Marin v Constitution Realty LLC

[*1] Marin v Constitution Realty LLC 2014 NY Slip Op 50206(U) Decided on February 20, 2014 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 February 20, 2014
Supreme Court, New York County

Jose Marin and ADA MARIN, Plaintiff,

against

Constitution Realty LLC, INDEPENDENCE LLC, KOEPPEL COMPANIES LLC, and GENERAL RESTORATION ASSOCIATES, INC., Defendants.



111531/2007



Sheryl Menkes, Esq.

325 Broadway, #504

New York, New York 11211

(212) 285-0900)

Jeffrey Manheimer, Esq.

377 Oak Street, Ste 210

Garden City, New York 11530

(516) 280-3065

David Golomb

370 Lexington Avenue, Ste 908

New York, New York 10017

(212) 661-9000

Carol R. Edmead, J.

MEMORANDUM DECISION

In this dispute regarding attorneys' fees, which arises from the settlement of a personal injury action under the Labor Law, Sheryl Menkes, Esq. ("Menkes") moves for an order establishing the attorneys' fees due to Jeffrey Manheimer, Esq. ("Manheimer") on a quantum meruit basis and to David Golomb, Esq. ("Golomb") at 12% of the total net attorneys' fee.

Manheimer opposes the motion and cross moves for an order fixing his fee at 20% of the [*2]total attorneys' fee pursuant to two written agreements.[FN1]

Golomb also opposes the motion and cross moves for an order fixing his fees at 40% of the total attorneys' fee, enforcing a charging lien pursuant to Judiciary Law 475 in that amount, and excluding from any calculation of disbursements chargeable to plaintiffs the "medical consultant" disbursement of $109,47.95 Menkes requests.[FN2]

Factual Background

The underlying action in this case was a personal injury action brought under the New York State Labor Law arising from serious injuries sustained by plaintiff Jose Marin on April 17, 2006, when he fell approximately 40 feet from a platform while at work in Manhattan.

Menkes commenced the case on behalf of Mr. Marin and his wife, Ada, in 2007. Plaintiffs were granted summary judgment as to liability in August 2012. The case ultimately settled for $8,000,000 on May 31, 2013. Pursuant to Menkes's contingency agreement with plaintiffs, the attorneys' fee in this case is $2,600,000.

Facts Regarding Manheimer

In early 2009, Menkes, an admittedly inexperienced attorney regarding cases of this magnitude, connected with Manheimer, a Labor Law specialist. Menkes and Manheimer entered into a fee-splitting agreement in February 2009, and an amended agreement in June 2009.

The February agreement provided that Menkes would be "attorney of record for the case"; Manheimer would "act as co-counsel" to Menkes, advise Menkes "with all phases of the litigation," attend defendants' deposition and trial, and "advance litigation expenses." Menkes agreed to pay Manheimer 20% of the net attorneys' fee if "the case settled before trial."

The June agreement provided that Manheimer would act in "an advisory capacity only as co-counsel" and "be available to answer questions" Menkes might have in connection with the litigation. Menkes assumed the role of paying "all litigation costs" in the matter and would "be the contact" person for all work generated in the matter. Manheimer agreed to "not contact the client, defendants experts or the Court" regarding the matter unless Menkes consented to same. Notwithstanding the amendments, Menkes again agreed to pay Manheimer 20% of the net attorneys' fee if the case settled before trial.

Plaintiffs were not advised of Manheimer's role in the case or of such agreements.[FN3]

Menkes alleges that over the eight weeks following the June 2009 agreement, Manheimer began to insinuate himself as lead counsel (see infra, pp. 22-23). On August 14, 2009, Menkes wrote Manheimer, attempting to terminate their relationship and stating that, instead of receiving [*3]20% of the fee, she would pay him on a quantum meruit basis if the case settled before trial.[FN4]

Manheimer did not respond to the letter, and Manheimer and Menkes did not communicate again until after the case had been resolved (see infra). Manheimer only learned from eLaw that Menkes had subsequently moved the court to determine Golomb's fees.[FN5]

Facts Regarding Golomb

After having obtained summary judgment in favor of plaintiffs as to liability in August 2012, in February 2013, Menkes contacted Golomb for assistance regarding an upcoming mediation on damages and, if necessary, to handle trial of the matter.[FN6] Golomb, like Manheimer, is an experienced attorney with prior success in litigating complicated personal injury actions.In March 2013, Golomb and Menkes negotiated and entered into an agreement [FN7] which provided, generally, for Golumb to receive 12% of all attorneys' fees "whenever the case is resolved" and "If the case does not resolve at the mediation, presently scheduled for May 20, 2013," 40% "of all legal fees whenever the case is resolved . . . ."[FN8]

On May 20, the scheduled mediation was held at JAMS before retired Judge Alan Hurkin-Torres (the "Mediator"). Plaintiffs' opening settlement demand was $19,000,000, and defendants' original offer was $2,000,000. By the end of the evening, plaintiffs' demand was at $8,500,000 and defendants' offer was $7,000,000 (Menkes claims that defendants offered $7.5 million). Defendants needed to obtain additional authority from their excess insurance carrier for any additional amounts.

Thereafter, the parties and Mediator continued discussions, and an agreement in principle was reached on May 31 for $8,000,000.

The Mediator's invoice bills for mediation services only on May 20, 2013, for four hours of "session time" commencing at 2:00 p.m., and one hour of "additional session time" that same day. Menkes paid this invoice in full. No other invoices regarding mediation exist.

Arguments Regarding Manheimer's Fees

Menkes argues that the February 2009 and June 2009 agreements are unenforceable because they are in violation of Disciplinary Rule DR 2-107(A) and Rule of Professional [*4]Conduct 1.5(g), respectively.[FN9] Both rules require that the client consent to the employment of an outside attorney and that either: (a) the client receive a writing indicating that both lawyers assume joint responsibility; or (b) the division of fees is in proportion to the services performed by each lawyer. As such, Manheimer is entitled to fees on a quantum meruit basis.

