178 Misc.2d 113, 1998-98,515, Darby & Darby, P.C. v. VSI Intern., Inc.

Docket Nº1998-98,515
Citation178 Misc.2d 113, 678 N.Y.S.2d 482
Party NameDarby & Darby, P.C. v. VSI Intern., Inc.
Case DateAugust 28, 1998
CourtUnited States State Supreme Court (New York)

Page 113

178 Misc.2d 113

678 N.Y.S.2d 482

DARBY & DARBY, P.C., Plaintiff,

v.

VSI INTERNATIONAL, INC., et al., Defendants.

1998-98,515

Supreme Court of New York

August 28, 1998.

[678 N.Y.S.2d 484] Layton Brooks & Hecht, New York City, for plaintiff.

Anderson Kill & Olick, New York City, for defendants.

FRANKLIN R. WEISSBERG, Justice.

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.

Background

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 [678 N.Y.S.2d 485] 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.

Discussion

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...

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