well as the Second Department’s holding in Casamento v. Juaregui, 88 A.D.3d 345, 929 N.Y.S.2d 286 (2 Dept., 2011). As is noted above,nd the Appellate Division, having found that RPL § 234 supported an award of attorneys’ fees to the Tenant, it saw no need to reach the Tenants’ alternate contention of his right to attorneys’ fees under RPL § 223(b). The Appellate Division’s Grant of Leave to Appeal to the Court of Appeals. The Landlord moved before the Appellate Division for leave to appeal to this Court. The Appellate Division granted that motion by order dated March 11, 2014. (R. 581). The Appellate Division certified the question to this Court as -41- follows: “Was the order of this Court, which modified and otherwise affirmed the order of the Appellate Term, properly made?” The Appellate Division also certified that its determination was made as a matter of law and not of discretion. Id. ARGUMENT POINT I THE ORDER OF THE APPELLATE DIVISION HOLDING THAT TENANT IS ENTITLED TO AN AWARD OF ATTORNEYS’ FEES UNDER THE LEASE BETWEEN THE PARTIES AND THE PROVISIONS OF REAL PROPERTY LAW § 234 SHOULD BE AFFIRMED. A. Per Force of RPL §234 and the Plain Language of the Statute, Implied In The Lease is a Covenant for the Landlord’s Payment of the Tenant’s Attorneys’ Fees and Expenses. Under the Lease, the Landlord Has the Right to Recover Attorneys’ Fees Incurred in an Action or Summary Proceeding to Recover Possession Through An Action for Damages, From Rents Received Upon Reletting, or As Additional Rent, Thereby Clearly Triggering in Three Separate Ways the Implied Covenant of RPL §234 in Favor of the Tenant. RPL § 234 applies to the Lease. As such, it operates to insert into the Lease an implied covenant for a landlord to pay the Tenant’s attorneys’ fees and costs. The statute is invoked under circumstances where, as here, the tenant is liable for such fees that the landlord may incur “in any action or summary proceeding,” “whenever” a residential lease provides that the landlord is entitled to recover “attorney’s fees and/or expenses incurred as the result of the failure of the tenant -42- to perform any covenant or agreement” or “that amounts paid by the landlord therefor shall be paid by the tenant as additional rent” under the lease. The implied statutory covenant requires payment by a landlord when the tenant incurs attorneys’ fees and/or expenses i) “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 ii) “in the successful defense of any action or summary proceeding commenced by the landlord against the tenant arising out of the lease.” Thus, the implied covenant of RPL §234 is triggered under three distinct circumstances: 1) the lease provides for recovery of attorneys’ fees incurred by the landlord as the result of the failure of the tenant to perform a covenant or agreement under the lease or the landlord’s taking back of possession in an action or summary proceeding; 2) the lease provides for recovery of expenses incurred as the result of the failure of the tenant to perform a covenant or agreement under the lease or the landlord’s taking back of possession in an action or summary proceeding; or 3) amounts paid by the landlord for attorneys’ fees or expenses as the result of the failure of the tenant to perform a covenant or agreement under the lease is payable to the landlord as additional rent under the lease. This Court in Duell v. Condon held that: The remedial nature of the Legislature's action to equalize the power The Lease language is in the disjunctive, not the conjunctive as the Landlord states.22 -43- of landlords and tenants is evident from both the language of the statute as well as historical documents ( see, Bill Jacket, L.1966, ch. 286). Real Property Law § 234 contains no limitation, stating that its terms apply “ [w]henever a lease of residential property” includes an attorneys' fees and expenses clause in favor of the landlord (emphasis supplied). Moreover, the memorandum of the sponsor of the bill states that the proposed statute would provide that “any lease giving such a right [to recover fees and expenses] to the landlord shall be construed to give a similar right to the tenant”. (Mem. of Senator Harrison Goldin, Bill Jacket, op. cit., at 1 [emphasis supplied].) It was intended, he said, that “by giving tenants the potential right to recover such legal expenses, the bill would act as a deterrent to overreaching practices by landlords who now rely upon their tenants' inability to bear the cost of legal proceedings required to redress [the] landlord's improper acts. Duell, 84 N.Y.2d at 783, 622 N.Y.S.2d at 895-896, 647 N.E.2d at 100-101 (emphasis supplied). That having been decided by this Court, the application of RPL § 234 to the Lease is clear. The Lease provides that if it is cancelled by reason of the Tenant’s failure to cure a default or to perform under the lease, the Landlord may “use eviction or22 other lawsuit to take back the apartment.” ( Lease, ¶15(C)(b), R. 427-28). Under the Lease, the Landlord has the right to recover from the Tenant the costs and expenses of taking back the Apartment, which costs and expenses include reasonable attorneys’ fees. (Id. at ¶15(D).) Par 15. D. (3) of the lease provides in part that “Landlord’s expenses include the costs of getting possession and re- -44- renting the Apartment, including, but not only reasonable legal fees....” The Lease then allows for the Landlord’s right of recovery of attorneys’ fees incurred by it in recovering possession of the apartment in at least three ways: 1) by charging the fees as additional rent ( Lease, R. 428, ¶ 15(D)(1)) 2) through rents collected in the reletting of the apartment (Lease, R. 428, ¶ 15(D)(2)), and/or 3) through recovery in the courts in an action or actions for damages, (Lease, R. 428, ¶ 15(D) (4)) (Id.). The application of RPL § 234 is therefore unavoidable. B. Applicable Rules for Construing RPL § 234. The Court’s task of construing the applicability of RPL § 234 to the Lease should present little challenge. The statute grants the Tenant attorneys’ fees if the Landlord can recover attorneys’ fees from the tenant. The Landlord can recover attorneys’ fees under the Lease and so the Tenant can recover his attorneys’ fees because that is what RPL § 234 says, plainly and literally. The Appellate Division below and the Second Department in Casamento reached this conclusion, not because they applied the wrong standard for statutory construction, as the Landlord and the dissent urge, but because any other interpretation would operate to defeat the statutory intent and purpose and obliterate the very language of the statute. -45- However, and the obvious and literal application of RPL § 234 to the Lease notwithstanding, canons of statutory construction simply serve to further reinforce and confirm the correctness of the holding of the Appellate Divisions in this case and in Casamento. As a preliminary matter, basic principles of contract interpretation require that the meaning of paragraph 15 of the Lease be discerned “by reading all clauses of this provision together and in context with the lease as a whole to determine its purpose and intent.” Casamento, 88 A.D.3d at 353, 929 N.Y.S.2d at 292 (citing W.W.W. Assoc. v. Giancontieri, 77 N.Y.2d 157, 162, 565 N.Y.S.2d 440, 566 N.E.2d 639 (1990); Bailey v. Fish & Neave, 8 N.Y.3d 523, 528, 837 N.Y.S.2d 600, 868 N.E.2d 956 (2007); J.W. Mays, Inc. v. Snyder Fulton St., LLC, 69 A.D.3d 572, 573, 893 N.Y.S.2d 162 (2010)). That required comprehensive and integrated reading of the Lease leaves no doubt as to the Landlord’s multifaceted remedies for recovering attorneys’ fees from the Tenant when such fees are incurred in an action or summary proceeding to take back possession or as the result of the Tenants’ default under the Lease. Second, the question of whether RPL § 234 is a remedial statute, thus requiring that it be liberally and broadly construed, has already been decided by this Court. That issue need not and should not be revisited here, and the Landlord -46- offers no reason for disturbing such settled law. Yet the Landlord, without sound basis or even explanation, in essence asks this Court to overrule its own determination in Duell as to the manner in which RPL § 234 is to be construed. Principles of stare decisis should operate to cause this Court to reject the Landlord’s attempt to have this Court undo Duell, especially, where, as here, it offers no reasons whatsoever for this Court’s doing so, much less a compelling reason as is required. See Statutes §72; People v. Taylor, 9 N.Y.3d 129, 848 N.Y.S.2d 554, 563, 148, 878 N.E.2d 969, 978 (2007); also see K2 Inv. Group, LLC v. American Guarantee & Liability Ins. Co. 22 N.Y.3d 578, 587, 983 N.Y.S.2d 761, 764, 6 N.E.3d 1117, 1120 (2014). This is especially true in the area of real property where settled principles and established precedents are not lightly cast aside. See Holy Properties Ltd., L.P. v. Kenneth Cole Productions, Inc. 87 N.Y.2d 130, 134, 637 N.Y.S.2d 964, 966, 661 N.E.2d 694, 696 (1995). Third, it is submitted that the argument advanced by the Landlord and the discussion by the dissent in the order on appeal regarding concepts of strict versus narrow interpretation of the statute, is, at best, a chimerical one. Notwithstanding the Landlord’s protestations, clearly the Lease in this case includes an attorneys' Landlord cites to Underhill v. Collins 132 N.Y. 269, 272, 30 N.E. 576 (1892) for the23 proposition that the off-set provision of the lease is for the sole benefit of a Tenant as a mitigation provision. Actually, the provision is designed to afford the Landlord an additional remedy for recovery of the attorneys’ fees and other Tenant liability under the lease through reletting but without such reletting being construed as a surrender as would be the case if such language were not included. As this Court held in Underhill v. Collins “...such reletting would operate as an acceptance of a surrender of the premises unless there is an agreement, express or implied, that such reletting may be made.” In any event, the Landlord’s argument is irrelevant to whether the provision triggers RPL § 234 since the Lease provides for the right of the Landlord to recover its attorneys’ fees. Indeed, none of the rent due under the remaining lease term is paid through the reletting until the attorneys’ fees and other expenses are first satisfied. (See Lease, ¶ D. 15. (3).) -47- fees and expenses clause in favor of the Landlord. 