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finding Rule 1.8 implicated where contingency agreement created possibility of firm receiving ownership interest in client's business entities
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16-CV-5273 (JSR)(SN)
07-31-2018
HELD & HINES LLP, Plaintiff, v. SANDY HUSSAIN, Defendant.
REPORT AND RECOMMENDATION SARAH NETBURN, United States Magistrate Judge.
TO THE HONORABLE JED S. RAKOFF:
On September 6, 2017, the Honorable Jed S. Rakoff referred this matter to me to report and recommend on any motions for summary judgment. ECF No. 86. On January 12, 2018, Plaintiff Held & Hines LLP ("H&H") filed a motion for summary judgment pursuant to Federal Rule of Civil Procedure 56. ECF No. 105. For the reasons that follow, I recommend GRANTING in part and DENYING in part the motion for summary judgment.
BACKGROUND
In 2012, Defendant Sandy Hussain and Ryan Slack worked together to organize the first Fashion Digital conference, an event "bringing together leaders, speakers, and sponsors in the industries of fashion, technology and e-commerce." Findings of Fact & Conclusions of Law at 4, MDB LLC v. Hussain (GreenPearl Matter), No. 14-CV-9281 (VEC)(SN) (S.D.N.Y. May 29, 2015), ECF No. 73. Hussain and Slack also dated on and off from 2010 to 2014. Id. at 3. Slack was the Chief Executive Officer, majority owner, and managing member of MDB LLC d/b/a GreenPearl Events ("GreenPearl"), which played an active role in organizing the first conference in New York City in October 2012. Id. at 3, 14. The conference was financially successful, and attendees and sponsors expressed interest in participating in future conferences. Id. at 14-15. Accordingly, over the two years that followed, GreenPearl, Slack, and Hussain organized additional conferences in New York, Los Angeles, and the United Kingdom. Id. at 16-18. While organizing these conferences, however, Hussain and Slack's professional and personal relationships deteriorated. Id. at 18-19.
On September 24, 2014, unbeknownst to GreenPearl, Hussain filed a trademark application with the U.S. Patent and Trademark Office to register the mark "Fashion Digital." Id. at 19. In addition, in early October 2014, Hussain commenced an action against Slack in the Supreme Court of the State of New York, Kings County. Id. Shortly thereafter, on October 9, 2014, Hussain entered into a legal services agreement with H&H for the purpose of "bringing an action against Ryan Slack, Greenpearl and other related parties for damages related to Breach of Contract, Unjust Enrichment and Assault." ECF No. 106-4. On November 21, 2014, GreenPearl and Slack commenced a federal action against Hussain in this Court (the "GreenPearl Matter"), seeking to enjoin Hussain from using the mark "Fashion Digital" and asserting claims against Hussain for unfair competition and false advertising. Complaint, GreenPearl Matter, ECF No. 1.
H&H claims that Hussain orally retained the firm to represent her in the GreenPearl Matter on November 21, 2014, and affirmatively stated that she would execute a second legal services agreement with H&H. ECF No. 106-1 at 2. On November 24, 2014, H&H appeared before the Court for a conference in the GreenPearl Matter, and a few days later, filed papers on Hussain's behalf opposing GreenPearl's motion for a temporary restraining order. Defendant's Memorandum of Law, GreenPearl Matter, ECF No. 10. On December 2, 2014, the Court denied GreenPearl's motion for a temporary restraining order and ordered expedited discovery. Order, GreenPearl Matter, ECF No. 15. Hussain then answered the complaint and asserted counterclaims seeking temporary and permanent injunctions barring GreenPearl and Slack from using the "Fashion Digital" and "FD Mobile" marks. Answer & Counterclaims, GreenPearl Matter, ECF No. 21.
