Hilton M. Wiener,
Plaintiff(s),
against
Frank Mulligan, MARIANNE MULLIGAN, COLD SPRING
ADVISORY GROUP, LLC, JENNIFER TARR, AEGIS CAPITAL CORP., JOHN
HITCHINGS, and FINANCIAL INDUSTRY REGULATORY AUTHORITY a/k/a FINRA,
Defendant(s).
|
17-602501
Plaintiff's Attorney:
Hilton M. Wiener, Esq.
244 Fifth Avenue
New
York, New York 10001
Defendants' Attorney:
Steven G. Legum, Esq.
170
Old Country Road
Mineola, New York 11501
Sanford N. Berland, J.
Upon the reading and filing of the following papers in this matter: (1) Notice of Motion by
defendants Frank Mulligan, Marianne Mulligan and Cold Spring Advisory Group LLC, dated
May 24, 2017, and supporting papers; (2) Notice of Motion by the plaintiff, dated February 22,
2018, and supporting papers; (3) Affirmation in Opposition by the plaintiff, dated June 13, 2017,
and supporting papers; (4) Affirmation in Reply by the defendants Frank Mulligan, Marianne
Mulligan and Cold Spring Advisory Group LLC, dated June 20, 2017, and supporting papers; (5)
Affirmation in Opposition by the defendants Frank Mulligan, Marianne Mulligan and Cold
Spring Advisory Group LLC, dated March 29, 2018, and supporting papers, it is,
ORDERED that motion sequence 002 by defendants for an order dismissing
the complaint is granted to the extent that "Count IV" of the Complaint and so much of "Count
V" as seeks to assert a claim against defendants Frank Mulligan and Marianne Mulligan are
dismissed, and is otherwise denied; and it is further
ORDERED that the motion 003 by the plaintiff is granted to the extent that
the parties are directed to appear for a preliminary conference on October 9, 2018 at 9:30
a.m.
This is a proceeding seeking recovery of legal fees and expenses, damages for alleged
tortious interference with a business relationship and other relief. The matter is now before the
court on the defendants' motion to dismiss the complaint pursuant to CPLR 3211(a)(1), (2), (7)
and (8) and on plaintiff's separate motion, pursuant to CPLR 3124, to compel further responses to
plaintiff's discovery demands. For the reasons that follow, the defendants' motion is granted in
part and otherwise denied, and plaintiff's motion is granted to the extent that the parties are
directed to appear for a preliminary conference.
The plaintiff, Hilton M. Wiener, is an attorney who represents clients in financial services
arbitrations and mediations and other matters. The remaining defendants are Frank and Marianne
Mulligan ("the Mulligans"), on whose behalf attorney Wiener commenced and prosecuted - until
discharged by the Mulligans - a Financial Industry Regulatory Authority ("FINRA") arbitration
against the Mulligans' two stock brokerages, and Cold Spring Advisory Group, LLC ("CSA"), a
so-called "stock loss recovery firm" that had been retained by the Mulligans to review their stock
portfolio and assess whether their investment losses were the result of broker neglect or other
misconduct. It appears to be undisputed that after reviewing the Mulligans' accounts, CSA
recommended that the Mulligans retain the plaintiff, that the Mulligans did so[FN1]
, and that plaintiff commenced and prosecuted a FINRA arbitration against the two brokerages on
behalf of the Mulligans, achieved a settlement with one of the brokerages and took the steps
necessary to coordinate and schedule a mediation with the remaining brokerage, and was
discharged by the Mulligans within hours of informing Frank Mulligan that the date had been set
for the mediation. For its part, CSA asserts, through its managing member, Michelle Ottimo, that
although at one time it "would recommend the plaintiff to its clients," it "[t]hereafter . . . learned
from other clients that plaintiff had been neglecting and mishandling their matters," and it
concedes that it "so advised" the Mulligans, "expressed [to them] concern that plaintiff might
likewise neglect and/or mishandle their matter,"[FN2]
and then "further advised" the Mulligans that CSA was "familiar with the progress of their
proceeding and could represent them in the forthcoming mediation and, if the mediation did not
produce a settlement, at the arbitration hearing," and that "thereafter," the Mulligans discharged
plaintiff and were represented by CSA at the mediation. Mr. Mulligan provides an affidavit in
which he confirms that it was CSA's advising him of "several incidents of plaintiff's neglect or
misconduct in the context of other matters on behalf of Cold Spring clients" that preceded his
"quickly" losing "confidence in the plaintiff's ability to competently handle his [sic] matter," as a
result of which he discharged plaintiff and requested that CSA handle "the impending
mediation." Neither Ms. Ottimo nor Mr. Mulligan puts an exact time frame on their
communications concerning plaintiff's alleged mishandling of other matters or on CSA's
expressing an ability and willingness [*3]to represent the
Mulligans in place of plaintiff at the FINRA mediation. However, when, on December 12, 2016,
plaintiff emailed Mr. Mulligan to inform him that the mediation in the FINRA matter with the
remaining respondent had been scheduled for January 31, 2017, he received, less than four hours
later, the following response from Mr. Mulligan:
My wife Marianne and I have decided that we do not want you to represent us any
longer in this case with Aegis Capital. We were told a settlement conference was going to be
held at the end of Nov. 2016. Now it's End [sic] of Jan. 2017. We've waited too long to go to
Arbitration, and this is just mediation!
