Residential Fences Corp. et al v. Rhino Blades Inc. et al

Filing 143

MEMORANDUM AND ORDER: For the reasons set forth in the attached Memorandum and Order, the Estate's motion for attorney's fees, DE 138 , is denied in its entirety. Plaintiffs' counsel is directed to serve a copy of this order on the Estate's counsel and file proof of service on ECF. Ordered by Magistrate Judge Steven I. Locke on 8/22/2023. (JM)

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UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
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RESIDENTIAL FENCES CORP. and
LASER INDUSTRIES INC.
Plaintiffs,

14-CV-2552 (SIL)

RHINO BLADES INC., TOMER YUZARY,
and ANGELA YUZARY,
Defendants.

MEMORANDUM
AND ORDER

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STEVEN I. LOCKE, United States Magistrate Judge:
Presently before the Court is Plaintiffs’ Residential Fences Corp. and Laser
Industries Inc. (“Plaintiffs”) former attorney’s James Moriarty, Esq. estate’s (the
“Estate”) motion for attorney’s fees. See DEs [138, 141, 142]. For the reasons set
forth below, the motion is denied in its entirety.
Before wading into merits of the motion, the Court notes as a preliminary
matter, that the circumstances here present a cautionary tale for all counsel as to
what can happen in the absence of a written retainer agreement. Further, this
opinion does not evaluate Mr. Moriarty’s abilities as a lawyer or qualities as a person.
Rather, it concerns only the Estate’s application for additional attorney’s fees beyond
what Mr. Moriarty was paid during the representation of Plaintiffs in this action and
nothing more.
I.

Background
The following facts are limited to those necessary to resolve this motion. This

litigation was commenced by Mr. Moriarty on Plaintiffs’ behalf by Complaint filed on
April 22, 2014, alleging claims against Defendants for fraud, conversion, theft and
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unjust enrichment, and seeking an accounting. See DE [1]. The essence of the claims
is that Plaintiffs are contractors and Defendants, Rhino Blades Inc., Tomer Yuzary
and Angela Yuzary are a corporate vendor and the vendor’s owners, who during the
relevant time period were married, and who together sold Plaintiffs certain types of
saw blades over several years. According to Plaintiffs, Defendants operated a scheme
during which they overcharged Plaintiffs for the blades delivered, and they
(Plaintiffs) now seek damages related to the overcharges. In order to resolve this
litigation, a bench trial was held on May 22, May 23 and June 8, 2023 and post-trial
briefing is being drafted for submission.
The issue presently before the Court, however, predates the trial.

After

numerous delays over the years, including those caused be the Covid 19 pandemic
and Mr. Moriarty’s health issues, this case was originally set for trial on April 4, 2022.
See DE [104]. All sides appeared and Mr. Moriarty asked for a few minutes to consult
with his clients before opening statements. Unfortunately, Mr. Moriarty passed away
in Court at this moment. The Court then adjourned all proceedings and the trial was
eventually conducted a year later. See Electronic order dated Apr. 4, 2022; DE [123].
It was during this intervening year that issues arose while incoming counsel
was attempting to get the case file from the Estate. See DE [112]. Eventually, the
Court learned that the Estate was refusing to turn over the file claiming that it was
still owed attorney’s fees and asserting a lien in this regard. See DEs [113, 116, 117].
The Court was unable to resolve the matter informally, and so an evidentiary hearing

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was held on March 6 and April 24, 2023. See DEs [124, 128, 138-1, 138-2]. Posthearing briefing followed. See DEs [138, 141, 142].
II.

Factual Findings
The following constitutes the Court’s findings of fact concerning the Estate’s

application for attorney’s fees. Mr. Moriarty represented Plaintiffs in this litigation
since its inception until April 4, 2022, the date trial was originally set to commence.
See Docket. There was no retainer agreement between Mr. Moriarty and Plaintiffs,
Hearing Transcript (“Tr.”), DE [138-1, 138-2] 7, see Tr. 47-48, 104-05, no evidence
that an hourly rate was ever discussed, 1 and Mr. Moriarty never sent Plaintiffs any
invoices. Tr. 60-61, 105, 109-110 (“I never had an agreement with him. He asked for
money and I paid him”), 112 (Plaintiffs and Moriarty never spoke about attorney’s
fees or hourly rates), 194 (“Q Did Mr. Moriarty provide invoices to you? A Never”).
The attorney-client relationship was “kind of relaxed,”—Mr. Moriarty would ask for
a check and Plaintiffs would provide it in the requested amount. Tr. 105-06. In the
end, Plaintiffs paid Mr. Moriarty whenever he asked to be paid until 2020, a total of
$291,500 in attorney’s fees, with the last check dated November 17, 2020. Tr. 64,
105-07, & Ex. B. In fact, the only time Plaintiffs ever complained about the fees was
in relation to the last check, when Mr. Moriarty asked for $15,000, and Plaintiffs
agreed to pay him $6,500. Tr. 106-08, 121-22. This was the only discussion between
Plaintiffs and Mr. Moriarty about attorney’s fees. Tr. 121-22.

