Friedman v. Kuczkir et al
OPINION AND ORDER. The foregoing constitutes the Courts Findings of Fact and Conclusions of Law. The Court has considered all of the arguments of the parties. To the extent not specifically addressed above, any remaining arguments are either moot or without merit. For the reasons explained above, Friedman is entitled to judgment on Counts One and Two in Action One for breach of contract and is entitled to judgment in the amount of the sum of all monies being held in escrow pending the outc ome of this litigation, with 9% interest as calculated pursuant to N.Y. C.P.L.R. § 5001. The remainder of the claims in Action One are dismissed as moot. The only remaining counterclaim in Action One is dismissed with prejudice. All of t he Kuczkir Parties claims in Action Two are dismissed with prejudice. Friedman shall submit a proposed judgment within five days of the date of this opinion. The remaining parties may submit a counter judgment two days thereafter. Friedman may submit any responses two days after the counter judgments are submitted. The Clerk is directed to close all pending motions. SO ORDERED. (Signed by Judge John G. Koeltl on 8/9/17) (yv)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
- against MARY KUCZKIR a/k/a FERN MICHAELS,
PAK6, INC., and KAP5, INC.,
MARY KUCZKIR a/k/a FERN MICHAELS,
PAK6, INC., FIRST DRAFT, INC., and
MRK PRODUCTIONS, INC.,
- against MCLAUGHLIN & STERN, LLP and
JOHN G. KOELTL, District Judge:
OPINION AND ORDER
This case is about the dissolution of a professional and
personal relationship between a lawyer and his former client.
Martin Friedman began performing a variety of legal
services for Mary Kuczkir -- a successful author who writes
under the pen name Fern Michaels -- in the early 1980’s.
Beginning in 2004 Friedman also began acting as Kuczkir’s
literary agent, and in 2007 Friedman began receiving an 11%
commission pursuant to a Commission Agreement for each
publishing contract procured by Friedman on Kuczkir’s behalf.
Friedman and his law firm, McLaughlin and Stern, continued to
bill Kuczkir by the hour for all work performed on her behalf,
including for the literary agency work. Over six years later,
the relationship deteriorated and Kuczkir fired Friedman.
Friedman now seeks payment of an 11% commission on the royalties
from a publishing contract that he claims to have procured
between Kuczkir and Kensington Publishing Corp. (“Kensington”)
prior to his termination in 2013, as well as commission payments
from other past publishing contracts which are currently being
withheld. Friedman asserts eight state law claims against
Kuczkir and two of her corporate entities (“Action One”), chief
among them breach of contract and, in the alternative, breach of
the implied covenant of good faith and fair dealing and quasicontractual claims.
Kuczkir argues that Friedman is not entitled to any
commission on the contract with Kensington –- a version of which
was ultimately signed in March of 2014 –- and also maintains in
a counterclaim in Action One that Friedman breached his
fiduciary duty to her, that the Commission Agreement is thus
unenforceable, and that all past commissions received should be
returned. Kuczkir and the various corporate entities through
which she contracts, including PAK6, Inc., KAP5, Inc., First
Draft, Inc., and MRK Productions, Inc. (together, the “Kuczkir
Parties”), also sued Friedman and his former law firm -McLaughlin and Stern -- alleging malpractice and seeking
disgorgement of all past fees paid by the Kuczkir Parties
The Court has jurisdiction over this case pursuant to 28
U.S.C. § 1332 based on complete diversity of citizenship.
The Court conducted a non-jury trial in this case from
January 9, 2017 through January 18, 2017. Having considered all
of the evidence and assessed the credibility of the witnesses,
the Court makes the following findings of fact and reaches the
following conclusions of law pursuant to Federal Rule of Civil
FINDINGS OF FACT
Martin Friedman is an attorney and former partner at the law
firm McLaughlin and Stern (“M&S”). Transcript (“Tr.”) 54.
Friedman is licensed to practice law in the state of New
York. Tr. 42.
Mary Kuczkir is an 84 year-old author who writes under the
pen name Fern Michaels. Kuczkir grew up poor and did not
attend college or receive any education in business, but has
achieved significant success as a prolific fiction author.
Tr. 288, 586. Kuczkir has dyslexia, but since the early
1970’s she has been responsible for approximately 165 novels,
nearly all of which have ended up on a bestseller list. Tr.
Rather than entering into agreements with publishers herself,
Kuczkir writes books pursuant to publication agreements
whereby one of her various corporate entities contracts with
the publisher directly. Tr. 395-96.
Friedman and M&S began representing Kuczkir, her family, and
her various corporate entities in the early 1980’s,
performing a variety of services including general corporate
work, intellectual property work related to Kuczkir’s writing
and publishing career, and trusts and estates work. Tr. 42.
Prior to 2004, Kuczkir used the services of at least five
literary agents in connection with her writing career. Tr.
42. Those agents would generally read Kuczkir’s manuscripts
and send them to publishers; attend book fairs and trade
shows; negotiate foreign rights; assist with marketing; set
up book signings; and assist in the selection of book covers
and book jacket designs. Tr. 588-89.
A literary agent has a fiduciary duty to the agent’s client
and is required to act in the best interests of the client.
The industry standard commission for literary agents is and
was 15%. Tr. 43. Agents are paid for all work procured by
them during their tenure as literary agents, regardless of
the amount of work performed. Tr. 830. When a literary agent
is terminated, the agent continues to be paid a commission on
any royalties received from deals negotiated by that agent.
All of Kuczkir’s literary agents prior to 2004 were paid a
15% commission on all advances and royalties generated as a
result of their procurement of contracts on Kuczkir’s behalf
with various publishing houses, including Kensington, her
primary publisher since the mid-1990’s. Tr. 42-43. Kuczkir
continued to pay each of her prior literary agents
commissions for all deals they had procured on her behalf
even after the end of the agency relationship. Tr. 56-57.
Kuczkir’s literary agent immediately prior to Friedman was
Robert Gottlieb. M&S represented Kuczkir in the negotiation
of the literary agency agreement between Kuczkir and
Gottlieb. Tr. 292, 416.
II. THE LITERARY AGENCY RELATIONSHIP
10. Sometime in 2004, Kuczkir indicated to Friedman that she was
“not fond” of her then-agent Gottlieb. In response, Friedman
told Kuczkir that Gottlieb’s primary function was to
negotiate contracts, and that Friedman could do that for her.
Friedman suggested to Kuczkir that she fire Gottlieb and have
Friedman himself act as her literary agent. Tr. 418-19, 590.
11. In late 2004 Kuczkir fired Gottlieb and Friedman began acting
as her sole literary agent. Tr. 590. Although Friedman
acknowledged that the agency relationship constituted a
“business relationship” with Kuczkir, neither Friedman nor
anyone at M&S advised Kuczkir to seek independent legal
advice regarding the agency relationship. Tr. 254. In May
2005, Kuczkir gave formal notice to her publishers, including
Kensington, that Friedman was her literary agent. Tr. 110;
Ex. 33. As a result, the standard Kensington publishing
agreement with the Kuczkir Parties was amended to reflect
that Friedman was Kuczkir’s literary agent and that monies
payable to Kuczkir should be sent initially to him at M&S.
