122 Misc. 2d 576 | N.Y. Sup. Ct. | 1983
OPINION OF THE COURT
Motions numbered 108 of January 11, 1982 and 174 of November 10, 1981 are consolidated for disposition.
In each, defendant City of New York moves pursuant to CPLR 3211 (subd [a], par 7) to dismiss the complaint upon the grounds plaintiffs have failed to state a cause of action for counsel fees and expenses in connection with prior Heart Bill litigation.
In 1979, a controversy arose among the city members and union members of the Board of Trustees (Board) of the Fire Department Pension Fund (F.D. Fund) and also among the respective members of the Police Department
Each pension fund is administered by its Board and disability pensions may only be awarded upon a majority vote of its members. The F.D. Fund’s Board has 24 votes (Administrative Code of City of New York, § B19-2.0), 12 controlled by the union and 12 controlled by the city and resolutions must be adopted by at least 14 votes (Administrative Code, § B19-2.0, subd b). Similarly the P.D. Fund’s Board has 12 votes, 6 controlled by the union and 6 controlled by the city and at least 7 votes are required to adopt a resolution (Administrative Code, § B 18-2.0, subd b).
Because of the even split between the union members of the Boards and the city members concerning their respective interpretations of what constituted an accident within the meaning of the Heart Bill, the requisite majority vote was not achieved and applicants were retired on ordinary disability (Matter of City of New York v Schoeck, 294 NY 559). The union members of the P.D. Fund retained Botein, Hayes, Sklar & Herzberg as counsel, and the union members of the F.D. Fund retained Gordon & Shechtman as counsel to challenge the interpretation of the city-controlled members on the Heart Bill retirement applications. In both cases, the union position was sustained (Uniformed Firefighters Assn. v Beekman, 52 NY2d 463; De Milia v McGuire, 52 NY2d 463).
Upon this motion to dismiss, defendants contend that the actions were commenced on behalf of plaintiff unions and their constituencies to challenge the pension funds’ failure to grant line-of-duty disability pensions under the Heart Bill. However, the prior record of both the police (De Milia v McGuire, 52 NY2d 463, affd 76 AD2d 1039, affg NYLJ, Nov. 20, 1979, p 6, col 1 [Ascione, J.]) and fire fighters (Uniformed Firefighters Assn. v Beekman, 52 NY2d 463, affg 76 AD2d 1039, affg 104 Misc 2d 829 [Greenfield, J.])
Defendants also assert that absent an agreement or specific statutory authority, a private litigant may not recover his counsel fees from an adverse litigant (see Soffer v Glickman, 27 Misc 2d 721, 724-725; Judiciary Law, § 474; Doyle v Allstate Ins. Co., 1 NY2d 439, 444; Matter of Loomis, 273 NY 76, 81-82).
Section 474 of the Judiciary Law specifically provides that: “[t]he compensation of an attorney or counsellor for his services is governed by agreement, express or implied, which is not restrained by law”. (Emphasis supplied.) The issue here presented is whether the responsibility for payment of the plaintiffs’ counsel fees is implied in law and is not otherwise restrained or prohibited.
In order to address this issue, a brief summary of the circumstances leading up to the commencement of the two actions is necessary.
In 1970, after years of effort by police and fire fighter organizations, there was enacted the Heart Bill (General Municipal Law, § 207-k, as added by L 1970, ch 805). The bill had previously been passed by the Legislature 13 previous times and vetoed by the Governor on each occasion. The purpose of the law was to relieve the pension applicant of the onerous burden of proving the connection between the applicant’s heart condition and his service by providing for a rebuttable presumption that an applicant’s heart disease was incurred as a result of his service. The statute was enacted originally for a period of one year. However, despite considerable opposition, it was re-en
In February, 1979, the then Corporation Counsel, Allen G. Schwartz, in conformity with the vehement and vocal opposition to the law, expressed by Mayor Edward Koch “rendered an opinion that despite the presumption of section 207-k * * * that heart disease sustained during the period of service of a uniformed policeman or fireman was incurred in the performance and discharge of duty, the disability pension applicant would still have to prove ‘that his disability is the result of some discrete and identifiable, unusual and sudden event which alone would constitute an “accident” * * *’ (Corporation Counsel Opn. No. 25-79.) He advised the board of trustees that they could not apply and interpret the disability sections as they had in the past.” (Uniformed Firefighters Assn. v Beekman, 104 Misc 2d 829, 833-834, affd 52 NY2d 463, 469, supra.)
