United States District Court, S.D. New York
March 22, 2004.
SEAN F. O'SHEA, Plaintiff -against- DR. H. GEORGE BRENNAN, Defendant
The opinion of the court was delivered by: KEVIN FOX, Magistrate Judge
MEMORANDUM AND ORDER
In this action, brought pursuant to the court's diversity jurisdiction,
plaintiff Scan F. O'Shea ("O'Shea") seeks to recover attorney's fees for
services he rendered to the defendant, Dr. H. George Brennan ("Brennan"),
in connection with, among other things, a defamation action filed on the
defendant's behalf in federal district court in California. Plaintiff has
moved for summary judgment, pursuant to Fed.R.Civ.P. 56(c), on his
claims for breach of contract and account stated, and for an order
dismissing the defendant's affirmative defenses and counterclaims. The
defendant opposes the motion; it is addressed below.
O'Shea is an attorney licensed to practice law in the state of New
York; his business offices are located in New York, New York. Brennan
is a physician specializing in plastic surgery; his business offices
are located in Beverly Hills, California. O'Shea and Brennan met
for the first time in November 1999. Brennan was then seeking legal
representation in connection with a defamation action he wished to file
against Ene Riisna ("Riisna"), a former patient. Brennan had previously
appeared on the American Broadcasting Company, Inc. ("ABC") News program
20/20. Following his appearance on that program, Brennan
performed plastic surgery on Riisna, who was a producer of the show.
Thereafter, he and Riisna became involved in litigation. Brennan believed
that, as a result of the litigation, Riisna had initiated a campaign of
libel and defamation against him.
On November 29, 1999, following their meeting to discuss a possible
defamation action, O'Shea sent Brennan a retainer agreement. The
agreement stated, in pertinent part:
This letter is to confirm your request to retain
me to represent you in connection with potential
[Ene] Riisna defamation litigation and related
matters . . . I will undertake the
representation with you upon payment of a retainer
in the amount of $25,000. The initial retainer
shall be deemed earned upon presentment . . .
You agree to pay my office's monthly bills upon
receipt. Monthly bills will be based upon fair and
reasonable fees for services rendered. The basis
for my fees will include consideration for my
expertise, effort expended and my customary hourly
rate. In addition, I will bill you on a monthly
basis for any expenses in connection with this
matter. . . .It is understood that you will
replenish the retainer as requested. It is
understood and agreed that this office will remain
ahead of its bills. . . .My hourly rate in
this matter will be $375 . . . It is understood
that this retainer does not commit me to appear on
your behalf or to represent you on other
matters. . . .
On February 7, 2003, Brennan sent a letter to O'Shea in which he
stated, inter alia, "enclosed please find a check in the amount
of $15,000, the mutually agreed upon amount, a signed copy of the
retainer agreement, and a Variety of collateral materials which will
confirm any questions or suspicions on this matter."
The record evidence presented in this case does not include the signed
copy of the retainer agreement to which Brennan refers in his letter, or
any other such document. In a deposition taken on April 17, 2003, O'Shea
testified as follows regarding the retainer agreement:
Q: Do you recall whether you ever received a
signed retainer agreement or engagement letter
from Dr. Brennan?
A: You know, I don't recall that [Brennan]
actually signed with a retainer and sent it back,
because I think that we that he called back
wanted a modification particularly on the initial
retainer amount, and I don't recall that [Brennan]
ever executed this particular retainer.
Q: Did he ever execute any retainer?
A: I don't know.
Q: I'm sorry?
A: I don't know.
In his response to plaintiffs Southern District of New York Local Civil
Rule 56.1 statement, which was submitted in connection with the instant
motion, the defendant states:
After their initial meeting in November 1999, Dr.
Brennan decided to retain Mr. O'Shea but did not
formally do so until February 2000, because he was
unsure of the fee arrangements he was willing to
make. . . .Dr. Brennan formally retained Mr.
O'Shea in February 2000. . . .At that time he
sent and Mr. O'Shea accepted a retainer check for
Thus, although the parties do not appear to have executed a
retainer agreement, they agree that O'Shea's representation of Brennan
commenced in February 2000.
According to O'Shea, during the period from November 1999 through May
2000, he undertook an investigation of Riisna's alleged defamation
campaign against Brennan; as part of the investigation, O'Shea
interviewed witnesses, prepared affidavits and reviewed background
material. In addition, O'Shea states, he conducted legal research
concerning Brennan's possible causes of action against Riisna under both
California and New York law. O'Shea asserts that, during this period, he
also engaged in meetings and negotiations with counsel for ABC News in
an attempt to stop Riisna's defamation campaign. O'Shea contends
that, as a result of these negotiations, ABC News decided to terminate
Riisna's employment and the defamation campaign against the defendant was
"stopped in its tracks." O'Shea contends that his investigations were
conducted with Brennan's full knowledge and approval and that he often
discussed strategic issues with his client, including whether to pursue
litigation against Riisna. However, on this and other points, Brennan's
recollection of pertinent events diverges from that of the plaintiff.
