A New Way to Award Attorney’s Fees

Posted on April 7, 2011 by Richard Klass

The “American Rule” governs most cases in United States’ courts, where each party to the litigation bears its own costs and attorney’s fees (as opposed to the “English Rule,” according to which the loser of the litigation is chargeable with the winner’s attorney’s fees). There are three exceptions to the “American Rule,” which are when there is:

(a) an agreement between the parties pertaining to attorney’s fees;
(b) a statute which awards reasonable attorney’s fees to the “prevailing party;” or
(c) a court rule provides for attorney’s fees.

Out With The “Old” Ways

Generally, courts around the country use one of two methods to determine the amount of “reasonable attorney’s fees” to be awarded to a party: (1) the “lodestar” method and (2) the “Johnson” twelve-factor method (these methods were the two existing methods endorsed by the US Supreme Court in Hensley v. Eckerhart, 461 US 424 (1983)).

The “lodestar” method figures out the reasonable attorney’s fee to be awarded — which is basically the product of the attorney’s usual hourly rate multiplied by the number of hours worked (for example: $3,500 attorney’s fees award based on 10 hours of the attorney’s hourly rate of $350). After figuring out the product, the fee may be adjusted by the court as part of the court’s fee-setting method — a starting point (if you will) for an initial estimate before considering the particulars of the case’s circumstances.

The “Johnson” method came about from a case titled Johnson v. Georgia Highway Express, 488 F.2d 714 (5th Cir. 1974), in which the court envisioned a one-step inquiry into attorney’s fees, based upon twelve factors, allowing the court to rely more on its experience and judgment with both the attorney and type of case involved. Market forces, which generally influence the hourly rate charged, are not to be the sole determining factor under this method.

In theory, courts that adopted the “lodestar” method were expected to consider fewer variables than the “Johnson” method; in practice, however, many courts consider the same set of variables under both methods to arrive at a fee amount. Some court decisions held that the “Johnson” factors should be applied after applying the “lodestar” calculation; some held that many of the “Johnson” factors were subsumed into the initial calculation.

The Presumptively Reasonable Fee

In a Decision rendered in April 2007 by the United States Court of Appeals for the Second Circuit in the case of Arbor Hill Concerned Citizens Neighborhood Association v. County of Albany, the Second Circuit held that it was abandoning the traditional “lodestar” method in favor of the concept of the “presumptively reasonable fee.” (The Second Circuit Court of Appeals covers cases in the federal courts of New York and Vermont). The Decision actually stated that the term, “lodestar method,” was a metaphor that has “deteriorated to the point of unhelpfulness.”

The Second Circuit decided to switch over to a new method of figuring out the reasonable attorney’s fee to be awarded to a prevailing party termed the “presumptively reasonable fee.” This new way asks the court to bear in mind all of the case-specific variables, including the reasonable hourly rate that a paying client would be willing to pay if he was able to negotiate with his attorney. In determining that, the court should consider, among other things, the “Johnson” factors and the fact that a reasonable, paying client would likely want to spend the minimum amount necessary to effectively litigate the case.

The Forum Rule

The Decision also highlighted a particular issue involved in setting fees — the “forum rule.” To determine the general hourly rate, the court has to consider the “community” in which the court sits; in federal courts, it has generally been the geographic area of the district in which the court is located. The Second Circuit recognized that that area could be skewed, depending on the district. So, the court clarified that a district court may use an out-of-district rate (or a rate in between in-district and out-of-district) if it is clear that a reasonable, paying client would have paid the higher rate; however, the court will presume that a client will either hire counsel located within the district or counsel whose rates are consistent with those of local counsel. The presumption may be rebutted if it can be shown that hiring higher-priced, out-of-district counsel was reasonable under the circumstances.

