Here is a case from Kings which illustrates difficulties in proving that the first attorney was terminated for cause. Often the client is so fixated on getting the case to the new attorney, that promises are made, and proper evidence is not prepared.
Vallejo v. Builders for the Family Youth, 5538/00
Decided: January 2, 2007
NEW YORK COUNTY
Incoming Attorney: Proner and Proner
Tobi Salottolo, Esq.
Outgoing Attorney: William J. Bendix, Esq.
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This decision and order resolves a fee dispute in this matter between William J. Bendix, Esq., ("Bendix"), the outgoing counsel for plaintiffs Maria Vallejo, Carmen Reina and Maya Reina, and Proner and Proner, P.C. ("Proner"), the incoming counsel for the same plaintiffs. Proner moved by order to show cause to vacate any liens for attorneys’ fees in this action claimed by Bendix. Bendix opposed the order to show cause, claiming that he is owed one-half of the attorneys’ fees in this matter. The parties changed counsel from Bendix to Proner in May 2002.
This case was assigned to me on September 12, 2005 for a jury trial, after the jury had been selected. Three plaintiffs then remained in the action, Maria Vallejo, Carmen Reina (who reached the age of majority prior to trial) and Mayra Reina. Most of the defendants had been previously dismissed from the action. After extensive discussions and negotiations with plaintiffs’ counsel, Mitchell Proner, Esq., and respective counsels for the remaining defendants, the matter was settled on September 13, 2005, with a stipulation of settlement placed on the record for a total package of $920,000.00 ($75,000.00 for Maria Vallejo, $405,000.00 for Carmen Reina, and $440,000.00 for Mayra Reina).
At issue between Proner and Bendix is the appropriate fee, if any, for Bendix. Proner contended that plaintiffs discharged Bendix for cause and thus Bendix is not entitled to any legal fees. Bendix claimed that he is entitled to a percentage of the legal fees for his work performed prior to his 2002 discharge. In my June 20, 2006 decision and order in this fee dispute, 12 Misc3d 1171 (A), 2206 NY Slip Op 51140 (U), I ordered a hearing to determine if Bendix was discharged with or without cause, and if Bendix was discharged without cause to determine the amount of legal fees owed to Bendix.
This personal injury action was the result of a May 9, 1999-motor vehicle accident. Proner’s affirmation in support of the order to show cause that resulted in my June 20, 2006 decision and its attached affidavits alleged that Bendix mishandled the case and the related no-fault claims of Mayra Reina. The plaintiffs’ affidavits in support of the order to show cause [exhibits D and G of the order to show cause] were all prepared subsequent to the September 13, 2005 settlement by stipulation and all sworn to on October 18, 2005, before the same notary public. The affidavits of Carmen Reina and Mayra Reina are almost identical. Both claimed that Bendix delayed depositions and never called them about the progress of the case. All three of these affidavits, dated about three and one-half years after Bendix’s discharge, state: "I discharged ‘WILLIAM BENDIX’ because I felt he did not provide me with proper representation in this action." Further, all three affidavits concluded with the identical assertion that "[b]ecause of his [Bendix] poor representation of us in this case, I do not think that he should be entitled to any of the legal fees in this case."
The Proner supporting papers spoke glowingly of Proner’s work. Bendix, in paragraph 3 of his affirmation in opposition to the order to show cause stated that Proner’s application "to vacate your affirmant’s lien is a layer cake of misinformation laid upon fabrication intended to deny your affirmant his rightful share of the legal fee in this matter." Proner failed to provide this Court with any documents from plaintiffs to Bendix, stating that Bendix was discharged for cause. The only documentation presented with respect to Bendix being discharged for cause are the October 18, 2005 affidavits, three and one-half years after plaintiffs discharged Bendix.
Exhibit E of the order to show cause presented various documents connected to the 2002 substitution of counsel. Attached to exhibit E are: copies of the April 30, 2002 retainer agreements by plaintiffs with Proner; copies of plaintiffs’ May 1, 2002 consents to change their attorney to Proner from Bendix; copies of May 1, 2002 letters from plaintiffs to Bendix, advising Bendix of the change of counsel to Proner, and requesting Bendix to transmit "information and documents" to Proner; and, the May 1, 2002 cover letter from Mitchell Proner to William Bendix, advising Bendix of the counsel change and the transmittal of the above-mentioned documents. Mitchell Proner, in his May 1, 2002 cover letter to William Bendix states, "[i]f you would like to discuss your disbursements and/or liens, please contact the undersigned upon receipt of this letter [emphasis added]."
