GS Brooklyn Apts. LLC v Roberts

[*1] GS Brooklyn Apts. LLC v Roberts 2015 NY Slip Op 51390(U) Decided on September 18, 2015 Supreme Court, Kings County Kurtz, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 September 18, 2015
Supreme Court, Kings County

GS Brooklyn Apts. LLC, Plaintiff,

against

Denyse Roberts, JONATHAN JACOBS, HOME HEATING OIL, INC., NEW YORK CITY DEPARTMENT OF HOUSING PRESERVATION AND DEVELOPMENT, MIRAGE MARKETING INC, NEW YORK CITY DEPARTMENT OF FINANCE PARKING VIOLATIONS BUREAU, NEW YORK CITY ENVIRONMENTAL CONTROL BOARD and "JOHN DOE No.1" through "JOHN DOE #12", the last twelve names being fictitious and unknown to plaintiff, the persons or parties intended being the tenants, occupants, persons or corporations, if any having or claiming a interest in or lien upon the premises described in the complaint, Defendants.



33167/08



Attorney for Defendant Denyse Roberts

Uche Emelumadu, Esq.

Madu, Edozie & Madu, P.C.1599 East Gunhill RoadBronx, NY 10469

Attorney for Plaintiff

Robert J. Howard, Esq.

Rosenberg, Calica & Birney100 Garden City Plaza, Suite 408Garden City, NY 11530

Attorney for Receiver

Jeffrey L. Saltiel, Esq.26 Court Street, Suite 1200Brooklyn, NY 11242
Donald Scott Kurtz, J.

DECISION/ORDER

Recitation, as required by CPLR §2219(a), of the papers considered in the review of this motion:

PapersNumbered

Order to Show Cause/Notice of Motion and

Affidavits/Affirmations Annexed....................................1-3

Answering Affidavits/Affirmations.................................4-6

Reply Affidavits/Affirmations.........................................7

Memoranda of Law..........................................................8

Other..................................................................................

Upon the foregoing cited papers, the Decision/Order on these motions are as follows:

The receiver appointed in this commercial foreclosure proceeding moves to settle and approve his final accounting for the period from October 1, 2014 through and including February 17, 2015; to allow the receiver to pay himself commissions in the amount of $7,372.20; to authorize the receiver to pay his attorney the amount of $78,870.25 for legal services rendered for the period from October 1, 2014 through July 6, 2015 in connection with the receivership; to authorize the payment of outstanding bills incurred by the receiver totaling $36,704.99; to cancel the receiver's bond and discharge the receiver and the surety on his bond; to authorize the receiver to turn over all documents and records to the new owner, Avenue D Properties, LLC.; [*2]and to authorize the release of the balance of the funds being held in escrow by plaintiff to defendant, Denyse Roberts, after payment of the aforementioned amounts.[FN1]

In this commercial foreclosure action, a receiver was appointed to collect rents and manage the subject property. Thereafter, defendant agreed, with plaintiff's consent, to sell the property to a third party. On October 22, 2014, the parties to this action and/or their attorneys entered into a stipulation which provided that if the closing did not take place by November 17, 2014, the receiver's accounting would serve as an approved "interim accounting" from January 24, 2014 through September 30, 2014; that plaintiff would pay the receiver $74,739.40 by November 17, 2014; and that the receiver would be authorized to pay himself commissions and his attorney's legal fees in amounts stated therein. The closing did not take place by November 17th. The closing ultimately took place on February 4, 2015 and by order of this Court dated February 13, 2015, the receiver's management rights and duties were terminated. Thereafter, the receiver moved to enforce the above-mentioned stipulation and plaintiff and defendant both moved to vacate the stipulation. By order of this Court dated July 28, 2015, the stipulation was upheld. The receiver also moved to settle and approve his final accounting, along with the other above-stated relief. The order to show cause contained a temporary restraining order enjoining and restraining the release of $165,000 being held in plaintiff's escrow account as a result of surplus funds from the sale of the property.

In support of his motion, the receiver submits an affidavit/accounting as well as a statement of legal services provided by his attorney. In total, from October 1, 2014 through April 24, 2015, the receiver received $65,020.73 and disbursed $38,994.03.

In opposition, defendant contends, inter alia, that since she never requested the appointment of a receiver, she is not obligated to pay the costs associated therewith; that the accounting is incomplete as it is not supported by an affidavit by the receiver; that the receiver was without authority to incur obligations in excess of monies in his hands without court order or consent; that the receiver was not authorized to pay the property manager without prior court approval; that several bills which were incurred after the receiver's management duties were terminated should not be paid; and that the receiver is himself an attorney and was expected to perform legal duties without the necessity of hiring counsel. Defendant maintains that if the Court is inclined to award commissions to the receiver, the total amount that passed through the receiver's hands from October 1, 2014 through February 17, 2015 is $64,554.78 and that, therefore, the maximum he may receive is 5% of that, which totals $3,227.73.

With respect to the request for attorney's fees by counsel for the receiver, defendant points to the various rates billed by counsel and his staff and argues that the hourly rates of $300 and $250, respectively, are excessive. Defendant further objects, inter alia, to many of the matters handled by the receiver's attorney and claims that it was the job of the receiver or property manager to handle such tasks.

