Summary
In Frankel v Frankel (2 NY3d 601), the Court of Appeals recognized that "the realities of contentious matrimonial litigation require a regular infusion of funds," and that "more frequent interim counsel fee awards would prevent accumulation of bills" (id. at 607, 605 n 1).
Summary of this case from Prichep v. PrichepOpinion
No. 100.
Argued June 2, 2004.
Decided June 29, 2004.
APPEAL from an order of the Appellate Division of the Supreme Court in the Second Judicial Department, entered September 8, 2003. The Appellate Division, with two Justices dissenting, (1) reversed, on the law, an order of the Supreme Court, Nassau County (Anthony F. Marano, J.), which had granted the application of defendant's former attorneys for an award of counsel fees against plaintiff and directed a hearing before a referee to fix reasonable fees, and (2) denied the application.
Frankel v. Frankel, 309 AD2d 65, reversed.
Schlissel, Ostrow, Karabatos, Poepplein, Cender Fisher, PLLC, Garden City ( Stephen W. Schlissel, Barry J. Fisher, Lisa R. Nakdai and Michael J. Ostrow of counsel), for appellant. I. Domestic Relations Law § 237 (a) does, and was specifically amended to, protect attorneys discharged without cause. ( Matter of New York Post Corp. v. Leibowitz, 2 NY2d 677; People ex rel. Wood v. Lacombe, 99 NY 43; Surace v. Danna, 248 NY 18; Eck v. United Arab Airlines, 15 NY2d 53; Matter of Petterson v. Daystrom Corp., 17 NY2d 32; Price v. Price, 69 NY2d 8; Matter of Guido v. New York State Teachers' Retirement Sys., 94 NY2d 64; Weingarten v. Board of Trustees of N.Y. City Teachers' Retirement Sys., 98 NY2d 575; Klein v. Eubank, 87 NY2d 459; People v. Finnegan, 85 NY2d 53.) II. The Appellate Division's decision is inconsistent with the holdings of this Court in Klein v. Eubank ( 87 NY2d 459). ( Intar-Tass Russian News Agency v. Russian Kurier, Inc., 140 F3d 442; Shalom Toy v. Each Every One of Members of N.Y. Prop. Ins. Underwriting Assn., 239 AD2d 196.) III. The firm's rights under Domestic Relations Law § 237 (a) were preserved in prior court decisions and at the time the firm was discharged. ( Hogan v. Hogan, 194 AD2d 520; Redgrave v. Redgrave, 304 AD2d 1062; Gleckman v. Kaplan, 215 AD2d 527.) IV. The order of the Appellate Division should be reversed as being contrary to the law and public policy. ( O'Shea v. O'Shea, 93 NY2d 187; Charpié v. Charpié, 271 AD2d 169; Katzman v. Katzman, 284 AD2d 160; Sadofsky v. Sadofsky, 78 AD2d 520; Hogan v. Hogan, 194 AD2d 520; Guardian Life Ins. Co. of Am. v. Schaefer, 70 NY2d 888; Monteleon v. Monteleon, 163 AD2d 372; Klein v. Eubank, 87 NY2d 459.) V. The order of the Appellate Division must be reversed. ( Klein v. Eubank, 87 NY2d 459; O'Shea v. O'Shea, 93 NY2d 187.)
