Feder Kaszovitz LLP v. Rosen

Filing 37

MEMORANDUM DECISION AND ORDER GRANTING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT granting 26 Motion for Summary Judgment. For the reasons stated herein, Plaintiffs motion is GRANTED. The parties are directed to come up with a mechanism for addr essing the issue of damages for Rosen's breach. The parties are further directed to address the issue of Defendant's counterclaims. The parties should submit a joint briefing schedule by August 9, 2018. The Clerk of Court is respectfully directed to terminate the motion at Docket Number 26. This constitutes the decision and order of the Court. (Signed by Judge Colleen McMahon on 8/3/2018) (ft)

l

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

USDC SDNY

DOCUMENT
ELECTRONICALLY FILED
DOC#: _ _ _ _ _---,--__

FEDER KASZOVITZ LLP,

DATE FILED:

c£J s// <g"

Plaintiff,
No. 17-cv-2954 (CM)
-against-

LEE S. ROSEN,
Defendant.

MEMORANDUM DECISION AND ORDER GRANTING PLAINTIFF'S MOTION FOR
SUMMARY JUDGMENT
McMahon, C.J.:
This case arises from a fee dispute between a law firm, Feder Kaszovitz LLP ("Feder"),
and its former client, Lee Rosen. Feder seeks to recover Rosen's non-payment of his legal bills. It
asserts claims of breach of contract, account stated, and quantum meruit. Defendant asserts
counterclaims of breach of contract and fraud in the inducement.

Plaintiff now moves for summary judgment on its breach of contract and quantum meruit
claims. For the reasons stated below, Plaintiffs motion is GRANTED, with further proceedings
to follow.

FACTS
The facts of this case are not disputed unless otherwise noted.

The Retainer Agreement
In August 2013, Alpha Capital Anstalt filed a lawsuit in this district against Rosen and
others, alleging, among other things, that Rosen had committed securities fraud. See Alpha Capital

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Anstalt v. New Generation Biofuels & Lee Rosen, No. 13 Civ. 5586 (VEC) (S.D.N.Y. Aug. 9,
2013), Dkt. No. 1 (the "Alpha Capital lawsuit"). (Deel. of David Richan ("Richan Deel.")

,r,r 6-7,

Dkt. No. 32.)
Rosen met with one ofFeder's partners, Murray Skala, to discuss the Alpha Capital lawsuit.
(Deel. of David Sack ("Sack Deel."), Ex. E ("Rosen Dep.") 9:21-10:4, Dkt. No. 26-6.) Rosen
ultimately agreed to engage Feder to represent him in the Alpha Capital lawsuit. In connection
therewith, the parties executed a retainer agreement, dated October 17, 2013 (the "Retainer
Agreement"). (Sack Deel., Ex. F, Dkt. No. 26-7.) It is a fairly standard New York State attorney
retainer agreement. It describes the work to be done ("representing you as a defendant in the [Alpha
Capital] matter"), and provides for a small upfront payment ($7,500) against compensation at the
hourly rate of attorneys assigned to the matter times actual hours worked, with bills to be rendered
periodically. The retainer agreement that the parties signed contains no cap on fees and includes
no estimate of either the cost of performing any task or the overall cost of the representation. It
does not contain a standard "merger clause" (that is, a clause worded more or less as follows: "This
document represents the entire agreement between the parties and supersedes all prior discussions
and representations ... "); but it states that the agreement reflects "our understanding of the scope
of our representation and the terms of our arrangement."
There were apparently discussions between the parties about the cost to Rosen of dealing
with the Alpha Capital lawsuit before the Retainer Agreement was signed. The parties agree on
two details about those conversations: that Rosen hoped his lawyers would "piggyback" on work
performed for other defendants in the lawsuit (Rosen Dep. 14: 12-22); and that the word "cap" was
never mentioned prior to the signing of the retainer agreement (Skala Dep. 23:22-24:15; Rosen
Dep. 23:10-13.) Otherwise they do not agree what was said. In fact, between the complaint and

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his deposition testimony, Rosen himself has taken different positions about exactly what he and
Skala said to each other.
Ultimately, none of that is of any moment, since the parties entered into a written retainer
agreement governing the terms of their arrangement.

