ROXBOROUGH APARTMENT CORPORATION v. BECKER (1998)

In this summary proceeding, which has already been dismissed, respondent is moving for an order granting him reasonable attorney's fees incurred in the successful defense of a non-primary residence proceeding which petitioner commenced against him.   Respondent's motion, made returnable in New York County, was referred to this Court because the Court had previously entertained respondent's motion for, inter alia, an order dismissing the petition and granting attorney's fees.   At that time, this Court granted respondent's motion to dismiss the petition on the express ground that “ petitioner's receipt and retention of the three rent checks [after the tenancy was purportedly terminated and before the commencement of the holdover proceeding] constitutes acceptance sufficient to vitiate the predicate [non-renewal and termination] notices that were served.”  Roxborough Apartment Corp. v. Becker, 176 Misc.2d 503, 506, 673 N.Y.S.2d 814 (Civil Court, New York Co.1998).

Although the Court's decision indicates that it had denied the remainder of respondent's motion as “moot,” the Court currently does not specifically recall whether it had actually considered respondent's motion for attorney's fees or whether it had mistakenly overlooked that portion of respondent's motion.   To the extent that the Court considered and denied the motion, the Court deems respondent's motion as one for reargument (C.P.L.R. 2221), which is hereby granted.

Contentions of the Parties

Respondent-tenant contends that he is entitled to attorney's fees pursuant to the lease between the parties and Real Property Law § 234 because respondent's motion to dismiss the petition was granted and petitioner is precluded from commencing another action upon the same grounds (i.e., non-primary residence grounds).   Petitioner does not dispute that the lease between the parties contains an attorney's fees clause which in the proper case may entitle a tenant to an award of attorney's fees.   Petitioner argues, however, that an award of attorney's fees is unwarranted in this particular case because this Court dismissed the petition “on procedural grounds and not on the merits.”

Discussion

Real Property Law § 234 provides that when a lease between a tenant and a landlord states that a landlord may recover attorney's fees incurred in a summary proceeding commenced against the tenant for a breach of the lease, there is “implied in such lease” a reciprocal duty on the part of the landlord to pay the tenant's legal expenses “incurred ․ in the successful defense of any ․ summary proceeding commenced by the landlord against the tenant arising out of the lease.”   A landlord or tenant is entitled to attorney fees, however, only when it can be said that the landlord or tenant is the “ prevailing party” in a “controversy” which reaches an “ultimate outcome.”  Elkins v. Cinera Realty, 61 A.D.2d 828, 402 N.Y.S.2d 432 (2d Dept.1978).   See also Centennial Restorations Co. v. Wyatt, 248 A.D.2d 193, 669 N.Y.S.2d 585 (1st Dept.1998)..

A controversy reaches an “ultimate outcome” when a court disposes of the action on the merits, or when it becomes clear that the action, although not disposed of on the merits, cannot or will not be commenced again on the same grounds.   A tenant may be entitled to attorney's fees, for example, when a landlord discontinues a proceeding for a second time and the applicable law does not permit the landlord to recommence a third proceeding, Centennial Restorations Co. v. Wyatt, supra, 248 A.D.2d 193, 669 N.Y.S.2d 585, or when a court dismisses a petition on a procedural ground and the landlord decides, for one reason or another, not to commence another proceeding against the tenant.   Park South Associates v. Essebag, 126 Misc.2d 994, 995, 487 N.Y.S.2d 252 (App.Term 1st Dept.1984);  N.V. Madison Inc. v.. Saurwein, 103 Misc.2d 996, 998-999, 431 N.Y.S.2d 251 (App.Term 1st Dept.1980).   A controversy does not reach an ultimate outcome sufficient to entitle a litigant to the award of attorney's fees, however, when an action is dismissed on procedural grounds or is otherwise discontinued and there is some indication that the action may be recommenced at a later time.

Here, the Court dismissed the petition on a quintessential procedural ground-i.e., that the predicate non-renewal notice, served pursuant to Rent Stabilization Code (RSC) (9 NYCRR) § 2524.2(c)(2), was effectively vitiated by the landlord's receipt and retention of three rent checks after the tenancy was purportedly terminated and before the commencement of the holdover proceeding.   Thus, petitioner is correct that the Court never addressed the actual merits of petitioner's non-primary residence claim.   The Court did not rule, and respondent, in his pre-answer motion, did not even ask the Court to rule, that petitioner's retention of the rent checks effected a complete waiver of the underlying non-primary residence claim.   Indeed, a tenant's substantial burden to prove a waiver of a non-primary residence claim would be much greater than respondent's burden to prove a waiver of a predicate notice.   See e .g., Melnick v. Melnick, N.Y.L.J., October 6, 1986, p. 7, col.   2 (App.Term 1st Dept.) (landlord's acceptance of rent constitutes waiver of predicate notice but not underlying holdover claim);  Associated Realties v. Brown, 146 Misc.2d 1069, 1070-1071, 554 N.Y.S.2d 975 (Civil Court, New York County 1990) (same);  Aaros Realty LLC v. Clements, N.Y.L.J., February 18, 1998, p. 28, col.   5 (Civil Court New York Co.) (landlord's acceptance of rent constitutes waiver of predicate notice;  petition dismissed without prejudice).   See also Jefpaul Garage Corp. v. Presbyterian Hospital in City of New York, 61 N.Y.2d 442, 474 N.Y.S.2d 458, 462 N.E.2d 1176 (1984).

