Atty fees

[tgeron]

My lease had a clause about agreeing to pay attorney fees that result from any action on LL's part. Now I settled an eviction proceeding brought against me for an illegal sublet. (I agreed to give up my rent controlled apartment at the end of the lease). Now my question is, am I on the hook for atty fees?

I am assuming that to actually get atty fees you would need to win a case, though the language in the lease doesn't really say this.

In any event let this be a cautionary tale to make sure you cross this clause off any lease you sign.

[TenantNet]

If you didn't have an atty, then get one and move to set aside the stip and keep your rent controlled unit (was it rent controlled or rent stabilized? Most RC units don't have leases).

If you had an attorney, then who was it? What attorney in their right mind would tell a client to give up a RC/RS unit for a sublet case, especially when there are ways to combat this. Tell us the atty if you had one.

As for atty fees, only a judge can order atty fees. It could also be argued that it was a settlement, not a decision, and there are no "prevailing parties." The clause may make it seem it works only one way, but if tenants win, then the LL can be on the hook for the tenant's atty fees. Again, only if ordered by a court. If the LL is attempting to collect atty fees without a court order, then his/her atty could be in deep trouble.

[Aubergine]

"What attorney in their right mind would tell a client to give up a RC/RS unit for a sublet case, especially when there are ways to combat this."

For one, an attorney whose client had permanently or indefinitely relocated and was in fact illegally subletting, with only a vague desire to retain a connection with the apartment "just in case." At trial that client would probably lose, incurring attorneys' fees, might be unable or unwilling to cure, and might have lease obligations somewhere else to worry about. This is not a rare situation. Not all L-T battles are worth fighting.

To answer the OP's question, a stipulation generally results in a waiver of attorneys' fees by either party unless that is provided for in the stipulation.

[TenantNet]

Not necessarily so. By the OPs meniton of a lease, there's a good chance the unit is RS, not RC. And it's a sublet case, not a non-primary case, so it's entirely curable. While the OP does not say one way or another, I'm assuming he or she would want to hold on to the unit if possible. If the OP wanted to just leave, they wouldn t have stretched it into court. Yes, I've seen tenant who otherwise move and want to hold on to the place for a year or two just in case things don't work out, but in such cases where the LL gets aggressive they usually decide to either bolt, to return or make the sublet legal--and they ususally do so on the Notice to Cure and before the Petition comes. Yes, not all battles are worth fighting, but it appears the issue of atty fees did not enter into consideration before or even during the court proceeding. There are TOO many cases where tenants are pressured to give up rights to their apartment when that's not what they really want to do. My original response was based on that more common situation.

To repeat, atty fees can only be collected when there's a court order, or - as Aubergene says - when a stip provides for such fees. But those stips would also need to be so-ordered by the Court.

[tgeron]

I guess I should provide more background. It was RS not RC. I had more or less moved out when there was 10 months left on the lease, and a friend moved in. I was served with the notice to cure and I tried to ask LL atty's how to cure or at least make the sublet legal. I was told by the LL atty that the only way to resolve this was to stretch it out and get a final order from the court.
The stip says nothing about lawyer fees. So does this mean that I don't owe them? What am I to do when the LL says that I do owe them ($800 over the security deposit)?
And by the way, I did not have lawyer, another mistake that I will be certain not to make in the future.

[TenantNet]

Thanks for the update. So it appears you are one of those who intended to move and not return, and therefore set up a sublet. While subletting is legal with the LL's consent, which he can't unreasonably deny, they often do putting tenants into a Catch-22. However, if your intent was to not return, the subletting would not have been the proper course.

But, OTOH, the LL's attorney was incorrect, and he/she likely did a disservice to his/her client, the LL. The options are to make it legal, if possible (which the LL can do with a simple letter or by dropping the matter irresepctive of your intentions), or for the tenant to a) move back in as subletting is curable, or b) leave or c) seek to have the LL assign the lease to a new tenant, maybe the person to whom you are subletting (but usually with a vacancy increase). By telling you that you must go through the court process, the LL atty is driving up his/her own fees at the expense of the LL and possibly you. He/she may have committed malpractice.

If the stip says nothing about atty fees, then they have essentially waived that claim unless they come back and make a motion. Besides, atty fees are usually for the "prevailing party" and it's debatable who really prevailed. There was no trial and no findings.