The Dispute that Led to This Lawsuit
Needless to say, defending against the Alpha Capital lawsuit cost a lot more than Rosen
had hoped to pay.
On December 5, 2013, Plaintiff filed a motion to dismiss the complaint in the Alpha Capital
lawsuit. (Richan Deel., Ex. F., Dkt. No. 32-6.) Skala sent Defendant a letter, dated December 17,
2013, informing Defendant that Plaintiff had filed the motion on his behalf. The letter indicated
that Feder had not been able to "piggyback" on the other defendants' work, as both Rosen and
Skala had hoped to do. Skala explained both why that proved impossible and what Feder actually
had to do in order to prepare papers on Rosen's behalf. (Richan Deel., Ex. G, Dkt. No. 32-7.)
Attached to the letter was an invoice for work performed, plus disbursements, through
November 30, 2013. The total time charges and disbursements totaled $87,231.69. On the bill,
Feder gave Rosen immediate credit for the $7,500 retained (per the terms of the retainer, it was to
have been applied against the final bill, not the first bill). The firm also offered Rosen a "courtesy
discount" of 20% of its time charges ($16,934), as well as the option to defer payment of another
$25,000 until the case was dismissed or settled. This left an amount due and immediately payable
of $45,000.00, against a total amount (less retainer and 20% discount) of $70,000. (Richan Deel.
Ex. H, Dkt. No. 32-8.) Skala's cover letter indicated that the write-off and the deferral of payment
were conditioned on prompt payment of the $45,000.

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When Rosen received Skala's letter and the invoice, he "freaked out." (Rosen Dep. 27:323.)
Lawyer and client met in January 2014. (Richan Deel. 125; Rosen Dep. 32:5-9.) By that
time, Alpha Capital had responded to the defendants' multiple motions to dismiss by filing an
amended complaint. The amended complaint was much longer than the original; it also included
new allegations against Rosen personally. This meant that the entire exercise had to be repeated,
that the first motions were for naught; there would be a second round of motions to dismiss, and
that new issues and arguments would have to be addressed. All this was discussed. Apparently the
parties also discussed the possibility of filing a motion for sanctions.
The parties do not agree about the substance of their January discussion insofar as it related
to fees. According to Rosen, ("Skala Dep.") 67:4-16, Dkt. No. 32-2.) Skala agreed to "cap
[Plaintiffs] fees at $45,000, including the second motion [to dismiss]." (Rosen Dep. 32:10-22.)
Skala, in a follow-up email sent to Rosen in order to memorialize the January meeting,
characterized the fee discussion rather differently:
I told you when we met that we would be prepared to cap our fees for the next motion to
dismiss round. I indicated that we would be willing to cap our fees at $45K, but that would
not include time in connection with a motion for sanctions, should you so wish to proceed.
Upon further consideration, we would be prepared to include the work on the motion for
sanctions as falling within the above cap. Also, please send us the payment that you said
that we would be receiving last week; it would be much appreciated.
(Sack Deel. Ex. H, at 2, Dkt. No. 26-9) (emphasis added).
While Rosen insists that this email places an absolute limit of $45,000 on fees for past and
future work (Richan Deel.~ 30; Rosen Dep. 34:23-35:9.), I cannot agree with his characterization,
or conclude that it raises a disputed issue of fact. Skala's email clearly states that (1) there was
going to be a second round of motions to dismiss; (2) Skala had originally promised to "cap our
fees/or the next motion to dismiss round . .. at $45K; (3) in their original conversation, that cap
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did not include work on a motion for sanctions; but (4) on sober reflection, Feder had decided to
include work performed on any sanctions motion within that $45,000 cap - which is to say,
$45,000 for the work on both the second motion to dismiss and the sanctions motion. Skala's email
said nothing about including work on the first motion to dismiss within the cap, or about capping
fees for the entire representation at $45,000. There is no way to read the email as saying anything
of the sort. Indeed, on Rosen's reading, Feder would essentially have been agreeing to perform all
future work on the case for free, as well as to write off the $20,000 that it had agreed to defer when
it issued the first invoice. Nothing in Skala's email suggests any such "agreement."
Rosen did not respond to Skala's email with some writing of his own, protesting that it did
not reflect their conversation. Neither did he fire his lawyers. Instead, he paid $25,000 against the
$45,000 invoice on February 22, 2014, and another $10,000 on or about May 19, 2014 - a total of
$42,500 out of the $45,000 due on the first invoice.
During that period, the firm continued to work on Rosen's behalf. Feder filed a motion to
dismiss the amended complaint in the Alpha Capital lawsuit on March 20, 2014. (Richan Deel. ,i
31.) Reply papers were filed in May. See Alpha Capital Anstalt, 13 Civ. 5586, ECF No. (S.D.N.Y.
Aug. 9, 2013), Dkt. No. 50.
Having completed work on the second motion to dismiss, Skala sent Rosen a letter, dated
June 10, 2014, attaching an invoice for services rendered from March 1 to May 31, 2014. Although
the firms' time records revealed over $53,000 in time actually expended on the second motion to
dismiss (substantially less that was expended on the first motion to dismiss), the invoice only
charged $48,000.00 - $45,420 in fees and the rest in disbursement. This reflected another 15%
courtesy discount, which brought the bill to almost exactly the $45,000 cap that Skala had proposed
for Round Two. In his cover letter, Skala noted that, "While we appreciate that from your