Like all considerations involved in deciding whether to bring a lawsuit against someone, the issue of attorney’s fees is an important one. Without effective, compensated counsel, a litigant with a true cause may be deprived of “his day in court.” Fee-shifting statutes and agreements for attorney’s fees ensure that each side to a dispute knows the risks of his conduct — whether it be the breach of a contract or commission of an act that a statute or court rule is designed to protect.

by Richard A. Klass, Esq.

copyr. 2011 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.

R. A. Klass
Your Court Street Lawyer

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Getting it Done: The Importance of Entering Timely Defaults

Posted on March 14, 2011 by Richard Klass

In 2004, a guy went out for a night of drinkin’ on the town. On the way home, he stopped in to one last bar to drink. At the bar, in a very drunk condition, he hit on a woman. After leaving the bar to go home, he saw standing by a nearby building a woman who he thought was the same one as the one in the bar. When the guy saw the woman on the street, thinking it was the one he saw in the bar, he grabbed and touched her. Unfortunately, it turned out that she was not the same woman—and she pressed charges of assault.

Naturally, the woman claiming assault not only sought criminal charges but also brought a civil action to recover damages from the guy. She brought the law suit against him through her lawyer in 2004. The defendant failed to answer the complaint after being served; however, her lawyer did not ask the judge to enter a default against the guy until 2006 – two years later. In support of the request for the default judgment, the lawyer stated that the woman had left New York to return to her native country because she was emotionally distraught over the assault and did not return until 2006. The judge granted a default judgment for the woman’s pain and suffering for $1,000,000.

The relevant New York statute governing default judgments, CPLR 3215, provides that, when a defendant has failed to appear in an action, the plaintiff may seek a default judgment against him. However, the plaintiff is required to do so within one year after the default, as required by subsection (c) thereof:

Default not entered within one year: If the plaintiff fails to take proceedings for the entry of judgment within one year after the default, the court shall not enter judgment but shall dismiss the complaint as abandoned, without costs, upon its own initiative or on motion, unless sufficient cause is shown why the complaint should not be dismissed. A motion by the defendant under this subdivision does not constitute an appearance in the action.

According to the above subsection, the court should have dismissed the complaint as abandoned, based upon the woman’s failure to take proceedings for the entry of default within one year. Numerous cases have held that dismissal of the complaint is required when there has been a failure to take timely proceedings for entry of default. See,Saunders v. Central Brooklyn Coordinating Council, Inc., 273 AD2d 294 (2d Dept. 2000); PM-OK Associates v. Britz, 256 AD2d 151 (1st Dept. 1998).

Plaintiff must show a justifiable excuse

The Second Department held, in Winkelman v. H&S Beer and Soda Discounts Inc., 91 AD2d 660 (1982), that, absent a justifiable excuse and a showing that the action is meritorious, the plaintiff’s failure to enter a default judgment against the defendant within one year of the latter’s default mandates dismissal of the action against defendant as abandoned. In the affirmation of the woman’s attorney, he stated:

“ That shortly after the Summons and Complaint was served, the Plaintiff, suffering from emotional stress and trauma based on the underlying assault and battery complained in this action, left the United States for her home country of Spain, as Defendant resided in the same neighborhood as Plaintiff, and Plaintiff, in fear of her safety and mental well-being, withdrew from the country. ”

In Herzbrun v. Levine, 23 AD2d 744 (1st Dept. 1965), the Court held that the plaintiff’s excuse that she was forced to move to West Germany shortly after the action was commenced was not sufficient cause to excuse the failure to comply with the provisions of CPLR 3215. In Sortino v. Fisher, 20 AD2d 25, 30 (1st Dept. 1963), the court stated that “[T[he duty of prosecuting …. (an) action rests upon the (person) who brings it, not the (party) who defends it.” In that case, the court stated that “there is an intimate relationship between the merit of an action and the fact that it has been neglected.” This is the reason why an affidavit is needed because it must be “as good as the kind of affidavit which could defeat a motion for summary judgment on the ground that there is no issue of fact.” As Justice Breitel wrote in the decision: “Given the delay, he has a double burden; to justify the delay and to lend credit to the proferred justification by establishing merit.” Further, “Even an action of great merit may be forfeited by prolonged delay. It is the right of a defendant to be free of a case which is not diligently prosecuted. For obvious reasons, it is very rare and quite perverse that an action of merit is not diligently prosecuted.”

