Marbru Assoc. v White

[*1] Marbru Assoc. v White 2009 NY Slip Op 51520(U) [24 Misc 3d 1219(A)] Decided on July 14, 2009 Civil Court Of The City Of New York, New York County Lebovits, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on July 14, 2009
Civil Court of the City of New York, New York County

Marbru Associates and the Berkeley Associates, L.P., , Petitioners,

against

William White, Ondrea White and Michael Huchzo, , Respondents.



099011/08



Seyfarth Shaw LLP, New York City (Jerry Montag of counsel), for petitioner.

Ellenoff Grossman & Schole LLP, New York City (Gabriel Mendelberg of counsel), for respondent.

Gerald Lebovits, J.

Respondents, William and Ondrea White, move under RPL § 234 for an award of $13,874.17 as attorney fees incurred in this proceeding. Respondents' motion is granted. Petitioners do not object to the reasonableness of the fees. They argue, however, that respondents do not have a lease allowing them to recover attorney fees; that they have not judicially admitted that a lease containing an attorney-fee-recovery provision exists; and that respondents are not the prevailing party in a controversy that has reached an ultimate outcome.

Respondents have been the tenants of a rent-stabilized apartment located at 175 West 12th Street in New York County for nearly 10 years. By notice to cure dated September 19, 2008, petitioners, Marbru Associates and The Berkeley Associates, L.P., gave respondents 10 days to cure alleged defaults, including the supposed illegal use of their apartment as a hotel and purported objectionable behavior. The notice informed respondents that "pursuant to Paragraph 10 of the Lease," their failure to remedy the violations would render them "liable for the costs and expenses incurred by the Landlord in [any ensuing] legal proceedings . . . including . . . Landlord's reasonable attorneys' fees." Petitioners' termination notice, dated October 20, 2008, further advised respondents that "pursuant to Paragraph 27 of the Lease, Tenants are obligated to reimburse the Landlord for its legal fees." In their holdover petition dated December 16, 2008, petitioners annexed copies of the predicate notices and incorporated them by reference in paragraphs 9 and 10. The petition also prayed for relief requesting "that a final judgment be entered awarding to Petitioner possession of the Premises together with attorneys' fees." [*2]

Respondents moved to dismiss this proceeding for failure to state a cause of action. They alleged that the predicate notices and petition were defective. On March 20, 2009, this court granted respondents' motion to dismiss on the ground that the predicate notices, as repeated in the petition, did not allege the critical element that respondents were illegally subletting. Respondents then brought this motion to compel petitioners to pay their legal fees.

Judicial Admissions

RPL § 234 provides that when a residential property lease contains a provision entitling a landlord to recover attorney fees resulting from a tenant's default, a reciprocal covenant is implied in the lease allowing the tenant to recover attorney fees incurred to defeat a landlord's proceeding. To recover attorney fees under RPL § 234, the tenant must prove the existence of a valid lease agreement containing an express obligation on the tenant's part to pay the landlord's legal fees. (Partnership 92 W. v Woods, 186 Misc 2d 445, 446 [App Term, 1st Dept 2000].)

Neither respondents nor petitioners produced a copy of the lease. According to petitioners' supplemental affidavit in opposition, the original lease agreement, which dates to the tenancy of respondent William White's grandfather, is lost. (Penson Aff. at ¶ 3.) Absent the original lease, respondents argue, the holdover petition's statements that pray for attorney fees and which incorporate petitioners' predicate notices constitute judicial admissions that entitle respondents to attorney fees without having to produce the lease.

In East Egg Associates v Diraffaele, the court awarded attorney fees to a tenant based on judicial admissions a landlord made in its petition, even though the original lease was lost. (See 158 Misc 2d 364 [Civ Ct, NY County 1993], affd 160 Misc 2d 667 [App Term, 1st Dept 1994].) The court explained that "where a proper excuse has been shown for the nonproduction of the original writing, such as its loss, the admissions of the adversary . . . can be received in evidence to prove the former existence as well as the contents of the writing.'" (158 Misc 2d at 366, quoting Dependable Lists v Malek, 98 AD2d 679, 680 [1st Dept 1983].) The East Egg court concluded that statements made in the landlord's petition, including "specific allegations of a written rental agreement'" followed by a reference to a particular lease paragraph under which the landlord was entitled to attorneys' fees, are "specific enough to constitute a formal judicial admission." (158 Misc 2d at 367.)

