As we have discussed in the recent past, the element “that but for the departure of the attorney there would have been a better economic outcome for plaintiff” is a black hole of such magnitude that a vast portion of dismissed legal malpractice cases disappear there.  Put another way, while it is simple to show a mistake make by an attorney, showing that the client would have otherwise won the case is subject to a world of other issues.

Ingvarsdottir v Gaines, Gruner, Ponzini & Novick, LLP  2016 NY Slip Op 08049
Decided on November 30, 2016 Appellate Division, Second Department is a great example.  Plaintiff hired attorneys to defend her in a civil action where she was named as a defendant along with her employer.

“The plaintiff, a native of Iceland, allegedly worked as an employee of Datalink in the United States while on two H-1B nonimmigrant visas issued for the period of May 20, 2005, until May 15, 2011. The plaintiff informed the law firm parties that Datalink did not pay her any wages or a salary for her services, and they subsequently asserted a cross claim on her behalf in the civil action pursuant to Business Corporation Law § 630(a) against Datalink and Bedi to recover unpaid wages. On May 3, 2014, the plaintiff commenced this action against the law firm parties to recover damages for legal malpractice alleging, among other things, that they had mistakenly asserted in her cross claim for unpaid wages that her employment with Datalink had ended in 2009, when it had actually ended on a later date, and that they had failed to timely provide notice to Bedi that she intended to recover unpaid wages from him as required by Business Corporation Law § 630(a).”

“Thereafter, the law firm parties commenced a third-party action against the attorney who represented the plaintiff in connection with certain immigration matters both before and during the period that they represented her in the civil action. The third-party complaint alleged that the law firm parties were entitled to common-law indemnification or contribution from the third-party defendant if they were held liable for legal malpractice to the plaintiff because the third-party defendant was involved in the drafting of the plaintiff’s cross claim for unpaid wages against Bedi and Datalink, and owed a duty to her to provide notice to Bedi on her behalf pursuant to Business Corporation Law § 630(a).”

“Here, the plaintiff alleged in paragraph 51 of her complaint that she actually worked for Datalink and Bedi until November 4, 2010. Business Corporation Law § 630(a) requires that for any employee to assert a claim to, in effect, pierce the corporate veil and hold a shareholder of a corporation responsible for the “debts, wages or salaries due and owing to any of its . . . employees,” written notice of claim must be given to the shareholder within 180 days “after termination of [the employee’s] services” (Business Corporation Law § 630[a]; see Stuto v Kerber, 26 Misc 3d 535, 537 [Sup Ct, Albany County], affd 77 AD3d 1233, affd 18 NY3d 909). Therefore, the plaintiff was obligated to provide her Business Corporation Law § 630(a) notice to Bedi not later than May 4, 2011. A party’s failure to comply with the notice requirement of Business Corporation Law § 630(a) precludes an action against the shareholder (see Beam v Key Venture Capital Corp., 152 AD2d 825; Pope v Halloran,76 AD2d 770). Since the complaint also alleges that the law firm parties were retained to represent her in the civil action on May 19, 2011, the complaint fails as a [*3]matter of law to state a cause of action to recover damages for legal malpractice, as the 180-day notice period of Business Corporation Law § 630(a) had already expired by the time the attorney-client relationship was formed.”

“We further reject the plaintiff’s argument that even if the Business Corporation Law § 630(a) notice period is measured from November 4, 2010, the complaint states a cause of action based upon the insanity toll of CPLR 208 and the doctrine of equitable tolling. Specifically, the plaintiff argues that the mental abuse she received from Bedi was of such magnitude that she was under a psychiatric disability at the relevant times. However, the legal malpractice complaint failed to allege sufficient facts to support a finding that the plaintiff was unable to function in society, as is required for a toll under CPLR 208 (see Santo B. v Roman Catholic Archdioscese of N.Y., 51 AD3d 956; Simon v Bryski, 278 AD2d 224; Steo v Cucuzza, 213 AD2d 624, 625).”

A commercial transaction (likely the sale of a business) leads to complications and eventually to a legal malpractice case.  What is the status of electronic stored information discovery upstate ?  In this Rochester case we see the parties battling over relatively small amounts of money in allocation of discovery costs.

