United States District Court, S.D. New York
MEMORANDUM DECISION AND ORDER GRANTING
PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT
case arises from a fee dispute between a law firm, Feder
Kaszovitz LLP ("Feder"), and its former client, Lee
Rosen. Feder seeks to recover Rosen's non-payment of his
legal bills. It asserts claims of breach of contract, account
stated, and quantum meruit. Defendant asserts counterclaims
of breach of contract and fraud in the inducement.
now moves for summary judgment on its breach of contract and
quantum meruit claims. For the reasons stated below,
Plaintiffs motion is GRANTED, with further proceedings to
facts of this case are not disputed unless otherwise noted.
The Retainer Agreement In August 2013, Alpha Capital
Anstalt filed a lawsuit in this district against Rosen and
others, alleging, among other things, that Rosen had
committed securities fraud. See Alpha Capital
Anstalt v. New Generation Biofuels & Lee Rosen,
No. 13 Civ. 5586 (VEC) (S.D.N.Y. Aug. 9, 2013), Dkt. No. 1
(the "Alpha Capital lawsuit"). (Decl. of David
Richan ("Richan Decl.") ¶¶ 6-7, Dkt. No.
met with one of Feder's partners, Murray Skala, to
discuss the Alpha Capital lawsuit. (Decl. of David Sack
("Sack Decl."), Ex. E ("Rosen Dep.")
9:21-10:4, Dkt. No. 26-6.) Rosen ultimately agreed to engage
Feder to represent him in the Alpha Capital lawsuit. In
connection therewith, the parties executed a retainer
agreement, dated October 17, 2013 (the "Retainer
Agreement"). (Sack Deck, Ex. F, Dkt. No. 26-7.) It is a
fairly standard New York State attorney retainer agreement.
It describes the work to be done ("representing you as a
defendant in the [Alpha Capital] matter"), and provides
for a small upfront payment ($7, 500) against compensation at
the hourly rate of attorneys assigned to the matter times
actual hours worked, with bills to be rendered periodically.
The retainer agreement that the parties signed contains no
cap on fees and includes no estimate of either the cost of
performing any task or the overall cost of the
representation. It does not contain a standard "merger
clause" (that is, a clause worded more or less as
follows: "This document represents the entire agreement
between the parties and supersedes all prior discussions and
representations..."); but it states that the agreement
reflects "our understanding of the scope of our
representation and the terms of our arrangement."
were apparently discussions between the parties about the
cost to Rosen of dealing with the Alpha Capital lawsuit
before the Retainer Agreement was signed. The parties agree
on two details about those conversations: that Rosen hoped
his lawyers would "piggyback" on work performed for
other defendants in the lawsuit (Rosen Dep. 14:12-22); and
that the word "cap" was never mentioned prior to
the signing of the retainer agreement (Skala Dep.
23:22-24:15; Rosen Dep. 23:10-13.) Otherwise they do not
agree what was said. In fact, between the complaint and his
deposition testimony, Rosen himself has taken different
positions about exactly what he and Skala said to each other.
none of that is of any moment, since the parties entered into
a written retainer agreement governing the terms of their
Dispute that Led to This Lawsuit
to say, defending against the Alpha Capital lawsuit cost a
lot more than Rosen had hoped to pay.
December 5, 2013, Plaintiff filed a motion to dismiss the
complaint in the Alpha Capital lawsuit. (Richan Decl., Ex.
F., Dkt. No. 32-6.) Skala sent Defendant a letter, dated
December 17, 2013, informing Defendant that Plaintiff had
filed the motion on his behalf. The letter indicated that
Feder had not been able to "piggyback" on the other
defendants' work, as both Rosen and Skala had hoped to
do. Skala explained both why that proved impossible and what
Feder actually had to do in order to prepare papers on
Rosen's behalf. (Richan Deck, Ex. G, Dkt. No. 32-7.)
to the letter was an invoice for work performed, plus
disbursements, through November 30, 2013. The total time
charges and disbursements totaled $87, 231.69. On the bill,
Feder gave Rosen immediate credit for the $7, 500 retained
(per the terms of the retainer, it was to have been applied
against the final bill, not the first bill). The firm also
offered Rosen a "courtesy discount" of 20% of its
time charges ($16, 934), as well as the option to defer
payment of another $25, 000 until the case was dismissed or
settled. This left an amount due and immediately payable of
$45, 000.00, against a total amount (less retainer and 20%
discount) of $70, 000. (Richan Decl. Ex. H, Dkt. No. 32-8.)