Plaintiffs did not consent to Manheimer's employment and did not know of the fee division. Even if they had, neither Manheimer nor Menkes provided a writing stating he was jointly responsible for the representation. The absence of such a notification reflects the reality that he never assumed joint responsibility for the matter. Moreover, awarding him 20% of the fee she earned over a seven-year period for merely acting as an advisor for six months is disproportionate to the value of any services he actually rendered.

In opposition, Manheimer claims that both agreements unambiguously provide that he was to receive 20% of the net attorneys' fee, and that contesting the purported termination letter was therefore unnecessary. And, based on multiple conversations had with Menkes, he assumed, understood, and was led to believe, that plaintiffs had been advised of his role and had consented to his assistance. Nevertheless, Menkes rejected all of his attempts to meet plaintiffs. Eventually, it was clear he would never meet them, due to the June agreement which forbade him from contacting them without her permission. Thus, Manheimer had no way of learning that she had never advised them of his role in the case and did not therefore violate any ethical rules.

Although Menkes agreed to give Manheimer 20% of the fee, she made it impossible for him to meet with plaintiffs and thus should not be allowed to shield herself under the cloak of DR 2-107(A) and Rule of Professional Conduct 1.5(g) and simultaneously accuse him of violating those rules to avoid compensating him the agreed upon fee.

Moreover, Menkes violated various rules of the Code of Professional Responsibility in that she failed to promptly inform plaintiffs of circumstances when their informed consent was required; knowingly made a false statement to Golomb by stating that no other attorneys were participating in the fee; failed to notice Manheimer of her application to determine Golomb's fees; and failed to notify the Court of Manheimer's existence as co-counsel.

Manheimer argues that her claim that he sought to insinuate himself as lead counsel in violation of the agreements is a fabricated attempt to abrogate the agreements and is unsupported by the actual work he performed. Manheimer claims he exchanged and reviewed numerous items of discovery, and provided her with a sample Labor Law summary judgment motion.

In reply, Menkes contends that Manheimer does not dispute that the ethical rules govern both agreements or claim that the agreements comport with the rules. Moreover, he fails to show that the fee he claims is in proportion to the work he actually performed or that he assumed joint responsibility by a writing given to the client, and that the clients agreed to Manheimer's retention. Thus, his arguments that the agreements should be enforced because they are "clear and unambiguous" lack merit, as the controlling case law provides that fee-splitting contracts like the ones at issue are unenforceable because they violate the ethical rules.

Menkes also denies stating that she told Manheimer that he would eventually meet with plaintiffs or that he ever asked to contact plaintiffs to obtain the required consent. Moreover, [*5]even assuming arguendo that she stated as such, his belief that she had informed plaintiffs of his role because of such statement does not establish that he believed that plaintiffs had been given the requisite writing required under the ethical rules or that they had ever agreed to a fee division.

Manheimer, an experienced attorney, knew or should have known of the requirements for a valid division of fees and, unlike Golomb, did not ensure that the basic requirements for a fee division were secured.[FN10] Because it was Manheimer who insisted on being compensated by a percentage of the fee, he cannot blame her for failing to protect him from the strict rules governing fee-splitting.

Menkes claims that Manheimer's minimal work in his advisory capacity did not provide any long-term benefit to her or the case. At most, Manheimer was involved for 1/14 of the life of the case. His lack of substantive involvement is not surprising given the June agreement which clarified his role as a consultant on the matter, and he was discharged in August 2009 because he repeatedly demonstrated that he would not, or could not, comply with the agreements.

None of the cases cited by Manheimer permits him to enforce the void agreements and circumvent the rule of quantum meruit. Manheimer could have conditioned his involvement with Menkes on plaintiffs being informed of his role and consenting to his obtaining a portion of the fee as required. However, having failed to do so, he cannot accuse her of an ethical violation for declining to pay him other than by quantum meruit where the rules provide that it would be a disciplinary violation for both of them if the fee is divided pursuant to the agreements.[FN11]

In his reply, Manheimer states there is no claim that he was terminated for cause or any misconduct; rather, he was discharged merely because Menkes wanted to handle the case alone. Moreover, there are no claims that Menkes was dissatisfied with his work product in the case, or that Manheimer ever refused a request to contribute more substantially.

The claim that his work time equaled 1/14 of the total life of the case is pure speculation and not relevant, because there is no ambiguity to the agreements. Nothing in the record indicates that Manheimer would not or could not comply with the agreements. The claim that he was engaged in an advisory role only is dubious because Menkes introduced Manheimer to defendants in writing as "co-counsel." Moreover, the work he performed was significant to the ultimate resolution of the matter.

Menkes's misrepresentations to the court, compounded by her willful failure to advise Manheimer of the settlement and/or notice him in her original motion for fees, place her in clear violation of the ethical rules. Furthermore, Menkes's claim that she "complied" with the court's orders is absurd, as she was forced to comply under the threat of contempt.

As to the merits, Manheimer contends that the agreements should be enforced because Menkes was the drafter, the terms were freely assented to, and she reaped the benefits of the agreements. Despite the fact that a fee-splitting agreement which violates the Code of Professional Responsibility is generally void, forfeitures by operation of law are disfavored, particularly where a defaulting party seeks to raise illegality as a sword for personal gain rather than as a shield for the public good. Moreover, the record is clear that Manheimer intended to, [*6]and attempted to, take joint responsibility for plaintiffs' representation. Menkes admittedly had no interest in having him meeting plaintiffs. However, she now seeks to use his lack of contact as justification for voiding the agreements. Manheimer's lack of contact with plaintiffs was due to the intentional and misleading actions of Menkes. If Manheimer had any indication that she had not informed plaintiffs of his involvement, he would have contacted them independently.

