SEYBURN KAHN GINN BESS DEITCH & SERLIN PC V KIRIT BAKSHI
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STATE OF MICHIGAN
COURT OF APPEALS
SEYBURN, KAHN, GINN, BESS, DEITCH AND
SERLIN, P.C.,
FOR PUBLICATION
April 1, 2008
9:25 a.m.
Plaintiff-Appellee,
v
No. 272903
Oakland Circuit Court
LC No. 1999-018126-CK
KIRIT BAKSHI,
Defendant-Appellant.
Advance Sheets Version
Before: Saad, P.J., and Jansen and Beckering, JJ.
SAAD, P.J.
Defendant Kirit Bakshi appeals from a judgment awarding plaintiff law firm Seyburn,
Kahn, Ginn, Bess, Deitch and Serlin, P.C. (Seyburn), $573,168.07 in this breach of contract
action to recover unpaid legal fees. For the reasons stated below, we reverse the trial court and
remand for entry of judgment for Bakshi.
I. Nature of the Case
Seyburn says that Bakshi owes it legal fees for litigation it handled for Bakshi and his
corporations from 1989 to 1993. Bakshi was ultimately unsuccessful in this litigation.1 In 1992,
Bakshi refused to pay the remaining fees of $50,603, in part because he says Seyburn wrongly
failed to credit the full amount of his payments.2 Bakshi also says he became dissatisfied with
Seyburn’s performance in the underlying litigation. This dispute between client and counsel
resulted in Seyburn’s motion in this Court to withdraw as counsel in 1993, while Bakshi’s appeal
of the unsuccessful litigation was pending in this Court. This Court granted Seyburn’s motion to
withdraw on September 30, 1993. Thereafter, Bakshi asked Seyburn for his litigation file, and,
1
This Court affirmed the trial court’s dismissal of his action in Interface Electronics v Minicomp
Private Ltd, unpublished opinion per curiam of the Court of Appeals, issued October 10, 1994
(Docket No. 146262).
2
Bakshi asserts in his brief that at the time of his refusal to pay the $50,603, he had already paid
Seyburn $92,000 in legal fees.
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as of October 12, 1993, Seyburn reviewed, copied, and sent relevant documents to Bakshi and
billed him $182 for the review and $250 for photocopying, bringing Bakshi’s outstanding
balance to $55,723. Bakshi’s dissatisfaction with Seyburn’s performance also led him to file a
malpractice action in 1995, but this action also was unsuccessful.3
Because Seyburn filed this suit on October 9, 1999, the dispositive question is whether its
breach of contract claim is (1) time-barred by the six-year statute of limitations because its claim
accrued on September 30, 1993, when this Court granted Seyburn’s motion to withdraw as
counsel, or (2) timely because its cause of action accrued on October 12, 1993, when Seyburn
reviewed and copied Bakshi’s file.
We hold that Seyburn’s contract claim is time-barred because it accrued on September
30, 1993, when this Court granted Seyburn the right to withdraw from its representation of
Bakshi in the underlying litigation, and we further hold that Seyburn’s activities associated with
copying and returning Bakshi’s litigation file do not extend the accrual date under MCL
600.5807(7) (now MCL 600.5807[8]).
II. Facts and Procedure
This case has a lengthy factual and procedural history. In 1989, Bakshi retained Seyburn
to represent him and his two corporations4 in a legal action (underlying litigation) and other legal
matters. Bakshi was unsuccessful in the underlying litigation: the trial court dismissed the
action on October 17, 1991, and this Court affirmed the trial court’s judgment. Interface
Electronics v Minicomp Private Ltd, unpublished opinion per curiam of the Court of Appeals,
issued October 10, 1994 (Docket No. 146262). (Circuit court records indicate that Seyburn also
represented Bakshi in at least one other lawsuit in the circuit court while the Interface
Electronics appeal was pending.)