Here, the holdover petition refers to a "written lease agreement, made heretofore" and prays for relief requesting "that a final Judgment be entered awarding to Petitioner possession of the Premises together with attorneys' fees and the value of use and occupancy of the Premises." Although the petition does not reference any lease paragraph containing an attorney-fee provision, the predicate notices, incorporated by reference in the petition, identify two paragraphs in the lease agreement containing attorney fee provisions.

Petitioners argue that because statements made in their predicate notices do not appear in their pleadings, the statements do not constitute formal judicial admissions. Ordinarily, statements made in predicate notices are not judicial admissions. They do not appear in pleadings, stipulations, or facts admitted in open court. (See Fisch, NY Evidence § 803, at 474 [*3][2d ed 1977 & Supp 2008] [defining concept of "formal judicial admission" and noting that an "admission dispenses with the necessity for proving the matter to which it refers"].) Pleadings are limited to a complaint, answer, and reply, together with any counterclaims, crossclaims, interpleader complaints, or third-party complaints. (CPLR 3011.) Predicate notices are not part of the pleadings. Statements in predicate notices do not constitute judicial admissions.

When a secondary document is incorporated by reference, however, the secondary document becomes part of the primary document and is treated as if it were contained therein. (See e.g. Jewish Theological Seminary of Am. v Fitzer, 258 AD2D 337, 338 [App Term, 1st Dept 1999] [concluding that a non-renewal notice was adequate because it incorporated by reference a separate rider setting forth the statutory grounds for non-renewal]; Ave. of the Americas Deli Corp. v MA Enter., Inc., 4 Misc 3d 139 [A] NY Slip Op [App Term, 1st Dept 2004] [holding that a "no waiver" clause in a primary lease, incorporated by reference into a sublease, defeats subtenant's claim of waiver].)

Statements made in petitioner's predicate notices were incorporated by reference into their petition. (Petition Holdover Dwelling, ¶¶ 9-10.) This case is therefore distinguishable from Partnership 92, on which petitioners rely, in which the Appellate Term, First Department, ruled that the tenant was not entitled to attorney fees. (See 186 Misc 2d at 446.) In Partnership 92, the original lease similarly could not be produced, and the holdover petition's prayer for relief sought, among other things, "rent and use and occupancy and legal fees." (Id.) These statements, according to the court, did "not have the force of a judicial admission which would concede the existence of a fees provision." (Id.) The tenant was not entitled to attorney fees, therefore, because the petition "did not allege the existence of a rental agreement in which the tenant agreed to pay reasonable attorneys' fees incurred by the landlord." (Id.) Here, by contrast, the predicate notices, incorporated by reference into the holdover petition, allege the existence of a lease in which the tenant agreed to pay attorney fees incurred by the landlord.

Petitioners next argue that references in their predicate notices to attorney fee provisions in the lease were errors attributable to counsel's paralegal and therefore should not constitute judicial admissions. In Schwartz v Lambise (18 Misc 3d 1114 [A] NY Slip Op [Civ Ct, NY County Dec. 31, 2007]), the court concluded that a landlord is bound by references in its petition to a lease containing an attorney fee provision, even though the landlord claimed that the statements were "inadvertent mistakes." The court adopted the holding of Maas v Cornell University (253 AD2d 1 [3d Dept 1999], affd 94 NY2d 87 [1999]): "Under the doctrine of judicial estoppel, or estoppel against inconsistent positions, a party is precluded from inequitably adopting a position directly contrary to or inconsistent with an earlier assumed position in the same proceeding." (253 AD2d at 5.) The Schwartz court denied respondent's award of attorney fees, however, because the petitioner had qualified its allegations by stating that they were made on information and belief. Petitioners here did not qualify their allegations. Therefore, statements made in the predicate notices and incorporated by reference into the petition, even if made in error, constitute judicial admissions.

