Robinson v. Garrett

• Decision Date: 01 July 2010
• Docket Number: No. 08 Civ. 2965(PKL).,08 Civ. 2965(PKL).
• Parties: LIDDLE & ROBINSON, LLP, Plaintiff, v. Robert Y. GARRETT, IV and Jay F. Luby, Defendants.
• Court: U.S. District Court — Southern District of New York

720 F.Supp.2d 417

LIDDLE & ROBINSON, LLP, Plaintiff,

v.Robert Y. GARRETT, IV and Jay F. Luby, Defendants.

No. 08 Civ. 2965(PKL).

United States District Court,S.D. New York.

July 1, 2010.

James A. Batson, Liddle & Robinson, LLP, New York, NY, for Plaintiff.

Thomas M. Mullaney, Law Offices of Thomas M. Mullaney, New York, NY, for Defendants.

OPINION AND ORDER

LEISURE, District Judge:

This is a diversity action for quantum meruit, breach of contract, and account stated. Defendants, Robert Y. Garrett, IV (“Garrett”) and Jay F. Luby (“Luby”) move pursuant to Federal Rule of Civil Procedure (“Rule”) 12(b)(6) to dismiss plaintiff's, Liddle & Robinson, LLP's (“Liddle”), Amended Complaint in its entirety. For the reasons stated below, defendants' motion to dismiss plaintiff's Amended Complaint is DENIED IN PART and GRANTED IN PART.

BACKGROUND

I. The Parties' Retainer Agreements

The following facts are taken from the pleadings and do not constitute the findings of the Court. Liddle, a limited liability partnership engaged in the practice of law, maintains its place of business in New York. (Am. Compl. ¶ 1.) Garrett resides in New Jersey and Luby resides in Massachusetts. ( Id. ¶¶ 2-3.)

Liddle began representing Garrett and Luby in August 2001 in connection with an employment-related dispute. ( Id. ¶ 4.) On September 10, 2001, Luby signed a written agreement, dated September 6, 2001, with Liddle (“Luby Agreement”). ( Id. ¶ 5 & Ex. A.) Pursuant to the Agreement, Luby agreed to pay Liddle an hourly fee for the first $20,000 of billing and 75% of Liddle's hourly rates thereafter, with a cap of $48,000 on hourly fees if Liddle commenced an arbitration or litigation on Luby's behalf. ( Id. ¶ 6 & Ex. A at 1.) The Luby Agreement also contained a contingency fee provision in the event that Liddle “achieve[s] a recovery on [Luby's] behalf, whether by way of settlement, award, judgment, verdict or otherwise.” ( Id. Ex. A at 1.) On November 16, 2001, Luby signed a written supplemental agreement (“Luby Supplemental Agreement”), agreeing to pay Liddle “10% of all recovery ... recovered before the commencement of an arbitration or other litigation” but the total of this contingency fee plus Liddle's fees under the Luby Agreement “shall not exceed 15% of the recovery.” ( Id. ¶¶ 9-10 & Ex. C.)

On September 11, 2001, Garrett signed a written agreement, dated September 6, 2001, with Liddle (“Garrett Agreement”). ( Id. ¶ 7 & Ex. B.) Pursuant to the Agreement, Garrett agreed to pay Liddle its hourly fee for the first $30,000 of billing and at 75% of Liddle's hourly rates thereafter, with a cap of $72,000 on hourly fees if Liddle commenced an arbitration or litigation on Garrett's behalf. ( Id. ¶ 8 & Ex. B at 1.) The Garrett Agreement also contained a contingency fee provision in the event that Liddle “achieve[s] a recovery on [Garrett's] behalf, whether by way of settlement, award, judgment, verdict or otherwise.” ( Id. Ex. B at 1.) On November 23, 2001, Garrett signed a written supplemental agreement (“Garrett Supplemental Agreement”), agreeing to pay Liddle “10% of all recovery ... recovered before the commencement of an arbitration or other litigation” but the total of this contingency fee plus Liddle's fees under the Garrett Agreement “shall not exceed 15% of the recovery.” ( Id. ¶¶ 11-12 & Ex. D.)

Pursuant to these agreements, Liddle “rendered extensive legal services” on Luby's and Garrett's behalf, “including, among other things, representing defendants in a mediation, performing legal research and drafting a statement of claim to commence an arbitration.” ( Id. ¶ 13.) Liddle mailed legal bills to Luby on September 30, 2001, October 3, 2001, November 14, 2001, December 10, 2001, and January 10, 2002, for a total of $21,419.50 ($19,554.10 in fees and $1865.40 in expenses). ( Id. ¶ 14.) Luby paid these bills in full without questioning or challenging them. ( Id. ¶ 15.) Liddle mailed legal bills to Garrett on September 19, 2001, October 2, 2001, November 8, 2001, December 10, 2001, and January 10, 2002, for a total of $22,057.18 ($20,158.85 in fees and $1898.33 in expenses). ( Id. ¶ 16.) Garrett made no payments towards these bills, but neither questioned nor challenged them. ( Id. ¶ 17.)

On February 2, 2002, Luby and Garrett met with attorneys from Liddle at Liddle's offices. ( Id. ¶ 18.) During this meeting, Luby and Garrett purportedly “terminated or constructively terminated” Liddle's representation of them. ( Id. ¶ 19.) By letter dated February 8, 2002, Liddle informed Luby and Garrett that they still were responsible for the attorneys' fees under their agreements and that Liddle still was entitled to receive a percentage of any amounts recovered. ( Id. ¶ 20 & Ex. E.)

