PRELIMINARY STATEMENT

          In its moving brief, the Sponsor demonstrated entitlement to attorneys' fees and related expenses under 15 U.S.C. §3611 (d). The Co-op does not dispute either that the Spoiisor is entitled to an award of fees and expenses for work done in connection with its successful suit or that it may also recover its reasonable fees for preparing this application.

          The Co-op does dispute the amount of work the Sponsor's counsel did in this matter because (it argues) the issues to be decided required minimal legal research. there was no need for discovery because the parties entered into a Stipulation of Undisputed Facts ("Stipulation"), and settlement discussion was practically non-existent. The Co-op also asserts that Proskauer's hourly rate is too high and the work it performed was redundant.

          All of the Co-op's contentions disregard the Supreme Court's holding that "'the most critical factor' in determining the reasonableness of a fee award 'is the degree of success obtained. '" Farrar v. Hobby, 506 U.S. 103, 114 (1992) (citing, Hensley v. Eckerhart, 461 U.S. 424, 436 (1983)). In light of the millions of dollars at issue and the work to be done the attorneys' fees were reasonable.

          The Co-op's position is untenable also because it ignores key facts:

          The Sponsor has also demonstrated that (i) its request for fees incurred before the June 2000 vote to terminate the Garage Lease, in a related dispute, and those paid to experts such as David Lifson are covered by the Act and supported by Second Circuit precedent and (ii) computerized legal research costs are part of attorneys' fees under Second Circuit Law.

          Finally, the Sponsor is absolutely entitled to an injunction preventing the Co-op from passing any portion of the awarded attorneys' fees back to it as an assessment oil its shares in the Co-op. The general state law concepts the Co-op relies on would, in these specific circumstances, interfere with the Congressional fee-shifting policy and are to that extent preempted.

ARGUMENT [1]

I.        THE RATES PROSKAUER CHARGED ARE REASONABLE

          As a threshold matter, the Sponsor disputes the Co-op's assertion that the standard hourly fee Proskauer charged is higher than prevailing market rates. (Opp. Br. at 7.) Courts in this District have routinely awarded firms of comparable, or even smaller size, comparable hourly rates. See, e.g., Lowrance v. Coughlin, No. 88 Civ. 3343), 1995 WL 103277 (S.D.N.Y. March 8, 1995) (finding Paul, Weiss' hourly rates of $155 to $295 for associate time and $465 for partner time to be reasonable more than six years ago); Harris Trust and Sav. Bank v. John Hancock Mut. Life. Ins. Co., 137 F. Supp. 2d 351, 358 (S.D.N.Y. 2001) (finding Anderson Kill's hourly rates of $500 for partner in December 2000 to be reasonable); ) Yurman Designs, Inc. v. PAJ Inc., 125 F. Supp. 2d 54, 57 (S.D.N.Y. 2000) affd.,_ F.3d _, 2002 WL 200242 (2d Cir. February 8, 2002) (allowing for the recovery of Pryor, Cashman's hourly rates of $520.69 for a partner and $278.50 for an associate); Broome v. Biondi, 17 F. Supp. 2d 230, 237-238 (S.D.N.Y. 1997) (holding larger firms with higher overhead entitled to charge higher rates and finding in 1996, Skadden's hourly rate of $250 for an associate and Latham & Watkins' $320 an hour for a partner to be reasonable).

          A firm's billing rate "must be evaluated in the context of prevailing market rates and billing practices for New York City firms of comparable size and expertise," Rodriguez v. McLoughlin, 84 F. Supp. 2d 417, 423 (S.D.N.Y. 1999) (internal quotes omitted) (emphasis added), and not compared to those of much smaller firms with lower overhead. Proskauer, currently one of the 11 largest firms in the State (See Bruce E. Fader Reply Declaration, dated March 11, 2002. Exs. B. Q. charges rates similar to those charged by other large New York firms. (See Fader Reply Dec., Exs. C, E.)

          The Sponsor, a sophisticated client, regularly paid the fees charged to it (but see footnote 2 infra) as they were incurred, (See Schreiber Dec., ¶¶ 9, 11, 13, 16, 18, 23, 29 and 33-34), further evidencing the reasonableness of those fees. See e.g., Yurinan Designs, 125 F. Supp. 2d at 58 (finding that the client was "sophisticated" and therefore "Its acceptance of the rates charged is in itself substantial evidence of their reasonableness."); Harris Trust and Sav. Bank, 137 F. Supp. 2d at 358 ("The reasonableness of [the lawyers'] fees is also demonstrated by the fact that [the plaintiff] actually paid the fees as they were incurred."); see also Broome, 17 F. Supp. 2d at 237-38 (noting that "The actual rate that applicant's counsel can command in the market is itself highly relevant proof of the prevailing community rate") (internal quotes omitted).

