605 Fifth Property Owner, LLC v. Abasic, S.A.

Background

605 Fifth Property Owner, LLC (“Owner”) sued Abasic, S.A. to enforce an unconditional guarantee. Under that guarantee, Abasic agreed to guarantee obligations of its subsidiary, NTS W. USA Corp., under a commercial lease. NTS later entered bankruptcy, rejected the lease, and unsuccessfully sought to avoid its lease obligations. The bankruptcy ruling was affirmed by the District Court, and NTS’s appeal to the Second Circuit was still pending when this fee dispute was decided.

On March 8, 2022, the court denied Abasic’s motion for summary judgment and granted Owner’s summary-judgment motions. Owner received $2,213,009.82 in damages. Owner then sought $194,895.87 in attorneys’ fees and disbursements under the guarantee: $173,737.32 in attorneys’ fees, $15,533.65 in disbursements, and an additional $5,624.90 for later work.

Legal standard

The court explained that New York law enforces a contractual attorneys’ fee provision when its language is sufficiently clear. The amount must be reasonable. The court used the lodestar method, which generally calculates a reasonable fee by multiplying a reasonable hourly rate by the number of hours reasonably spent. The court also noted that it has broad discretion in awarding fees under a valid contractual authorization.

The guarantee required Abasic to reimburse Owner for “all Legal Cost” incurred in proceedings or litigation enforcing the guarantee or lease. It defined “Legal Cost” to include reasonable costs and expenses, but excluded costs in a proceeding to the extent NTS or Abasic was the prevailing party.

Abasic’s objections

Abasic argued that at least $47,740.85 should be deducted. First, it claimed that $68,802 related to duplicative or unnecessary summary-judgment briefing. The court rejected that argument. It found that Owner’s separate motions addressed different issues and that Owner’s reply responded to matters Abasic raised for the first time in its opposition, including an expert report, damages objections, and the scope of the bankruptcy ruling.

Second, Abasic objected to charges for administrative work, including emails and filing and serving documents. The court rejected this objection as well. It found that the guarantee broadly covered services by paralegals, law clerks, and other personnel, and that the challenged entries were reasonable, particularly because many were billed at reduced rates for junior attorneys or paralegals.

Third, Abasic sought to exclude $10,575 in fees and expenses related to opposing NTS’s appeal of the bankruptcy ruling. Because Owner had reduced its attorneys’ fees by 20 percent, the amount actually requested for that work was $8,459.88. The court held that these costs were recoverable because the appeal concerned enforcement of the lease and NTS had not prevailed in the bankruptcy court or District Court. The court noted that the appeal remained pending.

Additional fees and disposition

Owner also sought $5,624.90 for work performed after filing the fee motion, including preparing a proposed damages judgment, reviewing NTS’s appeal brief, and preparing the reply supporting the fee request. The court held that the appeal-related work and preparation of the proposed judgment were covered by the guarantee.

The court denied recovery for the portion spent preparing and litigating the attorneys’ fee application itself. Under New York law, a fee-shifting agreement must contain unambiguous language authorizing “fees on fees”—fees incurred in recovering attorneys’ fees. The court found no such explicit language in the guarantee and excluded the identified amounts for preparing the initial fee motion and the reply.

The court concluded that Owner’s March 18, 2022 application was “largely granted.” It awarded Owner $183,296.27 in attorneys’ fees and disbursements. The Clerk was directed to enter judgment for Owner and close the case.