Ray Legal Consulting Group v. DiJoseph, III et al
OPINION AND ORDER re: 90 MOTION for Summary Judgment filed by Arnold E. DiJoseph, P.C., 92 MOTION for Summary Judgment filed by Arnold E. DiJoseph, P.C.: For the reasons stated in this Opinion, Defendants' motion for summary judgment is GRANTED. The Clerk of Court is directed to terminate all pending motions, adjourn all remaining dates, and close this case. (Signed by Judge Katherine Polk Failla on 4/12/2016) (tn)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
RAY LEGAL CONSULTING GROUP,
ARNOLD E. DiJOSEPH III and
ARNOLD E. DiJOSEPH, P.C.,
DOC #: _________________
DATE FILED: April 12, 2016
13 Civ. 6867 (KPF)
OPINION AND ORDER
KATHERINE POLK FAILLA, District Judge:
This Opinion puts to rest a claim that, at its core, seeks to hold an
attorney liable for doing no more than representing his client. Plaintiff Ray
Legal Consulting Group’s sole remaining claim in this case is one of tortious
interference with a contractual relationship; it is brought against attorney
Arnold E. DiJoseph III, and his firm, Arnold E. DiJoseph, P.C. (together, the
“DiJoseph Defendants” or “Defendants”). Defendants have moved for summary
judgment dismissing Plaintiff’s claim. For the reasons stated in this Opinion,
Defendants’ motion is granted.
The Court assumes familiarity with the facts detailed and conclusions
reached in its August 8, 2014 Opinion and Order (the “Opinion”) in this case.
The facts set forth herein are drawn, to the extent they are appropriately set forth
therein, from Defendants’ Statement of Undisputed Facts Pursuant to Local Civil Rule
56.1 (“Def. 56.1”) (Dkt. #95); the Declaration of Arnold E. DiJoseph in Support of
(Dkt. #45). Nevertheless, a brief summary of the relevant facts helps to frame
the Court’s analysis of Defendants’ motion.
The instant litigation stems from multiple, interlocking employment
disputes: It began when Deloitte Touche Tohmatsu Services, Inc. and Deloitte
Touche Tohmatsu Limited (together, “Deloitte”) terminated the employment of
Victor Caldwell, prompting Caldwell to retain attorney Stacey M. Gray in
November 2011 to represent him in negotiations with his now-former employer.
(Def. 56.1 ¶¶ 1-2). Approximately six weeks later, in December 2011, Caldwell
terminated Gray as his counsel, and Gray retained her own counsel to
represent her in a fee dispute with Caldwell. In relevant part, Gray asserted
that she was entitled to a lien on any settlement proceeds received by Caldwell
from Deloitte as compensation for the services she rendered, a point which
Caldwell contested. (Id. at ¶¶ 3-4, 9). Gray initially retained Leonard Benowich
as counsel, but replaced him with Defendants on February 2, 2012. (Id. at
¶¶ 9, 11).
Defendants’ Motion for Summary Judgment (“DiJoseph Decl.”) (Dkt. #97) and the
exhibits attached thereto; Plaintiff’s Counter-Statement of Undisputed Facts Pursuant
to Local Civil Rule 56.1 (“Pl. 56.1 Opp.”) (Dkt. #101); the Declaration of John Ray in
Opposition to Defendants’ Motion (“Ray Decl.”) (Dkt. #99) and the exhibits attached
thereto; and Defendants’ Reply to Plaintiff’s Counter-Statement (“Def. 56.1 Reply”) (Dkt.
#104). With the exception of Exhibit D, the exhibits to the DiJoseph Declaration are not
paginated. The Court therefore uses the page numbers assigned by the Court’s
Electronic Case Filing (“ECF”) system when citing to specific pages of those exhibits.
For convenience, Defendants’ opening brief is referred to as “Def. Br.” (Dkt. #96);
Plaintiff’s opposition brief as “Pl. Opp.” (Dkt. #98); and Defendants’ reply brief as “Def.
Reply” (Dkt. #102).
Citations to a party’s Rule 56.1 Statement incorporate by reference the documents cited
therein. Where facts stated in a party’s Rule 56.1 Statement are supported by
testimonial or documentary evidence, and denied with only a conclusory statement by
the other party, the Court finds such facts to be true. See S.D.N.Y. Local Rule 56.1(c)(d).
After Caldwell terminated Gray, he retained Plaintiff to represent him in
his ongoing negotiations with Deloitte. (Pl. 56.1 Opp. ¶ 30). On January 25,
2012, Plaintiff — through its individual member attorney, John Ray — met to
discuss settlement of the matter with Michael Bellinger, an attorney from the
law firm of Arent Fox LLP (“Arent Fox”), which then represented Deloitte. (Id. at
¶ 31). At the conclusion of their conversation, Ray and Bellinger shook hands
and parted ways; whether those actions betokened an enforceable settlement
agreement is the crux of the instant motion. Over the course of the coming
months, Ray and Bellinger exchanged numerous emails regarding the terms of
their agreement. (DiJoseph Decl. Ex. N). Meanwhile, Gray continued to assert
her right to a lien on any settlement funds paid to Caldwell by Deloitte.
(DiJoseph Decl. Ex. E, F, G).
