930 Fifth Corp. v. King, 42 N.Y.2d 886 (1977)

A landlord must assert all claims arising from a tenant’s lease default, including attorney’s fees, in a single action to avoid splitting a cause of action.

Summary

The case addresses whether a landlord can bring a separate action to recover attorney’s fees incurred in a prior summary proceeding against a tenant, based on a lease provision allowing for such recovery. The New York Court of Appeals held that the landlord could not bring a separate action. The court reasoned that the obligation to obey house rules, the right to re-enter upon default, and the liability for attorney’s fees are all interrelated parts of a single obligation under the lease. Therefore, the landlord was required to assert all claims, including attorney’s fees, in the initial summary proceeding, and failure to do so constituted an impermissible splitting of a cause of action.

Facts

A landlord (930 Fifth Corp.) and a tenant (King) entered into a lease agreement for an apartment. The lease contained a clause (Paragraph 30) granting the landlord the right to re-enter and remove the tenant for violating any lease covenant. Another clause (Paragraph 15) required the tenant to obey all house rules, including those restricting pets. The lease further stipulated that if the tenant defaulted, the tenant would be liable for the landlord’s expenses, including reasonable attorney’s fees, incurred in any action based on such default.

Procedural History

In a prior summary proceeding, the landlord successfully established that the tenant had violated a house rule regarding pets. No claim for attorney’s fees was made in that proceeding. Subsequently, the landlord initiated a separate action to recover reasonable attorney’s fees incurred in the prior summary proceeding. The lower courts ruled against the landlord. The case then reached the New York Court of Appeals.

Issue(s)

Whether a landlord can bring a separate action to recover attorney’s fees incurred in a prior summary proceeding against a tenant, when the lease agreement stipulates that the tenant is liable for such fees upon default, or whether such a claim must be brought in the initial action.

Holding

No, because the lease clauses regarding the tenant’s obligations, the landlord’s right to re-enter, and the tenant’s liability for attorney’s fees are all interdependent and constitute a single obligation, requiring the landlord to assert its entire claim, including attorney’s fees, in one action.

Court’s Reasoning

The Court of Appeals reasoned that the clauses of the lease are interdependent, creating a single obligation. The tenant’s covenant to obey house rules, the landlord’s right to re-enter upon default, and the tenant’s liability for attorney’s fees are all interrelated aspects of the whole lease agreement. Therefore, the landlord was obligated to assert its entire claim, including the claim for attorney’s fees, in the initial summary proceeding. Failure to do so constituted an impermissible splitting of a cause of action. The court cited Century Factors v New Plan Realty Corp., 41 NY2d 1040, stating that “[t]he obligation of the defendant, though consisting of two promises, is in truth a single obligation requiring the plaintiff to assert its full claim in one action”. The court also overruled any inconsistent holdings in prior cases, such as 207-17 West 25th St. Co. v Blu-Strike Safety Razor Blade Co., 302 NY 624.