April 9, 2013
DIANE F. KRAUSZ, Plaintiff,
WENDY KAUFMAN, Defendant Index No. 104174/2008
DECISION and ORDER AFTER NON JURY TRIAL
PRESENT: DEBRA A. JAMES Justice
The non-jury trial of this action for attorney's fees took place on July 18 through July 20, 2012.
FINDINGS of FACTS
The court recapitulates the facts that are not in dispute. Under the Engagement Letter dated November 17, 2005, signed by both parties (the "Engagement Letter"), plaintiff attorney was retained by defendant to represent her in connection with a renewal of her spokesperson contract for the Snapple brand of beverages. Defendant had been a spokesperson for Snapple since 1993 and was commonly known as "The Snapple Lady."
The Engagement Letter began by stating that "you hereby engage my legal services ("I" or "me") in connection with the negotiation and review of your proposed spokesperson contract for 2006 (and possibly future extensions) with the "Snapple" brand." With respect to the fee to be charged by plaintiff for legal services, the Engagement Letter stated in pertinent part
Upon execution of this agreement, you shall pay me a sum equal to five percent (5%) of any and all Gross income earned or received by you, or on behalf of your services and/or activities resulting or deriving from your contract with the "Snapple" brand in any media, now or hereafter known. Notwithstanding the above, to the extent that your compensation includes amounts that are clearly defined as reimbursements of your expenses (including repayment of your staffs' salaries, or your travel and appearances-related expenses), such amounts shall be excluded from the calculation of my fee.
Section 3 (a) of the Engagement Letter further stated-
Despite my reasonable efforts on your behalf, I cannot guarantee the outcome or success of any matter, project or transaction in connection with which I render services. Your obligation to pay my fees and disbursement is not contingent upon the success or outcome of any matter or transaction.
Plaintiff's obligations under the Engagement Letter were to "negotiate and review defendant's proposed spokesperson contract for 2006. There is no dispute that plaintiff negotiated a renewal contract for defendant with Snapple with a two year term ("the Contract"), which was signed by defendant on May 10, 2006, and such signature page was transmitted to Snapple on the next day. What is disputed was whether plaintiff completed the representation contemplated in the Engagement Letter prior to the termination of the attorney-client relationship between the parties, which took place on or about September 20, 2006.
The genesis of the end of the parties' attorney-client relationship was a disagreement between defendant and Snapple about what constitutes an "Appearance" as the term is defined under the Contract. In pertinent part, the Contract provided that defendant "make up to fifty personal appearances per each twelve month period (hereinafter referred to as 'Appearances') to promote the Snapple brand". The Contract defined "Appearances" as "a period of four (4) hours, exclusive of [defendant's] prep and travel time, during which [defendant] gives an interview with the press and/or personally appears in support of a live initiative planned and approved by Snapple with a focus on promoting the Snapple brand." As for defendant's compensation, the Contract stated that "in full and complete consideration of [defendant] entering and fulfilling all of her obligations under this Agreement, Snapple shall pay [defendant] a fee of Five Hundred Seventy Seven Thousand Five Hundred Dollars ($577, 500)" in each of the two years. In accordance with the Contract, Snapple paid defendant her fee in four installments- $350, 000 on May 18, 2006; $227, 500 on August 30, 2006; $350, 000 on March 12, 2007, and $227, 500 on September 7, 2007.
By e-mail on June 21, 2006, plaintiff relayed to Sean Gleason, who had negotiated the Contract on behalf of Snapple, that defendant understood that under the Contact, each individual press interview counted as a single appearance, for example five interviews over a four hour period would count as five of 100 appearances for the two year term. In his reply e-mail, Gleason responded "That is not the contract I signed. If she does 5 interviews- or 500- over the 4-hour period, so long as it stays within the 4 hour time frame, that counts as ONE appearance." Plaintiff forwarded Gleason's response to defendant, who then wrote plaintiff that
I was very worried that they would try to take advantage of this so please check the contract and call me.. Each separate interview ALWAYS counted as an individual appearance...regardless whether it was in the four hour frame or not..that is why I did 100 all the time. I think we were very clear....and it has always been this way in the past. Please handle Separate interviews into separate markets count as one each...
