Summary
granting summary judgment as to legal malpractice claim because "without expert testimony, it is unlikely that a jury could conclude whether, but for O'Shea's failure to file timely, [plaintiff] would have been successful in a defamation action in New York, had such an action been commenced"
Summary of this case from Gurvey v. Cowan, Liebowitz, & Latman, P.C.Opinion
02 Civ.3396(KNF)
March 22, 2004
MEMORANDUM AND ORDER
I. INTRODUCTION
In this action, brought pursuant to the court's diversity jurisdiction, plaintiff Scan F. O'Shea ("O'Shea") seeks to recover attorney's fees for services he rendered to the defendant, Dr. H. George Brennan ("Brennan"), in connection with, among other things, a defamation action filed on the defendant's behalf in federal district court in California. Plaintiff has moved for summary judgment, pursuant to Fed.R.Civ.P. 56(c), on his claims for breach of contract and account stated, and for an order dismissing the defendant's affirmative defenses and counterclaims. The defendant opposes the motion; it is addressed below.
II. BACKGROUND
O'Shea is an attorney licensed to practice law in the state of New York; his business offices are located in New York, New York. Brennan is a physician specializing in plastic surgery; his business offices are located in Beverly Hills, California. O'Shea and Brennan met for the first time in November 1999. Brennan was then seeking legal representation in connection with a defamation action he wished to file against Ene Riisna ("Riisna"), a former patient. Brennan had previously appeared on the American Broadcasting Company, Inc. ("ABC") News program 20/20. Following his appearance on that program, Brennan performed plastic surgery on Riisna, who was a producer of the show. Thereafter, he and Riisna became involved in litigation. Brennan believed that, as a result of the litigation, Riisna had initiated a campaign of libel and defamation against him.
On November 29, 1999, following their meeting to discuss a possible defamation action, O'Shea sent Brennan a retainer agreement. The agreement stated, in pertinent part:
This letter is to confirm your request to retain me to represent you in connection with potential [Ene] Riisna defamation litigation and related matters . . . I will undertake the representation with you upon payment of a retainer in the amount of $25,000. The initial retainer shall be deemed earned upon presentment . . . You agree to pay my office's monthly bills upon receipt. Monthly bills will be based upon fair and reasonable fees for services rendered. The basis for my fees will include consideration for my expertise, effort expended and my customary hourly rate. In addition, I will bill you on a monthly basis for any expenses in connection with this matter. . . .It is understood that you will replenish the retainer as requested. It is understood and agreed that this office will remain ahead of its bills. . . .My hourly rate in this matter will be $375 . . . It is understood that this retainer does not commit me to appear on your behalf or to represent you on other matters. . . .
On February 7, 2003, Brennan sent a letter to O'Shea in which he stated, inter alia, "enclosed please find a check in the amount of $15,000, the mutually agreed upon amount, a signed copy of the retainer agreement, and a Variety of collateral materials which will confirm any questions or suspicions on this matter."
The record evidence presented in this case does not include the signed copy of the retainer agreement to which Brennan refers in his letter, or any other such document. In a deposition taken on April 17, 2003, O'Shea testified as follows regarding the retainer agreement:
Q: Do you recall whether you ever received a signed retainer agreement or engagement letter from Dr. Brennan?
A: You know, I don't recall that [Brennan] actually signed with a retainer and sent it back, because I think that we — that he called back wanted a modification particularly on the initial retainer amount, and I don't recall that [Brennan] ever executed this particular retainer.
Q: Did he ever execute any retainer?
A: I don't know.
Q: I'm sorry?
A: I don't know.
In his response to plaintiffs Southern District of New York Local Civil Rule 56.1 statement, which was submitted in connection with the instant motion, the defendant states:
After their initial meeting in November 1999, Dr. Brennan decided to retain Mr. O'Shea but did not formally do so until February 2000, because he was unsure of the fee arrangements he was willing to make. . . .Dr. Brennan formally retained Mr. O'Shea in February 2000. . . .At that time he sent and Mr. O'Shea accepted a retainer check for $15,000.
Thus, although the parties do not appear to have executed a retainer agreement, they agree that O'Shea's representation of Brennan commenced in February 2000.
According to O'Shea, during the period from November 1999 through May 2000, he undertook an investigation of Riisna's alleged defamation campaign against Brennan; as part of the investigation, O'Shea interviewed witnesses, prepared affidavits and reviewed background material. In addition, O'Shea states, he conducted legal research concerning Brennan's possible causes of action against Riisna under both California and New York law. O'Shea asserts that, during this period, he also engaged in meetings and negotiations with counsel for ABC News in an attempt to stop Riisna's defamation campaign. O'Shea contends that, as a result of these negotiations, ABC News decided to terminate Riisna's employment and the defamation campaign against the defendant was "stopped in its tracks." O'Shea contends that his investigations were conducted with Brennan's full knowledge and approval and that he often discussed strategic issues with his client, including whether to pursue litigation against Riisna. However, on this and other points, Brennan's recollection of pertinent events diverges from that of the plaintiff.