Please respect our decision in this matter as it is final. Frank & Marianne Mulligan
According to plaintiff, prior to the December 12, 2016 email exchange, the Mulligans had
never voiced "any concern or object[ed] to the manner in which their claim was being handled"
by him, including when, "in late 2016," he recommended to them that they "engage in mediation"
with the remaining counterparty in the proceeding, "inasmuch as it in no way prejudices the
arbitration." He attributes the Mulligans' changed view and their decision to terminate his
representation of them to CSA's allegedly tortious interference with his relationship with the
Mulligans.
It is not clear whether there were any intervening exchanges between plaintiff and
the Mulligans following the December 12 emails, but on December 30, 2016, plaintiff sent the
Mulligans a statement totaling $26,410.00 for his work on their "FINRA Arbitration Case No.
15-03220" for the period through December 12, 2016, the date of his termination - $26,160.00 in
fees, calculated at an hourly rate of $400 over 65.4 hours, and $250.00 in expenses.[FN3]
Then, on January 18, 2017, CSA emailed plaintiff what it labeled a "formal notice," stating that
eleven listed individuals, including Frank and Maryanne [sic] Mulligan "have authorized CSAG
to represent them regarding invoice disputes with your firm" and that every listed individual "is
disputing the invoices that they received from your firm." The email also recited that "you are
[*4]on notice to cease and desist from contacting the above
individuals and direct all communications to CSAG." Shortly thereafter, plaintiff propounded
what he styled "Law Office of Hilton M. Wiener's Notice of Charging Lien," bearing the caption
of the Mulligans' FINRA arbitration and dated January 25, 2017 ("Notice of Charging Lien"),
asserting a lien, ostensibly pursuant to Judiciary Law §§ 475 and 475-a, in the amount
of his claimed legal fees and disbursements - $26,410.00 - against the proceeds of the
arbitration.[FN4]
It is also undisputed that the mediation of the Mulligans' claim against the remaining
brokerage went forward as scheduled on January 31, 2017, with CSA providing representation
for the Mulligans, and that a settlement of the Mulligans' claim was reached. A week later, on
February 7, 2017, Weiner, as "Petitioner," electronically filed in this court an
"Application/Affirmation to Determine and Enforce a Charging Lien and Memorandum of Law
in Support Thereof," together with a proposed order to show cause, a "Summons with Notice"
and a Request for Judicial Intervention, seeking, inter alia, an order fixing the amount of his
charging lien pursuant to Judiciary Law § 475 and enforcing it against the proceeds of the
Mulligans' settlement with Aegis Capital Corp., granting a judgment in his favor for the amount
of his claimed fees and costs, and enjoining the named "Respondents" — the current
defendants together with Jennifer Tarr - who is a CSA employee, Aegis, and John Hitchings,
Esq., from distributing any of the proceeds of the settlement until his lien had been satisfied. On
March 8, 2017, the court (Asher, J.(ret.)), signed and entered the Order to Show Cause (the
"March 8 Order to Show Cause"), which was made returnable on April 4, 2017. Although a
proposed provision that would have required answering papers to be served three days prior to
any hearing was stricken, the March 8 Order to Show Cause as entered specifically ordered that
"personal service made by overnight mail upon each of the Respondents of this Order to Show
Cause and all attachments hereto by March 20, 2017 be deemed good and sufficient." On March
17, 2017, plaintiff propounded a "Notice of Client's Right to Arbitrate a Dispute over Attorneys
Fees (Related to FINRA Case No. 15-02835)" (the "March 17, 2017 Notice of Right to
Arbitrate"), which was addressed to the Mulligans but sent by certified mail to the Mulligans'
attorney in this proceeding.