Proner subsequently had problems in getting the file from Bendix. Proner submitted an order to show cause with respect to the file transfer issues, to Justice Hutcherson, who signed it on May 17, 2002, returnable on June 5, 2002. Jennifer Bailine, Esq., an associate of Proner, not only prepared the 2006 order to show cause and affirmation in support, but also prepared the May 17, 2002 order to show cause and its affirmation in support. It is interesting to note that Ms. Bailine in the 2006 order to show cause affirmation in support moved to vacate any Bendix lien, while in her May 13, 2002 affirmation in support she stated, "[o]ur office has communicated to the outgoing attorney that we would acknowledge its lien and attorneys fees to be resolved at the conclusion of the case [emphasis added]." Justice Hutcherson, in his June 5, 2002 order, instructed that "liens and Bendix’s attorneys fees to be resolved . . . by stipulation or court."
This Court conducted a hearing on August 18, 2006 to determine if Bendix has a lien on attorneys’ fees or not. At the conclusion of the hearing, the Court reserved decision to review the hearing transcript and the Kings County Clerk’s files in the instant matter.
The Court makes the following findings. In Cohen v. Grainger, Tesoriero & Bell, 81 NY2d 655, 658 (1993), the Court of Appeals instructed that "[i]t is settled that a client may discharge an attorney at any time, with or without cause (Lai Ling Cheng v. Modansky Leasing Co., 73 NY2d 454, 457; Matter of Montgomery, 272 NY 232)." See Teichner by Teichner v. W & J Holsteins, Inc., 64 NY2d 977, 979 (1985); Campagnola v. Mulholland, Minion & Roe, 76 NY2d 38 (1990); Matter of Leopold, 244 AD2d 411 (2d Dept 1997); Papadopoulos v. Goldstein, Goldstein & Rikon, P.C., 283 AD2d 649 (2d Dept 2001); Byrne v. Leblond, 25 AD3d 640 (2d Dept 2006).
If an attorney is discharged for cause, the attorney is not entitled to any fee, notwithstanding a specific retainer agreement. Teichner by Teichner v. W & J Holsteins, Inc., supra at 979; Campagnola v. Mulholland, Minion & Roe, supra at 44; Byrne v. Leblond, supra at 641. When an attorney is discharged without cause, the attorney is entitled to compensation based upon quantum meruit. Reubenbaum v. B. & H.Exp., 6 AD2d 47, 48 (1st Dept 1958); Teichner by Teichner v. W & J Holsteins, Inc., supra at 979; Cohen v. Grainger, Tesoriero & Bell, supra at 658; Matter of Leopold, supra at 411; Papadopoulos v. Goldstein, Goldstein & Rikon, P.C., supra at 649; Byrne v. Leblond, supra at 641.
However, when the dispute is between attorneys, as in the instant matter, the Court in Cohen v. Grainger, Tesoriero & Bell, supra at 658, observed that:
the rules are somewhat different. The discharged attorney may elect to receive compensation immediately based on quantum meruit or on a contingent percentage fee based on his or her proportionate share of the work performed on the whole case (Cheng, supra, at 458 [citations omitted]).
Earlier this year, in Byrne v. Leblond, supra at 642, the Appellate Division, Second Department, instructed that:
the Supreme Court should have determined the amount of the contingency fee based upon the proportionate share of the work performed by the Rovegno firm [the outgoing firm] on the whole case taking into consideration the relative contributions of the lawyers thereto (see Lai Ling Cheng v. Modansky Leasing Co., supra at 458-459; Jones v. Birnie Bus Serv., Inc., 15 AD3d 951 ; Smerda v. City of New York, 7 AD3d 511 ). [Emphasis added]
In the instant case, with conflicting claims as to whether or not Bendix was discharged for cause, a hearing was necessary to resolve the fee dispute. Hawkins by Hawkins v. Lenox Hill Hosp., 138 AD2d 572 (2d Dept 1988); Klein v. Eubank, 87 NY2d 459 (1996); Byrne v. Leblond, supra at 642. Prior to the hearing, the Court had no evidence, other than plaintiffs’ October 18, 2005 affidavits, that Bendix may have been discharged for cause. In Klein v. Eubank, supra at 463, the Court noted that:
Attorney-client relationships frequently end because of personality conflicts, misunderstandings or differences of opinion having nothing to do with any impropriety by either the client or the lawyer. Others end because of unexpected conflicts of interests or changes in litigation strategy that require different lawyering skills. In some of those situations, the client may ask the attorney to withdraw. In others, it may be the attorney who initiates the termination process by offering to withdraw in order to avoid embarrassment, avert further conflict, preserve the relationship on a long-term basis or simplysave the client from the discomfort of having to fire the attorney. Importantly, in many such cases, the decision to terminate the relationship is the product of a mutual choice.