Bakshi ceased paying Seyburn’s legal bills in November 1992, while the appeal in the
underlying litigation was pending. At that time, Bakshi had already paid $92,000, and his
remaining balance was $50,603. Apparently, his refusal to pay initially arose from a dispute
with Seyburn over an amount he believed should have been credited to the account. The parties
continued to dispute this matter over the next several months. On March 3, 1993, Seyburn
argued a motion in the trial court on Bakshi’s behalf. This was the last date on which Seyburn
performed a service for Bakshi that was not related to the dissolution of the attorney-client
relationship. On April 27, 1993, Seyburn drafted a motion to withdraw as Bakshi’s counsel and
charged him for that task.
3
See Bakshi v Gold, unpublished opinion per curiam of the Court of Appeals, issued August 10,
2001 (Docket No. 220867).
4
Although Bakshi’s corporations also were Seyburn’s clients in the underlying litigation and
parties in the underlying litigation and malpractice action, for ease of reference we refer only to
Bakshi.
-2-
On June 8, 1993, Bakshi notified Seyburn that he believed that “our attorney client
relationship must be terminated or substantially modified.” He gave Seyburn two “options”:
Seyburn could refund the fees already paid and enable Bakshi to retain substitute counsel with
the refunded money, or Seyburn could refund 75 percent of the fees paid, file an appeal, and
withdraw. Bakshi also stated that he had no financial resources to pay for the litigation.
On July 30, 1993, Seyburn moved in this Court to withdraw as Bakshi’s counsel. It
stated that Bakshi was “indebted to counsel for fees and costs incurred at the trial court level as
well as fees associated with the appeal,” and that he “has indicated that it is not willing to pay the
outstanding fees or costs.” Seyburn also alleged in the withdrawal motion that the attorneyclient relationship between itself and Bakshi was “subject to irreconcilable differences and has
broken down to such an extent that counsel can not effectively represent [Bakshi’s] interest in
this appeal.” This Court granted the motion to withdraw on September 30, 1993.5
In October 1993, Bakshi requested his file from Seyburn. Seyburn’s paralegal reviewed
the file to determine which materials would be provided to Bakshi. On November 12, 1993,
Seyburn sent Bakshi a bill, which included charges for those activities, as follows:
10/10/93
Review file to determine what to keep and what to return to client;
draft memorandum regarding same;
10/11/93
Complete review of file to determine what to send back to client;
copy pleading indexes and correspondence;
10/12/93
Review and revise memorandum regarding file . . .
Seyburn charged Bakshi $182 for these activities, plus $250 for photocopying. Bakshi did not
pay this bill, and the unpaid balance on Bakshi’s account was then $55,723.
In 1995, Bakshi brought a legal malpractice action against Seyburn, claiming, among
other things, that he should be relieved of his obligation to pay Seyburn for negligently
performed legal services in the prior unsuccessful litigation. In a motion for summary
disposition, Seyburn argued that Bakshi’s action was barred in part by the two-year statute of
limitations for malpractice claims, MCL 600.5805(5) (now MCL 600.5805[6]). Contrary to the
position that it takes in this litigation, Seyburn stated in an affidavit that it last performed legal
services for Bakshi on March 3, 1993, and that it “discontinued” providing legal services to
Bakshi on April 27, 1993 (the latter date refers to the date it drafted its motion to withdraw as
counsel). The trial court commented in its opinion that “[Seyburn was] hired for the particular
purpose of representing [Bakshi] and did not discontinue serving [Bakshi] with respect to those
matters until October 1993 . . . .” The trial court dismissed the malpractice action in 1999, and
this Court affirmed the dismissal in Bakshi v Gold, unpublished opinion per curiam of the Court
5
This Court’s records show that substitute counsel for Bakshi entered an appearance on February
22, 1994.
-3-
of Appeals, issued August 10, 2001 (Docket No. 220867). Our Supreme Court denied leave to
appeal. Bakshi v Gold, 467 Mich 851 (2002).
