Korsinsky & Klein, LLP v. FHS Consultants, LLC

1

2023 NY Slip Op 31767(U)

Korsinsky & Klein, LLP, Plaintiff, v. FHS Consultants, LLC, Defendant.

Index No. 513969/16, Mot. Seq. No. 17

Supreme Court, Kings County

May 24, 2023

Unpublished Opinion

At an IAS Term, Part 29 of the Supreme Court of the State of New York, held in and for the County of Kings, at the Courthouse at 360 Adams Street, Brooklyn, New York, on the 24th day of May 2023.

DECISION AND ORDER

HON WAYNE P. SAITTA, Justice.

The following e-filed papers read herein: NYSCEF Doc Nos:

Notice of Motion, Affirmations, Memoranda of Law, and Exhibits Annexed .......327-366

Affirmations in Opposition, Memoranda of Law, and Exhibits Annexed .........368-378

Reply Affirmation.......................379

Additional Papers (Second Department's Decision &Order)..........382, 385, 387-388

In this action to recover damages for breach of contract, plaintiff Korsinsky &Klein, LLP ("plaintiff'), moves for an order:

(1) pursuant to CPLR 3211 (b), striking the extant affirmative defenses of defendant FHS Consultants, LLC ("defendant"); namely: (a) documentary evidence, (b) failure to state a claim on which relief can be granted, (c) laches, (d) unclean hands, (e) that defendant complied with all applicable laws, regulations, and statutes, (f) that no act or omission of defendant proximately caused any of plaintiff's damages, (g) that defendant did not willfully, knowingly, or negligently commit any wrongful, illegal, or inappropriate act, (h) any damages allegedly sustained by plaintiff were the result solely of its own actions, (i) that plaintiff's demand for punitive damages is not permitted under New York law for claims involving breach of a private contract, (j) plaintiff failed to attach the underlying agreement and failed to specifically reference the portions thereof that defendant allegedly breached, (k) plaintiff failed to provide an affidavit explaining, describing, or attaching the invoices that allegedly form the basis of its account-stated claim, and (1) plaintiff materially breached the underlying agreement with defendant, in each instance, because each such defense lacks merit and is an extension of the relief previously requested by defendant and granted by the Court, by short-form order, dated June 15, 2022 (the "June 2022 order"), which approved defendant's discontinuation of its counterclaims, and its withdrawal of its other affirmative defenses, in each instance, with prejudice;

(2) pursuant to CPLR 3212 (e), granting it partial summary judgment on the issue of liability in the amount of $288,903.59 (the "summary-judgment amount"), together with interest thereon from October 31, 2016, on the first, third, and fourth causes of action (all sounding in breach of contract), as well as on the tenth cause of action (sounding in account stated), of the second amended complaint;

(3) pursuant to CPLR 3212 (e), granting it partial summary judgment on the issue of liability on the sixth cause of action (sounding in breach of contract) and directing defendant's successor counsel to turn over to plaintiff $1,018.60 held in relation to the Tattnall matter representing plaintiff's share thereof (the "Tattnall escrow amount");^[1] (4) directing defendant to account for all monies paid with respect to matters it assigned to plaintiff (as pleaded in the second and third causes of action for accounting and breach of contract, respectively), or in the alternative and/or in addition, pursuant to CPLR 3212 (c), directing a hearing on damages;

(5) pursuant to CPLR 3212 (c), directing a hearing on the reasonable value of plaintiff s legal services on those matters in which it did not appear as counsel of record; and

(6) pursuant to CPLR 6401, appointing "a receiver to substitute as counsel for any cases [in] which [defendant] failed to obtain new counsel" and for ancillary relief

Defendant opposes all branches of plaintiffs motion.

Summary of Evidence Before the Court

(A)

Plaintiff is a law firm whose predecessor was retained to represent (and which, as the successor firm, continued to represent) defendant on various collection matters for the latter's clients. Defendant's clients (insofar as they were referred to plaintiff for collection) were, for the most part, nursing-home facilities who were owed receivables (Medicare, Medicaid, and private pay) for services they provided to their patients. The collection matters on contingency constituted the bulk of plaintiff s work for defendant. There was only one hourly matter (known as "Egan") which defendant referred to plaintiff for collection.