12. Between 2004 and 2007, the Kuczkir Parties were billed
$325/hour for all work performed by attorneys at M&S,
including for the literary agency work performed by Friedman.
13. Over the same three-year period, Friedman continued to
perform as Kuczkir’s literary agent. Among other work that he
performed, Friedman sought to secure film and television
rights on behalf of the Kuczkir Parties. See Exs. D, E. In
connection with those negotiations, Friedman also sought
payments and producer credits for himself in order to
establish name recognition in anticipation of a potential
career in Hollywood. Tr. 318-19.
14. Steven Zacharius, the CEO and President of Kensington
beginning in 2005 and one of Kuczkir’s close friends,
observed based on his dealings with Friedman that Friedman’s
work as a literary agent was limited compared to the tasks
undertaken by other agents. Tr. 791, 793-94. Zacharius
observed that Friedman’s work as an agent was mostly confined
to negotiating the terms of Kuczkir’s publishing contracts,
including the financial terms, the number of books, and the
amount that Kuczkir would be paid per book. Tr. 793-94.
Zacharius noted that Friedman did not, for example, assist
with book cover selection for Kuczkir’s books. Tr. 794.
15. In late 2005, one of Kuczkir’s daughters died unexpectedly.
III. THE COMMISSION AGREEMENT
16. Eventually, in early 2007, Friedman developed a desire to
obtain a literary agency commission in addition to the legal
fees that he was charging through M&S. Friedman believed he
had been working as Kuczkir’s literary agent for a belowmarket rate and that, after three years of experience, he
deserved to receive a commission just as Kuczkir’s prior
literary agents had. Tr. 114-15. Friedman considered this
arrangement –- whereby he would continue to perform the same
work he had been performing, but be paid vastly more for it
–- to be “the American dream.” Tr. 264.
17. Thus, sometime in early 2007, Friedman broached the topic of
receiving a commission for his literary agency work on a
phone call with Kuczkir. During the call, which lasted a few
minutes, Friedman requested the industry standard 15%
commission. Tr. 116-17. Kuczkir countered with an offer of
10%, and the two eventually agreed on an 11% commission on
all advances and royalties on all deals negotiated and
secured by Friedman on Kuczkir’s behalf (the “Commission
Agreement”). Tr. 117. Friedman testified that he communicated
to Kuczkir on that call that hourly billing through M&S
“would continue as it had before at the same rate” in order
for M&S not to be harmed by the arrangement. Tr. 259.
However, Friedman’s testimony that he specified on that call
that the hourly rate would continue to be charged for
precisely the same work that would also be subject to the
Commission Agreement was not credible. Tr. 259-60. Kuczkir,
for her part, testified that she refused to pay a 15%
commission and demanded a lower one because Friedman “had
absolutely no experience as a literary agent” –- although by
that time he had been acting as her literary agent for about
three years –- and had no other clients, no industry
contacts, and no staff to assist him. Tr. 443-44.
18. Following the phone call between Friedman and Kuczkir, in
March 2007 Friedman sent Kuczkir a written agreement (the
“2007 Written Agreement” or “Written Agreement”)
memorializing the 11% commission arrangement. Tr. 43, 123-26;
Ex. 11. The Written Agreement specified that Friedman would
be paid an 11% commission “relating to a proposed contract
with Kensington” for a specified set of twelve books. Ex. 11.
There were actually two contracts –- one contract for ten
books and a separate contract for another two books. Tr. 26770. The Agreement was written on Friedman’s personal
letterhead, and did not specify that M&S would continue to
bill Kuczkir $325/hour for all work performed, including
Friedman’s literary agency work. Ex. 11. Friedman testified
that he did not include any reference to the continued hourly
billing because he felt it “had nothing to do with” the
Written Agreement. Tr. 126. Kuczkir testified that it was her
understanding that “there would be no hourly rate” charged
for the literary agency work going forward but that testimony
was not credible. Tr. 450. There is no credible evidence that
Friedman and Kuczkir discussed continued billing by M&S for
Friedman’s literary agency work at the time they entered into
the Commission Agreement, and that issue was not included in
the Written Agreement. It was an issue that was simply not
19. The Written Agreement was modeled after -- but was not
identical to -- the literary agency agreement Kuczkir had
entered into with her prior agent, which had been negotiated
through counsel. Tr. 124; Ex. 11.
20. Neither Friedman nor anyone at M&S advised Kuczkir to seek
the advice of counsel before entering into the Commission
Agreement or signing the Written Agreement, which Friedman
agrees was a business relationship with a client. Tr. 127,
262. Friedman also admits that he was unaware at the time of
the existence of Disciplinary Rule 5-104, which governed
business transactions between lawyers and their clients in
2007. Tr. 271, 273. 1
21. Throughout the course of Friedman’s representation of the
Kuczkir Parties, Kuczkir was personally involved in several
substantial litigations in which she was represented by firms
other than M&S. Tr. 56. She had access to multiple other
attorneys besides Friedman and M&S, and consulted them
frequently. Tr. 46, 56.
22. Kuczkir did not consult an attorney before signing the
Written Agreement. Tr. 262. However, she testified that she
discussed the 2007 Written Agreement and the Commission
Agreement more generally with the then-owner of Kensington,
Walter Zacharius, who told her that it was okay to sign the
Agreement. Tr. 439. Kuczkir signed the Written Agreement and
sent it back to Friedman. Ex. 11.
The Code of Professional Responsibility, including the
Disciplinary Rules, was repealed, effective April 1, 2009, and
replaced by the New York Rules of Professional Conduct. DR 5-104
has been replaced by Rule 1.8, which carries forward
substantially the same provisions.
23. As a result, when the two pending contracts with Kensington
were signed in April 2007, Friedman received an 11%
commission on those contracts, including an immediate advance
of at least $110,000. Tr. 268, 284, 287; Ex. FF.
24. At trial, Kuczkir testified that at the time she signed the
Written Agreement –- nearly a year and a half after the death
of her daughter –- she was grieving and “wasn’t in a good
place” and was planning to quit writing. Tr. 439-40. She
testified further that she “couldn’t have cared less” about
the pending book contracts with Kensington, under which she
stood to make more than $4 million in advances. Tr. 440-41,
806; Ex. FF. Kuczkir had not testified at her deposition or
in any affidavit submitted during the course of this
litigation that she was grieving and was planning to quit
writing at the time the Written Agreement was signed.
Kuczkir’s trial testimony to that effect was not credible.
IV. PERFORMANCE UNDER THE COMMISSION AGREEMENT
25. The credible evidence establishes that Kuczkir understood and
agreed that she would be paying Friedman an 11% commission.
Tr. 43; Exs. 11, 92 ¶¶ 8-9. Although the Written Agreement
referred to a specific set of twelve books, the parties
agreed and continued to abide by the Commission Agreement for
all contracts procured by Friedman on behalf of the Kuczkir
Parties between March 2007 and his termination in the fall of
2013. Tr. 43.
26. Thus, for the 6 and ½ years between March 2007 and Friedman’s
termination on October 1, 2013, Friedman continued performing
the same literary agency work he had been performing prior to
the Commission Agreement, and Kuczkir continued paying
Friedman an 11% commission on all advances and royalties on
all deals that Friedman negotiated and secured on her behalf.