23 That being said, should this Court in its wisdom decide to jettison stare decisis principles in deciding this appeal, it should nevertheless reach the same holding it reached in Duell. Beyond the clear and literal application of the Lease provisions under RPL § 234 based on a plain reading of the statute and general rules of statutory construction, RPL § 234 is a remedial statute and, as such, must be construed and applied so as to accord it its broadest protective meaning consistent with the legislative intent. See Duell, 84 N.Y.2d at 783, 622 N.Y.S.2d at 895, 647 N.E.2d at 100; 245 Realty Associates v. Sussis, 243 A.D.2d 29, 35, 673 N.Y.S.2d 635, 639 (1 Dept. 1998). Indeed, as this Court pointed out in Duell, that the statute is intended to be remedial is steeped within the legislative history of the statute. As was held by this Court in Duell v. Condon: The overriding purpose of Real Property Law § 234 was to level the playing field between landlords and residential tenants, creating a In Duell v. Condon, this Court broadly construed the statute to apply to non-signatories24 of leases protected under rent regulation as “tenants.” The Court also held that as a remedial statute, it was to be applied retroactively. -48- mutual obligation that provides an incentive to resolve disputes quickly and without undue expense. The statute thus grants to the tenant the same benefit the lease imposes in favor of the landlord. An additional purpose, particularly relevant in cases in which the tenancy is governed by the emergency rent laws, is to discourage landlords from engaging in frivolous litigation in an effort to harass tenants, particularly tenants without the resources to resist legal action, into terminating legal occupancy (see, Mem. of Senate Sponsor Harrison Goldin, Bill Jacket, L.1966, ch. 286, at 1; Mem. of N.Y. St. Dept. of Social Welfare, op. cit., at 5; see also, Maplewood Mgt. v. Best, 143 A.D.2d 978, 533 N.Y.S.2d 612; Cier Indus. Co. v. Hessen, 136 A.D.2d 145, 150–151, 526 N.Y.S.2d 77). Duell,84 N.Y.2d at 780, 622 N.Y.S.2d at 893-94, 647 N.E.2d at 98.24 This Court’s liberal construction and broad application of RPL § 234 in Duell is exactly right and entirely consistent with long-held canons of statutory construction. Remedial statutes are required to be liberally construed to spread their beneficial results as widely as possible (Statutes § 321), and to carry out the intended reforms and to promote justice. Statutes § 321. Moreover, “statutes promoting the public good are liberally construed.” Statutes § 341. The general spirit and purpose underlying the statutes enactment must be considered, “and that construction is to be preferred which furthers the object, spirit and purpose of the statute.” Statutes § 96. The court in construing the statue “should consider the -49- mischief sought to be remedied” and should construe the act “so as to suppress the evil and advance the remedy.” Statutes § 95. Indeed, courts may depart from a literal construction in order to sustain the legislative intention even where it is contrary to the letter of the statute. Statutes §§ 111, 112. Perhaps most importantly, statutes should not be construed so as to render them ineffective. Statutes §144. “Though these maxims of statutory construction provide helpful guideposts, the reach of the statute ultimately becomes a matter of judgment made upon review of the legislative goal.” Duell v. Condon, supra., 84 N.Y.2d at 783, 622 N.Y.S.2d at 895, 647 N.E.2d at 100. Consistent with the language, intent, purpose, spirit and intended broad reach of the statute, the legislative history, its remedial purpose and the foregoing enunciated principles of statutory construction, the First Department in this case (as well as in Bunny Realty v. Miller, supra.), and the Second Department in Casamento, correctly held that such lease provisions trigger the implied covenant provisions of RPL § 234. Indeed, this case is the “poster child” for the type of case that the Legislature had in mind in enacting the statute. It reflects the very type of concerns the Legislature sought to address and it represents the very type of harassing, vexatious, disingenuous and retaliatory litigation aimed at displacing rent regulated tenants through dubious claims it sought to discourage. -50- The argument that the Landlord attempts to make, and which the dissent at the Appellate Division embraces, confuses and conflates two separate and distinct legal principles. While it is true enough that a remedial statute will be narrowly interpreted where the interpretation is undertaken in order to determine in the first instance whether a departure from common law rights was intended by the Legislature, that principle has no application here where the fundamental nature of the statute is to create a statutory right to meet an exception to the common law rule or to expressly undo the harshness or inequity fostered by a common law rule. Initially, it should be pointed out that the common law rule is not that there are no exceptions to requiring each side to bear their own attorneys’ fees. Rather, the common law’s so-called “American Rule” simply and generally holds that “attorneys’ fees are deemed incidental to litigation and may not be recovered unless supported by statute, court rule or written agreement of the parties.” (Bold supplied). Flemming v. Barnwell Nursing Home and Health Facilities, Inc., 15 N.Y.3d 375, 912 N.Y.S. 2d 504, 938 N.E.2d 937 (2010) (citing Hooper Assoc. v. AGS Computers, 74 N.Y.2d 487, 491, 549 N.Y.S.2d 365 (1989)). Here, the right to attorneys’ fees is supported by statute, which is consistent with the qualifying exception of the rule. Moreover, the Landlord’s argument and, respectfully, the dissent’s, for The case cited by the dissent, Vucetovic v. Epsom Downs, Inc., 10 N.Y.3d 517, 86025 N.Y.S2d 429 (2008), involved a local law of the City of New York, the purpose of which this Court recognized as being cost saving-legislation by shifting liability for injuries on defective sidewalks from the City to property owners. It was not remedial in nature. Moreover, as this Court found, it was clearly in derogation of common law in shifting liability for defective sidewalks to the landowner so as to spare the public purse. -51- strict construction of RPL§ 234, remains fundamentally flawed, legally incorrect and contrary to controlling legal authority as set down by this Court. This Court25 has long expressly rejected the very argument advanced by the Landlord and articulated by the dissent, holding: The section is remedial. It modifies rules of the common law. That law is that in determining whether or not a statute abrogates or modifies a rule of the common law, the construction of the statute must be strict. When, however, a remedial statute does replace, in whole or in part, common-law rules, it must be given an application, liberal and, within its language, commensurate with its purpose. (Bold supplied.) Archer v. Equitable Life Assur. Soc. of United States 218 N.Y. 18, 25, 112 N.E. 433, 436 (1916). See also Harrison v. Mary Bain Estates, Inc., 2 Misc. 2d 52, 152 N.Y.S.2d 239 (Sup. Ct., 1956), aff'd, 2 A.D.2d 670, 153 N.Y.S.2d 552 (1st Dep't 1956). This is the very distinction that makes Gottlieb v. Kenneth D. Laub & Co., Inc., 82 N.Y. 2d 457, 605 N.Y.S.2d 213, 626 N.E.2d 29 (1993), cited to by the Landlord and the dissent, inapposite. Indeed, for the Landlord to argue, in the See Labor Law §198 (1-a).26 This Court in Gottlieb held:27 “Plaintiff's position that Labor Law § 198(1–a) should apply to his common-law contract claim first overlooks the statutory language of the section which refers to an employer's “failure to pay -52- context of a statute that expressly is designed to afford a party to a lease the right to attorneys’ fees, that Gottlieb is applicable misses the mark entirely. In Gottlieb, the question before this Court was whether the Labor Law section that provided for attorneys’ fees when an employee successfully recovered on a cause of action created in the underlying minimum wage statute but contained no provision for26 employees’ recovery of attorneys’ fees in claims arising out of private employment contracts was intended to apply to a common law claim for wages under a private contract, thereby abrogating the common law rule regarding liability for attorneys’ fees. This Court then was called upon to determine whether the statute intended to give rights to a party under a contract to recover attorneys’ fees not otherwise available at common law. Gottlieb held that where the legislative history indicated that the fee provision was intended only to apply to claims directly related to the statutory cause of action thus created, the statute should be narrowly construed as not being intended to abrogate or modify the common law by creating a new right to attorneys’ fees in disputes involving strictly private contract claims. In sharp27 the wage required by this article ” (emphasis supplied), which clearly evinces a legislative intent to limit the remedies provided therein to violations of article 6. Although one might perhaps read the phrase “failure to pay the wage required by this article” to modify only the clause setting forth the liquidated damages remedy, the legislative history of section 198(1–a) as well as other statutory language contained in section 198 not only fails to support that construction but dictates the opposite conclusion.” Gottlieb v. Kenneth D. Laub & Co., Inc., supra., 82 N.Y.2d 457, 463, 605 N.Y.S.2d 213, 217, 626 N.E.2d 29, 33. This Court then went on to detail that legislative history that showed that the attorneys’ fees provision was intended only to discourage violations of the statutory minimum wage requirements. With the exception of one judge, the judges of this Court who rendered the decision in28 each of the cases were the same. -53- contrast, and as this Court recognized a mere two years after Gottlieb in Duell v. Condon, supra., RPL § 234 was enacted for the express purpose of injecting into private contracts (leases) containing one-sided attorneys’ fees provisions in favor of landlords, the right of tenants to recover attorneys’ fees in claims and disputes arising out of such private agreements. The distinction is decisive, and it is evident from those holdings that there exists no conflicting principles of laws to reconcile. Although decided only two years after Gottlieb, this Court in Duell makes28 no mention of Gottlieb, presumably because there was no reason to. Indeed, this Court has not issued any decision holding or even remotely suggesting that RPL § 234 is to be narrowly or strictly construed and applied. The holding in Gottlieb is both unremarkable and consistent with longstanding interpretations of the American Rule. This Court in Duell v. Condon, in a unanimous opinion, clearly held that -54- RPL § 234 is intended to remediate what the Legislature viewed as a widespread injustice that resulted from the unequal bargaining power between landlords and tenants, led to one-sided fee recovery provisions and was antithetical to the public good. Duell, 84 N.Y.2d at 783-784. In fact, this Court has consistently made clear that other tenant protection statutes should be construed broadly because they are intended to serve a remedial purpose. See, e.g., Murphy v. New York State Div. of Housing and Community Renewal, 21 N.Y.3d 649, 653, 977 N.Y.S.2d 161, 164, 999 N.E.2d 524, 527 (2013) (broad and lenient interpretation of Mitchell-Lama Law applied due to remedial purpose of the law); Federal Home Loan Mortg. Corp. v. New York State Div. Of Housing and Community Renewal, 87 N.Y.2d 325, 332, 639 N.Y.S.2d 293, 296, 662 N.E.2d 773, 776 (1995) (“Noting their Remedial Nature, this Court has repeatedly interpreted laws regulating rents broadly to effectuate their intended purpose”); Braschi v. Stahl Associates Co., 74 N.Y.2d 201, 208, 544 N.Y.S.2d 784, 787, 543 N.E.2d 49, 52 (1989) (“In addition, since rent-control laws are remedial in nature and designed to promote the public good, their provisions should be interpreted broadly to effectuate their purposes.”); Park West Village v. Lewis, 62 N.Y.2d 431, 437, 477 N.Y.S.2d 124, 127, 465 N.E.2d 844, 847 (1984) (minor lease violations should be disregarded in order to advance the remedial purpose of the rent stabilization code, which is intended to -55- protect tenants); Matter of Park E. Land Corp. v. Finkelstein, 299 N.Y. 70, 85 N.E.2d 869 (1949) (declining to strictly enforce the provisions of a lease because of the rent laws’ purpose of protecting tenants). It should be noted that in all of those cases, the statutes in question abrogated or modified common-law rights of landlord and tenant. It is worth noting, however, that whether fundamental canons of statutory construction applicable to all statutes are applied or the more liberal and broad construction required for remedial statutes is applied (as this Court held is the case in Duell), the statute should be construed as applicable to the Lease. To begin with, the so-called “strict” interpretation offered up by the Landlord and urged by the dissent is ill-advised and contrary to settled rules of statutory construction. The overly strict interpretation that the Landlord presses for, and that the dissent embraces, would improperly negate the explicit requirement of the statute. See Aloya v. Planning Bd. of Town of Stony Brook, 93 N.Y.2d 334, 340, 690 N.Y.S.2d 475, 477, 712 N.E.2d 644, 646 (1999). Such interpretation would rob the statute of its vitality and would thereby violate one of the most fundamental tenets of statutory construction, that an interpretation that renders a statute a