Opinion
2017-11179
04-27-2020
John R. BUCHHEIT, Plaintiff, v. Patricia A. BUCHHEIT, Defendant.
PATRICIA A. BUCHHEIT, Plaintiff Pro Se THE GLENNON LAW FIRM,P.C, For the Lienor, The Glennon Law Firm, P.C., Peter J. Glennon,Esq., Laura K. Figueras,Esq., 160 Linden Oaks, Rochester, New York 14625
PATRICIA A. BUCHHEIT, Plaintiff Pro Se
THE GLENNON LAW FIRM,P.C, For the Lienor, The Glennon Law Firm, P.C., Peter J. Glennon,Esq., Laura K. Figueras,Esq., 160 Linden Oaks, Rochester, New York 14625
Richard A. Dollinger, J.
Matrimonial litigants — often dissatisfied with just the process of divorce much less the result — frequently complain about its costs but, as most often happens, the fees in attorney time and effort are often directly proportional to the litigants' demands — reasonable or otherwise on both sides — during the process.
When the process ends and the attorney achieves a noteworthy and hard-fought result, a litigant's lament about the fees is silenced if the fees are reasonable and driven by a client initiated and demanded strenuous legal effort.
Such is the case in this instance.
In this matter, after a long fought resolution of a divorce matter, the substituted attorney — who joined the fray shortly before trial and spent seven months in a complicated wrangle over post-settlement conduct and allegations of fraud — moved to withdraw as the wife's counsel. As part of that application, the law firm asserted a charging lien against the proceeds of an equitable distribution to his client, the former wife. This Court, in an order dated December 23, 2019, granted the charging lien, as well as a lien for the another law firm that had previously represented the wife. The Court, without resolving the underlying factual issues involved in the law firm's representation of the former wife, ordered that a distributive award to be paid to the wife from her former husband should be escrowed in the trust account of the former's husband's attorney until the Court could resolve the lien questions. Thereafter, the wife filed an order to show cause, seeking an order referring the charging lien to arbitration through the Monroe County Bar Association, and ordering the law firm of the former husband not to release the escrowed funds until the arbitration was complete. The law firm cross-moved to confirm the amount of the lien — $64,933.95 plus interest — and seek its transfer out of escrow to the former wife's former counsel.
In this longstanding matter, a short history of the litigation provides a backdrop of the fee requested and the existing lien. This matter was scheduled for trial in March, 2019. The day of trial, the wife's former counsel moved to withdraw. The current lienor was substituted as counsel on what can only be described as "not just the eve of trial," but in "the 11th hour and 50th minute" before trial. Importantly, at the time the law firm was retained, the wife signed a retainer agreement with her new firm. The agreement gives the firm the right to assert a charging lien, for unpaid legal fees and disbursements, on any property awarded to the wife as a result of equitable distribution. The agreement also contained a provision that in the event of a dispute over fees, the client had a right to arbitration pursuant to court rules. 22 NYCRR 137.1(b)(2). The new law firm expended significant time getting, as their lead counsel describes "up to speed" a euphemism that many litigators understand when given a last-second demand for "all hands on deck" to staff an imminent trial.
A multi-day trial ensued, involving experts and valuations. The trial lasted for five full days: three spent in trial, and two spent in settlement discussions in lieu of trial, culminating with a settlement stipulation on the record in late March, 2019. However, the final divorce judgment was not entered until September, 2019. In the intervening six months, a blizzard of litigation ensued encompassing suspected hidden assets and other actions. Seven motions or cross-motions were brought after the negotiated settlement was reached on March 27, 2019. The law firm contends that the wife requested the filing of all of her post-trial motions, as well as all opposition to former husband's post-trial motions. There is no evidence that the wife did not authorize all of these applications and all the papers and arguments submitted in opposition to the husband's applications. In short, as the attorney describes the wife's conduct after the stipulation, the wife "made it clear that she wanted to stand up and fight, even after settlement."