          For these reasons, Proskauer's rates should be found to be reasonable. [2]

II.     PROSKAUER PERFORMED WORK FOR
         THE BENEFIT OF BOTH PARTIES

          The Co-op's argument that Proskauer devoted more time than required unfairly ignores the fact that Proskauer took the lead in two significant aspects of this litigation.

          First, Proskauer was the primary preparer of the Stipulation used by both parties in lieu of extensive discovery. (See Schreiber Dec. at ¶ 20.) To prepare the Stipulation, Proskauer was required to do a detailed investigation into the Co-op's history and unit ownership and then to synthesize large amounts of data into a cohesive document, including comprehensive charts.

          Second, it was Proskauer that (without objection) prepared the term sheet and draft settlement proposal. (Schreiber Dec., ¶¶31 -33); (Dale A. Schreiber Reply Declaration, dated March 11, 2002 at ¶3.) The Co-op's rejection of the Sponsor's offer should not preclude the recovery of the fees incurred in its development. See Lowrance, supra, at*2 (awarding fees for time spent on unsuccessful settlement negotiations).

III.     THE WORK PROSKAUER PERFORMED
         WAS NEITHER REDUNDANT NOR EXCESSIVE

          The Co-op further contends that Proskauer devoted too much time preparing its moving papers and responding to the Co-op's extensive cross-motion for summary judgment, even though substantially all the work was done by only two attorneys. The Co-op does not dispute that both parties litigated vigorously, as proved by this Court's docket sheet. (See Schreiber Dec., ¶¶24-29, Exs. 3 and 11.) The Co-op "cannot litigate tenaciously and then be heard to complain about the time necessarily spent by the plaintiff in response." Broome, 17 F. Supp. 2d at 235 (quoting City of Riverside v. Rivera,477 U.S. 561, 580, n.11 (1986)). [3]

          On the issue of the calculation of the number of cooperative units for purposes of the 25% calculation (which had never been passed upon by any court), the Co-op took multiple and changing positions, necessitating intensive factual and legal work, including a great deal of factual research into building records and related documents, research and analysis of the Act itself, its legislative history, case law interpreting it, and into analogous issues and principals of statutory construction. (See Mov. Br. at 11.)

          Similarly, the Co-op's assertion that the Lomantos' and the Iwanczuks' units should be added to the Sponsor's required factual and legal research. The Co-op contends (Opp. Br. at 6) that "a clear standard for judging if holders of unsold shares are successor developers as that term is defined by the Abuse Relief Act" exists, but it nonetheless vigorously litigated the facts surrounding whether those two holders of unsold shares with extremely attenuated relationships with the Sponsor qualified as "successors" to the "developer" under the Act. (See Schreiber Dec., Ex. 1 at 12-16.)

          As to the other issues raised, but not reached by this Court, the Co-op has either re-cast the case law, mischaracterized the Sponsor's arguments, or both. In any event, these were fair ground for litigation. [4]

          The Co-op also argues that having either one or two partners and an associate review and edit briefs was redundant and excessive. (Brill Aff., ¶¶30-32.) This argument mischaracterize the actual work performed and ignores the reality of law practice. Having more than one attorney "research and participate in drafting a brief is a common practice and therefore not necessarily duplicative." Broome, 17 F. Supp. 2d at 235. Indeed, "many tasks require or benefit from the attention of more than one attorney." Id.; see also Harb v. Gallagher, 131 F.R.D. 381, 387 (S.D.N.Y. 1990) (finding that having an associate perform initial research and drafting and a partner reviewing the work was "not a duplication of effort but, rather, a way to prepare a case in an efficient manner.")

          Further, the billing records the Sponsor submitted show that the primary drafting was done by associate Feld, and then reviewed by partner Schreiber. (See e.g., Schreiber Dec. Exs. 7, 10, and 11.) A substantial amount of the time Bruce Fader logged was not billed (and therefore not sought here) and he worked primarily on the opposition to the Co-op's cross-motion, the sur-reply, and the instant application. (Schreiber Dec., Exs. 11 and 16.)

IV.    THE SPONSOR IS ENTITLED TO RECOVER
         EXPERT FEES, FEES INCURRED BEFORE THE
         2000 TERMINATION VOTE, AND COMPUTER RESEARCH CHARGES

          The Act does not limit the fees the Sponsor may recover to those spent concerning only the 2000 vote. Courts applying the Act's fee-shifting provision have awarded fees for related work performed before the commencement of actual litigation. See 305 East 24th Owners Corp. v. Parnam Co., 799 F. Supp. at 353, 360 (S.D.N.Y. 1992) (awarding co-op attorneys' fees for legal work performed before the termination concerning the co-op's right to ternimate). Indeed in Darnet, a case argued by Mr. Brill, a co-operative was awarded attorneys' fees for work done in a prior proceeding because, as here, "the actions [were] clearly intertwined with one anaother, and the second set of actions [were], in one sense, a continuation of the first set." (Brill Aff., Ex. H at 10.)