That the Court did not dispose of the action on the merits, however, is not fatal to respondent's motion for attorney's fees.  Centennial Restorations Co. v. Wyatt, supra, 248 A.D.2d 193, 669 N.Y.S.2d 585 (“the tenant may recover [attorney's] fees when the ‘ultimate outcome’ is in his favor ‘whether or not such outcome is on the merits' ”), quoting Elkins v. Cinera Realty, supra, 61 A.D.2d 828, 402 N.Y.S.2d 432.   See also Park South Associates v. Essebag, supra, 126 Misc.2d at 995, 487 N.Y.S.2d 252.   As explained above, disposal on the merits is only one of the many ways in which an action may reach its ultimate outcome.

Thus, the critical question in this case is whether, the Court having dismissed the petition on procedural grounds, the petitioner may commence a new non-primary residence proceeding against respondent.   Because the answer to that question is no, an award of attorney's fees is warranted.

Petitioner is effectively precluded from commencing a new non-primary residence proceeding against respondent because of the operative effect of the Rent Stabilization Code and the special protection it affords to rent stabilized tenants.   Section 2524.2(c)(2) of the Code provides that a condition precedent to the commencement of a non-primary residence proceeding against a rent stabilized tenant is the service of a notice of non-renewal upon the tenant “at least 120 and not more that 150 days prior to the expiration of the lease term.”   See also Golub v. Frank, 65 N.Y.2d 900, 901, 493 N.Y.S.2d 451, 483 N.E.2d 126 (1985);  Herrick v. Debard, 155 A.D.2d 320, 547 N.Y.S.2d 291 (1st Dept.1989).

Because the Court has already held that the notice of non-renewal which was timely served in this case is invalid, petitioner cannot rely upon it as the predicate upon which to commence a new non-primary residence action.   See Nicolaides v. State Division of Housing and Community Renewal, 231 A.D.2d 723, 647 N.Y.S.2d 866 (2d Dept.1996);  Kaycee West 113th Street Corp. v. Diakoff, 160 A.D.2d 573, 554 N.Y.S.2d 216 (1st Dept.1990).   Nor can petitioner timely serve a new 120-150 day renewal notice since such notices must be served no more 150 days “prior to the expiration of the lease.”   Rent Stabilization Code [9 NYCRR] § 2524.2(c)(2).   In this case, the lease between the parties expired sometime in June of 1997 and thus petitioner cannot possibly satisfy the condition precedent requirements of RSC [9 NYCRR] § 2524. 2(c)(2).

Notably, petitioner does not even claim that it currently expects to recommence another non-primary residence proceeding against respondent.   Indeed, if anything, petitioner is statutorily required at this point to renew respondent's rent stabilized lease.   See Rent Stabilization Law § 26-511(c)(4) and (9);  Rent Stabilization Code [9 NYCRR] § 2524.1(a).   See also Golub v. Frank, supra, 65 N.Y.2d at 901, 493 N.Y.S.2d 451, 483 N.E.2d 126;  Cier Industries Co. v. Hessen, 136 A.D.2d 145, 148-149, 526 N.Y.S.2d 77 (1st Dept.1988).

Thus, although this Court did not dismiss the petition with prejudice and there is nothing in the Court's decision which expressly bars petitioner from recommencing the non-primary residence proceeding against respondent, petitioner is effectively barred from recommencing that action against respondent by operation of law.   Under these circumstances, respondent is entitled to an award of attorney's fees.   See e.g., Centennial Restorations Co. v. Wyatt, supra, 248 A.D.2d 193, 669 N.Y.S.2d 585 (attorney's fees warranted where landlord is precluded by law from recommencing action);  Feierstein v. Moser, 124 Misc.2d 369, 374, 477 N.Y.S.2d 545 (Supreme Court, New York Co.1984) (same).

Although an award of attorney's fees, emanating from the Court's dismissal of the petition, may appear to some to be a harsh consequence of the landlord's improper acceptance of three rent checks, the result is wholly consistent with the legislative intent, as evinced by R.P.L. § 234, that such “awards ․ be based on the ultimate outcome of the controversy, whether or not such outcome is on the merits.”  Elkins v. Cinera Realty, supra, 61 A.D.2d 828, 402 N.Y.S.2d 432.   It is also consistent with the primary purpose of R.P.L. § 234, which is “intended to discourage unnecessary litigation.”  Cier Industries Co. v. Hessen, supra, 136 A.D.2d at 150-151, 526 N.Y.S.2d 77.   As the Appellate Division stated in Cier Industries Co., supra, at 151, 526 N.Y.S.2d 77, “the intimidating effect of the availability of attorneys' fees to a successful tenant would constitute a significant restraint and important deterrent to the bringing of frivolous nonprimary residence proceedings by landlords.”

In this case, petitioner-landlord commenced a non-primary residence proceeding against a rent-stabilized tenant which petitioner should have known was not procedurally viable.   The law provides that he, and not respondent, should have to pay the price for that.

Accordingly, respondent's motion for an award of attorney's fees and expenses incurred in the successful defense of the summary proceedings and in the preparation of the motion for attorney's fees, is granted to the extent that a hearing is ordered to determine the reasonable value of the attorney's fees.

ROLANDO T. ACOSTA, Judge.