Opinion
Index No. E012023019456
05-01-2023
Lloyd A. GELWAN, Esq., Plaintiff, v. Todd HYSON, David Rose and Thomas Bagnall, Defendants.
This proceeding to enforce an attorney's charging lien arises from a 2011 federal civil rights action under 42 USC 1983 (the " Section 1983 action") brought by plaintiff on behalf of his clients (hereinafter, his "former clients") against the three present or former Columbia County Deputy Sheriffs named as defendants herein (see , Judiciary Law 475 ). Plaintiff was the attorney of record in the proceeding in federal court, along with his co-counsel, Steve M. Warshawsky, Esq., who appeared late in the proceedings to assist with trial.
In June 2016, Warshawsky negotiated a confidential settlement with the defendants and their employer, Columbia County (the "County"). Settlement proceeds in an unknown amount were paid out to Warshawsky and/or plaintiff's former clients in July or August 2016. Despite his avowed efforts to notify all concerned of his charging lien under Judiciary Law 475, plaintiff received no payment from the settlement proceeds. In August 2016, plaintiff commenced an action (hereinafter, the "2016 action") in New York County Supreme Court against Warshawsky and his former clients, in which he asserts a charging lien under Judiciary Law 475 for payment of his legal fees earned in the course of the Section 1983 action.
Plaintiff had an opportunity to have his charging lien determined in Section 1983 action when the federal court retained jurisdiction for 120 days after the settlement for this purpose. Plaintiff, however, resisted such a determination by the federal court, arguing that his claims for breach of contract, tortious interference with contract, promissory estoppel, quantum meruit recovery, declaratory judgment, breach of fiduciary duty and breach of the common-law covenant of good faith and fair dealing, were then before the New York County Supreme Court in the 2016 action. Plaintiff successfully argued that the full discovery and fact-finding required in the 2016 action took the proceedings well beyond the "common nucleus of operative facts" of the Section 1983 action.
In 2022, plaintiff commenced the present action against the defendants in New York County Supreme Court. After amending his complaint to include the County in the 2016 action, plaintiff moved to consolidate the two actions. By her decision/order dated December 21, 2022, Hon. Nancy M. Bannon denied plaintiff's motion to consolidate and granted defendants’ motion for a change of venue. As a result, this proceeding was transferred from New York County to Columbia County Supreme Court.
Readers are referred to Judge Bannon's decision (Gelwan v. Hyson , 2022 NY Misc LEXIS 8179* [Sup Ct NY Cty]), for a cogent summary of this and related actions.
Before this Court now is defendants’ motion to dismiss. Defendants argues for dismissal under CPLR 3211(a)(4), (5) and (7) on the grounds that the causes of action may not be maintained because of "payment" of the legal fees at issue, expiration of the applicable statute of limitations, the doctrine of waiver and the existence of a "prior action pending." Plaintiff opposes the motion, countering with a cross-motion for joint discovery and trial of this action with the 2016 action under CPLR 602(a). In its reply to plaintiff's cross-motion, defendants seek costs and sanctions under 22 NYCRR 130-1.1 for "frivolous litigation conduct".
In assessing the defendants’ motion to dismiss, the Court accepts the proffered facts as true and the plaintiff is afforded a liberal construction and the benefit of every favorable inference (John R. Higgett, Practice Commentaries, McKinney's Cons Laws of NY, Book 7B, CPLR, C 3211:10 [2016 ed]). The Court therefore accepts as true plaintiffs’ assertions regarding his legal services, the status of his legal representation and his efforts to put defendants’ counsel on notice of his charging lien.
Payment of Plaintiff's Fees. The question of the plaintiff's entitlement to a charging lien hinges on the circumstances of the termination of his representation of his former clients. If plaintiff was discharged by his former clients "for cause" or if he abandoned their representation, he is entitled to neither compensation nor a charging lien ( Callaghan v Callaghan , 48 AD3d 500, 501 [2d Dept 2008] ). The determination of plaintiff's right to a charging lien cannot be summarily made upon the conflicting affirmations of counsel; a hearing is required ( D'Amico v. Nuzzo , 138 AD2d 667, 668 [2d Dept 1988] ; see, also, W.D.G.R. Props., LLC v. Feldbein, 26 Misc 3d 137(A), 137A [2d Dept 2010]). In a similar vein, this Court cannot determine whether payment of the settlement amount to Attorney Warshawsky creates a defense of "payment" under CPLR 3211(a)(5) without further fact-finding.
