Supreme Court, New York County, February 14, 2020

Robin Shifrin, New York City, and Friedman Kaplan, New York City (Robert S. Smith of counsel), for defendant.

Yankwitt LLP, White Plains (Benjamin Allee of counsel), for plaintiff.

Plaintiff sues for breach of a contract in which defendant agreed to pay plaintiff a percentage of the net proceeds from the sale of residential real property. Defendant moves to dismiss the complaint under CPLR 3211 (a) (1) and (7) and for attorneys' fees under 22 NYCRR 130-1.1.

I. The Complaint

The verified complaint alleges that beginning on or about October 1, 2004, plaintiff, an attorney, assisted defendant to obtain full title to residential property at 202 Lenox Avenue, New York County, as part of her equitable distribution of marital assets in a divorce action. An acknowledgment of debt dated February 7, 2005, signed by defendant, and attached to the [*2]verified complaint, provides that she owes plaintiff a debt equal to 25% of the net proceeds eventually realized from the sale of the property, in exchange for his legal representation and advice.{**68 Misc 3d at 869}

II. Defendant's Motion to Dismiss the Complaint

In evaluating defendant's motion to dismiss the complaint under CPLR 3211 (a) (7), the court must accept plaintiff's allegations as true, liberally construe them, and draw all reasonable inferences in his favor. (JF Capital Advisors, LLC v Lightstone Group, LLC, 25 NY3d 759, 764 [2015]; Miglino v Bally Total Fitness of Greater N.Y., Inc., 20 NY3d 342, 351 [2013]; ABN AMRO Bank, N.V. v MBIA Inc., 17 NY3d 208, 227 [2011]; Matter of Drug Policy Alliance v New York City Tax Commn., 131 AD3d 815, 816 [1st Dept 2015].) Dismissal is warranted only if the complaint fails to allege facts that fit within any cognizable legal theory. (ABN AMRO Bank, N.V. v MBIA Inc., 17 NY3d at 227; Lawrence v Graubard Miller, 11 NY3d 588, 595 [2008]; Nonnon v City of New York, 9 NY3d 825, 827 [2007]; Mill Fin., LLC v Gillett, 122 AD3d 98, 103 [1st Dept 2014].) A motion to dismiss based on documentary evidence pursuant to CPLR 3211 (a) (1) will succeed only if admissible documentary evidence completely refutes plaintiff's factual allegations, resolving all factual issues as a matter of law. (Nomura Home Equity Loan, Inc., Series 2006-FM2 v Nomura Credit & Capital, Inc., 30 NY3d 572, 601 [2017]; Goshen v Mutual Life Ins. Co. of N.Y., 98 NY2d 314, 326 [2002]; Calpo-Rivera v Siroka, 144 AD3d 568, 568 [1st Dept 2016].)

Relying on the documents filed in the divorce action in this court where defendant obtained her equitable distribution, she maintains that plaintiff's noncompliance with the regulations governing matrimonial actions bars enforcement of a contract to recover compensation for his services in the divorce action. In particular, defendant claims that, in providing her legal representation and advice, plaintiff failed to (1) give her a statement of rights and responsibilities (22 NYCRR 1400.2); (2) obtain from her or file with the court a written retainer agreement (22 NYCRR 1400.3); (3) file a statement of her net worth with the court (22 NYCRR 202.16); or (4) obtain the court's approval to secure his attorney's fees with a security interest (22 NYCRR 1400.5). Although plaintiff may not be required in his complaint to allege compliance with the regulations governing matrimonial actions, an attorney's violation of these regulations precludes the attorney from collecting fees for services in a matrimonial action. (Law Off. of Sheldon Eisenberger v Blisko, 106 AD3d 650, 652 [1st Dept 2013]; Edelman v Poster, 72 AD3d 182, 184 [1st Dept 2010]; Julien v Machson, 245 AD2d 122, 122 [1st Dept 1997].) Defendant also claims that enforcement{**68 Misc 3d at 870} of the acknowledgment of debt violates the Rules of Professional Conduct prohibiting contingent fees in matrimonial actions (22 NYCRR 1200.0, rule 1.5 [c], [d] [5]) thus invalidating the contract. (Xiao Yang Chen v Fischer, 6 NY3d 94, 101 [2005]; Weinstein v Barnett, 219 AD2d 77, 79 [1st Dept 1996]; Medina v Richard A. Kraslow, P.C., 149 AD3d 928, 929-930 [2d Dept 2017]; Law Off. of Howard M. File, Esq., P.C. v Ostashko, 60 AD3d 643, 644 [2d Dept 2009]; see Freeman Lewis LLP v Financiera De Desarrollo Indus. y Commercial S.A., 172 AD3d 574, 574-575 [1st Dept 2019]; David v Hack, 97 AD3d 437, 438 [1st Dept 2012].)

