On October 19, 2022, Justice Cohen of the New York County Commercial Division issued a decision in First Equity Realty v. Harmony Group, II, 2022 NY Slip Op. 33601(U), awarding the defendant its fees related to the proof of damages that that did not exceed the amount of a CPLR 3220 offer, but only for the claim that was resolved at trial, explaining:
CPLR 3220 provides:
At any time not later than ten days before trial, any party against whom a cause of action based upon contract, express or implied, is asserted may serve upon the claimant a written offer to allow judgment to be taken against him for a sum therein specified, with costs then accrued, if the party against whom the claim is asserted fails in his defense. If within ten days thereafter the claimant serves a written notice that he accepts the offer, and damages are awarded to him on the trial, they shall be assessed in the sum specified in the offer. If the offer is not so accepted and the claimant fails to obtain a more favorable judgment, he shall pay the expenses necessarily incurred by the party against whom the claim is asserted, for trying the issue of damages from the time of the offer. The expenses shall be ascertained by the judge or referee before whom the case is tried. An offer under this rule shall not be made known to the jury.
The Judgment obtained after trial as to Count I was for less than the Offer. Therefore, CPLR 3220 applies. The Offer complied with the statute by remaining open for ten (10) days and Plaintiff elected not to accept the Offer with respect to Count I. Plaintiff’s reliance on Deck v Chautauqua County Patrons’ Fire Relief Assn., 73 Misc.2d 1048, 343 N.Y.S.2d 855 [Sup. Ct. Chautauqua County 1973], which did not involve an offer to liquidate damages under CPLR 3220, is misplaced. However, even a cursory review of Defendants’ application for expenses indicates that they seek recovery beyond the scope of what is permissible under CPLR 3220. Defendants appear to take the view that, with limited exceptions, they are entitled to recover all costs and fees incurred after their 3220 offers because the issues of liability and damages are inextricably intertwined.
That is not the law. CPLR 3220 provides for a recovery of expenses only for trying the issue of damages from the time of the offer. As Justice Dillon’s Practice Commentary to this provision points out, the court, upon determining the amount of trial-related costs and attorney’s fees, should make an award only to the extent of the damages portion of the trial, as the issues of liability were never conceded and are not within the scope or intendment of CPLR 3220. That approach is consistent with the general principal that “[s]tatutes authorizing an award of costs and sanctions are in derogation of common law and, therefore must be strictly construed.
Consistent with the foregoing, Defendants must submit a more narrowly targeted request that focuses on the question of damages, rather than liability. In this regard, the Court will consider at the hearing whether expenses with respect to the statute of limitations defense – to the extent it impacted the scope of recoverable damages – comes within the scope of CPLR 3220.
With respect to Count II, Plaintiff argues that because the claim was voluntarily withdrawn prior to trial there can be no expenses necessarily incurred for trying the issue of damages from the time of the offer under CPLR 3220. The parties have not cited any authority directly on point. In Abreu v Barkin and Assoc. Realty, Inc., 115 AD3d 624 [1st Dept 2014], the First Department held that a defendant was entitled to pursue expenses under CPLR 3220 with respect to a claim that was withdrawn by the plaintiff in a stipulation on the record at trial. By contrast, in Saul v Cahan, 153 AD3d 951 [2d Dept 2017], the court held that a defendant was not entitled to expenses under CPLR 3220 with respect to a claim that was dismissed by the court prior to trial on a motion to dismiss, thus obviating the need for trial on any claim.
This case falls somewhere between those two. Here, there was a trial, but not on the voluntarily dismissed claim (Count II). In view of the general principle of strictly construing a cost-shifting statute, the Court concludes that the most reasonable reading of CPLR 3220 is that there can be no recovery of expenses with respect to Count II because that claim did not proceed to trial.
(Internal quotations and citations omitted).