Opinion
026547/09.
Decided October 15, 2010.
Non-party, William Cohn moves for a protective order quashing a subpoena issued by plaintiff, Richard Meirowitz, an attorney.
The plaintiff moves for an Order: awarding Summary Judgment dismissing defendant Linda Cohn's affirmative defenses; dismissing defendant's counterclaims; and compelling defendant to fully comply with discovery demands, striking defendant's answer for failure to comply with discovery or alternatively assessing monetary sanctions against her, compelling joinder of non party, the Law Offices of Anthony Capetola.
Defendant cross moves for an Order awarding Summary Judgment dismissing the Complaint or, alternatively, appointing a referee to hear and resolve disputes regarding plaintiff's legal fees and dismissing the plaintiff's affirmative defenses to her counterclaims.
The only claim remaining is defendant's counterclaim against plaintiff sounding in unjust enrichment as the counterclaim sounding in negligence is rendered moot.
BACKGROUND
This is a contentious matter arising from a complex Stipulation of Settlement, ("Stipulation"), dated February 8, 1996 and executed and entered into by defendant, Linda Cohn and her estranged husband, William Cohn. The Stipulation, an 85-page document, excluding 42 pages of exhibits, addressed, inter alia, maintenance, equitable distribution of the marital residence and personal property, and notably dissolution\liquidation of the husband's extensive business assets. The Stipulation was incorporated but not merged in their Judgement of Divorce, dated April 18, 1996, and entered on May 21, 1996. As the defendant elected to settle for a percentage of the proceeds from the distribution of her husband's business assets in lieu of a lump sum payment, the Stipulation set forth provisions to monitor any diversions of proceeds or transfer of assets that would negatively impact any monetary distribution due her.
The Stipulation has not been submitted as an exhibit by either party; however, it is referenced in Hon. William R. LaMarca's Order, dated October 31, 2008 (see Cross Motion, Exhibit H).
In 2004, the defendant, upon examination of the records of her husband, William Cohn's, business entities, discovered that assets were liquidated without distribution to her and that he engaged in deceptive accounting practices where expenses were assessed against account receivables, resulting in a significant reduction in distributions that were to be paid to her. On or about June 8, 2006, she commenced an action in this Court against William Cohn for enforcement of the Stipulation, under Index No. 201647/06 and the caption, Linda Cohn v. William Cohn ("Stipulation Enforcement Action").
Plaintiff, who is not only an attorney but also the defendant's sister, alleges that defendant requested that he serve as co counsel to Anthony Capetola, an attorney she initially retained for the proceeding. Plaintiff then served as co-counsel to John Donahue, whom defendant retained in January, 2007 after discharging Mr. Capetola. Upon Mr. Donahue's discharge by defendant in May, 2007, plaintiff became lead counsel. Defendant rehired Anthony Capetola to act as co counsel to plaintiff in September, 2007.
It is undisputed that the plaintiff and defendant did not execute a retainer agreement. Because of their relationship and his prior representations of his sister without a retainer agreement, he did not insist on one. The parties, however, agreed that the defendant would pay plaintiff the sum of $5,000.00 per month plus disbursements for his services in addition to remitting further payment from any settlement and/or any distributions resulting from the enforcement proceeding. After about 1 1/2 years of making the monthly payments, the defendant indicated that she could no longer afford to do so while expressing dissatisfaction with the plaintiff's legal representation. Defendant also requested that plaintiff have no further contact with the Court; however she was willing to have him serve as co-counsel to Anthony Capetola. Defendant refused to agree to those terms and their attorney/client relationship dissolved in January, 2009.
Plaintiff contends that defendant failed to tender payment from distributions she received from William Cohn, as agreed, and that he is entitled to further legal fees for services performed on defendant's behalf. He places a fair and reasonable value of his services "at not less than $500,000.00".
The Stipulation Enforcement Action is still pending before another Justice of this Court.
