Fontilus v Pereira (2009 NY Slip Op 52438(U))

Fontilus v Pereira

2009 NY Slip Op 52438(U) [25 Misc 3d 1236(A)]

Decided on December 7, 2009

Supreme Court, Kings County

Schack, J.

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

This opinion is uncorrected and will not be published in the printed Official Reports.

In this declaratory judgment action, plaintiff-Mother MAJOLIE AUGUSTIN (AUGUSTIN) alleges that defendant law firm DINKES & SCHWITZER (D & S), in December 1999, was retained to prosecute an action against plaintiffs' previous landlords because of the landlords' alleged negligence in allowing unsafe conditions in landlords' rental property. These unsafe conditions led to the minor child ingesting lead paint chips and suffering lead poisoning, with severe and permanent injuries, including cognitive impairment, inability to socialize with other children, and limited control over urinary functions.

Further, on or about December 8, 1999, a summons and verified complaint were prepared by D & S, verified by LEONDROS A. VRIONEDES, a D & S associate, and filed with the Kings County Clerk on December 17, 1999, captioned JASMINE FONTILUS, an infant under the age of 14 years, by her Mother and Natural Guardian, MAJOLIE FONTILUS v TONY ST. FESTIN [*2]and CHRISTAINE ST. FESTIN, Index No. 48693/99. An affidavit of service was filed with the Kings County Clerk on January 18, 2000. On or about January 25, 2000, the law firm representing the St. Festin defendants served upon D & S: a verified answer; demands for a bill of particulars, discovery and inspection, collateral source information, medical reports and medical bills; and, a notice to take depositions. Plaintiffs allege that D & S never responded to any of the demands by St. Festins' counsel. Moreover, plaintiffs allege that D & S prepared, on or about January 27, 2000, a supplemental summons and amended verified complaint, also verified by LEONDROS A. VRIONEDES, Esq. This was filed with the Kings County Clerk on February 8, 2000. Counsel for the St. Festins served a supplemental verified answer on March 3, 2000.

Plaintiffs allege that subsequent to issue being joined, D & S did not proceed to prosecute the underlying action. However, the St. Festin defendants never moved to dismiss for failure to prosecute, the Court never dismissed the underlying action sua sponte, and D & S never moved to be relieved as counsel. The instant declaratory judgment action is plaintiffs' attempt to compel D & S to prosecute the dormant underlying matter.

Plaintiffs' counsel in the instant declaratory judgment action, Richard A. Montelione, Esq., of LOPEZ ROMERO & MONTELIONE, P.C. (LRM), states, in ¶ 20 of the complaint for declaratory judgment, that LRM "has no intention of being substituted as counsel for" D & S in the underlying matter. LRM claims, in ¶ 19 of the complaint, that because of the passage of almost ten years "it is virtually impossible and impractical to obtain other counsel to represent Plaintiff or the minor child in this matter." Further, plaintiffs' counsel, states, in ¶ 20 of his affirmation in support of the order to show cause in Motion Sequence (MS) Number 1, that "[m]y firm is involved in this matter solely for the purpose of bringing this motion to insure that the law firm of DINKES & SCHWITZER takes the required action to prosecute the underlying matter, including filing a Request for Judicial Intervention, and to monitor this case thereafter and protect the rights of the Plaintiffs." Mr. Montelione, in ¶ 19 of his affirmation in support of the MS No.1 order to show cause, clearly states, "[m]y firm is not interested in being substituted as counsel in the underlying matter."

Further, plaintiffs discontinued the instant action against defendants JASON L. PARIS, Esq. and LEONDROS A. VRIONEDES, Esq.

MS # 1 is plaintiffs' order to show cause, dated February 17, 2009, to: strike defendant D & S' eight affirmative defenses; declare that defendant D & S must prosecute the underlying action and file a request for judicial intervention (RJI) to schedule a preliminary conference; order costs and sanctions imposed against defendant D & S and defendant HERB PEREIRA, Esq. (PEREIRA) for frivolous conduct, by failing to prosecute the underlying action; award attorney's fees to LRM for monitoring the underlying matter for plaintiffs; and, other relief.

