Tenant Wins Legal Fees Against Landlord in Panel Ruling
Taylor's lease said, if the lease is terminated as a result of the tenant's default, the landlord "may relet the Apartment and anything in it," and that "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." Those expenses include legal fees, according to the lease.
Schneider awarded Taylor fees under §223-b, but ruled that he was not entitled to fees under §234.
On appeal, the Appellate Term, First Department, upheld the dismissal of the proceeding, but reversed Schneider's fee award.
The Appellate Division panel on Tuesday agreed with the Appellate Term that Taylor was not entitled to fees under §223-b, but ruled that he was entitled to them under §234.
Renwick wrote that, even though the lease did not include any obligation for the tenant to pay the landlord's fees, it "literally fits within the language of Real Property Law §234" by allowing the landlord to take back an apartment and recover fees by re-renting it, and that as a remedial statute, the law must be "accorded its broadest protective meaning consistent with legislative intent."
Renwick cited the First Deparment's 1992 decision in Bunny Realty v. Miller, 180 AD2d 460, which awarded fees to a tenant in light of a similar lease provision.
Renwick noted that Tuesday's decision resolved an "apparent conflict" between Bunny Realty and two 2009 First Department decisions.
In one of those, Oxford Towers Co., LLC v. Wagner, 58 AD3d 422, a unanimous panel that also included Renwick and Moskowitz, ruled that an almost identical lease provision was "not the type of provision covered by Real Property Law §234." That case was distinguishable, Renwick said, because the underlying dispute was not triggered by breach of the lease, but of a later agreement. The court's statement about the lease provision in that case was therefore dicta, she wrote.
In the second case, Madison-68 Corp. v. Malpass, 65 AD3d 445, a First Department panel reversed an award of attorney fees pursuant to an identical lease provision, citing Oxford Towers. Renwick said that case did not explicitly address Bunny Realty, and thus did not overturn it.
DeGrasse, who sat on the panel in the Madison-68 decision, said that the lease provision did not actually allow the landlord to recover fees from the tenant, but "merely provides for an offset of rents collected in the event of a reletting."