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Flemming v. Barnwell Nursing Home and Health Facilities

October 21, 2010


The opinion of the court was delivered by: Pigott, J.

This opinion is uncorrected and subject to revision before publication in the New York Reports.

On this appeal, we are asked to consider whether New York law permits an award of counsel fees and expenses to an objectant in a class action. We hold that it does not.

This class action lawsuit was brought on behalf of 242 individuals, who were residents at defendant Barnwell Nursing Home and Health Facilities, Inc. at any time from January 1, 1999 through January 31, 2000. The class claim, brought pursuant to New York's Public Health Law § 2801-d, alleged that the nursing home failed to comply with state-imposed standards of patient care.

After nearly six years of litigation, the parties reached a compromise and a motion for approval pursuant to CPLR Rule 908 was made to Supreme Court. Caroline Ahlfors Mouris, on behalf of her mother's estate, filed objections to the proposed award of fees to class counsel, the compensation established for the settlement administrator, and the incentive award to the class representative. She did not object to the overall settlement amount. Mouris also cross-moved for an award of counsel fees she incurred in preparing and presenting her objections.

Supreme Court approved the proposed settlement, and directed that certain monies be awarded to class counsel for fees and expenses, to the originator of the claim as an incentive award, and to the administrator for past and future services --the remainder be distributed among the class members in accordance with the approved distribution formula. The court denied Mouris's objections, as well as her cross motion for counsel fees, noting that her objections had neither assisted the court nor benefitted the class.

The Appellate Division modified by reducing or eliminating each category of Supreme Court's award (56 AD3d 162). As relevant to this appeal, the court held that Mouris was not entitled to an award of counsel fees because CPLR 909 "does not provide for the payment of counsel fees to any... party or individual" other than class counsel (id. at 168). The court remitted the matter to Supreme Court to determine the administrator's fees and expenses. Thereafter, Supreme Court issued a judgment determining such fees and expenses.

This Court granted Mouris leave to appeal from the judgment of Supreme Court to bring up for review the prior non-final Appellate Division order. We now affirm.

Under the general rule in New York, attorneys' fees are deemed incidental to litigation and may not be recovered unless supported by statute, court rule or written agreement of the parties (Hooper Assoc. v AGS Computers, 74 NY2d 487, 491 [1989]). An attorney is not entitled to legal fees from persons other than his or her client merely because such other persons were benefitted by his or her services (Matter of Loomis, 273 NY 76 [1937]). There are certain exceptions to the general rule, including an award of counsel fees for class actions brought on behalf of all members of a class.

Such an award is embodied in CPLR 909, which provides: "If a judgment in an action maintained as a class action is rendered in favor of the class, the court in its discretion may award attorneys' fees to the representatives of the class based on the reasonable value of legal services rendered and if justice requires, allow recovery of the amount awarded from the opponent of the class" (emphasis added).

Enacted in 1975, this provision was part of a comprehensive reform of the laws relating to class actions in New York:

"The bill codifies the usual rule that the attorneys for a class that has been successful (through judgment or settlement) are awarded a reasonable attorney's fee; historically, the prospect of obtaining substantial counsel fees has been an important factor in encouraging the private bar to undertake the class action representation of persons with moderate or modest resources" (Memorandum to Counsel to the Governor from the State Consumer Protection Board, Bill Jacket, L 1975, ch 207 [emphasis added]).

The statute codifies the common law rule that attorneys' fees may be paid out of a fund created for the benefit of the class by the litigation. It further empowers the court to order the fees to be paid by the class opponent "if justice requires."

The language of CPLR 909 permits attorney fee awards only to "the representatives of the class," and does not authorize an award of counsel fees to any party, individual or counsel, other than class counsel. Had the Legislature intended any party to recover attorney fees it could have expressly said so, as it has in other contexts (see e.g. Surrogate Court Procedure Act § 2302 [6] ["In a proceeding to construe a will or after appeal in such a proceeding, pursuant to the direction of the appellate court the court may award to a fiduciary or any party to the proceeding such sum as it deems reasonable for his, her or its counsel fees and other expenses necessarily incurred in the proceeding or on the appeal" [emphasis added]). Although federal courts have awarded counsel fees to objectors in certain situations under Federal Rule 23 (h), New York's statute is only in part modeled on that federal provision (Matter of Colt Indus. Shareholder Litig., 77 NY2d 185 [1991] [noting that CPLR 901-909 "has much in common" with Federal Rule 23]).

Mouris argues, and the dissent agrees, that a basis for an award of fees may be recognized under the "common fund" doctrine. However, no modern New York court has applied such rule to authorize an objector's counsel fee award in a class action lawsuit. The dissent cogently argues that section 909, being in derogation of our common law, should not be read so broadly as to totally eliminate the "common fund" doctrine. However, having comprehensively revised Article 9, it is not for this Court to assume a provision the Legislature could have easily provided and recognize a doctrine that has not been invoked in ...

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