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Non-Party Attorneys Properly Held in Civil Contempt for Starting a Class Action Suit In Violation of Anti-Suit Injunctive Order

In a proceeding to liquidate the Executive Life Insurance Company of New York, non-party attorneys for objectors to the liquidation filed a class action lawsuit in federal court in violation of anti-suit injunctive orders issued by Supreme Court.  In affirming Supreme Court’s finding the non-party attorneys in contempt, the Second Department explained the criteria:

To prevail on a motion to punish for civil contempt, the movant must demonstrate that the alleged contemnor violated a clear and unequivocal court order, of which the alleged contemnor had knowledge, thereby prejudicing a right of a party to the litigation (see Judiciary Law § 753[A][3]…). “To satisfy the prejudice element, it is sufficient to allege and prove that the contemnor’s actions were calculated to or actually did defeat, impair, impede, or prejudice the rights or remedies of a party” … .

* * * The commencement of the class action violated the anti-suit injunctive provisions set forth in three court orders entered in this rehabilitation proceeding commenced pursuant to Insurance Law article 74, that was later converted into a liquidation proceeding … . An order of the court must be obeyed until that order is set aside, either by appeal or otherwise, where, as here, the court that issued the order had jurisdiction to issue it … . The petitioner also demonstrated that the commencement of the class action prejudiced its rights … . Matter of Executive Life Ins Co of NY, 2014 NY Slip Op 07506, 2nd Dept 11-5-14

 

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Damages in Medical Malpractice Case Paid by Insurer and Hospital—Therefore Doctor, a Defendant in the Medical Malpractice Case, Could Show No Pecuniary Loss—Legal Malpractice Suit by Doctor Must Therefore Be Dismissed

The Third Department determined that because the damages assessed against a doctor in a medical malpractice action were paid entirely by the insurer and the hospital, she suffered no pecuniary loss.  In the absence of pecuniary loss, she could not maintain a legal malpractice action against her attorneys:

Elements that plaintiff must prove in a legal malpractice action include that her attorney was negligent, she would have succeeded on the merits “but for” her attorney’s negligence and she sustained actual and ascertainable damages … . * * *

Considering first the element of damages, the undisputed proof established that plaintiff did not have to pay any part of the verdict, which was covered in full by the insurer and hospital. Plaintiff’s contention that she sustained non-pecuniary damages, such as a taint on her reputation resulting from media and other coverage of the … verdict, is unavailing since “the established rule limit[s] recovery in legal malpractice actions to pecuniary damages” … . Plaintiff continued working at the hospital after the … verdict and, as her contract was coming to an end about a year later, plaintiff was offered a new contract. … Although plaintiff did not like some of the changes in the terms of the new contract, those same terms were also made mandatory for other physicians and plaintiff was not singled out in such regard because of the … verdict. Defendant produced proof that plaintiff took the position during contract negotiations that she desired to significantly scale back or eliminate the obstetrics part of her practice at the hospital, a move that was opposed by the hospital’s other physicians. Plaintiff eventually elected to resign from the hospital rather than renew her contract. Her arguments that her difficulty in obtaining employment with comparable compensation and that subsequent potential increases in her malpractice premiums resulted directly from the … verdict are speculative and unsupported in this record … . Kaufman v Medical Liab Mut Ins Co, 2014 NY Slip Op 07398, 3rd Dept 10-30-14

 

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Criteria for Dismissal of a Complaint Pursuant to CPLR 3211(a)(1) [Defense Based Upon Irrefutable Documentary Evidence] and CPLR 3211(a)(7) [Failure to State a Cause of Action] Explained

In the context of a legal  malpractice action, in affirming the denial of motions to dismiss, the Second Department explained the criteria for motions to dismiss pursuant to CPLR 3211(a)(1) [defense founded on documentary evidence] and CPLR 3211(a)(7) [failure to state a claim]:

A party seeking relief pursuant to CPLR 3211(a)(1) on the ground that his or her defense is founded upon documentary evidence ” has the burden of submitting documentary evidence that resolves all factual issues as a matter of law, and conclusively disposes of the plaintiff’s claim'” … . In the instant matter, the documentary evidence submitted by the defendants, consisting of the orders issued by the Supreme Court in the underlying action, failed to utterly refute the plaintiff’s allegations of malpractice or conclusively establish a defense as a matter of law in the instant action … . * * *

