Balestriere PLLC v Banxcorp   2014 NY Slip Op 32941(U)  November 17, 2014  Supreme Court, New York County  Docket Number: 650919/10  Judge: Joan A. Madden is yet another example of how an attorney fee-dispute can morph into a much larger case, and sometimes a real problem for the attorney.

“The Firm was retained by defendants in or about 2007, in connection with the New Jersey action, which is an antitrust suit arising out of Bankrate’s alleged misconduct, including price fixing and profit sharing agreements with competitors. This action arises out of the refusal of  defendants BanxCorp and Mehl to pay for legal services provided by plaintiff on their behalf in the New Jersey action. In support of its motion to compel defendants to produce the transcript of Mehl ‘s testimony in the New Jersey action, plaintiff argued that such transcript is relevant to the issue of the value of the services the Firm provided to defendants in the New Jersey action, and the issue of whether it was terminated for cause. Plaintiff also noted that the judge in the New Jersey action informed counsel during a conference call “that he would take no action with respect to the transcript until he received an order from this court compelling its production. Defendants opposed the motion to compel arguing, inter alia, that the transcript was the subject to the confidentiality order in the New Jersey action and was not relevant to the issues in this action. In the alternative, defendants argued that if the motion were granted, they should be able to amend their answer to reinstate their defense of termination for cause based on the Firm’s argument that the transcript was relevant to this issue.

Defendants now seek to serve a proposed amended answer which, in addition to a proposed first affirmative defense seeking to bar plaintiffs claim for quantum meruit based on allegations of termination for cause, also seeks to add a second affirmative defense that it has 2 [* 2] been damaged by the Firm’s alleged incompetence and poor work product, and a third and fourth defense alleging that certain evidence supporting plaintiff’s claims constitutes hearsay. The Firm opposes the motion, arguing that defendants now seek to add affirmative defenses not allowed by the June 6 order, which only gave defendants leave to renew with respect to the first of the four proposed affirmative defenses. The Firm al,so argues that the proposed affirmative defenses are without merit, noting that in its decision and order dated October 11, 2011, this court dismissed affirmative defenses and counterclaims based on the same or similar allegations made in support of the proposed affirmative defenses. As for the proposed third and fourth affirmative defenses, which allege, respectively, that plaintiff’s bill for services constitute inadmissible hearsay, and that plaintiff’s claim against Mehl is based on inadmissible hearsay, plaintiff argues that these affirmative defenses are improper as they relate to evidentiary issues.”

“The court also rejects the Firm’s argument that termination without cause is not a proper affirmative defense as plaintiff must show that it was not terminated for cause as part of its prima facie claim for recovery on the basis of quantum meruit. To state a cause of action for quantum meruit, a plaintiff must allege “( 1) the performance of services in good faith, (2) the acceptance of the services by the person to whom they are rendered, (3) an expectation of compensation therefor, and (4) the reasonable value of the services.” Fulbright & Jaworski, LLP v. Carucci, 63 AD3d 487, 489 (1st Dept 2009). While the reasons for the Firm’s termination may relate to the first element of the claim, the court finds that defendants should be permitted to assert termination for cause as an affirmative defense, particularly as such defense is not prejudicial to plaintiff. See generally Butler v. Cantinella, 58 AD3d 145 (2d Dept 2008); but see American Horse Show Ass’n Inc v. Ward, 186 Misc2d 571 (Sup Ct NY Co. 2000). ”

“Next, defendants’ request, pursuant to CPLR 5015(a)(3) 1 , to vacate the June 6 order directing Mehl to turn over his deposition transcript in the New Jersey action on the ground that it was procured by fraud and/or misconduct is without merit. Defendants argue that the June 6 order was procured by fraud as the attorneys for the Firm in this action did not inform this court or the Federal District Court in New Jersey that counsel was not licensed to practice law in New Jersey including in connection with their arguments made to the judge presiding over the New Jersey action. As counsel for plaintiff notes in opposition to the request to vacate the June 6 order, when addressing the court in the New Jersey action, counsel indicated that it represented plaintiff in this action and did not seek to appear in the New Jersey action. Notably, defendants do not argue that plaintiff sought relief from this court without knowledge of the New Jersey court. In fact, the record reveals otherwise. Accordingly, since defendants have not shown that the June 6 order was procured by fraud or misconduct, there is no basis for vacating the June 6 order under CPLR 5015(a)(3). See ~Jericho Group, Ltd. v. Midtown Dev., L.P., 47 AD3d 463 (1 51 Dept 2008)(vacatur of judgment under CPLR 5015(a)(3) is inappropriate in the absence of a showing that alleged fraud goes to the “very means by which the judgment is procured”)(internal citations omitted); Aames Capital Corp. v. Davidsohn, 24 AD3d 474 (2d Dept 2005)(defendant in foreclosure action not entitled to vacatur of default judgment where he offered only unsubstantiated allegations of fraud by plaintiff). “