Tuesday, January 30, 2007

Law Story

This should probably be read AFTER the previous post "How I Went Directly Into Solo Law Practice...." http://nylaw2law.blogspot.com/search/label/Directly%20Into%20Solo%20Practice since this piece makes reference to people and ideas from the previous post. In any event, hopefully this true story can also stand on its own. The events below happened when I was a 25 year old attorney, practising on my own for six months. As previously, this is a true story, only the names have been changed....


Mark and Sheryl Stern called about a tenant problem. They owned a 10 unit building on West 18th Street and lived in one of the apartments themselves. They were in a printing business together, worked long hours, and managed the building themselves. If the building were a candy store, it would feel nice to call it a Mom & Pop store. A Mom & Pop apartment building doesn't feel as nice.

One of their tenants, Tommy Bazillo, had a rent-stabilized lease but had been legally subletting the apartment for the past two years. As far as the Stern's knew, he was gone. The subtenant had asked for a lease, but they refused to give her one, and they were legally correct, they did not have to. They wanted to raise the rent and rent the apartment to a doctor friend, Jerry Marks. Two days before the end of his written lease, Tommy Bazillo knocked on Mark and Sheryl's door and said "I'm back in the apartment, under the law you have to keep giving me renewal leases, and I want that, unless you want to make it worth my while to leave".

Sheryl told Tommy he had given up his rights by vanishing for so long. Mark then escorted him to the street. He then went to the apartment, made a list of the very sparse items inside, placed the items in the basement for safe-keeping, and changed the lock. Two weeks went by, the Sterns heard nothing from Tommy, so they rented the apartment to Dr. Marks. He promptly commenced $30,000 worth of renovations.

The Sterns were then served with legal papers from Tommy's lawyers, for a date in Housing Court. Mark also got papers for Criminal Court, charging illegal eviction, a misdemeanor. The Sterns then did what any experienced landlord would do, they got out the yellow pages and called ME. Not wanting to show a big landlord the renovations in my office, I offered to visit them at home, for which they were most appreciative. After hearing the facts, I told them it seemed like the tenant was trying to shake them down for some small settlement, and the Housing court realities indicated that they should consider a small offer, considering the number of court appearances it might take, with their busy schedules and all, and the legal fees it might run into, and kicking and screaming they authorized me to appear in court on their behalf and offer the tenant as high as $1000.

Not to get technical, but Tommy's lawyer had gotten a court order called an Order to Show Cause, essentially the Stern's had to show the court why Tommy shouldn't be put back into possession or awarded money. On the Court date I put my Housing Court training into use and requested a conference, certain it would result in a stip, if not now, on a future date. Tommy's lawyer was willing to talk. She was also disconcerting, a short woman with glasses, serious and studious looking, strictly business. We marked the case for a conference and went out into the crowded hall. "Can you put my client back into possession?" she asked. "No", I answered, thinking about the doctors renovations.

She answered, "OK, $75,000 then."

I then did my best Gary Coleman and said "What you talkin' about"?

She replied "Look, you seem like a nice guy, but our firm specializes in illegal eviction cases, the laws have recently changed, and this case is a sure winner. Why don't we adjourn this a week and you can look up the things I'm telling you about." I took a breath and said "Even if this is technically a wrongful eviction, how can you possibly be making a claim for $75,000?".

She shot back "Rent stabilized apartment in the West Village where he has automatic renewal rights. He pays $650 now, market is $1500, take the difference for the rest of his life expectancy, he's now 24 years old. Also, the new law provides for treble damages and attorneys fees." Uh-oh.

So we adjourned for a week, and I went to the library. The laws had changed six months earlier, and this was not a nuisance case, but serious stuff. I went to visit the Sterns, who were not happy. If they weren't so furious at Tommy, and so sure he had set them up, I knew it was a matter of time until some anger was directed at me. I concealed nervousness and embarrassment at this turn of events, while my mind raced. Suddenly, an idea, "Let me see your insurance on this building?" Until that moment it hadn't occurred to me, but I had read something in the Law Journal about insurance coverage for unusual claims. The Sterns insurance policy had something in it about wrongful eviction suits, written in obscure language, but there it was. Further study convinced me they had insurance for this case, so I sent all the paperwork over to the insurance company, with a cover letter demanding that they take over defense of this case. Two days later I received a telegram (in the pre-historic era when faxes were not invented) from the insurance company disclaiming coverage. They were wrong, but that's one reason we have courts.

