Xiuwen Qi v Hang & Assoc., PLLC 2025 NY Slip Op 30306(U) January 24, 2025 Supreme Court, New York County Docket Number: Index No. 151821/2023 Judge: Mary V. Rosado discusses the exception to mandatory arbitration of attorney fee claims. Here, Plaintiff sued the law firm, and the law firm counterclaimed for fees. Is that counterclaim subject to mandatory arbitration or not? Answer: it is not.
“Plaintiff, who was a former client of Defendants, is seeking damages arising from Defendants’ alleged malpractice in a wage and hour lawsuit. In response to Plaintiff’s Complaint, Defendants asserted a counterclaim alleging quantum meruit damages arising from 134 hours of labor representing Plaintiff in his wage and hour dispute and $1,172.70 in costs (see NYSCEF Doc. 10). In Motion Sequence 001, Plaintiff moved to dismiss Defendants’ counterclaim arguing that this Court lacks subject matter jurisdiction over the quantum meruit counterclaim pursuant to the mandatory arbitration requirements of the Attorney Fee Dispute Resolution Program. In opposition, Defendants argued that the quantum meruit counterclaim is not subject to arbitration as resolution of the quantum meruit counterclaim involves resolving legal issues which are intertwined with Plaintiffs non-arbitrable malpractice claim. At oral argument dated October 31, 2023, this Court declined to rule on the motion to dismiss until the parties’ retainer agreement was produced. In a Decision and Order dated May 2, 2024 (NYSCEF Doc. 55), this Court denied the motion to dismiss, without prejudice, with leave to renew upon production of the retainer agreement. Plaintiff has produced the retainer agreement and seeks leave to renew his motion to dismiss. Defendants oppose Plaintiffs renewed application and argues nothing in the retainer agreement should change this Court’s decision to deny dismissal of Defendants’ counterclaim.”
“Claims and counterclaims involving substantial legal questions, including professional malpractice or misconduct, are not subject to arbitration under 22 NYCRR 137.l(b)(3) (see also Peters v Collazo Florentino & Keil LLP, 117 AD3d 432 [1st Dept 2014]). Whether Defendants have a quantum meruit claim necessarily hinges on whether they were terminated for cause, which is inextricably intertwined with the issues being litigated in this legal malpractice case (see also Brill & Meisel v Brown, 113 AD3d 435, 436 [1st Dept 2014]). Because the counterclaim’s existence is dependent on the resolution of the legal malpractice claim being litigated in this Court, the Court retains subject matter jurisdiction, and upon renewal, Plaintiff’s motion to dismiss is denied. The branch of Plaintiff’s motion seeking leave to reargue is denied as Plaintiff has failed to show that the Court overlooked any dispositive issues of fact or l”aw.