"As a general rule, commissions are only to be paid out of the funds in the receiver's hands at the termination of the receivership." Amusement Distribs., Inc. v. Oz Forum, Inc., 113 AD2d 855 (2d Dept 1985). Where receipts have been collected by a receiver, the maximum amount a court can award as compensation to the receiver, in the exercise of its discretion, is five percent of the funds received and disbursed during the receivership. CPLR §8004(a). See Amusement Distribs., Inc. v. Oz Forum, Inc., 113 AD2d at 855, supra.; Friesch—Groningsche Hypotheekbank Realty Credit Corp. v. Semerjian, 232 AD2d 448 (2d Dept 1993); JDM Long Island, LLC v. U.S. Bank Nat. Ass'n, Slip Copy, 2014 WL 6632644 (EDNY). The commission of the receiver should be calculated as 5% of the "gross receipts" and not "the aggregate amount of both receipts and disbursements." WF Shirley, LLC v. William Floyd Plaza Associates, 270 AD2d 255 (2d Dept 2000).

The receiver's management rights and duties were terminated on February 13, 2015. Therefore, the receiver is not entitled to commissions on payments made without court approval after that date. The receiver submits an undated affidavit/accounting in support of this motion sworn to on February 25, 2015. Although the receiver's attorney submits further affirmations setting forth purported updates to the accounting, the receiver failed to do so. Therefore, that portion of this motion which seeks payment of the receiver's commissions is held in abeyance pending an updated affidavit/accounting by the receiver. Moreover, this matter must be set down for a hearing to determine what, if any, obligations were incurred by the receiver which were in excess of the monies on hand at the time they were incurred, in violation of this Court's order. The receiver will not be entitled to commissions on those obligations incurred.

Defendant's contention that she did not request the appointment of the receiver and, therefore, should not pay the costs associated therewith is without merit. The mortgage agreement she entered into, and defaulted upon, provides that plaintiff may seek the appointment of a receiver. Although plaintiff is responsible for payment of the receiver, such costs may be paid out of the surplus funds from the sale of the property. Defendant's claim that the receiver was not authorized to pay the property manager without prior court approval is inaccurate as the order of this Court dated February 27, 2014 provided for reasonable payment of the property manager's services from the funds collected. Additionally, simply because the receiver is himself an attorney does not mean he was expected to perform legal duties without hiring counsel. The receiver, although an attorney, may not possess the expertise needed to litigate, for example, proceedings for contempt, the non-payment of rents, and evictions.

"The evaluation of what constitutes reasonable counsel fees is a matter within the sound discretion of the trial court. " Lefkowitz v. Van Ess, 166 AD2d 556 (2d Dept 1990). See Lancer Indem. Co. v. JKH Realty Group, LLC, 127 AD3d 1035,1036 (2d Dept 2015). The trial court is in a "far superior position to judge those factors integral to the fixing of counsel fees..." Lefkowitz v. Van Ess, 166 AD2d at 556, supra. "There is no hard and fast rule by which it can be determined what is reasonable compensation for an attorney in any given case." Matter of Levy, 111 AD2d 849,850 (2d Dept 1985) quoting Matter of Brehm, 37 AD2d 95 (4th Dept 1971). In determining reasonable value of an attorney's services, factors to consider include "matter of time and labor required, the difficulty of the questions involved, and the skill required to handle the problems presented; the lawyer's experience, ability and reputation; the amount involved and benefit resulting to the client from the services; the customary fee charged by the Bar for similar services; the contingency or certainty of compensation; the results obtained; and the responsibility involved (citations omitted.)" Matter of Freeman, 34 NY2d 1, 9 (1974). See Matter of Ury, 108 AD2d 816,817 lv denied 64 NY2d 611 (1985); Jordan v. Freeman, 40 AD2d 656 (1st Dept1972); Diaz v Audi of Am., Inc., 57 AD3d 828, 830 (2d Dept 2008).

The Court finds that the attorney's affirmation in support of his application for attorneys fees, together with the contemporaneous time records detailing the time spent and the categorical breakdown of the services performed are sufficient to make an award with respect to his fees without the necessity of a hearing. Therefore, after a careful review of the records, an assessment of the amount of work involved and benefit resulting to the plaintiff from the services, the results obtained, as well as the fees already received pursuant to the prior stipulation, the Court finds an award of $31,500 is a reasonable amount to be awarded to the receiver's attorney.

The Court hereby authorizes the payment of all outstanding bills to Chief Energy Corporation, Boro Energy Inc., Hendrick Bertrand, Max Herard, S & H Glazer Brothers, Steve Belsito Sons, Inc., Advantage Wholesale Supply, and BPC Mgt. Corp. as these services were necessary for the maintenance and upkeep of the building.[FN2] Upon said payments and submission of proof thereof, the receiver's bond and the surety on his bond will be cancelled and discharged. The receiver is hereby authorized to turn over all documents and records to the new owner, Avenue D Properties, LLC. The balance of the funds being held by plaintiff may be released to defendant after payment of the aforementioned bills and fees, with the exception of $7,372.20 which shall remain in escrow pending further order of the Court. The hearing to determine what obligations were incurred which were in excess of the monies on hand will be conducted by a Judicial Hearing Officer or Special Referee pursuant to separate order signed herewith.

The foregoing shall constitute the Decision and Order of the Court.

DONALD SCOTT KURTZ

Justice, Supreme Court

Footnotes

Footnote 1:The motion also sought authorization for the receiver to hold $20,000.00 for anticipated expenses. However, that part of the motion was withdrawn since the receiver has now been billed for all outstanding obligations.

Footnote 2:These invoices were for outstanding oil bills which were necessary to heat the building, plumbing, hardware supplies, new appliances, as well as snow removal services.