nullity itself defeats the legislative intent. See, generally, New York Telephone Co. v Supervisor of Town of Oyster Bay, 4 N.Y.3d 387, 392 n.2, -56- 796 N.Y.S.2d 7, 9 n.2 (2005). The Landlord’s request that this Court adopt its self- serving interpretation in reality asks this Court to blind itself to the most fundamental of all canons of statutory construction: that the purpose of the rules of statutory construction are to assist in ascertaining the legislative intent, not to defeat it. See Bath & Hammondsport R. Co. v. New York State Department of Environmental Conservation, 73 N.Y.2d 434, 441, 541 N.Y.S.2d 732, 735, 539 N.E.2d 560, 563 (1989). Too restrictive an interpretation of any statute that would defeat the statute’s basic purpose is to be avoided. See Freedman v. Chemical Construction Corp., 43 N.Y.2d 260, 267, 401 N.Y.S.2d 176, 181, 372 N.E.2d 12, 16 (1977). Indeed, even rules of strict construction, where applicable, are only a guide in the judicial search for legislative intent and may never be used to defeat legislative intent once it is found. See Robia Holding Corporation v. Walker, 257 N.Y. 431, 438, 178 N.E. 747, 750 (1931). When the principle of liberal interpretation and broad application of RPL § 234 as remedial legislation is properly applied, any possible lingering doubt as to whether the statute applies to the Lease provisions here at issue should certainly be extinguished. With these guiding principles and this Court’s holding in Duell in mind, this Court’s task on this appeal is an easy one. The Landlord does not dispute, nor could it be reasonably disputed, that it may recover29 attorneys’ fees as part of its damages of the Tenant fails to pay them. C.f G.M. Data Corp. v. Potato Farms, LLC, 95 A.D.3d 592, 594, 944 N.Y.S.2d 102, 104 (1st Dept. 2012) (calculation of damages properly included an award of reasonable attorneys' fees and costs, as provided for in the parties' agreements); Dinicu v. Groff Studios Corp., 257 A.D.2d 218, 224-225, 690 N.Y.S.2d 220, 224 (1st Dept. 1999) (right to recover attorneys’ fees under lease as element of damages). Also see A.G. Ship Maintenance Corp. v. Lezak, 69 N.Y.2d 1, 4-5, 511 N.Y.S.2d 216, 218, 503 N.E.2d 681 (recognizing attorneys’ fees as element of damages), Access Point Medical, LLC v. Mandell, 106 A.D.3d 40, 44, 963 N.Y.S.2d 44, 47 (1st Dept. 2013) (attorneys’ fees are an -57- 1. The Landlord Can Recover Attorneys’ Fees Under the Lease Through Reletting or Direct Recovery From the Tenant In an Action for Damages. Under the Lease The Landlord has No Duty to Mitigate and the Tenant Under All Circumstances Remains Liable for Attorneys’ Fees. To begin with, the Landlord’s argument that its sole right of recovery of attorneys’ fees under the Lease is through offset, aside from not advancing its cause, is simply not true. If the Tenant fails to pay the attorneys’ fees and other expenses of taking back possession or as the result of a lease default, the Lease secures the Landlord’s right to recover attorneys’ fees by reserving the right to brings actions to recover its damages, which would include failure to pay the attorneys’ fees. ¶15. D. (4) states that, “from time to time Landlord may bring actions for damages. Delay or failure to bring an action shall not be a waiver of Landlord’s rights.” The Lease then preserves the landlord’s right to bring an action to recover compensation for any monetary damages, including attorneys’ fees and costs, it incurs as a result of the proceeding to recover possession. Id. at ¶15(D)(4-5).29 element of damages.); Levitt v. Brooks, 102 A.D.3d 547, 547-548, 958 N.Y.S.2d 147, 148 (1st Dept. 2013) (entry of judgment for attorneys’ fees prima facie proof of damages). -58- If the Landlord takes back possession, the it has a second option of recovering its attorneys’ fees through the reletting of the apartment. ¶ 15 D. (3) provides that, if the Landlord does opt to relet, “any rent received by the Landlord from re-renting shall first be used to pay the Landlord’s expenses” (which expenses include attorneys’ fees as set forth in ¶ 15. D. (3)). This provision creates the right of the Landlord under the Lease to recover some or all of its expenses, including, but not only, attorneys’ fees incurred in taking back possession of the apartment. Thus, the Landlord is entitled under the Lease to recover attorneys’ fees and/or expenses incurred as the result of the action or proceeding. While the Landlord may choose to recover its attorneys’ fees through reletting, under the Lease it has no obligation whatsoever to do so. The Landlord may instead look directly and solely to the Tenant for recovery of its fees. ¶15. D. (4) and (5) makes this abundantly clear. ¶15. D. (5) provides that: If Landlord relets the apartment the fact that all or part of the next tenant’s rent is not collected does not affect Tenants’ liability. Landlord has no duty to collect the next tenant’s rent. Tenant must continue to pay rent, damages and expenses without offset. (Bold supplied). If the Landlord does relet and charge rent in order to mitigate its damages, -59- it has no obligation to charge rent sufficent to offset attorneys’ fees owed by the landlord. The tenant remains fully liable to pay those attorneys’ fees, for which the Landlord may maintain an action for damages. Moreover, if the Landlord does relet, it has no obligation to even collect the rent from the new tenant, and the tenant remains fully liable for all rent, additional rent and expenses (which includes attorneys’ fees under Lease ¶ 15. D. (3)) that the landlord can recover through legal proceedings. (Lease ¶ 15. D. (4) and (5)). Thus, the forgoing lease provisions constitute two of the three separate and independent mechanisms for Landlord’s recovery of attorneys’ fees and fall squarely and literally within the ambit of RPL § 234, as the Appellate Division correctly found, holding that: Paragraph 15, thus, literally fits within the language of Real Property Law § 234, since it does “provide that in any action or summary proceeding the landlord may recover attorneys' fees and/or expenses incurred as the result of the failure of the tenant to perform any covenant or agreement contained in such lease” (see Smith v. IG Second Generation Partners, L.P., 27 A.D.3d 265, 809 N.Y.S.2d 910 [1st Dept.2006]). Graham Court Owner's Corp., 115 A.D. 3d at 56, 978 N.Y.S.2d at 218. The court below correctly held that “what is significant for purposes of Real Property Law § 234 is whether the landlord's right to attorneys' fees is triggered by the tenant's failure to perform a covenant in the lease (see Duell, 84 N.Y.2d at 773, 622 The lease provision in Bunny Realty reads:30 Any rents received by the Landlord for the re-renting shall be used first to pay Landlord's expenses and second to pay any amount Tenant owes under this lease. Landlord's expenses include the cost of getting possession and re-renting the Apartment, including, but not only reasonable legal fees, brokers fees, cleaning and repairing costs, decorating costs and advertising costs. Bunny Realty v. Miller 180 A.D.2d 460, 462, 579 N.Y.S.2d 952, 954 (N.Y.A.D. 1 Dept.1992). -60- N.Y.S.2d 891, 647 N.E.2d 96 ).” Id., at 59. The First Department had reached this same conclusion some twenty-two years earlier in Bunny Realty v. Miller, supra., in considering a lease that was reported to contain offset provisions for recovery of attorneys’ fees, holding that the lease “clearly permits the landlord to recover legal fees for obtaining possession of the apartment” and finding that “this clause is sufficiently broad to allow the landlord to procure counsel fees for any reason, including breach of lease, so long as the ultimate result would be to take possession or re-rent the apartment.” Bunny Realty, 180 A.D.2d at 462-63, 579 N.Y.S.2d at 954-55. See30 also Lynch v. Leibman, 177 A.D.2d 453, 455, 576 N.Y.S.2d 550, 552 (1st Dept. 1991). The Second Department in Casemento also reached the same conclusion, even where the attorneys’ fees provision was apparently less expansive, containing only a recovery through reletting provision. It held: Paragraph 16 of the lease at issue in Casemento reads in relevant part:31 “C. If (1) the Lease is cancelled ..., Landlord may, in addition to other remedies, take any of the following steps: (a) peacefully enter the Apartment and remove Tenant and any person or property, and (b) use eviction or other lawsuit method to take back the Apartment. “D. If this Lease is cancelled, or Landlord takes back the Apartment, the following takes place: “(1) Rent and added rent for the unexpired Term becomes due and payable. “(2) Landlord may relet the Apartment and anything in it ... Tenant stays liable and is not released except as provided by law. “(3) Any rent received by Landlord for the re-renting shall be used first to pay Landlord's expenses and second to pay any amounts Tenant owes under this Lease. Landlord's expenses include the costs of getting possession and re-renting the Apartment, including, but not only reasonable legal fees, brokers fees, cleaning and repairing costs, decorating costs and advertising costs.” Casamento v. Juaregui, supra., 88 A.D.3d 345, 347-348, 929 N.Y.S.2d 286, 288. -61- While paragraph 16 is not an all-inclusive attorney's fee provision, it31 does permit the landlord, under the circumstances described, to recover an attorney's fee incurred in litigation occasioned by the tenant's failure to perform an obligation set forth in a covenant of the lease. Paragraph 16, thus, literally fits within the language of the first prong of section 234, since it does “provide that in any action or summary proceeding the landlord may recover attorneys' fees and/or expenses incurred as the result of the failure of the tenant to perform any covenant or agreement contained in such lease.” Use of the permissive word “may” in section 234 indicates that an attorney's fee provision in the lease will trigger the implied covenant even if it does not mandate the landlord's full recovery of his or her attorney's fee under every set of circumstances in which the parties litigate the tenant's alleged default under the lease. The word “recover” in section 234 indicates that the triggering lease provision must simply establish a method by which the landlord may recover his or her attorney's fee; the lease provision need not expressly require a court order awarding the attorney's fee or the tenant's direct payment of the fee to the landlord. -62- Casamento, 88 A.D.3d at 354-355, 929 N.Y.S.2d at 292-293. The very undergirding principles and reasoning of Bunny Realty were reaffirmed by a number of decisions in addition to the decision below. E.g see Marsh v. 300 West 106th St. Corp., 95 A.D.3d 560, 560, 943 N.Y.S.2d 525, 526 (1st Dept. 2012); 490 Owners Corp. v. Israel, 189 Misc.2d 34, 36, 729 N.Y.S.2d 819, 820 (App. Term, 1st Dept., 2001). Bunny Realty was widely followed in this State without controversy for decades. It was repeatedly reaffirmed by the First Department and fully adopted in the Second Department. The Landlord, however, complains that the First Department in Oxford Towers Co., LLC v. Wagner, 58 A.D.3d 422, 872 N.Y.S.2d 431 (1st Dept. 2009) and Madison-68 Corp. v. Malpass, 65 A.D.3d 445, 884 N.Y.S.2d 401 (1st Dept. 2009) seemed to depart from its earlier holding in Bunny Realty. However, this is not the case, as the Appellate Division below and the Second Department in Casamento carefully explained. In Oxford Towers, the First Department interpreted the right to fees under a stipulation between the parties and not the lease, as that court itself later recognized in Katz Park Ave. Corp. v. Jagger, 98 A.D.3d 921, 922, 951 N.Y.S.2d 497, 498 (1st Dept. 2012) (holding that a lease provision limited to recover of attorneys’ fees through reletting implicated Paragraph 23(D)(3) of the parties’ original 1988 lease in Katz Park Ave. Corp.32 contained an attorneys’ fees provision and relied upon for the award of fees in that case stated in pertinent part: 23. Tenant’s default. * * * D. If this Lease is cancelled, or Landlord takes