Smith v. Boscov's Dept. Store

• Decision Date: 22 April 1993
• Citation: 596 N.Y.S.2d 575,192 A.D.2d 949
• Parties: Minerva SMITH, Appellant, v. BOSCOV'S DEPARTMENT STORE, Respondent.
• Court: New York Supreme Court — Appellate Division

Page 575

596 N.Y.S.2d 575

192 A.D.2d 949

Minerva SMITH, Appellant, v. BOSCOV'S DEPARTMENT STORE, Respondent.

Supreme Court, Appellate Division Third Department.

April 22, 1993.

Frederick J. Meagher Jr., Binghamton, for appellant.

Scott C. Gottlieb, Binghamton, for respondent.

Before MIKOLL, J.P., and YESAWICH, MERCURE, CREW and HARVEY, JJ.

HARVEY, Justice.

Appeal from an order of the Supreme Court (Smyk, J.), entered April 6, 1992 in Broome County, which, inter alia, determined the amount of counsel fees owed by plaintiff to defendant.

Plaintiff sustained injuries when she slipped and fell at defendant's department store in Broome County. On November 14, 1990, plaintiff retained attorney Scott Gottlieb to represent her in connection with this case. At the time plaintiff contacted Gottlieb, she had already received an offer to settle from defendant's insurance carrier for approximately $29,000. Plaintiff entered into a retainer agreement with Gottlieb that provided, inter alia, that if the ultimate net recovery of the claim exceeded $31,644.09, then Gottlieb would be entitled to one third of the net recovery. Thereafter, Gottlieb began negotiations with defendant's insurance carrier that resulted in an offer of $45,000 to settle the claim. Gottlieb informed claimant of the offer but she apparently never got back to him about it. Instead, she discharged Gottlieb and retained the services of attorney William Palella.

Gottlieb ultimately forwarded plaintiff's file to Palella but he also informed Palella, by certified mail, that he was claiming one third of the rejected settlement offer of $45,000 as his attorney's lien with adjustments for disbursements. This amounted to $15,046.09. In October 1991, Palella informed Gottlieb that plaintiff's case had been settled for $90,000 and that a check from the insurance carrier in the full amount of Gottlieb's claimed lien was made out to both plaintiff and Gottlieb as payees. Plaintiff, however, refused to endorse the check. Plaintiff then brought this motion requesting a hearing to fix the amount of counsel fees due Gottlieb. After oral argument, Supreme Court determined that Gottlieb was entitled to the $15,040.09 and this appeal by plaintiff followed.

Plaintiff principally argues that Supreme Court erred in summarily fixing Gottlieb's fee without a hearing as to the reasonable value of the services he performed for her. We must agree with this contention. In New York, "[w]hen a client discharges an attorney without cause, the attorney is entitled to recover compensation from the client measured by the fair and reasonable value of the services rendered whether that be more or less than the amount provided in the contract or retainer agreement" (Lai Ling Cheng v. Modansky Leasing Co., 73 N.Y.2d 454, 457-458, 541 N.Y.S.2d 742, 539 N.E.2d 570; see, Matter of Montgomery, 272 N.Y. 323, 326-327, 6 N.E.2d 40). Recovery on a quantum meruit basis is called for even where the attorney discharged without fault was employed under a contingent fee contract (see, 7 N.Y.Jur.2d, Attorneys at Law, § 150, at 52). ¹ Simply awarding one third of a rejected settlement offer is not permissible (see, DeSalvatore v. Lavigne, 143 A.D.2d 513, 514, 533 N.Y.S.2d 41). The lien must still be determined on a quantum meruit basis (see, Matter of Shaad [Peck ], 59 A.D.2d 1061, 399 N.Y.S.2d 822). Therefore, while the terms of the percentage agreement is one factor that may be taken into account in determining the value of the services rendered, it is not to be considered the dispositive factor (see, 7 N.Y.Jur.2d, Attorneys at Law, § 150, at 54; see also, Annot,92 A.L.R.3d 690, § 3). Other factors, such as the nature of the...