Mahl v Rand

[*1] Mahl v Rand 2006 NY Slip Op 50518(U) [11 Misc 3d 1072(A)] Decided on March 30, 2006 Civil Court, New York County Lebedeff, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on March 30, 2006
Civil Court, New York County

Olga Berde Mahl, Esq., Plaintiff,

against

Julia Ayzman Rand, Defendant.



47978 CVN 2005



Brian J. Oberman, Esq., New York, New York (Stephanie J. Blumstein, Esq., of counsel) for plaintiff. Julia Ayzman Rand, defendant pro se.

Diane A. Lebedeff, J.

This litigation springs from an attorney fee dispute arbitration conducted under the Unified Court System's Attorney-Client Fee Dispute Resolution Program (22 N.Y.C.R.R. § 137.0, et seq.).[FN1] It places before the court the currently unresolved procedural issue of, where the [*2]arbitration award is in an amount within a lower court's limited monetary subject matter jurisdiction, what pleading is to be used by a party dissatisfied with the arbitration award to secure the trial de novo guaranteed by court rule.

The need to identify a cognizable pleading is the critical factor upon which this case turns. Although this decision sets forth no global solution, this court holds that, for the purposes of the New York City Civil Court, a petition to vacate the arbitration award as a matter of right which therein asserts entitlement to a trial de novo is a pleading which may be utilized by a party aggrieved by an attorney fee dispute arbitration award in a dollar amount within the court's monetary jurisdiction.

In this instance, the named parties (hereafter, respectively, "attorney" and "client") proceeded through the fee dispute arbitration program of a local bar association, which concluded with an arbitrator's award of approximately $4,000 in favor of the attorney. Shortly thereafter, the client repeatedly visited and communicated with various clerks in the Civil Court of New York City and attempted to commence a proceeding for a trial de novo. Each time, the client was told politely that the Civil Court had no known procedure for commencing an action with a demand for a trial de novo and the client was not advised of what course of action to pursue, as was confirmed by a supervising clerk on the record herein. Thereafter, the attorney commenced this action to request confirmation of the arbitration award (CPLR 7510).

As to the right to a trial de novo, a party who arbitrates a disputed legal fee under the court rules has an absolute right to have the matter litigated anew post-arbitration, so long as the request for review is timely (22 N.Y.C.R.R. §137.8 [a], "a party aggrieved by the arbitration award may commence an action in a court of competent jurisdiction within 30 days after the arbitration award has been mailed"; 22 N.Y.C.R.R. § 137.2 [a], arbitration award is "final and binding unless de novo review is sought as provided in section 137.8"). As to the court forum to be utilized, the language of the court rule referencing a "court of competent jurisdiction" is expanded upon by a supplementary directive that the aggrieved party "may commence an action on the merits of the fee dispute in a court with jurisdiction over the amount in dispute within 30 days after the arbitration award has been mailed" (Standards and Guidelines promulgated by the Board of Governors of the New York State Attorney-Client Fee Dispute Resolution Program, section 12; emphasis added).

The specific issue raised here how to secure a trial de novo in a court of limited jurisdiction following an attorney fee dispute arbitration award has been met with varying responses. At least one City Court permits the filing of a simple demand for a trial de novo, which is seen as consistent with the arbitration program's goal of a creating a simple and easily accessible method of resolving attorney fee disputes (Borgus v. Marianetti, 7 Misc 3d 1003 [A], 2005 WL 742300, 2005 NY Slip Op. 50420 [U] [City Ct. Rochester 2005, Yacknin, J.], discussing policies underlying the program and referencing bar association support for a simplified review methodology). However, for the purposes of the Civil Court, months after this client's inquiries, clerks were advised that litigants in the position of this client should be referred to the Supreme Court to commence a declaratory judgment action.[FN2] [*3]

On the unique facts present, this client has demonstrated timely concrete and confirmed efforts to obtain the judicial trial de novo provided for in the attorney fee dispute arbitration rules, in specific compliance with the applicable rules directing that she proceed to seek relief in a court with monetary jurisdiction over the arbitration award, without receiving alternate directions sufficient to allow preservation of the otherwise unqualified right to a de novo review.[FN3] Because the response she received impeded her access to judicial relief, further relief is warranted.

