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April 13, 2004.


The opinion of the court was delivered by: JOHN KEENAN, Senior District Judge



  Presently before the Court is a motion by Salon Marrow Dyckman & Newman, LLP ("SMDN"), attorneys of record for Data — Stream AS/RS Technologies, LLC ("Data — Stream"), to withdraw as counsel of record and obtain charging and retaining liens against Data — Stream. SMDN represented Data — Stream in two arbitration proceedings and an action before this Court to confirm one of those arbitrations. The instant motion was made while the confirmation action, decided in Data — Stream's favor on November 5, 2003, was sub judice. SMDN's motion is the result of a fee dispute and made pursuant to Section 475 of the Judiciary Law of New York.


  Data — Stream is a corporation engaged in the business of engineering and marketing automated storage retrieval systems for marine containers, truck chassis and automobiles. Chira Aff. ¶ 1. Joseph Chira ("Chira") is the Chief Executive Manager of Data — Stream. Id. At some point in 2001, Data — Stream found itself entangled in a pair of arbitration proceedings. In need of new counsel to represent the company in the proceedings, Chira contacted Robert Marrow ("Marrow"), a former partner in SMDN. See Chira Aff. ¶ 5. Marrow in turn passed Chira's information on to Louis J. Maione, Esq. ("Maione") of SMDN with the recommendation that Chira and Data — Stream might prove to be lucrative clients. See Maione Aff. ¶¶ 6-10.

  After reviewing a file of information relating to Data — Stream given to him by Marrow, Maione contacted Chira in the summer of 2001. See id. ¶ 12. Chira informed Maione that he was at the time involved in an ongoing arbitration proceeding against ACEquip, Ltd. ("ACEquip"). Chira had already retained another lawyer to represent Data — Stream in the ACEquip arbitration, but he believed Maione could provide some assistance in that matter. See Maione Aff. ¶ 13; Chira Aff. ¶ 7. Chira informed Maione that he was, however, interested in retaining him and SMDN to prosecute a claim Data — Stream had against China International Marine Containers (Hong Kong, Ltd.) ("CIMC"). Maione Aff. ¶ 14.

  From the beginning, Chira expressed to Maione a desire to limit the amount of money Data — Stream would spend on legal fees by agreeing to a cap. See Maione Aff. ¶ 15; Chira ¶ 5. Although wary of capping his firm's fees at a dollar amount significantly less than the actual value of the services provided, Maione did suggest in an August 9, 2001 letter to Chira that he was willing to agree on a cap if Chira could address his concerns. See Chira Aff. Ex. A. Whether or not Chira was able to properly allay Maione's fears, Maione nonetheless forwarded a letter agreement (the "Agreement") captioned "Retainer Agreement; Transact and CIMC — Tianda and Data — Stream and Ace — quip, Ltd.".*fn1 The August 30, 2001 letter, which is on SMDN letterhead, states that "the undersigned is willing to represent you on the following basis," and is signed by Maione. Below Maione's signature is the statement, "The Following Terms and Conditions of Representation Are Agreed and Accepted," followed by Chira's signature on behalf of Data — Stream. Presumably the parties meant the preceding terms and conditions rather than the "following" as all that follows is the signature line. Chira Aff. Ex. B; Petition Ex. A.*fn2

  Under the terms of the Agreement, Data — Stream would be charged at a rate of $235 per hour of Maione's time. According to the Agreement, this represented a "discount" of Maione's standard hourly rate of $300. In order to secure the representation Data — Stream was required to provide SMDN with a check in the amount of $7,500 to serve as a retainer. Of that amount, the Agreement set forth that $2,750 was to be paid to the American Arbitration Association as a filing fee. With respect to issue of a cap, the Agreement stated: [S]ince you wish to "cap" Data — Stream's legal fees at Ten Thousand ($10,000.00) Dollars, we have agreed to inform you in writing when we have expended services equal to approximately fifty (50%) percent of the Ten Thousand ($10,000.00) Dollar "cap", or Five Thousand ($5,000.00) Dollars, based on the discounted hourly rate (i.e., about twenty (20) hours of time). At that point, we will discuss with you your desire to proceed with the matter up to the "cap", or, perhaps, decide that Data — Stream would like to commit to additional time, i.e., increase the "cap" to another agreed upon threshold. In that case, we will amend this agreement, in writing. However, Data — Stream commits to pay for all services rendered pursuant to this Retainer Agreement.