On December 17, 2014, H&H and Hussain signed a second legal services agreement whereby Hussain formally retained H&H in connection with the GreenPearl Matter. ECF No. 106-5. The December 2014 agreement included the following provision:
In addition to paying the Firm a retainer of $10,000 for initial time and expenses, it is agreed that the Firm will receive thirty percent (30.00 %) of whatever amounts of monies, consideration or like kind for services rendered in guaranteeing your continued ownership and participation in Fashion Digital, FD Mobile or any other fashion, tech or mobile related companies or ventures that you are or shall have an interest in and are which [sic] recovered from the above matter, whether thru litigation, suit, verdict, mediation, arbitration, settlement, sale, assignment, transfer or end of case, whether in cash, stock or in kind (hereinafter referred to as "financial benefit"), to be paid according to the same schedule pursuant to which you receive your recovery from or on behalf of your opposing parties.Id. at 1. According to H&H, this provision was broader than the fee provision in the first legal services agreement because Hussain purportedly understood that the GreenPearl Matter might "result in an award to Hussain that comprised or included a non-cash component, such as stock, equity and/or a transfer or confirmation of ownership in the contested business entities and intellectual property." ECF No. 106-1 at 4.
On May 29, 2015, after conducting a bench trial, the Court issued findings of fact and conclusions of law denying GreenPearl's requests for preliminary and permanent injunctions and ruling that Hussain was the rightful owner of the Fashion Digital trademark. Findings of Fact & Conclusions of Law at 2, 38, GreenPearl Matter, ECF No. 73. The Court also ruled in favor of Hussain as to her unfair competition/false advertising counterclaim, but reserved judgment on Hussain's remaining counterclaims, including the ownership of the FD Mobile mark. Id. at 38- 39. Approximately one month later, the Court issued a permanent injunction stating that "GreenPearl and Slack are hereby permanently enjoined from use of the mark 'FASHION DIGITAL' including, but not limited to, any marks which include 'Fashion Digital', 'FD', 'FDNY', or any combination, derivative, or colorable imitation thereof." Order, GreenPearl Matter, ECF No. 84. Shortly thereafter, Hussain filed an application to hold GreenPearl in contempt for violating the Court's orders, and on July 31, 2015, the Court ordered GreenPearl and Slack to remove all references to Fashion Digital and the derivative marks from all websites and webpages under their control. Order, GreenPearl Matter, ECF No. 120.
On March 29, 2016, H&H moved for leave to withdraw as counsel and for retaining and charging liens on the grounds that H&H and Hussain had "fundamental, irreconcilable differences affecting the Firm's ability to represent [Hussain]." Letter at 1, GreenPearl Matter, ECF No. 154. During an April 15, 2016 conference, Mr. Eric A. Seiff, an independent attorney representing Hussain in connection with the motion to withdraw, argued that the disagreement between Hussain and H&H had arisen because H&H wanted to negotiate a monetary settlement, whereas Hussain preferred to maintain the trademark and continue operating her business. ECF No. 110-1 at 108. According to Mr. Seiff, H&H had a strong interest in pushing its client to accept a settlement, even though Hussain was not interested in one, because the resulting monetary payment would more easily facilitate a payment to H&H pursuant to the contingency arrangement. Id. at 108-09. In response, H&H argued that its motion to withdraw had "nothing to do with [its] fee." Id. at 112. Instead, H&H claimed that it was seeking to withdraw because Hussain had not provided the firm with any "proof of her damages," despite H&H's repeated requests for such documentation, and thus, Hussain was "not complying with her obligations under the retainer agreement." Id. at 112-13.
After hearing the parties' arguments and meeting with the parties separately, the Court stated, "I am going to relieve . . . Held & Hines . . . from representation of Ms. Hussain." Id. at 142. The Court also held H&H's request for a charging lien in abeyance "pending a referral to the magistrate judge to see if the parties can work out a fee agreement that is fair to both sides." Id. The Court explained:
I have stressed to Ms. Hussain that the law firm did work for her. . . . You're entitled to be paid. By the same token, you have to treat her fairly and negotiate fairly over what is a fair fee for the work that you have done in this case, recognizing that you are leaving the case prior to its termination.Id.; see also Order, GreenPearl Matter, ECF No. 163 (written order granting H&H's motion to withdraw and holding charging lien in abeyance).
