Fontana, et al v. Argentina Republic

Filing 128

ORDER denying as moot 114 Motion for Judgment; denying as moot 114 Motion for Default Judgment; granting 114 Motion for Attorney Fees. For the foregoing reasons, Gleizer's motion for an award of attorneys' fees pursuant to New Y ork Judiciary Law§ 475 is GRANTED, and his motion for entry of default judgment against Plaintiffs is DENIED as moot. Gleizer shall submit a proposed final judgment no later than October 8, 2021. The Clerk of Court is directed to close the open motion at docket entry 114. SO ORDERED. (Signed by Judge Loretta A. Preska on 9/30/2021) (va)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
HERNAN LOPEZ FONTANA and
MARIANA MORI DE LOPEZ,
Plaintiffs,

03 Civ. 8531 (LAP)

-againstTHE REPUBLIC OF ARGENTINA,
Defendant.
LORETTA A. PRESKA, Senior United States District Judge:
Before the Court is attorney Guillermo Gleizer's motion 1 for
attorneys' fees, pursuant to New York Judiciary Law§ 475
("Section 475"), jointly and severally against the Republic of
Argentina (the "Republic") and Plaintiffs.
the motion. 2

The Republic opposes

Gleizer also seeks entry of default judgment

against Plaintiffs.
For the following reasons, Gleizer's motion for an award of
attorneys' fees is GRANTED, and his motion for entry of default
judgment against Plaintiffs is DENIED as moot.

(See Notice of Motion, dated Dec. 15, 2020 [dkt. no. 114);
Memorandum of Law in Support ("Mot."), dated Dec. 15, 2020 [dkt.
no. 115); Reply Memorandum of Law ("Reply"), dated Feb. 10, 2021
[dkt. no. 127); see also Declaration of Guillermo A. Gleizer,
Esq. ("Gleizer Deel."), dated Dec. 15, 2020 [dkt. no. 116).)
2
(See Memorandum of the Republic of Argentina in Opposition to
Guillermo A. Gleizer's Motion for an Award of Attorneys' Fees
("Opp."), dated Jan. 27, 2021 [dkt. no. 123); see also
Declaration of Rathna J. Ramamurthi In Opposition to Guillermo
A. Gleizer's Motion for Attorneys' Fees ("Ramamurthi Deel."),
dated Jan. 27, 2021 [dkt. no. 121) .)
1

1

I .

Background

The Court assumes familiarity with this case's general
background, which the Court described in its prior order
addressing Mr. Gleizer's initial motion for fees, see Fontana v.
Republic of Argentina, No. 03 Civ. 8531 (LAP), 2019 WL 8112476,
at *1 (S.D.N.Y. Jan. 9, 2019), and which the Court of Appeals
also subsequently recounted, see Fontana v. Republic of
Argentina, 962 F.3d 667, 670-72 (2d Cir. 2020).

The Court

summarizes some relevant context.
Guillermo Gleizer represented Plaintiffs, Hernan Lopez
Fontana and Mariana Mori de Lopez, in this lawsuit against the
Republic of Argentina relating to defaulted Argentine bonds.
See Fontana, 962 F.3d at 670.
Plaintiffs in March of 2006.
2006 [dkt. no. 45].)

The Court entered judgment for
(See Judgment, dated March 27,

Plaintiffs later settled their claims with

Argentina in February of 2016 without Gleizer's involvement, as
part of the Republic's global settlement proposal (the
"Propuesta").

( See Ex. 3 to Gleizer Deel.

( "MSA") , dated Feb.

8, 2016 [dkt. 116-3].)
On November 6, 2018, Counsel for the Republic informed the
Court by letter that it would seek dismissal of this case
because Plaintiffs had settled their bond interests and thus no
longer held any claims against the Republic.
Bocuzzi, dated Nov. 6, 2018 [dkt. no. 69] .)

2

(Letter from C.
On November 13,

2021, Gleizer informed that Court that he intended to seek an
order to show cause why the Court should not issue an order
granting, among other things, an award of attorney fees in favor
of Gleizer and against Plaintiffs and the Republic, jointly and
severally.

(See Proposed Order to Show Cause, dated Nov. 13,

2018 [dkt. no. 72] .)