On March 31, 2017, counsel for Aegis and Hitchings requested by letter that the
return date for the order to show cause be adjourned to April 17, noting that "the parties"
— with whose consent, the letter stated, the request was being made — "are
working to resolve the temporary restraining element of Petitioner's application." Indeed, on
April 7, 2017, a proposed "So Ordered Stipulation," executed in counterpart by Wiener and
counsel for the Mulligans, CSA, [*5]Tarr, Aegis and
Hitchings[FN5]
, was submitted for "so ordering" by the court, among other things addressing the "restraining
element" of the March 8, 2017 Order to Show Cause by requiring Aegis to deposit the sum of
$26,410.00 - i.e., the amount Wiener had invoiced to the Mulligans for his work on their FINRA
matter and the amount stated in his notice of charging lien - with the clerk of the court within 30
days of the "so ordering" of the stipulation. Of particular significance to defendants' current
motion, the stipulation and order, which was "so ordered" by Justice Asher on April 24, 2017
(the "April 24 Stipulation and Order"), directed both that the deposited "sum shall be held by the
Supreme Court until such time as an order directing payment is issued by the Court, and after
expiration of any appeals period or appellate decision," and that "Petitioner shall file a complaint
upon the remaining parties[FN6]
in this action on or before April 20, 2017." Also of significance, the stipulation and order went
on to recite that named counsel for the Mulligans and CSA "hereby agrees to accept service of
the complaint on behalf of the Mulligan Respondents and Cold Spring Advisory Group, LLC,
who shall have 30 days from the date of service to answer or otherwise move with respect to the
Complaint." Consistently with the requirements of the stipulation and order, on April 18, 2017,
plaintiff electronically filed a "Complaint for Damages and Equitable Relief." Along with the
complaint, he also included a series of summonses, addressed, respectively, to Frank Mulligan,
Marianne Mulligan, CSA and Aegis. Copies of these filings were also emailed to counsel for the
Mulligans and CSA, who concedes that he accepted service of the complaint on behalf of his
clients pursuant to the terms of the April 24, 2017 Stipulation and Order but disputes that email
delivery of the summonses to him constituted sufficient service of the summonses upon any of
his clients. In addition, the moving defendants challenge the court's subject matter jurisdiction
over plaintiff's fee claims against the Mulligan defendants and assert that each of the other claims
asserted by plaintiff are deficient in some way or precluded.
Personal jurisdiction (CPLR 3211(a)(8)). The moving defendants' threshold
contention is that the court is without personal jurisdiction over them both because the
summonses that were delivered to their attorney by electronic mail with the complaint differ from
the summons with notice that was filed when the matter was commenced, and because, in any
event, they did not agree that "process" could be served upon their attorney or, for that matter, by
email. In so contending, however, they ignore both the form in which this matter was initiated
and the method by which personal jurisdiction over them was first obtained, as well as the effect
of the [*6]stipulation into which they subsequently entered, and
which was made an order of the court, altering the form of the matter so as to provide an
appropriate procedural structure for the adjudication of the parties' respective claims and
defenses, to allow the immediate distribution of a portion of the proceeds of the Mulligans'
settlement with Aegis and to provide the basis for the eventual distribution of the remaining
portion of that settlement. That is, the matter was initiated, and personal jurisdiction over the
moving parties and the other original respondents was acquired as a result of the filing of
Wiener's combined application and supporting affirmation seeking to assert and enforce his
claimed charging lien against the proceeds of the Mulligans' FINRA claim pursuant to Judiciary
Law § 475 in conjunction with the subsequent entry by the court, and personal service upon
the named respondents pursuant to its terms, of the March 8 Order to Show Cause together with
Wiener's application-affirmation (see CPLR 403(d)). It was then open to the defendants,
who could have raised, in response to the March 8 Order to Show Cause, such jurisdictional,
procedural or other objections to the proceedings, and to the method by which it had been
commenced and to the pleadings upon which it was predicated, as they deemed appropriate
(see, e.g., CPLR 404(a)). Instead, they, Wiener and the other defendants entered into a
stipulation, ultimately so ordered by the court — the April 24 Stipulation and Order - that,
among other things, removed the temporary restraint that the March 8 Order to Show Cause had
imposed against the distribution of the proceeds of the settlement between the Mulligans and
Aegis, obviated the need for a hearing on Wiener's request for a preliminary injunction
preventing distribution of such proceeds until his asserted charging lien could be determined, and
provided for the filing by Wiener of "a complaint upon the remaining parties in this action,"
effectively converting the matter from a proceeding to enforce a charging lien into an action for
money damages and injunctive and other relief (see generally CPLR 103(c); cf.
