Friday, September 30, 2011

Judicial Commission Reports On The Corruption Of Bronx Surrogate Lee Holtzman

Edward F Cox
And it looks bad for Holtzman.
Add caption
Oh, by the way, on September 22 2011 I was lucky to have a second with one of the best reporters out there, Bob Kappstatter of the NY Daily News. I was at the Republican event in the Bronx with Ed Cox, Mike Bloomberg  (who breezed in for 3 minutes), Jay Savino and others, including Bronx Borough President Ruben Diaz Jr. and Bronx District Attorney Rob Johnson....I told Mr. Cox about how my dad (Assistant Attorney General for New york State under Louis Lefkowitz) took my twin sister and me to the Metropolitan Club for lunch almost every Sunday when we were little, and how we, sis and I, wouldn't leave the lounge overlooking fifth avenue with the peanuts on the tables just because it was "for men only". Nope, we thought that wasnt right. We were 8 years old. That's where I met Dick Nixon and the family (the former President is Cox's late father-in-law).
Okay, back to the real story.
Betsy Combier, Bob Kappstatter
Looks like Bronx Surrogate Judge Lee Holtzman may be stepping down before the end of the year. The tie-in with Michael Lippman is great reading, thanks to Holtzman waiving his right to seal the report.
Now, I wish the judicial commission would look into one of the dirtiest judges out in judgeland right now, Bronx Criminal Judge Troy K. Webber.

Party pick ahead for new Bronx Surrogate
NY Daily News

Thanks to a term limit and possible misconduct, the plum Bronx Surrogate's job is soon coming up for grabs.
Surrogate Lee Holzman is due to step down when his 12-year-term expires Dec. 31, 2012. Maybe even sooner.
Earlier this month, the State Commission on Judicial Conduct recommended disciplinary action against him for allegedly appointing lawyer cronies, chief among them his main campaign fund-raiser Michael Lippman, who milked the estates of Bronxites who died without wills. It could mean anything from a slap on the wrist to dismissal for Holzman.(pictured below)

Surrogates traditionally favor appointing lawyers with connections to the ruling political party.
And we hear there already may be some behind-the-scenes wrangling over whether an African-American or Hispanic jurist will get the party's nod for the prize job.
Holzman's replacement for the $136,700 a year job - chosen by party boss Carl Heastie "in consultation with the party leadership" - will run in the September primary next year.
It also doesn't preclude other candidates gathering petitions to run against the party pick in the primary.
To keep the judicial job list interesting, another seat will open up when Bronx State Supreme Court Justice Yvonne Gonzalez retires at the end of this year.
Her term expires Dec. 31, 2012, so Gov. Cuomo is expected to appoint someone to fill out her term, with the Bronx Democratic Party's Judicial Convention in the fall of 2012 voting on a permanent replacement to be on the ballot line in the November general election.
In both cases, the party's non-partisan judicial screening panel will interview candidates and approve or disapprove them.
Stay tuned....

Conduct Panel Accuses Surrogate of Inaction in P.A. Counsel Scandal
Daniel Wise, New York Law Journal, 09-13-2011

The New York State Commission on Judicial Conduct has accused Bronx Surrogate Lee L. Holzman of failing to turn in to the authorities a former counsel to the Bronx public administrator after learning the attorney, Michael Lippman,(see picture below)  had received payments exceeding those authorized by an oversight commission headed by the surrogate.

The charges became public when Surrogate Holzman waived his right yesterday to have the commission proceedings against him remain confidential.

Read documents in the commission proceedings.

The commission issued charges on Jan. 4, 2011. But while the first witness was on the stand yesterday, a judge in Manhattan ordered the hearing temporarily stayed.
In its formal complaint, the commission charged Surrogate Holzman with misapplying guidelines for the payment of counsel to the public administrator in a case linked to Mr. Lippman, who was indicted in 2010 for collecting $300,000 in excessive fees (NYLJ, July 9, 2010).
The commission's complaint charged that in 2005-06 when Surrogate Holzman became aware that Mr. Lippman had received fees in excess of the 2002 guidelines, the judge failed to report Mr. Lippman to either law enforcement or professional disciplinary authorities.
Surrogate Holzman similarly failed to report payments that had been advanced to Mr. Lippman by a former Bronx public administrator, according to the complaint.
Surrogate Holzman's lawyer, David Godosky fired back that Surrogate Holzman "took immediate action" in late 2005 and early 2006 as soon as he learned of any misconduct in the Public Administrator's Office.
Ruben Diaz Jr., Betsy Combier, Robert Johnson

"Investigations by the Bronx District Attorney's Office, the New York City Department of Investigations and the FBI all concluded that the problem was in the Public Administrator's Office, not the Surrogate's Court," said Mr. Godosky, of Godosky & Gentile. Only the conduct commission has taken the position that Surrogate Holzman is "somehow responsible under a theory of respondeat superior," he added.
Surrogate Holzman became the chairman of the Administrative Board of the Offices of the Public Administrators in 2002, the year the body formulated guidelines for the payment of counsel to public administrators. The guidelines, which are not mandatory, set compensation at 6 percent of the first $750,000 at issue in an estate case, with the percentage declining in increments to 1.5 percent for amounts exceeding $5 million.
Surrogate Holzman remained the board's chairman through 2009 and continues to serve as a member.
The Surrogate's Court in each county appoints both the public administrator and his or her counsel. Public administrators are responsible for distributing the assets of persons who die without a will and who have no close relative to wind up their affairs.
Mr. Lippman was indicted in 2010 for receiving a total of $300,000 in excessive fees in five cases. Also, according to the conduct commission complaint, he received improper advances on his fees from a former public administrator, Esther Rodriguez. Those advances had not been approved by Surrogate Holzman.
The commission listed nearly 50 cases in which Mr. Lippman had received either excessive fees or advances on his earnings.
After learning of the improper payments in 2006, Surrogate Holzman fired both Ms. Rodriguez and Mr. Lippman, according to the commission's complaint, but allowed Mr. Lippman to continue working with the understanding that any fees he earned would be applied against the excessive or advance fees already paid to him.
A new public administrator and counsel were appointed, and during the next three years, Mr. Lippman, though no longer counsel, continued to work on 20 percent of the new cases that came into the office, said John J. Reddy Jr., who replaced the interim counsel in 2009.
Any amounts Mr. Lippman earned on those accounts were also used to replenish estates on which Mr. Lippman had received improper payments from Ms. Rodriguez, Mr. Reddy said.
With Mr. Reddy's arrival, Mr. Lippman's work on the Bronx office's cases ceased. At the time, according to Mr. Reddy, about 300 cases remained in which either overpayments or advances had not been worked off by Mr. Lippman.
Now that number is down to 32, he said.
Mr. Reddy said that fees generated by work that he or his firm, Reddy Levy & Ziffer, performed on Mr. Lippman's cases are used to replenish the estates that paid the excessive or advance fees to Mr. Lippman. Mr. Reddy said that to recover his own fees, he would have to sue Mr. Lippman for hundreds of thousands of dollars.
Stay Issued
Manhattan Justice Barbara Jaffe stayed the commission hearing yesterday morning while Ms. Rodriguez, the first witness, was on the stand.
Last Thursday Justice Jaffe had denied Surrogate Holzman's Article 78 petition for a stay to enable him to secure testimony from Mr. Lippman, who is certain to invoke his right to protection against self-incrimination until the criminal case is over. The criminal case, brought by the Bronx District Attorney's office, is still in the motion phase.
Surrogate Holzman also asked to delay the commission's hearing until the completion of Mr. Lippman's criminal case so the judge could obtain records compiled by law enforcement agencies in conjunction with the prosecution.
Yesterday, however, Justice Jaffe granted Surrogate Holzman's motion to reargue the Article 78 and stayed the commission hearing until the next court date, Sept. 21.

Daniel Wise can be contacted at

Commission on Judicial Conduct must send Lee Holzman packing
NY Daily News Editorials,
Saturday, July 19th 2008,

Any judge who lets cronies mishandle $20 million belonging to the heirs of the dead deserves to be kicked off the bench.
Any judge who puts taxpayers on the hook for $20 million by letting pals wrongly invest people's money deserves to be kicked off the bench.
Any judge who awards large fees to a buddy without requiring the buddy to first explain what he did to earn the money deserves to be kicked off the bench.
Bronx Surrogate Judge Lee Holzman must go.
The state Commission on Judicial Conduct must open a probe leading to Holzman's removal from office.
The facts are not in dispute. The whole outrageous story is detailed in Sunday's Daily News by reporter Nancie L. Katz. The cast of characters is a sorry lot.
Top billing goes to Holzman, a creature of the Bronx Democratic organization who presides over the estates of the dead. The post is coveted among machine lawyers because the surrogate dispenses lucrative assignments to attorneys and accountants.
The surrogate also appoints the public administrator, who handles estates that have no wills. And the surrogate names a counsel, a private lawyer who gets fees for services.
It has long been a swamp, but some laws and rules are aimed at keeping the muck to a minimum. No matter. Holzman, his former and present public administrators, Esther Rodriguez and John Raniolo, and counsel Michael Lippman went out of bounds.
For starters, Rodriguez and Raniolo were supposed to put inheritance money in conservative investments like treasury bonds. Instead, they put $20 million from 37 estates into what are known as auction-rate securities.
These are like bonds, only riskier. And the market for them froze with the subprime crisis. So Holzman & Co. can't redeem them. Controller William Thompson has determined the city must cover the $20 million and take the securities in return. Let's hope trading rebounds someday.
Holzman was ultimately responsible for approving the investments. His claim that he "had no knowledge [of the investments] until there was a problem" condemns him.
The result: Holzman's crew has denied the heirs access to the money - while doing well for themselves. Lippman pocketed $1.9 million in fees. And, for quite some time, Holzman signed off on payments before Lippman documented his charges.
Boot him. Case closed.

Wednesday, September 21, 2011

Matter of Koeppel, Summary Judgment Standards and Review of Attorney-Client Agreements

Matter of Koeppel

2011 NY Slip Op 51709(U)
Judge Keistin Booth Glen
Decided on January 19, 2011
Sur Ct, New York County
Glen, J.

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on January 19, 2011
Sur Ct, New York County

In the Matter of the Petition for Judicial Settlement of the Account of ROBERTA L. KOEPPEL and ALEXANDRA KOEPPEL as Executors of the Will of Robert A. Koeppel, Deceased.

For Richenthal, Abrams and Moss and the Law Offices of Craig Avedisian P.C.:
Law Offices of Craig Avedisian P.C. and Schoeman Updike and Kaufman LLP
For William Koeppel: Law Offices of Walter Jennings P.C.
Kristin Booth Glen, J.

The law firm of Richenthal Abrams and Moss (the "Richenthal Firm") and the Law Offices of Craig Avedisian PC ("Avedisian)" (together, the "Firms") seek to determine and enforce charging liens pursuant to section 475 of the Judiciary Law.[FN1] The liens would secure fees claimed by the Firms for legal services to William W. Koeppel ("William") under a retainer agreement dated July 10, 2006 (the "2006 Retainer"). The Firms represented William in a decade-long dispute among several Koeppel family members, involving various real estate holdings and family trusts. The dispute had been punctuated by at least two abortive settlements, the latter one in 2004. On January 3, 2008, however, the Koeppels' internecine battles ended in a global settlement placed on the record in open court and then further memorialized in a written stipulation implemented by a closing on August 27-29, 2008. The liens now claimed by the Firms relate to William's share of the proceeds of that settlement.

Discovery having concluded, the Firms and William have cross-moved for partial summary judgment. The issues raised on these motions involve the validity of the 2006 Retainer, its allegedly wrongful procurement, and, if it is valid, the meaning of several of its terms and the extent (if any) to which William's obligations under it are subject to conditions that have not been [*2]satisfied. The Firms acknowledge that the sums to which they are entitled for work resulting in the 2008 settlement cannot be fully determined without a hearing. William for his part asserts that a hearing is needed to determine the Firms' fees for hourly services in the litigation preceding that settlement.


The 2006 Retainer was drafted by the Richenthal Firm (with which Avedisian was then of counsel[FN2]) and executed on its letterhead. As described below, the Retainer provides for fees in respect of both settlement-related work and litigation-related work.

Settlement-related work gives rise to two types of fees: a flat fee and a performance fee, both contingent upon the effectuation of a settlement. Settlement itself is defined as "a settlement among substantially all of the descendants of Ruth and Harry Koeppel and the trusts and estates thereof."