back the Apartment, … * * * (3)… Landlord’s expenses include the costs of getting possession and re-renting the Apartment, including, but not only reasonable legal fees… . The Court is asked to take judicial notice of the provisions of the lease in Katz Park Ave. Corp v. Jagger, appearing in the appendix in that appeal at pp. 650-651. -63- RPL §234).32 The Landlord’s core argument is weak because the foundations it relies upon are mere phantoms, “straw men” created by the Landlord to try to evade liability. The Landlord argues that despite the clear language of the Lease (that the Landlord itself is solely responsible for drafting) affording it the right to attorneys’ fees incurred in actions or proceedings to take back possession of the Apartment, it can never actually recover attorneys’ fees against the tenant under the lease. So this argument goes, the only lease provision relating to attorneys’ fees is, what it characterizes to be, a mere mitigation provision in favor of the tenant. Aside from misstating and misrepresenting the actual Lease provisions as well as the Landlord’s rights and remedies under the lease, this argument fails to consider that whether as a practical matter the Landlord can ultimately get its money under the -64- lease provision it fashioned is not controlling as to whether RPL § 234 applies, and there is nothing in the language of the statute or the legislative history to suggest otherwise. The fact that the Landlord chooses to insert a particular remedy in a Lease as to how it can recover its attorneys’ fees that it incurred in an action or proceeding to recover possession or that it chooses to insert a remedy that might limit its recovery under a particular set of circumstances does not alter the application of RPL § 234. Indeed, if that were so, artful drafting could indeed easily be used to avoid the purpose, coverage and intended effect of the statute. With respect to the Lease provisions allowing for recovery of attorneys’ fees through off-set, as the Second Department explained in Casemento: We interpret this remedial scheme to permit the landlord to recoup any attorney's fee he incurs in an eviction proceeding against a defaulting tenant under circumstances in which the premises are relet prior to the defaulting tenant's satisfaction of outstanding rent and added rent. The landlord's entitlement to an attorney's fee in the eviction proceeding falls within the definition of “added rent” in such circumstances because it is a charge which the tenant “may be required to pay,” albeit indirectly. Throughout the eviction process, the tenant remains liable for rent and added rent due for the remainder of the unexpired term, and if the apartment is relet during that term, the landlord is potentially made whole for all legal fees and expenses incurred in “getting possession” of the apartment by lawsuit, over and above the rent and added rent still due and owing from the tenant. Casamento v. Juaregui 88 A.D.3d at 353-54, 929 N.Y.S.2d at 292. The Second Department went on to hold: -65- Our conclusion is supported by the “basic tenet of statutory construction that the ‘mischief to be corrected’ and the spirit and purpose of the statute must be considered” in construing the statutory language ( Nestor v. McDowell, 81 N.Y.2d 410, 414, 599 N.Y.S.2d 507, 615 N.E.2d 991, quoting Matter of Toomey v. New York State Legislature, 2 N.Y.2d 446, 448, 161 N.Y.S.2d 81, 141 N.E.2d 584). *** The lease in the record before us consists of a preprinted form which is generally in use throughout New York. Paragraph 16 provides the landlord with a mechanism to institute an eviction proceeding and regain possession of an apartment prior to the expiration of the lease term, immediately re-rent at a higher rate, and recover his or her attorney's fees and other expenses of litigation from amounts received from the re-rental, while the defaulting tenant remains liable for the entire outstanding balance of rent and added rent due for the unexpired term. Under such circumstances, a landlord has nothing to lose in instituting eviction proceedings, even if the factual basis for such proceedings is frivolous, unless the landlord faces the prospect of having to pay the tenant's attorney's fee if the tenant prevails. Casamento, 88 A.D.3d at 355-56, 929 N.Y.S.2d at 293-94. The First Department concurred, as follows: Furthermore, we concur with the Second Department's conclusion: “To deny the tenant's motion pursuant to [Real Property Law] 234 simply because [Paragraph 15] does not include a more direct method for the landlord's recovery of his attorneys' fees would be only to reward ‘artful draftsmanship’ and undermine the salutary purpose of section 234” ( id. at 357, 929 N.Y.S.2d 286 quoting Bunny Realty, 180 A.D.2d at 463, 579 N.Y.S.2d 952). Indeed, as particularly relevant in this case, where the landlord was found to have engaged in improper retaliation, a contrary conclusion -66- based on the dissent's narrow construction of Real Property Law § 234 would undermine one of the key purposes of Real Property Law § 234. As the Court of Appeals stated in Duell v. Condon, 84 N.Y.2d at 780, 622 N.Y.S.2d 891, 647 N.E.2d 96, “[a]n additional purpose of [section 234] is to discourage landlords from engaging in frivolous litigation in an effort to harass tenants, particularly tenants without the resources to resist legal action, into terminating legal occupancy.” Graham Court Owner's Corp., 115 A.D.3d at 59, 978 N.Y.S.2d at 219. Thus, even if attorneys’ fees could only be recovered through the reletting of the Apartment, as both the First and Second Departments have held, that would not remove the lease from the application of RPL § 234. Otherwise, the exact inequity that the statute was designed and enacted to eliminate would remain. It should also not escape this Court’s attention that the Landlord itself argues that it has no legal duty to mitigate its damages under the Lease by re- renting, acknowledging that, if the Landlord does relet and collects rent, it may recover the attorneys’ fees in that way. (Landlord’s Brief, p. 12-13). If the Landlord does nothing, relets and collects no rent, or relets and collects less rent than the reserved rent under the Lease, the Tenant, nevertheless, remains absolutely and unalterably liable for the Landlord’s attorneys’ fees incurred in cancelling the Lease or taking back possession. Clearly, if this Lease does not fall within RPL § 234, there apparently exists no lease provision that under the Landlord’s argument would be covered by RPL § 234, except for one that exactly While the Landlord states in its brief (at P. 10) that it “strongly disagrees” with the33 Appellate Division’s holding that the lease contains language enabling the Landlord to recover its attorneys’ fees and thereby triggers RPL § 234, the Landlord offers no explanation as to why in its verified petition it demanded judgment for its attorneys’ fees incurred in that proceeding if it truly believed that no such entitlement existed. It should also be noted that although the Tenant’s First Counterclaim sought attorneys’34 fees pursuant to RPL § 234, the Landlord never interposed a reply to the counterclaim denying the Tenant’s right to attorneys’ fees, and at no time prior to or during the trial did the Landlord seek dismissal of that counterclaim. This despite the fact that the proceeding was pending in the Housing Part. -67- parrots the wording of the statute. As the Appellate Division points out in its decision below, the Landlord’s argument is disingenuous at best, as the Landlord itself interprets the Lease as affording it a right to recover attorneys’ fees related to the summary proceeding. Landlord demanded in its verified petition judgment for “costs and disbursements herein plus legal fees in the amount of $3,000.00 or such other amount as is determined by the Court.” Graham Court Owners Court, 978 N.Y.S.2d at 218;33 Petition, R. 25. Graham Court Owner's Corp., 115 A.D. 3d at 57, 978 N.Y.S.2d34 at 218. The Landlord, in arguing in its brief to this Court that there is no provision for recovery of fees other than by off-set upon re-renting, conveniently omits entirely any discussion or even mention of Lease Pars. 15. D. (4) and (5) as if they did not exist, opting instead to erect its entire argument on a faux foundation by ignoring critical and material lease provisions that are inconvenient to its -68- argument, while dwelling on speculation as to whether it might be able to recover such fees through sett-offs from re-renting. The Landlord’s argument that the language of the lease clause that it drafted and executed is a “legal fiction” (Landlord’s Brief, p. 15) is as peculiar as it is irrelevant, speculative, incorrect and contrary to the plain lease language. First, as the Landlord conceded in the Court below, the Lease provision providing for offsets was engineered to benefit the Landlord where the law appeared to require the Landlord to mitigate its damages. It remains unsettled in the law whether a Landlord in the residential context has a duty to mitigate damages, as this Court has not directly addressed that question. The Second Department concluded in Rios v. Carillo, 53 A.D.3d 111, 861 N.Y.S.2d 129 (2d Dept. 2008), that no such mitigation is required, relying on this Court’s holding in the commercial context in Holy Props. v. Cole Prods., 87 N.Y.2d 130, 637 N.Y.S.2d 964, 661 N.E.2d 694 (1995). The Landlord’s argument implies that if it had known that the law would change to eliminate the mitigation provision, it may have changed the lease terms. However, Holy Props. was decided almost a decade before this lease was entered into. In any event, as this Court held in Duell v. Condon: Petitioners contend that because there was no opportunity to -69- renegotiate the terms and conditions of the expired lease before the attorneys' fee provision was carried forward into the statutory tenancy, Real Property Law § 234 unfairly imposes an unnegotiated obligation on the landlord of rent-controlled premises which could remain in effect for years before the statutory tenancy terminates. We conclude, however, that the imposition of a mutual obligation into preexisting leases is exactly what the Legislature sought to accomplish by the statute. Duell v. Condon 84 N.Y.2d at 783, 622 N.Y.S.2d at 895, 647 N.E.2d at 100. In any event, the lease provides the Landlord with wide latitude in exercising its option to mitigate damages through rent collection from a new tenant and makes clear that if it does, the funds received will first be applied to expenses, including attorneys’ fees. Thus, even under the mitigation provision, payment of the attorneys’ fees occurs. The Landlord has a myriad of options for recovering attorneys’ fees under the Lease, and its hypothetical scenarios about how it might not be able to recover are irrelevant. As the Second Department in Casamento held: Moreover, where, as here, the tenant seeks the benefit of the implied covenant after successfully defending a proceeding alleging his or her breach of the lease, nothing in section 234 requires the court, in determining the tenant's motion, to engage in a speculative analysis of hypothetical circumstances to determine if the landlord would have, in fact, recovered his or her attorney's fee under the subject lease provision had he or she prevailed in the lawsuit. The statute states, “Whenever a lease of residential property shall provide While the Landlord may claim that it could not do that because it would be splitting its35 causes of action, clearly it would argue that it was not doing so because the lease required the recovery in a seperate proceeding or action. -70- that in a any action or summary proceeding the landlord may recover attorneys’ fees and/or expenses incurred....” The use of the word “in” is not used to define where the attorneys’ fees can be recovered , but whether fees incurred in a summary proceeding or action may be recovered by the landlord under the lease. The Legislature in enacting RPL § 234 was most concerned with whether a landlord could recover attorneys’ fees, not procedurally how that might be accomplished. There is no legislative history or reason to support the construction of such remedial legislation offered up by the Landlord. Rather, such a construction would defeat the legislative purpose by enabling Landlords to avoid its reach through artful draftsmanship that makes the Tenant fully liable for attorneys’ fees incurred in the action or proceeding while avoiding RPL § 234 by limiting recovery to post- eviction actions. This is especially true here where the Legislature used such a35 broad and all-encompassing term as “whenever” in defining the scope of when a lease will trigger the statute’s application. -71- 2. Under the Lease, the Landlord Has the Right to Recover Attorneys’ Fees Incurred in an Action or Proceeding to Recover Possession Through Additional Rent, Thereby Affording A Third Provision Triggering the Implied Covenant of RPL § 234 in Favor of the Tenant. The third triggering provision of the lease allows for attorneys’ fees charges as “additional rent.” The Landlord conveniently and purposefully ignores this third separate and independent statutory factor. Par. 3 of the lease states in part: “Tenant may be required to pay other charges to Landlord under the terms of this Lease. They are called ‘added rent.’” The use of the term “other charges” is broad an unrestricted, and as such would include attorneys’ fees and other expenses incurred by the Landlord as the result of the tenant’s failure to perform any covenant or agreement contained in the lease. Par 15 D.