Cheng v. Modansky Leasing Co., Inc.

• Decision Date: 29 February 1988
• Court: New York Supreme Court — Appellate Division
• Parties: LAI LING CHENG, et al., Plaintiffs, v. MODANSKY LEASING CO., INC. et al., third-party Plaintiffs; Town of La Grange, et al., third-party Defendants. Edward J. Murtaugh, nonparty Respondent-Appellant; Lipsig, Sullivan & Liapakis, P.C., nonparty Appellant-Respondent.

Page 328

525 N.Y.S.2d 328

137 A.D.2d 781

LAI LING CHENG, et al., Plaintiffs, v. MODANSKY LEASING CO., INC. et al., third-party Plaintiffs;

Town of La Grange, et al., third-party Defendants.

Edward J. Murtaugh, nonparty Respondent-Appellant;

Lipsig, Sullivan & Liapakis, P.C., nonparty Appellant-Respondent.

Supreme Court, Appellate Division,

Second Department.

Feb. 29, 1988.

Lipsig, Sullivan & Liapakis, P.C., New York City (Harry H. Lipsig, Cyrus M. Diamond and Cheryl Eisberg Moin, of counsel), nonparty appellant-respondent pro se.

Corbally, Gartland & Rappleyea, Poughkeepsie (Daniel F. Leary, of counsel), for nonparty respondent-appellant.

Before KUNZEMAN, J.P., and RUBIN, HARWOOD and BALLETTA, JJ.

MEMORANDUM BY THE COURT.

In an action to recover damages for personal injuries, the plaintiffs' firm of successor attorneys, Lipsig, Sullivan and Liapakis, P.C. (hereinafter the Lipsig firm) appeals, and the plaintiffs' prior attorney Edward Murtaugh cross-appeals on the ground of inadequacy, from an order and judgment (one paper) of the Supreme Court, Dutchess County (Rosenblatt, J.), dated July 15, 1986, which after a hearing, awarded Murtaugh, the attorney who represented the plaintiffs in this matter prior to the commencement of the lawsuit, the principal sum of $108,000, representing 20% of the total attorney's fee in the underlying lawsuit and the balance to the Lipsig firm.

ORDERED that the order and judgment is modified, by reducing the award to Murtaugh to the principal sum of $35,000; as so modified, the order and judgment is affirmed, with costs to the Lipsig firm, and the matter is remitted to the Supreme Court, Dutchess County, for entry of an appropriate amended judgment, which shall be paid in full within 30 days after service upon the Lipsig firm of a copy of the amended judgment, with notice of entry.

On September 27, 1982, the plaintiffs' conservatee, Teresa Wong, sustained massive injuries when her vehicle collided with a tractor-trailer that had jack-knifed and crossed over into the opposite lane of traffic in which Wong was proceeding. The accident resulted in Ms. Wong's permanent mental and physical incapacitation.

That same evening, Ms. Wong's mother and uncle retained a local Dutchess County lawyer, Edward Murtaugh, to prosecute their claim for damages for Ms. Wong's injuries against the driver and corporate lessor and lessee of the tractor-trailer on a one-third contingency basis. Murtaugh performed numerous preliminary services for the plaintiffs but did not commence a lawsuit. On April 21, 1983, the plaintiffs discharged Murtaugh, without cause, and retained the Lipsig firm, again on a one-third contingency basis, to pursue their lawsuit. In a letter to Murtaugh dated May 2, 1983, the Lipsig firm acknowledged Murtaugh's lien for prior legal services, which it was agreed would be determined by the court at the conclusion of the litigation. The Lipsig firm thereafter performed all the legal work on the case. Some months before the case was scheduled to come to trial, the Lipsig firm settled it for $1,800,000 out of the defendant's $2,000,000 policy. The attorneys' fee was set by the court at $540,000. No agreement having been reached as to the amount due to Murtaugh, various motions were brought and a hearing was held, resulting in a ruling that 20% of this fee, or $108,000, plus interest, should be paid to Murtaugh. On appeal, both attorneys contest this figure, the Lipsig firm arguing that it is excessive, and Murtaugh alleging that it is inadequate.

On appeal, the Lipsig firm argues that because Murtaugh never instituted a lawsuit before he was discharged, he never became their attorney of record, so that he is entitled only...