GEORGE B. DANIELS, United States District Judge

MEMORANDUM DECISION AND ORDER

:

Plaintiff law firm Shaub & Williams L.L.P. brought this action in quantum meruit for attorneys' fees and costs related to Plaintiff's prior legal representation of Defendant Augme Technologies, Inc. in a patent infringement suit (the "Tacoda action"). Plaintiff moved to dismiss Defendant's legal malpractice and breach of contract counterclaims under Federal Rule of Civil Procedure 12(b)(6) ("MTD") and moved to strike certain of Defendant's affirmative defenses under Rule 12(f) ("MTS"). After the October 7, 2013 oral argument on these motions ("Hearing"), Defendant was permitted to seek leave to amend its counterclaims and affirmative defenses in light of the issues discussed at the Hearing. Defendant submitted a letter requesting leave to amend ("Leave to Amend Ltr.") and attached its proposed First Amended Counterclaims ("FACC"); Plaintiff filed a letter in opposition ("Leave to Amend Opp'n"); and Defendant replied ("Leave to Amend Reply"), attaching its proposed First Amended Affirmative Defenses ("FAAD").

Leave to amend Defendant's First Counterclaim (Legal Malpractice/Professional Negligence) and file new Third (Breach of Implied Covenant of Good Faith and Fair Dealing) and Fourth (Breach of Fiduciary Duty) Counterclaims is DENIED. Plaintiff's Motion to Dismiss the First Counterclaim is GRANTED. Leave to amend Defendant's Second Counterclaim (Breach of Contract) in order to add facts relating to allegations of excessive billing is GRANTED. Leave to amend Defendant's Second Counterclaim to add a new theory of liability relating to the February 28, 2013 charging lien is DENIED. Plaintiff's motion to dismiss Defendant's Second Counterclaim is DENIED.

Leave to amend Defendant's affirmative defenses is GRANTED with respect to the Second (Dismissal with Good Cause) and Sixth (Breach of Contract) Affirmative Defenses. Plaintiff's motion to strike these two affirmative defenses is DENIED. Leave to amend Defendant's affirmative defenses is DENIED with respect to the Ninth (Laches), Tenth (Waiver), and Eleventh (Estoppel) Affirmative Defenses. Plaintiff's motion to strike is GRANTED as to the Ninth, Tenth, Eleventh, and Twelfth (Unclean Hands) Affirmative Defenses.

Leave to Add New Counterclaims

A District Court has discretion to deny a party leave to amend. McCarthy v. Dun & Bradstreet Corp, 482 F.3d 184, 200-201 (2d Cir. 2007) ("[I]t is within the sound discretion of the district court to grant or deny leave to amend."). At the Hearing, the Court permitted Defendant to submit a letter to the Court requesting leave to amend its existing counterclaims, which the Court had identified as lacking sufficient factual allegations. In its submission, Defendant attempted to add two entirely new counterclaims: Third Counterclaim (Breach of Implied Covenant of Good Faith and Fair Dealing) and Fourth Counterclaim (Breach of Fiduciary Duty), as well as an entirely new theory of liability alleging failure to manage an expert witness in support of its existing legal malpractice counterclaim (First Counterclaim). (See FACC at 5-7, 9-12.) Plaintiff objected. (Leave to Amend Opp'n at 3, 8.) Leave to amend in order for Defendant to add these new counterclaims and new malpractice allegations is DENIED.

Defendant correctly states that Rule 15(a)(2) provides that courts "should freely give leave" to amend "when justice so requires." Fed. R. Civ. P. 15(a)(2). But by its terms, this rule is not absolute, and the Supreme Court long ago identified reasons "such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of amendment, etc." that justify denying a movant leave to amend. Foman v. Davis, 371 U.S. 178, 182 (1962). Plaintiff opposes Defendant's proposed new counterclaims and theories of liability on the grounds that (i) the new claims would be futile and (ii) Plaintiff would be prejudiced by Defendant's undue delay in asserting the new claims. (Leave to Amend Opp'n at 4-5.)