On February 8, 2012, Bellinger made clear to Plaintiff that unless a
confidentiality agreement were executed, there would be no settlement.
(DiJoseph Decl. Ex. J). Accordingly, Plaintiff, Defendants, and Arent Fox
entered into such an agreement (the “Confidentiality Agreement”) on February
10, 2012. (Id.). Among the Confidentiality Agreement’s terms was a provision
placing a portion of any settlement funds into an escrow account, with those
funds serving as the sum total of legal fees to be paid by Deloitte to Caldwell’s
counsel. (Id.). The apportionment of those funds between Plaintiff and Gray
was to be determined either through court order or binding arbitration. (Id.).
Caldwell and Deloitte executed a written settlement agreement (the
“Settlement Agreement”) on April 17, 2012. (DiJoseph Decl. Ex. L). As with the
Confidentiality Agreement, the Settlement Agreement required that a sum
certain be placed in escrow pending the resolution of Gray’s fee dispute with
Caldwell. (Id.). Throughout these proceedings, Plaintiff and Gray disputed
both the proper apportionment of the attorneys’ fees that had been escrowed
on account of Gray’s asserted lien, and the antecedent issue of whether Gray
had a right to file a lien in the first instance.
After unsuccessful attempts to resolve the disputes between and among
Gray, Plaintiff, and Caldwell, including: (i) a New York State Supreme Court
action filed by Caldwell, (ii) an action filed by Caldwell pursuant to the Attorney
Fee Dispute Resolution Program, and (iii) a New York State Supreme Court
action filed by Gray against Plaintiff and removed to federal court, Plaintiff filed
its Complaint with this Court on September 26, 2013. (Dkt. #1). 2 The
Complaint named as defendants DiJoseph and his firm; Gray and her firm,
Stacey M. Gray, P.C. (“the Gray Defendants”); Arent Fox; and Deloitte. Plaintiff
alleged tortious interference with contract, tortious interference with
prospective economic advantage, and civil conspiracy against the DiJoseph and
Gray Defendants; breach of fiduciary duty against Deloitte and Arent Fox; and
breach of the covenant of good faith and fair dealing against all defendants.
That same day, Plaintiff additionally filed a separate suit against Gray and her firm, Ray
Legal Consulting Group v. Gray, 13 Civ. 6866 (KPF), seeking to resolve entitlement to the
escrowed attorneys’ fees. That matter was dismissed as barred by res judicata on
August 8, 2014. See Ray Legal Consulting Grp. v. Gray, 37 F. Supp. 3d 689 (S.D.N.Y.
All of the originally-named defendants moved to dismiss the Complaint.
(Dkt. #22, 25, 28). Following briefing on the motions to dismiss, the Court
issued its August 8, 2014 Opinion dismissing all of Plaintiff’s claims, with the
exception of Plaintiff’s claim for tortious interference with contract against the
DiJoseph and Gray Defendants. (Dkt. #45).
The DiJoseph and Gray Defendants filed their respective answers to the
Complaint on September 29, 2014. (Dkt. #49, 50). On November 17, 2014,
the Gray Defendants moved to disqualify Plaintiff from representing Caldwell in
his deposition in connection with the instant matter. (Dkt. #59). Prior to the
Court’s decision on the motion to disqualify, however, the parties stipulated to
the dismissal of the remaining claims against the Gray Defendants, rendering
the motion moot. (Dkt. #68). Shortly thereafter, on January 28, 2015, the
DiJoseph Defendants took up the mantle, filing their own motion to disqualify
Plaintiff as Caldwell’s counsel. (Dkt. #71). Plaintiff filed its opposition on
February 19, 2015 (Dkt. #75); Defendants filed their reply on February 25,
2015 (Dkt. #77); and the Court issued an oral opinion denying the motion on
May 7, 2015 (see Dkt. #78).
Following a discovery period marked by heated disputes between the
parties, and repeated intervention and admonitions by the Court (see, e.g.,
Dkt. #83, 84, 85, 87), Defendants filed the instant motion for summary
judgment on October 16, 2015 (Dkt. #90, 91). Plaintiff filed its opposition on
November 16, 2015 (Dkt. #98), and Defendants concluded the briefing with the
filing of their reply on November 30, 2015 (Dkt. #102).
Motions for Summary Judgment
Under Federal Rule of Civil Procedure 56(a), summary judgment may be
granted only if all the submissions taken together “show that there is no
genuine issue as to any material fact and the movant is entitled to a judgment
as a matter of law.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); see also
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986).
The moving party bears the initial burden of demonstrating “the absence
of a genuine issue of material fact.” Celotex, 477 U.S. at 323. A fact is
“material” if it “might affect the outcome of the suit under the governing law,”
and is genuinely in dispute “if the evidence is such that a reasonable jury could
return a verdict for the nonmoving party.” Anderson, 477 U.S. at 248; see also
Jeffreys v. City of New York, 426 F.3d 549, 553 (2d Cir. 2005) (citing Anderson).
The movant may discharge this burden by showing that the nonmoving party
has “fail[ed] to make a showing sufficient to establish the existence of an
element essential to that party’s case, and on which that party will bear the
burden of proof at trial.” Celotex, 477 U.S. at 322; see also Selevan v. N.Y.
