To Be Argued By: MARC E. ISSERLES New York County Clerk’s Index No. 113781/09 New York Supreme Court APPELLATE DIVISION—FIRST DEPARTMENT dSCAROLA ELLIS LLP, Plaintiff-Respondent, —against— ELAN PADEH, Defendant-Appellant. BRIEF FOR DEFENDANT-APPELLANT ALEXANDRA A.E. SHAPIRO MARC E. ISSERLES JAMES DARROW SHAPIRO, ARATO & ISSERLES LLP 500 Fifth Avenue, 40th Floor New York, New York 10110 (212) 257-4880 [email protected] [email protected] [email protected] Attorneys for Defendant-Appellant REPRODUCED ON RECYCLED PAPER TABLE OF CONTENTS TABLE OF AUTHORITIES ................................................................................... iii PRELIMINARY STATEMENT ............................................................................... 1 QUESTIONS PRESENTED ...................................................................................... 4 STATEMENT OF FACTS ........................................................................................ 4 A. Elan Padeh Enters Into A Contingency-Fee Agreement With George Zelma And Sues Corcoran ........................................................................................... 4 B. Corcoran Brings Related Counterclaims Against Padeh And Virtually Identical Third-Party Claims Against Padeh’s Company In A Consolidated Action ............................................................................................................... 6 C. The Scarola Firm Takes Over Padeh’s Case Pursuant To A Co-Representation Agreement With Zelma ..................................................... 8 D. Corcoran Accuses Padeh And The TDG Witnesses Of Perjury In A “Flank Attack” On Padeh’s Claims ................................................................ 10 E. After Months Of Work On The Perjury Investigation, Scarola Draws Up A New Retainer Agreement ............................................................................... 12 F. The Perjury Investigation Comes To A Head ................................................ 13 G. Padeh Exercises His Absolute Right To Settle The Corcoran Litigation And Scarola Improperly Threatens To Sue Him ............................................ 15 H. Scarola Delivers On Its Threats And Sues Padeh To Recover More Than Its Agreed-Upon Fees .......................................................................................... 18 ARGUMENT ........................................................................................................... 21 I. SCAROLA’S UNJUST ENRICHMENT CLAIM IS BARRED AND ITS COMPENSATION MUST BE LIMITED TO THE CONTINGENCY FEE SET FORTH IN ITS RETAINER AGREEMENTS ...................................... 21 A. This Court Has Repeatedly Held That The Compensation Of A Contingency-Fee Lawyer Whose Client Settles Over His Objection Is Determined Exclusively By The Retainer Agreement ............................. 22 B. The Winkler Rule Rests Upon Well-Settled Legal Principles ................. 26 C. Under Winkler, Scarola’s Compensation Is Governed Exclusively By The Terms Of Its Retainer Agreements ................................................... 34 D. Scarola’s “Abandonment” Argument Is Meritless .................................. 38 II. THE FIRST CAUSE OF ACTION SHOULD ALSO BE DISMISSED AS A MATTER OF LAW ............................................................................. 40 CONCLUSION ........................................................................................................ 51 ii TABLE OF AUTHORITIES Cases Page(s) 805 Third Ave. Co. v. M.W. Realty Assocs., 58 N.Y.2d 447 (1983) ........................................................................................... 41 Andrewes v. Haas, 214 N.Y. 255 (1915) ................................................................................. 28, 33, 38 Bellino Schwartz Padob Adver., Inc. v. Solaris Mktg. Grp., Inc., 222 A.D.2d 313 (1st Dep’t 1995) ......................................................................... 34 Belzer v. Bollea, 150 Misc. 2d 925 (N.Y. Sup. Ct. 1990) ................................................................ 31 Childs v. Levitt, 151 A.D.2d 318 (1st Dep’t 1989) ......................................................................... 29 Clark-Fitzpatrick, Inc. v. Long Island R.R. Co., 70 N.Y.2d 382 (1987) ..................................................................................... 26, 35 Compton v. Kittleson, 171 P.3d 172 (Alaska 2007) ..................................................................... 30, 33, 36 Corcoran v. Geo. Kellogg Struc. Co., 179 A.D. 396 (4th Dep’t 1917) ............................................................................ 47 Corsello v. Verizon N.Y., Inc., 18 N.Y.3d 777 (2012) ..................................................................................... 