Graubard Mollen Horowitz Pomeranz & Shapiro v. Moskovitz

149 Misc. 2d 481, 565 N.Y.S.2d 672, 1990 N.Y. Misc. LEXIS 671
CourtNew York Supreme Court
DecidedApril 24, 1990
StatusPublished
Cited by4 cases

This text of 149 Misc. 2d 481 (Graubard Mollen Horowitz Pomeranz & Shapiro v. Moskovitz) is published on Counsel Stack Legal Research, covering New York Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Graubard Mollen Horowitz Pomeranz & Shapiro v. Moskovitz, 149 Misc. 2d 481, 565 N.Y.S.2d 672, 1990 N.Y. Misc. LEXIS 671 (N.Y. Super. Ct. 1990).

Opinion

OPINION OF THE COURT

Harold Baer, Jr., J.

Defendants move, pursuant to CPLR 3212, for summary judgment. Plaintiff cross-moves for partial summary judgment against defendants Schiller and Irving Moskovitz on the question of liability on the fourth cause of action.

[482]*482This case arises out of the dissolution of a law partnership, known as Graubard, Moskovitz, Dannett, Horowitz & Mollen (hereinafter the Firm). The complaint alleges that by 1982, the senior partners of the Firm, defendant Moskovitz and three others, were looking toward their retirement and wished both to establish a retirement program for themselves and to ensure the continued future success of the Firm. In April 1982, the partners approved a retirement program (hereinafter the Retirement Agreements) that provided for a "phase-down” of the senior partners, the return of their capital during the "phase-down”, and the payment of retirement benefits during a subsequent five-year period. Moskovitz allegedly represented that he and his fellow senior partners would "do all they could to ensure * * * the institutionalization of [the Firm’s] clients, particularly certain of its key clients, including [F. Hoffman-LaRoche & Co. Ltd. and related companies (hereinafter collectively referred to as HLR)].”

Moskovitz thereafter received benefits pursuant to the program. Plaintiff asserts, however, that Moskovitz took no reasonable steps to "institutionalize” the HLR account. In May 1988, Moskovitz, then of counsel and in the second year of the five-year retirement period, and the other defendants left the Firm and joined LeBoeuf, Lamb, Leiby & MacRae. Plaintiff alleges that prior to departing, Moskovitz, with the assistance of the other defendants, solicited HLR and other clients to transfer their business to defendants’ new firm, which transfer in fact occurred, at least in the case of the important HLR clients.

In addition to a claim for fraud, the complaint contains causes of action for conversion, breach of contract, breach of fiduciary duty and other wrongs. Defendants contend that plaintiffs case cannot stand because the purported agreement being sued upon is unenforceable as a matter of professional ethics.

Plaintiffs primary basis for its claim founded upon the Retirement Agreements in that the Agreements were breached by the failure to make efforts to "institutionalize” the clients and by the solicitation thereof. Plaintiff, however, also appears to be arguing that Moskovitz breached the Agreements by the simple act of leaving plaintiff to practice elsewhere during the period in which he was entitled to retirement benefits.

Plaintiff argues that DR 2-108, a principal piece of defen[483]*483dants’ artillery, does not apply here. The rule, which outlaws agreements among counsel that restrict an attorney’s right to practice law, refers to a "partnership or employment agreement.” There was no written partnership agreement for the Firm and the aim of the Retirement Agreements was not, strictly speaking, to provide employment. Nevertheless, this language should not be a bar to the application of this rule to a retirement agreement that places restraints upon the future professional activity of a partner once he retires. For the purpose of the rule, the Agreements may be considered a modification of an oral partnership arrangement.

