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Lorraine Pilitz, Autotech Collision Inc v. the Incorporated Village of Freeport

November 17, 2011

LORRAINE PILITZ, AUTOTECH COLLISION INC.,
AUTOTECH II INC., AND BELLMORE COLLISION, INC., PLAINTIFF(S),
v.
THE INCORPORATED VILLAGE OF FREEPORT, AND
THE INCORPORATED VILLAGE OF MALVERNE, DEFENDANT(S).



The opinion of the court was delivered by: E. Thomas Boyle United States Magistrate Judge

MEMORANDUM OPINION AND ORDER

Before the court is a motion by plaintiffs' former counsel, Sullivan Gardner, P.C., for a charging lien in the amount of $43,526.75 against the settlement procured by plaintiffs in this action, pursuant to New York Judiciary Law Section 475. For the following reasons, the motion for a charging lien is granted in the amount requested.

FACTS

Familiarity with the facts of the underlying action is presumed. The crux of this action is a civil rights claim by the individual plaintiff, Lorraine Pilitz, that the defendants discriminated against her and the plaintiff corporations with respect to the operation of her towing and collision business based on her gender--specifically, that the defendants unfairly denied her proper opportunities to tow accident-damaged or otherwise disabled vehicles pursuant to a rotation list of officially approved towing companies.*fn1 A trial in this action commenced on July 26, 2010. On July 30, 2010, during the course of the trial, the parties reached a settlement, the terms of which were placed on the record before the Court, and the jury was dismissed. The settlement eventually approved by the Court awarded plaintiffs $43,526.75 in damages, in addition to non-monetary relief designed to ensure that plaintiff and her businesses would not be denied towing opportunities by the defendants.

Prior to trial, plaintiffs were represented by Gold, Stewart, Kravatz, Benes LLP (the "Gold Firm"). On June 10, 2010, plaintiffs entered into a retainer agreement with Sullivan Gardner. (Declaration of Brian Gardner ("Gardner Decl."), Exh. A). The retainer agreement includes the following paragraph (the "Compensation Paragraph"), which governs the firm's compensation:

In consideration of these services, you have agreed to pay the Firm a fee of thirty thousand dollars ($30,000), plus a contingency fee depending upon the matter. This means that if you recover assets or funds from the Action, or any other matter undertaken upon your behalf by the Firm, greater than the costs and expenses incurred, you agree to pay the Firm a percentage of that recovery. Accordingly, you agree that the percentage will be 15% of any recovery, whether such recovery is from a settlement or as a result of trial for the Action, and 30% for any other matter undertaken. All attorney and paralegal work undertaken on your behalf will be billed pursuant to the following hourly rates: Peter Sullivan--$400, Brian Gardner--$395, Partner or Special Counsel--$350, Associate--$225 & $250, Paralegal--$100. You specifically agree that your liability shall include all work undertaken by the firm on the Client's behalf.

(Id., Exh. A at 2 (strikeouts omitted)). The agreement further contained the following paragraph (the "Costs Paragraph"):

It is specifically understood and agreed that all costs, disbursements and expenses which are incurred by the Firm on your behalf are not included herein and shall be paid by you upon receipt of a bill therefore. Costs include such items as, but not limited to, filing fees, experts, service fees, court reporter costs, messenger fees, and overnight deliver [sic]. All costs, disbursements, charges, and fees (experts, witness depositions), will be deducted off of any award, verdict, or settlement, prior to calculation of attorney's portion of the settlement.

(Id., Exh. A at 3).

The Gold Firm did not provide Sullivan Gardner with any of its work product, but provided "approximately 15 boxes full of disorganized documents." (Gardner Decl. ¶ 14). Sullivan Gardner's pre-trial tasks included "organizing the documents, analyzing what items of evidence could be introduced, preparing exhibits and witness lists, trial notebooks and subpoenaing third-parties. This work also included opposing motions in limine . . . and making required motions in limine." (Id. (italics omitted)). Gardner represented plaintiffs at several days of trial and in connection with the settlement agreement reached between plaintiffs and the remaining defendants, the Villages of Freeport and Malverne. Sullivan Gardner asserts that plaintiffs owe the firm $42,217.94 in hourly fees accrued up to and including July 30, 2010, the date of the settlement-in-principle; $11,846.68 in hourly fees accrued during the settlement process; $7,199.50 in disbursements and expenses; and $5,670.07 "representing the 15% contingency fee called for by the [r]etainer [a]greement;" and $3,998.91 in hourly legal fees accrued in connection with ancillary matters. (Id. ¶ 10). Thus, Sullivan Gardner claims that plaintiff owes the firm a total of $70,933.10. (Id.). The firm seeks a charging lien in the amount $43,526.75, which is plaintiffs' total monetary recovery in the action. (Id. ¶ 2).

