Darby & Darby, P.C. v. VSI Intern., Inc.
| Decision Date | 28 August 1998 |
| Citation | 678 N.Y.S.2d 482,178 Misc.2d 113 |
| Court | New York Supreme Court |
| Parties | , 1998 N.Y. Slip Op. 98,515 DARBY & DARBY, P.C., Plaintiff, v. VSI INTERNATIONAL, INC., et al., Defendants. |
Layton Brooks & Hecht, New York City, for plaintiff.
Anderson Kill & Olick, New York City, for defendants.
This is an action by a law firm to collect legal fees arising from its representation of the defendants in two Florida state proceedings. The plaintiff has moved for summary judgment against the defendant VSI International on its second cause of action seeking $206,954.22 for an account stated and dismissing the defendants' counterclaims for failure to state a cause of action. The defendants have cross-moved for an order compelling the plaintiff to accept their first amended answer and counterclaim.
The defendant VSI is a Florida corporation engaged in the wholesale sunglass and reading glass business. Defendant Myron Orlinsky is VSI's Chief Executive Officer. In 1989, the defendants retained the plaintiff law firm as patent and trademark counsel. In 1990, they retained plaintiff to represent them in two proceedings brought against them in Florida state court concerning VSI's design of hangers used to display reading glasses. VSI was accused of patent, trademark and trade dress infringement.
Up to the end of 1992, the defendants had paid a substantial portion of their legal bills. However, thereafter they only made one payment of $1,750.11 while incurring additional legal bills in excess of $150,000. As of September 29, 1993, they owed the plaintiff almost $200,000 in legal fees. As a result, the plaintiff applied for an order granting it leave to withdraw as the defendants' counsel in the Florida litigation. By order dated October 21, 1993, leave to withdraw was granted. The plaintiff turned over its litigation files to new counsel without asserting an attorney's retaining lien.
Aside from a $495 payment in July, 1996, the defendants failed to make any further payments. The plaintiff commenced this proceeding in New York State Supreme Court in August, 1996. The firm seeks a total of $206,954.22, with interest, costs and attorney's fees. It asserts four causes of action. The first cause of action is against both defendants for breach of contract, the second is against only VSI for an account stated, the third is against both defendants for quantum meruit and the fourth is against only Mr. Orlinsky for liability for the debts which VSI owes to plaintiff.
The defendants moved to dismiss the complaint for lack of personal jurisdiction. By order dated August 20, 1997, the Supreme Court (Charles Edward Ramos, J.) denied the motion, finding that the defendants' business contacts with New York State were sufficient to invoke the State's long-arm jurisdiction.
The defendants thereafter responded to the complaint by answer and counterclaims dated December 3, 1997. In their first counterclaim, they allege that the plaintiff had committed legal malpractice by failing to advise them of the possibility that their comprehensive general liability insurance policies might cover the costs of the Florida litigation. The defendants assert that counsel which replaced the plaintiff immediately, upon retention, advised them of this possibility and that, on February 3, 1994, they contacted their insurance carrier which agreed that the defendants' policies covered the costs of the intellectual property claims which had been brought against them. The carrier, however, denied coverage for all litigation expenses which had been incurred prior to the date that the insurance claim was filed. In their second counterclaim, the defendants assert that the plaintiff breached its fiduciary duty by failing to advise them about the possibility of insurance coverage.
The plaintiff then brought this motion for summary judgment against VSI on the second cause of action asserting an account stated and for dismissal of the counterclaims. Shortly thereafter, the defendants served plaintiff with an amended answer and counterclaims. This amended pleading added an allegation that prior to the commencement of the Florida proceedings, the plaintiff had committed malpractice by failing to advise the defendants of the potential costs, liability and damages which they could incur if they marketed and used the disputed hanger tags. The plaintiff refused to accept the amended pleadings on the ground that leave of court was necessary. As a result, the defendants have cross-moved for an order compelling plaintiffs to accept the pleadings or, in the alternative, for permission to serve them.
An "account stated" is "an agreement between the parties to an account based upon prior transactions between them with respect to the correctness of the separate items composing the account and the balance due." Chisholm-Ryder Co. v. Sommer & Sommer, 70 A.D.2d 429, 431, 421 N.Y.S.2d 455 (4th Dept.1979). The receipt and retention of a plaintiff's accounts "without objection within a reasonable time, and agreement to pay a portion of the indebtedness [gives] rise to an actionable account stated, thereby entitling plaintiff to summary judgment in its favor." Rosenman Colin Freund Lewis & Cohen v. Edelman, 160 A.D.2d 626, 559 N.Y.S.2d 249 (1st Dept.1990). See also Shea & Gould v. Burr, 194 A.D.2d 369, 598 N.Y.S.2d 261 (1st Dept.1993).
The plaintiff alleges that it is entitled to summary judgment in its favor because the defendants never disputed their legal bills and, in fact, partially paid the total amount due. However, on a motion for summary judgment, evidence of an oral objection to an account rendered, made with some specificity, is enough to rebut an inference of an implied agreement to pay the stated amount. See Kaye Scholer Fierman Hays & Handler v. L.B. Russell Chemicals, Inc., 246 A.D.2d 479, 667 N.Y.S.2d 753 (1st Dept.1998); Collier Cohen, Crystal & Bock v. MacNamara, 237 A.D.2d 152, 655 N.Y.S.2d 10 (1st Dept .1997). Here, the defendants have submitted two affidavits from defendant Orlinsky which detail numerous conversations he allegedly had with Bert J. Lewen, a member of the plaintiff law firm, in which he repeatedly complained about and disputed the legal bills which the defendants were receiving from the plaintiff. Since these affidavits raise issues of fact which can only be resolved at trial, they are sufficient to defeat the plaintiff's summary judgment motion.
The plaintiff has also moved, pursuant to CPLR 3211(a)(7), to dismiss the defendants' counterclaim which asserts that the firm committed legal malpractice by failing to advise the defendants of the possibility that their insurance might cover the costs of the intellectual property litigation in Florida.. The plaintiff argues that its professional responsibilities and duties as attorneys for the defendants only extended to the actual litigation and that it was not incumbent upon the law firm to advise the defendants about matters which related to the financing of the litigation. The plaintiff argues that the defendants, as the holders of the insurance policy, had the sole responsibility for realizing that the policy might cover the lawsuits against them and for submitting a claim for coverage.
In opposing the plaintiff's motion to dismiss their counterclaim, the defendants argue that an attorney who is retained to...
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...noteworthy that counsel which succeeded the plaintiff promptly pursued the insurance issue to the defendants' substantial benefit" (178 Misc 2d 113, 118). As for plaintiff's motion for summary judgment, the court held that defendant Orlinsky's affidavits indicating that he had disputed the ......
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...§203[d]); specifically, the alleged legal services rendered, in connection with plaintiff's claim for legal fees. See Darby & Darby, PC. v. VSI Intl., 178 Misc 2d 113, affirmed as modified 268 AD2d 270 (1st Dept 2000), leave to appeal granted 270 AD2d 975, affirmed95 NY2d 308 (2000)(in acco......
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