Magistrate Judge James C. Francis writes in  Brooks Banker,  v.Esperanza Health Systems, Ltd.,  05 Civ. 4115 (DAB) (JCF):

"Brooks Banker, an attorney, brings this action against the defendants, his former clients, for unpaid fees. Mr. Banker now moves pursuant to Rule 56 of the Federal Rules of Civil Procedure for summary judgment on his account stated claims against defendants Esperanza Health Systems, Ltd., Hunt Health Systems, Ltd., P&G Enterprises, Inc., and MHTJ Investments, Inc. (collectively, the "Business Defendants"). For the reasons that follow, I recommend that the plaintiff’s motion be granted."

Account stated claims are those where it is said that the biller sent bills and the payor failed to argue or contradict the bills.  When this happens, the courts deem the bill to be undisputed, and often order it paid, even though there are many new disputes about the bill now.

"Whether an attorney discharged without cause is entitled to bring a claim for account stated is a matter of state law that has not been addressed by the New York Court of Appeals. "In the absence of a definitive ruling by the highest court of a particular state, a district court should predict what the highest state court would decide when faced with an undecided issue of state law." Liddle & Robinson, LLP v. Garrett, 720 F. Supp. 2d 417, 424 (S.D.N.Y. 2010) (citing In re Methyl Tertiary Butyl Ether Products Liability Litigation, 415 F. Supp. 2d 261, 268 (S.D.N.Y. 2005)).

In Liddle, the Honorable Peter K. Leisure, U.S.D.J., engaged in such an analysis and concluded that "where an attorney allegedly discharged without cause seeks unpaid legal fees pursuant to a blended contingency and hourly fee agreement, New York’s highest court would find, as this Court does, that the attorney is limited to seeking relief in quantum meruit." Id. at 425. Based on this conclusion, Judge Leisure dismissed breach of contract and account stated claims asserted by an attorney against his former client where the attorney had been terminated without cause. Id. at 425-27."

"More compelling is the plaintiff’s contention that Judge Leisure’s construction of the New York cases upon which he relied was overbroad. While Rubenstein and Sae Hwan Kim both state that an attorney terminated without cause is entitled to recover in quantum meruit, neither holds that such an attorney is precluded from asserting an account stated claim. See also Schneider, Kleinick, Weitz, Damashek & Shoot v. City of New York, 302 A.D.2d 183, 186, 754 N.Y.S.2d 220, 223 (1st Dep’t 2002) (identifying remedies for attorney discharged without cause as retaining lien, charging lien, and quantum meruit, but not addressing account stated); Butler, Fitzgerald & Potter v. Gelmin, 235 A.D.2d 218, 218-19, 651 N.Y.S.2d 525, 527 (1st Dep’t 1997) (same).

The cases that do address account stated claims hold unequivocally that such claims may be brought by attorneys discharged without cause. For example, in Ferraioli ex rel.

*8

Suslak v. Ferraioli, 8 A.D.3d 163, 164, 779 N.Y.S.2d 72, 73 (1st Dep’t 2004), the court first found that the petitioner, a law firm, had been terminated without cause and then went on to hold that it was entitled to summary judgment on its account stated claim. Similarly, in Zanani v. Schvimmer, 50 A.D.3d 445, 446, 856 N.Y.S.2d 65, 66 (1st Dep’t 2008), the court granted summary judgment to a discharged attorney on an account stated claim, which included bills received by the clients after the attorney was terminated. In Bartning v. Bartning, 16 A.D.3d 249, 249-50, 791 N.Y.S.2d 541, 541-42 (1st Dep’t 2005), the court overturned a ruling rejecting an account stated claim based on an invoice sent after the attorney had been terminated. Finally, in Salans Hertzfeld Heilbronn Christy & Viener v. Between the Bread East, Inc., 290 A.D.2d 381, 736 N.Y.S.2d 665 (1st Dep’t 2002), the court explicitly addressed the argument advanced by the Business Defendants here. It stated:

The motion court, in denying defendants’ motion to dismiss, properly rejected their contention that the termination of plaintiff law firm’s services relegated plaintiff to recovering in quantum meruit for services rendered to defendants. Termination does not necessarily result in such remedial limitation and, indeed, we have specifically approved recovery by attorneys on an account stated theory for pre-termination services billed on an hourly basis at a contractually agreed rate.