The security deposit is a separate issue. If the LL holds onto it, then you should seek to reclaim it. OTOH, as discussed many places on this forum, there may be reasons to withhold the last month's rent to recover the deposit if you have reason to believe the LL might withhold it. It's not necessaril;y "legal" to do this, but from a practical matter, it's commonly done. That however, does not relieve a tenant of liability for actual damages (see other discussions for that).

If the LL asks for atty fees, ask him for a copy of a court order authorizing the fees.

[tgeron]

Thanks alot for your response, very helpful. My inclination and hope was that I wasn't on the hook for the atty fees, its just that looking at the clause in the lease "You must reimburse...any legal fees and disbursements for legal actions or proceedings brought by owner against you because of lease default...." This clause makes it seem like awarding atty fees are automatic whenever they are incurred by the LL.

As for the LL's atty. From what it seemed to me, it was the LL himself that was really driving the process to make it go all the way to court. But who knows what kind of advice LL was getting.

In light of how this experience has evolved I foresee a minor battle in getting my deposit back. I have already paid up the last month's rent. So if and when I get to the situation where the LL is claiming that I owe him the difference between the atty fees and the deposit, and I am trying to get back my deposit, would I be in housing court or small claims court?

[TenantNet]

Recovering deposits would not be in Housing Court. That would be through the AG's office, or small claims unless the amount is over what small claims allows. Do the research on deposits on this forum and the web site.

[Anna]

Q: "So if and when I get to the situation where the LL is claiming that I owe him the difference between the atty fees and the deposit, and I am trying to get back my deposit, would I be in housing court or small claims court?"

For the third or fourth time: your LL waived any potential claim for attys fees for the illegal sublet by NOT mentioning them in the stip, which is a contract.

Did this stip contain the usual phrase "each hereby releases the other from any and all claims and/or obligations that the releasing party has, ever had, or may have, against the other, under or arising from Respondent's occupancy of the Apartment and/or the Sublease, through the date hereof" or something similar?

IF YES:

1. then LL affirmatively waived any right to claim attys fees.

2. you may have waived your right to claim your security deposit if the stip was signed AFTER the last month you paid rent for: e.g.: rent paid for Sept, subtenant vacates by 9/30; stip signed in Oct.

[tgeron]

So as expected the LL still claims that as according to the lease I owe him the atty fees, even though these were not awarded to him on the stip. He claims that his lawywers agree that the stip does not free me from owing any atty fees. I suspect that he is just trying to pocket my deposit for today he said that if I dont demand my deposit back he would not pursue the extra amount of atty fees over the deposit amount.

Assuming that his attorney's did in fact advise him that he is still entitled to atty fees, are his attorney's simply wrong or are they violating some sort of ethical code?

What should my next step be?

SHould I contact his lawyers directly?

Can I just demand the deposit back and tell him to try and make a claim for atty fees if he wishes (I ask this under the theory that the deposit has nothing to do with atty fees that may be awarded under the lease).

Do I have to get a lawyer?

[Aubergine]

From Andrew Scherer, Residential Landlord - Tenant Law in New York § 16:46 (2006):

§ 16:46. Fees available only upon "ultimate outcome"--No attorneys' fees if not provided for in stipulation of settlement

When a matter is resolved by a stipulation of settlement that fails to address the issue of attorneys' fees, a party may not subsequently seek attorneys' fees for that proceeding. If the parties intend to have a claim of attorneys' fees survive a stipulation of settlement, the claim should be expressly preserved in the agreement. Rossmill Assocs v. Curtis, NYLJ 2/26/99 26:2 (App. Term 1st Dep't); Lewis v. Garber, NYLJ 2/19/92 21:2 (App. Term 1st Dep't); Arieh v. Meckler, NYLJ 6/20/91 25:5 (App. Term 1st Dep't); Sacchetti v. Rosen, NYLJ 3/6/02 19:2 (Civ. Ct. N.Y. Co.); Harmir Realty Co. v. Ravinett, 2002 WL 1880273 (App Term, 1st Dept 2002).

If the issue of attorney's fees could not be raised at the time of the settlement due to the lease's terms, however, an "implied waiver" is not present despite the stipulations' silence as to legal fees. Acierno v. Faldich, 193 Misc. 2d 144, 748 N.Y.S.2d 470 (Dist. Ct. 2002), aff'd, 4 Misc. 3d 98, 2004 WL 1431401 (N.Y. App. Term 2004).

