Scott Mollen

Commercial Landlord-Tenant—Guaranties—Attorney Fees—Guaranty Language Did Not Provide for "Fees on Fees"—Pre-Judgment Interest Awarded on Legal Fees—Legal Fees Are Recoverable Even Though They Had Been Incurred, But Not Paid and There Was No Written Retainer Agreement

A landlord commenced an action to recover on guaranties, following a breach of a commercial lease (guaranty action). The landlord had moved for attorney fees and costs incurred in litigating this action, attorney fees and costs arising from the subject motion (fees on fees) and prejudgment interest on the foregoing amounts, pursuant to CPLR §5001. The landlord also moved for the same relief in connection with a related action brought by the landlord's tenant alleging wrongful eviction (wrongful eviction action). The two actions had been joined for discovery and trial.

A defendant guarantor ("A") moved in the guaranty action for summary judgment dismissing the landlord's claim for attorney fees and costs. The court had denied the motion. The court had previously granted the landlord partial summary judgment on the "basic issue of liability." Additionally, the court rejected "A's" argument that the claim had been released pursuant to the tenant's bankruptcy plan.

The court reasoned that the landlord was "asserting its claim for attorneys' fees directly against ("A"), in its capacity as (tenant's) guarantor, rather than against (tenant) or its assignees…." Moreover, the guaranty specified that the guarantor's liability "shall not exceed the indebtedness of the tenants except that the landlord may recover the cost of collection (including attorneys' fees) in connection with its enforcement of the guaranty," and "the First Department has already held that the guaranty entitled landlord to collect attorneys' fees in connection with this collection proceeding and that the release of (tenant's) obligations to the landlord did not change this result, as the guaranty explicitly provides."