Background
Broadway Warehouse Co. held a commercial lease with Buffalo Barn Board, LLC. After a falling out over unpaid rent, Broadway Warehouse commenced a prior action and obtained a judgment. It then brought a second action seeking, as damages, the attorney’s fees it had expended to secure that original rent judgment — a classic fees-on-fees scenario. Supreme Court, Erie County granted partial summary judgment on liability for breach of contract and appointed a referee to determine the amount of recoverable fees.
Following an evidentiary hearing, the referee recommended awarding $135,009.89 — almost twice the amount of the underlying unpaid-rent judgment — but denied Broadway Warehouse’s request for prejudgment interest under CPLR 5001. Supreme Court went further, reducing the award to $88,487.58, limiting recovery to fees incurred from the commencement of the initial action through December 5, 2017, when the defendant’s principal paid the rent and interest due. Broadway Warehouse appealed, arguing it should also recover fees incurred after that date — fees generated in the effort to collect the attorney’s fee award itself.
The core question on appeal was whether a standard-form attorney’s fees clause in a commercial lease entitles a prevailing landlord to “fees on fees” absent express contractual language to that effect.
The Court’s Holding
The Fourth Department unanimously affirmed the reduced award and rejected the fees-on-fees claim. Citing the Second Department’s recent decision in Matter of Aron Law, PLLC v New York City Fire Dept. (239 AD3d 972 [2d Dept 2025]) and the First Department’s earlier holding in Batsidis v Wallack Mgt. Co., Inc. (126 AD3d 551, 553 [1st Dept 2015]), the court reaffirmed that an award of “fees on fees” is permitted only when authorized by “a specific contractual provision or statute.” The court further quoted Pace v Robertson (235 AD3d 989, 992 [2d Dept 2025]) for the proposition that “[i]n the absence of unmistakably clear intent regarding the recovery of fees on fees, a right to recover those fees should not be implied.”
On the prejudgment interest question, the court found the issue waived. Broadway Warehouse had failed to object to the referee’s recommendation denying prejudgment interest under CPLR 5001. Because the plaintiff did not challenge that portion of the referee’s report before Supreme Court, the objection could not be raised for the first time on appeal.
Key Takeaways
- A standard commercial lease attorney’s fees clause does not authorize recovery of fees incurred to collect a prior attorney’s fee award; only a specific contractual provision or statute can unlock “fees on fees,” and courts will not imply such a right absent unmistakably clear contractual intent.
- A party who fails to object to a referee’s report denying CPLR 5001 prejudgment interest waives that argument entirely — the objection cannot be resurrected on appeal.
- Landlords and commercial tenants drafting fee-shifting clauses should include express “fees on fees” language if they intend to permit recovery of fees incurred in the collection of a prior fee award.
Why It Matters
New York courts apply a bright-line rule against implied fees-on-fees recovery: the contractual intent must be “unmistakably clear,” and boilerplate attorney’s fees provisions — no matter how broadly worded — do not meet that threshold. This decision, joining a growing line of appellate authority across the Departments, serves as a direct warning to commercial litigants who assume that winning an attorney’s fee award automatically entitles them to additional fees incurred in pursuing it.
The waiver holding on prejudgment interest is equally instructive. Litigants in referee-supervised proceedings must scrutinize every component of a referee’s report and lodge timely objections or risk forfeiting the issue forever.