Wade v McConville  2016 NY Slip Op 51686(U)  Decided on November 3, 2016  Supreme Court, Monroe County  Rosenbaum, J. primarily discusses the allocation of costs.

“Defendants, Michael F. McConville and McConville, Considine, Cooman & Morin, [*2]P.C., move for an order granting a protective order pursuant to CPLR 3103 conditioning the further production of ESI, if any, on Plaintiff’s payment of all costs associated with producing said information. Other motions between the parties were also pending but have been resolved by stipulation and agreement, with one exception. As to the subpoenas issued by Plaintiff, the parties seek guidance from the Court on the appropriate temporal scope of the requests covered by the subpoenas.

This action was commenced on December 30, 2015, alleging among other things, legal malpractice in connection with Defendants’ representation of Plaintiff with respect to a commercial transaction that allegedly closed on December 31, 2012. Defendants answered on February 2, 2016, generally denying the allegations. Significant discovery has been exchanged, including ESI. The parties have come before the Court previously on a discovery motion, and a decision was issued thereon.”

“On July 19, 2016, Plaintiff requested production of the “Case Management System Entries” and the remainder of the ESI for paragraph 9 of Plaintiff’s Notice to Produce (which requested Defendants’ calendar, docket, appointments, diary, and case management system entries from September 1, 2013 to January 7, 2013 as well as documents showing entries related to the representation of Plaintiff). Defense counsel advised on July 22, 2016 that steps were being taken to explore this ESI and that the issue could be addressed further at a court conference scheduled for July 26, 2016.

During the July 26, 2016 conference, defense counsel stated that they were working with a third-party software provider to determine the procedure to obtain further ESI from Defendants’ case management system that had not been previously produced, as well as the cost. Defense counsel suggested that Plaintiff might have to bear the burden of the cost for production.

On September 1, 2016, defense counsel informed Plaintiff that the ESI production would cost $9,000, and advised that due to the undue burden, Plaintiff would have to bear the cost if she wished to proceed. Plaintiff’s counsel disagreed about shifting the cost.

Defendants contend that they should not bear the $9,000 cost for the ESI extraction when Plaintiff has failed to specifically articulate what she is looking for with regard to Defendants’ case management system. If further production is required of Defendants, they request an order conditioning further production of ESI on Plaintiff’s complete payment of costs associated with that production.”

“At least one New York court held that the requesting party should bear the entire cost of searching for, retrieving, and producing discovery that includes ESI. See Lipco Elec. Corp. v. ASG Consulting Corp., 4 Misc 3d 1019(A) (Sup.Ct. Nassau Co. 2004). Other courts have found an exception to that where the cost of production is not significant and the ESI is readily available. See Waltzer v. Tradescape, LLC, 31 AD3d 302, 304 (1st Dept. 2006). See also, MBIA Ins. Corp. V. Countrywide Home Loans, Inc., 27 Misc 3d 1061, 1075 (Sup.Ct. NY Co. 2010) (While producing readily-available electronically-stored information. . . will not warrant cost-allocation, the retrieval of archived or deleted electronic information has been held to require such additional effort as to warrant cost allocation”). Where ESI costs are significant, some courts encourage adoption of the standards articulated by the United States District Court in Zubulake v. UBS Warburg, LLC, 217 F.R.D. 309, 317-18 (S.D.NY 2003), which places the costs of discovery, including searching for, retrieving and producing ESI, at least initially, on the producing party. See U.S. Bank Nat. Ass’n v. GreenPoint Mortgage Funding, Inc., 94 AD3d 58, 63-64 (1st Dept. 2012). To vary from this standard, a party must demonstrate why the costs should be shifted, assessing several factors: the extent the request is tailored to discover relevant information, the availability of the information from other sources, the cost of products compared to the amount in controversy, the cost of production compared to the party’s resources, the relative ability of each party to control costs and its incentive to do so, the importance of the issues at stake in the litigation, and the relative benefits to the parties obtaining the information. See Id. at 64, quoting Zubulake v. UBS Warburg LLC, 217 F.R.D. 309, 317-18 (SDNY 2003).