(3) provision for the tenant to pay legal fees and expenses are “other charges: under the Lease within the plain meaning of those words. There is nothing in the Lease that omits the attorneys’ fees and expenses from the category “other charges under the lease” and they are clearly “other charges under the lease.” Par 15. D.(1) of the lease provides that “If this Lease is cancelled or Landlord takes back the Apartment, the following takes place: (1) Rent and added rent for the unexpired Term is due and payable.” The third alternate factor under -72- RPL § 234 for triggering the implied covenant is therefore also met. As the Second Department held in Casamento: The landlord's entitlement to an attorney's fee in the eviction proceeding falls within the definition of “added rent” in such circumstances because it is a charge which the tenant “may be required to pay,” albeit indirectly. Throughout the eviction process, the tenant remains liable for rent and added rent due for the remainder of the unexpired term, and if the apartment is relet during that term, the landlord is potentially made whole for all legal fees and expenses incurred in “getting possession” of the apartment by lawsuit, over and above the rent and added rent still due and owing from the tenant. Casamento, 88A.D.3d at 353-354, 929 N.Y.S.2d at 292. Again, under all three circumstances, the tenant remains fully liable for all rent, additional rent and expenses (which includes attorneys’ fees under Lease ¶15(d)(3)) that the landlord can recover through legal proceedings to recover its damages. (Lease ¶15(D)(4) and (5)). Any one of these provisions triggers RPL § 234. Certainly all three of them do. Indeed, if this were not the case, it is the Tenant, not the Landlord, that would have no right of recovery for attorneys’ fees while the Landlord could recover all of its attorneys’ fees and expenses as against the tenant through any of the several means available to the Landlord under the Lease, leaving firmly in place the very inequities that the statute was enacted to eliminate. -73- POINT II LANDLORD’S ARGUMENT THAT PLAINTIFF IS NOT ENTITLED TO ATTORNEYS’ FEES UNDER RPL §234 BECAUSE HE PURPORTEDLY BREACHED HIS LEASE IS IMPROPERLY RAISED AND OTHERWISE BASELESS. A. Landlord Failed to Raise Any Claim in the Court Below that Tenant Is Precluded From Recovering Attorneys’ Fees Because he Breached the Lease. Landlord, in its appeal to the Appellate Term, made no argument that the tenant breached the lease and that therefore the court should have exercised its equitable powers to deny Tenant attorneys’ fees. At the Appellate Term, the Landlord argued only that 1) there was no basis for an award under the statute, 2) the claim was barred by the statute of limitations, and 3) Tenant did not claim the right to attorneys’ fees. (Landlord’s Appellate Term Brief, Point VI, pp. 51-54.) As such, landlord abandoned any such argument, such argument was not preserved on its appeal. See In re Darryl Clayton T., III, 95 A.D.3d 562, 562, 944 N.Y.S.2d 519, 521 (1st Dept. 2012); Kermanshah Oriental Rugs, Inc. v. Gollender, 47 A.D.3d 438, 440, 850 N.Y.S.2d 47, 49 (1st Dept. 2008); People v. Watson, 245 A.D.2d 87, 87, 666 N.Y.S.2d 131, 131 (1st Dept. 1997); see also People v. Torres, 108 A.D.3d 474, 475, 969 N.Y.S.2d 462, 463-464 (1st Dept. 2013). Second, The Landlord incorrectly relies upon CPLR §§5501 to review the As the Appellate Division noted below: “This Court granted leave to the tenant, who36 appeals solely from the denial of attorneys' fees.” Graham Court Owner's Corp., 115 A.D. 3d at 55, 978 N.Y.S.2d at 216. -74- issue of prevailing party status. The Landlord did not appeal from the Appellate Term Order, and therefore prevailing party status was a conclusive finding. See36 Burke v. Crosson, 85 N.Y.2d 10, 15-16, 647 N.E.2d 736, 738, 623 N.Y.S.2d 524, 527 (1995). Moreover, the Appellate Division did not make a new finding of fact on the appeal. The Appellate Division expressly certified to this Court that it determined “as a matter of law” whether RPL § 234 applies to the Lease. (R. 581). The question of whether the Tenant prevailed at trial became final when the Landlord chose not to seek review of the Appellate Term’s Order. The Landlord now, in effect, argues for a back door determination by this Court that Tenant did breach the Lease. Landlord is foreclosed from making that argument on this appeal. Thus, the question of whether the Tenant was the prevailing party is therefore not properly at issue on this appeal. B. Nothing in the Facts of the Underlying Proceeding Supports Judicial Equitable Intervention to Deprive the Tenant of His Contractual and Statutory Rights to an Award of Attorneys’ Fees. The forgoing objection notwithstanding, the Tenant was the clear prevailing Aside from vigorously and consistently disputing that claim as the record bears out, as37 the trial court found (which finding the Appellate Term did not disturb), Tenant had also asserted that the work could not have constituted a breach of the lease because the work was performed before the lease commenced after the Landlord afforded the Tenant permission to enter the apartment and perform the work before the lease commencement date and before the Tenant moved into the Apartment. (R. 17.) -75- party. See Community Counseling & Mediation Services v. Chera, 115 A.D.3d 589, 982 N.Y.S.2d 469, 471 (1st Dept. 2014); Board of Managers of 55 Walker Street Condominium v. Walker Street, LLC, 6 A.D.3d 279, 280, 774 N.Y.S.2d 701 (1st Dept. 2004); Senfeld v. I.S.T.A. Holding Co., Inc. 235 A.D.2d 345, 345, 652 N.Y.S.2d 738, 739 (1st Dept. 1997) lv. dissms’d, 91 N.Y.2d 956, 671 N.Y.S.2d 717 694 N.E.2d 886 (1998); lv. appeal den. 92 N.Y.2d 818, 684 N.Y.S.2d 489,707 N.E.2d 444 (1998). While Landlord argues that the Tenant admitted to substantially breaching his lease, Landlord’s assertion is entirely false and ignores the unchallenged37 findings below. The trial court expressly found Landlord’s principal to be “entirely incredible” (R. 18) and to have “lied repeatedly and obviously” (id.), which findings were undisturbed on appeal. (R. 6). Both the Civil Court and the Appellate Term held that the Tenant did not breach the Lease. The Landlord did not seek any appeal from the Appellate Term’s affirmance of dismissal of the petition with prejudice. The Trial Court expressly found that “petitioner’s authorized agents -76- specifically authorized respondent to make all of the alterations he made in his apartment and that respondent therefore did not breach a substantial obligation of his tenancy.” (R. 19). Moreover, as the Appellate Term held, the Landlord was estopped by its own express consent to the work from claiming that a breach of the lease occurred “based on the tenant’s persuasive showing that landlord’s authorized agents expressly consented to the electrical work now complained of and the undisputed evidence that landlord, in connection with prior proceedings before the DHCR, (falsely) asserted that its own contractors had effectuated the electrical work.” (R. 6). Given that the holdover petition was dismissed with prejudice after trial upon the Trial Court’s finding that the proceeding was without basis and retaliatory, that the Appellate Term affirmed the Trial Court’s findings and affirmed the dismissal with prejudice and that the Landlord did not seek further review of those holdings, the Landlord’s argument that the Tenant was not the prevailing party is meritless and frivolous. Indeed, here, Landlord’s attempt to terminate the Lease under the circumstances and in retaliation for Tenant’s DHCR complaint was itself a substantial breach of the lease by the Landlord. See Jacreg Realty Corp. v. Matthew Barnes, 284 A.D.2d at 281, 727 N.Y.S.2d at 104 (2001). Under these circumstances, the Landlord’s argument is really nothing more -77- than a transparent attempt to try to circumvent RPL § 234. “[T]his would merely be an attempt to use equity to defeat the purpose of the statute...to permit the very result which the statute prohibits.” Symphony Space, Inc. v. Pergola Properties, Inc., 214 A.D.2d 66, 80-81, 631 N.Y.S.2d 136, 144 (1st Dept. 1995) aff’d 88 N.Y.2d 466, 646 N.Y.S.2d 641, 669 N.E.2d 799 (1996). In any event, the Landlord’s plea for equity is also as meritless as it is contrived. Indeed, Landlord 1) brought the eviction proceeding in retaliation for the Tenant’s assertion of his statutory rights as a rent regulated tenant, 2) had no genuine factual or legal basis for bringing the proceeding, 3) expressly consented to the very work that it claimed in the eviction proceeding to constitute a breach of the lease, 4) claimed as a breach of the lease the very work that the Landlord itself tried to (falsely) take credit for before the DHCR, 5) argued to the DHCR that the work was required to eliminate a dangerous condition and bring the apartment to code, 6) agreed to extend the term of lease after Tenant had performed the work at Tenant’s own costs in lieu of reimbursing the Tenant for the work he performed (R. 227), and 7) been estopped from claiming a breach of the lease because it expressly gave Tenant permission to perform the electrical work. Yet Landlord steadfastly argues the Trial Court should have exercised its equitable powers and intervened to preclude the otherwise required award of attorneys’ fees to the -78- Tenant under the Lease and statute so as to shield Landlord from having to pay its contractual and statutory obligations. It should first be noted that Landlord points to no provision in RPL § 234 that creates an exception for awarding attorneys’ fees as an element of damages and compensation for a tenant that prevails in defending against a summary proceeding or any legislative history that would support such an exclusion under these circumstances. The fundamental rule is that contracts are to be applied as written, and the courts should not modify contract terms to interject new terms or provisions. See Vermont Teddy Bear Co., Inc. v. 538 Madison Realty Co., 1 N.Y.3d 470, 475, 775 N.Y.S.2d 765, 767-768, 807 N.E.2d 876, 879 (2004). It should also be noted that a finding of estoppel does not mean that the Tenant breached the lease as the Landlord argues, it means that the Landlord through its conduct is precluded from claiming that the lease was breached. See N. & S. Decor Fixture Co., Inc. v. J. Enterprises, Inc., 57 A.D.2d 890, 890, 394 N.Y.S.2d 278, 280 (1st Dept. 1977). Equity should intervene only sparingly in relation to enforcement