On July 1, 2016, H&H filed this diversity action against Hussain for breach of contract, claiming that Hussain is "contractually obligated to pay H&H its contingency fee" and "reimburse H&H for expenses incurred, but nevertheless refuses to do so." ECF No. 1 ¶¶ 2, 43-50. H&H also raised a quantum meruit claim against Hussain, arguing that she is obligated to pay the firm "for the reasonable value of the legal services H&H provided to Hussain in good faith and for which H&H has not been compensated." Id. ¶¶ 61-68. Hussain is proceeding pro se as a defendant in this action. On July 13, 2016, after the parties were unsuccessful in resolving their fee dispute through mediation, the Court issued an order in the GreenPearl Matter granting H&H a charging lien and directing Hussain to inform the Court if she and H&H "resolve their fee dispute through settlement or litigation in the separate case, Held & Hines LLP v. Hussain." Order at 2, GreenPearl Matter, ECF No. 179.
On January 12, 2018, H&H moved for summary judgment in this matter, contending that Hussain breached the December 2014 agreement by refusing to pay H&H for its legal services. ECF Nos. 105, 106-1. H&H argues that Hussain owes the firm "at least $186,415.27 as a percentage of revenue through October 2017, plus $36,601.02 in expenses, for a total of $223,016.29 to date, with ongoing payments calculated as a percentage of revenue continuing from October 2017 forward." ECF No. 106-1 at 1. In the alternative, H&H contends that Hussain owes H&H quantum meruit damages of "at least $601,656.00 for the value of their time, plus $36,601.02 in expenses, for a total of at least $638,257.02." Id.
DISCUSSION
Under Federal Rule of Civil Procedure 56, the Court "shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." The moving party must show that "under the governing law, there can be but one reasonable conclusion as to the verdict." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). "If the movant makes this showing . . . the burden shifts to the nonmovant to point to record evidence creating a genuine issue of material fact." Salahuddin v. Goord, 467 F.3d 263, 273 (2d Cir. 2006). The parties "cannot rest on allegations in the pleadings and must point to specific evidence in the record to carry [their respective] burden[s] on summary judgment." Id. In determining whether there are genuine issues of material fact, the Court must "resolve all ambiguities and draw all permissible factual inferences in favor of the party against whom summary judgment is sought." Johnson v. Killian, 680 F.3d 234, 236 (2d Cir. 2012) (quoting Terry v. Ashcroft, 336 F.3d 128, 137 (2d Cir. 2003)). A court must also "liberally construe pleadings and briefs submitted by pro se litigants, reading such submissions 'to raise the strongest arguments they suggest.'" Bertin v. United States, 478 F.3d 489, 491 (2d Cir. 2007) (citations omitted) (quoting Burgos v. Hopkins, 14 F.3d 787, 790 (2d Cir. 1994)).
I. Contingency Arrangement
"[I]t is ethically suspect and generally unwise for attorneys to engage in business relationships with clients." Balestriere PLLC v. CMA Trading, Inc., No. 11-CV-9459 (MHD), 2014 WL 7404068, at *12 n.17 (S.D.N.Y. Dec. 31, 2014); accord Sun Forest Corp. v. Shvili, 152 F. Supp. 2d 367, 394 (S.D.N.Y. 2001); In re Corp. Res. Servs., Inc., 576 B.R. 779, 785 (Bankr. S.D.N.Y. 2017). "Such an exchange creates a risk that the lawyer's judgment will be skewed in favor of closing a transaction to such an extent that the lawyer may fail to exercise professional judgment as to whether it is in the client's best interest for the transaction to close." N.Y. Rules of Prof'l Conduct r. 1.8 cmt. 4C. "This conflict-of-interest caution is particularly appropriate when the subject of the legal representation overlaps with the business transactions between attorney and client." Balestriere PLLC, 2014 WL 7404068, at *12 n.17. "Courts scrutinize transactions between an attorney and a current client carefully because there is a presumption that the attorney will have advantages through his superior knowledge of transactions and by virtue of the inherent trust a client invests in her attorney." Id.