In relevant part, the provisions governing the flat fee are as follows:

"The amount of the flat fee will vary only in relation to the time an agreement is reached. For the purposes of this agreement, the time the agreement is reached is the date a settlement agreement (or any ancillary agreement) is signed by any person firm or entity that will be a signatory to the agreement (or any ancillary agreement), whether or not the person, firm or entity is a litigant. The flat fee will be in the following amounts over the following dates:

1.Before September 30, 2006 - $850,000
2.From October 1, 2006 to November 19, 2006 - Amount reduced $2,000/day
3.From November 19, 2006 to [May 1, 2007] ... - $750,000 ...
4.From [May 1, 2007] to the end of this Agreement - $650,000."As for the performance fee, the provisions governing it are in relevant part as follows:

"The performance fee will be calculated based on an increase in gross value over the agreement in principle reached in 2004 (the "2004 Deal") with Clypeta Realty Co. substituted for Whitehouse Estates, Inc. less $6,000,000 on account of the replacement of the brick facade. The valuations used will be based on Mr. Von Ancken's 2004 appraisals adjusted only for mortgages to third parties....

"Substituting Clypeta for Whitehouse Estates, Inc. less $6,000,000, the gross value above which a percentage will be earned is $43,640,000 (the Trigger Amount') ...." [*3]

Under a rider to the letterhead, the performance fee is the product of (1) the amount, if any, by which the settlement proceeds to William exceed (i.e., represent "an increase in value" over) the Trigger Amount and (2) a percentage ("x") determinable as follows:

"If increase in value [over the Trigger amount] is:

$0 - $5,000,000, x = 3%
$5,000,001 - $10,000,000, x = 5%
$10,000,001, x = 8%"
For work conducted in litigation, as opposed to settlement negotiation, the 2006 Retainer provides for compensation on the basis of billable hours. On that basis, the Richenthal Firm claims a lien in the amount of $298,955.55 as of January 19, 2010 (plus interest). On the same basis, the Avedisian Firm seeks hourly fees and expenses of $4,533.70 (plus interest). For work conducted in settlement negotiation, Avedisian also claims a flat fee of at least $650,000 (plus interest) and a performance fee of $6,218,926.82 (plus interest).

For his part, William denies that there is any valid retainer agreement with either firm. As discussed below, he raises several defenses to the lien sought by each as well as one counterclaim against both of the Firms.

If the 2006 Retainer is ruled to be valid, the parties also ask the court to resolve disputes concerning the meaning of certain of its terms.

Notwithstanding the parties' sharp disagreement about the immediate circumstances in which the 2006 Retainer was negotiated, the facts leading to such negotiations are essentially undisputed, and, to the extent relevant here, they are traced below.


Dissension among three generations of Koeppels over the considerable family wealth is at the root of the present proceeding. In the first generation were Harry, who died in March 1983, and his wife Ruth, who died in November 2000. In the second generation were the couple's two children, Robert, who died in October 1996 (i.e., predeceasing his mother by more than four years) and Nancy, who is still living.

Harry's will divided his estate between a trust ("Harry's Marital Trust") and an outright disposition to Ruth. Ruth in turn placed the assets that she had received outright from Harry's estate, including interests in various real estate entities, into successive grantor trusts. Until 1998, the trusts operated under provisions paralleling the provisions of Harry's Marital Trust, with the remainders evenly divided between the issue of Robert (William and his sisters Alexandra and Caroline) and Nancy (her children, David, Steven, and Elizabeth).

Robert left a large estate, including interests in the thirteen closely held companies in which the Koeppel real estate was held. Under Robert's will, probated on November 13, 1996, these interests passed to a marital trust for the lifetime benefit of his widow, Roberta ("Robert's Marital Trust"). The portion of the remainder that included majority interests in 11 of the closely held companies was to pass to William, with Robert's interests in the two additional family businesses to be divided between Alexandra and Caroline. [*4]

William had a strained relationship with his father and continues to have a strained relationship with Roberta. She, however, serves with Alexandra as co-executor and co-trustee under Robert's will. The intra-family litigation began after Robert's death when William sued his mother and sister as executors of Robert's estate, asserting, inter alia, claims of ownership to Robert's interests in the family businesses. Those claims went to trial before then Surrogate Preminger and were resolved in a decision rendered in early 2001 (Matter of Koeppel, NYLJ, January 8, 2001, at 26, col 6 [Sur Ct New York County]). Shortly thereafter, the executors petitioned to settle an interim accounting (for the period October 23, 1996, through September 1, 2001), in which William filed objections.

Additional issues arose with respect to Ruth's grantor trust, first established in 1983 and then replaced in 1993 (the "1993 Grantor Trust"). After Robert died, Ruth began to have more contact with Nancy, from whom she had been estranged for many years. By February 1998, Ruth had moved into Nancy's home in Florida, and two weeks after Ruth's relocation Ruth executed instruments revoking the 1993 Grantor Trust and replacing it with another trust (the "1998 Grantor Trust"). The dispositive provisions of the 1998 Grantor Trust differed dramatically from those of the 1983 and 1993 trusts. Rather than benefiting the issue of both of Ruth's children, the 1998 trust instrument instead left one half of the remainder at Ruth's death to Nancy outright and the balance in further trust for Nancy's primary benefit, giving Nancy the right to appoint the principal by her will. The 1998 trust instrument named Nancy and her son David as trustees (as opposed to the earlier instruments, under which Robert had served as trustee, followed by Alexandra as his nominated successor).

Shortly after the 1998 trust instrument was executed, Nancy and David as fiduciaries sought an accounting by Alexandra as trustee under the 1993 Grantor Trust and an order directing that she turn over the principal of that trust to them as trustees of the 1998 Grantor Trust. Alexandra responded by challenging the validity of the purported revocation and replacement of the 1993 Grantor Trust, maintaining that Ruth had lacked capacity to take such steps and that, in the alternative, she had been unduly influenced to do so.

At or about the same time as the 1998 trust instrument was drafted, Ruth changed her will and also purportedly tried to install Nancy and David as successor trustees of Harry's Marital Trust. After Ruth's death almost three years later, Nancy offered Ruth's will for probate in Florida, over Alexandra's objections.

Various proceedings, involving numerous motions, followed. Thus, after Nancy and David petitioned to compel an accounting for Harry's Marital Trust, Roberta and Alexandra voluntarily accounted for that trust as well as for the 1993 Grantor Trust, in proceedings in which Nancy and David filed objections. The issues in these accountings were referred to the Hon. Alice Daniels to hear and report. Nancy challenged, inter alia, the validity of a 1994 transfer to Robert of Ruth's 55% interest in a property known as "Clypeta"; questioned the trustees' valuations in relation to the real estate entities; objected to the size of management fees paid by the trustees in connection with the real estate interests held in the trusts; and further objected to the trustees' failure to turn over assets to Nancy, individually, and to her and David as trustees of the 1998 Grantor Trust.

During the hearing before Special Referee Daniels, the fiduciaries of Robert's and Ruth's [*5]respective estates entered into a settlement term sheet dated October 16, 2001, which purported to embody a global settlement of issues regarding those estates ("2001 Term Sheet"), including a Federal RICO action commenced by Nancy in the Federal District Court for the Southern District of New York and the Florida proceeding for probate of Ruth's 1998 will. Eventually, however, the term sheet, expressly conditioned upon court approval, itself became a subject of litigation, Nancy unsuccessfully seeking its approval in this court, in the Florida probate court, and in federal courts in Florida and New York.

In August 2002, Roberta and Alexandra filed an Intermediate Accounting as executors of Robert's estate. William filed objections in that proceeding, claiming, inter alia, that the fiduciaries had inflated estate income to benefit Roberta individually, leaving his remainder interest so encumbered as to be essentially worthless. In a separate proceeding against Robert's executors, William also sought to enforce certain rights arising from his 30.98% interest in one of the real estate entities, Whitehouse Estates, Inc., as well as his alleged ownership of other property that the executors claimed were part of Robert's estate.

In November 2003, the issues raised in the executors' Intermediate Accounting, as well as those raised in William's proceeding against Robert's executors, were referred to the Hon. Israel Rubin to hear and report, the most significant of which were (1) whether the 2001 Term Sheet should be approved; (2) the proper characterization and treatment of the challenged inter-company balances; and (3) the ownership of the Clypeta entity. The 2001 Term Sheet had allocated Clypeta to Nancy or to entities under her control, a position that William vigorously opposed.

Special Referee Rubin took testimony and evidence over twenty-four days from July 2004 through April 2005. His report, which this court confirmed in its entirety, recommended that the 2001 Term Sheet not be approved, that the Clypeta entity be ruled an asset wholly owned by Robert's estate (and not partially owned by Ruth's Grantor Trust), and that the inter-company balance issues be resolved by an independent accountant.

On December 1, 2004, while the evidence was still being taken by Special Referee Rubin, the parties reached a tentative global settlement. William's share in the 2004 tentative settlement is the basis for the $43 million "Trigger Amount" to which the 2006 Retainer refers. The 2004 tentative settlement, which called for acceleration of William's remainder interest in Robert's Marital Trust, was never consummated. Instead, in the wake of Referee Rubin's confirmed rulings, litigation among the various family members continued. By the spring of 2006, however, William apparently had decided that his fee arrangements with his lawyers could not also continue.


On May 30, 2006, William met with Avedesian to complain that he was "asset rich, cash poor." According to William, he had by then paid the Richenthal firm almost 3/4 of a million dollars; such payments, he avers, had required him to mortgage his New York home and further [*6]borrow against other assets (a West Palm Beach apartment, yacht, and businesses).[FN3] Client and counsel were in agreement that William's finances pointed to the wisdom of a contingency arrangement. Over the next three weeks, Avedisian negotiated the new retainer with William's accountant, Rifkin. As noted in the 2006 Retainer itself, William also consulted with an independent attorney during these fee negotiations.[FN4] The proposed retainer was sent to William on July 10, 2006. On July 12, William came to Avedisian's office to sign the retainer agreement and various security agreements.

For present purposes, the history of subsequent settlement negotiations and court appearances and conferences can be pared down to the following. By the summer of 2007, another settlement was in the offing between Robert's estate and Ruth's estate, but to the exclusion of William. However, in October of 2007, counsel for the fiduciaries of Robert's estate approached William with an idea for including him in the settlement, with interests in Whitehouse Estates as the centerpiece of a possible deal for him.

On October 11, 2007, Arthur Richenthal, one of the Richenthal Firm partners, died. Avedisian nonetheless continued to work on behalf of William, including work on a summary judgment motion in the accounting for Ruth's estate. The court denied that motion, and a trial was scheduled for the end of October 2007 and then rescheduled to January 3, 2008. On December 28, 2007, however, the parties called the court to report that they had resolved all outstanding disputes. As indicated above, the global settlement was placed on the record and implemented by a closing at the end of August 2008.


Summary determination of a claim or defense is appropriate only where the party seeking it makes a prima facie showing of entitlement to such determination as a matter of law (Andre v Pomeroy, 35 NY2d 361, 364 [1974]; see CPLR § 3212). If such showing is made, the burden shifts to the opposing party to produce admissible evidence establishing that a material issue of fact nevertheless remains open, requiring trial (Zuckerman v City of New York, 49 NY2d 557, 562-563 [1980]).

In addressing the particular claims, defenses, and counterclaim raised here, the court must be cognizant of certain general principles that underlie the attorney-client relationship. Given the fiduciary nature of that relationship, fee agreements between attorney and client are "affected by [*7]lofty principles different from those applicable to commonplace commercial contracts" (Matter of Cooperman, 83 NY2d 465, 472 [1994]). Accordingly, as a matter of public policy, courts must carefully scrutinize such fee arrangements (Bizar & Martin v U.S. Ice Cream Corp., 228 AD2d 588 [2d Dept 1996], citing Jacobson v Sassower, 66 NY2d 991, 993 (1985) and Shaw v Manufacturers Hanover Trust Co., 68 NY2d 172, 176 [1986]). A client must be "fully informed of all relevant facts and the basis of the fee charges, especially in contingent fee arrangements" (Shaw, 68 NY2d at 176). The burden is on the attorneys who drafted the fee agreement to show that it is "fair, reasonable, and fully known and understood by their clients" (id.). Moreover, as a general contract principle, where a term of the agreement is ambiguous, that is, reasonably susceptible of more than one interpretation, that term must be construed in favor of the non-drafting client (id). Where there is no ambiguity, however, the client does not have such an advantage; the instrument must simply be read in accordance with its plain terms. Furthermore, in a dispute between lawyer and client, the latter is not to be perceived as always the former's victim. Indeed, the charging lien itself is the law's device for shielding a lawyer from the possible knavery or overreaching of the client (Matter of Jaffe, 162 Misc 877 [Sur Ct Kings County 1937]; see Demov, Morris, Levin & Shein v Glantz, 53 NY2d 553, 558 [1981]).