On a motion to dismiss pursuant to CPLR 3211(a)(7), the facts alleged in the complaint must be accepted as true, the plaintiff is accorded the benefit of every possible favorable inference, and the court’s function is to determine only whether the facts as alleged fit within any cognizable legal theory … . “Whether the complaint will later survive a motion for summary judgment, or whether the plaintiff will ultimately be able to prove [his or her] claims, of course, plays no part in the determination of a prediscovery CPLR 3211 motion to dismiss” … . Here, the plaintiff alleged that, but for the defendants’ negligence, including their failure to assert “appropriate claims against the proper parties, . . . the Plaintiff’s medical malpractice claim would have succeeded and resulted in a different, better and/or more positive outcome.” Construing the complaint liberally, accepting the facts alleged in the complaint as true, and according the plaintiff the benefit of every possible inference, as required, the plaintiff stated a cause of action to recover damages for legal malpractice … . Tooma v Grossbarth, 2014 NY Slip Op 07347, 2nd Dept 10-29-14

 

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Revised Retainer Agreement, Which Changed the Fee Arrangement from Hourly to a 40% Contingency, Was Not Unconscionable/the Continuing Representation Doctrine Will Not Extend the Statute of Limitations for an Action Seeking the Return of Gifts Made by a Client to Her Attorneys Where the Sole Basis for the “Continuing Representation” Is a Fee Dispute

The Court of Appeals, in a full-fledged opinion by Judge Read, determined that, under the facts, a 40% contingent-fee retainer-agreement was not unconscionable.  The court further determined the six-year statute of limitations for an action seeking the return of gifts given to attorneys by their client was not tolled by the continuing representation doctrine because the doctrine is not applicable if the “continuing representation” is a fee dispute between the attorneys and client.  The underlying action was a suit by the beneficiaries of an estate worth $1 billion against the executor of the estate.  The estate litigation went on for more than 20 years.  The wife of the decedent, Alice Lawrence, after paying some $18 million in attorneys' fees under a retainer agreement, sought and negotiated a new contingent-fee agreement (40% of the amount recovered).  Lawrence was actively involved in the litigation and was apparently very savvy concerning financial affairs.  After the contingent-fee agreement was entered, the case took a sudden turn when the executor agreed to settle for more than $100 million, entitling Lawrence's attorneys to a fee of more than $40 million. Reversing the appellate division, the Court of Appeals determined the contingent-fee retainer agreement must be enforced:

Courts “give particular scrutiny to fee arrangements between attorneys and clients,” placing the burden on attorneys to show the retainer agreement is “fair, reasonable, and fully known and understood by their clients” … . A revised fee agreement entered into after the attorney has already begun to provide legal services is reviewed with even heightened scrutiny, because a confidential relationship has been established and the opportunity for exploitation of the client is enhanced … . …[A]n unconscionable contract is generally defined as “one which is so grossly unreasonable as to be unenforceable according to its literal terms because of an absence of meaningful choice on the part of one of the parties [procedural unconscionability] together with contract terms which are unreasonably favorable to the other party [substantive unconscionability]” … . * * *

Absent incompetence, deception or overreaching, contingent fee agreements that are not void at the time of inception should be enforced as written … . …”[T]he power to invalidate fee agreements with hindsight should be exercised only with great caution” because it is not “unconscionable for an attorney to recover much more than he or she could possibly have earned at an hourly rate” … . * * *

We have never endorsed continuous representation tolling for disputes between professionals and their clients over fees and the like, as opposed to claims of deficient performance where the professional continues to render services to the client with respect to the objected-to matter or transaction. Nor do the rationales underlying continuous representation tolling support its extension beyond current limits. Matter of Lawrence, 2014 NY Slip Op 07291, CtApp 10-28-14

 

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Plaintiff’s Proof Was Insufficient to Show an Interconnected Attorney-Client Relationship—Continuing Representation Doctrine Did Not Apply to Toll Statute of Limitations

The Third Department determined the “continuing representation doctrine” did not toll the statute of limitations in a legal malpractice action.  Plaintiff could not show an “interconnected” attorney-client relationship:

At all times, it was plaintiff’s burden to prove that the continuous representation doctrine applied here … . During the trial, even plaintiff conceded that while it was his hope that he would receive legal advice and guidance, neither [defendant] ever formally agreed to represent him … . * * * Plaintiff did not provide any written work product, nor was he able to recall the substantive content of any of the conversations he claims he had with [defendant]. In our view, Supreme Court was within its authority to credit the testimony of [defendants] that there was no legal relationship between them. Rather, because it was plaintiff alone who believed that he was being represented by [defendants], Supreme Court properly found that he did not establish the existence of an “interconnected” attorney-client relationship … . Accordingly, Supreme Court properly dismissed the complaint as barred by the statute of limitations. Deep v Boies, 2014 NY Slip Op 07215, 3rd Dept 10-23-14

 

