| Levy v Laing |
| 2007 NY Slip Op 06765 [43 AD3d 713] |
| September 18, 2007 |
| Appellate Division, First Department |
| John Corcos Levy, Appellant, v Jeffrey Laing,Respondent. |
—[*1] Andrew E. MacAskill, Rockville Centre, for respondent.
Order of the Appellate Term of the Supreme Court, First Department entered December 20,2005, which reversed an order of the Civil Court, New York County (Arthur F. Engoron, J.),entered July 6, 2005, denying defendant's motion for summary judgment, and dismissed thecomplaint, unanimously reversed, on the law, without costs, the motion denied and the complaintreinstated.
In 1986, defendant Jeffrey Laing retained plaintiff John Corcos Levy, Esq., for a one-thirdcontingency fee, to prosecute a legal malpractice action against the law firm of Bushin &Rosman (B & R) for B & R's alleged negligence in an underlying personal injury action. In 1989,an order granting B & R's motion for summary judgment dismissing the legal malpractice actionwas reversed by this Court (149 AD2d 351 [1989]). In 1990, Laing substituted the law firm ofGandin, Schotsky & Rappaport (GSR) for Levy. Levy and GSR then entered into a letteragreement giving Levy a 30% share in GSR's fee.
In 1993, the B & R legal malpractice action was marked off the calendar for Laing's failure toappear at a pretrial conference. Four years later GSR attempted to file a note of issue but a secondmotion by B & R to dismiss the action, this time pursuant to CPLR 3404, was granted. Weaffirmed (255 AD2d 113 [1998], lv dismissed 93 NY2d 957 [1999]).
Thereafter, in 2000, Laing retained the services of Andrew MacAskill, Esq. to commence asecond legal malpractice action, this one against GSR, whose actions and/or inactions during thefour-year hiatus had resulted in the final dismissal of the malpractice action against B & R. In2004, the action against GSR settled for $125,000.
Now, in this action, Levy, appearing pro se, sues former client Laing to recover $10,000 asthe reasonable value of his services in the B & R action. He claims that after assisting Laing inthe GSR malpractice action, he advised Laing of his position that he was entitled tocompensation for the work he did prior to their parting and Laing's retention of GSR. In response,Laing sent Levy $1,000, which Levy rejected.
Laing moved for summary judgment dismissing the complaint, averring that the $1,000 wascompensation, as agreed, for Levy's assistance in the GSR action, not the B & R action, and thatthere were no discussions about compensation for Levy's work in the B & R action. Further,Laing argued that as outgoing counsel, Levy is bound by his election to take a [*2]fixed 30% of GSR's contingency fee in the B & R case, is thereforenot entitled to have his fee fixed on a quantum meruit basis, and, because there was no recoveryby GSR, is not entitled to any fee whatsoever.
In opposition, Levy asserted that his compensation discussions with Laing concerned thework he performed before being substituted by GSR, and denied seeking payment for aidingMacAskill in the GSR action. He argued that because the settlement of the GSR action was aconsequence of the underlying personal injury claim and initial malpractice action against B & R,the GSR action "related back" to the B & R action and, as such, he was entitled to compensationfor his work in the B & R action.
The motion court denied Laing's motion to dismiss the complaint, finding "that the caseagainst GSR settled only because [Laing] had a cause of action against B & R that would havebeen successful but for the negligence of GSR," and ruling that Levy's "effort expended in goodfaith in litigation that ultimately, albeit in a different context, [was] successful" should bereasonably compensated.
Appellate Term, one Justice dissenting, disagreed and dismissed the complaint, holding thatwhen Levy contracted for a 30% share in GSR's future compensation in the B & R action, hewaived his right to payment based on quantum meruit, and that when the B & R action wasdismissed, his right to attorneys' fees based on a percentage was extinguished. The fact that Laingwas successful in his subsequent malpractice against GSR did not, according to Appellate Term,entitle Levy to recover, on any basis, for the services he rendered in the B & R action. Nor didthe fact that the GSR action was settled establish that the B & R action would have succeeded onthe merits. We now reverse.
Since the dispute regarding the fee is between Levy and Laing, the controlling agreement isnot the 30% fee-sharing agreement between Levy and GSR, as found by Appellate Term, butrather the one-third contingency fee agreement between Levy and Laing. This is an importantdistinction because in disputes between attorneys, the discharged attorney may elect to receivecompensation based on quantum meruit or on a contingency basis, whereas as against aformer client, the discharged attorney is entitled to quantum meruit only, unless the client andattorney agree otherwise (see Matter of Cohen v Grainger, Tesoriero & Bell, 81 NY2d655, 658 [1993]). Since Laing's discharge of Levy canceled and annulled the one-thirdcontingency fee agreement between them in the B & R action, Levy is entitled to recover inquantum meruit the fair and reasonable value of his services in that action, without limitation tothe original one-third contingency agreement (see Matter of Montgomery, 272 NY 323,326-327 [1936]; Kronish, Lieb, Shainswit, Weiner & Hellman v Howard Stores Corp.,44 AD2d 813 [1974]). The three remedies of an attorney discharged without cause—theretaining lien, the charging lien, and the plenary action in quantum meruit—are notexclusive but cumulative (Butler, Fitzgerald & Potter v Gelmin, 235 AD2d 218, 218-219[1997]). As such, contrary to Appellate Term's finding, while dismissal of the B & R action mayhave extinguished Levy's contractual right to recover 30% of GSR's fee, it did not affect his rightto recover in quantum meruit from Laing. To hold otherwise would disturb "the delicatebalance between the need to deter clients from taking undue advantage of attorneys, on the onehand, and the public policy favoring the right of a client to terminate the attorney-clientrelationship without inhibition on the other" (Demov, Morris, Levin & Shein v Glantz,53 NY2d 553, 558 [1981]).
Laing's argument, adopted by Appellate Term's majority, that proof was lacking that [*3]Levy would have prevailed in the initial B & R action, albeit aheavy burden (see Nazario v Fortunato& Fortunato, PLLC, 32 AD3d 692, 695-696 [2006]), is undermined by the fact of thesettlement of the subsequent GSR action. Nor do we agree that Laing's ultimate recovery,through settlement of the GSR action, was separate and apart from B & R's alleged originalmalpractice in the underlying personal injury action. As Laing does not deny that the GSR actionwas settled only because he had a cause of action against B & R that would have been successfulbut for GSR's malpractice, Levy should be reasonably compensated for the work he performed.We have considered Laing's remaining arguments and find them without merit.Concur—Saxe, J.P., Williams, Buckley, Catterson and Malone, JJ. [See 10 Misc3d 133(A), 2005 NY Slip Op 52066(U).]