As his first defense, William maintains that the 2006 Retainer is the product of duress and is thus unenforceable. William alleges that he had threatened to fire Avedisian in June 2006 and that Avedisian in turn threatened to retaliate either by withholding documents from and cooperation with new counsel or by dropping documents at William's doorstep. According to William, Avedisian also threatened to reveal to others involved in the Koeppel family proceedings that William was destitute, could not afford to continue to litigate, and would therefore be obliged to accept any settlement terms. Such threats, William maintains, added up to economic duress.

Avedisian vigorously denies such allegations. He claims that William himself suggested the contingency-fee arrangement, given his liquidity problems at the time, and that William is now simply attempting to evade payment for legal services from which he gained major benefits. Avedisian characterizes the 2006 Retainer as the product of intensive negotiations with William and his accountant, Noah Rifkin, as entirely free agents. Indeed, Avedisian maintains that at all times during the relevant period William had enjoyed a very significant net worth, but had simply chosen to devote his liquid assets to a lavish lifestyle rather than to legal fees.

To repudiate an agreement on the ground of duress, a party to it must show both (1) that he was wrongfully threatened by the other party and (2) that his will was thereby overpowered, resulting in his executing an agreement that he would otherwise have rebuffed (Austin Instr., Inc. v Loral Corp., 29 NY2d 124, 130 [1971]). But even if it is assumed arguendo that Avedisian in fact wrongfully threatened to betray his client's confidences (despite the risk to his law license that his doing so would pose), William's case for duress would still fall short since he has failed [*8]to establish that he had no choice but to accede to Avedisian's contractual demands.[FN5]

First, the law is clear that financial pressure and arguably unequal bargaining power do not per se add up to a lack of free will (Orix Credit Alliance, Inc. v Hanover, 182 AD2d 419 [1st Dept 1992]; see Gubitz v Security Mut. Life Ins. Co. of New York, 262 AD2d 451 [2d Dept 1999]; Edison Stone Corp. v 42d St. Dev. Corp., 145 AD2d 249 [1st Dept 1989]). Second, William does not even attempt to provide factual support for his assertion that it was "virtually impossible" to obtain the services of another law firm at the time.

What is clear is that William's financial position in the spring of 2006 was direly illiquid at least by his own estimate. But, given William's then assets and the various undisputed elements of his then life-style, that estimate was, to some extent if not entirely, "self-imposed ... and subjective," rather than, as it would have to be, objectively "reasonable" (Austin Instr., Inc. v Loral Corp., supra, at 131). In any event, William's hands were hardly tied under the circumstances, since there were clear alternatives to the fee deal offered by the Firms. William could still have proceeded toward litigation or settlement, if not likely pro se, then with the assistance of the Firms' existing co-counsel or, indeed, with some other firm as new counsel (as he himself apparently acknowledges he had threatened to do). Indeed, the choice of any of these options would have neutralized the purported threat by Avedisian to disclose that William could not afford to continue to fight for his position in the family litigation. In other words, William had it in his power to belie any such disclosure simply by continuing to press his interests through the services of his then co-counsel or another firm.

Nor can William be heard to suggest that a substitution of new counsel would have presented itself as a useless alternative. Substitution is a common and legitimate incident of litigation, and not necessarily at the early stage of proceedings or disputes. To be sure, substitutions usually occasion added delay in bringing new counsel up to speed, but the courts make accommodations for such delay where and to the extent appropriate. Substitution may also appear less than ideal to the client, who in the end may decide that the cost of a premium contingency or other fee arrangement is warranted to keep existing, experienced counsel at his side. But the point nonetheless remains that the client who must decide between a novation of his fee arrangement with his existing counsel and a different fee arrangement with a substitute is hardly left "without a choice to speak of."

Furthermore, the terms of the 2006 Retainer (the product of weeks-long discussions with William and his accountant) were hardly so one-sided as to indicate that William would not have accepted them voluntarily. This is not to ignore that, in assessing attorney-client agreements, [*9]courts must be alert to such contracts' inherent potential for overreaching. But there is nothing in the record here to warrant the conclusion that the fees prescribed by the Retainer were either onerous or unconscionable. Certainly, the fact of a contingency arrangement, even one with the prospect of a multi-million-dollar fee, does not per se invalidate the agreement. Thus, as the Court of Appeals has recently had occasion to observe,

"In general, agreements entered into between competent adults, where there is no deception or overreaching in their making, should be enforcedas written. Accordingly, the power to invalidate fee agreements with hindsight should be exercised only with great caution. It is not unconscionable for an attorney to recover much more than he or she could possibly have earned at an hourly rate. Indeed, the contingency system cannot work if lawyers do not sometimes get very lucrative fees, for that is what makes them willing to take the risk — a risk that often becomes reality — that they will do much work and earn nothing. If courts become too preoccupied with the ratio of fees to hours, contingency fee lawyers may run up hours just to justify their fees, or may lose interest in getting the largest possible recoveries for their clients" (Lawrence v Miller, 11 NY3d 588, 596, at n 4 [2008], affirming 48 AD3d 1 [1st Dept 2007]).[FN6]

Indeed, documents that are part of the record show that other parties to the Koeppel family litigation paid their respective lawyers fees in the several millions of dollars. As for William's case in particular, it is clear that he could not or would not continue to pay for representation in settlement negotiations on a cash basis. Under such circumstance, it was understandable that he would choose a contingency arrangement. It was also understandable that he would prefer to make such an arrangement with Avedisian and his then Firm, given Avedisian's decade-long familiarity with the myriad issues involved, even if obliged to pay a premium for such advantage.

Moreover, a defense of economic distress also requires an immediate disavowal of the contract, not the wait-and-see approach adopted by William. As explained by the Second Circuit:

"The requirement that the party claiming duress disclaim the contract or release about which he is complaining promptly or be held to have forfeited his right to do so protects the stability and reliability of such agreements by denying the weaker party the heads I win, tails you lose' option of waiting to see how the arrangement works out and then deciding whether to seek to undo it . . . . [T]he requirement of prompt disavowal after execution is fair to the disadvantaged party, who will ordinarily know at the time he executes the instrument that he is being economically coerced. He will therefore be able to disclaim the instrument [*10]immediately if he was forced into it by economic duress and wishes to avoid its effect" (VKK Corp. v National Football League, 244 F3d 114, 123-24 [2d Cir 2001]; accord Leader v Dinkler Management Corp., 26 AD2d 683 [2d Dept 1966], aff'd 20 NY2d 393 [1967]; Port Chester Elec. Const. Corp. v Hastings Terraces, 284 App Div 966, 966-67 [2d Dept 1954]).

Despite having a net worth of around $6 million, receiving dividends from Whitehouse Estates of $442,680 in August 2006 and borrowing at least $2,174,503 against his assets from May 2006 through August 2008 (and purchasing a Rolls Royce, albeit pre-owned, in the middle of September 2006), William never sought to disavow the Retainer on the ground of duress.

Furthermore, even after the Firms commenced the current proceeding in August 2008, William's initial opposing affidavits did not raise the issue of duress. It was not until he filed his pre-hearing brief at the end of October 2008 that William alluded to the duress issue, which was subsequently raised in his answer. William's failure to disavow the contract promptly requires the conclusion that he would have "forfeited his right" to claim duress even if the retainer had been so procured.

William's affirmative defense that the 2006 Retainer is invalid as the product of duress is therefore dismissed.


William argues that Avedesian's compensation must be limited to quantum meruit in that the 2006 Retainer was with the Richenthal Firm, and that law partnership dissolved by operation of law upon the death of partner Arthur Richenthal, on October 11, 2007.[FN7] William points out [*11]that the Retainer does not contain provisions for its continued effectiveness post-dissolution or for any assignability to another firm. Indeed, William maintains that, as a personal services contract, the Retainer could not have been made assignable and that it therefore cannot now serve as the basis for Avedisian's claim to a charging lien. Instead, according to William, Avedisian could not purport to represent William under the 2006 Retainer after the Richenthal Firm dissolved or, at the latest, after February 2008, when Avedisian filed a change of attorneys from the Richtenthal Firm to his own. According to William, in the absence of his own separate retainer, Avedisian has no basis for his claim to a performance fee.

While William is technically correct as to provisions of partnership law, the enforceability of an attorney retainer, including its transfer to another law firm or entity, does not depend on partnership law. The case of Goldston v Bandwidth Tech. Corp. (52 AD3d 360 [1st Dept 2008]) makes the point. There the Appellate Division addressed a claim that "the dissolution of the [attorney law firm] by operation of law upon the departure of [the main attorney providing work to the client] constitute[d] a breach of the retainer agreement" (id. at 365), making it unenforceable. The court emphasized that "a change in the organization of a business does not, without more, give rise to a claim by a party contracting with that business even if the reorganization adversely affects the party's interest" (id. at 366 [citations omitted]). The question there, as here, is whether the client clearly recognized that the attorney was continuing the prior representation. Here, the evidence is indisputable that William considered Avedesian his attorney in these proceedings,[FN8] and he was not discharged by William until well after this charging lien proceeding was commenced.

A similar rule has been recognized even in the matrimonial context where the policing of retainer agreements by regulation is more stringent (see Gross v Gross, 36 AD3d 318 [2d Dept 2006] [no new retainer required between spouse and her attorney following dissolution of attorneys partnership where same attorney was doing the same work for the client — interpreting 22 NYCRR § 1400.3]; Sheresky, Aronson & Mayefsky, LLP v Linder, NYLJ, Oct. 22, 1998, at 30, col 3 [Sup Ct NY County][same]). In response to this authority, William cites only an unreported Ohio case primarily involving fee-splitting between different attorneys, which does not support William's position (see Korey v Gross, 2004 WL 2260685, No. 2002 CA 00438 [5th Dist. Stark County, Ohio Court of Appeals 2004]).

The defenses that the 2006 Retainer was not assignable to Avedesian and that the [*12]settlement did not occur while the retainer was still in effect are dismissed.


As yet another defense, William contends that his obligation to pay fees under the 2006 Retainer was subject to preconditions that have not been satisfied. In this connection, he argues that the Retainer required (1) that his remainder interest in Robert's Marital Trust be accelerated and the trust assets be disbursed, as contemplated in principle under the 2004 agreement; (2) that he receive in settlement the specific properties whose values were the basis of the "Trigger Amount"; and (3) that there be a closing, which William contends has not yet occurred.

None of these conditions is found in the text of the 2006 Retainer; moreover, as to the purported failure to close, this court has previously found to the contrary (Matter of Koeppel, NYLJ, Nov. 25, 2009, at 1, col 3 [Sur Ct, New York County]).

The Retainer expressly contemplates a "(1) contingency arrangement for a settlement among substantially all of the descendants of Ruth and Harry Koeppel and the trusts and the estates thereof; (2) fees for litigation work; (3) out of pocket expenses; and (4) security in respect of your fees and expenses." There is nothing in the instrument that expressly or impliedly conditions the contingency fee on any specific settlement result. Although William claims to have understood that there was such a condition, the court cannot accept his invitation to import into the agreement terms that were not there when the parties executed it. This is not to overlook that the Retainer's performance fee provisions refer to four specified real estate entities and arrive at the Trigger Amount by adding the total values of such entities. But it is clear that such provisions merely establish a baseline against which to measure the "increase in gross value" that is one of the two factors in the fee calculation. The provisions not only are bare of language to suggest the purported condition, but also, are expressed in terms that affirmatively suggest quite the contrary. Thus, if the Retainer had contemplated a performance fee only on condition that William receive the four specified properties as part of the settlement ultimately secured for him by the Firms, the appraised values of those properties would have been irrelevant: the performance fee would simply have been calculable as a percentage of the value of any additional interest that was ultimately secured for him in settlement.

As for William's contention that the closing has not occurred, that proposition was resolved against William in a decision of this court addressing the enforcement of William's side agreement with Avedisian on August 20, 2008, concerning a monthly escrow payment to secure the Firms' respective charging liens (Matter of Koeppel, NYLJ, Nov. 12, 2009, at 31, col 6 [Sur Ct New York County]). In that decision, this court ruled that the closing had in fact occurred and had thus triggered William's obligation to begin the payments provided for under the side agreement. There is certainly no legal basis to reargue that decision in the context of this one.

