Conway & Conway v Fiorilla

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Conway & Conway v Fiorilla 2022 NY Slip Op 33244(U) September 23, 2022 Supreme Court, New York County Docket Number: Index No. 652138/2020 Judge: Dakota D. Ramseur Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication. INDEX NO. 652138/2020 FILED: NEW YORK COUNTY CLERK 09/26/2022 12:46 PM NYSCEF DOC. NO. 101 RECEIVED NYSCEF: 09/26/2022 SUPREME COURT OF THE STATE OF NEW YORK NEW YORK COUNTY PRESENT: HON. DAKOTA D. RAMSEUR Justice ---------------------------------------------------------------------X CONWAY & CONWAY, INDEX NO. MOTION DATE Plaintiff, 34M PART 652138/2020 NIA MOTION SEQ. NO. _ ____;:_00_;;_:2:;:____ - V - JOHN LEOPOLDO FIORILLA, CITIGROUP GLOBAL MARKETS, INC. DECISION + ORDER ON MOTION Defendants. -------------------- -------------------------------X The following e-filed documents, listed by NYSCEF document number (Motion 002) 36, 37, 38, 39, 40, 41,42,43,44,45, 46,47,48, 49, 50, 51, 52,53, 54, 55, 56,57, 58,59,60,61,62,63,64, 65,66,67,68, 69, 70, 71, 72 DISMISS were read on this motion to/for Plaintiff, Conway & Conway (plaintiff), commenced this action seeking to collect outstanding legal fees and interest allegedly owed by its former client, defendant John Leopoldo Fiorilla (Fiorilla), from funds held by defendant Citigroup Global Markets, Inc. (Citigroup). Citigroup now moves pursuant to CPLR 3211 (a)(7) to dismiss the complaint. The motion is opposed. For the following reasons, Citigroup's motion is granted. FACTUAL ALLEGATIONS In 2010, Fiorilla commenced the FINRA arbitration against Citigroup captioned John Leopoldo Fiorilla, Individually and as Trustee FBO John Leopoldo Fiori/la Trust U/AID 06-252003 v Citigroup Global Markets, Inc., FINRA Docket No. 10- 03615 (the arbitration), seeking to recover losses he allegedly incurred in the market downturn of 2007-2008. On April 30, 2012, one day before the arbitration hearings were scheduled to begin, both Citigroup and Fiorilla, through prior counsel, Klayman & Toskes, P.A. (Klayman), notified FINRA that they had settled all of Fiorilla's claims for the sum of $800,000 (the settlement). Fiori Ila subsequently terminated Klayman due to a disagreement over a settlement proposal contemplated by the parties, reneged on the settlement and, on May 11, 2012, notified FINRA that he wished to proceed with the arbitration. Upon termination of Klayman, Fiorilla retained plaintiff, a law firm, to represent him in connection with the arbitration and the subsequent proceeding related to the vacatur of Fiorilla's arbitration award (the vacatur proceeding). On May 14, 2012, plaintiff and Fiorilla executed a retainer agreement (2012 Retainer), which provided for plaintiff to receive a contingent fee on any amounts recovered in the FINRA arbitration. On July 29, 2013, plaintiff and Fiorilla executed a second retainer agreement (20 I 3 Retainer) providing for plaintiff's legal representation of Fiorilla in an appeal of a separate 652138/2020 CONWAY & CONWAY vs. FIORILLA, JOHN LEOPOLDO Motion No. 002 [* 1] 1 of 6 Page 1 of s FILED: NEW YORK COUNTY CLERK 09/26/2022 12:46 PM NYSCEF DOC. NO. 101 INDEX NO. 652138/2020 RECEIVED NYSCEF: 09/26/2022 ·r legal action. Prior to the FINRA panel's decision, Citigroup offered a subsequent multi-milliondollar settlement offer, which Fiorilla rejected. After attending twenty-eight hearing sessions at FINRA over the course of two years, plaintiff obtained an arbitration award for Fiori Ila in excess of $17,000,000 (arbitration award), inclusive of accrued interest. . In 2013, Citigroup petitioned the Supreme Court of the State of New York to vacate the arbitration award. Plaintiff represented Fiori Ila throughout the vacatur proceeding. By judgment dated January 2, 2014, the court granted Citigroup's petition and vacated the arbitration award . On May 15, 2014, the New York County Clerk entered judgment vacating the