Expert Witness Theory

Defendant sought leave to add to its First Counterclaim a new theory alleging that Plaintiff committed legal malpractice by "failing to manage" Andrew Cromarty, an expert witness retained by Defendant in the Tacoda action. (FACC ¶¶ 20-23.) Defendant alleges that Plaintiff "engaged" Mr. Cromarty as an expert witness by "drafting, revising, and/or reviewing the expert retainer agreement" and advising Defendant to sign that agreement. (FACC ¶¶ 20-21.) Defendant further alleges that the expert retainer agreement it signed was "heavily . . . weighted in favor of the expert," and that Plaintiff, by advising Defendant to sign the expert retainer agreement, failed to conduct itself as an attorney of ordinary skill, prudence and diligence. (FACC ¶ 21.) The specific terms in the expert retainer agreement that Defendant identifies as manifestations of Plaintiff's malpractice provided that (a) Mr. Cromarty's time could be rounded up to the nearest hour for billing purposes, and (b) Mr. Cromarty was not obligated to produce or release any work product until he was paid in full for work done to that date. (Id.) Defendant asserts that Plaintiff's malpractice forced Defendant both to pay Mr. Cromarty's "excessive bills" and eventually replace Mr. Cromarty with another expert to perform the same analysis that Mr. Cromarty was hired to perform. (Id.)

A district court "may deny a motion to amend when the movant knew or should have known of the facts upon which the amendment is based when the original pleading was filed, particularly when the movant offers no excuse for the delay." N.H. Ins. Co. v. Total Tool Supply, Inc., 621 F. Supp. 121, 124 (S.D.N.Y. 2009) (internal quotation marks and citation omitted); accord Reisner v. Gen. Motors Corp., 511 F. Supp. 1167, 1172 (S.D.N.Y. 1981) (delay in seeking to amend pleading requires some explanation), aff'd, 671 F.2d 91 (2d Cir. 1982). Defendant's allegations make clear that its new expert witness theory contains information no different from that which it necessarily possessed some time prior to the filing of its initial counterclaims on April 12, 2013, as Defendant states that it was "forced to replace Mr. Cromarty and pay another expert . . . [for] the same analysis and work" before dismissal of its case against Tacoda on September 4, 2012. (FACC ¶ 21(b); MTD Mem. at 3.) Defendant has offered no explanation for its failure to assert these facts prior to filing its proposed First Amended Counterclaims on October 21, 2013. Defendant's request for leave to amend in order to add new expert witness allegations to its First Counterclaim is DENIED on the ground that Plaintiff has shown that it would suffer prejudice due to Defendant's undue delay; Plaintiff could, for example, have addressed Defendant's expert witness theory of legal malpractice in its initial motion to dismiss. (See Leave to Amend Opp'n at 5 (arguing that "the proposed amendments, especially those related to Dr. Cromarty" would necessitate that Plaintiff revisit discovery requests and file new motions as to the "new allegations, damages, and counterclaims" that Defendant "fail[ed] to press . . . in a timely fashion") (citation omitted).) Despite Defendant's untimeliness, amendment would also be futile, as the conduct alleged neither constitutes negligence nor establishes causation with respect to any damages suffered by Defendant.

Third and Fourth Counterclaims

Under New York law, claims that arise from the same set of facts and do not allege distinct damages are duplicative of one another. See Fin. Freedom Senior Funding Corp. v. Bellettieri, Fonte & Laudonio, P.C., 852 F. Supp. 2d 430, 435-36 (S.D.N.Y. 2012) (quoting NetJets Aviation, Inc. v. LHC Commc'ns, LLC, 537 F.3d 168, 175 (2d Cir. 2008)). Defendant's breach of contract, breach of fiduciary duty, and breach of the implied duty of good faith and fair dealing counterclaims arise out of the same set of facts (i.e. Plaintiff's alleged overbilling practices) and seek identical damages. (See FACC at 7-12; Leave to Amend Opp'n at 9.) Defendant alleges that Plaintiff breached an implied covenant of good faith and fair dealing attendant to the parties' retainer agreement by excessively billing Defendant and "attempt[ing] to circumvent" the 50% fee agreement by overbilling Defendant. (FACC ¶¶ 39, 41.) Similarly, Defendant alleges that Plaintiff breached a fiduciary duty to Defendant by submitting bills that were "consistently, systematically, and intentionally excessive and padded." (FACC ¶¶ 46-47.) These counterclaims arise from the same set of facts upon which Defendant's breach of contract counterclaim is based; that claim alleges that Plaintiff breached the retainer agreement because it "continuously sought 100%" - instead of 50% - of its billed fees, billed Defendant at "rates higher than . . . agreed upon," and "improperly (and excessively)" charged Defendant for certain services. (FACC ¶¶ 27, 29-31.)

