Summary
finding "satisfactory reasons" to permit plaintiff's counsel's withdrawal when plaintiff "concedes that it has irreconcilable differences with its counsel"
Summary of this case from Catamount Radiology, P.C. v. BaileyOpinion
96 Civ. 2839 (RPP)(AJP)
October 21, 1997, Decided . October 21, 1997, Filed
For HALLMARK CAPITAL CORPORATION, plaintiff: Kevin J. Toner, Werbel McMillin & Carnelutti, New York, NY.
For THE RED ROSE COLLECTION, INC., DORASON CORPORATION, defendants: James Nespole, Fulbright & Jaworski, New York, NY.
OPINION AND ORDER
ANDREW J. PECK, United States Magistrate Judge:
This case involves an unfortunate breakdown in the attorney-client relationship. This Opinion is written to clarify the standard for permitting counsel to withdraw. Withdrawal under S.D.N.Y. Local Civil Rule 1.4 requires only "satisfactory reasons for withdrawal," which can be a lesser showing than the "good cause" showing necessary to preserve an attorney's charging lien. Since it is undisputed that plaintiff and her counsel have irreconcilable differences, withdrawal is appropriate; the issue of who caused those differences and therefore whether "good cause" exists can be deferred until later resolution of any charging lien dispute.
FACTS
At a settlement conference with the Court on July 22, 1997, the parties hand-wrote a binding summary settlement agreement. The parties were supposed to finalize formal settlement documents and file a notice of dismissal in August, but did not.
On September 22, 1997, Patricia Hall, president and owner of plaintiff Hallmark Capital Corporation, wrote to the Court requesting a conference because the settlement documents still were not completed. Her letter stated: "I am requesting the Court's assistance because my lawyer is no longer representing my best interests in this matter and has asserted positions averse [sic] to me." Plaintiff's counsel responded by, inter alia, moving for leave to withdraw as counsel, alleging that: (1) "Hallmark has failed to pay substantial outstanding invoices for services for more than one year," and (2) plaintiff verbally abused counsel, was failing to communicate with counsel and had sent the Court a letter damaging to counsel's representation. (Toner 9/29/97 Aff. PP 2, 3-5, 9.)
Hallmark and its new counsel oppose withdrawing counsel's motion while at the same time acknowledging the breakdown in the attorney-client relationship. Hallmark's brief opposing the withdrawal motion summarizes its position as follows:
While Hallmark agrees that there has been a serious breakdown in the relationship between Hallmark and W&C [Werbel & Carnelutti] and that therefore W&C should no longer represent Hallmark's interests in this action, Hallmark opposes W&C's motion to the extent that it seeks a determination that W&C should be granted leave to withdraw for cause. Rather, the Court should permit W&C to withdraw, subject only to any ancillary proceedings concerning its alleged charging lien and right to be paid, on the sole grounds that Hallmark has consented to the substitution of Robinson Brog Leinwand Greene Geneovese & Gluck, P.C. in place of W&C. The Court should explicitly reserve decision on the issue of good cause or the lack thereof.
Hallmark asserts that the breakdown that has occurred is the result of W&C's conduct and that Hallmark has cause for the discharge of W&C. . . . Because the material facts here are sharply disputed, it is necessary for the Court to hold a hearing to determine whether W&C's withdrawal was for cause, or was provoked by W&C's own actions.
(Hallmark Br. at 1-2, emphasis added; see also Hermann 10/15/97 Aff. P 4; Hall 10/12/97 Aff. P 1: "Because of the serious breakdown that has occurred in the relationship between Hallmark and W&C, Hallmark does not contest that W&C should no longer represent Hallmark in this litigation.")
ANALYSIS
Withdrawal of counsel is governed by S.D.N.Y. Local Civil 1.4 (formerly, Local General Rule 3(c)), which provides:
An attorney who has appeared as attorney of record for a party may be relieved or displaced only by order of the court and may not withdraw from a case without leave of the court granted by order. Such an order may be granted only upon a showing by affidavit or otherwise of satisfactory reasons for withdrawal or displacement and the posture of the case, including its position, if any, on the calendar.
Id. (emphasis added). The Rule speaks of "satisfactory reasons for withdrawal," not "good cause."
