Levitt v. Brook, No. 11-1233 (2d Cir. 2012)
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Defendant appealed from a judgment of the district court granting plaintiff's motion to compel outstanding attorneys' fees owed to plaintiff by defendant in connection with plaintiff's representation of defendant in a federal criminal proceeding. The court held that ancillary jurisdiction existed over the fee dispute and that the district court did not abuse its discretion in exercising that jurisdiction. The court also held that defendant forfeited many of the issues he raised on appeal and the court found no merit in his arguments based on the Constitution. Therefore, the court affirmed the district court's judgment.
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11-1233-cv RICHARD WARE LEVITT, ESQ. V. DAVID H. BROOKS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT August Term, 2011 (Submitted: February 7, 2012 Decided: February 14, 2012) Docket No. 11-1233 RICHARD WARE LEVITT, ESQ., Plaintiff-Appellee, v. DAVID H. BROOKS, Defendant-Appellant. Before: PARKER, WESLEY, LOHIER, Circuit Judges. Appeal from a judgment of the United States District Court for the Eastern District of New York (Seybert, J.), entered on March 15, 2011, granting Plaintiff-Appellee s motion to compel Defendant-Appellant s payment of outstanding legal fees owed to Plaintiff-Appellee for representation he provided to Defendant-Appellant in a federal criminal proceeding. AFFIRMED. Page 1 of 13 1 2 3 4 5 6 7 8 9 10 11 ANDREW J. GOODMAN, Garvey Schubert Barer, New York, NY, for Plaintiff-Appellant DEAN M. SOLOMON (Richard Ware Levitt, on the brief), Levitt & Kaizer, New York, NY., for Defendant-Appellant. PER CURIAM: Appellant David H. Brooks appeals from a judgment of 12 the district court granting Richard Ware Levitt s motion to 13 compel outstanding attorneys fees owed to Levitt by Brooks 14 in connection with Levitt s representation of Brooks in a 15 federal criminal proceeding. 16 jurisdiction existed over the fee dispute and that the 17 district court did not abuse its discretion in exercising 18 that jurisdiction. 19 of the issues he raises on appeal by not raising them below, 20 and we find no merit in his arguments based on the 21 Constitution. 22 March 15, 2011 judgment. 23 24 We hold that ancillary We also hold that Brooks forfeited many We therefore affirm the district court s Background This appeal arises out of Brooks s retention of Levitt 25 to represent him in connection with charges of securities 26 fraud, insider trading, and other criminal offenses. 27 charges resulted in an eight-month jury trial, after which Page 2 of 13 These 1 Brooks was found guilty. 2 prior to the close of trial, Brooks stopped paying Levitt s 3 bills. 4 According to Levitt, at some point Eventually, Brooks owed Levitt $224,956.16. In September 2010, subsequent to the jury verdict, 5 Brooks moved for the release of certain restrained assets 6 that the government contended were subject to forfeiture. 7 In support of that motion, Brooks asserted that he had 8 depleted all funds available to pay for his ongoing 9 defense, that given the unexpected length of his trial, he 10 had outstanding bills of approximately $1.5 million, and 11 that he anticipated significant costs for the post-trial 12 forfeiture hearing and other proceedings. 13 schedule of outstanding invoices, Brooks acknowledged that 14 he owed Levitt $265,000. 15 alleging that when he informed Brooks that he would move to 16 withdraw if Brooks did not pay the outstanding fee, Brooks 17 became belligerent, and hissed or spit at [Levitt] and 18 screamed a vulgar remark. 19 Brooks s motion. 20 In an attached Levitt submitted an affidavit The district court denied Brooks failed to pay Levitt the money and hired two 21 attorneys to assist in his post-trial defense. 