After the Court denied as moot Gleizer's

motion for an order to show cause because it observed that the
Court would retain jurisdiction over collateral matters under
the proposed satisfaction of judgment,

(see Order, dated Nov.

14, 2018 [dkt. no. 73]), Gleizer moved for an award of
attorneys' fees under Section 475,

(see Notice of Motion for an

Award of Attorneys' Fees Against Plaintiffs

&

Argentina, dated Nov. 26, 2018 [dkt. no. 76).

the Republic of
The Court denied

Gleizer's motion on the basis that Gleizer was not entitled to a
lien on the settlement proceeds because he did not participate
in the settlement.

See Fontana, 2019 WL 8112476, at *2.

The Court of Appeals, in vacating this Court's denial of
Gleizer's fee application, held that the enforceability of an
attorneys' lien against the proceeds of a settlement pursuant to
Judiciary Law§ 475 turns not on whether the attorney personally
participated in the settlement negotiations, but, rather,
attaches to the client's cause of action and is not affected by
settlement.

Fontana, 962 F.3d at 670.

The Court of Appeals

directed this Court on remand to consider on a more developed

3

record whether Gleizer unreasonably delayed in bringing his
motion.

Id. at 676.

The Court of Appeals also addressed that

this Court could consider whether to exercise supplemental
jurisdiction over any breach of contract claim that Gleizer
might raise or consider whether Plaintiffs have defaulted by
their failure to respond to Gleizer's motion.

Id. at 677. 3

On remand, the parties engaged in limited discovery on the
issue of whether Gleizer unreasonably delayed in bringing his
motion for fees,

(see Stipulation Regarding Limited Discovery,

dated Aug. 25, 2020 [dkt. no. 106)), before Gleizer brought the
instant motion.
II.

Applicable Law

"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 .

"

Antonmarchi

v. Consol. Edison Co. of N.Y., 678 F. Supp. 2d 235, 240
(S.D.N.Y. 2010)

(quoting Chadbourne & Parke, LLP v. AB Recur

Finans, 794 N.Y.S.2d 349, 350 (1st Dep't 2005)

(citations

Plaintiff seems to confuse the Court of Appeals' instruction
that the Court could consider whether to entertain supplemental
jurisdiction over a breach of contract claim against Plaintiffs.
As the Republic points out, this instruction pertains to
Plaintiffs, not the Republic, as jurisdiction over the Republic
is governed by FSIA Section 1605(a) (2).
(Opp. at 24-25.)
In
any case, as described below, because the Court has determined
that Gleizer may enforce his Section 475 lien, he need not bring
a plenary action for breach of contract against Plaintiffs.
3

4

"New York Judiciary Law§ 475 .

omitted)).

. governs

attorneys' charging liens in federal courts sitting in New
York."

Itar-Tass Russian News Agency v. Russian Kurier, Inc.,

140 F.3d 442, 448 (2d Cir. 1998).

Section 475 provides in

relevant part:
From the commencement of an action, special or other
proceeding in any court or before any state, municipal
or federal department . . . 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,
report,
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; and the lien cannot be affected by
any settlement between the parties before or after
judgment, final order or determination. The court upon
the petition of the client or attorney may determine and
enforce the lien.
"[T]he lien created by [Section]

N.Y. Judiciary Law§ 475.

475 . . . is enforceable in federal courts in accordance with
its interpretation by New York courts."
Supp. 2d at 240
F. 2d 60, 67

Antonmarchi, 678 F.

(citing Chesley v. Union Carbide Corp.,

927

(2d Cir. 1991).

"[A]n 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, so long as the attorney was
counsel of record at one point in the proceedings."
of Harley

&

Browne,

957

F.

Supp.

44,

48

Petition

(S.D.N.Y.

1997).

"[T]he district court has a responsibility to protect its own

5

officers in such matters as fee disputes."

Itar-Tass Russian

News Agency, 140 F.3d at 444.
III. Discussion
A. Gleizer's Entitlement to Enforce His Section 475 Lien
. may be enforced even when

"Although a charging lien

the proceeds have passed into the possession of the client or a
third party with knowledge, the right to enforce such a lien
will be waived by any action inconsistent with an intent to
enforce the lien .