PROCEDURE
The plaintiff commenced this action on or about December 29, 2009, against his sister to recover legal fees, alleging causes of action in unjust enrichment, and quantum meruit. The defendant filed a verified answer containing the following affirmative defenses: complaint fails to state a cause of action in quantum meruit; complaint fails to state a cause of action in unjust enrichment; the allegations of unjust enrichment and quantum meruit fail to comply with requirements of CPLR § 3016 (c); plaintiff has already been paid for his services and claims for further services are to be sought by plaintiff from settlement; plaintiff failed to execute a retainer agreement; plaintiff never issued and/or executed a Statement of Client's Rights and Responsibilities; plaintiff failed to seek counsel fees in the enforcement proceedings which precludes his seeking further payment of legal fees; plaintiff is estopped from claiming further legal fees through doctrine of laches; and plaintiff failed to offer defendant the right to arbitrate the legal fee dispute. The defendant also sets forth counterclaims sounding in negligence in that defendant failed to make the appropriate application before the Court for reimbursement of fees; and that plaintiff was unjustly enriched in that he accepted payment for legal fees to which he was not entitled.
On or about March 24, 2010, plaintiff served a subpoena upon William Cohn requesting disclosure and his appearance before this Court to which he responded by filing the instant motion to quash the subpoena. In addition, plaintiff seeks to join the Law Offices of Anthony Capetola as a necessary party to the instant case; however, there is no opposition regarding this specific issue.
DISCUSSION
The Court must resolve the material issue as to whether the underlying Stipulation Enforcement Action is a matrimonial and/or domestic relations matter requiring compliance with 22 NYCRR § 1400.2, and 1400.3. Section 22 NYCRR § 1400.3 provides in relevant part:
An attorney who undertakes to represent a party and enters into an arrangement for, charges or collects any fee from a client shall execute a written agreement with the client setting forth in plain language the terms of compensation and the nature of services to be rendered. The agreement, and any amendment thereto, shall be signed by both client and attorney, and, in actions in Supreme Court, a copy of the signed agreement shall be filed with the court with the statement of net worth
In addition, 22 NYCRR § 1400.2 entitled, Statement of Client's Rights and Responsibilities, provides:
An attorney shall provide a prospective client with a statement of client's rights and responsibilities, in a form prescribed by the Appellate Divisions, at the initial conference and prior to the signing of a written retainer agreement. . . .The attorney shall obtain a signed acknowledgment of receipt from the client. The statement shall contain the following: . . . [The client is] entitled to receive a written, itemized bill on a regular basis, at least every 60 days
Further, 22 NYCRR § 1400.1 provides:
This part shall apply to all attorneys who, on or after November 30, 1993, undertake to represent a client in a claim, action or proceeding, or preliminary to the filing of a claim, action or proceeding, in either Supreme Court or Family Court, or in any court of appellate jurisdiction, for divorce, separation, annulment, custody, visitation, maintenance, child support, or alimony, or to enforce or modify a judgment or order in connection with any such claims, actions or proceedings
The Stipulation Enforcement Action is an action to enforce a stipulation incorporated in a Judgment of Divorce and is directly related to a matrimonial and/or domestic relations matter. Pursuant to Domestic Relations Law § 237 (b), ". . . [a]n attorney's fee may be awarded when a party seeks by a plenary action to enforce a separation agreement or provisions of a judgment of divorce."(see Fine v. Fine , 26 AD3d 406 [2d Dept 2006], quoting Stephenson v. Stephenson, 116 AD2d 504 [1st Dept 1986], see also Haskin v. Mendler, 184 AD2d 372 [1st Dept 1992]). Therefore, the provisions of 22 NYCRR § 1400 applied to that proceeding, and plaintiff was required to provide and file a retainer agreement in the Court as well as a Statement of Client's Rights and Responsibilities.
As this Court has determined the Stipulation Enforcement Action to be a matrimonial and/or domestic relations matter, the Court will first address the defendant's cross motion to dismiss plaintiff's causes of action.
DEFENDANT'S CROSS MOTION FOR SUMMARY JUDGMENT TO DISMISS PLAINTIFF'S CAUSE OF ACTION.
A Court may grant summary judgment where there is no genuine issue of a material fact, and the moving party is; therefore, entitled to summary judgment as a matter of law ( Alvarez v. Prospect Hosp., 68 NY2d 320). Thus, when faced with a summary judgment motion, a court's task is not to weigh the evidence or to make the ultimate determination as to the truth of the matter; its task is to determine whether or not there exists a genuine issue for trial ( Miller v. Journal-News, 211 AD2d 626 [2nd Dept. 1995]).
