Doviak v. Lowe's Home Centers, Inc.

State of New York
Supreme Court, Appellate Division
Third Judicial Department
Decided and Entered: December 17, 2015 520534
________________________________
ZAYTUNE DOVIAK, Individually
and as Guardian ad Litem of
ROBERT DOVIAK,
Appellant,
v
MEMORANDUM AND ORDER
LOWE'S HOME CENTERS, INC.,
et al.,
Defendants.
FINKELSTEIN & PARTNERS, LLP,
et al.,
Respondents.
(And Two Third-Party Actions.)
________________________________
Calendar Date: October 14, 2015
Before: Lahtinen, J.P., McCarthy, Lynch and Devine, JJ.
__________
Phillips & Paolicelli, LLP, New York City (Steven J.
Phillips of counsel), for appellant.
Furman, Kornfeld & Brennan, LLP, New York City (A. Michael
Furman of counsel), for respondents.
__________
Lahtinen, J.P.
Appeals (1) from an order of the Supreme Court (Work, J.),
entered April 22, 2014 in Ulster County, which, among other
things, granted an application by Finkelstein & Partners, LLP for
an order directing, among other things, the payment of counsel
fees and disbursements, and (2) from the judgment entered
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thereon.
This appeal primarily involves a dispute about counsel fees
following a multi-million dollar recovery in a personal injury
action. The underlying facts of that action are set forth in an
earlier appeal (63 AD3d 1348 [2009]). Briefly, Robert Doviak
suffered catastrophic injuries when he fell at a construction
site and plaintiff – his wife and guardian ad litem – retained
Finkelstein & Partners, LLP (hereinafter Finkelstein). During
the eventual seven-day jury trial, several settlement offers were
reportedly rejected by plaintiff, including a final one of $12
million before summations. The jury returned a verdict for a
little over $3.7 million. Finkelstein then moved for a new trial
or significant additur, which Supreme Court (Egan Jr., J.)
partially granted in an order entered in March 2007 directing a
new trial on damages unless defendants stipulated to increase
damages by $3.1 million. Defendants so stipulated, bringing the
total damages to about $6.8 million. As relevant to the current
appeal, that award generated counsel fees of $1,892,760.31 under
the contingent fee retainer agreement.
Disagreements about various aspects of the judgment delayed
entry thereof until December 2007. Prior thereto, plaintiff had
ostensibly stopped communicating with Finkelstein and retained
new counsel. After the judgment was entered, plaintiff's new
counsel moved to resettle the judgment, which was granted in part
in an order and ensuing amended judgment entered in July 2008.
Plaintiff's new counsel perfected the appeal that had been filed
by Finkelstein, and we, among other things, increased damages by
$2.5 million (63 AD3d at 1356-1357), making total damages of
about $9.3 million. This resulted in additional contingency
counsel fees of $707,106.
In the interim, plaintiff, eventually represented by
Phillips & Paolicelli, LLP (hereinafter Phillips),1 commenced a
1
Although there is confusion in the record about exactly
who plaintiff retained after Finkelstein and when, for purposes
of this decision, we hereinafter refer to plaintiff's new counsel
as Phillips without making any determination as to any other
-3- 520534
legal malpractice action in Orange County against Finkelstein
alleging, among other things, that the trial settlement offer of
$12 million had not been communicated by Finkelstein to
plaintiff. After an appeal to the Second Department (Doviak v
Finkelstein & Partners, LLP, 90 AD3d 696 [2011]), that case moved
to a seven-week jury trial, which resulted in the jury finding no
legal malpractice by Finkelstein. In addressing a posttrial
motion in that action, Supreme Court (Ecker, J.) noted that
certain aspects of plaintiff's allegations that Finkelstein had
been discharged for cause had not been decided in the Orange
County action and should be heard in connection with the pending
fee dispute in the underlying Ulster County action.
Plaintiff then moved in the Ulster County action to, among
other things, discharge Finkelstein's liens in that action. In a
thorough written decision, Supreme Court (Work, J.) addressed a
host of remaining issues about the disputed fees and
disbursements. The court was unpersuaded by plaintiff's
contention that Finkelstein was discharged for cause so as to
justify denying Finkelstein any counsel fees. As for the counsel
fees of $1,892,760.31 generated from the pre-appeal action,
Supreme Court reduced Finkelstein's fee by $30,000 as sanctions
for several errors by Finkelstein that, ultimately, had not
adversely affected plaintiff but caused delay and necessitated
additional legal work. The court further directed that $40,000
from the pre-appeal counsel fees should be paid to Phillips for
its postverdict, pre-appeal legal work. The court thus awarded
Finkelstein $1,822,760.31 in counsel fees for pre-appeal legal
work and authorized Finkelstein to be reimbursed for its
disbursements of $199,126.73. As for the additional counsel fees
of $707,106 from the successful appeal, Supreme Court awarded two
thirds of such amount to Phillips and one third to Finkelstein.2
counsel that may have been involved at some point.
2
By the time the judgment on appeal was entered, changes
had been made to various amounts (including counsel fees) set
forth in the earlier order reflecting, among other things,
accrued interest. For example, the May 2014 judgment recited
that the additur from the appeal resulted in counsel fees
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Plaintiff appeals.