Plaintiffs oppose the application, asserting that the Sullivan Gardner's bills are inflated and overstate the value of their services; that the firm improperly seeks fees for work performed before it was retained; that the firms records include block billing, making it impossible to determine the reasonableness of the time spent; and that the firm improperly bills for ministerial tasks. (Michelen Affirmation in Opposition ("Michelen Aff.") ¶¶ 3-9). Plaintiffs further assert that they want the fee dispute arbitrated by the New York State Appellate Division's Joint Committee on Fee Disputes. (See id. ¶ 9); see also N.Y. Comp. Codes R. & Regs. tit. 22, § 137.0 et seq. (New York's Fee Dispute Resolution Program).

DISCUSSION

I. New York Judiciary Law Section 475

New York Judiciary Law Section 475 "governs attorney's charging liens in federal courts sitting in New York." Itar-Tass Russian News Agency v. Kurier, Inc., 140 F.3d 442, 448 (2d Cir. 1998) (citing cases). Pursuant to Section 475, "an attorney who is discharged is statutorily entitled to a charging lien on any monetary recoveries obtained by the former client in the proceedings in which the attorney had rendered legal services." Stair v. Calhoun, 722 F. Supp. 2d 258, 267 (E.D.N.Y. 2010) (citing N.Y. Judiciary Law § 475); see also Sequa Corp. v. GBJ Corp., 156 F.3d 136, 147 (2d Cir. 1998) ("Under New York law, an attorney dismissed without cause is entitled to liens in his favor to secure payment of reasonable fees and costs incurred prior to the date of substitution of counsel."). To establish entitlement to a lien under Section 475, "there must be asserted a claim which can eventuate in there being proceeds payable to, or assets recoverable by, the client as a result of the efforts of the attorney." Stair, 722 F. Supp. 2d at 267 (quotation omitted).

The charging lien should be fixed at the "the fair and reasonable value of the services rendered, determined at the time of the discharge and computed on the basis of quantum meruit." Id. at 268. A court may use a retainer agreement "as guidance in determining the reasonable value of the services provided." Id. at 269; see also Ingber v. Sabato, 645 N.Y.S.2d 918, 920 (App. Div. 1996). However, "[t]he theory of quantum meruit, rather than the retainer agreement, is the basis for determining the amount at which to fix the charging lien." Stair, 722 F. Supp. 2d at 268.

In determining the amount of a charging lien, the court may consider the following factors in addition to the retainer agreement: (1) "the difficulty of the matter"; (2) "the nature and extent of the services rendered"; (3) "the time reasonably expended on those services"; (4) "the quality of performance by counsel"; (5) "the qualifications of counsel"; (6) "the amount at issue"; and (7) "the results obtained." Sequa Corp., 156 F.3d at 148 (citations omitted). A court may look to such factors as whether the fee was fixed or contingent, any time limitations "imposed by the client or circumstances," and the "nature and length of the professional relationship with the client." Stair, 722 F. Supp. 2d at 273 n.1 (citing Johnson v. Georgia Highwau Express, Inc., 488 F.2d 714, 717-19 (5th Cir. 1974). "[T]he determination of the reasonable value of the services at issue is a matter within the sound discretion of the trial court." Stair, 722 F. Supp. 2d at 269 (citing Sequa Corp., 156 F.3d at 149). Moreover, the Supreme Court has recently emphasized:

[T]he determination of fees should not result in a second major litigation. The fee applicant . . . must, of course, submit appropriate documentation to meet the burden of establishing entitlement to an award. But trial courts need not, and indeed should not, become green-eyeshade accountants.

Fox v. Vice, - U.S. -, 131 S. Ct. 2205, 2216, 180 L. Ed. 2d 45 (2011) (internal citations and ...


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