MS # 2 is plaintiffs' amended motion to amend the caption and serve a supplemental summons and complaint, dated March 25, 2009.

MS # 3 is defendant D & S's order to show cause, dated August 4, 2009, to dismiss the complaint against defendant D & S and to dismiss plaintiffs' claims for costs and sanctions against defendant D & S. [*3]

MS # 4 is plaintiffs' cross-motion, dated August 10, 2009, for costs and sanctions, including attorney's fees, against defendant D & S because defendant D & S' MS # 3 order to show cause is frivolous.

It appears that this declaratory judgment action was commenced, because in the words of the Captain, played by Strother Martin, in the 1967 Paul Newman film Cool Hand Luke, "What we've got here is failure to communicate." We have "failure to communicate" between defendants D & S and PEREIRA as well as "failure to communicate" between defendants and plaintiff-Mother AUGUSTIN.

While the conduct of defendants D & S and PEREIRA was in error, no evidence has been presented by plaintiff-Mother AUGUSTIN as to why she failed to communicate with defendants PEREIRA and/or D & S for years about the status of the underlying action. PEREIRA and D & S had a working relationship for a period of years and PEREIRA retained D & S to prosecute the underlying lead paint case for plaintiffs. LRM's billing records support D & S' position that the underlying case file was returned by D & S to PEREIRA and plaintiff AUGUSTIN understood that PEREIRA was her attorney. After plaintiff AUGUSTIN signed an authorization for LRM to access the underlying personal injury file, Mr. Montelione contacted PEREIRA's secretary to get the file. Mr. Montelione did not contact D & S until nine months later, after reviewing the file and apparently seeing D & S on the summons and complaint as plaintiffs' counsel. It is logical to infer that plaintiff AUGUSTIN identified PEREIRA to LRM as her attorney in the underlying case and assumed the file was in his possession. Further, D & S had a reasonable basis to believe that the underlying matter had been transferred to PEREIRA. D & S' conduct is not willful or in bad faith.

This Court conducted a number of conferences and appearances in attempting to settle the instant declaratory judgment action and then to hear oral argument on the four pending orders to show cause or motions. The Court notes that plaintiffs' counsel, in ¶ 13 of his October 6, 2009-reply, states that "Plaintiffs' Counsel has previously requested, and continues to request, that everything be placed on the record or in writing involving this matter." Not only are settlement discussions informal, but oral argument in motion practice does not require a court reporter transcribing the oral argument. (Judiciary Law § 295; Torres v American Bldg. Maintenance Co. of NY, 51 AD3d 905 [2d Dept 2008]; Feuer v HASC Summer Program, 247 AD2d 429, 430 [2d Dept 1998]; Stevenson v City of Rome, 237 AD2d 946 [4d Dept 1997]).

Plaintiffs failed to demonstrate how the instant declaratory judgment action is necessary or even beneficial to the prosecution of the underlying action. A party commencing a declaratory judgment action is taking an "offensive" step. This precludes the awarding of costs or sanctions. The Court of Appeals, in a comparable situation, held that an insured is not entitled to legal fees when it brings a declaratory judgment action to settle its rights against its insurer, even if the insured prevails. (Mighty Midgets Inc. v Centennial Ins. Co., 47 NY2d 12 [1979]). (See Oriska Insurance Company v American Textile Maintenance, 322 F Appx 36 [2d Cir 2009]; New York University v Continental Ins. Co., 87 NY2d 308, 324 [1995]; Kantrowitz v Allstate Indem. Co., 48 AD3d 753, 754 [2d Dept 2008]). The Mighty Midgets plaintiff brought a declaratory judgment action against its insurer to compel the insurer to defend an underlying personal injury action. Even though plaintiff prevailed, the Court struck down the fee awarded to plaintiff, [*4]holding, at 21, "that such a recovery may not be had in an affirmative action brought by an assured to settle its rights . . . but only when he has been cast in a defensive posture by the legal steps an insurer takes in an effort to free itself from its policy obligations." Further, at 21 - 22, "it has now long been the universal rule in this country not to allow a litigant to recover damages for the amount expended in the successful prosecution or defense of its rights." The Court noted, at 21 - 22, that while other legal systems, such as the British, allows a successful litigant to recover expenses, the practice in the United States is not to allow a litigant to recover expenses "in the successful prosecution or defense of its rights" and "this practice reflects a fundamental legislative policy decision."

