Opinion
14769/2005.
Decided February 28, 2005.
The instant controversy, surrounding an attorney's evidently burning desire, after several years of inaction, to enforce his purported statutory charging lien by resorting to an order to show cause, raises novel issues of jurisdiction under the New York City Civil Court Act and unusual facts that have never been examined in any reported New York decision. Also, the rejection of a proposed order to show cause ordinarily requires only a brief hand-written explanation on the face of the order. The present proceeding is one of the rare exceptions to the general rule, thus justifying a developed opinion elaborating on those reasons for the Bar's enlightenment and benefit.
On February 24, 2005, while the undersigned was the "Special II Judge," required to review ex parte applications and sign proper orders to show cause, a representative of petitioner Law Offices of Allan Khoshbin ("Khoshbin") filed papers with the Clerk of Special Term seeking to fix a legal fee. The papers consisted of a proposed order, in the form of an order to show cause, accompanied only by an attorney's affirmation and a one page exhibit.
The affirmation by Ernest Miller, Esq. ("Miller") alleged that he is a member of Khoshbin's practice and that Roberto Abbate ("Abbate"), a former client of the firm, on November 1, 1999, signed a retainer agreement engaging Khoshbin to handle and prosecute a personal injury claim or action on his behalf. On the day before, October 31, 1999, Abbate allegedly had been injured in a motor vehicle accident. The one page retainer agreement, consisting of legal form T 540 by Julius Blumberg, Publisher ("Blumberg form"), bore Abbate's signature and provided an address for him in Queens County, New York, but did not identify the name of either the law firm or the attorney who is being engaged. Neither in the form retainer nor in Miller's affirmation is there a mention of where the accident occurred or the name and address of the defendant or defendants. It is presumed that the accident occurred somewhere within the City of New York, since Miller sketchily states, in his affirmation, that his firm obtained a New York City Police Accident report.
Miller then recites other work that Khoshbin's office performed. Khoshbin acted as a "lia[i]son" between health care providers and the insurance carrier for the payment of no fault first party benefits. Khoshbin prepared some undisclosed "liability analysis" for the insurance carrier, Progressive Insurance Company ("Progressive"), resulting in a pre-action offer of $10,000. Miller's skeletal affirmation omits key facts and dates, but does continue to recite that Abbate rejected the offer.
Khoshbin tried in vain to convince Progressive's claims examiner to increase the offer. When the examiner refused and Abbate announced his final rejection to his attorneys, Khoshbin did nothing.
On or about May 7, 2001, Khoshbin was reportedly stunned to receive papers from the Law Offices of Michael Ruiz, Esq. ("Ruiz"), stating that Abbate was now changing attorneys and requested that Khoshbin execute a "consent to change counsel." A copy of such consent is not attached to Miller's affirmation, because, as stated, the only exhibit consists of a one page Blumberg form entitled "Retainer," leaving a blank in the space provided for identifying the law firm or attorney that is hired. Khoshbin's alleged "Retainer" also was not a contingent sliding scale retainer agreement, as was incorrectly described in Miller's affirmation, but was for a fixed one-third fee.
Miller then alleges that Khoshbin forwarded certain stipulations for Ruiz to sign. Ruiz did not return them and persisted in ignoring every form of communication from Khoshbin. Khoshbin then "sent" letters to Progressive, on December 2, 2002, and June 2, 2004, asserting "a lien on the case." Miller does not state or describe how the two letters were "sent." He does not quote their contents and does not attach them as exhibits, so it is impossible to know whether they constituted a legal notice of lien. He does not append any proof of service of the two letters. Miller also fails to mention that, even prior to the mailing of the first such letter by Khoshbin on December 2, 2002, the statute of limitations on Abbate's claim for personal injuries would have expired on October 31, 2002, had a lawsuit not been commenced.
Progressive allegedly responded, in a letter of June 10, 2004, that it "resolved" Abbate's matter for $65,000. Miller fails to describe the method of resolution, whether by judgment or settlement. With regard to Khoshbin's alleged lien, Progressive reportedly stated that it had received a "hold harmless [letter]" from Ruiz. None of these letters — either between Khoshbin and Ruiz or between Khoshbin and Progressive — are attached as exhibits. Miller, moreover, among multiple omissions, fails to elaborate how the letters were "sent."