Seyburn filed its complaint in the instant action for unpaid legal fees on October 9, 1999,
while Bakshi’s malpractice action was pending. Bakshi moved for summary disposition
pursuant to MCR 2.116(C)(7), arguing that the six-year statute of limitations, MCL 600.5807(7)
(now MCL 600.5807[8]), had expired. He maintained that Seyburn’s claim accrued in
November 1992, when he last paid for legal services. In response, again contrary to the position
it took in the malpractice case, Seyburn argued that it last performed legal services on October
12, 1993, when it complied with Bakshi’s request to be provided with a copy of his file. It
asserted that the trial court in the malpractice action had already determined that its services
ended in October 1993.
In 2001, the trial court granted Bakshi’s motion for summary disposition based on the
statute of limitations, and held that Seyburn’s action accrued in 1992, when Bakshi stopped
paying Seyburn’s legal fees. Seyburn appealed that decision to this Court, which, in a split
decision, reversed the trial court’s decision. The majority agreed with Seyburn that its action
was timely filed because its claim accrued on October 12, 1993, the last date it performed a
properly billable service. Seyburn, Kahn, Ginn, Bess, Deitch and Serlin, PC v Bakshi,
unpublished opinion per curiam of the Court of Appeals, issued March 13, 2003 (Docket No.
238697). One judge, however, issued a separate partially dissenting opinion, which agreed with
the majority’s conclusion that summary disposition was improperly granted to Bakshi. However,
that judge wrote that the matter should be remanded to the trial court to determine whether “there
was a proper action on an open account” and, if so, the date of the last proper billable entry. In
this regard, the partially dissenting judge opined that the trial court should have considered
whether Seyburn could ethically and legally charge Bakshi for the tasks it performed in October
1993 in relation to his request for a copy of his file. However, she also commented that the
October dates were not necessarily dispositive of the question of when Seyburn’s claim accrued.
Id., slip op at 1-2 (White, J., concurring in part and dissenting in part.)
Bakshi thereafter filed an application for leave to appeal in the Michigan Supreme Court.
In lieu of granting leave to appeal, the Supreme Court vacated this Court’s judgment and
remanded the case to the trial court for further proceedings for the reasons stated in the partially
dissenting opinion. Seyburn, Kahn, Ginn, Bess, Deitch and Serlin, PC v Bakshi, 469 Mich 958
(2003).
On remand, the trial court held a hearing on the statue of limitations issue. It determined
that Seyburn performed the additional work in October 1993, at Bakshi’s request and for his
benefit, and that Seyburn could ethically charge Bakshi for those services. From this, the court
reasoned that the limitations period did not begin to run until October 12, 1993, and thus held
that Seyburn’s action, filed on October 9, 1999, was timely filed within the six-year period of
limitations. MCL 600.5807(8) (formerly MCL 600.5807[7]). Thus, the trial court determined
that Bakshi was liable for legal fees of $62,763, and that Seyburn was entitled to interest of
-4-
$510,405.07, as of August 16, 2006.6 It issued judgment ordering Bakshi to pay Seyburn
$573,168.07.
III. Analysis
We hold that the critical date for determining when Seyburn’s claim accrued is the date
that the attorney-client relationship was terminated, September 30, 1993, when our Court granted
Seyburn’s July 30, 1993, motion to withdraw. When the termination of an attorney-client
relationship coincides with the last date that the attorney provided services for the client, the
attorney’s claim for unpaid legal fees accrues on that date. In re Dei’s Estate, 293 Mich 651,
656-658; 292 NW 513 (1940). However, when the date of termination of the relationship is not
the same as, but instead occurs after, the date of the last services rendered, the question of the
proper accrual date appears to be an issue of first impression under Michigan law. We hold that
in the litigation context, like the situation here, the limitations period begins when the attorneyclient relationship is, in fact, terminated.7
Our Supreme Court has held that an attorney’s claim for unpaid legal fees accrues on the
last date that the attorney performed services for the client.8 The Court determined that there
was a mutual and open account current pursuant to 1929 CL 13977 (now codified as MCL
600.5831). However, in Dei’s Estate, there was no question that the end of the attorney’s
services coincided with the termination of the attorney-client relationship. Accordingly, the
Supreme Court approached the issue as a general question regarding the collection of an open
account and did not focus on the nature of the attorney-client relationship. Moreover, our
Supreme Court did not address whether the outcome would be different if the attorney-client
relationship did not end on the last date of billable service.
