Vargas v Go W. Entertainment, Inc.

[*1] Vargas v Go W. Entertainment, Inc. 2010 NY Slip Op 51476(U) [28 Misc 3d 1223(A)] Decided on June 17, 2010 Supreme Court, New York County Edmead, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 June 17, 2010
Supreme Court, New York County

Francis Vargas, Plaintiff,

against

Go West Entertainment, Inc., a/k/a "SCORES WEST SIDE," Defendant. SCORES HOLDING COMPANY, INC., Defendant and Third-Party Plaintiff, ENTERTAINMENT MANAGEMENT SERVICES, INC., Third-Party Defendant.



116454/07

Carol R. Edmead, J.

MEMORANDUM DECISION

In this action by plaintiff Francis Vargas ("plaintiff") to recover damages for, inter alia, sexual discrimination, defendant and third-party plaintiff Scores Holding Company, Inc. ("Scores") moves for an order, pursuant to CPLR §3025(b), granting it leave to serve

an Amended Answer, including affirmative defenses and a cross-claim against co-defendant Go West Entertainment, Inc. ("Go West").

In response, Go West's counsel, Gregory T. Ambus, Esq. ("Mr. Ambus"), cross moves for an order, pursuant to CPLR §321(b)(2), granting Mr. Ambus, Gregory T. Ambus, P.C. (Ambus-Russel, P.C, name of law firm amended to Gregory T. Ambus, P.C.), and Herman Wun ("Mr. Wun"), of Counsel, permission to withdraw as counsel for Go West, and staying all proceedings in this action, including any response due by Go West to the instant motion, for at least 30 days after service upon the parties of an order relieving said attorneys.

Background

The following facts are uncontested. On December 11, 2007, plaintiff filed this action pursuant to New York State's and New York City's Human Rights Laws to recover damages for [*2]sexual discrimination and for being subject to a hostile work environment. By Letter of Engagement dated December 27, 2007, Scores and Go West retained Mr. Ambus to represent them in the instant action (the "December 27, 2007 Engagement Letter"). On June 1, 2008, the parties executed a new Letter of Engagement, because the defendants "were facing numerous lawsuits and did not want to pay the renewed retainer at the time and wanted to be billed hourly" (the "June 1, 2008 Engagement Letter).[FN1]

On February 12, 2008, Scores and Go West filed a Verified Answer with affirmative defenses (see the "Answer"). Shortly afterward, Go West filed a bankruptcy petition in the United States Bankruptcy Court for the Southern District of New York. From that point on, all further action against Go West was automatically stayed until the Bankruptcy Court dismissed Go West's petition on July 23, 2009 (see the "Dismissal Order"). In the fall of 2009, plaintiff's counsel informed Mr. Ambus that Go West's bankruptcy petition had been dismissed. Subsequently, on April 27, 2010, Scores filed a third-party complaint seeking indemnification from Entertainment Management Services, Inc. ("EMSI") (see the "Third-Party Complaint").

In its motion for leave to serve an Amended Answer, Scores argues that its original Answer must be amended for the following reasons: (a) the Answer combined defenses, many of which apply only to Go West, as Scores did not own, operate or manage Go West; (b) there are certain changes and differences in responding solely on behalf of Scores, and (c) it is necessary that Scores have the opportunity to assert a cross-claim against Go West that Scores was unable to assert prior to the dismissal of Go West's bankruptcy petition (see the "Proposed Amended Answer").

Relying on the affidavit of its Chief Financial Officer, Curtis Smith ("Mr. Smith"), Scores contends that pursuant to a "Master License Agreement," EMSI agreed to indemnify Scores in exchange for the rights and license to use and sub-license to other entities the "Scores" name and trademarks (see the "Smith Affd."). Pursuant to the Master License Agreement, EMSI then gave Go West a sub-license to use the "Scores" name and trademarks for the venue Go West owned, managed and operated at 533-535 West 27th Street, New York, New York ("Scores West"). In exchange for this sub-license, Go West agreed to indemnify EMSI (see the "Sub-License Agreement, ¶ 9[b]"). Go West proceeded to own, operate and manage Scores West, the venue where plaintiff's claims arose.

Scores argues that since Go West owned, managed and operated Scores West, Scores should be allowed to amend its Answer and affirmative defenses to include a cross-claim against Go West for any amount that the Court may find is due and owing to plaintiff herein. Scores further argues that since no discovery has been conducted, none of the parties will be prejudiced if the Court grants Scores's motion.