Id. at 381, 736 N.Y.S.2d at 666 (citations omitted); see also Steven Wechsler, Professional Responsibility, 53 Syracuse L. Rev. 737, 760 (2003).Thus, whatever limitations there may be in New York law to the ability of a lawyer discharged without cause to recover under breach of contract or other theories, they do not preclude a claim for account stated. It is therefore appropriate to turn to the specific claims asserted in this case."

 

 

Clients often believe that their attorney was "bought off" and sometimes stretch the facts to fit a conspiracy theory.  Most of the time there is simply no institutional way that "buying off" could even have happened.  Sometimes we are non-plussed at the actions of attorneys.  We wonder, in this case, why the attorney didn’t tell the client that the buyer of real property had not sent a certified check, as per the contract, and why the attorney did not tell the client that the check was refused for insufficient funds.  What can their explanation be?

In Bilin v Segal, Goodman & Goodman, LLP ; 2011 NY Slip Op 00995 ; Decided on February 8, 2011 ; Appellate Division, Second Department  the court writes:
 

"The plaintiffs retained the defendant Segal, Goodman & Goodman, LLP, and one of its principals, the defendant Frank Goodman (hereinafter together the law firm), to represent them and three other individuals in the sale of six adjacent properties in Brooklyn to a real estate developer, the defendant Criterion Group, LLC (hereinafter Criterion). Each of the six contracts provided that the purchase price of each property was $1,250,000, of which a $62,500 down payment for each property was payable upon execution of the contract, with the $1,187,500 balance for each property due at closing. Although the contracts were executed in early June 2004, the plaintiffs contend that unbeknownst to them, Criterion did not authorize the law firm to deposit its uncertified check in the sum of $375,000, representing the collective down payment for all six properties, until sometime in July 2004. The plaintiffs further assert that the law firm did not inform them for at least two months that when the law firm deposited Criterion’s check in July 2004, it was returned for insufficient funds, and thereafter, Criterion never followed through on its promise to the law firm to provide it with a certified replacement check for the down payment."

"According to the plaintiffs, during this time period, with the law firm’s assistance, they pursued proceedings to ensure that tenants vacated their respective properties, as required under the contracts of sale executed between them and Criterion, and lost an opportunity to sell the properties to another developer at essentially the same purchase price offered by Criterion. They further contend that since Criterion never remitted a down payment, they were unable to retain such funds as liquidated damages when the sale of the properties to Criterion was never completed. The properties were ultimately sold to a third party, but in the interim, the plaintiffs contend that they were unable to rent the properties. "
 

"Here, contrary to the assertion of the law firm, it failed to meet its burden of establishing its entitlement to judgment as a matter of law (see Greene v Sager, 78 AD3d 777; Eisenberger v Septimus, 44 AD3d 994). Accordingly, the Supreme Court properly denied the law firm’s cross motion for summary judgment dismissing the complaint and all cross claims insofar as asserted against them. "
 

The Redskins!  6 Flags!  Cadwalader, Wickersham & Taft !  Legal malpractice cases do not get much higher visibility than this case. Nate Raymond of the  The New York Law Journal reports that  "Redskins owner Daniel Snyder has sued Cadwalader, Wickersham & Taft for $13 million over advice it gave on an investment bank’s fee during a proxy fight at Six Flags Inc. in 2005."  The legal malpractice claim, filed in Supreme Court, New York County "followed an October appellate ruling that the company owed UBS A.G. $8 million for its work on the Six Flags matter. While Red Zone said its lawyers at Cadwalader had claimed a contract they secured would limit the fee to $2 million, it did not."

"According to the malpractice complaint in Red Zone, LLC v. Cadwalader, Wickerham & Taft, 650318/2011, Red Zone hired Cadwalader in mid-2004 to advise it on its investment in and possible acquisition of Six Flags. Mr. Block, one of the top rainmakers at the New York firm and a veteran of mergers and acquisitions, was the partner in charge of the engagement, the complaint said.

