Opinion
No. 03 Civ. 8967 (SAS).
September 29, 2004
Jack S. Dweck, Esq., Robert Phelan, Esq., The Dweck Law Firm, L.L.P., New York, New York, for Plaintiff.
Aegis J. Frumento, Esq., Francine N. Nisim, Esq., Duane Morris, L.L.P., New York, New York, for Defendant.
MEMORANDUM OPINION AND ORDER
The Dweck Law Firm, L.L.P. ("Dweck") sued Cynthia Allen Mann ("Mann"), a former client, alleging breach of the covenant of good faith and fair dealing. A bench trial began on August 3, 2004 and was scheduled to conclude on August 4, 2004. At the close of the defendant's case, Dweck elected to withdraw its claim for breach of the covenant of good faith and fair dealing and instead pursue a claim against Mann for fees based on quantum meruit. This Court awarded Dweck fees based on quantum meruit and pre-judgment interest amounting to $224,177. Mann now moves for reconsideration of that decision on the ground that the Court overlooked controlling legal authority. For the following reasons, Mann's motion is denied.
See Dweck Law Firm, L.L.P. v. Mann, No. 03 Civ. 8967, 2004 WL 1794486 (S.D.N.Y. Aug. 11, 2004).
At the Court's request, the parties have also addressed the issue of whether the judgment in this action should be a charging lien against the underlying lawsuit by Mann, or enforceable on an immediate basis against all of Mann's assets. Having considered their submissions, I now conclude that Dweck may elect to receive the full amount of the award as a charging lien, or to receive a reduced award, enforceable immediately and against all of Mann's assets.
I. STANDARD OF REVIEW
A. Standard of Review for Motion for Reconsideration
Motions for reconsideration are governed by Local Civil Rule 6.3 and are committed to the sound discretion of the district court. Reconsideration is an "extraordinary remedy to be employed sparingly in the interests of finality and conservation of scarce judicial resources."
See ATT Corp. v. Microsoft Corp., No. 01 Civ. 4872, 2004 WL 309150, at *1 (S.D.N.Y. Feb. 19, 2004).
In re Health Mgmt. Sys., Inc. Secs. Litig., 113 F. Supp. 2d 613, 614 (S.D.N.Y. 2000) (quotation marks and citation omitted). See also Range Road Music, Inc. v. Music Sales Corp., 90 F. Supp. 2d 390, 392 (S.D.N.Y. 2000) ("The . . . limitation on motions for reconsideration is to ensure finality and to prevent the practice of a losing party examining a decision and then plugging the gaps of the lost motion with additional matters.") (quotation marks and citation omitted).
Under Local Civil Rule 6.3, "the moving party must demonstrate controlling law or factual matters put before the court on the underlying motion that the movant believes the court overlooked and that might reasonably be expected to alter the court's decision." The standard for granting a motion for reconsideration is strict so as to prevent repetitive arguments on issues that have been thoroughly considered by the court. But the court may grant a motion for reconsideration to "correct a clear error or prevent manifest injustice."
Montanile v. National Broad. Co., 216 F. Supp. 2d 341, 342 (S.D.N.Y. 2002), aff'd, 2003 WL 328825 (2d Cir. Feb. 13, 2003) (unpublished).
See In re Houbigant, Inc., 914 F. Supp. 997, 1001 (S.D.N.Y. 1996).
Doe v. New York City Dep't of Social Servs., 709 F.2d 782, 789 (2d Cir. 1983).
A motion for reconsideration is not a substitute for appeal. Nor is it a vehicle "to reargue those issues already considered when a party does not like the way the original motion was resolved." Accordingly, the moving party may not "advance new facts, issues or arguments not previously presented to the Court."
See RMED Int'l, Inc. v. Sloan's Supermarkets, Inc., 207 F. Supp. 2d 292, 296 (S.D.N.Y. 2002).
In re Houbigant, Inc., 914 F. Supp. at 1001.