In his cross-motion, Mr. Ambus argues that he should be relieved as counsel for Go West, because Go West has failed to (1) provide him with the business information he requested for discovery, (2) communicate with him, despite his numerous attempts to contact them, and (3) respond to his requests to renew its payment for his retainer. Mr. Ambus contends that after he learned of the dismissal of Go West's bankruptcy petition, he made numerous calls to Scores and Go West that were not returned. Then, on January, 25, 2010, Mr. Ambus wrote to Scores and Go [*3]West, informing them that they had not complied with any of his 2008 discovery requests, and that he wanted to rework their retainers in the instant matter as it was going to become active again (see the January 25, 2010 Letter).[FN2]

Mr. Smith, Scores's Chief Financial Officer, attests that pending the outcome of the bankruptcy action, controlling equity interest in Scores had changed hands, and the new majority owner was not agreeable to meeting Mr. Ambus's demand for additional fees (Smith Affd., ¶ 9). Mr. Smith further attests that it was felt that there was a conflict in Mr. Ambus's representing both Scores and Go West, since Scores planned to pursue a cross-claim against Go West. In addition, the new majority owner preferred to be represented by counsel familiar to him, namely, Perry Burkett, Esq. ("Mr. Burkett"). Mr. Ambus agreed to consent to a substitution, and he and Mr. Smith executed a Consent to Change Attorney (see the March 17, 2010 Letter from Mr. Ambus to Mr. Burkett and the "Consent to Change Attorney").

However, Mr. Ambus received no response from Go West. Therefore, he argues, his request to withdraw as counsel should be granted. Mr. Ambus further contends that Go West will also suffer no prejudice, as there has yet to be a preliminary conference in this matter. Finally, he requests that the Court stay the instant action for a reasonable time, so Go West may obtain new counsel.[FN3]

Discussion

Scores's Motion

It is well settled that leave to amend an answer pursuant to CLR §3025(b) should be freely granted, provided there is no prejudiceto the nonmoving party (Eighth Ave. Garage Corp. v H.K.L. Realty Corp., 60 AD3d 404, 405 [1st Dept 2009]; Murray v City of New York, 51 AD3d 502 [1st Dept 2008]; Crimmins Contr. Co. v City of New York, 74 NY2d 166 [1989]; McCaskey, Davies & Assoc. v New York City Health & Hosps. Corp., 59 NY2d 755 [1983]; Lambert v Williams, 218 AD2d 618, 631 NYS2d 31 [1st Dept 1995]). Although leave to amend should be freely granted, the movant must make some evidentiary showing that the proposed amendment has merit, and a proposed pleading that fails to state a cause of action or is plainly lacking in merit will not be permitted (Hynes v Start Elevator, Inc., 2 AD3d 178 [1st Dept 2003]; Tishman Constr. Corp. v City of New York, 280 AD2d 374 [1st Dept 2001]; Bencivenga & Co. v Phyfe, 210 AD2d 22 [1st Dept 1994]; Bankers Trust Co. v Cusumano, 177 AD2d 450 [1st Dept 1991], lv dismissed 81 NY2d 1067 [1993]).

Here, Scores has demonstrated that the proposed amendments to its Answer have merit.

First, the record indicates that for all times relevant herein Go West owned, operated, and managed Scores West, the venue where plaintiff's claims arose (Smith Affd.,¶¶ 13-14). Second, it is well settled that a "party is entitled to full contractual indemnification [for damages incurred in a personal injury suit] provided that the intention to indemnify can be clearly implied from the language and purposes of the entire agreement and the surrounding facts and circumstances'" (Masciotta v Morse Diesel International, Inc., 303 AD2d 309 [1st Dept 2003] citing Drzewinski v Atlantic Scaffold & Ladder Co., 70 NY2d 774, 777 [1987]). [*4]

The Master License Agreement states in relevant part: Licensee [EMSI] agrees to indemnify, defend, and hold harmless Licensor [Scores], its agents and employees from and against any and all loss and expense arising out of any claims of personal injury, product liability, wrongful death, negligence, strict liability or other similar action, in addition to the breach of any of its warranties hereunder or the violation of any applicable law or safety standard based on the use of the Scores Trademarks by or on behalf of [EMSI] and/or its subsidiary, affiliated, controlled company.(Master License Agreement, ¶ 10[b]) (Emphasis added).