At the start of 2005, Red Zone held 8.76 percent of the voting stock in the company with shares it purchased the year before for $34.5 million. Red Zone believed Six Flags was underperforming and wanted to see about raising money to take it over.

Red Zone brought in UBS to advise on the investment, with Cadwalader negotiating the engagement agreement. The contract called for UBS to receive a $10 million fee if the acquisition succeeded.

But Six Flags had an agreement with its bondholders that all of its $2.6 billion in debt would need to be paid immediately if someone acquired the company or more than 34.9 percent of its shares. UBS could not raise enough money to cover that payout.

Red Zone opted instead for a proxy contest. Before it moved, it told Mr. Block that it was unwilling to pay the $10 million fee to UBS if Red Zone could not secure a majority of the voting stock.

Instead, Red Zone told Mr. Block to have Cadwalader negotiate a new deal with UBS limiting the fee to no more than $2 million, the complaint said."
 

Real Estate commerce is a big time sport in New York, and in Manhattan might be considered a lifestyle unto itself.  The buying and selling of cooperative and condominium apartments goes on in an endless swirl, good or bad economic times notwithstanding.

One element of the purchase is an educated or studied prediction of future costs.  One may always expect an upward arc to maintenance or common charges; inflation is a constant pressure.  However, 14-142% increases are a nightmare.  That’s what happened in Hefter v Citi Habitats, Inc.; 2011 NY Slip Op 00733 ; Decided on February 8, 2011 ; Appellate Division, First Department . 
 

This was, at a minimum, the largest purchase that buyer made for a long time, perhaps the largest in his lifetime.  Why did he take the attorney recommended by the broker?  We don’t know, but he turned and sued the attorney for not advising buyer of potential increases.  However, it seems that attorney himself did not know, and no reasonable inquiry would have predicted actual future increases.  Thus case dismissed.

"Plaintiff’s allegations of legal malpractice against Nihamin, the attorney who represented him in the purchase of a cooperative apartment owned by the Greens, are conclusory and were properly dismissed. There is no allegation that Nihamin had notice of any facts which might reasonably have caused him to question the veracity of the managing agent’s response to a question about future maintenance increases. The "selection of one among several reasonable courses of action does not constitute malpractice" (Rosner v Paley, 65 NY2d 736, 738 [1985]), and plaintiff acknowledges that further inquiry by Nihamin would have been futile. Furthermore, plaintiff’s contention that Nihamin "had a potential conflict of interest" because he was recommended by the broker is, by itself, insufficient to state a claim for legal malpractice ."

 

Plaintiff is a corporation,and it files a Chapter 11 petition.  It then brings a traditional legal malpractice action in state court.  Plaintiff commences the action against Defendant DLA Piper LLP and then itself removes the case to US District Court.  The matter then is transferred to Bankruptcy Court.  How does this play out?  Why does plaintiff want the case in Bankruptcy Court?

in In re JOSEPH DELGRECO & COMPANY, INC., Debtor. JOSEPH DELGRECO & COMPANY, INC. And JOSEPH DELGRECO, Plaintiffs, – against – DLA PIPER LLP (US), Defendant.;10 CV 6422 (NRB);UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK ; 2011 U.S. Dist. LEXIS 10972;January 26, 2011, Decided
 

"District courts have original jurisdiction over "all civil proceedings arising under title 11, or arising in or related to cases under title 11." 28 U.S.C. § 1334 (b). However, a district court may refer such matters to the bankruptcy courts. 28 U.S.C. § 157(a) Indeed, in the Southern District of New York, the district [*5] court automatically refers all such cases to the bankruptcy court in the first instance. See Official Comm. of Unsecured Creditors of the VWE Grp., Inc. v. Amlicke (In re VWE Grp., Inc.), 359 B.R. 441, 446 (S.D.N.Y. 2007); Kenai Corp. v. Nat’l Union Fire Ins. Co. (In re Kenai Corp.), 136 B.R. 59, 60 (S.D.N.Y. 1992).

