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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



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 Page 2 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." Page 3
  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 $15,000.
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 Page 4 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 Page 5

  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 Page 6 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. Page 7

  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 action.

  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.

  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 so. Thereafter, Page 8

  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 coverage.

  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 Page 9 $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 ...

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