Reem Contr. v Altschul & Altshcul 2022 NY Slip Op 34430(U) December 30, 2022 Supreme Court, New York County Docket Number: Index No. 104202/2011 Judge: Kelly A. O’Neill Levy discusses two interesting points: when an expert is needed in a summary judgment motion on a legal malpractice case (covered on 1/9/23) and whether an account stated claim can proceed in a legal malpractice counterclaim/defense setting. Today, the Account Stated claim is discussed.

This is a legal malpractice action brought by plaintiffs Reem Contracting Corp. (Reem
Contracting), Jona Szapiro (Szapiro ), Reem Plumbing and Heating Corp. (Reem Plumbing), and the Estate of Steven Stein (Stein) (collectively, plaintiffs) against defendants Altschul & Altschul, Mark Altschul, Esq. (Altschul), and Cory Dworken, Esq. (Dworken) (collectively, defendants). Defendants represented plaintiffs in a federal action seeking recovery under section 515 of the Employee Retirement Income Security Act of 1974 (ERISA), 29 USC§ 1145 (the underlying action). Defendants have asserted a counterclaim for account stated. Defendants move, pursuant to CPLR 3212, for summary judgment on their account stated counterclaim.”

“In 2004, plaintiffs were named as defendants in the underlying action, captioned Trustees of Plumbers Local Union No. 1 Welfare Fund v Reem Plumbing & Heating Corp., 04-CV-4698 (CBA) (ED NY) (id., ,-i 5). The trustees (the Trustees) alleged that Reem Plumbing and Reem Contracting were contractually obligated to contribute to certain union benefit funds (the Funds), as required by four collective bargaining agreements between the Association of Contracting Plumbers of the City of New York and Local Union No. 1 of the United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada (id.). The Trustees conducted an audit for the period of January 1, 2002 through December 31, 2004, believing that there had been a significant shortfall in contributions (id., ,-i 6). The Trustees sought unpaid contributions, interest, liquidated damages, and attorney’s fees (id., ,-i 8). They also sought to hold Stein and Szapiro personally liable as fiduciaries of the Funds as defined under ERISA (id.). Altschul & Altschul represented plaintiffs in the underlying
action (id., ,-i 9). Altschul and Dworken were tasked with defending plaintiffs (id., ,-i 10).”

In the case below, ” By memorandum and order dated March 31, 2009, Judge Amon granted the Trustees’ motion for summary judgment, finding that Reem Plumbing was obligated to make contributions to the Funds during the audit period (2009 WL 10700668, *8, 2009 US Dist LEXIS 154698, *25). Judge Amon further held that, since plaintiffs admitted that Reem Plumbing and Reem Contracting were alter egos, Reem Contracting was bound to the same collective bargaining agreements as Reem Plumbing (id.). Judge Amon further held that Stein and Szapiro were fiduciaries of the Funds under ERISA, and that they were personally liable given their exclusive
control of the entities (2009 WL 10700668, * 10, 2009 US Dist LEXIS 154698, * 32). Finally, Judge Amon awarded damages against plaintiffs, jointly and severally, in the amount of $1,337,707.63 (2009 WL 10700668, *15, 2009 US Dist LEXIS 154698, *44). In doing so, Judge Amon determined the amount of unpaid contributions based solely on a Marshall & Moss audit of Reem Plumbing and Reem Contracting (2009 WL 10700668, * 13, 2009 US Dist LEXIS 154698, * 40-41 ).”

