2118 LLC v. LLC JOHN DOE JANE DOE (2026)

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

The following e-filed papers read herein: NYSCEF Doc. No.

Respondent's Notice of Motion, Affirmation and Exhibits 176-179

Petitioner's Notice of Cross-Motion/Affirmation in Opposition 182-183

Respondent's Affirmation in Opposition to Petitioner's Cross-Motion/Reply Affirmation in support of its Motion 184

Petitioner's Reply Affirmation in further Opposition to Respondent's Motion and in support of its Cross-Motion 185

II. Background

On August 2, 2022, Petitioner commenced the instant holdover summary proceeding against Respondent Lior Group, LLC in the commercial landlord-tenant part, seeking to recover possession of the premises described as the second, third, fourth, and fifth floors and the four (4) residential apartments in the building located at and known as 2118 Third Avenue, New York, NY 10029 (hereinafter, "Premises"), and for rental arrears and the fair value of use and occupancy. Respondent Lior Group LLC joined the action by interposing an answer.

Prior to the filing of the instant motions before this Court, the parties engaged in extensive motion practice and discovery. On November 13, 2022, Respondent Lior Group LLC moved by motion pursuant to CPLR 3212, seeking summary judgment to dismiss the proceeding, based upon its first affirmative defense, contending that the instant action was improperly commenced in the commercial landlord-tenant part as the Premises concerned a residential unit, and that instead, the action should be reverted to the Housing Court. Respondent further moved pursuant to Real Property Law ("RPL") § 234, seeking reasonable attorneys' fees, costs and expenses incurred in connection with the instant action ("Motion #1"). On December 2, 2022, Petitioner cross-moved pursuant to CPLR 3211, by motion seeking to dismiss Respondent Lior Group LLC's first affirmative defense, arguing that the subject premises was rented to Respondent Lior Group LLC pursuant to a commercial lease agreement, and that the court had jurisdiction to hear commercial disputes concerning rental of a building to a venture that is in the business of renting apartments. Petitioner further cross-moved pursuant to CPLR 3212, seeking summary judgment to dismiss Respondent's first counterclaim for attorneys' fees ("Motion #2"). Thereafter, the branch of Respondent's Motion #1 dismissing the Petitioner's Petition was granted by Hon. K. P., who held that the Premises was "being occupied as residential since families and households dwell therein" and that "[t]he determining factor of whether a summary proceeding should be commenced in a housing part or commercial landlord tenant part is based on what the premises is being occupied as, the actual usage, of the premises itself" (see decision and order of Hon. K. M. P., dated March 7, 2023, hereinafter, "P., J. Decision"; NYSCEF Doc. No. 34). The prior court further held that Respondent's claim for attorneys' fees was without merit, stating that RPL § 234 is applicable only in the residential setting and not in the commercial context (id.). All other contentions were deemed either moot or without merit (id.).

Petitioner subsequently appealed the P., J. Decision, whereupon the Appellate Term, First Department held that the limited record failed to establish as a matter of law that the proceeding was improperly commenced in the commercial part (see 2118 Group, LLC v Lior Group LLC et al, 80 Misc 3d 133[A], 2023 NY Slip Op 51130[U] [App Term, 1st Dept 2023], hereinafter "App. Term Decision"; NYSCEF Doc. No. 62).

Thereafter, the parties engaged in discovery pursuant to decision and order of Hon. J. Z., dated March 25, 2025 (see NYSCEF Doc. No. 82). Petitioner subsequently moved pursuant to CPLR 3212, by motion for summary judgment seeking to dismiss Respondent Lior Group LLC's affirmative defenses and for an order awarding Petitioner judgment on the Petition plus legal fees and disbursements incurred ("Motion #6"). Respondent Lior Group LLC cross-moved pursuant to CPLR 3211 by motion seeking to dismiss the proceeding on the grounds that (1) Respondent Lior Group LLC had already vacated and surrendered possession of the Premises and that Petitioner had been in possession of the Premises as of May 31, 2023; and that (2) Petitioner had commenced a plenary action in Supreme Court of the State of New York, County of New York under Index No. 652737/2022 seeking the same monies sought in this proceeding ("Motion #7").

By decision and order dated April 10, 2026, Hon. J. Z. denied Petitioner's Motion #6, holding that from the now more fully-developed record, that the Premises were occupied by Respondent Lior Group LLC's undertenants for residential purposes with knowledge of Petitioner, and that as such, the instant proceeding was a residential proceeding brought in the improper part (hereinafter, "Z., J. 2026 Decision"; see NYSCEF Doc. No. 174). The prior court granted Respondent Lior Group LLC's Motion #7 and dismissed the instant proceeding (id.). Petitioner subsequently appealed the Z., J. 2026 Decision. The appeal is pending.