In the application before this Court, the wife's law firm contends that her counsel obtained numerous evidentiary rulings in favor of the wife during the abbreviated trial, including getting previously contested expert reports received into evidence, and defeating the Plaintiff's proffered real estate appraisal. While perhaps laudable results, this Court will not venture into a review of the trial strategy or conduct of counsel leading up to the March settlement stipulation. It suffices that during and even shortly after the trial and even after the trial billings from the law firm were sent to and received by the wife, there is no evidence of any complaint by the wife about the quality of the firm's representation or the substantial fees that had accrued and the wife continued to utilize the firm's legal skills until the firm moved to withdraw.
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In addition, at least part of the post-stipulation litigation was a result of the wife's conduct. It is undisputed that the wife removed approximately $24,000 of her husband's separate funds from a still-jointly-titled investment account after the wife had already received her half share of this account. These actions complicated what was already a complicated and highly contentious post-settlement divorce scramble. As the post-settlement and judgment issues continued, the firm's lead attorney noted the wife frequently contacted the attorney, which resulted, at her request, in the attorney speaking to her more frequently to explain, reassure, and reason with her, sometimes multiple times in the same day. There is no evidence that the wife disputes that these conversations — a frequent occurrence in difficult divorce matters between attorney and clients — resulted in more fees. Based on the papers before this Court, there is no credible evidence that the wife ever contested the reasonableness of the fees or her responsibility to pay until the end of the representation.
As a result of the numerous motions and the attorney's frequent communications with his client, the wife accrued significant fees after the parties entered the stipulation. The law firm's time record indicate that the wife incurred additional attorney's fees of $41,591.82, between March 27, 2019 — the date was matter was settled by a stipulation — and November 22, 2019 -- the date the firm forwarded its then-final bill to the wife. The total fees, now sought as a charging lien, total $64,933.95.
1. The wife's claim for fee arbitration
In her motion before this Court, the wife argues that the fees requested by her former counsel are subject to arbitration under pertinent court rules. The wife filed a request for arbitration and while the law firm contends that the filing was untimely, the Court need not consider that issue. The fee arbitration rules for attorneys provide that resort to arbitration is only required if the amounts in dispute involve a sum of less than $1,000 or more than $50,000. 22 NYCRR 137.1(b)(2). Eiseman Levine Lehrhaupt & Kakoyiannis, P.C. v. Torino Jewelers, Ltd. , 44 AD3d 581 (1st Dept 2007). The rules do allow the arbitration program to take jurisdiction over a fee dispute beyond the jurisdictional limit if the parties consent. 22 NYCRR 137.1(b)(2) (an arbitral body "may hear disputes involving other amounts if the parties have consented"). Based on the facts before this Court, the amount is disputed exceeds $64,000 and exceeds the jurisdictional limit in the rules. In addition, it is undisputed that the law firm, in an exchange of correspondence with the administrator of the arbitration program, never consented to the arbitration and informed the administrator that the fee dispute was before Supreme Court.
In one other aspect, any deferral to arbitration is unwarranted. The law firm included in its retainer agreement with the wife a provision that the client had a right to arbitration under the court rules. However, the mere inclusion of this right in the retainer agreement does not constitute a waiver of the firm's right to insist that only disputes within the authorized limitations in the rule be subject to arbitration. The mere inclusion of this language in the retainer agreement does not forfeit the firm's right to decline arbitration if the amount exceeds the $50,000 cap in the rules.
Because the dispute does not fit into the envelope of Part 137.1(b)(2) and the law firm has not consented to arbitration, this Court cannot defer a decision and order this matter to arbitration.