For example, O'Shea contends that, when he first met Brennan in November 1999, four of the six defamatory communications attributable to Riisna were already time-barred under New York law. Thus, according to O'Shea, only two of the communications, a letter from Riisna to Mademoiselle magazine, dated April 2, 1999, and a letter from Riisna to Dr. Robert Miner, dated August 26, 1999, had been published recently enough to constitute a basis for a timely defamation action in New York. However, O'Shea maintains, Brennan had a chance of recovering for all of Rissna's defamatory publications under California law; consequently, in June 2000, O'Shea advised Brennan that, if he wished to pursue litigation against Riisna, he should do so in California.
Under New York law, a defamation suit must be filed within one year of the date of publication of the alleged defamatory statement regardless of when the plaintiff discovered the publication. See Teneriello v. Travelers Companies, 226 A.D.2d 1137, 1138, 641 N.Y.S.2d 482, 483 (App.Div. 4th Dep't 1996); Section 215 of New York's Civil Procedure Law and Rules ("CPLR").
Under California law, if a party could not reasonably have discovered the facts giving rise to a cause of action in defamation, the statute of limitations in a defamation suit begins to run upon discovery of the publication of the defamatory matter. See, e.g., Schneider v. United Airlines, Inc., 208 Cal.App.3d 71, 77, 256 Cal.Rptr. 71, 75 (Ct.App. 1989).
For his part, Brennan claims that he informed O'Shea at their first meeting that the August 2, 1999 letter to Mademoiselle magazine was the publication that most concerned him because, unlike Riisna's earlier publications which had been directed to individuals, this one had been sent to a magazine of mass circulation and, therefore, was likely to reach a much wider audience. Brennan also claims that he and O'Shea never discussed any strategy other than litigation, specifically, the filing of a defamation suit against Riisna and, possibly, against ABC News, and that he and O'Shea agreed that suit would be filed in New York as soon as possible. Brennan contends that it was not until June 2000 that O'Shea informed him that suit could not be filed in New York because that state's statute of limitations on the contemplated defamation action had expired. Brennan states that he now knows that a defamation suit based on the April 2, 1999 letter to Mademoiselle could have been filed timely in New York until April 2000. Brennan maintains that O'Shea's advice concerning filing suit in California was merely an attempt to cover up the fact that he had allowed the pertinent New York statute of limitations to expire, and that, had he known about that provision of New York law, he would have asked O'Shea to file suit in New York based on the April 1999 letter in a timely manner. There is no dispute that O'Shea, on Brennan's behalf, filed a defamation suit against Riisna in California in August 2000.
Another area of dispute between the parties concerns a disciplinary complaint filed against O'Shea by attorneys for Riisna in January 2001 and a counter-complaint filed by O'Shea at about the same time. O'Shea claims that these proceedings were directly related to his representation of Brennan, and that he explained this to Brennan. O'Shea contends that, consistent with their agreement, the invoices that he sent subsequently to Brennan for legal work performed on Brennan's behalf reflected time spent preparing, inter alia, a response to the disciplinary complaint filed against him. In addition, O'Shea asserts that Brennan never expressed any contemporaneous objection to the invoice entries concerning work performed in connection with the disciplinary proceedings.
Brennan claims that O'Shea did not discuss his intention to charge a fee for services rendered in connection with the disciplinary proceedings until after Brennan objected to the inclusion of such a fee in O'Shea's February 2001 invoice. According to Brennan, this was the first invoice to reflect time spent on the matter. Brennan asserts that, from the time he first discovered that he was being charged legal fees for work done in connection with the disciplinary proceedings, he objected to the fees and refused to pay them.
In March 2001, Riisna filed a complaint against Brennan in federal district court in New York alleging tortious interference with contract. Although the parties agree that O'Shea initially represented Brennan in that action, they disagree concerning the terms of that representation. O'Shea claims that he refused to appear on Brennan's behalf in connection with the action until he and Brennan resolved the matter of the outstanding balance due under their retainer agreement. O'Shea asserts that, as of May 10, 2001, Brennan owed him approximately $119,000 in legal fees. O'Shea maintains that Brennan complained for the first time about the fees on May 29, 2001, and that, as a result, O'Shea offered to discount his bill by twenty-five (25) percent, provided the defendant agreed to pay the amount due immediately, and also to discount all future bills by twenty (20) percent, provided the defendant agreed to pay those bills within thirty (30) days. O'Shea contends that, after Brennan promised to send him $25,000, he agreed to appear in connection with the tort action for the limited purpose of attending an initial conference.
Brennan contends that O'Shea's contacts with ABC News were the cause of Riisna's suit alleging tortious interference with contract, and that O'Shea agreed to defend him in connection with that action, although no retainer agreement pertaining to such representation had been signed. Brennan claims that, despite the absence of a retainer agreement, he agreed to pay O'Shea $25,000. This amount, Brennan claims, was not intended to defray the balance due on O'Shea's previous invoices, which were in dispute, but, rather, was "extorted" from him by O'Shea as the cost of appearing on Brennan's behalf in connection with the Riisna tort action.