A careful review of the available remedies leads the court to conclude it is appropriate to deem the client's showing to be a cross petition to vacate the arbitration award and, in light of the established facts, grant such cross petition and order that the legal fees claim of the attorney proceed as a plenary action. This result is consistent with precedent holding that a party with a right to a post-arbitration trial de novo may utilize a petition to vacate the award as a matter of right as its initial pleading to place the dispute to court.

A similar procedural situation was posed in Greenberg v. Ryder Truck Rental, Inc., 110 AD2d 585 (1st Dept. 1985), by a litigant who presented a petition to vacate a no-fault arbitration award as a matter of right and requested de novo review under Insurance Law Section 675 (2), which provides that, on certain claims, "the insurer or the claimant may institute an action in a court of competent jurisdiction to adjudicate the dispute de novo" (see also 70A NY Jur.2d Insurance § 1811, Judicial Review De Novo of Master Arbitrator's Award [2006]). Holding essentially that the petitioner utilized a permissible procedure, the appellate court in Greenberg v. Ryder Truck Rental, Inc., supra, concluded that the trial court should have granted the petition to vacate and permitted the matter to proceed to a trial de novo as a plenary action.[FN4] [*4]

The result reached was found mandated by CPLR 103 (c), which states that "If a court has obtained jurisdiction over the parties, a civil judicial proceeding shall not be dismissed solely because it is not brought in the proper form, but the court shall make whatever order is required for its proper prosecution." With strong language, the Appellate Division explained as follows: "The McLaughlin Practice Commentaries ... note that dismissal of an action or special proceeding simply because it is brought in the wrong form is forbidden.' Rather, once jurisdiction is acquired, the court will retain it and direct that the action or proceeding continue in its appropriate form. Accordingly, the CPLR, in favoring substance over form, provides for the conversion of actions or proceedings into their proper form. * * * * Therefore, the court below erred in not converting the notice of petition and petition into a summons and complaint and in not reviewing the case on its merits." (110 AD2d at 586-587; citations omitted; emphasis added.)

Additional support exists for this type of consolidated procedure, supporting vacating an arbitration award and then permitting the parties to move forward with plenary claims in the same action. CPLR 7502 (a)(iii), added by chapter 226 of the Laws of 2000, now provides that "Notwithstanding the entry of judgment [on an application relating to an arbitrable controversy], all subsequent applications shall be made by motion in the special proceeding or action in which the first application was made." The Court of Appeals, in In re Gleason (Michael Vee, Ltd.), 96 NY2d 117, 122 (2001), described this provision as "mandatory."

In light of the above authorities, the court is satisfied that the aggrieved client here was entitled to petition the Civil Court to vacate, as a matter of right, the legal fee dispute arbitration award as a predicate step to obtaining a de novo review. The Civil Court will have no difficulty dealing with the a demand for a trial de novo because, as an available procedure in the court's entirely distinct in-house program of arbitration of certain pending civil cases, demands for trials de novo have been interposed for decades on a daily basis (22 N.Y.C.R.R. Part 28, Alternative Method of Dispute Resolution by Arbitration; see 22 N.Y.C.R.R. § 28.12 [a], as to demand for trial de novo; see, summarizing experience with program from its 1979 inception through 1991, Michael Bruno and Joseph L. Latwin, Mandatory Arbitration of Civil Cases, 18 Westchester B.J. 113 [1991]).

As to the exact relief granted herein, the deemed cross petition to vacate the arbitration [*5]award is granted and the request to confirm such award denied and, from this point forward, this matter not pleaded as a special proceeding shall continue as a plenary action (Matter of Greenberg, 70 NY2d 573, 577 [1987], in a trial de novo under no-fault provisions, "the entire dispute is subject to a plenary judicial adjudication', [which is] something very different from judicial review of some other entity's determination"). The client has indicated agreement to proceed to a trial de novo.

