ENY Rockaway, LLC v W 16 East New York, LLC
Attorneys and Parties
Brief Summary
Commercial real estate sale; contractual rent remittance before conveyance; buyer’s right to extend closing; prevailing-party attorneys’ fees
Granted plaintiff summary judgment on breach claims and dismissed defendant’s counterclaims; denied plaintiff’s request for attorneys’ fees; denied defendant’s cross-motion.
Denial of attorneys’ fees; the matter was remitted for a hearing on the amount of reasonable fees.
The contract’s fee-shifting clause entitles the prevailing party to reasonable attorneys’ fees, and plaintiff was the prevailing party. Defendant’s arguments of termination and breach did not raise triable issues.
Background
In March 2021, the parties contracted for defendant to sell its interest in a Brooklyn property to plaintiff. Walgreens paid $60,000 monthly rent. The agreement required defendant, until closing, to pay the mortgage and remit to plaintiff any rent collected in excess of the monthly mortgage obligation within 30 days. Plaintiff could extend the conveyance date upon written notice and a fixed payment, with the right to delay conveyance until November 16, 2025. The contract also contained a prevailing-party attorneys’ fees clause. The parties amended the agreement in July 2021. On September 14, 2021, plaintiff preserved its right to extend through November 16, 2025, and defendant executed a memorandum of contract reflecting that timeline. Plaintiff tendered $3,823,227.11 per the agreement and amendment. Defendant remitted the rent balance from October 2021 through February 2022 (with a reduced amount in November 2021), then stopped. Plaintiff sued in August 2022 for breach and fees.
Lower Court Decision
Supreme Court, Nassau County granted plaintiff summary judgment on the first and third causes of action for breach and dismissed defendant’s counterclaims; denied plaintiff summary judgment on attorneys’ fees; denied defendant’s cross-motion. Judgment entered March 18, 2024 awarded plaintiff $476,077 and, in effect, dismissed the counterclaims.
Appellate Division Reversal
Appeals from the order were dismissed because entry of judgment terminated the right of direct appeal from the order (Matter of Aho, 39 NY2d 241, 248). The issues from the order were reviewed on the appeals from the judgment under New York Civil Practice Law and Rules (CPLR) 5501(a)(1) [permits review, on an appeal from a final judgment, of prior nonfinal orders that necessarily affect the judgment]. The court affirmed the judgment awarding plaintiff $476,077 and dismissing counterclaims, holding defendant breached by failing to remit the excess rents and failed to raise triable issues regarding any termination. It reversed the denial of attorneys’ fees because the contract provides the prevailing party “shall be entitled” to reasonable fees, and plaintiff prevailed; it remitted for a hearing on the amount. The notice of cross-appeal from the order was deemed a notice from the judgment (CPLR 5501[c] [notice of cross-appeal from the order is deemed also to be a notice of cross-appeal from the judgment]).
Legal Significance
Enforces clear fee-shifting clauses in commercial real estate contracts and affirms that a seller obligated to remit net rents before conveyance must continue doing so absent a valid termination. Clarifies appellate practice: once judgment enters, appeals from the order are dismissed, but issues are reviewable on appeal from the judgment under CPLR 5501(a)(1).
Where a contract unambiguously requires remittance of excess rents and includes a prevailing-party fee clause, failure to remit supports summary judgment and the prevailing party is entitled to reasonable attorneys’ fees; appellate review of prior orders proceeds via the appeal from the final judgment.