On September 25, 2001, Riisna filed a motion to disqualify O'Shea as Brennan's counsel in the tort action on the ground that O'Shea would be called upon to testify as a witness in the case. O'Shea claims that he opposed the disqualification motion successfully and later provided deposition testimony in the tort action that was in no way adverse to Brennan.
Brennan claims that O'Shea did not disclose to him that, if O'Shea were called to testify as a witness in the tort case, his representation of Brennan in that case might involve a conflict of interest on O'Shea's part, or that Riisna's counsel would attempt to have O'Shea disqualified as Brennan's counsel because of the alleged conflict of interest, or that Brennan should seek independent counsel for these reasons.
On October 23, 2001, Brennan signed a confirmation of his obligation to pay the outstanding balance due to O'Shea for legal services rendered. O'Shea then sought permission to withdraw as Brennan's counsel in both the tort action and the defamation action which had been filed in California; in both cases, he was permitted by the court to do so. Thereafter,
That document states: "I, Dr. H. George Brennan, agree to promptly pay the Law Offices of Sean F. O'Shea its outstanding bill for legal services at the earliest opportunity as discussed with Sean F. O'Shea on October 21, 2001."
Brennan's insurance company took over representation of Brennan in connection with the tort action.
Brennan claims that O'Shea asked him to sign the October 23, 2001 letter, confirming his obligation to pay the balance due on his account, on the pretense that O'Shea would continue to represent him in the tort matter. However, shortly after the letter was signed, O'Shea withdrew from the case.
The parties also disagree about their respective obligations with respect to determining the nature and extent of Brennan's insurance coverage. Brennan claims that, after O'Shea withdrew from representation in the tort action, Brennan's new counsel advised him that O'Shea had been served with document requests in that action by Riisna's attorney which, among other things, requested documents relating to Brennan's insurance coverage for the claims that were the subject of the suit. Brennan claims that O'Shea never informed him about the document requests or about the requirement to make initial disclosures concerning insurance coverage.
O'Shea asserts that neither the defendant's general counsel, George Chelius ("Chelius"), nor the defendant himself ever determined whether defendant's insurance policies covered the defense of the tortious interference with contract action filed against him by Riisna. Moreover, O'Shea contends, in an effort to minimize costs, he had delayed his response to discovery requests in the tort action, including document requests concerning insurance coverage, pending the outcome of a motion to dismiss the case and of Riisna's motion to disqualify; therefore, O'Shea maintains, the case never reached the discovery phase while he was counsel of record.
The parties also have presented divergent accounts of the fee arrangements agreed to between them. Brennan claims that, when he retained O'Shea, the attorney's hourly rate was $375. However, Brennan maintains, during the course of the representation, O'Shea, without Brennan's approval, increased his hourly rate, first, to $400 and, later, to $425. O'Shea claims that he notified Brennan in advance of his standard annual rate increases and that his other clients received the same rate increases during the relevant time period. O'Shea claims that the hourly rates charged were fair and consistent with comparable rates in the geographical area during the relevant time period.
Brennan also objects to various items in O'Shea's invoices, including work done preparatory to the New York defamation lawsuit that was never filed, work done preparatory to the lawsuit against ABC that was never filed, and work done in connection with the disciplinary proceedings brought by and against O'Shea. Brennan also claims that O'Shea's invoices were not accompanied by itemized time records, and that such records, which were kept by O'Shea's office staff, were not provided to Brennan until March 2001, when they were reviewed by his accountant, who produced summaries of the amounts billed for each matter undertaken. Brennan claims that O'Shea's various proposals to reduce the amount of the outstanding invoices, as well as the amount of the fees for work done in the `future, was a direct response to Brennan's complaints regarding O'Shea's failure to advise him correctly concerning the statute of limitations for defamation actions in New York.
For his part, O'Shea contends that the summaries prepared by Brennan's accountant are not competent interpretations of his invoices and, therefore, any conclusions reached by Brennan on the basis of those summaries should be disregarded by the Court. O'Shea also contends that he reviewed in advance every invoice sent by his office to Brennan, that the work reflected in the invoices was performed either by O'Shea personally or under his direct supervision, and that all the legal services performed by him or his associates were reasonably required for the diligent and effective representation of Brennan's interests and, moreover, were consistent with the retainer agreement entered into by the parties.
In May 2002, O'Shea filed a complaint against Brennan alleging breach of contract, account stated and quantum meruit, and seeking to recover $138,994.15 or, in the alternative, $102,791.26, in attorney's fees and expenses purportedly due to him for services rendered to Brennan. In his answer to the complaint, Brennan raised, in addition to various affirmative defenses, counterclaims for negligence (legal malpractice) and breach of contract. The instant motion for summary judgment followed.
III. DISCUSSION
Standard of Review for Summary Judgment
Summary judgment may be granted in favor of the moving party "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." See Fed.R.Civ.P. 56(c);see also D'Amico. v. City of New York. 132 F.3d 145, 149 (2d Cir.), cert. denied, 524 U.S. 911, 118 S.Ct. 2075 (1998). When considering a motion for summary judgment, "[t]he court must view the evidence in the light most favorable to the party against whom summary judgment is sought and must draw all reasonable inferences in his favor."L. B. Foster Co. v. America Piles. Inc., 138 F.3d 81, 87 (2d Cir. 1998) (citing Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356).