In accordance with these principles, New York Rule of Professional Conduct 1.8(a) provides:
A lawyer shall not enter into a business transaction with a client if they have differing interests therein and if the client expects the lawyer to exercise professional judgment therein for the protection of the client, unless:These three requirements ordinarily must be met "when the lawyer accepts an interest in the client's business or other nonmonetary property as payment of all or part of the lawyer's fee." N.Y. Rules of Prof'l Conduct r. 1.8 cmt. 4C; accord Passante v. McWilliam, 62 Cal. Rptr. 2d 298, 302 (Ct. App. 1997); People v. Bennett, 810 P.2d 661, 665 (Colo. 1991); Weiss v. Statewide Grievance Comm., 227 Conn. 802, 814-15 (1993); Sotiriou v. Billis, 782 N.Y.S.2d 917, 918 (2d Dep't 2004); Schlanger, 631 N.Y.S.2d at 296; ABA Standing Comm. on Ethics & Prof'l Responsibility, Formal Op. 418 (2000).
(1) the transaction is fair and reasonable to the client and the terms of the transaction are fully disclosed and transmitted in writing in a manner that can be reasonably understood by the client;
(2) the client is advised in writing of the desirability of seeking, and is given a reasonable opportunity to seek, the advice of independent legal counsel on the transaction; and
(3) the client gives informed consent, in a writing signed by the client, to the essential terms of the transaction and the lawyer's role in the transaction, including whether the lawyer is representing the client in the transaction.
The New York Court of Appeals has explained:
[A]n attorney who seeks to avail himself of a contract made with his client, is bound to establish affirmatively that it was made by the client with full knowledge of all the material circumstances known to the attorney, and was in every respect free from fraud on his part, or misconception on the part of the client, and that a reasonable use was made by the attorney of the confidence reposed in him.Greene v. Greene, 56 N.Y.2d 86, 92 (1982) (quoting Whitehead v. Kennedy, 69 N.Y. 462, 466 (1877)). A client's allegations that "he did not understand the terms or the effect of the agreement are sufficient, if proven, to entitle him to rescission unless the attorney 'can convincingly show that [the client] was fully and fairly informed of the consequences of the agreement and the special advantages it gave to [him].'" Schlanger v. Flaton, 631 N.Y.S.2d 293, 296-97 (1st Dep't 1995) (alterations in original) (quoting Greene, 56 N.Y.2d at 93).
H&H contends that the December 2014 agreement granted H&H "a 30% contingency fee on the value of the rights [the firm was] able to secure for Hussain." ECF No. 106-1 at 12. Although the language of the retainer agreement is far from clear, the parties appear to agree that this is the proper interpretation of the agreement. During her deposition, Hussain was asked whether "Held & Hines was entitled to 30 percent of what was won." ECF No. 106-14 at 201. She responded, "Yes, had they seen the case through." Id. Thus, H&H argues that Hussain must pay the firm a 30% share of the value her business has generated since the Court initially ruled in Hussain's favor in the GreenPearl Matter and a 30% share of any value the business generates in the future. Id. at 5, 12-17. In other words, H&H asserts that the retainer agreement effectively gave H&H a 30% ownership interest in Hussain's business contingent upon the firm's successful defense of the case. This type of compensation arrangement constituted a business transaction with a current client that triggered the requirements of Rule 1.8(a). See N.Y. Rules of Prof'l Conduct r. 1.8 cmt. 4C.
"An exchange of securities for legal services will also trigger the requirements of Rule 1.7 if the lawyer's ownership interest in the client would, or reasonably may, affect the lawyer's exercise of professional judgment on behalf of the client." N.Y. Rules of Prof'l Conduct r. 1.8 cmt. 4D. Rule 1.7(a) provides that "a lawyer shall not represent a client if a reasonable lawyer would conclude that . . . there is a significant risk that the lawyer's professional judgment on behalf of a client will be adversely affected by the lawyer's own financial, business, property or other personal interests." Nevertheless, even if such a conflict of interest exists, the lawyer may still represent the client if:
(1) the lawyer reasonably believes that the lawyer will be able to provide competent and diligent representation to [the] client;N.Y. Rules of Prof'l Conduct r. 1.7(b). "Where the fact, validity or propriety of client consent is called into question, the lawyer has the burden of establishing that the client's consent was properly obtained in accordance with the Rule." Id. cmt. 19.
