Graham Court Owner's Corp., Appellant,v.Kyle Taylor, Respondent.BriefN.Y.January 14, 2015To be Argued by: NATIV WINIARSKY, ESQ. (Time Requested: 30 Minutes) Court of Appeals of the State of New York O GRAHAM COURT OWNER’S CORP., Petitioner-Landlord-Appellant, – against – KYLE TAYLOR, Respondent-Tenant-Respondent. REPLY BRIEF FOR PETITIONER- LANDLORD-APPELLANT KUCKER & BRUH, LLP Attorneys for Petitioner-Landlord-Appellant 747 Third Avenue, 12th Floor New York, New York 10017 Tel: (212) 869-5030 Fax: (212) 944-5818 NWiniarsky@KBLLP.com Dated: July 11, 2014 Civil Court, New York County Clerk’s Index No.: L&T 70520/2007 New York County Clerk’s Index No.: 570661/2010 APPELLATE INNOVATIONS (914) 948-2240 8494 Court of Appeals No. 2014-00055 i TABLE OF CONTENTS Page TABLE OF AUTHORITIES .................................................................................... ii POINT-I THE RESPONDENT INCORRECTLY CLAIMS THAT THE PARTIES’ LEASE ALLOWS THE PETITIONER TO RECOVER ATTORNEYS’ FEES FROM THE RESPONDENT ......................................................................................... 1 POINT-II THE PARTIES’ LEASE DOES NOT ALLOW THE PETITIONER TO RECOVER ATTORNEYS’ AS PART OF DAMAGES ................................................................................. 4 POINT-III THERE IS NO PROVISION IN THE LEASE WHICH ALLOWS THE PETITIONER TO INCLUDE ITS ATTORNEYS’ FEES AS ADDITIONAL RENT OWED BY RESPONDENT ............................................................................ 12 POINT-IV THE PETITIONER IS ALLOWED TO RAISE ISSUES OF FACT BEFORE THIS COURT PURSUANT TO CPLR § 5501 .................................................................................................... 13 POINT-V THE RESPONDENT DID NOT FILE AN APPEAL IN THIS MATTER AND CANNOT RAISE HIS OWN ISSUES ................................. 21 CONCLUSION ........................................................................................................ 26 ii TABLE OF AUTHORITIES Page Cases: 433 Sutton Corp v Broder, 22 NY3d 1161, 984 NYS2d 636 (2014) ........................................................... 17 511 West 232nd Owners Corp v Jennifer Realty Co, 98 NY2d 144, 746 NYS2d 131 (2002) ............................................................. 22 A.G. Ship Maintenance Corp v Lezak, 69 NY2d 1, 511 NYS2d 216 (1986) ................................................................... 5 Access Point Medical, LLC v Mandell, 106 AD3d 40, 963 NYS2d 44 (1st Dept, 2013) .................................................. 6 Burke v Crosson, 85 NY2d 10, 623 NYS2d 524 (1995) ........................................................... 7, 17 Casamento v Juaegui, 88 AD3d 345, 929 NYS2d 286 (2nd Dept, 2011) ...................................... 10, 11 Dinicu v Groff Studios Corp, 257 AD2d 218, 690 NYS2d 220 (1st Dept, 1999) .............................................. 5 Duell v Condon, 647 NY2d 773, 647 NE2d 96, 622 NYS2d 891 (1995) ...................................... 9 Excelsior 57th Corp v Winters, 227 AD2d 146, 641 NS2d 675 (1st Dept, 1996) ............................................... 18 First Avenue Village Corp v Harrison, 17 Misc3d 20, 844 NYS2d 544 (AT, 1st Dept, 2007) ...................................... 16 G.M. Data Corp v Potato Farms, LLC, 95 AD3d 592, 944 NYS2d 102 (1st Dept, 2012) ................................................ 5 Giddings v. Waterside Redevelopment Co., NYLJ, 6/30/98, p 26, col 1 (AT, 1st Dept.) ...................................................... 16 iii Graubard Mollen Dannett & Horowitz v Moskovitz, 86 N.Y.2d 112, 653 N.E.2d 1179, 629 N.Y.S.2d 1009 [1995] ......................... 22 Haberman v Hawkins, 170 AD2d 377, 566 NYS2d 279 (1st Dept, 1991) ...................................... 18, 19 Hecht v City of New York, 60 N.Y.2d 57, 467 N.Y.S.2d 187, 454 N.E.2d 527 [1983] ............................... 22 Levitt v Brooks, 102 AD3d 547, 958 NYS2d 147 (1st Dept, 2013) .......................................... 6, 7 Munoz v 221 West 16th Realty, LLC,, 24 AD3d 112, 804 NYS2d 248 (1st Dept, 2003) .............................................. 24 N & S Décor Fixture Co v V J Enterprises, 57 AD2d 890, 394 NYS2d 278 (1st Dept, 1977) .............................................. 19 Nestor v McDowell, 81 NY2d 410, 599 NYS2d 507 (1993) ............................................................. 17 Ram I, LLC v Stuart, 248 AD2d 255, 668 NYS2d 888 (1st Dept, 1998) ...................................... 15, 16 Rules, Laws and Statutes: CPLR § 5501 ............................................................................................................ 14 CPLR § 5601(b)[2](i)............................................................................................... 