Whether This Proceeding Has Been Concluded[*4]

Petitioners argue that an award of attorney fees is premature because this proceeding has not yet reached an end. Petitioners claim that they intend to serve both a Golub (intention not to renew a lease) notice and a new cure notice on respondents. Petitioners allege that this confirms that this proceeding has not been resolved on the merits. (Montag Supplemental Aff. at ¶ 6.)

Whether an action is disposed of on the merits, attorney fees may still be awarded "when it can be said that the landlord or tenant is the prevailing party' in a controversy' which reaches an ultimate outcome.'" (Roxborough Apt. Corp. v Becker, 177 Misc 2d 408, 410 [Civ Ct, Kings County 1998], quoting Elkins v Cinera Realty, 61 AD2d 828 [2d Dept 1978]; accord N.V. Madison, Inc. v Saurwein, 103 Misc 2d 996, 998 [App Term, 1st Dept 1980].) An "ultimate outcome" is reached "when it becomes clear that the action . . . cannot or will not be commenced again on the same grounds." (Roxborough, 117 Misc 2d at 410.) When "a subsequent proceeding is commenced but sets forth a different basis for recovery from that set forth in the dismissed proceeding, it has been held that the tenant is entitled to counsel fees for successfully defending the original proceeding." (Scotia Assocs. v Bond, 126 Misc 2d 885, 887 [Civ Ct, NY County 1985].) Furthermore, when an action is dismissed on procedural grounds, the landlord must take steps within a "reasonable time . . . considering all the circumstances . . . to reactivate litigation with respect to the claim made in the dismissed proceeding." (Id. [holding that a tenant was entitled to attorney fees because 45 days had passed since petition was dismissed on procedural ground and landlord had failed to reactivate litigation].)

This proceeding has been concluded. Respondents were the prevailing party in a controversy that reached an ultimate outcome. Petitioners have not reactivated litigation on the same grounds within a reasonable time. Petitioners argue that they intend to serve a new Golub notice on respondents before respondents' September 2009 lease expires. (See Montag Supplemental Aff. at ¶ 6.) Commencing a nonprimary-residence proceeding does not constitute a continuation of this proceeding. A nonprimary holdover sets forth a basis for recovery different from this dismissed sublet proceeding.

Likewise, the new cure notice, which is dated June 17, 2009 and is annexed to petitioners' supplemental affidavit in opposition, contains allegations different from those in this proceeding. This proceeding was based on respondents' alleged use of their apartment as a hotel and their supposed objectionable behavior. Petitioners' unserved cure notice alleges that respondents sublet their apartment to one particular individual and/or "John and/or Jane Doe."

Furthermore, petitioners have not reactivated litigation within a reasonable time. This proceeding was dismissed on March 20, 2009. Nearly four months later, petitioners have still not reactivated their litigation. They state only that they "intended" to serve a Golub notice before respondents' lease expires on September 30, 2009, and that they have "elected" to serve a new cure notice. (Montag Supplemental Aff. in Opposition at ¶ 6.) Neither of these notices have been served. If petitioners' position were correct, a party could repeatedly defeat a valid motion for attorney fees by drafting a new cure notice and argue that the case has not yet reached an ultimate outcome because the party "intends" and "elects" to serve new papers on some future, unspecified date.

[*5]Interest

Under CPLR 5001(a), respondent is entitled to collect interest on unpaid attorney fees at a rate of nine percent. An award of attorney fees "does not mature until the underlying action or proceeding has been determined." (119 Fifth Ave Corp. v Berkhout, 135 Misc 2d 773, 774 [Civ Ct, NY County 1987].) The potential for attorney fees began on March 20, 2009, when this court dismissed the holdover proceeding.

Under CPLR 5001(b) "interest shall be computed upon each item from the date it was incurred or upon all of the damages from a single intermediate date." The intermediate date in the 116 day period between March 20, 2009 and July 14, 2009 is May 17, 2009, the 58th day. To calculate interest, the sum of $13,874.17 is multiplied by nine percent (.09) legal interest (CPLR 5004), for a total of $1248.67. The sum of $1248.67 is then multiplied by 58 and divided by 365, the number of days in a year, for a total interest of $198.41. Accordingly, $198.41 in interest is added to $13,874.17 in attorney fees, for a total final money judgment in respondent's favor of $14,072.58.

This opinion is the court's decision and order.

Dated: July 14, 2009

J.H.C.