of contracts where proper grounds are present. Where, as here, the Lease provisions affording the rights to attorneys’ fees are clear, and are conferred on Tenant in the contract by statute, “a court is not free to alter the contract to reflect its personal -79- notions of fairness and equity.” Greenfield v. Philles Records, Inc., 98 N.Y.2d 562, 570, 750 N.Y.S.2d 565, 570, 780 N.E.2d 166, 171 (2002). In any event, it is axiomatic that a party that seeks the aid of equity must have done equity him or herself. This case is not even a close call. “He who comes into a court of equity must come with clean hands.” The doctrine is “that the party asking the aid of the court must stand in conscientious relations towards his adversary, that the transaction from which his claim arises must be fair and just, and that the relief itself must not be harsh and oppressive upon the defendant. [Citing1 Pomeroy's Equity Jurisprudence, § 400.] York v. Searles, 97 A.D. 331, 335, 90 N.Y.S. 37, 39 (2d Dept. 1904), aff’d, 189 N.Y.573, 82 N.E. 1134 (1907). See also Grosch v. Kessler, 256 N.Y. 477, 478, 177 N.E. 10, 11 (1931). While this Court has not had the opportunity to opine as to the limits of a court’s equitable powers to deny an otherwise clear contract right to attorneys’ fees, a line of cases has developed in the lower courts recognizing that the right of courts to exercise their equitable powers to deprive a party of an otherwise clear contractual and statutory right to an award of attorneys’ fees is limited to circumstances where “manifest unfairness” would result through the unwavering application of the lease provision providing for such an award or where bad faith of the prevailing party was the cause of the lawsuit. Jacreg Realty Corp., supra., -80- 284 A.D.2d at 280-281, 727 N.Y.S.2d at 104. Equitable principles are then applied to “import the concept of fundamental fairness.” 135 East 57th Street LLC v. Daffy's Inc., 91 A.D.3d 1, 934 N.Y.S.2d 112, 114 (1st Dept. 2011). “Good faith” alone in bringing the proceeding (which is, in any event, not the case here), is not a basis to deny a prevailing tenant attorneys’ fees, as that would be an exception that would swallow the rule and there is otherwise no statutory basis for such an exception. See Nesbitt v. New York City Conciliation and Appeals Bd., 121 Misc.2d 336, 340-41, 467 N.Y.S.2d 528, 531-32 (Sup. Ct., N.Y. Co., 1983). Such extraordinary equitable intervention has been limited (in the case of tenants) to special circumstances where the tenant in the case had in fact been found by the court at trial to have breached the lease but prevailed due to technical reasons or a cure, was guilty of some bad faith conduct vis-a-vis the landlord, or where the tenant engaged in the act complained of but the law changed during the course of the litigation requiring dismissal of the proceeding . See, e.g., 333 East 49th Partners, L.P. v. Flamm, 107 A.D. 3d 584, 967 N.Y.S.2d 719, 720 (1st Dept. 2013) (“in light of the former tenant's misconduct in signing false affidavits of primary residency and entering into a subtenancy without the consent of the landlord, equitable considerations and fairness militate against an award of attorneys' fees in his favor”); Abrams v. 4-6-8, LLC, 38 Misc. 3d 127(A), 969 -81- N.Y.S.2d 801 (App. Term, 1st Dept., 2012) (Civil Court expressly found, tenant “still maintained and significantly prolonged this proceeding after the violation had been cured.”); Kralik v. 239 E. 79th St. Owners Corp., 93 A.D.3d 569, 570, 940 N.Y.S.2d 488 (1st Dept. 2012) (fees denied to prevailing party when the law that was in effect when the case was brought changed during the course of the litigation); see also Wells v. East 10th Street Associates, 205 A.D.2d 431, 431, 613 N.Y.S.2d 634, 634 (1st Dept. 1994) lv. den. 84 N.Y.2d 813, 647 N.E.2d 453, 623 N.Y.S.2d 181 (1995). Landlords have also been denied attorneys’ fees where equitable principles were applied to avoid manifest unfairness. See Jacreg, 284 A.D.2d at 280-81, 727 N.Y.S.2d at 104 (prevailing landlord denied attorneys’ fees where it wrongfully withdrew the tenant’s executed renewal lease in retaliation for the tenant having filed a complaint with the DHCR); Solow Mgt. Corp. v. Lowe, 1 A.D.3d 135, 766 N.Y.S.2d 838 (1st Dept. 2003) (Attorneys’ fees denied landlord under circumstances where protracted lawsuits between parties and tenants agreement to pay the disputed rent to end the litigation and forego valuable claims and defenses in doing so, made an award of attorneys’ fees unfair). 433 Sutton Corp. v. Broder, 22 N.Y.3d 1121, 984 N.Y.S.2d 636, 7 N.E.3d 1124 (2014), cited to by the Landlord, involved such equitable considerations. -82- There, the defendant tenant sought legal fees after the court denied the landlord cooperative a preliminary injunction, but where it was undisputed that there existed foul conditions in his apartment that violated the cooperative’s house rules. The Supreme Court ruled that the tenant was not entitled to attorneys’ fees due to equitable considerations and the fact that the injunction was ultimately denied only because the the offending condition was removed before the motion for a preliminary injunction was decided. In Broder, after the Appellate Division reversed, this Court, without opinion, reversed and reinstated the Supreme Court Order. This Court apparently also concluded that the Supreme Court properly exercised its equitable powers to deny the tenant attorneys’ fees under circumstances where the cooperative had legitimately brought the action due to that tenant’s undisputed default under the cooperative’s house rules, and in order to prevent harm to other residents, thereby forcing the tenant to cure the breach. In the underlying litigation, all of the equities favored the Tenant. None of the equities favored the Landlord (whose principal and agent were found to have lied on the stand as well as bringing a proceeding for no reason other than to retaliate against the Tenant.) (R. 16-19.) As the Trial Court found, which finding the Appellate Term declined to disturb, the holdover proceeding was motivated -83- and precipitated by the Landlord’s unscrupulous conduct designed to punish the Tenant for having asserted his rights under the Rent Stabilization Law and Code and for having acted to uncover the Landlord’s falsehoods and illegality in deregulating the apartment and charging an unlawful rent. (R. 19). In Haberman v. Hawkins, 170 A.D.2d 377, 566 N.Y.S.2d 279 (1st Dept. 1991), cited by the Landlord, the court did not address attorneys’ fees. The remaining cases cited by the Landlord are also inapposite. See Ram I, LLC v. Stuart, 248 A.D.2d 255, 668 N.Y.S.2d 888 (1st Dept. 1988) (denial of fees appropriate where tenant’s breach of the lease was established at trial); First Ave. Village Corp. v. Harrison, 17 Misc.3d 20, 844 N.Y.S.2d 544 (App. Term, 1st Dept. 2007) (tenant not entitled to a fee award “as his breach of lease involving the unauthorized installation of various electrical fixtures and appliances, though ultimately remedied, was established, and his initial intransigence in responding to petitioner's demands for access caused undue delay in resolving the disputed issues.”); Giddings v. Waterside Redevlopment Co., N.Y.L.J., p. 26, col. 1 (App. Term, 1st Dept., 1998) (established at trial that the tenant had violated both her lease and HPD rules by subletting the Mitchell-Lama apartment four times for lengthy periods without authorization, and was only not evicted because the hearing officer found the conduct not to be so egregious as to constitute -84- profiteering and therefore she was allowed to cure); Stepping Stones Associates v. Seymour, 48 A.D.3d 581, 853 N.Y.S.2d 562 (1st Dept. 2008) (tenant found at trial to have repeatedly breached the lease through defaults in rent payments to support the landlord’s claim of breach of substantial obligation of the tenancy, but proceeding dismissed solely on the technical ground that landlord issued a renewal lease to the tenant during the proceeding resulting in a finding that the Landlord could not rely on the default notice issued under the prior lease). When the Landlord’s behavior is duly considered, when the hardship to Tenant in having had to defend against this vexatious court proceeding for years to protect his home is taken into account, and when the fact that the Landlord was the one who initiated and relentlessly prosecuted this baseless and malicious eviction proceeding is put into its proper perspective, Landlord’s plea for equitable intervention to relieve it from its contractual and statutory obligations can, at best, be viewed as outlandish and even farcical. The principles applicable to the exercise of equity in no way support the Landlord’s argument for equitable intervention, even if jurisdiction of this Court to do so otherwise exists in this case, and even if such exercise is otherwise properly exercisable given the Lease content and the purpose of RPL § 234. It was undisputed that the building has four or more units. The building is registered38 with the New York City Department of Housing and Community Renewal as having 100 Class A apartments. -85- POINT III TENANT IS ENTITLED TO AN AWARD OF ATTORNEYS’ FEES AND COSTS AS AN ELEMENT OF COMPENSATION FOR DAMAGES UNDER RPL § 223-B AND COMMON LAW. As noted above, the Trial Court held that the Tenant, on his counterclaim under RPL§ 223-b, is entitled to recover compensation for damages in the form of attorneys’ fees and costs. The Appellate Term reversed finding that no such right existed. On appeal to the Appellate Division, that court did not reach the issue due to its finding of Tenant’s entitlement to fees under RPL § 234 Graham Court Owner's Corp., 115 A.D.3d at 50, 978 N.Y.S.2d at 220-21. However, given the important public purpose at issue, this Court should address this separate grounds for an award of attorneys’ fees and reinstate the Trial Court’s order granting such relief. A. RPL § 223-b’s Broad Grant of Authority to Courts to Fashion Remedies for Damages, Authorized the Trial Court to Award the Tenant Attorneys’ Fees. RPL § 223-b provides, in relevant part, that a landlord of a residential building with four or more units may not commence any proceeding against a38 tenant in retaliation for: Under RPL § 223-b(5), a rebuttable presumption of retaliation arises when the landlord39 serves the notice or commences the proceeding within six months after the tenant (or the tenant’s representative) undertook the protected activity, or within six months after “an inspection was made, an order was entered, or other action was taken as a result to” the tenant’s complaint or other good faith action. See also Salvan v. 127 Management Corp., 101 A.D.2d 721, 722, 475 N.Y.S.2d 30, 32 (1 Dept. 1984); Mayfair York, L.L.C. v. Zimmerman, 183 Misc.2d 282, 286,st 702 N.Y.S.2d 494, 497 (Civ. Ct., New York Co. 1999)(“[I]f the tenant established the protected activity and the landlord’s unmeritorious proceeding within the requisite period, she should be able to avail herself of the presumption to draw a causal connection between the two.”). -86- a. A good faith complaint, by or in behalf of the tenant, to a governmental authority of the landlord’s alleged violation of... any law or regulation which has as its objective the regulation of premises used for dwelling purposes; or b. Actions taken in good faith, by or in behalf of the tenant, to secure or enforce any rights under the lease or rental agreement, ... or under any other law of the state of New York, or of its governmental subdivisions, or of the United States which has as its objective the regulation of premises used for dwelling purposes... RPL § 223-b(1). The trial court held that the Landlord violated this section of the39 RPL. RPL § 223-b(3) also provides that if a landlord violates any provision of RPL § 223-b, that landlord: [S]hall be subject to a civil action for damages and other appropriate relief, including injunctive and other equitable remedies, as may be determined by a court of competent jurisdiction