A recent decision of the Appellate Division, First Department, Krodel v. Amalgamated Dwellings, Inc., 166 A.D.3d 412, 88 N.Y.S.3d 31 (2018) inspires us to re-examine New York’s doctrine about recovering attorney fees in litigation. Krodel itself explores a corner of the “American Rule” that holds that one cannot recover attorney fees from an adversary in litigation absent an authorizing statute, rule, or contract, and finds that under certain circumstances, contract provisions authorizing the fees are unconscionable. With that boundary point established, older case law fills in when such contract clauses will receive enforcement.

American Rule

Under the American Rule, “attorneys’ fees and disbursements are incidents of litigation and the prevailing party may not collect them from the loser unless an award is authorized by agreement between the parties or by statute or court rule.” Matter of A.G. Ship Maintenance Corp. v. Lezak, 69 N.Y.2d 1, 5, 503 N.E.2d 681, 511 N.Y.S.2d 216 (1986). In landlord tenant litigation, one of the richest sources of attorney fee law, some few statutes award attorney fees in particularized situations, such as RPL §227-d that awards such fees for housing discrimination against victims of domestic violence; RPL §237-a awarding the fees to victims of discrimination against children in housing; and RPL §226-b awarding the fees to a tenant when a landlord has unreasonably withheld consent to a residential subletting.

The general attorney fees provision in landlord tenant litigation is RPL §234 that reads into the lease a right to attorney fees when the residential lease grants landlord such a right in litigation with the tenant.

Central Relief

In Murphy v. Vivian Realty Co., 199 AD2d 192, 605 NYS2d 285 (AD1 1993) the First Department limited the award of attorneys for when the party seeking them has actually prevailed in the underlying litigation. In thus ruling, it cited to Sperling v. 145 East 15th Street Tenant’s Corp., 174 AD2d 498, for such a rule with respect to RPL §234. The idea of “prevailing,” however is complicated by the doctrine of the “central relief sought.” It is not enough that a litigant win the case. Under this doctrine, in order to be entitled to attorney fees, the litigant has to win at least most of that which was sought at the very beginning of the case, as the court perceives that goal to have been.

In Nestor v. McDowell, 81 N.Y.2d 410, 599 N.Y.S.2d 507 (1993), the court held that that which was sought was an eviction, even though the reason the eviction was denied the landlord was because during the case, the tenant ceased its wrongful conduct. Even though Nestor never explained how a court knows that the landlord really sought eviction rather than the cessation of the wrongful conduct, for failing to have obtained that “central relief,” the landlord was denied attorney fees.