Defendants do not analyze this standard in arguing in favor of cost-shifting. Moreover, in making this motion for a protective order, Defendants have not proffered to the Court a copy of the $9,000 proposal, nor an affidavit from the Defendants or someone from Aderant.

Here, extracting the ESI requested will allegedly cost $9,000. Plaintiff has requested “Defendants’ calendar, docket, appointments, diary and case management system entries. . . both ESI and documents, showing entries related to the Representations of the Plaintiff.” The Court previously determined that this information was to be produced, and a timely motion to reargue was not made. Accordingly, to the extent it is sought, the Court declines Defendants’ invitation to revisit the issues raised in the previous motion.

Defendants’ motion for a protective order is denied. Defendants’ proffer on this motion is insufficient: they have not submitted a cost proposal or client affidavit on this issue. The Court further notes that Defendants have made no attempt to address the Zubulake factors. Defendants’ motion does not satisfy any burden in seeking to shift the costs of producing discovery to Plaintiff.”

It is a frequent trope in the legal malpractice world that LM claims are made reflexively in order to avoid payment of attorney fees.  While that might actually happen, our anecdotal examination finds that most legal malpractice claims are well considered, and are generally meritorious. The same is not necessarily true of Judiciary Law 487 claims after the Court of Appeals decided Amalfitano v Rosenberg  12 NY3d 8,   February 12, 2009 Read, J.  Court of Appeals.  Lin Shi v Alexandratos
2016 NY Slip Op 01560 [137 AD3d 451]  March 3, 2016  Appellate Division, First Department provides an example.  This is a residential real estate sales contract which never closed.  The Court had to decide whether purchaser had waited too long to try to cancel.  In the swirl, purchaser asserted a claim for JL 487 against the escrow holder.  It was summarily dismissed.

“The residential contract of sale entered into between plaintiff and defendants Panagis Alexandratos and Carol Alexandratos provided that, if plaintiff did not receive a commitment for a first mortgage loan from an institutional lender on or before the “Commitment Date,” he “may cancel this contract by giving Notice to Seller within 5 business days after the Commitment Date.” It is undisputed that plaintiff failed to give the Alexandratoses notice of cancellation within five business days after the date on which the extension period he had requested and been granted expired. Plaintiff’s argument that the mortgage contingency clauses of the contract constituted a condition precedent to his purchase of the Alexandratoses’ house is belied by the contract language and by plaintiff’s own conduct in requesting an extension of the mortgage contingency date before the initial 60-day “Commitment Date” term expired (see Regal Realty Servs., LLC v 2590 Frisby, LLC, 62 AD3d 498 [1st Dept 2009]).

Plaintiff’s equitable restitution cause of action is barred by the existence of the contract of sale (see IIG Capital LLC v Archipelago, L.L.C., 36 AD3d 401, 404-405 [1st Dept 2007]).

Plaintiff’s causes of action against defendant Triades for breach of fiduciary duty and violation of Judiciary Law § 487 were correctly dismissed since documentary evidence established that Triades, as escrow agent, handled the down payment in accordance with the contract’s escrow terms (see Carter Fin. Corp. v Atlantic Med. Mgt., 268 AD2d 233 [1st Dept 2000], lv denied 94 NY2d 764 [2000]). We have considered plaintiff’s remaining arguments and find them unavailing. Concur—Tom, J.P., Saxe, Richter and Kapnick, JJ.”

Attorney fee litigation takes up the larger part of all litigation involving attorneys as parties, and it almost always revolves around hourly billing.  There are few cases involving contingent fee cases.  Hourly rate billing principles include “account stated” which posits that regularly tendered invoices for services rendered to the client where the client either signed off on the invoices or failed to timely object to them constitutes “acceptance” of the invoices, and precludes an argument that they are in any fashion incorrect.

Wand, Powers & Goody, LLP v Yuliano  2016 NY Slip Op 07946  Decided on November 23, 2016  Appellate Division, Second Department shows us one defense to the “account stated” principle.  “The Supreme Court should have denied that branch of the plaintiff’s motion which was for summary judgment on the complaint. The plaintiff demonstrated its prima facie entitlement to judgment as a matter of law on the complaint by establishing that it regularly tendered invoices for services rendered to the defendant and that the defendant either signed off on the invoices or failed to timely object to them (see Landa v Blocker, 87 AD3d 719, 721). Nonetheless, in opposition, the defendant submitted an affidavit in which she asserted that she only signed the invoices because she was told that, if she did not sign, no work would be done on her case. This assertion was sufficient to raise a triable issue of fact as to whether the defendant acquiesced in the correctness of the invoices (see id. at 721).”