In the litigation context, other jurisdictions have held that when an attorney ceases to
perform services for the client, but the attorney-client relationship is not legally terminated until
a later date, the date of the termination of the attorney-client relationship, and not the last date of
services, is the date that the attorney’s cause of action for unpaid legal fees accrues. 60 ALR 2d,
§§ 1, 2, pp 1008, 1010. Of these cases, there is one, Pellettieri, Rabstein and Altman v
Protopapas, 383 NJ Super 142, 145; 890 A2d 1022 (2006), whose reasoning we find particularly
persuasive. In Pellettieri, the plaintiff attorney represented the defendant client in divorce and
bankruptcy proceedings beginning in 1995. The parties entered into a retainer agreement for the
divorce matter, which provided that the plaintiff would bill the defendant every 60 days for
services rendered, and that the defendant would be responsible for the entire amount charged,
subject to 12 percent annual interest for amounts not paid within 30 days of the billing. The
6
Seyburn charged 18 percent annual interest on unpaid balances; thus, Bakshi’s outstanding
balance grew from $62,763 in 1993 to $573,168 in 2006.
7
The question whether a claim is barred by a statute of limitations is a question of law that this
Court reviews de novo. Scherer v Hellstrom, 270 Mich App 458, 461; 716 NW2d 307 (2006).
8
In In re Dei’s Estate, supra, 293 Mich at 656-658.
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plaintiff charged the defendant a flat fee for the bankruptcy representation pursuant to federal
law, although the parties entered into a supplemental retainer agreement related to a contested
matter that the defendant’s wife filed in the bankruptcy action. Id. at 145-146. The defendant
failed to keep up with his payments on the periodic billings. In 1996, he agreed to pay $2,000
each month toward his unpaid balance, but he failed to comply with this agreement. The
plaintiff warned him that it would terminate its services if the payments were not made. Id. at
146-147. In 1997, the plaintiff notified the defendant that it would move to withdraw as counsel
unless the defendant agreed to a substitution of counsel. The defendant agreed to the
substitution, and the plaintiff was permitted to withdraw in June 1997, before the divorce was
entered. Id. at 148.
The plaintiff brought its action for unpaid legal fees in March 2003. The trial court
determined that the six-year statute of limitations began to run when the defendant breached the
agreement by failing to pay the plaintiff’s periodic billings, and concluded that the action was
timely only with respect to charges made in the six-year period before plaintiff filed its action.
Id. at 150. The New Jersey Superior Court, Appellate Division, disagreed, and reasoned as
follows:
Analyzing the retainer agreement, the judge mistakenly relied on general
contract principles to find that the plaintiff’s cause of action accrued when
defendant failed to pay the due periodic bills. The statement in the agreement
reserving the right to seek termination for non-payment was not equivalent to a
commercial installment sales contract, which permits a creditor immediate
redress. Unlike the general commercial transaction . . . where the “critical point”
for the determination of accrual of the cause of action is the date when the
payment of the invoice becomes due, an attorney’s cause of action does not
accrue based upon non-payment alone. More is needed. Specifically, absent
completion of services under a retainer agreement, the attorney-client
relationship must be terminated before plaintiff’s cause of action accrues. [Id. at
150-151 (emphasis added).]
The court ruled that an attorney’s claim for unpaid legal bills could not be evaluated according to
ordinary commercial-law principles because attorneys are bound by ethical constraints that
preclude them from unilaterally severing an attorney-client relationship. It explained:
While a lawyer must seek client approval to withdraw, the client may
discharge the attorney at will. Moreover, depending on the timing of the request,
there is no guarantee that an attorney will be permitted to withdraw even if there
is client consent and grounds to do so under the Rules of Professional Conduct. R
5:3-5(d) provides that after the fixing of a trial date, or prior to the fixing of such
date where the client does not consent, “an attorney may withdraw from the action
only by leave of court on motion on notice to all parties.” The rule goes on to
outline several circumstances that the court should consider in deciding the
motion. A lawyer’s inability to sue a client before either obtaining consent of the
client or leave of court to withdraw mandates a tolling of the statute. Stated
another way, an attorney’s cause of action to seek unpaid fees arising from a
retainer agreement permitting periodic hourly billing does not arise until the
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matter is concluded or the attorney-client relationship is terminated, whichever
occurs first. [Id. at 152-153 (emphasis added).]