Tr. 43, 57.
27. Throughout that time, Kuczkir retained complete authority to
accept or reject any offer that was presented to her. Tr. 55.
She also understood that she could fire Friedman as her
literary agent and as her attorney at any time. Tr. 56, 134.
28. Once a publishing agreement was entered into, Kuczkir was
always aware of when money was due to be paid to her. Tr. 70,
722-23. Once payments were made by the publisher, those funds
were deposited into the PAK6 Signature Bank account, which
had been set up by Friedman. Tr. 112-13. Friedman would then
cut a check to Kuczkir for 89% of the amount deposited, and a
check to himself for the remaining 11%. Tr. 111-12. M&S never
received any portion of the commission payments. Tr. 462.
29. The Kuczkir Parties’ “de facto CFO” and accountant Michael
Bernstein received copies of all monthly bank statements from
the PAK6 Signature Bank account, and Kuczkir spoke frequently
with Bernstein about her finances. Tr. 112, 141. PAK6,
through Bernstein, issued annual IRS Form 1099s to Friedman
and took a tax deduction for all commissions paid to him as
the Kuczkir Parties’ literary agent. Tr. 58. Kuczkir reviewed
the annual tax returns prepared by Bernstein. Tr. 59.
Bernstein testified that Friedman and Kuczkir were “on the
same page” about Friedman’s getting “an 11 percent commission
agreement,” and the credible evidence supports that
testimony. Tr. 723.
30. Throughout the same time period -– between 2007, when the
Commission Agreement was entered into, and October 2013, when
Friedman was terminated –- Friedman continued to bill the
Kuczkir Parties at an hourly rate of $325/hour for all work
performed, including his literary agency work that was also
subject to the 11% commission. Tr. 43, 84. Friedman’s normal
average billing rate in 2007, by comparison, was
approximately $480/hour. Tr. 55. M&S was aware that Friedman
was receiving a commission for his literary agency work in
addition to billing hourly for time spent on that work,
although Friedman had not discussed the Commission Agreement
with the firm before entering into it. Tr. 128-30. Beginning
in 2008, M&S reported Friedman’s agency relationship with the
Kuczkir Parties to the firm’s insurance carrier. Tr. 788-89.
31. Every month Kuczkir received a billing invoice from M&S for
work performed during the previous month. See Ex. 93. The
first page of those invoices included a summary paragraph
detailing the types of services rendered that month. Ex. 93.
Kuczkir received and reviewed the M&S invoice every month,
read the summary description on each bill, and personally
paid the invoice by check each month. Tr. 43-44. The literary
agency services performed by Friedman were not distinct from
the legal work performed, and the monthly invoices did not
categorize or otherwise specify which work performed was
legal and which was non-legal in nature. Tr. 877-80.
32. It was nevertheless plain from the face of the monthly
invoices that literary agency work performed by Friedman
continued to be billed hourly by M&S after Friedman and
Kuczkir entered into the Commission Agreement. The summary
paragraph in the monthly invoices nearly always included
express references to Friedman’s work as a literary agent,
including references to negotiations with Kensington and
other book publishers. For example, the summary paragraph in
the May 9, 2007 invoice lists tasks including “review emails
re: Simon and Schuster’s proposal and telephone conferences
with Mary Kuczkir re: same,” and the June 13, 2007 invoice
includes “telephone conferences with [Kensington employees]
re: publication schedules; review novella contract; memo to
[Kensington employee] re: comments.” Ex. 93.
33. Barbara Bennett –- the General Counsel at Kensington who was
also retained by the Kuczkir Parties as an expert witness in
this case –- testified that it was clear from the summary
descriptions on the invoices that the M&S bills included
literary agency work. Tr. 945-46.
34. Kuczkir continued to receive, review, and pay the monthly M&S
invoices after entering into the Commission Agreement and did
not notice any decrease in the amounts charged before and
after the Agreement. Tr. 593-94. Indeed, the amount charged
by M&S on a monthly basis remained essentially static from
2007 through 2013. Ex. 93; Tr. 593-94. Friedman testified
credibly that Kuczkir never asked why the hourly billing for
literary agency work had not stopped. Tr. 122. Kuczkir’s
testimony at trial –- that she eventually questioned Friedman
about the continued hourly billing for agency work and that
she “just took his word for everything” and accepted his
response that “[h]e was doing this and he was doing that” and
then never brought it up again -– was not credible. Tr. 594.
Kuczkir’s testimony that she never noticed that the amounts
charged had remained static after entering into the
Commission Agreement in March 2007 because she “wasn’t in the
land of the living” due to the death of her daughter in late
2005 was likewise not credible. Tr. 593-94.
35. Kuczkir testified at trial that the first time she
“discovered” that the literary agency work had continued to
be billed hourly was when her daughter “pointed it out” to
her in 2013. Tr. 595. But the invoices reviewed by Kuczkir’s
daughter –- from which her daughter gleaned that the literary
agency work had been billed by the hour -– were precisely the
same invoices that Kuczkir had been receiving, reviewing, and
paying for more than six years after the entry of the
Commission Agreement. Tr. 59-60, 595. Kuczkir also told
Bernstein in a December 9, 2013 email that she herself had
been the one to “discover” the continued hourly billing and
that she had done so “by looking at the bills.” Ex. 83.
36. The credible evidence therefore establishes that for over six
years after she entered the Commission Agreement with
Friedman, Kuczkir knowingly paid $325/hour for literary
agency work performed by Friedman in addition to knowingly
paying the 11% commission under the Commission Agreement.
37. All told, between 2007 and 2013 Friedman received over $1.5
million in commissions on contracts that generated over $12
million for the Kuczkir Parties. Kuczkir Parties’ Resp. to
Friedman and M&S’s 56.1 Stmt. ¶¶ 34-36.
THE NEW CONTRACT
38. Friedman left M&S effective August 6, 2013 but continued to
represent the Kuczkir Parties. Tr. 54, 60, 748. With
Kuczkir’s authorization, most of the Kuczkir Parties’ files
were sent to Friedman. Tr. 60, 748.
39. Sometime in 2013, Kuczkir received an offer for a three-book
deal from Harlequin, another publishing house. Tr. 497.
Friedman used that offer as leverage to secure a new
publishing deal with Kensington, Kuczkir’s primary publisher.
During the summer of 2013, Friedman had been in the midst of
negotiating that new contract with Kensington. Tr. 45; Ex.
87. By August 9, 2013, the parties had come to an agreement
on several essential terms of the deal: Kensington would
publish “three mass market paperback original books” in the
“Sisterhood” series and “two stand-alone” novels, defined as
“CONTEMPORARY NOVELS #49, #50, #51, #52 and #53.” Ex. 12. The
parties agreed to the total amount of the advance payment,
$3.2 million, payable in installments, and agreed that
Kuczkir would be paid about one-third of the advance within
thirty days of signing the agreement. Tr. 60; Ex. 12. That
agreement constituted the first time that Kensington had
offered Kuczkir such a large proportion of the total amount
of the contract as an upfront payment. Tr. 60-61.