The statute of limitations is a strong and almost impermeable defense…when there is adequate proof that the attorney-client relationship actually ended.  Here, in  Aqua-Trol Corp. v Wilentz, Goldman & Spitzer, P.A.  2016 NY Slip Op 07916  Decided on November 23, 2016  Appellate Division, Second Department the proof was lacking and the case goes on.

“The plaintiff and another entity, Land Settlement, LLC, retained the defendant law firm to represent them in their efforts to recover funds loaned to a real estate developer, which were secured by a mortgage on certain real property in New Jersey, after the developer defaulted in repaying the loan. Another mortgagee of the same property then commenced a foreclosure action against the developer in 2009, naming the plaintiff and Land Settlement, LLC, as junior lienors. The resulting judgment in the foreclosure action effectively extinguished the mortgage lien of the plaintiff and Land Settlement, LLC.

On September 11, 2014, the plaintiff commenced this legal malpractice action against the defendant to recover the loan amount, alleging that in an answer filed by the defendant on May 27, 2009, on behalf of the plaintiff and Land Settlement, LLC, in the foreclosure action, the defendant erroneously made certain concessions and failed to raise meritorious defenses to foreclosure. The defendant thereafter moved pursuant to CPLR 3211(a) to dismiss the complaint, contending, inter alia, that the action was time-barred by the three-year statute of limitations applicable to legal malpractice actions. The defendant contended that it continued to represent the plaintiff in the foreclosure matter only until August 18, 2011, when it sent a letter to an attorney and principal of Land Settlement, LLC, in which it turned over the litigation file in the foreclosure action [*2]to him and asked him to execute and file with the court a substitution of attorney in that action. The plaintiff opposed the motion by arguing that there was no indication that the August 18, 2011, correspondence was ever sent to it. Rather, the plaintiff maintained that the defendant’s legal representation of its interests continued until at least March 7, 2012, when the defendant wrote to the plaintiff’s president requesting that the plaintiff execute a substitution of attorney relieving it from representing the plaintiff in the foreclosure action.”

“A claim to recover damages for legal malpractice accrues at the time the malpractice is committed (see Shumsky v Eisenstein, 96 NY2d 164, 166; Farage v Ehrenberg, 124 AD3d 159, 164). However, pursuant to the doctrine of continuous representation, the time within which to sue on the claim is tolled until the attorney’s continuing representation of the client with regard to the particular matter terminates (see Farage v Ehrenberg, 124 AD3d at 164). Here, the defendant satisfied its initial burden on its motion to dismiss the complaint as time-barred by establishing that more than three years had elapsed between the commission of the alleged malpractice and the commencement of this action on September 11, 2014 (see Singh v Edelstein, 103 AD3d 873, 874; DeStaso v Condon Resnick, LLP, 90 AD3d 809, 812). The burden then shifted to the plaintiff to raise a question of fact, inter alia, as to whether the action was timely under the continuous representation doctrine. Contrary to the Supreme Court’s determination, the plaintiff satisfied this burden by raising a question of fact as to whether any notice of the defendant’s termination of the attorney-client relationship was communicated to it prior to March 7, 2012 (see generally Shumsky v Eisenstein, 96 NY2d at 171). Although the defendant contends that the parties’ relationship terminated at the time it sent the August 18, 2011, letter and the case file to another attorney, it submitted no affidavit from a person with personal knowledge or documentary evidence establishing that notice of the cessation of the attorney-client relationship was given to the plaintiff. Moreover, the letter dated March 7, 2012, sent by the defendant to the plaintiff requesting that the plaintiff execute a substitution of attorney relieving the defendant from representing it in the foreclosure action suggests that the legal representation continued until that date. Accordingly, the Supreme Court erred in dismissing the complaint as time-barred.”