Tunick v. Shaw 45 AD3d 145 [1st Dept 2007], mot. for lv. den., 10
NY3d 930 [2008]). The April 24 Stipulation and Order, which expressly called for counsel for
the Mulligans and CSA to accept service of the complaint, imposed no additional requirement
that a summons be propounded by Wiener or served upon any of the respondents-defendants.
Absent such a requirement, particularly given that no objection to personal jurisdiction had been
reserved in the stipulation and order or otherwise asserted and that no party has contended that
personal service of the March 8 Order to Show Cause had not been effectuated according to its
terms, Wiener's propounding and effecting email delivery of the summonses to defendants'
counsel was, at best, surplusage.
Compliance with 22 NYCRR § 137.6. The express terms of April 24
Stipulation and Order, together with the March 17, 2017 Notice of Right to Arbitrate, likewise
obviate the moving defendants' contention, pursuant to CPLR 3211(a)(2), that the court is
without subject matter jurisdiction of the action against the Mulligan defendants for plaintiff's
allegedly insufficient and belated service of the notice required by, and failure to allege in the
complaint compliance with, NYCRR § 137.6.
Pursuant to NYCRR §137.6(a)(1), "where an attorney and client cannot agree as to the
attorney's fee," the attorney is required to serve the client personally or by certified mail with,
among other things, a complying notice of the client's 's right to elect, within 30 days of receipt of
the notice, to resolve the dispute through arbitration. NYCRR 137.6(b), provides, in turn, that
[*7]the attorney may commence an action to recover his or her
fee if the client does not file a request for arbitration within 30 days after receiving the notice
required by subdivision (a)(1) and that the complaint in such an action must allege either that the
client received the required notice or that the dispute is exempt from the requirement. Here, the
complaint contains no such allegation, and it is undisputed that the March 17, 2017 Notice of
Right to Arbitrate was served not directly upon the Mulligans, but upon their attorney, and that
although such service of the notice occurred more than 30 days prior to the filing and service of
the complaint, it was effectuated after the proceeding was commenced.
With respect to the moving defendants' contention that the notification to the Mulligans of
their right to demand arbitration of their fee dispute with plaintiff was required to be served upon
them prior to the commencement of the present litigation, the weight of authority holds that as
"the remedies available to an attorney to recover the value of his legal services, including
arbitration and the attachment of a charging lien, are 'cumulative rather than exclusive'"
(Pilitz v. Inc. Vill. of Freeport, No. CV 07-4078 ETB, 2011 WL 5825138, at *9 [EDNY
Nov. 17, 2011], quoting Moody v. Sorokina, 50 AD3d 152, 856 NYS2d 755, 757
[4th Dept 2008]; Schneider, Kleinick, Weitz, Damashek & Shoot v. City of New
York, 302 AD2d 183, 186 [1st Dept 2002]), an attorney may seek the imposition of a
charging lien upon the proceeds of the underlying claim pursuant to Judiciary Law § 475
independently from a plenary action to determine and recover the amount due for his or her
services up to the time of discharge (Schneider, Kleinick, Weitz, Damashek & Shoot
v. City of New York, supra; Dayan v. Dayan, 58 Misc 3d 957, 963 [NY
Sup Ct 2017]). Thus, while the latter may be subject to arbitration pursuant to 22 NYCRR Part
137, the existence of a fee dispute between an attorney and his or her clients "does not preclude
enforcement of the charging lien" apart from the constraints imposed by court rules
(J.K.C. v. T.W.C., 39 Misc 3d 899, 902—03 [Sup. Ct. Monroe County
2013], citing Moody v. Sorokina, 50 AD3d 1522, 1523—1524
[4th Dept 2008]).
The April 24 Stipulation and Order required plaintiff to file a complaint on or before April
20, 2017. Before doing so, however, on March 17, 2017, plaintiff propounded the "Notice of
Client's Right to Arbitrate a Dispute over Attorneys Fees (Related to FINRA Case No.
15-02835)," which he sent to the attorney for the Mulligan defendants by certified mail that same
day. The Mulligans' attorney does not dispute that he was representing the Mulligans at that time,
but he nonetheless contends that service of the Notice of Right to Arbitrate upon him was
ineffectual because under the express language of 22 NYCRR § 137.6(a)(1), the notice
should instead have been forwarded to the Mulligans themselves. However, CPLR 2103(b)
provides that the "papers to be served upon a party in a pending action shall be served upon a
party's attorney," and not the party directly, once that party is represented by counsel (see generally Al Turi Landfill, Inc. v.