22 RPL § 223-B .................................................................................................... Passim RPL § 234 ........................................................................................................ Passim 1 COURT OF APPEALS --------------------------------------------------------------------X GRAHAM COURT OWNER’S CORP., APL-2014-00055 Petitioner-Landlord-Appellant, New York Co. Index -against- L&T 70520/07 KYLE TAYLOR, Respondent-Tenant-Respondent. --------------------------------------------------------------------X REPLY POINT-I THE RESPONDENT INCORRECTLY CLAIMS THAT THE PARTIES’ LEASE ALLOWS THE PETITIONER TO RECOVER ATTORNEYS’ FEES FROM THE RESPONDENT In his brief the Respondent, Kyle Taylor (hereafter “Respondent”) argues that under the parties’ lease the Petitioner Graham Court Owner’s Corp (hereafter “Petitioner”) can recover its attorney’s fees from Respondent either directly as added rent or as damages. Nothing in the lease supports this claim. What the lease does provide is that if the Respondent vacates or is evicted from the subject apartment the Petitioner “may” relet the apartment. The lease further provides that if the Petitioner elects to relet, any expenses incurred by it, including “legal fees”, would be paid by “[a]ny rent received by Petitioner for the re-renting.” Under the plain language of the 2 lease Petitioner receives nothing from the Respondent towards payment of its legal fees. The Respondent’s bald assertions are easily refuted by citing directly from the language of the parties’ lease. For example the Respondent claims in his brief (p 43) that: 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).) Nothing in the lease supports this claim. Paragraph 15(D) begins by stating that if the lease is cancelled “the following takes place” and then lists three events. The first, 15(d)(1), simply states that upon the cancellation of the lease “rent and added rent for the unexpired Term is due and payable.” This is a fairly common term and merely insures that the Respondent remains liable for all rent due to the end of the lease term. The second listed provision, 15(D)(2), states that the Petitioner “may” relet the subject apartment: Landlord may relet the Apartment and anything in it. The reletting may be for any term. 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 Finally, the third listed provision, 15(D)(3), provides for mitigation in the event that the Petitioner elects to relet under 15(D)(2). The clause provides that if the Petitioner elects to relet the apartment the rent paid by the next tenant would be used to offset the Petitioner’s expenses and the rent still owed by the Respondent. The provision states: (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 the 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. Again, by its plain language 15(D)(3) clearly does not require the Respondent to pay anything and specifically does not allow the Petitioner to recover its attorneys’ fees from Respondent. It plainly provides that if there is a relet it is the next tenant’s rent payments which will be used to pay the Petitioner’s expenses and to “pay the amounts [Respondent] owes under the lease.” Read in proper context 15(D)(3) is a mitigation clause which benefits the Respondent. Under 15(D)(1) the Petitioner is not required to relet the apartment and can insist that the Respondent pay the entire rent due for the unexpired term of the lease.1 As stated in Petitioner’s brief, numerous court decisions support the 1. The Respondent contends in his brief (p 68) that: “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 4 right of the Petitioner not to relet the apartment and to require the Respondent to pay all the remaining rent due on the lease. 15(D)(3) only comes into effect if the Petitioner elects to relet the apartment. Further, as stated in Petitioner’s brief, the application of 15(D)(3) will never require the Respondent to pay more rent. The application of 15(D)(3) can only result in the Respondent paying either less rent or the same rent he agreed to pay in his lease. There will either be full mitigation, partial mitigation or no mitigation of the rent owed under the lease. In no event will the Respondent be required to pay more than the rent the Respondent agreed to pay under the lease. POINT-II THE PARTIES’ LEASE DOES NOT ALLOW THE PETITIONER TO RECOVER ATTORNEYS’ AS PART OF DAMAGES The Respondent’s next argument is buried in footnote # 29 of his brief (p 57) where he states that: The Landlord does not dispute, nor could it be reasonably disputed, that it may recover attorneys’ fees as part of its damages of [sic] the Tenant fails to pay them. addressed that question.” In fact the law is settled to the extent that it ever is. The Petitioner can only present the case law as it currently exists and it serves no point to speculate as to what this Court or other courts may do in the future. 