40. These details, and others, were commemorated in a “Letter
Agreement” dated August 9, 2013, prepared and signed by
Barbara Bennett at Kensington and countersigned by Kuczkir’s
son on behalf of PAK6. Ex. 12. It was not Kensington’s normal
practice to send out such a memorandum. Tr. 799. Kensington
prepared the Letter Agreement at the direction of its
President, Steven Zacharius, who testified that Friedman had
indicated to him that Kuczkir was eager to “get a new
contract done immediately.” Tr. 798. Thus, in order to
preserve the basic terms of the agreement, Bennett drafted
the Letter Agreement. Tr. 798-99, 824; Ex. 59.
41. The Letter Agreement did not include many of the essential
terms of a publishing contract, including delivery and
publishing schedules, reversion and options periods, and
other boilerplate legal provisions generally contained in
Kensington’s publishing contracts. Tr. 617, 800; Ex. 12.
Delivery dates are essential to a publishing contract because
they, for example, inform the author how much time the author
has to write the books at issue, and dictate scheduling,
planning, artwork, marketing, and other related decisions.
Tr. 616, 801. Reversion periods are also essential because
those dates dictate the period of time in which the publisher
can guarantee that the author will not publish another book
in a certain genre or category with another publisher. Tr.
42. Kensington would not have paid Kuczkir or published any books
based solely on the Letter Agreement. Tr. 804; Ex. 12.
43. Kuczkir was elated at the financial terms of the deal -– in
particular, the offer to pay a one-third advance upfront. In
an August 5, 2013 email to her accountant Michael Bernstein,
Kuczkir stated: “[Friedman] somehow managed to get one third
of the total contract up front which will be $1,216,667 . . .
I am positively giddy. Who knew????” Ex. 40.
44. At trial, Kuczkir testified that she did not want to agree to
the Letter Agreement and was actually thinking of quitting
writing. Tr. 615. She testified that she was concerned about
entering another book deal in light of the existence of
another contract that she had already entered into which
obligated her to write several other e-books and novellas.
Tr. 616-17; Ex. P. Kuczkir testified that she told Friedman
that she did not want to enter into another book deal at that
time, but that Friedman pressured her to have her son sign
the Letter Agreement on her behalf by assuring her that the
Agreement was not binding and was meant simply to keep the
offer on the table. Tr. 498, 617. She further testified at
trial that “Marty [Friedman] is the one that wanted the
upfront money,” that he always wanted “more, more, more,” and
that Friedman did not care that Kuczkir would have to work
“24/7” to fulfill her obligations under the publishing
contract. Tr. 614, 617. Kuczkir insisted at trial that she
did not care at all about the advance and that, indeed, she
preferred not to receive so much of the total value of a
contract upfront. Tr. 614. That testimony was not credible
and is not supported by the contemporaneous documents, which
establish that Kuczkir was not only ready and willing to
enter a new agreement to produce and publish more books, but
also was “giddy” at the terms laid out in the Letter
Agreement -- especially the size of the upfront advance. Ex.
40. Moreover, Kuczkir’s testimony was inconsistent with the
fact that she subsequently entered into an agreement to
produce the very same books for the same amounts of money.
45. Later in August 2013, Kuczkir was in a car accident in which
nobody was hurt but during which she claimed that her “life
flashe[d]” before her. Tr. 498. As a result, she decided to
“put [her] house in order.” Tr. 498. As part of that process,
Kuczkir reviewed the terms of a trust that had been prepared
by M&S nearly a decade earlier and found that it was not what
she wanted. Tr. 498; Ex. 51. Kuczkir communicated her
displeasure to Friedman by email on August 15, and Friedman
responded assuring Kuczkir that he would work with another
attorney to ensure the issue was resolved to her
satisfaction. Ex. 51. On August 19, Kuczkir told Friedman
that they would “discuss the Trust when [she] ha[d] a very
clear head on it. Until then, it’s business as usual.” Ex.
52. Kuczkir went on to explain that “[w]e have two different
issues here. The Trust and my work. One has nothing to do
with the other.” Ex. 52.
46. Friedman therefore continued to negotiate the terms of a new
publishing agreement between Kensington and Kuczkir. On
September 12, 2013, Barbara Bennett emailed Friedman stating:
“I have the new contract ready.” Ex. 46. That agreement,
which was marked “#13-09-251A (AL),” (“the New Contract”) –“AL” being a reference to Kuczkir’s editor at Kensington,
Audrey LaFehr -- was a full-length standard Kensington
publishing agreement that included the same books and the
same payout terms as the Letter Agreement. Tr. 66; Ex. 28. It
included dates for manuscript delivery and publication,
provisions for reversion and options rights, and other
standard legal provisions. However, the reversion and options
dates were left “TBD.” Ex. 28. The parties made another
series of small changes and Barbara Bennett sent Friedman an
updated version of the New Contract by email on September 26,
2013, stating: “I’m assuming you had no other issues with the
agreement and that we should be in very good shape here.” Ex.
47. On September 30, 2013, Kuczkir contacted Friedman and stated
that she “ha[d] been going over [her] finances” and that she
believed she had been mistakenly billed twice in August for
work that had been performed by an associate at M&S. Ex. T.
Kuczkir asked for a “detailed breakdown” of her legal bills.
Ex. T. Friedman followed up the same day acknowledging that a
mistake had been made. Ex. U. Kuczkir did not say anything at
that time about being billed hourly by M&S for the literary
agency work performed by Friedman. Ex. T.
48. Kuczkir terminated Friedman by email the very next day,
October 1, 2013. Ex. 54. In response, Friedman stated that he
had “spent considerable time and energy negotiating what we
both know is a great deal with Kensington” and that he
“expect[ed] to be paid for any contract that [Kuczkir]
enter[ed] into with Kensington for print books.” Ex. 54.
Friedman added: “Considering the amount of money involved, I
am prepared to go the distance with [a] [law]suit if
necessary, but I would hope to settle any dispute now rather
than later.” Ex. 54. Kuczkir immediately forwarded the email
to Steven Zacharius with the note: “Can he do this? What
should we do?” Ex. 54.
49. The same day, Kuczkir notified Zacharius in a separate email
that she had terminated Friedman and instructed that “his 11%
of any advances or royalties that he handled are to be paid
directly to him.” Ex. 58.
50. Shortly thereafter, Kuczkir began inquiring into the effects
of the Letter Agreement, the status of the New Contract, and
the implications of terminating Friedman. On October 2,
Barbara Bennett emailed Kuczkir attaching the signed Letter
Agreement. Bennett stated: “You might recall that we prepared
this document in advance of actual contracts because the
publication schedule for the new books had not been
determined.” Ex. 55. Kuczkir responded that she had not
signed it but that her son did and then asked: “Now, what
does that mean?” Ex. 55.
