Big projects require lots of legal work.  In Whiteman Osterman & Hanna, LLP v Preserve Assoc., LLC  2019 NY Slip Op 29056  Decided on February 28, 2019  Supreme Court, Albany County Platkin, J. we see the unusual situation in which a law firm waits 13 years or so to collect a huge legal fee, and does so in a way that allows immediate summary judgment on the amount.

“Pending before the Court are motions for summary judgment in lieu of complaint, made pursuant to CPLR 3213, in two separate collection actions brought against defendants Preserve Associates, LLC and Tupper Lake Preserve LLC.[FN1] In Action No. 1, the law firm of Whiteman, Osterman & Hanna, LLP (“WOH”) sues to recover the sum of $7,131,156 pursuant to a written agreement providing for the payment of past-due amounts owed for legal services rendered from 2006 through 2018. In Action No. 2, the law firm of Shanley, Sweeney, Reilly & Allen, P.C. (“SSRA”) sues under a similar instrument to recover the sum of $667,808, representing unpaid legal fees from 2004 and 2005. Defendants oppose the motions.

BACKGROUND

Plaintiffs are law firms that rendered legal services to defendants in connection with the development of the Adirondack Club and Resort (“Adirondack Club”) in Tupper Lake, New York (see NY St Cts Electronic Filing [NYSCEF] Doc No. 3 [Action No. 1], ¶¶ 2-3 [“Henry Aff.”]; NYSCEF Doc No. 3 [Action No. 2], ¶¶ 2-3 [“Allen Aff.”]). The Adirondack Club project (“Project”) is located on about 6,200 acres of land surrounding the former Big Tupper Ski Area, and the Project encompassed: the renovation and re-opening of the long-closed ski area; the construction of a new ski lodge, restaurant and hotel; permits for 651 building lots; development of an extensive network of cross-country and hiking trails; and the construction of a marina and clubhouse on Tupper Lake (see Henry Aff., ¶ 3).[FN2]

SSRA rendered legal services to defendants in 2004 and 2005 in connection with the real-estate development work on the Project (see Allen Aff., ¶ 2). By January 2006, defendants had fallen behind in their payments. “As an accommodation to the client, [SSRA] agreed to a [*2]forbearance in the collection of the legal bills in exchange for accruing interest and a bonus in the event that an extremely contentious permit was obtained from the Adirondack Park Agency” (id., ¶ 4).

In January 2006, lawyers from SSRA joined WOH (see id., ¶ 4), and WOH thereafter rendered legal services to defendants from January 2006 through October 2018 in relation to the Project (seeHenry Aff., ¶¶ 2, 4-5, 10). “By 2008, the growing recession caused [defendants] to fall behind in payments due for legal fees and expenses,” and WOH similarly agreed to forbear from collection in exchange for the accrual of interest and the prospect of a success fee (id., ¶ 4; see NYSCEF Doc No. 5 [Action No. 1], pp. 3-4 [“WOH Retainer”]).

From 2006 through 2018, plaintiffs honored the forbearance agreements while WOH “guided the project through . . . the APA permit, Town of Tupper Lake rezoning and subdivision approvals, New York State Department of Environmental Conservation permits, United States Army Corps of Engineers permits, and New York State Attorney General approvals” (Henry Aff., ¶ 5). WOH’s legal work also “included defense of five lawsuits involving the [P]roject, including two appeals to the Appellate Division and a motion for leave to appeal to the Court of Appeals. All of this litigation was decided in [defendants’] favor” (id.).”

“”An estoppel . . . rests upon the word or deed of one party upon which another rightfully relies and so relying changes his [or her] position to his [or her] injury” (Triple Cities Constr. Co. v Maryland Cas. Co., 4 NY2d 443, 448 [1958] [internal quotation marks and citation omitted]). Under principles of judicial estoppel, a party may not take a “factual position in a legal proceeding that is contrary to a position previously taken by [the party] in a prior legal proceeding” (American Mfrs. Mut. Ins. Co. v Payton Lane Nursing Home, Inc., 704 F Supp 2d 177, 192 [ED NY 2010]). In other words, a “party will not be permitted to assume a contrary position in another proceeding simply because the party’s interests have changed” (Green Harbour Homeowners Assn., Inc. v Ermiger, 128 AD3d 1142, 1144 [3d Dept 2015] [internal quotation marks and citation omitted]). These principles apply with equal force where the earlier position successfully was taken before an administrative agency (see American Mfrs., 704 F Supp [*8]2d at 193 [collecting authorities]; see also Mahoney-Buntzman v Buntzman, 12 NY3d 415, 422 [2009]).