arbitration award and reinstating the settlement, providing that Citigroup owed Fiorilla $800,000 pursuant to the prior agreement between the parties settling the matter (the 2014 Judgment). The decision of the Supreme Court of the State of New York was affirmed by the New York Appellate Division, First Department, and the New York Court of Appeals denied Fiorilla leave to further appeal the vacatur of the arbitration award. On June 1, 2020, plaintiff commenced the instant matter against Fiorilla and Citigroup for payment under the 2012 and 2013 Retainers. Plaintiffs cause of action for constructive bai lment against Citigroup, alleges that plaintiff has perfected an attorney ' s lien upon the Settlement and that Citigroup is obligated to deliver to plaintiff the full $263,532.43 and associated statutory and contractual interest that Fiori Ila purportedly owes plaintiff (NYSCEF doc. no . 53, comp! at ,i,i 80-85.). According to plaintiff, Citigroup has refused to make payment on Fiorilla' s 2014 Judgment, alleging competing claims on the 2014 Judgment. Plaintiff claims that Citigroup currently has no claims on the 2014 Judgment. DISCUSSION " On a motion to dismiss pursuant to CPLR 321 l(a)(7), the court must "accept the facts as alleged in the complaint as true, accord plaintiff the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory" (Leon v Martinez, 84 NY2d 83 , 87-88 [1994]; see also Chapman. Spira & Carson. LLC v Helix BioPhanna Corp., 115 AD3d 526,527 [I st Dept 2014]). "Whether the plaintiff will ultimately be successful in establishing those allegations is not part of the calculus" (Landon v Kroll Lab. Specialists, Inc., 22 NY3d 1,6 [2013], reargdenied22 NY3d 1084 [2014] [internal quotation marks and citation omitted]). Although factual allegations in a plaintiffs pleading may be accorded favorable inference, bare legal conclusions and inherently incredible facts are not entitled to preferential consideration (see Sud v Sud, 211 AD2d 423,424 [1st Dept 1995]). Initially, plaintiff fails to cite to any relevant case law or statue indicating that a defendant bailee such as Citigroup lacks standing to challenge plaintiffs claims. Accordingly, the Court next addresses Ci ti group's motion to dismiss the complaint. In support of its motion to dismiss, Citigroup argues that plaintiff fai Is to state a claim for constructive bai lment. Specifically, Citigroup argues that plaintiff has not adequately alleged that any portion of the funds Citigroup holds for Fiorilla pursuant to the settlement is plaintiff's property or that Citigroup is under any legal obligation to deliver any funds to plaintiff. Citigroup further contends that plaintiff was not the attorney of record during the settlement, that the 652138/2020 CONWAY & CONWAY vs. FIORILLA, JOHN LEOPOLDO Motion No. 002 [* 2] 2 of 6 Page 2 of 5 FILED: NEW YORK COUNTY CLERK 09/26/2022 12:46 PM NYSCEF DOC. NO. 101 INDEX NO. 652138/2020 RECEIVED NYSCEF: 09/26/2022 settlement was not the result of a claim or counterclaim asserted by Fiorilla, or that the settlement was not a result.of plaintiffs efforts. Citigroup further argues that plaintiffs services pursuant to the 2013 Retainer cannot form the basis for a charging lien because it was unrelated to· the settlement. Citigroup next argues that plaintiff has waived the right to' assert a charging lien because plaintiff did not notice its purported lien until July 9, 2018·, four years after this court reinstated the settlement. Citigroup further argues that even if a charging lien could be enforced, plaintiff is not entitled to statutory pr contractual prejudgment interest. A constructive bailment claim arises when there is delivery of property, acceptance of the property, and failure to return the property on demand (see Jay Creations, Inc. v Hertz Corp., 42 AD2d 534 [1st Dept 1973)). Central to plaintiffs claim for constructive bailment is whether plaintiff alleged sufficient