Guzik v. Lendit Conference, LLC et al
Filing
39
OPINION AND ORDER: re: 37 LETTER MOTION for Conference re: 24 Amended Complaint Pursuant to Rule 16 addressed to Judge J. Paul Oetken from Samuel S. Guzik dated October 18, 2016 filed by Samuel S. Guzik, 38 SUPPLEMENTAL LETTER MOTION for Conference re: 37 LETTER MOTION for Conference re: 24 Amended Complaint Pursuant to Rule 16 addressed to Judge J. Paul Oetken from Samuel S. Guzik dated October 18, 2016. [Plaintiff's SUPPLEM filed by Samuel S. Guzik, [26 ] MOTION to Dismiss filed by Dara S. Albright. Because the Second Amended Complaint states a claim for quantum meruit, the motion to dismiss is DENIED. Defendant shall file an answer to the Second Amended Complaint within 21 days of this order. Th e Court will schedule an initial pretrial conference pursuant to Federal Rule of Civil Procedure 16 thereafter. The Clerk of Court is directed to close the motions at Docket Numbers 26, 37, and 38. SO ORDERED. (Signed by Judge J. Paul Oetken on 11/28/2016) (ama)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
SAMUEL S. GUZIK d/b/a GUZIK &
ASSOCIATES,
Plaintiff,
16-CV-2257 (JPO)
-v-
OPINION AND ORDER
DARA S. ALBRIGHT,
Defendant.
J. PAUL OETKEN, District Judge:
On March 28, 2016, Plaintiff Samuel S. Guzik filed this action against Dara S. Albright
(“Defendant”) and LendIt Conference, LLC (“LendIt”). (Dkt. No. 1.) On June 1, 2016, the
Court issued an order dismissing the case for lack of subject-matter jurisdiction, because
Defendant LendIt was not diverse to Plaintiff, and allowing Plaintiff to file an amended
complaint dropping LendIt as a party to cure the jurisdictional defect. (Dkt. No. 23.) On June
30, 2016, Plaintiff filed a Second Amended Complaint naming only Albright as Defendant.
(Dkt. No. 24 (“SAC”).) The SAC alleges a single count of quantum meruit.
On August 24, 2016, Defendant, proceeding pro se, moved this Court to dismiss the SAC
for failure to state a claim, pursuant to Federal Rule of Civil Procedure 12(b)(6). (Dkt. No. 26.)
Thereafter, Plaintiff filed a letter motion (Dkt. No. 37) and a supplemental letter motion (Dkt.
No. 38), asking the Court to proceed to a Rule 16 conference to commence discovery. For the
reasons that follow, Defendant’s motion to dismiss is denied and Plaintiff’s letter motions for a
conference are granted.
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I.
Background 1
Guzik is an attorney who was retained by Albright between May 2014 and December
2015. (SAC ¶ 1.) The matters for which Albright engaged Guzik’s legal services ultimately
settled in February 2016. (Id. ¶ 2.) Guzik seeks recovery in quantum meruit for the value of
legal services rendered during the period of engagement. (Id. ¶ 1.)
In January 2014, before retaining Guzik, Albright sold a membership interest that she
owned in LendIt to Goodworld Creations LLC d/b/a/ Crowdnetic (“Crowdnetic”). (Id. ¶ 9.) In
May 2014, Albright informed Crowdnetic that she was rescinding the sale. (Id. ¶ 10.) Albright
engaged Guzik shortly thereafter. (Id. ¶ 11.) Crowdnetic did not agree to the rescission and
commenced a declaratory judgment action against Albright to establish, inter alia, that
Crowdnetic was the rightful owner of the interest and Albright had no right to rescind
Crowdnetic’s purchase. See GoodWorldCreations LLC v. Albright, No. 14 Civ. 3848, 2015 WL
4900246 (S.D.N.Y. Aug. 17, 2015). Guzik represented Albright in that action. (SAC ¶ 13.)
Guzik and Albright entered into an oral agreement in which Guzik would provide legal
services to assist Albright in the recovery of her membership interest in return for a one-third
share of the value of the net recovery, in the event a recovery was procured, plus out-of-pocket
expenses. (Id. ¶ 17.) This agreement was confirmed in correspondence between Guzik and
Albright as well as in between Albright and a managing member of LendIt. (Id. ¶ 18.)
Guzik terminated his representation of Albright “for cause” on December 17, 2015. (Id.
