R&E Secures Appellate Division Win, Securing Attorney’s Fees In Marathon, 12-Action Case: Successfully Defends Coop’s Right to Deduct Legal Fees from Proceeds of Judicial Sale

Rosenberg & Estis 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. The Appellate Division upheld the decision of the New York State Supreme Court in New York County, ruling 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. 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 R&E into the case. R&E 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. The Court granted R&E 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.