IN RE: ARYEH REALTY CORP. (2024)

Order of the Appellate Term, Supreme Court, First Department, entered on or about October 25, 2024, which affirmed a judgment of the Civil Court, New York County (Aija Tingling, J.), entered November 13, 2023, unanimously modified, on the law, to remand for further proceedings in accordance with this decision, and otherwise affirmed, without costs.

The Appellate Term correctly found that Civil Court's finding that the parties orally agreed to a modification of the monthly rent was supported by the record.  That finding “rest[ed] in large measure on considerations relating to the credibility of witnesses” (Thoreson v. Penthouse Intl., 80 N.Y.2d 490, 495, 591 N.Y.S.2d 978, 606 N.E.2d 1369 [1992] [internal quotation marks omitted]).  We agree with the Appellate Term that Civil Court properly found that the parties orally agreed that petitioner landlord would reduce the rent by $15,000 per month, and that, although such a reduction was not compatible with the lease as written, there was performance confirming the modification that was unequivocally referable to the oral modification (see Paramount Leasehold, L.P. v. 43rd St. Deli, Inc., 136 A.D.3d 563, 568, 26 N.Y.S.3d 258 [1st Dept. 2016], lv denied and dismissed 28 N.Y.3d 1024, 42 N.Y.S.3d 675, 65 N.E.3d 705 [2016]).  We decline to consider landlord's argument related to consideration for the rent reduction, since it was not presented to Civil Court (see National Interstate Ins. Co. v. Interstate Indem. Co., 215 A.D.3d 593, 595, 187 N.Y.S.3d 228 [1st Dept. 2023];  Twitchell Tech. Prods. v. Mechoshade Sys., LLC, 227 A.D.3d 45, 55–56, 208 N.Y.S.3d 657 [2d Dept. 2024]).  For similar reasons, we decline to consider landlord's argument that tenant did not detrimentally rely on the oral modification.

Determining whether a party has “prevailed” for purposes of recovering its attorneys’ fees “requires an initial consideration of the true scope of the dispute litigated, followed by a comparison of what was achieved within that scope” (Excelsior 57th Corp. v. Winters, 227 A.D.2d 146, 147, 641 N.Y.S.2d 675 [1st Dept. 1996]).  The Appellate Term properly found that Civil Court correctly concluded that the central issue in this proceeding, was whether the lease was orally modified to afford tenant a rent reduction.  Petitioner did not prevail and is therefore not entitled to recover attorneys’ fees (see Matter of Wiederhorn v. Merkin, 98 A.D.3d 859, 863, 952 N.Y.S.2d 478 [1st Dept. 2012], lv denied 20 N.Y.3d 855, 2012 WL 6582317 [2012]).

While we agree that the record supports the finding that there was a valid oral modification of the lease agreement, we agree with petitioner that Civil Court failed to make a determination as to the extent to which the admitted breach of Article 45 of the lease agreement affects any monies owed petitioner.  Therefore, we remand for further determination of this issue.

We have considered petitioner's remaining arguments and find them to be unavailing.