Richard A. Klass, Your Court Street Lawyer, brought a motion, termed an “Order to Show Cause,” to vacate the default judgment and dismiss the action. The motion stated that the excuse of the plaintiff for not entering the default within one year (that the woman suffered from emotional stress) had absolutely nothing to do with the requirement that her attorney should have moved for the default within one year since he proceeded on the Verified (or sworn) Complaint of his client and did not need any further sworn affidavits from her to obtain the default judgment.

In response to the Order to Show Cause, the plaintiff capitulated and agreed to settle the ‘Million Dollar’ case for a mere $7,500 to avoid further litigation!

by Richard A. Klass, Esq.
Your Court Street Lawyer

R. A. Klass
Your Court Street Lawyer

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The (Property) Bonds of Matrimony That Can’t Be Broken

Posted on February 21, 2011 by Richard Klass

Two sisters and their respective husbands decided to purchase a two-family house in The Bronx in 1995. At the closing, they took title to the property, reflected on the Deed, as follows: “Gilberto Hernandez and Consolacion Hernandez, his wife …. And Erlinda Que and Elpidio Rodriguez, her husband.” Erlinda executed her Last Will and Testament, in which she devised her “half share and interest in the real property” to her sister, Consolacion, and her husband, Elpidio, in equal shares. In December 2000, Erlinda passed away, survived by her husband, Elpidio.

For a long time after Erlinda’s death, Elpidio and his deceased wife’s sister continued to maintain the house. At some point, he remarried and wanted to sell it and move. And, when they all couldn’t agree on how to accomplish this, a lawsuit was initiated called a “Partition and Sale” action. In this type of lawsuit, the parties ask a judge to order the property sold at auction.

The decedent’s sister and her husband, along with the nominated executor under the Will, claimed that ownership of the Bronx property passed under Erlinda’s Last Will and Testament. Therefore, they claimed that half of Erlinda’s quarter-share went to Consolacion (or one-eighth of the total interest in the property), and half of Erlinda’s quarter-share went to Elpidio. By their claim, Elpidio would be entitled to only 37.5% of the house.

Elpidio, the decedent’s surviving spouse, came to Richard A. Klass, Your Court Street Lawyer, for legal advice. Elpidio felt that, as Erlinda’s husband, he should get more.

Tenancy by the Entirety:

One of the “perks” of being married is that real property deeded to a husband and wife creates a “tenancy by the entirety,” under New York’s Estates Powers and Trusts Law Section 6-2.2(b). This form of ownership, among other things, prevents creditors of one spouse from forcing the sale of the house and easily transfers title to one spouse upon the death of the other. The exception to this rule about a tenancy by the entirety is if the Deed expressly declares it to be a joint tenancy or tenancy in common (where each spouse owns a divisible share).

Commonly, the Deed to a husband and wife will indicate that they are married, with language such as “A and B, as husband and wife” or “A and B, his wife” or “A and B, her husband.” This form of ownership, by statute, cannot be altered or changed without the mutual consent of the spouses or a divorce. Obviously, the ownership of a house by spouses as a tenancy by the entirety gives comfort that one spouse cannot sell his/her interest in the house without the other spouse’s consent. Only in limited circumstances, such as a divorce proceeding or bankruptcy case, can a court force the disposition of a house owned by the spouses in this form without their consent.