On February 8, 2002, Liddle mailed a bill to Luby for an additional $13,704.55 in fees and $533.95 in expenses, for a total outstanding balance of $14,238.50. ( Id. ¶ 22.) On March 7, 2002, Liddle sent Luby an adjusted bill reflecting additional expenses and a refund of certain expenses, reducing Luby's total balance to $13,687.72. ( Id. ¶ 24.) Liddle's legal services for Luby, therefore, totaled $33,258.65 in fees and $1848.57 in expenses, for a grand total of $35,107.22, of which Luby's outstanding balance was $13,687.72. ( Id.)

On February 8, 2002, Liddle mailed a bill to Garrett for an additional $16,893.89 in fees and $533.96 in expenses, for a total outstanding balance of $39,485.03. ( Id. ¶ 21.) On March 6, 2002, Liddle sent Garrett an adjusted bill reflecting additional expenses and a refund of certain expenses, reducing Garrett's total balance to $38,934.26. ( Id. ¶ 23.) Liddle's legal services for Garrett, therefore, totaled $37,052.74 in fees and $1881.52 in expenses, for a grand total of $38,934.26, of which Garrett “never paid anything.” ( Id.)

Liddle believes that in or about July 2002, Luby and Garrett “settled their dispute and were paid substantial sums.” ( Id. ¶ 25.) Following their purported settlement, neither Luby nor Garrett paid Liddle any additional fees or expenses and have failed or refused to pay Liddle for services rendered despite their written agreements and Liddle's demand for payment. ( Id. ¶¶ 26-27.)

On May 22, 2008, Liddle filed an Amended Complaint, alleging quantum meruit, breach of contract, and account stated against each defendant. ( Id. ¶¶ 28-42.) Liddle attaches to its Amended Complaint five exhibits-Exhibit A, the Luby Agreement; Exhibit B, the Garrett Agreement; Exhibit C, the Luby Supplemental Agreement; Exhibit D, the Garrett Supplemental Agreement; and Exhibit E, the February 8, 2002 letter from Liddle to Luby and Garrett discussing Luby's and Garrett's responsibility for Liddle's attorneys' fees. ¹ Liddle seeks damages against Luby in the amount of $13,687.72, as well as the amount of contingency fees under the Luby Agreement and Supplemental Agreement. ( Id. ¶¶ 31, 35, 40-41.) Liddle seeks damages against Garrett in the amount of $38,934.26, as well as the amount of contingency fees under the Garrett Agreement and Supplemental Agreement. ( Id. ¶¶ 29, 33, 37-38.)

II. The Instant Motion to Dismiss

Luby and Garrett move to dismiss Liddle's Amended Complaint for failure to state a claim pursuant to Rule 12(b)(6). ( See Defs.' Mem. of Law in Supp. of Their Mot. to Dismiss Pl.'s Am. Compl. (“Defs.' Mem.”) 1.) Luby and Garrett contend that the Amended Complaint should be dismissed as a matter of law because “Jeffrey L. Liddle, a name[d] partner in the Plaintiff firm ... abruptly terminated his firm's attorney-client relationship with Defendants.” ( Id. 1.) Luby and Garrett further argue that “even if [Liddle] had pled that it was terminated by Defendants without cause, [Liddle] still could not maintain its causes of action for breach of contract and account stated ... [because] New York law permits exclusively a quantum meruit claim in a plenary action for the recovery of attorneys' fees.” ( Id. (emphasis in original).)

DISCUSSION

The Court first addresses the standard for a motion to dismiss under Rule 12(b)(6). Next, the Court analyzes whether the Amended Complaint properly states a claim for quantum meruit, breach of contract, and account stated under New York law.

I. Rule 12(b)(6)

Luby and Garrett move to dismiss Liddle's Amended Complaint for failure to state a claim upon which relief can be granted. ( Id.) On a motion to dismiss, the Court considers “all ‘well-pleaded factual allegations' to be true, [to] ‘determine whether they plausibly give rise to an entitlement to relief.’ ” Selevan v. N.Y. Thruway Auth., 584 F.3d 82, 88 (2d Cir.2009) (quoting Ashcroft v. Iqbal, --- U.S. ----, 129 S.Ct. 1937, 1950, 173 L.Ed.2d 868 (2009)). In Iqbal, the Supreme Court set out a two-pronged analysis to determine whether pleadings meet this plausibility standard. First, a court “can choose to begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth.” Iqbal, 129 S.Ct. at 1950; see also United States v. Lloyds TSB Bank PLC, 639 F.Supp.2d 326, 338-39 (S.D.N.Y.2009) (same). “While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations.” Iqbal, 129 S.Ct. at 1950. Second, “[w]hen there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.” Id.; see also Lloyds TSB, 639 F.Supp.2d at 339 (same). “Determining whether a complaint states a plausible claim for relief will ... be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Iqbal, 129 S.Ct. at 1950; S. Cherry St., LLC v. Hennessee Group LLC, 573 F.3d 98, 110 (2d Cir.2009) (Kearse, J.) (same).

Where a complaint fails to plead a plausible claim for relief, a Court may grant leave to amend. See Fed.R.Civ.P. 15(a)(2) (“The court should freely give leave [to amend] when justice so...