¶ 19.) Albright obtained new counsel and a settlement was reached among Albright, LendIt, and
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Unless otherwise noted, the facts are drawn from the SAC. On a motion to dismiss, facts
in a plaintiff’s complaint are assumed to be true. Cleveland v. Caplaw Enters., 448 F.3d 518,
521 (2d Cir. 2006).
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Crowdnetic in February 2016. (Id. ¶ 20-21.) For Albright, the settlement amounted to not less
than ten million dollars. (Id. ¶ 22.) To date, Guzik has received no compensation from Albright.
(Id. ¶ 26.)
Albright now moves under Rule 12(b)(6) to dismiss Guzik’s SAC for failure to state a
claim for quantum meruit. (Dkt. No. 26.)
II.
Discussion
To survive a Rule 12(b)(6) motion to dismiss, a plaintiff must allege “enough facts to
state a claim to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544,
570 (2007). A court “must take all of the factual allegations in the complaint as true, [and is]
‘not bound to accept as true a legal conclusion couched as a factual allegation.’” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 555). The Court construes
Defendant Albright’s motion and brief broadly because “a court is ordinarily obligated to afford
a special solicitude to pro se litigants.” 2 Tracy v. Freshwater, 623 F.3d 90, 101 (2d Cir. 2010)
(internal citations omitted).
Under New York Law, claims sounding in quantum meruit or quasi-contract require: (1)
good faith performance on the part of the Plaintiff; (2) acceptance by the Defendant; (3) the
expectation of compensation; and (4) the reasonable value of the services. See Leibowitz v.
Cornell Univ., 584 F.3d 487, 509 (2d Cir. 2009); Landcom, Inc. v. Galen-Lyons Joint Landfill
Comm’n, 259 A.D.2d 967, 967 (N.Y. App. Div. 4th Dep’t 1999).
Albright argues that the SAC fails to establish both that Guzik performed his services in
good faith and the reasonable value of the services rendered. (Dkt. No. 26 at 6-8.)
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Because Guzik is an attorney representing himself, he is not entitled to the presumption
ordinarily applied to pro se parties. See Tracy, 623 F.3d at 102.
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A.
Good Faith Performance
Albright argues that the SAC fails to allege that Guzik performed the services in good
faith because Guzik (1) failed to plead that his resignation was for just cause, and (2) failed to
provide reasonable notice of his termination. (Id.) However, for a Plaintiff seeking to recover
fees for legal services rendered under quantum meruit, the good faith element is met where the
complaint merely states that the Plaintiff-attorney “rendered extensive legal services on
defendants’ behalf.” See, e.g., Liddle & Robinson, LLP v. Garrett, 720 F. Supp. 2d 417, 422
(S.D.N.Y. 2010) (citation and quotation mark omitted). Guzik alleges that, in total, he expended
more than 1,200 hours on Albright’s behalf from May 2014 until his resignation on December
17, 2015, and incurred thousands of dollars in out-of-pocket expenses. (SAC ¶ 24.) And
because Guzik alleges that he “performed legal services and incurred costs at Albright’s request
and for the benefit of Albright,” he has pleaded the requirement of “good faith” necessary to
sustain his claim for quantum meruit at this stage. (Id. ¶ 47.)
Moreover, Albright’s arguments improperly focus on the end of the business relationship
between Guzik and Albright instead of the nature of the services rendered throughout. “The
requirement of good faith under the doctrine of quantum meruit is linked to the performance of
the services, not to the demise of the relationship.” Aniero Concrete Co. v. N.Y. City Const.
Auth., No. 94 CIV. 3506 (CSH), 2000 WL 863208, at *9 (S.D.N.Y. June 27, 2000). That is, “the
requirement of good faith, under the doctrine of quantum meruit . . . is linked to the performance
of the services, as oppose[d] to the parties’ relationship.” Realuyo v. Diaz, No. 98 Civ. 7684,
2006 WL 695683, at *8 (S.D.N.Y. Mar. 17, 2006). There is nothing before the Court to suggest
that Guzik performed the legal services in question with anything other than good faith. As such,
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Guzik has sufficiently alleged that the performance of legal services was done in good faith for
the purposes of his quantum meruit claim.
Nevertheless, the Court briefly addresses each of Albright’s arguments in turn
First, the SAC affirmatively pleads that Guzik’s resignation was for cause. (SAC ¶ 19.)
Indeed, Guzik alleges multiple grounds on which he “was forced to resign.” (Id. ¶ 29.)