(2) the representation is not prohibited by law;
(3) the representation does not involve the assertion of a claim by one client against another client represented by the lawyer in the same litigation or other proceeding before a tribunal; and
(4) [the] client gives informed consent, confirmed in writing.
When the December 2014 agreement was executed, a reasonable attorney would have foreseen that such a broadly defined contingency arrangement posed "a significant risk" that the firm's professional judgment on behalf of Hussain would be adversely affected by the firm's own financial and business interests. N.Y. Rules of Prof'l Conduct r. 1.7(a). From the outset of the GreenPearl Matter, H&H had a clear interest in obtaining an outcome that would allow the firm to recoup its investment and receive payment for its services. Because the retainer agreement purportedly gave H&H a share of any and all value Hussain received in the litigation, the firm was strongly incentivized to encourage Hussain to forfeit her control of the trademark and the business in exchange for a monetary payment from GreenPearl. But these financial and business interests were directly in conflict with Hussain's own interests in the matter—she preferred to maintain the trademark and continue operating her business.
In light of this conflict of interest, H&H was required to assess whether the firm would be able to provide competent and diligent representation to Hussain, fully disclose the terms of the December 2014 agreement to Hussain in a manner that she could reasonably understand, advise her regarding the parties' divergent interests in entering the agreement, and obtain her informed consent to the business arrangement and conflict of interest in writing. N.Y. Rules of Prof'l Conduct rs. 1.7(b), 1.8(a); Greene, 56 N.Y.2d at 92-93; Sotiriou, 782 N.Y.S.2d at 918; Schlanger, 631 N.Y.S.2d at 296-97. Nonetheless, H&H has not described any efforts the firm took to advise Hussain on the terms of the retainer agreement or the parties' differing interests. Nor has H&H produced any evidence to show that the firm obtained Hussain's informed consent to the conflict of interest in writing.
Before signing the retainer agreement and entering the business transaction, H&H was also required to advise Hussain in writing of the desirability of seeking the advice of independent legal counsel. N.Y. Rules of Prof'l Conduct r. 1.8(a). H&H claims without any evidentiary support that Hussain consulted with her own independent counsel before signing the December 2014 agreement, an allegation which Hussain refutes. ECF No. 106-2 ¶ 14; ECF No. 109 at 9. But regardless of whether Hussain actually consulted with an independent attorney, H&H still had an obligation to advise her in writing that she should consider seeking independent legal advice before signing the agreement. The December 2014 agreement itself does not contain any discussion of the desirability of consulting with independent legal counsel, ECF No. 106-5, and H&H has not pointed to any other evidence in the record demonstrating that the firm advised Hussain that she should consult with an independent attorney before entering the agreement.
H&H's Rule 56.1 submission includes many statements that are not supported by citations to the record, including this one. Local Civil Rule 56.1(d) provides that each statement of material fact in a party's Rule 56.1 submission "must be followed by citation to evidence which would be admissible." A party's "failure to comply with Local Rule 56.1 is grounds for deeming admitted the facts contained in [the opposing party's] Rule 56.1 statement." Prunella v. Carlshire Tenants, Inc., 94 F. Supp. 2d 512, 513 n.1 (S.D.N.Y. 2000). But the Court is "not required" to deem the statements in the opposing party's Rule 56.1 statement admitted and "may overlook the 'technical deficiency' of a party's submission." Balut v. Loral Elec. Sys., 988 F. Supp. 339, 343 (S.D.N.Y. 1997) (quoting Thaler v. Casella, 960 F. Supp. 691, 697 (S.D.N.Y. 1997)), aff'd, 166 F.3d 1199 (2d Cir. 1998). Despite H&H's failure to comply with Rule 56.1, I recommend that the Court refrain from deeming admitted the facts contained in Hussain's Rule 56.1 counterstatement.