5 Of course the Petitioner does “dispute” this claim and did so in its brief. None of the court decisions cited by the Respondent in support of this argument have anything to do with lease language similar to that in the instant matter. In G.M. Data Corp v Potato Farms, LLC, 95 AD3d 592, 944 NYS2d 102 (1st Dept, 2012), the Court held that: “The court’s calculation of damages properly included an award of reasonable attorneys’ fees and costs, as provided for in the parties’ agreements” [emphasis added]. In the instant matter, unlike G.M. Data, the parties’ lease does not provide for an award of attorneys’ fees. In Dinicu v Groff Studios Corp, 257 AD2d 218, 690 NYS2d 220 (1st Dept, 1999), the litigation concerned a co-op and a proprietary lease. The Court in Dinicu held that the plaintiff/shareholder was the prevailing party and entitled to an award of attorneys’ fees, citing RPL § 234. However, nowhere in the decision did the Court cite the relevant language in the proprietary lease regarding attorneys’ fees and there is no reason to believe that such language mirrored that which is in issue in the instant matter. In A.G. Ship Maintenance Corp v Lezak, 69 NY2d 1, 511 NYS2d 216 (1986), the matter concerned “malicious or vexatious litigation” and whether the responsible party could be directed to pay his/her opponent’s attorneys’ fees and costs as sanctions. Contrary to the Respondent’s claim, this Court did not find a 6 “right to attorneys’ fees under lease as an element of damages” (Respondent’s footnote # 29, p 57). This Court expressly held that: in the case now before us sanctions cannot be imposed because at the time the petitioner instituted the proceeding, there was neither a statute nor a court rule authorizing the imposition of sanctions for frivolous actions. In Access Point Medical, LLC v Mandell, 106 AD3d 40, 963 NYS2d 44 (1st Dept, 2013), the matter concerned a claim that an attorney breached of his fiduciary duty to his client. The plaintiff in Access Point was not seeking an award of attorneys’ fees and that issue never arose. In fact, in Access Point the plaintiff sought, inter alia, a return of the fees they had paid to the defendant, an attorney previously retained by plaintiff. Again, contrary to the claim of the Respondent in his brief that the Court in Access Point recognized “attorneys’ fees as element of damages” (Respondent’s brief, footnote # 29, p 57-58), the Court in Access Point merely stated that: In contrast, plaintiff’s demand for the return of attorneys’ fees they paid to defendants is, essentially, a claim for monetary damages. The calculated use of the term “disgorgement” instead of other equally applicable terms such as repayment, recoupment, refund, or reimbursement, should not be permitted to distort the nature of the claim so as to expand the applicable limitations period from three years to six. Finally, in Levitt v Brooks, 102 AD3d 547, 958 NYS2d 147 (1st Dept, 2013), the Court was concerned with whether the plaintiff law firm could collect its fees 7 from its client’s brother. As noted by the Court, the defendant brother had executed “an agreement to be jointly and severally liable for his brother’s legal fees.” In this context the Court in Levitt held that: The order of the Federal District Court, granting plaintiff’s motion to compel defendant’s brother to pay the outstanding attorney’s fees and directing the entry of judgment in plaintiff’s favor in the amount of $224,956.16, was prima facie proof of plaintiff’s damages in this case. As stated above, none of the decisions cited by the Respondent support his argument that the Petitioner could include an award of attorneys’ fees from Respondent in a lawsuit for damages.2 As shown above, 15(D)(3), the only clause in the lease which references “legal fees” does not provide that Respondent was required to pay Petitioner’s attorneys’ fees, thus triggering the reciprocal provisions of RPL § 234. As the lease herein does not include a provision for an award of attorneys’ fees any such claim by Petitioner in a lawsuit for damages would have to be dismissed. In his brief (p 58) the Respondent next argues that clause 15(D)(5) allows the Petitioner to “look directly and solely to the Tenant for recovery of its [attorneys’] fees.” Reading the entire clause refutes such claim. 15(D)(5) provides: 2. Indeed, any attempt by the Petitioner to obtain its attorneys’ fees in a separate court action for damages after the Respondent has been evicted would be dismissed on the basis that the Petitioner was splitting its cause of action. See, Burke v Crosson, 85 NY2d 10, 623 NYS2d 524 (1995) 8 If Landlord relets the Apartment combined with other space an adjustment will be made based on square feet. 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. Landlord is entitled to all of it. If Landlord relets the Apartment the fact that all or part of the next tenant’s rent is not collected does not affect Tenant’s liability. Landlord has no duty to collect the next tenant’s rent. Tenant must continue to pay rent, damages, losses and expenses without offset. [emphasis added] This paragraph clearly states that the Petitioner’s failure to collect rent from the next tenant will “not affect Tenant’s liability.” It states the obvious, if the next tenant fails to pay rent or the Petitioner fails to collect such rent there will be no mitigation. Importantly, the clause does not add to or subtract from the “Tenant’s liability” but clearly refers to existing liability under other sections of the lease. For example, paragraph 3 of the lease requires the Respondent to pay rent. Paragraph 7 requires that Respondent be responsible for the costs of removing illegal alterations. Paragraphs 8 and 9 allow the Petitioner to make needed