For the foregoing reasons, William's defenses alleging unsatisfied conditions are dismissed.


The Firms claim that the hourly billing for litigation work is properly the subject of a summary judgment motion as an account stated (Tunick v Shaw, 45 AD3d 145 [1st Dept 2007]). William on the other hand argues that he regularly disputed the bills for litigation work and that [*13]no account can therefore be stated in relation to such billing. An account stated is merely a contract express or implied as to the amount of compensation due for services rendered (Parker, Chapin, Flattau and Klimpl v Daelen Corp., 59 AD2d 375 [1st Dept 1977]; see Rodkinson v Haecker, 248 NY 480 [1928]). The issue here is whether there is evidence of assent by William to the account as stated. Assent may be implied from actions taken or by the client's silence after receipt of the invoices in question (see Shea & Gould v Burr, 194 AD2d 369 [1st Dept 1993]; Ruskin, Moscou, Evans & Faltichek, P.C. v Beal, 212 AD2d 687 [2d Dept 1995]).[FN9] William alleges that he raised oral objections to the bills that were sent from the Richenthal Firm almost monthly during June 2006 through August 2008 and from the Avedisian Firm in February 2008 and in August 2008.[FN10] While an oral protest may in certain circumstances create a question of fact as to assent, the law is clear that the client must substantiate the protest that he alleges by making specific, rather than conclusory, allegations detailing when and to whom the alleged oral objections were made and the substance of the alleged conversations (Fink, Weinberger, Fredman, Berman & Lowell, P.C. v Petrides, 80 AD2d 781 [1st Dept 1981]). "Bare assertion of oral protest" is insufficient (Darby & Darby P.C. v VSI International, Inc., 268 AD2d 270, 273 [1st Dept 2000]), especially where the debtor receiving the account made partial payments on it (Parker, Chapin et al, 59 AD2d 375; Shea & Gould, 194 AD2d 369; cf. Farley v Promovision Video Displays Corp., 198 AD2d 122 [1st Dept 1993] [refusals to pay attorney's bill]). Here, William's assertions amount to nothing more than bare claims of prior oral protests, and moreover, when he had the funds, he partially paid the amounts due.[FN11]

In his affidavit in opposition, William alleges that the Firms' hourly charges "have been and are being disputed" and that this "has been conveyed to Mr. Avedisian a number of times." However, just when and what particular charges he was or is disputing, even at this late date, remain unspecified. Instead, William makes two general points regarding the invoices. First, without referring to any particular invoice, he sweepingly claims that Avedisian "overdoes [*14]things." Second, he claims that there "were innumerable incidences where Mr. Avedisian would bill [him] for normal office, paralegal, and administrative time that Mr. Avedisian, because he had no secretary or paralegal, would do." But he fails to specify even one of such "innumerable incidences"; nor does he specify when or how such an objection was made.[FN12] Such belated, conclusory and unsupported claims are insufficient to raise a question of fact on the issue of the accounts stated by the invoices sent to William by the Firms (Warshaw, Burstein, Cohen, Schlesinger & Kuh v Kessner, 214 AD2d 472 [1st Dept 1995]; Rosenman Colin Freund Lewis & Cohen v Neuman, 93 AD2d 745 [1st Dept 1983]). The Firms are therefore granted summary judgment on their claims of accounts stated for hourly litigation work.


William's last remaining defense against the petition is that the Firms have breached their ethical and fiduciary duties to William by revealing in their papers on this motion his confidences as a client, to his embarrassment and injury. These allegations are also part of the fabric of his counterclaim to the effect that Avedisian drafted the settlement documents to benefit the attorneys to whom he was answerable; that Avedisian failed to advise him that he would owe $7 million in fees upon entering into the settlement; and that Avedisian failed to wind up the closing contemplated by the settlement. But such defense and counterclaim receive little attention in William's motion papers. Nor does the record otherwise support either, on the facts or the law.

Simply put, William has failed to preserve his claims for trial by laying bare his proofs to show that the Firms disclosed client confidences that would not have been obtainable from outside sources. In any event, the Rules of Professional Conduct permit a lawyer to "reveal or use confidential information to the extent that the lawyer reasonably believes necessary . . . to defend the lawyer . . . against an accusation or wrongful conduct; or . . . to establish or collect a fee" (22 NYCRR Part 1200, Rule 1.6[b][5] [formerly DR 4-101(C)(4)]). In raising an economic duress claim, William placed his ability to pay for new counsel at issue, and the Firms were thus justified in demonstrating that William at all relevant times had significant net worth and that his liquidity problems were self-inflicted injuries incident to his high-wheeling lifestyle. There is thus no proscribed revelation of client confidences on which to rest William's claimed defense to the contract.

Beyond merely conclusory statements, William has also failed to substantiate his claim [*15]that Avedisian drafted settlement documents to benefit the Firms and their members rather than him as client. In other words, William's general sense of betrayal cannot serve as the basis for his breach of fiduciary duty claims.

Additionally, an attorney is not obliged to forecast to the client the specific size of the ultimate fee, so long as the retainer agreement gives the client notice of the basis upon which the fee is calculable. Nor is a lawyer required to inform the client that a lien in respect of the legal fee will attach to settlement proceeds (see Friedman v Park Cake, Inc., 34 AD3d 286, 286 [1st Dept 2006] ["While it undoubtedly would be preferable for counsel to identify and discuss any specific liens on a plaintiff's settlement, regardless of whether the client affirmatively asked for that information, the failure to do so is not grounds for depriving counsel of an earned legal fee.]). Finally, the claim that Avedisian failed to complete the closing is not supported by William, and, as noted above, was in any event resolved in a prior decision of the court (Matter of Koeppel, NYLJ, Nov. 12, 2009, at 31, col 6 [Sur Ct New York County]).

Consequently, the affirmative defense and counterclaim premised on purported breaches of ethical or fiduciary duties are dismissed.


The parties disagree about the meaning and application of several of the 2006 Retainer's terms. The first issue in such connection[FN13] concerns the method by which the performance fee is to be calculated under the Retainer's terms. As indicated above, the Retainer defines the size of the performance fee in terms of (a) the value of the settlement ultimately reached for William over and above the $43 million Trigger Amount (the "Increase in Value)" and (b) fixed percentages (varying in direct proportion to the magnitude of the Increase in Value), as follows:

"If the Increase in Value is:

$0 - $5,000,000, x = 3%
$5,000,001 - $10,000,000, x = 5%
$10,000,001, x = 8%"
According to Avedisian's reading, if the Increase in Value is above $10 million (as he maintains it is), then the performance fee is 8% of the Increase in Value in its entirety. By contrast, William proposes that in such circumstance the performance fee is instead to be calculated in three steps, applying 3% to the first $5 million of the Increase in Value, 5% to the next $5 million, and 8% only to the amount above $10 million. But the court does not agree that [*16]the foregoing terms lend themselves to more than one reasonable construction, much less that they support William's reading. In other words, those terms — "if the Increase in Value is $10 million, x [the applicable percentage] is 8% — unambiguously provide that the performance fee is the product of 8% and the Increase in Value where the latter exceeds $10 million. Indeed, as numerous statutes illustrate, if the terms for which William argues had been intended, that intention could very readily have been expressed (compare, e.g., SCPA § 2309[2]; 26 USC § 1; 26 USC § 2001).

Another of William's arguments is that his remainder interest in Robert's Marital Trust cannot be factored into the "Increase in Value" because such interest was property to which he would have been entitled with or without Avedisian's assistance. Notably, however, the 2006 Retainer pegs "value" not in terms of "acquisitions" for William, but only in terms of the money or money's worth that would be allocated to William as his portion of family interests that he did not already own outright. Indeed, the value of property in which William has a remainder interest was factored into William's share of the abortive 2004 settlement and thus into the base line against which the value of the Firms' settlement services is measured.

By contrast, William is correct to dispute Avedisian's claim that the 30.98% of Whitehouse Estates in William's name prior to the settlement should be considered as part of the value of William's share of the 2008 settlement. That William had such an individual interest in Whitehouse Estates was never at issue in the Koeppel family disputes and was independent of the estates and trusts that were carved up in the 2008 settlement. Accordingly, that interest cannot factor into Avedisian's performance fee under the 2006 Retainer.

The parties further disagree as to whether William's remainder interest in Robert's Marital Trust should be discounted to its present value, given Roberta's intervening life estate. In this connection, Avedisian's position— that no such discount is required—is unsupported by the language of the 2006 Retainer as drafted by Avedisian himself. Nor does Avedisian's position find support in the spirit of the agreement, which clearly contemplates that the performance fee be based upon the current value (even if only approximated by appraisals from 2004) of whatever was conceded to William in the settlement. Accordingly, William's interest in Robert's Marital Trust remainder is to be discounted as William has argued.


Each party's motion for partial summary judgment is granted in part and denied in part as set forth in the foregoing discussion. As is indicated by the foregoing, and as is acknowledged by the Firms' request for only partial summary judgment, the precise value of what William received in settlement cannot be calculated on this record and is accordingly an issue to be resolved at a hearing.

This decision constitutes the order of the court.



Dated: January 19, 2011
Footnote 1:The statute provides: "From the commencement of an action, special or other proceeding in any court ..., or the service of an answer containing a counterclaim, the attorney who appears for a party has a lien upon his client's cause of action, claim or counterclaim, which attaches to a verdict, report, determination, decision, judgment or final order in his client's favor, and the proceeds thereof in whatever hands they may come; and the lien cannot be affected by any settlement between the parties before or after judgment, final order or determination. The court upon the petition of the client or attorney may determine and enforce the lien."

Footnote 2:Avedisian had begun his representation of William in relation to Koeppel family matters in December 1996. He did so first as an associate of another firm and then, starting in 2002, as the principal of the Law Offices of Craig Avedesian, a solo practice. The services relevant to this proceeding, however, were performed after Avedisian had become "of counsel" to the Richenthal Firm.

Footnote 3:William recalls: "In effect what I was doing at the time was I was borrowing and withdrawing the equity from the assets to pay the indebtedness on those very same assets." (WWK Affidavit in Opposition, at 11).

Footnote 4:It is noted that during the entire period William was also represented by co-counsel, the firm of Kaye Scholer. On the heels of the settlement closing, that firm also brought a proceeding to enforce a charging lien, but that proceeding was immediately settled by a stipulation with William.

Footnote 5:The other threats that William attributes to Avedisian were not "wrongful." That Avedesian refused to turn over documents to new counsel unless paid in full, i.e., that he asserted a retaining lien permitted by law; that Avedisian further threatened, once paid in full, to dump the files in a box and put them on his doorstep and give no cooperation to new counsel, are merely things that Avedisian had the right to do and thus do not serve as a basis for a claim of duress (Fred Ehrlich, P.C., v Tullo, 274 AD2d 303 [1st Dept 2000]; Gerstein v 532 Broad Hollow Road Co., 75 AD2d 292, 297 [1st Dept 1980]).

Footnote 6:As past was prologue, the eventuality of a global settlement among all parties here was far from certain.

Footnote 7:William also argues that the 2006 Retainer violated 22 NYCRR § 1215.1 by not setting forth the dollar amounts to be charged on an hourly basis, as well as the amounts that the client could expect to be charged for expenses, and by failing to disclose that William might have the right to arbitrate fee disputes. The regulation in question, however, which became effective as of March 2, 2002, contains an exception for "representation where the attorney's services are of the same general kind as previously rendered to and paid for by the client" (22 NYCRR § 1215.2[b]). The original fee arrangement between William and the Firms had been established in a 2002 written retainer — executed prior to the regulation's effective date — providing for hourly billing at a certain rate and setting forth the manner in which expenses were to be handled; such terms explicitly continued to apply to litigation work under the 2006 Retainer. It may be noted that, in any event, the billing rates were clearly stated on all invoices sent to William. Moreover, by their terms the arbitration provisions of Part 137 of the Rules of the Chief Administrator do not apply to "amounts in dispute involving a sum of less than $1,000 or more than $50,000" and were thus not applicable to the 2006 Retainer, which clearly contemplated fees in excess of $50,000 (see Morgan Lewis & Bockius LLP v, Inc., 14 Misc 3d 1224(A), 836 NYS2d 486 [Sup Ct New York County 2007]).

Footnote 8:William argues that he relied on the advice and expertise of the Richenthal Firm as a whole, and there is no question that Avedisian did seek counsel, on occasion, with the attorneys of that Firm on issues related to Koeppel matters. However, there is also no question that the Firm's other attorneys were not involved on a daily basis, as Avedisian was, with the sturm und drang of the Koeppel litigations and settlement discussions, and that the principal work was done by Avedisian. As always, William was free to terminate his relationship with Avedesian and chose not to do so; under Goldston, the 2006 Retainer remained enforceable by Avedisian in such circumstance.

