Tuesday, June 5, 2012

New York Civil Procedure Roundup

No "prevailing party" attorneys' fees unless party prevailed with respect to "central relief sought."  On April 27, 2012, the Fourth Department issued a decision in Chainani v. Lucchino addresing the availability of "prevailing party" attorneys' fees.  Here the plaintiffs sued the defendants alleging that defendants breached a 2000 agreement granting a parking easement, by modifying its lot in a way that prevented their parking.  Plaintiffs brought two causes of action, one seeking damages and a prospective injunction prohibiting defendants from interfering with plaintiffs' parking rights, and another seeking a more limited order that defendants modify the lot to enable them to park there.  The parties settled for a stipulated order requiring the modifications, and dismissal of the claim for a broader injunction and damages.  Plaintiffs then sought attorneys' fees under the 2000 agreement, which contained a provision giving fees to a "prevailing party" in an action to enforce the agreement.  The lower court denied fees, and the Fourth Department affirmed, over a dissent from Justice Carni.  The court noted that in determining who is a "prevailing party" it considers whether the party obtained the "central relief" sought, "consider[ing] the true scope of the dispute litigated, followed by a comparison of what was achieved with that scope."   Because plaintiffs did not obtain damages, a finding that the 2000 agreement was breached, or the broader injunctive relief sought in their first cause of action, the court held that the comparison favored finding that they were not prevailing parties.

This case has some potential relevance to consumer-debt cases that have an attorney fee-shifting provision. One strategy in such cases is to argue that because interest was not authorized by any contract, plaintiff is limited to obtaining the balance of principal remaining when all payments are applied against principal.  Even if this amounts to something, where it amounts to far less than the demanded amount, a debtor defendant should be able to argue that the plaintiff is not the prevailing party.  More importantly, if this was the position taken all along by the defendant, the latter should be able to argue that he or she is the prevailing party and so entitled to attorneys' fees.  (General Obligation Law 5-327 provides that any time a consumer contract provides for attorneys' fees to be awarded against the consumer, the consumer is automatically reciprocally entitled to fees if he or she prevails.)

Party may request change of venue in amended complaint.  In Valley Psychological, P.C. v. GEICO, the Third Department on May 10, 2012, held that where a defendant failed to request change of venue before or with the original answer as required by CPLR 511(b), but served an amended answer as of right, the party could request change of venue in the amended answer.  The amended answer supersedes the original answer and so including the request in it satisfies the CPLR 511(b) requirement.  CPLR 511(b) further provides that the request is waived if a motion to change venue is not made within 15 days of serving the demand to change venue, which the defendant here did.  Although the lower court granted change of venue in its discretion under forum non conveniens principles, finding that Nassau County was more convenient than Albany County, the Third Department held that defendant was entitled to change of venue as a matter of right because the demand was properly served and Albany County was not a proper venue since neither party had its principal place of business there.
This decision is likely to come in handy for attorneys who take over cases that had been litigated by self-represented defendants that may have neglected to assert a venue defense in the original answer.  Courts liberally allow amendment of the answer under such circumstances.  See Renaissance Equity Holdings, LLC v. O’Neil, Index No. 098946/08, 2009 N.Y. Misc. LEXIS 2416, at *3 (Sup. Ct. Kings County Apr. 27, 2009).  Although CPLR 513 absolves consumers from any need to affirmatively request change of venue in consumer debt-collection cases, individuals defending commercial debt-collection cases may benefit from this rule.

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