repairs and charge Respondent for the costs. As stated above, nowhere in the lease does it provide that the Respondent is responsible or “liable” for Petitioners’ attorneys’ fees. As stated above, 15(D)(3) clearly does not make the Respondent responsible for the Petitioner’s attorneys’ fees. 15(D)(3) concerns mitigation only. Thus, contrary to the claim of the 9 Respondent, attorneys’ fees is not an expense included in the “Tenant’s liability” referenced in 15(D)(5). Ignoring the fact that RPL § 234 was intended to impart reciprocity in the award of attorneys’ fees the Respondent argues (p 64) that: whether as a practical matter the Landlord can ultimately get its money under the 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. Of course the fact that the Petitioner can never recover its own attorneys’ fees under 15(D)(3) has everything to do with the applicability of RPL § 234 in this matter. As this Court stated in Duell v Condon, 647 NY2d 773, 647 NE2d 96, 622 NYS2d 891 (1995): 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. Thus, as this Court stated in Duell, reciprocity is the cornerstone of RPL § 234. If the Petitioner cannot obtain an award of attorneys’ fees in this matter, either as a matter of law or in practical application of the lease, RPL § 234 should not allow the Respondent to obtain an award of his attorneys’ fees. Such result would be the opposite of what the Legislature intended. 10 The Respondent further argues in its brief that if the Petitioner cannot recover its attorneys’ fees under 15(D)(3) it cannot complain because Petitioner drafted the lease. Respondent misses the point. If the lease was drafted in a manner such that Petitioner can never recover its attorneys’ fees from Respondent, even if only “as a practical matter”, the reciprocal provisions of RPL § 234 cannot apply. The statute is intended to “level the playing field” and not to grant to the tenant a benefit the landlord does not have. The Respondent next refers to the decision of the Appellate Division, Second Department, in Casamento v Juaegui, 88 AD3d 345, 929 NYS2d 286 (2nd Dept, 2011) in claiming that 15(D)(3) allows the Petitioner to recover its attorneys’ fees by reletting the apartment. As pointed out in the Petitioner’s brief, the problem with this argument is that under 15(D)(3) the Petitioner in reality never “recovers” anything. Although the clause states that the rent paid by the next tenant will first be applied to pay the Petitioner’s expenses, in reality the rent paid by the next tenant will have to be applied to the next tenant’s own rent obligation. If the Petitioner actually took the rent paid by the next tenant and used it for some other purpose the next tenant would have his own legitimate complaint. The purpose of 15(D)(3) is to provide for mitigation to the Respondent if the Petitioner elects to relet the apartment. In application, such mitigation may be 11 reduced by any expenses incurred by the Petitioner in removing Respondent. Depending on the number of months left in the lease term and the rent received from the next tenant, the net result of 15(D)(3) will be that the Respondent will receive either full mitigation, partial mitigation or no mitigation. The Petitioner will receive nothing from the Respondent other than the rent he agreed to pay less any applicable mitigation. It is only by taking 15(D)(3) out of context, which the Appellate Division did in Casamento, that an argument can be made that the clause allows Petitioner to recover its attorneys’ fees. The clause is written awkwardly allowing for some confusion. But in application the only purpose of the 15(D)(3) is to provide mitigation to Respondent. If the Petitioner had intended to put an attorneys’ fees clause in the lease it would have done so in a manner that insured that it would receive the full rent the Respondent agreed to play plus an award of attorneys’ fees. This is how attorneys’ fees clauses work. It provides for legal fees on top of the rent owed by the tenant. In contrast, 15(D)(3) of the lease herein does not add to the Respondent’s rent in any manner, it either reduces the amount of rent owed by the tenant or is neutral in that regard. Contrary to the claims of the Respondent 15(D)(3) is simply not an attorneys’ fees clause. 12 POINT-III THERE IS NO PROVISION IN THE LEASE WHICH ALLOWS THE PETITIONER TO INCLUDE ITS ATTORNEYS’ FEES AS ADDITIONAL RENT OWED BY RESPONDENT The Respondent argues in his brief (p 71) that he is required to pay “other charges” under paragraph 3 of the lease and that “other charges” includes the “legal fees” referenced in clause 15(D)(3) of the lease. The Respondent is wrong. Paragraph 3 of the lease provides: Rent, added rent. The rent payment for each month must be paid on the first day of that month at Landlord’s address. Landlord need not give notice to pay the rent. Rent must be paid in full without deduction. The first month rent is to be paid when Tenant signs this Lease. Tenant may be required to pay other charges to Landlord under the terms of this Lease. They are called “added rent.” This added rent will be billed and is payable as rent together