Although the Estate’s counsel referred to an hourly rate of $450 found in an unidentified ledger, Tr.
9, this ledger was never introduced into evidence. Further, although Mr. Moriarty’s widow testified
to this hourly rate, the answer was stricken because it was based on hearsay. See Tr. 26.
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The Estate asserts that the fees previously paid included work on matters
unrelated to this case. See DE [138] at 3-6. The Estate’s claim, however, was
speculative, and Plaintiffs’ bookkeeper, Seth Goldberg, and owner John Gulino,
testified credibly and provided records refuting this assertion. See Tr. 61-68, 105 Exs.
B-D.
Although, Mr. Moriarty’s widow did not work with him, or sit with him while
he worked, Tr. 45-47, she testified that Mr. Moriarty worked on this matter five hours
a day, three or four days a week, and longer for the three months immediately prior
to trial. Tr. 32-33, 36-37, 44 & Ex. 1-3. Although the Court believes that Mrs.
Moriarty recalled events to her best recollection, the Court is skeptical as to the
accuracy of her testimony. In the time it has taken to preside over this litigation, the
Court has become familiar with the issues and underlying facts.

It is not a

complicated case, and no attorney could have reasonably worked so many hours on
it.
There is, however, evidence that Mr. Moriarty did work on this case between
his last fee payment on November 17, 2020, and the original day of trial, April 4,
2022. For example, Plaintiff’s bookkeeper Seth Goldberg testified that to prepare for
trial in early 2022, he attended between one and five meetings lasting between
approximately one and three hours and participated on four or five phone calls of
between five and 45 minutes each. Tr. 80-81, 84-86. There were also other trial prep
meetings with some of Plaintiffs’ owners. See Tr. 117, 120-21, 204. Further, on the
day of trial, Mr. Moriarty brought several boxes and files to Court which demonstrate

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that he did other work in preparation for trial. See Tr. 20-21. During 2021, prior to
the trial prep, client meetings/phone calls were between once a month and once every
three months. Tr. 82-83. There were also occasional court appearances during this
time. Tr. 119.
In terms of work performed however, the Court notes that no depositions were
conducted in this case, no dispositive motions were ever filed, and despite the need
for certain documents to be obtained from third parties, no subpoenas were ever
served, leaving incoming counsel to serve document subpoenas on the eve of trial. See
Tr. 108, 141, 145-47, Docket. In order to correct for some of these failures, Mr.
Moriarty served a voluminous notice to admit on Defendants after discovery had
closed without moving for an extension of discovery deadlines, and the Court
ultimately ruled that Defendants did not need to respond. Tr. 143-45, DE [44].
Moreover, the evidence demonstrates in terms of preparation, that Mr. Moriarty
compiled certain spreadsheets to be offered into evidence, but they turned out to be
inaccurate and had to be redone by incoming counsel. Tr. 142-43. In addition, the
docket is replete with Mr. Moriarty missing deadlines and requesting extensions and
adjournments. See, e.g., DEs [24, 25, 35, 46, 47, 48, 50, 60, 62, 74, 102].
III.

Conclusions of Law

Although the Estate’s papers are unclear as to the exact amount sought,
adding up the figures in its post-hearing submissions, it appears to seek an award of
between $96,000 and $122,000 in attorney’s fees for work performed between
Plaintiffs’ last payment on November 17, 2020 and April 4, 2022, the date Mr.

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Moriarty appeared for trial.

See DE [138] at 8-10 (totaling the computations

provided). For the reasons set forth below, the application is denied in its entirety.
It is axiomatic that New York law, which applies to the fee dispute at issue
here, requires that legal representation must be memorialized in writing.