Alexander Potruch, L.L.C., Mineola ( Alexander Potruch and Michael C. Daab of counsel), for respondent. I. Domestic Relations Law § 237 (a) does not grant a "discharged" or "former" attorney the right to seek an award of counsel fees in its own name as against the adversary spouse. ( O'Shea v. O'Shea, 93 NY2d 187; Charpié v. Charpié 271 AD2d 169; Katzman v. Katzman, 284 AD2d 160; Sadofsky v. Sadofsky, 78 AD2d 520; Bartow v Bartow, 212 AD2d 564; Hogan v. Hogan, 194 AD2d 520; Monteleon v. Monteleon, 160 AD2d 372; American Home Assur. Co. v. Levy, 179 Misc 2d 773; Weiss v. Manfredi, 83 NY2d 974; Bluntt v. O'Connor, 291 AD2d 106.) II. "Under the circumstances of this case" appellant's right to make an application against respondent was not preserved, and a reversal of the Appellate Division's determination will lead to unintended, negative consequences which could not have been intended by the Legislature. ( Campaign for Fiscal Equity v. State of New York, 100 NY2d 893; DeCabrera v. Cabrera-Rosete, 70 NY2d 879.) III. The facts in the case of Klein v. Eubank ( 87 NY2d 459) do not parallel the facts of the instant matter and do not provide a basis to reverse the majority opinion of the Appellate Division. ( Sadofsky v. Sadofsky, 78 AD2d 520; Haser v. Haser, 271 AD2d 253; Miller v. Kassatly, 216 AD2d 260; Kaplan v. Reuss, 113 AD2d 184.)
Elliott Scheinberg, New York City, for American Academy of Matrimonial Lawyers, New York Chapter, amicus curiae. I. Counsel fees have long been acknowledged as a failsafe to financial disparity which permits the nonmonied spouse, typically the wife, to participate meaningfully in the litigation. ( Hinden v. Hinden, 122 Misc 2d 552; O'Shea v. O'Shea, 93 NY2d 187; DeCabrera v. Cabrera-Rosete, 70 NY2d 879; Charpié v. Charpié, 271 AD2d 169.) II. Frankel v. Frankel ( 309 AD2d 65) is contrary to codified principles of statutory construction that the legislative intent be effectuated, first and foremost, and to the precedent authority of O'Shea v. O'Shea ( 93 NY2d 187) and DeCabrera v. Cabrera-Rosete ( 70 NY2d 879) which held that the elimination of the words "during the pendency of the action" broadened the scope of the statute with the legislative intent. ( Matter of Albano v. Kirby, 36 NY2d 526; Matter of Hogan v. Culkin, 18 NY2d 330; Katzman v. Katzman, 284 AD2d 160.) III. Decisional authority, like its statutory counterpart, has steadfastly held that an absence of ambiguity in a statute does not mandate a substitution for reasoned interpretation: effectuating the legislative intent is the preeminent responsibility. ( Fumarelli v. Marsam Dev., 92 NY2d 298; Matter of Petterson v. Daystrom Corp., 17 NY2d 32; New York State Bankers Assn. v. Albright, 38 NY2d 430; Price v. Price, 69 NY2d 8; Rankin v. Shanker, 23 NY2d 111; Matter of Albano v. Kirby, 36 NY2d 526; Matter of Hogan v. Culkin, 18 NY2d 330; Matter of Sutka v. Conners, 73 NY2d 395; Matter of Scotto v. Dinkins, 85 NY2d 209.) IV. Statutes are presumed not to work hardships nor injustice, nor are they created in a vacuum to leave parties without a remedy; decisional authority and the Legislature have been consistent in their efforts to prevent unjust results to counsel and clients; if permitted to stand, Frankel v. Frankel ( 309 AD2d 65) will harm counsel and litigants. ( Sadofsky v. Sadofsky, 78 AD2d 520; Haser v. Haser, 271 AD2d 253.) V. It is settled law that a timely fee application is key to the preservation of an outgoing attorney's rights to a hearing within the context of the action; although timely asserted Frankel v. Frankel, ( 309 AD2d 65) resulted in a forfeiture of the right. ( Sadofsky v. Sadofsky, 78 AD2d 520; Pratt v. Pratt, 282 AD2d 941; Matter of Buono v. Fantacone, 252 AD2d 917; Shapiro v. Shapiro, 179 AD2d 525; Gleckman v. Kaplan, 215 AD2d 527; New York Life Ins. Co. v. Aitkin, 125 NY 660; Matter of Salvano v. Merrill Lynch, Pierce, Fenner Smith, 85 NY2d 173; Rubenfeld v. Rubenfeld, 279 AD2d 153; Bartow v. Bartow, 212 AD2d 564; Zielinski v. Zielinski, 252 AD2d 800.) VI. Outgoing counsel in Frankel v. Frankel ( 309 AD2d 65) seeks to preserve a procedural right not to immediately enforce a substantive one to the client's detriment as seems to concern the majority; these concerns can be easily remedied without prejudice to