with the next monthly rent due. If Tenant fails to pay his added rent on time, Landlord shall have the same rights against Tenant as if Tenant failed to pay rent. If a check from Tenant to Landlord bounces, Tenant shall be charged $25 for processing costs as added rent. If rent or added rent is not received within 5 days of the due date, Landlord may charge the Tenant a late fee of $25.00. [emphasis added] Paragraph 3 clearly provides that “added rent” is comprised of “other charges” the Respondent is required to pay “under the terms of this Lease.” The Respondent argues that the “legal fees” referenced in clause 15(D)(3) of the lease constitute such “other charges.” However, as stated repeatedly above, 15(D)(3) 13 does not require the Respondent to pay anything. It is a mitigation clause and the only possible effect 15(D)(3) can have on Respondent’s rent obligation is a reduction. The Respondent in his brief has given clause 15(D)(3) all sorts of “magical powers” which are not ascertainable from the plain language of the lease. The only purpose of the clause is to provide mitigation to the Respondent, a reduction in the Respondent’s rent obligation. Respondent’s claim that the clause also allows the Petitioner to commence a separate court action against Respondent for its attorneys’ fees or to include such fees as “damages” or to include such fees as “added rent” requires a contortion of the plain language of the lease which is neither logical nor practical. POINT-IV THE PETITIONER IS ALLOWED TO RAISE ISSUES OF FACT BEFORE THIS COURT PURSUANT TO CPLR § 5501 In its decision the Appellate Division, First Department, for the first time held that RPL § 234 applied to the lease in this matter. The Appellate Division next held that the Respondent was entitled to an award of attorneys’ fees under the statute. In order to find that the Respondent was entitled to an award of attorneys’ fees the Appellate Division was required to first find that the Respondent was the “prevailing party” in the litigation. This last finding is a finding of fact made by the 14 Appellate Division for the first time in this matter and under CPLR § 5501 the Petitioner has the right to have such finding of fact reviewed by an appellate court at least once, which is why this Court is entitled to review such finding. The Respondent in his brief (p 73) wrongly states that the Petitioner before the Appellate Term “made no argument that the tenant breached the lease.” In fact, the Petitioner has repeatedly raised this argument including at the Appellate Term and at the Appellate Division. In its notice of termination the Petitioner expressly stated that: Without permission of the Landlord and in violation of paragraph 7 your lease, you have altered the Subject Apartment by installing an entire new electrical system in the kitchen including, wiring, switches, outlets, a distribution panel, ceiling fixtures and under-counter lighting. (R: 27) See also Notice to Cure (R: 475), Notice of Termination (R: 473), and Petition (R: 472). In its decision the Civil Court expressly held that RPL § 234 did not apply and that the Respondent was not entitled to an award of attorneys’ fees under such statute. (R: 19) Thus, the issue of “prevailing party status” under RPL §234 was not considered or ruled on by that Court. In its Appellate Term brief, however, the Petitioner did make clear that the issue of the Respondent’s substantial violation of the lease was raised. In its first argument in its Appellate Term brief the Petitioner stated that: 15 THE RESPONDENT VIOLATED THE TERMS OF THE LEASE BY MAKING ALTERATIONS TO THE SUBJECT APARTMENT WITHOUT OBTAINING THE PRIOR WRITTEN CONSENT OF THE APPELLANT The Petitioner’s entire first argument in its Appellate Term brief concerned the Respondent’s violation of paragraph 7 of the lease. Moreover, the Respondent cross-appealed the Civil Court’s Order to the Appellate Term and claimed in his brief that RPL § 234 applied. In response to the Respondent’s Appellate Term cross-appeal, the Petitioner did raise the issue of “prevailing party status” under RPL § 234 and expressly stated the Respondent’s violation of the lease prevented his from being considered the prevailing party: Moreover, even if Respondent were found by this Court to be the prevailing party and the lease provided for an award of attorneys’ fees, the Respondent’s admitted violation of the lease would preclude his entitlement to attorneys’ fees. In Ram I, LLC v Stuart, 248 AD2d 255, 668 NYS2d 888 (1st Dept, 1998), the landlord was unsuccessful on its holdover proceeding based upon unauthorized alterations as the court found that the “tenant’s replacement of a 27- year old stove with a new stove was merely a technical violation of the ‘no alterations’ clause of the parties’ leases . . .” Notwithstanding the landlord’s failure to succeed on its central relief sought, the Appellate Division denied the tenant’s request for attorneys’ fees holding, “denial of tenants’ application for counsel fees where tenants breach of the lease, albeit minor, was established, was also appropriate.” 