Defendants’ motion to dismiss on the grounds of "payment" is therefore denied.
Statute of Limitations. Defendants argue that plaintiff's attorney's charging lien is time-barred because, as a "vested property right" or the subject of "an action to recover upon a liability," it is subject to a 3-year statute of limitations. Plaintiff argues in favor of a six-year statute of limitations.
This Court finds that an attorney's charging lien is first and foremost a lien ( In re Heinsheimer , 214 NY 361, 366 (1915)). The lien in favor of counsel is vested in their client's cause of action at the signing of a retainer agreement ( LMWT Realty Corp. v. Davis Agency , 85 NY2d 462, 467 [1995] ). Equitable liens like plaintiff's are governed by CPLR 213(1), which establishes a six-year statute of limitations for actions like this "for which no limitation is specifically prescribed by law" ( Morando v. Morando , 41 AD3d 559 [2d Dep't 2007] ).
The Court finds that plaintiff's cause of action arose in the July or August of 2016, when plaintiff first learned that the settlement proceeds had been paid out to his former clients and/or co-counsel Warshawsky without regard for his equitable interest therein ( Vigilant Ins. Co. of America v. Housing Authority of City of El Paso, Texas , 87 NY2d 36, 43 [1995], holding that a cause of action accrues when "an injury is sustained ... [and] all the facts necessary to sustain the cause of action have occurred").
This action was commenced on May 25, 2022. Because the applicable statute of limitation was tolled under Executive Order 202.8 (as extended by subsequent Executive Orders) for 228 days in 2020, the commencement of this action in May 2022 places it well within the applicable 6-year statute of limitations established under CPLR 213(1) ( Foy v. State of New York , 71 Misc 3d 605, 608 [Ct Claims 2021] ).
Defendant's motion to dismiss on the grounds that the applicable statute of limitations had expired prior to the commencement of this action is therefore denied.
Prior Action Pending New York courts generally follow the "first-in-time" rule under which the court that has "first taken jurisdiction is the one in which the matter should be determined" ( Syncora Guaranty, Inc. v J.P. Morgan Sec., LLC , 110 AD3d 87, 96 [1st Dept 2013] [internal quotation marks and citation omitted]). The policy behind the rule is one of judicial economy, intended to forestall "vexatious litigation and duplication of effort, with the attendant risk of divergent rulings on similar issues" ( White Light Productions, Inc. v. On the Scene Productions, Inc. , 231 AD2d 90, 96 [1st Dept 1997] ).
In furtherance of this policy, CPLR 3211(4) permits dismissal of an action when "there is another action pending between the same parties for the same cause of action in a court of any state or the United States." Defendants cite the 2016 action brought by plaintiff against the County, plaintiff's former clients and co-counsel Warshawsky as a "prior action pending." The 2016 action may be treated as a prior action pending under CPLR 3211(a)(4) if the parties, facts and relief sought in each action are substantially the same ( PK Restaurant, LLC v. Lishutz , 138 AD3d 434, 436 [1st Dept 2016] ).
The critical element in an action brought under CPLR 3211(a)(4) is that "both suits arise out of the same subject matter or series of alleged wrongs" ( Cherico, Cherico & Assoc. v Midollo , 67 AD3d 622, 622 [2d Dept 2009], citations omitted. ) If a movant can establish a common actionable wrong, they must then be ready to show "that there is no good reason why one action should not be sufficient to resolve the disputed issues" ( Hinman, Straub, Pigors & Manning, P. C. v. Broder , 89 AD2d 278, 280 [3d Dept 1982] ).
The Court finds that there is "no good reason" that one action ---- in this case, the 2016 action ---- should not be sufficient to resolve all issues among the parties. In both the 2016 action and the present one, the cause of action arises from "the same alleged harm based on the same underlying events" ( Syncora Guaranty, Inc. v. JP Morgan Sec., LLC, 110 AD3d 87, 96 [1st Dept 2013] ). Plaintiff's choice to pursue divergent legal theories in the 2016 action and the present one is not sufficient to distinguish the two proceedings (Matter of Schaller v. Vacco, 241 AD2d 663 [3d Dept 1997] ). The Court therefore finds that the events underlying the alleged harm are sufficiently similar to sustain a finding of a "prior action pending."