The Sub-License Agreement contains similar language: Licensee [Go West] agrees to indemnify, defend, and hold harmless Licensor [EMSI], its agents and employees from and against any and all loss and expense arising out of any claims of personal injury, product liability, wrongful death, negligence, strict liability or other similar action, in addition to the breach of any of its warranties hereunder or the violation of any applicable law or safety standard based on the use of the Scores Trademarks by or on behalf of [Go West] and/or its subsidiary, affiliated, controlled company.

(Sub-License Agreement, ¶ 9[b]) (Emphasis added).

Here, the indemnification clauses of the Master License Agreement and the Sub-License Agreement appear to support Scores's indemnification claim and allegation that Go West is potentially liable for any damages owed as a result of plaintiff's claims.

In her Complaint, plaintiff alleges that while she was employed at Scores West, she was discriminated against and subjected to a hostile work environment in violation of New York State and City Human Rights Laws. The original Answer does not reflect Go West's and Scores's relationship as indemnitor and indemnitee, respectively. Instead, the Answer is filed on behalf of Scores and Go West as co-defendants, and contains general denials, responses, and 18 affirmative defenses.

The Proposed Amended Answer is filed on behalf of Scores only, "answering the Verified Complaint of the Plaintiff herein and complaining of co-defendant [Go West]" (see the "Proposed Answer"). It contains Scores's responses to plaintiff's claims, as well as Scores's 18 affirmative defense. Importantly, it contains a cross-claim for indemnification against Go West (id. at pp. 9-10), and as indicated above, the Master License Agreement and the Sub-License Agreement support Scores's cross-claim. Further, as no discovery has been conducted and there has been no significant progress in the instant action,[FN4] the Court can discern no prejudice to the parties (Ancrum v St. Barnabas Hosp., 301 AD2d 474, 475 [1st Dept 2003]; Atlantic Mut. Ins. Co. v Greater New York Mut. Ins. Co., 271 AD2d 278, 280 [1st Dept 2000]). Accordingly, Scores's motion for leave to serve an Amended Answer is granted.

Mr. Ambus's Cross-Motion

"It is well settled that an attorney may withdraw from representing a client only for a good and sufficient cause and upon reasonable notice to the client" (Bucaro v Keegan, Keegan, [*5]Hecker & Tully, P.C., 126 Misc 2d 590, 592, 483 NYS2d 564, 567 [1984]; Benefield v City of New York, 14 Misc 3d 603, 606, 824 NYS2d 889, 891 [Sup Ct, Bronx County 2006] ["An attorney does not have an unfettered right to unilaterally withdraw. Good cause is required, to be determined, ultimately, by the Court]; see also, CPLR §321[b][2]).[FN5] Pursuant to Disciplinary Rule 2-110(c)(1)(iv) of the Code of Professional Responsibility,[FN6] an attorney is permitted to withdraw from employment where a client "renders it unreasonably difficult for the lawyer to carry out his employment effectively." Further, pursuant to Disciplinary Rule 2-110(c)(1)(vi),[FN7] permissive withdrawal may be authorized where a client "[d]eliberately disregards an agreement or obligation to the lawyer as to expenses or fees" (Mastec North America, Inc. v Consolidated Edison, Inc., 2008 WL 695034 [Trial Order] [Sup Ct New York County 2008]; Holmes v Y.J.A. Realty Corp., 128 AD2d 482, 483 [1st Dept 1987]). Finally, it is well settled that a client's failure to cooperate or communicate with counsel constitutes good cause for granting the counsel's motion to withdraw (Bok v Werner, 9 AD3d 318 [1st Dept 2004]; Dillon v Otis Elevator Co., 22 AD3d 1, 4 [1st Dept 2005]).

Here, the record demonstrates good cause and reasonable notice.

