Dayan v. Dayan, 54225/2015

• Decision Date: 30 November 2017
• Docket Number: 54225/2015
• Citation: 2017 NY Slip Op 27399
• Parties: Jennifer Dayan, Plaintiff, v. Maurice S. Dayan, Defendant.
• Court: New York Supreme Court

2017 NY Slip Op 27399

Jennifer Dayan, Plaintiff, v. Maurice S. Dayan, Defendant.

54225/2015

Supreme Court, Kings County

Decided on November 30, 2017

Butterman & Kahn, LLP

Former Attorneys for Plaintiff

219 E. 31st Street

New York, NY 10016

Walter E. Anderocci, Esq.

Attorney for Defendant

32 Court Street

Brooklyn, NY 11201

Coffinas & Lusthaus, PC

Attorneys for Plaintiff

186 Joralemon Street

Brooklyn, NY 11201 Susan Smith, Esq.

Attorney for the Children

26 Court Street, Suite 1809

Brooklyn, NY 11242

Jeffrey S. Sunshine, J.

Introduction

In New York State an attorney has the right at common law to secure a retaining lien on a file to secure payment pending a hearing to establish a security interest if available for counsel to secure a fee or determination of a charging lien pursuant to Judiciary Law § 475. In a matrimonial action it now appears that the right to a charging lien must be held in abeyance in order to satisfy the dictates of Charnow v. Charnow (134 AD3d 875, 876, 22 N.Y.S.3d 126 [2d Dept., 2015]).

In Charnow the Appellate Division, Second Department held that:

"a charging lien is a security interest in the favorable result of litigation, giving the attorney equitable ownership interest in the client's cause of action and ensuring that the attorney can collect his fee from the fund he has created for that purpose on behalf of the client ( Chadbourne & Parke, LLP v. AB Recur Finans, 18 AD3d 222, 223, 794 N.Y.S.2d 349 [citation omitted]); see Judiciary Law § 475). In a matrimonial action, a charging lien will be available 'to the extent that an equitable distribution award reflects the creation of a new fund by an attorney greater than the value of the interests already held by the client' ( Moody v. Sorokina, 50 AD3d 1522, 1523, 856 N.Y.S.2d 755 [internal quotation marks omitted]). However, '[w]here the attorney's services do not create any proceeds, but consist solely of defending a title or interest already held by the client, there is no lien on that title or interest' (Theroux v.Theroux, 145 AD2d 625, 627—628, [2d Dept., 1988])."

Charnow creates the situation where plaintiff cannot secure her file and properly prosecute her matrimonial action because the issue of a charging lien is not ripe for adjudication pendente lite since the case has not yet been tried and determined. Thus this Court herein as a matter of first impression must establish that outgoing counsel has a right to a hearing on the issue of a retaining lien and that the court may set a security interest and an "interim charging lien." That lien would then be subject to a further hearing at the conclusion of the trial and after decision to determine the amount of a "final charging lien" that would attach to proceeds that is limited "to the extent that an equitable distribution award reflects the creation of a new fund by an attorney greater than the value of the interests already held by the client" (Charnow supra at 876). To hold otherwise would leave a party without recourse to obtain their file and in effect deprive a party of the ability to prosecute or defend an action for divorce.

Plaintiff's incoming counsel moves by order to show cause (motion seq. #15), dated August 31, 2017, for the following relief: 1) Directing Butterman & Kahn, LLP to deliver the file with respect to this action to plaintiff's new attorney; or in the alternative 2) Directing Butterman & Kahn, LLP to deliver a copy of the file with respect to this action to Plaintiff's new attorney; and 3) For such additional and different relief as to this court seems equitable just and fair. Plaintiff's former counsel submitted an affirmation in opposition on September 15, 2017. Defendant did not respond or take a position regarding this order to show cause.

Plaintiff's Contentions

Plaintiff contends that she retained the law firm of Butterman & Kahn, LLP "on or about August 2015" in connection with the above captioned matrimonial action. She avers that pursuant to this Court's March 6, 2017 decision and order, the Court directed defendant to pay "directly to Butterman & Kahn, LLP pendente lite counsel fees in the sum of $100,000.00 within 45 days of service of notice of entry." She asserts that the payment "was due by May 9, 2017" and "to date, defendant has not paid any portion of the pendente lite counsel award." At oral argument plaintiff's outgoing counsel asserted he has already secured a judgment against defendant directly for $100,000.00.

