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Unearned Hourly Fees and Contingency Fees Are Not the Property of a Dissolved Law Partnership

The Court of Appeals, in a full-fledged opinion by Judge Read, determined that unearned hourly fees and contingency fees are not the property of a dissolved law firm such that a bankruptcy trustee can reach them on behalf of creditors:

In New York, clients have always enjoyed the “unqualified right to terminate the attorney-client relationship at any time” without any obligation other than to compensate the attorney for “the fair and reasonable value of the completed services” … . In short, no law firm has a property interest in future hourly legal fees because they are “too contingent in nature and speculative to create a present or future property interest” …, given the client's unfettered right to hire and fire counsel. Because client matters are not partnership property, the trustees' reliance on Partnership Law § 4 (4) is misplaced.

… New York courts have never suggested that a law firm owns anything with respect to a client matter other than yet-unpaid compensation for legal services already provided. Appellate Division decisions dealing with unfinished business claims in the context of contingency fee arrangements uniformly conclude that the dissolved partnership is entitled only to the “value” of its services… . Matter of In re: Thelen LLP, 2014 NY Slip Op 04879, CtApp 7-1-14

 

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In a Partition Action, Tenant in Common Not Liable to Other Tenants in Common for Use and Occupancy of the Property/Tenant in Common Entitled to Reimbursement from Other Tenants in Common for Taxes and Repairs

In the context of a partition action, the Fourth Department explained that a tenant in common is not liable to other tenants in common for the use and occupancy of the property and is entitled to reimbursement of any payments made for taxes and repairs:

Contrary to plaintiffs’ contention, the court properly determined that defendant was not liable to them for the value of defendant’s use and occupancy. “[P]artition is an equitable remedy in nature and [the court] has the authority to adjust the rights of the parties so [that] each receives his or her proper share of the property and its benefits” (Hunt v Hunt, 13 AD3d 1041, 1042). A tenant in common “has the right to take and occupy the whole of the premises and preserve them from waste or injury, so long as he or she does not interfere with the right of [the other tenants] to also occupy the premises” … . “Mere occupancy alone by one of the tenants does not make that tenant liable to the other tenant[s] for use and occupancy absent an agreement to that effect or an ouster” … , both of which are absent here.

Contrary to plaintiffs’ further contention, the court properly determined that defendant was entitled to be reimbursed for payments that he made for property taxes and repairs. It is well settled that a tenant in common is entitled to be reimbursed for the share of the taxes paid by him for the benefit of other tenants in common … . Additionally, a tenant in common is entitled to be reimbursed for money expended in maintaining, repairing and improving the property, if such maintenance, repairs, and improvements were undertaken in good faith and were necessary to protect or preserve the property … . Cooney v Shepard, 2014 NY Slip Op 04589, 4th Dept 6-20-14

 

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Petition for Modification of Custody Should Not Have Been Dismissed Without a Hearing

The Fourth Department determined Family Court should not have dismissed mother’s petition for a modification of custody without holding a hearing:

It is well settled that a party seeking a change in an established custody arrangement must show “a change in circumstances [that] reflects a real need for change to ensure the best interest[s] of the child[ren]” … . Although a “hearing is not automatically required whenever a parent seeks modification of a custody order”… , we conclude that the mother made a sufficient evidentiary showing of a change in circumstances to warrant a hearing … . “[T]he mother’s allegations that [the father] imposed excessive and inappropriate discipline on the subject children, including corporal punishment, [were] sufficient to warrant a hearing” … , as were the mother’s allegations that the father had refused to permit her to exercise visitation with the subject children for four weeks … . Consequently, we agree with the mother that the court erred in dismissing the petition without conducting a hearing.  Matter of Isler v Johnson, 2014 NY Slip Op 04678, 4th Dept 6-20-14

 

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Father’s Parental Rights Should Not Have Been Terminated Pursuant to Social Services Law 384-b Which Is Relevant Solely to Destitute or Dependent Children

The Fourth Department determined father’s parental rights should not have been terminated pursuant to Social Services Law 384-b, which was not applicable:

Social Services Law § 384-b is entitled “Guardianship and custody of destitute or dependent children; commitment by court order; modification of commitment and restoration of parental rights” (emphasis added). A destitute child is defined as a child “who is in a state of want or suffering due to lack of sufficient food, clothing, shelter, or medical or surgical care,” does not fit within the definition of an abused or neglected child and is without any parent or caretaker; “a child who is . . . absent from his or her legal residence without the consent of his or her parent, legal guardian or custodian”; “a child . . . who is without a place of shelter where supervision and care are available;” or “a person who is a former foster care youth under the age of twenty-one who was previously placed in the care and custody of [DSS] . . . and who was discharged from foster care . . . , [and] who has returned to foster care” (§ 371 [3] [a] – [d]). A dependent child is defined as “a child who is in the custody of, or wholly or partly maintained by an authorized agency or an institution, society or other organization of charitable, eleemosynary, correctional, or reformatory character” (§ 371 [7]). It is indisputable that the subject child is neither a destitute nor a dependent child. Social Services Law § 384-b is thus inapplicable to the child and may not be invoked by either the mother or DSS as a means to terminate the father’s parental rights. We therefore reverse the order and grant the father’s motion to dismiss the petition. We note, however, that our determination does not leave the mother without a remedy. She may seek to dispense with the father’s consent to adoption pursuant to Domestic Relations Law § 111 (2) (a) … . Matter of Anastasia I, 2014 NY Slip Op 04657, 4th Dept 6-20-14

 

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Party Represented by Counsel at a Scheduled Court Appearance Has Not Failed to Appear

In affirming the termination of mother’s parental rights, the Fourth Department noted that a party who is represented by an attorney at a scheduled court appearance has not failed to appear:

A party who is represented at a scheduled court appearance by an attorney has not failed to appear’ ” … . The mother initially appeared at the fact-finding hearing, and her attorney participated in the hearing by presenting an opening statement and cross-examining the first witness. The mother’s attorney chose not to participate in the remainder of the hearing when the mother left the courtroom after the first witness testified. Inasmuch as the mother’s attorney “appeared at and participated in the hearing” until the mother left the courtroom, “there was no default”… . Matter of Savanna G, 2014 NY Slip Op 04658, 4th Dept 6-20-14

 

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Mother Not Adequately Apprised of Her Right to Counsel—New Hearing Ordered

The Fourth Department determined a new hearing was required because mother was not adequately apprised of her right to counsel:

We agree with the mother that she was denied her right to counsel. The mother was entitled to representation based upon her status as a respondent in a Family Court Act article 6 proceeding and a person alleged to be in willful violation of a court order, and Family Court’s inquiry concerning her decision to proceed pro se was insufficient to enable the court to determine whether she knowingly, intelligently and voluntarily waived her right to counsel… . Matter of Seifert v Pastwick, 2014 NY Slip Op 04677, 4th Dept 6-20-14

 

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In Absence of a “Special Relationship” Insurer Not Liable for Agent’s Negligent Misrepresentation

The Fourth Department determined the insurance carrier was entitled to summary judgment because it did not have a “special relationship” with the insured.  Plaintiff’s insurance had been cancelled for lack of payment.  After a loss, the plaintiff sued the insurer alleged that he had relied on the agent’s representation that his insurance premium had been paid.  Absent a “special relationship” suit can not be premised on such reliance:

We agree with defendant that the court erred in denying its motion for summary judgment dismissing the complaint, the gravamen of which is a claim for negligent misrepresentation. An essential element of such a claim is the “duty to use reasonable care to impart correct information due to a special relationship between the parties” … . A special relationship may arise from “a course of dealing over an extended period of time which would have put objectively reasonable insurance agents on notice that their advice was being sought and specially relied on” … . According to plaintiff, he had a special relationship with defendant based on a course of dealing. We conclude that defendant met its burden on the motion, and plaintiff failed to raise an issue of fact concerning the existence of a special relationship … . The interactions between plaintiff and defendant on which plaintiff relies ” would [not] have put [an] objectively reasonable insurance agent[] on notice that [his or her advice] was being sought and specially relied on’ ” … , such that a special relationship was formed based on a course of conduct. Defendant therefore cannot be held liable for negligent misrepresentation based on its agent’s response to an inquiry from plaintiff concerning whether his policy premium had been paid. In view of our determination, we do not consider defendant’s remaining contentions. Majtan v Urbanke Assoc Inc, 2014 NY Slip Op 04631, 4th Dept 6-20-14

 

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Count Rendered Duplicitous by Trial Evidence Dismissed

The Fourth Department determined one count of an indictment had been rendered duplicitous by the trial evidence.  The indictment charged the theft of a bicycle.  However the trial evidence alleged the theft of two bicycles.  Therefore it is possible the jury was not unanimous in determining a specific bicycle had been stolen:

Because defendant’s right to be tried and convicted of only those crimes charged in the indictment is fundamental and nonwaivable” …, we review defendant’s contention despite his failure to preserve it. CPL 200.30 (1) provides that “[e]ach count of an indictment may charge one offense only.” Count five of the indictment charged defendant with stealing a bicycle and thus was not facially defective. At trial, however, the evidence established that two bicycles were stolen. Consequently, ” [r]eversal is required because the jury may have convicted defendant of an unindicted [petit larceny], resulting in the usurpation by the prosecutor of the exclusive power of the [g]rand [j]ury to determine the charges’ . . . , as well as the danger that . . . different jurors convicted defendant based on different acts’ “… . People v Wade, 2014 NY Slip Op 04587, 4th Dept 6-20-14