Neither the Third nor the Fourth Counterclaim alleges that a viable legal duty extraneous to the retainer agreement was breached, which could thereby give rise to the torts alleged in those counterclaims. Clark-Fitzpatrick, Inc. v. Long Island R.R. Co., 70 N.Y.2d 382, 389 (1987) ("It is a well-established principle that a simple breach of contract is not to be considered a tort unless a legal duty independent of the contract itself has been violated . . . [t]his legal duty must spring from circumstances extraneous to, and not constituting elements of, the contract."). Moreover, when certain of the facts alleged by Defendant took place, Defendant had already terminated the retainer agreement and its fiduciary relationship with Plaintiff, thereby vitiating any fiduciary duty. Access Point Med., LLC v. Mandell, 963 N.Y.S.2d 44, 47-48 (1st Dep't 2013) ("[An] attorney's fiduciary duty to the client necessarily ends when the representation ends."). Allegations based on the February 28, 2013 charging lien and any bills submitted after Plaintiff was terminated in April 2011 cannot support a claim for violation of a fiduciary duty because one was no longer owed by Plaintiff to Defendant.

Defendant's breach of fiduciary duty and breach of implied duty of good faith and fair dealing counterclaims arise out of the same set of alleged excessive billing practices as Defendant's breach of contract counterclaim. They also seek damages identical to those in Defendant's breach of contract counterclaim. Therefore, the proposed new Third and Fourth Counterclaims are duplicative of Defendant's breach of contract counterclaim and, if permitted, would be DISMISSED on that basis. See Refreshment Mgmt. Servs., Corp. v. Complete Office Supply Warehouse Corp., 933 N.Y.S.2d 312, 315 (2d Dep't 2011) ("Although every contract contains an implied covenant of good faith and fair dealing . . . a cause of action alleging breach of the implied covenant of good faith and fair dealing must be dismissed if it is merely duplicative of a breach of contract claim."); William Kaufman Org., Ltd. v. Graham & James LLP, 703 N.Y.S.2d 439, 442 (1st Dep't 2000) ("A cause of action for breach of fiduciary duty which is merely duplicative of a breach of contract claim cannot stand."). Additionally, Defendant has failed to allege facts to support any connection or causation between its allegations of securities law threats, an improper charging lien, the violation of any Professional Rules of Conduct, and its claim for damages. (See FACC ¶¶ 42-43, 48-49.) Therefore, leave to add the proposed Third and Fourth Counterclaims is DENIED as futile. Oneida Indian Nation, 337 F.3d at 168.

Motion to Dismiss Defendant's Counterclaims

Plaintiff opposes Defendant's request for leave to file the proposed First Amended Counterclaims and moves to dismiss Defendant's First (Legal Malpractice/Professional Negligence) and Second (Breach of Contract) Counterclaims under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. (MTD Mem. at 7-15.) Plaintiff argues, among other things, that Defendant's proposed amended counterclaims would be futile. (Leave to Amend Opp'n at 2, 8-9.) Leave to file an amended pleading should be denied when the amendment would be futile. Absolute Activist Value Master Fund, Ltd. v. Ficeto, 677 F.3d 60, 71 (2d Cir. 2012) (citing Port Dock & Stone Corp. v. Oldcastle Ne., Inc., 507 F.3d 117, 127 (2d Cir. 2007)). A proposed amendment is futile when "it could not withstand a motion to dismiss pursuant to Rule 12(b)(6)." Oneida Indian Nation, 337 F.3d at 168.

To survive a motion to dismiss, "a [pleading] must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). This standard requires that a party "plead[] factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged" (id.), and those factual allegations "must be enough to raise a right to relief above the speculative level." Twombly, 550 U.S. at 555. Only Defendant's allegation that Plaintiff breached their contract by billing excessively satisfies these requirements.