Consistent with the court's treatment of the client's papers as seeking relief available in a special proceeding under CPLR Article 4, the court directs that, should the attorney wish to proceed upon the claim for legal fees, the attorney shall supplement the record by serving and filing a copy of the legal fee bills at issue (see CPLR 409) and thereafter file a note of trial expeditiously in order that the triable issues of fact may be "tried forthwith" (CPLR 410). The court directs the filing of the claim for legal fees by the attorney in order to avoid placing upon a client the burden of pleading the opposing party's attorney fee claim, which accords with the principle that the burden of proof on the disputed legal fee is always borne by the attorney (22 N.Y.C.R.R. § 137.7 [d], "the burden shall be on the attorney to prove the reasonableness of the fee by a preponderance of the evidence and to present documentation of the work performed and the billing history"; Borgus v. Marianetti, supra, 2005 WL 742300 at *1). In future petitions to vacate fee dispute arbitration awards as a matter of right, it would produce procedural symmetry if any request for a legal fee were either (1) included in the petition, if the attorney is petitioner, or (2) raised in the attorney's answer, if the client is petitioner.

The triable issue here will be "the reasonableness of fees for professional services, including costs, taking into account all relevant facts and circumstances" (22 N.Y.C.R.R. § 137.0). In the evaluation of the reasonableness of the legal fee, the court shall consider all the usual factors bearing upon attorney fees, including the nature and extent of the services, the actual time spent, the necessity therefore, the nature of the issues involved, the professional standing of the attorney and those providing services, and the results achieved (Jordan v. Freeman, 40 AD2d 656 [1st Dept. 1972]; 7 N.Y.Jur.2d Attorneys at Law § 202, Control by Court [2006]).

In closing, the court observes that the Office of Alternative Dispute Resolution Programs is entirely correct that a declaratory judgment action may be utilized to obtain a trial de novo following a legal fee dispute arbitration award and emphasizes that such Office was not presented with the fact pattern present here, which would have brought to the fore consideration of a petition to vacate an arbitration award as a pleading mechanism available in either the Civil Court or District Courts. It is also noted that the result reached here is fully consistent with the directive of the Board of Governors of the New York State Attorney-Client Fee Dispute Resolution Program that such claims should be presented to the lower courts, from which it is assumed that their goal was to avoid placing upon litigants the difficulty of drafting a complex judgment pleading, to lessen the exposure of both sides to increased fees and complications, and to obviate the possibility of delays flowing from Supreme Court remands of this category of cases to lower courts with monetary jurisdiction over the disputed fee as permitted by Appellate Division rules authorizing such transfers pursuant to CPLR 325 (d). It may well be that the Board of Governors will proceed to develop other specific directives or proposed court rules to [*6]create a uniform pleading which may be utilized in all lower courts.[FN5]

Either party may serve a copy of this order upon the appropriate clerk, who shall issue a judgment vacating the arbitration award upon the presentation of appropriate papers. The parties shall thereafter proceed as directed above.

This decision constitutes the order of the court.

Dated: March 30, 2006

_________________________

J.C.C.

Footnotes

Footnote 1: The New York court system's program for arbitration of attorney-client fee disputes is applicable to almost all civil matter attorney fee disputes ranging between $1,000 and $50,000 (22 N.Y.C.R.R. Part 137, eff. Jan. 1, 2002), with an absolute right to a judicial trial de novo if timely demanded (22 N.Y.C.R.R. § 137.8 [a]). Attorneys are obligated to co-operate with the arbitration program (Disciplinary Rule 2-106 [e] of the Code of Professional Responsibility, appearing at 22 N.Y.C.R.R. § 1200.11 [e], requiring lawyers to resolve fee disputes by arbitration, and 22 N.Y.C.R.R. § 1215.1 [b][3], written letters of engagement to include reference to fee dispute arbitration; see also, 22 N.Y.C.R.R. § 1400.1, et seq., as to domestic relation cases and, generally, Norman B. Arnoff and Sue C. Jacobs, Professional Liability: Mandatory Engagement Letter/ Retainer Pact, Fee-Dispute Arbitration, N.Y.L.J. Feb. 20, 2002, p. 3, col. 1). The fee arbitration program first applied to certain domestic relation matters (22 N.Y.C.R.R. Part 136, repealed eff. Jan. 1, 2002, except as to then pending arbitrations), and those rules did not provide for vacature as a matter of right, but required a petition brought pursuant to CPLR 7511 (see, for example, In re Serazio-Plant, 299 AD2d 696 [3d Dept. 2002], lv app denied 100 NY2d 512 [2003], and Riley v. Coughtry, 13 AD3d 703 [3d Dept. 2004]).