Also, plaintiffs were not harmed by Manheimer's representation. In fact, were it not for his involvement, plaintiffs' claims would have been diminished due to Menkes's inexperience.

The extrinsic evidence submitted by Menkes regarding the February and June 2009 agreements ventures beyond the plain language of the agreements. And, it is irrelevant that the June agreement amended the first agreement, as the plain language of the agreement provides that he was still entitled to a 20% fee.

Arguments Regarding Golomb's Fees

Menkes argues that the agreement between her and Golomb delineates two scenarios for his involvement. One is the handling of the mediation, which was to begin on May 20, 2013. If the case settled at mediation, Golomb would receive a 12% fee. Following such mediation, if the case was not resolved, Golomb agreed to prepare for trial and try the case for a 40% fee.

The mediation did not end on May 20, and at the close of the May 20 session, settlement discussions remained ongoing, as the mediation was not deemed a failure at any time. Moreover, the Mediator continued to be involved in the ongoing negotiations. As such, Golomb was not "preparing for trial," as he anticipated that settlement was at hand and did nothing but progress negotiations, which resulted in settlement on May 31 conveyed by the Mediator.

The argument that Golomb was entitled to receive 40% of the fee because the case did not settle at the May 20 mediation would result in an unintended absurdity. The case herein involved multiple parties, insurers, large sums of money and numerous details, and like many such cases, settlement was not reached in a single session. The Mediation did not begin until mid-afternoon, and the parties agreed to adjourn for the day so that the excess carrier could obtain additional authority and plaintiffs could explore reducing the workers' compensation lien. Menkes would not have agreed to begin the Mediation in the mid-afternoon had she understood that the mediation was required to finish on May 20 in order for Golumb to be limited to the 12%. Golumb's right to 40% did not vest automatically at midnight in the absence of any trial preparation. And, the reference to "at" mediation does not state or imply that the mediation process was confined to May 20. This was not a case where there was an urgency to resolve matters in a single day; the trial was not to start until September. Moreover, accepting Golomb's position would provide him with an unconscionable incentive to obtain a windfall by delaying even one day in reaching agreement. Indeed, the mediation extended to days after the 20th, with Golumb, Menkes, and the Mediator communications back and forth regarding the workers' compensation lien and the excess carriers. The absence of any further invoice from the Mediator shows that the parties were close to a deal on May 20.

The timing of the settlement so close to May 20, the absence of any marked end to the mediation (such as where a mediator declares an unbridgeable impasse), and the absence of steps to prepare for trial after May 20 lead to the conclusion that the case settled as a direct result of the Mediation.

The agreement is ambiguous and should be construed against the party who prepared it. [*7]It would be absurdly harsh and unreasonable to read the agreement as granting Golomb 40% of the fee because the settlement was not completed "on" May 20, or to interpret "mediation" to include only steps taken in a formal session. The intent of the agreement to boost Golomb's percentage was not based on whether the mediation process took a week to complete or whether Golomb closed the deal without the Mediator's assistance. Instead, the increased fee must hinge on two events that did not occur: the clear rejection by the parties of a mediated settlement after a reasonable time to see if the mediation bore fruit; and some action that halted the settlement process begun at the mediation and led Golomb to prepare for trial. Thus, the court may reject a construction in favor of one that better accords with the reasonable expectations of the parties and the purpose of the agreement.

In his cross-motion/opposition, Golomb argues that a successful mediation always produces a signed settlement agreement, something that did not occur here. Further, no continuation or additional mediation session was ever proposed, much less contemplated or held. The invoice sent by the Mediator to Menkes shows that the only mediation ever conducted was on May 20. Moreover, when the mediation concluded, the parties were still over $1,000,000 apart in negotiations. The record indicates that Golomb performed significant work leading up to and after mediation. Also, the claim that Golomb had perverse incentives to avoid settling the case at mediation is speculative and unsupported by the record.

The agreement unambiguously provides that Golomb was entitled to 40% of the fee when the case did not settle at the May 20 mediation. The agreement was prepared by both Golomb and Menkes, contrary to Menkes's claim. In any event, the court should not accept Menkes's extrinsic evidence, which tries to sow ambiguity where none exists. The claims that conditions precedent that there had to have been a clear rejection of a mediated settlement after a reasonable amount of time and some action that halted the settlement process begun at the mediation that led to Golomb and Menkes to prepare for trial exist precluding his right to a 40% fee are nowhere stated and diametrically opposed to the actual, clear terms of the agreement. Thus, his right vested when the case did not settle at the May 20 mediation; at that point, whether the case settled the next day or in the weeks after became irrelevant.

Even assuming arguendo the agreement is ambiguous, the extrinsic evidence shows that to complete settlement, much of Golomb's work critical to the settlement did not involve the Mediator in any way. Also, even assuming trial preparation was necessary, the work performed leading up to the mediation consisted of mediation preparation as well as trial preparation.

In reply, Menkes submits that the parties' submissions must be analyzed against the backdrop of the significant time she has devoted to the case. Menkes also asserts that the mediation process continued unabated after the face-to-face meeting on May 20, 2013 and resulted directly in an $8,000,000 settlement that the Mediator conveyed to Golomb. And again, Golomb's claimed entitlement to an additional $700,000 because the mediation of a complicated, multi-party case took more than one day to finish is absurd. Golomb's argument that the mediation terminated in failure on May 20 does not account for the fact that significant progress was made at the session, and that the Mediator agreed at the end of the session to continue shuttling between the parties to effect a settlement.

Golomb's claim that his right vested automatically at midnight on May 21 regardless of whether the mediation was ultimately successful, and whether he actually had to do additional [*8]trial preparation is not the letter or spirit of the agreement. Had the intent of the parties been to state or imply that the mediation process was inevitably confined to May 20, the agreement would have stated that the 40% fee vested if the case settled anything "after May 20" and would have made no distinction between a successful mediation and a failed one.