The regulations governing matrimonial actions apply to plaintiff's legal representation and advice for three principal reasons. First, plaintiff filed an appearance on defendant's behalf in the divorce action. (Myers aff, exhibit 1, ¶ 14; see 22 NYCRR 1400.1; Law Off. of [*3]Sheldon Eisenberger v Blisko, 106 AD3d at 652; Edelman v Poster, 72 AD3d at 186.) Second, as alleged in the complaint, plaintiff provided legal services to defendant in the divorce action. (Myers aff, exhibit 1, ¶¶ 5, 13-14, 16, 34.) In fact, the complaint extols plaintiff's extensive legal services in the divorce action, assisting defendant in obtaining valuable real property as part of her equitable distribution, which plaintiff oversaw to its resolution through a settlement and judgment in 2006. (Id. ¶¶ 14, 16, 34.) This assistance to defendant qualifies not only as legal services, but as one of the most significant services, in the divorce action. Third, the acknowledgment of debt itself specifies that the "debt arises as a consequence of the extensive representation and advice in all legal proceedings and negotiations with various parties," when the only "legal proceedings" in which plaintiff and defendant were involved was the divorce action. Because the acknowledgment of debt's plain terms provide that the debt arose from plaintiff's legal services, which plaintiff rendered in a divorce action, the matrimonial regulations govern those legal services and the contract to compensate plaintiff for them. (Edelman v Poster, 72 AD3d at 184; see Coburn v Coburn, 303 AD2d 281, 281 [1st Dept 2003].)

The only violation of the regulations governing matrimonial actions that the documents filed in the divorce action establish is plaintiff's failure to file a retainer agreement. (22 NYCRR 1400.3; Leary v Bendow, 161 AD3d 420, 421 [1st Dept 2018]; Matter of Part 60 RMBS Put-Back Litig., 155 AD3d 482, 483 [1st Dept 2017]; Bennett v Gordon, 99 AD3d 539, 539 [1st Dept{**68 Misc 3d at 871} 2012]; Yuppie Puppy Pet Prods., Inc. v Street Smart Realty, LLC, 77 AD3d 197, 202 [1st Dept 2010].) The acknowledgment of debt itself, attached to the complaint, establishes that "the payment or amount of the fee is . . . determined by reference to the amount of . . . equitable distribution, or property settlement," in violation of Rules of Professional Conduct (22 NYCRR 1200.0) rule 1.5 (d) (5) (i). To support the other violations, defendant relies on her affidavit, which the court may not consider as the type of documentary evidence to support a motion under CPLR 3211 (a) (1). (Serao v Bench-Serao, 149 AD3d 645, 646 [1st Dept 2017]; Calpo-Rivera v Siroka, 144 AD3d at 568; Asmar v 20th & Seventh Assoc., LLC, 125 AD3d 563, 564 [1st Dept 2015]; City of New York v VJHC Dev. Corp., 125 AD3d 425, 426 [1st Dept 2015].)

[1] Although a single violation of the regulations in the context of substantial compliance with the regulations may not totally bar recovery, plaintiff falls far short of substantial compliance. (Law Off. of Sheldon Eisenberger v Blisko, 106 AD3d at 652; Daniele v Puntillo, 97 AD3d 512, 513 [1st Dept 2012]; Moyal v Moyal, 85 AD3d 614, 616-617 [1st Dept 2011]; Flanagan v Flanagan, 267 AD2d 80, 81 [1st Dept 1999].) Taking the position that the regulations do not apply to him, he shows no compliance whatsoever. (Edelman v Poster, 72 AD3d at 184; Julien v Machson, 245 AD2d at 122.) The established violation of 22 NYCRR 1400.3, moreover, is substantial in itself, because the requirements for a retainer agreement implicate the client's rights to cancel the agreement, to be informed of the attorney's hourly rate, to itemized billing every 60 days, and to arbitrate any dispute concerning the attorney's fee, none of which plaintiff afforded to defendant. Therefore, even though plaintiff may have obtained favorable results for defendant, his total failure to comply with the regulations governing his services bars enforcement of the contract providing for his recovery of compensation for those services.