The Mighty Midgets scenario is present in the instant case, with plaintiffs initiating

a declaratory judgment action to compel their attorneys to litigate their underlying

personal injury action. While the Mighty Midgets plaintiff was limited to the insurer whose services it had contracted and paid for, plaintiff AUGUSTIN was free to change attorneys in the underlying action at any time if she was dissatisfied. Again, there is no evidence that plaintiff AUGUSTIN did anything, before retaining LRM, to communicate with defendants to have them diligently prosecute the underlying lead paint case. Plaintiffs' counsel fails to show how the fees and expenses incurred in commencing the instant declaratory judgment action were necessary, let alone reasonable.

Moreover, defendants' failure to diligently prosecute the underlying action, due to communication mistakes, does not fall within the ambit of 22 NYCRR § 130-1.1 for costs and sanctions. 22 NYCRR § 130-1.1 gives the Court, in its own discretion, the authority

to award costs "in the form of reimbursement for actual expenses reasonably incurred and reasonable attorney's fees" and/or the imposition of financial sanctions upon a party or attorney who engages in "frivolous conduct." 22 NYCRR § 130-1.1 (c) states:For purposes of this Part, conduct is frivolous if

Counsel for D & S informed the Court that D & S is willing to prosecute the

underlying action. Therefore, the conduct of D & S does not support the proposition that defendants' actions "were completely without merit in law." D & S's conduct was not undertaken to "delay or prolong the resolution of the litigation, or to harass or maliciously injure another." (See Arciniega v Arciniega, 48 AD3d 607 [2d Dept 2008]; Rennie-Otote v Otote, 15 AD3d 380, 381 [2d Dept 2005]; Hamilton v Cordero, 10 AD3d 702, 703 [2d Dept 2004]; Stow v Stow, 262 AD2d 550, 551 [2d Dept 1999]). Further, D & S is willing to proceed with the underlying action and is not asserting "material factual statements that are false." D & S' conduct does not fall within the frivolous conduct parameters articulated by the Court in Kernisan, M.D. v Taylor (171 AD2d 869 [2d Dept 1991]), which held that the intent of the Part 130 Rules "is to prevent the waste of judicial resources and to deter vexatious litigation and dilatory or malicious litigation tactics (cf. Ministers, Elders & Deacons of Refm. Prot. Dutch Church of City of New York v 198 [*5]Broadway, 76 NY2d 411, see Steiner v Bonhamer , 146 Misc 2d 10)."

Further, MS # 4, in which plaintiffs allege that MS # 3, D & S' order to show cause to dismiss the complaint and seek costs and sanctions against LRM, is frivolous, is denied. For the same reasons, the Court will not grant D & S ' MS #3 order to show cause for costs and sanctions against LRM. An attorney opposing a motion or an order to show cause does not in and of itself engage in vexatious litigation and dilatory or malicious litigation tactics, which is frivolous. (See Badillo v Badillo, 62 AD3d 635 [2d Dept 2009]; Arciniega v Arciniega, supra; Rennie-Otote v Otote, supra; Hamilton v Cordero, supra; Stow v Stow, supra).

Moreover, the retainer agreement between LRM and plaintiff is unorthodox. The

retainer agreement states that LRM will seek fees from defendants through a declaratory judgment action, yet LRM is seeking legal fees for bringing the instant declaratory judgment action. Further, LRM will be paid if there is a judgment in the underlying action, receiving a portion of "the plaintiffs' share or the mother's share of the proceeds." Contingency fee arrangements are utilized to encourage attorneys to take upon themselves the risk and expense of representing a client who cannot afford to pay out of pocket. LRM, in the instant action, seeks to be paid out of a judgment in the underlying action without taking on any of the risks or expenses of the litigation of the underlying lead paint action. There is no authority for granting attorney's fees in this type of action. Therefore, LRM will not receive attorney's fees from defendants for this declaratory judgment action.