With a throwaway line that plaintiff also brought claims against “the attorneys”, Homapour v Harounian  2016 NY Slip Op 31408(U)  July 21, 2016  Supreme Court, New York County Docket Number: 653795/2015  Judge: Eileen Bransten goes on to discuss when a receiver should be appointed in a litigation.

“This is an action brought by Mehrnaz Nancy Homapour against her brother, Defendant Mark Harounian, and sixteen family-held limited liability companies (“Family LLCs”) 1 , of which Homapour and Harounian are each members. Homapour alleges that Mark Harounian mismanaged the Family LLCs to further his own interest. As a result, at the commencement of this litigation, Homapour filed the instant motion for the appointment of a receiver. Defendant Harounian opposes. For the reasons that follow, Homapour’ s motion is denied. ”

“After commencing the instant action, asserting a sole claim for a formal accounting, Defendants purportedly allowed Homapour access to records for the years 2013, 2014, and 2015 for the purpose of conducting an audit. Id. iii! 71-72. Through this audit, Plaintiff purportedly learned that Harounian was giving himself distributions from the LLCs’ accounts in the guise of commissions and personal expenditures. Id. iii! 83- l 01. Harounian also allegedly performed a cash-out refinancing of one of the LL Cs – United Fifth, LLC – and wrote himself a check for the proceeds without providing a distribution to any of the other members of United Fifth, LLC, including Plaintiff. Id. iii! 80-82. Homapour then amended her complaint to add Harounian and certain LLCs created by Harounian as defendants, as well as her father, sister, and sister-in-law. In addition, Homapour brings claims against the Family LLCs’ attorney and accountant. In addition to expanding the number of defendants, Homapour likewise added to the number of claims, which now number thirteen. Seven claims are asserted against Harounian: breach of fiduciary duty; waste; conversion; unjust enrichment; fraud/fraudulent inducement; constructive trust; and, accounting. Claims for breach of fiduciary duty, aiding and abetting breach of fiduciary duty, and injunction are brought against the lawyer, while Plaintiff asserts aiding and abetting breach of fiduciary duty and professional negligence against the accountant. ”

“CPLR § 6401(a) provides for the appointment of a temporary receiver where “[ u ]pon motion of a person having an apparent interest in property which is the subject of an action . . . where there is danger that the property will be removed from the state, or lost, materially injured or destroyed.” “It is well recognized that courts of equity exercise extreme caution in appointing receivers pendente lite because such appointment results in the taking and withholding of possession of property from a party without an adjudication on the merits.” Hahn v. Garay, 54 A.D.2d 629, 630-31 (1st Dep’t 1976). Therefore, appointment of a temporary receiver requires a showing by clear and convincing evidence of the danger of irreparable loss or damage. See McBrien v. Murphy, 156 A.D.2d 140, 140 (1st Dep’t 1989). No such showing is made here. While Plaintiff highlights certain distributions to and expenditures made by Harounian, her displeasure with Harounian’s compensation and her belief that “he admittedly will not stop” do not demonstrate by clear and convincing evidence that the assets of the Family LLCs are in danger of waste, dissipation or disappearance. In re Armienti, 309 A.D.2d 659, 661 (1st Dep’t 2003). Instead, her allegations, if proven, may support her claims in the litigation3 but do not mandate the immediate wresting of the corporation from Harounian’ s control for the pendency of the litigation. Notably, Plaintiff does not challenge Harounian’s assertion that the Family LLCs are profitable, going concerns; instead, Homapour asserts that the profitability of the LLCs is no bar to the imposition of a temporary receiver. However, in this instance, the unchallenged solvency of the corporations and the fact that the compensation at issue has been in effect for several years strongly detracts from Plaintiff’s argument that Harounian’s alleged financial diversions “pose[] an immediate danger to the Companies’ well-being.” (Reply Br. at 12); see Martin v. Donghia Associates, Inc., 73 A.D.2d 898, 898 (1st Dep ‘t 1980) (determining that “it is unnecessary at this time to appoint a receiver for this profitable, on-going business”); see also B.D. & F. Realty Corp. v. Lerner, 232 A.D.2d 346, 346 (1st Dep’t 1996) (affirming denial of receiver application where “the value of the realty itself provides security and the property still generates income”). “

It takes a lawyer and an accountant to make a mess that basically stupefies the mind and court.  Attorney agrees to defend an accountant in a malpractice setting and barters the fees for accounting work. (Red flag?)  Later, the accountant, who works for a big firm takes on the attorney as a “private client” in violation of the partnership agreement.  Bad so far?  It gets far worse.  Accountant fills out income tax returns for the attorney and tells it to wire the tax payments to the accountant’s account.  Does the money go to the firm, and then to the IRS?  No.  Close to $1 Million goes to the accountant and is stolen.  Is there a malpractice claim against the accounting firm?