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Surrogate’s Court Abused Its Discretion In Awarding Attorney’s Fees Greater than Those Called for by the Retainer Agreement—Evidence in Support of “Exceptional Circumstances” Justifying the Higher Fees Not Sufficient—Retainer Agreement Construed in Light Most Favorable to the Client

The Third Department determined Surrogate’s Court erred in awarding attorney’s fees in excess of those agreed to in the retainer agreement between the executors of an estate and the attorney hired to handle the estate.  Although the retainer agreement allowed for increased fees for “extenuating circumstances,” the Third Department found the proof of consultation and approval re: increased fees, required by the retainer agreement, lacking.  The court noted that a retainer agreement is construed in the light most favorable to the client:

Surrogate’s Court abused its discretion in fixing [the estate attorney’s] fee at $50,000. Surrogate’s Court is vested with broad discretion to fix the reasonable compensation of an attorney who renders legal services to a fiduciary of an estate, subject to modification only where that discretion has been abused (see SCPA 2110…). While the court is not bound by a retainer agreement when determining whether an unreasonable fee must be restricted …, a court “cannot award legal fees in excess of what has been agreed to by the parties in a retainer agreement” … . The attorney seeking fees bears the burden of establishing the reasonable value of the services rendered … . * * *

“The general rule that ‘equivocal contracts will be construed against the drafters’ is subject to particularly rigorous enforcement in the context of attorney-client retainer agreements,” such that we must construe the agreement in the light most favorable to the clients … . Matter of Benware, 2014 NY Slip Op 07218, 3rd Dept 10-23-14

 

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Defendant’s Request for New Assigned Counsel Was Not Supported by Sufficient Facts to Warrant Inquiry by the Court

In finding defendant’s request for new assigned counsel was properly denied, the Second Department explained the relevant analytical criteria:

A defendant may be entitled to new assigned counsel upon a showing of good cause, such as a conflict of interest or other irreconcilable conflict with counsel … . “Whether counsel is substituted is within the discretion and responsibility’ of the trial judge, and a court’s duty to consider such a motion is invoked only where a defendant makes a seemingly serious request[ ]'” … . Where a seemingly serious request is made, the trial court is obligated to conduct at least a “minimal inquiry” to determine the nature of the conflict and a possible resolution … .

In People v Porto, the Court of Appeals delineated the threshold necessary to require a court to make further inquiry, to wit, a defendant’s request to substitute counsel must contain “specific factual allegations of serious complaints about counsel'” … . Here, no serious complaint about counsel was raised by the defendant … . Instead, the defendant, who already had at least one prior change of counsel, stated that he wanted new counsel because he didn’t “want [his current counsel] anymore. First and foremost [he is] not helping me at all. I don’t see myself even surviving the jungle right here with him even representing me.” The defendant further stated, “I don’t want to proceed with him. And I’m going to tell you, I’m not a lawyer or nothing like that. But I think I can do better than him.” The defendant’s bare assertions did not suggest the serious possibility of a genuine conflict of interest or other impediment to the defendant’s representation by assigned counsel, and did not create a duty of inquiry on the part of the trial court … . Under these circumstances, the trial court providently exercised its discretion in denying the defendant’s request … . People v Ward, 2014 NY Slip Op 07193, 2nd Dept 10-22-14

 

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Request for Redacted Signatures on Sheriff’s Department Overtime Records Properly Granted—-Attorney’s Fees Properly Awarded

The Second Department determined the sheriff’s department did not sufficiently justify the redaction of signatures on the requested documents (overtime records) and the petitioners were entitled to attorney’s fees:

In a proceeding pursuant to CPLR article 78 challenging denial of a Freedom of Information Law (hereinafter FOIL) request, the agency denying access has the burden of demonstrating that the information requested falls within a statutory exemption, which exemptions are to be narrowly construed (see Public Officers Law § 89[5][e], [f]…). This showing requires the entity resisting disclosure to “articulate a particularized and specific justification for denying access'” … . “Conclusory assertions that certain records fall within a statutory exemption are not sufficient; evidentiary support is needed” … . Because FOIL is “based on a presumption of access to the records” …, “FOIL compels disclosure, not concealment'” wherever the agency fails to demonstrate that a statutory exemption applies … . * * *

The agency claimed that redaction was proper pursuant to the “unwarranted invasion of personal privacy” statutory exemption (Public Officers Law § 87[2][b]) since disclosing the captains’ signatures “would result in economic or personal hardship to the subject party” and the signatures were “not relevant to the work of the agency” (Public Officers Law § 89[2][b][iv]). However, because the agency failed to proffer more than conclusory assertions supporting these claims, the Supreme Court correctly determined that the agency failed to meet its burden of demonstrating that the information requested fell within this statutory exemption (see Public Officers Law § 89[5][e], [f]…), and thus, properly directed disclosure of the records without these redactions.  Matter of Jaronczyk v Mangano, 2014 NY Slip Op 070164, 2nd Dept 10-22-14