Despite Mr. Ambus's attempts to communicate with Go West, the record is devoid of any response from Go West. It is undisputed that after Mr. Ambus learned of the dismissal of Go West's bankruptcy petition, he made numerous calls to Scores and Go West that were not returned (cross-motion, ¶8). In his January, 25, 2010 Letter to Scores and Go West, Mr. Ambus informed them that neither had responded to his 2008 request for business records as part of discovery. Mr. Ambus also wrote: "Scores West has no current monies in [its] account, and $7,500.00 must be forwarded with the information requested herein, and the signed retainer . . . . If either or both parties do not wish to go forward then you must either terminate my services, or I . . . will make a motion to be relieved from this case." Mr. Smith attests that after he received Mr. Ambus's January 25, 2010 Letter, he communicated Mr. Ambus's concerns about his retainer to Richard Goldring and Elliott Osher, the principals of Go West (Smith Affd., ¶ 8). In a February 9, 2010 Letter, Mr. Burkett informs Mr. Ambus that "I have spoken to one of the former principals of [Go West] and I am hoping to hear from him with respect to whether they are going to continue with you or obtain another attorney to be substituted for the representation of [Go West in this matter]." Further, Mr. Ambus copied the March 17, 2010 Letter giving his consent to substitution to the principals of Go West. However, Go West has yet to contact him (cross-motion, ¶ 9), and Mr. Ambus's cross-motion is unopposed. Therefore, Mr. Ambus has demonstrated good cause for his withdrawal, as the evidence in the record demonstrates that Go West has failed to cooperate or communicate with Mr. Ambus regarding his retainer and discovery, thus rendering it unreasonably difficult for Mr. Ambus to represent Go West. [*6]

In addition, the evidence in the record demonstrates that Mr. Ambus has provided Go West with reasonable notice of his request to withdraw as counsel. It is undisputed that Mr. Ambus served Go West with notice of his application to be relieved as counsel at its last known business address by certified mail and regular mail (see the "Receipts"). Mr. Ambus also served Go West via the Secretary of State, pursuant to Business Corporation Law §§306, and 102 (a)(11) (see the "Affidavit of Service"). Therefore, as Mr. Ambus has demonstrated sufficient notice to Go West and good cause to be relieved as counsel, the branch of his cross-motion for leave to withdraw and a stay of proceedings for 30 days is granted.

However, the branch of the cross-motion for a stay of any response due by Go West is denied, without prejudice. Scores's motion for leave to amend is simple and has merit, and the Court cannot envision any basis to deny such motion under the circumstances. Further, any challenge by Go West, through new counsel, to the Amended Complaint can be made pursuant to the CPLR in the form of, inter alia, a pre-answer motion to dismiss and/or a motion to renew and/or reargue.

Conclusion

Based on the foregoing, it is hereby

ORDERED that the motion of defendant and third-party plaintiff Scores Holding Company, Inc. for leave to serve an Amended Answer against co-defendant Go West Entertainment, Inc. is granted, and such Amended Answer shall be served within 30 days of the date of this order; and it is further

ORDERED that the branch of the cross-motion for an order granting Gregory T. Ambus, Esq., Gregory T. Ambus, P.C. (Ambus-Russel, P.C, name of law firm amended to Gregory T. Ambus, P.C.), and Herman Wun, of Counsel, permission to withdraw as counsel for Go West Entertainment, Inc. is granted; and it is further

ORDERED that the branch of the cross-motion for an order staying all proceedings, including any response due by Go West to the instant motion, for at least 30 days after service upon the parties of an order relieving said attorneys is granted solely to the extent that no further proceedings may be taken against Go West Entertainment, Inc. without leave of this court for a period of 30 days after service on plaintiff of this order; and it is further

ORDERED that within five (5) days, said counsel shall serve a copy of this order with notice of entry upon Go West Entertainment, Inc. at its last known address by certified mail, return receipt requested, and upon the attorneys for all other parties appearing herein by regular mail; and it is further

ORDERED that the parties appear for a Preliminary Conference before Justice Carol Edmead, 60 Center Street, Part 35, Rm. 438 on Tuesday, August 17, 2009 at 2:15 p.m.

This constitutes the decision and order of the Court.

Dated: June 17, 2010____________________________________

Hon. Carol R. Edmead, J.S.C. Footnotes

Footnote 1:See also Mr. Ambus's cross-motion, ¶ 3.

Footnote 2:Mr. Ambus also informed defendants that the name of his firm had changed, because his partner had retired.

Footnote 3:The Court notes that Mr. Ambus's cross-motion is unopposed.

Footnote 4:A preliminary conference has yet to be conducted.

Footnote 5:CPLR §321(b)([2) provides that: "An attorney of record may withdraw or be changed by order of the court in which the action is pending, upon motion on such notice to the client of the withdrawing attorney, to the

attorneys of all other parties in the action or, if a party appears without an attorney, to the party, and to any other person, as the court may direct."

Footnote 6:22 NYCRR §1200.15(c)(1)(iv).

Footnote 7:22 NYCRR §1200.15 (c)(1)(vi).