Lieb at Law, P.C. v. Lodato, Index No. CV-2154-19/SM

CourtNew York District Court
Writing for the CourtJames F. Matthews, J.
Citation73 Misc.3d 1219 (A),155 N.Y.S.3d 304 (Table)
Parties LIEB AT LAW, P.C., Plaintiff, v. Susan LODATO and Gilla Rosswaag, Defendants
Docket NumberIndex No. CV-2154-19/SM
Decision Date28 October 2021

73 Misc.3d 1219 (A)
155 N.Y.S.3d 304 (Table)

LIEB AT LAW, P.C., Plaintiff,
Susan LODATO and Gilla Rosswaag, Defendants

Index No. CV-2154-19/SM

District Court, New York, Suffolk County, Fourth District.

Decided on October 28, 2021

James F. Matthews, J.

Upon the following papers numbered 1 to 40 read on this motion by plaintiff for summary judgment pursuant to CPLR 3212 and for dismissal of counterclaims by Notice of Motion/Order to Show Cause and supporting papers 1-3,16 ; Notice of Cross Motion and supporting papers; Answering Affidavits and supporting papers 17-9,34,35,36 ; Replying Affidavits and supporting papers 37,38,39,40 ; Filed papers; Other exhibits: 4-15,20-33 ; (and after hearing counsel in support of and opposed to the motion), it is

ORDERED that the motion by plaintiff for summary judgment pursuant to CPLR 3212, is denied, as there are material issues of fact which must be determined at a trial (see Alvarez v Prospect Hospital , 68 NY2d 320,324 [1986] ; Winegrad v New York Univ. Med. Ctr. , 64 NY2d 851,853 [1985] ; Zuckerman v City of New York , 49 NY2d 557,562 [1980] ); and it is further

ORDERED that the part of plaintiff's motion seeking to dismiss defendants’ first counterclaim (and sixth defense) alleging legal malpractice, as being time-barred by the three-year statute of limitations, is granted, except to the extent that the first counterclaim seeks to offset as a shield for equitable recoupment purposes, a sum equal to an award of legal fees to the plaintiff, and not to the extent that it seeks affirmative relief, which is time-barred. The counterclaim alleging legal malpractice relates to the plaintiff's performance under the same retainer agreement pursuant to which the plaintiff would recover and therefore this counterclaim falls within the permissive ambit of CPLR 203(d) ; and it is further

ORDERED that the part of plaintiff's motion seeking to dismiss defendants’ second counterclaim alleging breach of contract, is granted. The counterclaim of breach of contract is duplicative of the counterclaim alleging legal malpractice and does not allege distinct damages; and it is further

ORDERED that the part of plaintiff's motion seeking to dismiss defendants’ third counterclaim alleging breach of fiduciary duty owed to defendants, is granted. The counterclaim arises from the same facts as the legal malpractice counterclaim and does not allege separate and distinct damages from those caused by the alleged malpractice; and it is further

ORDERED that the issue raised by plaintiff in its reply papers, that defendants’ opposition papers were one day late and should not be considered by the Court, is denied. Plaintiff has failed to demonstrate the accrual of prejudice for the one day of tardiness, which under the circumstances appears to be inadvertent.

Plaintiff law firm seeks recovery for past due legal fees in the sum of $10,405.00, with statutory interest from 11/04/2016, allegedly earned pursuant to a signed written retainer agreement dated 11/05/2015 (hereinafter "retainer agreement"), which included legal representation "to perform due diligence regarding an anticipated appeal concerning a Surrogate Court matter under Index No. 382P2008/C and representation concerning said appeal should it ensue," and a signed supplemental retainer agreement dated 12/10/2015 (hereinafter "supplemental agreement" and collectively referred to as "retainer agreements"), which expanded "the scope of representation to include pending litigation under Index No. 611065/2015" in the Supreme Court, Suffolk County.

Payments were to be made by defendants (Susan Lodato, who is 81 years of age and Gilla Rosswaag, who is 87 years of age, as of 06/02/2021), pursuant to invoice, and a last payment was made on 05/05/2016 in the sum of $16,750.00, leaving an unpaid balance of $10,405.00. However, on September 15, 2016, defendants discharged plaintiff, purportedly for good cause, from any further legal representation in the case before the Supreme Court, Suffolk County, captioned as Nannette Stanya v Susan Lodato and Gilla Rosswaag , under Index No. 611065/2015 (Garguilo, J., hereinafter "Supreme Court action"), the matter referred to in the supplemental agreement. The discharge was claimed to be "due to poor legal advice, substandard services performed and lack of communication by plaintiff." Plaintiff law firm was substituted and replaced by The Law Offices of David P. Fallon, PLLC., with a duly executed Consent to Change Attorney form dated 09/15/2016 (also the attorney of record for the instant matter).