Town of Goshen, 93 AD3d 786, 791 [2d Dept 2012]). Hence, such service of the
Notice of Right to Arbitrate upon the attorney for the Mulligans was both sufficient and
appropriate at the time it was effected. No less significantly, moreover, the parties' April 24, 2017
Stipulation and Order, by requiring Wiener to file a complaint and by making the disposition of
the sum required to be deposited by Aegis with the clerk subject to judicial determination
evinced a clear election by the Mulligans, as well by Wiener and the other parties, to resolve the
dispute through adjudication and not arbitration. To the extent that an allegation [*8]that notice has been given, or is unnecessary, pursuant to 22
NYCRR Part 137 of the clients' right to request arbitration of the dispute is nonetheless
necessary, pursuant to CPLR 2001 and CPLR 3025(c), based upon the proofs submitted on the
current motion and the absence of prejudice to the defendants, the complaint is deemed amended
to contain such an allegation (see Cave v. Kollar, 2 AD3d 386, 388 [2d
Dept 2003] (court sua sponte may deem pleadings amended to conform to evidence presented on
motion for summary judgment); Blenheim LLC v. Il Posto LLC, 14 Misc 3d 735, 738 [Civ Ct
NY County 2006]).
Account stated. Defendants move to dismiss Count IV of the complaint, which
alleges a claim for account stated, pursuant to CPLR 3211(a)(1), as contravened by documentary
evidence. Plaintiff appears to base his account stated claim upon the $26,410.00 December 30,
2016 invoice that he sent to the Mulligans for his claimed fees and expenses for the FINRA
matter through the date of his discharge. Plaintiff alleges that he "provided legal services to the
Defendants for more than one year which were accepted by Defendants," that "[t]he provision of
these services resulted in the agreed upon resulting balance," and that he "rendered a statement to
the defendants to which defendants did not object" (Complaint, Paragraphs 57-58). On the other
hand, and notwithstanding his allegation that there was an "agreed upon resulting balance," later
in the same count of his complaint, he alleges that he is owed "$26,410.00 or 30% of the
settled amount, whichever is greater . . ." (Complaint, Paragraph 59 (emphasis supplied)). As
the Court of Appeals has explained, however:
The rule that an account which has been rendered and to which no objection has been made
within a reasonable time should be regarded as admitted by the party charged as prima facie
correct assumes that there exists some indebtedness owing between the parties or an Express
agreement between the parties to treat the statement as an account stated although such statement
may encompass amounts not yet due if there remain no further obligations to be performed by the
party claiming payment.
(Gurney, Becker & Bourne, Inc. v. Benderson Dev.
Co., 47 NY2d 995, 996 [1979]. See also Simplex Grinnell v. Ultimate Realty, LLC, 38 AD3d 600, 600,
832 N.Y.S.2d 244, 245 [2d Dept 2007] ("An account stated assumes the existence of some
indebtedness between the parties, or an express agreement to treat a statement of debt as an
account stated" (citations omitted)). Plaintiff's attempt to cast his claim for account stated as both
fixed and contingent, thus, is contrary both to the rationale for account stated recovery and to the
mechanism by which the right to such relief arises. His account stated claim is also, as
defendants contend, contradicted by the documentary record, which shows that objection to the
December 30, 2016 invoice - so far as appears from the papers submitted by the parties, the only
invoice plaintiff directed to the Mulligans during or after his representation of them[FN7]
- was emailed to plaintiff by [*9]CSA on behalf of the Mulligans
on January 18, 2017, that is, within a reasonable time after plaintiff had sent the invoice to the
Mulligans.[FN8]
(see generally In re Rockefeller Ctr. Properties, 272 B.R. 524, 541—44
[US Bkrptcy Ct SDNY 2000]). Accordingly, the motion to dismiss the claim asserted in Count
IV of the complaint pursuant to CPLR 3211(a)(1) is granted.
