Binder & Binder, P.C. v. Astrue
| Decision Date | 25 January 2012 |
| Docket Number | No. CV–11–0467 (SJF).,CV–11–0467 (SJF). |
| Citation | 848 F.Supp.2d 230 |
| Parties | BINDER & BINDER, P.C., Plaintiff, v. Michael K. ASTRUE, Commissioner of the Social Security Administration, Defendant. |
| Court | U.S. District Court — Eastern District of New York |
OPINION TEXT STARTS HERE
Jeffrey Herzberg, Smithtown, NY, for Plaintiff.
Vincent Lipari, United States Attorneys Office, Central Islip, NY, for Defendant.
Binder & Binder, P.C. (“plaintiff”) commenced this action against Michael K. Astrue(“defendant”), Commissioner of the Social Security Administration (“SSA”), seeking to recover attorney's fees relating to its representation of a claimant for social security disability insurance (“DI”) benefits pursuant to Section 206 of the Social Security Act, 42 U.S.C. § 406. The parties now cross-move pursuant to Rule 56 of the Federal Rules of Civil Procedure for summary judgment. For the reasons set forth below, plaintiff's motion is granted in part and defendant's cross motion is denied.
The following facts are undisputed, unless otherwise indicated:
On or about August 9, 2007, Gordon P. Landwirth (“Landwirth”) retained plaintiff to represent him with respect to his application for DI benefits and executed an agreement entitled, “Fees for Representation before the Social Security Administration” (“the Fee Agreement”). . Under the Fee Agreement, inter alia, if Landwirth was successful on his claim for DI benefits:
(Compl., Ex. A). However, if Landwirth was successful on his claim only following a review by the Appeals Council, the Fee Agreement provided that “the fee petition system will be used,” pursuant to which “the fees charged by [plaintiff] will be twenty-five percent of all past-due benefits awarded.” ( Id.) The Fee Agreement further provided, inter alia, that if it were invalidated by the SSA “for any reason,” plaintiff “will use the fee petition method.” ( Id.)
By decision dated November 13, 2009, following an Appeals Council remand, Administrative Law Judge Mark Hecht (“the ALJ”) found Landwirth to be disabled as of November 1, 2005 and entitled to DI benefits. (T. 1–3, 6–12). By order dated November 13, 2009, the ALJ approved the Fee Agreement, “subject to the condition that the claim results in past-due benefits.” (T. 4–5).
On or about December 9, 2009, the SSA paid plaintiff a total of five thousand nine hundred seventeen dollars ($5,917.00), i.e., six thousand dollars ($6,000.00) minus a statutory assessment of eighty-three dollars ($83.00) imposed pursuant to 42 U.S.C. § 406(d), for the legal services it rendered to Landwirth during the SSA proceedings. (T. 13).
On March 20, 2010, the SSA's Office of Central Operations (“OCO”) advised Landwirth, inter alia: (1) that he was awarded past-due benefits for the period between August 2006 through October 2009 in the total amount of sixty-five thousand five hundred eighty-eight dollars ($65,588.00); (2) that he would be receiving monthly benefits in the amount of one thousand six hundred sixty-two dollars ($1,662.00), as well as checks in the amount of (a) one thousand seven hundred seventy-two dollars and seventy cents ($1,772.70) for money due him through December 2009 and (b) sixty-one thousand three hundred sixty dollars and forty cents ($61,360.40) “because of an additional lump-sum payment;” (3) that the Fee Agreement between him and plaintiff had been approved by the SSA; and (4) that six thousand dollars ($6,000.00) had therefore been withheld from the past-due benefits award to pay plaintiff pursuant to the Fee Agreement and that the balance of the past-due benefits award would then be forwarded to Landwirth. (T. 14–16).
By order dated April 21, 2010, upon review of the Fee Agreement, Mark S. Sochaczewsjy (“Chief ALJ”), the Regional Chief ALJ for the SSA, invalidated the Fee Agreement on the basis that it did “not meet the statutory requirements of Sections 206(a)(2)(A) of the Social Security Act as amended by Section 5106(a) of the Omnibus Budget Reconciliation Act of 1990.” 1 (T. 18). In a letter to plaintiff dated that same day, the Chief ALJ explained that:
(T. 17). Plaintiff was advised that it was “entitled to request a [legal] fee through the petition process;” that “[a]ll papers must be submitted to the New York Hearing Office if [it] wish[ed] to charge and collect a fee in this case;” and that the Chief ALJ's order was not subject to further review. (T. 17).
