Background
A landlord-tenant contract dispute produced a useful warning about New York’s offer-to-liquidate-damages procedure. 11H, LLC sued Brandon Adegunle over a rental agreement for property in Oyster Bay. Ten days or more before trial, Adegunle served a written offer under CPLR 3220 to resolve the contract damages for a specified amount. The plaintiff rejected the offer and proceeded through a nonjury trial.
The trial court ultimately awarded 11H only $3,910.60, less than Adegunle’s pretrial offer. Adegunle then sought the expenses necessarily incurred in trying damages after the offer, including attorney fees. Supreme Court granted the application and awarded $11,473 in fees and costs. The plaintiff appealed, arguing that CPLR 3220 did not apply because its complaint contained claims beyond breach of contract and that the statute’s reference to “expenses” did not authorize attorney fees.
CPLR 3220 is a specialized New York cost-shifting device for claims based on contract. Unlike the more familiar CPLR 3221 offer of judgment, it allows a defendant to make an offer to liquidate damages while liability remains contested. If the claimant does not accept and then fails to obtain a more favorable damages award, the claimant must pay the defendant’s post-offer trial expenses on the damages issue.
The Court’s Holding
The Second Department affirmed. It held that CPLR 3220 applied even though 11H pleaded causes of action in addition to breach of contract. The statutory mechanism was available because the action included a contract-based claim, the offer was served at least ten days before trial, and Adegunle had not conceded liability before trial.
The court also squarely rejected the argument that “expenses” excludes legal fees. Relying on its existing CPLR 3220 precedent, the panel stated that the provision authorizes recovery of attorney fees. That makes the rule an exception to New York’s usual American Rule, under which each side ordinarily bears its own legal fees absent a contract, statute, or court rule providing otherwise.
Finally, the panel found the $11,473 award reasonable. The party seeking fees bears the burden of showing the hours reasonably expended and the prevailing community rate for comparable work. Adegunle’s submissions met that standard, and the amount fell within Supreme Court’s discretion. The award therefore stood even though it substantially exceeded the damages the plaintiff recovered at trial.
Key Takeaways
- A CPLR 3220 offer can shift attorney fees, not merely taxable costs, when the claimant’s contract recovery fails to beat the offer.
- Adding noncontract claims does not necessarily take a case outside CPLR 3220 when a contract-based cause of action remains in the case.
- Defendants should serve a clear offer at least ten days before trial and preserve proof separating post-offer damages work from unrelated litigation tasks.
Why It Matters
For New York commercial litigators, the ruling makes CPLR 3220 a meaningful settlement tool rather than procedural trivia. A carefully timed offer can change the economics of trying a modest contract claim, particularly where anticipated legal fees are likely to exceed the disputed damages.
Claimants and in-house counsel should evaluate these offers with a fee-shifting model, not only a damages comparison. Defendants seeking an award should maintain contemporaneous time records tied to the post-offer damages phase. The decision also counsels against assuming that alternative tort or equitable counts neutralize the statute.