Opinion
No. 113626/06.
2012-07-30
James LEWIS, v. The CITY OF NEW YORK, The New York City Department of Education, The New York City School Construction Authority, Alps Mechanical Inc ., and Consolidated Edison Company of New York.
Arnold E. Dijoseph, P.C, Robert A. Cardalli & Associates, P.C., New York, Attorneys for Petitioner. Richard A. Slater, Esq., Richard A. Slater & Associates, LLC, New York, Attorneys for Respondent.
Arnold E. Dijoseph, P.C, Robert A. Cardalli & Associates, P.C., New York, Attorneys for Petitioner. Richard A. Slater, Esq., Richard A. Slater & Associates, LLC, New York, Attorneys for Respondent.
MANUEL J. MENDEZ, J.
Upon a reading of the foregoing cited papers, it is ordered that this petition and cross petition for a hearing to determine and enforce a charging lien and ordering discovery is granted to the extent indicated in this order.
In this dispute between two attorneys the court is asked to determine and enforce a charging lien. Petitioner claims that he is entitled to a percentage of the fee, Respondent claims Petitioner is not entitled to anything because the client discharged Petitioner for cause.
Petitioner Robert A. Cardalli & Associates was retained by Mr. James Lewis
(Client) In April 2006, to prosecute an action—for damages as a result of personal injuries—against the defendants named in this caption. Petitioner represented the Client from the initial investigation of the matter through the filing of the Note of Issue. After the filing of the Note of Issue a dispute arose between Petitioner and the Client regarding the billing of items for which the Client believed work had not been performed. Although Petitioner is subsequent billings corrected the item, The Client decided to discharge Petitioner and retain new counsel—Richard N. Slater, Esq.—to continue prosecuting this action.[ See Petition and Cross Petition Exhibit A].
Respondent Richard N. Slater, Esq., was an attorney at the offices of Petitioner who—according to the Client—was terminated from employment with petitioner on August 19, 2010. The Client contacted Respondent in August 2010, discharged Petitioner's office on September 10, 2010 and retained Respondent on September 20, 2010. Respondent and The Client sent Petitioner a signed consent to change attorney form and on September 22, 2010 Petitioner mailed and faxed Respondent a letter agreement to be signed by respondent, agreeing to pay for legal disbursements of $11,146.29 and acknowledging a charging lien on the file—of a percentage of the gross attorney fee—to be determined by the court at the conclusion of the case.
[ See Petition Exhibits A & B, Cross Petition Exhibit A].
The Client's case was settled for Two Million Six Hundred Thousand ($2,600,000.00)Dollars. Petitioner and Respondent want the court to determine the amount of the charging lien Pursuant to Judiciary Law § 475. Respondent claims that Petitioner was discharged for cause and is not entitled to any part of the fee. Petitioner claims it was not discharged for cause and is entitled to its share of the fee.
The fee to be recovered is approximately One-third of the settlement amount or approximately $866,666.66 dollars.
It should first be noted that since the underlying action was settled after jury selection and immediately before commencement of trial this court retains jurisdiction over this matter without the need for a plenary action (Russo v. City of New York, 48 AD3d 540, 853 N.Y.S.2d 87 [2nd. Dept.2008] ).
In accordance with Judiciary Law § 475 from the commencement of an action an attorney has a lien upon his client's cause of action. The Court upon the petition of the client or attorney may determine and enforce the lien. An attorney discharged without cause has three remedies: a retaining lien, a charging lien and a plenary action in Quantum Meruit (Levy v. Laing, 43 AD3d 713, 843 N.Y.S.2d 542 [1st. Dept.2007] ). A charging lien is a security interest in the favorable result of litigation, giving the attorney equitable ownership in the client's cause of action and ensuring that the attorney can collect his fee from the fund he has created for that purpose on behalf of the client (Chadbourne & Parke, LLP, v. AB Recur Finans, 18 AD3d 222, 794 N.Y.S.2d 349 [1st. Dept.2005] ). An attorney does not lose his statutory lien under Judiciary Law § 475 by reason of substitution of a new attorney by his consent (In re Burroughs & Brown 239 A.D. 794, 263 N.Y.S. 772 [2nd. Dept.1933] ).
Petitioner, being the Client's attorney obtained a lien on the Client's cause of action from the commencement of the action in 2006. Petitioner represented the Client from April 2006 through the filing of the Note of Issue in September 2010 and was entitled to a charging lien on the Client's cause of action. This lien was not extinguished by reason of substitution of petitioner by a new attorney.