 

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Although the Police Could Have Done More to Make Sure Defendant Was Not Represented by Counsel Before Questioning Him, Defendant’s Prior Attorney’s Statement to the Police that He Was No Longer Representing the Defendant Was Enough

The Court of Appeals, in a full-fledged opinion by Judge Smith, over a dissent, determined that the police properly questioned the defendant without an attorney present after they were told by defendant's prior attorney that the he no longer represented the defendant. Defendant was represented on a robbery charge. After defendant indicated he had knowledge of the commission of an unrelated murder, he entered a plea bargain which promised a reduced sentence if he provided useful information about the murder.  The police who interviewed the defendant about the murder did not believe his story and the defendant did not receive a reduced sentence for the robbery.  Subsequently, the police suspected defendant was himself involved in the murder.  Before questioning the defendant, the police met with the attorney who had represented the defendant on the robbery charge.  The police did not tell the attorney why they wanted to question the defendant. The police then elicited statements from the defendant without any further inquiry about whether he was represented by counsel.  The dissent argued that there was ambiguity about the defendant's representational status, the burden was on the police to make sure the defendant was no longer represented before questioning him, and that burden was not met here:

Here, the police did have a reason — an excellent one — to believe that the attorney-client relationship had ceased: the attorney had told them so. By asking the question and getting an unequivocal answer, the police discharged their burden. It is no doubt true that they could have done more. They could have explained to [defendant's attorney] exactly why they were eager to talk to defendant, or they could have asked defendant himself whether the relationship had reached an end. Perhaps had they done so, they would have received a different answer. But the police are not required to take all imaginable steps to protect a defendant's right to counsel. Where they follow the rules laid down in our cases — rules that are, in general, highly protective of the attorney-client relationship — they need do no more … .  People v McLean, 2014 NY Slip Op 07085, CtApp 10-21-14

 

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County Court Was Not Required to Inquire Whether Defendant Wished to Seek New Counsel—Defendant’s Counsel of Choice Was Ill and County Court Ordered the Trial to Go Forward with Substitute Counsel (Selected by Defendant’s Counsel of Choice) After Denying Defendant’s Request for an Adjournment

The Court of Appeals, in a full-fledged opinion by Judge Pigott, over a dissent, determined defendant was not denied the right to his counsel of choice when County Court ordered the trial to go ahead with substitute counsel (selected by defendant's counsel of choice) because defendant's counsel of choice was ill.  The case turned on its facts.  Defendant did not request an adjournment to seek new counsel.  County Court was not required to ask the defendant whether he wished to seek new counsel:

A defendant who does not require appointed counsel has a right under both Federal and State constitutions to choose who will represent him … . “The constitutional guarantee to be represented by counsel of one's own choosing is a fundamental right” … . Nevertheless, “the right to counsel of choice is qualified, and may cede, under certain circumstances, to concerns of the efficient administration of the criminal justice system” … .

In particular, we have held that a defendant may not use the right to counsel of choice “as a means to delay judicial proceedings. The efficient administration of the criminal justice system is a critical concern to society as a whole, and unnecessary adjournments for the purpose of permitting a defendant to retain different counsel will disrupt court dockets, interfere with the right of other criminal defendants to a speedy trial, and inconvenience witnesses, jurors and opposing counsel” … . In short, appellate courts must recognize “a trial court's wide latitude in balancing the right to counsel of choice against the needs of fairness and against the demands of its calendar” … .

Significantly, in the present case, defendant does not contend that he expressly requested new counsel … and that the request was wrongly denied. Rather, defendant's principal argument is that when he moved, through counsel, for adjournment, County Court was obliged to inquire of him whether he was in fact seeking new counsel. We disagree.

…[I]n this case, County Court did not violate any of defendant's constitutional rights by denying the adjournment motions without that inquiry. On the record before us on direct appeal …  no communication was made to County Court from which it would appear that defendant was asking for the opportunity to retain new counsel, or for an adjournment in the hope that [his counsel of choice] would recover quickly enough to become his trial counsel. Rather, defendant simply sought an adjournment to give [substitute counsel] more time to prepare. Under these circumstances, there was no obligation on the part of County Court to inquire as to whether defendant was seeking new counsel. People v O'Daniel, 2014 NY Slip Op 07087, CtApp 10-21-14

 

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