For example, O'Shea contends that, when he first met Brennan in
November 1999, four of the six defamatory communications attributable to
Riisna were already time-barred under New York law.*fn1 Thus, according
to O'Shea, only two of the communications, a letter from Riisna to
Mademoiselle magazine, dated April 2, 1999, and a letter from
Riisna to Dr. Robert Miner, dated August 26, 1999, had been published
recently enough to constitute a basis for a timely defamation action in
New York. However, O'Shea maintains, Brennan had a chance of recovering
for all of Rissna's defamatory publications under California law;
consequently, in June 2000, O'Shea advised Brennan that, if he wished to
pursue litigation against Riisna, he should do so in California.*fn2
For his part, Brennan claims that he informed O'Shea at their first
meeting that the August 2, 1999 letter to Mademoiselle magazine
was the publication that most concerned him because, unlike Riisna's
earlier publications which had been directed to individuals, this one had
been sent to a magazine of mass circulation and, therefore, was likely to
reach a much wider audience. Brennan also claims that he and O'Shea never
discussed any strategy other than litigation, specifically, the filing of
a defamation suit against Riisna and, possibly, against ABC News, and
that he and O'Shea agreed that suit would be filed in New York as soon as
possible. Brennan contends that it was not until June 2000 that O'Shea
informed him that suit could not be filed in New York because that
state's statute of limitations on the contemplated defamation action had
expired. Brennan states that he now knows that a defamation suit based on
the April 2, 1999 letter to Mademoiselle could have been filed
timely in New York until April 2000. Brennan maintains that O'Shea's
advice concerning filing suit in California was merely an attempt to
cover up the fact that he had allowed the pertinent New York statute of
limitations to expire, and that, had he known about that provision of New
York law, he would have asked O'Shea to file suit in New York based on
the April 1999 letter in a timely manner. There is no dispute that
O'Shea, on Brennan's behalf, filed a defamation suit against Riisna in
California in August 2000.
Another area of dispute between the parties concerns a disciplinary
complaint filed against O'Shea by attorneys for Riisna in January 2001
and a counter-complaint filed by O'Shea at about the same time. O'Shea
claims that these proceedings were directly related to his representation
of Brennan, and that he explained this to Brennan. O'Shea contends that,
consistent with their agreement, the invoices that he sent subsequently
to Brennan for legal work
performed on Brennan's behalf reflected time spent preparing,
inter alia, a response to the disciplinary complaint filed
against him. In addition, O'Shea asserts that Brennan never expressed
any contemporaneous objection to the invoice entries concerning work
performed in connection with the disciplinary proceedings.
Brennan claims that O'Shea did not discuss his intention to charge a
fee for services rendered in connection with the disciplinary proceedings
until after Brennan objected to the inclusion of such a fee in O'Shea's
February 2001 invoice. According to Brennan, this was the first invoice
to reflect time spent on the matter. Brennan asserts that, from the time
he first discovered that he was being charged legal fees for work done in
connection with the disciplinary proceedings, he objected to the fees and
refused to pay them.
In March 2001, Riisna filed a complaint against Brennan in federal
district court in New York alleging tortious interference with contract.
Although the parties agree that O'Shea initially represented Brennan in
that action, they disagree concerning the terms of that representation.
O'Shea claims that he refused to appear on Brennan's behalf in connection
with the action until he and Brennan resolved the matter of the
outstanding balance due under their retainer agreement. O'Shea asserts
that, as of May 10, 2001, Brennan owed him approximately $119,000 in
legal fees. O'Shea maintains that Brennan complained for the first time
about the fees on May 29, 2001, and that, as a result, O'Shea offered to
discount his bill by twenty-five (25) percent, provided the defendant
agreed to pay the amount due immediately, and also to discount all future
bills by twenty (20) percent, provided the defendant agreed to pay those
bills within thirty (30) days. O'Shea contends that, after Brennan
promised to send him $25,000, he agreed to appear in connection with the
tort action for the limited purpose of attending an initial conference.
Brennan contends that O'Shea's contacts with ABC News were the cause of
Riisna's suit alleging tortious interference with contract, and that
O'Shea agreed to defend him in connection with that action, although no
retainer agreement pertaining to such representation had been signed.
Brennan claims that, despite the absence of a retainer agreement, he
agreed to pay O'Shea $25,000. This amount, Brennan claims, was not
intended to defray the balance due on O'Shea's previous invoices, which
were in dispute, but, rather, was "extorted" from him by O'Shea as the
cost of appearing on Brennan's behalf in connection with the Riisna tort
On September 25, 2001, Riisna filed a motion to disqualify O'Shea as
Brennan's counsel in the tort action on the ground that O'Shea would be
called upon to testify as a witness in the case. O'Shea claims that he
opposed the disqualification motion successfully and later provided
deposition testimony in the tort action that was in no way adverse to
Brennan claims that O'Shea did not disclose to him that, if O'Shea were
called to testify as a witness in the tort case, his representation of
Brennan in that case might involve a conflict of interest on O'Shea's
part, or that Riisna's counsel would attempt to have O'Shea disqualified
as Brennan's counsel because of the alleged conflict of interest, or that
Brennan should seek independent counsel for these reasons.
On October 23, 2001, Brennan signed a confirmation of his obligation to
pay the outstanding balance due to O'Shea for legal services
rendered.*fn3 O'Shea then sought permission to withdraw as Brennan's
counsel in both the tort action and the defamation action which had been
filed in California; in both cases, he was permitted by the court to do
Brennan's insurance company took over representation of Brennan in
connection with the tort action.