At the same time, plaintiff law firm asserted a retaining lien on its legal file, pursuant to Judiciary Law § 475 for defendants’ unpaid balance for legal fees of $10,405.00. Defendants incoming counsel responded with a suggestion to plaintiff law firm that it return its file without seeking additional legal fees and stated that defendants "dispute the bills sent and demand a refund of the monies previously paid."

The Supreme Court matter was ultimately settled on 12/06/2016, by "So Ordered" Stipulation (Garguilo, J.), which, inter alia , withdrew the motion and cross-motion for summary judgment, and by Stipulation of Settlement of the same date (Garguilo, J.), which settled the lawsuit with defendants’ agreement to purchase Stanya's 1/3 interest in the real property pursuant to a delineated price and schedule of payments.

On 10/04/2016 plaintiff served defendants with a Right to Arbitrate Fee Dispute Notice, pursuant to Part 137 of the Rules of the Chief Administrator, Title 22 of the Official Compilation of Codes, Rules and Regulations of the State of New York and the Standards and Guidelines as of 10/03/2001, as amended 01/31/2014, which offer for binding arbitration was not utilized by defendants within the 30 days allowed under the arbitrationrules.


In excess of three years later, plaintiff commenced the instant lawsuit in District Court dated 11/25/2019, against defendants Lodato and Rosswaag (collectively "defendants"), for actions alleging breach of contract, unjust enrichment, quantum meruit, and an account stated, demanding judgment in the sum of $10,405.00 for its unpaid invoices for legal services rendered, together with statutory interest from 11/04/2016.

After a consent adjournment, defendants filed a Verified Answer dated 03/13/2020, which denied the allegations, and alleged a first counterclaim for legal malpractice, noting although plaintiff waited over 3 years before filing the instant claims to allow expiration of the 3 year statute of limitations, defendants are seeking to offset as a shield for equitable recoupment purposes, a sum equal to any damages asserted by plaintiff for legal fees, pursuant to CPLR 203(d) ; a second counterclaim for breach of contract to perform legal services under the retainer agreements; and a third counterclaim for breach of fiduciary duty owed to defendants by plaintiff. Defendants demand damages for the full refund of the legal fees paid to plaintiff (disgorgement of legal fees), as well as dismissal of plaintiff's complaint.


Plaintiff now moves for summary judgment in its favor, for unpaid attorney fees in the sum of $10,405.00, together with statutory interest from 11/04/2016, and also seeks to dismiss defendants counterclaims. In support of the motion, Dennis C. Valet, Esq.("Valet") asserts in his affirmation that defendants "made multiple payments pursuant to the retainer agreement," and "readily admit that they did not pay the invoice presented by plaintiff [for the unpaid sum of $10,405.00]." Valet asserts that "plaintiff was diligent in their representation of defendants, offering competent legal advice and representation." Valet also asserts that the factual allegations of defendants do not amount to a discharge for cause, but consist of dissatisfaction with reasonable strategic choices made by plaintiff regarding litigation. He contends that plaintiff made certain strategic decisions which were "made only to rebut the allegations in the underlying action," and "defendants cannot show how the arguments actually harmed them in the action, making only conclusory statements that they were forced to settle" (which is "something they wanted to do all along"). Valet also contends the settlement demand obtained by plaintiff after the filing of those particular arguments, was more favorable than the settlement amount ultimately agreed upon by defendants "and their present counsel" after indicating his "displeasure with plaintiff's legal strategy."

Valet further contends that the counterclaim asserted by defendants for legal malpractice is barred by the 3 year statute of limitations, and that 2 of the 3 counterclaims should be dismissed as being duplicative of the legal malpractice claim, as not alleging facts or damages which are unique and distinct from the claim for legal malpractice. However, Valet acknowledges that CPLR 203[d] does permit an equitable recoupment for an untimely statute of limitations counterclaim, to the extent that the counterclaim arose out of the same transaction, but it may only be used as a...

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