 

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Defense Counsel’s Failure to Object to Considerable Testimony About Prior Consistent Statements Made by the Victim Concerning Alleged Sexual Abuse Did Not Constitute Ineffective Assistance of Counsel

The Fourth Department, over a strong two-justice dissent, determined defendant’s motion to set aside the verdict based upon ineffective assistance of counsel was properly denied.   The complainant was allowed to describe prior consistent statements she made about the alleged incidents of sexual abuse. In addition, the People’s expert was allowed to testify about those prior consistent statements.  Defendant’s trial counsel did not object to that testimony and she indicated she had no strategic purpose in failing to object.  The majority determined the prior consistent statements were admissible because they completed a narrative.  The dissent noted that no cases supporting the introduction of prior consistent statements to complete a narrative were found.  In the opinion of the dissenters, the prior consistent statements constituted inadmissible bolstering and defense counsel’s failure to object to them constituted ineffective assistance:

… [O]ur dissenting colleagues conclude that defense counsel was ineffective by failing to object to the testimony of the victim that she reported to her mother at age six that defendant had touched her in a sexual manner; that she reported to her sister at age 14 that defendant had raped her; and that she told a police witness and the grand jury what she told the jury during her testimony. We respectfully disagree with that conclusion. Although the dissent correctly notes that the repetition of prior consistent statements may “give to a jury an exaggerated idea of the probative force of a party’s case” … , here, the victim’s testimony constituted a narrative of events. Indeed, she did not repeat the specific allegations of her testimony, i.e., that defendant had engaged in anal penetration … . In light of defense counsel’s opening statement that the relationship between defendant, the victim and the victim’s mother was such that it could “cause someone to make fake allegations,” the narrative of events was relevant. We also disagree with our dissenting colleagues that defense counsel’s failure to object to the prosecutor’s remarks during summation referencing that testimony constitutes ineffective assistance of counsel. Because the remarks were a fair response to defense counsel’s summation challenging the credibility of the victim and her motivation for making the accusations …, we conclude that the failure of defense counsel to object to those comments does not constitute ineffective assistance of counsel … . People v Gross, 2014 NY Slip Op 04592, 4th Dept 6-20-14

 

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Rebuttal Witness Properly Called by the People to Show Possible Bias of Defense Witness

The Fourth Department, over a strong two-justice dissent, determined that a rebuttal witness called by the People was properly allowed to testify to demonstrate the bias of a defense witness.  The explanation about the relevance of the rebuttal testimony is fact-specific.  The dissenters did not see the rebuttal testimony as relevant to the defense witness’ bias and did not agree that the “bias” rationale for the rebuttal was actually raised in the trial court:

…[T]he rebuttal witness was properly called to give testimony that was relevant to the defense witness’s bias or motive to fabricate, which is not collateral … . The defense witness was defendant’s former girlfriend, and the rebuttal witness was defendant’s ex-wife, who married defendant after he and the defense witness ended their romantic relationship. In her cross-examination of the defense witness, the prosecutor attempted to show that defendant and the defense witness were romantically involved at the time of the trial, but the defense witness would admit only that she and defendant were friends, and claimed that she and defendant had been friends “all along,” i.e., they were friends even when defendant and the rebuttal witness were married. The prosecutor informed the court that she wanted to call the rebuttal witness to rebut the defense witness’s testimony that she and defendant were “friends this entire time.” We disagree with our dissenting colleagues that the rebuttal witness should not have been allowed to testify. Reading the prosecutor’s colloquy with the court on this issue, together with her cross-examination of the defense witness, we conclude that the purpose of calling the rebuttal witness was to show that defendant and the defense witness were romantically involved at the time of the trial, which the prosecutor believed could be inferred if the defense witness and defendant had not been friends when he was married to the rebuttal witness.

We also disagree with our dissenting colleagues that our affirmance of the trial court’s ruling violates People v Concepcion (17 NY3d 192). The Court of Appeals has ” construed CPL 470.15 (1) as a legislative restriction on the Appellate Division’s power to review issues either decided in an appellant’s favor, or not ruled upon, by the trial court’ ” (id. at 195). Contrary to the position of the dissent, we are not affirming on a ground that is different from that determined by the court. The court allowed the rebuttal witness to testify for the “limited purpose” of whether the defense witness and defendant were friends, and we conclude that the court’s determination was proper. We simply differ from the dissent in our interpretation of the meaning of the rebuttal witness’s testimony tending to show that the defense witness and defendant were not friends after defendant married the rebuttal witness.  People v Nicholson, 2014 NY Slip Op 04611, 4th Dept 6-20-14

 

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