Plaintiff avers that "in or about July 2017" she received an invoice from Butterman & Kahn, LLP "reflecting a balance due in the approximate sum of $288,000.00." She contends that "as of the date of that invoice, I had already paid the firm a total sum of $95,000.00." She contends that her attorney "requested that I pay the balance due on his invoice or seek other representation."¹ She states that on July 28, 2017 she "substituted the law firm of Coffinas & Lusthaus, P.C." as the attorney of record on consent (annexed as exhibit A to the order to show cause).

Plaintiff asserts that incoming counsel, Meredith Lusthaus, Esq., sent a letter to outgoing counsel, Jay Butterman, Esq., on August 1, 2017 (annexed as exhibit B to the order to show cause) requesting the plaintiff's file in the above-captioned matrimonial matter. She avers that by letter dated August 3, 2017 (annexed as exhibit C to the order to show cause), Mr. Butterman "declined to turn over the file and asserted both a retaining lien and a charging lien." She then states that Ms. Lusthaus sent a letter to Mr. Butterman dated August 11, 2017 (annexed as exhibit D to the order to show cause) requesting "at least" a copy of the file, to which Mr. Butterman responded by letter dated August 14, 2017 (annexed as exhibit E to the order to show cause) in which he declined to provide a copy of the file to incoming counsel.

Plaintiff contends that "there has been extensive litigation in this case" and that the file "consists of numerous documents that cannot be reproduced from the Court file, such as documents and other evidence that I provided to Mr. Butterman, documents provided in response to numerous subpoena demands and discovery documents obtained from non-parties and out of state proceedings." She avers that "there will be a significant delay of the matrimonial proceedings if the file is held until resolution of the fee dispute" and that "without the file, or at least a copy of the file, my attorney will not be able to adequately represent my interests in the matrimonial action and in turn, I will be severely prejudiced."

Plaintiff contends that "the case law with respect to the assertion of a retaining lien does not support a former attorney's refusal to deliver a copy of the file." She also argued during oral argument on September 18, 2017 that "there are documents that were made part of the file that belong to the plaintiff directly that weren't necessarily work product. So, I would argue that at least those documents be made available, not only documents but other types of evidence which again was supplied directly by plaintiff and I would ask that those at least be made available to her pending a hearing."

Plaintiff's Former Counsel's Contentions

Mr. Butterman contends that "the file which plaintiff seeks turnover consists of 15 boxes, including massive amounts of work product, and numerous boxes of discovery material." He affirms that "the parties have heavily litigated custody, including emergency motions and proceedings, time consuming negotiations on the custody issues with opposing counsel and the children's attorney Susan Smith, numerous drafts of parenting plans, and addressing a myriad of requirements of both parties with regard to the children."² He argues that "the financial case required even greater effort [...] involving substantial assets."

Plaintiff's former counsel avers that he has "been completely transparent to the Court and plaintiff as to the amount of my fees throughout this litigation, and the difficulty of my firm was facing in the absence of payment." He argues that "I fully appreciate the difficult position plaintiff is placed in, but [...] I am unable to place my firm in a position of financial distress solely for the benefit of one case which required an enormous amount of effort and which produces no revenue." Plaintiff's former counsel contends that "plaintiff not only did not object to these efforts, but was either personally present for much of the work or in constant contact with me or my office by phone, text or email." He avers that "plaintiff consistently demanded specific work be done on her behalf, often in response to requests from me for payment" and "plaintiff made no objection when I referenced the sums due in Court and in papers."

Mr. Butterman contends that "as of my statement which runs through the end of June (exhibit A in counsel's opposition), the last bill sent before I was discharged, the total outstanding fees and disbursements due and owing amount to $278,591.12. Additional time and disbursements since June but prior to discharge amount to $288,841.25 (exhibit B in counsel's opposition)." Counsel then states he sent a "notice to charging lien in the amount of $288,792.65 (exhibit C in counsel's opposition)." Counsel acknowledges that "since July of 2015, when my firm was retained by [plaintiff], we have been paid a total of $95,250.00" (exhibit D in counsel's opposition) and "the last payment of fees was made on January 4, 2017."

Former counsel argues that "to turn over the file to plaintiff's new counsel until the issue of my retaining and charging liens are addressed by the Court would be to abandon many of the rights I retain with regard to payment of the fees due to my firm." He acknowledges that "there is an exception to this rule in cases of exigent circumstances" but contends that "plaintiff does not claim any exigent circumstances recognized under the law."³ Counsel contends that "the entire point of a retaining lien is to...