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Current Developments in the Commercial Divisions of the
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Posted: March 13, 2015

Attorneys’ Fees Award Reversed for Lack of Proof

On March 10, 2015, the First Department issued a decision in 135 E. 57th St., LLC v. 57th St. Day Spa, LLC, 2015 NY Slip Op. 01897, reversing an award of attorneys’ fees because “[t]he admissible evidence submitted at the hearing was not sufficient to determine the reasonable amount of attorneys’ fees incurred by plaintiff as a result of defendants’ discovery defaults.”

The decision in 135 E. 57th St., LLC, is a classic case of winning the battle but losing the war. Justice Ramos of the New York County Commercial Division granted attorneys’ fees to the plaintiff as a discovery sanction against the defendant, and referred the case to a Special Referee to determine the amount of a reasonable fee award. Justice Ramos proceeded to affirm the Special Referee’s award of $69,106.25, but the First Department reversed, finding the evidence submitted at the hearing insufficient. The Court explained:

The admissible evidence submitted at the hearing was not sufficient to determine the reasonable amount of attorneys’ fees incurred by plaintiff as a result of defendants’ discovery defaults. Accordingly, the motion court should have rejected the Special Referee’s report recommending that plaintiff be awarded $69,106.25 in attorneys’ fees. The Special Referee erred in admitting a spreadsheet into evidence as a business record pursuant to CPLR 4518(a), since the document was prepared by plaintiff’s counsel for use at the hearing, and was not supported by a proper business record foundation. Nor was the limited testimony provided by an associate of the law firm representing plaintiff sufficient to establish that the amount of attorneys’ fees and expenses was fair, reasonable and incurred as a result of the discovery defaults.

(Internal quotations and citations omitted) Luckily for the plaintiff, the First Department decided to give it another bite at the apple, remanding the case for “a new hearing and determination.” The lesson here: don’t lose sight of your damages case. A finding of liability won’t help your client if you can’t present admissible evidence to prove your damages.

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