Thus, a hearing was necessary to determine the facts and circumstances relating to Bendix’s 2002 discharge. If Bendix was discharged without cause he is entitled to a portion of the attorneys’ fees in the instant matter, based upon either quantum meruit or a percentage of the contingency fee earned for his "proportionate share of the work performed." Lai Ling Cheng v. Modansky Leasing Co., supra at 458; Cohen v. Grainger, Tesoriero & Bell, supra at 658; Klein v. Eubank, supra at 464; Byrne v. Leblond, supra at 642. Further, this Court takes judicial notice of Justice Hutcherson’s June 5, 2002 order, which stated that Bendix’s "fees to be resolved . . . by stipulation or court."
Proner’s counsel, at the August 18, 2006 hearing, informed the Court, "Your Honor, I’m willing to stipulate that the initial letter sent to him [Bendix] discharging him, did not say for cause." (tr., p. 4, lines 17 – 19). Proner’s counsel then called plaintiff Mayra Reina to testify (tr., pp. 7 – 18). Ms Reina testified about her dissatisfaction with Bendix’s representation and her satisfaction with the work performed by Proner. At the conclusion of Ms. Reina’s testimony, I asked a question to clarify an issue [tr., p. 18, lines 10 – 19]:
THE COURT: I want to ask Ms. Reina a question. When you changed lawyers, going back a little more than three years, April, May of 2003 [actually 2002], you signed some documents, am I correct, for Mr. Proner?
THE WITNESS [Ms. Reina]: Yes.
THE COURT: Did you send any kind of communication to Mr. Bendix, giving a reason why he was discharged as your lawyer?
THE WITNESS [Ms. Reina]: No.
THE COURT: Thank you.
Proner’s counsel had no other witnesses to call. Bendix called Anthony Iadevaia, Esq., a personal injury lawyer with fifteen years experience (tr., p. 26), to testify. Mr. Iadevaia represented John Vallejo, Sr. , the last named plaintiff in the caption, who settled his case separately, just prior to trial. He testified that delays in trying the case were due to the dilatory tactics of defendant City of New York. The City was ultimately let out of the case. The following colloquy took place at tr., p. 21, lines 6 – 25.
THE WITNESS [Mr. Iadevaia]: That was the reason that there were so many adjournments with the depositions, because the City witnesses were not ready. The City attorneys were not ready. I went through the same frustrations [to Bendix] as you did on that particular matter.
THE COURT: This is your client, Mr. Vallejo; you were ready to have him deposed, your would get a call from the Corp. Counsel, "I need a delay?"
THE WITNESS [Mr. Iadevaia]: That’s correct, because the City was a party to the action, Judge. As you might be aware, the PC [preliminary conference order] says the EBT’s have to be done in their office [New York City Corporation Counsel] which is on Jay Street [across the street from Kings County Supreme Court].
THE COURT: You had to deal with Mr. Kalish [former head of the Corporation Counsel’s Torts Division in Kings Count], now Judge Kalish?
THE WITNESS [Mr. Iadevaia]: Now Judge Kalish.
Because there were so many plaintiffs, there was always a question of the City being ready.
I recall Mr. Bendix and I were ready pretty much every time, other than the City kind of throwing a thorn into things.
Mr. Iadevaia testified that after Proner replaced Bendix the case continued to drag on due to both the City’s delays and needless motion practice by Proner (tr., pp. 22 – 23). On cross-examination, Mr. Iadevaia testified that he never heard complaints from Mr. Vallejo, his client, about concerns of his stepdaughter, Mayra Reina about Bendix’s representation of the plaintiffs (tr., p. 32).