Khoshbin then brought the instant matter demanding a one-third share of the one-third share presumably received by Ruiz. Since one-third of one-third of $65,000 is $7,222.22, Khoshbin turned to the Civil Court of the City of New York for relief, with its maximum monetary jurisdiction of $25,000 (New York City Civil Court Act § 202; see, Simmons v. Simmons, 2 Misc 3d 536, 538 [NYC Civ Ct Queens County 2003] [citing cases]).
As an initial matter, Khoshbin's papers are not in proper form. First, in seeking to enforce a statutory charging lien for legal fees in a special proceeding, Khoshbin ideally should have proceeded by filing a notice of petition and petition (CPLR 403[a]). In this case, it brought an order to show cause, and that route is expressly permitted under CPLR 403[d], although Khoshbin fails to explain the urgency in proceeding ex parte, as opposed to a notice of petition, especially when it allowed so much time to elapse. The fact that the order is accompanied only by Miller's affirmation and not a petition is not an obstacle to relief. CPLR 405 permits a court to correct defects or omissions in the papers. This Court, accordingly, treats Miller's signed affirmation as a verified petition ( see, Page v. Ceresia, 265 AD2d 730, 731 [3rd Dept. 1999] [per curiam]; Gryska v. Chemung County Elmira Sewer Dist., 149 AD2d 849, 849 n. 1 [3rd Dept. 1989]; accord, Matter of Stuberfield v. Long Is. City Sav. and Loan Assn., 235 NYS2d 923, 924 [Sup Ct Queens County 1962] [not officially reported]).
Khoshbin's papers are fatally defective for a myriad of reasons. They are riddled with gaps of content. The conclusion is inescapable, upon reviewing the petition, that the gloss over the facts and the failure to attach critical documents as exhibits are not the product of sloppiness, but of studied and deliberate omission, coated with a veneer of sophistry to make the arguments seem attractive. Even if Khoshbin's papers on this application had been perfect in form and thoroughly supported by exhibits — and they were not, this Court would have ordered disclosure (CPLR 408) and a hearing (CPLR 409) regarding the alleged legal work done and time spent.
At any rate, Khoshbin's papers are devoid of any statement of jurisdiction, required in any legal action or special proceeding. Other than the printed address on its "blue back," listing an address in Queens County, Khoshbin's petition does not state where it or Ruiz maintains offices for the practice of law. There is no statement of their admission or registration in the State of New York as attorneys. The papers' most egregious omission is the failure to state whether an action was ever instituted on Abbate's behalf and by whom it was commenced and in what jurisdiction and court such an action was maintained.
The Appellate Term, in NYC Medical and Neurodiagnostic, P.C. v. Republic Western Ins. Co. (___ Misc 3d ___, 2004 WL 2978289, 2004 NY Slip Op 24526 [App T 2nd Dept. 2004] [2-1 decision], rev'g 2003 WL 21537410, 2003 NY Slip Op 51070[U] [NYC Civ Ct Queens County 2003], and on reargument, 3 Misc 3d 925 [NYC Civ Ct Queens County 2004]), held, inter alia, that a court could not consult a web site of the State Department of Insurance, expressly created by that agency for use by its own employees and all members of the public, including judges and court personnel who are supplied with both computers and internet access by the Office of Court Administration, to determine whether an insurer was listed by the state agency as authorized to conduct business in the State of New York. As presented in the cogent and compelling dissenting opinion of Presiding Justice Michael L. Pesce, the undersigned would not be permitted to examine Attorney Registrations, regarding lawyers and their offices although such information may be germane, and these records, too, are made available on the world wide web and placed on the home page of the Unified Court System of New York.
New York City Civil Court Act section 301 permits the venue of an action in a county where a party resides, if they are residents of New York City. If neither party resides in the City, then the action shall be brought in the county where a party maintains a place for the regular transaction of business. If no party has a place of business in New York City, the venue is in the county in which the course of action arose. None of these facts are supplied.