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perspective this has already been more expensive than you anticipated, we trust you appreciate the
work that has been done and the need for us to be paid for our work." (Richan Deel. Ex. N, Dkt.
No. 32-14.)
Skala followed up with an email dated June 30, 2014, asking for payment of Feder's
outstanding invoice. Rosen responded the next day:
We have a big problem. I was EXTREMELY clear when we met at my house that
originally I would only spend 25,000 on the case. The first bill came and I ended up
spending 32,500 and was VERY clear that I would only spend an additional 10,000 .... I
have no intention and no where with all [sic] to pay your bill.
(Richan Deel., Ex. 0, Dkt. No. 32-15.)
Skala responded to Rosen as follows: "If the discounts are not acceptable, and you are not
willing to have our outstanding invoice (for $48,000.00) paid, then we will seek to recover the fair
and reasonable value of our services (quantum meruit) which we believe is substantially higher
than our outstanding invoice." (Richan Deel., Ex. P, Dkt. No. 32-16.)
Summer passed with no resolution of the parties' fee dispute. On September 4, 2014, Skala
sent Defendant a letter, stating that Defendant's nonpayment "leaves us no choice but to take
appropriate legal action." (Richan Deel. Ex. Q, Dkt. No. 32-17.) Attached to the letter was an
invoice for all legal services rendered from the start of Plaintiffs representation of Defendant
through May 31, 2014, plus disbursements through July 31, 2014. The invoice, which no longer
reflected any discounts (either the 20% courtesy discount that had been reflected on the face of the
first invoice or the 15% courtesy discount on the second invoice). It indicated that Plaintiff had
provided a total of $187,477.75 in legal services (which was substantially more than the total time
charges reflected on the two invoices - $140,667.44), and had incurred a total of $15,680.38 in
disbursements (three times the total of $5,349.44 that is reflected on the two invoices). This final
invoice noted that Defendant had made three payments (including his $7,500 retainer), totaling
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$42,500.00, toward Feder's bills. It demanded a balance of $160,658.00. (Sack. Deel.~~ 16-17.)
Doing the math, it seems that Feder added back in the $20,000 deferred payment from the first
mvmce.
Rosen "laughed" when he received the invoice, and called Skala to discuss it. (Rosen Dep.
38: 18-40:4.) Their discussion did not yield any resolution. So Rosen fired Feder and retained new
counsel, who participated in discovery and ultimately settled Alpha Capital's claims against
Rosen. (Rosen Dep. 40:9-12; 44:21-45:6.) He made no further payment to Feder.
Feder commenced this lawsuit on April 24, 2017, seeking the outstanding balance of the
September 2014 invoice, or $160,658.00. (Compl., Dkt. No. 1.) Rosen filed his Answer on June
26, 2017, and asserted counterclaims of $100,000.00 in damages for breach of contract and fraud
in the inducement. (Answer, Dkt. No. 13.)
DISCUSSION

