Rosenberg & Estis, P.C. Secures Appellate Division Win For Owner Against Tenant Seeking Attorney’s Fees

On Behalf of | Jan 3, 2022 | Press Releases

Rosenberg & Estis, P.C., prevailed Tuesday before the Appellate Division, First Department of the New York State Supreme Court in a dispute over whether a residential landlord was responsible for a tenant’s attorneys’ fees arising from a DHCR luxury deregulation proceeding that eventually reached the Court of Appeals.

The Appellate Division unanimously ruled that Brookford LLC, owner of an Upper West Side apartment building, was not responsible for tenant Margaret Schuette’s attorneys’ fees in a rent regulation case in which she prevailed. Jeffrey Turkel, a member of Rosenberg & Estis, P.C., represented Brookford, the defendant-respondent, in the case against Schuette, the plaintiff-appellant.

Justices Rolando Acosta, Judith Gische, David Friedman and Tanya Kennedy unanimously upheld a Jan. 10, 2020 decision by Justice Kathryn Freed of the State Supreme Court of New York County. The case stemmed from Brookford’s 2006 effort to deregulate Schuette’s rent via an administrative proceeding before the State Division of Housing and Community Renewal.

Schuette successfully challenged Brookford’s petition for a high-income-related rent deregulation, by arguing that DHCR could not consider her husband’s income because he had moved into an assisted living facility in March 2005 – prior to the April 2006 issuance of her income certification form. The Court adopted Schuette’s argument that in a high-income luxury deregulation case the tenant gets to decide what percentage of jointly filed income should count toward the luxury deregulation income threshold.

The State Supreme Court of New York County denied Brookford’s challenge and dismissed the proceeding, and both the Appellate Division and the Court of Appeals affirmed DHCR’s denial of the property owner’s rent deregulation petition. In March 2019, Schuette commenced an instant action seeking to recover reasonable attorneys’ fees in an amount to be determined at trial but for no less than $150,000.00, along with costs and interest for defending herself in the underlying proceeding.

The Appellate Division on Tuesday unanimously upheld Justice Freed’s January 2020 decision that Schuette cannot recover the attorneys’ fees she expended during the DHCR rent deregulation proceeding, subsequent Article 78 proceedings and appeals. Freed found that it is well-established, pursuant to Section 234 of Real Property Law, that “a tenant may not recover such fees in administrative proceedings or proceedings brought pursuant to Article 78.”

The Appellate Division agreed, opining that “well-established precedent holds that DHCR proceedings such as the one that [the] defendant commenced here, do not trigger the reciprocal provisions of RPL 234 because ‘[a]n administrative proceeding is not an action,’” and the Court “has repeatedly interpreted the words ‘in any action or summary proceeding’ in RPL 234 not to include administrative proceedings.”

“Rosenberg & Estis is committed to defending landlords from all manner of frivolous claims, including instances in which tenants wrongly seek to be compensated for attorneys’ fees,” Turkel said. “Important precedents such as the one upheld by the Appellate Division help ensure the fair treatment of landlords and other parties.”