District courts also have authority to "withdraw . . . any case or proceeding referred [to the bankruptcy court] on its own motion or on a timely motion of any party, for cause shown." 28 U.S.C. § 157(d); see also Orion Pictures Corp. V. Showtime Networks, Inc. (In re Orion Pictures Corp.), 4 F. 3d 1095, 1101 (2d Cir. 1993), cert. denied 511 U.S. 1026, 114 S. Ct. 1418, 128 L. Ed. 2d 88 (1994) Although section 157 (d) does not define "cause," the Second Circuit has instructed district courts to consider: (1) whether the claim is core or non-core; (2) whether the claim is legal or equitable and thus whether a right to jury trial exists; and (3) whether other factors — including the efficient use of judicial resources, delay and cost to the parties, uniformity of bankruptcy administration, and the prevention of forum shopping — counsel in favor of withdrawal. In re Orion, 4 F. 3d at 1101; see also South St. Seaport Ltd. P’ship v. Burger Boys, Inc. (In re Burger Boys, Inc.), 94 F.3d 755, 762 (2d Cir. 1996); [*6] Northwest Airlines Corp. v. City of Los Angeles (In re Northwest Airlines Corp.), 384 B.R. 51, 56 (S.D.N.Y. 2008)"

‘In this Circuit, "[a] district court considering whether to withdraw the reference should first evaluate whether the claim is core or non-core, since it is upon this issue that questions of efficiency and uniformity will turn." In re Orion, 4 F.3d at 1101. This evaluation is relatively straight-forward. [*7] "A proceeding that involves rights created by bankruptcy law, or that could arise only in a bankruptcy case, is a core proceeding." United Orient Bank v. Green (In re Green), 200 B.R. 296, 298 (S.D.N.Y. 1996) (collecting cases); see also Kerusa Co. LLC v. W10Z/515 Real Estate Ltd. P’ship, 04 Civ. 708 (GEL), 2004 U.S. Dist. LEXIS 8168, 2004 WL 1048239, at *2 (S.D.N.Y. May 7, 2004); 1800Postcards, Inc. v. Morel, 153 F. Supp. 2d 359, 366-67 (S.D.N.Y. 2001) By contrast, "[a]n action that does not depend on the bankruptcy laws for its existence and which could proceed in a court that lacks federal bankruptcy jurisdiction is non-core." In re Green, 200 B.R. at 298 (collecting cases); see also Kerusa, 2004 U.S. Dist. LEXIS 8168, 2004 WL 1048239, at *2; Morshet Israel, Inc. v. Irmas Charitable Found. (In re Morshet Israel, Inc.), No. 97 Civ. 1852 (SHS), 1999 U.S. Dist. LEXIS 4127, 1999 WL 165699, at *2 (S.D.N.Y. Mar. 24, 1999)."

"First, withdrawing the reference at this stage in the adversary proceeding would promote judicial economy. Because the malpractice claims against DLA Piper are non-core, the case must ultimately be tried by this Court or by a state trial court. Thus, the efficiency question reduces to whether judicial economy is served by permitting the bankruptcy court to oversee discovery and other pre-trial proceedings. Here, plaintiffs do not assert, credibly or otherwise, that the bankruptcy court is particularly familiar with the facts that underlie the legal malpractice claims or better equipped to handle any pre-trial proceedings. Accordingly, we cannot conclude that retaining the reference until the case is trial-ready would further judicial economy.

Second, plaintiffs have not argued that withdrawing the reference would delay the case or would result in excess costs to the parties. Thus, we cannot reasonably conclude that withdrawing the reference now, as opposed to at a later date, would burden the parties [*14] with delays or additional expenses.

Third, withdrawing the reference would not undermine uniform administration of the law. This case involves state law claims, which arose prior to the bankruptcy filing, and which do not raise substantive issues of bankruptcy law. "

 

 

There are a large number of cases in which plaintiff loses the capacity to sue a prior attorney in legal malpractice because in the interim, plaintiff has filed for bankruptcy.  Any claim, even inchoate, that a petitioner in bankruptcy has at the time of filing a Chapter 7, becomes part of the bankrupt’s estate and hence may be administered by the Trustee.  The trustee must take every claim  including one not yet in suit for potential pre-petition bankruptcy, as a potential asset of the estate and try to turn it into money.  In Strujan v Tepperman & Tepperman, LLC. ; 2011 NY Slip Op 30211(U); January 28, 2011; Sup Ct, New York County ;Docket Number: 401164/2010 ;Judge: Jane S. Solomon we see one such typical outcome.