          The fact that the Sponsor - when given notice and a meaningful opportunity to be heard in 1999 - persuaded the shareholders not to vote for termination does not negate the fact that the Co-op's action in 1999 was intertwined with the 2000 termination vote (when the Sponsor was deprived of such an opportunity). (Schreiber Dec., ¶¶ 9-13.) Similarly, the dispute involving the sidewalks in front of the property was all part of the Co-op's campaign of harassment and the Co-op should not be permitted to evade the resulting costs. (1d. at ¶34.)

          Moreover, the Act is not limited to recovery of attorneys' fees but also permits recovery of "independent ... appraisers' fees." 15 U.S.C. § 3611 (d). In fact, such fees were awarded in Darnet. (Brill Dec., Ex. H at 12.) Thus, the Sponsor is entitled to the $6,418.75 paid to Hayes & Co. for appraising the tax costs from the lease transfer. (Newman Aff. at ¶10.)

          Finally, under Second Circuit precedent, this Court should award the Sponsor the costs incurred in performing computerized research. United States ex rel Evergreen Pipline Constr. Co. v. Merritt Meridian Constr. Corp., 95 F.3d 153, 173) (2d Cir. 1996) ("[C]omputer research is... compensable under an application for attorneys' fees... ); LeBlanc-Sternberg v. Fletcher, 143 F.3d 748, 763 (2d Cir. 1998) (same).

          Under the Act, a prevailing plaintiff (and, as specifically envisioned by Congress, a prevailing sponsor) is entitled to recover its expenses in prosecuting its rights under the Act. (See Mov. Br. at 2.) If the Co-op is not enjoined from passing a portion of the award back to the Sponsor as an assessment.. this Congressional goal will be frustrated. It is also fundamentally unfair for the Co-op to argue that the Sponsor is not entitled to notice and an opportunity to be heard on the termination vote but must nonetheless bear part of the cost of that decision.

          The Act's savings provision (15 U.S.C. §3 )612) does not eliminate the conflict between the State law the Co-op relies on and the Act's fee-shifting goal and the former is therefore preempted. Cf. Chanoff v. United States Surgical Corp., 857 F. Supp. 10 11, 10 15-1017 (D. Conn.). aff'd per curiam, 31 F.3d 66 (2d Cir. 1994) (finding savings provision in federal securities laws does not prevent preemption of state law that is in direct conflict). [5] Nor does enjoining the Co-op from assessing the Sponsor's shares to cover these cost conflict with the Second Circuit's refusal to "broaden the relief provided by the Act beyond its literal terms." Bd. of Managers of the Charles House Condo. v. Infinity Corp., 21 F.3d 528,53-3) (2d Cir. 1994). To the contrary, allowing the Co-op to pass its legal costs to the Sponsor would subvert §3 ) 611 (d)'s fee-shifting intention.

          The Co-op's argument that passing the full amount of the Sponsor's legal fees would result in a "crushing burden" (Opp. Br. at 8) is legally irrelevant and factually inconsistent with the Co-op's recent pronouncement that it is able to cover the Sponsor's attorneys' fees. (Kenneth B. Newman Reply Affidavit, dated March 11, 2002 at ¶3 and Ex. A.) (The Board reported that a loan of $100,000 would cost a 100-share apartment owner only $34.84 per year in tax-deductible interest. (Id.)).

CONCLUSION

          For the foregoing reasons, the Sponsor respectfully requests that this Court grant its motion for fees and expenses in their entirety together with the appropriate injunctive relief. [6]