Footnote 9:To be a basis for an account stated, invoices must state the dollar amount of the charges, the billable hours expended, and the services rendered (Ween v Dow, 35 AD3d 58 [1st Dept 2006]). William does not contend that the invoices here were inadequately stated.

Footnote 10:William's bill of particulars describes the frequency of his protests as follows: "On or about once a week during the summer of 2007 and 2008, once a month almost every month from September through May for the years 2005 through 2008." Avedisian points out that William thus claims to have disputed invoices for months in which no invoices were in fact sent to him for litigation work. On the other hand, Avedisian concedes that there was one occasion on which William did protest an invoice, which billed for work performed at a meeting among counsel in July 2006. Although that meeting had been called to discuss settlement, it appears to have focused instead on litigation issues, and Avedisian billed William accordingly as litigation time. Nevertheless, when William objected, Avedisian voided the charges and did not bill William for the time in question.

Footnote 11:William's claim that the burden is on the Firms to show which invoices he was making partial payment on is supported by no authority or reasoning, and the court rejects it.

Footnote 12:William also complains bitterly about the excessive time spent by Avedisian in preparing a spreadsheet regarding the intercompany balances for the hearing before Referee Rubin. That work was invoiced prior to July 2006, but it was paid in full and the debt was acknowledged in writing by him on May 3, 2005. This allows no later objection on William's part that these charges were not accounts stated (Biegen v Paul K. Rooney, P.C., 269 AD2d 264 [1st Dept 2000]; Bracken & Margolin, LLP, 270 AD2d 221 [2d Dept 2000]). In his memorandum of law on his cross motion, the point is also made by William that Avedisian also did work late at night when he was more tired and less efficient, but these claims are not supported by a factual affidavit on these cross motions from one with personal knowledge and thus not considered here.

Footnote 13:Initially, the parties had disagreed about whether under the circumstances the 2006 Retainer entitled the Firms to a flat fee of $750,000 or $650,000, Avedisian contending that William had rejected a higher settlement made available to him between November 19, 2006, and May 1, 2007, William denying that such had been the case. The issue, however, appears to have been mooted by Avedisian's stipulation (in papers on this motion) to claim a flat fee of $650,000 only, with the proviso that the 2008 settlement will remain the basis for determining the issues raised by this proceeding. Assuming that such proviso will be satisfied, the court deems the flat-fee issue mooted by Avedesian's stipulation.

Friday, September 16, 2011

Perez v State of New York: Schneiderman's Office Loses, Defendants Found To Be 100% Liable

Perez v State of New York
2011 NY Slip Op 21321
Decided on August 3, 2011
Ct Cl,
Marin, J.

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and subject to revision before publication in the printed Official Reports.

Decided on August 3, 2011
Ct Cl,
Jeanette Perez, Claimant,
The State of New York, Defendant.

For Claimant:
Gary E. Divis, Esq.

For Defendant:
Eric T. Schneiderman, Attorney General
By: Suzette C. Rivera, AAG
Alan C. Marin, J.

This is the decision following the liability trial of Jeanette Perez's claim against the State of New York that while incarcerated in Bayview Correctional Facility, correction officer Peter Zawislak had sex with her on multiple occasions. Sexual encounters between a correction officer and an inmate cannot be consensual (Penal Law §130.05.3(e)).

The parties do not dispute that sex between the two occurred.[FN1] Officer Zawislak pled guilty to Rape in the Third Degree and was sentenced to one to three years imprisonment (cl exh 6). Further, Ms. Perez gave birth to a son on October 15, 2001, and Mr. Zawislak acknowledged that he was the father. The case here turns on what the facility administration could have done to prevent the statutory, non-consensual sexual encounters.

Bayview is a seven-story medium security facility located at 550 West 20th Street in Manhattan. There were inmate housing units or dorms on floors 3, 5, 6 and 7; the third floor unit [*2]was an honor dorm classified as minimum security. The facility also had an annex for work-release inmates.

Mr. Zawislak became a correction officer in 1996; his first assignment was at Sing Sing, after which he was transferred to Bedford Hills Correctional Facility, a maximum security women's prison where he met Perez. The two had no sexual relationship at Bedford Hills; Zawislak testified that, "we talked a lot, and that was about it." The officer transferred to Bayview in December of 1998, which was about the same time that Perez arrived there.

At Bayview, Ms. Perez, who was serving a term of 6 to 12 years for armed robbery, was initially placed in a regular dorm on the sixth floor that housed about 50 inmates. At the beginning of 1999, Perez was moved to the honor dorm. The honor dorm at the time housed about 10 to 12 inmates in rooms, not cells, one inmate to a room.[FN2] Each room had a door containing a window with a curtain. The inmate could keep the door open or shut, but the curtain could only be pulled over the window when the inmate was dressing. The rooms line two corridors that meet in a corner where the officer's station is situated.

The third floor also had a law library and a gym. According to the testimony of Kenneth Werbacher, Bayview's deputy superintendent for security, the library's hours were about 2 to 8 p.m., and it did not have an officer assigned there when open, and the gym was open from 3 p.m. to about 9 or 10 p.m. and was staffed with an officer. The gym officer could escort inmates up to the roof for an hour or so of exercise and fresh air. The roof is reached by taking an elevator to the 7th floor and then a flight of stairs.

Deputy Superintendent Werbacher explained that the third floor had an officer assigned for the second and third shifts, 3 p.m. to 11 p.m. and 11 p.m. to 7 a.m., but not for the day shift because the inmates were out of the dorm at their jobs. However, such assigned officer on the honor dorm was, Werbacher testified, "what they call a contingency post; meaning that, if the officer was needed for something somewhere else, they could take him off that floor and leave it unmanned. That was the only housing unit like that."

Zawislak testified that at Bayview, he had held the posts of roundsman, gym officer and honor floor officer (the contingent post). Werbacher described a roundsman's duties as, "responsible for random patrols around the facility, who also picks up count slips at count times, and responds to emergencies." The deputy superintendent agreed that the roundsman had a set of keys and, "almost full range of the facility," and was not subject to increased supervision.

Zawislak added that his duties as roundsman at Bayview also included non-inmate related chores such as gassing up the vehicles or collecting garbage at the end of the shift, which he would be directed to do by radio. It was as a roundsman that he had first had sex with Perez late in the summer of 1999 and as a roundsman in March of 2001, that Zawislak was found trying to hide in Perez's room under her bunk or bed.


Zawislak testified that at Bayview he had attended an in-service training course on working with female offenders, at which the correction officers in attendance were told that sexual contact in any form was illegal. Claimant's exhibit 3 is a form that was signed by [*3]Zawislak on May 5, 1999, in which he affirmed that he had attended, "the in-service training on working with female offenders," and that he had, "been informed of NY Penal Law 130.05, that it is a felony in New York State to engage in sexual activity with an inmate."

In addition to the scheduled training sessions, Deputy Werbacher testified that there were reminders, from time to time, at the beginning of shift lineups: "don't get involved." In addition, according to the deputy superintendent, he would on a quarterly basis give a speech to all shifts, "don't have sex with the inmates"; the correction officers were told that sex with an inmate was a Class E felony, and that they could do jail time.

A printout of the training courses taken by Zawislak lists an April 7, 1999 two-hour course, Sexual Harassment; the May 5, 1999 course, The Female Offender (four hours); an October 14, 1999 four-hour course, Inappropriate Behavior; and a June 20, 2000 four-hour course on sexual harassment. The last course (and probably the October 14, 1999 one) were given after Zawislak and Perez had begun having sex. (Def exh C). (See the 20-page course outlines entitled Avoiding Inappropriate Behavior Between Staff and Inmates and Working with Female Offenders, def exhs D and E).

In view of the aforementioned evidence and the fact that claimant's expert, Robert DeRosa, did not directly challenge same, the Court concludes that the training Zawislak received on sexual relationships between officers and inmates was sufficient and cannot serve as a basis for liability on the part of the defendant.

Supervision: Rules and Policy

As noted, the third floor dorm housed a much smaller inmate population than the other three floors with dorms. The women housed in the honor dorm were chosen through a process governed by a written procedure and criteria applied by a committee comprised of the deputy superintendent for programs, a captain, sergeant and the senior housing counselor (def exh U, p. 1).

Mr. DeRosa, at time of trial, associate director for security and risk manager at Manhattan College, explained that he had served 26 years with the New York City Department of Correction, starting as a correction officer and completing his service as chief of compliance management and special services. In the intervening years, he had been a captain, deputy warden of the Rose M. Singer Center (a 1,500 bed female detention facility), and warden of three City corrections facilities.

DeRosa criticized the roundsman's free-ranging assignment:

The ability to go through this building with keys, drawer keys from areas that are secure — the rule is security in jails is if it has a lock, lock it and if it's not occupied, I expect that door is locked and the last officer there is the person who secured it so therefore I don't really want a roundsman going through those areas again unless he finds something suspicious . . .

DeRosa stated in response to a question on whether DOCS [FN3] operations at Bayview were [*4]contrary to recognized principles or standards: " [F]or hours, based on the testimony and the documents I've read, the officer's not present, he's been reassigned or she's been reassigned to other duties off the unit so now those prisoners are unsupervised." He testified that, "when you have prisoners unsupervised it's just a lot of things that can happen . . ." But as DeRosa conceded on cross-examination, he did not review any DOCS policies or Bayview policies:

Q. And is there a direct policy that Bayview facility failed to abide by in their supervision of the inmates at that facility?

A. I don't have any direct policy.

Mr. DeRosa testified that there should have been cameras positioned on the dormitory corridors so that supervisory staff could see who was entering the rooms. The only cameras Bayview had at the time were mounted by the street-level entrance. DeRosa could point to no rule or standard on cameras, and he agreed that the requirement for them in the City of New York was pursuant to a federal consent decree.

Claimant further contended that the contingent nature of the security coverage on the honor dorm violated the rules of the State Commission of Correction, which provides that "active supervision" shall be maintained in all facility housing areas (9 NYCRR § 7003.3(a)). However by its terms, Part 7003 applies to local correctional facilities, not state prisons (§7003.1).

In response, claimant pointed to Sanchez v State of New York, 99 NY2d 247, 251 n2 (2002), in which the Court of Appeals noted that although the Commission's rules "apply to county jails and penitentiaries, not state prisons, the [claimant's] expert concluded that they are relevant in establishing a reasonable standard of supervision, and they are thus also relevant to our foreseeability analysis [as to an inmate-on-inmate assault]." With that said, while the expert the Court of Appeals referred to in Sanchez was Robert DeRosa, Mr. DeRosa in his testimony here did not cite the Commission's standards; the issue arose during the cross-examination of defendant's expert.

Moreover, even assuming that Part 7003's definition of active supervision could apply to state facilities, its application would still be uncertain. The Part defines active supervision to include: (1) the uninterrupted ability to communicate orally with the inmate; (2) the conducting of supervisory visits at 30-minute intervals; (3) the ability to respond immediately to emergency situations and; (4) the continuous occupation of a security post within a housing area. Item (4) contains qualifying language that the staffing of the security post shall be for a housing area with more than 20 inmates,[FN4] which was not the case for Bayview's honor dorm.

Defendant called as an expert Martin Horn, a professor at John Jay College of Criminal Justice, who had been a superintendent of a state correctional facility, executive assistant to the DOCS commissioner, Secretary of Corrections for Pennsylvania, Corrections Commissioner for the City of New York and a commissioner on accreditation for the American Correctional Association. [*5]

Mr. Horn testified that having the third floor covered by a contingency post rather than a fixed post was appropriate.[FN5] The purpose is to provide for a more efficient utilization of staff. This is a small unit, the kind of dorm, "reserved for low security inmates with a high degree of maturity and responsibility," and as noted earlier, this particular unit is classified as minimum security. And further, "[i]t is intended to provide individual inmates with an opportunity to experiment with [a] greater degree of freedom, to give them a great likelihood of success upon release, to allow them to be self-governing and self-directing."

In view of the foregoing, the Court concludes that the rules and policies then extant at Bayview cannot, per se, serve as a basis for liability on the part of the defendant.

