Leon v. Martinez

• Decision Date: 07 July 1994
• Citation: 84 N.Y.2d 83,614 N.Y.S.2d 972,638 N.E.2d 511
• Court: New York Court of Appeals Court of Appeals
• Parties: , 638 N.E.2d 511 Xavier LEON et al., Respondents, v. Wilfredo MARTINEZ, Defendant, and Pearlman, Apat & Futterman et al., Appellants.

Page 972

614 N.Y.S.2d 972

84 N.Y.2d 83, 638 N.E.2d 511

Xavier LEON et al., Respondents, v. Wilfredo MARTINEZ, Defendant, and Pearlman, Apat & Futterman et al., Appellants.

Court of Appeals of New York.

July 7, 1994.

Rivkin, Radler & Kremer, Uniondale (Evan H. Krinick and John M. Denby, of counsel), for appellants.

Razis & Ross, P.C., Long Island City (George J. Razis and Avery Friedman, of counsel), for respondents.

OPINION OF THE COURT

LEVINE, Judge.

Plaintiffs brought this action against defendant Wilfredo Martinez and his attorneys to enforce plaintiffs' claim of entitlement to a portion of the proceeds of the settlement of a personal injury action by Martinez against the Hertz Corporation. The complaint alleges that, before the settlement of Martinez v. Hertz Corp., at the request of plaintiffs and in consideration for plaintiffs' care of Martinez following his accident, defendant attorney Ira Futterman drafted an agreement between plaintiffs and Martinez which Martinez executed. The agreement, annexed to the complaint, provided as follows:

"(1) I give to Gina Leon 5% of any recovery that I may get after deducting all disbursements, expenses and attorney's fees from the case of WILFREDO MARTINEZ v. HERTZ CORPORATION.

"(2) I give to Xavier Leon 5% of any recovery that I may get after deducting all disbursements, expenses and attorney's fees from the case of WILFREDO MARTINEZ v. HERTZ CORPORATION.

"(3) I give to Maria Macia 15% of any recovery that I may get after deducting all disbursements, expenses and attorney's fees from the case of WILFREDO MARTINEZ v. HERTZ CORPORATION."

Plaintiffs alleged that the agreement constituted a "lien" upon the proceeds of the settlement. The complaint further alleged that, contrary to the agreement, when the personal injury action was settled, defendant Futterman disbursed the entire net proceeds to Martinez and in doing so had a conflict of interest and was guilty of professional misconduct.

Defendants Futterman and the law firm Pearlman, Apat & Futterman moved to dismiss the complaint as against them pursuant to CPLR 3211(a)(1) as barred by documentary evidence (i.e., the agreement between plaintiffs and Martinez) and CPLR 3211(a)(7) for failure to state a cause of action. Plaintiffs submitted an affidavit in opposition describing in greater detail the services rendered by them to Martinez, the circumstances under which Futterman was requested to prepare the agreement, and their ongoing professional relationship with Futterman and his firm.

Supreme Court granted defendants' motion under CPLR 3211(a)(1), concluding that Futterman's preparation of the agreement did not create liability on the part of him and his law firm for Martinez's failure to honor it. Plaintiffs appealed and the Appellate Division reversed, with one Justice dissenting (193 A.D.2d 788, 598 N.Y.S.2d 274). The Court held that where attorneys have notice of an assignment of a portion of their client's recovery, they may be held liable to the assignees for paying out that recovery in disregard of the assignment. The Appellate Division granted the defendants' motion for leave to appeal to this Court and certified the following question: "Was the decision and order of this court dated May 24, 1993, properly made?" We now affirm.