16 See also, First Avenue Village Corp v Harrison, 17 Misc3d 20, 844 NYS2d 544 (AT, 1st Dept, 2007) and Giddings v. Waterside Redevelopment Co., NYLJ, 6/30/98, p 26, col 1 (AT, 1st Dept.). Similarly, the issue of “prevailing party status” and the Respondent’s violation of the lease was also raised and argued by the Petitioner in its brief before the Appellate Division. In its brief the Petitioner argued to the Appellate Division in its third argument point: EVEN IF THIS COURT ELECTS NOT TO FOLLOW ITS PRECEDENTS OF OXFORD AND MADISON-68 THE APPELLANT WOULD STILL NOT BE ENTITLED TO AN AWARD OF ATTORNEYS’ FEES HEREIN AS HE HAS ADMITTED SUBSTANTIALLY BREACHING HIS LEASE As with it did before the Appellate Term, before the Appellate Division, the Petitioner again cited Ram I, LLC v Stuart, 248 AD2d 255, 668 NYS2d 888 (1st Dept, 1998) and other court decisions in support of its argument that the Respondent could not be the prevailing party as he had breached his lease. Thus, the Respondent’s contention that the Petitioner did not preserve for appeal the issue of “prevailing party status” under RPL § 234 is either disingenuous or simply wrong. The Petitioner has raised the issue at every opportunity it had to do so. Also wrong is the Respondent’s claim that: “The Landlord did not appeal from the Appellate Term Order, and therefore prevailing party status was a 17 conclusive finding.” The Respondent also argues that “the Appellate Division did not make a finding of fact on the appeal” and that 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.” In fact, like the Civil Court, the Appellate Term also held that RPL § 234 was inapplicable and therefore made no finding as to which party was prevailing.3 (R: 5-7) The finding of “prevailing party” was not made until the Appellate Division issued its decision which is presently before this Court. Indeed, where both the Civil Court and the Appellate Term held that RPL § 234 was not applicable there was no opportunity for either Court to make a finding of fact as to “prevailing party” status under the statute. Certainly the Respondent was prevailing with respect to getting the holdover proceeding dismissed following the Civil Court trial. However, “prevailing party” status under RPL § 234 is an entirely different factual issue as this Court recognized in Nestor v McDowell, 81 NY2d 410, 599 NYS2d 507 (1993) and 433 Sutton Corp v Broder, 22 NY3d 1161, 984 NYS2d 636 (2014). Determining “prevailing party” status is clearly a separate factual decision different from the 3. The Respondent in his brief (p 74) cites this Court’s decision in Burke v Crosson, 85 NY2d 10, 623 NYS2d 524 (1995) in support of this claim. However, nothing in Burke appears remotely connected to the Respondent’s argument. 18 result of the lawsuit. As stated by the Court in Excelsior 57th Corp v Winters, 227 AD2d 146, 641 NS2d 675 (1st Dept, 1996): The basic issue to be determined on this appeal is which party should be accorded the status of “prevailing party”, thereby allowing recovery of attorneys’ fees. We have previously stated that such a determination requires an initial consideration of the true scope of the dispute litigated, followed by a comparison of what was achieved with that scope [citation omitted]. The Respondent next argues that he “was the clear prevailing party” and that he did not breach his lease. According to the Respondent (p 75) “[b]oth the Civil Court and the Appellate Term held that the Tenant did not breach the Lease.” In fact, in its decision the Appellate Term expressly held: We agree, essentially for reasons stated by Civil Court, that landlord is estopped from enforcing the “no alterations” provision of the governing lease agreement (see Haberman v Hawkins, 170 AD2d 377 [1991]) * * * [emphasis added] (R: 6) In Haberman v Hawkins, 170 AD2d 377, 566 NYS2d 279 (1st Dept, 1991), cited by the Appellate Term in its decision, the Court stated: The violation of an express covenant not to make any alterations without the landlord’s permission is a violation of a “substantial obligation” of the tenancy. [citations omitted]. Nevertheless, we find that the tenant presented sufficient evidence to support the affirmative defense of estoppel and waiver based upon the landlord’s having given his prior consent to the replacement of the windows. 19 Thus, in stating that the Petitioner herein was “estopped” from enforcing the “no alterations” clause and in citing Haberman for that holding the Appellate Term affirmed that the Respondent did in fact breach his lease.4 If the Respondent had not breached his lease there would be no reason to estop the Petitioner from enforcing the “no alterations” clause.5 Thus, contrary to the claim of the Respondent in his brief the Appellate Term did not find that the Respondent had not breached his lease but expressly made the opposite finding. Similarly wrong is the Respondent’s claim in his brief (p 76) that the Appellate Term affirmed the “Trial Court’s finding that the proceeding was without basis and retaliatory.” In fact, the Appellate Term held: In light of this determination, and in the absence of any competent showing by tenant that he sustained compensable damages as a result of landlord’s unsuccessful prosecution of its possessory claim, we need not and do not address the merits of tenant’s affirmative defense of retaliatory eviction. [emphasis added] 4. The Petitioner does not dispute that the Civil Court found that “Respondent therefore did not breach a substantial obligation of his tenancy.” However, clearly the Appellate Term did not accept this finding and held for the Respondent upon the alternative basis that Petitioner was “estopped” from enforcing the no alterations clause. 