Thruway Auth., 711 F.3d 253, 256 (2d Cir. 2013) (finding summary judgment
appropriate where the non-moving party fails to “come forth with evidence
sufficient to permit a reasonable juror to return a verdict in his or her favor on
an essential element of a claim” (internal quotation marks omitted)).
If the moving party meets this burden, the nonmoving party must “set
out specific facts showing a genuine issue for trial” using affidavits or
otherwise, and cannot rely on the “mere allegations or denials” contained in the
pleadings. Anderson, 477 U.S. at 248, 250; see also Celotex, 477 U.S. at 32324; Wright v. Goord, 554 F.3d 255, 266 (2d Cir. 2009). The nonmoving party
“must do more than simply show that there is some metaphysical doubt as to
the material facts,” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S.
574, 586 (1986) (citations omitted), and cannot rely on “mere speculation or
conjecture as to the true nature of the facts to overcome a motion for summary
judgment,” Knight v. U.S. Fire Ins. Co., 804 F.2d 9, 12 (2d Cir. 1986) (citing
Quarles v. General Motors Corp., 758 F.2d 839, 840 (2d Cir. 1985)).
Tortious Interference with Contract
Plaintiff’s remaining claim in this case contends that, (i) as of January
25, 2012, Caldwell and Deloitte had an enforceable oral settlement agreement,
(ii) that settlement agreement did not contain a provision placing attorneys’ fees
in escrow, and (iii) as a consequence of Defendants’ tortious interference,
Deloitte breached its oral contract by requiring the Confidentiality Agreement
and its included escrow provision. Under New York law, a claim for tortious
interference with a contract requires:
[i] the existence of a valid contract between the plaintiff
and a third party; [ii] the defendant’s knowledge of that
contract; [iii] the defendant’s intentional procurement of
the third party’s breach of the contract without
justification; and [iv] an actual breach of the contract
and damages resulting from such breach.
Brady v. Calyon Sec. (USA), 406 F. Supp. 2d 307, 314 (S.D.N.Y. 2005) (citing
Bradbury v. Woller Cope-Schwarz, 798 N.Y.S.2d 207, 207 (3d Dep’t 2005)).
Where, as here, the “contract” at issue consists of an unwritten
settlement agreement, courts within the Second Circuit consider four factors to
determine whether the agreement was indeed binding on the parties. These
[i] whether there has been an express reservation of the
right not to be bound in the absence of a writing;
[ii] whether there has been partial performance of the
contract; [iii] whether all of the terms of the alleged
contract have been agreed upon; and [iv] whether the
agreement at issue is the type of contract that is usually
committed to writing.
Winston v. Mediafare Entm’t Corp., 777 F.2d 78, 80 (2d Cir. 1985); accord
Powell v. Omnicom, 497 F.3d 124, 129 (2d Cir. 2007); Sawabeh Info. Servs. Co.
v. Brody, 832 F. Supp. 2d 280, 301 (S.D.N.Y. 2011). When applying the
Winston factors, “[n]o single factor is decisive”; rather, a court must consider
each within the context of the entire record. Ciaramella v. Reader’s Digest
Ass’n, Inc., 131 F.3d 320, 323 (2d Cir. 1997).
No Enforceable Contract Existed 3
Plaintiff asserts that a binding contract was formed between itself and
Bellinger on January 25, 2012. (Pl. Opp. 11-12; see also Ray Decl. ¶¶ 7-15).
In addition to contesting the existence of an enforceable oral contract, the parties
disagree as to whether Plaintiff was a party to any such contract. (Def. Br. 14; Pl.
Opp. 14). Because the Court finds that no enforceable contract existed, it need not
decide whether Plaintiff was a party to the alleged agreement. For later analysis in this
Opinion, the Court assumes, for purposes of this motion, that Plaintiff would have been
a party to the agreement had it existed.
Applying the Winston factors to the facts at hand, the Court concludes that no
reasonable juror could find that the contractual relationship alleged by Plaintiff
Reservation of the Right Not to Be Bound
Regarding the first element, reservation of the right not to be bound,
Plaintiff states that not only was no such reservation made, but that Bellinger’s
client affirmatively “expressed its assent to be bound by the oral settlement
agreement,” and that “Bellinger confirmed that . . . the parties had a binding
settlement agreement.” (Ray Decl. ¶¶ 12-15). In particular, Plaintiff recounts
that, after their conversation, Ray and Bellinger “shook hands on the oral
settlement agreement they had reached at the meeting as a further sign of the
Settling Parties’ commitment to the oral settlement agreement.” (Id. at ¶ 16).
