May 30, 2013
CH CONSULTING GROUP, INC., Plaintiff,
MONTGOMERY, McCRACKEN, WALKER & RHOADS, LLP, Defendant. No. 652076/2012.
This decision has been referenced in a table in the New York Supplement.
Rubin & Bailin, LLP, for plaintiff.
Montgomery, McCracken, Walker & Rhoads, LLP, pro se for defendant.
SHIRLEY WERNER KORNREICH, J.
Defendant Montgomery, McCracken, Walker & Rhoads, LLP (MMWR) moves for summary judgment against plaintiff CH Consulting Group, Inc. (CH) pursuant to CPLR 3212. Defendant's motion is granted for the reasons that follow.
Factual Background & Procedural History
Carol Hayden is the president of CH, a legal recruitment firm. MMWR is a law firm based in Pennsylvania that, as of 2008, also had offices in Delaware and New Jersey. In 2008 and 2009, Hayden separately solicited MMWR and Kurzman, Karelsen & Frank LLP (KKF), another law firm that was based in New York. In 2008, MMWR told Hayden of its interest in opening an office in New York. In 2009, Hayden spoke with Lee Unterman, a managing partner at KKF, who told her of KKF's interest in merging with another law firm. In 2010, MMWR and KKF entered into merger negotiations, which fell apart toward the end of that year. In the summer of 2011, KKR moved to new, larger offices, and sought to sublet some of that space to another law firm. Unterman recalled from the merger discussions in 2010 that MMWR was interested in opening a New York office. He therefore reached out to MMWR and offered to sublet them space in KKR's new offices. In September 2011, MMWR and KKF entered into a sublease, and MMWR began operating a New York office in that space. At some point thereafter, MMWR and KKF reopened merger negotiations, which ultimately led to the firms combining businesses as of March 1, 2012. MMWR hired nearly all of KKF's attorneys and other employees, purchased some of KKF's assets, and KKF began the process of unwinding its business. From March 2012 through December 2012, MMWR operated as " Montgomery McCracken Kurzman Karelsen" to capitalize on the name recognition of KKF's partners, who, unlike MMWR, had a long established presence in New York. However, since January 1, 2013, MMWR has operated exclusively under its legal name (Montgomery, McCracken, Walker & Rhoads, LLP). KKF no longer has clients, who are now either represented by MMWR or, presumably, some other firm. KKF's lease was assigned to MMWR, and KKF's website was shut down and directs visitors to MMWR's website.
On May 29, 2012, Hayden sent a $400,000 invoice to MMWR for the " placement" of Unterman and approximately 13 other former KKF attorneys, including " five other attorneys ... whose identities are currently unknown." MMWR refused to pay. This action followed.
On June 14, 2012, CH commenced this action, asserting breach of contract and unjust enrichment against MMWR. CH's claims are based on an email purportedly sent by Hayden to Michael Epstein (a managing partner at MMWR) on April 16, 2008, which describes the terms of CH's engagement. The email sets forth two possible fee calculations: (1) a fee for placing an individual attorney with the firm, to be calculated based on 25% of the attorney's first year compensation with the firm; and (2) a fee for a " MERGER, or AFFILIATION [capitalization in original] which for purposes of this Agreement means the placement of two or more attorneys who are presently partners, or the formation of a new firm or office," to be calculated based on 10% of the billings of the new attorneys in the year prior to their joining the new firm. The email concludes by stating " [i]f the foregoing correctly sets forth the terms of our agreement, please sign, date, and return to us a copy of this letter. Neither party signed it.
Between 2008 and 2012, Hayden sent numerous emails to MMWR and KKF regarding the status of the merger negotiations. The emails contained general information about the other firm, including practice areas, billing rates, and office locations. Hayden, however, did not discuss information about or solicit the employment of particular attorneys, nor did she vet any of their individual, professional experiences or review their resumes.
It is well established that summary judgment may be granted only when it is clear that no triable issue of fact exists. Alvarez v. Prospect Hosp., 68 N.Y.2d 320, 325 (1986). The burden is upon the moving party to make a prima facie showing of entitlement to summary judgment as a matter of law. Zuckerman v. City of New York, 49 N.Y.2d 557, 562 (1980); Friends of Animals, Inc. v. Associated Fur Mfrs., Inc., 46 N.Y.2d 1065, 1067 (1979). A failure to make such a prima facie showing requires a denial of the motion, regardless of the sufficiency of the opposing papers. Ayotte v. Gervasio, 81 N.Y.2d 1062, 1063 (1993). If a prima facie showing has been made, the burden shifts to the opposing party to produce evidentiary proof sufficient to establish the existence of material issues of fact. Alvarez, 68 N.Y.2d at 324; Zuckerman, 49 N.Y.2d at 562. The papers submitted in support of and in opposition to a summary judgment motion are examined in the light most favorable to the party opposing the motion. Martin v. Briggs, 235 A.D.2d 192, 196 (1st Dept 1997). Mere conclusions, unsubstantiated allegations, or expressions of hope are insufficient to defeat a summary judgment motion. Zuckerman, 49 N.Y.2d at 562. Upon the completion of the court's examination of all the documents submitted in connection with a summary judgment motion, the motion must be denied if there is any doubt as to the existence of a triable issue of fact. Rotuba Extruders, Inc. v. Ceppos, 46 N.Y.2d 223, 231 (1978).
