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Citing Anti-SLAPP Statute, Appeals Court Awards Adam Leitman Bailey Attorney Fees, Costs for Having to Defend Against $25M ‘Malicious Media Campaign’ Suit

Well-known real estate lawyer Adam Leitman Bailey on Tuesday claimed another victory in a headline-grabbing landlord-”holdover” tenant fight that has involved multiple $25 million lawsuits, as well as cross-claims and cross-appeals, brought in state court.

In a terse opinion, the Appellate Division, First Department court ruled that based on the state’s anti-SLAPP statute, Bailey is due attorney fees and costs in the wake of him being sued personally by a real-estate developer that claimed he’d waged a “malicious media campaign” aimed at “shaking down” the developer, which has been in litigation with Bailey’s client.

Bailey’s “statements, which concern a landlord/tenant dispute between a large real estate developer and a sole holdout tenant [represented by Bailey], constituted comments and an exercise of free speech in connection with an issue of public interest, rather than a purely private matter,” wrote a First Department appellate panel while explaining its decision to award costs and fees to Bailey and his law firm under New York’s anti-SLAPP statute as amended in 2020.

The unanimous panel then pointed to the dismissal last September of the $25 million suit leveled by the developer that had claimed Bailey and his Manhattan-based firm had waged a “malicious media campaign” in an effort to “shake down,” or extract, a higher payout from the developer for Bailey’s client.

“The action was ‘without a substantial basis in fact and law,’ as demonstrated by the [lower] court’s dismissal of the complaint for failure to state a claim,” the panel said while quoting New York’s Civil Rights Law § 70-a[1][a].

Anti-SLAPP statutes, which target Strategic Lawsuits Against Public Participation, or SLAPP suits, give redress to those who are forced to defend themselves against civil suits that don’t have merit and that may only have been brought in an effort to dissuade, or pressure, the defendants from producing negative publicity about something.

In the May 2022 suit leveled by 215 West 84th St. Owner LLC, which is an arm of Manhattan condominium developer Naftali Group, against Bailey and his 29-lawyer firm, the plaintiff brought claims of abuse of process and tortious interference with economic advantage.

Bailey had been representing a client named Ahmet Ozsu, who the Naftali Group had already sued separately for $25 million. Naftali alleged that he was a wrongful holdover tenant at West 84th St. who was delaying a planned redevelopment of the building into luxury condominiums.

In the abuse-of-process and tortious-interference suit against Bailey, the 84th St. landlord connected to Naftali Group alleged that Bailey, while working as Ozsu’s counsel, had wrongfully “turned what should be a dispute settled according to the law” regarding a “holdover tenant”  into “a multi-national media circus.”

Bailey had resorted to “extra-judicial channels” and, allegedly, the “key” to his strategy was “public pressure and delay,” the landlord claimed in a 15-page complaint, while being represented by Y. David Scharf, a well-respected litigator and chairman of Morrison Cohen.

More specifically, Bailey had “engineered for the New York Post to run an article entitled: ‘This Lone Holdout Tenant is Blocking a $70M NYC Luxury Condo Tower’ (despite the fact that plaintiff is still considering what form the Planned Development will take),” the lawsuit claimed.

It added that the Post “article featured posed photos of ALB [Adam Leitman Bailey] with holdover occupant [Ozsu] inside the property—clearly an event staged by defendants to portray holdover occupant as the David versus the evil Goliath plaintiff.”

Moreover, said the complaint, “the New York Post article has received several comments on its webpage as of this filing. Many of those responses evidence the harm to plaintiff that defendants’ media campaign is causing, no doubt by design, such as: ‘Naftali is acting like bullies. I wouldn’t buy an apartment from people like them.’”

And the now-dismissed suit laid out a disputed April 19, 2022, incident in which Bailey allegedly tried to have police arrest a Naftali employee after the building placed an industrial air filter outside Ozsu’s apartment door that roared nonstop.

Bailey and his firm “have taken the disreputable practice of holding out for payouts to new lows,” the complaint also said, while alleging that Ozsu had been “unable to quickly extract the seven-figure payout he expects” as a tenant living in a $70 million building that could be remade into a luxury condominium site.

Bailey, shortly after the suit was filed last year in Manhattan Supreme Court, fired back in a New York Law Journal interview in which he said the action against him was nothing more than “harassment and bullying.”

“To me, it’s an honor to be an attorney, and I love to practice law,” he said at the time. “I think that it’s sad that attorneys are allowed to use the courts to file frivolous lawsuits against my client and myself without retribution, and without any harm to them.”

He further claimed that the suit was rife with false allegations, including the notion that he bragged about keeping his client in his top-floor 84th Street apartment for any amount of time, or that he ever mentioned a possible seven-figure payout from Naftali to his client to get him to move.

He also called out Scharf by name, saying that “Mr. Scharf cannot win this case [against me] under any circumstances, assuming all the facts in it are true, which they are not.”

And with regard to various articles that had appeared last year in publications ranging from The New York Times to the Post about the Naftali-Ozsu high-stakes standoff, Bailey said media coverage was out of his control.