Therefore, if the attorney knowingly

allows the proceeds to pass into the hands of the client or
another party without asserting his or her rights, or if the
attorney fails to enforce the lien within a reasonable time, the
lien will be deemed waived and the attorney relegated to a
plenary action against the client for any fees."
Reuss, 113 A.D.2d 184, 187

(2d Dep't 1985)

Kaplan v.

(citations omitted),

aff'd, 68 N.Y.2d 693 (1986).
The Republic contends that Gleizer delayed unreasonably by
seeking an award of fees in November 2019, just one week after
the Republic filed notice of settlement but two-and-a-half years
after the Republic actually settled with Plaintiffs in February
2018.

While the Court observes that Gleizer could have done

more to confirm whether his clients had settled the case without
him, having reviewed the portions of the discovery record
submitted by the parties the Court finds that Gleizer did not

6

delay unreasonably in attempting to enforce his lien in under
the circumstances.
Although Plaintiffs and the Republic reached a settlement
in February 2016, discovery shows that Gleizer did not become
aware of the settlement until the Spring of 2018, despite
communicating with his clients and offering his continued
assistance to pursue Plaintiffs' claim against the Republic.
Gleizer commenced this case on behalf of Plaintiffs in 2003.
Three years later, Plaintiffs, with Gleizer's assistance,
obtained a judgment against the Republic in the amount of$
696,385.14.

(See Judgement at 1.)

For years, Plaintiffs

obtained no proceeds from the Republic in satisfaction of the
judgment.

In 2010, years before Plaintiffs obtained a

settlement from the Republic, Gleizer first sought attorneys'
fees pursuant to Section 475.

(See Order to Show Cause, dated

June 23, 2010 [dkt. no. 60] .)

As the Republic points out, in

February 2016, the Propuesta was widely publicized,
and Plaintiffs signed the MSA on February 8, 2016,
Gleizer Deel.

("MSA")

[dkt. no. 116-3], at 8).

(Opp. at 1),
(see Ex. 3 to

The Republic

avers that Gleizer should have known that his clients accepted a
settlement as part of the Propuesta because "the Republic filed
a declaration on the public dockets stating that it had reached
agreements in principle with certain large hedge funds, and that
payment would be made if enumerated conditions were met,

7

including vacatur of the so-called pari passu injunctions."
(Opp. at 2-4.)

However, neither Plaintiffs nor the Republic

filed anything on this case's docket indicating that Plaintiffs
had participated in the settlement.
The record indicates that Gleizer made some efforts to
contact Plaintiffs around the time that the Propuesta was
publicized.

On February 16, 2016, Gleizer emailed his clients,

stating that "[t]he Milberg law firm has become co-counsel with
me and is helping to process your claim under an agreement with
my firm" and that there was "no change in the attorney's fees or
expenses that you are obligated to pay."
Deel.

(Ex. 6 to Gleizer

[dkt. no. 116-6], at ARG-FON0000237.)

This followed his

sending an email (albeit in draft form) to Plaintiffs on
February 11, 2021, in which he communicated that Michael Spencer
of Milberg LLP, who had noticed his appearance in 2015, "is
proceeding with collection efforts for your judgment."
to Ramamurthi Deel.

(Ex. I

[dkt. no. 121-9], at ARG-FON0000217.)

Despite these emails communicating counsel's availability to
pursue collection, Plaintiffs never informed Gleizer that they
in fact had already reached a settlement with the Republic.
In September 2017, Pablo Giancaterino, Gleizer's former cocounsel, filed a criminal fraud case against Plaintiffs in
Argentina (the "Ushuaia Case") in connection with their nonpayment of attorneys fees.

Giancaterino and Gleizer were no

8

longer associated professionally at this time.
Ex. 6 to Gleizer Deel.

(Reply at 10;

[dkt. no. 116-6], at ARG-FON0000223.)

In

a decision in that case, the Argentine court stated that in
early 2017, Giacaterino had "received a telephone call from the
attorneys of the L6pez Fontana family in the United States"
informing him that Plaintiffs had accepted a settlement,
although there is no indication, beyond a reference to U.S.
counsel, that this phone call came from Gleizer.
Ramamurthi Deel.

[dkt. no. 121-11], at 3.)

