Cohen Lans LLP v. Naseman

• Decision Date: 03 February 2017
• Docket Number: 14-CV-4045 (JPO)
• Parties: COHEN LANS LLP, Plaintiff, v. DAVID M. NASEMAN, Defendant.
• Court: U.S. District Court — Southern District of New York

COHEN LANS LLP, Plaintiff, v. DAVID M. NASEMAN, Defendant.

14-CV-4045 (JPO)

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

February 3, 2017

OPINION AND ORDER

J. PAUL OETKEN, District Judge:

Cohen Lans LLP ("Cohen Lans") initiated this action against David M. Naseman, an attorney proceeding pro se, to recover unpaid legal fees and expenses in connection with Cohen Lans' legal representation of Naseman in a civil action from 2007 to 2009. (Dkt. No. 15 ("Compl.").) Naseman filed a counterclaim against Cohen Lans, adding as Counterclaim-Defendants Robert S. Cohen, Deborah E. Lans, Ryan Weiner, and Dan Rottenstreich, all of whom were attorneys at Cohen Lans. (Dkt. No. 83.) Before the Court are cross-motions for summary judgment filed by Cohen Lans along with the additional Counterclaim-Defendants (Dkt. No. 123), and by Naseman (Dkt. No. 133). For the reasons that follow, Cohen Lans' and the additional Counterclaim-Defendants' motion for summary judgment is granted and Naseman's motion for summary judgment is denied.

I. Background

The following facts are taken from the parties' 56.1 statements and are undisputed unless otherwise noted.

A. The Harding Action

On November 13, 2007, Naseman retained Cohen Lans to represent him in connection with a lawsuit brought against him by his ex-wife Toehl Harding (the "Harding Action"). (Dkt. No. 145 ¶¶ 4-6.) In the Harding Action, Harding raised twelve causes of action against Naseman, including two fraud claims, alleging that Naseman improperly hid over $4 million in income when she and Naseman negotiated their 1993 Property Settlement Agreement ("PSA") as part of their divorce. (Id. ¶ 6.) (Cohen Lans did not represent Naseman in connection with the negotiation of the PSA. (Id. ¶ 47.)) Harding claimed that Naseman created a false federal income tax return showing income much lower than that reported on his actual tax return. (Id. ¶¶ 7-8.) Naseman also filed a counterclaim for attorney's fees. (Id. ¶ 41.)

Naseman and Cohen Lans signed a written retainer agreement in connection with the representation. (Id. ¶ 10.) The agreement included the hourly rates and reimbursements which Naseman would pay Cohen Lans, including a retainer of $50,000, which was to be credited against the time and disbursements charged to Naseman. (Id. ¶¶ 13-15.) However, the retainer agreement did not include express integration, modification, or attorney's fees provisions. (Dkt. No. 141 ¶ 2.) Cohen Lans represented Naseman for the duration of the Harding Action before Judge Patterson in the Southern District of New York, including through trial. (Dkt. No. 145 ¶ 12.)

Cohen Lans also engaged in efforts to settle the Harding Action. For example, on December 7, 2007, Cohen Lans sent a letter to Harding's counsel discussing her claims. (Id. ¶ 17.) And on December 18, 2007, Harding's counsel proposed a walk-away settlement agreement to Cohen Lans partner Robert Cohen (the "December Settlement"), which Cohen then shared with Naseman, who agreed to the proposal. (Id. ¶¶ 18-19.) On December 19, 2007, Cohen informed Judge Patterson that Harding had agreed to withdraw the lawsuit. (Dkt. No. 141 ¶ 8; Dkt. No. 145 ¶ 20.) Cohen also informed Naseman that Harding's counsel had requested the exchange of mutual releases, which Cohen agreed to, and Rottenstreich forwarded a draft release to Naseman—but did not request that Naseman sign and return the release. (Dkt. No. 141 ¶¶ 24-26.) The parties dispute whether Cohen Lans advised Naseman that the settlement was contingent upon arriving at a release mutually acceptable to Harding and Naseman. (Id. ¶¶ 29.) In discussing the confidentiality provisions of the proposed settlement agreement, Mr. Naseman informed Cohen Lans that he "must" be able to respond to inquiries about the allegations in the Harding Action. (Dkt. No. 145 ¶¶ 24-25.)

The parties dispute whether Judge Patterson then "so-ordered" the settlement; Naseman claims that Judge Patterson did, but Cohen Lans claims that Judge Patterson only approved the adjournment of a scheduling conference. (Dkt. No. 141 ¶¶ 8-9.) Through December 31, 2007, less than $19,000 in fees and costs had been incurred by Cohen Lans in connection with its representation of Naseman. (Id. ¶ 16.)