The defendants, however, are not identical: the County is a defendant in the 2016 action, but it is the County's employees who are named in the present action. However, complete identity between the parties is not required under these circumstances: instead, "substantial" identity of the parties has consistently been found to satisfy CPLR 3211(4) (see, eg, Syncora Guaranty, Inc. v. JP Morgan Sec., LLC , 110 AD3d at 96, where close corporate affiliates held to be substantially identical parties).
The defendants here were employees of Columbia County; their conduct in the course of their employment as deputy sheriffs prompted the Section 1983 action in which plaintiff's fees were earned. In this respect, the defendants are in a role similar to the hospital employees sued for negligent release of a corpse to a funeral home in Musso v. Owens Funeral Home , 2022 NYLJ LEXIS 396 [Sup Ct Kings Cty]. In Musso, the court found that an existing action against the corporate employer was "a prior action pending" barring a subsequent action against the employees because it arose from "conduct that occurred during the course of their employment" (see, also, Cliff v. Mayo , 271 AD2d 763 [3d Dept 2000], where a single correctional institution was named as a co-defendant with two different groups of corrections officers in succeeding actions, the later action was held barred by the prior action pending).
Beyond the caselaw supporting a finding of identity of interests between the County and the defendants, Plaintiff himself concedes this point in other pleadings in this action:
- affirming that the two cases "[involve] the exact same parties in interest, Columbia County and [defendants]" in his reply affirmation in support of his cross-motion to retain venue and consolidate this action with the 2016 action (NYSCEF Doc. No. 31); and
- asserting that the "[2016 action] against the County — which for all intents and purposes is the same as the instant action against the [defendants] in their official capacity" in his reply affirmation in support of the present cross-motion for order of joint administration (NYSCEF Doc. No. 67).
Further correspondence of the County interests with those of defendants is found in plaintiff's averral that (1) they are represented by the same law firm which represents the County in the 2016 action and (2) the County's liability insurance policy named defendants as additional insureds with the County, and funded the settlement of the civil rights action against the defendants. The Court finds that the interests of the defendants herein coincide with those of their employer, Columbia County, as evidenced by their common legal representation and their status as co-insureds under the County's liability insurance policy and that they are therefore "substantially" the same parties for purposes of CPLR 3211(4).
Inasmuch as this proceeding is based upon the same actionable wrongs as the 2016 action and concerns parties who are substantially the same, plaintiff can obtain complete relief in the the prior action and dismissal of this proceeding under CPLR 3211(4) is appropriate ( In re Estate of Aaron , 232 AD2d 758, 760 [3d Dept 1996] ).
Plaintiff's Cross-Motion. In addition to its opposition to defendants’ motion to dismiss, plaintiff seeks by cross motion joint discovery and trial of this action with the 2016 action under CPLR 602(2). This would effectively transfer this action back to New York County. Such a result would contravene Judge Bannon's December 21, 2022 order denying plaintiff's cross-motion to consolidate the actions and granting defendants a change of venue to Columbia County under CPLR 504(1).
Plaintiff argues that his current motion for joint discovery and trial is distinguishable from his prior motion to consolidate. This is a distinction without a difference. CPLR 504 ’s mandate which underlies Judge Bannon's decision requires that actions against a county or its "officers, boards or departments" shall be venued in such county is intended to protect public officers and employees from the inconvenience of defending suits in remote counties (Vincent C. Alexander, Practice Commentaries, McKinney's Cons Laws of NY, Book 7B, CPLR 504 [2006 ed]). Joining this action with the 2016 action for purposes of discovery and trial would subject the defendants to the same inconvenience as would their consolidation: defendants’ personal appearances at depositions and trial in New York County would be required in either case, whether they are brought to New York County as part of a consolidated action or "merely" joint discovery and trial (Vincent C. Alexander, Practice Commentaries, McKinneys Cons Laws of NY, Book 7B C602:2).
Judge Bannon held that a lawsuit against Columbia County or its employees must be brought in Columbia County under CPLR 504(1). This finding was necessary to her final determination on the merits of plaintiff's motion. It is the law of the case and her determination therefore "precludes further litigation of this issue" ( Scofield v. Trustees of Union College , 288 AD2d 807, 808 [3d Dept 2001] ). Judge Bannon's decision mandates denial of plaintiff's cross-motion seeking to re-venue this action to New York County by means of joint discovery and trial.
