The opinion of the court was delivered by: KEVIN FOX, Magistrate Judge
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 ...