Opinion
102640/93.
Decided June 22, 2004.
Petitioner, Fitzgerald Fitzgerald, P.C. ("Fitzgerald") seeks an order vacating the report of Special Referee Sue Ann Hoahng dated December 10, 2003 and seeks reference to another referee for a " de novo hearing with regard to the share of attorneys' fees due each firm involved in the within case." Affirmation in Support ("Supp Aff."), at ¶ 2. Petitioner argues that, as a matter of law, it is entitled to a percentage of the contingent fee recovered as attorneys' fees.
Shayne, Dachs, Stanisci, Corker Sauer ("Shayne"), attorneys for plaintiff, cross-moves for an order confirming the referee's report.
Background
This action arose out of an April 1991 accident wherein plaintiff Stephanie Vento suffered ankle injuries after exiting a New York City Transit Authority bus and stepping into a shallow depression in the roadway adjacent to a manhole. Supp. Aff., at ¶ 3. Ms. Vento retained Fitzgerald in May 1991 and signed a "Retainer Statement." Id., at ¶ 4.
Fitzgerald allegedly performed work on the case, including serving Notices of Claim on certain entities. Id., at ¶ 6. In November 1991, Fitzgerald served a summons and complaint on the City of New York, Consolidated Edison and MABSTOA. Id., at ¶ 7. Fitzgerald also, among other things, made disclosure requests on Ms. Vento's behalf.
In November 1992, Ms. Vento informed Fitzgerald that she retained Shayne as her attorneys to proceed with the matter. Id., at ¶ 10. By letter dated November 9, 1992, Fitzgerald informed Shayne, among other things, that it had incurred $367.24 in disbursements. Id., Ex. 3.
In June 1997 — almost five years later — Ms. Vento settled her action for $330,000. Attorneys fees were held in escrow pending a determination — by the agreement of the parties or court order — of what fees Fitzgerald was entitled to recover.
On August 22, 1997 Fitzgerald moved for a determination of "the reasonable value of the services performed by Fitzgerald Fitzgerald, P.C." Supp. Aff., Ex. 6. On November 12, 1997, an order was issued by Justice Gangel-Jacob referring the "issue of the reasonable value of the services performed by Fitzgerald Fitzgerald, P.C. * * * to the Legal Support Office for assignment of a Special Referee to hear and report." Id., Ex. 7. The Order directed that to "obtain a calendar date, a copy * * * shall be filed with the Clerk of Legal Support, Room 311, 60 Centre Street, NY, NY." Id.
Apparently, Fitzgerald did not file a copy of the Order with the Clerk of the Legal Support Office. Thus, no hearing was ever scheduled.
In June 2000, Fitzgerald moved to have the matter resolved. Fitzgerald sought from this Court an "Order setting a date for the hearing on the reasonable value of the services rendered by Fitzgerald Fitzgerald, P.C."
Shayne opposed the motion and cross-moved for dismissal, urging that Fitzgerald failed to carry out the "clear, concise instructions contained in the Order" and should not be permitted a hearing after sitting on its rights. Shayne also argued that Fitzgerald failed to establish that the firm did significant or substantial legal work on the case. Indeed, Shayne maintained that Fitzgerald incorrectly sued MABSTOA instead of the New York City Transit Authority, and thus, Ms. Vento was unable to seek compensation from the proper party.
On September 19, 2000, based on Fitzgerald's own request for relief, this Court issued a Decision and Order instructing that "the factual issue of the reasonable value of Fitzgerald and Fitzgerald's services" be sent to a special referee. Id., Ex. 8. The Court ordered that "the issue of the reasonable value, if any, of the services of Fitzgerald and Fitzgerald shall be referred to a special referee." The Order further directed Fitzgerald to serve a copy of the Order on the Clerks of the Trial Support Office (Room 158) so that the matter could be calendered. The Order unambiguously stated that if Fitzgerald failed to serve the order within a 10-day period, the "motion shall be denied and the cross-motion granted, without any further action." Id.
It is unclear why no hearing was held. In June 2003, this Court re-signed its September 2000 Order.
On December 9, 2003, Special Referee Ann Hoahng held a hearing to ascertain the reasonable value, if any, of the services provided by Fitzgerald. Supp. Aff., Ex. 10. At the hearing, petitioner's counsel, who was of counsel to Fitzgerald and not a member or employee of the firm ( see, Supp. Aff., Ex. 10, at 8-9), requested an adjournment so that she could bring in a witness from Fitzgerald as she herself had not worked on the Vento matter. Petitioner's counsel also mentioned that she requisitioned certain court files for the hearing but they had not been provided. Id., at 10. The Special Referee rejected the request for an adjournment and explained that petitioner should have been better prepared for the hearing, which was being held at petitioner's request and had already been delayed.
On December 10, 2003 Special Referee Hoahng issued a report. In her findings of fact, the Special Referee explained that "the parties stipulated that * * * [Fitzgerald] made a mistake in not naming New York City Transit Authority (NYCTA) a party in the instant law suit." She concluded based on the evidence presented and credibility determinations that Fitzgerald "is not entitled to an award of attorney's fees." Supp. Aff., Ex. 11, at 9. Because petitioner "failed to establish who rendered the services and what work was performed * * * [and] failed to introduce any records that describe the work that was done" and because there was no documentation or evidence of time spent rendering particular services, the Referee concluded that Fitzgerald had not met its burden. The Special Referee stated, moreover, that petitioner's counsel's "testimony was not credible regarding whether documents or records actually existed." Id.