The moving party bears the burden of showing that no genuine issue of material fact exists. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2552 (1986). Once the moving party has satisfied its burden, the non-moving party must come forward with "specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e);see Anderson v. Liberty Lobby. Inc. 477 U.S. 242, 250, 106 So. Ct. 2505, 2511 (1986).
In order to defeat a motion for summary judgment, the non-moving party cannot merely rely upon the allegations contained in the pleadings that raise no more than "some metaphysical doubt as to the material facts."Matsushita, 475 U.S. at 586, 106 S.Ct. at 1355. "[T]he mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment." Anderson, 477 U.S. at 247-48, 106 S.Ct. at 2510. The non-moving party must offer "concrete evidence from which a reasonable juror could return a verdict in his favor." Anderson, 477 U.S. at 256, 106 S.Ct. at 2514. Summary judgment should only be granted if no rational jury could find in favor of the non-moving party. See Heilweil v. Mount Sinai Hospital, 32 F.3d 718, 721 (2d Cir. 1994).
O'Shea contends that he is entitled to judgment as a matter of law on his claims for breach of contract and account stated. In addition, O'Shea asserts that Brennan's affirmative defenses, and his counterclaims for legal malpractice and breach of contract, must be dismissed because they raise no genuine issues of material fact and, as a matter of law, Brennan cannot prevail on them.
Breach of Contract Claim
Under New York law, to prevail on a claim for breach of contract, a plaintiff must prove: (1) the existence of a contract between the plaintiff and defendant; (2) performance of the contract by the plaintiff; (3) breach of the contract by the defendant; and (4) damages resulting from the breach. See First Investors Corp. v. Liberty Mutual Ins. Co., 152 F.3d 162, 168 (2d Cir. 1998);Feldman v. Talon Paint Products, Inc., No. 01 Civ. 5657, 2002 WL 31385826, at *4 (S.D.N.Y. Oct. 22, 2002).
"Under New York law, contracts between attorneys and clients are of special interest and concern to the courts." Carey v. Mui-Hin Lau, 140 F. Supp.2d 291, 296 (S.D.N.Y. 2001) (citing Cohen v. Ryan, 34 A.D.2d 789, 790, 311 N.Y.S.2d 644, 645 [App. Div.2d Dep't 1970]). An attorney who has drafted a retainer agreement has the burden of proving that the agreement was fair, reasonable and fully known and understood by the client. See Revson v. Cinque Cinque. P.C., 221 F.3d 59, 67 (2d Cir. 2000); Mar Oil S.A. v. Morrissey. 982 F.2d 830, 838 (2d Cir. 1993); Shaw v. Manufacturers Hanover Trust Co., 68 N.Y.2d 172, 176, 507 N.Y.S.2d 610, 612 (1986). Even if there is no evidence that an agreement to pay a legal fee was obtained by fraud or undue influence, the agreement may be invalid "if it appears that the attorney got the better of the bargain," unless he or she "can show that the client was fully aware of the consequences and that there was no exploitation of the client's confidence in the attorney." Revson, 221 F.3d at 68 (quotingJacobson v. Sassower, 66 N.Y.2d 991, 993, 499 N.Y.S.2d 381, 382); see also Mar Oil 982 F.2d at 838-39. Moreover, whether the nature of an agreement to pay a legal fee was fully known and understood by the client is a question for the trier of fact. See Revson, 221 F.3d at 68; Feldman. 2002 WL 31385826, at *5.
As discussed earlier in this writing, the record in this case does not include a copy of a signed retainer agreement. However, the parties appear to agree that they entered into a retainer agreement on February 7, 2000, and, moreover, that the terms of the agreement, with the exception of the amount of the retainer, which was reduced from $25,000 to $15,000, were the same as those set forth in O'Shea's letter dated November 29, 1999.
O'Shea asserts that he is entitled to judgment as a matter of law on his breach of contract claim because he certified under oath that, among other things, all of the legal services described in the invoices he sent to Brennan were reasonably required and consistent with the retainer agreement entered into by the parties, the time expended on the tasks performed was fair, reasonable and accurate, and the hourly rates charged to the defendant were fair and consistent with those charged by attorneys in this judicial district. However, the plaintiffs assertions notwithstanding, the evidence presented in this case indicates that the terms of the parties' retainer agreement were not fully known or understood by the defendant and factual issues exist about what the parties agreed to with respect to the legal services to be provided by, and the fees to be paid to the plaintiff.
For example, it does not appear that the parties were in accord with respect to the time and place of the filing of the defamation action against Riisna. O'Shea claims that he advised Brennan to file his defamation suit against Riisna in California, rather than in New York, based on his professional discretion, and that he often discussed such strategic issues with his client. Brennan claims, however, that he understood from O'Shea that the defamation suit would be filed in New York (a course of action Brennan preferred), and that it was not until June 2000, that O'Shea informed him that suit could not be filed in New York because that state's statute of limitations had expired.