The Court notes as a preliminary matter that Plaintiff’s account of
Bellinger’s statements constitutes inadmissible hearsay. See Fed. R. Evid. 801;
Trebor Sportswear Co. v. The Ltd. Stores, Inc., 865 F.2d 506, 510 (2d Cir. 1989)
(“[I]n order to survive [Defendant’s] motion for summary judgment, it was
incumbent upon appellants to identify sufficient admissible evidence of an
agreement so as to demonstrate that there existed a genuine issue of material
fact regarding the alleged agreement.” (emphasis added)); cf. Myers v. Patterson,
— F.3d —, No. 14-2554-cv, 2016 WL 1397905, at *7 (2d Cir. Apr. 12, 2016)
(vacating grant of summary judgment based on finding of qualified immunity
and remanding for development of record, where evidence consisted of
caseworker notes, with no statements from arresting officer; “It is, of course,
quite possible, that Officer Patterson made observations of Johnson’s
dangerousness that would support arguable probable cause to arrest her. But
the unsworn argument of an officer’s attorney cannot substitute for record
evidence.”). Moreover, Bellinger flatly contradicts Plaintiff’s account of their
conversation — and, as the Court discusses further in this section, so does the
documentary record. See Scott v. Harris, 550 U.S. 372, 380 (2007) (“When
opposing parties tell two different stories, one of which is blatantly contradicted
by the record, so that no reasonable jury could believe it, a court should not
adopt that version of the facts for purposes of ruling on a motion for summary
During his deposition, Bellinger asseverated that during January and
February of 2012, “[t]here was no final settlement agreement. There were
negotiations.” (DiJoseph Decl. Ex. D at 29:23-25). When asked whether
Bellinger had entered into an “oral agreement that [the Caldwell] matter was
resolved prior to the settlement agreement or the confidentiality agreement”
that was executed in April 2012, Bellinger unequivocally answered, “No …
certainly there was no enforceable settlement agreement.” (Id. at 52:21-53:4).
When pressed on the significance of his handshake with Plaintiff at the
conclusion of their meeting, Bellinger emphasized that “[i]t was just etiquette,”
not “a legality,” nor was it even necessarily a sign of good faith (id. at 81:2182:4): He explained that “no matter whether I shake someone’s hand or not
there’s no deal until it’s reduced to a writing and everyone signed it.” (Id. at
Bellinger’s account of his negotiations with Plaintiff is supported by the
contemporaneous documentary evidence in the record. On January 31, 2012,
Bellinger sent an email to Gray stating, “I believe I have forged a settlement
between Mr. Caldwell and [my client] …. I would appreciate your input but
Thursday may be too late in the settlement process.” (Ray Decl. Ex. 3).
Bellinger clearly indicated that he “believe[d]” an agreement has been reached,
but solicited Gray’s input, thereby indicating that he did not understand the
agreement to be in its final form. Rather, he describes his client as engaged in
“the settlement process.” Plaintiff evidenced a similar understanding in its
April 15, 2012 email to Bellinger, in which it demanded certain changes to a
draft settlement circulated by Bellinger that, if not made, would cause Plaintiff
and its client to abandon settlement negotiations and “proceed forward” with
litigation. (DiJoseph Decl. Ex. N at 4). Thus, the record indicates Plaintiff’s
own reservation of the right not to be bound absent certain wording adopted in
the written agreement. (Cf. id. (April 13, 2012 email from Bellinger stating, “I
am sending you what I consider to be a good faith attempt to settle this matter
with the proviso that this does not purport to be the final version.” (emphases
added)). Similarly, an email from Bellinger to Plaintiff on April 10, 2012, stated
that “the final settlement agreement was provided to you on March 29, 2012,”
and that Caldwell had until April 19, 2012, to consider it; on that date, “if not
accepted it [would] be withdrawn.” (Id. at 5). Hence, the “final settlement
agreement” was not presented until March 29, 2012 — nearly two months after
Defendants’ alleged interference — and even then, Bellinger reserved his
client’s right to withdraw from the agreement unless acceptance was received
within a specified timeframe. Cf. Ciaramella, 131 F.3d at 325 (“[A]n attorney’s
statement that ‘a handshake deal’ existed was insufficient to overcome ‘months
of bargaining where there were repeated references to the need for a written
and signed document, and where neither party had ever ... even discussed
dropping the writing requirement.’” (quoting R.G. Grp., Inc. v. Horn & Hardart
Co., 751 F.2d 69, 76 (2d Cir. 1984))).
Considering finally the written agreement itself, the executed Settlement
Agreement contains a merger clause stating that it supersedes any preceding
written or oral agreements, and cannot be orally modified (DiJoseph Decl. Ex. L
at ¶ 25); the Second Circuit has found that “such a merger clause is persuasive
evidence that the parties did not intend to be bound prior to the execution of a
written agreement.” Ciaramella, 131 F.3d at 324-25 (citing R.G. Grp., Inc., 751
F.2d at 76; McCoy v. New York City Police Dep’t, No. 95 Civ. 4508 (RPP), 1996
WL 457312, at *2 (S.D.N.Y. Aug. 14, 1996)). Further, the Settlement
Agreement states, “If this Agreement does not become effective, it shall be
deemed negotiation for settlement purposes only and will not be admissible or
usable for any purposes.” (DiJoseph Decl. Ex. L at ¶ 28). In other words, the
parties expressly reserved their right not to be bound by the terms of the
settlement absent the execution of the written agreement.
In short, the record does not support — and in fact refutes — Plaintiff’s
claim that the parties affirmatively agreed to be bound by an oral settlement
reached on January 25, 2012. In light of the many objective indications that
the parties to the agreement intended to reserve their rights not to be bound
absent a writing, the first Winston factor weighs against finding the existence of
an enforceable oral contract.
Partial Performance of the Agreement
Plaintiff next argues that its “partial performance” weighs in favor of a
binding contract, because Plaintiff and Caldwell “refrained from filing
anticipated litigation” as a result of the settlement conversation. (Pl. Opp. 11).
