Supreme Court, New York County, October 20, 2023

Gary J. Wachtel, New York City, for plaintiff.

In this action, plaintiff, Caprice Associates, has sued defendant, George Martel, for damages consisting of (i) rent allegedly owed by Martel under a residential lease between them; (ii) legal fees incurred by plaintiff in bringing a related Housing Court nonpayment eviction proceeding; and (iii) legal fees incurred by plaintiff in this action. Plaintiff now moves without opposition under CPLR 3215 for default judgment against Martel. The motion is granted in part and denied in part.

A plaintiff moving for default judgment must establish proper service on defendant; defendant's default; and the facts constituting plaintiff's claims. (CPLR 3215 [f].) Plaintiff has shown that it properly served Martel. (See NY St Cts Elec Filing [NYSCEF] Doc No. 2.) And Martel has not appeared in this action. With respect to plaintiff's claim for $120,975.02 in unpaid rent, plaintiff has sufficiently proved the facts constituting that claim for default-judgment purposes through the affidavit of its managing partner and the documents attached to the affidavit, including copies of the lease and renewal lease, and a rent ledger. (See NYSCEF Doc No. 5, aff; NYSCEF Doc No. 8, leases; NYSCEF Doc No. 11, rent ledger.)

In addition to unpaid rent, plaintiff seeks an award of attorney fees incurred in this action and in the related Housing Court proceeding. This court agrees with plaintiff that article{**81 Misc 3d at 706} 20 of the lease permits plaintiff to recover fees. (See NYSCEF Doc No. 8 at 8.) But, as discussed further below, whether plaintiff may now recover fees incurred in the Housing Court proceeding, in particular, presents a more difficult question.

I. Whether Plaintiff's Claim for Attorney Fees Incurred in a Prior Housing Court Summary Proceeding is Subject to the Bar on Claim-Splitting

Plaintiff's claim for fees from the Housing Court proceeding would ordinarily be foreclosed by the bar on claim-splitting. Under that doctrine, a party must seek "attorneys' fees [*2]within the action in which they were incurred, not a subsequent action."^[FN1] (O'Connell v 1205-15 First Ave. Assoc., LLC, 28 AD3d 233, 234 [1st Dept 2006].) A question exists here, however, whether plaintiff's claim for Housing Court fees is barred. The bar on claim-splitting is an aspect of the doctrine of claim preclusion. (See Sannon-Stamm Assoc., Inc. v Keefe, Bruyette & Woods, Inc., 68 AD3d 678, 678 [1st Dept 2009], citing Stoner v Culligan, Inc., 32 AD2d 170, 171-172 [3d Dept 1969].) And no claim-preclusion bar applies "where the remedy that the plaintiff seeks in the subsequent proceeding was unavailable to the litigant in the prior proceeding." (Matter of Singh v New York State Div. of Human Rights, 186 AD3d 1694, 1694-1695 [2d Dept 2020], citing 172 Van Duzer Realty Corp. v Globe Alumni Student Assistance Assn., Inc., 24 NY3d 528, 534 [2014].)

Thus, if plaintiff was foreclosed from obtaining an award of attorney fees in the Housing Court nonpayment proceeding, plaintiff may now seek those fees in this action. This court concludes that plaintiff was foreclosed, on two alternative, and independent, grounds: Real Property Actions and Proceedings Law § 702 (1) barred plaintiff from seeking attorney fees in the first place; and Real Property Law § 234 barred plaintiff from recovering fees even had they been sought, because the Housing Court judgment was entered on default.

A. Whether Plaintiff was Barred from Seeking Attorney Fees in the Housing Court Proceeding

The prior Housing Court proceeding, brought in 2022, undisputedly "relat[ed] to a residential dwelling or housing accommodation." (RPAPL 702 [1].) Section 702 (1), enacted as part of{**81 Misc 3d at 707} the Housing Stability and Tenant Protection Act of 2019 (HSTPA), defines "rent" as "the monthly or weekly amount charged in consideration for the use and occupation of a dwelling pursuant to a written or oral rental agreement." And it provides that "[n]o fees, charges or penalties other than rent may be sought in a summary proceeding pursuant to this article, notwithstanding any language to the contrary in any lease or rental agreement." (RPAPL 702 [1].) The question, then, is whether this language prevented plaintiff from seeking attorney fees in Housing Court.