Supervision: Zawislak and Perez

As for the actual supervision involving Zawislak and Perez, specific knowledge by the defendant is not required. Rather, if it can be shown that defendant reasonably should have known of the relationship, liability will obtain - - a standard with which defendant's expert concurred.[FN6]

There were some inconsistencies in the testimony, but certain basic elements went essentially unchallenged. Zawislak first had sex with Perez in the late summer of 1999 in the C stairway off the third floor.[FN7] He had directed Perez to clean the stairs, without, he testified, any immediate ulterior motive.

Until they were caught on March 10, 2001, the two had had sexual relations at least 20 times, some 15 times in Perez's room in her bed, but also in another stairway, the gym, the rooftop and the officer's station on the third floor. Moreover, Zawislak testified that, "Well we had been kissing regularly before the first time we engaged in anything, and things got hot and [*6]heavy, and that's how it happened."

Zawislak stated that as of April 1999, "Well we cared very much for each other before that. We already had romantic feelings for each other . . . [as of] about April of 99." Zawislak testified that he had told Officer Sterling, "could have been July, August of 1999" that he had feelings for Perez, but that they were not having sex. Zawislak recalls that Sterling replied, "be careful."

Zawislak implied that he and Perez had exchanged notes more than once:

Q. Did you know that it was wrong to have any sort of personal relationship, intimate relationship, aside from sex, with an inmate?

A. Romantically you mean? Like - - as far as love notes and that kind of thing?

Q. Yes.

A. I knew the Department frowned upon it, yeah.

Q. And you still pursued this avenue?

A. . . .Yes.

Zawislak had given Perez a wedding band. This may not have alerted the Bayview staff to anything untoward inasmuch as Perez already had been allowed a, "yellow metal wedding band." See defendant's Exhibit K, which is the authorization therefor, signed by Perez and two staff members, with the date issued filled in as December 30, 1998.

Zawislak testified that when he entered the third floor on his roundsman's duties, he was not required to sign the logbook at the officer's desk, but Deputy Werbacher testified that the roundsman would have to sign the logbook in the honor unit. In any event, DeRosa conceded that as to having had Zawislak sign the logbook, "I didn't say it was going to stop it," although claimant's expert observed, "As a roundsman they didn't seem to know where he was, they relied on the radio, but the logbook is an option [as is radioing in his location to be logged] . . . They didn't do that, so he was free to roam the building and access areas without any supervision." With that said, DeRosa did not refer to any rules, standards or policies that were not adhered to.

Sergeant Sylvester Johnson took the stand at trial, at which time he had nearly 30 years with the Department and had been at Bayview, serving as a sergeant, from 1995 to 2005. He testified that he had no prior knowledge of an inappropriate sexual relationship between the two, and if he had, he would have reported it immediately to his superiors. Sergeant Johnson also stated that it was inappropriate for an officer to just sit and talk with an inmate in her room unless it is security-related.

Johnson said he walked through the floor twice a shift, a lieutenant does so once or twice [*7]and other walk-throughs would be done at various times during the day by each of the three deputy superintendents (for security, administration and programs). In addition, according to Johnson, the "charge sergeant" might walk through. Sergeant Johnson made this point about the doors to the inmate rooms on the third floor:

[U]sually, on the honor floor . . . most doors are open. So when the officer or the roundsman then makes the rounds, normally when he walks down the corridor, he sees that the door is open. If the door is closed for some reason, he would knock on the door and see if anyone would answer, see if anyone's in the room. If the person didn't answer, he would normally open up the door.

As for Ms. Perez, she has a fairly expansive view of what staff knew about the relationship. While there may be an incentive for Zawislak to help Perez recover, inasmuch as an award of money would likely be of benefit to the child they had together, his demeanor was credible and he had pled in open court to the same actions.

For her part, claimant was less credible, and while her defensiveness on the stand to the point of belligerence ("but did you not hear what I just said") may show a spontaneous truth-telling that was not a pat, prepared-for-trial presentation, her testimony in light of all the evidence in this case coupled with her admission that she lied in her 2009 letter to the federal judge [FN8] handling the parallel federal civil suit [FN9] effectively undercut the credibility of her uncorroborated testimony on who she told or who otherwise knew or might have known of the relationship. The Court will not rely on this testimony.

Avoiding Supervision

Werbacher did not provide much of an analysis as to how the two managed to avoid detection, but did remark on it at his deposition of October 14, 2010, about which he was asked at trial:

Q. Do you accept that Zawislak avoided being caught by a supervisor making rounds because of luck, or that he was good and quick at what he did?

A. All of that.

Werbacher testified that the count of inmates is done at regular times, for uniformity around the State, but that the rounds of supervisors were conducted, "irregularly"; the implication being that the officers being supervised did not know when their superiors would be on site.

Consider Zawislak's testimony on the issue. It is unclear from all the evidence whether the only time he had sex with Perez in her room was when Zawislak was the contingency officer; Zawislak's following testimony strongly suggests it was, although, for example, Werbacher's [*8]March 21, 2001 memo to the Inspector General's office, following the discovery of Zawislak in claimant's room on March 10, includes the following: "Officer Hill was the unit officer but, due to it being a contingency post, was off the unit at the time" (def exh W).

Q. Do you recall the number of times you had sex with her in her bed?

A. At least fifteen.

Q. When you had sex with her in her bed was there a correction officer on post, at the officer's station?

A. No.

Q. How did you manage to be on the honor floor, during those occasions, to have sex with [the] Claimant?

A. I was the officer assigned there.

Zawislak's testimony continues on the supervision:

Q. Were there any supervisors checking on you?

A. They do their rounds and after that, that would be it.

Q. How did you avoid being caught when they went on their rounds?

A. They just came at different times, and then usually they just showed up once or twice and then that would be it . . . They already signed the logbook and then left, and that was it.

Perez's testimony is less suspect on the scheduling of the roof and gym and can be used. She explained that the roof "runs" every hour but if no one showed by quarter past the hour, she and Zawislak had the next 45 minutes. Perez testified that they were able to have (oral) sex in the gym without being caught because, "he'd picked me up or called for me after the inmates would go back to the units."


What we have here is a striking asymmetry of knowledge. An officer with some three years of experience when this all began knew where everyone was - - or at least enough to avoid them - - and the staff who were supposed to know where he was invariably did not. In fact, the illegal relationship was finally uncovered when, "Sgt. Green went to the floor specifically [*9]looking for Zawislak as he had been calling for him but could not locate him" (def exh W).

Before the sex began, there were examples that Zawislak and Perez had gone beyond the proper officer-inmate interaction. The Employees' Manual, §7.18, provided, in part, that, "Employees shall maintain a quiet, firm demeanor in their contacts with inmates with no undue familiarity or hostility" (cl exh 1).

Deputy Superintendent Werbacher's memo of March 21, 2001 to the Inspector General [FN10] provides, "Although Hill could not verify the incident, he did state that Zawislak often visits the unit, talks to the inmate in question (Perez, 97G0760 room 311) and then leaves through the back door" [def exh W]. Werbacher testified that such actions by Zawislak violated at least §2.15 of the Employees' Manual (cl exh 1), which among other things, banned any conversation, association or relationship by an employee with an inmate unless it was part of the employee's duties, and should have been reported to the supervisor, but as Werbacher said, "obviously he didn't. "

The primary location for sexual relations was claimant's room. As Sergeant Johnson testified, if the door were shut, an officer would knock on it to see if anyone would answer and then if there was no answer, open it. We did not hear any testimony that while the two were in Perez's room with the door closed, only Perez answered and was able to deflect an officer's inquiry. Testimony was elicited of a number of supervisory staff going through the honor dorm several times a day on a random basis. It seems less than likely that they never came on the floor when the door was shut and the two were behind it.

To this trier of fact, the explanation from Werbacher that Zawislak was "good and quick," as well as lucky, is not persuasive. This statement naturally leads to the inquiry as to why no one else on the Bayview staff was good and quick from a supervisory vantage. Citing luck as a factor is telling because, given the frequency of the encounters between the two and the unscheduled supervisory tours through the third floor, it sounds as if Werbacher himself has a difficult time finding a valid operational basis for how detection was avoided for so long.

In view of the foregoing, the Court finds that claimant satisfies her burden of proof by a fair preponderance of the credible evidence: it was more likely than not that defendant should have known of the sexual relationship between Officer Zawislak and Claimant Perez. The Clerk of the Court is directed to enter judgment for 100% liability against defendant State of New York.


New York, New York [*10]

August 3, 2011
Judge of the Court of Claims

Footnote 1:Compare Thompson v State of New York, Ct Cl, August 10, 2007 (unreported, claim no. 108000, UID #2007-010-016, Ruderman, J.), affd 63 AD3d 825 (2d Dept 2009).

Footnote 2: Claimant's exhibit 7 is a diagram of the third floor layout showing 13 rooms.

Footnote 3: "DOCS" for Department of Correctional Services; its name was changed by Chapter 62 of the Laws of 2011 to the Department of Corrections and Community Supervision, reflecting the assumption of parole functions.

Footnote 4: 9 NYCRR §7003.2 (c)(4).

Footnote 5: Defendant's exhibit V is the job description for the third floor contingency post; among the 25 listed duties are to, "Respond immediately to all emergency and evacuation procedures."

Footnote 6: Q. In your use of the term foreseeable, do you believe you consider . . . what the Department of Corrections reasonably should have known, as opposed to . . . A. [Interposing] What they actually knew.

Q. Actually knew? A. Right, what they reasonably should have known.

Footnote 7: The testimony differed on when in 1999 the two first had sex. At trial, Zawislak initially said it was August or September of 1999, and then later in his testimony, August. According to his June 25, 2001 statement to the New York County District Attorney, the sexual relationship began in October or November of 1999. Defendant's exhibit T is Zawislak's videotaped statement to the DA in 2001; this Court ruled it can only be used for impeachment purposes.

Zawislak stated that they had sex 15 times in claimant's room plus the other locations mentioned, typically once. Perez said when asked about the frequency of sex, "Every time he was on the unit."

Footnote 8: Claimant's letter was dated February 14, 2009 and addressed to the Hon. Gabriel W. Gorenstein, a United States magistrate judge (def exh R).

Footnote 9: Regarding informing the federal judge whether Perez had spoken to her lawyers, "that part I lied about."

Footnote 10: The DOCS policy statewide was that officers who learned of such activity were to inform the appropriate official, here Werbacher, or the facility superintendent, and the former would put together the information he had and forward it to the IG's office, which had a sex crimes unit. At trial, we heard from two senior investigators of the IG's office, Linda Carrington and Faith Watson.

Saturday, September 10, 2011

Legal Representation By The Corporation Counsel: What's The Standard?

Many people are charged with allegations of misconduct performed in their jobs or while at work, and they seek representation by the New York City Law Department or "Corporation Counsel". I do not understand how NYC randomly and often abusively denies this representation to teachers and other employees without any basis in fact or law.
In the case of teacher Steve Ostrin, he was accused of harassment of a female student in his class at Brooklyn Technical High School, but according to Theresa Europe, Director of the Gotcha Squad, the case was closed in 2007 and there was no investigation of the charges. Nonetheless Steve asked for, but was denied representation by the Corporation Counsel.
Thus any student or person so inclined can accuse anyone who is an employee of the City of New York of anything, and the NYC Law Department can deny legal representation saying that the allegation must be true, therefore the employee was acting outside of his/her employment and cannot be represented by the City.

Allegations are just that; they are not facts. This is what the "Gotcha Squad" is known for, and that is, scheduling 3020-a arbitration with allegations that have not been proven or voted on by a school board nor any outside party, and the single arbitrator not chosen by the charged party helps the NYC BOE "prove" the allegations and punish the employee. The rubber rooms were holding pens set up by the Board of Education and accepted by the UFT and NYSUT as proper placement for tenured employees who needed to be sitting somewhere while they were framed ....oops, I mean "investigated". When the public heard through the media that there were large warehouses of people getting paid for doing nothing, Mike Bloomberg, Joal Klein, Cathy Black, Dennis Walcott and the NYC BOE woke up to the fact that 100+ people in one place will talk with each other and organize opposition groups.

The NYC BOE (the name "Board of Education" for NYC was evidently never changed  in court, so that's why I use 'BOE' and not 'DOE') also sets up parents who blow the whistle on fraud inside their child's school, and indemnify parents who attack other parents. When I, a parent of two daughters who attended Stuyvesant High School from 1999-2007,  asked to see the financial records of the Stuyvesant High School Parents Association and I and the chinese parents were denied these records (and verbally abused by the officers of the PA who did not want us to have this information), I sued to get the records. The Corporation Counsel - namely Attorney Martin Bowe - called me up to tell me that the parents who were doing these heinous acts - Paula De Kock, Lauren Coleman-Lochner and Sumitake Nakazato - were now indemnified by him "because he wanted them to be." I asked him why he didnt indemnify me, and defend my efforts to get transparency with the finances of the Stuy PA, and he told me "We will NEVER,NEVER, defend you." [Does that mean that I dont have to pay City taxes?]

