Lawyer Misses the Bus (a $300,000 tale of woe)

The cabbie’s nightmare began with courtesy and continued with insult and injury.

It began as just another busy day in the life of a New York livery cab driver: picking up and dropping off passengers. On this particular day, the cabbie had pulled to the curb just past a bus stop in Manhattan to let out a passenger. He then stepped out of the car to open the passenger’s door. Perhaps he thought a little extra courtesy might result in a bigger tip but, no matter the reason, in this case, it cost him dearly.

The next moment, a New York City Transit Authority (NYCTA) bus, while running its regular route, pulled behind the livery cab at the bus stop. The bus driver opened his door and shouted at the driver, “You idiot, what are you doing in the bus stop!” The cabbie calmly apologized and said he’d move his car. However, without waiting for that to happen, the bus driver drove the bus close to the cabbie, requiring him to close his passenger door slightly so as to avoid his car door being damaged by the bus. The bus driver then accelerated the bus and drove closer, striking the cabbie, and causing him severe personal injuries.

The injured driver hired a law firm to bring a personal injury claim. That law firm brought a case against the NYCTA, seemingly the owner and operator of the bus. Unfortunately, the law firm did not learn that the bus operator could only have been an employee of a separate public authority known as the Manhattan and Bronx Surface Transit Operating Authority (MABSTOA) until long past the statute of limitations period in which to make a claim. Only at the deposition of the bus depot dispatcher, held more than two years after the incident, did the law firm learn from the witness that the bus operators for that bus route were all MABSTOA employees and not NYCTA employees (and only because all bus operators listed on the “crew report” had the designation “M” for MABSTOA).

The case against the NYCTA went to trial and the jury rendered a verdict in favor of the NYCTA and dismissed the claims of the livery cab driver. The cab driver then retained Richard A. Klass, Your Court Street Lawyer to make a claim against the personal injury law firm for legal malpractice.

Time-barred by the Statute of Limitations:

The concept of a “Statute of Limitations” is that people are afforded a certain amount of time to take action concerning a legal claim they may have; if that period of time passes without taking action, then the ability to pursue the legal claim has been waived. Most people are familiar, for instance, that in New York State the statute of limitations period within which to file most personal injury cases is three years from the date of accident. In this particular case, though, a notice of claim had to be served upon MABSTOA within 90 days of the incident under certain rules contained in the Public Authorities Law and General Municipal Law §50-e; then, an action had to be commenced in 1 year and 90 days after the incident.

Confusion between the MTA, NYCTA and MABSTOA:

Within the “alphabet soup” letters of all of these different municipal authorities lays a trap to catch the unwary. According to the statutory scheme laid out in the Public Authorities Law §1260 et. seq., the Metropolitan Transportation Authority (MTA) is a public benefit corporation which was created to oversee the mass transportation systems of New York City, and which functions as an umbrella organization for various other independent but affiliated agencies. See, In re New York Public Interest Research Group Straphangers Campaign, Inc., 309 AD2d 127 [1 Dept. 2003]. However, aside from the MTA’s overall organization, the MTA and each of its subsidiaries (which include NYCTA and MABSTOA) must be separately sued and are not responsible for each other’s torts. See, Mayayev v. Metropolitan Transportation Authority Bus, 74 AD3d 910 [2 Dept. 2010]. As provided for in Public Authorities Law §1203-a, MABSTOA is a subsidiary, public benefit corporation.

In Nowinski v. City of New York, 189 AD2d 674 [1 Dept. 1993], the plaintiff sued MABSTOA for personal injuries sustained at a location for which the NYCTA maintained responsibility. The plaintiff sought to serve a late notice of claim and both MASTOA and NYCTA moved to dismiss the action. The court held that the injured person was time-barred from serving the late notice of claim, given that the statute of limitations had already long expired. (See, generally, Public Authorities Law §1276).

No claim for being “lulled” into a false sense of security:

To the extent that the law firm could have claimed in its defense that it could not have known of the relationship between the MABSTOA, MTA, NYCTA and the relevant bus operators identified in the crew report, the court in Delacruz v. Metropolitan Transportation Authority, 45 AD3d 482 [1 Dept. 2007], held that the injured plaintiff could not claim that, by the actions of the MTA, he was “lulled into a false sense of security” that his lawyer sued the right public authority. The court specifically held the doctrine of “equitable estoppel” applies only when a governmental subdivision acts wrongfully or negligently inducing reliance by a party who is entitled to rely and who changes his position to his detriment or prejudice. There was no evidence here of any wrongful conduct by the NYCTA; it did not hide the information about MABSTOA or mislead the injured driver’s lawyer.

The legal malpractice claim was settled for $300,000 to pay for the livery cab driver’s injuries and medical lien. This case only emphasizes the point of how important it is for a lawyer to identify the proper legal entities to be sued on behalf of a client.

— by Richard A. Klass, Esq.

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copyr. 2014 Richard A. Klass, Esq.
The firm's website: www.CourtStreetLaw.com
Richard A. Klass, Esq., maintains a law firm engaged in civil litigation in Brooklyn Heights, New York.
He may be reached at (718) COURT-ST or e-ml to RichKlass@courtstreetlaw.com with any questions.
Prior results do not guarantee a similar outcome.

Art credits:
Image at top of page: El Gouna (Red Sea, Egypt): public transport bus, customized and highly decorated in genuine Pakistani style. Coach built by Chishti Engineering (Karachi) and decorated by S. Gulzar (Karachi). Author/photographer: Marc Ryckaert, 2009. This image is licensed under the Creative Commons Attribution 3.0 Unported license.