Specifically, he avers that “Albright failed to cooperate in the representation” and “rendered the
objective of the representation unreasonably difficult”; that “Albright blocked Plaintiff from
taking appropriate measures” to fulfill his duty as attorney; and that “Albright had persisted in a
course of action that Plaintiff believed was unlawful under New York law.” (Id.)
Albright relies on New York law that, “[i]f the defendant’s withdrawal as counsel was
unjustifiable, then he forfeited any right to recover damages for services rendered on the basis of
quantum meruit.” Allen v. Rivera, 125 A.D.2d 278, 280 (N.Y. App. Div. 2d Dep’t 1986). Even
if Defendant’s arguments were a proper challenge to Guzik’s “good faith” performance, instead
of an argument that Guzik should not have been permitted to withdraw as counsel, Plaintiff’s
factual allegation that Albright failed to cooperate such that Plaintiff could not perform his duties
as her attorney, taken as true, would justify withdrawal. See Joseph Brenner Assocs., Inc. v.
Starmaker Entm’t, Inc., 82 F.3d 55, 57 (2d Cir. 1996) (finding withdrawal permissible if the
“client renders it unreasonably difficult for the lawyer to carry out employment effectively”)
(citing N.Y. Comp. Codes R. & Regs., tit. 22, § 1200.15(c)(1)(iv)); Itar–Tass Russian News
Agency v. Russian Kurier, Inc., No. 95 Civ. 2144, 1999 WL 58680, at *2 (S.D.N.Y. Feb. 4,
1999) (holding that failure to pay fees in addition to a “breakdown in communication between
[counsel and client] plainly constitutes just cause for withdrawal”).
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Second, Albright argues that, upon Guzik’s withdrawal, she was left with only thirteen
days to retain new counsel to respond to a motion for partial summary judgment. (Dkt. No. 26 at
7-8.) The SAC alleges, however, that “[f]rom and after the Date of Termination Plaintiff made
every conceivable effort to avoid any material adverse effect on the interests of Albright” by
reason of the termination. (SAC ¶ 30.) Taken as true, the SAC sufficiently alleges that Guzik
took reasonable steps to avoid any unfair prejudice to Albright.
Guzik has properly alleged that he performed the legal services in question in good faith.
B.
Reasonable Value
The SAC also adequately pleads the reasonable value of the legal services in question.
To survive a motion to dismiss, a plaintiff must provide “more than vague and conclusory
allegations regarding . . . the reasonable value” of the services rendered. DeSilva v. N. ShoreLong Island Jewish Health Sys., Inc., 770 F. Supp. 2d 497, 535 (E.D.N.Y. 2011) (citing
Singerman v. Reyes, 240 A.D.2d 335, 336 (N.Y. App. Div. 1st Dep’t 1997).
Here, Guzik explicitly alleges that, “[a]s a direct and proximate result of Albright’s
failure to pay Plaintiff the reasonable value of services provided, Plaintiff has suffered damages
in an amount to be proven at trial, believed to be approximately $3,333,333.” (Id. ¶ 50.) Indeed,
the SAC alleges that Guzik furnished Albright with an invoice for “approximately 1/3 of the
value of the property received by Albright in settlement of her subject claims.” (Id. ¶ 25.) This
amount is consistent with the terms of the alleged oral agreement 3—one-third of any recovery—
considered with the alleged value of the settlement, ten million dollars. (Id. ¶ 17, 22.)
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However, the Court notes that Plaintiff cannot recover under a quantum meruit theory if
the oral agreement alleged in the SAC is a “valid, enforceable contract that governs the same
subject matter as the quantum meruit claim.” Mid-Hudson Catskill Rural Migrant Ministry, Inc.
v. Fine Host Corp., 418 F.3d 168, 175 (2d Cir. 2005); see also Leibowitz v. Cornell Univ., 584
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III.
Conclusion
Because the Second Amended Complaint states a claim for quantum meruit, the motion
to dismiss is DENIED.
Defendant shall file an answer to the Second Amended Complaint within 21 days of this
order. The Court will schedule an initial pretrial conference pursuant to Federal Rule of Civil
Procedure 16 thereafter.
The Clerk of Court is directed to close the motions at Docket Numbers 26, 37, and 38.
SO ORDERED.
Dated: November 28, 2016
New York, New York
____________________________________
J. PAUL OETKEN
United States District Judge
F.3d 487, 509 n.10 (2d Cir. 2009) (“[P]laintiff may only assert a claim of quantum meruit in the
absence of an agreement between the parties, be it oral, written or implied-in-fact.”).
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