With D & S willing to prosecute the underlying action, it appears that the only reason that plaintiffs' declaratory judgment action is proceeding to collect legal fees. The instant case is unique in that plaintiff-Mother AUGUSTIN retained one attorney, D & S, whose services she did not pay for in advance, and then retained a second attorney, LRM, whose services she also did not pay for in advance, for the purpose of compelling the first attorney, D & S, to litigate her case. It is rare for a party to retain a second attorney to initiate a lawsuit against her own attorney. It is much simpler, and much more common, for the client to change attorneys. Plaintiff AUGUSTIN fails to explain why, if she feels that the underlying case is neglected, she prefers D & S to litigate her case rather than seek new counsel. Plaintiffs do not claim that they could not obtain a different attorney or that they attempted to do so. Further, plaintiffs' counsel in the instant action, LRM, does not explain why it chose to commence the instant declaratory judgment action rather than take over plaintiffs' representation in the underlying case. LRM's decision to pursue the instant action only makes sense from the cynical viewpoint that LRM is seeking to obtain fees by proceeding with this declaratory judgment action and motion practice, without taking upon itself any of the risks in pursuing the underlying lead paint action.

ORDERED, that the order to show cause, dated February 17, 2009 (Motion Sequence # 1), of plaintiffs, JASMINE FONTILUS, a minor under a disability, by her Mother and Natural Guardian, MAJOLIE AUGUSTIN, formerly known as MAJOLIE FONTILUS, to: strike the eight affirmative defenses of defendant DINKES & SCHWITZER; declare that DINKES & SCHWITZER must prosecute the underlying action and file a request for judicial intervention to schedule a preliminary conference; order costs and sanctions imposed against defendants DINKES & SCHWITZER and defendant HERB PEREIRA, ESQ. for frivolous conduct by [*6]failing to prosecute theunderlying action; award attorney's fees to plaintiffs' counsel, LOPEZ ROMERO & MONTELIONE, P.C. for monitoring the underlying matter for plaintiffs; and, other relief, is granted only to the extent that defendant DINKES & SCHWITZER shall prosecute the underlying matter, JASMINE FONTILUS, an infant under the age of 14 years, by her Mother and Natural Guardian, MAJOLIE FONTILUS v TONY ST. FESTIN and CHRISTAINE ST. FESTIN, Index No. 48693/99, for plaintiffs and file a request for judicial intervention by December 21, 2009; and it is further

ORDERED, that the amended motion, dated March 25, 2009 (Motion Sequence #2), of plaintiffs, JASMINE FONTILUS, a minor under a disability, by her Mother and Natural Guardian, MAJOLIE AUGUSTIN, formerly known as MAJOLIE FONTILUS, to

amend the caption and serve a supplemental summons and complaint, is granted only to the extent that the matter is discontinued against defendants JASON L. PARIS, Esq. and LEONDROS A. VRIONEDES, Esq. and the caption is amended to:

and it is further

ORDERED, that the order to show cause of defendants DINKES & SCHWITZER, dated August 4, 2009 (Motion Sequence # 3), to dismiss the complaint against defendant DINKES & SCHWITZER and to dismiss plaintiffs' claims against defendant DINKES & SCHWITZER for costs and sanctions, is granted only to the extent that plaintiffs' claims against defendant DINKES & SCHWITZER for costs and sanctions are dismissed; and it is further

ORDERED, that plaintiffs' cross-motion, dated August 10, 2009 (Motion Sequence # 4), for costs and sanctions against defendant DINKES & SCHWITZER, including attorney's fees, because defendant DINKES & SCHWITZER'S order to show cause, dated August 4, 2009 (MotionSequence # 3), is frivolous, is denied.