The opinion of the court was delivered by: HENRY PITMAN, Magistrate Judge
This is a diversity action in which Mayra Cruz and fourteen
other passengers sought to recover damages for personal injuries
they sustained in a bus accident. The personal injury claims of
all the passengers have been settled. The matter is currently
before me on remand to resolve a dispute concerning how the
contingent fee resulting from Cruz's settlement should be divided
between the law firm which commenced the action on behalf of
Mayra Cruz Budin, Reisman, Kupferberg & Bernstein ("Budin,
Reisman") and the law firm that subsequently took over the
representation of Cruz and obtained a settlement in the amount of
$475,000 the Law Offices of Rosemarie Arnold ("the Arnold
Firm").
Budin, Reisman and the Arnold Firm consented to my exercising
plenary jurisdiction over this fee dispute pursuant to 28 U.S.C. § 636(c) (Docket Item No. 16). The Court has subject
matter jurisdiction over the dispute pursuant to the doctrine of
supplemental jurisdiction. See Alderman v. Pan Am World
Airways, 169 F.3d 99, 101-02 (2d Cir. 1999); Itar-Tass Russian
News Agency v. Russian Kurier, Inc., 140 F.3d 442, 449 (2d Cir.
1997); see also Tancredi v. Metro. Life Ins. Co.,
378 F.3d 220, 225 (2d Cir. 2004) ("We have consistently held that
`[w]henever a district court has federal jurisdiction over a
case, it retains ancillary jurisdiction after dismissal to
adjudicate collateral matters such as attorney's fees.'"),
quoting In re Austrian & German Bank Holocaust Litig.,
317 F.3d 91, 98 (2d Cir. 2003).
A. Facts Underlying the Personal Injury Claim and the Fee
Dispute
Based on hearings I held on August 13 and September 4, 2002, I
make the following findings of fact.
On August 14, 1999, Mayra Cruz was a passenger on a bus that
was involved in an accident on the New Jersey Turnpike, in
Ridgefield Park, New Jersey. Cruz suffered multiple injuries in
the accident, was hospitalized for six days and underwent surgery
to repair her tibia.
While Cruz was hospitalized, an investigator from Budin,
Reisman met with her. Cruz retained Budin, Reisman as her attorneys on August 18, 1999. Budin, Reisman was also retained by
the fourteen other plaintiffs in this matter. On or about
September 20, 1999, Budin, Reisman commenced the underlying suit
in Supreme Court, Bronx County; an amended complaint was filed on
September 29, 1999. Defendants removed the matter to this Court
on October 28, 1999.
By letter dated November 29, 1999, plaintiff terminated Budin,
Reisman's representation and hired the Arnold Firm. In June 2000,
the Arnold Firm settled plaintiff's case for $475,000 and
received a contingency fee of $157,855.12. However, prior to the
closing of this case, Budin, Reisman contacted Judge Rakoff and
claimed that it was entitled to a portion of that contingency fee
for work that it performed on the case prior to its termination.
On February 11, 2003, I issued an Amended Opinion and Order
ruling that (1) New York law applies to Budin, Reisman's claim,
(2) Budin, Reisman was not terminated for cause and (3) Budin,
Reisman was entitled to fees on a quantum meruit basis in the
amount of $16,500 for the sixty hours of work it performed on
plaintiff's case (Docket Item No. 26). I arrived at this figure
by multiplying sixty hours by $275, which I concluded was a
reasonable hourly rate. On October 23, 2003 the Court of Appeals vacated my Amended
Opinion and Order and remanded the matter for further
proceedings. Budin, Reisman, Kupferberg & Bernstein, LLP v. Law
Office of Rosemarie Arnold, 79 Fed. Appx. 460 (2d Cir. 2003).
The Court of Appeals agreed with my conclusion that New York law
applied to this dispute but found that I had applied New York law
erroneously. Specifically, the Court of Appeals stated:
The law pertaining to fee disputes between attorneys
when a discharge is not for cause is . . . clear. The
Court of Appeals announced in Cohen v. Grainger,
Tesoriero & Bell, 81 N.Y.2d 655, 602 N.Y.S.2d 788,
622 N.E.2d 288, 290 (1993), that the "discharged
attorney may elect to receive compensation
immediately [upon discharge] based on quantum
meruit or on a contingent percentage fee based on
his or her proportionate share of the work performed
on the whole case. That right can only be limited by
waiver or operation of law." In Cohen, the discharged
attorney told the new attorney that he would seek his
fee "at an appropriate time." Id. at 290. Although
the new attorney argued that it would be
"unconscionable" and against the spirit of a
"contingency" fee to allow discharged attorneys to
take a contingent fee after they know the outcome of
the litigation, the New York Court of Appeals held
that when attorneys agree to put off getting a
quantum meruit recovery up front, a contingent fee
basis should be presumed, with the discharged
attorney receiving a "prorated share." Id. at
290-91. Although the New York Court of Appeals has
held that "[w]here [a] discharge is without cause,
the attorney is limited to recovering in quantum
meruit the reasonable value of the services
rendered," Campagnola v. Mulholland, Minion & Roe,
76 N.Y.2d 38, 44, 556 N.Y.S.2d 239, 555 N.E.2d 611
(1990), that case applies to disputes between lawyers
and their clients, whereas Cohen is the proper
authority to guide decisions in disputes between
lawyers or sets of lawyers.
The district court erred in applying the quantum
meruit basis of recovery. Accordingly, we vacate
the district court's judgment so that it may apply the
relevant law as set forth in Cohen.
79 Fed. Appx. at 461.
Thus, in light of the Court of Appeals' decision, my task is to
determine the proportionate shares of the work performed by
Budin, Reisman and the Arnold Firm and allocate the ...