"Tepperman moves f o r summary judgment on the ground that filed for bankruptcy, Strujan lacked the capacity to commence a lawsuit in her individual capacity, so that her malpractice claim must be dismissed because she cannot establish that she would have prevailed in the underlying action.  The commencement of a bankruptcy case creates a  bankruptcy estate, which gains control over the property of the  debtor. When Strujan filed for bankruptcy in 2005, the claim
arising from her 2003 injury became the property of her estate.  "[The failure to schedule a legal claim as an asset in a  bankruptcy proceeding deprives the debtor of standing to raise it
in a subsequent legal action" (Barranco v. Cabrini Medical Center , 50 AD3d 281 (1st Dept, 2008)

Upon her discharge, the claim does not revert to Struhan, because "[i]f a claim owned by
a bankrupt is of value, his creditors are entitled to it, and he cannot, by withholding knowledge of its existence from the trustee, obtain a release from his debts and still assert title to–and collect upon–the claim for his own benefit” (Ortiz v.New York Medical Group PC , 55 AD3d 509 [l" Dept., 2008.  Accordingly, Strujan could not have brought the personal injury lawsuit in her individual capacity. ‘

 

 

 

This case sheds a light on how personal injury firms get, evaluate and reject clients.  Likely unknown to the public, PI and Med Mal firms often "take" a case by having a Blumberg retainer signed which might have the language "for investigation" or "for medical records" or some other modifier.  The attorneys then spend some time getting records, reviewing accident reports, and then, often just days prior to the statute of limitations running whether they will, in fact, take the case.  In the Med Mal world, whether the firm obtains an expert will be the deciding factor.  An expert is "required" for the Certificate of Merit. 

Here, in Depouli v Barasch McGarry Salzman & Penson;;2011 NY Slip Op 30163(U); January 24, 2011; Supreme Court, New York County; Docket Number: 150123/10; Judge: Eileen A. Rakower the attorneys recruited clients through a Bar Association "Information" Session, signed plaintiff up, waited until the  88th day or so, and then sent a rejection letter.  A notice of claim was due several days later.

"Plaintiff, along with other potential plaintiffs, met with Michael Barasch from BMS&P, and was  informed that BMS&P was prepared to represent him. By letter, dated June 10, 2008, sent via Federal Express, BMS&P informed plaintiff that: after careful review and analysis of the facts and circumstances surrounding the March 15,2008 crane collapse, we have decided not to pursue a claim against the City of New York. We certainly welcome the opportunity to represent your interests against the construction companies that operated the crane, as well as other responsible parties 

 The letter concludes with the following:
AGAIN, PLEASE UNDERSTAND THAT WE WILL NOT BE
FILING A NOTICE OF CLAIM AGAINST THE CITY OF NEW
YORK FOR YOU IN THIS MATTER. OTHER ATTORNEYS
MAY HAVE A DIFFERENT OPINION AND WE ENCOURAGE
YOU TO GET A SECOND OPINION IF YOU ARE DESIROUS
OF PROCEEDING WITH A CLAIM AGAINST THE CITY.
PLEASE NOTE THAT YOU MUST FILE A NOTICE OF CLAIM
ON OR BEFORE JUNE 13,2008. IF YOU FAIL TO DO SO, YOU
WILL BE JEOPARDIZING YOUR RIGHTS AGAINST THE
CITY. FOR YOUR CONVENIENCE, WE ARE ENCLOSING A
BLANK NOTICE OF CLAIM WHICH YOU CAN COMPLETE
AND FILE ON YOUR OWN. PLEASE DO SO NO LATER THAN
JUNE 13, 2008. YOU CAN FILE IT EITHER IN PERSON
(WHICH WE RECOMMEND) OR BY MAILING IT BY THIS
FRIDAY, JUNE 13TH, CERTIFIED MAIL RETURN Receipt
REQUEST[sic] TO EITHER:
The New York City Comptroller OR Michael Cardozzo, Esq., Corporation
1 Centre Street, Room 629
New York, NY 10007
Counsel
100 Church Street
New York, NY 10007