First Counterclaim (Legal Malpractice)

Defendant asserts a legal malpractice counterclaim based on allegations that Plaintiff's misconduct in the underlying Tacoda action forced Defendant to voluntarily dismiss the Tacoda action "for nothing." (Leave to Amend Ltr. at 2; FACC ¶¶ 14, 18.) Defendant alleges that Plaintiff failed to obtain and prevent spoliation of relevant evidence in the Tacoda action - specifically, of a source code, which might have been in the possession of non-party Burst Media ("Burst Source Code"). (FACC ¶¶ 10, 13-14.) To this day, Defendant does not allege that it has found, obtained, or even determined that the Burst Source Code ever existed. Defendant also alleges that Plaintiff committed legal malpractice by filing an "incomprehensible" sanctions motion for Burst Media's purported failure to preserve the alleged source code. (FACC ¶¶ 11-12.)

"An action for legal malpractice requires proof of the attorney's negligence, a showing that the negligence was the proximate cause of the plaintiff's loss or injury, and evidence of actual damages . . . [Counsel's alleged misconduct] is not the proximate cause of the harm if the client cannot demonstrate its own likelihood of success absent such [misconduct]." Pellegrino v. File, 738 N.Y.S.2d 320, 323 (1st Dep't 2002) (dismissing malpractice claim) (citations omitted).

Like Defendant's initial articulation of its legal malpractice counterclaim, its proposed amended source code-related allegations depend on the wholly speculative assertion that Defendant would have been able to obtain a more favorable settlement in the underlying patent infringement action but for Plaintiff's alleged misconduct. (See FACC at 2-5.) In its submissions, Defendant attempts to address this deficiency by making a tenuous and conclusory comparison between the underlying Tacoda settlement and the completely separate AOL settlement (see, e.g., FACC ¶ 18), and stating that its damages are not speculative but merely "unknown." (Leave to Amend Reply at 3 ("Damages are not speculative simply because the exact amount is unknown.")).

Defendant's First Counterclaim fails not merely because the amount of damages is unknown, a fact which Defendant openly admits. (See Leave to Amend Ltr. at 2-3 (Defendant "will never know" and "cannot say with certainty" what purported legal malpractice damages might have been; see also FACC ¶¶ 14, 17-18 (proffering vague description of damages as "uncertain" and "something").) Defendant's claim fails because the entire existence of damages attributable to any misconduct by Plaintiff is pure supposition and cannot be adequately alleged by Defendant. Defendant has alleged no facts that indicate that, but for alleged instances of Plaintiff's misconduct, the outcome of its Tacoda lawsuit would have been anything other than a voluntary dismissal by Defendant, let alone that Defendant would have been "likely to succeed" in the Tacoda action, as required under New York law. Pellegrino, 738 N.Y.S.2d at 323. Thus, Defendant has failed to adequately plead proximate cause and damages in its legal malpractice counterclaim. See Morgan, Lewis & Bockins LLP v. IBuyDigital.com, Inc., 836 N.Y.S.2d 486, at *6 (Sup. Ct. 2007) ("With regard to the element of causation, the factual allegations in the [legal malpractice claim] must 'permit the inference that, but for [Plaintiff's alleged negligence], [Defendant] would not have sustained actual, ascertainable damages.'") (quoting Pyne v. Block & Assocs., 760 N.Y.S.2d 30 (1st Dep't 2003)).

Defendant has not cured its initial failure, articulated by the Court at the Hearing, to set forth facts supporting the allegation that misconduct on Plaintiff's part resulted in any damages to Defendant with respect to the outcome of the underlying case. Even as amended, Defendant's proposed source code malpractice counterclaim fails to state facts that support the allegation that any misconduct by Plaintiff was the proximate cause of some actual damages to Defendant. At best, Defendant has pled, and proposed to plead, facts in support of its First Counterclaim "that are 'merely consistent' with liability," instead of "well-pleaded facts [that] permit the court to infer more than a mere possibility of misconduct" on the part of Plaintiff and to find that Defendant has shown plausible entitlement to relief. See Ashcroft, 556 U.S. at 678-79 (citing Fed. R. Civ. P. 8(a)(2)). Besides failing to demonstrate causation and damages, Defendant has not sufficiently articulated any negligence on the part of Plaintiff. Leave to amend Defendant's First Counterclaim is therefore DENIED as futile. Plaintiff's motion to dismiss Defendant's First Counterclaim with prejudice is GRANTED.