Brennan claims that O'Shea asked him to sign the October 23, 2001
letter, confirming his obligation to pay the balance due on his account,
on the pretense that O'Shea would continue to represent him in the tort
matter. However, shortly after the letter was signed, O'Shea withdrew
from the case.
The parties also disagree about their respective obligations with
respect to determining the nature and extent of Brennan's insurance
coverage. Brennan claims that, after O'Shea withdrew from representation
in the tort action, Brennan's new counsel advised him that O'Shea had
been served with document requests in that action by Riisna's attorney
which, among other things, requested documents relating to Brennan's
insurance coverage for the claims that were the subject of the suit.
Brennan claims that O'Shea never informed him about the document requests
or about the requirement to make initial disclosures concerning insurance
O'Shea asserts that neither the defendant's general counsel, George
Chelius ("Chelius"), nor the defendant himself ever determined whether
defendant's insurance policies covered the defense of the tortious
interference with contract action filed against him by Riisna. Moreover,
O'Shea contends, in an effort to minimize costs, he had delayed his
response to discovery requests in the tort action, including document
requests concerning insurance coverage, pending the outcome of a motion
to dismiss the case and of Riisna's motion to disqualify; therefore,
O'Shea maintains, the case never reached the discovery phase while he was
counsel of record.
The parties also have presented divergent accounts of the fee
arrangements agreed to between them. Brennan claims that, when he
retained O'Shea, the attorney's hourly rate was
$375. However, Brennan maintains, during the course of the
representation, O'Shea, without Brennan's approval, increased his hourly
rate, first, to $400 and, later, to $425. O'Shea claims that he notified
Brennan in advance of his standard annual rate increases and that his
other clients received the same rate increases during the relevant time
period. O'Shea claims that the hourly rates charged were fair and
consistent with comparable rates in the geographical area during the
relevant time period.
Brennan also objects to various items in O'Shea's invoices, including
work done preparatory to the New York defamation lawsuit that was never
filed, work done preparatory to the lawsuit against ABC that was never
filed, and work done in connection with the disciplinary proceedings
brought by and against O'Shea. Brennan also claims that O'Shea's invoices
were not accompanied by itemized time records, and that such records,
which were kept by O'Shea's office staff, were not provided to Brennan
until March 2001, when they were reviewed by his accountant, who produced
summaries of the amounts billed for each matter undertaken. Brennan
claims that O'Shea's various proposals to reduce the amount of the
outstanding invoices, as well as the amount of the fees for work done
in the `future, was a direct response to Brennan's complaints regarding
O'Shea's failure to advise him correctly concerning the statute of
limitations for defamation actions in New York.
For his part, O'Shea contends that the summaries prepared by Brennan's
accountant are not competent interpretations of his invoices and,
therefore, any conclusions reached by Brennan on the basis of those
summaries should be disregarded by the Court. O'Shea also contends that
he reviewed in advance every invoice sent by his office to Brennan, that
the work reflected in the invoices was performed either by O'Shea
personally or under his direct supervision, and that all
the legal services performed by him or his associates were
reasonably required for the diligent and effective representation of
Brennan's interests and, moreover, were consistent with the retainer
agreement entered into by the parties.
In May 2002, O'Shea filed a complaint against Brennan alleging breach
of contract, account stated and quantum meruit, and seeking to recover
$138,994.15 or, in the alternative, $102,791.26, in attorney's fees and
expenses purportedly due to him for services rendered to Brennan. In his
answer to the complaint, Brennan raised, in addition to various
affirmative defenses, counterclaims for negligence (legal malpractice)
and breach of contract. The instant motion for summary judgment followed.
Standard of Review for Summary Judgment
Summary judgment may be granted in favor of the moving party "if the
pleadings, depositions, answers to interrogatories, and admissions on
file, together with the affidavits, if any, show that there is no genuine
issue as to any material fact and that the moving party is entitled to
judgment as a matter of law." See Fed.R.Civ.P. 56(c);
see also D'Amico. v. City of New York. 132 F.3d 145, 149 (2d
Cir.), cert. denied, 524 U.S. 911, 118 S.Ct. 2075 (1998). When
considering a motion for summary judgment, "[t]he court must view the
evidence in the light most favorable to the party against whom summary
judgment is sought and must draw all reasonable inferences in his favor."
L. B. Foster Co. v. America Piles. Inc., 138 F.3d 81, 87 (2d
Cir. 1998) (citing Matsushita Electric Industrial Co. v. Zenith
Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356 ).
The moving party bears the burden of showing that no genuine issue of
material fact exists. Celotex Corp. v. Catrett, 477 U.S. 317,
323, 106 S.Ct. 2548, 2552 (1986). Once the moving party has satisfied
its burden, the non-moving party must come forward with "specific facts
showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e);
see Anderson v. Liberty Lobby. Inc. 477 U.S. 242, 250, 106 So.
Ct. 2505, 2511 (1986).
In order to defeat a motion for summary judgment, the non-moving party
cannot merely rely upon the allegations contained in the pleadings that
raise no more than "some metaphysical doubt as to the material facts."