In his closing arguments (tr., p 34 – 35), Bendix referred to his affirmation in opposition and supplemental affirmation in opposition to the order to show cause, to demonstrate that he prepared bills of particular, secured medical authorizations, and made attempts to have his clients deposed. He stated at tr., p. 35, lines 19 -20, "I didn’t do anything wrong. The case was delayed because the City was involved." Bendix, at tr., p. 35, line 21 – p. 36, line 4, stated:
I feel I’m entitled to 50 percent of the legal fee. I did 50 percent of the work here. I brought the case to suit, did the BP’s [bills of particulars], put the case on for the PC conference. Referral gets one-third. I’m way beyond the one-third in this case, Your Honor. I think they should be entitled to something too. I don’t think I should be shafted here because they now at the end of the case come with the idea that they should have 100 percent of the legal fee.
In her closing arguments, Proner’s counsel (tr. pp. 36 -37) admitted that Bendix "put in the suit" (tr., p. 36, line 10). However, she argued that when Proner got the file, the plaintiffs still were not ready to be deposed. Further, Proner had to get medical and hospital records, prepare amended and supplemental bills of particulars, attend a preliminary conference, prepare and take depositions, and prepare for trial.
After reviewing the transcript of the August 18, 2006 hearing, and the official files for this case maintained by the Kings County Clerk, the Court makes the following findings of fact and conclusions of law. Both Ms. Reina and Mr. Iadevaia were credible witnesses. Proner’s counsel conceded that the letters sent by the three plaintiffs to Bendix about his discharge never mentioned cause. Further, Ms. Reina admitted that Bendix was never given a reason for his discharge. Several weeks after Bendix’s discharge, Ms. Bailine of Proner’s office acknowledged in her May 13, 2002 affirmation in support of an order to show cause that the Bendix lien was "to be resolved at the conclusion of the case." In his June 5, 2002 order, Justice Hutcherson instructed that ""liens and Bendix’s attorneys fees to be resolved . . . by stipulation or court." Therefore, Bendix was never discharged for cause.
The Court of Appeals noted, in Cohen v. Grainger, Tesoriero & Bell, supra at 658, that "[t]he discharged attorney may elect to receive compensation immediately based on quantum meruit or on a contingent percentage fee based on his or her proportionate share of the work performed on the whole case." The Appellate Division, Second Department, in Byrne v. Leblond, supra at 642, instructed that in determining the amount of the contingency fee earned by the outgoing firm, the trial court has to take into account the "proportionate share of the work performed . . . on the whole case taking into consideration the relative contributions of the lawyers thereto."
Bendix must be given credit for initiating the lawsuit and keeping it alive for three years. He prepared the summons and complaint, medical authorizations, bills of particulars, attended General Municipal Law §50 (h) hearings with the City, and conducted numerous other tasks necessary to prosecute the case. After, the plaintiffs exercised their right to change counsel to Proner, Proner must be given credit for continuing the case, preparing many amended and supplemental documents, preparing and attending depositions, and getting the case ready for trial. Without the efforts of the Proner firm, the plaintiffs would not have secured a total settlement package of $920,000. Therefore, in analyzing the " proportionate share of the work performed" and "the relative contributions of the lawyers," the Court finds that Bendix is entitled to forty (40 percent) percent of the legal fees in the instant action and Proner is entitled to sixty (60 percent) percent of the legal fees in the instant action.
Accordingly, it is
ORDERED, that William J. Bendix, Esq., serve a notice of entry of this order and decision upon the law firm of Proner and Proner, P.C., together with a detailed accounting of his costs and disbursements in this matter; and it is further
ORDERED, that within 14 days after receiving the notice of entry of this order and decision, and the detailed accounting of Mr. Bendix’s costs and disbursements, Proner and Proner, P.C. shall, after deducting Mr. Bendix’s costs and disbursements and Proner and Proners’ costs and disbursements, transmit to William J. Bendix, Esq., a check for his costs and disbursements in the instant action, and forty (40 percent) percent of the net proceeds for legal fees from the $920,000.00 settlement in the instant action, and retain sixty (60 percent) percent of the net proceeds from the $920,000.00 settlement in the instant action.
This constitutes the decision and order of this court.