On April 14, 2026, Respondent Lior Group LLC moved pursuant to RPL § 234 by motion seeking a judgment for attorney's fees in an amount to be determined at a hearing, arguing that the instant proceeding had been dismissed by the prior court, and that as such, Respondent Lior Group LLC was the prevailing party and thus entitled to attorneys' fees from Petitioner ("Motion #8"). Petitioner thereafter cross-moved pursuant to 22 NYCRR 130-1.1 by motion seeking costs and sanctions against Respondent Lior Group LLC for filing a frivolous motion for attorneys' fees, contending that Respondent Lior Group LLC's counterclaim for attorneys' fees pursuant to RPL § 234 had already been denied by the P., J. Decision (see NYSCEF Doc. No. 34), as modified by the App. Term Decision, which dismissed Respondent Lior Group LLC's counterclaim (see NYSCEF Doc. No. 62) ("Motion #9"). Petitioner further argued that Article 31 of the lease agreement only provides for an award of legal fees to the landlord. Motion #8 and Motion #9 were subsequently submitted to this Court for determination.

III. Discussion

i. Respondent's Motion seeking attorneys' fees

In essence, the dispute in the case at bar stems from the issue of whether Respondent's counterclaim for attorneys' fees was dismissed.

The P. J. Decision held:

"Respondent's claim for legal fees is without merit because there is no statutory authority for respondent to recover legal fees in a commercial holdover proceeding and the lease does not provide for recovery of fees. Pursuant to Real Property Law ("RPL") § 234, attorney's fees may be awarded, in appropriate circumstances, to a tenant who is a prevailing party in a controversy; however, RPL § 234 is applicable only in the residential setting and not in the commercial context (see 150 W. End Owners Corp. v Chestnut Holdings of NY Inc., 49 Misc 3d 1147, 1150 [Civ Ct 2015]).

Accordingly, that branch of Respondent's motion for summary judgment dismissing Petitioner's Petition is granted and Petitioner's cross motion is denied. All other contentions are either moot or without merit."

(See decision and order of Hon. K. M. P., dated March 7, 2023; NYSCEF Doc. No. 34).

Petitioner subsequently appealed the above P., J. Decision. Reference is made to the App. Term Decision (see 2118 Group, LLC v Lior Group LLC et al, 80 Misc 3d 133[A], 2023 NY Slip Op 51130[U] [App Term, 1st Dept 2023]; NYSCEF Doc. No. 62), which states, in pertinent part:

"Order (K. M. P., J.), dated March 7, 2023, modified, tenant's motion denied, petition reinstated, that portion of landlord's cross motion seeking summary judgment dismissing the counterclaim granted, and the matter remanded to Civil Court for further proceedings; as modified, order affirmed, with $10 costs.

This holdover proceeding, based upon allegations that the corporate tenant failed to obtain liability insurance as required by the lease, is not subject to summary judgment dismissal. The limited record so far developed fails to establish as a matter of law that the proceeding was improperly commenced in the Commercial Part (see 22 NYCRR 208.42[a]; U.B.O. Realty Corp. v Mollica, 257 AD2d 460 [1999]; Amush Enters., LLC v Wallace, 47 Misc 3d 154[A], 2015 NY Slip Op 50851[U] [App Term, 1st Dept 2015]). In this regard, the subject premises, consisting of the 'second, third, fourth, and fifth floors and the four (4) residential apartments' in the building, includes both common areas and dwelling units; these premises were rented to the corporate tenant pursuant to a triple net lease; tenant is a business that rents apartments to others; and it is unclear on this record if tenant or any others reside in any of the apartments.

Tenant's counterclaim for attorneys' fees was denied on the merits by the motion court, but was not formally dismissed. Thus we modify accordingly."

[Emphasis added]

Based on the above decisions, Petitioner contended that the Appellate Term modified the P., J. Decision by reinstating the Petition and dismissing Respondent's counterclaims for attorneys' fees. Conversely, Respondent reached a different interpretation of said decisions, arguing that its counterclaim for attorneys' fees was not dismissed, that it was precluded only from recovering attorneys' fees in the context of commercial holdover proceeding and that the matter had been remanded to the Civil Court for further proceeding. Respondent quoted the following from the decision of the Appellate Term in support of its position: "[t]enant's counterclaim for attorneys' fees was denied on the merits by the motion court, but was not formally dismissed" (see NYSCEF Doc. No. 184, ¶ 5). It is noted that Respondent did not refer to the sentence that followed: "[t]hus we modify accordingly" (see 2118 Group, LLC v Lior Group LLC et al, 80 Misc 3d 133[A], 2023 NY Slip Op 51130[U] [App Term, 1st Dept 2023]; NYSCEF No. 62).