This reversal of position created turmoil in the proceedings of the Boards of Trustees. The city-controlled members voted to deny accidental disability benefits unless a specific accident was demonstrated, but the union-controlled members, relying on the prior interpretation of section 207-k, voted to grant disability benefits without such proof. The Boards’ votes were split 50-50 and, in consequence of not having obtained the majority necessary to adopt resolutions (Administrative Code, § B18-2.0, subd b [for the P.D. Fund]; § B19-2.0, subd b [for the F.D. Fund]), applicants were retired on ordinary disabilities. Thus, the Corporation Counsel’s new interpretation was adopted by the Boards of Trustees by default. To rectify this situation, the union trustees retained counsel and commenced declaratory judgment actions.
As previously noted, the Pension Funds are agencies within the meaning of the New York City Charter (§1150, subd 2) since the expenses of the funds’ operations are paid
The city argues that this very issue was determined by the Court of Appeals in Seifv City of Long Beach (286 NY 382). In Seif, the Mayor of Long Beach retained private counsel to institute legal proceedings to compel the Board of Supervisors of Nassau County, sitting as a board of equalization, to exclude certain property from the total assessed value of property in the City of Long Beach. The court stated that notwithstanding the fact that the City of Long Beach knew of and acquiesced in the retention of private counsel and gladly accepted the benefits of that representation, these circumstances did not constitute a ratification sufficient to compel payment of the attorney’s fees. “Where the Legislature provides that valid contracts may be made only by specified officers or boards and in specified manner, no implied contract to pay for benefits furnished by a person under an agreement which is invalid because it fails to comply with statutory restrictions and inhibitions can create an obligation or liability of the city.” (Seif v City of Long Beach, 286 NY, at p 387; see, also, NY City Charter, §§ 394, 395.)
But Seif (supra) does not address the particular problems here presented. In Seif, the Long Beach Corporation Counsel was apparently always ready, willing and able to prosecute the case and in fact was directed to file a notice of appeal of the Appellate Division’s order in the case. In this case, independent counsel was required to challenge the opinion of the very Corporation Counsel that the defendants suggest should have been retained.
The situation here presented was one where “the corporation counsel himself is confronted with the dilemma of either on the one hand refusing to discharge his statutory duty, or of assuming to act as the * * * [trustees] legal advisor under circumstances which should in no event be required of any honest and self-respecting attorney.” (Judson v City of Niagara Falls, 140 App Div 62, 66, supra.) Where, as here, the question of conflict of interest is so obvious, there can be no requirement that the trustees first request that Corporation Counsel represent them and then retain independent counsel upon his refusal (see, e.g., Business Corporation Law, § 626, subd [c]; Barr v Wackman, 36 NY2d 371).
Defendant’s reliance upon Corning v Village of Laurel Hollow (48 NY2d 348) is misplaced. In that case, in a 4 to 3 opinion, the Court of Appeals citing Seif (supra) again stated that plaintiff’s counsel was not entitled to reimbursement where they had not been retained in accordance with statute and further that plaintiffs, former municipal officers, were not entitled to reimbursement where they had been sued personally in a Federal civil rights action (US Code, tit 42, § 1983) for their actions while in office. The court held that the defense of that action was purely
In this case, the Corporation Counsel did not and, indeed, under the Code of Professional Responsibility (see, e.g., EC 5-15), he could not undertake to represent the very trustees who sought to vacate his opinion. Moreover, the trustees neither sought nor obtained any personal benefit from the declaratory judgment action they commenced; rather, the actions were prosecuted by 50% of the trustees to compel the remaining 50% of the trustees to observe their fiduciary duties to the trust and end a deadlock created by the Corporation Counsel’s opinion. It is beyond cavil that a trustee owes a duty to the beneficiaries of the trust to take reasonable steps to realize on claims which he holds in trust and trustees have an inherent equitable right to be reimbursed all expenses which they reasonably incur in the execution of the trust including all reasonable fees for legal services in discharge of their duties (see 3 Scott, Trusts [3d ed], § 188.4; Perry, Trusts, §§ 910, 917, 918; Woodruff v New York, Lake Erie & Western R. R. Co., 129 NY 27; Corn Exch. Bank Trust Co. v Bankers Trust Co., 268 NY 224; Schoenherr v Van Meter, 215 NY 548).
Accordingly, this court concludes that the plaintiffs in the original actions — De Milia v McGuire (52 NY2d 463, supra) and Uniformed Firefighters Assn. v Beekman (52 NY2d 463, supra) — brought the lawsuits as trustees of the pension funds in circumstances where they could not be
The motions to dismiss the complaints are denied and defendants are directed to serve their answers within 10 days after service upon them of a copy of this order with notice of entry.