Morse/Diesel, Inc. v. Fidelity and Deposit Co. of Maryland, 768 F. Supp. 115, 116 (S.D.N.Y. 1991).
II. DISCUSSION
A. The Date from Which Pre-Judgment Interest Should Run
The Court awarded Dweck pre-judgment interest on the fee award running from March 22, 1999, the date Mann discharged Dweck. Mann contends that the Court overlooked controlling legal authority to the effect that pre-judgment interest must be computed from the date Dweck demanded payment for his services in quantum meruit, not from the date of discharge.
Under New York law, prejudgment interest is computed from "the earliest ascertainable date the cause of action existed." Mann cites a number of cases involving awards of counsel fees in which courts interpret the `earliest ascertainable date' to be the earliest date on which a demand for payment following the completion of services was made. Mann's argument does not meet the strict standards required of a motion for reconsideration. The Court did not overlook the authority on which Mann relies, but simply did not find it persuasive. While it is true, as Mann argues, that many courts have, without analysis, fixed the date from which interest runs as the date of the first demand for payment, others have used the method adopted by the Court ( i.e., the date of termination). The Court found that Dweck's cause of action arose on the date Mann discharged the firm, following Dweck's refusal of Mann's demand that it renegotiate its fee downwards. At that time a cause of action in quantum meruit accrued. In short, Dweck must be deemed to have sought payment as of that date.
N.Y.C.P.L.R. § 5001(b) (McKinney 2004).
See, e.g., Spanos v. Skouras Theatre Corp., 235 F. Supp. 1, 17 (S.D.N.Y. 1964) ("In the case of a discharged lawyer who recovers the reasonable value of his services, interest runs from the date of discharge"); Ash Miller v. Freedman, 114 A.D.2d 823, 824 (1st Dep't 1985) (holding that interest runs from the date of discharge, which was the earliest ascertainable date on which the cause of action existed). But see Kramer, Levin, Nessen, Kamin Frankel v. Aronoff, 638 F. Supp. 714, 721 (S.D.N.Y. 1986) (interest runs from the date of demand for payment); Arrow, Edelstein Gross, P.C. v. Rosco Productions, Inc., 581 F. Supp. 520, 524 (S.D.N.Y. 1984) (same); Brent v. Keesler, 32 A.D.2d 804, 805 (2d Dep't 1969) (same).
See February 23, 1999 Letter from Jack Dweck to Mann, Plaintiff's Exhibit 6 at 1.
See Matter of Leopold, 244 A.D.2d 411, 411 (2d Dep't 1997) (holding that an attorney's quantum meruit cause of action accrues immediately upon discharge).
See Katz v. Nichols, 48 N.Y.S.2d 640, 642 (Sup.Ct., Bronx Co., 1944) (holding that "a claim for legal services resting on a quantum meruit draws interest from the time when a demand is made after the close of the services," but that an attorney is "deemed" to have demanded payment on the day of discharge following failed negotiations for payment).
Even if I found the alternative rule to be applicable, interest would not run from the date Dweck brought the present action seeking payment in quantum meruit, as Mann argues, but from the earliest date after discharge on which Dweck sought payment, regardless of whether Dweck sought payment in quantum meruit or under the contract. The latest possible date from which interest could be awarded is therefore November 5, 1999, when Dweck brought suit seeking payment in New York Supreme Court.
See Kramer, Levin, Nessen, Kamin Frankel, 638 F. Supp. at 718, 721 (awarding interest from date of final bill).
If interest were calculated as of that date, the award would be reduced by approximately five percent.
B. The Fair Value of Dweck's Services
Mann also challenges the method used by the Court to determine the fair value of Dweck's services to Mann. The Court relied in part on a lodestar analysis, and determined that Dweck expended 300 hours on the matter. Because Dweck was retained on a contingency basis, no contemporaneous time records were kept for his services on behalf of Mann. Jack Dweck ("Mr. Dweck"), a principal of the firm, testified that his firm spent around 400 hours on the matter, a figure which he conceded was little more than a "guesstimate." The Court found Mr. Dweck's testimony credible, taking into account such evidence as, inter alia, the documents Dweck prepared in the course of its representation of Mann. However, the Court discounted his figure of 400 hours by 25%, to 300 hours, to account for the fact that it was merely an estimate, unsupported by contemporaneous time records.
