Spina v Michael J. Defilippo P.C.

[*1] Spina v Michael J. Defilippo P.C. 2010 NY Slip Op 50907(U) [27 Misc 3d 1225(A)] Decided on May 12, 2010 Civil Court, Richmond County Straniere, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. As corrected in part through June 4, 2010; it will not be published in the printed Official Reports.

Decided on May 12, 2010
Civil Court, Richmond County

Nanette M. Spina, Claimant,

against

Michael J. Defilippo P.C., Defendant.



SCR 32/09



Claimant

Nanette Spina (pro se)

118 Rustic Place

Staten Island, NY 10308

Defendant

Michael J. Defilippo P.C.

6659 Amboy Road

Staten Island, NY 10309

Philip S. Straniere, J.

Claimant, Nancy Spina, commenced this small claims action against the defendant, Michael DeFilippo, P.C. seeking the refund of attorneys' fees paid to the defendant. Defendant defaulted in appearing and answering. On February 19, 2009, claimant was awarded a judgment in the amount of $3,790.00 after inquest before an arbitrator in the small claims part. Thereafter claimant sought to enforce the judgment through the marshal's office. The marshal apparently identified assets of the defendant from which to satisfy the judgment.

Currently before the court is an order to show cause brought by the defendant more then one year after entry of the judgment to vacate the execution on the grounds that the judgment is against "Michael DeFilippo, PC" and that the claimant "misled" the marshal by giving him information that the judgment was a personal one against "Michael DeFilippo, individually" resulting in restraints being placed on defendant's personal bank account and NYPD Pension Fund. Defendant asserts that "the Claimant has no legal right [*2]to enforce any judgment against me as an individual because the Defendant never entered into any contract to perform services as an individual, but only as President of the now defunct corporation." The court must question either defendant's record keeping or veracity because a search of the Department of State-Division of Corporations records reveals that the "Law Offices of Michael J. DeFilippo A Professional Corporation" was incorporated on July 5, 2005 and remains an "active" domestic professional corporation with Michael J DeFilippo as its "Chairman or Chief Executive Officer" and it is not "defunct" as alleged by the defendant. Defendant's letter head for the retainer agreement, which is the basis of this litigation, lists only Michael J. DeFilippo as the sole attorney in the professional corporation.

It should be noted that claimant only commenced this small claims action after the defendant failed to refund monies awarded to her by the Richmond County Fee Arbitration Panel. On November 3, 2008, a three-person panel had concluded that the claimant was entitled to a refund of $3,790.00 from Michael DeFilippo, PC. The documents submitted by the defendant include the Levy issued by the marshal with "Michael DeFilippo PC" listed as the defendant in the caption.

The Rules of the Chief Administrative Judge Part 137 (22 NYCRR 137.0 et seq.) establishes the "Fee Dispute Resolution Program" as an informal and expeditious method to resolve fee disputes between clients and lawyers. The record indicates that the parties participated in this process and on November 3, 2008 the panel awarded claimant a refund. The rules state that "all attorneys are required to participate in the arbitration program" and that the failure to participate will generate a referral to the grievance committee for "appropriate action" (22 NYCRR 137.11) The arbitration process sets forth a procedure to be followed if any party is dissatisfied with the finding of the panel. Rule 137.8 provides: (a) A party aggrieved by the arbitration award may commence an action on the merits of the fee dispute in a court of competent jurisdiction within 30 days after the arbitration award has been mailed. If no action is commenced within 30 days of the mailing of the arbitration award, the award shall become final.

Defendant, obviously dissatisfied with the award, as he did not refund the money to the claimant awarded by the panel, never acted to assert his rights as an "aggrieved party" under the rules for a trial de novo. Nor did the defendant move to vacate the award within ninety days as provided for in Civil Practice Law and Rules (CPLR) §7511. At this point, he is precluded from re-litigating the merits of the award.

Claimant, who prevailed at the arbitration, not receiving payment from the defendant, in January 2009, commenced this small claims action. In reality, claimant, although not labeled as such, commenced an action to confirm the arbitration award pursuant to CPLR Article 75-Arbitration. CPLR §7510 states: "The court shall confirm an award upon application of a party within one year after its delivery to him, unless the award is vacated or modified upon a ground specified in section 7511." Claimant's action [*3]would be timely under CPLR §7510 as it was brought within one year of the arbitration award. Civil Court Act §206 specifically grants the Civil Court the authority to enforce claims arising pursuant to CPLR Article 75 so long as the amount in question is within the monetary jurisdiction of the court. In fact, defendant has neither contested the finding of the small claims arbitrator nor submitted an excuse for his default and a meritorious defense so as to warrant the vacating of the small claims judgment.

