Owner Files/Withdraws Action for Access to Adjoining Parcel

Was Neighbor Entitled to Legal/Architectural Fees Incurred?             

Somchai Ngamwajasat and Ladda Ngamwajasat made a motion for an order granting them summary judgment on the issue of their counterclaim against West End Ave Development LLC for reimbursement of professional fees they incurred relating to (i) the negotiations with West End for a license agreement for temporary access to their home located 71 West End Avenue, Brooklyn, New York, and (ii) their opposition to West End’s action under RPAPL 881.

Ted Kalavesios, West End’s counsel, sent an e-mail to Joanna C. Peck, of the law firm of Adam Leitman Bailey, P.C.,  counsel for Somchai N. and Ladda N., advising of his intention to withdraw the petition for the RPAPL 881 license. The exact message was as follows:

As you probably know, the huge hit on the financial market due the Coronavirus impact and the worsening economic conditions in the construction industry have caused an unprecedented financial crisis. My client, trying to adopt this new economic landscape, has decided to pull back the permit for the demolition of its property, withdraw its plans for a new construction and instead proceed with limited renovations and repair (floors, painting etc.) to turn the existing structure into a rental income producing property. To that effect, I will also notify the Court and seek to discontinue the S881 proceeding. We are actually hoping that whatever friction may have existed between our respective clients will dissipate in time and that they would be able to interact with each other with neighborly civility and mutual respect.

Peck’s responded to the e-mail as follows:

I hope you are feeling better. I will draft the stipulation of discontinuance and send to you. I understand that you may still be ill, and therefore are unable to respond immediately.”

But, instead,  Somchai N. and Laddda N. interposed an answer with seven affirmative defenses and a counterclaim for professional fees and expenses—and thereafter filed a motion for summary judgment on the issue of their counterclaim for the reimbursement of professional fees that they incurred relating to the negotiations with West End for a license agreement for temporary access to their home and in opposition to the West End’s action under RPAPL 881.

West End then filed a notice of cross of motion for an order directing the voluntary discontinuance of the proceeding without prejudice and granting West End an award of reasonable costs, disbursements, and attorneys’ fees on its opposition and Somchai N. and Ladda N.’s bad faith delay and refusal to promptly discontinue the action by stipulation.

The Court granted West End’s cross motion to voluntarily discontinue the action, gbut declined to award costs, disbursements and attorney’s fees to either side.  Somchai N. and Ladda N.’s motion seeking summary judgment on their counterclaim was denied without prejudice as premature because West End had not yet interposed a reply to the counterclaim. West End thereafter interposed a reply to the counterclaim, which included six affirmative defenses.

West End’s petition alleged the following salient facts. West End is the owner of a property located at 73 West End Avenue in Brooklyn, New York .  Somchai N. and Ladda N. are the fee owners of an adjacent property located at 71 West End Avenue.

West End filed plans with the New York City Department of Buildings intending to demolish a three-family residence and construct a six-story mixed-use building in its place at their premise. Somchai N. and Ladda N.s adjacent premises was a two-family residential house. West End sought access to the adjacent premises to perform pre-construction surveys, and to install and erect overhead protections on the front and rear side of the house located at the adjacent property. West End estimated that the work described would be completed in twenty-four months. And West End alleged that it had requested such access to no avail.

The answer with counterclaim  of Somchai N. and Nadda N. contained thirty-eight allegations of fact in support of a counterclaim for professional fees and expenses. The answer with a counterclaim alleged the following salient facts. Somchai N. and Ladda N. are the owners of the adjacent premises. Early in the COVID-19 pandemic, an unmasked representative of West End approached their home. The threats of  COVID-19 and the fact that Somchai N. and Ladda N. are septuagenarians, made them wary of discussing anything with that individual. They alleged that West End was aggressive in the pursuit of a license agreement including calling them at unfavorable hours. Although they had not received any plans for the  project, West End  continued to demand their cooperation with a project that had not received the requisite permits from the DOB. But West End filed an action seeking access to the adjacent premises.

Somchai N. and Ladda N. engaged counsel to represent them. And their attorney contacted West End’s counsel to negotiate a license agreement. At or around the same time, they engaged the services of Don Erwin of Erwin & Bieinski PLLC, an architect, to review the site safety plans and other plans to determine what protections were necessary for their home.

Based upon ongoing negotiations the parties executed a stipulation to adjourn the matter. Somchai N. and Ladda N. worked in good faith to negotiate a license agreement with West End. However, the parties were unable to reach an agreement.

Since an agreement could not be reached, Somchai N. and Ladda N., by their counsel, worked on opposing the RPAPL application. They alleged that they had incurred professional fees and expenses relating to the engagement of an architect to review the plans for the demolition phase of the project and proposed site safety plans for their home. That was is in addition to the legal fees and expenses incurred in opposing the proceeding. They sought judgment in their favor for at least $30,000.00 plus costs and disbursements.

