Successfully Defends Coop’s Right to Deduct Legal Fees from Proceeds of Judicial Sale
For Immediate Release
Shea Communications, LLC
George Shea, Mark Faris (212) 627-5766
Rosenberg & Estis, P.C., a leading New York City real estate law firm, has prevailed before the Appellate Division, First Department, of New York State, successfully defending a cooperative corporation’s right to unilaterally deduct approximately $390,000 in attorney’s fees as additional maintenance from the proceeds of a judicial sale.
The ruling follows an epic legal battle with a litigious shareholder in 12-14 East 64th Street that entailed a total of 12 different actions, including the appeal. What began in 2006 as an effort to force the shareholder to pay her maintenance ended in the shareholder’s eviction and the award of maintenance arrears and attorney’s fees.
Rosenberg & Estis Member Bradley Silverbush represented 12-14 East 64th Street before the Appellate Division. The Appellate Division upheld the decision by Justice Lynn R. Kotler of the New York State Supreme Court in New York County, who ruled that the co-op was justified in withholding approximately $390,000 in attorney’s fees as additional maintenance from proceeds on the sale of the shareholder’s apartment.
“Despite the seemingly endless delay, this case demonstrates that with zealous legal representation co-operative boards can prevail over combative shareholders,” said Silverbush. “The co-op board steadfastly defended its rights, and at the conclusion of the litigation it was able to evict the shareholder and receive compensation for all legal fees.”
The shareholder, Verina Hixon, had a history of filing suits against the co-op and other entities. In 2006, following Hixon’s failure to pay maintenance, 12-14 East 64th Street commenced a summary non-payment in Housing Court. After years of delays and appeals, 12-14 East 64th Street brought Rosenberg & Estis into the case. Silverbush successfully defended various legal actions brought by Hixon against the co-op and secured an eviction.
After Hixon was evicted, the co-op held a public auction to sell her unit, and transferred the shares to the new purchaser. Hixon then sued the coop and two board members, alleging that the sale of the property was improperly handled. She also sued for damages to her personal property, and alleged that the legal fees and maintenance deducted from the proceeds of the sale were unreasonable. Her main argument was to challenge the fees on the basis that they were more than the maintenance she owed.
Justice Kotler granted Rosenberg & Estis summary judgment, dismissing all of the claims with the exception of the determination of the fees, pending review of an accounting. After reviewing the invoices and an affirmation attesting to the reasonableness of the fees, and without soliciting argument by opposing counsel, the judge made a final determination, holding that all of the fees deducted were reasonable. This was an implicit recognition of, and testament to, the expertise of the co-op’s attorneys.
Among the cases during the saga:
- Successful prosecution of a case based upon Hixon’s default in maintenance payment;
- Successful defense of two Housing Part cases commenced by Hixon;
- Successful defeat of four small claims cases commenced by Hixon;
- Successful defense of a bogus claim of discrimination, resulting in the dismissal of Hixon’s claim;
- Successful dismissal of Hixon’s bankruptcy petition, which she commenced to try to maintain possession of the premises;
- Two successful decisions in Hixon’s supreme court action;
- Success before the Appellate Division.
Hixon also had an appeal from a prior case that she lost at the Appellate Division, and a motion for leave to appeal to the Court of Appeals that was rejected.