Mann argues that the Court erred in basing its analysis in part on this post hoc estimate. The rule in this Circuit is that a party seeking an award of attorney's fees must support that request with contemporaneous time records. "However, in cases governed by state law, such as diversity cases, where the allocation of attorneys' fees constitutes a substantive issue, state law governs the distribution." Under New York law, while the burden is on the discharged attorney to keep and present records from which the court may determine the reasonable value of his or her services, the failure to keep contemporaneous time records is not fatal to a fee request, although the court may discount the amount claimed accordingly. Mann challenges Mr. Dweck's estimate as "speculative" and mere "whimsy," and argues that such speculation cannot, as a matter of law, be the basis for an award of fees. The Court, however, found the estimate to be credible, and well-supported by the evidence in the record and by Mr. Dweck's description of the nature of the services rendered. Mann's arguments challenging the credibility of the estimate raise no facts or controlling legal authority not considered by the Court.
See New York State Ass'n for Retarded Children, Inc. v. Carey, 711 F.2d 1136, 1154 (2d Cir. 1983).
Schafrann v. Karam, No. 01 Civ. 0647, 2003 WL 289620 at *6 (S.D.N.Y. Feb. 10, 2003).
See F.H. Krear Co. v. Nineteen Named Trustees, 810 F.2d 1250, 1265 (2d Cir. 1987).
See General Star Indemnity Co. v. Custom Editions Upholstery Corp., 940 F. Supp. 645, 653 (S.D.N.Y. 1996).
C. Dweck May Choose to Receive the Full Amount of the Award as a Charging Lien, or a Reduced Award on an Immediate Basis
The Court raised the issue, sua sponte, of whether the judgment in this case should be a charging lien on Mann's underlying lawsuit. Having considered the parties' submissions, I now conclude that Dweck is entitled to an award that is enforceable immediately, against all of Mann's assets.
Under New York law, an attorney discharged without cause may choose between two distinct remedies: she may seek a quantum meruit judgment, enforceable immediately against all of the client's assets, or a charging lien against the underlying lawsuit. The discharged attorney's recovery in quantum meruit is not limited by the former client's ultimate recovery in the underlying lawsuit. Where the reasonable value of the services cannot be determined before the resolution of the underlying lawsuit, the award may be made a charging lien on that lawsuit. This may be the case if, because of the work left to be done in the underlying suit, it is not possible to determine the value of the services or the quality of the attorney's performance without reference to the amount of the award, if any.
See Lai Ling Cheng v. Modansky, 73 N.Y. 2d 454, 459 (1989); Butler, Fitzgerald Potter v. Gelmin, 235 A.D.2d 218, 218-19 (1st Dep't 1997).
See Universal Acupuncture v. Quadrino Schwartz, 370 F.3d 259, 264 (2d Cir. 2004).
See Corsi v. Ott, 44 A.D.2d 906, 906 (4th Dep't 1974).
See id. (citing Bradbury v. Farber, 31 A.D.2d 824 (2d Dep't 1969).
At trial, it was undisputed that Dweck was discharged without cause. Accordingly, Dweck was entitled to choose, as it did, to pursue a claim for quantum meruit, enforceable immediately. The amount of the award can be fixed now, without waiting for the resolution of the underlying action. The Court has heard evidence on the extent and nature of the services rendered by Dweck. Based on that evidence, the Court determined the hours reasonably worked and a fair hourly rate and set a lodestar recovery. Whatever the outcome of Mann's present litigation, it will shed little light on the value of the services Dweck performed over five years ago.