Somchai N. and Ladda N. moved for an order granting summary judgment on the counterclaim. The counterclaim sought reimbursement of professional fees and expenses incurred by them in: (1) the negotiation of a license agreement, which included the review of the plans and the drawings and the performance of site inspections and (2) for preparing and submitting opposition to West End’s action.

A prevailing party may not recover attorneys’ fees from the losing party except where authorized by statute, agreement, or court rule. That rule is based upon the high priority accorded free access to the courts and a desire to avoid placing barriers in the way of those desiring judicial redress of wrongs.

But Samchai N. and Ladda N. were not claiming entitlement to attorneys’ fees based on a court rule or on an agreement between the parties. Rather, they contended that RPAPL 881 provided the statutory authority for the court to award professional fees, including attorney’s fees under the circumstances they encountered. And RPAPL 881 gave the court discretionary authority to award such fees under appropriate circumstances.

In opposition, West End’s counsel contended that Somchai N. and Ladda N.  were not entitled to any fees because no license was granted pursuant to RPAPL 881. In the alternative, West End’s counsel contended that any award should be limited to actual fees incurred up to and until January 22, 2021—on the ground that no fees should be allowed for any work done after being informed that West End intended to discontinue the petition.

RPAPL 881 pertains to gaining access to adjoining property to make improvements or repairs and provides in pertinent part as follows:

When an owner or lessee seeks to make improvements or repairs to real property so situated that such improvements or repairs cannot be made by the owner or lessee without entering the premises of an adjoining owner or his lessee, and permission so to enter has been refused, the owner or lessee seeking to make such improvements or repairs may commence a special proceeding for a license so to enter pursuant to article four of the civil practice law and rules. The petition and affidavits, if any, shall state the facts making such entry necessary and the date or dates on which entry is sought.

A license to enter the adjoining property shall be granted by the court in an appropriate case upon such terms as justice requires and, in determining whether or not to grant a license pursuant to the statute, the courts generally apply a standard of reasonableness. Such terms as justice requires extends to the nature and extent of access that is necessary, the duration such access may be necessary, as well as what protections may be necessary to safeguard the adjoining owner’s property.

Section 881 compels a property owner to grant access for the benefit of another. The respondent to an 881 petition did not seek out, and does not derive any benefit from, the intrusion.. The court must be mindful of the fact that it is called upon to grant access after the parties have failed to reach an agreement and must not allow either party to overreach and use the court to avoid negotiating in good faith.

RPAPL 881 authorizes the court to grant the license on such terms as justice requires. That language is broad and allows for the flexibility and full scope upon which equity depends. It is sufficient statutory authority to award reasonable attorneys’ fees as well architectural fees as a condition of a license, where the circumstances so warrant.

In deciding whether justice requires attorneys’ fees, either for negotiating an agreement or in opposing a petition pursuant to RPAPL 881, the court must balance the equities. The court should consider the extent to which the access sought interferes with the owner’s use and enjoyment of the property, the risks it poses to the property, as well as the complexities which the access sought presents in drafting a license agreement. Also, any attorneys’ fees included as a condition of a license should be proportional to the size and scope of the project. In this case, Somchai N. and Ladda N. contended that they engaged the service of an architect to assess West End’s plans and that they engaged the services of counsel to help them assess and negotiate a reasonable license agreement.

Assuming that Somchai N. and Ladda N. made a prima facie showing of those claims, those costs would be properly compensable limited only by their reasonableness. That would be so regardless of the fact West End voluntarily withdrew the petition for an RPAPL 881 license. Once West End asked Somchai N. and Ladda N. for a license and then commenced a special proceeding to obtain a license by a court order, it was to be expected that its neighbors would engage an architect to review, assess and inform them of West End’s plan and their potential options. It was also perfectly reasonably for Somchai N. and Ladda N. to engage counsel to help them navigate and negotiate a reasonable license agreement.

But the fees they incurred on or after January 25, 2021, were a different matter entirely. Based on the email exchange between  counsel for the parties, counsel for Somchai N. and Ladda N. agreed to draft a stipulation of discontinuance. On February 16, 2021, instead of drafting and forwarding a stipulation of discontinuance to West End’s counsel, they filed an answer with a counterclaim for professional fees.

A plaintiff may voluntarily discontinue an action without a court order by serving the parties with a notice of discontinuance at any time before a responsive pleading is served or, if no responsive pleading is required, within 20 days after service of the pleading asserting the claim and filing the notice with proof of service with the clerk of the court.

On January 22, 2021, when West End’s counsel sent the email to counsel for Somchai N. and Ladda N., West End was free to discontinue the petition without leave of the Court and without their consent because they had not yet interposed an answer. At that time the right to discontinue was absolute and unconditional. Where no pleadings have been served, West End had the absolute and unconditional right to discontinue the action by serving a notice of discontinuance upon opposing counsel without seeking judicial permission.

