New York Family Law Blog
This Civil Court action involves a dispute over legal fees that span a period of nearly eight (8) years. The deterioration of the attorney-client relationship and the legal action that ensue, often reveal acts and omissions by both parties that requires judicial intervention and scrutiny.
The particulars of this dispute unfolded in this sequence of events. The Plaintiff is the senior attorney in a law office and is admitted to practice law in the State of New York. The Defendant, is a resident of the State of New Jersey. Based on the record the fiancé of the Defendant referred her to the law office for legal representation based on the fact that the aforementioned law office had successfully defended him in his divorce action. According to the parties, the parties participated in a meeting at the law office where the parties discussed the legal action proposed by plaintiff to remove tenants from a residential apartment in Brooklyn.
It this stage, it is appropriate to divulge the factual history of a divorce action between defendant and her former spouse in the State of New Jersey. The factual history as presented by plaintiff in documentary evidence admitted as Court Exhibit “1” disclose these facts. In or about August 7, 2002, defendant filed for a divorce against her husband in the Superior Court of New Jersey in the Chancery Division of the Family Part in Bergen County, New Jersey. Issue was joined by the service and filing of the Defendant’s answer in or about November 3, 2002.
On October 17, 2003, the presiding judge over the above action, dismissed the Defendant’s answer and his supporting defenses, and granted defendant a Final Judgment of Divorce. The Final Judgment of Divorce, subsequently subsumed by an Amended Final Judgment of Divorce, in addition to the resolution of issues of equitable distribution, child support, and visitation, provides, in relevant part, as follows: “Plaintiff shall receive all title and interest in the condominium located at 4050 Nostrand Avenue, Apartment PH-C, Brooklyn, New York and Judgment is (sic) hereby entered in her favor. The Superior Court appointed attorney-in-fact, to execute and file the New York State Deed and the other recording documents mandated by NY law to complete the transfer of the property to defendant. It is irrefutable and undeniable that the deficiency in the aforementioned legal description of the property in the decree is the catalyst for the controversy in this case.
On April 23, 2004, the Plaintiff Law Office and the Defendant executed a General Retainer which provided, in relevant part, as follows: The Defendant hereby retains the Plaintiff Law Firm “for the eviction of tenants located at 4050 Nostrand Avenue, Apartment PH-C, Brooklyn, New York, for a flat fee of $3,000.00 payable as follows: $1,500.00 down and the balance of $1,500.00 due in 30 days on May 23, 2004”. A copy of the General Retainer is admitted into evidence as Plaintiff’s Exhibit “1.”
The Retainer Agreement, as is customary and standard in the legal industry, “makes no representation, express or implied, concerning the outcome of the litigation”. Likewise, the agreement describes the mandatory provisions regarding fee disputes between the parties and the client’s rights to fee dispute arbitration. The document itself and the testimony of plaintiff contends that defendant acknowledged that all the terms and conditions had been reviewed, understood and approved by her. Since Russian, and not English, is the primary language of the Defendant, it is questionable whether the Defendant understood all of the terms of the agreement. After the Defendant was inept in her response to her own attorney’s questions on direct examination in her case-in-chief, this court insisted that the Defendant use an official Court ordered Russian interpreter. The Retainer did not contain an affidavit from an official Russian interpreter that the terms and conditions were explained to the Defendant.
After a five-day non-jury trial, the court had ample opportunity to observe the demeanor and credibility of the witnesses. After carefully reviewing and assessing all of the evidence in this case and after the reading of the trial transcript, obtained with the consent of the attorneys for the respective parties, the court makes the following findings of fact and conclusions of law.
Although a determination as to the proper amount of an award for legal fees lies largely within the discretion of the court, the discretion is not unlimited. There are many parameters that affect the value of legal services and must be considered by the court in evaluating this action. Those factors are the hours reasonably expended, a reasonable hourly rate, computation of the Lodestar fee and adjustments to the Lodestar fee.
In general, attorneys are free to select a number of reasonable courses of action in prosecuting a client’s case without exposing themselves to liability for malpractice or negligence. In this case, the court does not find that the Plaintiff’s law office selected a reasonable course of action in prosecuting the claim in this action. The first professional rule provides that a lawyer shall not handle a legal matter that the lawyer knows or should know that the lawyer is not competent to handle without associating with a lawyer who is competent to handle it.
In this action, the first course of action for the Plaintiff law firm should have been to communicate with the attorney that handled the divorce action in New Jersey. Although Plaintiff did testify that he spoke to her and obtained her file, he never made any inquiry about the exclusion of the lease agreement or leasehold interest in the divorce decree. Any real estate attorney would have made a determination of any and all liens, tenancies, leases, encumbrances, claims, actions and exceptions to title that were subject to the transfer of the condominium to the Defendant. It is this court’s opinion that the divorce attorney assumed responsibility for all rights, title and interest that the Defendant may have had in the subject property including any leases that may have been made subject of the transfer. But for the neglectful exclusion of such qualifying language in the transfer of this real estate located in Brooklyn, New York, the entire course of litigation undertaken by the Plaintiff’s attorney would have been different or even non-existent.