"'It is well-settled that non-payment of fees is a valid basis for the Court to grant counsel's motion to withdraw. . . .'" Fischer v. Biman Bangladesh Airlines, 1997 U.S. Dist. LEXIS 10405, 96 Civ. 3120, 1997 WL 411446 at *1 (S.D.N.Y. July 18, 1997) (Peck, M.J.) (and cases cited therein). Here, Hallmark admits that it has not paid all of its withdrawing counsel's legal bills, because of both financial difficulties and its belief that counsel's "final" bill is excessive. (Hall 10/12/97 Aff. PP 10-19.) The Court, however, need not rely on the fee issue in granting counsel's motion to withdraw.
"The courts also have ruled that lack of cooperation by a client with its counsel, including lack of communication, is a sufficient reason for allowing withdrawal." Fischer v. Biman Bangladesh Airlines, 1997 WL 411446 at *1 (and cases cited therein). Moreover, "as this Court previously has held, 'it is clear that the existence of an irreconcilable conflict between attorney and client is a proper basis for the attorney to cease representing his client.'" Cosgrove v. Federal Home Loan Bank, 1995 U.S. Dist. LEXIS 14880, 90 Civ. 6455 & 92 Civ. 4225, 1995 WL 600565 at *2 (S.D.N.Y. Oct. 12, 1995) (Peck, M.J.) (emphasis added) (quoting Generale Bank, New York Branch v. Wassel, 1992 U.S. Dist. LEXIS 2001, 91 Civ. 1768, 1992 WL 42168 at *1 (S.D.N.Y. Feb. 24, 1992)); accord, e.g., Dowler v. Cunard Line Ltd., 1996 U.S. Dist. LEXIS 9100, 94 Civ. 7480, 1996 WL 363167 at *1 (S.D.N.Y. June 28, 1996); SEC v. Towers Fin. Corp., 1996 U.S. Dist. LEXIS 7450, 93 Civ. 0744 & 0810, 1996 WL 288176 at *3 (S.D.N.Y. May 30, 1996) (Peck, M.J.), report & rec. adopted, 1996 U.S. Dist. LEXIS 9493, 1996 WL 288176 (S.D.N.Y. July 8, 1996); see also, e.g., Emile v. Browner, 1996 U.S. Dist. LEXIS 18654, 95 Civ. 3836, 1996 WL 724715 at *1 (S.D.N.Y. Dec. 17, 1996) ("when a client . . . indicates that she lacks confidence in and no longer wishes to be represented by the attorney, and the attorney-client relationship has broken down, these are more than sufficient reasons for counsel to be relieved."); Tufano v. City of New York, 94 Civ. 8655, 1996 WL 419912 at *1 (S.D.N.Y. July 25, 1996) (withdrawal permitted on showing that "an irreconcilable conflict has developed between [counsel and client] regarding litigation strategy"); McGuire v. Wilson, 735 F. Supp. 83, 85 (S.D.N.Y. 1990) (counsel permitted to withdraw where client's affidavit "established that the [attorney-client] relationship . . . had deteriorated beyond repair," although client claimed fault was counsel's); Sansiviero v. Sanders, 117 A.D.2d 794, 795, 499 N.Y.S.2d 431, 431 (2d Dep't) (in "light of the irreconcilable differences between" counsel and his client "with respect to the proper course to be pursued by counsel in the litigation, the appellant's motion to withdraw as counsel for the plaintiff should have been granted."), appeal dismissed, 68 N.Y.2d 805, 506 N.Y.S.2d 868, 498 N.E.2d 432 (1986).
"'Under New York law, the refusal of a client to accept a settlement offer is not good and sufficient cause for the withdrawal of the attorney.'" Cosgrove v. Federal Home Loan Bank, 1995 U.S. Dist. LEXIS 14880, 90 Civ. 6455 & 92 Civ. 4225, 1995 WL 600565 at *2 (S.D.N.Y. Oct. 12, 1995) (Peck, M.J.). While Ms. Hall claims that her differences with withdrawing counsel began in part because of differences in settlement strategy (and the interplay of settlement vs. litigation on counsel's fees) (Hall 10/12/97 Aff. P 4), the case did settle, and Hallmark and its counsel's difficulties not only continued but were exacerbated. Thus, counsel's withdrawal motion, and the Court's decision on the motion, is not based on differences as to settlement strategy.
Here, Hallmark concedes that it has irreconcilable differences with its counsel. Thus, there are "satisfactory reasons" for counsel to be permitted to withdraw pursuant to S.D.N.Y. Local Civil Rule 1.4.