This court's research has not found any decision of the Appellate Division—or, for that matter, the Appellate Term—squarely addressing this issue. At most, in Beco v Ritter, the Appellate Division, Third Department, stated that a landlord's proposed rental-payment schedule improperly "imposed a penalty that may not be sought in a summary proceeding," citing RPAPL 702. (190 AD3d 1150, 1152 [3d Dept 2021].) But that statement was made in the context of a declaratory-judgment action brought by the tenant in Supreme Court to challenge the legality of the proposed rental schedule, in which the availability of prevailing-party attorney fees was not at issue. This court is not persuaded that Beco should be treated as resolving that attorney-fee [*3]question.^[FN2]

[1] Considering the matter for itself, this court concludes that RPAPL 702 (1) bars attorney-fee claims from being asserted in RPAPL article 7 proceedings by prevailing parties.

The broad, categorical language of section 702 (1) would appear on its face clearly to preclude a landlord—or a tenant under the reciprocity language of Real Property Law § 234 (1)—from asserting a claim for attorney fees in a Housing Court{**81 Misc 3d at 708} summary proceeding.^[FN3] And some lower trial courts have held as much. (See e.g. 744 E. 215 LLC v Simmonds, 65 Misc 3d 1234[A], 2019 NY Slip Op 51996[U], *4 [Civ Ct, Hous Part, Bronx County 2019] [holding that section 702 (1) "has made it clear that regardless of any statute or lease provision allowing for recovery of attorneys' fees in a summary proceeding, parties may no longer seek such fees in housing court and are relegated to commencing a plenary action for same"]; Magnano v Stewart, 71 Misc 3d 1223[A], 2021 NY Slip Op 50466[U], *3-4 [Ossining Just Ct 2021] [same].)

Reasons exist, though, to question this straightforward reading. Commentators have suggested, for example, that RPAPL 702 (1)'s language was intended merely to prevent landlords from seeking eviction for nonpayment of non-rent fees, including attorney fees, rather than to prevent landlords (and tenants) from being awarded attorney fees in summary proceedings brought on other grounds.^[FN4] And this understanding draws some support from HSTPA's bill jacket: The Senate sponsor's memorandum summarizing the bill's (many) provisions describes the provision that became section 702 (1) as "defin[ing] 'rent' for the purposes of eviction proceedings to exclude extraneous fees and charges to protect tenants from eviction due to failure to pay fees." (Senate Introducer's Mem in Support, Bill Jacket, L 2019, ch 36 at 8.)

Additionally, when the Legislature enacted HSTPA, Real Property Law § 234 implied a reciprocal covenant in residential property leases that would permit a tenant to recover prevailing-party attorney fees when the lease provided for the landlord to recover those fees "in any action or [*4]summary proceeding." (Real Property Law § 234 [1] [emphasis added].) Section 234 also implied an agreement between landlord and tenant that the tenant could bring a fee claim under section 234 "in an action commenced against the landlord or by way of counterclaim in any action or summary proceeding commenced by the landlord against the tenant." (Id. [emphasis added].) HSTPA, although amending section 234 (1) to bar landlords{**81 Misc 3d at 709} from recovering attorney fees on a default judgment, did not strike section 234 (1)'s references to attorney fees being sought and obtained in summary proceedings. That omission might reflect a legislative intent to permit landlords and tenants to recover attorney fees in statutory proceedings.^[FN5]

These objections to the no-attorney-fees reading of RPAPL 702 (1) are not without force. But the objections cannot overcome the clarity of section 702 (1) itself. Again, the statute provides that "[n]o fees, charges or penalties other than rent may be sought in a summary proceeding pursuant to this article." (RPAPL 702 [1].) This language is well-chosen if the no-attorney-fees reading of the statute is correct. Conversely—and tellingly—it would be ill-chosen if the narrower alternative reading ("eviction for nonpayment of attorney fees may not be sought in a summary proceeding") were correct.

In these circumstances, construing section 702 (1) to permit attorney-fee claims in article 7 summary proceedings would require this court essentially to disregard the language that the Legislature enacted, and give legal effect instead to ambiguous contextual hints that the Legislature might have meant to do something different. This court declines to take that step.

The court recognizes the undesirable practical consequences that might result in many cases from applying the interpretation of RPAPL 702 (1) that this court reaches here. Among other things, doing so will end up requiring prevailing parties in Housing Court to bring separate plenary actions to recover attorney fees to which they are contractually or statutorily entitled, an inefficiency with obvious costs and few discernable benefits. Indeed, given the reciprocal covenant of Real Property Law § 234 (1), the burdens of this inefficiency will in many cases fall on the backs of tenants—litigants who are frequently unrepresented, of limited means, or both. But these practical policy problems are the result of the statute the Legislature enacted. They are problems for the Legislature, not this court, to solve.