Account Stated Claim

An “account stated” is “an agreement between the parties to an account based upon prior transactions between them with respect to the correctness of the separate items composing the account and the balance due, if any, in favor of one party or the other” (Shea & Gould v Burr, 194 AD2d 369, 370 [1st Dept 1993] [internal quotation marks and citation omitted]). The agreement is an acceptance of an amount due on an account that has been rendered (Jnterman Indus. Prods. v R. S. M Electron Power, 37 NY2d 151, 153-154 [1975]; M & A Constr. Corp. v McTague, 21 AD3d 610, 611 [3d Dept 2005]). To establish an account stated, there must be a mutual examination of the claims of the respective parties, a balance struck, an agreement either express or implied that the balance is correct, and that the party against whom it is found will pay it (Bank of New York-Del. v Santarelli, 128 Misc 2d 1003, 1004 [County Ct, Greene County 1985]).
A client has “an absolute right, at any time, with or without cause, to terminate the
attorney-client relationship by discharging the attorney” (Campagnola v Mulholland, Minion Roe, 76 NY2d 38, 43 [1990]). An attorney discharged without cause may seek recovery in quantum meruit for the reasonable value of his or her services (Butler, Fitzgerald & Potter v Gelmin, 235 AD2d 218,219 [1st Dept 1997]). However, “[a]n attorney who is discharged for cause is not entitled to compensation or a lien” (Maher v Quality Bus Serv., LLC, 144 AD3d 990, 992 [2d Dept 2016]). In this regard, cases hold that “[a]n attorney who violates a disciplinary rule may be discharged for cause … ” (Doviak v Finkelstein & Partners, LLP, 90 AD3d 696, 699 [2d Dept 2011 ]). Moreover, “[ m ]isconduct that occurs before an attorney’s discharge but is not discovered until after the discharge may serve as a basis for a fee forfeiture” ( Orendick v Chiodo,
272 AD2d 901, 902 [ 4th Dept 2000]). “Th[is] rule * * * is well calculated to promote public confidence in the members of an honorable profession whose relation to their clients is personal and confidential” (Campagna/a, 76 NY2d at 44 [internal quotation marks and citation omitted]).

Generally, “a hearing is required to determine whether discharge was for cause” ( Ulico Cas. Co. v Wilson, Elser, Moskowitz, Edelman & Dicker, 56 AD3d 1, 13 [1st Dept 2008]).
Defendants are not entitled to summary judgment on their account stated counterclaim, as their claim for legal fees is intertwined with plaintiffs’ legal malpractice claim. Indeed, the alleged conduct which forms the basis for the malpractice occurred during the billing period atissue2 (see Glassman v Weinberg, 154 AD3d 407,409 [1st Dept 2017] [attorney not entitled to summary judgment on account stated claim since he “has not demonstrated entitlement to dismissal of defendant’s legal malpractice counterclaims, which are sufficiently intertwined with the account stated claim so as to provide a bona fide defense”]; Emery Celli Brinckerhoff & Abady, LLP v Rose, 111 AD3d 453,454 [1st Dept 2013], Iv denied 23 NY3d 904 [2014] [same]; cf Morrison Cohen Singer & Weinsten v Ackerman, 280 AD2d 355, 356-357 [1st Dept 2001] [ noting that legal malpractice claim was not “so intertwined” with a claim for fees where “the
vast majority, if not all, of the alleged conduct on plaintiffs part, which forms the basis of the malpractice claim, occurred prior to the billing period covered by the invoices in question”]). Altschul only states that “[t]he legal services were reasonably required to defend the Plaintiffs herein against claims for breach of a union collective bargaining agreement the Plaintiffs were a party to at the specific request of the Plaintiffs” (NYSCEF Doc No. 245, Altschul aff, ~ 5).

Additionally, there are issues of fact as to whether defendants were discharged for cause (see Brill & Meisel v Brown, 113 AD3d 435,436 [1st Dept 2014]). Contrary to plaintiffs’ contention, defendants’ failure to comply with the rules concerning retainer agreements (22 NYCRR 1215.1) does not preclude them from recovering in quantum meruit (Frechtman v Gutterman, 140 AD3d 538,538 [1st Dept 2016]; Seth Rubenstein, P.C. v Ganea, 41 AD3d 54, 60-63 [2d Dept 2007]).”

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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…

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.