Managing Partner
One of the most frequently asked questions by corporate clients of their litigation counsel, particularly Cooperative and Condominium Boards, is “Can we recover our attorney’s fees in this lawsuit”? As this recently decided case in New York Supreme Court demonstrates, you better make sure the entitlement to those remedies is spelled out in the governing documents of the entity. In The Bd. of Managers of the 207-209 E. 120Th St. Condo. v. Dougan (May 4, 2022) the condo board plaintiff sought default judgment against a condo unit owner to recover legal expenses incurred during a prior lawsuit in which it was the successful litigant. In the prior action, the condo board had prevailed against the unit owner who was using his apartment for short-term rentals in violation of the condo’s by-laws. Upwards of $37,000 in legal fees were incurred by the condo board in the action to ensure their by-laws were enforced.
The Court granted the condo’s request for a default judgment finding that a meritorious claim was established by relying on the language provided in the building’s governing documents. Thereafter, the court turned to the request for reasonable attorney’s fees. In rendering its decision on that issue, the court first outlined New York’s long-standing jurisprudence and the restrictions on collecting attorney’s fees. The court then took on an exercise of contract interpretation in reviewing the condominium’s by-laws; and emphasized that for a condo to recover attorney’s fees, the condo must make explicit its intent to recover such fees from the unit owner in the by-laws.
Even though the by-laws contained language giving the condo board the right to recover expenses for “remov[ing]” or “abat[ing]” a breach of the by-laws by condo unit owners, the lack of specific language referencing attorney’s fees and expenses proved fatal to the plaintiff’s motion for default judgment. Thus, the court decided that the condo by-laws did not establish the right to attorney’s fees or litigation expenses.
The lesson: Be explicit. Condominium boards should ensure their by-laws contain specific language referencing the board’s intent to recover attorney’s fees and related expenses from breaching unit owners if litigation is sought to remedy a breach. Without that specific language, the condominium board may end up being responsible for its own litigation costs, even when the defending unit owner fails to appear in court.