Defendant does not dispute that plaintiff provided legal services collateral to the divorce action, such as assisting her in financing and developing the property obtained in the divorce [*4]action. The fact that the acknowledgment of debt may include legal services unrelated to the divorce action, however, does not permit plaintiff to recover for those separate services when his compensation for matrimonial services and nonmatrimonial services is combined in a single contract that violates Rules of Professional Conduct (22 NYCRR 1200.0) rule 1.5 (c) and (d){**68 Misc 3d at 872} (5), and 22 NYCRR 1400.3. (See Morrison Cohen Singer & Weinstein, LLP v Brophy, 19 AD3d 161, 162 [1st Dept 2005]; Ross v DeLorenzo, 28 AD3d 631, 634 [2d Dept 2006].) The "better rule is to prohibit contingency fees in the context of any action containing matrimonial claims" (Ross v DeLorenzo, 28 AD3d at 634), because

"allowing contingency fees for nonmatrimonial claims interposed with matrimonial claims would contravene the important policy concerns that inform the general prohibition. Such a rule would create an incentive for attorneys to characterize most, if not all, of the proceeds of a settlement as deriving from the nonmatrimonial claims in order to maximize the value of, and therefore the contingency fee derived from, those claims." (Id. at 634-635.)

Plaintiff's opposition to defendant's motion demonstrates that just such an incentive motivates plaintiff here. As set forth above, the complaint extols plaintiff's extensive legal services in the divorce action and his assistance to defendant in obtaining valuable real property as part of her equitable distribution. Upon realizing that plaintiff's violation of the regulations governing matrimonial actions precludes plaintiff from collecting fees for services in the divorce action, however, his attorney seeks to characterize most of plaintiff's services as assisting defendant, outside the context of the divorce action, in financing and developing the property obtained in the divorce action. This characterization ignores the complaint, ignores the fact that financing and developing the property would have been meaningless without obtaining it, and engages in the very mischief and controversy over which services did and did not relate to the divorce action that the rules regulating retainer agreements and prohibiting contingent fees in matrimonial actions seek to avoid.

The contract providing compensation for matrimonial services and any nonmatrimonial services is unenforceable. (Rules of Professional Conduct [22 NYCRR 1200.0] rule 1.5 [c], [d] [5]; 22 NYCRR 1400.3; Morrison Cohen Singer & Weinstein, LLP v Brophy, 19 AD3d at 162; Medina v Richard A. Kraslow, P.C., 149 AD3d at 929-930; Ross v DeLorenzo, 28 AD3d at 634; Law Off. of Howard M. File, Esq., P.C. v Ostashko, 60 AD3d at 644; see Freeman Lewis LLP v Financiera De Desarrollo Indus. y Commercial S.A., 172 AD3d at 574-575; David v Hack, 97 AD3d{**68 Misc 3d at 873}at 438.) Since the only claim in the complaint is for breach of the contract, the question whether plaintiff may recover for the nonmatrimonial services based on another theory, were he within the applicable statute of limitations, is not before the court. (CPLR 213 [2]; see Law Offs. of Paul A. Chin, P.C. v Seth A. Harris, PLLC, 159 AD3d 637, 638-639 [1st Dept 2018]; Ferst v Abraham, 140 AD3d 581, 582 [1st Dept 2016]; Fischbarg v Doucet, 63 AD3d 628, 628 [1st Dept 2009]; Medina v Richard A. Kraslow, P.C., 149 AD3d at 930.)

III. Defendant's Motion for Sanctions

The court may impose sanctions on plaintiff and his attorney in the form of reasonable attorney's fees as defendant requests when plaintiff and his attorney have engaged in "frivolous conduct." (22 NYCRR 130-1.1 [a].) For conduct to qualify as "frivolous," however, it must be completely without merit and unsupported by any reasonable argument for an extension or modification of current law, be undertaken primarily to delay or prolong the litigation or to [*5]harass or maliciously injure another person, or involve false material factual statements. (22 NYCRR 130-1.1 [c]; Borstein v Henneberry, 132 AD3d 447, 450 [1st Dept 2015]; Cadlerock Joint Venture, L.P. v Sol Greenberg & Sons Intl., Inc., 94 AD3d 580, 581-582 [1st Dept 2012]; Newman v Berkowitz, 50 AD3d 479, 480 [1st Dept 2008]; Tavella v Tavella, 25 AD3d 523, 524-525 [1st Dept 2006].)

