Summary
holding that law firm was liable for restitution of contingency fee but not of other, non-contingent fees following vacatur of judgment
Summary of this case from Lake Eugenie Land & Development, Inc. v. BP Exploration & Production, Inc.Opinion
March 24, 1998
Appeal from the Supreme Court, New York County (Harold Tompkins, J.).
Generally, where money is paid to or obtained by an attorney on behalf of a client pursuant to a judgment subsequently reversed on appeal, the attorney is liable to make restitution of that portion of the funds that represents a contingency fee retained in connection with the matter ( see, CPLR 5523; Zaccour v. Zaccour, 32 A.D.2d 745; Mormilo v. Allied Stevedores Corp., 8 A.D.2d 217, 218), but will not be liable for amounts paid out as distributions or disbursements or amounts retained by the attorney in payment of debts owed by his or her client ( see, Millfield Realty Co. v. Catena, 257 N.Y. 515, 517; Forstman v. Schulting, 108 N.Y. 110, 113; Mormilo v. Allied Stevedores Corp., supra).
Here, in response to defendant Lee's motion for restitution, appellant law firm indicated that upon receipt of Lee's money, it paid a sheriff's fee, paid itself a contingency fee and disbursements relating to this action, paid itself amounts owing by reason of the prior indebtedness of plaintiffs to the law firm and then distributed the balance of Lee's money to plaintiffs.
While the law firm is clearly liable to make restitution of its contingency fee, it should not be liable for monies distributed to plaintiffs or disbursed to entities other than the law firm, such as the sheriff. Moreover, it is unclear whether certain sums it paid to itself out of the judgment were made pursuant to a prior debtor-creditor relationship with plaintiffs and, hence, whether such disbursements should be shielded from restitution ( Forstman v. Schulting, supra, at 113). Accordingly, the matter is remanded to the motion court for a hearing on the appropriate amount of restitution to be made by the law firm in light these considerations.
Concur — Ellerin, J. P., Nardelli, Williams and Mazzarelli, JJ.