Board of Managers of Foundry at Washington Park Condominium v. Foundry Development Co.
142 A.D.3d 1124
| N.Y. App. Div. | 2016Background
- Three related actions joined for discovery and trial involving breach of fiduciary duty; Action No. 3 named Joseph Suarez as a plaintiff and Blustein, Shapiro, Rich & Barone, LLP (BSRB) as a defendant.
- Supreme Court (Aug 23, 2013) dismissed the action against BSRB and found Suarez engaged in frivolous conduct under 22 NYCRR 130-1.1, directing imposition of sanctions including attorney's fees.
- BSRB moved to recover attorney's fees and disbursements incurred defending the action, seeking fees for work by McDonough Law, LLP (retained by BSRB’s malpractice insurer) and partner Gardiner S. Barone.
- Supreme Court (May 28, 2014) awarded BSRB $29,968.70 in fees and costs; Suarez appealed limited to the fee award to BSRB.
- The Appellate Division affirmed the fee award, addressing arguments about insurer-paid fees, client-versus-counsel status, and recoverability of partner time.
Issues
| Issue | Suarez's Argument | BSRB's Argument | Held |
|---|---|---|---|
| Whether fees paid by BSRB’s malpractice insurer (McDonough’s work) are recoverable as sanctions | Fees paid by insurer cannot be recovered from Suarez because BSRB did not suffer actual pecuniary loss | Fees paid on BSRB’s behalf are recoverable; compensatory sanctions need not show actual pecuniary loss | Fee award for McDonough’s services recoverable despite insurer payment; showing of actual pecuniary loss not strictly required |
| Whether fees for partner Barone’s time (BSRB as client, not counsel of record) are recoverable | BSRB, as client, cannot recover fees for work performed by its partner | A partner who represents himself may recover value of professional time he would otherwise have had to pay | Court allowed recovery for Barone’s time; in-house/self-representation time recoverable |
| Whether the amount of sanctions/fees awarded was an abuse of discretion | Award excessive or improperly calculated | Award falls within court’s discretion given frivolous conduct and work performed | Appellate court found Supreme Court did not abuse its discretion in awarding $29,968.70 |
| Procedural/forfeiture challenges to the award | Various remaining contentions on appeal | Arguments lacked preservation or merit | Remaining contentions were unpreserved, improperly raised, or without merit |
Key Cases Cited
- Strunk v. New York State Bd. of Elections, 126 A.D.3d 779 (recognizing court discretion to impose sanctions for frivolous conduct)
- Matter of Khan-Soleil v. Rashad, 111 A.D.3d 727 (discussing standard for imposing costs and sanctions)
- Mackler Productions, Inc. v. Turtle Bay Apparel Corp., 153 F. Supp. 2d 504 (compensatory sanctions need not always be tied to actual pecuniary loss)
- Manhattan Indus., Inc. v. Sweater Bee by Banff, Ltd., 885 F.2d 1 (same principle regarding pecuniary loss and sanctions)
- Parker 72nd Assoc. v. Isaacs, 109 Misc. 2d 57 (value of professional time for self-representing attorney may be recovered)
- Gray v. Richardson, 251 A.D.2d 268 (related authority on recovery of attorney time)