Granting of Summary Judgment:

The term “summary judgment” means that the litigant believes that there are no issues of fact which necessitate a trial before a judge or jury. When one litigant “moves” or asks the judge to grant summary judgment, he must present proof (in admissible form) which supports the request and which demonstrates that the matter may be decided on the law alone. It can then be said that the movant has established his“prima facie” case (meaning “at first sight”). Then, the other side to the litigation must present the judge with proof that there are genuine factual issues, and that the matter cannot be decided without a trial. Many readers will understand that judges deny summary judgment motions in most cases because they want to give litigants their day in court, and the facts are not always the facts.

In the probate proceeding in the Surrogate’s Court for Bronx County, Elpidio asked the Surrogate to grant him “summary judgment” on his claim that he is entitled to Erlinda’s entire interest in the house. The ‘Exhibit A’ proof, offered by Elpidio that he was entitled to Erlinda’s whole share, was the Deed itself. There was no express declaration in the Deed that it had been conveyed or transferred to Elpidio and Erlinda as anything other than husband and wife.

In granting summary judgment to Elpidio, in In the Estate of Erlinda Que, Deceased [Surrogate’s Court, Bronx County, February 25, 2010], Surrogate Holzman determined that, despite the language of Erlinda’s Last Will and Testament granting her sister a half-share of her interest in the house, Elpidio should be declared the full owner of half or 50% of the whole house. Specifically, Surrogate Holzman held that:

“ A tenancy by the entirety is different from both a tenancy in common and a joint tenancy in that ‘it remains fixed and cannot be destroyed without the consent of both parties’ for ‘as long as the marriage remains legally intact,’ with both parties continuing ‘to be seized of the whole, and the death of one merely results in the defeasance of the deceased spouse’s coextensive interest in the property.’ (V.R.W. Inc. v. Klein, 68 NY2d 560 [1986].) ”

Accordingly, by operation of law, the death of Erlinda, one of the spouses, resulted in that spouse/tenant no longer having an interest in the property, with Elpidio, as the surviving spouse, now owning her share as well as his own. Surrogate Holzman recognized the long-standing rule that “a severance of a tenancy by the entirety cannot be effectuated by the unilateral last will of one of the spouses alone.” (Matter of Strong, 171 Misc. 445 [1939].

by Richard A. Klass, Esq.

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copyr. 2010 and 2011 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.

R. A. Klass
Your Court Street Lawyer

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The Wrong Side of the Tracks Costs Law Firm $800,000.

Posted on February 1, 2011 by Richard Klass

The Long Island Railroad (LIRR) leased one of its old rail yards in Queens to a recycling company. One of the recycling company’s employees was working the late shift on a rainy evening in 2003. That rainy night, he was assigned the task of welding on a portion of the metal fence surrounding the yard with an acetylene torch. He got up on a ladder, climbed up several rungs, and started to weld. At that point, the injured worker got a shock from the welding equipment. The ladder then shifted in the mud and he fell to the ground, suffering severe injuries. Since that incident, he was unable to work, having become disabled, and having had several surgeries to his back and knee.

The injured worker hired a law firm to bring a personal injury claim against the owner of the yard under New York’s Labor Law Section 240 known as the “Scaffolding Law.” That law firm brought a petition to file notices of claim against the MTA (Metropolitan Transportation Authority) and the LIRR. The Supreme Court Justice dismissed the petition, indicating in his decision that, as to the MTA, the reason for the late notice of claim was not meritorious and, as to the LIRR, no notice of claim was needed and that the law firm merely needed to timely commence a lawsuit under New York’s Public Authority Law. Needless to say, the time within which the injured worker needed to commence the lawsuit against the LIRR had already passed by the time of that decision. The injured worker retained Richard A. Klass, Your Court Street Lawyer to sue the personal injury law firm for legal malpractice.