I.

Summary Judgment Standard

Summary judgment is appropriate if ''there is no genuine dispute as to any material fact
and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). Whether any
disputed issue of material fact exists is for the court to determine. Balderman v. United States
Veterans Admin., 870 F.2d 57, 60 (2d Cir.1989). At summary judgment, the court must construe
the evidence in the light most favorable to the non-movant and draw all reasonable inferences in
its favor. Costello v. City of Burlington, 632 F.3d 41, 45 (2d Cir. 2011 ).
Not every factual dispute will preclude summary judgment. A fact is material "when it
might affect the outcome of the suit," Jeffreys v. City of New York, 426 F.3d 549, 553 (2d Cir.
2005), and a genuine dispute requires "evidence on which the jury could reasonably find for the
[non-movant]." Anderson v. Liberty Lobby, Inc., 477 U.S. 242,248 (1986).

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To defeat summary judgment, the non-movant must support the existence of an alleged
genuine dispute of material fact by citing materials in the record that would be admissible in
evidence. Fed. R. Civ. P. 56(c). If the non-movant fails "to make a sufficient showing on an
essential element of her case with respect to which she has the burden of proof' at trial, then
summary judgment will be granted. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).
II.

Breach of Contract

Under New York law, a plaintiff asserting breach of contract must prove: ( 1) existence of
a contract; (2) adequate performance by the plaintiff; (3) breach by the defendant; and (4) damages.
Eternity Glob. Master Fund Ltd v. Morgan Guar. Tr. Co. of N. Y, 375 F.3d 168, 177 (2d Cir.
2004).
The parties do not dispute that the Retainer Agreement is a valid contract, or that Feder
performed legal services for Rosen as required by the contract. They also agree that Defendant has
failed and refused to pay Plaintiff any more than $42,500.00.
Feder seeks summary judgment for the balance it alleges is due - $160,658 - on the ground
that, even viewing the evidence in Rosen's favor, Defendant breached the Retainer Agreement.
Rosen points to two issue of fact as to which he says there is genuine dispute.
1.

The Alleged Prior Oral Agreement Between Defendant and Skala

First, Rosen argues that the parties orally agreed, prior to the signing of the Retainer
Agreement, that Rosen would have some cap on the cost to him of defending against the Alpha
Capital suit. He variously says that he insisted he would only have to pay $25,000 defending the
Alpha Capital lawsuit; that Skala represented it might cost as much as $50,000 to get the lawsuit
dismissed; and that he signed the retained agreement on the understanding that he would have to
pay between $25,000 and $50,000. Skala of course denies that any of this was said, but Rosen's

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argument must be rejected because it is inconsistent with the utterly unambiguous terms of the
Retainer Agreement that he, Rosen, signed.
Under New York law, "the fundamental, neutral precept of contract interpretation is that
agreements are construed in accord with the parties' intent." Greenfield v. Philles Records, Inc.,
98 N.Y.2d 562, 569 (2002). The best evidence of the parties' intent is the contract itself. See
Eternity Glob., 375 F.3d at 177. Where "parties set down their agreement in a clear, complete

document, their writing should as a rule be enforced according to its terms." W. W. W. Assocs. v.
Giancontieri, 77 N.Y.2d 157, 162 (1990). In such a case, the "parol evidence rule forbids proof of

