Opinion
96-CV-1678 (DNH/DRH)
January 18, 2001
ELI BASCH, ESQ., Kingston, New York, for Plaintiff.
MAURICE L. SYKES, ESQ., LUSTIG BROWN, LLP, Buffalo, New York, for Defendant Roadmaster.
MICHAEL P. CAVANAGH, ESQ., O'CONNOR, O'CONNOR, MAYBERGER FIRST, P.C., Albany, New York, for Defendant Wal-Mart.
MEMORANDUM-DECISION AND ORDER
Presently pending is a motion by Lustig Brown, LLP ("Lustig Brown") to withdraw as counsel for defendant Roadmaster Corporation ("Roadmaster"). Docket No. 23. Roadmaster, co-defendant Wal-Mart Stores, Inc ("Wal-Mart") and plaintiff Judith Lapidus ("Lapidus") have failed to respond to the motion. For the reasons which follow, the motion is denied.
I. Background
Lapidus brought this action in New York State Supreme Court, Ulster County alleging strict products liability, negligence and breach of warranty. Compi. (Docket No. 1). On October 17, 1996, defendants filed a petition for removal to this Court based upon diversity of citizenship. Docket No. 2. On September 9, 1997, Roadmaster (now known as RDM Holdings, Inc.) filed a notice of bankruptcy, informing this Court that it had filed a voluntary petition under Chapter 11 in the Bankruptcy Court for the Northern District of Georgia. Docket No. 10. By order dated September 12, 1997, the undersigned stayed this action pursuant to 11 U.S.C. § 362 pending resolution of the bankruptcy proceeding. Docket No. 12. By order dated July 27, 2000, the stay was lifted and the undersigned set a discovery deadline for May 11, 2001 and a dispositive motion deadline and trial ready date for August 1, 2001. Docket No. 18.
By letter dated August 25, 2000, Bainton, McCarthy Siegel, LLC informed the Court that it no longer represented defendants. Docket No. 20. Lustig Bown was substituted as counsel of record for Roadmaster by notice of consent filed on September 6, 2000. Docket No. 21. Lustig Brown was retained by Royal Speciality Underwriting, Inc. ("Royal") pursuant to an insurance contract between Roadmaster and Royal. Sykes Aff. (Docket No. 23), ¶ 5.
By letter dated September 12, 2000, Royal denied coverage under the policy stating that Roadmaster had failed to provide proper notice of the lawsuit. Id. at Ex. B. Royal also informed Lustig Brown that it would not pay for any legal services beyond September 12, 2000. Id. at Ex. D. Lustig Brown promptly advised Laura Woodson ("Woodson"), attorney for Roadmaster's trustee in bankruptcy, that new counsel would have to be retained. Id. at Ex. C. When Woodson failed to respond to Lustig Brown, it again sent a letter dated September 28, 2000, requesting that Woodson either appoint new counsel or take over representation of Roadmaster. Id. at Ex. E. By letter dated October 2, 2000, Woodson advised Lustig Brown that Roadmaster was disputing Royal's denial of coverage and requested continued representation until the dispute was resolved. Id. at Ex. F. By letter dated October 23, 2000, Royal advised Lustig Brown that it had not changed its position and would not cover Roadmaster's legal expenses in this action. Id. at Ex. G. This motion followed.
II. Discussion
Under Rule 83.2(b) of the Local Rules of the Northern District of New York, an attorney may withdraw from representation upon notice to the client and all parties and upon a finding of good cause. Lustig Brown have satisfied the notice requirement. See Notice of Motion (Docket No. 23), p. 2. Further, Roadmaster, Wal-Mart and Lapidus have failed to respond to this motion. Such failure is deemed by the Court as consent of these parties to the motion. See N.D.N.Y.L.R. 7.1(b). To ensure protection of Roadmater's rights, however, a motion to withdraw should not be granted on this ground alone. Rather, a court should inquire into the basis for the motion. See Brown v. National Survival Games, Inc., No. 91-CV-221, 1994 WL 660533, at *2 (N.D.N.Y. Nov. 18, 1994) (Munson, J.).
Lustig Brown contend that Royal's denial of coverage for legal fees constitutes good cause for withdrawal because Roadmaster has failed or is unable to pay its fees. See Sykes Aff., ¶ 13. In support of its contention, Lustig Brown rely on National Survival Games, 1994 WL 660533, at *2-4. Lustig Brown's reliance on National Survival Games, however, is misplaced. Courts have determined that a clients refusal to pay attorney's fees may constitute good cause to withdraw. See Rophaiel v. Alken Murray Corp., No. 94 CIV. 9064, 1996 WL 306457, at *1 (S.D.N.Y. June 7, 1996) (collecting cases); Boucher v. Sears, No. 89-CV-1353, 1995 WL 283742, at *14-15 (N.D.N.Y. May 8, 1995) (same). These courts, however, permitted counsel to withdraw where the client refused payment or "deliberately disregarded" financial obligations. Id. These cases do not hold that inability to pay alone is sufficient to establish good cause. See Rophaiel, 1996 WL 306457, at *1 (nonpayment of fees alone is insufficient to establish good cause); see also In re Meyers, 120 B.R. 751, 752 (Bankr. S.D.N.Y. 1990) (same). Furthermore, many of these cases involved clients that both failed to pay fees and failed to cooperate with counsel. See Rophaiel, 1996 WL 306457, at *1.
Here, Lustig Brown has failed even to allege that Roadmaster has refused to pay its legal fees. See Whiting v. Lacara, 187 F.3d 317, 321 (2d Cir. 1999) (allegation of nonpayment of fees must be done "with sufficient particularity") (citing Rophaiel, 1996 WL 306457, at *1-2). Royal's denial of coverage alone is insufficient to demonstrate that Roadmaster is unable to fulfill future payment obligations. See, e.g., Rophaiel, 1996 WL 306457, at *2 (mere assertion by counsel seeking to withdraw that client is unable to pay fees is insufficient to justify withdrawal). Furthermore, Royal has refused coverage for legal fees incurred after September 12, 2000. Lustig Brown were retained only on September 6, 2000. There is no evidence that Roadmaster has incurred or owes any legal fees to date. Absent evidence that Roadmaster refuses to meet its financial obligations incurred in defense of this action, there is no basis for Lustig Brown's motion to withdraw. See id. at *1.
Accordingly, Lustig Brown's motion to withdraw as counsel for Roadmaster is denied.
III. Conclusion
For the foregoing reasons, it is hereby
ORDERED that Lustig Brown's motion to withdraw as counsel for Roadmaster is DENIED; and it is
ORDERED that the Clerk of the Court serve a copy of this Order, by regular mail, upon parties to this action.