I wasn't sure what to do next so I called Fred. He said I'd have to bring a
"D.J. action".

"A what?"

"A new lawsuit in Supreme Court for Declaratory Judgment (DJ) asking the Supreme Court to order the insurance company to do what they were supposed to do."

"Oh". "Got any forms I can use?"

He had something very basic that he'd used in an accident case once. Not exactly on point, but a start. This was going to take some work, and some time.

I showed up in Housing Court and told Tommy's lawyer "Listen, we have insurance, but the company disclaimed and I have to file a DJ action, so you should give me an adjournment so I can do the DJ. I can't talk settlement with you because it would blow my DJ action. How long can you give me??" I held my breath and waited for her to tell me how stupid I was. But, she knew exactly what I was talking about and gave me two weeks. Two weeks turned out not to be enough so we actually started a trial. Fortunately Dr. Marks showed up in Court, without a lawyer, and told the Judge he was the occupant of the apartment, was never served with papers, but came into court because he heard someone was trying to get his apartment. The Judge must have been mad at Tommy's lawyers for not giving me a longer adjournment, because he held a hearing to see if Dr. Marks was a proper party (he was) and whether the lawsuit papers were properly served on him (they weren’t) so in the middle of the trial he declared a mis-trial. Fred said he never heard of a mis-trial in Housing Court, but who cared, I now had some time. Tommy's lawyers would have to start their case over, and of course they did.

Somehow I filed the DJ papers in Supreme Court, basically an Order to Show Cause where the insurance company would have to show why they didn't have to defend this case. I waited for their opposing papers, they never came. On the court date I was sure they'd ask for more time to oppose me, but they didn't show up and my papers were submitted to the court without opposition. Now I was really nervous. I called the insurance company and asked "Are my papers so weak that you don't think the court will order you to defend and insure?"

"Not at all". came the reply. "We know you are right, there IS coverage. We just don't think there is any damages exposure so we'll let it run its course."

"Excuse me, but are you aware of the new law? And treble damages? And rent stabilization versus market rents? Read my papers, your policy says you have to cover for damages the landlord is LEGALLY RESPONSIBLE for, and I think you have a lot of exposure here!"

"Hold on". After 15 minutes he came back on. "When is the next Housing Court date?"

"Day after tomorrow. 111 Centre Street, 9:30, Judge Bramsen."

"We'll have a money man there". Click.

Bottom line, they sent a representative to Housing Court and we negotiated a settlement where the insurance company paid Tommy and his lawyers $22,500 and the Sterns were off the hook. Tommy never showed up in Criminal Court so the Criminal charges were dismissed. There was one small detail remaining. Insurance companies are not only supposed to insure you, the coverage includes paying for your defense. They usually hire their own lawyers, but I had clearly done their work. They told me to prepare an hourly statement showing what I had done. Not having kept time sheets as I went, I had to reconstruct, and probably lost some hours. It still came out to 84 hours of work, and since we hadn't agreed on an hourly, I decided on $75 per hour, which was below market even then. This came out to $6300. They received my statement and called, saying "We all looked bad on this one, the bill is high, can we talk about it?"

"The bill is right and fair."

"We think some of the hours you charged us for are prior to when you notified us."

"How many hours is that?"

"Hmm, about four."

"What do you want to do then?"

"Cut the bill down to $6000 even".

I thought about this for about 10 seconds, and said, "I'll agree, on one condition.......have the check ready so I can come pick it up right now".


And that was that. So much for the first of many law stories. I no longer do landlord tenant cases. The Sterns have been clients on many other matters up through the present. I love learning new things, and believe all lawyers learn something new on every case. Of course, the reality of law practice is there’s no time to bask in the glory. It’s always “on to the next case”.

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