Moreover, there was no necessity that the mediation process result in a settlement on May 20, because trial was not scheduled until September and there was no significance attached by any of the parties to whether a mediated settlement was reached on May 20 or a few days later.

Golomb's argument that his recovery hinged on whether the process succeeded in a single day would have created an absurd incentive for Menkes: to insist that no one leave for the day until they had absolutely exhausted all hope of future settlement. Had it occurred to her that the mediation had to start and end on the same day to be deemed a success, Menkes would have suggested that it start first thing in the morning and continue without adjournment; advised the mediator and all parties that the mediation was expressly limited to one day (failing which, the parties would inevitably proceed to trial); and urged that all parties appear with maximum authority. In other words, had she understood that the mediation was required to finish on May 20 or else Golomb would automatically receive an extra $700,000 of the fee, she would not have agreed to begin mid-afternoon on May 20 and would have herself had the incentive to take the ridiculous position of opposition the mediation's adjournment for the day.

After the May 20 mediation, Golomb and the Mediator remained in contact as to the case, and Golomb admitted that the Mediator bridged the gap between the parties after May 20. As such, the claim that because the Mediator did not invoice the parties for time spent on the matter after May 20, he did not provide any mediation services after May 20, 2013, is dubious. Co-defendant General Restoration Associates's counsel Eugene Boule avers, in his supplemental affirmation (submitted at Menkes's request)[FN12] that although they did not schedule another in-person session, he understood that the Mediator would continue efforts to bridge the gap after the May 20 session by contacting the excess carriers and plaintiffs' attorneys to continue negotiations.

Also, the absence of a further invoice shows that the parties were close to a deal on May 20, it took very little additional time and effort by the Mediator to close the gap; and he thus chose not to bill for completing what began on May 20. In support of this assertion, the affirmation of David Brodsky, a professional mediator/arbitrator who specializes in complex commercial and financial disputes, is submitted for the proposition that mediation is often a process that does not begin and end in a single day. Brodsky also states that he does not bill for follow-up work to effect a final settlement; and when he believes the parties have reached an impasse, he will advise them that the mediation cannot succeed.

Under Golomb's logic, even if the parties reached a monetary settlement on May 20, and unresolved loose ends remained, the matter would not be considered settled "at" mediation, thus entitling him to 40%. Such an interpretation is implausible.

In his reply, Golomb states that Menkes's relies solely on extrinsic evidence to construct ambiguity where none exists and re-define plain English words. Menkes's arguments about what she "would not have agreed to do" do not constitute admissible proof. [*9]

The amount of work claimed to have been done by each attorney is irrelevant to the plain and unambiguous agreement. Moreover, there remains no dispute that the case did not settle at the only mediation held in the matter.

Menkes's reply is nothing more than a misguided effort to persuade the court to find that the phrase "after such mediation, I will be entitled to 40% of all attorneys' fees whenever the case is resolved" actually means "only after the Mediator declared an impasse, or only after he made further efforts to settle, or only after more trial preparation was undertaken by Golomb would the higher fee percentage apply. Also, Menkes does not establish that the fee agreement provides that additional work had to be undertaken after the mediation in order to invoke the higher fee.

Moreover, the submission of the Brodsky affidavit to establish that the mediation was "adjourned" (and thus not completed) is unavailing, because the plain meaning of "adjourn" is to suspend indefinitely or until a later stated time, and it is undisputed no further mediation sessions were scheduled. Also, as a commercial mediator, Brodsky has no expertise in tort litigation and/or tort mediation, nor does he dispute that a successful mediation would culminate in a signed settlement agreement. Also, Brodsky is not a mediator at JAMS, and would thus have no specific knowledge of JAMS' practices.

The supplemental Boule affirmation does not change his original conclusions that no further mediation was ever scheduled and that no settlement was reached on May 20.[FN13]

Golomb's Cross-Motion For Disallowal of Disbursements

Before the May 20 mediation, plaintiff Mrs. Marin requested Menkes to provide the total of her disbursements. On May 7, Menkes provided an itemized list in the amount of $59,585.82. In June 2013, after the case had settled in principle, Menkes emailed Ms. Marin a bill from Jon Korn, M.D., a "medical consultant," in the amount of $109,747.95. Menkes seeks this additional disbursement, which would be applied against plaintiffs' recovery.

Ms. Marin submits an affidavit averring that Menkes had previously told her that Dr. Korn was a "friend" and that there would be no charge for his assistance. Since plaintiffs do not consent to the imposition of the expense, it should not be charged against their gross recovery.

In opposition, Menkes argues that Golomb lacks standing to disallow the disbursement, and any issue the plaintiffs may have on this topic can be addressed upon a motion by them. In any event, it is standard practice for an attorney to treat the fees of a medical consultant as a disbursement and Golomb does not challenge the nature of the disbursement. Dr. Korn's invoice details his actual time and involvement in the case. Menkes claims that she told plaintiffs that Dr. Korn was an important part of their case and was a necessary expense. The reason Dr. Korn's expenses were not provided prior to the mediation is that the pre-mediation list concerned only out-of-pocket disbursements and Menkes had not yet paid Dr. Korn's expenses.

In reply, Golomb argues that he has standing because he is indisputably co-counsel of record for plaintiffs (who would be directly affected by a ruling on the issue), and Ms. Marin submitted an affidavit in support of the cross-motion. Lastly, Menkes does not that she told Ms. Marin that Dr. Korn was "a friend" and was not charging for his services.

Discussion [*10]

Although agreements are to be construed in accord with the parties' intent, it is well-settled that the best evidence of what parties to a written agreement intend is what they say in their writing (see Greenfield v. Philles Records, 98 NY2d 562 [2002]). Thus, an agreement that is complete, clear and unambiguous on its face must be enforced according to its plain meaning (Id.; see also White v. Continental Casualty Co., 9 NY3d 264 [2007]). And, the rule that agreements should be enforced according to their stated terms should be applied with special force when negotiated at arm's length or by sophisticated business people (see Riverside S. Planning Corp. v. CRP/Extell Riverside, L.P., 13 NY3d 398 [2009]).

