Ross v. Delorenzo

• Decision Date: 18 April 2006
• Docket Number: 2004-09440.
• Citation: 2006 NY Slip Op 02867,28 A.D.3d 631,813 N.Y.S.2d 756
• Parties: ROBERT A. ROSS, Appellant, v. LINDA DELORENZO, Respondent.
• Court: New York Supreme Court — Appellate Division

28 A.D.3d 631

813 N.Y.S.2d 756

2006 NY Slip Op 02867

ROBERT A. ROSS, Appellant, v. LINDA DELORENZO, Respondent.

2004-09440.

Appellate Division of the Supreme Court of the State of New York, Second Department.

April 18, 2006.

In an action to recover unpaid legal fees, the plaintiff appeals from so much of an order of the Supreme Court, Suffolk County (Burke, J.), dated September 23, 2004, as granted those branches of the defendant's motion which were for summary judgment dismissing so much of the first cause of action as sought recovery on a contingency fee agreement, the second cause of action, and the third cause of action.

Ordered that the order is affirmed insofar as appealed from, without costs or disbursements.

The defendant hired the plaintiff to represent her in a divorce action. The defendant and her husband, Anthony DeLorenzo, began their relationship in 1974. Soon thereafter, they began living together and bore a child together in 1975. According to the defendant, she and Anthony agreed, beginning in 1975, to form a partnership "for the purchase and sale of specialty antiques and collectible art," in furtherance of which the defendant agreed to perform domestic services and Anthony set up various business entities. The defendant also claimed that, beginning in 1975, she entrusted various antiques and pieces of collectible art to Anthony in reliance on his managing them for her benefit.

In 1979 the couple moved to a house in Smithtown, New York, owned by Anthony, and in 1981 Anthony granted the defendant a one-half interest in the house. According to the defendant, she and Anthony were married under the common law of Pennsylvania in 1983 and were married in a civil ceremony in New York in early 1990. The couple continued to live together until 1993, when the defendant decided to end the marriage due to Anthony's alleged adultery and cruel and inhuman treatment. According to the defendant, Anthony spent anywhere from two to five days a week with her at the house in Smithtown, and on the other nights he stayed in Manhattan for business.

Initially, the defendant and the plaintiff signed an hourly fee agreement. But, after discussing the case, the plaintiff concluded that, based on the short duration and alienated nature of the marriage and the dearth of marital property, the defendant was only entitled to nominal maintenance and was not entitled to equitable distribution. The plaintiff decided that he would interpose claims alleging an oral partnership and constructive trust alongside the claims for divorce, maintenance, and equitable distribution, and the parties signed a contingency fee agreement whereby the plaintiff would recover one third of all sums recovered on the partnership and constructive trust claims. Several months later, the parties executed a new hourly fee agreement that increased the plaintiff's hourly rate. According to the plaintiff, at some point during the course of the litigation he and the defendant agreed that he would accept $300,000 in full satisfaction of his fees if the matter settled for less than $1.8 million.

Also during the course of the litigation the Supreme Court, Kings County (Heitler, J.), granted the defendant's motion for pendente lite support and ordered Anthony to pay the defendant $2,000 per month. Thereafter, before trial, the defendant and Anthony entered into a stipulation of settlement whereby they agreed to settle "all issues relating to maintenance, distribution of all their respective property rights . . . and . . . all other rights remedies, privileges and obligations to each other arising out of the marriage relationship or otherwise." The settlement provided, inter alia, that the defendant would receive a total of $1,345,613 cash over three years, including $450,000 "for [the defendant's] support and maintenance," and $850,000 "for equitable distribution of marital property," as well as Anthony's one-half interest in the marital residence, valued at $184,500, and miscellaneous other property.

At a hearing on the same day, the parties stipulated to the settlement, and Anthony delivered to the plaintiff the sum of $970,000 and a deed transferring his interest in the house to the defendant. The Supreme Court granted the defendant's uncontested motion for leave to amend her complaint to include a claim of constructive abandonment, and on August 31, 1998, the court entered a judgment of divorce based on its finding that Anthony had constructively abandoned the defendant starting in August of 1994 and that the parties had identified and disposed of their separate and marital property pursuant to the terms of the settlement.

The plaintiff delivered the $970,000 settlement proceeds to the defendant, and the defendant thereafter remitted the sum of $200,000 to the plaintiff. The plaintiff reminded the defendant that he was entitled to an additional $100,000, but the defendant refused to pay it, and the present suit ensued.

The first question presented on this appeal is whether an attorney may, in the context of a suit which includes both matrimonial and nonmatrimonial causes of action, enter into a contingency fee agreement whereby he becomes entitled to a percentage of so much of the proceeds of the litigation as are derived from the nonmatrimonial causes of action. The issue appears to be one of first impression.

While an attorney may charge a contingency fee to prosecute nonmatrimonial claims generally (see 7 NY Jur 2d, Attorneys at Law § 209), "[a] lawyer shall not enter into an arrangement for, charge or collect . . . [a]ny fee in a domestic relations matter . . . the payment or amount of which is contingent upon the securing of a divorce or in any way determined by reference to the amount of maintenance, support, equitable distribution, or property settlement" (Code of Professional Responsibility DR 2-106 [c] [2] [i] [22 NYCRR 1200.11 (c) (2) (i)]; see 22 NYCRR 1400.1, 1400.2; Xiao Yang Chen v. Fischer, 6 NY3d 94 [2005]; Matter of Dangler, 192 App Div 237 [1920]; Van Vleck v. Van Vleck, 21 App Div 272 [1897]). "The rule against contingent fees in domestic relations cases in New York is deep seated and well established. The policy reasons include a belief that this kind of fee might induce lawyers to discourage reconciliation and encourage bitter and wounding court battles. Another often expressed policy reason to preclude contingent fees in matrimonial actions is that they are not necessary, since the court may award attorney's fees to a nonmonied spouse and thus any party should be able to retain counsel" (7 NY Jur 2d, Attorneys at Law § 211).

The plaintiff argues that, because "res judicata bars a subsequent plenary action concerning an issue of marital property which could have been, but was not, raised in the prior matrimonial action" (Boronow v. Boronow, 71 NY2d 284, 289 [1988]; see Rakowski v. Rakowski, 109 AD2d 1 [1985]; Marinelli v. Marinelli, 88 AD2d 635 [1982]), and because courts may not award attorney's fees for work performed in prosecuting nonmatrimonial causes of action (see Domestic Relations Law § 237; Skinner v. Skinner, 271 AD2d 679, 681 [2000]; Lucci v. Lucci, 227 AD2d 387, 389 [1996]; Sandel v. Sandel, 96 AD2d 584 [1983]), permitting attorneys to charge contingency fees for the sums recovered pursuant to those claims is consistent with the purpose of Domestic Relations Law § 237 because it would facilitate the nonmonied spouse's access to the courts (see O'Shea v. O'Shea, 93 NY2d 187, 190 [1999]).

We are also aware of rulings from other states holding that such fees do not violate the public policy against contingency fees in domestic relations matters because they are not contingent upon the securing of "alimony or support or property settlement in lieu thereof" (Salter v. St. Jean, 170 So 2d 94, 95 [Fla 1964]; see Burns v. Stewart, 290...