Second Counterclaim (Breach of Contract)

Under New York law, "the elements of a cause of action for breach of contract are (1) the existence of a contract, (2) performance of the contract by one party, (3) breach by the other party, and (4) damages suffered as a result of the breach." Beautiful Jewellers Private Ltd. v. Tiffany & Co., 438 F. App'x 20, 21-22 (2d Cir. 2011). Defendant's breach of contract counterclaim arises from Plaintiff's alleged overbilling of Defendant in breach of the parties' retainer agreement. (Answer to First Amended Complaint ("Answer") at 13-14; FACC at 7-8.)

Plaintiff argues that the breach of contract counterclaim should be dismissed because it (i) is duplicative of Defendant's legal malpractice claim, and (ii) fails to allege breach of a specific promise contained in a contract. (MTD Mem. at 13-15; Leave to Amend Opp'n at 8-9.) Plaintiff's first argument fails because Defendant's legal malpractice and breach of contract counterclaims are based on different sets of facts; the proposed legal malpractice counterclaim arises from alleged facts relating to the Burst Source Code (FACC at 2-5), whereas Defendant's proposed amended breach of contract counterclaim arises from facts alleged as to Plaintiff's billing practices (FACC at 7-8). In any event, Defendant's malpractice claims are dismissed and disallowed. Therefore, these counterclaims are not duplicative. As for Plaintiff's second argument for dismissal, there are generally two bases upon which a party may bring a breach of contract claim against an attorney under New York law: breach of a promise to achieve a specific result identified in the contract and breach of a general, implied promise of due care. See Schutz v. Kagan Lubic Lepper Finkelstein & Gold, LLP, No. 12-cv-9459, 2013 WL 3357921, at *9 (S.D.N.Y. July 2, 2013) (applying New York law) ("Where the complaint alleges that a lawyer promise[d] a specific result to his client or breache[d] an implied promise of due care, a breach of contract claim can go forward.") (internal quotations and citation omitted).

Defendant alleges that Plaintiff breached specific contractual provisions containing certain agreed-upon billing rates and Plaintiff's immediate entitlement to only 50% of the fees it billed Defendant for its legal services. (See FACC ¶¶ 27-30.) Defendant alleges that Plaintiff breached these two contract terms by, respectively, billing at rates higher than agreed upon and seeking 100% of its billed fees. (FACC ¶¶ 29, 30.) Though neither of these contract terms is a promise to achieve a specific result, New York law also provides that "[o]verbilling and padding of costs can constitute a breach of contract, and can give rise to a cause of action . . . against an attorney." O'Connor v. Blodnick, Abramowitz & Blodnick, 744 N.Y.S.2d 205, 206 (2d Dep't 2002) (citations omitted). Because Defendant may state a cause of action for breach of contract based on alleged overbilling by Plaintiff even though it did not allege a breach of a promise to achieve a specific result, the breach of contract counterclaim may not be dismissed on that ground. Leave to amend Defendant's Second Counterclaim to add facts relating to the allegations of overbilling as proposed in the FACC is GRANTED. Plaintiff's motion to dismiss the Second Counterclaim is DENIED with respect to Defendant's excessive billing allegations to the extent that Defendant seeks the return of legal fees already paid to Plaintiff.

Motion to Strike Certain Affirmative Defenses

Plaintiff moves under Federal Rule of Civil Procedure 12(f) to strike Defendant's Second Affirmative Defense (Dismissal with Good Cause), Sixth Affirmative Defense (Breach of Contract), Ninth Affirmative Defense (Laches), Tenth Affirmative Defense (Waiver), Eleventh Affirmative Defense (Estoppel), and Twelfth Affirmative Defense (Unclean Hands). (PL's Mem. in Support of MTS at 6-8 ("MTS Mem."); see also Answer at 8-9.) At the Hearing, the Court gave Defendant an opportunity to submit amended affirmative defenses and add factual allegations to those defenses that had been challenged by Plaintiff as conclusory or insufficiently pled. Defendant provided factual support for certain of these defenses in its First Amended Affirmative Defenses ("FAAD") and its Leave to Amend Reply (Leave to Amend Reply at 7-8).