The proper course of action would have been to commence a summary proceeding to recover possession of the subject apartment. The Housing Part of the Civil Court of the City of New York has been clearly granted statutory authority pursuant to RPAPL §235-c to declare the alleged twelve (12) year lease agreement at a monthly rent of $590.00 for the duplex Penthouse in Brooklyn unconscionable. RPAPL §235-c provides, in relevant part, as follows: “If the court, as a matter of law, finds a lease or any clause of the lease to have been unconscionable at the time it was made, the court may refuse to enforce the lease, or it may enforce the remainder of the lease without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result”. As compelling, Section 2 of the statute provides that when it is claimed or appears to the court that the lease or any clause thereof may be unconscionable, the parties shall be afforded a reasonable opportunity to present evidence as to its setting, purpose and effect to aid the court in making the determination. This is not a new statute. It is well known to those attorneys that practice Landlord and Tenant law. The statute was enacted in 1976, effective July 26, 1976, and is applicable to all leases regardless of when executed in this state. No evidence, testimonial or otherwise, was introduced to show that plaintiff retained or consulted a Landlord and Tenant attorney notwithstanding the fact that he stated he was a veteran in the Landlord and Tenant Court. Even those that are experts consult with others in decision-making particularly in the legal profession.
This court is in accord with the Defendant’s claims that the proper venue to remove the tenants from possession was the Brooklyn Housing Part of the Civil Court of the City of New York and not the Superior Court in New Jersey. The Judge correctly instructed the Plaintiff law firm that the appropriate venue was New York based upon the fact that the property was located in New York, the occupants were residents of New York and were not parties to the divorce action. The judge was explicit that the tenants, in light of the evidence presented by both parties, may have some rights to occupancy.
Under New York law, both parties would have been given an opportunity to participate in an evidentiary hearing to determine the validity of the lease. Defendant could have presented expert testimony of a real estate broker and/or real estate appraiser to substantiate that the rental amount was a “sweetheart deal” and well below the fair market value for a comparable apartment of that size, condition and location. Of equal importance, defendant would have been offered the opportunity to present evidence to prove that the sum of $590.00 did not reflect the fair market rent for the subject premises and that such a low rental was due to the prior ownership of the subject premises by the Defendant’s former spouse. Evidence should have also been adduced to substantiate, as alleged by the Plaintiff law firm in the New Jersey Order to Show Cause, that the lease was intended to defeat her rights of possession contrary to the divorce decree. On the other side, the occupants would have been granted the statutory right to defend the lease, including but not limited to, the memorandum of lease dated March 25, 2003 that was sent to the title company for recordation, the lease itself and any other admissible evidence, testimonial or documentary, to substantiate its authenticity and its enforceability.
In regard to the initial fee customarily charged in the locality for similar legal services, this court finds that the fee initially charged at $3,000.00 for a simple holdover proceeding commonly referred to as a “no defense” holdover proceeding was escalated; $3,000.00 is not customarily charged in Kings County for a holdover proceeding for the recovery of possession from occupants presumably with no lease. A $3,000.00 or above retainer fee would be appropriate for a holdover proceeding to recover possession of a rent regulated tenancy such a Rent Control, Rent Stabilized or even Federal Section 8 tenant(s), in part, due to the complexity of those laws and regulations. However, the initial retainer amount was not totally unreasonable under the facts. Since the services in this case were clearly fixed and not contingency, those factors are not relevant here.
In addition to all of the above, this court finds it a deviation from traditional and customary legal practices for plaintiff to have his junior associate act as trial counsel in this case. As the presiding judge in many legal fee cases and trial counsel in many more cases of like substance, it is customary in the legal community for the Plaintiff to retain outside counsel in cases such as this one. In many instances, those outside counselors have an ongoing relationship with the law firm; many act, of counsel, on behalf of the firm as trial counsel or specialize in areas unfamiliar to the law firm. The trial transcript in this case speaks volumes of imprudence, inexperience and developing trial skills. It is apparent that no one, not even the managing partner, consulted with outside counsel to discern the requisite elements to prove a legal fee dispute case. Had such action been taken, maybe this action would have been avoided altogether. This court was remorseful that a young associate was obligated to act as trial counsel for his employer in this legal fee case. This court would discourage such uncustomary and irresponsible practice.
Based on all of the above facts and evidence, this court finds that the Plaintiff law firm has failed to prove that the legal fees rendered herein were reasonable and therefore, the complaint is dismissed with prejudice.
The Defendant is entitled to a refund in the sum of $1,918.50 and the Plaintiff is directed to refund this sum within 30 days from the date of this order. Upon the failure of the Plaintiff to comply with this order, the Defendant may enter judgment for $1,918.50 with interest from May 10, 2004, together with costs and disbursements.
The Defendant shall serve a copy of this Order with notice of entry on the Plaintiff within 30 days of the date of entry of this order by the Clerk of the court, and shall file proof of service thereof with the Clerk of this Court.
In order to retrieve any and all of the exhibits that were admitted into evidence in the above captioned case, the attorneys for the respective parties must appear at the 7th floor security desk and after the proper notice to the Chambers of the undersigned, all evidence on the execution of the form provided for that purpose acknowledging receipt thereof.
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