In support of his claim, Brennan has submitted, among other things, a copy of a letter from O'Shea to Riisna, dated May 30, 2000, in which O'Shea informed Riisna that he and his client proposed to file a defamation action against her in New York. A copy of a draft complaint in the matter, indicating that it was intended to be filed in the Southern District of New York, accompanied the letter. In addition, Brennan has submitted copies of contemporaneous time records prepared by O'Shea in connection with the Riisna defamation litigation; these time records show that the first time Brennan was charged a fee for research concerning the issue of the statute of limitations for defamation in California was June 14, 2000.
The statute of limitations on a defamation action in New York, based on the April 1999 letter from Riisna to Mademoiselle, expired in April 2000. Thus, the evidence shows that O'Shea was still considering filing suit in New York several months after the expiration of the limitations period in that state. This suggests that he may not have been aware that he had already missed that deadline. In addition, the fact that there is no reference, in the invoices received by Brennan from O'Shea, to a defamation action in California until June 2000 indicates that the decision to file suit in that state may not have been a matter of strategy or professional discretion, as O'Shea maintains, but rather an attempt to avoid dismissal of the defamation action altogether and the forfeiture of any damages to which Brennan may have been entitled had he prevailed in such an action. In any case, genuine issues of material fact exist about whether the terms of the retainer agreement with respect to the time and place of the filing of a defamation action against Riisna were fully known and understood by the defendant.
In addition, Brennan claims that certain fees charged by O'Shea were not agreed upon by the parties and were not within the scope of the retainer agreement. For example, Brennan claims that O'Shea billed him improperly for the disciplinary proceedings brought against O'Shea by Riisna in January 2000. O'Shea avers that he discussed the disciplinary complaint with Brennan as soon as the matter arose and explained to him that it was directly related to the representation. O'Shea avers, further, that Brennan never voiced any contemporaneous objection to the February 2001 invoice. However, in deposition testimony, Brennan stated that O'Shea did not tell him that disciplinary proceedings had been filed, and did not discuss billing him for this expense, until after Brennan questioned O'Shea about his invoice dated February 12, 2001, which was the first invoice to reflect work done on this matter. Brennan claims that he was billed approximately $66,949 for work done on the disciplinary proceeding and that, from the time he discovered he was being charged for such work, he objected to the fees and refused to pay them.
The language of the retainer agreement, which identifies the subject matter of O'Shea's representation of Brennan as the "potential [Ene] Riisna defamation litigation and related matters," is unclear with respect to the scope of that representation. Specifically, it is not clear whether a disciplinary action brought by an attorney for the opposing party was to be treated as a matter "related" to the defamation litigation. Moreover, a review of the record in this case indicates that O'Shea failed to make Brennan fully aware of his obligations under the retainer agreement with respect to work done on the disciplinary proceedings.
The record shows that the first time Brennan was charged a fee for work performed in connection with the disciplinary proceedings was in February 2001. Further, at about the time he received the February 2001 invoice, Brennan requested from O'Shea "back-up" records for all of the invoices he had received to date, that is, contemporaneous time records detailing the amount of the fees charged for each of the items included on the invoices. The record shows that O'Shea provided such time records to Brennan on March 27, 2001.
The record also shows that, after receiving a letter from O'Shea in which the latter threatened to withdraw from the representation because of non-payment of fees, and to commence legal action against Brennan to collect those fees, Brennan responded, in a letter dated May 29, 2001, stating, inter alia, that he found the current bill "excessive for reasons that should not be my obligation." Thereafter, on June 28, 2001, Brennan informed O'Shea that, after reviewing an analysis of O'Shea's invoices, which had been prepared by a certified public accountant, he did not believe that he was responsible for the fees incurred in connection with the disciplinary proceedings and wished to have those fees deleted from his statement. On June 29, 2001, O'Shea responded, stating that he would reduce the amount of the bill from $96,153 to $60,000.
Thus, the record indicates that there is a genuine issue of material fact concerning whether Brennan was fully aware of the consequences of entering into a retainer agreement with O'Shea with respect to the matter of fees charged for work done on the disciplinary proceedings. Although O'Shea's eventual proposal to reduce his fees apparently resolved the issue, in the absence of uncontroverted evidence establishing that the parties came to an agreement concerning this matter at the time O'Shea undertook to represent Brennan or, at least, prior to the date upon which Brennan was charged a fee for legal services rendered in connection with the matter, the plaintiff has not met his burden of showing that his client fully understood the nature and scope of the retainer agreement.
The record in this case indicates that factual disputes exist with respect to other matters as well, including whether the tortious interference of contract action filed by Riisna against Brennan was "related" to the defamation litigation and, thus, within the scope of the original retainer agreement, whether, as discussed infra, the October 23, 2001 letter of acknowledgment signed by Brennan was understood to be part of the original retainer agreement, whether Brennan's signature on that document was obtained properly, and the reasonableness of the parties' fee arrangements. Therefore, under the circumstances, the Court finds that plaintiff has not demonstrated that he is entitled to judgment as a matter of law on his claim for breach of contract. Accordingly, this branch of plaintiff's motion for summary judgment is denied.