 Chira Aff. Ex. B; Petition Ex. A. According to Chira, the requirement that he be notified in writing was inserted at his request. Chira claims to have wanted the ability to "judge how to proportion Maione's legal services for the future." Chira Aff. 1 9.

  Maione's representation of Data — Stream began in September of 2001. During that month Maione filed, on Data — Stream's behalf, a demand for arbitration against CIMC. According to Chira, during the period from September, 2001 through January, 2002 he never received a bill from Maione. Nor was Chira informed during this time that Maione's fees were approaching the 50%/$5,000 mark. Chira Aff. ¶ 10. Finally, on February 1, 2002, Chira received a letter by facsimile from Maione alerting him to the fact that Maione's fees had surpassed the $5,000 mark at the beginning of January. Petition Ex. B. Pursuant to the notification provision of the Agreement, the February 1, 2002 letter was nearly a full month overdue when it was sent. In addition to informing Chira that the fees had surpassed 50% of the cap amount, Maione's letter warned that he anticipated the work he was to do for Data — Stream would push the total to "a few thousand" over $7,500. Maione, therefore, requested that Chira authorize him to proceed with his representation. Id.

  Upon receiving Maione's February 1, 2002 letter, Chira called Maione to discuss the situation. Chira Aff. ¶ 11. Aside from being nearly a month late, Maione's letter arrived a mere three days before Data — Stream's arbitration hearing was scheduled to begin. Id.; Petition ¶ 28. With the start of the hearing roughly 72 hours away, Chira claims to have "had little alternative except to allow him to represent Data — Stream at the hearing." Id. According to Chira, he authorized Maione to continue his work on Data — Stream's behalf and represent the company in the arbitration hearing. Chira also states that he "again told [Maione] the company had limited resources for this proceeding, and reminded him of the cap in the Retainer Agreement." Id. Maione does not dispute that Chira made these statements to him. In his Reply Affirmation, Maione asserts that the affirmation "respond[s] to Mr. Chira's affidavit, paragraph by paragraph, where appropriate, to refute the spurious allegations he has made therein." Maione Aff. ¶ 5. Yet in response to Mr. Chira's claim that he reminded him of the cap, Maione states only that "Mr. Chira actually believes that because he constantly says, `But, I only want to spend $10,000.00 . . .', [sic] that everyone should agree with him that $10,000.00 becomes the fixed number." Id. ¶ 38.

  Based on Chira's authorization to continue, Maione and SMDN represented Data — Stream throughout the CIMC arbitration proceedings. This representation included taking part in the hearings in February of 2002, the drafting and filing of post — hearing submissions, a motion for reargument before the arbitrator and the filing of a motion for confirmation and modification of the award before this Court. See Maione Aff. ¶ 41. SMDN's efforts were successful in winning an award of approximately $152,000 for Data — Stream. See Petition ¶ 20. Maione alleges that he and his firm expended approximately $30,000 in legal fees in order to obtain this result. See id. ¶ 59.

  Although Chira claims to have requested a bill during his conversation with Maione in response to the February 1, 2002 letter, Chira did not receive one until May 6, 2002. See Chira Aff. f 11. Upon receiving the bill from SMDN, Chira objected to both its amount and certain of the charges it included. See id. ¶ 14. In particular, Chira objected to the fact that the bill had greatly surpassed the $10,000 cap set forth in the Agreement. Maione explained to Chira that he believed he had been authorized to continue the representation of Data — Stream with the implication that SMDN's bills would be paid regardless of whether they exceeded the $10,000 cap. Chira and Maione continued to argue over the amount of the bill from May of 2002 until January, 2003. Their conversations seem never to have progressed beyond Chira's insistence that the fees had been capped at $10,000 and Maione's belief that Chira knew that expecting SMDN to arbitrate the CIMC claim for only $10,000 was ludicrous and impossible. Due to this lack of progress, Maione sent Chira a memorandum on January 23, 2003 suggesting Data — Stream pay SMDN a portion of the requested fee and grant the firm a lien on any arbitration award Data — Stream might ...

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