That same day, plaintiff, in an e-mail message sent defendant and her husband and manager Steve Harkins, stated:
What I remember is different from what you do- so it is pointless to talk about it at this point. So I'm going to fix it so that you don't do 500 interviews of even 6 in 4 hours....all I know is that you wanted the deal closed and they weren't budging...but what is the point to remind you of that now? I'll try to get Sean to back down- for my information....how many appearances have you done so far since May?
Later that same day, plaintiff transmitted an additional electronic message to defendant-
Since all I have is a signature page and what I believe to be a final version of a contract BUT NOT A FINAL CO-SIGNED AND INITIALED AGREEMENT BACK FROM SNAPPLE- we have leverage to discuss what is REALLY THE FINAL VERSION according to both of us...l have notes that indicate that we were unable to have Snapple agree to the one interview equals one appearance rule-and that Wendy decided to sign and deal with this last final stalemate as we went along....whether she recalls this or not is a matter of recollection and can be disputed both with me and Sean...at any rate, I am hoping to find a decent resolution with Sean apart from the fact that there is no clear "final" contract initialed page here-just a solitary signed final page, I would suggest that you go, do the interview and leave the final count "open" pending resolution early next week.
However...attacking and threatening me and my staff is highly counterproductive and makes me lack incentive at this point- and is not acceptable. At this point I am unwilling to continue on this matter until your current attacks and behavior changes. I must however reserve all of my and my staffs [sic] legal rights at law and equity in this regard, though I am sure this will not be necessary.
The court credits plaintiffs testimony that she compared the number of interviews versus the number of appearances with defendant to make sure there was not a wide divergence, and determining that there was not, she and defendant agreed that they would continue to monitor the numbers to use in the event that a discrepancy became an issue with respect to defendant's performance under the Contract. On August 15, 2006, plaintiff and Gleason exchanged e-mails that stated that defendant had made no complaints about the number of appearances.
Promptly after she was paid by Snapple on May 18, 2006, defendant paid plaintiff attorneys fees in the amount of 5% of the first installment of $350, 000, or $17, 500. However, though defendant, in accordance with the Contract, received her installments from Snapple on August 30, 2006, March 12, 2007 and September 7, 2007, she failed to remit any further payments to plaintiff. On September 6, 2006, defendant e-mailed a message to plaintiff that stated in essence that plaintiff would have to wait until defendant determined defendant's expenses, which would be deducted from the fees defendant received from Snapple, before defendant would apply the 5% to her earnings and remit the balance of the attorneys' fees owed to plaintiff. Defendant retained the firm of Brown Moskowitz & Kallen ("BM&K") who sent a letter dated September 20, 2006 on behalf of defendant to plaintiff. In that letter BM&K, inter alia, noted plaintiff's pledge in her letter of September 8, 2006 to continue to work for defendant pursuant to the Engagement Letter, characterized her demands for payment of attorney's fees as illegitimate, and acknowledged and accepted plaintiff's resignation by e-mail dated September 6, 2006, in which e-mail plaintiff requested that defendant "pay the full amount you think you owe me at this time".
CONCLUSIONS of LAW
Having reviewed the evidence, both the testimony and records, the court determines that plaintiff fully completed the legal services she promised to render to defendant under the Engagement Letter dated November 17, 2005 ("Engagement Letter"), that defendant breached that Engagement Letter in failing to remit the balance of attorneys' fees outstanding thereunder, and that plaintiff is entitled to recover such fees from defendant.
At the outset of the trial, the court agreed with plaintiff that this court's order dated February 14, 2012 dismissing defendant's counterclaims for malpractice and breach of fiduciary constituted law of the case. Such order held that whether plaintiff fully completed the services outlined in the Engagement Letter prior to the termination of the attorney-client relationship and if so, the amount of attorney's fees owed by defendant to plaintiff under such contract, remained issues to be determined by the fact finder at trial. See Kronish. Lieb. Shainswit. Weiner and Hellman v Howard Stores Corp.. 44 A.D.2d 813, 814 (1st Dept 1974) ("when services of the attorney are incomplete at the time of discharge, the lawyer is relegated, as a matter of law, to a suit in quantum meruit").