More vital than venue, Khoshbin fails to present any jurisdictional predicate. The petition is silent as to Khoshbin's operations, respondent Ruiz's law practice, Abbate's residence [listed only in the blank retainer, but not in the petition], the place of the accident, and the court, jurisdiction, and county where any lawsuit was brought. Looking only at the petition, as far as this Court is concerned, Ruiz might be an out-of-state lawyer, who maintains no office in New York City and simply obtained permission to represent Abbate on a pro hac vice basis in a court of this State. The fact is that Ruiz's practice is listed only in the proposed order, in the provision directing the service of a signed order to show cause, as located at 61 Broadway in New York County. Even treating Miller's affirmation as a petition, it must be whole on its face, especially in its jurisdictional averments, without requiring the court to search for petitioner's address on the blue back or respondent's address in the proposed decretal paragraph for service.
The failure to state a jurisdictional basis alone warrants rejection of the proposed order and dismissal of the petition. Yet, Khoshbin's lapses abound, since, despite its strident, self-assured claims of a charging lien, it failed to follow both Judiciary Law sections 475 and 475-a.
Courts are often called to allocate percentage shares of contingent attorney fees earned in personal injury actions to multiple law firms that handled the action or stages of it ( see, e.g., Louima v. City of New York, 2004 WL 2359943 [EDNY 2004]; Casey v. Ruffino, 306 AD2d 304 [2nd Dept. 2003]). Courts, however, as discussed in the cases below, are scrupulous about requiring law firms and counsel, who want to benefit from sections 475 and 475-a, to adhere to its requirements.
Judiciary Law section 475, indeed cited and relied upon by Khoshbin, requires that an "attorney who appears for a party" has a lien on a "client's cause of action, claim or counterclaim" by commencing an action or special proceeding "in any court" or before nearly all municipal, state, and federal departments [except a department of labor] or by serving an answer. Under Judiciary Law section 475, petitioner was, in short, obligated to have commenced an action or other proceeding on the underlying personal injury case in any court. This is a threshold issue. The supporting affirmation/petition is devoid of any such allegation. Although Khoshbin cites Judiciary Law section 475, it fails to provide any fact to show that it applies or was followed. Khoshbin studiously avoids any discussion of any lawsuit that may have been filed on Abbate's behalf. Khoshbin fails to attach any pleading to show that it participated in any stage of the lawsuit.
Since Miller was eager to share with this Court how Khoshbin took out a manila folder and "open[ed] a file," obtained the police report, acted in some "lia[i]son" capacity, forwarded medical reports and authorizations to the insurance carrier, and held talks with a claims representative, the silence as to any discussion of any lawsuit or who brought it speaks volumes. Miller does state that Khoshbin was retained on November 1, 1999, and that it was informed that it was "discharged without cause" on May 7, 2001, representing a period in excess of 18 months. The court in Melendez v. Kim (6 Misc 3d 1018[A], 2005 WL 277318, 2005 NY Slip Op 50119[U] [Sup Ct New York County 2005]), indeed, noted with undisguised disdain that it took an attorney "one and one half years after being retained to have a summons and complaint served." In the present case, after one and one half years, Khoshbin failed to do even that!
The reticence of Miller to discuss any lawsuit is striking and permits the Court to arrive at the conclusion that a lawsuit was, indeed, filed on behalf of Khoshbin in some unidentified court, not by it, but by respondent Ruiz.
Miller readily admits that his firm was able to extract an offer of only $10,000 from the claims examiner. Often, as a practical matter, a plaintiff's attorney purposefully does not rush to litigation because the lawyer believes that his/her talks with a claims examiner will result in a satisfactory pre-litigation settlement; under that scenario, if litigation were to be commenced, a plaintiff's counsel fears or, at least, is concerned that the carrier's file will be transferred from a "friendly" examiner to a more aggressive and tight-fisted one, who is litigation-ready and ready to deploy lawyers and experts. Khoshbin had no such dilemma here. Miller states that Khoshbin's client was upset at the examiner's flat offer of $10,000 and that his firm was unsuccessful in trying to get the immovable claims examiner to increase it. Under these circumstances, as night follows day, the institution of a lawsuit was not just an option; it was the only avenue left for Khoshbin and Abbate to pursue. Yet, reading the petition, with its omission of critical dates and time gaps, Khoshbin seems to have slumbered from August, 2000 [when it contacted Progressive] to May 7, 2001 [the date it learned of its discharge as plaintiff's counsel]. Had Khoshbin filed suit on behalf of Abbate, news of Ruiz's entry would not have come "as a complete surprise to our office," as Miller alleges.