Tortious interference and injunctive relief. In "Count V" of his complaint, plaintiff
alleges, among other things, that defendant CSA tortiously interfered with his "business
relationship" with the Mulligans, that the Mulligans "decided to join the conspiracy to discredit
the Plaintiff by terminating the relationship without any intention to pay the plaintiff for the legal
services he had provided on their behalf," and that the conduct of the defendants in interfering
with his business relationship was "intentional, willful and designed to cause economic and
reputational damage to Plaintiff." He also claims that there was "no justifiable reason" for the
defendants' conduct and that it was "done with actual malice and ill will toward Plaintiff with the
improper purpose of causing damage to the Plaintiff." He seeks compensatory and punitive
damages, and in his next alleged cause of action, "Count VI" of the complaint, he also seeks
broad injunctive relief, both to protect his claim against the Aegis settlement proceeds and to
prevent interference with his business relationships with other clients who were referred to him
by CSA. Defendants move to dismiss both purported causes of action pursuant to CPLR
3211(a)(7).
As a threshold matter, the contention that the Mulligans entered into a conspiracy with CSA,
or were otherwise acting, to interfere with their own relationship with plaintiff is unsustainable
(Steinberg v. Schnapp, 73 AD3d 171, 175—76 [1st Dept 2010] ("It is
evident that if there were an economic relationship, advantageous or otherwise, between
[plaintiff and defendant, defendant] could not be liable in tort for interfering with his own
economic relationship")). Thus, the claims against the Mulligans alleging tortious interference
with their relationship with plaintiff, past or prospective, including, any seeking injunctive relief,
must be dismissed[FN9]
.
Plaintiff's tortious interference claims against CSA, of course, rests on a different footing.
Relying on the Court of Appeals' decision in Carvel Corp. v. Noonan, 3 NY3d 182 [2004], and the Second
Department's in Anesthesia Assocs.
of Mount Kisco, LLP v. N. Westchester Hosp. Ctr., 59 AD3d 473 [2d Dept 2009],
defendants contend, however, that the plaintiff's allegations are insufficient to meet the
requirements for stating a cause of action either for tortious interference with a contractual
relationship or for tortious interference with prospective business advantage. As the Second
Department explained in Anesthesia Assocs., supra:
The Court of Appeals has recognized that "inducing breach of a binding agreement and
interfering with a nonbinding 'economic relation' can both be torts, but that the elements of the
two torts are not the same" (Carvel Corp. v Noonan, 3 NY3d 182, 189 [2004]). "[T]he degree of
protection available to a plaintiff for a [defendant's] tortious interference with contract is defined
by the nature of the plaintiff's enforceable legal rights. Thus, where there is an existing,
enforceable contract and a defendant's deliberate interference results in a breach of that contract,
a plaintiff may recover damages for tortious interference with contractual relations even if the
defendant was engaged in lawful behavior . . . Where there has been no breach of an existing
contract, but only interference with prospective contract rights, however, plaintiff must show
more culpable conduct on the part of the defendant" (NBT Bancorp v Fleet/Norstar Fin. Group,
87 NY2d 614, 621 [1996] [citations omitted]; see Carvel Corp. v Noonan, 3 NY3d at 190;
Guard-Life Corp. v Parker Hardware Mfg. Corp., 50 NY2d 183, 193-194 [1980]).
Anesthesia Assocs. of Mount Kisco, LLP v. N. Westchester Hosp. Ctr.,
supra, 59 AD3d at 476. CSA argues, first, that plaintiff cannot state a claim against it for
alleged interference with his contractual relationship with the Mulligans - and, presumably his
other clients - because the attorney-client relationship is "non-binding," i.e., a client
always retains the absolute right to discharge his or her attorney, and such discharge therefore
cannot constitute a breach of contract (see, e.g., Demov, Morris, Levin &
Shein v. Glantz, 53 NY2d 553, 556 [1981]), and, second, that he has not stated a cause
of action against it for interference with a non-binding, prospective business relationship because
he has not sufficiently alleged that CSA "participated in any criminal behavior" or "committed
any independent tort." In so arguing, CSA ignores not only plaintiff's claim that because of its
alleged interference, he was deprived of the opportunity to earn a full contingency fee for his
handling of the Mulligans' FINRA arbitration and remains uncompensated for the services he
provided to them in bringing and prosecuting that matter through the time of his discharge, but
also his sufficiently specific allegations that CSA and its alleged founder contacted not only the
Mulligans but also other clients who had been referred to him by CSA "directly . . . and began to
attack Plaintiff's business practices, impugn his reputation and slander his name through emails
and in telephone conversations" in order to displace plaintiff and "take over cases it referred to"
plaintiff; that they uttered "blatantly false and misleading statement[s]" about him; and that such
conduct on their part was "intentional, wilful and intended to cause economic and reputational
damage" to plaintiff (see Complaint, e.g.. Paragraphs 29 and 66 through 68). Although
the moving defendants may take issue with the plaintiff's characterization of the veracity of their
communications and of their respective motives, they do not dispute that such communications
occurred, nor do they appear, at this [*10]juncture, to dispute that
the purpose, and the effect, of those communications was to cause the Mulligans to lose
"confidence in the plaintiff's ability to competently handle" the FINRA arbitration. In any event,
"[o]n a motion to dismiss pursuant to CPLR 3211(a)(7) for failure to state a claim, we must
afford the complaint a liberal construction, accept the facts as alleged in the pleading as true,
confer on the nonmoving party the benefit of every possible inference and determine whether the
facts as alleged fit within any cognizable legal theory" (McFadden v Amodio,
149 AD3d 1282, 1283, 52 NYS3d 538 [3d Dept 2017]). Construed according to that standard, it
cannot be said that the allegations of the complaint fail to state a cause of action against CSA for
tortious interference with both a contractual relationship and with prospective business
relationship or economic advantage. Accordingly, the motion to dismiss Count V of the
complaint as against defendant CSA, pursuant to CPLR 3211(a)(7), must be denied.
