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CAREY v. MUI-HIN LAU

April 12, 2001

MICHAEL Q. CAREY, PLAINTIFF,
V.
MUI-HIN LAU, HO SIH FONG, KAU-YING LAU, YING LUP LAU, A/K/A MICHAEL LAU WAI YAU CHI, AND YING TAK LAU, A/K/A DANIEL LAU DEFENDANTS.



The opinion of the court was delivered by: Motley, United States District Judge.

  AMENDED MEMORANDUM OPINION

Pro se plaintiff, Michael Carey, brings this diversity action to recover attorneys' fees for services rendered to defendants, Mui-Hin Lau, Ho Sih Fong, Kau-Ying Lau, Ying Lup Lau, a/k/a Michael Lau, Wai Yau Chi, and Ying Tak Lau, a/k/a Daniel Lau. Plaintiff filed the complaint on February 1, 1999, claiming breach of contract, quantum meruit, account stated, and contractual interest. Plaintiff claims that he is owed $449,255.32 in outstanding legal fees. Plaintiff also claims over $503,303.00 in interest on the unpaid legal fees.

On June 26, 2000, this court granted Wai Yau Chi's motion for summary judgment dismissing plaintiff's claims against her. See June 26, 2000 Order. Ying Lup Lau, a/k/a Michael Lau is now deceased. Plaintiff now brings this motion for partial summary judgment as to liability against Mui-Hin Lau, Ho-Sih Fong, and their son, Ying Tak Lau, a/k/a Daniel Lau. These three defendants have cross-moved for summary judgment dismissing plaintiff's claims against them. Plaintiff also brings a motion for a default judgment against defendant Kau-Ying Lau.

For the reasons stated below, this court GRANTS plaintiff's motion for partial summary judgment and GRANTS plaintiff's motion for a default judgment. This court DENIES the defendants' cross-motion for summary judgment.

I. BACKGROUND*fn1

In 1984, Richardson Greenshields Securities, Inc. ("Richardson"), a registered futures commission merchant, brought a proceeding in this court against defendants Mui-Hin Lau, Ho Sih Fong, Kau-Ying Lau, Ying Lup Lau ("Michael Lau"), and Wai Yau Chi ("Cathy Lau") (collectively "Richardson defendants") entitled Richardson Greenshields Securities, Inc. v. Mui-Hin Lou, et. al., 84 Civ. 6134 ("Richardson action"). Richardson claimed unpaid commissions for commodities trading and sought separate individual amounts of damages against each defendant. The total amount of damages against all defendants was approximately $167,000.

In December 1984, the Richardson defendants asked plaintiff to represent them in connection with the Richardson action. Plaintiff was formally retained in January 1985. Each Richardson defendant signed a written retainer agreement prepared by plaintiff dated January 25, 1985 ("first retainer"). The first retainer set out hourly fees of $125 for each partner, $75 to $100 for each associate, $40 for each paralegal, and $20 for overtime secretarial services. See Carey Decl., Ex. 3-7. The first retainer did not provide that the Richardson defendants would be held jointly and severally liable for plaintiff's services and did not state that interest would be charged for unpaid legal fees. See id. As to counterclaims, the first retainer stated that the Richardson defendants did not wish to pursue counterclaims "at this time." See id.

In 1986, each Richardson defendant and Daniel Lau (collectively "defendants") asserted counterclaims or claims against Richardson and four of Richardson's employees alleging Racketeer Influenced and Corrupt Organizations Act ("RICO") violations, Commodity Exchange Act violations, fraud, breach of contract, breach of fiduciary duty, conversion, money had and received, negligence and constructive trust ("Lau action"). Defendants sought recovery of approximately $2 million in compensatory damages, $6 million in treble damages under RICO, and attorneys' fees. These counterclaims and claims were filed on July 2, 1986. Each defendant signed a written retainer with plaintiff dated July 3, 1986 ("second retainer"). The second retainer provided for defendants to pay plaintiff on an hourly basis for services performed plus a 10% contingency fee. See Carey Decl., Ex. 8-12. The second retainer set out hourly fees of $125 for each partner, $75 to $100 for each associate, $40 for each paralegal, $30 for computer data entry services, and $20 for secretarial services. See id. The second retainer did not provide that the defendants would be held jointly and severally liable for plaintiff's services and did not state that interest would be charged for unpaid legal fees. See id. Plaintiff performed legal services for the Richardson defendants from December 1984, and for Daniel Lau from July 3, 1986, until he withdrew as defendants' attorney for nonpayment of fees on June 2, 1993. The last date for which plaintiff seeks legal fees is January 17, 1994.