Appended to the letter is a notice of claim form wherein the following sections have been filled in by BMS&P: Section (2) “The nature of the claim,” Section (3) “The time, when, the place where, and ~e manner in which the claim arose,” and Section (4) “The items of damage or injuries claimed . . -” Left blank is Section (1) “The name and post-office address of each claimant and of claimant’s attorney,” and there is a blank space provided in Section 4 for plaintiff to fill in his name. Also
included with the letter is a Verification Form, that requires a signature and notarization.
 

On June 28, 2008, plaintiff signed a retainer agreement with BMS&P. In a letter, dated July 25,2008, BMS&P requested that plaintiff forward any receipts, paid bills, and the names and addresses of any doctors that he saw after the accident. By letter, dated November 14, 2008, BMS&P informed plaintiff that, after “careful consideration,” it would not be representing him at all.

"As to the first allegation, BMS&P’s choice to not pursue claims against the City, but rather to  recover solely from the construction companies, does not support a claim for malpractice. “Selection of one among several reasonable courses of action does not constitute malpractice.” (Rosner v. Paley, 65 NY2d 736,73 8[ 1985]).“Neither an error in judgment, nor in choosing a reasonable course of action constitutes malpractice.” (Hand v. Silberman, 15 AD3d 167[ 1 st Dept. 2005)

Further, the June 10, 2008 letter conclusively establishes a defense to the malpractice claim. BMS&P explicitly states several times that a notice of claim must be filed by June 13, 2008. BMS&P not only appended a notice of claim and a verification form to the letter, but it also filled out the notice of claim for plaintiff,  save for fie blank spaces left for plaintiffs name, his counsel’s name, and their respective addresses. Additionally, BMS&P lists the addresses that plaintiff may send
the notice to, as well as informing plaintiff of the form of mailing required. Also, BMS&P  recommends plaintiff drop off the notice of claim in person. Plaintiff does not claim he received this letter after June 13,2008.

Large scale legal malpractice cases (greater than $ 10 Million dollars) often engender highly technical motion practice.  Here, in Ableco Fin. LLC v Hilson ;2011 NY Slip Op 00566 ;Decided on February 1, 2011 ;Appellate Division, First Department  we see the aftermath of a bankruptcy – reorganization – take over gone bad.  The figures are staggering,  although we must admit that big number legal malpractice cases seem to be more and more prevalent.
 

Plaintiffs won this motion before Justice Kornreich, but now lose one arm of the negligence claims.  The AD1 decision surgically dissects out whether a certain loan and security transaction potentially violated bankruptcy rules, and if it did not, why it should be dismissed.

"The allegations that defendants failed to advise plaintiff that the acquisition documents permitted the borrower to have credit card sales proceeds deposited into bank accounts over which the retailer retained control and that there was a significant risk that the retailer would use these deposits to set off its own expenses rather than to repay the loan are sufficient to allege that defendants "failed to exercise the reasonable skill and knowledge commonly possessed by a member of the legal profession" (Arnav Indus., 96 NY2d at 303-304; Camarda, 167 AD2d at 152). Defendants’ contention that the alleged "improper conduct" of the retailer was an unforeseen intervening cause of plaintiff’s loss is unavailing at this juncture (see Garten v Shearman & Sterling LLP, 52 AD3d 207 [2008]).

However, documentary evidence establishes a conclusive defense to the allegation that defendants’ failure to include in the original security agreement an express obligation that the borrower sign control account agreements raised the "specter" of a preferential transfer challenge to a $28.5 million loan repayment the borrower made within 90 days of filing for bankruptcy. [*2]The documents show that on August 26, 2008, the borrower granted plaintiff a security interest in all its deposit accounts and cash, and that on September 12, 2008, plaintiff executed an agreement that required the bank to honor all instructions it received from plaintiff, but not from the borrower, concerning that account. Thus, a security interest in the account was transferred to plaintiff on August 26, 2008 and was perfected on September 12, 2008 — within 30 days of the transfer. Pursuant to bankruptcy law, if the security interest is perfected within 30 days of the transfer, then the transfer is deemed to have been made when the security interest was created (see 11 USC § 547[e][2][A]). Since the transfer is deemed to have been made on August 26, 2008, it was not "for or on account of an antecedent debt owed by the debtor before such transfer was made" — one element required to establish a voidable preference (see id. § 547[b][2]). Thus, no voidable preference was established (id. § 547[b]). "