This forbearance, however, does not constitute “partial performance” in a
manner suggesting the establishment of a binding contract. Partial
performance provides a useful indicator of a contract where a party would not
undertake the action in question absent the belief that a contract had been
formed. In other words, partial performance is most relevant where such
performance would not be expected absent a final agreement. Where, as here,
however, the “performance” in question consists of forestalling litigation, such
performance offers no insight into the status of settlement negotiations. The
filing of a claim would provide a clear indication that negotiations had broken
down, and that no agreement was or would be reached; Plaintiff’s failure to file,
on the other hand, shows only that settlement was still a possibility. Cf. Leber
v. Blackmon, No. 89 Civ. 5474 (MBM), 1991 WL 19851, at *2 (S.D.N.Y. Feb. 13,
1991) (perpetual release of claims did not constitute “performance” on a
settlement contract for purposes of the statute of frauds).
The Court can imagine circumstances in which failure to file an
otherwise viable claim might constitute performance relevant to the
determination of a contract, such as where a claim expires due to forbearance
in reliance on an oral agreement. This case presents no such circumstances;
on the contrary, Plaintiff continued to threaten litigation against Caldwell’s
former employer as late as April 15, 2012, using that threat as a bargaining
chip in negotiating the language of the written settlement agreement.
(DiJoseph Decl. Ex. N at 4 (email from Plaintiff to Bellinger demanding certain
changes to the draft agreement and stating that “[i]f your client refuses, we will
proceed forward with the EEOC and in court”)). Because Plaintiff’s decision to
hold off on filing a complaint was entirely consistent with ongoing settlement
negotiations, the second Winston factor does not suggest the existence of a
binding agreement between the parties; rather, it is largely neutral. See Case
v. City of New York, No. 12 Civ. 2189 (AJN) (AJP), 2012 WL 5951296, at *6
(S.D.N.Y. Nov. 28, 2012) (citing cases in which the second Winston factor was
Whether the Material Terms Have Been Agreed Upon
The record reflects that the parties did not orally agree upon all material
terms of their settlement. On February 24, 2012, Plaintiff (through Ray) sent
an email to Bellinger stating, “[w]e … want to be certain that we [are] on the
While Plaintiff does not assert the steps taken toward consummation of settlement as
“partial performance,” the Court acknowledges that some courts in this District have
considered such steps in assessing the Winston factors. See Estate of Andrea Brannon
v. City of New York, No. 14 Civ. 2849 (AJN), 2016 WL 1047078, at *3 (S.D.N.Y. Mar. 10,
2016) (discussing cases). Considering the steps taken toward consummation would
not, however, support the existence of a contract here in light of both sides’ respective
failure to accept such performance, as evidenced by their continued threats to walk
away from the agreement. See Ciaramella v. Reader’s Digest Ass’n, Inc., 131 F.3d 320,
325 (2d Cir. 1997) (stating the second Winston factor as considering “whether one party
has partially performed, and that performance has been accepted” (emphasis added)).
same page, so that  we are not spinning our wheels if there is no substantive
agreement on the material terms, which I understood we had some time ago.”
(DiJoseph Decl. Ex. N at 14). Plaintiff thus acknowledges that as of
February 24, 2012, it was unclear whether the parties had “substantive
agreement on the material terms,” Plaintiff’s previous impressions
notwithstanding. See Sprint Commc’ns Co. v. Jasco Trading, Inc., 5 F. Supp. 3d
323, 338 (E.D.N.Y. 2014) (finding no enforceable contract where there was no
“meeting of the minds” on the key terms); Benicorp Ins. Co. v. Nat’l Med. Health
Card Sys., Inc., 447 F. Supp. 2d 329, 337 (S.D.N.Y. 2006) (framing the question
as “whether the parties had a common, mutual understanding” of the key terms
of the agreement (emphasis added)).
Plaintiff’s email exchange with Bellinger discloses multiple issues on
which the parties had not yet reached agreement following their January 25
conversation. As of February 8, 2012, Plaintiff and Bellinger had not yet
resolved the need for a confidentiality agreement, independent of any escrow
conditions. (DiJoseph Decl. Ex. J (February 8, 2012 email from Bellinger to
Ray stating, “The equation is quite simple: no Confidentiality Agreement, no
settlement.”)). 5 On February 20, 2012, Ray sent Bellinger an email noting that
Plaintiff contends that this demand for a confidentiality agreement was the direct result
of Defendants’ tortious interference. (Pl. Opp. 8). However, the only “interference”
Plaintiff alleges is Defendants’ claim of a lien, which led to an escrow provision; nowhere
does the record suggest that Defendants made any demands regarding confidentiality.