Matsushita, 475 U.S. at 586, 106 S.Ct. at 1355. "[T]he mere
existence of some alleged factual dispute between the parties will not
defeat an otherwise properly supported motion for summary judgment."
Anderson, 477 U.S. at 247-48, 106 S.Ct. at 2510. The non-moving party
must offer "concrete evidence from which a reasonable juror could return
a verdict in his favor." Anderson, 477 U.S. at 256, 106 S.Ct.
at 2514. Summary judgment should only be granted if no rational jury
could find in favor of the non-moving party. See Heilweil v. Mount
Sinai Hospital, 32 F.3d 718, 721 (2d Cir. 1994).
O'Shea contends that he is entitled to judgment as a matter of law on
his claims for breach of contract and account stated. In addition, O'Shea
asserts that Brennan's affirmative defenses, and his counterclaims for
legal malpractice and breach of contract, must be dismissed because they
raise no genuine issues of material fact and, as a matter of law, Brennan
cannot prevail on them.
Breach of Contract Claim
Under New York law, to prevail on a claim for breach of contract, a
plaintiff must prove: (1) the existence of a contract between the
plaintiff and defendant; (2) performance of the contract
by the plaintiff; (3) breach of the contract by the defendant; and
(4) damages resulting from the breach. See First Investors Corp.
v. Liberty Mutual Ins. Co., 152 F.3d 162, 168 (2d Cir. 1998);
Feldman v. Talon Paint Products, Inc., No. 01 Civ. 5657, 2002
WL 31385826, at *4 (S.D.N.Y. Oct. 22, 2002).
"Under New York law, contracts between attorneys and clients are of
special interest and concern to the courts." Carey v. Mui-Hin
Lau, 140 F. Supp.2d 291, 296 (S.D.N.Y. 2001)(citing Cohen v.
Ryan, 34 A.D.2d 789, 790, 311 N.Y.S.2d 644, 645 [App. Div.2d Dep't
1970]). An attorney who has drafted a retainer agreement has the burden
of proving that the agreement was fair, reasonable and fully known and
understood by the client. See Revson v. Cinque & Cinque.
P.C., 221 F.3d 59, 67 (2d Cir. 2000); Mar Oil S.A. v.
Morrissey. 982 F.2d 830, 838 (2d Cir. 1993); Shaw v.
Manufacturers Hanover Trust Co., 68 N.Y.2d 172, 176, 507 N.Y.S.2d 610,
612 (1986). Even if there is no evidence that an agreement to pay a
legal fee was obtained by fraud or undue influence, the agreement may be
invalid "if it appears that the attorney got the better of the bargain,"
unless he or she "can show that the client was fully aware of the
consequences and that there was no exploitation of the client's
confidence in the attorney." Revson, 221 F.3d at 68 (quoting
Jacobson v. Sassower, 66 N.Y.2d 991, 993, 499 N.Y.S.2d 381, 382
); see also Mar Oil 982 F.2d at 838-39. Moreover, whether
the nature of an agreement to pay a legal fee was fully known and
understood by the client is a question for the trier of fact. See
Revson, 221 F.3d at 68; Feldman. 2002 WL 31385826, at *5.
As discussed earlier in this writing, the record in this case does
not include a copy of a signed retainer agreement. However, the parties
appear to agree that they entered into a retainer agreement on February
7, 2000, and, moreover, that the terms of the agreement, with the
exception of the amount of the retainer, which was reduced from
$25,000 to $15,000, were the same as those set forth in O'Shea's letter
dated November 29, 1999.
O'Shea asserts that he is entitled to judgment as a matter of law on
his breach of contract claim because he certified under oath that, among
other things, all of the legal services described in the invoices he sent
to Brennan were reasonably required and consistent with the retainer
agreement entered into by the parties, the time expended on the tasks
performed was fair, reasonable and accurate, and the hourly rates charged
to the defendant were fair and consistent with those charged by attorneys
in this judicial district. However, the plaintiffs assertions
notwithstanding, the evidence presented in this case indicates that the
terms of the parties' retainer agreement were not fully known or
understood by the defendant and factual issues exist about what the
parties agreed to with respect to the legal services to be provided by,
and the fees to be paid to the plaintiff.
For example, it does not appear that the parties were in accord with
respect to the time and place of the filing of the defamation action
against Riisna. O'Shea claims that he advised Brennan to file his
defamation suit against Riisna in California, rather than in New York,
based on his professional discretion, and that he often discussed such
strategic issues with his client. Brennan claims, however, that he
understood from O'Shea that the defamation suit would be filed in New
York (a course of action Brennan preferred), and that it was not until
June 2000, that O'Shea informed him that suit could not be filed in New
York because that state's statute of limitations had expired.
In support of his claim, Brennan has submitted, among other things, a
copy of a letter from O'Shea to Riisna, dated May 30, 2000, in which
O'Shea informed Riisna that he and his client
proposed to file a defamation action against her in New York. A
copy of a draft complaint in the matter, indicating that it was intended
to be filed in the Southern District of New York, accompanied the letter.
