RHODES v. John N. Bain, et al., Defendants-Beneficiaries. (1999)

Judgment, Supreme Court, New York County (Richard Lowe, III, J.), entered May 14, 1998, which, in an action by an attorney against his former clients for breach of fiduciary duty, inter alia, declared that plaintiff has no interest in any inventions or patents held by defendants individually or in any trust or other entity, rescinded ab initio any interest plaintiff holds in the two trusts named as defendants, and awarded plaintiff $1.5 million representing the reasonable value of the legal services he rendered to defendants, inclusive of prejudgment interest, unanimously affirmed, without costs.

No matter the form the parties' relationship assumed, it remained at all times that of attorney-client, a relationship based upon plaintiff's performance of legal services in exchange for an interest initially in defendants' inventions, and then in the corporation, and later the trusts, set up to exploit those inventions.   The record supports the trial court's findings that neither the initial arrangement nor its subsequent incarnations were entered into upon adequate disclosure to defendants of other possible fee arrangements and potential conflicts of interest, or with the aid of independent counsel retained for the purpose of safeguarding defendants' interests.   Rescission of the parties' arrangements ab initio, with payment to plaintiff in quantum meruit for his services, is an equitable result (see, Howard v. Murray, 43 N.Y.2d 417, 421, 401 N.Y.S.2d 781, 372 N.E.2d 568;  Matter of Cooperman, 83 N.Y.2d 465, 473, 611 N.Y.S.2d 465, 633 N.E.2d 1069;  Schlanger v. Flaton, 218 A.D.2d 597, 631 N.Y.S.2d 293, lv. denied 87 N.Y.2d 812, 644 N.Y.S.2d 145, 666 N.E.2d 1059).   We have considered the parties' other contentions and find that they do not warrant disturbing the judgment.

MEMORANDUM DECISION.