Gelwan v Youni Gems Corp.  2015 NY Slip Op 30916(U)  June 2, 2015  Supreme Court, New York County  Docket Number: 653656/2013  Judge: Manuel J. Mendez is an example of how much time and effort attorneys are willing to put into their own fee dispute cases.  Here the dispute is over a contingent fee in a $1 Million dollar case.

All the parties to this action entered into a retainer agreement on September 28, 2005. Pursuant to the retainer agreement, plaintiff and nominal defendants were to provide legal services to the defendants in an action involving a joint venture brought against non-parties, Bassco Creations, Incorporation, Efraim Basalel, and Eliahu Basalel, all d/b/a Bassco Creations (herein “Bassco Defendants”). Plaintiff and nominal defendant provided services and on July 17, 2007, obtained a judgment in favor of defendants in the amount of $1,097, 724. 73. The Bassco Defendants sought to vacate the judgment and filed appeals. A dispute arose between plaintiff and nominal defendant concerning expenses. Defendants did not sign a retainer agreement related to the appellate work, or a Separation Agreement prepared by plaintiff and nominal defendant related to attorney fees. On July 28,2009, defendants retained other attorneys to represent them on appeals against the Bass co defendants. The defendants were successful on the appeals, but continued to be involved in litigation against a holdover tenant and have not obtained possession of the seized asset.

In its decision dated March 19, 2015, this Court reasoned that the counterclaims for violations of Judiciary Law § 487 were improperly pied; duplicative of the legal malpractice claims; and pied as a means to circumvent the expired three-year statute of limitations governing the legal malpractice claims. This Court dismissed the counterclaims for attorney deceit, attorney misrepresentation, breach of fiduciary duty for conflict of interest, excessive fee demand and coercion, depravation of rights pursuant to 22 NYCRR 137, refusal to arbitrate reimbursement of related costs, and for violations of Judiciary Law Section 487, the New York State Rules of Professional conduct, and the violation of client rights. In opposition to nominal defendant’s motion to dismiss defendants’ counterclaims, defendants argue that the continuous representation doctrine tolled the statute of limitations for the counterclaims. However, defendants does not offer any proof to substantiate this claim. For the reasons stated in this Court’s March 19, 2015 decision, and because of defendants’ lack of proof to substantiate that the continuous representation doctrine tolled the statute of limitations governing the counterclaims asserted against nominal defendant, the counterclaims asserted by defendants against the nominal defendant are severed and dismissed.

The Amended Answer annexed to defendants’ moving papers do not add substantive amendments (see Moving Papers, Mot. Seq. 11, Exhibits 1 and 2). Defendants merely deletes previously dismissed counterclaims and rephrases them as a counterclaim for fraud, and fail to allege nominal defendant’s knowledge that his alleged misrepresentations were false when he made them. Accordingly, it is ORDERED, that nominal defendant’s motion under Motion Sequence 010 dismissing the counterclaims asserted in the Answer is granted, the counterclaims asserted in the Answer are severed and dismissed, and it is further, ORDERED, that defendants’ motion under Motion Sequence 011 for leave to serve an amended answer is denied…”