The "[m]ere assertion by one that the contract language means something to him, where it is otherwise clear, unequivocal and understandable when read in connection with the whole contract, is not in and of itself enough to raise an issue of fact" (see Vesta Capital Mgmt. LLC v. Chatterjee Group, 78 AD3d 411, 910 NYS2d 64 [1st Dept 2010]). An agreement that on its face is reasonably susceptible of only one meaning is unambiguous, and as such, the court is not free to alter the contract to reflect its personal notions of fairness and equity (see Greenfield, supra; Riverside S. Planning Corp., supra). Further, extrinsic evidence outside the four corners of the document as to what was "really intended" but was unstated or misstated is inadmissible to add to or vary the writing, where no ambiguity exists upon the face of the agreement (see W.W.W. Assoc. v. Giancontieri, 77 NY2d 157 [1990]; Riverside S. Planning Corp., supra). Such extrinsic proof may only be considered after the court decided as a matter of law that the agreement is ambiguous (see Madison Ave. Leasehold, LLC v. Madison Bently Associates, LLC, 8 NY3d 59 [2006]).

An agreement between attorneys regarding the division of a legal fee is valid and enforceable in accordance with its terms provided that the attorney who seeks his share of the fee contributed some work, labor or services toward earning the fee (see Benjamin v. Koeppel, 85 NY2d 549 [1995]). "In the realm of fee-sharing disputes, courts will not inquire into the precise worth of the services performed" by each attorney, as long as each actually "contributed to the legal work" and there is no claim that each refused to contribute more substantially (Samuel v. Druckman & Sinel, LLP, 12 NY3d 205, 210 [2009]).

Golomb is Entitled to 40% of the Total (Net) Fee

It is undisputed that Menkes and Golomb entered into an enforceable agreement. The only issue herein is whether Golomb is entitled to 12% (as Menkes contends) or 40% (as Golumb contends) of the net fee.

The controlling provisions of the agreement between Menkes and Golomb are as follows: I [Golomb] have agreed to review the file, provide whatever services are needed, with your and your office's assistance, to prepare it for the mediation and to handle the mediation. For those services, I will be receive [sic] twelve (12%) of all attorneys' fees whenever the case is resolved, whether by settlement, verdict after trial or appeal, calculated after the attorneys have been reimbursed for all expenses laid out.If the case does not resolve at the mediation, presently scheduled for May 20, 2013, then I will be responsible, with your and your office's assistance as requested, for preparing for trial and trying the case. After such mediation, I will [*11]be entitled to forty (40%) of all attorneys' fees whenever the case is resolved. In the event this matter has to be tried, the total of all attorneys' fees to which I am entitled for all of the services set forth, including mediation, shall be forty (40%) of all attorneys' fees.

Menkes Aff., Ex. E.

Given that the agreement is clear and unambiguous, it is interpreted based on a plain reading of its terms and the court does not consider the extrinsic evidence submitted by the parties in an attempt to provide further and unnecessary context for the clear and unambiguous agreement.

The first reference to the word "mediation" appears in the first paragraph noted above, and is not further defined, particularized or qualified in that paragraph. However, a mediation was contemplated by the parties at the time this agreement was reached, as Golumb was expressly engaged to provide services to prepare and handle "the mediation."

Yet, the term "mediation," is elucidated in the second paragraph above, as the mediation "presently scheduled for May 20, 2013." Golomb becomes entitled to 40% of the total attorneys' fees if the case does not resolve "after such mediation." Additionally, "After such mediation" refers to the previously-referenced mediation, "presently scheduled for" May 20. Therefore, reading the second paragraph as a whole, the Court finds that the "mediation" had a designated date of May 20, 2013.

It is noted that 'Mediation' is defined as "intervention; interposition; the act of a third person who interferes between two contending parties with a view to reconcile them or persuade them to adjust or settle their dispute" (Black's Law Dictionary Free Online Legal Dictionary 2nd Ed.). As indicated above, the term 'mediation' was modified by the addition of the words "at," "the" and "presently scheduled for May 20, 2014." The only way "mediation" can be defined here is as the mediation session scheduled for (and held on) May 20.

At the mediation that was then scheduled for and designated to be held on May 20, 2013, the case was not resolved. It is undisputed that the parties were at least $1,000,000 apart when that mediation ended. The case was not settled, even in principle. Indeed, there was no resolution of any portion of plaintiffs' case. Consequently, at the time the mediation concluded on May 20th, the matter had "to be tried," thereby also triggering the last, unambiguous sentence in the second paragraph noted above, providing that "In the event this matter has to be tried, the total of all attorneys' fees to which I [Golumb] am entitled for all of the services set forth, including mediation, shall be forty (40%) of all attorneys' fees." Notably, the Mediator's invoice makes clear that the only "mediation services" billed for by the Mediator were billed for the one mediation held on May 20, 2013.