51. That same day, Zacharius emailed Kuczkir about the Letter
Agreement, informing her that he did not know whether
Friedman would be entitled to a commission under the Letter
Agreement but that was something Kuczkir should talk about
with her own lawyer. Ex. 56. He continued: “In the meantime
with the new contract; we’re going to have to be told how to
proceed in terms of splitting or possibly withholding his
potential commission on the signing payments. . . . Of course
as I’ve kept saying, we don’t have a signed contract yet, so
you have no reason to rush . . . although we do want to get
the contract completed and I assume you want your signing
payment.” Ex. 56.
52. Two days later, Zacharius followed up with Kuczkir requesting
“guidance on how to proceed with the new contract that had
already had the terms agreed to with Marty [Friedman] and I
believe your son, on behalf of PAK6.” Ex. 57. Zacharius told
Kuczkir that Friedman was likely to sue and that “the easiest
option at this point” would be to offer Friedman a reduced
commission on the New Contract. Zacharius further advised
Kuczkir to speak to a lawyer. Ex. 57.
53. Around the same time as those communications between Kuczkir,
Bennett, and Zacharius, Kuczkir wrote Friedman a letter that
stated, among other things, that she felt she had “lost [her]
best friend,” that she had never been “trying to cheat
[Friedman] or deny [him] fees,” and that “the contract never
entered [her] mind at the time” that she terminated him. Ex.
32; Tr. 524. She went on to explain: “I took great offense
that you wanted to rush and jam this at me at a time when I
was trying to figure out what went awry with the Trust. . . .
All you had to do was give me time to make sense of the mess
and it was a mess, and we could have cleared it all up. A
mess YOU created with the Trust.” Ex. 32. Again, Kuczkir said
nothing about being billed hourly for literary agency work
performed by Friedman.
54. The credible evidence in this case therefore does not support
Kuczkir’s testimony at trial that she terminated Friedman on
October 1 because she had discovered for the first time,
based on her daughter’s review of the monthly billing
invoices, that she was being charged hourly by M&S for the
literary agency services rendered by Friedman. Tr. 491, 595,
611. Rather, the contemporaneous documentation shows that the
first time Kuczkir complained of having paid an hourly rate
for the literary agency services was in December 2013. Exs.
35, 68, 83. At that time, Kuczkir told Bernstein that “I have
all [Friedman’s] bills for the year 2013 where he billed me
hourly for things an agent does as his duties as an agent. So
in truth, he did double dip me. The truth of the matter is
after we did a contract, he just sat back and collected 11%
for doing absolutely nothing.” Ex. 35. A few days later,
Kuczkir contacted Bernstein again, stating that “I figured it
all out myself by looking at the bills.” Ex. 83. Bernstein
initially testified at trial that Kuczkir had notified him in
an email prior to Friedman’s termination on October 1 that
Friedman had been “double dipping” her by charging by the
hour for the agency work. Tr. 715. However, when presented
with the December 16 email, Bernstein testified that he
believed that email was in fact the first time that Kuczkir
had relayed her complaint of “double dipping.” Tr. 716-17.
55. In mid-October, Kuczkir followed up again with Barbara
Bennett to ask what significance the Letter Agreement had
“toward the pending contract that has not been signed.” Ex.
37. Kuczkir told Bennett that she planned to dissolve PAK6
but would be willing to “negotiate a new contract on my own
under a new corporation.” Ex. 37. Bennett responded that she
could not advise Kuczkir of the legal significance of the
Letter Agreement and that Kuczkir should consult her own
counsel. Ex. 59. In a separate exchange, Steven Zacharius
communicated to Kuczkir that both he and Barbara Bennett had
spoken to “outside counsel” and believed that “it would make
more sense” to settle with Friedman than to engage in
protracted litigation. Ex. 61.
56. Kuczkir continued to seek out ways to have the New Contract
canceled. In November, Kuczkir contacted Bernstein asking him
“what is the shelf life or expiration on a memo of intent
that has Marty [Friedman’s] knickers in a knot? Do you
know? Could it be 90 days?” Ex. 69. The same day, Kuczkir
suggested to Barbara Bennett that Kensington could “cancel”
the New Contract or allow it to “expire” so that they could
enter a new contract with Kuczkir representing herself
without an agent. Ex. 63. Bennett assured her that Kensington
had “no intention of canceling the [L]etter [A]greement.” Ex.
63. At trial, when asked whether, at this point in time,
Kuczkir was “intending to enter into the same agreement later
on,” she answered, “[p]ossibly.” Tr. 572.
57. On December 17, 2013, Kuczkir emailed one of her lawyers the
following request: “Can you please form me a new corporation
ASAP. I have a contract pending with Kensington that is ready
to go and we do not want to attach it to [PAK6]. . . . New
name is KAP 5.” Ex. 68.
58. The credible evidence therefore establishes that Kuczkir
terminated the Commission Agreement with Friedman with the
express purpose of avoiding any obligation to pay Friedman
the 11% commission for the New Contract.
VII. THE NEW CONTRACT, REVIVED
59. In January 2014 a new corporate entity, KAP5, was created and
substituted for PAK6 as the contracting party to the New
Contract. Ex. 68; Tr. 67.
60. In March 2014, Kuczkir and the newly-formed corporation KAP5
entered into a contract with Kensington for the same fivebook deal that was memorialized in the Letter Agreement and
set out in the New Contract. Exs. 12, 28, 29. The contract
(the “KAP5 Contract”) was marked “#13-09-251B (AL),” that is,
with the exact same identifier used for the New Contract
except that the KAP5 Contract was marked “B” instead of “A.”
Exs. 28, 29. The KAP5 Contract covers the exact same set of
books and includes the exact same payment amounts, payout
terms, and various dates as the New Contract. The only
substantive differences between the New Contract and the KAP5
Contract are that (1) KAP5 was substituted for PAK6 as the
contracting entity; (2) manuscript deadlines for two of the
five books were changed in the KAP5 Contract to account for,
in one case, the fact that the KAP5 Contract was not signed
until months after the New Contract was initially drafted;
and (3) the dates for exclusivity and options periods, which
had previously been marked “TBD,” were filled in. Exs. 28,
29. 2 Kuczkir continues to perform under that contract. Tr.
226; Ex. 8.
61. Although the KAP5 Contract was not signed until March 26,
2014, the first manuscript due under that contract was to be
submitted by March 1, and Kuczkir was to be paid $200,000
thirty days later, just a few days after the contract was
signed. Ex. 29. Kuczkir testified at trial that she may well
have been performing under the KAP5 Contract –- that is, she
may have already been working on the books set forth in that
contract, which were identical to the ones set forth in the
New Contract –- before she signed it. Tr. 582. The credible
evidence therefore establishes not only that the contract
that was signed was identical in all material respects to the
New Contract negotiated by Friedman, but also that Kuczkir
was either prepared to perform or had in fact already begun
The KAP5 Contract also directed an 11% commission to be held in
escrow pending the outcome of this case.
performing under the terms of the deal negotiated by Friedman
before signing the KAP5 Contract.
62. Kuczkir has expressed satisfaction that the duration of this
case has caused Friedman to “spend his retirement funds to
defend this” while she “keep[s] getting richer.” Ex. 79. She
has also expressed glee at the emotional toll that the case
has taken on Friedman. See Ex. 79.