[2] Given the absence of any dispute that plaintiff provided nonmatrimonial as well as matrimonial services and obtained favorable results for defendant, she fails to establish that his action to enforce the contract intended to compensate him for those services was nothing but an exercise in futility. (Ray v Ray, 180 AD3d 472, 474 [1st Dept 2020]; Parkchester S. Condominium Inc. v Hernandez, 71 AD3d 503, 504 [1st Dept 2010]; Adelaide Prods., Inc. v BKN Intl. AG, 38 AD3d 221, 227 [1st Dept 2007]; Parametric Capital Mgt., LLC v Lacher, 26 AD3d 175, 175 [1st Dept 2006]; see Borstein v Henneberry, 132 AD3d at 451-452.) Instead, plaintiff's action falls in the category of actions pursued in good faith, but ultimately found unpersuasive. (Ray v Ray, 180 AD3d at 474; Bradley v Bradley, 167 AD3d 489, 490 [1st Dept 2018]; Gordon Group Invs., LLC v Kugler, 127 AD3d 592, 594 [1st Dept 2015]; Kremen v Benedict P. Morelli & Assoc., P.C., 80 AD3d 521, 523 [1st Dept 2011]; see Yeun-Ah Choi v Shoshan, 136 AD3d 506, 506 [1st Dept 2016].) Defendant does not show that she warned plaintiff she would seek sanctions for his meritless action, and he nonetheless{**68 Misc 3d at 874} persisted (see 22 NYCRR 130-1.1 [c]) nor that he has advanced repeated untenable legal claims, engaged in a pattern of delay, unprofessional conduct, or harassment, or misrepresented material facts. (Ray v Ray, 180 AD3d at 474; Lawlor v McAuliffe, 152 AD3d 427, 428 [1st Dept 2017]; Komolov v Segal, 96 AD3d 513, 514 [1st Dept 2012]; Benishai v Benishai, 83 AD3d 420, 420 [1st Dept 2011]; see Zappin v Comfort, 146 AD3d 575, 575 [1st Dept 2017]; Borstein v Henneberry, 132 AD3d at 452.)

Finally, since defendant herself drafted the acknowledgment of debt, it does not constitute an abusive practice of matrimonial law that the regulations plaintiff violated are intended to address, even though, in practicing matrimonial law, he was required to comply with them or suffer the consequence of being denied compensation. (See Straus v Strauss, 173 AD3d 631, 632 [1st Dept 2019].) For these reasons, the court denies defendant's motion to the extent that she requests sanctions. (22 NYCRR 130-1.1 [a], [c]; Ray v Ray, 180 AD3d at 474; Torres v Torres, 171 AD3d 613, 614 [1st Dept 2019]; Bradley v Bradley, 167 AD3d at 489-490; Korangy v Malone, 161 AD3d 645, 646 [1st Dept 2018].)

IV. Conclusion

For all the reasons explained above, the court grants defendant's motion to dismiss the complaint based on plaintiff's noncompliance with Rules of Professional Conduct (22 NYCRR 1200.0) rule 1.5 (c) and (d) (5), and 22 NYCRR 1400.3. (CPLR 3211 [a] [1].) The court denies defendant's motion (1) to dismiss the complaint based on plaintiff's noncompliance with 22 NYCRR 202.16, 1400.2, and 1400.5 as academic and (2) to impose sanctions. (22 NYCRR 130-1.1 [a], [c].) Defendant also may pursue any claims regarding ethical violations in the forum for those claims. (22 NYCRR 1240.7, 1240.8; see Shapiro v McNeill, 92 NY2d 91, 97 [1998]; Suttongate Holdings Ltd. v Laconm Mgt. N.V., 173 AD3d 618, 619 [1st Dept 2019]; Cohen v Kachroo, 115 AD3d 512, 513 [1st Dept 2014]; Arkin Kaplan LLP v Jones, 42 AD3d 362, 366 [1st Dept 2007].)