Graham Court Owner’s Corp. v. Taylor, Appellate DivisionFirst Department 70520/2010
In a 3-2 decision, the First Department has endorsed a broad reading of Real Property Law § 234. That statute provides for an implied reciprocal right of a residential tenant to recover attorneys’ fees whenever the lease provides that a landlord may recover attorneys’ fees if the tenant fails to perform a lease covenant. In Graham Court, the lease did not have a traditional landlord’s attorneys’ fees clause. Rather, the lease provided that any rent the landlord received from re-renting the premises was first to be used to pay the landlord’s expenses. Expenses was defined to include attorneys’ fees.
“As a remedial statute, Real Property Law § 234 should be accorded its broadest protective meaning. . . . .”
The court held that as a “remedial statute, Real Property Law § 234 should be accorded its broadest protective meaning consistent with legislative intent.” Accordingly, the court ruled that the tenant, who was ultimately successful in his defense of a claim of an unauthorized alteration (the landlord also lost a rent overcharge claim), was entitled to recover attorneys’ fees. A thorough analysis of the opinion can be found in Warren Estis’s and Michael Feirstein’s New York Law Journal column here.
Because Graham Court was a 3-2 decision, the First Department, may not have the last word on the scope of RPL 234, but, for now, the lesson of Graham Court is that a residential lease that contains a landlord’s prevailing party legal fee clause, no matter how disguised, will likely be read to include an implied reciprocal tenant’s prevailing party legal fee clause.