Batsidis v. Wallack Management Co.

65 A.D.3d 332, 882 N.Y.S.2d 102
CourtAppellate Division of the Supreme Court of the State of New York
DecidedJuly 2, 2009
StatusPublished
Cited by1 cases

This text of 65 A.D.3d 332 (Batsidis v. Wallack Management Co.) is published on Counsel Stack Legal Research, covering Appellate Division of the Supreme Court of the State of New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Batsidis v. Wallack Management Co., 65 A.D.3d 332, 882 N.Y.S.2d 102 (N.Y. Ct. App. 2009).

Opinion

OPINION OF THE COURT

Saxe, J.P.

This dispute concerns the scope of a cost-shifting provision in a standard alteration agreement between the proprietary lessee of a co-op apartment and the cooperative corporation and its management company. We hold that the cost-shifting provision is proper, clear, unambiguous and enforceable as written; we reject plaintiffs contention that the provision may be applied only where the cooperative corporation is determined to be the prevailing party and the fees it incurred in relation to its oversight of the proposed alterations are determined to be reasonable. However, as a procedural matter, since defendants stipulated to allow plaintiff to recommence the work upon his completion of stated conditions, and the court so-ordered that stipulation by way of resolving plaintiffs motion for an order authorizing him to resume work, defendants must be precluded at this juncture from using plaintiffs obligation to pay those costs as an impediment to his resumption of the agreed-upon renovation work.

Defendant 225 East 57th Street Owners, Inc. is the owner of the residential cooperative located at 225 East 57th Street; defendant Wallack Management Company is its managing agent. Plaintiff is the nonresident proprietary lessee of apartment 9C.

Plaintiff sought to renovate the kitchen and one bathroom in apartment 9C and to perform minor work in the rest of the [334]*334apartment. He submitted a proposal, which was reviewed by the co-op’s engineer and approved. The parties entered into an alteration agreement dated June 15, 2007.

Paragraph 7 of the agreement entitles the co-op to charge the unit owner for costs it incurs with respect to the renovation work:

“If the Corporation is required, or deems it wise, to seek legal, engineering, electrical, architectural or other advice relating to the work or this Alteration Agreement, at any time and from time to time prior to or after granting permission for the work to be performed, the Shareholder hereby agrees to reimburse on demand all fees and disbursements incurred by the Corporation with respect to the same, whether or not the Corporation grants permission for performance of the work. The Shareholder agrees to reimburse the Corporation for all such expenses promptly upon receipt of the Corporation’s bill for the same, and if permission is granted, then all fees incurred prior to commencement of the work shall be reimbursed to the Corporation prior to such commencement” (emphasis added).

Paragraph 32 provides that all expenses and fees required to be paid by the shareholder will be considered additional rent under the lease.

Plaintiff began work on the premises. On October 2, 2007, the resident superintendent, Larry McCool, went to the apartment in response to a complaint of excessive noise, and observed that severe cuts had been made into a structural column, which damaged the column, and that the work undertaken exceeded the scope of the work set forth in plaintiff’s renovation proposal. McCool shut down the job pursuant to paragraph 30 of the alteration agreement, which provides that upon a breach of the alteration agreement the co-op corporation has the right to suspend all work and to prevent workers from entering the building and the apartment, and to revoke its permission for performance of the work.

Plaintiff commenced this action on October 30, 2007, seeking damages for breach of contract and a mandatory injunction compelling defendants to permit him to resume work on the premises. Defendants counterclaimed for attorneys’ and engineers’ fees, and asserted that plaintiffs proposed renovations were not undertaken in accordance with the proposal and [335]*335therefore that plaintiff was in default of his obligations under both the alteration agreement and the proprietary lease.

Plaintiff moved for preliminary injunctive relief, and on November 15, 2007, the motion’s return date, it was resolved by so-ordered stipulation. The parties agreed that plaintiff would retain a licensed home improvement contractor and submit required documentation and proof of insurance, that plaintiffs own electrical contracting firm would perform electrical work only, that any channeling and other invasive work would require advance written approval, and that repairs to the column previously channeled by plaintiff would be performed in accordance with the requirements of defendants’ engineer. The stipulation allowed plaintiff to proceed with the work once those conditions were satisfied: “As soon as P[laintiff] provides the material in the immediately preceding [paragraph], P[laintiff] may complete the renovation; however[,] the channeling repair and the HVAC work may proceed before such time, i.e., w/o delay[,] in accordance with Blum’s directives.”

Despite this so-ordered resolution of plaintiffs application to be allowed to recommence the work, when he sought to proceed with the work in compliance with those terms, defendants would not permit its resumption until plaintiff paid the fees they claimed they incurred for the services of legal counsel and the engineer they consulted.

After an exchange of letters, plaintiff, relying on the terms of the so-ordered stipulation, brought another motion, requesting an order compelling defendants to allow the resumption of the renovations. Defendants argued that the stipulation was always subject to the alteration agreement and contained no waiver of defendants’ rights under that agreement. The motion court agreed with defendants and denied the motion.

At the outset, we reject plaintiffs contention that the cost-shifting provision of the alteration agreement may be applied only where the co-op establishes that it is the prevailing party and that the expert or legal fees it seeks to impose on plaintiff are reasonable. Nothing in law or public policy supports limiting the provision in that manner or precludes its enforcement as written. Indeed, the provision is reasonable.

Plaintiffs reliance on case law limiting successful litigants’ entitlement to legal fees is misplaced. The general rule that legal fees are not awarded for the successful prosecution or defense of an action does not apply here (see Alyeska Pipeline Service Co. v Wilderness Society, 421 US 240, 247 [1975]; Mighty [336]*336Midgets v Centennial Ins. Co., 47 NY2d 12, 21-22 [1979]). We are not dealing with “a provision in an agreement allowing the recovery of attorneys’ fees that are ‘incidents of litigation’ ” (see Horwitz v 1025 Fifth Ave., Inc., 34 AD3d 248, 249 [2006]). Such provisions, including lease provisions for attorneys’ fees resulting from the successful prosecution of tenant defaults, and the converse entitlement created by Real Property Law § 234, are strictly construed, so as to further the important public policy of ensuring that people are not dissuaded from seeking judicial redress of wrongs (see Matter of A.G. Ship Maintenance Corp. v Lezak, 69 NY2d 1, 5 [1986]).

A completely different policy concern applies to the cost-shifting provision under consideration here. The form alteration agreement used by defendants is based on a model form promulgated in 2000 by the Residential Management Council of the Real Estate Board of New York, in conjunction with the Committee on Cooperative and Condominium Law of the Association of the Bar of the City of New York.

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Related

Batsidis v. Wallack Mgt. Co., Inc.
126 A.D.3d 551 (Appellate Division of the Supreme Court of New York, 2015)

Cite This Page — Counsel Stack

Bluebook (online)
65 A.D.3d 332, 882 N.Y.S.2d 102, Counsel Stack Legal Research, https://law.counselstack.com/opinion/batsidis-v-wallack-management-co-nyappdiv-2009.