Targum v Citrin Cooperman & Co., LLP  2016 NY Slip Op 31628(U)  August 25, 2016   Supreme Court, New York County  Docket Number: 650665/2014  Judge: Saliann Scarpulla starts to move toward decision and then backs off.

“It is well established that before a defendant may be held liable for negligence it must be shown that the defendant owes a duty to the plaintiff. In the absence of duty, there is no breach and without a breach there is no liability.” See Pulka v Edelman, 40 NY2d 781, 782 (1976) (internal citations omitted). An accountant owes a duty “to the party contracting for the accountant’s services,” see William Jselin & Co., Inc. v Landau, 71 NY2d 420, 425 (1988),4 but “accountants do not have a duty to the public at large.” Parrot v Coopers & Lybrand, L.L.P., 263 AD2d 316, 319 (1st Dept 2000), aff’d 95 NY2d 479 (2000). Similarly, an accountant-client relationship is a necessary element to the Targum plaintiffs’ fiduciary duty claim. See Tai v Superior Vending, LLC, 20 AD3d 520, 521 (2d Dept 2005). Thus, the Targum plaintiffs’ negligence claims, as well as its claim for breach of fiduciary duty, depend entirely upon a finding that the Targum plaintiffs were Citrin clients.

Citrin has submitted substantial evidence to show that it did not have an accountant-client relationship with the Targum plaintiffs. Unlike other Citrin clients, Citrin did not have an engagement agreement with the Targum plaintiffs. No invoices were ever issued by Citrin to the Targum plaintiffs,5 and Targum never paid Citrin for any of Weber’s accounting services.6 Further, it is undisputed that the Targum/Weber barter agreement was solely between Targum and Weber. Weber himself states that Citrin had nothing at all to do with his barter agreement with Targum, and that Targum knew that Weber was working individually for the Targum plaintiffs, not in his capacity as a partner of Citrin. Finally, the only person who worked on the Targum plaintiffs tax returns was Weber. In opposition, the Targum plaintiffs submit the generic Citrin memos they allegedly received, which were addressed to “Our Clients.”7 The Targum plaintiffs also submit some of the tax returns Weber prepared for the Targum plaintiffs which contain Citrin’s name on them, as well as a screen shot showing that Lester reviewed the returns for a length of time of 0:00. 8 Finally, the Targum plaintiffs’ note that their tax notices were mailed to Citrin. This evidence, though underwhelming, at best, is sufficient to warrant an exchange of discovery as to whether there was an accountant-client relationship between Citrin and the Targum plaintiffs. Accordingly, although I originally determined to convert this motion to a summary judgment motion, I decline at this time to dismiss the Targum plaintiffs’ negligence, breach of fiduciary duty, professional negligence, and negligent supervision claims. Instead, I direct the parties to exchange discovery related to whether or not the Targum plaintiffs were clients of Citrin, and invite the parties to remake their summary judgment motions at the close of discovery. “

Attorneys and attorney fees inhabit such a large portion of the legal malpractice universe, and indeed the legal practice universe itself, that it is a tautology to say that attorney fees are always the subject of attorneys’ attention.

The story in Matter of Ginsburg 2016 NY Slip Op 07733 Decided on November 17, 2016  Appellate Division, Third Department starts with a suicide, one of many at this particular bridge over a gorge in Ithaca by a Cornell freshman.  The case then devolved into a fight over legal fees and claims of violation of Judiciary Law § 487.