This court concludes, therefore, that notwithstanding the language of the parties' lease, plaintiff was statutorily barred{**81 Misc 3d at 710} from seeking attorney fees in the prior Housing Court proceeding. (Id.)[*5]

B. Whether Plaintiff was Otherwise Barred from Recovering Attorney Fees in the Housing Court Proceeding

[2] The lease in this case undisputedly pertained to "residential property." (Real Property Law § 234 [1].) Section 234 (1) provides that in actions or summary proceedings relating to residential property, a "landlord may not recover attorneys' fees upon a default judgment." In the prior Housing Court proceeding here, the court found for plaintiff (there, petitioner), and entered a judgment of possession, upon the "failure to answer" of defendant (there, respondent). (See NYSCEF Doc Nos. 14, decision & order, 13, judgment, in Caprice Assoc. v Martel, index No. LT-308549-22.) Because the prior Housing Court judgment was entered on default, section 234 (1) barred plaintiff from recovering attorney fees, even if plaintiff could have sought them in its petition. This separate statutory bar on plaintiff's obtaining attorney fees in the Housing Court proceeding provides an alternative basis for this court's conclusion that the claim-splitting doctrine does not foreclose plaintiff's current request for its attorney fees incurred in that proceeding.

II. Whether Plaintiff is Entitled to its Claimed Amount in Attorney Fees

Plaintiff claims entitlement to $11,026.78 in attorney fees incurred in the Housing Court proceeding. (See NYSCEF Doc No. 5 ¶ 11.) But plaintiff neither explains nor justifies that figure, for example through the submission of time records or invoices. Plaintiff thus has not proved the facts constituting its claim for attorney fees incurred in the other proceeding. Plaintiff may still do so, however, through a motion on notice supported by appropriate documentation.

With respect to plaintiff's claim for attorney fees incurred in this action, plaintiff does not claim a specific amount in fees. Instead, it asks the court to "set[ ] this matter down for an inquest for reasonable attorneys' fees," as claimed in plaintiff's second cause of action. (Id. at 5.) Plaintiff may establish on papers the amount of its reasonable attorney fees incurred in this action. This court does not at this time perceive a need also to hold an inquest.

Accordingly, it is ordered that the branch of plaintiff's motion seeking default judgment with respect to unpaid rent (excluding attorney fees) is granted, and plaintiff is awarded a{**81 Misc 3d at 711} judgment against defendant for $120,975.02, with interest running from April 1, 2023; and it is further ordered that the branches of plaintiff's motion seeking default judgment with respect to attorney fees incurred in the related Housing Court proceeding, and attorney fees incurred in this action, are granted only to the extent that plaintiff may seek an award of those two increments of attorney fees through a motion on notice, supported by appropriate documentation, and otherwise denied; and it is further ordered that upon this court's determination of any motion by plaintiff for the award of attorney fees, plaintiff may enter a supplemental judgment for the amount that this court determines to be plaintiff's reasonable attorney fees.

Footnote 1:The Housing Court proceeding was litigated to a final judgment of possession. (See NYSCEF Doc No. 13, judgment, in Caprice Assoc. v Martel, Civ Ct, NY County, index No. LT-308549-22.)

Footnote 2: Language in the 2021 supplement to West's Practice Commentaries for Real Property Law § 234 could be read to imply that the Appellate Division decisions discussed in that update treated RPAPL 702 (1) as not barring attorney-fee claims. But none of those decisions concerned an RPAPL article 7 summary proceeding brought after HSTPA's effective date.

Similarly, the undersigned held in 61 W. 62 Owners Corp. v Pastena (77 Misc 3d 1220[A], 2023 NY Slip Op 50008[U], *2 [Sup Ct, NY County, Jan. 3, 2023]) that a landlord's attorney-fee claim was partially barred by the claim-splitting doctrine. But the prior action in Pastena, brought years before the Legislature enacted HSTPA, was a plenary action brought by tenant against landlord, not a Housing Court summary proceeding brought by landlord against tenant. (See Pastena, 2023 NY Slip Op 50008[U], *1.)

Footnote 3: Section 702 (1) does not, admittedly, expressly bar a court from awarding attorney fees in a summary proceeding. But it is difficult to see how fees could properly be awarded if they were not first sought by the prevailing party.

Footnote 4: See e.g. Gerald Lebovits, John S. Lansden & Damon P. Howard, New York's Housing Stability and Tenant Protection Act of 2019: What Lawyers Must Know, 29 J Affordable Hous & Cmty Dev L 75, 118 (2020) (describing the different views on this issue).

Footnote 5: That said, one should not overread this language. The agreement implied by section 234 (1) permitting a tenant to bring a fee claim against a landlord permits fees to be recovered only "as provided by law"—and thus is potentially limited by RPAPL 702 (1)'s restrictions on the permissible relief in summary proceedings.