Plaintiff used Daniel and Michael Lau as intermediaries to communicate with Mui-Hin Lau, Ho Sih Fong, Kau-Ying Lau, and Cathy Lau throughout the entire course of the representation. Plaintiff also sent copies of correspondence, legal documents, and invoices to all of the defendants during the course of his representation of them. The invoices plaintiff sent were detailed and itemized and included computer reports of time and disbursements. Each of the defendants received at least some of the plaintiff's invoices. Although many of plaintiff's invoices were paid, not all invoices were paid in full. None of the defendants ever complained to plaintiff about the invoices or fees until February 1990 when defendants informed plaintiff that they were no longer able to pay his fees. However, defendants paid plaintiff $190,000 after February 1990. In total. defendants have paid plaintiff a total of $511,293.71 from June 24, 1985 to September 23, 1992.

Plaintiff notified defendants that he would be charging them interest on the unpaid fees for the first time on July 19, 1991. In a letter to defendants, plaintiff said he was charging interest for the last year and a half but did not mention interest charges in the future. See Carey Decl. Ex. 22. Interest charges were then included in all future invoices. Plaintiff originally computed interest at 18%; however. Plaintiff reduced the amount of interest to 12% on May 25, 1994. one year after plaintiff terminated his relationship with defendants. See Carey Decl., Ex. 26. The change to 12% per annum interest was retroactive and was applied to all past bills. Furthermore, plaintiff has amended the period for which he seeks interest payments and states in his motion for partial summary judgment that he seeks interest payments on unpaid legal fees as of November 1, 1991. At the November 1, 2000 pre-trial conference, plaintiff stated that the interest charges to date amounted to $503,303.00. See Hr'g Tr. at 29. Plaintiff is seeking interest up to the date of judgment as well as post-judgment interest. See Hr'g Tr. at 31.

The Richardson action and Lau action were resolved by this court on April 1, 1993 after being tried before the court from March 31, 1992 to April 29, 1992. For a complete account of the disposition of this case, see Richardson Greenshields Securities Inc. v. Lau, 819 F. Supp. 1246 (S.D.N.Y. 1993). To briefly summarize the outcome of the case, this court found that the Richardson defendants, with the exception of Wai Yau Chi, were liable for account deficits in the Richardson trading accounts, because Michael Lau and Daniel Lau acted with apparent authority to trade in the family accounts and because the account holders ratified the trades made by Michael Lau and Daniel Lau. See Richardson, 819 F. Supp. at 1259, 1260. This court also dismissed all of defendants counterclaims because (1) defendants did not meet their burden of proof as to any of the counterclaims; (2) the trading in the family accounts was supported by the doctrine of apparent authority or ratified by the holders of the accounts; and (3) the defendants were equitably estopped from recovering because "the moneys lost were not their own but belonged to Wing Sang Lau, the uncle of Michael and Daniel Lau." See Richardson, 819 F. Supp. at 1262, 1263. As to this last point, this court stated that:

Wing Sang Lau's entire $2,000,000 was siphoned [without his permission or knowledge] by Daniel and Michael Lau to pay the margin calls on the Lau commodity accounts. . . . Thus the defendant Lau brothers cannot assert that they, as the virtual thieves of these funds, have standing to seek their recovery.

Richardson, 819 F. Supp. at 1262.

On June 2, 1992, this court plaintiff's motion to withdraw as for the Lau family. ...


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