22 Levitt moved: (1) to withdraw as counsel, and (2) for a Page 3 of 13 As a result, 1 court order remitting to Levitt, from forfeited bail funds, 2 $224,956.16 to satisfy the unpaid fees. 3 for an accounting of how the bail funds previously released 4 to Brooks for litigation expenses were expended; or, 5 alternatively, that funds seized by the government for 6 forfeiture be released to him to satisfy his unpaid fees. 7 As a final alternative, Levitt asked that the district court 8 exercise its ancillary jurisdiction and enter an order 9 compelling Brooks to pay Levitt. 10 Brooks opposed Levitt s motion. Levitt also asked He did not, however, 11 contest the amount he owed Levitt. 12 Levitt s motion to compel payment was premature and 13 prejudicial to his interests. 14 arguments as defenses: (1) Brooks was not attempting to 15 evade his obligation to Levitt and had acknowledged his 16 debt to Levitt before th[e district c]ourt, and made every 17 attempt to satisfy it; (2) Levitt should not be permitted 18 to jump the line over Brooks s other legal creditors who 19 provided services in connection with his case, or those 20 attorneys and staff who were currently working in 21 anticipation of (or would work on) Brooks s upcoming 22 forfeiture proceedings, sentencing, and appeal; and (3) Instead, he argued that He asserted the following Page 4 of 13 1 Levitt s conduct, in revealing the vulgar remark, violated 2 Rule 1.6 of the New York Rules of Professional Conduct 3 concerning the confidentiality of information. 4 2011, the district court directed the district clerk to open 5 a new civil docket number concerning the fee dispute. 6 Shortly thereafter, pursuant to its ancillary jurisdiction, 7 the district court granted Levitt s motion to compel 8 payment. 9 10 In March Discussion On appeal, Brooks argues that: (1) the district court 11 erred by exercising ancillary jurisdiction over the fee 12 dispute; (2) the district court failed to abide by the 13 Federal Rules of Civil Procedure; (3) the lack of any 14 evidentiary hearing or trial violated his due process 15 rights; and (4) he was deprived of his right to a jury 16 trial. 17 ancillary jurisdiction was proper, that Brooks waived his 18 claims regarding the Federal Rules of Civil Procedure by not 19 raising those issues below, and that his Due Process and 20 jury trial claims are without merit. We find that the district court s exercise of 21 22 Page 5 of 13 1 I. The District Court s Exercise of Ancillary 2 Jurisdiction1 3 In this case, ancillary jurisdiction existed and the 4 district court did not abuse its discretion in exercising 5 that jurisdiction to resolve the fee dispute between Brooks 6 and Levitt. 7 in its discretion, exercise ancillary jurisdiction to hear 8 fee disputes . . . between litigants and their attorneys 9 when the dispute relates to the main action. It is well settled that a federal court may, Chesley v. 10 Union Carbide Corp., 927 F.2d 60, 64 (2d Cir. 1991) 11 (internal quotation marks and alteration omitted). 12 Ancillary jurisdiction over fee disputes is equally 13 available in criminal and civil cases. 14 443 F.3d 202, 207 (2d Cir. 2006). 15 Garcia v. Teitler, In Garcia, we explained that [a]t its heart, ancillary 16 jurisdiction is aimed at enabling a court to administer 17 justice within the scope of its jurisdiction and that 18 [w]ithout the power to deal with issues ancillary or 19 incidental to the main action, courts would be unable to 1 We review questions of a court s subject-matter jurisdiction de novo. See Bank Of India v. Trendi Sportswear, Inc., 239 F.3d 428, 436 (2d Cir. 2000). Once we determine that ancillary jurisdiction exists, we review a district court s exercise of that jurisdiction for abuse of discretion. See Joseph Brenner Assocs., Inc. v. Starmaker Entm t, Inc., 82 F.3d 55, 58 (2d Cir. 1996). Page 6 of 13 1 effectively dispose of the principal case nor do complete 2 justice in the premises. 3 marks omitted). 4 following an attorney s withdrawal after a Curcio hearing, 5 Garcia should not be viewed as limited to just that 6 situation. 