Summary
finding that the "annual interest rate ... was not usurious because it involved interest to be paid based upon a contingency within the control of the debtor —in this case, default in the payment of an agreed-upon obligation ...."
Summary of this case from HGT Capital LLC v. HDS Int'l Corp.Opinion
2013-07243, 2013-09596
06-17-2015
Bryan L. SALAMONE, P.C., appellant, v. Vincent RUSSO, respondent.
Rivkin Radler, LLP, Uniondale, N.Y. (Evan H. Krinick, Cheryl F. Korman, Max S. Gershenoff, and Henry Mascia of counsel), for appellant.
Rivkin Radler, LLP, Uniondale, N.Y. (Evan H. Krinick, Cheryl F. Korman, Max S. Gershenoff, and Henry Mascia of counsel), for appellant.
MARK C. DILLON, J.P., JOHN M. LEVENTHAL, CHERYL E. CHAMBERS, and JOSEPH J. MALTESE, JJ.
Opinion In an action to recover damages for breach of contract, the plaintiff appeals (1) from an order of the Supreme Court, Suffolk County (Spinner, J.), dated May 3, 2013, which denied its motion for summary judgment on the complaint and, upon searching the record, awarded summary judgment to the defendant dismissing the complaint, declaring that a retainer agreement between the plaintiff attorney and the defendant dated October 9, 2009, is “null, void, cancelled, and of no force and effect,” and “barr [ing], enjoin[ing], and prohibit[ing]” the plaintiff and its successors and assigns from “enforcing or attempting to enforce the agreement or any portion thereof,” and (2), as limited by its brief, from so much of an order of the same court dated August 1, 2013, as, in effect, upon reargument, adhered to the determination in the order dated May 3, 2013.
ORDERED that the appeal from the order dated May 3, 2013, is dismissed, as that order was superseded by the order dated August 1, 2013, in effect, made upon reargument; and it is further,
ORDERED that the order dated August 1, 2013, is modified, on the law, by deleting the provision thereof, in effect, upon reargument, adhering to so much of the determination in the order dated May 3, 2013, as searched the record and awarded summary judgment to the defendant dismissing the complaint, declaring that the agreement between the plaintiff and the defendant dated October 9, 2009, is “, void, cancelled, and of no force and effect,” and “barr[ing], enjoin[ing], and prohibit[ing]” the plaintiff and its successors and assigns from “enforcing or attempting to enforce the agreement or any portion thereof,” and substituting a provision, upon reargument, vacating so much of the determination in the order dated May 3, 2013, as searched the record and awarded summary judgment to the defendant dismissing the complaint, declaring that the agreement between the plaintiff and the defendant dated October 9, 2009, is “, void, cancelled, and of no force and effect,” and “barr[ing], enjoin[ing], and prohibit[ing]” the plaintiff and its successors and assigns from “enforcing or attempting to enforce the agreement or any portion thereof”; as so modified, the order dated August 1, 2013, is affirmed insofar as appealed from, without costs or disbursements, and the matter is remitted to the Supreme Court, Suffolk County, for further proceedings on the complaint before a different Justice.