2. Right to charging lien
Judiciary Law § 475 provides that, from the commencement of an action in any court, the attorney who appears for a party has a lien upon his client's cause of action, claim, or counterclaim, which attaches to a verdict, report, determination, decision, judgment, or final order in his client's favor, and the proceeds thereof. " NY JUD LAW § 475 ; Wasserman v. Wasserman , 119 AD3d 932 (2d Dept 2014). A charging lien is a security interest in the favorable result of litigation, giving the attorney an equitable ownership interest 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, 223 (1st Dept 2005). In a matrimonial action, a charging lien will be available " ‘to the extent that an equitable distribution award reflects the creation of a new fund by an attorney greater than the value of the interests already held by the client’ " Moody v. Sorokina , 50 AD3d 1522, 1523 (4th Dept 2008) ; J.K.C. v. T.W.C. , 39 Misc 3d 899, 908, 966 NYS2d 812 [Sup. Ct Monroe County 2013] ). It is well settled that a charging lien will be available to attach to an award of equitable distribution. Dayan v. Dayan , 58 Misc 3d 957 (Sup.Ct. Kings Cty 2008) (Sunshine, J.) Importantly, in Moody v. Sorokina , the Fourth Department held that a declaration by a court in a matrimonial dispute, awarding a spouse an equitable share of a marital asset represented proceeds created by the attorney's efforts in the matrimonial action rather than the value of an interest "already held by [his client]." Id. at 1523.
In this instance, the law firm properly assets the lien against a payment from the husband to his ex-wife and these payments were a result of the law firm's work on her behalf.
3. The law firm's fees are reasonable under prevailing fees charged for comparable legal services.
In determining the reasonable value of an attorney's services, this Court must evaluate the time spent, the difficulties involved in the case, the nature of the services rendered, the amount in controversy, the professional standing of counsel, the fee customarily charged by other similarly situated attomeys for similar services, the contingency or certainty of compensation, and the results obtained. Matter of Freeman , 34 NY2d 1 (1974) ; Laffey v. Laffey , 174 AD3d 582 (2d Dept 2109) ; Hayes v. Ontario Plastics, Inc. ,6 AD3d 1122 (4th Dept2004).
The lead attorney for the firm here is an accomplished litigator with substantial experience in matrimonial matters before this Court. He previously served as a law clerk in the Appellate Division, Fourth Department. His hourly rate for this matter, and for other senior attorneys in the Firm, was $325.00, which the Court finds is reasonable compared to rates charged by other similarly-experienced counsel in this region. The rate of associate attorneys for this matter was $195.00 per hour, a rate that again parallels that charged by other matrimonial firms in this region for associate work and the same analysis applies to the rates charged by paralegals and legal assistants which was billed at the rate of $125.00 per hour.
In evaluating the total workload by the firm in this matter, this Court cannot fully evaluate the total hours expended by counsel. The Court is not in a position to determine whether hours spent here or there are justified as either a factual or legal matter. But, in a complicated divorce matter, which involves substantial up-front time to handle a trial on short notice and then extensively litigates post-judgment matters, the 321 hours expended by the applicant law firm can not be judged to be unreasonable. The firm's time records reveal approximately 19 hours on client communications, approximately 38 hours on communications with the Court and counsel, including court appearances, approximately 38 hours related to investigation, research and subpoena practice concerning the suspected hidden assets, approximately 45 hours in review of motion drafting, review, and research, and approximately 35 hours reviewing and editing judgment roll and ancillary settlement documents. The time consumed is substantial but, in view of the complex legal matters and the wife's apparent post-stipulation desire to litigate related matters, this Court cannot declare the time to be excessive. In addition, the amount in dispute in this divorce action was sizable: the wife received a substantial distributive award and substantial other assets. This matrimonial litigation was intense in the real meaning of the word: the volume of post-stipulation motions and cross-motions attests to its intensity and the requirement for exceptional diligence in representing the wife's interests.
For all these reasons, this Court finds that the time expended and the fees accumulated are reasonable for a first-rate highly skilled matrimonial litigator, who intervened on his client's behalf at a critical time and produced a significant result. The fees covered by the lien are easily justified under all the circumstances.
4. Conclusion
The wife's application to defer this matter to arbitration is denied. The law firm's cross-motion to confirm the charging lien is granted. The law firm is also awarded, in the Court's discretion, interest from 60 days after the submission of the final bill to the wife. The interest charge is permitted under the firm's retainer agreement with the wife. The lien is granted against funds held by the firmer husband's attorney and he shall, within 10 days of service of the entered order in this matter, pay over the amount requested — $64,933.95 — and any calculated interest as directed by this Court to the law firm.