Not so fast. Lawyer Can’t Be Displaced by Client without Court Order.

The client was injured and hired a lawyer to prosecute his personal injury claim against various entities for negligence. The lawyer agreed to handle the personal injury claim for a one-third contingent legal fee. “Contingent fee” refers to an arrangement with an attorney for payment of a percentage of an amount recovered for the client through settlement or resolution of the claim; a one-third contingency is fairly standard in personal injury matters.

After being retained by the client, the lawyer took a number of steps towards prosecuting the claim, including (1) commencing an action (termed a “special proceeding” in the New York State Supreme Court) against a municipality to file a “late” notice of claim to sue that government entity; (2) representing the client in the related worker’s compensation claim before the New York State Worker’s Compensation Board; and (3) commencing an action for personal injuries against the potentially-liable company in the New York State Supreme Court.

After the action was started in the New York State court, the defendant “removed” the action to federal court (based on a concept known as “diversity,” because that defendant was an out-of-state company). In the federal court case, the action continued with discovery proceedings taking place between the parties. The defendant even made an offer to settle the personal injury claim for $50,000, which was rejected.

Displacement of the Attorney
Three days after the $50,000 settlement offer, the lawyer received a letter from another law firm enclosing a Consent to Change Attorney form for the lawyer to sign and return with the file. The letter indicated that the client had now retained the other law firm to continue litigating his personal injury claim and, effectively, terminated the lawyer’s representation in the federal court case.

It is not uncommon for a client to change attorneys midstream during litigation; the usual steps taken upon substitution of attorneys is for the outgoing attorney to deliver the client’s file to the incoming attorney and for the attorneys to come to an arrangement concerning the split of the contingency fee when and if the case settles or resolves. It is also common for the incoming attorney to pay the outgoing attorney’s expenses on the file, including court filing fees, process service fees, and the costs of medical records and investigators. Unfortunately, in this situation, the incoming attorney was unwilling to pay the outgoing attorney’s expenses; he also refused to negotiate any division of the one-third contingency legal fee with the outgoing attorney, claiming instead that the outgoing attorney was entitled to nothing.

Attorney Cannot Be Displaced without Court Order
The outgoing attorney contacted Richard A. Klass, Your Court Street Lawyer, about enforcing his rights to both his legal fee and reimbursement for expenses. The first step was to draft an Order to Show Cause seeking both a “charging” lien upon any future legal fee upon settlement of the case for the lawyer’s percentage and a “retaining” lien to hold onto the client’s file until the expenses were paid.

There is a rule in the United States District Court for the Eastern District of New York concerning the situation where an attorney withdraws or is displaced from a case:

Local Civil Rule 1.4. Withdrawal or Displacement of Attorney of Record.An attorney who has appeared as attorney of record for a party may be relieved or displaced only by order of the Court and may not withdraw from a case without leave of the Court granted by order. Such an order may be granted only upon a showing by affidavit or otherwise of satisfactory reasons for withdrawal or displacement and the posture of the case, including its position, if any, on the calendar, and whether or not the attorney is asserting a retaining or charging lien.

The Order to Show Cause stated that the lawyer was “displaced” from the case by his former client for no legitimate reason and that the lawyer could only be displaced by Order of the Court. Stated in the accompanying affirmation of the outgoing attorney was that the incoming attorney (and, presumably, his former client) were proposing to pay him $0 for two years’ worth of work on the file. It was urged that the federal judge uphold longstanding New York State law that protects attorneys who render legal services on behalf of their clients.

Charging and Retaining Liens
Under New York State law, an attorney who is discharged by his client is statutorily entitled to a charging lien on any monetary recoveries obtained by the former client in the proceedings in which the attorney had rendered legal services. See Judiciary Law § 475. In Mello v. City of New York, 303 AD2d 564 [2003], the court held that where an attorney’s services were provided on a contingent-fee basis, the court should determine the amount of the lien to be fixed in accordance with the attorney’s request, as a contingent percentage based on the proportionate percentage of work he performed, to be determined at the conclusion of the action (see Matter of Rosenblum, 121 AD2d 546 [1986]; see also Lai Ling Cheng v Modansky Leasing Co., 73 NY2d 454, 457-458 [1989]).

A discharged attorney is also entitled to a retaining lien on the former client's papers and property that are in the attorney's possession, under New York common law. See Resolution Trust Corp. v. Elman, 949 F.2d 624, 626 (2d Cir.1991). This mean that the client’s file can be retained by an attorney until he is paid, similar to how a mechanic can hold onto a car until the car’s owner pays for the repairs.

A conference was held with the judge. The judge decided that the client’s file would be exchanged only upon payment of the file expenses and that the outgoing attorney’s percentage of the overall legal fee would be determined when the case settled or resolved. About six months later, the incoming attorney settled the case for $70,000. The charging lien was settled through negotiations between the attorneys, with the outgoing attorney being paid $16,000 for one third of the initial $50,000 settlement offer and the incoming attorney being paid $6,000 for one third of the next $20,000 settlement portion.

Contact me if you have any questions.

Sincerely yours,
Richard A. Klass, Esq.
Your Court Street Lawyer
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copyr. 2011 Richard A. Klass, Esq.
The firm's website: www.CourtStreetLaw.com
Richard A. Klass, Esq., maintains a law firm engaged in civil litigation in Brooklyn Heights, New York.
He may be reached at (718) COURT-ST or e-mail to richklass@courtstreetlaw.com with any questions.
Prior results do not guarantee a similar outcome.