We agree with Pellettieri and hold that an attorney’s cause of action for breach of
contract against his or her client, for fees arising out of representation in litigation, accrues on the
date of the termination of the attorney-client relationship. If, as in Pellettieri, and as here, that
relationship continues formally and legally beyond the last date of services performed, the
termination date, and not the last date of service, is the dispositive date for the accrual of the
attorney’s claim for fees. The attorney-client relationship is not extended (and the accrual date is
not postponed) merely because the attorney renders a compensable, but ministerial, service like
returning the client’s file, as occurred in this case. See Bauer v Ferriby & Houston, PC, 235
Mich App 536, 538-539; 599 NW2d 493 (1999).
Moreover, we agree with the reasoning underlying the analysis in Pellettieri because it is
informed by the unique status of the attorney-client relationship that distinguishes that
professional relationship from other forms of commercial contractual relationships. Also, the
holding in Pellettieri is consistent with the principle applied in litigation that an attorney’s
representation of a client continues until the client or the court relieves that attorney of the
obligation. Mitchell v Dougherty, 249 Mich App 668, 683; 644 NW2d 391 (2002). Further,
Pellettieri’s rationale reflects the ethical principles that prohibit an attorney from unilaterally
terminating his or her representation of a client at will, and also from suing the client for unpaid
fees until the representation is terminated. Clearly, an attorney is not free to withdraw from
representation of a client unless withdrawal can be accomplished without material adverse effect
on the client’s interests. MRPC 1.16(b). See Friedman v Dorzac, 412 Mich 1, 57 n 60; 312
NW2d 585 (1981) (“[a]n attorney’s ability to withdraw from representation is limited if the client
objects); see also Lipton v Boesky, 110 Mich App 589, 599; 313 NW2d 163 (1981) (“[A]n
attorney owes a duty of care to his client until he is discharged by the client or the court.”).
Furthermore, an attorney may not ethically sue a client to recover unpaid legal fees while the
attorney represents the client. Such an action would certainly violate MRPC 1.7(b), which
prohibits an attorney from representing a client if the representation of that client “may be
materially limited . . . by the lawyer’s own interests.”9 See also State Bar of Michigan Informal
Ethics Opinion RI-159 (April 13, 1993), which states that an attorney who represents a client in a
divorce action may not sue the client for unpaid fees before the action is resolved, and also that
the assignor of an attorney’s claim for unpaid fees may not sue the client until the representation
is completed. The court in Pellettieri, supra, correctly recognized that these prudential and
ethical considerations toll the period of limitations for an action to collect fees until the
representation period has ended. Accordingly, we agree that in the litigation context, where, as
here, legal services are no longer being provided and a dispute over fees exists, an attorney’s
action for unpaid legal fees accrues on the date a court orders the termination of the attorneyclient relationship.
9
MRPC 1.7(b) provides an exception to this restriction where the attorney reasonably believes
that the representation will not be adversely affected and the client consents, but these conditions
would not be satisfied in any realistic scenario.
-7-
Seyburn urges this Court to hold that its cause of action did not accrue until October 12,
1999, the last date that it performed a service for Bakshi. We reject this proposition and instead
hold that the tasks Seyburn performed in October 1993 do not constitute continued
representation for purposes of determining the end of the attorney-client relationship. In Bauer,
supra 235 Mich App at 539, this Court stated:
Some of a lawyer’s duties to a client survive the termination of the
attorney-client relationship, most notably the general obligations to keep client
confidences and to refrain from using information obtained in the course of
representation against the former client’s interests. . . . Sound public policy
would likewise encourage a conscientious lawyer to stand ever prepared to advise
a former client of changes in the law bearing on the matter of representation, to
make a former client’s file available if the former client had need of it . . . . To
hold that such follow-up activities attendant to otherwise completed matters of
representation necessarily extends the period of service to the client would give
providers of legal services a powerful disincentive to cooperate with a former
client who needs such attention. We conclude that the proper inquiry is whether
the new activities occur pursuant to a current, as opposed to a former, attorneyclient relationship. [Emphasis added.]
