On February 4, 2015, the Second Department issued a decision in Prince v. Schacher, 2015 NY Slip Op. 00862, holding that a court has the power to reject the parties’ agreed-to formula for calculating attorneys’ fees awardable under a promissory note.
In Prince , the Second Department reversed the trial court, holding that the plaintiff was entitled to judgment on a promissory note, but it also held that while the plaintiff was entitled to attorneys’ fees under the note, the trial court was not bound by the formula for calculating fees prescribed by the note, explaining:
The second cause of action was for an award of counsel fees incurred to enforce the note in an amount equal to 20% of the principal and interest due on the note, as expressly set forth in the instrument. However, while the plaintiff established as a matter of law that she is entitled to an award of counsel fees incurred in enforcing the note, the court is not bound by the fixed percentage set forth in the note, but has the inherent authority to determine reasonable attorneys’ fees. Accordingly, the Supreme Court should have granted that branch of the plaintiff’s motion which was for summary judgment on the issue of liability on the second cause of action, and determined the reasonable counsel fees to which the plaintiff is entitled for the enforcement of the note against the defendant.
(Internal quotations and citations omitted) (emphasis added).