We consider first plaintiff's argument that Finkelstein
should not get any counsel fees because it was discharged for
cause. "[A] client has an absolute right, at any time, with or
without cause, to terminate the attorney-client relationship by
discharging the attorney" (Campagnola v Mulholland, Minion & Roe,
76 NY2d 38, 43 [1990]). "If the discharge is with cause, the
attorney has no right to compensation or to a retaining lien"
(Teichner v W & J Holsteins, 64 NY2d 977, 979 [1985] [citations
omitted]). A "for cause" termination must be based on more than
"a client's 'general dissatisfaction' with the attorney's
performance" (Wiggins v Kopko, 105 AD3d 1132, 1134 [2013],
quoting De Luccia v Village of Monroe, 180 AD2d 897, 899 [1992])
and typically involves a "significant breach of legal duty" such
that the client can establish that the "attorney's conduct
constituted a failure to properly represent [the client's]
interests" (Antonmarchi v Consolidated Edison Co. of N.Y., 678 F
Supp 2d 235, 241 [SD NY 2010] [internal quotation marks and
citations omitted]; see Greenberg v Cross Island Indus., 522 F
Supp 2d 463, 467 [ED NY 2007]).
The most serious allegation that could have supported a
"for cause" termination – i.e., the purported failure to inform
plaintiff of the $12 million settlement offer – was resolved in
Finkelstein's favor during plaintiff's unsuccessful malpractice
action. Plaintiff now relies on a litany of mostly postverdict
infirmities by Finkelstein. Supreme Court (Work, J.) fully
analyzed each of the purported errors and ethical breaches and we
discern no reason to depart from that court's conclusions. With
respect to Finkelstein's application to Supreme Court (Egan Jr.,
J.) for its counsel fees without providing adequate notice to
plaintiff, the fee request was consistent with the retainer
agreement, it was made at a time when plaintiff had apparently
ceased communicating with Finkelstein and Supreme Court (Work,
J.) found no willfulness by Finkelstein and noted no harm to
plaintiff. Given Finkelstein's extensive legal work in this
exceeding $1.2 million. For purposes of consistency, the amounts
used in the April 2014 decision and order are used herein.
-5- 520534
complex case that culminated in a generally favorable result for
plaintiff, this error was insufficient under all the relevant
circumstances to serve as a basis to deny Finkelstein any counsel
fees, and Supreme Court's decision to reduce Finkelstein's fee by
$10,000 was within its discretion and an appropriate sanction.
The initial incorrect inclusion in the proposed judgment of
a set off for plaintiff's children's Social Security disability
benefits was eventually corrected and, while the error
contributed to the delay in final resolution of the litigation,
it was adequately addressed by Supreme Court's reduction of
Finkelstein's fee by an additional $10,000. The remaining errors
have been considered and, to the extent they remained viable
after the jury verdict in favor of Finkelstein in plaintiff's
malpractice action, do not rise to the level of a significant
breach of Finkelstein's duty to plaintiff or reveal that
Finkelstein failed to properly represent plaintiff's interest to
such an extent as to justify termination for cause. We further
agree with Supreme Court that Finkelstein adequately established
the amount of its disbursements for which it was entitled to be
reimbursed under the retainer.
Nor are we persuaded that Supreme Court erred in the manner
in which it divided the counsel fees generated from the additur
resulting from the appeal to this Court. An attorney's "charging
lien does not merely give an attorney an enforceable right
against the property of another, it gives the attorney an
equitable ownership interest in the client's cause of action"
(LMWT Realty Corp. v Davis Agency, 85 NY2d 462, 467 [1995]; see
Judiciary Law § 475). Although the retainer provided that it did
not cover an appeal, it did specifically cover any monies that
plaintiff received by reason of the action and further provided
for a reasonable fee should there be an appeal. Supreme Court
noted that Finkelstein successfully developed the record that
became the basis for this Court's additur. Finkelstein also
filed a notice of appeal and took steps, including ordering the
trial transcript, toward perfecting the appeal. Further,
Finkelstein had researched, prepared and presented to the trial
court the partially successful motion for, among other things,
additur, which provided the foundation – expanded upon by
Phillips – for the successful appeal. The relevant language of
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the retainer as well as the outcome at the trial level were
materially different here than in Shaw v Manufacturers Hanover
Trust Co. (68 NY2d 172, 175-176 [1986]), a case relied upon by
plaintiff. The retainer did not forfeit a fee upon an adverse
trial verdict, plaintiff's trial in the underlying personal
injury action did not end adversely to plaintiff, and
Finkelstein's retainer entitled it to a fee based on monies
recovered by reason of the claim. Supreme Court's division of
the counsel fees resulting from the appeal was appropriate (see
generally Matter of Cohen v Grainger, Tesoriero & Bell, 81 NY2d
655, 658-660 [1993]).
Finally, in light of the proof in the record, Supreme Court
acted well within its discretion in setting quantum meruit fees
of $40,000 for Phillips for legal work conducted postverdict and
pre-appeal (see Chernofsky & DeNoyelles v Waldman, 212 AD2d 566,
566 [1995]). The remaining arguments have been considered and
are unavailing.
McCarthy, Lynch and Devine, JJ., concur.
ORDERED that the order and judgment are affirmed, with
costs.
ENTER:
Robert D. Mayberger
Clerk of the Court