UPFRONT MEGATAINMENT INC v. PLLC (2023)

Order, Supreme Court, New York County (Arthur F. Engoron, J.), entered June 3, 2022, which granted plaintiffs’ motion to vacate nonparty Napoli Shkolnik PLLC's charging lien, unanimously reversed, on the law, with costs, the motion denied, the lien reinstated, and the matter remanded for an evidentiary hearing on whether the Napoli firm was terminated for cause.

The Napoli firm established prima facie that it was entitled to a charging lien under Judiciary Law § 475 (see Matter of Mason v. City of New York, 67 A.D.3d 475, 475, 889 N.Y.S.2d 24 [1st Dept. 2009]).  Although the firm did not represent plaintiffs in this action, no party disputes that it was retained to negotiate the settlement agreement on which the action is based, and that its retainer agreement with plaintiffs entitled it to payments “for any amounts recovered” under the settlement agreement (see id.).  The record also fails to show a clear intention by the Napoli firm to relinquish its contractual right to attorneys’ fees under the settlement agreement (see Fundamental Portfolio Advisors, Inc. v. Tocqueville Asset Mgt., L.P., 7 N.Y.3d 96, 104–105, 817 N.Y.S.2d 606, 850 N.E.2d 653 [2006]).

Furthermore, a law firm's right to enforce a charging lien under Judiciary Law § 475 is not forfeited in a case where the firm's representation is discontinued by mutual consent for reasons not rising to the level of misconduct or just cause (Klein v. Eubank, 87 N.Y.2d 459, 463, 640 N.Y.S.2d 443, 663 N.E.2d 599 [1996]).  Thus, the issue of whether the Napoli firm was terminated for cause requires credibility determinations and fact-finding that warrant an evidentiary hearing (see Mason, 67 A.D.3d at 475–476, 889 N.Y.S.2d 24;  Genton v. Arpeggio Rest., Inc., 232 A.D.2d 274, 275, 648 N.Y.S.2d 552 [1st Dept. 1996]), as none of the purported omissions that plaintiffs allege as a basis for terminating the firm's services constitute cause to discharge an attorney as a matter of law (see Friedman v. Park Cake, Inc., 34 A.D.3d 286, 287, 825 N.Y.S.2d 11 [1st Dept. 2006]).