VIII. PAYMENTS MADE AND RECEIVED
63. In January 2014, Kuczkir instructed Kensington to stop paying
any commissions owed to Friedman and to hold those funds in
escrow. Tr. 64. All commissions owed to Friedman under any
past contracts and under the KAP5 Contract are therefore
being held by Kensington pending the resolution of this case.
Tr. 64. Those commissions total over $700,000 and include
payments from October 3, 2013 through the present. Ex. 8; Tr.
64. In total, between March 29, 2007 and October 1, 2013, the
Kuczkir Parties paid $390,000 in hourly fees to Friedman and
M&S. Tr. 70. Of that total amount, approximately half –$195,000 –- related to Friedman’s work as Kuczkir’s literary
agent, and the other half was for legal work unrelated to the
agency work. Tr. 70.
65. Over that same time period, Friedman received just over $1.5
million in commission payments on contracts procured on the
Kuczkir Parties’ behalf. The Kuczkir Parties received over
$12,200,000 under those same contracts. Kuczkir Parties’
Resp. to 56.1 Stmt. ¶¶ 34-36.
CONCLUSIONS OF LAW
To the extent that any of the foregoing findings of fact is a
conclusion of law, it is hereby adopted as a conclusion of
The Court has jurisdiction over this case pursuant to 28
U.S.C. § 1332 based on complete diversity of citizenship.
The parties agree that New York law applies.
I. THE KUCZKIR PARTIES BREACHED THE COMMISSION AGREEMENT
In order to recover from the Kuczkir Parties for breach of
contract, Friedman must prove by a preponderance of the
evidence (1) the existence of a contract between himself and
the Kuczkir Parties; (2) that Friedman performed his
obligations under the contract; (3) that the Kuczkir Parties
breached the contract; and (4) that Friedman incurred damages
as a result of that breach. Diesel Props. S.r.l. v. Greystone
Bus. Credit II LLC, 631 F.3d 42, 52 (2d Cir. 2011).
The existence of an enforceable contract was established by
credible evidence that there was “an offer, acceptance,
consideration, mutual assent and intent to be bound” by the
Commission Agreement. Register.com, Inc. v. Verio, Inc., 356
F.3d 393, 427 (2d Cir. 2004) (quotation marks omitted). In
March 2007 Friedman and Kuczkir agreed that Friedman would be
paid personally 11% of all advances and royalties derived
from all contracts negotiated and procured by Friedman as
Kuczkir’s literary agent. Ex. 11. Although the Written
Agreement was initially limited to twelve books, the parties
agreed that the Commission Agreement would extend to further
book contracts negotiated by Friedman for Kuczkir, and the
parties abided by the terms of that Commission Agreement
until Friedman was terminated. Tr. 43, 57.
Friedman performed his obligations under the Commission
Agreement from March 2007 through the date of his termination
on October 1, 2013, acting as Kuczkir’s literary agent and
negotiating and procuring contracts on her behalf.
Kuczkir breached the Commission Agreement by failing to pay
Friedman a commission for all contracts negotiated and
procured on behalf of the Kuczkir Parties prior to his
termination on October 1, 2013. Friedman is therefore
entitled to “all the direct and proximate damages which
result[ed]” from that breach. Nat’l Mkt. Share, Inc. v.
Sterling Nat’l Bank, 392 F.3d 520, 525 (2d Cir. 2004)
(quotation marks omitted). Those damages consist of the
entire amount of the funds being held in escrow totaling over
$700,000, which represent the commissions for all contracts
procured by Friedman as the Kuczkir Parties’ literary agent,
including commissions on the KAP5 Contract, that have been
improperly withheld after Friedman’s termination. Ex. 8; Tr.
Friedman is entitled to an 11% commission on the KAP5
Contract despite the fact that he was terminated prior to its
execution because he was the procuring cause of that
contract. See Berman & Brickell, Inc. v. Penn Cent. Corp.,
1986 WL 9689, at *1 (S.D.N.Y. Aug. 26, 1986) (noting that
“the broker must be the procuring cause of the contract
between his principal and a third party to be entitled to
compensation either under a specific agreement or in quantum
meruit” (quotation marks omitted)). Although Friedman had
been fired by the time the KAP5 Contract was signed and
therefore took “no part in the arrangement of its final
details,” including some of the manuscript submission dates
and the options and exclusivity dates, the credible evidence
clearly demonstrates that the KAP5 Contract proximately
resulted from Friedman’s efforts. Id. at *2 (quotation marks
omitted). Kuczkir herself admits that it was Friedman who
used a competing proposal from Harlequin as leverage to
obtain the basic agreement from Kensington. Tr. 45. That
agreement –- to publish Kuczkir’s Contemporary Novels #49,
50, 51, 52, and 53 for a total advance payment of $3,200,000,
including over $1 million as an upfront advance –- was
precisely the agreement that Kuczkir ultimately entered into
by signing the KAP5 Contract. Ex. 29. Kuczkir also
acknowledged that it was Friedman who was responsible for
negotiating the one third advance, remarking that “[Friedman]
somehow managed to get one third of the total contract up
front which will be $1,216,667.” Ex. 40. And the KAP5
Contract is nearly identical –- down to its precise language
–- to the New Contract negotiated by Friedman prior to his
termination. Exs. 28, 29. Thus, the fact that Friedman had
been terminated by the time the KAP5 Contract was actually
signed is irrelevant because it is plain that Friedman was
the “procuring cause” of that contract. Berman & Brickell,
1986 WL 9689, at *1; see also Manhattan Fuel Co. v. New
England Petroleum Corp., 439 F. Supp. 959, 970 (S.D.N.Y.
1977) (broker was entitled to commission where broker was not
involved in the final stages of the negotiation, but brought
contracting parties together, supplied relevant quotations
and other information, and arranged and attended meetings to
facilitate agreement on terms of the deal, and where final
contract contained several provisions negotiated by the
broker). 3 That conclusion is bolstered by credible evidence
The Kuczkir Parties’ argument that “the procuring cause
doctrine is inapplicable to literary agency relationships” is
unsupported. Kuczkir Parties’ Proposed Findings at 30. The case
upon which the Kuczkir Parties rely merely states that the
that Kuczkir took steps following Friedman’s termination to
“cancel” or stall the deal in an explicit attempt to deprive
Friedman of his commission under the New Contract. See Exs.
63, 69. Those steps culminated in the creation of a new
corporate entity which was substituted for PAK6 and which
ultimately entered into the nearly-identical KAP5 Contract.
Exs. 28, 29. That Kuczkir went to such lengths to avoid
signing the New Contract only to enter into a nearlyidentical deal evidences her understanding that Friedman had
procured the New Contract and that she would have been
obligated to pay him a commission under that contract.
Kuczkir’s sleight of hand –- switching one corporate entity
out for another and delaying the execution of the agreement
for a few months –- does not relieve her of that obligation.
The Kuczkir Parties’ only defense to the claim of breach of
contract is that the entire Commission Agreement is
procuring cause doctrine “is generally applied to real estate
transactions and almost exclusively to individual transactions
where a broker seeks to recover commissions for a single sale.”