 

Transactional attorney engaged in lending deals gets a release from the parties.  Of course, litigation between the parties ensues, and the attorneys get roped in.  When and under what circumstances is the release good?  Does there have to be consideration from the attorney to the parties?  Must it be a real exchange of $$ ?

in Seaview Mezzanine Fund, LP v Lopresti ;2011 NY Slip Op 30102(U);;January 14, 2011;n Supreme Court, New York County; Docket Number: 105540/2009; Judge: Louis B. York writes:

"Seaview next argues that the release agreement is unenforceable for lack of consideration because Great Eastern breached the release agreement subsequent to signing it. See Plaintiffs Memorandum of Law in Opposition, at 8-9. The LoPresti defendants reply that this argument is unavailing pursuant to General Obligations Law  15-303, which specifically provides that a release shall nor fail for lack of consideration. See Defendants’ Reply Memorandum, at 9- 1 1. The
LoPresti defendants are correct. Under to General Obligations Law  15-303: A written instrument which purports to be a total or partial release of all claims, debts, demands or obligations, or a total or partial release of any particular claim, debt, demand or obligation, or a release or discharge in whole or in part of a mortgage, lien, security interest or charge upon personal or real property, shall not be invalid because of the absence of consideration or of a seal [emphasis added],
The Appellate Division, First Department, routinely enforces this statute in a wide variety of contexts. See e.g. Angel v Bank of Tokyo-Mitsubishi, Ltd., 39 AD3d 68 (1st Dept  2007); Collins v E-Magine, LLC, 291 AD2d 350 (1st Dept 2002); Mergler v Crystal Properties Associates, Ltd., 179 AD2d 177 (1st Dept 1992). Therefore, the court rejects Seaview’s second opposition argument, and finds that Seaview’s complaint should be dismissed on the ground that all of the causes of
action set forth therein are barred by the express language of the release agreement.

Here is a short, pungent and dispositive decision by the Appellate Division, Second Department in Zito v Fischbein Badillo Wagner Harding  ; 2011 NY Slip Op 00285 ; Decided on January 20, 2011 Appellate Division, First Department.
 

We’ve seen a "charging lien" utilized as res judicata against a subsequent legal malpractice case, but the use of a "retaining lien" is much more rare.  Presumably, there was litigation in which the Court also determined that fees were actually due to the law firm, and not simply that the law firm had the right to retain files pending a later determination.

"Plaintiff is collaterally estopped from seeking a declaration that he had cause to terminate his attorney-client relationship with defendant Nimkoff Rosenfeld & Schechter (the third cause of action) by this Court’s order on a prior appeal, which implicitly determined that defendant was not discharged for cause, because in fact it was not discharged at all but voluntarily withdrew (see 58 AD3d 532 [2009]). Any other construction of the order would be contrary to law, since an attorney discharged for cause "has no right to compensation or to a retaining lien" (Teichner v W & J Holsteins, 64 NY2d 977, 979 [1985]). The issue of discharge that plaintiff raised in his legal malpractice action is identical to the issue addressed by this Court in the prior appeal of the original action. Indeed, during the prior appeal, plaintiff asked this Court to take judicial notice of the malpractice action he commenced in Nassau County, and fully briefed his malpractice claims.

The second cause of action, alleging legal malpractice, is barred under the doctrine of res [*2]judicata by the court’s imprimatur of a retaining lien (see Kinberg v Garr, 28 AD3d 245 [2006]; Molinaro v Bedke, 281 AD2d 242 [2001]; Summit Solomon & Feldesman v Matalon, 216 AD2d 91 [1995], lv denied 86 NY2d 711 [1995]; see generally Blair v Bartlett, 75 NY 150, 154 [1878]). "