Account Stated
Under New York law, in order to recover on an account stated claim, O'Shea must prove the existence of an agreement between the defendant and himself based upon prior transactions between them. See Feldman. 2002 WL 31385826, at *5; Carey, 140 F. Supp.2d at 298; Orb Factory, Ltd. v. Design Science Toys, Ltd., No. 96 Civ. 9469, 1999 WL 191527, at *17 (S.D.N.Y. Apr. 7, 1999). Such an agreement is implied if O'Shea shows that (1) the defendant received invoices from him, and (2) the defendant failed to object within a reasonable time or made partial payment on the account. See Feldman, 2002 WL 31385826, at *5; Carey, 140 F. Supp.2d at 298; Orb Factory, Ltd., 1999 WL 191527, at *17. "This is so unless fraud, mistake, or other equitable considerations are shown."Feldman, 2002 WL 31385826, at *5 (citing Rosenman Colin Freund Lewis Cohen v. Neuman, 93 A.D.2d 745, 746, 461 N.Y.S.2d 297, 298 [App. Div. 1st Dep't 1983]). A client's objection must be made timely and must be based on the reasonableness of the fees charged. See id. Thus, "[a]n objection made for the first time upon the commencement of proceedings will not suffice."Id.
The plaintiff asserts that the record in this case demonstrates an account stated, both express and implied. Specifically, O'Shea points to the October 23, 2001 writing in which Brennan acknowledged his responsibility for the balance due on his account. O'Shea contends that this document creates an explicit account stated. O'Shea contends further that the invoices issued by him prior to October 23, 2001, also are settled under an account stated.
With respect to the letter dated October 23, 2001, it is not clear whether this document should be regarded as part of the original retainer agreement or as a separate contract between the parties. Furthermore, in this regard, it is not clear whether O'Shea's representation of Brennan in the action for tortious interference with contract constituted a matter "related" to the defamation litigation, as described in the original retainer agreement, or was, instead, the subject of a separate agreement. Brennan contends that neither he nor O'Shea ever signed a retainer agreement concerning the tort action. Brennan also contends that his agreement to pay O'Shea $25,000 in exchange for the latter's appearance at an initial conference in that matter was not intended to defray the balance due on the previous invoices but, instead, was intended to induce O'Shea to appear on his behalf in the tort matter. Thus, at the very least, there is ambiguity concerning the scope of the original retainer agreement between the parties, the parties' respective obligations under that agreement, the nature and scope of any subsequent agreements they may have entered into, and any fee structure to which they may have agreed.
In any case, setting aside the question of the nature and scope of the October 23, 2001 writing, it does not appear that O'Shea has demonstrated a necessary element of his account stated claim with respect to that document. To prevail on that claim, O'Shea must demonstrate that Brennan failed to object within a reasonable time to any invoices covered by the letter of acknowledgment, or made partial payment on the account.
The record does not contain an explicit objection by Brennan to any invoices that may have been covered by the letter of acknowledgment. However, under New York law, where an attorney-client relationship is already deteriorating, a client's retention without objection of an attorney's bills, even after the signing of an acknowledgment of indebtedness, does not create a sufficiently clear inference of acquiescence to warrant granting summary judgment. See Rosenman Colin Freund Lewis Cohen. 93 A.D.2d at 746, 461 N.Y.S.2d at 299 (holding that silence does not imply acquiescence, where the attorney-client relationship has deteriorated contemporaneously with the client's receipt of bills). Moreover, there is evidence that Brennan implicitly objected to any invoices covered by the letter of acknowledgment by refusing to sign a confession of judgment.
Furthermore, Brennan contends that the $25,000 he paid O'Shea to represent him for the purpose of attending an initial conference in the tort action was "extorted" from him by O'Shea and that he paid this amount, not because he no longer disputed the fees he was being charged, but in order to forestall abandonment by his attorney. There is evidence to support Brennan's contention. For example, in his letter demanding an acknowledgment of indebtedness, O'Shea states that if Brennan sends him "a letter along the lines of the attached," he will obtain a further waiver of the statute of limitations on defamation from ABC. Thus, questions of fact exist concerning the circumstances surrounding Brennan's signing of the October 23, 2001 writing.
As for invoices issued prior to this date, as discussed earlier, Brennan began questioning the reasonableness of the fees charged early in 2001 when he requested "back up" records from O'Shea. Thereafter, he refused to submit payment on the account pending an analysis of the invoices and raised explicit objections to the fees charged in letters dated May and June 2001. Under the circumstances, this appears to constitute a timely objection. See, e.g., Feldman, 2002 WL 31385826, at *7 (finding that objection made one month after legal firm sent its first bill was sufficient to defeat a claim for account stated); Carey, 140 F. Supp.2d at 298 (finding that attorney's claim for account stated was established where defendant failed to object to statement of account for five to fourteen years); see generally Orb Factory, Ltd., 1999 WL 191527, at *17 (finding that plaintiff failed to establish a claim for account stated where issues of fact existed regarding the nature of the obligations of the parties).
Therefore, for the reasons set forth above, the Court finds that questions of fact exist concerning O'Shea's claim for account stated. Accordingly, summary judgment is not appropriate with respect to this branch of plaintiff's motion.