Peter Lampack Agency, Inc. v. Grimes, 939 N.Y.S.2d 409, 410
(App. Div. 2012) (quotation marks omitted). The fact that the
procuring cause doctrine is “generally” applied to real estate
transactions does not foreclose its applicability in this case.
The court in Peter Lampack Agency denied recovery because the
plaintiff was not the procuring cause of the contracts at issue.
See id. Moreover, it is untrue that the procuring cause
doctrine is limited to real estate brokerage contracts. The
doctrine was applied in the Manhattan Fuel Company case to a
broker who procured two fuel oil supply contracts. 439 F. Supp.
at 960, 970.
unenforceable. Specifically, they argue that the Commission
Agreement was entered into in violation of New York’s
Disciplinary Rules and is “therefore void as against the
public policy of the state of New York and cannot as a matter
of law be ratified.” Kuczkir Parties’ Proposed Findings at
10. This argument is meritless. The parties agree that the New
York Disciplinary Rules governed the provision of both legal
and non-legal services provided by Friedman to the Kuczkir
Parties during the relevant time period. DR 5-104 governed
business relationships between lawyers and their clients and
stated, in relevant part:
A. A lawyer shall not enter into a business transaction
with a client if they have differing interests
therein and if the client expects the lawyer to
exercise professional judgment therein for the
protection of the client, unless:
1. The transaction and terms on which the lawyer
acquires the interest are fair and reasonable
to the client and are fully disclosed and
transmitted in writing to the client in a
manner that can be reasonably understood by the
2. The lawyer advises the client to seek the
advice of independent counsel in the
3. The client consents in writing, after full
disclosure, to the terms of the transaction and
to the lawyer’s inherent conflict of interest
in the transaction.
N.Y. Comp. Codes R. & Regs. tit. 22, § 1200.23(A) (2007).
11. “Differing interests” include “every interest that will
adversely affect either the judgment or the loyalty of a
lawyer to a client, whether it be a conflicting,
inconsistent, diverse, or other interest.” Id. § 1200.1(1).
At the time that Friedman approached Kuczkir about entering
into the Commission Agreement, he had been performing
literary agency work on her behalf for nearly three years at
a rate of $325/hour. The two therefore brought “differing
interests” to the transaction whereby Friedman would go from
doing literary agency work for an hourly rate of $325/hour to
performing that same work for the same hourly rate, with the
addition of an 11% commission. Friedman’s interests were in
being paid as much as Kuczkir would be willing to pay, and
Kuczkir’s interest was in, at the very least, continuing to
pay the same amount for the same work. Friedman also had an
interest, not shared by Kuczkir, in continuing to bill hourly
for all literary agency services rendered so as not to cause
any financial harm to his law firm, which benefitted from the
continued hourly billing. The fact that DR 5-104 is not
implicated when a lawyer negotiates or renegotiates his legal
fees with a client is irrelevant because the Commission
Agreement was unrelated to legal work. The negotiation of the
Commission Agreement was the negotiation of a business
transaction in which the lawyer and the client had different
interests. It was therefore subject to the requirements set
out in DR 5-104(A), which Friedman did not satisfy. See Tr.
12. Friedman therefore violated the Disciplinary Rules by
entering into the Commission Agreement without meeting the
requirements laid out in DR 5-104 by failing to advise
Kuczkir to seek the advice of independent counsel before
entering into the Commission Agreement and failing to specify
in the Agreement that Kuczkir would continue to be billed
$325/hour for the same work that would be subject to the
Commission Agreement. Tr. 254; Ex. 11.
13. However, the fact that the Commission Agreement was entered
into without the protections required by DR 5-104 does not
automatically render the agreement unenforceable or entitle
Kuczkir to rescission. Rather, an agreement between an
attorney and a client will be voided only if it is tainted by
the lawyer’s fraud or undue influence or if “it appears that
the attorney got the better of the bargain, unless he can
show that the client was fully aware of the consequences and
that there was no exploitation of the client’s confidence in
the attorney.” Greene v. Greene, 436 N.E.2d 496, 499 (N.Y.
1982); see also Small Bus. Bodyguard Inc. v. House of Moxie,
Inc., 230 F. Supp. 3d 290, 321 (S.D.N.Y. 2017) (joint venture
between lawyer and client would not be invalidated where
agreement was not fraudulent or unfair and where client
entered the agreement with “full knowledge of material facts
they needed to enter the contract”). This same standard
applies even if there has been a violation of DR 5-104. See
Schlanger v. Flaton, 631 N.Y.S.2d 293, 296 (App. Div. 1995).
14. In this case, there was no exploitation of the client’s
confidence in the attorney. Kuczkir had significant
experience dealing with attorneys, including attorneys
outside M&S, and had worked with no fewer than five literary
agents before Friedman. Tr. 42, 46, 56. Moreover, the
agreement was negotiated: Friedman initially proposed a 15%
commission, Kuczkir counter-offered at 10%, and the two
settled on 11%. Tr. 116-17, 443-44. Kuczkir also consulted
with Walter Zacharius before signing the Written Agreement.
Tr. 439. And even combined with the hourly rate charged, the
11% commission represented less than the market literary
agency rate of 15%. Tr. 43.
15. Friedman took no “affirmative steps to benefit himself at the
expense of [his] client” in entering into the Commission
Agreement. Schlanger, 631 N.Y.S.2d at 296. Friedman prepared
a straightforward agency agreement that was based on the same
agreement Kuczkir had had with prior literary agents. Tr.
124; Ex. 11. Friedman continued to owe Kuczkir a fiduciary
duty and was therefore obligated to continue to act in her
best interests. Kuczkir maintained complete authority to
accept or reject any publishing agreements procured by
Friedman, and retained a greater share of the total amount of
those contracts -– 89% -- than she had with prior agents. Tr.
55-56, 134. Indeed, if Kuczkir had retained another literary
agent, it is likely that she would have paid that agent the
market rate of 15% -- 4% more than Friedman charged in
commissions –- and there is no evidence that Kuczkir would
have obtained better results.
16. The Kuczkir Parties also contend that the Commission
Agreement is unenforceable because the total fees –- the
combination of the hourly fees and the commissions –constituted an “illegal or excessive fee” under the
Disciplinary Rules. 22 N.Y.C.R.R. § 1200.11(A). “A fee is
excessive when, after a review of the facts, a lawyer of
ordinary prudence would be left with a definite and firm
conviction that the fee is in excess of a reasonable fee.”
Id. § 1200.11(B).
17. The fee was plainly not excessive. The Kuczkir Parties
introduced no evidence that the fee was excessive. Indeed,
their expert witness on legal ethics, Professor Roy Simon,
testified that he expressed no opinion on whether the fees
were excessive because he believed that was a question for
the Court. Tr. 864-66. By the time the Commission Agreement
was entered into, Friedman had been performing successfully
as Kuczkir’s literary agent for three years. Kuczkir has
presented no evidence that Friedman performed inadequately as
a literary agent. Indeed, Friedman continued to procure
lucrative publishing contracts on behalf of the Kuczkir
Parties pursuant to the Commission Agreement, under which
contracts Kuczkir was paid over $12 million. Kuczkir’s Resp.
to Friedman 56.1 Stmt. ¶¶ 34-36; see 22 N.Y.C.R.R.