For Menkes to prevail in her motion and limit Golomb's recovery to 12% of the total fee, the court would have to read into the agreement terms which do not exist, such as "during/through" the mediation "process." However, courts "may not 'by construction' add or excise terms, nor distort the meaning of those used and thereby make a new contract for the parties under the guise of interpreting the writing" (see Riverside S. Planning Corp., supra). Menkes's interpretation depends heavily upon the finding that 'mediation' can be defined in terms of being a process as opposed to the mediation session that was held on May 20. However, the agreement cannot be interpreted to limit Golumb's fees to 12% even assuming "mediation" is defined as a "process." In this regard, the "mediation process" is itself a dubious phrase given [*12]that the phrase "at the mediation" implies a specific mediation held at a specific location. To interpret "mediation" as an indefinite process would render the phrase "If the case does not resolve at the mediation, presently scheduled for May 20, 2013," meaningless and nothing in the agreement indicates an expectation of an automatic continuation of the mediation despite the failure to reach any resolution of the case on that date. Even assuming such a "process" occurred on May 20, the qualifier "presently scheduled for May 20, 2013" (which follows "at the mediation") limits the timeframe of the mediation that was then presently scheduled (and actually held) on that date. In any event, it is undisputed that the case was not "resolved" on May 20, as negotiations broke down on that date, at which time the parties were $1,000,000 apart. Thus, even under Menkes's reading, any such "process" ended on May 20 as per a complete reading of the paragraph.

Thus, Golomb was entitled to the 40% fee at the precise moment the May 20 mediation ended (on May 20) without a resolution. Whatever legal services Golumb performed after May 20th are of no moment as to whether he is entitled to 40%.

Contrary to Menkes's contention, there are no further conditions precedent attached to this provision. A plain reading of the agreement does not support her claim that the increased fee hinges on: the Mediator declaring an impasse; the Mediator making additional efforts to resolve the case; a clear rejection by the parties of a mediated settlement after a reasonable time to see if the mediation bore fruit; and/or Golomb undertaking additional trial preparation.

In the same vein, the court rejects the argument that the plain language of the agreement delineated Golomb's role in two phases: mediation preparation/mediation; and if the mediation did not result in a settlement, trial preparation/trial. There is no support within the agreement for the claim that the agreement provides that if mediation eventually "resulted in" settlement, the lower fee would be applicable.

Accordingly, because the agreement clearly and unambiguously provides that Golomb became entitled to the 40% fee when the case did not resolve at the May 20 mediation, the court does not consider Menkes's remaining arguments which purport to show her supposedly "true" intent regarding the agreement. Nor does the court consider Menkes's remaining arguments, which are based entirely on extrinsic evidence.

Further, it also matters not how much Menkes worked on the matter versus how much effort Golomb expended; the case law cited above makes clear that fee-sharing agreements will not be scrutinized as such. The parties to an agreement are free to make their bargain, "even if the consideration exchanged is grossly unequal or of dubious value" and absent "fraud or unconscionability, the adequacy of consideration is not a proper subject of judicial scrutiny" (see Goldston v. Bandwidth Tecnology Corp., 52 AD3d 360, 366, 859 NYS2d 651 [1st Dept 2010]).

Here, there can be no finding of fraud or other improper conduct on Golomb's part. Despite claims that Golomb had a perverse incentive to not settle the case at the mediation, there is no evidence that Golomb intentionally delayed settlement. If anything, the evidence indicates that Golomb did precisely what he was required to do under the agreement, and that he vigorously represented plaintiffs' interests at all times.

Therefore, the branch of Menkes's motion establishing the attorneys' fees due to Golomb at 12% of the total net attorneys' fee is denied, and the branch of Golomb's cross-motion for an order fixing his fees at 40% of the total attorneys' fee and enforcing a charging lien pursuant to [*13]Judiciary Law 475 in that amount is granted.

Manheimer is Entitled to 20% of the Total (Net) Fee

The essential terms of the February 2009 and June 2009 agreements are unequivocal and unambiguous. Moreover, there is no claim that Manheimer was asked to contribute more substantially regarding his work on the matter.

Both agreements provide that Manheimer would be entitled to 20% of the total net attorneys' fee should the case settle before trial. There is no requirement in either agreement than Manheimer had to remain as co-counsel throughout the duration of the matter to collect his 20% fee. Likewise, there is no provision in either agreement that if Menkes terminated Manheimer before the case was resolved, he would not be entitled to the fee.

In Menkes's purported termination letter, there is no mention of any dissatisfaction with any of the work Manheimer performed; no complaints that he had in any way exceeded the role she had requested he perform; and no objection to any aspect of his performance as co counsel.

In her affirmation submitted in her moving papers, Menkes alleges that Manheimer breached the June 2009 agreement because he: "sought to insinuate himself as lead counsel, seeking to contact persons I had never authorized him to contact and seeking to take charge of the case. On a single occasion, upon his insistence that he could not 'advise' me regarding certain issues to be raised, I allowed him to take a deposition rather than cause undue delay by adjourning it. I also recall on one occasion asking him for a recommendation of a liability expert and on another occasion he reviewed a notice to admit (which instead of providing he rewrote and added his name as counsel). His substantive work on the case during the entirety of the period was minimal and, during the majority of the time he was advising me he was acting in a manner inconsistent with, and antithetical to, our agreement."

(see Menkes Aff., para. 7).

Aside from the allegation regarding Manheimer's work on the notice to admit, Menkes's allegations are conclusory and do not establish that Manheimer breached either of the agreements (see Gordon v. Dino De Laurentiis Corp., 141 AD2d 435, 529 NYS2d 777 [1st Dept 1988]). Notably, however, the notice to admit was served in March 2009, before the June 2009 agreement which provided that Manheimer was to act in an "advisory role." Thus, at most, Menkes was concerned that Manheimer might overstep his role as co-counsel. However, this is not equivalent to setting forth evidence that Manheimer actually breached one of the agreements. Contrary to Menkes's arguments, neither agreement provides that Manheimer was barred from "trying to usurp Menkes's role as lead counsel" (see Menkes Memorandum of Law, p. 15), or that "repeated attempts to control the case" and/or "insisting on involvement exceeding what Menkes required and demanded" (see moving memorandum of law p. 15) would constitute a breach. Menkes claim that Manheimer was discharged in August 2009 because he "repeatedly demonstrated that he would not, or could not, comply with our agreement" (see Menkes Reply Aff., para. 32) is insufficient to establish an actual breach.