extrinsic evidence to contradict or vary the terms of a written instrument and, accordingly, one
who seeks, in a breach of contract action, to enforce an oral representation or promise relating to
the subject matter of the contract cannot succeed.'' Sabo v. Delman, 3 N.Y.2d 155, 161 (1957).
Therefore, if the parol evidence rule applies, Skala and Defendant's prior conversations are
inadmissible as evidence to interpret the Retainer Agreement's fee provision.
The first step in determining whether the parol evidence rule applies is deciding whether
the Retainer Agreement is an integrated contract. 4Kids Entm 't. Inc. v. The Upper Deck Co., 797
F. Supp. 2d 236, 245 (S.D.N.Y. 2011). A contract is integrated "when the parties intend it to
constitute the complete and final expression of their agreement," Starter Corp. v. Converse, Inc.,
170 F.3d 286, 295 (2d Cir. 1999), and it "appears complete on its face," Wayland Inv. Fund, LLC
v. Millenium Seacarriers, Inc., 111 F. Supp. 2d 450,454 (S.D.N.Y. 2000). Finding that a contract

is integrated is "particularly appropriate" when the agreement contains an express merger clause.
Inv 'rs Ins. Co. of Am. v. Dorinco Reinsurance Co., 917 F.2d 100, 104 (2d Cir. 1990). However,

where it is apparent from the face of a contract that it represents the parties' entire understanding,
no formal merger clause is necessary in order to conclude that the agreement is integrated. See

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Bourne v. Walt Disney Co.,68 F.3d 621,627 (2d Cir. 1995) (explaining that, in the absence of a

merger clause, the court must "read the writing in light of the surrounding circumstances" to
determine whether the parties intended the agreement to be an integrated writing); see also 4Kids
Entm 't, Inc., 797 F. Supp. 2d at 245 ("The absence of a merger clause does not conclusively

demonstrate that an agreement is not integrated."); Battery Steamship Corp. v. Refineria Panama,
SA., 513 F.2d 735, 738 n.3 (2d Cir. 1975) ("[A] contract which appears complete on its face is an

integrated agreement as a matter oflaw.") (citing Higgs v. De Maziroff, 263 N.Y. 473,478 (1934)).
When an agreement is not integrated, however, the parol evidence rule does not apply.
Starter, 170 F.3d at 295.

The Retainer Agreement in this case is an integrated agreement. Its plain language
demonstrates that it is the complete expression of Plaintiff and Defendant's agreement. See Sack
Deel. Ex. F, at 1 ("This letter sets forth our understanding of the scope of our representation and
the terms of our arrangement."). It identifies the work to be done; explains how that work will be
billed, and sets forth a dispute resolution mechanism. No term of the parties' agreement is left
unexpressed.

I disagree with Defendant that the Retainer Agreement is "incomplete" because it does not
set out a cap Plaintiff's fees. The law imposes no such requirement: "A price term is not necessarily
indefinite because the agreement fails to specify a dollar figure, or leaves fixing the amount to the
future, or contains no computational formula." Cobble Hill Nursing Home, Inc. v. Henry & Warren
Corp., 74 N.Y.2d 475,483 (1989). This particular contract clearly lays out Plaintiff's fee structure:

payment of an initial retainer, followed by billing for every hour of time expended at specified
hourly rates. It contains a plain and easily understood statement of the computational formula that
will be used to charge for Feder's work: number of hours worked times hourly rates. It identifies