By letter to the ALJ and petition, both dated July 8, 2010 and received by the SSA's Office of Disability Adjudication and Review (“ODAR”) on July 22, 2010, plaintiff submitted a “Petition to Obtain Approval of a Fee” to the SSA, seeking a legal fee pursuant to 42 U.S.C. § 406(a) in the amount of eight thousand dollars ($8,000.00). (T. 33–41). In the letter to the ALJ, plaintiff noted, inter alia, (T. 33).
On July 16, 2010, Landwirth filed a voluntary petition for relief under Chapter 7 of the United States Bankruptcy Code, 11 U.S.C. § 101, et seq., in the United States Bankruptcy Court for the Southern District of New York (“the bankruptcy court”). (T. 21–29). Pursuant to the “Notice of Chapter 7 Bankruptcy Case, Meeting of Creditors, & Deadlines” (“Chapter 7 Notice”) issued by the bankruptcy court, potential creditors of Landwirth were notified, inter alia, that if they “believe[d] that [Landwirth] [was] not entitled to receive a discharge under Bankruptcy Code §§ 727(a)or that a debt owed to [them] [was] not dischargeable under Bankruptcy Code §§ 523(a)(2), (4), or (6), [they] must start a lawsuit by filing a complaint in the bankruptcy clerk's office by [October 12, 2010].” (T. 21–22). “Schedule F–Creditors Holding Unsecured Nonpriority Claims” (“Schedule F”) designated plaintiff as a creditor of Landwirth with respect to a disputed claim in an unknown amount, but did not provide plaintiff's address. (T. 25, 27). The Certificate of Notice indicates that plaintiff was not sent a copy of the Chapter 7 Notice. (T. 29). Plaintiff alleges that it, therefore, did not receive notification of Landwirth's Chapter 7 proceeding in time to file a timely objection to Landwirth's discharge, i.e., that Landwirth's debt to plaintiff was not dischargeable under Section 523(a)(2), (4) or (6) of the Bankruptcy Code. (Compl., ¶ 11).
On July 26, 2010, the SSA's ODAR issued an “Authorization to Charge and Collect Fee,” authorizing plaintiff to charge and collect a fee in the amount of eight thousand dollars ($8,000.00) for services it provided to Landwirth in the SSA proceedings and advising plaintiff that the fee would be paid directly to it from Landwirth's past-due benefits check, but that if the check did not cover the fee, payment of the balance due was “a matter for [plaintiff] and [Landwirth] to settle.” 2 (T. 19). Plaintiff alleges that it is entitled to payment of two thousand dollars ($2,000.00) since it was only paid six thousand dollars ($6,000.00) of the eight thousand dollar ($8,000.00) legal fee certified by the SSA. (Compl., ¶ 13).
On October 26, 2010, the bankruptcy court entered a “Discharge of Debtor Order of Final Decree” (“the bankruptcy order”), releasing Landwirth from all dischargeable debts, i.e., most debts existing on the date the bankruptcy case was filed, and closing the Chapter 7 proceeding. (T. 30). On the “Explanation of Bankruptcy Discharge in a Chapter 7 Case” annexed to the bankruptcy order, it is noted that certain types of debt are generally not discharged in the case, including, inter alia, “Some debts which were not properly listed by the debtor.” (T. 31).
On December 19, 2010, the SSA's OCO advised plaintiff, pursuant to its “Hearings, Appeals and Litigation Law Manual” (“HALLEX”), that it had received plaintiff's July 8, 2010 “petition requesting a fee for the services [plaintiff] performed for * * * Landwirth,” but that since Landwirth had filed a bankruptcy petition, the SSA could not act on plaintiff's fee petition absent authorization from the bankruptcy court. (T. 32). The SSA requested plaintiff to notify it, or to have Landwirth notify it, of the outcome of the bankruptcy proceeding. (T. 32).
On January 31, 2011, plaintiff commenced this action seeking to recover from the SSA the remaining two thousand dollars ($2,000.00) of its certified legal fee under Section 206 of the Social Security Act, 42 U.S.C. § 406(a), plus interest.
The parties cross-move pursuant to Rule 56 of the Federal Rules of Civil Procedure for summary judgment.
Summary judgment should not be granted unless “the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a...
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