in any case in which the landlord has violated the provisions of this section. (Italics supplied.) In this case, Tenant suffered damages including, but not limited to, those in the form of attorneys’ fees and costs that he was forced to incur in order to defend -87- against an illegitimate, abusive and retaliatory eviction proceeding that was initiated by Landlord in bad faith and maintained in violation of RPL § 223-b. The statutory provision for compensation and damages contained in RPL § 223-b is broadly crafted to give courts broad powers to make tenants whole and to impose liability on landlords violating the statute, including making awards of attorneys’ fees. The language of RPL § 223-b(3) requires that courts award compensation, damages and other appropriate relief, as they may determine, as well as equitable relief, where a landlord has violated that statute. The clear intention of the Legislature in enacting RPL § 223-b was, in part, to “protect tenants from retaliation against a good faith exercise by a tenant of his right to complain.” Executive Memorandum on L. 1979, p. 1828, 1979 McKinney’s Session Law News of New York. When a landlord seizes upon our judicial system as a weapon of retaliation against tenants who seek to lawfully enforce their rights, landlords well understand that one of the central components of harm that they inflict as part of their retaliation is to force the tenant to incur attorneys’ fees and costs, or even to force them to surrender their protected leaseholds if they are unable to afford an attorney to mount a defense. See Statutes §§ 92 and 94. The Legislature and New York City Council have repeatedly recognized the threat to the public safety and welfare that arises from the dislocation of tenants -88- from their apartments. See, e.g., Emergency Tenant Protection Act § 2; Rent Stabilization Law § 26-501; Multiple Dwelling Law § 280. This legislative concern is further amplified in RPL § 223-b, regarding the dislocation of tenants by landlords who seek to retaliate, through eviction proceedings, against tenants who have sought to enforce basic rights that the Legislature has afforded them, and is intended to ensure that statutes, laws and regulations designed to promote the health and welfare of tenants are not undermined. Executive Memorandum on L. 1979, p. 1828, 1979 McKinney’s Session Law News of New York. It is respectfully submitted that the potential for an award of damages that includes the tenant’s attorneys’ fees is what will best discourage the abuse of the legal system with this type of lawsuit, and that the statutory language is sufficiently broad to include such an award, especially given the intention of the Legislature in enacting this statute. As is discussed in Point I. A. above, the rules of statutory construction of remedial statutes should be applied, and the statute liberally and broadly construed to carry out its remedial purpose as widely as possible. The Legislature crafted language designed to afford tenants expansive remedies and rights to recover damages, that certainly to includes all existing remedies and forms of compensation that the courts are authorized to award. In -89- fact, the language employed by the statute is uniquely broad in the statutes of the state of New York. Specifically, RPL § 223-b (3) grants courts enormous discretion to courts in awarding damages where such retaliation is found to have occurred. In this case, the retaliation is remarkably venal, vicious, dishonest and malevolent. The Landlord’s purpose in bringing the proceeding was clear: 1) retaliate against and cause economic and other hardship and injury to the Tenant for having asserted his rights, 2) try to force the Tenant from possession by pursuing costly litigation in order to exact its malicious revenge, and 3) dissuade other tenants from even thinking about asserting their otherwise legally enforceable rights. Typically, monetary loss to a prevailing tenant in an eviction proceeding is largely, if not entirely, comprised of the expenses incurred in defending against the landlord’s retaliatory proceedings, which fees can impose enormous hardship and loss on the tenant. Unscrupulous landlords understand the expense of defending against an eviction proceeding and the damaging effect such expense has when they bring proceedings against tenants as a mechanism of retaliation, which is exactly what makes such conduct so insidious. That is precisely why such landlords bring retaliatory proceedings in which they have no hope of succeeding -90- and otherwise attempt to convert the State’s justice system from a forum for the just resolution of disputes to their own personal weapon to avenge a tenant’s good faith efforts to protect his or her rights. The statute’s requirement that courts fashion and award compensation, damages and equitable remedies to tenants who are faced with unlawful retaliatory eviction proceedings would, in most cases, be hollow and nugatory if the statute were to be construed as not providing for awards of attorneys’ fees. In other words, interpreting RPL § 223-b(3) as disallowing, as a matter of law, awards of attorneys’ fees as a form of “damages, compensation or equitable relief” would, contrary to legislative intent and fundamental principles of statutory construction, leave the courts impotent to afford any real remedy. The Legislature, in enacting RPL § 223-b, well understood just how corrosive and destructive such retaliatory conduct is to the myriad of tenant protection legislation enacted to promote the public good, health and safety. Retaliatory eviction cases such as the instant case are singularly inimical to the public policy objectives. Indeed, if the courts omit attorneys’ fees as a proper element of damages, compensation or equitable remedy under RPL § 223-b(3), it will only serve to encourage such retaliatory conduct, since in most cases landlords will face little real risk in doing so, while obviating the statutory purpose In the 35 years since RPL §223-b was enacted, there is only one reported decision that40 research has disclosed awarding damages on a retaliatory eviction claim. That award was for $3,000. See 601 West 160 Realty Corp. v. Henry, 183 Misc. 2d 666, 705 N.Y.S.2d 212 (Civ. Ct., 2000); affirmed, 189 Misc.2d 352, 353, 731 N.Y.S.2d 581 (App. Term, 2d Dept., 2001). C.f. Mayfair York L.L.C. v. Zimmerman, 183 Misc.2d 282, 288, 702 N.Y.S.2d 494, 499 (N.Y.City Civ.Ct., 1999) (Retaliatory eviction found, but “scant” evidence of damages.) N.b. Kumble v. Windsor Plaza Co., 161 A.D.2d 259, 262, 555 N.Y.S.2d 290, 292 (1st Dept.1990), appeal dismissed, 76 N.Y.2d 843, 560 N.Y.S.2d 126 (1990), appeal den. 76 N.Y.2d 709, 561 N.Y.S.2d 913 (1990) (noting that after finding of retaliatory eviction “tenant did not then demand damages (perhaps because, as indicated by the trial court, she was not then prepared to “document her claimed losses,” or perhaps because her damages were not then large enough to bother with.”) -91- of discouraging litigation that will make tenants fearful of asserting rights granted to them by the Legislature. 40 The Legislature, in using such broad language in affording the courts power to fashion remedies, was presumably aware of the historical power of the courts to award fees where ill-motivated or malicious litigation, such as retaliatory eviction proceedings, are brought. (See discussion in sub-point B below.) Indeed, as is discussed in sub-point B below, the Appellate Term, in ruling that a tenant can never get compensation for damages in the form of attorneys’ fees and costs under RPL § 223-b, not only improperly read into the statute a limitation and exclusion for which there exists no evidence of supportive legislative intent, it also arbitrarily and improperly disregarded more than a century of jurisprudence in this state recognizing attorneys’ fees and costs as an element of damages in similar or equivalent circumstances. -92- The Appellate Term erroneously relied upon two cases in reaching this conclusion. The first case, Green v. Potter, 51 N.Y.2d 627, 435 N.Y.S.2d. 695, 416 N.E.2d 1030 (1980), involved the question of whether attorneys’ fees could be awarded in a conservatorship proceeding under a provision of the Mental Hygiene Law. In carefully examining the legislative history of that statutory scheme, this Court concluded that the Legislature’s omission of an attorneys’ fee provision was deliberate and therefore that the courts could not award such fees. Indeed, the Court of Appeals analysis in Green unmistakably indicates that even in the absence of an express provision allowing for an award of attorneys’ fees from a statute, the courts may look to the legislative history to determine whether such an award is within the overall intention of the statute. Were this not the case in Green, that analysis would not have been undertaken since it was plain that the statutory enactment at issue in that case, on its face, contained no provision for an award of attorneys’ fees. It was only after concluding that the omission was deliberate after delving into the legislative history that this Court in Green ruled that fees could not be awarded. In the second case relied upon by the Appellate Term, Braithwaite v. 409 Edgecombe Ave. HDFC, 294 A.D.2d 233, 233-34, 742 N.Y.S.2d 280, 281 (1st Dept. 2002), the court denied attorneys’ fees because the case involved a challenge -93- to a cooperative board election for which there existed no contractual or statutory basis, or even legislative history or intent, for an award of attorneys’ fees or any other compensation in such cases. The Appellate Term also simply ignored controlling authority recognizing exceptions to the general principle regarding fee awards in cases involving misuse of the judicial system. See e.g., United Pickle Co., Inc. v. Omanoff , 63 A.D.2d 892, 893, 405 N.Y.S.2d 727 (1st Dept. 1978); Fugazy Travel Bureau, Inc. v. Ernst & Ernst, 31 A.D.2d 924, 924, 298 N.Y.S.2d 519, 520 (1st Dept. 1969), and discussion in sub-point B. Dismissal of a retaliatory proceeding without making the tenant whole through compensation for his or her losses, including the financial damages associated with the legal costs of defending against such a proceeding, is of little comfort to the tenant and does nothing to dissuade landlords from using the courts as a retaliatory vehicle. B. The Trial Court’s Award of Attorneys’ Fees Was Otherwise Well Within the Broad Powers of the Courts to Fashion Remedies and Award Compensation, Including Awarding Attorneys’ Fees as an Element of Damages, Where the Litigation Is Brought with Retaliatory or Malicious Motives. Aside from the legislative intention in enacting RPL § 223-b of affording courts broad discretion in fashioning damages awards, including discretion to -94- award attorneys’ fees and costs to tenants who have been forced to defend against retaliatory litigation, the Legislature, in leaving it to the courts to fashion remedies for damages, compensation and equitable remedies, must be assumed to have been aware of the recognized power of the courts to award attorneys’ fees as an element of damages in cases where the action or proceeding was initiated for malevolent or malicious purposes, including retaliation, and that such power could be used by the courts in fashioning such remedies. By holding that a court may never award attorneys’ fees and costs as an element of damages, compensation or equitable relief, it is respectfully submitted that the Appellate Term, without any basis or analysis, ruled contrary to established and controlling legal authority in this State and otherwise improperly engaged in judicial legislating by superimposing such restrictions on the statutory enactment and in the absence of any language or legislative history to support that restriction. See, discussion in sub-point A above. Longstanding principles set forth in the decisions of the courts of this State over more than a century afford a sound basis for the Trial Court’s award of Tenant attorneys’ fees and costs as an element of his compensation