In moving for summary judgment, H&H has presumably presented its best evidence to show that the firm complied with its ethical obligations in entering into the December 2014 agreement with Hussain. But the firm has not pointed to any evidence to suggest that the firm advised Hussain in writing regarding the conflict of interest or the desirability of seeking independent legal counsel. Nor does the evidence presented show that H&H obtained Hussain's informed consent to the conflict of interest. H&H has failed to "convincingly show that [Hussain] was fully and fairly informed of the consequences of the agreement and the special advantages it gave to" the firm. Schlanger, 631 N.Y.S.2d at 296-97 (quoting Greene, 56 N.Y.2d at 93). Accordingly, I recommend that the Court hold sua sponte that the December 2014 agreement is unenforceable under New York law and enter judgment dismissing H&H's breach of contract claim. See Greene, 56 N.Y.2d at 92-93; Schlanger, 631 N.Y.S.2d at 296-97; see also Sotiriou, 782 N.Y.S.2d at 918 (holding that an attorney could not foreclose on property securing a loan to a client because the attorney "failed to provide full disclosure to his client . . . regarding the parties' divergent interests as borrower and lender, the potential for conflict, and the consequences of a default" and failed to advise the client "to consult with independent counsel"). If H&H can point to evidence produced in discovery to show that the firm met its obligations under New York Rules of Professional Conduct 1.7 and 1.8, H&H should submit that evidence with any objections to this Report and Recommendation.
II. Quantum Meruit
In the alternative, H&H argues that it is "entitled to be paid on a quantum meruit basis." ECF No. 106-1 at 17. "Where a retainer agreement is unenforceable, the attorney is entitled under New York law to collect the reasonable value of his services, notwithstanding that it was the attorney's misconduct that precluded liability under the written contract." In re Rosenman & Colin, 850 F.2d 57, 63 (2d Cir. 1988); accord Mar Oil, S.A. v. Morrissey, 982 F.2d 830, 840 (2d Cir. 1993); In re Cooperman, 83 N.Y.2d 465, 475 (1994); Nabi v. Sells, 892 N.Y.S.2d 41, 44 (1st Dep't 2009); Law Office of Howard M. File, Esq., P.C. v. Ostashko, 875 N.Y.S.2d 502, 504 (2d Dep't 2009); Ruthman, Mercadante & Hadjis, P.C. v. Nardiello, 791 N.Y.S.2d 665, 668 (3d Dep't 2005). Three "separate and distinct remedies" are available to an attorney "to recover the value of his legal services" in such a circumstance. Butler, Fitzgerald & Potter v. Gelmin, 651 N.Y.S.2d 525, 527 (1st Dep't 1997). The first remedy is "a plenary action in quantum meruit seeking a judgment for the reasonable value of the services, which would be enforceable against all of the client's assets." Id. "The second remedy available is a charging lien against any judgment or settlement in favor of the client in an action in which the . . . attorney formerly was the attorney of record for the client." Id. "The third remedy is the retaining lien, which permits the attorney to retain all of the client's papers and files until all fees are paid." Id.
But in order to demonstrate a right to any of these remedies, a withdrawing attorney must first show that he "had good cause to justify his withdrawal as counsel." Allen v. Rivera, 509 N.Y.S.2d 48, 50 (2d Dep't 1986); accord Diarama Trading Co. v. J. Walter Thompson U.S.A., Inc., No. 01-CV-2950 (DAB), 2005 WL 1963945, at *3 (S.D.N.Y. Aug. 15, 2005) (noting that "[a] withdrawing attorney is only entitled to [a charging] lien if he has withdrawn for 'good cause,' which is a higher standard than the 'satisfactory reason' requirement" that must be met for an attorney simply to withdraw as counsel under Local Civil Rule 1.4). When the Court granted H&H's request to withdraw from representing Hussain in the GreenPearl Matter, the Court stated that H&H was "entitled to be paid . . . . a fair fee" for its work. ECF No. 110-1 at 142. The Court later granted H&H a charging lien. Order at 2, GreenPearl Matter, ECF No. 179. Although the Court did not explain its reasoning in detail, by granting the charging lien, the Court implicitly determined that H&H had withdrawn from the case for good cause and thus was entitled to receive some compensation for its work. The parties have not given the Court any reason to deviate from this previous judicial finding. Therefore, H&H is entitled to recover the reasonable value of its services under New York law.