Defendants’ Motion for Sanctions. Defendants invoke 22 NYCRR 130-1.1 seeking costs and sanctions against plaintiff for "frivolous litigation conduct." Under 22 NYCRR § 130-1.1, frivolous conduct is (1) completely without merit in law and cannot be supported by a reasonable argument for an extension, modification or reversal of existing law; or (2) undertaken primarily to delay or prolong the resolution of the litigation, or to harass or maliciously injure another; or (3) asserts material factual statements that are false.
In this regard, defendants cite plaintiff's present cross-motion for joint discovery and trial with the 2016 action under CPLR 602(2), relief which was denied him by Judge Bannon in her December 2022 decision. Defendants further seek an order enjoining plaintif from initiating any further actions arising from his representation of this former clients, citing the four New York State Supreme Court actions now pending in this regard (including this one).
Plaintiff appears pro se in this action. He is, however, an experienced New York attorney who is clearly skilled in litigation strategy and practice. Plaintiff's motion under CPLR 602(a) seeks to integrate discovery and trial of this action with the 2016 action and comes only a few months after Judge Bannon denied his motion to consolidate the two actions. Unquestionably, plaintiff knew of and understood the legal ramifications of Judge Bannons's decision and its implications for the prosecution of this action.
Defendants’ motion for sanctions is nevertheless denied. In reviewing the cases in which sanctions have been ordered, it is clear that a pattern of frivolous litigation is required, as in
• Minister, Elders & Deacons of Reformed Protestant Dutch Church v. 198 Broadway, Inc., 76 NY2d 411, 413-414 [1990], where the Court observed that "a barrage of litigation" including a declaratory judgment action based on a new legal theory, an unsuccessful appeal to the Court, two post-appeal motions addressed to the disposition of that appeal and separate motions to vacate a judgment upheld by the Court in 1983 justified sanctions;
• Levy v. Carol Mgmt. Corp., 260 AD2d 27, 34 [1st Dept 1999], where motions were filed redundant to matters already decided on the merits and rulings were ignored despite the court's warnings to cease delaying tactics, sanctions are appropriate to punish frivolous litigation.
• Jason v. Chusid, 1991 NY LEXIS 5080, *1 [1991] , where the nature and repetition of plaintiffs’ litigation tactics over a five-year period resulted in four separate adjudications in the Court and the imposition of sanctions by the trial court, the Court identified a strategy of dilatory, harassive, abusive and frivolous conduct within the meaning of 22 NYCRR 130-1.1(a) and (c).
Plaintiff's present, single motion for relief denied to him by Judge Bannon's final decision cannot be said to constitue a "barrage," nor is it "repetitious" or even a "strategy" sufficient to establish a pattern of frivolous conduct. Defendants’ motion for costs and sanctions under 22 NYCRR 130-1.1 is therefore denied.
The remaining contentions of the parties have been examined and found to be lacking in merit or need not be reached in light of this Court's determination.
IT IS, THEREFORE,
ORDERED and DECREED, that defendants’ motion to dismiss this action based on "prior action pending" under CPLR 3211(4) is hereby granted.
This constitutes the order of the Court. All papers, including this Order, are hereby entered and filed with the County Clerk. Counsel is not relieved from the applicable provisions of CPLR Section 2220 relating to service and notice of entry.
Documents reviewed:
1. Cross-Motion to Retain Venue and Consolidate (NSYCEF No. 31)
2. Notice of Motion (NYSCEF No. 51)
3. Attorney Affirmation (NYSCEF No. 52), with Exhibits 1-6 (NYSCEF Nos. 53-58)
4. Memorandum of Law in Support of Motion (NYSCEF No. 59)
5. Notice of Cross-Motion (NYSCEF No. 61)
6. Affirmation in Opposition to Motion and in Support of Cross-Motion (NYSCEF No. 62), with Exhibits 1-2 (NYSCEF Nos. 63, 64)
7. Memorandum of Law in Support of Reply, Opposition to Cross-Motion and Request for Sanctions (NYSCEF No. 66)
8. Reply Affirmation in Support of Cross-Motion (NYSCEF No. 67)
9. Affirmation in Further Support of Cross-Motion (NYSCEF No. 67), with Exhibit 1 (NYSCEF No. 68)