Sacchetti v Rosen, NYLJ, March 6, 2002, at 19, col 2 (Civ Ct, NY County, Elsner, J.):

New York Law Journal, Wednesday, March 6, 2002

Court Decisions
First Judicial Department
Civil Court
New York County
Housing Part H

SACCHETTI V. ROSEN

The Petitioners herein move for attorneys fees incurred as the result of successfully opposing an appeal by Respondent of this Court's order dated October 13, 2000. The Order issued after a hearing, granted Petitioners' motion for leave to execute on a warrant issued pursuant to a stipulation in a holdover proceeding. Respondent opposes said motion.

Procedural History

On March 27, 2000, the parties to the proceeding entered into a stipulation of settlement which resolved claims of attorneys fees through that date. The stipulation awarded Petitioners a final judgment of possession and warrant of eviction which was stayed through March 31, 2001, provided Respondent did not engage in conduct which adversely effected the other tenants in the building. Upon compliance with the terms of the agreement, the proceeding would be deemed discontinued and the warrant vacated.

The stipulation specifically stated that in the event of a breach, no further cure would be allowed and that Petitioners would be entitled to execute on the warrant of eviction. The stipulation was silent as to attorneys fees incurred in connection with a successful or unsuccessful claim of breach of the agreement.

A short time later, Petitioners moved to execute on the judgment and warrant based upon an alleged breach of the agreement. A hearing was conducted over a period of several days. The Court found that Petitioners established a documented case of nuisance and granted Petitioners' motion for leave to execute on the judgment and warrant.

Respondent appealed this Court's order to the Appellate Term, First Department. By order and Decision dated September 25, 2001, the Appellate Term affirmed the trial courts order, allowing Petitioners to execute on the judgment and warrant.

Legal Analysis

The law is clear that where a stipulation of settlement is silent as to fees and settles a proceeding in its entirety, a party may not seek fees incurred for legal action taken prior to the date of the agreement absent a reservation of rights. This proposition applies even when one party violates the terms of the stipulation at issue. See generally, Lewis v. Garber, NYLJ 2/19/92, p. 21 col. 2 (App. Term 1st Dep't.); Arieh v. Meckler, NYLJ 6/20/91, p. 25 col. 5 (App. Term 1st Dep't.); Rossmill Associates v. Curtis, NYLJ 2/26/99, p. 26 col. 2 (App. Term 1st Dep't.) Courts have also held that a party may be awarded prevailing party status pursuant to an attorneys fees provision in a lease whether the matter is resolved by trial or by stipulation wherein a party secures the central relief sought. Nestor v. McDowell, 81 NY2d 410, 415-416 (1993).

In this instance, the Court ordered stipulation did not provide that the prevailing party in a hearing arising from an alleged breach of said stipulation, would be awarded attorneys fees. Given that the March 27, 2000 stipulation was the second stipulation of settlement in the proceeding, a breach was a forseeable circumstance and would certainly have been contemplated by the parties, who were well represented by counsel when the agreement was executed. As such, Petitioner is prevented from obtaining attorneys fees for those legal costs incurred for the hearing which resulted from a breach of the March 27, 2000 stipulation.

What could not have been anticipated at the time the stipulation was executed, is that Respondent would appeal an adverse decision by the trial court. The terms of the stipulation should not be applied forward to cover unforseeable circumstances, especially when the costs incurred were solely due to Respondent's decision to seek relief from a higher court. The fees incurred as a result of this strategy should be treated differently that those incurred for the hearing. Furthermore, the fees incurred by Petitioners during the course of the appeal did not result from the Respondent's breach of the stipulation, but rather Respondent's effort to maintain her tenancy in the face of an adverse decision by the trial court.

Conclusion

Based upon the applicable provisions of the lease together with Real Property Law Section 234, Petitioners are awarded costs and legal fees incurred in connection with opposing Respondent's appeal of the Order and Decision of this Court dated October 13, 2000. The matter is set down for a hearing on March 5, 2002, to determine the reasonable value of same.

This constitutes the order and decision of this Court.

<small>[ January 18, 2006, 09:45 PM: Message edited by: aubergine. ]</small>

[Downtown]

Make a copy of aubergine's post and include with letter (sent RRR) to LL requesting full return of deposit within 10 business days or you will pursue this legally.
If no reply and under $5,000 file in Small Claims.
Bring proof of deposit, stip and letter to LL (with cited cases).