The burden on the party moving for summary judgment is to demonstrate a prima facie entitlement to judgment as a matter of law by tendering sufficient evidence to demonstrate the absence of material issue of fact ( Ayotte v. Gervasio, 81 NY2d 1062). If this initial burden has not been met, the motion must be denied without regard to the sufficiency of the opposing papers ( Alvarez v. Prospect Hospital, 68 NY2d 320, supra; Miceli v. Purex, 84 AD2d 562 [2d Dept. 1981])
Plaintiff vigorously argues that the enforcement proceeding is a non matrimonial matter and cites authority stating that an attorney who fails to obtain a written retainer agreement or letter of engagement with a non-matrimonial client in violation of Rule 1215.1, may recover the reasonable value of services rendered on a quantum meruit basis (see Seth Rubenstein, P.C. v. Ganea , 41 AD3d 54, [2nd Dept. 2007], Barry Mallin Associates P.C. v. Nash Metalware Co. Inc. , 18 Misc 3d 890 [N.Y.City Civ.Ct.,2008]).
Plaintiff also relies on a computer printout of the WebCivil Supreme Court-Motion Detail detailing the case's activity to support that the enforcement proceeding is actually a commercial transaction based on its initial assignment to the Court's commercial part before the Hon. William R. LaMarca. However, the printout further indicates that in March 2010, the matter was referred to the Matrimonial part, specifically to the Hon. Randy Sue Marber, and then to the Hon. Robert A. Ross in July, 2010 (see Plaintiff's Further Reply Affidavit in Further Support of His Motion and In Further Opposition to Defendant's Cross Motion, Exhibit A).
The fact that plaintiff did not provide or execute a retainer agreement, comply with the requirements to file a copy of the written retainer agreement with the court with a statement of net worth, provide the client with written, itemized bills at least every 60 days, and provide the client with notice of her right to arbitrate any fee dispute prior to institution of the enforcement proceeding, are not in dispute. Therefore, the plaintiff did not abide by any of the provisions set forth in 22 NYCRR § 1400.
It is well settled that an attorney representing a client in a matrimonial matter is precluded from seeking fees from his or her client where the attorney has failed to comply with 22 NYCRR 1400.3, which requires the execution and filing of a retainer agreement that sets forth, inter alia, the terms of compensation and the nature of services to be rendered" ( Mulcahy v Mulcahy, 285 AD2d 587 [2nd Dept 2001]). Further, an attorney's failure to provide a prospective client with a statement of rights and obligations will also preclude collection of a fee as will the attorney's failure to provide itemized bills at least every 60 days. The failure to abide by these rules, "promulgated to address abuses in the practice of matrimonial law and to protect the public," will result in preclusion from recovering such legal fees (see Bishop v. Bishop, 295 AD2d 382 [2d Dept 2002] quoting Mulcahy v. Mulcahy, 285 AD2d 587 [2d Dept 2001], Kayden v. Kayden, 278 AD2d 202 [2d Dept 2000]). The plaintiff's claim that his representation yielded favorable results for the defendant does not alter the result. Even if this were true, it generally does not constitute substantial compliance with the applicable rules and regulations (see Mulcahy v. Mulcahy, supra).
Accordingly, defendant has met her burden, as a matter of law, and is awarded Summary Judgment as to the cause of action in quantum meruit.
As to the cause of action in unjust enrichment, a party must show that the other party was enriched at that party's expense, and that it is against equity and good conscience to permit [the other party] to retain what is sought to be recovered (see Citibank, N.A. v Walker , 12 AD3d 480 , [2d Dept 2004] quoting Paramount Film Distrib. Corp. v State of New York, 30 NY2d 415, cert denied 414 US 829). Plaintiff argues that he is able is recover fees from the defendant under this theory and that the defendant would be the beneficiary of a windfall if she did not have to compensate the plaintiff for services rendered.
For the same reasons set forth in the discussion regarding the cause of action in quantum meruit, plaintiff cannot recover attorney fees. Therefore, the defendant's motion is granted and the cause of action sounding in unjust enrichment is dismissed.