As Bellinger explained in his deposition, while the Confidentiality Agreement ultimately
entered into did contain the now-contested escrow provision, it served the independent
purpose of — as the name suggests — establishing the terms of the settlement as
confidential. (DiJoseph Decl. Ex. D at 109). Thus the record does not support an
inference that the need for an escrow provision was the sole motivation behind
Bellinger’s ultimatum. Rather, it indicates that confidentiality was, as of February 8,
2012, an unsettled element of any settlement agreement.
there were still outstanding issues, and stating, “we need to finish this
agreement this week.” (DiJoseph Decl. Ex. N at 17). Subsequent emails
discuss unsettled provisions, including the amount of unpaid leave for which
Caldwell would receive credit (id. at 13 (February 24, 2012 email from Bellinger
to Plaintiff, in response to Plaintiff’s request for four months’ unpaid leave,
stating, “We agreed upon TWO months unpaid leave, not FOUR! My notes are
clear on that point”)); the basis upon which certain damages would be paid to
Caldwell (id. (February 24, 2012 email from Ray to Bellinger, observing that the
proposed draft agreement left out “the 40% nonwithholding allocation to
phy[si]cal injury,” which, along with unpaid leave, was a “very material term
to Mr. Caldwell’s agreement”)); the reciprocity of the release provisions in the
agreement (id. at 9 (April 2, 2012 email from Plaintiff to Bellinger, stating,
“obviously there are still a few kinks in this agreement that we need to iron out.
A significant issue is its lack of reciprocity on the release provisions.”)); and the
effect on the agreement of Caldwell finding new employment (id. at 4 (April 13,
2012 email from Bellinger to Plaintiff, noting that certain terms still needed to
be sorted out, “such as what happens if Mr. Caldwell were to begin new
employment on June 1, 2012?”)).
When considering whether all the material terms of an agreement have
been agreed upon, the Second Circuit has explained that courts should not
retroactively decide that certain changes to an agreement were so “minor” or
“technical” as to be of no import to an agreement’s binding effect. Winston, 777
F.2d at 83; accord Ciaramella, 131 F.3d at 325; Sprint Commc’ns Co. L.P., 5 F.
Supp. 3d at 336. Here, the email correspondence between Plaintiff and
Bellinger from February 10, 2012, through April 17, 2012, reflects ongoing
negotiations in which the parties themselves referred to outstanding issues as
“material” and “significant,” with each party threatening to walk away from the
agreement should particular terms not be adopted. To say, on this record, that
the parties had an enforceable oral agreement as of January 25, 2012, would
confound common sense. Hence, this factor weighs heavily against finding the
existence of an enforceable oral contract.
Whether the Agreement Is of a Sort Usually Reduced to
Considering the final Winston factor, the Second Circuit has recognized
that “[s]ettlements of any claim are generally required to be in writing or, at a
minimum, made on the record in open court.” Ciaramella, 131 F.3d at 326.
Furthermore, “[w]here, as here, the parties are adversaries and the purpose of
the agreement is to forestall litigation, prudence strongly suggests that their
agreement be written in order to make it readily enforceable, and to avoid still
further litigation.” Winston, 777 F.2d at 83.
The complexity of an agreement also informs the determination of
whether it would be expected to be reduced to writing. Ciaramella, 131 F.3d at
326; Winston, 777 F.2d at 83; R.G. Grp., Inc., 751 F.2d at 76. The Winston
Court found, for instance, that a four-page settlement document containing
obligations that would extend for a period of years constituted an agreement
complex enough to require a writing. Winston, 777 F.3d at 83. Here, the
Settlement Agreement spanned 20 pages and contained highly specific
provisions regarding benefits eligibility, salary payments, and tax treatment of
payments made under the agreement. (See DiJoseph Decl. Ex. L). Thus, the
final factor supports the conclusion that the parties did not enter into an
enforceable oral contract.
In sum, three of the four Winston factors weigh decisively against the
finding of a binding oral agreement between Plaintiff and Bellinger’s client, and
the fourth does not tip the scales in either direction. Consequently, the Court
finds no triable issue of fact that remains on this point. See, e.g., Adjustrite
Sys., Inc. v. GAB Bus. Servs., Inc., 145 F.3d 543, 551 (2d Cir. 1998) (concluding
that three of four factors indicated parties did not intend to be bound until
formal documents were executed and therefore summary judgment was
appropriate); Ciaramella, 131 F.3d at 326 (vacating, based on “the totality of
the evidence,” the district court’s determination that a binding agreement was
reached); Arcadian Phosphates, Inc. v. Arcadian Corp., 884 F.2d 69, 72-73 (2d
Cir. 1989) (affirming grant of summary judgment notwithstanding considerable
partial performance, where language of memorandum showed that parties did
not intend to be bound until final contract was signed); Winston, 777 F.2d at
83 (reversing district court after concluding that parties were not bound to
preliminary settlement agreement, where three of four factors established
parties did not intend to be bound until formal documents were executed and
delivered). In the absence of a valid contract with which to interfere,
Defendants’ motion for summary judgment on Plaintiff’s tortious interference
with contract claim is granted.