In addition, Brennan has submitted copies of contemporaneous time records
prepared by O'Shea in connection with the Riisna defamation litigation;
these time records show that the first time Brennan was charged a fee
for research concerning the issue of the statute of limitations for
defamation in California was June 14, 2000.
The statute of limitations on a defamation action in New York, based on
the April 1999 letter from Riisna to Mademoiselle, expired in
April 2000. Thus, the evidence shows that O'Shea was still considering
filing suit in New York several months after the expiration of the
limitations period in that state. This suggests that he may not have been
aware that he had already missed that deadline. In addition, the fact
that there is no reference, in the invoices received by Brennan from
O'Shea, to a defamation action in California until June 2000 indicates
that the decision to file suit in that state may not have been a matter
of strategy or professional discretion, as O'Shea maintains, but rather
an attempt to avoid dismissal of the defamation action altogether and the
forfeiture of any damages to which Brennan may have been entitled had he
prevailed in such an action. In any case, genuine issues of material fact
exist about whether the terms of the retainer agreement with respect to
the time and place of the filing of a defamation action against Riisna
were fully known and understood by the defendant.
In addition, Brennan claims that certain fees charged by O'Shea were
not agreed upon by the parties and were not within the scope of the
retainer agreement. For example, Brennan claims that O'Shea billed him
improperly for the disciplinary proceedings brought against O'Shea by
Riisna in January 2000. O'Shea avers that he discussed the disciplinary
complaint with Brennan
as soon as the matter arose and explained to him that it was
directly related to the representation. O'Shea avers, further, that
Brennan never voiced any contemporaneous objection to the February 2001
invoice. However, in deposition testimony, Brennan stated that O'Shea did
not tell him that disciplinary proceedings had been filed, and did not
discuss billing him for this expense, until after Brennan questioned
O'Shea about his invoice dated February 12, 2001, which was the first
invoice to reflect work done on this matter. Brennan claims that he was
billed approximately $66,949 for work done on the disciplinary proceeding
and that, from the time he discovered he was being charged for such work,
he objected to the fees and refused to pay them.
The language of the retainer agreement, which identifies the subject
matter of O'Shea's representation of Brennan as the "potential [Ene]
Riisna defamation litigation and related matters," is unclear with
respect to the scope of that representation. Specifically, it is not
clear whether a disciplinary action brought by an attorney for the
opposing party was to be treated as a matter "related" to the defamation
litigation. Moreover, a review of the record in this case indicates that
O'Shea failed to make Brennan fully aware of his obligations under the
retainer agreement with respect to work done on the disciplinary
The record shows that the first time Brennan was charged a fee for work
performed in connection with the disciplinary proceedings was in February
2001. Further, at about the time he received the February 2001 invoice,
Brennan requested from O'Shea "back-up" records for all of the invoices
he had received to date, that is, contemporaneous time records detailing
the amount of the fees charged for each of the items included on the
invoices. The record shows that O'Shea provided such time records to
Brennan on March 27, 2001.
The record also shows that, after receiving a letter from O'Shea in
which the latter threatened to withdraw from the representation because
of non-payment of fees, and to commence legal action against Brennan to
collect those fees, Brennan responded, in a letter dated May 29, 2001,
stating, inter alia, that he found the current bill "excessive
for reasons that should not be my obligation." Thereafter, on June 28,
2001, Brennan informed O'Shea that, after reviewing an analysis of
O'Shea's invoices, which had been prepared by a certified public
accountant, he did not believe that he was responsible for the fees
incurred in connection with the disciplinary proceedings and wished to
have those fees deleted from his statement. On June 29, 2001, O'Shea
responded, stating that he would reduce the amount of the bill from
$96,153 to $60,000.
Thus, the record indicates that there is a genuine issue of
material fact concerning whether Brennan was fully aware of the
consequences of entering into a retainer agreement with O'Shea with
respect to the matter of fees charged for work done on the disciplinary
proceedings. Although O'Shea's eventual proposal to reduce his fees
apparently resolved the issue, in the absence of uncontroverted evidence
establishing that the parties came to an agreement concerning this matter
at the time O'Shea undertook to represent Brennan or, at least, prior to
the date upon which Brennan was charged a fee for legal services rendered
in connection with the matter, the plaintiff has not met his burden of
showing that his client fully understood the nature and scope of the
The record in this case indicates that factual disputes exist with
respect to other matters as well, including whether the tortious
interference of contract action filed by Riisna against Brennan was
"related" to the defamation litigation and, thus, within the scope of
the original retainer agreement, whether, as discussed infra,
the October 23, 2001 letter of acknowledgment signed by
Brennan was understood to be part of the original retainer
agreement, whether Brennan's signature on that document was obtained
properly, and the reasonableness of the parties' fee arrangements.
Therefore, under the circumstances, the Court finds that plaintiff has
not demonstrated that he is entitled to judgment as a matter of law on
his claim for breach of contract. Accordingly, this branch of plaintiff's
motion for summary judgment is denied.
