Petitioner East River Housing Corporation commenced the instant proceeding pursuant to Article 78 of the Civil Practice Law and Rules ("CPLR") seeking to set aside a final determination made by respondent the New York State Division of Human Rights ("DHR"), dated June 14, 2013, which dismissed a complaint filed by Stephanie Aaron, an East River shareholder, alleging housing discrimination because of a disability. In a decision dated October 22, 2013, this court denied the petition finding that DHR's determination was rational. The Appellate Division, First Department reversed this court's denial of the petition, annulled the DHR's determination and granted the petition. Petitioner now moves for an Order pursuant to CPLR § 8601 awarding petitioner fees and expenses, including attorney's fees, incurred in connection with its initial Article 78 proceeding and its appeal to the First Department. For the reasons set forth below, petitioner's motion is granted.

Pursuant to CPLR § 8601(a), "a court shall award to a prevailing party, other than the state, fees and other expenses incurred by such party in any civil action brought against the state, unless the court finds that the position of the state was substantially justified or that special circumstances make an award unjust."

In the instant action, petitioner's motion for an Order pursuant to CPLR § 8601 awarding it fees and expenses, including attorney's fees, incurred in connection with its initial Article 78 proceeding and its appeal to the First Department is granted. As an initial matter, this court finds that petitioner is an eligible party under the statute. Article 86 of the CPLR defines a "party" as "any owner of an unincorporated business or any partnership, corporation, association, real estate developer or organization which had no more than one hundred employees at the time the civil action was filed." CPLR § 8602(d)(ii). Petitioner has provided the affidavit of Harold Jacob, petitioner's Vice President, who has affirmed that petitioner is a corporation and that it had no more than 100 employees at the time the proceeding was commenced. Additionally, this court finds that petitioner may seek an award under CPLR § 8601 as it was the "prevailing party" in the proceeding. Article 86 of the CPLR defines a "prevailing party" as "a plaintiff or petitioner in the civil action against the state who prevails in whole or in substantial part...." CPLR § 8602(f). The Court of Appeals has held that "a party has prevailed' within the meaning of [Article 86 of the CPLR] if it has succeeded in acquiring a substantial part of the relief sought in the lawsuit...it is a plaintiff who can show that it succeeded in large or substantial part by identifying the original goals of the litigation and by demonstrating the comparative substantiality of the relief actually obtained." Matter of New York State Clinical Lab. Assn. v. Kaladjian, 85 NY2d 346, 355 (1995). Here, it is clear that petitioner is the "prevailing party" for purposes of Article 86 of the CPLR. In its decision, the First Department annulled the DHR's determination and granted the underlying petition in its entirety, providing petitioner with the full relief it sought, which was to annul DHR's determination.

As this court has determined that petitioner is eligible to seek a fees award pursuant to Article 86 of the CPLR, this court must now determine whether petitioner is entitled to an award pursuant to that statute. This court now finds that petitioner is entitled to an award under CPLR § 8601 on the ground that DHR's position was not "substantially justified" and that there are no special circumstances that make an award unjust. Pursuant to CPLR § 8601(a), "[w]hether the position of the state was substantially justified shall be determined solely on the basis of the record before the agency or official whose act, acts, or failure to act gave rise to the civil action." [*2]The Court of Appeals has interpreted the phrase "substantially justified" to mean " justified to a degree that could satisfy a reasonable person', or having a reasonable basis both in law and fact.'" Id. at 356 (internal citations omitted). Additionally, "the government bears the burden of proof and...it must make a strong showing that its position was substantially justified." Matter of Barnett v. New York State Dept. of Social Servs., 212 AD2d 696, 697-98 (2d Dept 1995). Here, the court finds that DHR's position was not "substantially justified" based on the First Department's decision in which it held that DHR's determination was "purely arbitrary" and that it was "issued in contravention of the agency's own rules...." Additionally, the First Department found that DHR's stated grounds for its dismissal based on administrative convenience "cannot be rationally applied to the instant circumstances." Specifically, the First Department found that the administrative convenience dismissal made on the purported basis of the availability of another forum for the complainant to pursue her grievances was a sham because "there is no indication that the complainant...sought to pursue her claims in another forum and, in any event, doing so after dismissal based upon a finding of no probable cause,' would contravene the election of remedies provision contained in section 297(9) of the Executive Law...." Further, the DHR has not set forth any special circumstances in this case that would make an award unjust.

DHR's assertion that Executive Law ("Exec. Law") § 297(10) bars petitioner from recovering attorney's fees under Article 86 of the CPLR is without merit. That statute governs the award of reasonable attorney's fees to a prevailing party "in an action or proceeding at law under this section or section two hundred ninety-eight of this article." Exec. Law § 297(10). Thus, by its terms, Exec. Law § 297(10) is not applicable to this Article 78 proceeding and petitioner's entitlement to attorney's fees.

Finally, this court finds that the issue of the amount of fees and expenses petitioner may recover from the DHR must be resolved at a hearing. Pursuant to CPLR § 8601(a), "[f]ees shall be determined pursuant to prevailing market rates for the kind and quality of the services furnished." Additionally, CPLR § 8602(b) defines "[f]ees and expenses" to include "reasonable attorneys' fees." Here, the DHR has raised an issue of fact as to whether the fees claimed by petitioner are reasonable based upon the amount of hours worked by petitioner's attorneys and paralegals and the number of attorneys and paralegals assigned to the case. Thus, a hearing to resolve the issue is appropriate in this case. See Morgan & Finnegan v. Howe Chemical Company, 210 AD2d 62 (2d Dept 1994)(ordering a hearing on "[t]he reasonableness of plaintiff's fees [which] can be determined only after consideration of the difficulty of the issues and the skill required to resolve them; the lawyers' experience, ability and reputation; the time and labor required;...[and] the customary fee charged for similar services....") Accordingly, it is hereby

ORDERED that petitioner's motion for an Order pursuant to CPLR § 8601 awarding it fees and expenses, including attorney's fees, incurred in connection with its initial Article 78 proceeding and its appeal to the First Department, is granted; and it is further

ORDERED that the amount of reasonable fees and expenses, including attorney's fees, that petitioner may recover against the DHR is referred to a Special Referee to hear and report. Within thirty (30) days from the date of this order, counsel for petitioner shall serve a copy of this order with notice of entry, together with a completed Information Sheet, upon the Special Referee Clerk in the General Clerk's Office (Room 119), who is directed to place this matter on the calendar of the Special Referee's Part for the earliest convenient date. This constitutes the [*3]decision and order of the court.