Under Real Property Law Section 234 (RPL 234), when a residential lease provides for the landlord's recovery of attorney fees resulting from the tenant's breach of the lease, a reciprocal covenant is implied requiring the landlord to pay the tenant's attorney fees incurred as a result of, among other things, the tenant's successful defense of an action or summary proceeding that the landlord commenced arising out of an alleged lease default. In order for the tenant to become entitled to attorney fees, the tenant must be the “prevailing party,” meaning that the result must be substantially favorable to the tenant.¹

While the court has some discretion to deny attorney fees to the “prevailing party” in the underlying litigation, the courts have repeatedly held that such discretion should be exercised sparingly, and that attorney fees should not be denied to the prevailing party unless “bad faith is established on the part of the successful party or where unfairness is manifest.”²

In December 2012, the Appellate Term, First Department issued its decision in 251 CPW Housing v. Pastreich.³ In Pastreich, the Housing Court found that the tenant was the prevailing party in the underlying summary proceeding and was awarded attorney fees. The Appellate Term reversed, based on its finding that the landlord's possessory claims against the tenant were of “colorable merit” at the time the summary proceeding was commenced. The Appellate Division, First Department, however, reversed the Appellate Term in its decision dated Jan. 6, 2015.⁴ The Appellate Division rejected the Appellate Term's “colorable claim” standard and reinstated the award of attorney fees to the tenant.