Stewart v. New York City Transit Authority

125 A.D.3d 129, 998 N.Y.S.2d 370
CourtAppellate Division of the Supreme Court of the State of New York
DecidedDecember 30, 2014
Docket13911/99
StatusPublished
Cited by4 cases

This text of 125 A.D.3d 129 (Stewart v. New York City Transit Authority) is published on Counsel Stack Legal Research, covering Appellate Division of the Supreme Court of the State of New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Stewart v. New York City Transit Authority, 125 A.D.3d 129, 998 N.Y.S.2d 370 (N.Y. Ct. App. 2014).

Opinions

OPINION OF THE COURT

Manzanet-DAJSTIELS, J.

The motion court erroneously determined that it had the inherent authority to reduce the fee plaintiff and his attorneys had agreed upon in connection with the successful defense of the verdict on appeal. Since the parties clearly excluded appellate work from the initial retainer, and executed a second retainer providing for a separate fee for appellate work, it cannot be said that the award of an additional 10% contingency fee ran afoul of precedent or section 603.7 (e) of the Rules of the Appellate Division, First Department (22 NYCRR), governing contingent fee arrangements. We accordingly reverse.

On December 7, 1998, plaintiff retained nonparty law firm Sonin & Genis to prosecute his negligence action against defendant arising out of a slip and fall at an elevated subway station. Plaintiff and the firm entered into a retainer agreement on an approved Office of Court Administration form providing for a one-third contingent fee of the net recovery through trial and further providing that in the event of an appeal a separate fee agreement would be entered into. The agreement specifically stated, “Client further understands that the services to be provided through this agreement will not extend through the prosecution of an appeal or representation on appeal brought by any of the parties to the lawsuit,” and that “[c]lient understands that SONIN & GENIS, ESQS may charge reasonable additional compensation ... if the case is appealed .... This further representation will require a new [f]ee [agreement.”

The firm represented plaintiff throughout seven years of discovery, motion practice and trial preparation. Following a three-week trial, the jury returned an approximately $7 mil[132]*132lion verdict in plaintiffs favor. The firm successfully opposed defendant’s posttrial motions, and entered into a structured judgment which provided that the firm would receive attorneys’ fees equal to one third of the recovery.

Defendant appealed the judgment to this Court. On July 19, 2010, plaintiff and Sonin & Genis entered into a new and separate retainer agreement pursuant to which it was agreed that the firm would “provide APPELLATE legal services” for 10% of the net sum recovered. The second retainer expressly stated that

“[c]lient further understands that the services to be provided through this agreement is [sic] only for prosecution/defense of an appeal only and for no other purpose, and is [sic] in addition to the retainer signed for the litigation and trial of this matter, wherein SONIN & GENIS, ESQS., are to receive ONE THIRD (33Vs%) OF THE NET RECOVERY.”

On March 3, 2011, this Court modified the judgment to the extent of setting aside the amounts for lost earnings and future medical expenses unless plaintiff stipulated to a reduction in the amounts awarded, and otherwise affirmed (Stewart v New York City Tr. Auth., 82 AD3d 438 [1st Dept 2011], lv denied 17 NY3d 712 [2011]). Plaintiff so stipulated, and an amended judgment was entered on May 5, 2011 reflecting the reductions and granting attorneys’ fees in the amount of 43V3%, i.e., one third plus 10% (2011 WL 1806917 [2011]). Defendant did not contest the award of attorneys’ fees. Following the denial of motions for reargument (2013 WL 6857162 [2013]) and leave to appeal to the Court of Appeals (during which defendant, again, did not contest the award of attorneys’ fees), a further amended judgment, containing the same terms but providing for additional costs and interest, was signed and entered on December 16, 2011, and served on defendant with notice of entry.

On February 16, 2012, defendant moved by order to show cause for a stay of enforcement of the December 16, 2011 judgment and to vacate it, pursuant to CPLR 5015 (a), on the ground that the attorneys’ fees were “erroneously set ... in excess of 40%.”

Plaintiff opposed the motion, arguing that defendant lacked standing to challenge the contracts between plaintiff and his attorneys, and had waived its right to make the motion at that late stage of the litigation. Plaintiff asserted that since the [133]*133Court of Appeals refused to alter or vacate the May 5, 2011 judgment (which differed only in the calculation of costs and interest), the motion court lacked authority to revisit the issue of the propriety of the judicially approved judgment or its terms. Plaintiff cross-moved for sanctions and for acceleration of the payment of the further amended judgment in a lump sum, pursuant to CPLR 5043 (b) and 5044.

By order entered January 14, 2013, the motion court granted defendant’s motion “to the extent that plaintiffs attorney is not entitled to additional fees for the appeal.” The court did not rule on plaintiffs cross motion for sanctions and for acceleration of the judgment.

We now reverse, and hold that the motion court lacked the authority to reach the issue of the propriety of the fee arrangement between plaintiff and his counsel. We find, moreover, that the contractual arrangement between plaintiff and his attorneys providing for a separate fee for appellate work was entirely proper and in conformity with the rules of this Court.

Initially, we note that defendant has no standing to challenge the fees agreed upon as between plaintiff and his counsel. CPLR 5015 (a) (3) provides that “[t]he court which rendered a judgment or order may relieve a party from it upon such terms as may be just, on motion of any interested person . . . upon the ground of . . . fraud, misrepresentation, or other misconduct of an adverse party” (emphasis added). Defendant is not an “interested person” within the meaning of the statute, as even the motion court appeared to recognize. Defendant will pay the same amounts pursuant to the judgment regardless of the division of fees as between plaintiff and his counsel. Defendant’s proffered rationale as to why it has standing to challenge the award — that one day in the unforeseen future, plaintiff might seek to hold it liable for excess fees disbursed to his attorney — does not withstand scrutiny.

Further, there is no evidence whatsoever that the judgment was procured by fraud, misrepresentation or other misconduct by plaintiff or his attorneys. As the motion court went out of its way to remark, “[T]here is absolutely no feeling or finding of bad faith, unconscionable conduct, on [the part] of Mr. Genis [plaintiffs attorney].”

Defendant having no standing under CPLR 5015 (a) (3) to challenge the separate fee for appellate work, the court relied on its “inherent authority” to reach the issue. A court, however, has no inherent authority to sua sponte reach the issue of at[134]*134torneys’ fees (see State of New York v Philip Morris Inc., 308 AD2d 57 [1st Dept 2003], lv denied 1 NY3d 502 [2003]). In Phillip Morris Inc., we noted that a court has inherent authority over attorneys’ fees in “two situations: (i) an attorney asking the court to approve a fee, or (ii) a client complaining about a fee” (id. at 68-69). We distinguished between the inherent power of courts to promulgate rules of general applicability regarding attorneys’ fees, and an individual judge’s authority to conduct “a sua sponte inquiry into the appropriate amount of attorneys’ fees” (id. at 68). In the latter case, the Supreme Court “ha[s] no authority or jurisdiction sua sponte to make an independent inquiry into the amount of or method used in fixing the attorneys’ fees” (id. at 65).

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Cite This Page — Counsel Stack

Bluebook (online)
125 A.D.3d 129, 998 N.Y.S.2d 370, Counsel Stack Legal Research, https://law.counselstack.com/opinion/stewart-v-new-york-city-transit-authority-nyappdiv-2014.