Clearly, Seyburn did not extend the period of representation into October 1993 by
performing the ministerial task of providing Bakshi with a copy of his file. Indeed, Seyburn
itself acknowledged this in an affidavit it submitted to the trial court in Bakshi’s malpractice
action against Seyburn. One of Seyburn’s partners averred in his affidavit that “[t]he last legal
services that [Seyburn] performed for [Bakshi] with regard to any matters was on March 3, 1993,
and [Seyburn] discontinued providing legal services to [Bakshi] on April 27, 1993.” Seyburn
readily acknowledged in this affidavit that reviewing and copying a file would not extend the
period of representation for purposes of determining the accrual date for a cause of action for
legal malpractice. Likewise, such activity does not extend the period of representation for
purposes of this action to collect unpaid fees.10
10
The trial court was also required on remand to consider whether this case involved an open
account. MCL 600.5831 provides that “[i]n actions brought to recover the balance due upon a
mutual and open account current, the claim accrues at the time of the last item proved in the
account.” Payments on an account for services are sufficient to render it an open and mutual
account for purposes of the statute of limitations. Payne v Walker, 26 Mich 60, 62 (1872). We
acknowledge that our Supreme Court previously applied the predecessor statute to determine the
accrual date for an attorney’s cause of action for unpaid fees. Dei’s Estate, supra, 293 Mich at
656-658. However, the law specifically governing the termination of the attorney-client
relationship takes precedence over a statute of general applicability. Here, the application of
MCL 600.5831 would create the anomaly of extending the accrual date of the attorney’s cause of
action beyond the termination of the attorney-client relationship, merely because the attorney
performed the necessary tasks of copying documents to give to the former client.
-8-
The trial court erroneously assumed that the attorney-client relationship ended on the last
date that the attorney rendered any services for which it could legally charge payment. Acting
on this assumption, it determined that Seyburn’s services to Bakshi ended on October 12, 1993.
The trial court concluded that Seyburn permissibly billed Bakshi for reviewing and copying his
file because State Bar of Michigan Ethics Opinion R-19 (August 4, 2000) provides that a “lawyer
may properly charge for the service of searching the files to provide the client access to
information and for the reproduction or other methods of access to such information,” although it
“may not charge for the return of that portion of the file that is the property of the client.”11
The trial court erred in reasoning that because Seyburn could ethically charge for this
service, the attorney-client relationship ended on this date for purposes of determining the
accrual date. Clearly, the question of when Seyburn’s claim accrued does not hinge on the
propriety of the October charges.
Bakshi’s obligations to Seyburn arose from the attorney-client relationship they
established when Bakshi retained the firm to represent him and his corporations in litigation, and
the period of limitations for the action for unpaid fees began to run when that relationship was
terminated by this Court on September 30, 1993.
We reverse the trial court’s order of judgment and remand for entry of judgment in favor
of defendant-appellant, Kirit Bakshi, consistent with this opinion. We do not retain jurisdiction.
Beckering, J., concurred.
/s/ Henry William Saad
/s/ Jane E. Beckering
11
Bakshi maintains that Ethics Opinion R-19 does not govern these circumstances, because it
was not decided until after Seyburn attempted to bill him for activities related to copying the file.
He argues that prior ethics opinions, issued before October 1993, supported his position that the
billing was improper. Bakshi’s argument raises questions concerning the retroactivity of ethics
opinions and the application of prior opinions to the October 1993 billing. However, it is
unnecessary to resolve these questions because the salient question is not whether the October
1993 billings were proper and permissible, but whether they extended the period of the attorneyclient relationship.
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