Rather, defendant asserts the completely absurd position that "Michael DeFilippo" the individual is a different legal entity for the purpose of attorney-client relationships than "Michael DeFilippo, PC." Defendant even advised the court that he is now doing business under the name "DeFilippo & Associates." The litigation back for this motion lists the entity as "DeFilippo & Associates PLLC." A search of the department of state records does not disclose a entity registered under that name. The court would like to point out to defendant: YOU ARE A LAWYER!!!!! and not some "fly-by-night" business incorporating to limit its liability. The defendant cannot use various business entities to create a self-imposed "witness protection program" to avoid validly incurred legal obligations. As a lawyer, whether operating as an individual, partnership, professional services limited liability company or professional service corporation, the defendant is held to a higher standard of behavior than any other professional service corporation or professional services limited liability company. Defendant's activities are governed by a Code of Professional Responsibility and not the "smoke and mirror illusions" of a carnival funhouse. Defendant must be reminded that Zorro(Don Diego de la Vega), The Shadow(Lamont Cranston) and Superman(Clark Kent)[FN1] each had an alter-ego but was in fact only one person who understood the difference between right and wrong and, unlike the defendant, never sought to disavow responsibility for their own actions.

Article 15 of the Business Corporations Law governs the formation and activities of "professional service corporations." BCL §1505 provides: (a) each shareholder, employee or agent of a professional service corporation shall be personally and fully liable and accountable for any negligent or wrongful act or misconduct committed by him or by any person under his direct supervision and control while rendering professional services on behalf of such corporation.(b) The relationship of an individual to a professional service corporation which such individual is associated whether as shareholder, director, officer, employee or agent, shall not modify or diminish the jurisdiction over him of the licensing authority and in case of an attorney and counsellor-at-law, the other courts of this state.[FN2]

[*4]The statute makes it clear that the defendant is subject to rules of the chief administrator of the courts.[FN3] As pointed out above Rule 137.11 requires the attorney to "participate" in the program. "Participation" cannot just mean to "show-up" at the arbitration. To make sense "participation" means abiding by the ruling of the arbitration panel or if in disagreement with its findings, seeking redress through the avenues provided in Part 137 or under the CPLR. Not only has defendant failed to avail himself of these "avenues", but he has elected to navigate himself "off the road", onto the "shoulder" perilously close to falling into the "ditch" of a disciplinary proceeding. Defendant in effect chose not to "participate" and abandoned the process. He cannot now come to court and assert that he has no obligation to honor either the arbitration panel award or the judgment of this court. Defendant is not seeking to disavow responsibility of a contractual business obligation which would be permitted in some circumstances under the statute. He is trying to escape his obligation to refund monies due and owing a client.

The Disciplinary Rules (22 NYCRR §1200.11) provide: "E. Where representation is in a civil matter, a lawyer shall resolve fee disputes by arbitration at the election of the client pursuant to a fee arbitration program established by the Chief Administrator of the Courts and approved by the justices of the Appellate Division" (DR 2-106). The Disciplinary Rule would make no sense if the attorney who participates in the fee dispute arbitration plan not only ignores the ruling of the arbitration panel, but then fails to take any steps under the CPLR to protect his rights if he or she disagreed with the panel's determination.

Conclusion:

Defendant's motion is denied. As an attorney, he cannot seek to shield himself from liability to return a legal fee to a client by ignoring the award of the fee dispute arbitration panel and failing to pursue his rights as set forth in the Chief Administrator's Rules and the CPLR. For the purpose of fee disputes, an attorney is not afforded any protection by incorporating as a professional service corporation or by changing the name of the law firm under which he does business. Defendant is a professional governed by rules of conduct and has an obligation to comply with the law and the rulings of tribunals.

Collecting an award from the fee arbitration panel should not subject a client to the legal equivalent of a "three card Monte game" or the "cap game" at Yankee Stadium with [*5]the successful client having to identify and locate the name of the entity under which the attorney is doing business. In fact, if the attorney was not properly named at the fee arbitration hearing, he or she has an ethical obligation to inform the panel of any errors in that regard and not place the information up his or her sleeve to later produce at the opportune moment to thwart collection.

The judgment of the small claims arbitrator remains in full force and effect. Any and all stays on the enforcement of the judgment are lifted. Claimant may seek to collect against the assets of Michael DeFilippo and against any of the incarnations of his law practice under whatever name he is operating. Claimant cannot collect from exempt personal funds.

This constitutes the decision and order of the Court.

Exhibits, if any, will be available at the office of the clerk of the court 30 days after receipt of a copy of this decision.

Dated: May 12, 2010

Staten Island, NY HON. PHILIP S. STRANIERE

Judge, Civil Court

Footnotes

Footnote 1: As were Superman's DC Comics cohorts: Batman(Bruce Wayne), Green Arrow(Oliver Jonas Queen), Green Lantern(Hal Jordan), The Flash(Barry Allen), Aquaman(Arthur Curry), Hawkman(Carter Hall), Hawkgirl(Shiera Hall), The Atom(Ray Palmer)and [*6]Wonder Woman(Princess Diana of Themyscira). Note these are the characters from the Silver Age of Comics(Justice League) and not the Golden Age(Justice Society).

Footnote 2: Two things must be noted about this statute. First, the legislature has not made the language gender neutral. Second, the letter "l" eliminated by the legislature in drafting the Article 9 and Article 10 of the Personal Property Law when they used the word "instalment" rather than the preferred spelling of "installment" has been added back in this section where the legislature used the word "counsellor" rather than the preferred spelling of "counselor."

Footnote 3: Limited Liability company Law§ 1203 (e) also requires Limited Liability Companies which practice law to be subject to rules & regulations governing attorney conduct.