Rule 12(f) permits a court to "strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter." Fed. R. Civ. P. 12(f). A motion to strike an affirmative defense "is not favored and will not be granted unless it appears to a certainty that plaintiffs would succeed despite any state of the facts which could be proved in support of the defense." Salcer v. Envicon Equities Corp., 744 F.2d 935, 939 (2d Cir. 1984), vacated on other grounds, 478 U.S. 1015 (1986) (internal quotations and citation omitted). In determining the sufficiency of a defense, "the Court ordinarily accepts as true all well-pleaded factual allegations and draws all reasonable inferences in the [non-moving party's] favor." Coach, Inc. v. Kmart Corps., 756 F. Supp. 2d 421, 425 (S.D.N.Y. 2010). Nevertheless, affirmative defenses that are merely "conclusory assertions, absent any supporting factual allegations[,] are insufficient as a matter of law and fail to provide a plaintiff with any notice as to how the defense applies to the plaintiff's claims." Id. Inclusion of these invalid defenses risks prejudice to a plaintiff due to increased time and expense of litigation. Estee Lauder, Inc. v. Fragrance Counter, Inc., 189 F.R.D. 269, 272 (S.D.N.Y. 1999).

Second Affirmative Defense (Dismissal with Good Cause)

Defendant asserts that it terminated Plaintiff "for good cause" based on Plaintiff's (i) alleged failure to identify and obtain evidence in the Tacoda action, (ii) submission of "incomprehensible" briefs to the previous Court, (iii) unprofessional demeanor at hearings, (iv) excessive billing practices, and (v) mishandling of experts. (FAAD at 2.) This proposed amended defense provides sufficient factual support to put Plaintiff on notice of the basis for Defendant's asserted defense, thus overcoming Plaintiff's objection to the initial pleading. (See MTS Mem. at 6; MTS Reply at 2-3.) Whether Plaintiff actually was terminated for good cause, or was notified of such termination, is a factual inquiry not appropriate for determination on a motion to strike. In re Credit Indus. Corp., 366 F.2d 402, 412 (2d Cir. 1966). Leave to amend the Second Affirmative Defense is GRANTED. Plaintiff's motion to strike the Second Affirmative Defense is DENIED.

Sixth Affirmative Defense (Breach of Contract)

Defendant asserts as a defense to Plaintiff's quantum meruit claim that Plaintiff breached the retainer agreement, an express contract between the parties, which dictates the limits of Plaintiff's recovery. (FAAD 2-3; Leave to Amend Reply at 7.) Plaintiff argues that this defense should be stricken because, under New York law, Plaintiff is precluded from seeking recovery of attorneys' fees via a contract claim, making Defendant's breach of contract defense irrelevant. (MTS Mem. at 6.) However, Plaintiff has not shown that there is no plausible set of facts upon which a breach of contract defense might succeed; indeed, the very case cited by Plaintiff suggests that whether Plaintiff may recover on a theory other than quantum meruit may depend on whether Defendant discharged Plaintiff with cause - as alleged in the Second Affirmative Defense - or without cause, a question of fact assumed to be in Defendant's favor and inappropriate for resolution in the context of this motion to strike. See Liddle & Robinson, LLP v. Garrett, 720 F. Supp. 2d 417, 422-25 & n.3 (S.D.N.Y. 2010); Byrne v. Leblond, 811 N.Y.S.2d 681, 683 (2d Dep't 2006). If Defendant did terminate Plaintiff for cause, then Plaintiff would be precluded under New York law from recovering unpaid compensation by any mechanism. Teichner v. W&J Holsteins, Inc., 64 N.Y.2d 977, 979 (1985) ("If [an attorney's] discharge is with cause, the attorney has no right to compensation or to a retaining lien."); Schultz v. Hughes, 971 N.Y.S.2d 536, 538 (2d Dep't 2013) (same); see also Nabi v. Sells, 892 N.Y.S.2d 41, 43-44 (1st Dep't 2009) (explaining rule's rationale). Leave to amend the Sixth Affirmative Defense is therefore GRANTED. Plaintiff's motion to strike the Sixth Affirmative Defense is DENIED.

