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Karoon v. Franklin

May 27, 2010

KAYVAN KAROON, KAMRAN KAROON, INDIVIDUALLY AND AS ADMINISTRATORS OF THE ESTATE OF MAJID KAROON, AND MAHIN D. KAROON, PLAINTIFFS,
v.
FRANKLIN, WEINRIB, RUDELL & VASSALLO, P.C., DEFENDANT.



The opinion of the court was delivered by: Denise Cote, District Judge

OPINION & ORDER

This action arises from the efforts of defendant Franklin, Weinrib, Rudell & Vassallo, P.C. ("defendant"), a law firm, to enforce a twelve-year old judgment against a former client.

That client, now deceased, was the former husband of plaintiff Mahin Karoon and the father of plaintiffs Kayvan Karoon and Kamran Karoon (collectively, the "plaintiffs"). Plaintiffs allege that defendant levied and executed upon two properties in France in violation of New York statutory and common law. For the following reasons, defendant's motion for summary judgment is granted.

BACKGROUND

The following facts are undisputed. From May 8, 1997 through to February 3, 1998, defendant represented the late Majid Karoon ("Mr. Karoon") in a divorce action brought by his former wife, plaintiff Mahin Karoon ("Mrs. Karoon"), in New York Supreme Court (the "Matrimonial Action"). At the time Mrs. Karoon sued for divorce, Mr. Karoon owned apartments in London, England, and Paris and Cannes, France (the "London property," "Paris property," and "Cannes property," respectively), among other places. This action concerns the Paris and Cannes properties.

On April 16, 1997, Mrs. Karoon moved for a temporary restraining order and a preliminary injunction against the disposition of assets by Mr. Karoon in the Matrimonial Action. On May 12, after defendant had been retained by Mr. Karoon, Mr. and Mrs. Karoon entered into a stipulation (the "May 12, 1997 Stipulation"). The May 12, 1997 Stipulation provided, inter alia, that: (1) a sum of money be placed in an escrow account (the "Escrow Account") to pay certain expenses as stipulated; and (2) the London property be sold and the proceeds deposited in a separate escrow account. The May 12, 1997 Stipulation contains no reference to the Paris or Cannes properties.

On June 23, 1997, Mr. and Mrs. Karoon entered into a second stipulation (the "June 23, 1997 Stipulation"). The June 23, 1997 Stipulation provided, inter alia, that (1) carrying charges on the London, Paris, and Cannes properties would be paid out of Mr. and Mrs. Karoon's joint bank accounts in those cities; and (2) pursuant to the May 12, 1997 Stipulation, proceeds from the sale of the London property would be deposited in a separate escrow account to be used for expenses if the funds in the Escrow Account were exhausted. The June 23, 1997 Stipulation contains no reference to the Paris or Cannes properties being the subject of any escrow account.

On January 6, 1998, following the sale of the London property, Mr. and Mrs. Karoon entered into a third stipulation (the "January 6, 1998 Stipulation"). The January 6, 1998 Stipulation provided that the proceeds from the sale would be held in a joint escrow account during the pendency of the Matrimonial Action. Like the two earlier stipulations, the January 6, 1998 Stipulation contains no reference to the Paris or Cannes properties being the subject of any escrow account.

On February 3, defendant ceased representation of Mr. Karoon. At that time, Mr. Karoon owed defendant approximately $102,818 in legal fees and disbursements. On March 13, defendant moved in the Matrimonial Action for a charging lien against any recovery Mr. Karoon might obtain in the Matrimonial Action. The motion was granted by a May 11 order, which required the amount of the charging lien to be fixed at a hearing before a special referee on June 25. Defendant separately filed a plenary action against Mr. Karoon in New York Supreme Court to recover from Mr. Karoon the legal fees he owed (the "Plenary Action").

On June 23, defendant and Mr. Karoon entered into a stipulation of settlement to resolve the charging lien and Plenary Action (the "Legal Fees Stipulation"). The Legal Fees Stipulation was "So Ordered" by the New York court in the Matrimonial Action. Pursuant to the Legal Fees Stipulation, defendant agreed to discount the amount owed by Mr. Karoon to $85,210 (including $210 in costs) in return for Mr. Karoon confessing judgment in that amount. Mr. Karoon's confession of judgment was filed with the New York County Clerk's Office on June 24, 1998 as a judgment (the "New York Judgment").

Several provisions of the Legal Fees Stipulation are relevant to this action. First, paragraph 2(b) provides that Mr. Karoon "shall execute any documents which... may be necessary to enforce the judgment in any jurisdiction worldwide, or to enter judgment in any such jurisdiction." Second, paragraph 4 provides:

Mr. Karoon acknowledges that [defendant's] rights with respect to the Escrow Accounts shall be determined upon the trial of the Matrimonial Action, and that such rights shall not be prejudiced by this Stipulation. Accordingly, [defendant] shall not levy against the Escrow Accounts, or disbursements from the Escrow Accounts, to enforce its judgment in the Plenary Action, it being expressly understood that the judgment in the Plenary Action is not intended to affect whatever rights it may have in the Matrimonial Action, including, without limitation, a direction that the funds in the Escrow Accounts be utilized to satisfy all or part of the judgment in the Plenary Action. (Emphasis added). And third, paragraph 5 provides:

In addition to any rights which [defendant] may have as judgment creditor in the Plenary Action, [defendant] shall also have the following rights in the Matrimonial Action: (a) The first $7,500 which is made available to Mr. Karoon for payment of his legal fees from the Escrow Accounts shall be paid to [defendant]; (b) Any sums thereafter made available in the Matrimonial Action for the payment of Mr. Karoon's legal fees, including, without limitation, from the Escrow Accounts, a fee award in his favour and/or the proceeds from the sale of any of the parties' real or personal properties, whether here or abroad, shall be divided in a manner determined by [the court in the Matrimonial Action] between [defendant] and Cox, Buchanan [the law firm that succeeded defendant in representing Mr. Karoon].

(emphasis added). The Legal Fees Stipulation defines "Escrow Accounts," as used in paragraphs 4 and 5 above, as "certain funds [that] are currently being maintained in the joint names of Cox Buchanan [Mr. Karoon's counsel] and Denise Morner Kranz, one of Mrs. Karoon's attorneys, which accounts are ...


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