In an action, Defendants may move to dismiss a Plaintiff’s Complaint based upon the allegation that the Complaint fails to state a cause of action, pursuant to CPLR 3211(a)(3) and (7). In deciding such a motion, the court must accept the facts as alleged in the Complaint as true, according the plaintiff the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory. Goldman v. Metropolitan Life Insurance Co., 5 NY3d 561 [2005]. Essentially, the court should impose a “four corners” test in liberally construing the four corners of the pleading to see whether they establish valid causes of action. Schwaner v. Collins, 17 AD3d 1068 [4 Dept. 2005].
As the Court of Appeals enunciated in Guggenheimer v. Ginzburg, 43 NY2d 268 [1977], on a motion to dismiss made pursuant to CPLR 3211(a)(7), “the sole criterion is whether the pleading states a cause of action, and if from its four corners factual allegations are discerned which taken together manifest any cause of action cognizable at law.” Further, “when evidentiary material is considered, the criterion is whether the proponent of the pleading has a cause of action, not whether he has stated one, and unless it has been shown that a material fact as claimed by the pleader to be one is not a fact at all and unless it can be said that no significant dispute exists regarding it, again dismissal should not eventuate.” Guggenheimer, supra at 275.
Punitive Damages Are Not Recoverable for Ordinary Breach of Contract
Punitive damages are those awarded to a litigant, separate and apart from the person’s actual damages, to “punish” the bad conduct of the other party.
It is well-founded that “punitive damages are not recoverable for ordinary breach of contract as their purpose is not to remedy private wrongs but to vindicate public rights.” See, Rocanova v. Equitable Life Assurance Society of United States, 83 NY2d 603 [1994]. Damages arising from a simple breach of contract are usually limited to contract damages. See, New York University v. Continental Insurance Company, 87 NY2d 308 [1995].
It is well-founded that “punitive damages are not recoverable for ordinary breach of contract as their purpose is not to remedy private wrongs but to vindicate public rights.” See, Rocanova v. Equitable Life Assurance Society of United States, 83 NY2d 603 [1994]. Damages arising from a simple breach of contract are usually limited to contract damages. See, New York University v. Continental Insurance Company, 87 NY2d 308 [1995].
Standard for Injunctive Relief
“This Court Should Grant Injunctive Relief”
CPLR 6301 authorizes the Court to grant a preliminary injunction where it appears that the defendant threatens, is about to, or is doing an act in violation of the plaintiff’s rights respecting the subject of the action, which would tend to render any judgment ineffectual. A temporary restraining order may also be granted where it appears that there is immediate and irreparable injury, loss or damage resultant therefrom.
This Court is permitted to issue an injunction in this matter based upon the following factors, which are demonstrated herein: (a) there is a likelihood of Plaintiffs’ success on the merits; (b) irreparable harm will occur without an injunction; and (c) a balancing of the equities tips in favor of Plaintiffs as against Defendants. Hoeffner v. John F. Frank Inc., 302 AD2d 428 (2d Dept. 2003).
A: Likelihood of success on the merits:
Under the first prong of the three-part test, the plaintiff is not required to show a certainty of success, but rather must make a prima facie showing of its right to relief. Terrell v. Terrell, 279 AD2d 301 (1st Dept. 2001).
B: Irreparable harm or injury:
Courts have generally construed irreparable injury as actual and imminent harm to be suffered, as opposed to a remote possibility or speculation. See, e.g. Khan v. State University of New York Health Science Center at Brooklyn, 271 AD2d 656 (2d Dept. 2000). An injury will be viewed as irreparable if adequate compensation cannot be fixed, such as in cases involving the loss of a business’s goodwill. Battenkill Veterinary Equine PC v. Cangelosi, 1 AD3d 856 (3d Dept. 2003).
Where the plaintiff’s allegations in support of the motion are specific and factual, and not conclusory in nature, the granting of injunctive relief is proper. Cf., Matos v. City of New York, 21 AD3d 936 (2d Dept. 2005).
C: Balancing of the equities:
In balancing the equities, the court must weigh the harm each side will suffer in the absence or face of injunctive relief. Battenkill Veterinary Equine PC v. Cangelosi, supra; Credit Index LLC v. Riskwise Intern. LLC, 282 AD2d 246 (1st Dept. 2001). For the plaintiff to prevail, “[i]t must be shown that the irreparable injury to be sustained…is more burdensome [to the plaintiff] than the harm caused to the defendant through imposition of the injunction.” McLaughlin, Piven, Vogel, Inc. v. W.J. Nolan and Co. Inc., 114 AD2d 165 (2d Dept. 1986), quoting Nassau Roofing and Sheet Metal Co. Inc. v. Facilities Development Corp., 70 AD2d 1021 (3d Dept. 1979).
Not so fast. Lawyer Can’t Be Displaced by Client without Court Order.
The client was injured and hired a lawyer to prosecute his personal injury claim against various entities for negligence. The lawyer agreed to handle the personal injury claim for a one-third contingent legal fee. “Contingent fee” refers to an arrangement with an attorney for payment of a percentage of an amount recovered for the client through settlement or resolution of the claim; a one-third contingency is fairly standard in personal injury matters.
After being retained by the client, the lawyer took a number of steps towards prosecuting the claim, including (1) commencing an action (termed a “special proceeding” in the New York State Supreme Court) against a municipality to file a “late” notice of claim to sue that government entity; (2) representing the client in the related worker’s compensation claim before the New York State Worker’s Compensation Board; and (3) commencing an action for personal injuries against the potentially-liable company in the New York State Supreme Court.