5. The Respondent in his brief (p 78) states that “a finding of estoppel does not mean that the Tenant breached his lease as the Landlord argues, it means that Landlord through its conduct is precluded from claiming that the lease was breached” citing N & S Décor Fixture Co v V J Enterprises, 57 AD2d 890, 394 NYS2d 278 (1st Dept, 1977). In N & S Décor, however, the Court actually held that the landlord was “estopped from claiming a termination of the lease.” There was no finding in N & S Décor that the landlord was estopped “from claiming that the lease was breached” as the Respondent wrongly alleges. 20 (R: 6-7) In his brief (p 77) the Respondent recites a litany of essentially his own findings of fact and, based thereon, contends that the “equitable powers” of the Court should be exercised in his favor. In fact, the Civil Court made only two factual findings of fact, the first being that “petitioner’s authorized agents specifically authorized respondent to make all of the alterations he made in his apartments . . . .” The second factual finding of the Civil Court was that “petitioner commenced this proceeding in retaliation for respondent’s successful rent overcharge claim.” (R: 19) All other “findings of fact” claimed by the Respondent in his brief are wholly his own opinion. The Petitioner did not appeal the Civil Court’s finding that the Respondent had received authorization from Petitioner’s agents to make the alterations. The Petitioner made the calculated decision that an appeal of this issue was not worth the cost. The Petitioner did successfully appeal the finding of the Civil Court that the holdover proceeding was commenced in retaliation. As stated above, the Appellate Term expressly held that “we need not and do not address the merits of tenant’s affirmative defense of retaliatory eviction.” In determining “prevailing party” status the only currently existing “findings of fact” are that (1) the Respondent breached a substantial obligation of his lease by doing major alterations without obtaining the Petitioner’s written consent and 21 that (2) the Petitioner’s agents had given the Respondent permission to do the alterations. The Respondent’s reference to the Court’s use of “equity” in this matter in relation to attorneys’ fees is a red herring. Determining “prevailing party” status does not involve the Court’s equity powers.6 It is a necessary finding of fact to determine which party, if any, is entitled to an award of attorneys’ fees under the lease. The Appellate Division made such factual finding, for the first time, and the Petitioner is seeking appellate review of that finding by this Court. POINT-V THE RESPONDENT DID NOT FILE AN APPEAL IN THIS MATTER AND CANNOT RAISE HIS OWN ISSUES Although the Respondent did not move for permission or file a cross-appeal in this matter he seeks to raise his own issues unrelated to the issues raised by the Petitioner in its appeal. Thus, the Respondent argues in his brief (p 85) that this Court should grant him damages, in the form of attorneys’ fees and costs, under the provisions of RPL § 223-B. According to the Respondent: 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. 6. The Respondent fails to cite any Constitutional provision or statute which would allow this Court to exercise equitable powers in the instant matter. 22 It should be noted that the Petitioner did not file the instant appeal with this Court as of right. The Petitioner was required to and did seek permission from the Appellate Division for that purpose pursuant to CPLR § 5601(b)[2](i). Permission was granted solely for the purpose of reviewing the application of RPL § 234 in this matter. The Respondent could have but chose not to seek permission to appeal his own separate issue of the application of RPL § 223-b. This Court has repeatedly held that it would only consider those issues raised in the appeal. As stated by this Court in 511 West 232nd Owners Corp v Jennifer Realty Co, 98 NY2d 144, 746 NYS2d 131 (2002): At the onset, we note a jurisdictional limitation on the scope of this appeal. Plaintiffs and plaintiff’s amici, including the Attorney General, argue that the Attorney General does not have exclusive jurisdiction to prosecute Martin Act violations and that the Appellate Division erred in holding that plaintiffs had no standing to prosecute their fraud causes of action. Plaintiffs also argue that the Appellate Division wrongly dismissed the complaint’s fraud claims as duplicative of the contract claims. These issues are beyond this Court’s review because plaintiffs failed to cross-move for leave to appeal. We will generally deny affirmative relief to a nonmoving party (see Hecht v City of New York, 60 N.Y.2d 57, 61-62, 467 N.Y.S.2d 187, 454 N.E.2d 527 [1983]), even where the Appellate Division broadly certifies the propriety of its order for review by this Court (see Graubard Mollen Dannett & Horowitz v Moskovitz, 86 N.Y.2d 112, 118, 653 N.E.2d 1179, 629 N.Y.S.2d 1009 & n 2 [1995]). 