Brennan's Counterclaims
O'Shea contends that Brennan's counterclaim for breach of contract is merely a "redundant pleading" of his legal malpractice claim. In addition, O'Shea maintains, Brennan's legal malpractice claim must be dismissed because he has failed to proffer expert testimony concerning the standard of care in the legal profession, or to submit any competent evidence to support his allegations of professional misconduct.
A. Breach of Contract Counterclaim
Under New York law, a cause of action for breach of contract is "a redundant pleading of a malpractice claim" if it does not "rest upon a promise of a particular or assured result" and claims only "a breach of general professional standards." Senise v. Mackasek, 227 A.D.2d 184, 185, 642 N.Y.S.2d 241, 242 (App.Div. 1st Dep't 1996); see also Schwartz v. Olshan Grundman Frome Rosenzweig, 302 A.D.2d 193, 199-200, 753 N.Y.S.2d 482, 487 (App. Div. 1st Dep't 2003); Nevelson v. Carro, Spanbock, Kaster Cuiffo, 290 A.D.2d 399, 400, 736 N.Y.S.2d 668, 670 (App.Div. 1st Dep't 2002). In addition, breach of contract and malpractice claims are duplicative if both claims arise from the same facts and give rise to the same damages. See Nevelson, 290 A.D.2d at 400, 736 N.Y.S.2d at 670;Tyborowski v. Cuddeback Onofry, 279 A.D.2d 763, 765, 718 N.Y.S.2d 489, 491 (App.Div. 3rd Dep't 2001).
In the case at bar, Brennan has not shown that his counterclaim for breach of contract is distinct from his counterclaim for legal malpractice. In the first place, there is no evidence that Brennan's claim for breach of contract rests on a promise by O'Shea to achieve a particular or assured result. As noted earlier, the parties' retainer agreement provides only for representation "in connection with potential [Ene] Riisna defamation litigation and related matters."
Furthermore, contrary to the argument presented by the defendant in his opposition papers, a review of the amended answer to the complaint in this action reveals that the counterclaims for breach of contract and legal malpractice are based upon the same set of facts and seek the same damages. Therefore, the defendant's counterclaim for breach of contract is dismissed.
B. Legal Malpractice Counterclaim
In order to prevail on a claim of legal malpractice under New York law, a plaintiff must demonstrate: "(1) a duty, (2) a breach of the duty, and (3) proof that actual damages were proximately caused by the breach of the duty." Marshall v. Nacht 172 A.D.2d 727, 728, 569 N.Y.S.2d 113, 114 (App.Div.2d Dep't 1991): see also Ocean Ships. Inc. v. Stiles, 315 F.3d 111, 117 (2d Cir. 2002); Nobile v. Schwartz, 265 F. Supp.2d 282, 288 (S.D.N.Y. 2003). In establishing a breach of duty, a client must show that his attorney failed to exercise that degree of care, skill and diligence commonly possessed arid exercised by a member of the legal community. See Marshall. 172 A.D.2d at 727-28, 569 N.Y.S.2d at 114; Greene v. Payne, Wood and Littlejohn, 197 A.D.2d 664, 666, 602 N.Y.S.2d 883, 885 (App.Div.2d Dep't 1993); Nobile, 265 F. Supp.2d at 288. Furthermore, proof that actual damages were proximately caused by the breach of duty requires a showing that "but for the defendant's negligence, [the plaintiff] would have prevailed in the underlying action or would not have sustained any damages."Nobile, 265 F. Supp.2d at 289 (citing Davis v. Klein, 88 N.Y.2d 1008, 1009-10, 648 N.Y.S.2d 871 (1996): see also Logalbo v. Plishkin, Rubano Baum, 163 A.D.2d 511, 513, 558 N.Y.S.2d 185 (App.Div.2d Dep't 1990). In most cases, expert testimony must be introduced to establish the standard of care in the legal profession, whether the attorney failed to comply with that standard, and whether the attorney's negligence proximately caused any damages to the client. See Greene, 197 A.D.2d at 666, 602 N.Y.S.2d at 885; Kranis v. Scott, 178 F. Supp.2d 330, 334 (E.D.N.Y. 2002); Hatfield v. Herz, 109 F. Supp.2d 174, 179 (S.D.N.Y 2000). However, expert testimony may be dispensed with where "the ordinary experience of the fact finder provides sufficient basis for judging the adequacy of the professional service, or the attorney's conduct falls below any standard of due care." Greene, 197 A.D.2d at 666, 602 N.Y.S.2d at 885 (citations omitted); see also Nobile. 265 F. Supp.2d at 288; Kranis, 178 F. Supp.2d at 334.
O'Shea maintains that this case does not present one of the exceptions in which a fact finder is capable of assessing the adequacy of the legal service provided or whether the attorney's conduct fell below any standard of care. Therefore, he argues, expert testimony is mandatory and Brennan's failure to offer such testimony requires dismissal of his counterclaims.
