East Eleventh Street Associates v. Breslow

Oct 17, 1997
Versions:174 Misc. 2d 994
669 N.Y.S.2d 133
1997 N.Y. Misc. LEXIS 647

Lead Opinion

OPINION OF THE COURT

Per Curiam.

Order entered July 10, 1996 affirmed, with $10 costs.

Having prevailed on the merits of the underlying nonpayment proceeding, the petitioner landlord seeks recovery of attorney’s fees on the basis of an attorney’s fee provision which, while appearing (inconspicuously at paragraph 20 on the fourth of five pages) in the parties’ 1985 stabilized renewal lease, was undisputedly absent from the parties’ initial 1982 stabilized lease. We agree with Civil Court that the landlord’s inclusion in the renewal lease of a new provision purporting to authorize its recovery of attorney’s fees violated the requirements of Rent Stabilization Code (9 NYCRR) § 2523.5 (a) that any renewal lease be on the same terms and conditions as the expiring lease, and was of no legal effect (see, Matter of David v New York City Conciliation & Appeals Bd., 59 NY2d 714). The counsel fee provision contained in the renewal lease clearly sought to create a new tenancy obligation not expressed in the earlier lease, and thus was contrary to the statutory framework. This is so despite landlord’s argument that any right to attorney’s fees conferred upon it in the renewal lease would be made reciprocal to the tenant by statute (see, Real Property Law § 234). A stabilized tenant is entitled to a renewal lease substantially similar to the expiring one, and may not be forced to accept any new term or condition, even one that potentially may prove to be a benefit to the tenant.

It need be emphasized that the record provides no support for a finding that the tenant somehow accepted or ratified the counsel fee provision added by the landlord, sub rosa, to the renewal lease. Absent is any indication that the landlord directed the tenant’s attention to the presence of the attorney fee provision prior to execution of the renewal lease or, indeed, at any time. ”[I]t should not be necessary for a tenant to do a microscopic analysis of the new lease, together with a study of the law of landlord and tenant * * * in order to determine whether the terms and conditions offered are [as favorable as those in] the expiring one.” (Mehlman Mgt. Corp. v Meyers, 51 AD2d 949, 950, lv denied 40 NY2d 807.) Nor is it of any mo*996ment that tenant is an attorney, since "the recognized inequality at the bargaining table between landlord and tenant” (Cier Indus. Co. v Hessen, 136 AD2d 145, 150) obtains regardless of the tenant’s knowledge of the law. Further, to the extent that this tenant was aware of the attorney fee provision at the time of the commencement of the underlying nonpayment proceeding, her litigation conduct negates any inference of a "ratification” of such a provision. Significant in this regard is the fact that the tenant, while opposing the landlord’s entitlement to attorney’s fees, did not affirmatively seek a recovery of attorney’s fees of her own, either in her verified answer or in her renewed submissions on the parties’ respective motions for summary judgment.

Finally, we do not read the reservation of rights provision of the parties’ September 14, 1995 stipulation as independently creating a contractual basis for attorney’s fees not otherwise available. The handwritten stipulation merely provided that "Each party reserves their [sic] right to legal fees”. Properly construed against the landlord, its drafter,, that language should not be stretched beyond its obvious, albeit inartfully expressed intention: to preserve and postpone resolution of any viable claim for legal fees that either side may have possessed.





Dissenting Opinion

McCooe, J. P.

(dissenting). I respectfully dissent. The issue is not whether a rent-stabilized tenant can be forced to accept a renewal lease with a different provision than the expired lease. The law is clear that she cannot. The issue is whether a tenant can accept the benefit of the new provision, ratify it and more than 10 years later seek to disaffirm the provision when the benefit is unavailable to her. The second issue is whether the parties can contract to pay legal fees, independent of the lease.

The 1985 renewal lease signed by the tenant, an attorney who has represented herself throughout this proceeding, authorized attorney’s fees which provision was not present in the prior lease. No objection was made to this provision.

The parties on September 14, 1995 during the summary proceeding entered into a partial stipulation of settlement, apparently in open court, leaving open various issues including attorney’s fees. Paragraph 2 of the stipulation states that "Each party reserves their [sic] right to legal fees.”

The petitioner has established its right to recovery on two theories. First, on the fee provision in the renewal lease. The tenant not only failed to object to the fee provision in the renewal lease for more than 10 years but has affirmatively sought *997to utilize the same fee provision to which she now objects by seeking attorney’s fees. The stipulation was an acknowledgment of the reciprocal right to attorney’s fees and a knowing waiver of any right to object. (Blum v Graceton Estates, 228 AD2d 274; Kent v Bedford Apts. Co., 237 AD2d 140.)

A tenant may not waive the benefit of any provision of the Rent Stabilization Code and the tenant has not. A fee provision is a generally accepted neutral clause found in most leases which authorize recovery to the prevailing party. Rather than seeing this clause as the loss of a benefit, the tenant treated it as an added benefit not present in the prior lease, which would give her the right to recover attorney’s fees.

The second basis for the recovery of attorney’s fees is the stipulation. A stipulation is a contract and parties can agree to payment of attorney’s fees to the prevailing party. (Matter of A. G. Ship Maintenance Corp. v Lezak, 69 NY2d 1, 5.) The language that "Each party reserves their [sic] right to attorney’s fees” is a term of the contract which clearly shows an intent to provide for attorney’s fees. (Iacobacci v McAleavey, 222 AD2d 406, 407.) The controlling word is "right” which in common use means an entitlement. The Rent Stabilization Code is not implicated in this independent agreement between two attorneys entered into during litigation.

The tenant, an attorney, took advantage of the fee provision when she thought she would be successful. Once she lost, she disclaimed it. She should not have it both ways.

The order should be reversed and the matter remanded for an assessment of legal fees by the petitioner.

Freedman and Davis, JJ., concur; McCooe, J. P., dissents in a separate memorandum.