Mann argues that due to "the procedural manner in which this issue has come up, a charging lien is all this Court presently may award." Mann contends that the Court may not make a quantum meruit award to Dweck, enforceable immediately against all Mann's assets, because Dweck never properly commenced an action for quantum meruit. Dweck brought this action seeking to recover for breach of the covenant of good faith and fair dealing. At the end of the trial, I permitted Dweck to revive his previously dismissed claims (" Dweck I"). Mann now contends that Dweck never asserted a claim for quantum meruit in Dweck I, and so there was no such claim to revive.
September 10, 2004 Letter to the Court of Aegis Frumento, Defendant's counsel, at 1.
I dismissed all of Dweck's claims in Dweck I. See Dweck Law Firm, L.L.P. v. Mann, No. 02 Civ. 8481, 2003 WL 22480042 (S.D.N.Y. Nov. 3, 2003). I dismissed Dweck's breach of contract claim, which I construed as a claim for payment in quantum meruit, on the ground that when an attorney retained under a contingency fee agreement is discharged, but the client makes no recovery in the underlying action, the attorney has no right to recover in quantum meruit. See id. at *5. The authority supporting this decision was subsequently overruled by the Second Circuit in Universal Acupuncture Pain Services, P.C. v. Quadrino Schwartz, P.C., 370 F.3d 259 (2d Cir. 2004).
Mann's argument is based on a very narrow reading of Dweck I. In that case, Dweck pressed a claim for breach of contract, seeking to recover fees due under the retainer agreement. Liberally construed, however, Dweck's complaint in Dweck I also stated a claim for quantum meruit. Dweck sought to recover "compensatory damages . . . for work, labor and services." This is the essence of a claim for quantum meruit. Accordingly, I discussed the merits of Dweck's quantum meruit claim at some length in my opinion dismissing that case. Mann was clearly on notice, throughout the present action, that Dweck had raised a claim for quantum meruit.
October 23, 2002 Complaint ¶ 1.
See New York Jurisprudence, Contracts § 594 (2003) ("A party may recover the value of work, labor, or services in an action for quantum meruit"). See also Matarese v. Moore-McCormack Lines, Inc., 158 F.2d 631, 633 (2d Cir. 1946) (holding that, under Federal Rules of Civil Procedure, plaintiff may recover in quantum meruit even where only an express contract has been pleaded).
See Dweck Law Firm, L.L.P., 2003 WL 22480042, at *3, 5.
However, while Dweck is entitled, if it chooses, to receive immediate payment in quantum meruit, it may not recover the full amount of $224,177 on that basis. In calculating the award of $224,177, I began with a lodestar analysis, then made an upward adjustment of 50% for the risk involved in a contingency representation. Having considered Mann's submission, I am persuaded that this risk premium is not consistent with an award enforceable on an immediate basis against all of Mann's assets. Only if the award is made as a charging lien, so that Dweck can recover only from the proceeds, if any, of Mann's suit, is a risk premium justified. Dweck may therefore choose between remedies. If Dweck chooses to accept the award as a charging lien, Dweck may receive the full sum of $224,177. However, if Dweck chooses to enforce the award on an immediate basis, it may not receive the 50% risk premium. Without the risk premium, the fee award and interest total $143,380.
In presenting Dweck with this choice, I am treating Mann's submission as analogous to a motion for remittitur. Remittitur is "the process by which a court compels a plaintiff to choose between reduction of an excessive verdict and a new trial." Earl v. Bouchard Transp. Co., 917 F.2d 1320, 1328 (2d Cir. 1990).
The calculations underlying this figure are set forth at length in my Opinion of August 6, 2004.
V. CONCLUSION
For the foregoing reasons, Mann's motion for reconsideration is denied. The Clerk of the Court is directed to close this motion [#27 on the docket sheet]. My Opinion of August 6, 2004 is modified in accordance with the discussion above. The award of $224,177 is conditioned on Dweck's willingness to accept the award as a charging lien; if Dweck elects instead that the award should be enforceable on an immediate basis, Dweck may receive only $143,380.
SO ORDERED.