Brennan claims, with respect to the matter of filing suit in New York, that no expert testimony is needed to prove that O'Shea committed legal malpractice by allowing the New York statute of limitations to expire on the April 1999 defamatory writing. Brennan also claims that O'Shea committed legal malpractice by failing to advise him about insurance coverage with respect to the tort action filed against Brennan by Riisna. Since he has not provided expert testimony, in order to overcome the motion for summary judgment, Brennan must show that a jury reasonably could conclude that O'Shea was negligent and, if so, that such negligence was the proximate cause of the defendant's alleged damages or, alternatively, that O'Shea's conduct was so negligent as to fall below any standard of due care.
1. Statute of Limitations
"An attorney's failure to commence an action within the statute of limitations is grounds for a legal malpractice claim. . . . "Macklev v. Sullivan Liapakis, P.C., No. 98 Civ. 8460, 2001 WL 1658188, at *3 (S.D.N.Y. Dec. 27, 2001) (citing Nitis v. Goldenthal, 128 A.D.2d 687, 688, 513 N.Y.S.2d 186, 188 [App. Div.2d Dep't 1987]). See also Cruz v. Durst Law Firm, 273 A.D.2d 120, 710 N.Y.S.2d 888 (App.Div. 1st Dep't 2000) (finding that, in an action for legal malpractice, defendant attorneys failed to meet their burden as summary judgment movants to demonstrate the absence of a triable issue as to whether plaintiffs would have prevailed to some extent in the underlying action but for their malpractice,i.e., failing to name the record owner of the premises where plaintiffs' personal injuries occurred, thus allowing the statute of limitations to expire against that party); Burke v. Law Offices of Landau, Miller Moran, 289 A.D.2d 16, 17, 733 N.Y.S.2d 416, 417 (App.Div. 1st Dep't 2001) (finding that defendant law firm was not entitled to dismissal of the legal malpractice cause of action against it as a matter of law, where, inter alia, it failed to call the prospective client's attention specifically to the number of days remaining before the relevant statue of limitations expired).
With respect to the matter of filing suit in New York, a jury could conclude, without the benefit of expert testimony, that O'Shea failed to file a New York defamation action timely, allowing the state's statute of limitations on that action to expire. The record evidence establishes that the relevant defamatory writing, namely, the letter to Mademoiselle, published in
April 1999, could have been filed timely in New York until April 2000. The record also shows that the parties entered into a retainer agreement in February 2000. Thus, the letter to Mademoiselle was not time-barred at the time O'Shea first agreed to represent Brennan. As discussed earlier, the record evidence shows that O'Shea was still contemplating a New York action after the limitations period in that state had elapsed and did not submit an invoice for work done in connection with the pertinent California statute of limitations until June 2000.
The law concerning the applicable standard of care in this respect is not so complex as to require expert testimony concerning whether O'Shea's conduct met that standard of care. However, even if O'Shea's acts or omissions were obviously negligent, it would not be clear without expert testimony whether such negligence was the proximate cause of any alleged damages. That is, without expert testimony, it is unlikely that a jury could conclude whether, but for O'Shea's failure to file timely, Brennan would have been successful in a defamation action in New York, had such an action been commenced. Therefore, summary judgment is appropriate with respect to this element of Brennan's counterclaim for legal malpractice.
2. Insurance Coverage
With respect to the matter of O'Shea's failure to advise Brennan about his insurance coverage in connection with Riisna's tort action, Brennan, relying upon Darby Darby, P.C. v. VSI International Inc., 95 N.Y.2d 308, 716 N.Y.S.2d 378 (2000), claims that attorneys in New York have a duty to investigate whether claims against their clients are covered by their client's insurance.
In Darby, the New York Court of Appeals found that a New York law firm retained to defend a corporate client in a patent infringement litigation did not have a duty to advise the client about possible insurance coverage for the costs of the litigation. See Darby Darby. 95 N.Y.2d at 311, 716 N.Y.S.2d at 379. In reaching this conclusion, the court noted that at the time of plaintiffs representation of the defendant, the law regarding insurance coverage in the relevant circumstances was unsettled and that the plaintiff could not be held liable for its failure to advise its client about what was, at the relevant time, "a novel and questionable theory pertaining to their insurance coverage." Id. t 314, 382.
Brennan contends that the reasoning of the New York Court of Appeals "leaves no doubt that attorneys are now duty-bound to investigate their client's coverage in certain circumstances." According to Brennan, "[i]mplicit in the Court's holding is that if an insurance policy clearly covers a client's litigation expenses or risk, a lawyer has a duty to advise the client about possible insurance coverage." The Court is not persuaded by this argument. What might be implicit in the court's holding in Darby does not constitute viable authority in this case. Furthermore, it is not clear, given the complexity of the law in this area, whether a jury could conclude, without the benefit of expert testimony, either that O'Shea's failure to advise his client about his insurance coverage was a breach of his professional duty of care or that his conduct caused the defendant's alleged damages. Therefore, the plaintiff is entitled to judgment as a matter of law on this element of Brennan's counterclaim for legal malpractice.
IV. CONCLUSION
For the reasons set forth above, the plaintiffs motion for summary judgment on his claims for breach of contract and account stated is denied. The plaintiffs motion for summary judgment with respect to the defendant's counterclaims for breach of contract and legal malpractice is granted. Accordingly, the defendant's counterclaims for breach of contract and legal malpractice are dismissed.