7 defendant s right to choose his own counsel where, as here, 8 his criminal case is ongoing, and to avoid the possibility 9 of defendants becoming indigent and requiring the Id. at 208 (internal quotation Although Garcia dealt with a fee dispute Rather, we held that [i]n order to guarantee a 10 appointment of counsel, a district court must be able to 11 exercise ancillary jurisdiction to resolve a fee dispute. 12 Id. at 209; see also Novinger v. E.I. DuPont de Nemours & 13 Co., Inc., 809 F.2d 212, 217 (3d Cir. 1987). 14 the Third Circuit explained that even though attorneys fees 15 arrangements are primarily a matter of state law, the 16 federal forum has a vital interest in those arrangements 17 because they bear directly upon the ability of the court to 18 dispose of cases before it in a fair manner. 19 F.2d at 217. 20 In Novinger, Novinger, 802 Under Garcia, ancillary jurisdiction existed over the 21 fee dispute between Levitt and Brooks. 22 486 F.3d 753 (2d Cir. 2007), on which Appellant relies, is Page 7 of 13 Stein v. KPMG, LLP, 1 not to the contrary. 2 basis that Stein involved a contract dispute between 3 defendants and their non-party former employer. 4 61. 5 involved a non-party and explained that: Stein distinguished Garcia on the Id. at 760- In Stein, we emphasized the fact that the fee dispute 6 7 8 9 10 11 12 13 14 Id. at 761. 15 involved in the underlying action. 16 differs from Stein and is closer to Garcia. 17 Brooks put his legal fees in controversy by moving for 18 release of restrained assets for the purpose of paying his 19 legal bills. 20 ongoing (albeit post-trial), making defendant s legal fees 21 relevant to the district court s management of its case, 22 specifically its responsibility to ensure defendant does not 23 become indigent and that he has representation throughout 24 the proceedings. 25 appropriate because it enable[d the] court to function 26 successfully, that is, to manage its proceedings, vindicate While we do not exclude the possibility of a legitimate ancillary proceeding involving a nonparty to the primary litigation, we believe that the requisite compelling circumstances will be rare, as the need for such a proceeding generally will be far less pressing than in cases involving parties already before the court. Here, the parties to the fee dispute are both This case, therefore, Specifically, And the underlying proceedings remained Like Garcia, ancillary jurisdiction was Page 8 of 13 1 its authority, and effectuate its decrees. 2 (internal quotation marks omitted). 3 Id. at 760 Brooks claims that even if ancillary jurisdiction was 4 available, the district court abused its discretion in 5 deciding the fee dispute. 6 several non-exhaustive factors can weigh in favor of 7 exercising ancillary jurisdiction. 8 familiarity with the subject matter of the suit, especially 9 with the amount and quality of work performed by the We disagree. We have held that These include: (1) 10 attorneys; (2) a court s responsibility to protect officers 11 of the court in such matters as fee disputes; (3) the 12 convenience of the parties; and (4) judicial economy. 13 Cluett, Peabody & Co., Inc. v. CPC Acquisition Co., Inc., 14 863 F.2d 251, 256 (2d Cir. 1988). 15 present here and weighed in favor of the court s exercise of 16 ancillary jurisdiction. 17 proceedings, the district court was undoubtedly the most 18 familiar with the subject matter and the amount and quality 19 of work performed by Levitt. 20 fee dispute promoted judicial economy.2 All of these factors were Having presided over the criminal Thus, the court s deciding the 2 The court s Brooks s assertion that judicial economy weighed against exercising ancillary jurisdiction because Levitt had commenced a proceeding in state court against Brooks's brother as a guarantor of legal fees is unpersuasive. The district court's resolution of the dispute between Levitt and Brooks did not resolve any issues of liability relating to Brooks's brother, and no Page 9 of 13 1 responsibility to officers of the court was also implicated. 