10

the rates charged by certain lawyers who would be performing under the contract (Skala and
Jonathon Honig), and it notes that other lawyers who might work on the matter would charge
hourly rates of between $185 and $425 per hour. It also describes the type of disbursements for
which Rosen would be charged. There is no indication in the Retainer Agreement that the parties
agreed to any cap, and Rosen signed the document knowing full well that it did not include any
fee cap.
That is the arrangement to which the parties agreed. Rosen's proposed parol evidence about
a prior agreement containing a cap on his fees would make a sham of the written agreement and
impose an entirely different fee structure on the parties' express arrangement. His proposed
testimony would vary the terms of an integrated written agreement. It is, therefore, inadmissible.
Of course, even if an agreement is integrated, a court may consider extrinsic evidence
where the language in question is ambiguous. See Seiden Assocs., Inc. v. ANC Holdings, Inc., 959
F.2d 425, 429 (2d Cir. 1992). Rosen urges me to find that the Retainer Agreement's fee provision
is ambiguous because it does not provide a total fee amount.
But there is nothing ambiguous about the fee arrangement set forth m the retainer
agreement.
Ambiguity is a question of law to be resolved by the court. See W W W, 77 N. Y.2d at 162.
Terms are ambiguous where they are "capable of more than one meaning when viewed objectively
by a reasonably intelligent person who has examined the context of the entire integrated agreement
and who is cognizant of the customs, practices, usages and terminology as generally understood
in the particular trade or business." Lightfoot v. Union Carbide Corp., 110 F.3d 898, 906 (2d Cir.
1997). "The language of a contract is not made ambiguous simply because the parties urge different

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interpretations," Seiden, 959 F.2d at 428, and extrinsic and parol evidence is inadmissible to create
ambiguity where none exists, WWW, 77 N.Y.2d at 163.

If the terms are "clear and unambiguous, courts do not look beyond the four comers of the
agreement, and parol evidence of the parties' intentions is inadmissible." R/S Assocs. v. N. Y Job
Dev. Auth., 98 N.Y.2d 29, 33 (N.Y. 2002); see also Metro. Life Ins. Co. v. RJR Nabisco, Inc., 906

F.2d 884, 889 (2d Cir. 1990).
The written terms of the Retainer Agreement are not capable of more than one meaning
when viewed objectively by a reasonably intelligent person - especially a sophisticated
businessman (as Rosen was) who is familiar with the standard practices used in the retention of
legal services (which have for decades been charged as a time charge applicable to a particular
lawyer times the number of hours that lawyer worked). Defendant's suggestion that the
agreement's failure to set a maximum fee renders it ambiguous suffers from a fatal flaw: under
New York law, "silence does not equate to contractual ambiguity." Greenfield, 98 N.Y.2d at 573;
see also Spinelli v. Nat'! Football League, 96 F. Supp. 3d 81, 126 (S.D.N.Y. 2015) ("Silence, or

omission of a term, however, does not generally create ambiguity."). The Retainer Agreement
requires Rosen to pay Feder for legal services rendered, applying to the number of hours actually
worked specified hourly rates that are subject to periodic adjustment by Feder. The agreement does
not set a cap; it does not contemplate a cap. All of that is clear and unambiguous.
Because I find the Retainer Agreement to be integrated, and the fee provision to be
unambiguous, the parol evidence rule bars consideration of any alleged prior understanding
between Defendant and Skala that would contradict or vary its terms. Rosen's parol evidence does
not create any genuine issue of material fact; the contract says what it says.

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2.

The Alleged Modification of the Retainer Agreement in January 2014

The more complicated question is whether the retainer agreement was modified in early
2014. This issue is relevant because it is relevant to how much Rosen must pay Feder.
Sadly for Rosen, the agreement was not modified. It easily could have been - but it was
not.
As noted above, once the amended complaint was filed and the landscape changed, the
parties met to discuss their relationship. The record reveals that, in an email dated February 4,
2014, Skala, on behalf of Feder, offered to cap the firm's fees for filing a second motion to dismiss,
together with any sanctions motion that might be filed (none was), at $45,000. As discussed above,
Rosen is not correct that Skala agreed to cap the fee for the entire representation at $45,000; there
is no way to read the email as saying any such thing. The communication that could not be clearer:
... we would be prepared to cap our fees for the next motion to dismiss round I indicated
that we would be willing to cap our fees at $45K, but that would not include time in
connection with a motion for sanctions, should you so wish to proceed. Upon further
consideration, we would be prepared to include the work on the motion for sanctions as
falling within the above cap.
(Sack Deel. Ex. H, at 2, 0kt. No. 26-9) (emphasis added).
The parties' different understanding of the meaning of Skala's email ends up answering
the question of whether the agreement was modified. Since they do not agree about what the email
means, there was no meeting of the minds. Therefore, the agreement was not modified.
New York law is clear: parties may modify a written contract by subsequent oral
agreement, subject to the statute of frauds, 1 especially if the agreement does not specifically
prohibit oral modification - which the Retainer Agreement in this case does not. See Rose v. Spa