Later, Khoshbin appears to have been shocked by another unexpected revelation. In June, 2004, Khoshbin was advised by Progressive that the entire matter had been somehow "resolved" on some unknown date for $65,000. This Court notes that, unlike the bottle of wine that improves with age, an attorney who is litigation-shy does not command more money with the passage of time. Khoshbin fails to explain how Ruiz was able to secure $65,000, when it could obtain only $10,000 from the insurer. Khoshbin's avoidance of discussing whether Ruiz and Abbate initiated a personal injury action is conspicuous. That a litigation was commenced is as clear as the azure sky over the Mediterranean. Specifically, Abbate's personal injuries from a motor vehicle accident occurred on October 31, 1999, and the statute of limitations for such injuries was only three years (CPLR 214). Had a lawsuit not been commenced on or before October 31, 2002, an insurer would have surely directed its counsel to make a motion to dismiss under CPLR 3211, based on a statute of limitations defense. The insurer and its counsel would make such a motion with understandable self-confidence and relish, as opposed to writing a check for $65,000.
This Court thus concludes, drawing the permissible inferences from the petition and its multiple, notorious silences, that a lawsuit was, indeed, commenced on behalf of Abbate, but that it was not done by Khoshbin, who had been discharged previously, but by Ruiz. Since the commencement of an underlying action on behalf of a client by the lawyer asserting a charging lien under Judiciary Law section 475 is a jurisdictional prerequisite, Khoshbin's attempt to assert a statutory lien has no merit ( see, Great Lakes Tr. Corp. v. Marceau, 154 F2d 623, 628-629 [2nd Cir. 1946]; De La Paz v. Coastal Petroleum Transp. Co. Inc., 136 F Supp 928, 930 [SDNY 1955]; Picciolo v. State of New York, 287 AD2d 721, 722 [2nd Dept. 2001]; Cataldo v. Budget Rent A Car Corp., 226 AD2d 574 [2nd Dept.], lv dismissed, 88 NY2d 1017, and lv denied, 89 NY2d 811). As stated by the Appellate Division, Second Department in Wahba v. Parmar ( 1 AD3d 507), with equal applicability to the instant proceeding: "Preliminary services performed by an attorney discharged before the commencement of an action do not entitle that attorney to a lien under Judiciary Law § 475" ( id. at 508).
Although not cited by Miller, Khoshbin does have one other avenue of relief in an effort to assert a charging lien. Provided that all of its elements are met, Judiciary Law section 475-a permits a law firm or attorney to assert a charging lien even though he/she/it may not have started the action. If an attorney "serves a notice of lien upon the person or persons against whom his client has or may have a claim or cause of action" and strictly follows the methods of writing, signing, and service of such a notice, not even the knavery of a mischievous client can wriggle out of the lien. Section 475-a requires that the notice "be served by either personal service or registered mail," in addition to several other requirements.
In the present proceeding, Miller states only that a "letter was sent [by Khoshbin to Progressive] on December 2, 2002 and again on June 2, 2004." The petitioner does not quote the contents of the letters, does not attach them as exhibits, does not describe how these two letters were sent, fails to state whether a notice of lien was served on both Ruiz and Progressive, and does not even cite section 475-a, let alone prove compliance with its multiple requirements. Since the petitioner is so ready and forward to recite the alleged steps taken by Khoshbin on behalf of Abbate, the Court will similarly deduce that its failure to elaborate on the sending of the two letters or the service of a notice of lien or to attach proofs of service as exhibits means that Khoshbin's letters to Progressive were sent by standard first-class mail. This is not what section 475-a requires; personal service or registered [not even certified] mail is mandatory ( see, Glassberg v. All City Ins. Co., 72 Misc2d 651 [NYC Civ Ct New York County 1972]; O'Grady v. Schmidt, 22 Misc2d 974, 976 [Sup Ct Queens County 1959]; accord, De La Paz v. Coastal Petroleum Transp. Co., Inc., 136 F Supp at 930, supra).