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N.Y.C.R.R. § 1215.1; 6340 NB LLC v. Capital One, N.A., 20-CV-2500 (JMA)(JMW),
2022 WL 17083292, at *4, n.4 (E.D.N.Y. Nov. 18, 2022) (recognizing applicability of
New York law in federal court with respect to requirement that attorneys have
written retainer agreements with clients). In the absence of a written agreement, an
attorney may not seek fees asserting a breach of contract. Mintz Fraade Law Firm,
P.C. v. Brady, 19-CV-10236 (JMF), 2022 WL 1125957, at *3 (S.D.N.Y. Apr. 15, 2022);
Sidoti v. Hall, 124 A.D.3d 760, 761, 998 N.Y.S.2d 662, 662 (2d Dep’t 2008). Instead
the attorney may seek recovery in quantum meruit. Mintz Fraade at *3 (citing Simon
v. Sack, 451 F. App’x 14, 17 (2d Cir. 2011) (summary order)); District Attorney of New
York v. Republic of the Philippines, 14 Civ. 890 (KPF), 2021 WL 8531662, at *8
(S.D.N.Y. Oct. 10, 2021).
In order to establish a claim for quantum merit in the fee context, the attorney
must show: (1) the performance of services in good faith; (2) the acceptance of the
services by the person to whom they were rendered; (3) an expectation of
compensation therefor; and (4) the reasonable value of the services. Fulbright &
Jaworski, LLP v. Carucci, 63 A.D.3d 487, 489, 881 N.Y.S.2d 56, 57 (1st Dep’t 2009);
Flanagan Law, PLLC v. Perno, Index No. 655160/2019, 70 Misc. 3d 1201(A), 135
N.Y.S.2d 630 at *2 (Sup. Ct. N.Y. Cnty. Dec. 18, 2020). In this context, the moving

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party bears the burden of establishing that the alleged fee arrangement was “fair,
fully understood, and agreed to.” District Attorney at *8.; Seth Rubenstein, P.C. v.
Ganea, 41 A.D.3d 54, 60, 833 N.Y.S.2d 566, 573 (2d Dep’t 2007); accord N.Y. Rules of
Prof. Cond. 1.5. In determining a fee in quantum meruit courts consider multiple
factors: the time and skill required to litigate the matter, the matter’s complexity,
the attorney’s experience, ability and reputation, the benefit to the client, and fees
charged for similar services. SBC 2010-1, LLC v. Smits Structure Corp., 167 A.D.3d
795, 795, 87 N.Y.S.3d 484, 484 (2d Dep’t 2018); DeGregorio v. Bender, 52 A.D.3d 645,
646, 860 N.Y.S.3d 193, 193 (2d Dep’t 2008).
Applying these standards, the Estate’s motion fails in its entirety.

Mr.

Moriarty was paid $291,500 for his services in this case—a straightforward
commercial litigation. He took no depositions, served no non-party subpoenas and
there were no dispositive motions.

The only work done was limited document

discovery, which this Court presided over, and the only evidence presented at the fee
hearing was that these documents were summarized for use at trial, but had to be
redone.
Awarding any more attorney’s fees in this context would be patently
unreasonable. It did not take extensive time or an unusual amount of skill to litigate
this case.

This matter is not unusually complex.

No evidence concerning Mr.

Moriarty’s reputation was submitted into evidence. The services provided to the
clients were not particularly beneficial in that no depositions were conducted, and no
subpoenas were served, leaving incoming counsel scrambling to obtain evidence in

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advance of trial. Finally, there was no evidence that other attorneys would have been
paid nearly the amount Mr. Moriarty received for the limited amount of work he
performed. In fact, it is the Court’s opinion that had another attorney conducted
depositions, filed dispositive motions and tried the case to a conclusion, the fees would
still not have totaled $291,500.
Against these conclusions, the Court accepts that Mr. Moriarty did work on the
case between the date of the last check he received, November 17, 2020, and the
morning trial was originally set to commence, April 4, 2022. Nevertheless, because
Plaintiffs have already paid Mr. Moriarty such a large sum for the work already
performed, no more is due. Accordingly, the Estate’s motion for attorney’s fees is
denied in its entirety.
IV.

Conclusion
For the foregoing reasons, the Estate’s motion for attorney’s fees is denied.
SO ORDERED.

Dated:

Central Islip, New York
August 22, 2023

/s/ Steven I. Locke
Steven I. Locke, USMJ

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