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Toussie v. Allstate Insurance Co.

United States District Court, E.D. New York

February 20, 2018



          Cheryl L. Pollak, United States Magistrate Judge Eastern District of New York

         Plaintiffs Robert Toussie and Laura Toussie recently retained new counsel after the Court allowed their prior attorneys to withdraw. (See 1/9/2018 Order, ECF No. 144; 1/25/2018 Notices of Appearance, ECF Nos. 149, 2150). On February 15, 2018, the parties filed a joint status report in which they raise several issues for the Court's consideration. (See generally Status Report, Feb. 15, 2018, ECF No. 153). The Court addresses each issue in turn.

         A. Former Counsel's Retaining Lien

         The Toussies' former attorneys from the firm Abrams, Fensterman, Fensterman, Eisman, Formato, Ferrara, Wolf & Carone, LLP (“Abrams Fensterman”) have asserted a retaining lien over the files and papers related to this action. (See Status Report at 1-2). On February 2, 2018, the Court entered a stay in the flood case to allow Mr. Toussie to attempt to resolve his former attorney's retaining lien. See Toussie v. Allstate Ins. Co., No. 14 CV 2705, Slip. Op. at 2 (E.D.N.Y. Feb. 2, 2018), ECF No. 202.

         As the Court explained in its Order granting a stay in the flood case, in addition to the statutory charging lien and quantum meruit recovery, New York law allows an attorney who withdraws for “good cause” to assert a retaining lien until the client's account is paid in full. Melnick v. Press, No. 06 CV 6686, 2009 WL 2824586, at *11 (E.D.N.Y. Aug. 28, 2009) (quoting Theroux v. Theroux, 145 A.D.2d 625, 626, 536 N.Y.S.2d 151 (2d Dep't 1988)). The retaining lien is founded on physical possession and “gives an attorney the right to keep, with certain exceptions, all of the papers, documents and other personal property of the client which have come into the lawyer's possession in his or her professional capacity as long as those items are related to the subject representation.” Luca v. Giaccone, No. 16 CV 4975, 2017 WL 3669614, at *6 (E.D.N.Y. Aug. 24, 2017) (quoting Universal Acupuncture Pain Servs., P.C. v. Quadrino & Schwartz, P.C., 370 F.3d 259, 262 n.3 (2d Cir. 2004)). Such retaining liens are fully enforceable in the federal courts, which “have the responsibility to exercise supplemental jurisdiction over an attorney's claim for a lien “to protect its own officers in such matters[.]” Haggar Int'l Corp. v. United Co. for Food Indus. Corp., No. 03 CV 5789, 2013 WL 3356953, at *2 (E.D.N.Y. July 3, 2013) (quoting Itar-Tass Russian News Agency v. Russian Kurier, Inc., 140 F.3d 442, 449 (2d Cir. 1998)). Courts will grant an exception to the retaining lien only where a party demonstrates extreme hardship or other extraordinary circumstances. Melnick v. Press, 2009 WL 2824586, at *11 (citing Pomerantz v. Schandler, 704 F.2d 681, 683 (2d Cir. 1983)).

         Although this Court did not issue a stay in this case when it issued the stay in the related flood case, the Court agrees that to require plaintiffs and their new counsel to respond to written discovery and the pending motion filed by the defendant to amend their Answer to add counterclaims for, inter alia, fraud, without the benefit of files exclusively in the possession of former counsel, poses an unacceptable risk of undue prejudice to plaintiffs. Thus, except as discussed below, all proceedings in this case are stayed until March 9, 2018, during which time the Toussies and their new counsel shall attempt to resolve the retaining lien in good faith.

         B. Inspection of CFASS

          Since at least June 13, 2017, Allstate has sought to inspect the boxes plaintiffs have stored at Christie's Fine Art Storage Services (“CFASS” or “Christie's”). (See Def.'s Mot. to Compel, June 13, 2017, ECF No. 94). After a delay of several months caused by the withdrawal of Mark E. Goidell, Esq., who served as plaintiffs' counsel before Abrams Fensterman, the Court held a conference regarding the inspection of the boxes and premises at CFASS. (See Minute Entry, Oct. 3, 2017, ECF No. 107). Thereafter, the Court denied plaintiffs' motion to quash defendant's subpoena directed to CFASS or for a protective order, and directed defendant to submit a subpoena to be endorsed by the Court to eliminate any doubt about the necessity of compliance. See generally Toussie v. Allstate Ins. Co., No. 15 CV 5235, 2017 WL 4773374 (E.D.N.Y. Oct. 20, 2017), ECF No. 110. After endorsing the subpoena on October 23, 2017 (see Order, Oct. 23, 2017, ECF No. 113), the Court again rejected plaintiffs' attempts to prevent or narrow discovery of the boxes at CFASS. See Toussie v. Allstate, No. 15 CV 5235, 2017 U.S. Dist. LEXIS 178571, at *2-3 (E.D.N.Y. Oct. 27, 2017), ECF No. 117.

         That Order marked the fourth time the Court had ruled on the plaintiffs' concerns regarding the CFASS inspection. See id. at 4. The Court observed that “the arguments and issues raised in plaintiffs' motion are not at all new, nor are the Court's concerns about plaintiffs' conduct.” Id. at 3. The Court was “deeply troubled by the pattern of seeking to thwart proper discovery requests and to delay this litigation.” Id. at 4.

         Through new counsel, plaintiffs yet again attempt to revisit the Court's earlier rulings regarding the scope of the inspection at CFASS for a fifth time. (See Status Report at 5-6). In light of counsel's recent appearance and their lack of access to files of former counsel, the Court assumes that plaintiffs' new counsel is not seeking to perpetuate the pattern of improper discovery conduct and frivolous arguments previously identified by this Court or to ignore the Court's Orders. See, e.g., Toussie v. Allstate, 2017 U.S. Dist. LEXIS 178571, at *5 (explaining that “[a]lthough sanctions have not been requested at this time, the Court expects that going forward, plaintiffs and their counsel will adhere to the Federal Rules and this Court's prior Orders and will not continue to re-litigate the same issues previously decided by the Court”). Nonetheless, plaintiffs' counsel should review the docket carefully on CM/ECF or PACER. “The case does not start anew each time there is a change in attorney.” Martinez v. City of New York, 16 CV 79, 2017 WL 6403512, at *2 (E.D.N.Y. Dec. 14, 2017).

         To eliminate any doubt and to avoid further disputes regarding the inspection, the Court reaffirms its earlier rulings and makes it clear that Allstate is entitled to inspect, open, and photograph the exterior, interior, and contents of any of the boxes at CFASS. See Toussie v. Allstate, 2017 U.S. Dist. LEXIS 178571, at *3. The parties agree that the inspection of the boxes and premises at CFASS should continue even though the rest of the case is stayed. (See Status Report at 4-7). Accordingly, the parties are Ordered to proceed with the inspection of the boxes and premises at CFASS and shall endeavor to complete the inspection by March 16, 2018.

         Although the parties shall complete the inspection as quickly as possible, the Court denies plaintiffs' request that Allstate be required to finish the inspection in a single day. (See Status Report at 6).

         C. Payment of CFASS's Outside Counsel Fees

         The parties dispute whether CFASS has requested that the parties pay its outside counsel's fees and whether any such request was the result of Mr. Toussie's conduct at the inspections. (See Status Report at 9-11). In the absence of a ...

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