Client is a big-time hedge fund earner, getting $5 and $6 million in bonuses over the years. Suddently, the bottom falls out, and he is offered severeness of only $ 1.6 million. He consults with defendants who tell him that they can help. However, defendants divert from the contractually set-up appeal procedure and plaintiff ends up with nothing at all. Negligence or judgment?
Garner v Liddle & Robinson, L.L.P. 2016 NY Slip Op 30659(U) April 13, 2016 Supreme Court, New York County Docket Number: 150058-2012 Judge: George J. Silver takes the view that there are sharp issues of fact to be determined by the jury.
“From 2001 through 2006, plaintiff, along with Alai, received an annual Bonus ranging from $5.1 million to approximately $9 million. Specifically, plaintiff and Alai each received, for the years 2001through2006, bonuses of $5.1 million, $7.25 million, $8.9 million, $8.3 million, $9 million, and $7.4 million respectively. Then, in June 2007, UBS closed Dillon Read, and on June 20, 2007, plaintiff and Alai each received a letter terminating his employment and detailing the terms of his termination and the UBS Separation Program (the “Separation Letter”). The Separation Letter offered to pay plaintiff severance under the UBS Global Management Separation Program (the “Separation Program”) consisting of (i) thirty nine (39) weeks of his base salary, and (ii) a Special payment of $1,850,000 (“Severance Offer”), for a total of $1,981,000.00. Alai received an identical termination letter. The Separation Letter explained that the Special Payment of $1,850,00 had been determined at the sole discretion of Dillon Read’s management and authorized under a supplement to the Separation Program for certain employees, and that in order to receive the Severance Offer, plaintiff was required to sign a Separation Agreement and General Release within forty five ( 45) days. Further, the Separation Letter explained that if plaintiff wished to challenge the Severance Offer or any aspect of the Separation Agreement, plaintiff was required to first consult with his Client Relationship Manager. The Separation Letter further stated that if plaintiff was unable to resolve the issues through such consultation, plaintiff had the right, within forty-five (45) days, to submit a written statement to a UBS committee (the “Committee”) through Kiku Taura, the UBS Executive Director/Human Resources at UBS Global Asset Management (Americas), Inc., describing the basis for his claim. Upon receiving the letter, plaintiff and Alali met with Liddle and Marc Susswein (“Susswein”) and retained L&R for the purpose of obtaining “guidance and advice concerning their rights under the Separation Agreement Letter, the Separation Program, their employment agreements, and prevailing employment and contract laws”, and ultimately, to obtain a higher Severance Offer. On May 2, 2008, plaintiff entered into a retainer agreement with defendants whereby plaintiff agreed to pay, in addition to retainer and contingency fees, disbursements and expenses. Plaintiff alleges that Liddle advised him that he and Alali were each entitled to receive a minimum of 3% of the net profits of the CRE for the period from January 1, 2007 until their termination – approximately $6 million each, a sum that more closely represented their historical bonuses of 3% during the years 2001-06 – as opposed to the Special Payment of $1.8 million. Further, plaintiff alleges that Liddle advised him that he would respond to the Separation Letter, and “expressed confidence that they would each receive at least $6 million based upon the prevailing law and his familiarity with UBS’ business practice and management, and that, in no event would they receive less than $2 million each.” On August 1, 2007, Liddle wrote to Rebecca White, Esq. (White), the Managing Director of UBS America’s Legal Employment Section, to discuss the terms of the Settlement Letter and the Severance Offer on behalf of plaintiff and Alali. The letter asks White to share its contents with certain specified “senior business executives within UBS.” Upon receipt of the letter, which had been forwarded to her as an email attachment by Susswein that same day, White emailed Susswein that she would forward the letter to “the UBS AM Severance Committee,” and suggested in the future he deal directly with Kiku Taura, “as set forth in the plan.” In response, Susswein told White, “Messrs. Garner and [redacted] are of the belief that given the substantial amounts that are at issue in their matter, that it is likely better addressed at a senior level outside of the UBS SM Severance Committee, which is why we have not submitted their letter directly to the committee.” White responded, “Just so it is clear, the severance packages offered to these employees will expire by their terms. As you requested, we will address the issues you have raised after we have had the opportunity to discuss them with the appropriate members of management.”
” In October of 2008, approximately six months after plaintiff turned down the increased offer of $2.6 million, defendants initiated an arbitration proceeding on behalf of plaintiff before the Honorable Stephen Crane at JAMS. Judge Crane dismissed the majority of plaintiffs claims, and specifically determined that “because he failed to comply with the Separation program’s appeal procedure, [plaintiffJ has failed to exhaust his administrative remedies.” As such, plaintiff was no longer entitled to the initial Severance Offer. Subsequently, on September 24, 20 I 0, defendants asked Judge Crane to restore the Severance Offer, which Judge Crane declined to do. Twelve days later, Judge Crane issued his Final Award, dismissing plaintiffs remaining claims. As a result, plaintiff received no severance payment from UBS, and now seeks to recover from defendants the amount originally offered by UBS in its June 20, 2007 Separation Letter, as well as legal fees. ”
“Neither party is entitled to summary judgment with respect to plaintiffs’ causes of action for legal malpractice. Based upon the record before the court it is for jury to determine whether defendants’ decision to attempt to negotiate a higher severance payment for plaintiff by means other than an appeal to the UBS AM Severance Committee, as called for in the Separation Agreement Letter, was a reasonable strategic decision which cannot serve as the basis of a malpractice claim (see Wagner Davis P.C. v Gargano, 116 AD3d 426 [l5t Dept 2014]) or was “so unreasonable at the inception as to have manifested professional incompetence” (Rodriguez v Fredericks, 213 AD2d 176 [1st Dept 1995]). There are also issues of fact as to whether defendants’ alleged negligence proximately caused plaintiff actual and ascertainable damages. Plaintiff contends that when he rejected UBS’ Revised Severance Offer of $2.6 million he did so under the belief that he was choosing between the Revised Severance Offer and original Severance Offer because he had never been advised that defendants, through the August 2007 correspondence with White, had not preserved his rights to the original Severance Off er. Plaintiff claims that had he known that he did not have the right to any severance payment from UBS unless UBS renewed its offer or a court or arbitrator awarded him the payment he would have viewed the Revised Severance Offer differently and would have accepted it without hesitation. Plaintiff also claims that the Revised Severance Offer was conditional in that both he and Alali had to accept it and that he rejected it in light of the advice provided to him by defendants that he was entitled to a $6 million severance, based upon his past bonuses, and that he would receive, at worst, approximately $2 million. Defendants argue that their representation of plaintiff was not a proximate cause of plaintiffs alleged loss because their representation of plaintiff resulted in the Revised Severance Offer that was $750,000 higher than the initial Severance Offer. Defendants argue that in the face of an increased severance offer there can be no legal malpractice. Plaintiffs claim that his rejection of the significantly higher Revised Severance Offer was compelled by defendants’ advice that plaintiffs rights to the Severance Offer had been preserved and that he that he was entitled to at most $6 million and at worst $2 million, in the face of defendants’ claim that no such advice was given, raises issues of fact and credibility that must be resolved by a jury and which necessitate denial of both the motion and cross-motion for summary judgment. “