After the action was started in the New York State court, the defendant “removed” the action to federal court (based on a concept known as “diversity,” because that defendant was an out-of-state company). In the federal court case, the action continued with discovery proceedings taking place between the parties. The defendant even made an offer to settle the personal injury claim for $50,000, which was rejected.
Displacement of the Attorney
Three days after the $50,000 settlement offer, the lawyer received a letter from another law firm enclosing a Consent to Change Attorney form for the lawyer to sign and return with the file. The letter indicated that the client had now retained the other law firm to continue litigating his personal injury claim and, effectively, terminated the lawyer’s representation in the federal court case.
It is not uncommon for a client to change attorneys midstream during litigation; the usual steps taken upon substitution of attorneys is for the outgoing attorney to deliver the client’s file to the incoming attorney and for the attorneys to come to an arrangement concerning the split of the contingency fee when and if the case settles or resolves. It is also common for the incoming attorney to pay the outgoing attorney’s expenses on the file, including court filing fees, process service fees, and the costs of medical records and investigators. Unfortunately, in this situation, the incoming attorney was unwilling to pay the outgoing attorney’s expenses; he also refused to negotiate any division of the one-third contingency legal fee with the outgoing attorney, claiming instead that the outgoing attorney was entitled to nothing.
Attorney Cannot Be Displaced without Court Order
The outgoing attorney contacted Richard A. Klass, Your Court Street Lawyer, about enforcing his rights to both his legal fee and reimbursement for expenses. The first step was to draft an Order to Show Cause seeking both a “charging” lien upon any future legal fee upon settlement of the case for the lawyer’s percentage and a “retaining” lien to hold onto the client’s file until the expenses were paid.
There is a rule in the United States District Court for the Eastern District of New York concerning the situation where an attorney withdraws or is displaced from a case:
Local Civil Rule 1.4. Withdrawal or Displacement of Attorney of Record.An attorney who has appeared as attorney of record for a party may be relieved or displaced only by order of the Court and may not withdraw from a case without leave of the Court granted by order. Such an order may be granted only upon a showing by affidavit or otherwise of satisfactory reasons for withdrawal or displacement and the posture of the case, including its position, if any, on the calendar, and whether or not the attorney is asserting a retaining or charging lien.
The Order to Show Cause stated that the lawyer was “displaced” from the case by his former client for no legitimate reason and that the lawyer could only be displaced by Order of the Court. Stated in the accompanying affirmation of the outgoing attorney was that the incoming attorney (and, presumably, his former client) were proposing to pay him $0 for two years’ worth of work on the file. It was urged that the federal judge uphold longstanding New York State law that protects attorneys who render legal services on behalf of their clients.
Charging and Retaining Liens
Under New York State law, an attorney who is discharged by his client is statutorily entitled to a charging lien on any monetary recoveries obtained by the former client in the proceedings in which the attorney had rendered legal services. See Judiciary Law § 475. In Mello v. City of New York, 303 AD2d 564 [2003], the court held that where an attorney’s services were provided on a contingent-fee basis, the court should determine the amount of the lien to be fixed in accordance with the attorney’s request, as a contingent percentage based on the proportionate percentage of work he performed, to be determined at the conclusion of the action (see Matter of Rosenblum, 121 AD2d 546 [1986]; see also Lai Ling Cheng v Modansky Leasing Co., 73 NY2d 454, 457-458 [1989]).
A discharged attorney is also entitled to a retaining lien on the former client’s papers and property that are in the attorney’s possession, under New York common law. See Resolution Trust Corp. v. Elman, 949 F.2d 624, 626 (2d Cir.1991). This mean that the client’s file can be retained by an attorney until he is paid, similar to how a mechanic can hold onto a car until the car’s owner pays for the repairs.
A conference was held with the judge. The judge decided that the client’s file would be exchanged only upon payment of the file expenses and that the outgoing attorney’s percentage of the overall legal fee would be determined when the case settled or resolved. About six months later, the incoming attorney settled the case for $70,000. The charging lien was settled through negotiations between the attorneys, with the outgoing attorney being paid $16,000 for one third of the initial $50,000 settlement offer and the incoming attorney being paid $6,000 for one third of the next $20,000 settlement portion.
by Richard A. Klass, Esq.
copyr. 2012 Richard A. Klass, Esq.
The firm’s website: www.CourtStreetLaw.com
Richard A. Klass, Esq., maintains a law firm engaged in civil litigation at 16 Court Street, 28th Floor, Brooklyn Heights, New York.
He may be reached at (718) COURT-ST or e-ml to RichKlass@courtstreetlaw.comcreate new email with any questions.
Prior results do not guarantee a similar outcome.
Summary Judgment Motion Should Be Denied When There Are Material Issues of Fact
On a motion for summary judgment, it is well-settled that the movant must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to demonstrate the absence of any material issues of fact. If the movant fails to make such a showing, then the motion must be denied, regardless of the sufficiency of the opposing papers. Once a showing has been made, the burden shifts to the party opposing the motion to produce evidentiary proof in admissible form sufficient to establish the existence of material issues of fact which require a trial of the action. See Zuckerman v. City of New York, 49 NY2d 557 [1980]; SRM Card Shop v. 1740 Broadway Associates, 2 AD3d 136 [1 Dept. 2003]; Romano v. St. Vincent’s Medical Center of Richmond, 178 AD2d 467 [2 Dept. 1991].