§ 1200.11(B) (listing considerations relevant to the
determination of the reasonableness of a fee). Notably, the
total fee arrangement was lower than the “fee customarily
charged in the locality for similar  services,” 22
N.Y.C.R.R. § 1200.11(B)(3), because it is well established
that the market rate for literary agency services is a
commission of 15%. The total fee -- an 11% commission plus
hourly billing at a rate of $325/hour, the latter of which
totaled approximately $195,000 for literary agency services
over more than six years –- was effectively a discount for
Kuczkir, who had routinely paid a 15% commission to all of
her past agents. Tr. 70.
18. The Kuczkir Parties’ defense of unenforceability also fails
because the Kuczkir Parties plainly ratified the Commission
Agreement and the continued hourly payments by knowingly
operating under that combined fee arrangement for over six
years. Beginning in March 2007 and continuing through
Friedman’s termination on October 1, 2013, the Kuczkir
Parties paid Friedman an 11% commission on all contracts
negotiated and procured on their behalf while also paying
$325/hour for literary agency services rendered. That the
literary agency work was being billed hourly was not hidden
from the Kuczkir Parties and was plain from the face of the
monthly invoices, which Kuczkir herself received, reviewed,
and paid on a monthly basis. Tr. 43-44. There is no credible
evidence that the Commission Agreement was unconscionable.
Despite her protestations to the contrary, Kuczkir was a
savvy business person who –- at the time that she negotiated
a below-market rate for Friedman’s work as a literary agent –
- had significant experience dealing with lawyers and
literary agents. See In re Lawrence, 23 N.E.3d 965, 976-77,
979 (N.Y. 2014) (concluding that a revised contingency fee
agreement between a lawyer and client was not procedurally
unconscionable because the fee agreement was “not so
difficult for a layperson to comprehend”; the client was
actively engaged in the negotiation of the agreement and had
experience “hiring and firing attorneys and other
professionals”; and because there was no evidence to suggest
that the client “was not fully in command of her faculties
when she executed” the agreement; and was not substantively
unconscionable particularly in view of the fact that the
client was “a competent and shrewd woman who made a business
judgment that was reasonable at the time”).
19. Moreover, even an unconscionable fee agreement may be
ratified when “a fully informed client with equal bargaining
power knowingly and voluntarily affirms an existing fee
arrangement” and “the client has both a full understanding of
the facts that made the agreement voidable and knowledge of
his or her rights as a client.” King v. Fox, 851 N.E.2d 1184,
1192 (N.Y. 2006). The fee agreement was not rendered
unconscionable merely by virtue of having been entered into
without the protective steps required under DR 5-104, and as
indicated above, the total fee collected was not excessive.
Kuczkir personally received, reviewed, and paid the monthly
invoices and thereby plainly ratified the Commission
Agreement under which she and Friedman performed by operating
pursuant to its terms for more than six years. Tr. 42-44, 46,
56, 134. She had full knowledge of the facts and could have
terminated the Commission Agreement at any time. But she
chose not to do so, instead continuing to accept the benefits
of the Agreement. That was ratification.
20. Friedman is therefore entitled to the entirety of the
commissions currently being held in escrow, plus statutory
prejudgment interest at a rate of 9%. N.Y. C.P.L.R. § 5004.
21. Because Friedman has established his claims for breach of
contract, the Court need not address his other claims, which
were pleaded in the alternative.
II. THE KUCZKIR PARTIES’ BREACH OF FIDUCIARY DUTY AND
MALPRACTICE CLAIMS FAIL
22. “To establish a prima facie case of legal malpractice, the
plaintiff must prove that (1) the attorney departed from the
exercise of that degree of care, skill, and diligence
commonly possessed and exercised by a member of the legal
community, (2) the attorney’s departure from the standard of
care was the proximate cause of the loss sustained by the
plaintiff, and (3) the plaintiff incurred damages as a direct
result of the attorney’s actions.” Edwards v. Haas,
Greenstein, Samson, Cohen & Gerstein P.C., 793 N.Y.S.2d 167,
169 (App. Div. 2005). Violation of the Disciplinary Rules,
standing alone, does not support a claim of legal
malpractice. Schafrann v. N.V. Famka, Inc., 787 N.Y.S.2d 315,
316 (App. Div. 2005). “In order to establish a breach of
fiduciary duty, a plaintiff must prove the existence of a
fiduciary relationship, misconduct by the defendant, and
damages that were directly caused by the defendant’s
misconduct.” Kurtzman v. Bergstol, 835 N.Y.S.2d 644, 646
(App. Div. 2007).
23. The Kuczkir Parties contend that Friedman committed legal
malpractice and breached his fiduciary duty to them by (1)
failing to enter into a written retainer agreement with the
Kuczkir Parties; (2) charging an excessive fee; and (3)
entering into the Commission Agreement without abiding by the
protections listed in DR 5-104(A), thereby violating New York
public policy as embodied by the Disciplinary Rules. They
also contend that M&S committed malpractice by, inter alia,
failing to execute a written retainer agreement with the
Kuczkir Parties and failing to supervise and train lawyers
adequately to ensure compliance with the Disciplinary Rules.
The Court already dismissed on summary judgment any claim of
malpractice related to the absence of a written retainer
agreement. And, as explained above, the fee arrangement did
not produce excessive fees.
24. The Kuczkir Parties’ claims based on the violation of DR 5104 fail because they have not proved that they suffered any
damages. They allege that they were damaged in the amount of
the entire sum of fees paid to M&S and Friedman between March
29, 2007 and October 1, 2013. As described above, the Kuczkir
Parties knowingly paid those fees for more than six years and
therefore ratified the fee arrangement. Moreover, there is no
evidence that the fees were excessive in view of the work
that was performed. Those amounts therefore cannot support a
claim of damages.
25. Because there is no actionable claim for any underlying
violation of the Disciplinary Rules, M&S is not liable for
any failure to supervise and train its lawyers.
The foregoing constitutes the Court’s Findings of Fact and
Conclusions of Law. The Court has considered all of the
arguments of the parties. To the extent not specifically
addressed above, any remaining arguments are either moot or
without merit. For the reasons explained above, Friedman is
entitled to judgment on Counts One and Two in Action One for
breach of contract and is entitled to judgment in the amount of
the sum of all monies being held in escrow pending the outcome
of this litigation, with 9% interest as calculated pursuant to
N.Y. C.P.L.R. § 5001. The remainder of the claims in Action One
are dismissed as moot. The only remaining counterclaim in Action
One is dismissed with prejudice. All of the Kuczkir Parties’
claims in Action Two are dismissed with prejudice.
Friedman shall submit a proposed judgment within five days
of the date of this opinion. The remaining parties may submit a
counter judgment two days thereafter. Friedman may submit any
responses two days after the counter judgments are submitted.
The Clerk is directed to close all pending motions.
New York, New York
August 9, 2017
John G. Koeltl
United States District Judge
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