Plaintiff's new counsel apparently has confused the Local Civil Rule 1.4 "satisfactory reasons" standard with the "good cause" standard applicable to an attorney's charging lien under New York Judiciary Law § 475. Under New York law, if an attorney withdraws without "good cause" or is discharged with "good cause," he loses his charging lien. See, e.g., Petition of Harley & Browne, 957 F. Supp. 44, 48 (S.D.N.Y. 1997); Dowler v. Cunard Line Ltd., 1996 WL 363167 at *2; Rankel v. Tracey, 1991 U.S. Dist. LEXIS 10673, 84 Civ. 3412, 1991 WL 156324 at *7 (S.D.N.Y. Aug. 2, 1991), aff'd, 969 F.2d 1041 (2d Cir.), cert. denied, 506 U.S. 978, 113 S. Ct. 476 (1992); Lazzaro v. Manber, 87 Civ. 2153, 1989 WL 47708 at *2 (E.D.N.Y. April 27, 1989); Petition of Rosenman Colin Freund Lewis & Cohen, 600 F. Supp. 527, 533 (S.D.N.Y. 1984); Marrero v. Christiano, 575 F. Supp. 837, 839 (S.D.N.Y. 1983); Shalom Toy, Inc. v. Each & Every One, 658 N.Y.S.2d 1, 3 (1st Dep't 1997).
While a finding of "good cause" for charging lien purposes by definition would include "satisfactory reasons" for withdrawal under Local Civil Rule 1.4, the converse is not necessarily true. As this case demonstrates, if the client and counsel have irreconcilable differences, that is a satisfactory reason to allow counsel to withdraw. In deciding the withdrawal motion, it is not necessary for the Court to decide who or what caused the irreconcilable differences, which goes only to "good cause" for charging lien purposes. See, e.g., Marrero v. Christiano, 575 F. Supp. at 837, 839-40 (court allowed counsel to withdraw while initially reserving decision on charging lien application and thereafter denying lien because no "good cause" found).
The Court recognizes that some cases have found that the satisfactory reason for withdrawal also is good cause for withdrawal for lien purposes. E.g., Dowler v. Cunard Lines Ltd., 1996 WL 363167 at *2. The Court believes these cases merely used imprecise language because of the factual situations facing the Court, and that their results (as opposed to language) are consistent with this Opinion.
This difference in standards makes perfect sense because of litigation-timing realities. Decision on an attorney's motion to withdraw must be decided expeditiously to allow the main litigation to go forward. The charging lien issue, on the other hand, may involve investigation into who caused the differences and/or as to what constitutes a "reasonable" fee, issues that may be more complex and time consuming. Indeed, resolution of the charging lien issue may require a trial-like hearing, while decision on withdrawal can be done on the papers. See, e.g., Petition of Rosenman Colin Freund Lewis & Cohen, 600 F. Supp. at 531-32; Kahn v. Kahn, 186 A.D.2d 719, 720, 588 N.Y.S.2d 658, 659 (2d Dep't 1992) ("a hearing is required to determine the amount of compensation, unless the parties consent to a determination of the reasonable value of the attorney's services on the papers submitted to the court") (citations omitted). Moreover, the charging lien issue will not necessarily be decided in the federal action, depending on whether the Court exercises ancillary jurisdiction over the fee dispute. See, e.g., Pay Television of Greater New York, Inc. v. Sheridan, 766 F.2d 92, 94 (2d Cir. 1985) (in exercise of ancillary jurisdiction, "the decision whether to fix the fees due a withdrawing attorney lies within the discretion of the district court" and it is not an abuse of discretion to abstain from setting fees where "the fee dispute is not a cut-and-dried matter"); SEC v. Towers, 1996 WL 288176 at *3 (declining to exercise ancillary jurisdiction over fee dispute after having allowed counsel to withdraw).
The Court will reserve decision at this time as to whether it will exercise ancillary jurisdiction over the fee dispute between Hallmark and its withdrawing counsel.
At this point, while withdrawing counsel has invoked a charging lien, neither counsel nor Hallmark have formally moved for the Court to resolve their fee dispute.
CONCLUSION
For the reasons set forth above, the Court grants Werbel & Carnelutti's application to withdrawn, and reserves decision on whether to exercise ancillary jurisdiction over plaintiff's fee dispute with withdrawing counsel.
SO ORDERED.
DATED: New York, New York
October 21, 1997
Andrew J. Peck
United States Magistrate Judge