Time-barred by the Statute of Limitations:

The concept of a “ Statute of Limitations ” is that people are afforded a certain amount of time to take action concerning a legal claim they may have; if that period of time passes without taking action, then the ability to pursue the legal claim has been waived. Most people are familiar, for instance, that in New York State the statute of limitations period within which to file most personal injury cases is three years from the date of accident. In this particular case, though, the Statute of Limitations period within which to sue the potentially liable parties was shorter (to a period of one year and thirty days) because the personal injury claim was against the LIRR, a governmental authority under a special statute.

Once the judge had dismissed the injured worker’s lawsuit, thus leaving him without recourse to recover monetary damages for his injuries, the law firm was exposed to the legal malpractice claim brought against it because it was alleged to have “blown” the statute of limitations by neglecting to timely file the lawsuit against the LIRR.

In legal malpractice cases, the statute of limitations in which to sue an attorney is three years from the date of malpractice under New York’s CPLR Section 214(6). Since many times in litigation, attorneys who have committed malpractice continue representing their clients for months or years afterward, there is also a concept of “ continuous representation. ” This means that the statute of limitations “clock” does not start to tick until the attorney has stopped representing the client in the matter.

Proving the underlying case under Labor Law Section 240:

A legal malpractice case is a very difficult type of litigation for one particular reason: Assuming that the lawyer ‘screwed up’ as much as possible, doing everything as wrong as could be done or failing to do any of the right things, it still might not matter — the ultimate question for purposes of liability for legal malpractice will be whether there was any merit to the underlying case that the lawyer was hired to handle. Rephrased: Would the client have won “but for” his lawyer?!

New York’s Scaffolding Law provides that owners of real estate, such as the LIRR, are “strictly liable” for injuries suffered by workers who fall from a ladder or scaffold under almost all circumstances, with limited exceptions, such as if there was a lack of adequate safety devices. This basically means that the landowner is responsible to pay for all of the worker’s damages for his injuries, including medical bills, lost wages, and pain and suffering. An exception to holding the landowner strictly liable under the Scaffolding Law is where the injured worker is found to have been the “ sole proximate cause ” of his injuries. In this case, the law firm being sued for legal malpractice argued that, in the event the LIRR had been sued, the injured worker would not have prevailed anyway because this exception to the Scaffolding Law would have applied because he knew not to weld in the rain. In response, the injured worker claimed that his employer at the yard instructed him to weld in the rain and that he was not going to be insubordinate.

Separate and apart from the Scaffolding Law issue, the law firm argued that there was no proof of exactly where the fall occurred to establish that it happened on the LIRR’s property. In response, a surveyor was retained to survey the area surrounding the old rail (now recycling) yard, and Deeds dating back to the 1800s were obtained. These documents were produced to establish the legal ownership of the location where the fall took place. This was a necessary element of the case in order to prove that the LIRR would have been liable for injuries to workers on its property under the Scaffolding Law.

The legal malpractice case came up for a pre-trial conference. Attorneys Richard A. Klass and Stefano A. Filippazzo appeared at the conference on behalf of the injured worker. The law firm being sued for legal malpractice finally settled with the injured worker for $800,000 to settle the action and pay for his injuries and extensive medical lien.

by Richard A. Klass, Esq.

copyr. 2011 Richard A. Klass, Esq.

Art credits: page one, Hjørring – Hirtshals Line in Northern Denmark. Photograph by Tomasz Sienicki, 2003.

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.

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Emergency and Expedited Legal Services

Posted on January 14, 2011 by Richard Klass

The economic downturn has created situations where many clients may need Emergency and Expedited Legal Services.

If you, a friend or a family member has a legal emergency and time is of the essence, call immediately.

I will answer your questions and provide an initial consultation AT NO CHARGE. If you, or someone you know, is facing any of the following situations, it is imperative to quickly secure competent legal representation.

Need to save the home.
Need to avoid “fire-sale low-ball offers” on your real estate.
Bankruptcy protection that considers your needs (Chapters 7, 11 and 13)
Taking action when you or another homeowner has been lured into a foreclosure scam.
Any other situation involving the sudden loss of real estate.