Upon reargument, the Supreme Court erred in adhering to so much of its original determination as searched the record and awarded the defendant summary judgment dismissing the complaint, declaring that a retainer agreement between the plaintiff attorney and the defendant dated October 9, 2009, is “ null, void, cancelled, and of no force and effect,” and “barr[ing], enjoin [ing], and prohibit[ing]” the plaintiff and its successors and assigns from “ enforcing or attempting to enforce the agreement or any portion thereof.” The retainer agreement assessed an annual interest rate of 18% upon an outstanding balance when the defendant defaulted on the payment of a bill. The interest that may be charged on such an outstanding balance is not subject to the limitations on the rate of interest imposed by General Obligations Law § 5–501 because the underlying obligation does not constitute a loan or forbearance (see Matias v. Arango, 289 A.D.2d 459, 460, 735 N.Y.S.2d 157 ). The Supreme Court's reliance on Eikenberry v. Adirondack Spring Water Co., 65 N.Y.2d 125, 490 N.Y.S.2d 484, 480 N.E.2d 70 for the proposition that the retainer agreement was subject to General Obligations Law § 5–501 is misplaced, as the subject agreements in that case that were found to be usurious “were concededly made in consideration of [the] plaintiff's forbearance from suit—the summons and complaint were already in the hands of a process server—and [we]re therefore ‘forbearances' within the usury law” (id. at 127–128, 490 N.Y.S.2d 484, 480 N.E.2d 70 ). Additionally, the 18% annual interest rate applicable here was not usurious because it involved interest to be paid based upon a contingency within the control of the debtor—in this case, default in the payment of an agreed-upon obligation—and the debtor could have avoided the imposition of such charges simply by paying promptly (see Kraus v. Mendelsohn, 97 A.D.3d 641, 641, 948 N.Y.S.2d 119 ; Waterbury v. City of Oswego, 251 A.D.2d 1060, 1060, 674 N.Y.S.2d 530 ; Emigrant Mtge. Co., Inc. v. Markland, 37 Misc.3d 1230[A], 2012 N.Y. Slip Op. 52245[U], *4, 2012 WL 6178408 [Sup.Ct., Kings County] ). Further, the retainer agreement was not a contract of adhesion because no evidence exists that the plaintiff employed high pressure tactics or deceptive language and that the parties' bargaining power was unequal (see Morris v. Snappy Car Rental, 84 N.Y.2d 21, 30, 614 N.Y.S.2d 362, 637 N.E.2d 253 ; Berger–Vespa v. Rondack Bldg. Inspectors, 293 A.D.2d 838, 841, 740 N.Y.S.2d 504 ; Brower v. Gateway 2000, 246 A.D.2d 246, 252, 676 N.Y.S.2d 569 ). Moreover, the defendant could have retained another law firm to perform the requested legal services (see Brower v. Gateway 2000, 246 A.D.2d at 252, 676 N.Y.S.2d 569 ). Accordingly, the Supreme Court should not have searched the record and awarded the defendant summary judgment dismissing the complaint, declaring that the agreement between the plaintiff and the defendant dated October 9, 2009, is , void, cancelled, and of no force and effect, and barring, enjoining, and prohibiting the plaintiff and its successors and assigns from enforcing or attempting to enforce the agreement or any portion thereof.Upon reargument, the Supreme Court, however, properly adhered to so much of its original determination as denied the plaintiff's motion for summary judgment on the complaint. Although the plaintiff established its prima facie entitlement to judgment as a matter of law by submitting the retainer agreement, the unpaid bills, and evidence that the defendant received and retained the plaintiff's bills without objection (see Sullivan v. REJ Corp., 255 A.D.2d 308, 308, 679 N.Y.S.2d 343 ; Moses & Singer v. S & S Mach. Corp., 251 A.D.2d 271, 271, 675 N.Y.S.2d 62 ), in opposition, the defendant, appearing pro se, raised triable issues of fact by submitting his own handwritten statements alleging that the plaintiff overbilled him and acted unprofessionally and unethically. Even if the defendant failed to timely object to the plaintiff's invoices, the defendant is not bound by them as accounts stated in the event of fraud, mistake, or other relevant equitable considerations (see Marchi Jaffe Cohen Crystal Rosner & Katz v. All–Star Video Corp., 107 A.D.2d 597, 599, 483 N.Y.S.2d 707 ; Lapidus & Assoc., LLP v. Elizabeth St., Inc., 25 Misc.3d 1226[A], 2009 N.Y. Slip Op. 52306[U], 2, 2009 WL 3823246 [Sup.Ct., N.Y. County], affd. 92 A.D.3d 405, 937 N.Y.S.2d 227 ).
In light of certain passages contained in the Supreme Court's order that may be indicative of bias, we direct that further proceedings in connection with this matter be heard by a different Supreme Court Justice.