Plaintiff also argues that the rule is inapplicable because the Agreements do not restrict an attorney’s right to practice "after the termination of a relationship created by the agreement” (DR 2-108 [A]). Plaintiff, though, insofar as its primary claim is concerned, is not relying upon a restriction upon Moskovitz’s right to practice law, in marked contrast with, for example, Cohen v Lord, Day & Lord (75 NY2d 95 [1989]) and Matter of Silverberg (Schwartz) (75 AD2d 817 [2d Dept 1980], appeal dismissed 53 NY2d 704 [1981]). Rather, the heart of plaintiff’s theory is founded upon Moskovitz’s affirmative undertaking to try to "institutionalize” the clients (and, implicitly, not to solicit them) while in practice at plaintiff. Furthermore, Moskovitz, though not required to do so in return for retirement benefits, was still working for the Firm (in an of counsel role) when he committed the principal wrongs alleged. In this capacity, he owed a duty not to compete with the Firm at the same time or to solicit Firm clients. The Agreements did not restrict his right to practice law while he acted as of counsel since his fiduciary obligations would have imposed undivided loyalty on him in any event. The target of DR 2-108 is an agreement that restricts an attorney’s right to practice law in competition with his former firm after he leaves practice with that firm.

The situation is somewhat different, however, with regard to plaintiff’s second theory, which is that, having accepted retirement benefits, Moskovitz was barred from leaving plaintiff to do anything other than spend his time in a hammock.

Plaintiff argues that the restraint it defends is legitimate because the Agreements are within the retirement benefits exception to the disciplinary rule. In contrast with Cohen v Lord, Day & Lord (supra), the Agreements here clearly concerned retirement. This was denominated a "Phasing Out and Retirement Program”, and unlike the partnership agreement [484]*484in Cohen, the Agreements did not contain separate retirement and withdrawal provisions. The undisputed origin of the Agreements was the concern of the aging partners about their retirement and about the Firm’s future. The Agreements provided for a "phase-down” period and a retirement period. The Agreements specifically concerned the situations of four named senior partners of advanced age and all other partners beginning with age 67. Although it is true that the benefits in question were to be temporally limited (compare, Cohen v Lord, Day & Lord, 75 NY2d, at 100), that factor alone should not be determinative. This was without doubt a retirement program.

What restrictions upon a retiring partner’s right to practice law do the Agreements attempt to impose? A partner in retired status may work but is not obliged to do so. During the five-year period in which he receives retirement benefits, he is obligated to offer any new business that comes his way to the Firm in the first instance. In addition, "[i]t is the spirit of the program that during retirement, and even afterward, each of the retirees will not do anything to impair the firm’s relationship with its existing clients and business.” Plaintiff seems to argue from these provisions that Moskovitz either was free to practice with plaintiff or obliged to forgo practice altogether. DR 2-108 in permitting restrictive covenants "as a condition to payment of retirement benefits” is somewhat obscure. Professor Hazard, writing about the comparable ABA Model Rules of Professional Responsibility rule 5.6 (a), remarks that the "purpose and meaning of the last clause * * * is not crystal clear. It appears to mean that when a lawyer is retiring and winding up his affairs with a firm, he may be required to agree to 'stay retired’ as a condition of the settlement.” (1 Hazard & Hodes, Lawyering, at 486 [1989]; see, Cohen v Lord, Day & Lord, supra, 75 NY2d, at 106, n 2 [Hancock, Jr., J., dissenting].) But, as Professor Hazard puts it, a permanent ban "appears to contradict the spirit (if not the letter) of the rest of the Rule, for it would prevent a lawyer from having a change of plans and making himself available to clients again.” (1 Hazard & Hodes,

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Related

Graubard Mollen Dannett & Horowitz v. Moskovitz
653 N.E.2d 1179 (New York Court of Appeals, 1995)
Jacob v. Norris, McLaughlin & Marcus
607 A.2d 142 (Supreme Court of New Jersey, 1992)

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Bluebook (online)
149 Misc. 2d 481, 565 N.Y.S.2d 672, 1990 N.Y. Misc. LEXIS 671, Counsel Stack Legal Research, https://law.counselstack.com/opinion/graubard-mollen-horowitz-pomeranz-shapiro-v-moskovitz-nysupct-1990.