The Heightened Bad Faith Standard Applicable to Tortious
Interference with Contract Claims Against Attorneys Has Not
Even were the Court to find that a triable issue existed regarding the
enforceability of Plaintiff’s purported oral agreement with Bellinger, Defendants’
motion for summary judgment would nevertheless succeed. While tortious
interference with contract generally requires intent, a plaintiff asserting
tortious interference against an attorney acting on behalf of a client must meet
a higher standard: Attorney liability requires either malicious intent or
personal interest. M’Baye v. World Boxing Ass’n, No. 05 Civ. 9581 (DC), 2009
WL 2245105, at *10 (S.D.N.Y. July 28, 2009); see also Newburger, Loeb & Co.
v. Gross, 563 F.2d 1057, 1080 (2d Cir. 1977) (“Under New York law an attorney
generally cannot be held liable to third parties for actions taken in furtherance
of his role as counsel unless it is shown that he ‘did something either tortious
in character or beyond the scope of his honorable employment.’” (quoting
Dallas v. Fassnacht, 42 N.Y.S.2d 415, 418 (N.Y. Sup. Ct. 1943))); Four Finger
Art Factory, Inc. v. Dinicola, No. 99 Civ. 1259 (JGK), 2001 WL 21248, at *7
(S.D.N.Y. Jan. 9, 2001) (“[I]f an attorney or any other agent of a contracting
party takes actions that induce a breach of contract while acting within the
scope of an agency relationship and is not motivated by personal gain, the
attorney or agent is not liable to the third party for tortious interference with
contract.”). The record does not support a finding of either.
Plaintiff does not allege, nor does the record suggest, that Defendants
acted in their personal interest; rather, they acted at all times in their capacity
as Gray’s counsel. Plaintiff nevertheless points to (i) Defendants’ assertion of a
charging lien on Gray’s behalf, (ii) Defendants’ demand that a portion of the
settlement funds paid to Caldwell be placed in escrow pursuant to that lien,
and (iii) Defendants’ threat to bring litigation on behalf of their client as
evidence of Defendants’ bad faith. (Pl. Opp. 12-13). None of these actions
suffices to show the “malicious intent” required to substantiate Plaintiff’s
The Engagement Agreement entered into between Gray and Caldwell
stated that Gray’s firm would “receive one-third (33.3%) of the total amount
received by [Caldwell] through a settlement/severance agreement with [his]
Employer less any out-of-pocket payments made by [Caldwell] for attorney
fees,” and that Gray could “put a lien on any settlements, awards and
severance amounts for payment of services rendered as well as costs and
expenses.” (Ray Decl. Ex. 4 at 3). Accordingly, on December 21, 2011 — the
day Caldwell terminated Gray as his attorney — Gray wrote to counsel for
Plaintiff cites to this Court’s earlier decision resolving the motions to dismiss for the
proposition that where an attorney asserts a “knowingly false claim of a ‘statutory
charging lien’ … and threats of litigation, with no basis under the law for such a claim,
that is bad faith misconduct, and supports a claim for tortious interference, as in this
case.” (Pl. Opp. 13 (citing Ray Legal Consulting Group v. DiJoseph, 37 F. Supp. 3d 704,
721 (S.D.N.Y. 2014))). Plaintiff mischaracterizes this Court’s statements. In regard to
the Court’s August 8, 2014 Opinion, the parties had not briefed, nor did this Court
discuss, the heightened standard for tortious interference with contract applicable to
claims against attorneys. Rather, the Court observed only that Plaintiff’s pleadings
satisfied the basic “intent” requirement for a tortious interference with contract claim.
The Court will not now opine on whether, had Defendants raised an argument based on
their status as attorneys at the motion to dismiss stage, Plaintiff’s surviving claim
would, in fact, have survived. The Court simply notes that the variable intent standard
for tortious interference with contract claims was not addressed by this Court
previously. Plaintiff’s citation to this Court’s prior Opinion and the “cases cited therein”
is consequently inapposite.
Caldwell’s employer (and copied Plaintiff), stating, “My office will place a lien on
Mr. Caldwell’s file along with any settlements, awards and severance amounts
that [his Employer] pays to [him].” (DiJoseph Decl. Ex. E). That same day,
Plaintiff engaged in a series of emails with Gray, accusing her of breaching her
professional conduct obligations through her assertion of a settlement lien and
asking for the bases of her claim, in response to which Gray referred Plaintiff to
her Engagement Agreement with Caldwell. (DiJoseph Decl. Ex. F). 7 On
December 23, 2011, Gray sent Plaintiff a letter “as notice” that she was placing
“both a retaining lien and contractual charging lien on Mr. Caldwell’s file and
any recovery obtained arising out of his dispute with [his Employer].” (Id. at 9).
Plaintiff and Gray continued to exchange emails, throughout which Gray
steadfastly asserted her claimed right to a lien on any recovery received by
Caldwell pursuant to “basic contract law.” (Id. at 9-16).
On February 1, 2012, the day prior to her engagement of Defendants as
counsel, Gray wrote to Bellinger and Plaintiff, informing them that “the liens
[were] still in effect.” (DiJoseph Decl. Ex. G at 2-3). That day, Plaintiff (through
Ray) sent multiple emails to Gray’s then-counsel, Leonard Benowich,
articulating its skepticism of Gray’s right to a lien. (Id. at 8-14). It further
drafted and circulated a notice of petition against not only Gray, but also
attorney Benowich, threatening to file if Gray did not agree to settle her claims.
(Id. at 13; DiJoseph Decl. Ex. H). The draft that Plaintiff circulated including
Somewhat ironically, Plaintiff disputed Gray’s assertion of a previous settlement offer
“in the absence of a firm proposed agreement as to all material terms in writing.”
(DiJoseph Decl. Ex. F at 6).