DEFENDANT'S COUNTERCLAIMS
Regarding the defendant's counterclaim sounding in negligence, it is noted that plaintiff contends in his papers that an application to this Court for reimbursement of legal fees from the defendant's ex husband, would be denied as the Stipulation Enforcement Action is not a matrimonial/domestic relations matter. He even claimed that the Hon. William R. LaMarca's October 2008 Order of this Court denied the application. After a review of the Order, there is no reference to or indication of an application for legal fees; in fact, that issue was never addressed.
Also problematic is the fee structure as set forth by plaintiff which is set forth as follows: ". . . [d]efendant agreed to pay [plaintiff] a reduced fee of $5,000 per month plus disbursements against a final determination of a larger negotiated fee entitlement, to be paid by defendant, at such time as the [S]ettlement [D]ispute [L]itigation was settled or adjudicated" (see Notice of Motion, ¶ 22). In sum, a settlement would be a condition precedent as defendant would not have to make payment until settlement, if any, occurred.
The rule against contingent fees in domestic relations cases in New York is deep seated and well established. The policy reasons include a belief that this kind of fee might induce lawyers to discourage reconciliation and encourage lengthy and emotionally wounding court battles. Further, the rules and regulations cited in 22 NYCRR § 1400 specifically prohibits attorneys from entering into an arrangement in a domestic relations matter, where the payment or amount of fees is in any way determined by reference to the amount of maintenance, support, equitable distribution or property settlement ( Ross v. DeLorenzo , 28 AD3d 631 [2nd Dept 2006]), 22 NYCRR 1200.11[c][2] [i]; see 22 NYCRR 1400.1, 1400.2). Accordingly, the fee agreement as arranged between plaintiff and defendant, is unenforceable as violative of public policy (see Law Office of Howard M. File, Esq., P.C. v. Ostashko , 60 AD3d 643 [2nd Dept 2009]).
Based on the award of Summary Judgment to the defendant, her counterclaim alleging negligence based on plaintiff's failure to make application to this Court for reimbursement of legal fees in the Stipulation Enforcement Action is rendered moot (see Habe v. Triola, 154 AD2d 437 [2d Dept 1989]).
As to the counterclaim alleging a cause of action in unjust enrichment, there are issues as to whether the plaintiff is entitled to retain the fees already collected from the defendant. Attorneys who substantially comply with the rules and regulations, are allowed to retain fees already collected (see Verkowitz v. Torres, 2009 WL 1455303). However, regarding the issue of an attorney retaining fees already collected in the event of his/her complete non compliance with the rules and regulations of 22 NYCRR § 1400, the case law clearly indicates that utter and complete non compliance will require that an attorney forfeit such fees (see In re Serazio-Plant, 299 AD2d 696, [3rd Dept 2002], McMahon v. Evans, 169 Misc 2d 509 [Broome County Sup. Ct. 1996], Agostini-Knops v. Knops, 2003 WL 1793054), Mueller v. Pacicca, 179 Misc 2d 392 [White Plains City Court 1998]).
Because the plaintiff was completely noncompliant with 22 NYCRR § 1400, he is not entitled to retain fees already paid by the defendant. The plaintiff's motion to dismiss the defendant's counterclaim sounding in unjust enrichment is dismissed .
PLAINTIFF'S MOTION TO DISMISS AFFIRMATIVE DEFENSES, DISMISS COUNTERCLAIMS, COMPEL DISCOVERY, JOIN NON PARTY
It has been determined that plaintiff is not entitled to recover legal fees from the defendant. Therefore, the plaintiff's remaining motions are rendered moot .
MOTION TO QUASH
The motion by non party William Cohn to quash the subpoena is rendered moot and the branch of the motion requesting sanctions against plaintiff is denied .
Accordingly, the complaint is dismissed. The counterclaim sounding in unjust enrichment against the plaintiff is severed as a separate cause of action and is continued. It is hereby
ORDERED, that the parties are directed to appear in DCM for a Preliminary Conference on November 8, 2010 at 9:30 a.m. on the defendant's remaining counterclaim.
This constitutes the Decision and Order of the Court.