Skala's cover letter indicated that the write-off and the
deferral of payment were conditioned on prompt payment of the
Rosen received Skala's letter and the invoice, he
"freaked out." (Rosen Dep. 27:3-23.)
and client met in January 2014. (Richan Decl. ¶ 25;
Rosen Dep. 32:5-9.) By that time, Alpha Capital had responded
to the defendants' multiple motions to dismiss by filing
an amended complaint. The amended complaint was much longer
than the original; it also included new allegations against
Rosen personally. This meant that the entire exercise had to
be repeated, that the first motions were for naught; there
would be a second round of motions to dismiss, and that new
issues and arguments would have to be addressed. All this was
discussed. Apparently the parties also discussed the
possibility of filing a motion for sanctions.
parties do not agree about the substance of their January
discussion insofar as it related to fees. According to Rosen,
("Skala Dep.") 67:4-16, Dkt. No. 32-2.) Skala
agreed to "cap [Plaintiffs] fees at $45, 000,
including the second motion [to dismiss]."
(Rosen Dep. 32:10-22.) Skala, in a follow-up email sent to
Rosen in order to memorialize the January meeting,
characterized the fee discussion rather differently:
I told you when we met that we would be prepared to cap our
fees for the next motion to dismiss round. I
indicated that we would be willing to cap our fees at $45 K,
but that would not include time in connection with a motion
for sanctions, should you so wish to proceed. Upon further
consideration, we would be prepared to include the work on
the motion for sanctions as falling within the above cap.
Also, please send us the payment that you said that we would
be receiving last week; it would be much appreciated.
(Sack Decl. Ex. H, at 2, Dkt. No. 26-9) (emphasis added).
Rosen insists that this email places an absolute limit of
$45, 000 on fees for past and future work (Richan Decl.
¶ 30; Rosen Dep. 34:23-35:9.), I cannot agree with his
characterization, or conclude that it raises a disputed issue
of fact. Skala's email clearly states that (1) there was
going to be a second round of motions to dismiss; (2) Skala
had originally promised to "cap our fees for the
next motion to dismiss round ... at $45K; (3) in their
original conversation, that cap did not include work on a
motion for sanctions; but (4) on sober reflection, Feder had
decided to include work performed on any sanctions motion
within that $45, 000 cap - which is to say, $45, 000 for the
work on both the second motion to dismiss and the sanctions
motion. Skala's email said nothing about including work
on the first motion to dismiss within the cap, or about
capping fees for the entire representation at $45, 000. There
is no way to read the email as saying anything of the sort.
Indeed, on Rosen's reading, Feder would essentially have
been agreeing to perform all future work on the case for
free, as well as to write off the $20, 000 that it had agreed
to defer when it issued the first invoice. Nothing in
Skala's email suggests any such "agreement."
did not respond to Skala's email with some writing of his
own, protesting that it did not reflect their conversation.
Neither did he fire his lawyers. Instead, he paid $25, 000
against the $45, 000 invoice on February 22, 2014, and
another $10, 000 on or about May 19, 2014 - a total of $42,
500 out of the $45, 000 due on the first invoice.
that period, the firm continued to work on Rosen's
behalf. Feder filed a motion to dismiss the amended complaint
in the Alpha Capital lawsuit on March 20, 2014. (Richan Deck
¶ 31.) Reply papers were filed in May. See Alpha
Capital Anstalt, 13 Civ. 5586, ECF No. (S.D.N.Y. Aug. 9,
2013), Dkt. No. 50.
completed work on the second motion to dismiss, Skala sent
Rosen a letter, dated June 10, 2014, attaching an invoice for
services rendered from March 1 to May 31, 2014. Although the
firms' time records revealed over $53, 000 in time
actually expended on the second motion to dismiss
(substantially less that was expended on the first motion to
dismiss), the invoice only charged $48, 000.00 - $45, 420 in
fees and the rest in disbursement. This reflected another 15%
courtesy discount, which brought the bill to almost exactly
the $45, 000 cap that Skala had proposed for Round Two. In
his cover letter, Skala noted that, "While we appreciate
that from your perspective this has already been more
expensive than you anticipated, we trust you appreciate the
work that has been done and the need for us to be paid for
our work." (Richan Deck Ex. N, Dkt. No. 32-14.)
followed up with an email dated June 30, 2014, asking for
payment of Feder's outstanding invoice. Rosen responded
the next day:
We have a big problem. I was EXTREMELY clear when we met at
my house that originally I would only spend 25, 000 on the
case. The first bill came and I ended up spending 32, 500 and
was VERY clear that I would only spend an additional 10, 000I
have no intention and no where with all [sic] to pay your
(Richan Deck, Ex. O, Dkt. No. 32-15.)
responded to Rosen as follows: "If the discounts are not
acceptable, and you are not willing to have our outstanding
invoice (for $48, 000.00) paid, then we will seek to recover
the fair and reasonable value of our services (quantum
meruit) which we believe is substantially higher ...