In determining the reasonable value of an attorney's services, a court should consider "the nature of the litigation, the difficulty of the case, the time spent, the amount of money involved, the results achieved and amounts customarily charged for similar services in the same locality." Nabi, 892 N.Y.S.2d at 44 (quoting Schneider, Kleinick, Weitz, Damashek & Shoot v. City of New York, 754 N.Y.S.2d 220, 224 (1st Dep't 2002)). Hussain has raised disputes with respect to the attorneys' fees and costs H&H incurred in connection with the GreenPearl Matter. For example, Hussain claims that she never authorized Attorney John Borg's work on the case and questions why H&H has listed this contract attorney's work as an expense rather than an attorney's fee. ECF No. 109 at 7-8. In addition, when considering H&H's motion to withdraw from the GreenPearl Matter, the Court stated that some of H&H's work on the case "seemed unnecessary." ECF No. 110-1 at 23. This suggests that H&H may have spent time on tasks that were not required to litigate the GreenPearl Matter effectively. Finally, H&H has done little to explain why the attorneys' fees and costs to which it claims an entitlement are fair and reasonable. H&H devotes only eight lines of text to arguing that it should be granted a large sum of quantum meruit damages ($638,257.02). ECF No. 106.1 at 17. This terse discussion does not enable the Court to determine the reasonable value of the firm's services.
Accordingly, I recommend granting judgment in H&H's favor with respect to the quantum meruit claim and conducting a damages hearing to determine the reasonable value of the services H&H provided in the GreenPearl Matter. See Teichner v. W & J Holsteins, Inc., 64 N.Y.2d 977, 979 (1985) (holding that a hearing was required to determine an attorney's "fee on the quantum meruit basis"); Mason v. City of New York, 889 N.Y.S.2d 24, 25 (1st Dep't 2009) (same); Lopresti v. Ingenito, 646 N.Y.S.2d 45, 46 (2d Dep't 1996) (same).
CONCLUSION
I recommend GRANTING in part and DENYING in part H&H's motion for summary judgment, ECF No. 105. Because H&H has failed to demonstrate that Hussain was fully and fairly informed of the consequences of the December 2014 agreement, I recommend DENYING H&H's motion for summary judgment with respect to its breach of contract claim and dismissing the claim sua sponte. In addition, I recommend GRANTING in part H&H's motion for summary judgment with respect to its claim for quantum meruit damages and conducting a damages hearing to determine the reasonable value of the services H&H provided in the GreenPearl Matter.
/s/_________
SARAH NETBURN
United States Magistrate Judge DATED: July 31, 2018
New York, New York cc: Sandy Hussain (by Chambers)
613 E. Santa Ana Blvd.
Santa Ana, CA 92701
* * *
NOTICE OF PROCEDURE FOR FILING OBJECTIONS
TO THIS REPORT AND RECOMMENDATION
The parties shall have fourteen days from the service of this Report and Recommendation to file written objections pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure. See also Fed. R. Civ. P. 6(a), (d) (adding three additional days when service is made under Fed. R. Civ. P. 5(b)(2)(C), (D), (E), or (F)). A party may respond to another party's objections within fourteen days after being served with a copy. Fed. R. Civ. P. 72(b)(2). Such objections shall be filed with the Clerk of the Court, with courtesy copies delivered to the chambers of the Honorable Jed S. Rakoff at the United States Courthouse, 500 Pearl Street, New York, New York 10007, and to any opposing parties. See 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 6(a), 6(d), 72(b). Any requests for an extension of time for filing objections must be addressed to Judge Rakoff. The failure to file these timely objections will result in a waiver of those objections for purposes of appeal. See 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 6(a), 6(d), 72(b); Thomas v. Arn, 474 U.S. 140 (1985).