" GOL § 5-701(a)(10) requires that every agreement to pay compensation for services rendered in negotiating a business opportunity be (1) in writing and (2) subscribed by the party to be charged therewith. Although the statute of frauds does not apply to the services of employment agencies or placement firms with respect to the placement of individuals, it does apply where, as here, the recruiting firm is seeking a fee for services rendered with respect to effecting a merger or combination of two law firms." Mark Bruce Int'l, Inc. v. Blank Rome LLP, 19 Misc.3d 1140(A), at *5 (Sup Ct, N.Y. County 2008), aff'd 60 A.D.3d 550 (1st Dept 2009) (citations omitted), citing Howard-Sloan Legal Search, Inc. v. Todtman, Young, Tunick, Nachamie, Hendler & Spizz, P.C., 193 A.D.2d 404 (1st Dept 1993) (employment recruiting agency's services in effectuating a merger of two law firms was a " business opportunity" as defined by GOL § 5-701(a)(10)).
CH is seeking a fee " for services rendered with respect to effecting a merger or combination of two law firms." This claim is precluded under § 5-701(a)(10) because there is no signed written agreement for these services. Nonetheless, CH avers that when a recruiting firm's claim to enforce an engagement agreement is barred by the statute of frauds because the firm's services were exclusively limited to helping effectuate a merger (and did not entail any services related to the hiring of specific attorneys), the recruiting firm is still entitled to recover a fee for the placement of the individual attorneys who were hired by the new firm under a quantum meruit theory. MMWR relies on Howard-Sloan, where the court held that:
As for the [ ] cause of action alleging breach of an oral agreement to compensate plaintiff for services rendered in individually placing a partner in one of the predecessor firms with the other predecessor firm, and the [ ] cause of action for recovery in quantum meruit based on such services, the motion for summary judgment was properly denied, since [GOL] § 5-701(a)(10) does not apply to the services of employment agencies and a triable issue of fact exists as to whether the alleged oral agreement contemplated the payment of a fee as a result of the partner's being employed by the newly-merged firm.
Howard-Sloan, 193 A.D.2d at 405 (internal citation omitted).
Howard-Sloan does not stand for the broad proposition suggested by CH. In fact, the plaintiff in Howard-Sloan ultimately lost. The facts set forth in the Appellate Division's affirmance of the judgment demonstrate how the facts in this case are very different:
Plaintiff made an oral agreement to recruit a bankruptcy associate for placement with defendant predecessor law firm. Plaintiff unsuccessfully attempted to recruit a bankruptcy partner at another firm to become an employee at defendant predecessor. Instead, a merger was effectuated between the two law firms, and the bankruptcy partner in question became a partner of the newly formed firm there was no meeting of the minds that defendant would owe a fee under the circumstances presented Plaintiff was not retained for the purpose of effectuating a merger, and, in any event, was not the procuring cause of the merger. That the merger may not have occurred were not for the initial introduction of the bankruptcy partner to defendant predecessor firm is immaterial, since the partner categorically rejected the employment offer and was never hired by defendant predecessor firm.
233 A.D.2d 191, 191-92 (1st Dept 1996).
Thus, Howard-Sloan presented a converse situation, where the plaintiff was retained to place an individual attorney with another law firm, not to consult on the merger. The takeaway, however, is that a later employment outcome that occurs under circumstances not contemplated by the parties does not entitle the plaintiff to a fee if the plaintiff was not the procuring cause of the outcome. Ergo, a plaintiff cannot rewrite history to frame its engagement based on whet actually transpired when such events were not contemplated by the parties. Likewise, CH, which was consulting on a merger, cannot reframe its claim as one for attorney placement when individual placement services were not contemplated or provided.
It is clear that CH was not retained to help the subject attorneys (Unterman from KKF and Epstein from MMWR) find a new job at another firm. Rather, these attorneys, who were managing partners, dealt with Hayden exclusively in their role as their firm's lead negotiators in the merger talks, not as prospective individual hires. See Trans., p. 7. The fact that Unterman left KKF (along with many attorneys and support staff) to join MMWR after the merger does not alter the nature of CH's services from merger consulting to attorney placement. If a recruiting firm were always entitled to maintain a quantum meruit claim for the placement of attorneys in a law firm merger, even where no placement service were rendered, the statue of frauds would never apply to law firm mergers because all such mergers necessarily involve attorneys switching firms. This would undermine the statue of frauds.
The result would be different if Hayden had performed services to help a specific attorney obtain new employment, where the focus was on the qualifications of the attorney and not on the benefits of combining the two firms. For instance, if Hayden touted Unterman's particular qualifications to Epstien and convinced Unterman that MMWR was a good fit for him individually, Hayden might be entitled to a placement fee for Unterman. However, the evidence is clear that, from the start, Hayden's involvement was limited to the solicitation of the merger of MMWR and KKF. To be entitled to a consulting fee for such services, a signed writing is required. There is none in this case. Therefore, MMWR is granted summary judgment and CH's breach of contract claim is dismissed.
Finally, CH cannot maintain its claim for unjust enrichment because it is duplicative of a breach of contract claim barred by the statute of frauds. Mark Bruce, supra, at *7 (" While the statute of frauds is not necessarily a bar to a cause of action for unjust enrichment where, as here, the claim for damages is indistinguishable from, and merely duplicative of, the breach of contract claim, dismissal is warranted." ), citing Andrews v. Cerberus Partners, 271 A.D.2d 348 (1st Dept 2000). Accordingly, it is
ORDERED that the motion by defendant Montgomery, McCracken, Walker & Rhoads, LLP for summary judgment against plaintiff CH Consulting Group, Inc. is granted, and the Clerk is directed to enter judgment dismissing the Complaint with prejudice.