Accordingly, the court finds that the agreements entitle Manheimer to receive 20% of the total net attorneys' fee (since the case settled before trial). [*14]

As such, the next issue is whether the alleged violation of the rules of professional conduct with respect to the agreements renders them unenforceable.

It is undisputed that DR 2-107(A) applies to the February 2009 agreement and that RPC 1.5 applies to the June 2009 agreement. Here, the parties' submissions establish that both agreements were made in violation of those rules, as there is no evidence that plaintiffs consented to Manheimer's representation, and Menkes and/or Manheimer failed to notify plaintiffs of Manheimer's representation and the subject fee division.

Illegal contracts are, as a general rule, unenforceable (see Lloyd Capital Corp. v. Pat Henchar, Inc., 80 NY2d 124, 127 [1992]). However, where contracts which violate statutory provisions are merely malum prohibitum, the general rule does not always apply (see Benjamin, supra). If the statute does not provide expressly that its violation will deprive the parties of their right to sue on the contract, and the denial of relief is wholly out of proportion to the requirements of public policy, the right to recover will not be denied (Id.; see also Rosasco Creameries v. Cohen, 276 NY 274, 278 [1937] ("[I]f the statute does not provide expressly that its violation will deprive the parties of their right to sue on the contract, and the denial of relief is wholly out of proportion to the requirements of public policy or appropriate individual punishment, the right to recover will not be denied")).

Menkes seeks the use non-compliance of the ethical rules as a sword to have the duly executed agreements ruled unenforceable. If ruled unenforceable, it is undisputed that Manheimer would be entitled to payment on a quantum meruit basis, as opposed to the 20% of the total net fee (see Matter of Cooperman, 83 NY2d 465 [1994]).

The court rejects Menkes's disingenuous arguments. Menkes is subject to the same rules of professional conduct that Manheimer is subject to. Her apparent ploy to void the agreements she benefitted from on the grounds that they are void pursuant to the rules of professional conduct which she also violated will not be entertained.

The Court of Appeals has addressed the issue of whether the violation of an ethical rule renders a fee sharing agreement unenforceable. In Benjamin v. Koepper (supra), the Court refused to void a fee sharing agreement on the grounds that the parties violated the Code of Professional Responsibility. Specifically, the Court noted: "[I]t ill becomes defendants, who are also bound by the Code of Professional Responsibility, to seek to avoid on "ethical" grounds the obligations of an agreement to which they freely assented and from which they reaped the benefits"Benjamin, 85 NY2d at 556.

In Law Offices of K.C. Okoli, P.C. v. Maduegbuna (62 AD3d 477, 880 NYS2d 230 [1st Dept 2009]), an action between attorneys, plaintiff alleged that he assisted defendants in a contingency fee case for which they paid him, in breach of an oral agreement, 20% of the fee realized on settlement, instead of the required 50% fee based on the agreement. The First Department ruled that based on Benjamin, the agreement was not void due to a mutual violation of the Code of Professional Responsibility.

This court has ruled upon this issue before, in Hiller v. Lo (2011 WL 11166357 [Sup Ct New York Cty 2011]). Therein, the court cited an expert commentator, who stated that: "[D]R 2-107 [the predecessor to Rule 1.5(g)] was intended to address referral [*15]situations, prevent unreasonable fees to a client and to ensure that the client was made aware of the identities of attorneys working on his or her case so as to avoid controversy as to fee sharing among the lawyers" (citations omitted).

As in the present case, the counsel of record in Hiller argued that the obligation of disclosing the fee sharing arrangement to the client falls on the "outside counsel" (here, Manheimer). Nevertheless, the court ruled that defendant would not be heard to void on ethical grounds the subject agreement (see Hiller, supra).

Paragraph 12 of the Preamble to the current Rules of Professional Conduct (including Rule 1.5(g)) is also instructive and provides the following: "[T]he purpose of the Rules can be subverted when they are invoked by opposing parties as procedural weapon. The fact that a Rule is a just basis for a lawyer's self-assessment, or for sanctioning a lawyer under the administration of a disciplinary authority, does not imply that an antagonist in a collateral proceeding or transaction has standing to seek enforcement of the Rule..."

Following the above cases and reasoning, the court rules that the agreements are enforceable. Moreover, there is not even an allegation by Menkes (let alone plaintiffs) that plaintiffs were harmed by Manheimer's work. Menkes nowhere claims that Manheimer's work was ineffective; she merely claims that he overstepped the bounds of their agreement. However, with Manheimer's (and Golomb's) assistance, a settlement of $8,000,000 was achieved.

Although the court is troubled by Manheimer's apparent violation of the rules, it is undisputed that his efforts to become more involved with the case (and plaintiffs themselves) were rebuffed by Menkes. If plaintiffs were deceived or misled in regard to Manheimer's representation of their interests in this matter, it was by the actions of Menkes, who forbade Manheimer from contacting them.

Thus, despite Manheimer's own violation of the ethical rules, the interests of justice weigh in favor of enforcing the agreements. Menkes freely assented to the subject agreements, benefitted from them, and will thus not be permitted to use Manheimer's ethical violation as a sword while simultaneously ignoring her own violation.

Thus, the branch of Menkes's motion for an order establishing the attorneys' fees due to Manheimer on a quantum meruit basis is denied, and Manheimer's cross-motion for an order fixing his fee at 20% of the total (net) attorneys' fee is granted.

The Cross-Motion Disallowing Dr. Korn's Disbursement

Contrary to Menkes's contention, Golomb has standing to bring the cross-motion, as Golomb is co-counsel of record for plaintiffs, and Mrs. Marin submitted an affirmation in support of the cross-motion. The issue directly affects plaintiffs' recovery, and the instant motion is brought within the caption in which Jose and Ada Marin are the named plaintiffs.