Under New York law, in order to recover on an account stated claim,
O'Shea must prove the existence of an agreement between the defendant
and himself based upon prior transactions between them. See
Feldman. 2002 WL 31385826, at *5; Carey, 140 F. Supp.2d
at 298; Orb Factory, Ltd. v. Design Science Toys, Ltd., No. 96
Civ. 9469, 1999 WL 191527, at *17 (S.D.N.Y. Apr. 7, 1999). Such an
agreement is implied if O'Shea shows that (1) the defendant received
invoices from him, and (2) the defendant failed to object within a
reasonable time or made partial payment on the account. See
Feldman, 2002 WL 31385826, at *5; Carey, 140 F. Supp.2d
at 298; Orb Factory, Ltd., 1999 WL 191527, at *17. "This is so
unless fraud, mistake, or other equitable considerations are shown."
Feldman, 2002 WL 31385826, at *5 (citing Rosenman Colin
Freund Lewis & Cohen v. Neuman, 93 A.D.2d 745, 746,
461 N.Y.S.2d 297, 298 [App. Div. 1st Dep't 1983]). A client's
objection must be made timely and must be based on the reasonableness of
the fees charged. See id. Thus, "[a]n objection made for the
first time upon the commencement of proceedings will not suffice."
The plaintiff asserts that the record in this case demonstrates an
account stated, both express and implied. Specifically, O'Shea points to
the October 23, 2001 writing in which Brennan acknowledged his
responsibility for the balance due on his account. O'Shea contends
that this document creates an explicit account stated. O'Shea
contends further that the invoices issued by him prior to October 23,
2001, also are settled under an account stated.
With respect to the letter dated October 23, 2001, it is not clear
whether this document should be regarded as part of the original retainer
agreement or as a separate contract between the parties. Furthermore, in
this regard, it is not clear whether O'Shea's representation of Brennan
in the action for tortious interference with contract constituted a
matter "related" to the defamation litigation, as described in the
original retainer agreement, or was, instead, the subject of a separate
agreement. Brennan contends that neither he nor O'Shea ever signed a
retainer agreement concerning the tort action. Brennan also contends that
his agreement to pay O'Shea $25,000 in exchange for the latter's
appearance at an initial conference in that matter was not intended to
defray the balance due on the previous invoices but, instead, was
intended to induce O'Shea to appear on his behalf in the tort matter.
Thus, at the very least, there is ambiguity concerning the scope of the
original retainer agreement between the parties, the parties' respective
obligations under that agreement, the nature and scope of any subsequent
agreements they may have entered into, and any fee structure to which
they may have agreed.
In any case, setting aside the question of the nature and scope of the
October 23, 2001 writing, it does not appear that O'Shea has demonstrated
a necessary element of his account stated claim with respect to that
document. To prevail on that claim, O'Shea must demonstrate that Brennan
failed to object within a reasonable time to any invoices covered by the
letter of acknowledgment, or made partial payment on the account.
The record does not contain an explicit objection by Brennan to any
invoices that may have been covered by the letter of acknowledgment.
However, under New York law, where an
attorney-client relationship is already deteriorating, a client's
retention without objection of an attorney's bills, even after the
signing of an acknowledgment of indebtedness, does not create a
sufficiently clear inference of acquiescence to warrant granting summary
judgment. See Rosenman Colin Freund Lewis & Cohen. 93
A.D.2d at 746, 461 N.Y.S.2d at 299 (holding that silence does not imply
acquiescence, where the attorney-client relationship has deteriorated
contemporaneously with the client's receipt of bills). Moreover, there is
evidence that Brennan implicitly objected to any invoices covered by the
letter of acknowledgment by refusing to sign a confession of judgment.
Furthermore, Brennan contends that the $25,000 he paid O'Shea to
represent him for the purpose of attending an initial conference in the
tort action was "extorted" from him by O'Shea and that he paid this
amount, not because he no longer disputed the fees he was being charged,
but in order to forestall abandonment by his attorney. There is evidence
to support Brennan's contention. For example, in his letter demanding an
acknowledgment of indebtedness, O'Shea states that if Brennan sends him
"a letter along the lines of the attached," he will obtain a further
waiver of the statute of limitations on defamation from ABC. Thus,
questions of fact exist concerning the circumstances surrounding
Brennan's signing of the October 23, 2001 writing.
As for invoices issued prior to this date, as discussed earlier,
Brennan began questioning the reasonableness of the fees charged early
in 2001 when he requested "back up" records from O'Shea. Thereafter, he
refused to submit payment on the account pending an analysis of the
invoices and raised explicit objections to the fees charged in letters
dated May and June 2001. Under the circumstances, this appears to
constitute a timely objection. See, e.g., Feldman, 2002 WL
31385826, at *7 (finding that objection made one month after legal firm
sent its first bill was
sufficient to defeat a claim for account stated); Carey,
140 F. Supp.2d at 298 (finding that attorney's claim for account stated
was established where defendant failed to object to statement of account
for five to fourteen years); see generally Orb Factory, Ltd.,
1999 WL 191527, at *17 (finding that plaintiff failed to establish a
claim for account stated where issues of fact existed regarding the
nature of the obligations of the parties).
Therefore, for the reasons set forth above, the Court finds that
questions of fact exist concerning O'Shea's claim for account stated.
Accordingly, summary judgment is not appropriate with respect to this
branch of plaintiff's motion.