In a dispute between an attorney and a client, on substitution of attorneys all the former attorney is entitled to is a lien upon the proceeds of the action in an amount representing the “reasonable value” of his services as of the date when he was superseded by the new attorney (Bernstein v. Suchoff, 242 A.D. 784, 274 N.Y.S. 586 [2nd. Dept.1934]. The factors to be considered in ascertaining the “reasonable value” of legal services for purposes of a charging lien are:
(1) the difficulty of the matter;
(2) the nature and extent of the services rendered;
(3) the time reasonably expended on those services;
(4) the quality of the performance of counsel;
(5) the qualifications of counsel;
(6) the amounts at issue; and
(7) the results obtained.
(Casper v. Lew Lieberbaum & Co, Inc., 182 F.Supp. 2nd. 342 [2002] ).
However, where the dispute is between plaintiff's current and former counsel, the former counsel has the option of receiving the “reasonable value” of his services or a contingent percentage fee based on the proportionate share of the work he performed on the whole case (Braider v. 194 Riverside Owners Corp., 237 A.D.2d 147, 654 N.Y.S.2d 755 [1st. Dept.1997]; Smerda v. City of New York, 7 AD3d 511, 776 N.Y.S.2d 86 [2nd. Dept.2004]; Tutarashvili v. Barzilay, 39 AD3d 851, 832 N.Y.S.2d 810 [2nd. Dept.2007; Russo v. New York, 48 AD3d 540, 853 N.Y.S.2d 87 [2nd. Dept.2008] ).
The dispute herein does not arise between Petitioner and the Client, but between the Client's current and former attorneys. Prior to Petitioner turning over the file to the Client and his current counsel they acknowledged that there were disbursements owed and that Petitioner would retain a “charging lien ... to be determined by the court at the conclusion of the case ... on the gross legal fees ...”[ see Petition Exhibit B]. Petitioner is not foreclosed from electing as its fee a contingent percentage on the proportionate share of the work he performed. (Lai Ling Cheng v. Modansky Leasing Co., 73 N.Y.2d 454, 539 N.E.2d 570, 541 N .Y.S.2d 742 [1989] ).
Respondent alleges that Petitioner is disqualified from receiving a fee in this matter because he was discharged for cause. An attorney who is discharged for cause or misconduct has no right to the payment of fees or a lien, notwithstanding the existence of a retainer agreement (Williams v. Hertz Corp., 75 A.D.2d 766, 427 N.Y.S.2d 825 [1st. Dept.1980] ); However, the Client does not allege that Petitioner neglected to properly represent him, committed a legal impropriety amounting to a significant breach of a legal duty or violated any legally or professionally imposed duty with regards to the Client. The sole reason for the discharge stems from improperly billing for outside work, which Petitioner immediately corrected deducting the erroneous amount on a subsequent bill. “Under New York law, where a client attributes the decision to discharge an attorney to billing problems, without any showing that the attorney violated any legally or professionally imposed duty, an attorney is not discharged for cause and does not forfeit its fee” (Allstate Insurance Company v. Nandi, 258 F.Supp.2d 309 [S.D. N.Y.2003] ).
Respondent has not provided a sufficient basis for this court to determine that Petitioner was discharged for cause or to warrant a hearing on the matter. The only issue left to be determined is the contingent percentage of the fee Petitioner is entitled to receive from the gross legal fees, based on the proportionate share of the work Petitioner performed on the case.
Accordingly, it is ORDERED that the Petition is granted and it is further
ORDERED, that the Cross Petition is denied, and it is further
ORDERED, that this matter shall be set down for a hearing to determine the amount of the contingent percentage Petitioner is entitled to receive from the gross legal fees based on the proportionate share of the work petitioner performed on the case, and it is further
ORDERED, that Petitioner is to serve a copy of this order with Notice of Entry—and proof of service upon Respondent—upon the clerk of the trial Support office (Room 158), who is directed to refer this matter to the Special Referee Clerk(Room 119M) for placement at the earliest possible date upon the calendar of the Special Referees Part, which in accordance with the Rules of that Part shall assign this matter to an available Special Referee to hear and report as specified above, and it is further
ORDERED, that the parties shall appear for the reference hearing, including with all witnesses and evidence they seek to present, and shall be ready to proceed, on the date first fixed by the Special Referee Clerk subject only to any adjournment that may be authorized by the Special Referee Part in accordance with the Rules of that Part, and it is further
ORDERED, that the hearing will be conducted in the same manner as a trial before a Justice without a jury and, except as otherwise directed by the assigned Special Referee for good cause shown, the trial of the issue specified above shall proceed from day to day until completion.