1
The statute of frauds is not applicable here because the proposed modification - work on the second mot10n to
dismiss - was capable of being performed within a year - and indeed, was performed between February and May of
2014

13

Realty Assocs., 42 N.Y.2d 338, 343-44 (1977). However, a party seeking to prove modification

must submit "proof of each element requisite to the formulation of a contract," including mutual
assent to its terms, Dallas Aerospace, Inc. v. CJS Air Corp., 352 F.3d 775, 783 (2d Cir. 2003), as
well as valid consideration, Baraliu v. Vinya Capital, L.P., 765 F. Supp. 2d 289, 298 (S.D.N.Y.
2011).
In this case, there is no proof of the most essential elements of contract formation: mutual
assent.
"To form a binding contract there must be a meeting of the minds, such that there is a
manifestation of mutual assent sufficiently definite to assure that the parties are truly in agreement
with respect to all material terms." Stonehill Capital Mgmt., LLC v. Bank of the W, 28 N.Y.3d
439,448 (2016). Were there any indication in the record that Rosen assented to Skala's proposed
modification of the retainer agreement, I would readily conclude that the clearly stated terms of
Skala's February 4 email worked a modification. And I would hold that Feder was only entitled
to recover $45,000 for its work on the second motion to dismiss.
However, Rosen absolutely refuses to concede that the email says what it clearly says. He
insists that the email means that Skala agreed, on behalf of Feder, to cap the fees for work done in
connection with both motions to dismiss at $45,000. As there is no rational way to read Skala's
words as Rosen does, I am constrained to conclude that he did not assent to Skala's proposed
modification of the Retainer Agreement - there was no meeting of the minds. So the email is
simply an offer to modify the contract. Because the offer was not accepted, Rosen find himself in
the position of having agreed to pay Feder for the work performed on the second motion in
accordance with the written agreement he signed.

14

Additionally, even if there had been mutual assent to the terms of the modification, Rosen
has not shown that it was supported by adequate consideration. See Tierney v. Capricorn Inv 'rs,
L.P., 189 A.D.2d 629,631 (1st Dep't 1993) ("Neither a promise to do that which the promisor is

already bound to do, nor the performance of an existing legal obligation constitutes valid
consideration."). On the record before the Court, the only possible consideration for the
modification proposed by Skala would have been Rosen's abandonment of the argument that his
fees should be capped at $45,000 for the entire representation. Rosen had not conceded that to this
day. Neither side has identified any other consideration that Rosen offered or was in a position to
offer in exchange for Skala's agreement to modify the Retainer Agreement by capping his fee for
the second motion to dismiss at $45,000.
In short, the undisputed facts show that the original Retainer Agreement did not cap Feder's
fees and that the parties did not modify it in order to cap the fees. Therefore, Rosen's refusal to
pay Feder the fees due pursuant to the terms of the retainer agreement means that he has breached
the Retainer Agreement.
And Plaintiff is entitled to summary judgment on its breach of contract claim.
The question becomes: summary judgment in what amount?
I fear that the amount due is not obvious from the parties' submissions. Feder insists that
it is the amount of its last and final invoice - approximately $160,000 - but it appears to the Court
that Rosen substantially complied with the demand for payment of the $45,000 first invoice having paid all but $2,500 of that amount - such that it would not be appropriate for the Court to
revoke the $16,933 courtesy discount that was voluntarily given Rosen by Feder in connection
with that first bill. Feder's last invoice of course eliminates that discount. The parties have not
addressed that issue at all in their papers.