On a motion to dismiss pursuant to CPLR 3211, the pleading is to be afforded a liberal construction (see, CPLR 3026). We accept the facts as alleged in the complaint as true, accord plaintiffs the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory (Morone v. Morone, 50 N.Y.2d 481, 484, 429 N.Y.S.2d 592, 413 N.E.2d 1154; Rovello v. Orofino Realty Co., 40 N.Y.2d 633, 634, 389 N.Y.S.2d 314, 357 N.E.2d 970). Under CPLR 3211(a)(1), a dismissal is warranted only if the documentary evidence submitted conclusively establishes a defense to the asserted claims as a matter of law (see, e.g., Heaney v. Purdy, 29 N.Y.2d 157, 324 N.Y.S.2d 47, 272 N.E.2d 550). In assessing a motion under CPLR 3211(a)(7), however, a court may freely consider affidavits submitted by the plaintiff to remedy any defects in the complaint (Rovello v. Orofino Realty Co., supra, 40 N.Y.2d at 635, 389 N.Y.S.2d 314, 357 N.E.2d 970) and "the criterion is whether the proponent of the pleading has a cause of action, not whether he has stated one" (Guggenheimer v. Ginzburg, 43 N.Y.2d 268, 275, 401 N.Y.S.2d 182, 372 N.E.2d 17; Rovello v. Orofino Realty Co., supra, 40 N.Y.2d at 636, 389 N.Y.S.2d 314, 357 N.E.2d 970). In light of these principles, we agree with the majority at the Appellate Division that the instant complaint and supporting affidavit, although inartfully drafted, adequately alleged for pleading survival purposes that the instrument prepared by Futterman was intended by all parties to effectuate a present assignment to plaintiffs of interests in the future settlement.

No particular words are necessary to effect an assignment; it is only required that there be a perfected transaction between the assignor and assignee, intended by those parties to vest in the assignee a present right in the things assigned (see, 4 Corbin, Contracts § 879, at 528 [1951]; Hinkle Iron Co. v. Kohn, 229 N.Y. 179, 182-183, 128 N.E. 113; Coastal Commercial Corp. v. Kosoff & Sons, 10 A.D.2d 372, 376, 199 N.Y.S.2d 852). ¹ Thus, Professor Corbin illustrates, in a contingent fee arrangement between attorney and client, there is a difference in legal effect between the words " 'I will pay you a fee equal to one third of the amount collected from the defendant' " and the words " 'I now give you a one third interest in the claim as your fee' " or " 'You are entitled to one third of any amount that may be collected as your fee' " (4 Corbin, Contracts § 879, at 530 [emphasis supplied]. In the latter cases, Professor Corbin concludes, "the transaction seems to be an assignment and not a mere promise" (id., at 530). In accordance with these principles, in Speelman v. Pascal, 10 N.Y.2d 313, 316, 222 N.Y.S.2d 324, 178 N.E.2d 723, supra, we held that a document stating "I give you from my shares of profits * * * five per cent (5%) in England, and two per cent (2%) of my shares of profits in the United States" constituted a present assignment of the specified shares of future royalties to be received by the assignor (emphasis supplied). ² Thus, although there are other inconsistent phrases in the instrument executed by Martinez, the words "I give" in the instrument are sufficient to withstand a pleadings challenge as to whether the parties intended to effect a present transfer of the specified percentages of the personal injury recovery to plaintiffs.

Assuming that an enforceable assignment of the funds is proven, Futterman unquestionably had notice of the agreement he drafted and of the parties' objectives in entering into that agreement. Accordingly, the allegation that Futterman paid the entirety of the funds to Martinez in disregard of the agreement is sufficient to state a cause of action (see, Sims v. Brown, 6 Thomp. & C. 5, affd. 64 N.Y. 660; Brinkman v. Moskowitz, 38 Misc.2d 950, 238 N.Y.S.2d 876 [App Term, 2d Dept]; cf., Matter of Kelly, 23 N.Y.2d 368, 382, 296 N.Y.S.2d 937, 244 N.E.2d 456; see also, Tri City Roofers v. Northeastern Indus. Park, 61 N.Y.2d 779, 780-781, 473 N.Y.S.2d 161, 461 N.E.2d 298; Continental Purch. Co. v. Van Raalte Co., 251 App.Div. 151, 152, 295 N.Y.S. 867). We of course express no opinion as to...