Further, “a party’s affidavit that contradicts his or her prior sworn testimony creates only a feigned issue of fact, and is insufficient to defeat a properly supported motion for summary judgment” (Pippo v City of New York, 43 AD3d 303, 304 [1st Dept 2009] [internal quotation marks, brackets and citation omitted]).

Here, plaintiffs have established that Lawson did, at pertinent times, bind defendants in relation to matters critical to the development of the Project. This is in stark contrast to Lawson’s current testimony that he lacked such authority, as well as Lawson and Foxman’s testimony that Lawson’s only authority to bind defendants arose from formal actions of the type taken in connection with the OWDT transaction.

Plaintiffs’ proof further demonstrates that defendants, through Lawson, submitted sworn statements to OAG that were relied upon by the administrative agency in taking favorable action on the proposed Martin Act amendments. Lawson also prepared affidavits on behalf of defendants for submission to Supreme Court, Franklin County in connection with the successful continuation of a mechanic’s lien asserted against Project lands.

Having consistently obtained substantial benefits on the basis of Lawson’s representations that he was authorized to act on defendants’ behalf, defendants are estopped as a matter of law from denying Lawson’s authority to execute the Agreements and Amendments. To hold otherwise would accord defendants “an unfair advantage [and] impose an unfair detriment on [plaintiffs]” (American Mfrs., 704 F Supp 2d at 198).

B. Statute of Limitations

Defendants contend that plaintiffs’ claims are partially barred by the expiration of the statute of limitations. Specifically, defendants argue that plaintiffs may not obtain recovery of attorney’s fees incurred more than six years prior to the commencement of these actions.

The Court concludes that this defense is without merit. Plaintiffs’ actions are brought under the Agreements. Defendants’ default under the SSRA Agreement occurred no later than September 16, 2017, and their default under the WOH Agreement occurred no later than December 1, 2017.Moreover, and in any event, the record shows that defendants reaffirmed their indebtedness to plaintiffs on January 29, 2016 via written instruments executed by Foxman (see Henry Aff., Ex. B; Allen Reply Aff., Ex. H), thereby beginning the running of the six-year statute of limitations anew (see General Obligations Law § 17-101; Lew Morris Demolition Co. v Board of Educ. of City of NY, 40 NY2d 516, 520-521 [1976]).

C. Reasonableness of Attorney’s Fees

Finally, defendants claim to have raised triable issues of fact concerning the reasonableness of the underlying fee obligation that plaintiffs are seeking to collect. Specifically, defendants argue that in the absence of detailed invoices, time sheets and billing records, there is no way to ascertain the manner in which the underlying fee obligation has been calculated, and no way to assess whether plaintiffs’ charges were necessary, reasonable and/or proper. According to defendants, they are entitled to discovery to analyze, assess and challenge the amounts claimed due.

The proof adduced by plaintiffs in reply [FN12] shows that WOH contemporaneously sent at least 148 monthly billing packages to defendants, each broken down to the tenth of the hour and providing detailed narratives of the legal services provided (see Henry Reply Aff., ¶ 11 & Exs. 6-7). Likewise, SSRA sent 13 similar billing packages to defendants during its more limited period of representation (see Allen Reply Aff., ¶ 4 & Ex. A). Despite receiving detailed billing statements for almost 13 years and repeatedly reaffirming the amount of their indebtedness in documents delineating plaintiffs’ computations (see e.g. Henry Aff., Ex. B), defendants failed to raise any contemporaneous objections to the charges claimed by plaintiffs (see Lapidus & Assoc., 92 AD3d at 405-406).[FN13]

Even now, defendants fail to raise any particularized objections to the amounts claimed by plaintiffs. Defendants merely question the reasonableness of certain charges in highly conclusory fashion (see Foxman Aff., ¶ 12), which is insufficient to raise a triable issue of fact (see Shea, 194 AD2d at 371). In this connection, the Court notes that detailed information concerning the fees claimed by plaintiffs has been in the possession of defendants for many years, and defendants neither contend nor offer admissible proof that information needed to oppose the motion lies in the exclusive possession of plaintiffs (see CPLR 3212 [f]; Ingalsbe v Chicago Ins. Co., 287 AD2d 939, 940 [3d Dept 2001]).