and damages. Where, as here, the litigation is found to have been brought with malicious intention, courts retain broad powers to award attorneys’ fees to the prevailing party who was unjustly forced to defend his or her lawful position. Even in cases -95- where there exists no contract giving rise to a claim for attorneys’ fees and there is no broad statutory grant of discretion to the courts to fashion damages remedies like that found in RPL § 223-b, if judicial proceedings are used as a weapon to maliciously inflict damages, the courts, including this Court, have repeatedly held that attorneys’ fees may be awarded as a proper element of compensatory damages. See, e.g., United Pickle Co., Inc. v. Omanoff , 63 A.D.2d 892, 893, 405 N.Y.S.2d 727 (1st Dept. 1978). See also Broughton v. State, 37 N.Y.2d 451, 457, 314, 373 N.Y.S.2d 87, 93-94, 335 N.E.2d 310 (1975); Avildsen v. Prystay, 204 A.D.2d 154, 155, 611 N.Y.S. 188 (1st Dept. 1994); Coopers and Lybrand v. Levitt, 52 A.D.2d 493, 496, 384 N.Y.S.2d 804, 807 (1st Dept. 1976); Fugazy, 31 A.D.2d at 924, 298 N.Y.S.2d at 520; Mook v. Merdinger, 18 A.D.2d 983, 983-84, 238 N.Y.S.2d 609, 610 (1st Dept. 1963); N.b. A.G. Ship Maintenance Corp. v. Lezak, 69 N.Y.2d 1, 4-5, 511 N.Y.S.2d 216, 218, 503 N.E.2d 681, 681 (1986) (recognizing common law right of a party to bring action for recovery of attorneys’ fees as damages resulting from defending against malicious claims or abuse of process.) The power of the courts to award attorneys’ fees as an element of damages and as an exercise of their equitable powers was specifically recognized in cases of malicious litigation involving unlawful evictions long before that power was -96- codified by the legislature in RPL § 223-b. See, e.g., O’Horo v. Kelsey, 60 App. Div. 604, 70 N.Y.S. 14 (4th Dept. 1901). See also Aero Garage Corp. v. Hirschfeld, 185 A.D.2d 775, 586 N.Y.S.2d 611 (1st Dept. 1992); Park South Associates v. Essebag, 126 Misc.2d 994, 487 N.Y.S.2d 252 (App. Term, 1st Dept., 1984) (recognizing the authority of courts to award attorneys fees against landlords for malicious or bad faith litigation). As the First Department held: Although it is a governing principle of our jurisprudence that since “public policy requires that all persons should freely resort to the courts for redress of wrongs, the law protects them when they act in good faith and upon reasonable grounds in commencing either a civil or criminal prosecution.” (Burt v Smith, 181 NY 1, 5.) Nevertheless we see no impediment here to the recovery of attorneys' fees, as damages, for malice is the gravamen of the conspiracy appellant was found to have been engaged in. (Mastic Fuel Serv. v Van Cook, 55 AD2d 599.) He intentionally sought to inflict economic injury on respondents by forcing them to engage legal counsel. This was an actionable wrong. The fact that the devices he utilized to harass and oppress them were legal procedures does not relieve him from liability for those legal fees (cf. Board of Educ. v Farmingdale, 38 NY2d 397, 406), since they constitute respondents' harm. United Pickle Co., Inc., 63 A.D.2d at 893, 405 N.Y.S.2d at 727. In Fugazy Travel Bureau, Inc., 31 A.D.2d at 924, 298 N.Y.S.2d at 520, the court held: Leave to amend plaintiff's complaint so as to add a cause of action for professional fees necessarily and reasonably incurred was properly -97- granted. If the alleged wrongful act of the defendant was the occasion of these fees, and if they are reasonable, a cause of action does lie, as a well recognized exception to the rule that, in the absence of any contractual or statutory liability, attorney's fees and expenses incurred in litigating a claim, aside from the usual court costs, are not recoverable as an item of damages, either in that suit or in a suit subsequently brought. Shindler v. Lamb, 25 Misc.2d 810, 211 N.Y.S.2d 762, aff'd 10 A.D.2d 826, 200 N.Y.S.2d 346, 9 N.Y.2d 621, 210 N.Y.S.2d 226, 172 N.E.2d 79. In Mastic Fuel Service, Inc. v. Van Cook, 55 A.D.2d 599, 389 N.Y.S.2d 388 (2d Dept. 1976), cited by the court in United Pickle, where the plaintiffs brought an analogous claim for malicious prosecution and abuse of process, the court held that “[a]ttorneys' fees are recoverable as a measure of damages in tort actions where malice is an element of the tort (see 13 NY Jur, Damages, § 145).” It should be noted that “the essence of malicious prosecution is the perversion of proper legal procedures.” Broughton, 37 N.Y.2d at 457, 373 N.Y.S.2d at 93-94, 335 N.E.2d at 314. See also Mook, 18 A.D.2d at 983-984, 238 N.Y.S.2d at 610. Specific to cases involving leaseholds, attorneys’ fees have been awarded in the absence of a lease provision or statutory right, including where summary proceedings are improperly brought. In O’Horo, 60 App. Div. at 604, 70 N.Y.S at 14, the court held: We think the court also erred in not permitting the plaintiff to prove the value of the attorney's services in defending the summary proceedings instituted by the defendant for the removal of the -98- plaintiff from the premises. The charge is, and there is some proof tending to show, that such proceedings were instituted by the defendant willfully and for the purpose of carrying out his plan to obtain possession of the premises to which he knew he was not entitled. We think proof of the reasonable expenses incurred by the plaintiff in defending his possession against such an assault was proper to be considered by the jury. However, the award of attorneys’ fees as an element of damages or as punishment for the wrongdoer is not limited to the form of action. See Cooper v. Weissblatt, 154 Misc. 522, 277 N.Y.S.2d 709 (App. Term, 2d Dept., 1935). Exceptions to the “American Rule” have been recognized in other circumstances as well. See, e.g., Shindler v. Lamb, 25 Misc.2d 810, 211 N.Y.S.2d 762 (Sup Ct., NY Co., 1959), aff’d, 10 A.D.2d 826, 200 N.Y.S.2d 346, aff’d, 9 N.Y.2d 621, 210 N.Y.S.2d 226, 172 N.E.2d 79 (1960); Central Trust Co., Rochester v. Goldman, 70 A.D.2d 767, 767, 417 N.Y.S.2d 359, 361 (4th Dept. 1979), appeal dismissed, 48 N.Y.2d 454 (1979); Abounader v. Strohmeyer & Arpe Co., 217 A.D. 43, 48, 215 N.Y.S. 702, 708 (4th Dept. 1926), aff’d, 243 N. Y. 458, 154 N. E. 309, 312 (1927); Johnson v. General Mut. Ins. Co., 24 N.Y.2d 42, 50, 298 N.Y.S.2d 937, 942, 246 N.E.2d 713, 716 (1969) (where a party is forced to defend against an insurer’s commencement of litigation to avoid coverage); Schanbarger v. Kellogg, 43 A.D.2d 362, 365, 352 N.Y.S.2d 50, 53 (3d Dept. 1974), aff’d, Broughton v. State, 37 N.Y.2d 451, 459, 373 N.Y.S.2d 87, 96, 335 N.E.2d 310, 316 (1975) cert -99- den. Schanbarger v. Kellogg, 423 U.S. 929, 96 S.Ct. 277, 46 L.Ed.2d 257 (1975) (where a person is forced to pay to defend him or herself as the result of a false arrest); Jefferies Avalon, Inc. v. Gallagher, 149 Misc. 2d 552, 567 N.Y.S.2d 339 (Sup., Ct., NY Co.,1991) (as an element of damages in an award of punitive damages). In McNamara v. Powell, 256 A.D. 554, 558, 11 N.Y.S.2d 491, 496-497 (4th Dept. 1939), the court upheld an award of legal fees where the “litigation into which plaintiff was plunged was the direct result of the acts of the defendants and was undoubtedly intended to be the result of such acts.” Courts have held that attorneys’ fees are recoverable in any situation where elements of malice are involved. See Render Trap, Inc. v. Town of Huntington, 100 Misc.2d 108, 116, 418 N.Y.S.2d 537 (Sup. Ct., Nassau Co, 1979) (citing New York Jurisprudence definition of malice as follows: “Generally speaking, malice may consist of any personal hatred or ill will, any improper or sinister purpose, or any reckless disregard of the rights of others which is inconsistent with good faith or the mere purpose to further the ends of justice.”) Moreover, recovery of attorneys’ fees has also been imposed as a punishment for a party’s wrongful and malicious acts. See Russian Church of Our Lady of Kazan v. Dunkel, 67 Misc.2d 1032, 1061, 326 N.Y.S.2d 727, 757 (N.Y. Sup., 1971) (citing 25 C.J.S. Damages § -100- 50(d)). It is respectfully submitted that the Trial Court, in a legitimate exercise of its discretion and power under the facts of this case, and consistent with the Tenant’s common law rights, properly awarded attorneys’ fees and costs as compensation and damages to Tenant, the prevailing party, in order to ensure a just result in a case found to have been commenced for retaliatory and malicious reasons, and consistent with the broad authority for awards of compensation, damages and equitable relief under RPL § 223-b. Thus, even at common law, attorneys’ fees and costs properly constitute elements of compensatory damages in such circumstances where litigation is used for the purpose of inflicting economic harm. Inherent in the very statutory defense and cause of action is the notion that the landlord is acting with malice in order to avenge the tenant’s lawful conduct. Indeed, that is the gravamen of the claim for damages under RPL § 223-b. The Appellate Term did just the opposite of what the laws and principles of statutory interpretation command, effectively reading into the terms “damages and other appropriate relief” and “equitable relief” an exclusion for attorneys’ fees and costs as an element of damages even though such damages are available at common law. Clearly, the terms “damages” and “equitable relief” are unrestricted -101- in the statute. Neither the statute itself, nor the legislative history, give any suggestion that any particular category of damages was meant to be excluded. See Statutes, § 76. The Appellate Term, in carving out such an exclusion and in reading into the statute a limitation that excludes an entire category of damages available at common law, violated a principal tenet of statutory construction that “[i]f there is nothing to indicate a contrary intent on the part of the lawmakers, terms of general import in a statute ordinarily are to receive their full significance.” Statutes §114. The Appellate Term, also violated another fundamental tenet of statutory construction: “The courts in construing statutes should avoid judicial legislation; they do not sit in review of the discretion of the Legislature or determine the expediency, wisdom, or propriety of its action on matters within its powers.” Statutes § 73. See also New Amsterdam Cas. Co. v. Stecker, 1 A.D.2d 629, 632, 152 N.Y.S.2d 879, 882-83 (1st Dept. 1956) (holding that court cannot engage in judicial legislation by reading into a statute an intent to limit its scope where no such limitation exists in the statute itself). This Court has itself noted the frequency in which it has held that “[i]t is the duty of the courts to give effect to statutes as they are written and that we may not limit or extend the scope of the statute as written unless literal construction of the statute would produce a result which the Legislature plainly did not intend.” Russo v. Valentine, -102- 294 N.Y. 338, 342, 62 N.E.2d 221, 222-23 (1945). Also see Statutes §§ 95 and 96. CONCLUSION WHEREFORE, so much of the decision and order the Appellate Division as held that the Tenant is entitled to attorneys’ fees under the lease and RPL § 234 and remitting the matter to the Trial Court for a determination of the amount to be awarded the Tenant, should in all respects be affirmed, and so much of the order of the Appellate Term as modified the order of the trial court so as to delete the award of attorneys’ fees and costs pursuant to RPL §223-b and prevailing case law, should in all respects be reversed, attorneys’ fees and costs should be awarded to the Tenant, and the matter should be remanded to the Housing Part of the Civil Court for a determination of the amount of the Tenant’s reasonable attorneys’ fees and costs and for judgment therefor, together with an award of costs and such other and further relief as is just and proper. Dated: New York, New York June 26, 2014 Respectfully submitted, BIERMAN & PALITZ LLP By: Mark H. Bierman Attorneys for Respondent-Tenant-Appellant 74 Trinity Place, Ste. 1550 New York, New York 10006 Tel. (212) 232-2055