Court Sets Hearing For Determination of Attorney Charging Lien

In a Decision and Order, dated October 3, 2023, in Seymour v. Hovnanian., Index No. 154579/2016, Justice Melissa Crane set a hearing on plaintiff’s former counsel’s motion to enforce its statutory charging lien. The Court explained:

Thus, because the nature of TKD's discharge is disputed, a hearing is needed to determine whether TKD has an enforceable charging lien (see e.g. 1B Carmody-Wait 2d § 3:581 ["Where a charging lien is asserted, the attorney is entitled to a prompt hearing to fix the amount of the lien."]). The hearing must also determine the amount of attorneys' fees TKD is due, if any. Plaintiffs did not countersign the retainer agreement that TKD submitted in support of this motion and, in any event, plaintiffs disputed the invoices when they were sent and continue to dispute those invoices now.

The court rejects TKD's argument that it is entitled to recover its fees under an account stated theory. First, TKD did not commence a separate plenary proceeding to recover the unpaid fees, although it could have done so under Judiciary Law§ 475. Instead, it interposed this application in the parties' long-delayed lawsuit. TKD is entitled to recover its reasonable attorneys' fees in quantum meruit, if at all, following an evidentiary hearing (see Chadbourne & Parke, LLP v AB Recur Finans, 18 AD3d 222,223 [1st Dept 2005]; see also e.g. Campagna/av Mulholland, Minion & Roe, 76 NY2d 38, 44 [1990] ["Where that discharge is without cause, the attorney is limited to recovering in quantum meruit the reasonable value of the services rendered."]).

The court also rejects plaintiffs' argument that any attorneys' fees awarded should be paid by the defendants' insurance companies pursuant to the underlying license agreement. Judiciary Law§ 475 states that "the attorney who appears for a party has a lien upon his or her client's cause of action, claim or counterclaim, which attaches to a verdict, rep ort, determination, decision, award, settlement, judgment or final order in his or her client's favor, and the proceeds thereof in whatever hands they may come." Here, the lien, if it is enforceable, attaches to the interlocutory judgment entered in favor of plaintiffs.

Finally, the court denies TKD's request for its costs and fees in making this motion. "Where an attorney brings a motion to establish and enforce a charging lien under the Judiciary Law, the court has no power to award the attorney counsel fees for the sums expended in bringing the action" (1B Carmody-Wait 2d § 3:579, citing Ajar v Ajar, 207 AD2d 469,471 [2d Dept 1994] [holding that fees cannot be recovered for a motion to establish and enforce a charging lien pursuant to Judiciary Law§475]).

Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you or a client have questions concerning charging liens or attorneys’ fees.