“I don’t own the media, I don’t control the media,” he said. And he said that when the first article about the developer-tenant stalemate appeared in February 2022 in The Real Deal, a Manhattan-based real estate publication, he still had not been retained by Ozsu.

Asked in the May 2022 interview if he’d later brought the story to reporters for other publications, Bailey declined to comment.

Scharf said at the time, only, “We don’t have any additional comment to the allegations in the complaint.”

Then in September 2022, Manhattan Supreme Court Justice Sabrina Kraus dismissed the 215 West 84th St. Owner’s action against Bailey, taking apart both the tortious-interference and abuse-of-process claims.

In addressing the tortious-interference claim, which it appeared was based, at least in part, on Bailey and Ozsu speaking to the media about Ozsu’s alleged plight, Kraus wrote that “New York courts have rejected claims containing general allegations of interference with customers without detailed allegations of interference with specific business relationships,” citing McGill v. Parker.

And she said that “to state a cause of action for tortious interference with economic advantage requires [that] plaintiff must allege defendants engaged in conduct for the sole purpose of harming the plaintiff.”

But here Bailey and his firm were “acting to zealously represent their client and not solely to harm plaintiff, and plaintiff has failed to allege any business relationship that was interfered with,” she wrote.

In addition, she noted that generally tortious-interference conduct “must amount to a crime or an independent tort, and may consist of physical violence, fraud, misrepresentation, civil suits and criminal prosecution.”

And in considering alleged abuse of process, Kraus focused on the building owner’s allegations that Bailey had advised Ozsu to apply to a state program created to help tenants pay overdue rent during the pandemic called the Emergency Rental Assistance Program, and, in turn, use that application to argue that the Naftali Group’s holdover eviction proceeding lodged against him must automatically be stayed while his application was pending.

Specifically, she wrote that Ozsu’s “filing of an ERAP application with the New York State’s Office of Temporary and Disability Assistance does not constitute issuance of process by defendants and effectuates an automatic stay as a matter of law.”

Moreover, she said “the stay attendant to an ERAP filing is automatic under New York Law and plaintiff was free to move to vacate said stay in Housing Court if it felt the stay was not applicable to Ozsu.”

And Kraus noted that “AO [Ahmet Ozsu] states he filed for ERAP relief shortly after the holdover proceeding was commenced and prior to being represented by defendants,” but said that “even if that were not true and AO filed on advice of counsel, it’s hard to see how an attorney giving its client advice pertaining to the defense of a holdover proceeding amounts to abuse of process.”

With Tuesday’s decision, the First Department panel, composed of Justices Jeffrey Oing, Anil Singh, Peter Moulton, Saliann Scarpulla and Martin Shulman, affirmed Kraus in part, agreeing with her dismissal of the action against Bailey and his firm.

But the justices reversed Kraus’ 2022 opinion to the extent it had denied Bailey’s request for costs and attorney fees.

Still, the panel agreed with her in having denied Bailey’s additional request for punitive damages.

The appellate justices wrote that punitive damages were not owed by 215 West 84th St. Owner “because the record does not show that [the landlord] commenced the action solely with malicious intent,” citing state Civil Rights Law § 70-a[1][c]).

In a response to a request for comment for this story, Scharf said that, in his view, the First Department panel had erred in its opinion issued Tuesday. And he said he and his client will be pursuing those errors in court.

“The Appellate Division made two material errors in its analysis of the amended anti-[SLAPP] statute,” said Scharf by email. “We intend to bring those errors to the attention of that court or take it up with the Court of Appeals as they are clear errors of statutory interpretation and application.”

“The first error,” he continued, “relates to the [First Department] court‘s failure to recognize that the matter of public interest which the the statute requires to be analyzed is the ERAP proceeding and criminal arrest complaint, not the lawsuit against the Bailey law firm.

“The second error is the requirement that a court determine that the lawsuit did have basis in any extension or modification of law in order to find that fees can be awarded, and the appellate decision failed to address that prong of the statute,” said Scharf.

He also noted that the Naftali Group’s suit and headline-grabbing dispute with Ozsu over the holdover situation and planned redevelopment of the 84th Street building had ended.

“There has not been for sometime any litigation between the former tenant and the owner/developer,” Scharf said. “All their disputes were resolved in a confidential law suit and the development is moving forward as planned.”

Bailey, in an email responding to a request for comment, said, “We cannot underestimate the importance of this [First Department] decision [on Tuesday] for small firms, underdogs, those without a lot of money.”

He added, “A big law firm bully tried to use the legal system in a frivolous lawsuit to sue me personally for 20 million dollars. Many firms would be forced to drop their clients or stay away from representing certain clients if the Appellate Division did not ban litigation bullying.  All New York attorneys should be celebrating this decision and be thankful for this panel deciding this case.”

In the $25 million action Naftali Group brought against Ozsu which has now been resolved, the developer had bought the 84th Street building last year for $70 million. It claimed it had offered to pay Ozsu $30,000 to move out or to place him in a comparable apartment in another building in the same area of Manhattan, but that Ozsu turned down the options.

Ozsu, meanwhile, told The New York Times in April 2022 that he considered the actions being taken against him, apparently including allegations in the suit he faced, to be defamation of character.

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