Counsel's wrongful withholding of information related to the sought-for disbursement constitutes misconduct resulting in a forfeiture of counsel's right to same (see Wingate, Russotti & Shapiro, LLP v. Friedman, Khafif & Assocs., 41 AD3d 367, 839 NYS2d 469 [1st Dept 2007]).

Here, a question of fact exists as to whether Menkes represented to plaintiffs before the mediation and settlement that Dr. Korn's work would be billed and later charged as a [*16]disbursement against their recovery.

That Dr. Korn and Menkes may have had an agreement by which Dr. Korn billed Menkes for his services does not establish that plaintiffs were advised and/or agreed that such services would be charged against them. However, contrary to Mrs. Marin's assertions, Menkes states that she advised plaintiffs of such disbursement, and provides a purported invoice detailing Dr. Korn's alleged time and efforts spent, and fees incurred.

Thus, the court declines to rule on the branch of Golomb's cross-motion seeking disallowance of the Dr. Korn disbursement, and the parties are directed to appear at a hearing to determine whether said disbursement is chargeable to the plaintiffs.

Consequently, upon resolution of the issue regarding the medical consultant fee disbursement, Golumb shall disburse the remainder of the funds currently held in his escrow account as directed, and re-calculate the final amount due to plaintiffs and disburse to them any additional funds to which they may be entitled. And, upon such disbursement, Golumb shall be discharged from any further liabilities in the matter.

Conclusion

Based on the foregoing, it is hereby

ORDERED that Menkes's motion is denied; and it is further

ORDERED that Manheimer's cross-motion is granted solely to the extent that his fee is fixed at 20% of the total net attorneys' fee; and it is further

ORDERED that Golomb's cross-motion is granted to the extent that his fee is fixed at 40% of the total net attorneys' fee, and that upon resolution of the issue regarding the medical consultant fee, Golumb shall disburse the remainder of the funds currently held in his escrow account as directed, and re-calculate the final amount due to plaintiffs and disburse to them any additional funds to which they may be entitled; and that upon such disbursement, Golumb shall be discharged from any further liabilities in the matter; and it is further

ORDERED that the issue whether the "medical consultant" disbursement of $109,47.95 should be excluded from any calculation of disbursements chargeable to plaintiffs is hereby severed and referred to Hon. Ira Gammerman to hear and determine; and it is further

ORDERED that Menkes shall serve a copy of this order with notice of entry on all parties and the Special Referee Clerk, Room 119M, within 30 days of entry to arrange a date for the reference to a Special Referee.

This constitutes the decision and order of the Court.

Dated: February 20, 2014_______________________________________________

Hon. Carol Robinson Edmead, J.S.C.

In accordance with the accompanying Memorandum Decision, it is hereby

ORDERED that the motion by Sheryl Menkes for an order establishing the attorneys' fees due to Jeffrey Manheimer, Esq. on a quantum meruit basis and to David Golomb, Esq. at 12% of the total net attorneys' fee is denied; and it is further

ORDERED that Manheimer's cross-motion is granted solely to the extent that his fee is fixed at 20% of the total net attorneys' fee; and it is further

ORDERED that Golomb's cross-motion is granted to the extent that his fee is fixed at 40% of the total net attorneys' fee, and that upon resolution of the issue regarding the medical consultant fee, Golumb shall disburse the remainder of the funds currently held in his escrow account as directed, and re-calculate the final amount due to plaintiffs and disburse to them any additional funds to which they may be entitled; and that upon such disbursement, Golumb shall be discharged from any further liabilities in the matter; and it is further

ORDERED that the issue whether the "medical consultant" disbursement of $109,47.95 should be excluded from any calculation of disbursements chargeable to plaintiffs is hereby severed and referred to Hon. Ira Gammerman to hear and determine; and it is further

ORDERED that Menkes shall serve a copy of this order with notice of entry on all parties and the Special Referee Clerk, Room 119M, within 30 days of entry to arrange a date for the reference to a Special Referee.

This constitutes the decision and order of the Court. Footnotes

Footnote 1: Manheimer also cross moves for an order "reviewing her conduct as an attorney and officer of the Court."

Footnote 2: Golomb also requests that upon entry of any order, the Court direct him to disburse the remainder of the funds currently held in his escrow account as directed, and re-calculate the final amount due to plaintiffs and disburse to them any additional funds to which they may be entitled; and that upon such disbursement, that he be discharged from any further liabilities in the matter.

Footnote 3: Manheimer claims that based on multiple conversations with Menkes, plaintiffs were advised of his role and had consented to his assistance. Menkes denies this.

Footnote 4: In the letter, Menkes did not claim to be dissatisfied with Manheimer's work, or raise any complaints that he exceeded the scope of his performance as co-counsel.

Footnote 5: In that motion, Menkes represented that Golomb was the only other attorney who had a claim to fees in the matter. Thereafter, Manheimer's application to intervene was granted on July 17, 2013. Menkes, who had not served Manheimer with her moving papers, delayed in serving Manheimer with the papers exchanged between her and Golomb, and was eventually sanctioned by this Court for her conduct.

Footnote 6: At a conference in the court's Mediation Part, counsel agreed to try the case in September if mediation failed.

Footnote 7: It is undisputed that the agreement complies with all applicable ethical rules, and that plaintiffs were duly notified of Golomb's role in the case.

Footnote 8: Menkes also represented in the agreement that no other attorneys were participating in the fee.

Footnote 9: Rule 1.5(g), which became effective on April 1, 2009, also requires that the share of fees each lawyer will receive must be disclosed to the client.

Footnote 10: Menkes claims that she was unaware in 2009 of the ethical requirements governing fee division.

Footnote 11: Menkes claims she ultimately complied with the court's orders and such issues are not relevant here.

Footnote 12: Boule submitted an affirmation with Golomb's cross-motion stating that the mediation ended on May 20.

Footnote 13: Golomb's remaining arguments regarding extrinsic evidence, and his other arguments reiterated on reply, are not recited herein.