“On February 17, 2010, Bradley Marc Ginsburg (hereinafter decedent), then a freshman at respondent Cornell University in Tompkins County, jumped to his death from the Thurston Avenue Bridge — one of several bridges extending across the gorges located on or near Cornell’s campus. The bridge in question, which spans Falls Creek Gorge and connects two portions of Cornell’s campus, is owned by respondent City of Ithaca. Petitioner, who is both decedent’s father and an attorney licensed to practice in this state, was granted letters of administration in May 2011 and thereafter retained respondent Leland T. Williams as counsel for the estate. In late 2011, Williams commenced an action upon petitioner’s behalf against, among others, Cornell and [*2]the City of Ithaca in the United States District Court for the Northern District of New York. The complaint set forth 14 causes of action sounding in, among other things, wrongful death and premises liability and sought damages in the amount of $180 million, including $12 million in punitive damages.

After District Court dismissed the punitive damages claim and all claims against those Cornell representatives or employees named in their individual capacities, petitioner terminated Williams’ representation and retained respondent McCallion & Associates, LLP (hereinafter the firm) as counsel ^[FN1]. Thereafter, Kenneth F. McCallion (hereinafter McCallion) — a principal therein — entered into settlement negotiations with Cornell and the City of Ithaca upon petitioner’s behalf. After much discussion, the parties devised a proposed settlement of the wrongful death claim — specifically, that petitioner would accept a monetary sum from the City of Ithaca and, as to Cornell, would agree that a scholarship would be established in decedent’s name ^[FN2]. While McCallion was not opposed to this resolution, he advised petitioner via email that, “[b]efore [he] sign[ed] onto any settlement proposal,” petitioner and the firm would need to “reach an understanding as to the allocation of any settlement funds” — namely, that “the balance of the net cash component of the settlement,” then anticipated to be $200,000, would be allocated to the firm as counsel fees. In response, petitioner advised District Court that he, in his capacity as co-counsel, would be handling all further negotiations, and McCallion was excluded from the settlement conferences that followed.”

“In September 2014, petitioner entered into stipulations of settlement with Cornell and the City of Ithaca resolving the wrongful death claim. Specifically, the City of Ithaca agreed to pay $100,000 in settlement of the District Court action against it, and Cornell agreed to establish a perpetual scholarship in memory of decedent. Although documentation in the record reflects that such scholarship, if funded by a private donor, would have required an endowment of approximately $1.6 million, the stipulation of settlement provided that the scholarship would be established “using existing financial aid funds” and, inasmuch as Cornell was neither “allocating any new money” to the scholarship nor otherwise making any payment to petitioner, the scholarship itself had “no monetary value” — except to the student recipients thereof. District Court thereafter signed off on the respective stipulations of settlement.

In November 2014, petitioner sought leave in Surrogate’s Court to compromise the wrongful death claim against Cornell and the City of Ithaca. In conjunction therewith, petitioner asked that both Williams and the firm (hereinafter collectively referred to as respondents) be denied counsel fees — essentially contending that Williams and McCallion each had engaged in conduct that was contrary to the interests of the estate. Respondents opposed petitioner’s requests and cross-moved to, among other things, disapprove the settlement agreements and sanction petitioner in accordance with Judiciary Law § 487.”

“Rather, as Surrogate’s Court appropriately found, petitioner — in his representative capacity as the administrator of decedent’s estate — received in settlement from Cornell only the sentimental, “symbolic or moral value” of the scholarship established in decedent’s name. As the scholarship itself clearly was not an asset of decedent’s estate, Surrogate’s Court did not abuse its discretion in computing respondents’ respective counsel fees based solely upon the $100,000 monetary settlement received from the City of Ithaca. To hold otherwise not only would ignore the plain language of the stipulation of settlement with Cornell but, further, would misconstrue the nature of the scholarship itself by assigning — to decedent’s estate — a monetary value or benefit that exists only with respect to the scholarship’s actual recipients. Adopting respondents’ valuation analysis also would obligate decedent’s estate, which ultimately received less than $4,000 in settlement proceeds and otherwise is devoid of assets, to pay a six-figure bill for counsel fees — a result that hardly can be characterized as reasonable, equitable or just. Respondents’ remaining contentions, to the extent that they do not lie outside the jurisdiction of Surrogate’s Court in the first instance (see SCPA 201), have been examined and found to be lacking in merit.”