2 Moreover, before the court, Brooks acknowledged his debt to 3 Levitt while contesting that it should be paid from funds 4 held by the government. 5 Brooks asserts that Levitt s alleged violation of New 6 York s Rules of Professional Conduct made the district 7 court s exercise of ancillary jurisdiction an abuse of 8 discretion. 9 Furthermore, we disagree with Brooks s contention that We see no basis for such an argument. 10 Levitt violated the Rules of Professional conduct. 11 Matter of Priest v. Hennessy, 51 N.Y.2d 62, 69 (1980). 12 Priest the New York Court of Appeals held that [a] 13 communication concerning the fee to be paid has no direct 14 relevance to the legal advice to be given. 15 collateral matter which, unlike communications which relate 16 to the subject matter of the attorney s professional 17 employment, is not privileged. 18 the Rules of Professional Conduct protects information 19 broader than the attorney-client privilege, it only goes so 20 far as to protect information gained during or relating to 21 the representation of a client, N.Y. Rules of Prof l Id. See In It is a Although Rule 6.1 of judicial economy would have been gained by the court refusing to resolve the fee dispute before it. Page 10 of 13 1 Conduct R. 1.6(a), and Brooks s remark contained no material 2 information beyond the use of profanity directed at counsel. 3 We find no merit in Brooks s claim that ancillary 4 jurisdiction was improper, and we therefore affirm. 5 II. Application of the Federal Rules of Civil Procedure 6 Brooks contends that the district court failed to 7 comply with the Federal Rules of Civil Procedure in the 8 civil action because: (1) the court did not require the 9 filing of a complaint and service of process, (2) the 10 absence of any pleadings deprived Brooks of his ability to 11 assert affirmative defenses and counterclaims, and (3) the 12 court did not permit discovery. 13 of these arguments in opposition to Levitt s motion (which 14 expressly invoked the district court s ancillary 15 jurisdiction) or alert the district court to any potential 16 issues that warranted the need for discovery. 17 are forfeited. 18 498, 504 (2d Cir. 2006). 19 Brooks failed to raise any Thus, they See Bogle Assegai v. Connecticut, 470 F.3d To the extent Brooks asserts that the district court 20 never had jurisdiction over the fee dispute because there 21 was no filing and service of a complaint, this argument is 22 also forfeited because it relates to personal jurisdiction, Page 11 of 13 1 a waiveable defect, and Brooks failed to raise the issue 2 below. 3 183 F.3d 151, 154 (2d Cir. 1999); see also Miss. Pub. Corp. 4 v. Murphree, 326 U.S. 438, 444 45 (1946); In re DES Litig., 5 7 F.3d 20, 24 (2d Cir. 1993). 6 III. 7 See Credit Lyonnais Secs. (USA), Inc. v. Alcantara, Constitutional Arguments Brooks s argument that the district court violated his 8 due process rights is also without merit. 9 a sufficient opportunity to be heard, and in fact filed He was not denied 10 three responsive memoranda to Levitt s motion, none of which 11 requested (let alone established any need for) a hearing or 12 trial. 13 (2d Cir. 2007); cf. Rein v. Socialist People s Libyan Arab 14 Jamahiriya, 568 F.3d 345, 354 (2d Cir. 2009); In re Thirteen 15 Appeals Arising Out of San Juan Dupont Plaza Hotel Fire 16 Litig., 56 F.3d 295, 303 (1st Cir. 1995). 17 Brooks failed to contest the amount owed to Levitt or raise 18 any contested factual issues below. 19 facts to be tried; his asserted right to a jury trial was 20 not implicated. See United States v. Santiago, 495 F.3d 27, 29 30 21 22 Page 12 of 13 Furthermore, Thus, there were no 1 Conclusion 2 The district court s judgment of March 15, 2011, 3 granting Plaintiff-Appellee s motion to compel Defendant- 4 Appellant payment of outstanding legal fees owed to 5 Plaintiff-Appellee is hereby AFFIRMED. Page 13 of 13
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