As stated succinctly by the Appellate Division, Second Department in Jaghab Jaghab v. Marshall ( 256 AD2d 342, 343):
Since the petitioner law firm neither appeared as attorney of record in an action or proceeding (Judiciary Law § 475) nor filed a proper notice of lien pursuant to Judiciary Law § 475-a, it was not entitled to a charging lien under the Judiciary Law.
That holding applies equally to this application.
In light of Khoshbin's failure to adhere to the precise dictates of Judiciary Law sections 475 and 475-a, it has no charging lien. This Court, furthermore, as discussed above, lacks jurisdiction based on the petition's wholesale failure to plead such essential averments. This Court, therefore, rejects the proposed order, refuses to sign it for the aforementioned reasons, and dismisses the petition.
Under the facts stated, Khoshbin's sole remedy, if so advised, is to institute a plenary common law action for damages against Ruiz and Abbate under solely a quantum meruit theory ( see, Universal Acupuncture Pain Servs., P.C. v. Quadrino Schwartz, P.C., 370 F3d 259 [2nd Cir. 2004]; Decolator, Cohen DiPrisco, LLP v. Lysaght, Lysaght Kramer, P.C., 304 AD2d 86, 92 [1st Dept. 2003]; Schneider, Kleinick, Weitz, Damashek Shoot v. City of New York, 302 AD2d 183, 186, 188-89 [1st Dept. 2002]; Butler, Fitzgerald Potter v. Gelmin, 235 AD2d 218, 218-219 [1st Dept. 1997]; see also, Tops Mkts, Inc. v. Quality Mkts, Inc., 2001 WL 392082, 2001-1 Trade Cases P 73,266 [WDNY 2001]; Lai Ling Cheng v. Modansky Leasing Co., Inc., 73 NY2d 454). Quantum meruit is the appropriate method for calculating damages, because liability here is premised or predicated on a contract that was terminated by one party before it could be completed by the other ( Schultz Constr. Inc. v. Franbilt, Inc., 285 AD2d 936, 938 [3rd Dept. 2001] [citing cases]).
Although quantum meruit is an equitable theory, if the relief sought is money damages, then the Civil Court has jurisdiction, provided that Khoshbin adequately pleads jurisdiction ( see, e.g., Adler v. Edwards, 6 Misc 3d 1024[A], 2005 WL 386818, 2005 NY Slip Op 50168[U] [NYC Civ Ct Kings County 2005]; see generally, Binderman v. Kazdan, 145 Misc2d 628, 630 [NYC Civ Ct New York County 1989] [action for unjust enrichment, although technically an equitable theory, but seeking only money damages, is within the Civil Court's jurisdiction]; Fiona Press, Inc. v. Hewig and Marvic, Inc., 122 Misc2d 680 {NYC Civ Ct New York County 1984] [same]).
Khoshbin's own retainer preserves the right to proceed on a quantum meruit basis. In an action on a quantum meruit theory, a court would have to evaluate several factors, following an opportunity for discovery, in evaluating the reasonable value of such services. Ruiz would be entitled to discover the work and time actually devoted by Khoshbin and the utility, helpfulness, and value of such alleged endeavors. In quantum meruit, Khoshbin would not be entitled to fixed percentages, such as his request for one-third of the one-third received by Ruiz. In fact, under the present facts, it is conceivable that the services provided by Khoshbin, judged from a quantum meruit basis, may be less than the amount Khoshbin would have received [a one-third share under the retainer] had Abbate accepted the insurer's offer of $10,000 [i.e., $3,333.33].
In such a plenary action, Khoshbin should not repeat its conduct here of, after years of inactivity, seeking almost instantaneous relief by the stroke of the pen of the judge assigned to ex parte applications. The resort here to attempting to secure a judge's signature on a proposed order to show cause that would require an almost immediate determination as to why Khoshbin should not be given a quick award of "one third of the one third of . . . $65,000" [i.e., $7,222.22] — more than double of what its share would have been had its client, Abbate, accepted the claims examiner's modest offer — was nothing more than an attempt to do an end-run around numerous factual issues and Khoshbin's own multiple shortcomings.
The foregoing constitutes the decision, order, and opinion of the Court.
The Court directs the Clerk of Special Term to mail copies of this decision and order to both petitioner, respondent, and Abbate.