Dated:   New York, New York
             March 11, 2002

FOOTNOTES

[1]      The Co-op submits by the Affidavit of Alan H. Brill, Esq. ("Brill Aff.") who reveals his bias by noting that his firm "currently represents over 100 cooperatives and condominiums in New York City on a regular basis. . . ." (Brill Aff., ¶5.) Mr. Brill's testimony is not only highly argumentative and conclusory but, more fundamentally, it expresses various legal conclusions that should be excluded. See Hugh v. Jacobs, 961 F.2d 359, 363 (2d Cir. 1992) ('[t]his circuit is in accord with other circuits in requiring exclusion of expert testimony that expresses a legal conclusion"); Media Sport & Arts v. Kinney Shoe Corp., 1999 WL 946-354, at *3 (S.D.N.Y. Oct. 19, 1999) (the expert "may not, under any circumstances, opine on the ultimate legal issue in the case"). Moreover, Mr. Brill's testimony should be disregarded because, as he has admitted (Brill Aff., ¶8), he lacks first-hand knowledge of facts surrounding this litigation. See Media Sport, 1999 WL 946354 at *3 (granting motion to exclude expert testimony where such testimony "is not based on personal knowledge, but instead on his review of documents and depositions produced by parties."). Finally, Mr. Brill does not Purport to be an expert on the prevailing market for attorneys' fees and his affidavit is devoid of reference to one of the premiere firms with a cooperative and condominium law practice, Stroock & Stroock & Lavan, LLP and its partner Richard Siegler, who publishes articles on the subject in the New York Law Journal. (See Fader Reply Dec. at ¶5, Exs. D and E.)

[2]      And as noted. Proskauer voluntarily wrote-off and did not charge a Substantial portion of its fees. (Fader Dec. ¶¶5, 10.)

[3]      In Mr. Brill's affidavit, he claims that this Court reduced a motion for attorney's fees he submitted on behalf of the sponsor in Darnet on the bases that the fees were excessive and unreasonable. (Brill Aff., ¶47.) Mr. Brill conveniently omits that the fees were reduced because his client, the sponsor there, prevailed only by inadvertence, when the Second Circuit itself raised, sua sponte, the decisive issue. (See Brill Aff. Ex. H at 6.) Thus, that particular sponsor was limited in its fee recovery. Id.

[4]      First, the Co-op argues that the Second Circuit has established a per se rule that parking garages appurtenant to cooperative apartments are always "property serving the ... cooperative unit owners." (Opp. Br. at 6.) However, Darnet Realty Assocs. LLC v. 136 E. 56th St. Owners, Inc., 214 F.3d 79 (2d Cir. 2000) (Darnet II), held simply that the lack of a garage use preference did not automatically remove the property from that type of property that serves unit owners. Darnet II, 214 F.3d at 86 (stating that "[w]e hold . . . that a parking garage 'with or without tenant preferences' is 'property serving the . . unit owners"'). Whether a parking garage appurtenant to a building where the unit owners do not use or own motor vehicles or have any meaningful need for the parking garage (as in this case) is considered "property serving" as defined under the Act and Second Circuit precedent remains an open question. (Cf. West 14th St. Commercial Corp. v. 5 W. 14th St. Owners Corp., 815 F.2d 188, 198 (2d Cir.) cert. denied, 484 U.S. 850 and 484 U.S. 871 (1987)).

         Second, the Co-op oversimplifies the Sponsor's argument that it ceased to maintan special developer control under the Act, and that the window period therefore closed in 1990. The Sponsor did not dispute that "special developer control" is not eliminated merely by election of an independent board; it argued that the By-laws and Proprietary Lease provisions at issue do not constitute either singly or in the aggregate "special developer control" because they do not "retain [for the Sponsor] significant clout over [the Co-op's] affairs independent of [the Sponsor's] direct voting influence over [the Co-op's] Board." (See Schreiber Reply Dec. Ex. 1) (quoting Darnet II, 214 F.3d at 83.) District courts have taken inconsistent approaches on this issue and the Second Circuit has yet to decide "whether each (or any) of those decisions drew the line at precisely the right place." Id.

         Third, whether the Sponsor was entitled to notice of the vote to terminate is an issue that is similarly unsettled. The one case from this Court and two from New York State trial court opinions the Co-op cites (Opp. Br. at 6) do not resolve the Sponsor's contention that, under N.Y. BCL §605 (a) and the Co-op's By-Laws, it was entitled to notice and a meaningful opportunity to solicit votes before the shareholders meeting. Clearly, the Co-op's tactic was to prevent that open process, by secretly soliciting proxies from unit owners thus coopting the shareholders meeting.

[5]      Contrary to the Co-op's assertion (Opp. Br. at 10), 3060 Ocean Ave. Owners, Inc. v. Bistricer, 247 A.D.2d. 275, 667 N.Y.S.2d 909 (1st Dep't 1998), affirmed dismissal of an injunction and stands only for the proposition that a cooperative may at least initially assess a sponsor owner with the costs of state law litigation against it. It does not hold that a losing co-op may defeat a Congressional fee-shifting statute after a final decision.

[6]      The Sponsor respectfully submits billing records indicating that the legal costs in preparing this reply are $20,982.25 in attorneys' and legal assistants' fees and $1,409.77 in expenses. (Fader Reply Dec., ¶7, Ex. F).

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