The court has considered the moving defendants' remaining proffered grounds for dismissal
and finds them to be insufficient at this time.[FN10]
Finally, plaintiff's separate motion pursuant CPLR 3124 is granted to the extent that counsel
for the remaining parties are directed to appear for a Preliminary Conference in this matter on
October 9, 2018 at 9:30 a.m.
The foregoing constitutes the Decision and Order of the court.
Dated: September 26, 2018
Riverhead, New York
HON. SANFORD NEIL BERLAND, A.J.S.C.
Footnotes
Footnote 1:The four-page "Legal Services
Agreement for Securities Claims/Stock Losses," on plaintiff's letterhead and dated June 3, 2015,
was addressed to both "Frank and Marianne Mulligan," although the salutation is directed to Mr.
Mulligan and the document was countersigned, on June 5, 2015, by Mr. Mulligan only. There
does not appear to be any dispute that the FINRA arbitration was commenced and prosecuted by
plaintiff on behalf of both Mulligans.
Footnote 2: Plaintiff disputes CSA's
disparaging characterizations of his claims handling practices, in particular contending that
mediations and settlement conferences are encouraged in FINRA arbitrations and that he
succeeded in achieving a high rate of favorable settlements through mediation for those clients
who elected to participate in mediation. Moreover, he denies that the Mulligans voiced any
concern or expressed any objection to the manner in which he was handling their claim prior to
their discharging him. For his part, he directs a series of disparaging comments of his own at
CSA and the individual whom he claims is its founder, owner and actual operational head,
Michelle Ottimo's husband, Louis Ottimo.
Footnote 3: Two provisions in the June 2015
"Legal Services Agreement" provide for plaintiff receiving compensation on an hourly basis,
together with disbursements, in the event of termination of plaintiff's representation whether by
withdrawal or discharge. Pursuant to Paragraph 3 of the June 2015 Legal Services Agreement
("Disbursements"), "[i]f the Client substitutes another lawyer or law firm," the "Client" is
responsible for all disbursements and for "the hourly legal fee of the Firm for all time incurred at
the regular billing rate of $400 per hour, regardless of recovery." More broadly, pursuant to, the
second sentence of Paragraph 6 of that agreement ("Right to Withdraw"), "[i]n the event the
Client advises the Firm to discontinue the handling of this claim, or fails to cooperate with the
Firm in" its handling, the client "is to compensate the Firm a reasonable amount for its services,
and for its time spent on this claim on an hourly basis or under such other arrangement that may
be agreed upon by the parties." In addition, the penultimate sentence of Paragraph 6 provides as
follows: "in the event that the Client tries to transfer the file from this office, the Client shall be
responsible to compensate the Firm for the reasonable value of their services."
Footnote 4: A certification incorporated into
plaintiff's Notice of Charging Lien states that it was served by email and certified mail upon the
Mulligans and another individual, John Hitchings, Esq. The parties' submissions are silent
concerning the role played by Mr. Hitchings or the claimed basis for serving him with the Notice
of Charging Lien. In any event, although Mr. Hitchings was also named as a party in this
proceeding, the claims against him have been discontinued with prejudice.
Footnote 5: Plaintiff's signature on the
stipulation and order is dated March 29, 2017, and he avers that counsel for the Mulligans and
CSA signed it on that date as well.