26, 36 Dagny Mgmt. Corp. v. Oppenheim & Meltzer, 199 A.D.2d 711 (3d Dep’t 1993).......................................................................... 33 Darrin v. Clay, 143 A.D. 937 (2d Dep’t 1911) .................................................................. 42, 45, 48 iii Davis v. CornerStone Tel. Co., 25 Misc. 3d 1071 (N.Y. Sup. Ct. 2009) ................................................................ 38 Davis v. CornerStone Tel. Co., 78 A.D.3d 1263 (1st Dep’t 2010) ......................................................................... 38 Demov, Morris, Levin & Shein v. Glantz, 444 N.Y.2d 553 (1981) ................................................................................... 30, 38 Ellis v. Mitchell, 193 Misc. 956 (N.Y. Sup. Ct. 1948) ......................................................... 43, 45, 48 Ellis v. Mitchell, 275 A.D. 767 (1st Dep’t 1949) ............................................................................. 43 Feigen v. Advance Capital Mgmt. Corp., 150 A.D.2d 281 (1st Dep’t 1989) ......................................................................... 34 Gair v. Peck, 6 N.Y.2d 97 (1959) ............................................................................................... 31 Greenberg v. Bar Steel Constr. Corp., 22 N.Y.2d 210 (1968) ........................................................................................... 49 Hamilton v. Ford Motor Co., 636 F.2d 745, (D.C. Cir. 1980) ............................................................................. 46 IDT Corp. v. Morgan Stanley Dean Witter & Co., 12 N.Y.3d 132 (2009) ........................................................................................... 26 In re Cooperman, 83 N.Y.2d 465 (1994) ......................................................................... 29, 32, 36, 41 In re Estate of Schanzer, 7 A.D.2d 275 (1st Dep’t 1959) ............................................................................. 41 In re Estate of Schanzer, 8 N.Y.2d 972 (1960) ............................................................................................. 41 iv In re Howell, 215 N.Y. 466 (1915) ............................................................................................. 42 In re Levy, 249 N.Y. 168 (1928) ....................................................................................... 24, 27 In re Raymond, 214 A.D. 622 (1st Dep’t 1925) ............................................................................. 49 In re Snyder, 190 N.Y. 66 (1907) ............................................................................................... 30 In re Spellman, 4 A.D.2d 215 (1st Dep’t 1957) ........................................................... 25, 26, 39, 47 In re Winkler, 154 A.D. 532 (1st Dep’t 1913) ......................................................................passim Jaffe & Asher LLP v. Ross, 6 A.D.3d 357 (1st Dep’t 2004) ....................................................................... 25, 29 Jaffe & Asher LLP v. Ross, No. 125616/02, 2003 WL 25520435 (N.Y. Sup. Ct. Nov. 10, 2003) ...... 24, 27, 39 Jontow v. Jontow, 34 A.D.2d 744 (1st Dep’t 1970) ..................................................................... 27, 35 Julien J. Studley, Inc. v. N.Y. News, Inc., 70 N.Y.2d 628 (1987) ........................................................................................... 34 Knipe v. Wheelehan, 160 N.Y.S. 1012 (1st Dep’t 1916) ........................................................................ 28 Lefkowitz v. Leblang, 187 N.Y.S. 520 (1st Dep’t 1921) .............................................................. 23, 24, 28 Mahan v. Mahan, 213 A.D.2d 458 (2d Dep’t 1995).......................................................................... 38 v Maiullo v. Genematas, 16 Mich. App. 231 & n.1, 167 N.W.2d 849 (Ct. App. 1969) ........................ 44, 46 Miller v. Doniger, 272 A.D.2d 73 (1st Dep’t 2000) ........................................................................... 26 Mrozinski v. Marinello, 46 Misc. 2d 637 (N.Y. Sup. Ct. 1965) .................................................................. 43 Murray v. Waring Hat Mfg. Co., 142 A.D. 514 (2d Dep’t 1911) ........................................................................ 24, 32 Neu v. Brooklyn Heights R.R. Co., 113 A.D. 446 (2d Dep’t 1906) .............................................................................. 24 Race v. Harris, 246 A.D. 367 (3d Dep’t 1936) .............................................................................. 43 Richland v. Bramnick, 81 N.Y.S.2d 735 (N.Y. Sup. Ct. 1948) ............................................... 43, 46, 47, 48 Samuels v. Simpson, 144 A.D. 466 (1st Dep’t 1911) ............................................................................