Smith, Gambrell & Russell, LLP v. Telecommunications Systems, Inc.
155 A.D.3d 457
| N.Y. App. Div. | 2017Background
- Plaintiff Smith, Gambrell & Russell (SGR) represented defendant Telecommunications Systems (TSI) in a federal patent action and later filed a motion seeking attorneys' fees/sanctions after judgment.
- TSI counterclaimed in state court, alleging legal malpractice for SGR's failure to file a timely Rule 54(d)(2)(B) motion for attorneys' fees (14 days after entry of judgment).
- The federal proceedings included extensive postjudgment motions; SGR moved for sanctions 16 months after the 14‑day deadline, not a § 285 fee motion.
- Supreme Court, New York County granted SGR’s motion to dismiss TSI’s counterclaim for failure to state a malpractice claim; TSI appealed.
- On appeal, the First Department considered whether the 54(d)(2)(B) deadline was extended by postjudgment motions and whether SGR’s choice to seek sanctions instead of a § 285 fee constituted malpractice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Timeliness under Fed. R. Civ. P. 54(d)(2)(B) | SGR: motion was timely because filed within 14 days of resolution of postjudgment motions | TSI: SGR missed the 14‑day deadline and thus committed malpractice | Court: Federal law treats fee motions as timely if filed within 14 days after judgment or within 14 days after resolution of postjudgment motions; dismissal affirmed |
| Choice of procedural vehicle for fees (sanctions motion vs. § 285) | SGR: decided § 285 was unlikely to succeed; pursued sanctions instead | TSI: SGR breached duty by filing sanctions motion rather than a § 285 fee motion, constituting malpractice | Court: Tactical choice is an error in judgment, not malpractice; claim fails |
| Causation — entitlement to § 285 fees | SGR: no admission that the case was "exceptional" under § 285 standard | TSI: would have recovered fees under § 285 but for SGR's choice | Court: TSI failed to plead that the case was exceptional; proximate causation not established |
| Consideration of new appellate argument | SGR: appellate court may consider on-record legal theory | TSI: raised new theory on appeal | Court: Allowed new argument as it appeared on the record and was dispositive, but rejected it on the merits |
Key Cases Cited
- Octane Fitness, LLC v. Icon Health & Fitness, Inc., 134 S. Ct. 1749 (2014) (describing standard for awarding fees under 35 U.S.C. § 285 in exceptional cases)
- Rosner v. Paley, 65 N.Y.2d 736 (1985) (attorney error in judgment does not alone establish malpractice)
- Sitomer v. Goldweber Epstein, LLP, 139 A.D.3d 642 (1st Dep't 2016) (reaffirming that judgmental decisions by counsel are not malpractice)
- Vanship Holdings Ltd. v. Energy Infrastructure Acquisition Corp., 65 A.D.3d 405 (1st Dep't 2009) (appellate consideration of issues appearing on the face of the record)
- Sorenson v. Wolfson, 170 F. Supp. 3d 622 (S.D.N.Y. 2016) (treating fee motions as timely if filed within 14 days after resolution of postjudgment motions)