The governing principles concerning plaintiff's breach of contract claim as stated by the Court are clear:
It is well established that a client may discharge his attorney at any time for any reason he deems sufficient. In such circumstances the attorney is relegated to an action for the reasonable value of his services, unless he has fully performed his contract. In the event of full performance prior to discharge, however, the attorney may stand upon his contract and the measure of his damages is the agreed value of his services.
McAvoy v Schramme. 238 AD 225, 228 (1st Dept 1933) (citations omitted) affd 263 NY 548, 549 (1933): see also Finkelstein v Kins. 124 A.D.2d 92, 95 (1st Dept 1987). In addition, "[a]n attorney may terminate his relationship at any time for good cause and upon reasonable notice." Matter of Dunn (Bracket). 205 NY 398, 403 (1912).
Whether the attorney client relationship between the parties terminated on September 6, 2006, when plaintiff sent her "I do resign" e-mail to defendant or on September 20, 2006 when defendant, by her attorneys, accepted plaintiff's resignation, plaintiff had fully performed all the services due under the Engagement Agreement, by September 6, 2006. The measure of damages that defendant owes plaintiff is therefore the amount to which the parties agreed under such Engagement Agreement.
Handelman v Olen. 11 A.D.2d 987 (1st Dept 1960).
Defendant was paid by Snapple and accepted all of the payments totaling $1, 055, 000.00 for performing the Appearances under the Contract. Notwithstanding that there is no evidence that Snapple ever signed the Contract, as Snapple fully performed its terms, without any dispute about the number of appearances defendant made thereunder, there is no question that it was enforceable. See Crabtree v Elizabeth Arden Sales Corp. 305 NY 48 (1953). Having negotiated and reviewed the Contract, which was fully enforceable, and ascertained that there were no conflicts over the number of interviews, plaintiff completed her services under the Engagement Letter. Therefore, defendant is obligated to compensate plaintiff as provided. The language of the Engagement Letter is clear and unambiguous that defendant agreed to pay plaintiff 5% of the gross income received by defendant less any amounts "clearly defined as reimbursements of your expenses". Defendant came forward with no evidence that any portion of the four installments totaling $1, 055, 000 that she received from Snapple represented reimbursements for her expenses. In fact, the Contract provided that the fee paid defendant was inclusive of any and all personal and/or business expenses incurred by defendant. Plaintiff's efforts to negotiate to have Snapple pay defendant separately for appearances and for reimbursement of "out of pocket" expenses were unsuccessful. Snapple was adamant that it wanted to be "able to write one check and know that if it is not airline-related travel..., then it's covered. This allows my PR people to be PR people and not accountants!" Further, as explicitly stated in the Engagement Letter plaintiff did not guarantee a particular outcome or transaction. Moreover, the Engagement Letter did not state that "clearly defined reimbursements" would be based upon prior contracts that defendant had with Snapple.
Accordingly, it is
ORDERED and ADJUDGED that the counterclaim for overcharge against plaintiff Diane F. Krausz interposed in the answer of defendant Wendy Kaufman is dismissed; and it is further
ORDERED and ADJUDGED that the plaintiff Diane F. Krausz recover of the defendant Wendy Kaufman, and the Clerk shall enter judgment in favor of plaintiff and against defendant in the amount of $11, 375, together with statutory interest thereon, from September 11, 2006, and in the amount of $17, 500, together with statutory interest thereon, from March 22, 2007, and in the amount of $11, 375, together with statutory interest thereon, from September 16, 2007, until the date of entry of judgment, total interest in the amount of $_____, as calculated by the Clerk, together with costs and disbursements of this action to be taxed by the Clerk upon submission of an appropriate bill of in the amount of $______, for a total amount of $_____.
This is the decision and order of the court