counsel. ( O'Shea v. O'Shea, 93 NY2d 187; DeCabrera v. Cabrera-Rosete, 70 NY2d 879.) VII. Pursuant to the principles of statutory construction Domestic Relations Law § 237 (a) and Judiciary Law § 475 are statutes in pari materia which must be accorded analogous and parallel readings because they seek to protect the same class of people — attorneys; Frankel v. Frankel ( 309 AD2d 65) contravenes this Court's ruling in Klein v. Eubank ( 87 NY2d 459) under section 475. ( Kaplan v. Reuss, 113 AD2d 184, 68 NY2d 693.) VIII. Frankel v. Frankel ( 309 AD2d 65) erred in ruling that neither statute nor case law grants a discharged attorney a right to apply in his or her own name for retrospective fees against the adversary spouse, either within or without the matrimonial action. ( Klein v. Eubank, 87 NY2d 459; Haser v. Haser, 271 AD2d 253; Kaplan v. Reuss, 113 AD2d 184, 68 NY2d 693.) IX. Domestic Relations Law § 237 (a) places counsel for the nonmonied spouse in limited privity directly with the other spouse. ( Sadofsky v. Sadofsky, 78 AD2d 520; Haser v. Haser, 271 AD2d 253.) X. Frankel v. Frankel ( 309 AD2d 65) not only devastates counsel's procedural rights but it also assaults his or her substantive rights by exposing uncollected fees to dischargeability in bankruptcy. ( In re Spong, 661 F2d 6.)
Chief Judge Kaye and Judges G.B. Smith, Ciparick, Grafeo, Read and R.S. Smith concur.
OPINION OF THE COURT
In matrimonial litigation, counsel fee awards have helped reduce what would otherwise be a substantial advantage to the monied spouse. Pursuant to Domestic Relations Law § 237 (a), a lawyer who represents a nonmonied spouse may seek attorneys' fees from the monied spouse in the divorce action. This appeal raises the question whether attorneys may do so after their clients have discharged them without cause. A divided Appellate Division said no. We disagree and reverse.
The Frankels were married in December 1988. The husband was a cardiologist and the wife a homemaker. The husband filed for divorce in 1998, and Supreme Court granted it in 2001. The wife paid her lawyer an initial retainer of $5,000, but the billings soon went well beyond that amount. In June 1999, Supreme Court awarded the wife's attorney an interim fee of $2,500. Nearly two years later, after a 32-day custody trial, the court granted an additional interim counsel fee of $25,000 on March 12, 2001, to be paid by the husband at the rate of $1,500 per month. Eighteen days later, the wife discharged her lawyer without cause. After taking into account the retainer and the two interim awards, the wife's lawyer claimed that she owed him considerably more and proceeded against the husband for that amount pursuant to Domestic Relations Law § 237 (a). The court ruled that even though the wife's attorney had been discharged, he could look to the husband for counsel fees. The court then ordered a hearing before a special referee to determine the appropriate award. On the husband's appeal, the Appellate Division reversed, holding that "former counsel has no standing to pursue the adversary spouse within the matrimonial action" ( 309 AD2d 65, 69 [2d Dept 2003]).
We note that more frequent interim counsel fee awards would prevent accumulation of bills. As the Committee to Examine Lawyer Conduct in Matrimonial Actions (Committee) noted in a report, "[t]he practice of many judges to defer [pendente lite counsel fee applications] to the trial court essentially delays the awarding of fees until the final settlement or judgment, and often compromises the nonmonied spouse's ability to adequately litigate the case" (Report of Committee, at 36 [May 4, 1993]). The Committee further observed that if applications for legal fees are denied or deferred, "the attorney for the nonmonied spouse is left not only without payment for services rendered but without reasonable expectation as to how or whether payment will be made. Considering the protracted nature of divorce actions, both client and attorney are left in limbo for an indefinite period of time, a circumstance which can drive a wedge between attorney and client" ( id. at 37; see also Scheinkman, Practice Commentaries, McKinney's Cons Laws of NY, Book 14, Domestic Relations Law C237:4 [1999]; Uniform Rules for Trial Cts [22 NYCRR] § 202.16 [k]).