Footnote 2: An informal memorandum was issued in February of 2006 by the Office of Alternative Dispute Resolution Programs, generally recommending that an aggrieved party should seek a the trial de novo by a declaratory judgment action to be commenced in Supreme Court (see, for an example of such a declaratory judgment action, Wagner Davis P.C. v. Finkelstein, N.Y.L.J., Jan. 25, 2006, p. 19, col. 1 [Sup. Ct. NY Co., Lehner, J.]). If a declaratory judgment pleading were filed in the Civil Court, applicable law would require the action be transferred to the Supreme Court (see, collecting authorities, Sterling National Bank v. Kings Manor, LLC, 9 Misc 3d 1116 [A], 2005 WL 2464167, *7-*9, 2005 NY Slip Op 51604 [U] [Civ. Ct. NY Co. 2005, Lebedeff, J.]).

Footnote 3: To the extent that the attorney protests that the client's request for a trial de novo was not effectively commenced within the allotted time limits, if this protest sounds in laches, the attorney bears the burden of proof thereon and the attorney here has failed to establish the necessary cognizable prejudice (Dreikausen v. Zoning Bd. of Appeals of City of Long Beach, 98 NY2d 165, 173 fn. 4 [2002], "a claim asserted following unreasonable delay may be barred by the equitable doctrine of laches. Laches must be pleaded and proved by one who urges it" [citations omitted]; Matter of Sheerin v. New York Fire Dept. Arts. 1 & 1B Pension Funds, 46 NY2d 488, 495 [1979], "invocation of the equitable defense of laches ordinarily requires a showing of prejudice").

Footnote 4: The Appellate Division, First Department, approved of the use of a petition to vacate an arbitration award notwithstanding that CPLR 7511 (b), which defines the grounds upon which an arbitration award may be vacated, does not specifically refer to an award which may be vacated as a matter of right. In relation to an arbitration award, the Civil Court has subject matter jurisdiction to vacate, confirm or modify an arbitration award if the award is in an amount within the court's monetary subject matter jurisdiction (N.Y.C. Civ. Ct. A. § 206 [b], "Where a controversy has been duly arbitrated and an award made therein is for relief which is within the court's jurisdiction, the court shall have jurisdiction of proceedings under CPLR ... 7510 through 7514"; see, same text, Uniform Dist. Ct. Act § 206 [b]; compare Uniform City Ct. Act § 206 and Uniform Just. Ct. Act § 206; see MBNA America Bank, N.A. v. Coe, 2 Misc 3d 355 [City Ct. White Plains 2003, Friia, J.]).

Footnote 5: This court would not encourage resort to the simplified procedure for court determination of disputes, which is the single form of action in which a contract dispute may be submitted to a court by either contracting party without consideration of pleading and proof burdens (CPLR 3031 through 3037; N.Y.C. Civ. Ct. Act § 910; Uniform City Ct. Act § 910; Uniform Dist. Ct. Act § 910; Uniform Just. Ct. Act § 910). This procedure is disfavored by litigants (Siegel, NY Prac. § 609 [4th ed.], called "last ... in the affections of the New York bar"; see also, Jay C. Carlisle, Simplified Procedure for Court Determination of Disputes under New York's Civil Practice Law and Rules, 54 Brook. L. Rev. 95, 102 [1988], procedure "not often utilized"). This jurist's experience is that the simplified procedure confounds trial participants and increases uncertainty by reason of such statutory features as the dispensing with many rules of evidence (CPLR 3036 [1]). Such procedure cannot be invoked here because the retainer agreement does not explicitly permit its use (CPLR 3033 [1]).