O'Shea contends that Brennan's counterclaim for breach of contract
is merely a "redundant pleading" of his legal malpractice claim. In
addition, O'Shea maintains, Brennan's legal malpractice claim must be
dismissed because he has failed to proffer expert testimony concerning
the standard of care in the legal profession, or to submit any competent
evidence to support his allegations of professional misconduct.
A. Breach of Contract Counterclaim
Under New York law, a cause of action for breach of contract is "a
redundant pleading of a malpractice claim" if it does not "rest upon a
promise of a particular or assured result" and claims only "a breach of
general professional standards." Senise v. Mackasek, 227 A.D.2d 184,
185, 642 N.Y.S.2d 241, 242 (App. Div. 1st Dep't
1996); see also Schwartz v. Olshan Grundman Frome &
Rosenzweig, 302 A.D.2d 193, 199-200, 753 N.Y.S.2d 482, 487 (App.
Div. 1st Dep't 2003); Nevelson v. Carro, Spanbock,
Kaster & Cuiffo, 290 A.D.2d 399, 400, 736 N.Y.S.2d 668, 670
(App. Div. 1st Dep't 2002). In addition, breach of
contract and malpractice claims are duplicative
if both claims arise from the same facts and give rise to the same
damages. See Nevelson, 290 A.D.2d at 400, 736 N.Y.S.2d at 670;
Tyborowski v. Cuddeback & Onofry, 279 A.D.2d 763, 765,
718 N.Y.S.2d 489, 491 (App. Div. 3rd Dep't 2001).
In the case at bar, Brennan has not shown that his counterclaim for
breach of contract is distinct from his counterclaim for legal
malpractice. In the first place, there is no evidence that Brennan's
claim for breach of contract rests on a promise by O'Shea to achieve a
particular or assured result. As noted earlier, the parties' retainer
agreement provides only for representation "in connection with potential
[Ene] Riisna defamation litigation and related matters."
Furthermore, contrary to the argument presented by the defendant in his
opposition papers, a review of the amended answer to the complaint in
this action reveals that the counterclaims for breach of contract and
legal malpractice are based upon the same set of facts and seek the same
damages. Therefore, the defendant's counterclaim for breach of contract
B. Legal Malpractice Counterclaim
In order to prevail on a claim of legal malpractice under New York law,
a plaintiff must demonstrate: "(1) a duty, (2) a breach of the duty, and
(3) proof that actual damages were proximately caused by the breach of
the duty." Marshall v. Nacht 172 A.D.2d 727, 728, 569 N.Y.S.2d 113, 114
(App. Div.2d Dep't 1991): see also Ocean Ships. Inc. v. Stiles,
315 F.3d 111, 117 (2d Cir. 2002); Nobile v. Schwartz, 265 F. Supp.2d 282, 288
(S.D.N.Y. 2003). In establishing a breach of duty, a client must show
that his attorney failed to exercise that degree of care, skill and
diligence commonly possessed arid exercised by a member of the legal
community. See Marshall. 172 A.D.2d at 727-28, 569 N.Y.S.2d at 114;
Greene v. Payne, Wood and Littlejohn, 197 A.D.2d 664, 666, 602 N.Y.S.2d 883,
885 (App. Div.2d Dep't 1993); Nobile, 265 F. Supp.2d
at 288. Furthermore, proof that actual damages were proximately
caused by the breach of duty requires a showing that "but for the
defendant's negligence, [the plaintiff] would have prevailed in the
underlying action or would not have sustained any damages."
Nobile, 265 F. Supp.2d at 289 (citing Davis v.
Klein, 88 N.Y.2d 1008, 1009-10, 648 N.Y.S.2d 871 (1996): see
also Logalbo v. Plishkin, Rubano & Baum, 163 A.D.2d 511, 513,
558 N.Y.S.2d 185 (App. Div.2d Dep't 1990). In most cases, expert
testimony must be introduced to establish the standard of care in the
legal profession, whether the attorney failed to comply with that
standard, and whether the attorney's negligence proximately caused any
damages to the client. See Greene, 197 A.D.2d at 666, 602
N.Y.S.2d at 885; Kranis v. Scott, 178 F. Supp.2d 330, 334
(E.D.N.Y. 2002); Hatfield v. Herz, 109 F. Supp.2d 174, 179
(S.D.N.Y 2000). However, expert testimony may be dispensed with where
"the ordinary experience of the fact finder provides sufficient basis
for judging the adequacy of the professional service, or the attorney's
conduct falls below any standard of due care." Greene, 197
A.D.2d at 666, 602 N.Y.S.2d at 885 (citations omitted); see also
Nobile. 265 F. Supp.2d at 288; Kranis, 178 F. Supp.2d at
O'Shea maintains that this case does not present one of the exceptions
in which a fact finder is capable of assessing the adequacy of the legal
service provided or whether the attorney's conduct fell below any
standard of care. Therefore, he argues, expert testimony is mandatory and
Brennan's failure to offer such testimony requires dismissal of his
Brennan claims, with respect to the matter of filing suit in New York,
that no expert testimony is needed to prove that O'Shea committed legal
malpractice by allowing the New York statute of limitations to expire on
the April 1999 defamatory writing. Brennan also claims that O'Shea
committed legal malpractice by failing to advise him about insurance
respect to the tort action filed against Brennan by Riisna. Since
he has not provided expert testimony, in order to overcome the motion for
summary judgment, Brennan must show that a jury reasonably could conclude
that O'Shea was negligent and, if so, that such negligence was the
proximate cause of the defendant's alleged damages or, alternatively,
that O'Shea's conduct was so negligent as to fall below any standard of
1. Statute of Limitations
"An attorney's failure to commence an action within the statute of
limitations is grounds for a legal malpractice claim. . . . "