15

The dispute resolution mechanism in the Retainer Agreement calls for any fee disputes that
are not submitted to arbitration in accordance with the Rules of the Chief Administrator to be
resolved in New York County without a jury. (Sack Deel., Ex. F at 3, Dkt. No. 26-7 .) Since the
Court is the trier of fact, I direct the parties to come up with a mechanism for addressing the issue
of damages for Rosen's breach - which can include an inquest before a United States Magistrate
Judge. If the parties cannot agree, they will be on 48 hours' notice for a damages trial before me.

III.

Quantum Meruit

Plaintiff also has moved for summary judgment on its quantum meruit claim.
Under New York law, quantum meruit is analyzed as a quasi contract claim. Mid-Hudson
Catskill Rural Migrant Ministry, Inc. v. Fine Host Corp., 418 F.3d 168, 175 (2d Cir. 2005). In

order to recover on a quasi-contract claim, Plaintiff must establish "(1) the performance of services
in good faith, (2) the acceptance of the services by the person to whom they are rendered, (3) an
expectation of compensation therefor, and (4) the reasonable value of the services." Id (internal
quotation marks omitted) (quoting Revson v. Cinque & Cinque, P.C., 221 F.3d 59, 69 (2d Cir.
2000)). However, "the existence of a valid and enforceable written contract governing a particular
subject matter ordinarily precludes recovery in quasi contract for events arising out of the same
subject matter." Clark-Fitzpatrick, Inc. v. Long Island R.R. Co., 70 N.Y.2d 382,388 (1987).
The Court has already concluded that the Retainer Agreement is a valid and binding
contract. Plaintiffs quantum meruit claim arises from the exact same facts as its breach of contract
claim. Since Plaintiff will recover damages on its breach of contract claim, it cannot recover for a
second time under a theory of quantum meruit. The second cause of action is dismissed.

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IV.

The Parties' Remaining Claims

Plaintiffs claim for account stated is dismissed sua sponte. A claim for account stated
"cannot be made an instrument to create liability, nor may it be utilized simply as another means
to attempt to collect under a disputed contract." 4Kids Entm 't, Inc., 797 F. Supp. 2d at 249.
Plaintiffs account stated claim is entirely duplicative of its breach of contract claim.
What remains of this case, then, are Rosen's counterclaims. As neither side has sought
summary judgment on the counterclaims, the Court will not grant it sua sponte - though I note that
a court may grant summary judgment to a non-moving party if, upon reviewing the record,
summary judgment is warranted. See Schanjield v. Sojitz Corp. of Am., 663 F. Supp. 2d 305, 347
(S.D.N.Y. 2009). This is especially true where "the court's sua sponte determination is based on
issues identical to those raised by the moving party. Absent some indication that the moving party
might otherwise bring forward evidence that would affect the court's summary judgment
determination, failure to provide an opportunity to respond is not reversible error." Coach
Leatherware Co. v. AnnTaylor, Inc., 933 F.2d 162, 167 (2d Cir. 1991).

It appears to me that the resolution of Peder's motion for summary judgment with a finding
of breach by Rosen necessarily means that the counterclaims must be dismissed - especially
because Rosen's fraudulent inducement counterclaim appears to rest on the same inadmissible
parol evidence that had to be ignored in connection with Peder's breach of contract claim.
However, I insist that the parties make a proper presentation, properly supported, before I will
address the counterclaims.
CONCLUSION

For the reasons stated above, Plaintiffs motion is GRANTED.

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The parties are directed to come up with a mechanism for addressing the issue of
damages for Rosen's breach.
The parties are further directed to address the issue of Defendant's counterclaims. The
parties should submit a joint briefing schedule by August 9, 2018.
The Clerk of Court is respectfully directed to terminate the motion at Docket Number 26.
This constitutes the decision and order of the Court.

Dated: August 3, 2018

Chief Judge

BY ECF TO ALL COUNSEL

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