Opinion
No. 98-CV-4314 (SJF)(ASC).
Dated: February 7, 2005
OPINION ORDER
I. Introduction
Finz Finz, P.C. ("Finz") has moved to enforce a stipulation of settlement in connection with its former representation of plaintiff in the underlying action or, in the alternative, for a hearing to be held pursuant to New York Judiciary Law § 475 to apportion compensation for legal services rendered.
II. Background
In February 1997, attorney Seymour Zager ("Zager") contacted Finz with respect to the representation of plaintiff Janet Hill ("plaintiff" or "Hill") in potential litigation against defendant Baxter Healthcare Corporation ("defendant" or "Baxter"), a latex glove manufacturer. (Feigenbaum Aff. para. 3; Benjamin's Mem. of Law in Opp'n to Motion for Legal Fees at 2). On June 18, 1998, Gary Douglas ("Douglas"), a member of the Finz firm, filed a complaint on plaintiff's behalf alleging product liability. (Compl.). About two weeks later, plaintiff and Finz entered into a retainer agreement whereby Finz would receive one-third (1/3) of the net proceeds resulting from a judgment or settlement of the action. (Feigenbaum Aff. exh. A).
In March 2001, Douglas terminated his employment with the Finz firm. (Id. para. 8-9). Finz commenced an action against Douglas and his new firm, Millman Douglas, P.C. ("MD"), in New York Supreme Court, Nassau County. (Id. para. 9-10). In a court-ordered stipulation of settlement dated April 9, 2002, the parties to the New York Supreme Court case agreed that with respect to Hill's federal complaint:
the attorneys fees which are due or shall be due to [Finz] and MD, upon settlement, . . . verdict or other disposition in favor of [Hill] . . ., and which shall be paid to [Finz] and MD by MD or any successor or other firm in which either Douglas, MD or Debra Millman has an interest, either directly or indirectly, . . . is apportioned as follows: a) fifty-two and one-half (52½%) percent of . . . (the total gross attorneys fees awarded . . . less the amount due to [Zager,] the Forwarding Attorney, if any . . .) shall be due and paid to [Finz] and forty-seven and one-half (47½%) percent . . . shall3 be due and paid to MD. . . .
(Id. exh. C). The stipulation of settlement further agreed that Zager would receive twenty-five percent (25%) of the attorneys' fees. (Id. para. 10).
As the close of discovery neared in the summer of 2004, Douglas concluded that the trial date for Hill's case conflicted with his schedule. (London Aff. para. 4-11). Douglas and Michael London, his partner at Douglas London, P.C. ("DL"), recommended to Hill a number of attorneys to try her case, (id. para. 12), and on August 24, 2004, Ronald Benjamin ("Benjamin") filed a notice of appearance on her behalf. (Docket No. 79). On September 14, 2004, Hill and defendant settled the case for sixty thousand dollars ($60,000).
III. Analysis
A. Attorneys' Fees
Finz seeks the enforcement of the state court stipulation of settlement. Disciplinary Rule 2-107(a) of the Code of Professional Responsibility provides in pertinent part:
A lawyer shall not divide a fee for legal services with another lawyer who is not a partner in or associate of the lawyer's law firm, unless:
(2) The division is in proportion to the services performed by each lawyer or, by a writing given to the client, each lawyer assumes joint responsibility for the representation.
N.Y. Comp. Codes R. Regs. tit. 22, § 1200.12(a)(2005). Neither Zager nor Finz assumed, in writing, joint responsibility for Hill's representation. However, since the Court has not been provided with information regarding the amount of services performed by Zager, Finz, and Douglas, there is an issue of fact as to the services performed by counsel which will be determined after a hearing.
Finz further contends that it is entitled to a lien pursuant to New York Judiciary Law § 475. Section 475 provides in pertinent part:
From the commencement of an action . . . in any court . . ., the attorney who appears for a party has a lien upon his client's cause of action, . . . which attaches to a verdict, report, determination, decision, judgment or final order in his client's favor, and the proceeds thereof in whatever hands they may come; and the lien cannot be affect by any settlement between the parties. . . . The court upon the petition of the client or attorney may determine and enforce the lien.
N.Y. Judiciary Law § 475 (McKinney 2005). However, under New York law, an attorney who withdraws without good cause or is discharged with good cause is not entitled to a charging lien.Hallmark Capital Corp. v. Red Rose Collection, Inc., No. 96-2839, 1997 U.S. Dist. LEXIS 16328, at *8 (S.D.N.Y. Oct. 27, 1997); Rankel v. Tracey, No. 84-3412, 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, 121 L. Ed. 2d 382 (1992); Lansky v. Easow, 304 A.D.2d 533, 534, 756 N.Y.S.2d 885 (N.Y.App.Div., 2d Dep't 2003). There is no evidence regarding Hill's motivation for discharging Finz. Since an issue of facts exists as to whether Finz was discharged for good cause, the validity of its lien will also be determined at a hearing.
B. Statutory Lien of State Insurance Fund
The workers' compensation insurance carrier for Hill's employer, the New York State Insurance Fund ("SIF") has paid Hill approximately $162,115.00 in compensation benefits and $137,586.64 in medical expenses for "severe allergic exacerbation to latex." (Sharbin Aff. para. 6, 9). SIF contends that it has a lien on the proceeds of Hill's settlement pursuant to New York Workers' Compensation Law § 29. (Id. para. 10). Section 29(1) provides in pertinent part:
If such injured employee, . . . take or intend to take compensation, and medical benefits . . . under this chapter and . . . bring action against such other, . . . the state insurance fund . . . shall have a lien on the proceeds of any recovery from such other, whether by judgment, settlement or otherwise, after the deduction of the reasonable and necessary expenditures, including attorney's fees, incurred in effecting such recovery, to the extent of the total amount of compensation awarded under or provided or estimated by this chapter for such case and the expenses for medical treatment paid or to be paid by it and to such extent such recovery shall be deeded for the benefit of such fund. . . .
N.Y. Workers' Comp. Law § 29(1) (McKinney 2005). Plaintiff claims that her workers' compensation claim is not related to the instant case because there is no proof of a latex allergy which was the basis of SIF's payments. (Letter from Ronald R. Benjamin to Hon. Sandra J. Feuerstein dated Sept. 16, 2004). Therefore, according to plaintiff, SIF does not have a lien on the settlement proceeds. (Id.). SIF counters that jurisdiction with respect to the applicability of the lien rests with the Workers' Compensation Board. If this Court were to assume jurisdiction, SIF contends that plaintiff's workers' compensation claim and instant litigation arise out of the same events. (Sharbin Aff. para. 5, 10).
"The amount of any lien to be allowed against the recovery in a third-party action is a question of fact for the Workers' Compensation Board. . . ." Bopp v. Wiest, 229 A.D.2d 183, 186, 654 N.Y.S.2d 927 (N.Y.App.Div., 4th Dep't 1997). Accordingly, whether plaintiff has a latex allergy or rather an injury of unknown etiology is an issue for the Workers' Compensation Board to decide.
IV. Conclusion
The parties are directed to appear at 225 Cadman Plaza East, Brooklyn, New York on March 1, 2005 at 10:00am for a hearing on the issue of attorneys' fees and to engage in good faith settlement negotiations on this issue prior to the hearing.
IT IS SO ORDERED.