Three weeks after the e-mail in which counsel for counsel for Somchai N. and Ladda N. offered to draft the notice of discontinuance, those attorneys interposed an answer with counterclaim. With the filing of the answer, West End lost the ability to unilaterally discontinue the action without leave of the Court. Now, West End could only withdraw the petition without leave of the Court by stipulation of the parties or by seeking leave of the Court.

The e-mail response by counsel for Somchai N. and Ladda N. reasonably expressed to West End their consent to the discontinuance. The repudiation of that consent by the filing of an answer with counterclaim was a breach of the agreement to consent to the discontinuance. West End thereafter moved for an order permitting discontinuance of the action. Somchai N. and Ladda N. opposed the motion which the court granted.

Somchai N. and Ladda N. interposed an answer with counterclaims before West End filed a notice of discontinuance of the petition. They sought reimbursement for expenses incurred in retaining an architect to review West End’s plans, and in retaining an attorney to negotiate and draft a license agreement. And they also sought reimbursement for attorney’s fees incurred in opposing the petition and in prosecuting the counterclaim.

However, as of January 25, 2021, Somchai N. and Ladda N. had reneged on an agreement to draft a stipulation of discontinuance. As of that date, any attorney fees incurred by them were generated to oppose an RPAPL 881 petition that they knew was being withdrawn. They also knew that the negotiation for the RPAPL 881 license had in effect ended. Therefore, in determining the reasonableness of the attorney’s fees generated in negotiating the RPAPL 881 license, no attorney’s fees were compensable on or after January 25, 2021; regardless of whether they were incurred in opposing the petition or in prosecuting the counterclaim.

The Court noted that the email exchange between the attorneys during January 21st and 25th of 2021, not only demonstrated that Somchai N. and Ladda N. tacitly consented to West End’s intention to discontinue the petition, but also, that they agreed to draft the stipulation of discontinuance for the West End’s counsel since he was still recuperating from a recent hospitalization due to COVID -19. Moreover, the exchange provided a reasonable basis for West End’s counsel’s reliance and his delay in drafting the notice of discontinuance himself while he was waiting for opposing counsel to follow through on its offer.

West End contended that the conduct  of counsel for Somchai N. and Ladda N. in filing of an answer and a counterclaim for attorney and architect fees, after tacitly agreeing to draft the order of discontinuance, was an improper attempt to generate unwarranted additional attorney’s fees. And the Court found that contention to be valid and meritorious. So Somchai N. and Ladda N. were not entitled to attorney’s fees generated after January 25, 2021, for either opposing the petition of prosecuting the counter claim.

Regarding the attorney’s fees incurred prior to the commencement of the petition and to the fees incurred after the commencement but prior to January 25, 2021, those fees were compensable to the extent the attorney was trying to negotiate a reasonable license agreement. Similarly, the architectural fees generated during this period were compensable.

Somchai N. and Ladda N. originally sought a total of $32,805.00 in professional fees, including $11,397.50 in attorney’s fees and $5,400 in architectural fees relating to the negotiation of the license agreement, and $16,007.50 additional attorney’s fees relating to the opposition of the RPAPL 881 petition.

The attorney’s fees in the amount of $11,397.50 were relating to the negotiation of the license agreement. The figure was supported by, among other things, a copy of invoices from counsel for the period from November 9, 2020, through and including December 23, 2020, at a rate of $525.00 an hour. Counsel also submitted an affirmation in support explaining that the work was related to assessing and negotiating a license agreement.

The architectural fees in the amount of $5,400.00 were relating to reviewing West End’s plans as part of the negotiation of the license agreement. The figure was supported by invoices from the  architectural firm for the period from November 12, 2020, through and including February 9, 2021, at a rate of $300.00  an hour. Architect Don Erwin also submitted an affidavit explaining the work that had been done.

The attorney’s fees in the amount of $16,007.50 was related to opposing the RPAPL 881 petition. The invoices  demonstrated that they were for the period from January 4, 2021, through and including February 26, 2021, at a rate of $525.00 per hour. An analysis of the invoice reflected that the  attorney billed for 3.1 hours of work conducted during January 12, 2021, through January 22, 2021, at $525.00 per hour for a total of $1627.50. That amount was properly compensable. All attorney’s fees incurred after that date were not.

In opposition to the application for professional fees, West End did not raise a triable issue of fact. The amount of those professional fees, however, was limited pursuant to the Court’s discretionary authority. Accordingly, the Court granted Somchai N. and Ladda N.’s summary judgment on their request for professional fees to the following extent: West End was liable for their attorney’s fees in the amount of $13,025.00. West End was also liable for the their architectural fees in the amount of $5,400.00.  But West End was was not liable for any professional fees incurred on or after January 25, 2021.

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