Notwithstanding the putative settlement, the parties continued to litigate the Harding Action. On May 27, 2008, Cohen Lans filed a motion for summary judgment on Naseman's behalf, seeking to dismiss Harding's claims in their entirety and to enforce the December 2007 settlement. (Dkt. No. 145 ¶ 33.) Cohen Lans did not seek an evidentiary hearing on Naseman's summary judgment motion. (Dkt. No. 141 ¶ 11.) On August 1, 2008, Harding filed a motion to dismiss Naseman's counterclaim for attorney's fees, which Cohen Lans successfully opposed. (Dkt. No. 145 ¶¶ 41-42.) On October 2, 2008, Cohen Lans partner Deborah Lans again raised the possibility of a "mutual 'walk[-a]way'" agreement. (Id. ¶ 26.) On November 13, 2008, Judge Patterson granted Naseman's motion for summary judgment as to Harding's ten non-fraud claims, denied the motion as to the enforcement of the settlement agreement, and allowed the two fraud-based claims to proceed to trial. (Id. ¶¶ 36-38.)

A bench trial was held before Judge Patterson from December 16 to 19, 2008. (Id. ¶ 39.) At trial, Cohen Lans presented evidence in support of Naseman's fees counterclaim, but did not call Cohen as a witness to testify concerning the potential settlement. (Id. ¶¶ 28, 43; Dkt. No.141 ¶ 15.) On July 8, 2009, Judge Patterson issued an Opinion and Order dismissing Harding's remaining fraud-based claims. (Dkt. No. 145 ¶ 40.) The Opinion and Order also dismissed Naseman's fees counterclaim on the basis that the parties' PSA precluded the requested relief. (Id. ¶ 45.)

Cohen Lans terminated its representation of Naseman by letter dated July 20, 2009. (Id. ¶ 48.) Both Harding and Naseman filed notices of appeal from the July 8, 2009, Opinion and Order; Naseman retained separate appellate counsel to do so. (Id. ¶¶ 49-50.) On May 14, 2010, the United States Court of Appeals for the Second Circuit affirmed Judge Patterson's Order in its entirety. (Id. ¶ 51.)

B. The Fee Dispute

Throughout Cohen Lans' representation of Naseman, it sent him (and he received) a series of bills reflecting current charges and unpaid balances. (Id. ¶¶ 52-53, 55.) The bills include some identification of the tasks being performed and the costs incurred, though the parties dispute the completeness and specificity of the bills. (Id. ¶¶ 59-60.) Naseman concedes that his defense in the Harding Action required, for certain periods, a significant amount of time and effort by attorneys who were working long hours, and that it was "very important" to Naseman that he win the Harding Action. (Id. ¶¶ 67-68, 70.) After the termination of its representation, Cohen Lans sent Naseman statements of accounts reflecting an unpaid balance due. (Id. ¶ 54.) Naseman's last payment to Cohen Lans was for $300,000 in December 2008. (Id. ¶ 56, 62.) This payment was made after repeated warnings from Cohen and Lans that if Naseman failed to pay prior to the commencement of the trial, Cohen Lans would cease its representation. (Dkt. No. 141 ¶¶ 42-45.) Cohen Lans alleges, though Naseman denies, that Naseman owes Cohen Lans $651,867.68 for legal services it provided him and disbursements it incurred on his behalf in the period after November 2008, including for trial preparation andpost-trial submissions. (Dkt. No. 145 ¶¶ 65-66.) The parties agree that this sum includes $12,000 that Cohen Lans paid in expert fees relating to the Harding Action. (Dkt. No. 141 ¶ 54.) Naseman claims, though Cohen Lans denies, that following Cohen Lans' termination of representation, Naseman proposed a settlement of claims between the two parties. (Id. ¶¶ 51-52.)

Cohen Lans claims, though Naseman denies, that Naseman has a pattern of claiming non-performance by professionals who seek to be paid by him for services rendered. (Dkt. No. 145 ¶ 72.) Naseman admits that he has been sued for non-payment for professional services no fewer than five times, including the instant action, with one such lawsuit resulting in significant liability for him. (Id. ¶ 73.) For example, Naseman was sued for unpaid fees and costs by both his appellate counsel and the handwriting expert in the Harding Action. (Id. ¶¶ 75, 78.) Moreover, in some instances, malpractice or non-performance were among the issues involved in the lawsuits. (Id. ¶ 74.)

Cohen Lans initiated this action on June 4, 2014 (Dkt. No. 1), and filed the operative, Amended Complaint on September 2, 2014 (Compl.). Cohen Lans asserts four claims relating to Naseman's alleged failure to pay for its legal services: (1) breach of contract; (2) account stated; (3) unjust enrichment; and (4) quantum meruit. (Compl. ¶¶ 33-51.) Naseman asserts counterclaims alleging that Cohen Lans and some of its attorneys—Cohen, Lans, Weiner, and Rottenstreich—are liable for malpractice, breach of contract, and breach of fiduciary duty as a result of, among other things, their failure to settle the civil suit before trial. (See Dkt. No. 83.) Cohen Lans initially moved for summary judgment on its claims and on Naseman's counterclaims on October 22, 2014, before the completion of discovery. (Dkt. No. 26.) This Court denied that motion without prejudice as "premature." (Dkt. No. 65.) The parties now cross-move for summary judgment.

II. Legal Standard

Summary judgment is appropriate when "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56. A fact is material if it "might affect the outcome of the suit under the governing law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute is genuine if, considering the record as a whole, a rational jury could find in favor of the non-moving party. Ricci v. DeStefano, 557 U.S. 557, 586 (2009) (citing Matsushita Elec. Indus. Co. v. ...