Ninth, Tenth, and Eleventh Affirmative Defenses (Laches, Waiver, and Estoppel)

Defendant asserts laches, waiver, and equitable estoppel defenses to Plaintiff's quantum meruit claim, all of which are premised on the same factual allegations that Plaintiff accepted only 50% payment of its billed hours until after it was discharged by Defendant, and that Defendant relied on this 50% rate. (See FAAD at 3-4; Leave to Amend Reply at 8; Engagement Agreement at 1 ("[Plaintiff's] compensation will consist of the following: 1. 50% of billed fees, plus all costs. . . . 2. The balance of 50% of the fees are [sic] to be paid out of cash received from any settlement of the pending action").) Plaintiff argues that these defenses should be stricken because Defendant was aware that the balance of billed attorneys' fees was merely deferred and there was no representation that Plaintiff had permanently given up such fees on which Defendant could justifiably rely. (MTS Reply at 4.) Plaintiff also objects to the Ninth (Laches), Tenth (Waiver), and Eleventh (Estoppel) Affirmative Defenses on the ground that Defendant has not shown that it suffered any prejudice due to the conduct it alleges. (MTS Mem. at 6-7; MTS Reply at 3-5.)

Defendant's own factual allegations, taken as true in the context of this motion to strike, undermine its assertion of the laches and estoppel defenses. Defendant states that Plaintiff conveyed its intent to recover the balance of its billed fees at least as early as May 2011, one month after Plaintiff's dismissal by Defendant. (See, e.g., FAAD 9.) Defendant cannot now claim to be prejudiced by any purported delay in Plaintiff's timely filing of this lawsuit when it admits that it was on notice, as early as May 2011, of the very claim filed against Defendant. Legislator 1357 Ltd. V. MGM, Inc., 452 F. Supp. 2d 382, 391 (S.D.N.Y. 2006) (discussing requirement of prejudice or detrimental reliance for claims of laches and equitable estoppel).

Additionally, Defendant's amended Tenth Affirmative Defense does not sufficiently plead waiver, as Defendant has not alleged any fact supporting the assertion that Plaintiff at any point intentionally renounced, by actions or words, a previously held right to the balance of billed fees. Voest-Alpine Int'l Corp. v. Chase Manhattan Bank, N.A., 707 F.2d 680, 685 (2d Cir. 1983) ("To establish waiver under New York law[,] one must show that the party charged with waiver relinquished a right with both knowledge of the existence of the right and an intention to relinquish it."). The facts alleged in Defendant's proposed FAAD demonstrate that Defendant is unable to sufficiently plead its Ninth, Tenth, and Eleventh Affirmative Defenses, even as amended. Leave to amend the Ninth, Tenth, and Eleventh Affirmative Defenses is therefore DENIED as futile. Plaintiff's motion to strike the Ninth, Tenth, and Eleventh Affirmative Defenses is GRANTED.

Conclusion

Leave to amend Defendant's First Counterclaim (Legal Malpractice/Professional Negligence) and file new Third (Breach of Implied Covenant of Good Faith and Fair Dealing) and Fourth (Breach of Fiduciary Duty) Counterclaims is DENIED. Plaintiff's Motion to Dismiss the First Counterclaim is GRANTED. Leave to amend Defendant's Second Counterclaim (Breach of Contract) in order to add facts relating to allegations of excessive billing is GRANTED. Leave to amend Defendant's Second Counterclaim to add a new theory of liability relating to the February 28, 2013 charging lien is DENIED. Plaintiff's motion to dismiss Defendant's Second Counterclaim is DENIED.

Leave to amend Defendant's affirmative defenses is GRANTED with respect to the Second (Dismissal with Good Cause) and Sixth (Breach of Contract) Affirmative Defenses. Plaintiff's motion to strike these two affirmative defenses is DENIED. Leave to amend Defendant's affirmative defenses is DENIED with respect to the Ninth (Laches), Tenth (Waiver), and Eleventh (Estoppel) Affirmative Defenses. Plaintiff's motion to strike is GRANTED as to the Ninth, Tenth, Eleventh, and Twelfth (Unclean Hands) Affirmative Defenses.

The Clerk of Court is directed to close the motions at ECF Nos. 12 and 14. Dated: New York, New York

February 14, 2014

SO ORDERED.

/s/_________

GEORGE B. DANIELS

United States District Judge