Macklev v. Sullivan & Liapakis, P.C., No. 98 Civ. 8460,
2001 WL 1658188, at *3 (S.D.N.Y. Dec. 27, 2001) (citing Nitis v.
Goldenthal, 128 A.D.2d 687, 688, 513 N.Y.S.2d 186, 188 [App. Div.2d
Dep't 1987]). See also Cruz v. Durst Law Firm, 273 A.D.2d 120,
710 N.Y.S.2d 888 (App. Div. 1st Dep't 2000)(finding that,
in an action for legal malpractice, defendant attorneys failed to meet
their burden as summary judgment movants to demonstrate the absence of
a triable issue as to whether plaintiffs would have prevailed to some
extent in the underlying action but for their malpractice,
i.e., failing to name the record owner of the premises where
plaintiffs' personal injuries occurred, thus allowing the statute of
limitations to expire against that party); Burke v. Law Offices of
Landau, Miller & Moran, 289 A.D.2d 16, 17, 733 N.Y.S.2d 416, 417
(App. Div. 1st Dep't 2001) (finding that defendant law
firm was not entitled to dismissal of the legal malpractice cause of
action against it as a matter of law, where, inter alia, it
failed to call the prospective client's attention specifically to the
number of days remaining before the relevant statue of limitations
With respect to the matter of filing suit in New York, a jury could
conclude, without the benefit of expert testimony, that O'Shea failed
to file a New York defamation action timely,
allowing the state's statute of limitations on that action to
expire. The record evidence establishes that the relevant defamatory
writing, namely, the letter to Mademoiselle, published in
April 1999, could have been filed timely in New York until April 2000.
The record also shows that the parties entered into a retainer agreement
in February 2000. Thus, the letter to Mademoiselle was not
time-barred at the time O'Shea first agreed to represent Brennan. As
discussed earlier, the record evidence shows that O'Shea was still
contemplating a New York action after the limitations period in that
state had elapsed and did not submit an invoice for work done in
connection with the pertinent California statute of limitations until
The law concerning the applicable standard of care in this respect is
not so complex as to require expert testimony concerning whether O'Shea's
conduct met that standard of care. However, even if O'Shea's acts or
omissions were obviously negligent, it would not be clear without expert
testimony whether such negligence was the proximate cause of any alleged
damages. That is, without expert testimony, it is unlikely that a jury
could conclude whether, but for O'Shea's failure to file timely, Brennan
would have been successful in a defamation action in New York, had such
an action been commenced. Therefore, summary judgment is appropriate with
respect to this element of Brennan's counterclaim for legal malpractice.
2. Insurance Coverage
With respect to the matter of O'Shea's failure to advise Brennan about
his insurance coverage in connection with Riisna's tort action, Brennan,
relying upon Darby & Darby, P.C. v. VSI International Inc.,
95 N.Y.2d 308, 716 N.Y.S.2d 378 (2000), claims that attorneys in New York
have a duty to investigate whether claims against their clients are
covered by their client's insurance.
In Darby, the New York Court of Appeals found that a New York
law firm retained to defend a corporate client in a patent infringement
litigation did not have a duty to advise the client about possible
insurance coverage for the costs of the litigation. See Darby &
Darby. 95 N.Y.2d at 311, 716 N.Y.S.2d at 379. In reaching this
conclusion, the court noted that at the time of plaintiffs representation
of the defendant, the law regarding insurance coverage in the relevant
circumstances was unsettled and that the plaintiff could not be held
liable for its failure to advise its client about what was, at the
relevant time, "a novel and questionable theory pertaining to their
insurance coverage." Id. t 314, 382.
Brennan contends that the reasoning of the New York Court of Appeals
"leaves no doubt that attorneys are now duty-bound to investigate their
client's coverage in certain circumstances." According to Brennan,
"[i]mplicit in the Court's holding is that if an insurance policy clearly
covers a client's litigation expenses or risk, a lawyer has a duty to
advise the client about possible insurance coverage." The Court is not
persuaded by this argument. What might be implicit in the court's holding
in Darby does not constitute viable authority in this case.
Furthermore, it is not clear, given the complexity of the law in this
area, whether a jury could conclude, without the benefit of expert
testimony, either that O'Shea's failure to advise his client about his
insurance coverage was a breach of his professional duty of care or that
his conduct caused the defendant's alleged damages. Therefore, the
plaintiff is entitled to judgment as a matter of law on this element of
Brennan's counterclaim for legal malpractice.
For the reasons set forth above, the plaintiffs motion for summary
judgment on his claims for breach of contract and account stated is
denied. The plaintiffs motion for summary judgment
with respect to the defendant's counterclaims for breach of
contract and legal malpractice is granted. Accordingly, the defendant's
counterclaims for breach of contract and legal malpractice are dismissed.