Opinion
4747/2010.
Decided June 15, 2010.
Ieda Fuller, New York, New York.
Hass Gottlieb, Scarsdale, New York.
On January 9, 2007, defendant's former husband David Addison entered into a retainer agreement with plaintiff law firm Hass Gottlieb, of which plaintiff Lawrence Gottlieb is a partner, to represent his interests in a bankruptcy proceeding maintained by the 251 West 121 Street Corporation ("the Corporation") in the US Bankruptcy Court. Addison was a 25 percent shareholder of the Corporation. Pursuant to an equitable distribution agreement between Addison and defendant executed by the parties as part of the dissolution of their marriage, defendant had a claim to one half of Addison's 25 percent interest in the Corporation. In the retainer agreement between plaintiffs and Addison, Addison agreed to pay plaintiffs a legal fee of 33% of sums recovered from the Corporation in the bankruptcy proceeding. During the course of the bankruptcy litigation the real property owned by the Corporation and located at 251 West 121 Street, New York, New York was sold. After a five day trial during which plaintiffs represented Addison, the court found that Addison's interest in the Corporation was worth $145,155.85 which was to be split evenly between Addison and defendant. Although defendant Fuller appeared pro se in the bankruptcy proceeding, she took no part in the trial.
Plaintiffs' contend that during a January 20, 2010 court conference in the bankruptcy action, plaintiff Lawrence Gottlieb, Addison and defendant orally agreed that plaintiffs' legal fees would be shared equally by defendant and Addison. However, according to plaintiffs, during a January 28, 2010 phone conversation between Gottlieb and defendant, defendant refused to pay her agreed upon share of legal fees.
On February 5, 2010, plaintiffs commenced this action against defendant seeking $2,063.78 in unreimbursed expenses and $23,269.66 representing 33% of the sums paid to defendant in the bankruptcy proceeding on the grounds that: (1) defendant received a substantial benefit from plaintiffs' representation of Addison which created a "common fund" for the benefit of Addison and defendant and that "reasons of justice require that [plaintiffs] be paid out of that portion of the litigation award that has heretofore been distributed to [defendant]", and (2) that the sums distributed to defendant are trust funds for the benefit of plaintiffs, thus, the court should impose a constructive trust upon the funds distributed to defendant in the amount of $23,269.66.
Appearing pro se, defendant moves to dismiss the complaint on the ground that she does not have a retainer agreement with plaintiffs. Defendant notes that plaintiffs represented her ex-husband David Addison in the bankruptcy litigation and submits a copy of the retainer agreement which clearly establishes that she is not a party to their retainer agreement. Defendant also notes that all billing invoices regarding plaintiffs' representation of Addison were sent to Addison not defendant. Defendant contends that she neither orally nor in writing agreed to be represented by plaintiffs. In fact, she notes that she appeared pro se in the bankruptcy proceeding and submits several bankruptcy court orders which note her appearance in the matter as pro se.
Discussion
Although the defendant does set forth the statutory provisions she relies upon in making her motion to dismiss, the Court shall consider the motion as one for dismissal of the complaint pursuant to CPLR 3211(a)(1) and (7).
Under CPLR 3211(a)(1), a complaint may be dismissed where a "defense is founded upon documentary evidence". However, to prevail under this provision, "the documentary evidence that forms the basis of the defense must be such that it resolves all factual issues as a matter of law, and conclusively disposes of the plaintiff's claim" ( Teitler v. Max J. Pollack Sons, 288 AD2d 302 [2d Dept. 2001]).
By contrast, on a motion for dismissal pursuant to CPLR 3211(a)(7) for failure to state a cause of action, "[the Court's] well-settled task is to determine whether, accepting as true the factual averments of the complaint, plaintiff can succeed upon any reasonable view of the facts stated'" ( Campaign for Fiscal Equity, Inc. v. State, 86 NY2d 307,318 [1995] [internal citations and quotation marks omitted]). In performing that task, the Court "[is] required to accord plaintiff[] the benefit of all favorable inferences which may be drawn from [its] pleading, without expressing [any] opinion as to whether [it] can ultimately establish the truth of [its] allegations before the trier of fact" ( ibid.).
Here, defendant has established via documentary evidence that there was no written retainer agreement between plaintiffs and defendant. Moreover, merely because defendant may have derivatively benefitted from plaintiff's representation does not impose a duty upon defendant to pay for that benefit. It is well settled that attorneys may not recover legal fees from persons other than their client merely because such other persons might have benefitted from their services. ( See Builders Affiliates v. North Riv. Ins. Co., 91 AD2d 360, 366-67 [2nd Dept 1983]; Matter of Linder, 17 AD2d 949, 950 [2nd Dept 1962]; Armstrong v. I.T.T.S. Corp., 10 AD2d 711 [2nd Dept 1960]). Thus, defendant has established the complaint must be dismissed under this provision.
The complaint must also be dismissed pursuant to CPLR 3211(a)(7), failure to state a cause of action. Plaintiffs' causes of action to recover legal fees under the theory of "common fund" and/or "constructive trust" cannot be maintained against plaintiff.
In Gibson Cushman Dredging Corp. v. Halliburton Co., Inc., ( 111 AD2d 741 [2nd Dept 1985]), the Second Department affirmed the dismissal of plaintiff attorney's "common fund" cause of action holding that it was inapplicable to defendant. In Gibson, a law firm was hired by a general contractor to commence an action against LILCO to recover payments which were due the general contractor pursuant to a construction contract it had with LILCO. The general contractor also entered into a liquidation agreement with one of its subcontractors in which the general contractor agreed to pay the subcontractor a certain amount of the funds it recovered from LILCO. The litigation between general contractor and LILCO settled for about $600,000 from which the subcontractor was to be paid approximately $85,000.00 out of that settlement.
The plaintiff attorneys sought to retain approximately 20% as attorneys fees from the $85,000.00 due to the subcontractor and commenced an action against the subcontractor to recover those fees based on the theory of "common fund."
Affirming the lower Court's dismissal of the complaint, the Second Department held that the theory of "common fund" was not applicable because the benefit conferred upon the subcontractor was not attributable to the legal services provided by the plaintiff. Rather it arose from the liquidating agreement between general contractor and the subcontractor regarding the distribution of the settlement recovered. The Second Department noted that the legal services rendered by the plaintiff in the suit against LILCO played no role in creating the subcontractor's status under the liquidating agreement. Accordingly, plaintiff could not recover a legal fee from the subcontractor.
Likewise, here, defendant's entitlement to her share of the Addison's interest in the Corporation did not arise out of plaintiffs' representation of Addison in the bankruptcy proceeding, but rather from her equitable distribution agreement with Addison. Accordingly, plaintiffs' "common fund" cause of action must be dismissed.
Plaintiffs' cause of action for a constructive trust must also be dismissed. The usual elements required for the imposition of a constructive trust are: (1) a confidential or
fiduciary relation; (2) a promise; (3) a transfer in reliance thereon; and (4) unjust enrichment. ( See Sharp v. Kosmalski, 40 NY2d 119, 121). Since there was no confidential or fiduciary relationship between plaintiffs and defendant, there is no basis for a constructive trust claim.
Based on the foregoing, defendant's motion to dismiss the complaint in its entirety is GRANTED.