A written agreement, dated August 30, 2007 (the "retainer"), governed the terms of defendant's retention of plaintiff for contingency and, separately, for hourly collection matters (NYSCEF Doc No. 333). According to the retainer, plaintiffs fee (excluding appeals) on the contingency matters was calculated (unless agreed to otherwise) at 22% of the amount "collected"; i.e., when the recipient of the funds (be it the nursing facility, defendant, or plaintiff) was paid the amount due by Medicare, Medicaid, or the patient (or his/her family or estate) (the "contingency matters") (Retainer, ¶¶ 3, 9). It appears that plaintiff's contingency fee in Medicaid matters was 80% of 10% of the sums actually received by the facility.^[2] The hourly matters (if so designated by defendant) were billed by plaintiff to defendant at plaintiff s then-prevailing hourly rates (the "hourly matters") (id., ¶ 3). In addition, defendant was to pay - when billed by plaintiff and regardless of any recovery - all costs, expenses, and other disbursements which plaintiff incurred on its behalf (id., ¶¶ 4-5). Defendant had the right to terminate plaintiffs services at any time upon written notice to plaintiff (id., ¶ 6).

(B)

By October 2014, the relationship between the parties soured. By email, dated October 30, 2014, timed at 3:58 p.m., from defendant's principal Saul Elliott Goldbaum ("Goldbaum") to plaintiffs principal Mark Korsinsky ("Korsinsky") "formally request[ed] that [plaintiffs] office cease working on any of [defendant's] files and prepare to forward them to a different attorney for collection" (the "termination email").^[3]A few days thereafter, an email, dated November 6, 2014, timed at 9:37 a.m., from Goldbaum to plaintiffs partner, Joseph Klein ("Klein"), reiterated that: (1) defendant terminated the retainer with plaintiff for most of the then-outstanding contingency matters and for all hourly matters; (2) defendant wanted plaintiff to transfer most of the then-outstanding contingency matters to other counsel defendant which had selected (collectively, the "transferred matters");^[4] and (3) plaintiff, over defendant's objection, wanted to keep "over 20" then-outstanding contingency matters to work on posttermination (collectively, the "retained matters").^[5] A response email, dated November 16, 2014, timed at 9:15 p.m., from Klein to Goldbaum, proposed, with respect to the transferred matters, a 50-50 split of plaintiff's contingency fee with successor counsel.^[6]In response, successor counsel proposed a 25-75 split of plaintiffs fee on certain of the transferred matters, which proposal plaintiff rejected.^[7]

(C)

Two years later, defendant, by letter, dated November 28, 2016, reaffirmed (by email) its prior termination of its relationship with plaintiff (the "termination letter").^[8]Defendant, by way of the termination letter, reiterated its earlier request for plaintiff to transfer the retained matters, as well as all other then-outstanding contingency matters, to successor counsel and further requested "a bill for the fees that you [plaintiff] believe that you are/will be entitled to [be paid by defendant] on each matter."^[9]

Shortly thereafter, defendant, by email, dated December 8, 2016, timed at 10:48 a.m., supplied plaintiff with a full list of the active contingency matters (for a total of 20 of defendant's clients with a combined number of 30 patients spread across them^[10]) which defendant believed plaintiff was then working on for defendant (the "active matters list"), and requested that plaintiff transfer all of those matters to successor counsel.^[11] In the same email, defendant requested that plaintiff inform it of "any other active [matters]" plaintiff might have been then working on for defendant.^[12]

In response to defendant's active matters list, plaintiff emailed defendant, under a cover letter, dated December 12, 2016, "the first batch of change of counsel forms" for defendant's clients (as well as for successor counsel) to sign so that "we [plaintiff] may process the change of counsel forms and our liens" (the "change-of-counsel list").^[13] Plaintiff s submission of the "first batch of change of counsel forms" in response to defendant's active matters list revealed, for the first time, a major disconnect between the parties' respective positions. Whereas defendant's active matters list reflected a total of 20 facilities (with 30 patients spread across them), plaintiffs change-of-counsel list reflected only six facilities (with nine patients spread across them) from defendant's active matters list.^[14] What's more, plaintiffs change-of-counsel list added two facilities (with one patient each), as well as added one patient to one of the existing facilities on defendant's active matters list.^[15] Separately, plaintiff billed defendant at $450 per hour for plaintiffs post-termination services from December 1, 2016 through May 17, 2017 on defendant's matters which plaintiff unilaterally refused to turn over to successor counsel, for a total of $23,863.18 (inclusive of $418.18 in disbursements) (the "post-termination services").^[16]

(D)

The summary-judgment amount of $288,903.59 which...