Gottlieb, Rackman & Reisman, P.C. v Marusya, Inc.
Annotate this CaseDecided on November 12, 2004
Civil Court of the City of New York, New York County
GOTTLIEB, RACKMAN & REISMAN, P.C.,, Plaintiff,
against
MARUSYA, INC. and MARY BULGER, Defendants.
59559 CVN 2003
Arthur F. Engoron, J.
Defendants' motion to dismiss this action based on plaintiff's failure to comply with Part 137 of the Rules of the Chief Administrator is denied, and the parties are directed to continue the trial at the date and time set forth below.
Background
Plaintiff seeks payment of attorney's fees for legal work performed on behalf of defendants. Defendants dispute the value and effectiveness of the services performed and argue that plaintiff is not entitled to payment.
Both sides agree that plaintiff did not notify defendants of the court's arbitration provision in the manner required under Part 137 of the Rules of the Chief Administrator ("Part 137"). It is also agreed that Part 137 does not apply to actions in which representation began prior to January 1, 2002.
On December 12, 2001, subsequent to a face-to-face meeting, plaintiff sent defendants a retainer letter informing defendants that plaintiff law firm would be taking their case, and that a $2,500 retainer was required. Mr. George Gottlieb, first named partner of plaintiff law firm, testified that on December 21, 2001 his firm opened a client file for defendants.
[*2]
On December 17, 2001, Ms. Bulger, on behalf of the defendants, signed a letter purporting to accompany a signed copy of the retainer letter and the retainer check of $2,500. Ms. Bulger further testified before this Court that she intended to deliver the signed retainer letter and check, also dated December 17, 2001, to plaintiff before the holidays, but that she did not in fact do so until January 8, 2002.
Defendants argue that because the retainer letter was not signed and delivered to plaintiff until January 8, 2002, representation did not begin until that date, and therefore plaintiff's failure to comply with the directives of Part 137 is a complete bar to the action, and the matter should be dismissed in its entirety.
In opposition, plaintiff argues that it began representing defendants in December 2001, going so far as to open a file and send a retainer letter, and that it was therefore not obligated to comply with Part 137. Plaintiff also argues that defendants failed to raise this issue as an affirmative defense and, therefore, are barred from doing so at trial.
Discussion
Plaintiff sent defendants a retainer letter on December 12, 2001, manifesting its intention to represent defendants in a legal capacity. Moreover, plaintiff opened and began maintaining a file on the claim for which defendants hired plaintiff, further evincing that plaintiff believed itself to be (and acted in accordance with that belief) representing defendants' interests as of December, 2001. Likewise, defendants made clear their intention to be represented by plaintiff as of December 17, 2001, when Ms. Bulger wrote plaintiff a letter stating that she was signing the retainer agreement, and wrote a retainer check for $2,500 that very same day (even though it was not delivered until three weeks later).
A search of statutory and case law finds no hard and fast rule for when attorney representation of a client actually begins. However, the courts have generally found that "Such a relationship arises when a contract is formed between an attorney and client for the performance of legal services or the rendition of legal advice. Since formality is not essential to the formation of the contract, it is necessary to look to the words and actions of the parties to ascertain if an attorney-client relationship was formed." C.K. Indus. Corp. v C.M. Indus. Corp., 213 AD2d 846, 847-848 (3d Dept 1995) (citations omitted). Thus, this Court will look to the intentions of the parties as can be gleaned from the record of their interactions prior to January 1, 2002. See, Wei Cheng Chang v Pi, 288 AD2d 378, 380 (2d Dept, 2001) ("In determining the existence of an attorney-client relationship, a court must look to the actions of the parties to ascertain the existence of such a relationship.")
Based on the evidence it is clear that plaintiff's representation of the defendants began in December 2001. As pointed out by plaintiff, 22 NYCRR 1215.1 allows for the exchange of a written letter of engagement, or retainer agreement in lieu thereof, at a reasonable time after commencing representation of the client. Thus, contrary to defendants' contention, the actual [*3]signing of the retainer agreement by defendants was not a condition precedent to the commencement of representation.
Defendants' reliance on Young v Oak Crest Park, Inc., 75 AD2d 956 (3d Dept 1980), does little to bolster its position and, in fact, supports today's decision. The Young Court found that "it is not essential to the establishment of an attorney-client relationship that the client be billed or that a fee agreement be made," Id., at 957, and the lack of these things, at best, only gives rise to a "permissible inference" of no relationship. Nothing in the Young decision controverts that an attorney-client relationship can be found to exist in the absence of bills and fees, especially where, as here, and in contrast to the facts in Young, the parties exchanged a retainer demand and defendants' letter and check of December 17, 2001, shows a willingness to accept that agreement. Thus, plaintiff's representation of defendants began in December 2001, and plaintiff was under no obligation to comply with the mandates of Part 137 prior to bringing the within lawsuit, and therefore defendants' motion is hereby denied.
Even assuming, arguendo, that plaintiff did not begin representing defendants until January 2002, defendants' failure to plead plaintiff's alleged breach of Part 137 as an affirmative defense would bar them from raising it at the present time. CPLR 3018(b) states that "A party shall plead all matters which if not pleaded would be likely to take the adverse party by surprise or would raise issues of fact not appearing on the face of a prior pleading . . ." The issue of when representation began and whether plaintiff violated Part 137 unequivocally raises questions of fact not otherwise addressed in the litigation or raised as an issue by any of the other pleadings, and therefore defendants were required to raise the failure to comply with Part 137 as an affirmative defense. This case demonstrates the adverse consequences that could accrue if affirmative defenses are not timely raised. By not timely pleading this affirmative defense, defendants are barred from raising it at this time, and the motion is denied on this ground as well.
Finally, this Court notes, solely in passing, that the arbitration established by Part 137, although mandatory, is not binding.
Conclusion
Based on the above, defendants' request to dismiss this matter is denied, and the parties are directed to continue with the trial before the undersigned, on December 9, 2004, at 9:30 a.m. Counsel are hereby directed to contact chambers at 212-374-8055 by 11/19/04 to confirm their and their witnesses' availability.
Dated: 11/12/04
Arthur F. Engoron, JCC
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