Benowich as a defendant claimed no action taken by Benowich in his personal
capacity, but rather sought declaratory judgment on legal claims that he had
asserted on Gray’s behalf. (See DiJoseph Decl. Ex. H at 4-5).
Just as the record suggests no malfeasance on the part of Benowich, it
nowhere suggests that Defendants asserted a charging lien out of malicious
intent; on the contrary, Gray had been claiming the right to a lien since the day
of her termination, and Defendants merely acted as her attorney in continuing
to assert the claim on her behalf. Plaintiff points to Defendants’ lack of
proffered case law as evidence of their “malicious intent,” but Gray’s claim was
expressly premised on her Engagement Agreement and principles of contract
law; in that context, Defendants’ failure to provide their opponent with specific
case citations does not suggest bad faith. Plaintiff similarly argues that
Defendants’ client lacked a valid basis upon which to assert a “statutory
charging lien,” as the version of New York Judiciary Law § 475 then in place
did not entitle her to such a lien. (Pl. Opp. 6, 8, 13-14; Ray Decl. ¶¶ 48-50).
Plaintiff might perhaps be correct in its interpretation of § 475 as it stood in
2012; but Defendants’ interpretation of the law was not so beyond the pale as
to suggest, on its own or in combination with other record evidence, that
Defendants’ assertion of a lien on behalf of their client was made in “bad
Until December 31, 2012, New York Judiciary Law § 475 read, in relevant part:
From the commencement of an action … or the service of an answer
containing a counterclaim, the attorney who appears for a party
has a lien upon [her] client’s cause of action, claim or counterclaim,
which attaches to a verdict, report, determination, decision,
Considering next the request that a portion of the settlement funds be
placed in escrow, this again does not suggest any “malicious intent” by
Defendants. To the contrary, under New York’s Professional Rules of Conduct,
Funds belonging in part to a client or third person and
in part currently or potentially to the lawyer or law firm
shall be kept in such special account or accounts, but
the portion belonging to the lawyer or law firm may be
withdrawn when due unless the right of the lawyer or law
firm to receive it is disputed by the client or third person,
in which event the disputed portion shall not be
withdrawn until the dispute is finally resolved.
N.Y.S. R.P.C. Rule 1.15(b)(4) (emphases added). In other words, Defendants’
request that the disputed funds be placed in escrow was the natural and
proper consequence, under New York’s Professional Rules, of their client’s
asserted lien against Caldwell. Certainly, it evinces no malice on the part of
judgment or final order in [her] client’s favor, and the proceeds
N.Y. Jud. L. § 475 (2012). An amended version of § 475 went into effect on January 1,
2013, providing that:
From the commencement of an action … or the service of an answer
containing a counterclaim, or the initiation of any means of
alternative dispute resolution including, but not limited to, mediation
or arbitration, or the provision of services in a settlement negotiation
at any stage of the dispute, 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[.]
N.Y. Jud. L. § 475 (2013) (emphases added). Thus, Plaintiff argues, prior to January 1,
2013, when attorneys who appear for settlement purposes were explicitly added to the
scope of § 475, Gray was not entitled to a statutory charging lien for her settlementrelated services. (Pl. Opp. 6, 13-14). The parties have not briefed, and Court declines
to opine on, the proper construction of the pre-amendment § 475; suffice it to say that
neither the fact of amendment, nor the statute’s lack of express reference to settlement
counsel prior to 2013, serves to transform Defendants’ 2012 assertion of a charging lien
on their client’s behalf into “bad faith misconduct” sufficient to support a tortious
Finally, as to Plaintiff’s contention that Defendants “threatened litigation”
to protect their client’s rights: It may be that Defendants were incorrect in their
belief that Gray had a right to a lien on Caldwell’s settlement award; but an
attorney’s incorrect advice is not itself grounds for tortious interference with
contract. Purvi Enterprises, LLC v. City of New York, 879 N.Y.S.2d 410, 412
(1st Dep’t 2009) (quoting Beatie v. DeLong, 561 N.Y.S.2d 448 (1st Dep’t 1990)).
Defendants informed Plaintiff and Caldwell that their client “intend[ed] to
pursue all legal remedies available to her,” as their client had a plausible claim
to a portion of any settlement Caldwell received. (DiJoseph Decl. Ex. K). In
this respect, Defendants behaved entirely appropriately. Inasmuch as Plaintiff
previously threatened, and then actually filed, a lawsuit against an attorney for
doing no more than representing his client, the Court might hesitate to say the
same of Plaintiff.
The evidence in the record indicates that Defendants acted at all times in
accordance with and on behalf of their client’s interests, and contains no
suggestion of personal interest or malicious intent. As the Court has already
discussed, no enforceable oral contract existed between Plaintiff and Caldwell’s
employer, and Defendants’ motion succeeds on that ground; but even had such
a contract been in place, no reasonable juror could find that Defendants acted
with the heightened intent necessary to find an attorney liable for tortious
interference with contract. For this separate reason, their motion for summary
judgment is granted.
For the reasons stated in this Opinion, Defendants’ motion for summary
judgment is GRANTED. The Clerk of Court is directed to terminate all pending
motions, adjourn all remaining dates, and close this case.
April 12, 2016
New York, New York
KATHERINE POLK FAILLA
United States District Judge
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