Are There Fees Due, and Was There Legal Malpractice?
One of the more interesting phenomena is the transition of claims into findings as a case goes to trial. What were formerly "strong" claims, now are final findings of fact. In Krausz v Kaufman 2013 NY Slip Op 30803(U) April 9, 2013 Sup Ct, New York County Docket Number: 104174/2008
Judge Debra A. James performs the magic. Her decision dissects the question of whether plaintiff attorney is due fees, and whether defendant client can pursue legal malpractice claims.
"Under the Engagement Letter dated November 17, 2005, signed by both parties (the Engagement Letter”), plaintiff attorney was retained by defendant to represent her in connection with a renewal of her spokesperson contract for the Snapple brand of beverages. Defendant
had been a spokesperson for Snapple since I993 and was commonly known as “The
Snapple Lady.” The Engagement Letter began by stating that “you hereby engage my legal
services (“I” or “me”) in connection with the negotiation and review of your proposed
spokesperson contract for 2006 (and possibly future extensions) with the “Snapple”
brand.” With respect to the fee to be charged by plaintiff for legal services, the
Engagement Letter stated in pertinent part Upon execution of this agreement, you shall pay me a sum equal to five percent (5%) of any and all Gross income earned or received by you, or on
behalf of your services and/or activities resulting or deriving from your contract with the “Snapple” brand in any media, now or hereafter known. Notwithstanding the above, to the extent that your compensation includes amounts that are clearly defined as reimbursements of your expenses (including repayment of your staffs’ salaries, or your travel and appearances-related expenses), such amounts shall be excluded from the calculation of my fee.
The genesis of the end of the parties’ attorney-client relationship was a disagreement between defendant and Snapple about what constitutes an “Appearance” as the term is defined under the Contract. In pertinent part, the Contract provided that defendant “make up to fifty personal appearances per each twelve month period (hereinafter referred to as ‘Appearances’) to promote the Snapple brand”. The Contract defined “Appearances” as “a period of four (4) hours, exclusive of [defendant’s] prep and travel time, during which [defendant] gives an interview with the press and/or personally appears in support of a live initiative planned and approved by Snapple with
a focus on promoting the Snapple brand.” As for defendant‘s compensation, the Contract stated that “in full and complete consideration of [defendant] entering and fulfilling all of her obligations under this Agreement, Snapple shall pay [defendant] a fee of Five Hundred Seventy Seven Thousand Five Hundred Dollars ($577,500)” in each of the two years. In accordance with the Contract, Snapple paid defendant her fee in four installments- $350,000 on May 18, 2006; $227,500 on August 30, 2006; $350,000 on March 12,2007, and $227,500 on September 7,2007.
By e-mail on June 21, 2006, plaintiff relayed to Sean Gleason, who had negotiated the Contract on behalf of Snapple, that defendant understood that under the Contact, each individual press interview counted as a single appearance, for example five interviews over a four hour period would count as five of 100 appearances for the two year term. In his reply e-mail, Gleason responded “That is not the contract I signed. If she does 5 interviews- or 500- over the 4-hour period, so long as it stays within the 4 hour time frame, that counts as ONE appearance.”
Promptly after she was paid by Snapple on May 18, 2006, defendant paid plaintiff attorneys fees in the amount of 5% of the first installment of $350,000, or $1 7,500. However, though defendant, in accordance with the Contract, received her installments from Snapple on August 30, 2006, March 12, 2007 and September 7, 2007, she failed to remit any further payments to plaintiff. On September 6, 2006, defendant e-mailed a message to plaintiff that stated in essence that plaintiff would have to wait until defendant determined defendant’s expenses, which would be deducted from the fees defendant received from Snapple, before defendant would apply the 5% to her earnings and remit the balance of the attorneys’ fees owed to plaintiff. Defendant retained the firm of Brown Moskowitz 8 Kallen (“BM&K) who sent a letter dated September 20, 2006 on behalf of defendant to plaintiff. In that letter BM&K, inter alia, noted plaintiffs pledge in her letter of September 8, 2006 to continue to work for defendant pursuant to the Engagement Letter, characterized her demands for payment of attorney’s fees as illegitimate, and acknowledged and accepted plaintiff‘s resignation by e-mail dated September 6, 2006."
"Having reviewed the evidence, both the testimony and records, the court determines that plaintiff fully completed the legal services she promised to render to defendant under the Engagement Letter dated November 17, 2005 (“Engagement Letter”), that defendant breached that Engagement Letter in failing to remit the balance of attorneys’ fees outstanding thereunder, and that plaintiff is entitled to recover such fees from defendant."