Footnote 6: That stipulation and order also
dismissed "the Matter," with prejudice, "as against" Hitchings and Tarr and called for the caption
to be "reformed" to remove their names from it, and also called for plaintiff to file a Notice of
Dismissal with Prejudice as to Aegis upon proof that the required sum had been deposited with
the County Clerk. In fact, on April 18, plaintiff filed a "Notice of Dropping Parties," "dropping"
Hitchings and Tarr "as parties to this action with prejudice," and a Stipulation of Discontinuance,
dated May 18, 2017 and signed by plaintiff and by counsel for Aegis, discontinuing against Aegis
with prejudice, was filed on that same date.
Footnote 7: In his opposing memorandum of
law, plaintiff asserts that although in the two-week period between "service" of his December 30,
2016 invoice and of his January 12, 2017 Notice of Charging Lien, the Mulligans "were in
contact with the Plaintiff via email requesting that the Plaintiff cease all communications they
never once disputed the invoice," nor did Mr. Mulligan do so when plaintiff contacted him on
February 9, 2017. Even if these assertions were cognizable, they would be insufficient to
overcome the consequence of the January 18, 2017 email to plaintiff from CSA unambiguously
objecting to the invoice on behalf of the Mulligans. As set forth in text, in light of that email,
which plaintiff does not dispute receiving, a viable claim for account stated cannot be alleged by
him.
It should be noted that plaintiff has not asserted, nor has he alleged in his
complaint any facts that would support, any claim that upon or following his discharge by them,
he and the Mulligans arrived at an express agreement concerning compensation to be paid to him
for his work on the FINRA matter through the time of his discharge (cf. Nabi v.
Sells, 70 AD3d 252, 253-54 [1st Dept 2009].)
Footnote 8: Defendants have provided an
affidavit of defendant Frank Mulligan in which he avers that after receiving "what purported to
be a bill from plaintiff for services rendered . . . [y]our deponent directed Cold Spring to
promptly forward an objection on his behalf to plaintiff."
Footnote 9: Nor is there any particularized
allegation that the Mulligan defendants interfered with any contractual, business or economically
advantageous relationship plaintiff had with any other individuals or entities.
Footnote 10: Thus, the defendants'
contention that so much of plaintiff's claim for injunctive relief ("Count VI" of the complaint) as
would prohibit defendants from further tortiously interfering with his business relationships with
clients would result in an impermissibly vague and unenforceable, and likely unconstitutional,
prohibition is necessarily premature, as issue has yet to be joined on plaintiff's prayer for a
permanent injunction and no motion for temporary injunctive relief has been made.
With respect to defendants' contention that plaintiff's claim for recovery based
upon a theory of unjust enrichment - "Count IV" of the complaint - is precluded by his claim for
contract damages - "Count III" - particularly where, as here, the applicability of an express
agreement to the "particular subject matter" is disputed by the parties against whom the contract
claim is asserted, alternative pleading of a quasi-contractual claim is appropriate (see generally Ashwood Capital, Inc. v.
OTG Mgmt., Inc., 99 AD3d 1, 10 [1st Dept 2012]; UETA Latinamerica, Inc. v.
Zafir, 129 AD3d 704, 705—06 [2d Dept 2015]). Indeed, New York law is
well settled that while a client has the unqualified right to discharge his or her lawyer without
penalty (Demov, Morris, Levin & Shein v. Glantz, 53 NY2d 553, 556
[1981]), "[a]gainst the client's unqualified right to terminate the attorney-client relationship is
balanced the notion that a client should not be unjustly enriched at the attorney's expense or take
undue advantage of the attorney, and therefore the attorney is entitled to recover the reasonable
value of services rendered" if the attorney has been discharged without cause (Nabi v.
Sells, 70 AD3d 252, 253—54 [1st Dept 2009]), and that although an "annulled
contingency fee agreement no longer governs the parties' relationship, it may 'be taken into
consideration as a guide for ascertaining quantum meruit'" (id., 70 AD3d at 255,
quoting Matter of Tillman, 259 NY 133, 135 [1932] ). Although plaintiff
has entitled "Count III of the complaint "Unjust Enrichment," liberally viewed, the allegations
fairly state a permissible cause of action for recovery based upon quantum meruit. Further,
because the characterization of the part played by CSA following plaintiff's discharge by the
Mulligans is, at this juncture, uncertain, as is the role, if any, to be played by the Mulligan
retainer agreement with plaintiff, see, e.g., Cohen v. Grainger, Tesoriero &
Bell, 81 NY2d 655, 658 [1993]; Nabi v. Sells, supra, 70 AD3d at 254,
defendants' motion to dismiss plaintiff's cause of action alleging breach of contract, "Count II" of
the complaint, is premature.