The Referee explained that petitioner's counsel could not testify whether an attorney or a paralegal performed services, or how much time it took to complete particular tasks. Petitioner's counsel's testimony about Fitzgerald's failure to name the New York City Transit Authority as a party was deemed to have "no value." Id.
Now, Fitzgerald moves that the Referee's report be rejected. Fitzgerald argues that the Referee used the wrong standard in analyzing its application. Relying on Lai Ling Cheng v. Modansky Leasing Co., 73 N.Y.2d 454, 458-460 (1989), Fitzgerald contends that, as a matter of law, absent discharge for cause it has a right to elect a contingent percentage fee based on the proportionate share of the work performed on the whole case. Thus, Fitzgerald maintains that it is entitled to "a percentage of the contingent fee that was recovered." Petitioner's Memorandum of Law, at 6. Fitzgerald further argues that the Referee erred in assuming that "reasonable value" necessarily entailed application of an hourly rate and that instead it was entitled to a percentage of the contingent fee. Fitzgerald argues that it was not discharged for cause and did not commit malpractice. Finally, Fitzgerald takes issue with the Referee's conclusion that because its counsel could not testify about the time spent on the matter or who performed the work, it was not entitled to compensation.
Shayne cross-moves to confirm the Special Referee's report. In support of its motion, Shayne argues that Fitzgerald's retainer agreement was illegal and void; therefore, it is not entitled to a percentage of the attorneys' fees. Shayne contends that the Referee's recommendations are supported by the evidence and that Fitzgerald's request for an adjournment was properly denied since Fitzgerald had indicated that it was ready to proceed and the matter had already been postponed from September 2003 to December 2003.
Based on the scope of the reference — which tracks the language in petitioner's own request for a hearing with regard to attorneys' fees — this Court agrees with Shayne that the Special Referee's report must be confirmed.
Analysis
A Special Referee is constrained to make findings and issue a report strictly within the framework of the reference. Cf., 401 Hotel, L.P. v. MTI/The Image Group, Inc., 271 A.D.2d 228, 229 (1st Dep't 2000). Here, Fitzgerald specifically and unambiguously asked this Court for an "Order setting a date for the hearing on the reasonable value of the services rendered by Fitzgerald Fitzgerald, P.C." The Court granted Fitzgerald's motion and set a date for a hearing to ascertain the reasonable value of the services it rendered.
Fitzgerald correctly points out that when it is attorneys who dispute the breakdown of attorneys' fees, the "outgoing attorney may elect to take compensation on the basis of a presently fixed dollar amount based upon quantum meruit for the reasonable value of services or, in lieu thereof, the outgoing attorney has the right to elect a contingent percentage fee based on the proportionate share of the work performed on the whole case." Lai Ling Cheng v. Modansky Leasing Co., supra, 73 N.Y.2d, at 458. By asking this Court to set a hearing to ascertain the "reasonable value" of services it provided, Fitzgerald elected, indeed it unambiguously requested, a fixed dollar amount based on quantum meruit as opposed to a contingent percentage fee. It is now, with good reason, estopped from seeking a different alternative.
Fitzgerald's argument that "reasonable value" assessment involves analysis of proportionate time spent by attorneys on the action or that it can be a percentage of the contingent fee is belied by the very case Fitzgerald cites. A careful reading of Lai Ling Cheng v. Modansky Leasing Co., Inc., makes clear that an outgoing attorney may elect either a percentage of the contingent fee or the reasonable value of the services performed. Lai Ling Cheng v. Modansky Leasing Co., supra, 73 N.Y.2d, at 458 (emphasis added). Lai Ling Cheng further makes perfectly plain that it is the contingent percentage fee option that involves assessment of, among other things, "the amount of time spent by each lawyer on the case [and] the work performed." Id. Indeed, the Court of Appeals states that reasonable value of services can be calculated without analyzing "the proportionate share of the work performed by each lawyer." Id., at 459 (emphasis added).
This Court will not reject the Special Referee's analysis and findings, where, as here, they are completely faithful to the scope of the reference. Fitzgerald sought analysis of the "reasonable value" of its services and that is exactly what it obtained (despite the firm's dissatisfaction with the result). A contrary holding would require a further and very different reference potentially involving inquiry into (1) whether Ms. Vento terminated Fitzgerald for cause and (2) re-examination of all of the attorneys' work on the matter. The Court will not sanction expenditure of additional judicial resources or require Shayne to further litigate the matter, which has been ongoing for years. In the end, Fitzgerald had its chance. It elected to seek "reasonable value" of services from this Court and it had a full and fair opportunity to present evidence of the reasonable value of its services measured by time and expenses. Fitzgerald entirely failed to meet its burden and cannot be given another opportunity to relitigate now that it has lost.
The Court further concludes that the Special Referee's determination is supported by the evidence and should not be disturbed. See, e.g., RC 27th Avenue Realty Corp. v. New York City Housing Auth., 305 A.D.2d 135, 135 (1st Dep't 2003). Additionally, adjournment of the matter (involving a case that settled seven years ago) would have been entirely inappropriate.
Accordingly, it is
ORDERED that the motion by Fitzgerald Fitzgerald, P.C. to reject the Referee's Report is denied. It is further
ORDERED that the cross-motion by Shayne, Dachs, Stanisci, Corker Sauer is granted and December 10, 2003 report of Special Referee Hoahng is confirmed.
This constitutes the Decision and Order of the Court.