 I started looking into this issue of representation by the Corporation Counsel. The pattern and practice seems to me to be completely arbitrary and capricious. Are there any attorneys out there who can describe to me how the Corporation Counsel works?

I'd really like to understand how the State of New York can prosecute its citizens with a huge Law firm funded by taxpayer funds.

Below are a few more examples and by the way, Stuart Lichten, a very good attorney I've heard, whose law firm is Schwartz, Lichten & Bright, is the husband of Senior NYSUT Attorney Maria Elena Gonzalez:

Matter of O'Brien v Spitzer
2006 NY Slip Op 05158 [7 NY3d 239]
June 29, 2006
R.S. Smith, J.
Court of Appeals
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
As corrected through Wednesday, August 9, 2006

In the Matter of Stephen L. O'Brien, Respondent,
Eliot Spitzer, as Attorney General of the State of New York, Appellant
Argued June 6, 2006; decided June 29, 2006
Matter of O'Brien v Spitzer, 24 AD3d 9, reversed.
{**7 NY3d at 241} OPINION OF THE COURT
R.S. Smith, J.
We hold that the Attorney General properly found a private lawyer who was appointed as referee in a mortgage foreclosure proceeding to be an independent contractor, not a state employee. The referee therefore was not entitled to defense and indemnification from the State in a lawsuit brought against him.
Facts and Procedural History
This case arises out of a proceeding to foreclose a mortgage on a home owned by Donald MacPherson. Supreme Court entered a judgment of foreclosure and sale, and appointed petitioner, a lawyer in private practice, as referee to supervise the sale of the property. The property was sold and MacPherson, contending that the foreclosure and sale violated his constitutional rights, brought a lawsuit in federal court seeking damages and injunctive relief against several defendants, including petitioner.
Petitioner informed the Attorney General of the lawsuit, and requested defense and indemnification pursuant to Public Officers Law § 17. The Attorney General rejected the request, relying on the exclusion of "independent contractor[s]" from the rights given by the statute. Petitioner then brought this proceeding under CPLR article 78 against the Attorney General, seeking an order annulling the Attorney General's determination and directing the Attorney General to defend petitioner in MacPherson's suit. MacPherson later withdrew his claims against petitioner, but petitioner continues to seek indemnification for the expense the suit caused him.{**7 NY3d at 242}
[*2]Supreme Court granted the petition, and the Appellate Division affirmed. The Appellate Division permitted the Attorney General to appeal to this Court on a certified question, and we now reverse.
Public Officers Law § 17 (2) (a) requires the State to "provide for the defense" of an "employee" in an action arising out of his or her public duties. "Employee" is defined in Public Officers Law § 17 (1) (a), which provides in relevant part: "As used in this section, unless the context otherwise requires the term 'employee' shall mean any person holding a position by election, appointment or employment in the service of the state, . . . but shall not include an independent contractor."
The issue is whether petitioner was an "employee" or an "independent contractor" within the meaning of this section. We first consider whether the Attorney General's resolution of this issue is entitled to deference, and we conclude that it is.
While as a general rule courts will not defer to administrative agencies in matters of "pure statutory interpretation" (Matter of KSLM-Columbus Apts., Inc. v New York State Div. of Hous. & Community Renewal, 5 NY3d 303, 312 [2005]), deference is appropriate "where the question is one of specific application of a broad statutory term" (Matter of American Tel. & Tel. Co. v State Tax Commn., 61 NY2d 393, 400 [1984], quoting NLRB v Hearst Publications, Inc., 322 US 111, 131 [1944] [interpreting the term "employees"]). This case is in that category.
The terms "employee" and "independent contractor" are familiar ones, and their definitions are well known. Broadly speaking, an employee is someone who works for another subject to substantial control, not only over the results produced but also over the means used to produce the results. A person who works for another subject to less extensive control is an independent contractor (e.g., Matter of Hertz Corp. [Commissioner of Labor], 2 NY3d 733, 735 [2004]; Matter of Charles A. Field Delivery Serv. [Roberts], 66 NY2d 516, 521 [1985]). But it is often not easy to apply those definitions to specific facts. When a person claiming to be a public employee requests indemnification, the Attorney General must first decide whether that person is indeed an employee, or is an independent contractor. Where his decision is a reasonable one, courts should not second-guess it.
Here, there was ample basis for the Attorney General's determination that petitioner was an independent contractor, not an{**7 NY3d at 243} employee. Petitioner worked without day-to-day supervision and chose his own hours of work; it was he who selected the date for the foreclosure sale. He performed his duties on a part-time basis, while also working for clients of his private law practice. His compensation did not come from state funds, but from the sale proceeds. The State did not withhold income tax or provide workers' compensation. Petitioner furnished whatever materials he needed for his work, and paid his own expenses, subject to reimbursement from the sale proceeds. He deposited the proceeds in a special bank account bearing his own name, as required by CPLR 2609. He was, in short, substantially more independent from state control over his activities than a typical state employee. Beyond this, public policy supports the Attorney General's decision: The purpose of Public Officers Law § 17 is, in essence, to provide insurance against litigation. Private lawyers like petitioner ordinarily have malpractice coverage, and the Legislature is unlikely to have intended to substitute the State for lawyers' malpractice carriers.
Accordingly, the order of the Appellate Division should be reversed, without costs, the petition dismissed and the certified question answered in the negative.
Chief Judge Kaye and Judges G.B. Smith, Ciparick, Rosenblatt, Graffeo and Read concur.
Order reversed, etc.

Decided on August 29, 2011 
Supreme Court, New York County

In the matter of the application of Josephine Thomas, Petitioner, For a Judgment Pursuant to Article 78 of the Civil Practice Law and Rules, 


New York City Department of Education, Cathleen Black, as Chancellor of the New York City Department of Education and City of New York, Respondents.

Attorneys for Plaintiff: 

Lichten & Bright, P.C. 
475 Park Ave. South, 17th FL 
New York, New York 10016 
(646) 588 - 4871 

Attorneys for Defendant: 
Corporation Counsel 
100 Church Street, 4th FL 
New York, New York 10007 
(212) 788 - 0303 
Judith J. Gische, J.
Petitioner is a City employee employed as a paraprofessional. Respondents are the New York City Department of Education, its former chancellor and the City of New York (hereinafter "respondents" sometimes "DOE"). Petitioner seeks reversal of the respondents' decision denying her legal representation in connection with a civil law suit commenced against her by the mother of one of her students. The respondents have answered and seek the denial of the petition without the need for a testimonial hearing.
Since an Article 78 proceeding is a special proceeding, it may be summarily determined upon the pleadings, papers, and admissions to the extent that no triable issues of fact are raised [*2](CPLR § 409[b]; CPLR §§ 7801, 7804 [h]). Therefore, the court will decide the issues raised on the papers and grant judgment for the prevailing party, unless there is an issue of fact requiring a trial (CPLR § 7804 [h]); York v. McGuire, 99 AD2d 1023 [1st Dept 1984] aff'd 63 NY2d 760 [1984]; Battaglia v. Schumer, 60 AD2d 759 [4th Dept 1977]). 