(See Ex. K to

The Republic points

to little else in the record that contradicts Gleizer's
assertion that he became aware of the Ushuaia Case sometime
between February 22, 2018 and April 17, 2018, around the time he
(Ex. R to Ramamurthi Deel.

retained counsel in that action.
[dkt. no. 121-18], at 3.)

Gleizer's actions immediately upon the Republic's filing of
notice of satisfaction of the judgment based on its settlement
with Plaintiffs further persuade the Court that Gleizer was not
aware of the settlement until 2018 and acted relatively without
delay after he learned of it.

After the Republic filed its

notice of satisfaction of the judgment on November 6, 2018,
Gleizer moved first, on November 13, 2018 for an order to show
cause (dkt. no. 72) and, then, on November 26, 2018, filed his
motion for fees

(dkt. no. 76).

Moreover, the Court lends some

credence to Gleizer's contentions that he did not file the

9

instant petition immediately upon learning of the Ushuaia Case
in Spring 2018 because he believed that, with the Ushuaia Case
still pending in Argentina, his petition would be dismissed as
frivolous.

(Mot. at 5.)

Although Gleizer's conclusion was

perhaps incorrect as a legal matter, Gleizer's delay between
learning about his clients' settlement between February 22, 2018
and April 17, 2018, and filing suit approximately two months
after the Ushuaia Case was dismissed on September 5, 2018, was
not so unreasonable under the circumstances so as to amount to
waiver of his lien.
The cases cited by the Republic do not compel a contrary
result.

In Hellerstein v. Hellerstein, 305 A.D.2d 211 (1st

Dep't 2003), for example, the attorney asserting a charging lien
was aware that "on April 16, 2001, an identifiable fund in the
form of the wife's half interest in [a retirement fund] had been
created as a result of [counsel]'s efforts .

[but] counsel

did not restrain or otherwise assert her charging lien against
that fund until December 2001."

305 A.D.2d 211 at 212.

the court found that "under the circumstances,

There,

[counsel]'s delay

in asserting her lien at or about the time of her discharge was
inconsistent with an intent to enforce it, and warranted its
subordination to" other claims on her client's assets."
212.

Id. at

Here, Plaintiffs never discharged Gleizer as counsel, and

Gleizer never withdrew from this case without asserting an

10

attorneys' fees lien, as counsel in Hellerstein did.

Further,

unlike Hellerstein's counsel, who was clearly aware that her
client was entitled to funds at the time her client came into
that money, the record makes clear that Gleizer had no specific
confirmation from either his clients or the Republic that his
clients had obtained proceeds directly from the Republic at the
time they signed the MSA in February 2016.

In any case, the

Hellerstein court did not find that an eight-month delay
deprived counsel of the ability to enforce her lien.

To the

contrary, it found that the lien could still be enforced but was
subject to subordination based on competing claims for the
client's assets, Hellerstein, 305 A.D.2d at 212.

The Court is

not aware of any competing claims for the settlement proceeds
here.

Moreover, in Petition of Harley

&

Browne, 957 F. Supp. 44

(S.D.N.Y. 1997), the government informed counsel that it had
settled with his client on February 10, 1994, but counsel did
not attempt to enforce a charging lien against the government
and his former client until October 28, 1996. 4

Id. at 49.

The

Republic's reliance on Brettschneider v. City of New York, No.

Moreover, as the Republic acknowledges (Opp. at 20 n. 15), the
Court in Harley & Brown denied counsel's petition for the
independent reason that counsel had been discharged by his
client for cause, and "[i]t is well-settled that an attorney
loses his right to enforce a charging lien if the attorney
withdraws or is discharged for cause." Harley & Browne, 957 F.
Supp. at 48 (citing People v. Keeffe, 50 N.Y.2d 149 (1980)).
4

11

15 Civ. 4574

(CBA)

(SJB), 2020 WL 5984340 (E.D.N.Y. Aug. 25,

2020) is inapposite, as there the Court did not consider the
merits of counsel's Section 475 application but, rather, the
timeliness of counsel's motion to intervene.

Id. at* 18.

To be sure, Gleizer's efforts to learn whether his clients
had settled this matter with the Republic are hardly a
masterclass in diligence.

Although his conduct was not totally

unreasonable under the circumstances, he could have made further
inquiry after his February 2016 emails.

