Quinn McCabe LLP recently obtained a favorable ruling in the Appellate Division, First Department which will benefit developers in future license agreement negotiations and RPAPL § 881 Actions. Specifically, In the Matter of 419 Partners LLC v. Eli Zabar et al., Index No. 156867/2021, Case No. 2022-00982, the First Department ruled in favor of the developer’s position that neighbors are not entitled to an award of professional fees when a license is not actually awarded. The ruling incentivizes neighbors to reach resolution on access issues rather than opposing them, lest they be required to pay their own professional fees.
David M. Peraino, Esq., a partner of the firm, successfully argued that the plain wording of RPAPL 881 does not authorize the award of professional fees to a neighbor without the award of a license. Specifically, Mr. Peraino argued that although the statute provides that a license may be granted “upon such terms as justice requires”, when a license is not granted, the statute does not allow for equitable relief, including a neighbor’s legal and engineering fees. Mr. Peraino further noted that the relief was both consistent with First Department precedent, and achieved the equitable balance favored by courts: given that a neighbor would not be burdened with a license, a developer should not have to pay their fees. The trial court agreed, and the First Department unanimously affirmed.
The decision is an important one in the ever-changing landscape of access agreement negotiations and litigations as it disincentives neighbors from focusing their efforts on opposing access requests. Neighbors inclined to do so will face a best-case scenario that they temporarily stave off access, but in the process, incur potentially significant legal and engineering fees which will not be reimbursed by the developer, as is often the case. Rational neighbors are likely to either grant access to a developer pursuant to amicable negotiations, or, in responding to an RPAPL 881 petition, seek favorable access terms rather than opposing the award of a license.
If you have questions about these developments, please contact one of our partners: Matthew S. Quinn, at (212) 447-5510 or mquinn@QMlegal.com, Christopher P. McCabe, at (212) 447-5520 or cmccabe@QMlegal.com, Simon Block, at (212) 447-5530 or sblock@QMlegal.com, Jonathan Krukas, at (212) 447-5560 or jkrukas@QMlegal.com.