Facts considered and arguments presented
On May 11, 2009, petitioner was a paraprofessional assigned to P.S. 94, a school in the Bronx. In an incident that was reported to the Office of Special Investigations, it was alleged that the petitioner, while working with a kindergarten student on a lesson, struck the child on the forehead with the back of her hand because the was doing the assignment incorrectly and had gotten the answer wrong.
Following the incident an investigation ensued. The allegations were found to be "substantiated" in a report dated May 19, 2009. By correspondence dated May 21, 2009, the principal of P.S. 94 notified the petitioner of the investigation's findings. The letter states that "evidence gathered substantiates the allegation that you did hit [the child] on the head during small group work." As a result of these findings, petitioner was reassigned with a warning that "[o]ur students are our most precious resource and must be respected and protected at all times. Under no circumstances is it acceptable to hit a student." Thereafter, the child's mother filed a civil action against the city, the New York City Board of Education and Ms. Thomas in the Bronx (Index No. 350220/10) ("civil action"). Petitioner requested legal representation in the civil action and Corporation Counsel responded to her request by letter October 14, 2010 stating that it could not provide legal representation after conducting its review "pursuant to Section 50-k of the General Municipal Law."
Respondents have answered the petition and provide further clarification of what the letter meant and why they denied legal representation. They contend that they properly denied petitioner a defense because General Municipal Law § 50-k and Education Law § 2560 govern the situation at bar and, according to respondents, the actions petitioner took — corporal punishment — was not within the scope of her duties as a New York City school paraprofessional and they violated the rules and regulations of the DOE.
The parties' disagreement focuses on the both afore cited sections of law as well as Education Law § 3028. The parties also disagree about whether certain trial court decisions apply (as petitioner claims) or have been incorrectly decided (as respondents contend). Initially, respondents sought a stay of this proceeding pending decisions in the appeals of two legal representation cases (Zampieron v. Board of Education, Index No. 109677/10, 2010 NY Slip Op. 52338U [Sup Ct, NY Co. 2010] and Morel v. Board of Education, 116668/10, 2010 NY Slip Op 32079U [Sup Ct. NY Co, 2010]). Respondents withdrew that application pursuant to the so-ordered stipulation of the parties dated May 26, 2011. These and other cases are examined later in this decision in the Discussion section below.
Education Law § 2560 [1] provides, in relevant part, as follows:
Notwithstanding any inconsistent provision of law, general, special or local, or the limitation contained in the provisions of any city charter, any duly appointed member of the board of education in a city having a population of one million or more, the members of each community school board in such city, the teaching or supervising staff, officer, or employee of such board and of each such community school board, member of a committee on special [*3]education or subcommittee thereof or authorized participant in the school volunteer program in such city shall be entitled to legal representation and indemnification pursuant to the provisions of, and subject to the conditions, procedures and limitations contained in [GML § 50—k] ....
General Municipal Law § 50-k [2] provides, in relevant part, as follows:
[T]he city shall provide for the defense of an employee of any agency in any civil action or proceeding ... arising out of any alleged act or omission which the corporation counsel finds occurred while the employee was acting within the scope of his public employment and in the discharge of his duties and was not in violation of any rule or regulation of his agency at the time the alleged act or omission occurred. . .
General Municipal Law § 50—k [3] provides, in pertinent part, as follows:
The city shall indemnify and save harmless its employees in the amount of any judgment obtained against such employees ..., or in the amount of any settlement of a claim ... provided that the act or omission from which such judgment or settlement arose occurred while the employee was acting within the scope of his public employment and in the discharge of his duties and was not in violation of any rule or regulation of his agency at the time the alleged damages were substantiated; . . .
Education Law § 3028 provides the following, in pertinent part:
Notwithstanding any inconsistent provision of any general, special or local law, or the limitations contained in the provisions of any city charter, each board of education, trustee or trustees in the state shall provide an attorney or attorneys for, and pay such attorney's fees and expenses necessarily incurred in the defense of a teacher, member of a supervisory or administrative staff or employee, or authorized participant in a school volunteer program in any civil or [criminal] action or proceeding arising out of disciplinary action taken against any pupil of the district while in the discharge of his duties within the scope of his employment or authorized volunteer duties.
Petitioner contends that she is entitled to a defense by the Corporation Counsel because she did not strike the child, the incident is alleged to have occurred during a lesson and, therefore, the act allegedly took place "while [she] was acting within the scope of [her] public employment and in the discharge of [her] duties," as General Municipal Law § 50-k [2] provides. She argues that Education Law § 3028, not Education Law § 2560 controlling.
Respondents, on the other hand, deny that Education Law § 3028 is applicable. They argue that Education Law § 2560 supercedes Education Law § 3028 because section 2560 is a specific statute, applicable to schools in a "city having a population of one million or more" (which New York City has) and when Education Law § 2560 was amended in 1979 it was to make sure there were consistent standards for, and conditions of, indemnification for all New York City employees. [*4]
Alternatively, respondents argue that even if Education Law § 2560 did not supersede section 3028, Education Law § 3028 is inapplicable to the facts of this case because the civil action against petitioner did not arise out of some legitimate disciplinary action taken by her against a student. They argue that petitioner hit the child because he got the wrong answer and, therefore, her actions (corporal punishment) is prohibited by DOE's regulations. Thus, respondents distinguish the present situation where the teacher is behaving in a rogue manner from those in which a teaching is dutifully and properly carrying out his or her duties within the scope of his or her employment.
Respondents point out that under General Municipal Law § 50-k, the Corporation Counsel has the right in the first instance to determine whether the alleged act or omission "occurred while the employee was acting within the scope of his public employment and in the discharge of his duties" and whether the act was in "violation of any rule or regulation of his agency" Thus, respondents argue that Corporation Counsel had a sufficient factual basis for its determination that petitioner was not entitled to legal representation because she had violated DOE's regulation forbidding corporal punishment.
Finally, respondents argue that petitioner did not satisfy statutory pre-conditions to filing this summary proceeding because she did not provide DOE with a notice of claim. For this argument they rely on the requirements of General Municipal Law § 50-k [6] which proscribes the institution of any proceeding under section 50-k, "unless notice of claim shall have been made and served upon the city in compliance with section [50- i]." This section of the law is entitled "prosecution of tort claims; commencement of action."
Another disagreement between the parties is whether petitioner is entitled to reimbursement of her legal fees because Corporation Counsel has declined to provide her with legal representation. Petitioner claims that if she has not violated any rule or regulation, then by not providing her legal representation, respondents have violated General Municipal Law § 50-k. 
In an Article 78 proceeding, the applicable standard of review is whether the administrative decision being challenged has a rational basis (CPLR 7803 [3]). Thus, where it is alleged the decision was arbitrary and capricious, or without a rational basis, the petitioner must set forth facts that establish it is "without sound basis in reason" (Matter of Pell, Jr. v. Board of Educ. of Union Free School District No., 1 of the Towns of Scarsdale and Mamaroneck, Westchester County, 34 NY2d 222 at 231 [1974]; Matter of Colton, Jr. v. Berman, 21 NY2d 322 [1967]). The court cannot and must not disturb such a decision, even if it would have arrived at a different decision itself. For the reasons that follow, the court finds that petitioner has failed to establish that the determination by respondents, denying her legal representation, and for reimbursement of legal fees is neither arbitrary nor capricious.
The law in this area (legal representation for a school employee) is unsettled. Some trial courts have held that Education Law § 3028 is controlling and that the only ground upon which legal representation can be refused by respondents is if the alleged conduct was not within the scope of petitioner's employment (Morel v. Board of Education, 116668/10, 2010 NY Slip Op 32079U [Sup Ct. NY Co, 2010] ("Morel"); Inglis v. Dundee Cent. School Dist. Bd. of Education., 180 Misc 2d 156 [Sup Ct, Yates County 1999]; Sagal-Cotler v. Board of Education, Index No. 104406/10 [Sup Ct., NY Co 2011] ("Inglis"). [*5]
Other courts have, however, decided that Education Law § 2560 is a specific statute governing a petitioner's right to legal representation by the respondents (Zampieron v. Board of Education of City School Dist. of City of New York, 30 Misc 3d 1210 [A], 2010 WL 5576190 (Table) [Sup Ct. N.Y.Co., 2010] ("Zampieron"), holding that if the Corporation Counsel makes a rationally based determination that petitioner's conduct violated DOE's rules and regulations, then respondents' decision denying legal representation cannot be disturbed (also, Martin v. Board of Education of the City of New York, 2011 WL 1527190 [Sup Ct., NY Co., 2011] ["Martin"]). For the reasons that follow, this court agrees with the analysis set forth in the decisions of Zampieron and Martin and the court holds that petitioner failed to meet her burden of showing the respondents' decision is without a rational basis.
Upon initial examination, it appears that Education Law § 3028 and Education Law § 2560 (which incorporates General Municipal Law § 50—k [2] by reference) are inconsistent. However, upon closer inspection, it is apparent that Education Law § 2560 is more specific than section 3028 and the two sections of the law can be harmonized.
Whereas section 3028 is a general statute, Education Law § 2506 specifically applies to New York City schools. Furthermore, even if the two statutes cannot be harmonized, under rules of statutory construction the later, more specific statute takes precedence over the pre-existing and irreconcilably conflicting provision (see, Zampieron, 30 Misc 3d 1210 [A] [Sup Ct., NY Co.] and cases cited therein). The legislative history provided by respondents supports their arguments, that the amendments to Education Law § 2506 were insure that all city employees were indemnified against civil liabilities incurred as a result of proper performance of their duties on the job (see, Governor's Bill Jacket, 1979, Ch. 673). Consequently, a New York City DOE employee who is sued is entitled to a legal defense "in any civil action or proceeding ... arising out of any alleged act or omission which the corporation counsel finds occurred while the employee was acting within the scope of his public employment and in the discharge of his duties and was not in violation of any rule or regulation of [his or her] agency at the time the alleged act or omission occurred ..." (General Municipal Law § 50-k [2]) (emphasis added). Therefore, under Education Law § 2506, there are conditions that must be met before a petitioner is eligible for legal defense by the Corporation Counsel.
Although petitioner easily meets "the within the scope of [his or her] public employment" requirement because she was in a class working with a student when the incident occurred, petitioner fails in meeting the other requirements. According to the child and an eyewitness, petitioner struck the child because he got the wrong answer on a lesson. Not only was the action alleged — hitting the child - not undertaken in the discharge or furtherance of her duties as a school employee, corporal punishment by a school employee violates specific regulations (8 NYCRR § 19.5[a][2]; Chancellor's Reg A-420). Consequently, while Education Law § 2560 may provide school employees in a city having a population of one million or more the right to legal defense where an action arises out of disciplinary action taken by the employee against a student while discharging his or her duties within the scope of his employment, it is up to the Corporation Counsel to make the initial determination whether these requirements are satisfied (General Municipal Law § 50-k [2] Perez v. City of New York, 43 AD3d 712, 841 N.Y.S.2d 559 [1st Dept 2007]). The Corporation Counsel's determination on behalf of the respondents is not subject to attack unless it is arbitrary and capricious and without a rational basis. [*6]
Although petitioner contends the decisions in Zampieron (and Martin) are inconsistent with the decision in Timmerman v. Board of Educ. of City School Dist. of City of New York, 50 AD3d 592 [1st Dept 2008], this argument fails. In Timmerman, the Appellate Division, First Department ordered DOE to reimburse petitioner for the attorneys' fees and expenses he incurred in defending himself against criminal charges. The charges arose, however, from disciplinary action he undertook against three disruptive students. When the students did not curb their behavior, Timmerman called one of the girl's parents. A few days later, two of the students reported that Timmerman had "touched" them in a sexual manner and he was arrested on the strength of those claims. The First Department observed that the charges which were dropped were directly tied to his actions as a teacher trying to keep control and discipline in his class. In this case there is no suggestion that the child involved (age 6) reported he was hit on the head to get back at petitioner having taken some disciplinary action against him. The act of hitting the child on the head is simply an act of corporal punishment which is not tolerated except for in the most extreme and dire of circumstances not present on the day of the alleged incident. Following an investigation, the petitioner's actions were reported as "substantiated" and she was disciplined by reassigning her and having a letter put into her employment file.
The decision by respondents to deny petitioner legal representation is firmly supported by the record which includes the incident report and the report following the investigation, each identifying the incident of corporal punishment with specificity. The respondents' decision to deny her legal representation has a rational basis. Therefore, the petition, insofar as it seeks judgment directing respondents to provide her with legal representation is denied.
Petitioner also seeks reimbursement for the legal fees she has incurred because she is a "modestly paid public servant." Pursuant to General Municipal Law § 50-k [2], the initial determination as to whether an employee was acting within the scope of his or her employment, rests solely with the Corporation Counsel (Blood v. The Board of Education of the City of New York, et al, 121 AD2d 128, 130 [1st Dept 1986]). This is to protect "fallible public employees from the potentially ruinous legal consequences" of "unintentional lapses in the daily discharge of their duties" (Blood v. The Board of Education of the City of New York, et al., supra at 132). "
General Municipal Law § 50-k [2] does not provide for private recovery of legal fees if the petitioner is not represented by Corporation Counsel. However, General Municipal Law § 50-k [5] does provide that if the court proceeding against the employee is also "the basis of a disciplinary proceeding by the employee's agency against the employee, [then] representation by the corporation counsel and indemnification by the city may be withheld (a) until such disciplinary proceeding has been resolved and (b) unless the resolution of the disciplinary proceeding exonerated the employee as to such act or omission."
In the case at bar, there is no unresolved disciplinary proceeding against petitioner. The allegations against have been substantiated and she has been disciplined. She is not now, nor will she be in the future, eligible to recover the legal fees she has incurred in obtaining private legal counsel to defend against the civil action, even if it is dismissed against her because her employer, the city, has determined her actions were not within the scope of her employment (see, Ostrin v. The City of New York, 2007 WL 4241913 [Sup Ct., NY Co. 2007]). Therefore, this branch of her petition is denied as well.
Although respondents have raised an issue that petitioner did not comply with the notice [*7]requirements of General Municipal Law § 50- i, they have not shown that this section, pertaining to "prosecution of tort claims" has any applicability to this Article 78 summary proceeding. Therefore, respondents' claimed lack of notice is not a basis to deny this petition. 
In accordance with the foregoing,
It is hereby
ORDERED, DECREED and ADJUDGED that the petition for a judgment (1) declaring that respondents' denial of legal representation and indemnification of expenses he incurred in defense of a civil proceeding was arbitrary, capricious and contrary to law and an abuse of discretion; (2) directing that respondents provide him with legal representation in the civil proceeding is DENIED in its entirety and this proceeding is dismissed; and it is further
ORDERED that this constitutes the decision, order and Judgment of the Court. 

Dated:New York, New York
August 29, 2011
So Ordered:
Hon. Judith J. Gische, JSC

Perez v City of New York
2007 NY Slip Op 06764 [43 AD3d 712]
September 18, 2007
Appellate Division, First Department
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

As corrected through Wednesday, November 7, 2007

Severino Perez, Respondent,
City of New York et al., Appellants, and Carol Healy, Respondent.
[*1] Michael A. Cardozo, Corporation Counsel, New York (Janet L. Zaleon of counsel), for appellants.
Pollack, Pollack, Isaac & DeCicco, New York (Jillian Rosen of counsel), for Severino Perez, respondent.
Cascione, Purcigliotti & Galluzzi, P.C., New York (Thomas G. Cascione of counsel), for Carol Healy, respondent.
Judgment, Supreme Court, Bronx County (Alexander W. Hunter, Jr., J.), entered December 16, 2005, after a jury trial, awarding plaintiff damages in the principal sum of $1.1 million, and judgment, same court and Justice, entered December 6, 2005, which, after a hearing before Anne E. Targum, J., awarded defendant Healy indemnification against defendant City for legal fees and expenses in the amount of $31,000, unanimously reversed, on the law, without costs, and the complaint and Healy's cross claim dismissed. The Clerk is directed to enter judgment accordingly.
Plaintiff was arrested and prosecuted at the instigation of defendant Healy, then a City police officer, in an incident culminating a long-brewing personal dispute between them. The jury determined that Healy was acting within the scope of her employment. We find no reasonable interpretation of the facts to support that conclusion (see e.g. Caits v Keyser, 202 AD2d 180 [1994]). As a matter of law, an officer is not acting within the scope of employment when causing an arrest of an individual while "engaging in a personal dispute, without any genuine official purpose," and simply "motivated by personal pique" (Campos v City of New York, 32 AD3d 287, 291-292 [2006], lv denied 8 NY3d 816 [2007]). This arrest was clearly "brought on by a matter wholly personal in nature, the source of which was not job-related" (see Seymour v Gateway Prods., 295 AD2d 278, 278 [2002]). The trial court should have granted the City's motion to dismiss on this ground.
This finding necessitates rejection of Healy's cross claim for legal fees and expenses as well. Pursuant to General Municipal Law § 50-k, she requested the Corporation Counsel to [*2]provide her with a defense. The Corporation Counsel has the statutory authority to determine whether or not the subject "act or omission . . . occurred while the employee was acting within the scope of [her] public employment and in the discharge of [her] duties and was not in violation of any rule or regulation of [her] agency at the time the alleged act or omission occurred" (§ 50-k [2]). Here, the negative determination by the Corporation Counsel should not have been set aside by Supreme Court, since it cannot be said that it lacked a factual basis, or was, in that sense, arbitrary and capricious (see Wong v City of New York, 174 AD2d 486 [1991]). Concur—Andrias, J.P., Buckley, Catterson, Malone and Kavanagh, JJ.