23 The Respondent did raise the issue of the application of RPL § 223-b before the courts below. At that time the Petitioner presented a vigorous and thorough argument as to why RPL § 223-b did not apply. In its decision the Appellate Term agreed with Petitioner (R: 5-7) and the Appellate Division did not reverse the Appellate Term on this issue(R: 556-580). Although the Respondent lost on the issue of the application of RPL § 223-b below he elected not to move for permission to appeal the issue to this Court. Relief under RPL § 223-b is completely different and apart from any relief applicable under RPL 234.7 RPL § 223-b concerns retaliation and any relief the tenant is due if retaliation is found is ascertained from proven damages. There is no provision for an award of attorneys’ fees in RPL § 223-b. In contrast, RPL § 234 7. RPL § 234 solely concerns the insertion of an attorneys’ fees clause in the lease. RPL § 223-b does not involve attorneys’ fees and the remedies provided therein are left to the discretion of the court. As stated in RPL § 223-b, with respect to available remedies: 3. A landlord shall 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. 4. In any action to recover real property or summary proceeding to recover possession of real property, judgment shall be entered for the tenant if the court finds that the landlord is acting in retaliation for any action set forth in paragraphs a, b, and c of subdivision one of this section and further finds that the landlord would not otherwise have commenced such action or proceeding. Retaliation shall be asserted as an affirmative defense in such action or proceeding. The tenant shall not be relieved of the obligation to pay rent for which he is otherwise liable. 24 only the terms of the parties lease and is not a statute concerning wrong-doing by any party. RPL § 234 merely provides that if the lease provides for an award of attorneys’ fees for the landlord, the same clause must be deemed to be included in the lease on behalf of the tenant. If the Respondent wanted to pursue relief under RPL § 223-b he was required to do so by seeking permission to appeal to this Court8, as the Petitioner did with respect to RPL § 234.9 Finally, the Respondent claims in its brief that: By holding that a court may never award attorney’s 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. 8. The Respondent in his brief (p 85) admits that he was aggrieved by the decision of the Appellate Term. According to the Respondent: “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.” 9. If this Court were to review the issue, the Respondent strongly believes it would be successful. Firstly, there is no basis for asserting a counter-claim for damages based upon RPL § 223-b in a summary proceeding. The statute expressly provides that it is an “affirmative defense”. Secondly, the Respondent asserted the claim of retaliatory eviction more than one year after he filed his complaint with the DHCR. A retaliatory eviction claim under RPL § 223-b must be made within one year of the DHCR complaint. See, e.g., Munoz v 221 West 16th Realty, LLC, 24 AD3d 112, 804 NYS2d 248 (1st Dept, 2003). 25 As with RPL § 223-b, the Respondent failed to preserve this issue for appeal. The Respondent was required to cross-move for permission to appeal if he wanted to contest the decision of the Appellate Term. The Respondent has raised the issue of retaliatory eviction under 223-b and his demand for equitable damages to either distract attention from the actual legal issues raised in this appeal or to prejudice the Court by again claiming (p 89) that the Petitioner’s actions were “remarkably venal, vicious, dishonest and malevolent.” For the record, the Respondent did major alterations in the apartment, causing violations to be placed by the NYC Department of Buildings, without obtaining the prior written consent of the Petitioner as required by the lease. At trial the Respondent claimed that he was given oral permission to make such alterations on the same day he executed the lease. Although Respondent’s testimony of such oral permission should have been prohibited at trial by the Parol Evidence Rule, it was allowed in by the Civil Court and, based thereon, the Civil Court held in favor of the Respondent. CONCLUSION The lease language in issue in the instant matter does not provide the Petitioner with an award of attorneys' fees and does not trigger the reciprocal provisions of RPL § 234. Even if RPL § 234 did apply in this matter this Court should find that the Respondent was not the "prevailing party" due to Respondent's substantial breach of the lease. Dated: New York, New York July 10, 2014 Respectfully submitted, KUCKER & BRUH, LLP For Petitioner-Appellant 747 Third Avenue , New York 10017 9-50 0 ~ 26