Upon review of the submissions, this Court is unpersuaded by Respondent's contention that Petitioner's interpretation of the decisions was erroneous. It appears from the language of the decision of the Appellate Term that the prior court's denial of Respondent's counterclaim for attorneys' fees was upheld, and modified accordingly to dismiss it because the P., J. Decision did not formally dismiss Respondent's counterclaim for attorneys' fees. "An appellate court's resolution of an issue on a prior appeal constitutes the law of the case and is binding on [this Court], as well as on the appellate court [and] operates to foreclose re-examination of the question absent a showing of subsequent evidence or change of law" (see Board of Mgrs. of the 25 Charles St. Condominium v Seligson, 106 AD3d 130, 135-136 [1st Dept 2013] [internal quotation marks and citations omitted]).

In light of the prior court's denial of Respondent's motion for attorneys' fees (see Motion #1) and the Appellate Term's dismissal of Respondent's counterclaim for attorneys' fees, this Court declines to address the merits of whether Respondent is entitled to attorneys' fees pursuant to Article 31 of the lease agreement and the reciprocal right to such fees provided under RPL § 234, as alleged by Respondent (see Carmona v Mathisson, 92 AD3d 492, 492-493 [1st Dept 2012] [internal citations omitted] [the court is precluded from reconsidering an issue pursuant to the doctrine of law of the case]).

Accordingly, Respondent's motion for attorneys' fees is denied.

ii. Petitioner's Cross-Motion for sanctions

Pursuant to 22 NYCRR 130-1.1(a) and (b), the court has discretion to award "costs, including attorney's fees, as well as impose financial sanctions against an attorney or firm that engages in "frivolous conduct." A conduct is considered "frivolous" if "(1) it is completely without merit in law and cannot be supported by a reasonable argument for an extension, modification or reversal of existing law; (2) it is undertaken primarily to delay or prolong the resolution of the litigation, or to harass or maliciously injure another; or (3) it asserts material factual statements that are false" (see 22 NYCRR 130-1.1[c]).

"Trial judges should be accorded wide latitude to determine the appropriate sanctions for dilatory and improper attorney conduct" (see Pickens v Castro, 55 AD3d 443, 444 [1st Dept 2008]).

Here, as stated above, it appears that the parties reached different interpretations of the App. Term Decision (see 2118 Group, LLC v Lior Group LLC et al, 80 Misc 3d 133[A], 2023 NY Slip Op 51130[U] [App Term, 1st Dept 2023]; NYSCEF Doc. No. 62), with Respondent incorrectly concluding that the entirety of the matter was remanded to Civil Court for further proceedings. This resulted in Respondent moving on two occasions by motion seeking attorneys' fees pursuant to RPL § 234 (see Motion #1 and Motion #8).

As such, the Court finds that Respondent Lior Group LLC's filing of its second motion seeking attorneys' fees, though apparently lacking in legal merit, "did not manifest the extreme behavior usually required to sustain the award of sanctions" (see Ray v Ray, 180 AD3d 472, 474 [1st Dept 2020], lv dismissed 35 NY3d 1007 [2020] [internal quotation marks and citation omitted]; see e.g. Tsabbar v Auld, 26 AD3d 233 [1st Dept 2006] [sanctions were granted where plaintiff had previously been warned by the court that further litigation against defendants would be sanctionable pursuant to 22 NYCRR 130-1.1]; Parametric Capital Mgt., LLC v Lacher, 26 AD3d 175, 175 [holding that "[t]he action for which Supreme Court sanctioned plaintiffs, although apparently lacking in legal merit, was not so egregious as to constitute 'frivolous conduct' within the meaning of 22 NYCRR 130-1.1"]).

Accordingly, Petitioner's Cross-Motion for sanctions is denied.

IV. Order

Accordingly, it is hereby:

ORDERED that Motion #8, Respondent's Motion for attorney's fees, costs and expenses is DENIED; and it is further

ORDERED that Motion #9, Petitioner's Cross-Motion for sanctions is DENIED.

This constitutes the DECISION and ORDER of the Court.

DATE June 22, 2026

HON. WENDY CHANGYONG LI, J.C.C.

Wendy Changyong Li, J.