On remand from the New York Court of Appeals, the Appellate Division for the First Judicial Department modified a judgment in a fight over attorneys’ fees

At issue on remand from the Court of Appeals (Matter of Kasowitz, Benson, Torres & Friedman, LLP v JPMorgan Chase Bank, N.A., — NY3d —, 2024 NY Slip Op 05876, [2024], revg 209 AD3d 529 [1st Dept 2022]) is Chase’s challenge to the award of attorneys’ fees to The Dakota in prior litigation initiated by its former shareholder-tenant Alphonse Fletcher, Jr.

The proprietary lease between The Dakota and Fletcher states that The Dakota would be entitled to attorneys’ fees “[i]f the Lessee shall at any time be in default hereunder, and the Lessor shall take any action against the Lessee based upon such default, or if the Lessor shall defend any action or proceeding (or claim therein) commenced by the Lessee.” This provision makes clear that attorneys’ fees are to be awarded under two circumstances: first, when the lessee is in default; second, whenever a lessee sues The Dakota, even if The Dakota is in default.

Because the lease provides for attorneys’ fees regardless of default or merit, in a dispute between a residential co-op and a shareholder tenant, we find this provision to be unenforceable as unconscionable…

Result

Chase now concedes that The Dakota’s lien has priority insofar as it is based on charges unrelated to the disputed claim for legal fees, and that those unrelated charges come to $592,189.69. Therefore, the judgment is modified to that extent.

(Mike Frisch)