Domestic Relations Law § 237 (a) provides, in pertinent part, that
"[i]n any action or proceeding . . . for a divorce . . . the court may direct either spouse . . . to pay such sum or sums of money directly to the attorney of the other spouse to enable that spouse to carry on or defend the action or proceeding as, in the court's discretion, justice requires, having regard to the circumstances of the case and of the respective parties."
The statute goes on to say that "[a]ny applications for counsel fees and expenses may be maintained by the attorney for either spouse in [counsel's] own name in the same proceeding." The provision is silent, however, as to whether an attorney who has been discharged without cause has the right in the same proceeding to seek counsel fees.
A divided Appellate Division concluded that, because he was discharged, the wife's attorney had no standing to proceed against the husband for counsel fees. The Court interpreted Domestic Relations Law § 237 (a) as authorizing only "the current attorney of record" to seek counsel fees against a client's spouse ( 309 AD2d at 67). Reading the provision in light of our precedents and the policy interests surrounding the statute, we agree with the Appellate Division dissenters that Domestic Relations Law § 237 (a) allows an attorney who was discharged without cause to proceed against the monied spouse in the matrimonial litigation.
We note that in the context of Judiciary Law § 475, we have already held that a discharged attorney may enforce his statutory charging lien ( see Klein v. Eubank, 87 NY2d 459, 462 [1996]).
In O'Shea v. O'Shea ( 93 NY2d 187), we considered whether a trial court had discretion to award fees under Domestic Relations Law § 237 (a) for legal services rendered before and after the divorce action. Although the predecessor statute, former Civil Practice Act § 1169, included language limiting fee awards to services rendered "during the pendency" of an action, this clause does not appear in the current statute. In concluding that courts could award counsel fees for services performed both before and after the divorce action itself, we looked not only to this textual change but also to the policy underlying fee shifting in the divorce context. This is a dramatic departure from the American rule that usually requires litigants to pay their own legal expenses. We explained that giving courts the power to order a spouse to pay the other's counsel fees "is designed to redress the economic disparity between the monied spouse and the non-monied spouse" and ensure that "the matrimonial scales of justice are not unbalanced by the weight of the wealthier litigant's wallet" ( id. at 190).
That is true here. If lawyers terminated without cause lose their right to petition the court for a fee award from an adversary spouse, the less affluent spouse would suffer the consequences. The spouse with ready and ample funds would have a wide choice of counsel, and the financial wherewithal to maintain the litigation, while the nonmonied spouse would struggle to find a lawyer who might have to go unpaid. A matrimonial lawyer may be willing to carry a client on its accounts receivable books, but not as to accounts that will prove unreceivable. In this regard, the Legislature designed Domestic Relations Law § 237 (a) to eliminate the disparity between the monied and the nonmonied spouse. The husband's interpretation would thwart the statutory intent.
As amicus American Academy of Matrimonial Lawyers points out, the realities of contentious matrimonial litigation require a regular infusion of funds. Although this is a regrettable byproduct of divorce, interpreting the statute to preclude applications like the one at issue here would confound the collection process and discourage attorneys from representing nonmonied litigants.
The husband argues that a rule allowing a wife's discharged attorney to proceed against him would impede settlements. We disagree. Allowing the application would enable a global settlement that takes into account property distribution and other equities that affect the outcome. Otherwise, the case would be "settled," leaving unadjudicated the amount of the attorney's rightfully earned fees and shifting the venue to a plenary proceeding — another lawsuit, with the unpleasant prospect of a judgment against the nonmonied spouse.
Accordingly, the order of the Appellate Division should be reversed, with costs, and the order of Supreme Court, Nassau County, reinstated.
Order reversed, etc.