However, Gleizer acted

with some urgency to assert this lien after he learned of his
clients' settlement with the Republic--a lien that both his
clients and the Republic were aware of at the time they settled. 5
Accordingly, Gleizer's motion to enforce his lien for attorneys'
fees pursuant to Section 475 is granted.
B. Award Amount

In New York, "a discharged attorney may recover the fair
and reasonable value of the services rendered, determined at the

In their briefing, each side accuses the other of assorted
violations of ethical or professional rules based on conduct
that occurred years ago during the course of this litigation.
(Mot. at 12-14; Opp. at 24; Reply at 11.) These gripes are of
little relevance to the instant dispute, and, moreover, "[t]he
business of the court is to dispose of litigation and not to act
as a general overseer of the ethics of those who practice here
unless the questioned behavior taints the trial of the cause
before it." Giuffre v. Dershowitz, 515 F. Supp. 3d 123, 128
(S.D.N.Y. 2021) (quoting W.T. Grant Co. v. Haines, 531 F.2d 671,
677 (2d Cir. 1976)).
5

12

time of the discharge" and "[t]he theory of quantum meruit,
rather than the retainer agreement, is the basis for determining
the amount at which to fix the charging lien."

Stair v.

Calhoun, 722 F. Supp. 2d 258, 268 (E.D.N.Y. 2010).

Such a

calculation is not required, however, where, as here, the client
never discharged the attorney.

"[W]here a client enters into a

contingent fee agreement with an attorney, and subsequently,
without discharging the attorney, settles the case directly with
the defendant, the attorney may assert his statutory lien
against the settlement proceeds, and collect the contracted-for
percentage from that recovery."

Cook v. Moran Atl. Towing

Corp., 79 F.R.D. 392, 395 (S.D.N.Y. 1978); see Ward v. Donovan,
235 N.Y. 240 (N.Y. 1923); Matter of Reisfeld, 227 N.Y. 137 (N.Y.
1919).
Gleizer has affixed to his declaration a copy of his
retainer agreement with Plaintiffs,

(Ex. 1 to Gleizer Deel.

[dkt. no. 116-1]), which provides for a contingency fee of 30%
of any recovery.

Because Gleizer had not been discharged by

Plaintiffs prior to their settling with the Republic (or at any
point), Gleizer is entitled to a charging lien in the amount of
$207,000, 30% of the settlement amount of $690,000.
6. )

13

(See MSA at

C. Default Judgment as to Plaintiffs

Gleizer additionally moves for entry of default judgment
against Plaintiffs under Federal Rule of Civil Procedure 55 on
the basis of Plaintiffs' failure to respond to his motion for
fees.
As described above, Gleizer has established his entitlement
to an enforceable attorneys' fees lien.

Section 475 allows an

attorney to enforce a lien upon the proceeds from an asserted
cause of action "in whatever hands they may come."
Judiciary Law§ 475.

N.Y.

The Court of Appeals observed that "the

attorney may enforce his lien against a defendant who failed to
provide for the attorney's fee."
(citing Sargent v. New York Cent.
365 (1913)).

Fontana, 962 F.3d at 675
&

H.R.R. Co., 209 N.Y. 360,

Here, the Court of Appeals observed that "the

circumstances of this case permit Gleizer to assert his claim
against Argentina and plaintiffs simultaneously."

Id. at 676

(2d Cir. 2020). Because the Court has determined Gleizer's
application on the merits, and his lien may be enforced against
both Plaintiffs and the Republic, it is not necessary for the
Court to enter judgment against Plaintiffs by default.
Accordingly, Gleizer's motion for default judgment pursuant
to Federal Rule of Civil Procedure 55 is denied as moot.

14

IV.

Conclusion

For the foregoing reasons, Gleizer's motion for an award of
attorneys' fees pursuant to New York Judiciary Law§ 475 is
GRANTED, and his motion for entry of default judgment against
Plaintiffs is DENIED as moot.
Gleizer shall submit a proposed final judgment no later
than October 8, 2021.
The Clerk of Court is directed to close the open motion at
docket entry 114.
SO ORDERED.

Dated:

New York, New York
September 30, 2021

~azt&0>4u/4

LORETTA A. PRESKA
Senior United States District Judge

15