facts to demonstrate that plaintiff asserted a charging lien on the 2014 Judgment pursuant to Judiciary Law§ 475. "Pursuant to Judiciary Law§ 475, '[w]hen an_action is commenced, the attorney appearing for a party obtains a lien upon his or her client's causes of action ... This lien attaches to any final order or settlement in the client's favor" (Tangredi v Warsop, 110 AD3d 788, 788 [2013]). Further, an attorney need not be counsel of record at the time a plaintiff receives judgment or settlement proceeds in order to have a lien on those proceeds, rather "[a]n attorney's participation in the proceeding at one point as counsel of record is a sufficient predicate for invoking the statute's prntection" (Klein v Eubank, 87 NY2d 459, 462 [1996]). Plaintiff alleges that it worked on Fiorilla's representation in the FINRA arbitration over · the course of two years, including by engaging in extensive preparation, presentation, the of settlement the of part as $800,000 awarded was Fiorilla that negotiation, and discovery, arbitration. However, plaintiff fails to allege any facts demonstrating that its efforts resulted in the settlement that plaintiff now seeks a lien, and in fact alleges that the settlement occurred prior to its representation of Fiorilla (see Rothfeder v City of New York, 48 AD3d 234, 235 [1st Dept 2008] ["While a charging lien does extend to settlement proceeds ... , it is enforceable only against the portion of the fund created in that action as a result of the attorney's efforts"] [internal quotation marks and citations omitted]; Chadbourne & Parke, LLP v AB Recur Finans, 18 AD3d 222, 223 [1st Dept 2005] ["A charging lien is a security interest in the favorable result of litigation ... , giving the attorney equitable ownership interest in the client's cause of action and ensuring that the attorney can collect his fee from the fund he has created for that purpose on behalf of the client"] [internal quotation marks and citations omitted]; Schneider, Kleinick, Weitz, · Damashek & Shoot v City ofNew York, 302 AD2d 183, 187 [I st Dept 2002] ["The lien is and judgment, the obtained effort and skill his_ by has attorney predicated on the idea that the hence should have a lien thereon for his compensation, in analogy to the lien which a mechanic has upon any article which he manufactures"] [internal quotation marks and citations omitted]). Thus, the Court finds that plaintiff fails to allege that it undertook any efforts in producing the settlement, and thus plaintiffs claims for an attorney's charging lien on Fiorilla's recovery pursuant to the 2014_ Judgment fails. Plaintiffs argument that its work performed during the vacatur proceeding resulted in the 2014 Judgment, i.e. the settlement, made for the first time during oral argument, is without merit. As Citibank correctly argues, the vacatur proceeding was initiated by Citibank because of the 652138/2020 CONWAY & CONWAY vs. FIORILLA, JOHN LEOPOLDO Motion No. 002 [* 3] 3 of 6 Page 3 of 5 FILED: NEW YORK COUNTY CLERK 09/26/2022 12:46 PM NYSCEF DOC. NO. 101 INDEX NO. 652138/2020 RECEIVED NYSCEF: 09/26/2022 unfavorable determination in the FINRA arbitration. Further, plaintiffs representation of Fiori Ila was limited to avoiding the reinstatement and enforcement of the already agreed-to settlement. Indeed, the 2014 Judgment states: "[p ]ursuant to the settlement between the parties reached prior to the commencement of the arbitration hearings, [Citigroup] shall have judgment against [Fiori Ila] in the amount of $800,000 in full and complete satisfaction of all claims made in the [FINRA arbitration]" (NYSCEF doc. no. 47, Citigroup Global Markets, Inc. v. Fiori/la, index no. 653017/2013, [Sup. Ct., New York County 2014], proposed order and judgment, motion sequence 00 I). The trial court in the vacatur proceeding acknowledged the settlement of the underlying matter, which predated plaintiffs representation of Fiori Ila. Thus, plaintiffs