Finally, the Court observes that plaintiffs undertook about 13 years of legal work to assist defendants in obtaining all of the government permits and approvals needed to develop a 6,200-acre luxury resort in the Adirondack Park (see Henry Reply Aff., Ex. 9, p. 3). Plaintiffs’ work further encompassed the successful defense of all associated litigation and appeals. All the while, plaintiffs were not being paid for their work, but undertook to continue to render professional services (and forbear from collection, despite the obvious risks) in reliance on defendants’ repeated promises to pay the past-due legal fees, interest and a success fee. On these facts, the Court sees no procedural or substantive unconscionability that should prevent plaintiffs from obtaining the substantial recovery sought herein (see generally Matter of Lawrence, 24 NY3d 320 [2014]).”

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Andrew Lavoott Bluestone

Andrew Lavoott Bluestone has been an attorney for 40 years, with a career that spans criminal prosecution, civil litigation and appellate litigation. Mr. Bluestone became an Assistant District Attorney in Kings County in 1978, entered private practice in 1984 and in 1989 opened his private law office and took his first legal malpractice case.

Since 1989, Bluestone has become a leader in the New York Plaintiff’s Legal Malpractice bar, handling a wide array of plaintiff’s legal malpractice cases arising from catastrophic personal injury, contracts, patents, commercial litigation, securities, matrimonial and custody issues, medical malpractice, insurance, product liability, real estate, landlord-tenant, foreclosures and has defended attorneys in a limited number of legal malpractice cases.

 

Bluestone also took an academic role in field, publishing the New York Attorney Malpractice Report from 2002-2004.  He started the “New York Attorney Malpractice Blog” in 2004, where he has published more than 4500 entries.

Mr. Bluestone has written 38 scholarly peer-reviewed articles concerning legal malpractice, many in the Outside Counsel column of the New York Law Journal. He has appeared as an Expert witness in multiple legal malpractice litigations.

Mr. Bluestone is an adjunct professor of law at St. John’s University College of Law, teaching Legal Malpractice.  Mr. Bluestone has argued legal malpractice cases in the Second Circuit, in the New York State Court of Appeals, each of the four New York Appellate Divisions, in all four of  the U.S. District Courts of New York and in Supreme Courts all over the state.  He has also been admitted pro haec vice in the states of Connecticut, New Jersey and Florida and was formally admitted to the US District Court of Connecticut and to its Bankruptcy Court all for legal malpractice matters. He has been retained by U.S. Trustees in legal malpractice cases from Bankruptcy Courts, and has represented municipalities, insurance companies, hedge funds, communications companies and international manufacturing firms. Mr. Bluestone regularly lectures in CLEs on legal malpractice.

Based upon his professional experience Bluestone was named a Diplomate and was Board Certified by the American Board of Professional Liability Attorneys in 2008 in Legal Malpractice. He remains Board Certified.  He was admitted to The Best Lawyers in America from 2012-2019.  He has been featured in Who’s Who in Law since 1993.

In the last years, Mr. Bluestone has been featured for two particularly noteworthy legal malpractice cases.  The first was a settlement of an $11.9 million dollar default legal malpractice case of Yeo v. Kasowitz, Benson, Torres & Friedman which was reported in the NYLJ on August 15, 2016. Most recently, Mr. Bluestone obtained a rare plaintiff’s verdict in a legal malpractice case on behalf of the City of White Plains v. Joseph Maria, reported in the NYLJ on February 14, 2017. It was the sole legal malpractice jury verdict in the State of New York for 2017.

Bluestone has been at the forefront of the development of legal malpractice principles and has contributed case law decisions, writing and lecturing which have been recognized by his peers.  He is regularly mentioned in academic writing, and his past cases are often cited in current legal malpractice decisions. He is recognized for his ample writings on Judiciary Law § 487, a 850 year old statute deriving from England which relates to attorney deceit.