representation of Fiori Ila in vacatur proceeding may not be a basis for a charging lien (see Judiciary Law§ 4 75) As stated in the 2014 Judgment, Citigroup, and not plaintiff, received a favorable determination in the vacatur proceeding. As there is no allegation that plaintiff obtained an affirmative recovery on behalf of Fiorilla, plaintiff has failed to state a claim for a charging lien (see Tunick v Shaw, 6 Misc 3d 1014[A], 800 NYS2d 358 [Sup Ct, New York County 2004), affd as mod(fied, 45 AD3d 145 [I st Dept 2007] ("With respect to the first requirement, an attorney's charging lien does not attach when an attorney merely defends or protects a client's interests in property the client already owns, without asserting an affirmative claim, or obtaining an affirmative recovery"]). Accordingly, the vacatur proceeding neither arose from a claim or counterclaim, nor was the result of the ·vacatur proceeding a determination in Fiorilla' s favor. Moreover, it is unclear what the connection is between the work plaintiff performed under the 2013 Retainer agreement and the work performed in connection with the 2014 Judgment, as plaintiff fails to allege facts sufficient to establish the work performed under the 2013 Retainer concerned the 2014 Judgment or the settlement (see Kaplan v Reuss, 113 AD2d 184, 186 [2d Dept 1985], affd, 68 NY2d 693 [I 986] ["A charging lien, on the other hand, applies only to the proceeds obtained from a particular litigation and may be enforced only to obtain the reasonable value of the attorney's services and disbursements in connection with that litigation]). Accordingly, plaintiff also fails to demonstrate a charging lien as in relation to the 2013 Retainer. Plaintiff also argues that Fiorilla is entitled to postjudgment interest on the 2014 Judgment. This request, which does not appear as relief sought in the complaint, is denied. Fiori Ila has not asserted the right to collect postjudgment interest from Citigroup pursuant to the 2014 Judgment. Importantly, plaintiff fails to allege any facts demonstrating that plaintiff will be harmed by Citigroup's alleged failure to remit payment of postjudgment interest to Fiori Ila (see Frankel v J.P. Morgan Chase & Co., 193 AD3d 689 [2d Dept 2021] ["To confer standing, a claimed injury may not depend upon speculation about what might occur in the future, but must consist of cognizable harm, meaning that a plaintiff has been or will be injured"]). This is especially true in light of the Court's finding that plaintiff has failed to state a claim for constructive bailment. Thus, plaintiff fails to demonstrate standing to assert a claim for postjudgment interest on the 2014 Judgment. Similarly, in light of the above finding that plaintiff failed to allege facts sufficient to state a claim for constructive bailment, ·plaintiff is not entitled to either statutory or contractual prejudgment interest on the charging lien. 652138/2020 CONWAY & CONWAY vs. FIORILLA, JOHN LEOPOLDO Motion No. 002 [* 4] 4 of 6 Page 4 of 5 INDEX NO. 652138/2020 FILED: NEW YORK COUNTY CLERK 09/26/2022 12:46 PM NYSCEF DOC. NO. 101 RECEIVED NYSCEF: 09/26/2022 Accordingly, it is hereby ORDERED that Citjgroup's motion pursuant to CPLR 321 l(a)(7) to dismiss the complaint is granted, and the complaint is dismissed against that defendant; and it is further ORDERED that Citigroup shall serve a copy of this decision and order upon all parties, with notice of entry, within ten (10) days of entry. This constitutes the decision and order of the Court. 9/23/2022 DATE DAKOTA D.' RAMSEUR, J.S.C. • CHECK ONE: CASE DISPOSED APPLICATION: SETTLE ORDER SUBMIT ORDER INCLUDES TRANSFER/REASSIGN FIDUCIARY APPOINTMENT GRANTED CHECK IF APPROPRIATE: - _ NON-FINAL DISPOSITION DENIED 652138/2020 CONWAY & CONWAY vs. FIORILLA, JOHN LEOPOLDO Motion No. 002 [* 5] 5 of 6 GRANTED IN PART • • OTHER REFERENCE Page 5 of 5

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