Hernan Lopez Fontana, et al. v. Argentina Republic

Background

The pending disputes concerned attorney’s fees between Guillermo Gleizer and Sutton Sachs Meyer PLLC (SSM). Gleizer had represented Hernan Lopez Fontana and Mariana Mori De Lopez in this case against the Republic of Argentina, which involved defaulted Argentine bonds. After the plaintiffs settled with Argentina in 2016, Gleizer retained SSM in 2018 to handle, among other things, his fee dispute.

Under the engagement letter, Gleizer agreed to pay SSM at least 18% of recovered net attorney’s fees, with the fee potentially increasing to 25% if Gleizer obtained a substantial reduction in certain administrative costs. The agreement also gave SSM the exclusive right to take legal steps to collect outstanding attorney’s fees and required Gleizer not to bypass SSM in resolving the matters.

The court later entered a judgment ordering the plaintiffs to pay Gleizer $152,834.54 in attorney’s fees. SSM received part of a settlement payment into its New York escrow account. It disbursed $113,395.81 to Gleizer but retained $57,423.66 as its fee related to the settlement and $38,208.63 as security for a possible fee connected to enforcing the judgment abroad. The parties disputed whether SSM was entitled to a 25% fee and whether Gleizer’s actions repudiated his fee obligations.

SSM also sought to attach the $38,208.63 to secure payment of an alleged balance arising from services in a separate case. Gleizer disputed, among other things, the legitimacy of the invoices. Separately, Gleizer asked the court to remove SSM as his counsel and sought recusal of the judge.

Attachment of the Remaining Fee

Applying New York law through Federal Rule of Civil Procedure 64, the court held that SSM satisfied the requirements for an order of attachment. Attachment is a provisional remedy that secures property for a possible money judgment. The court found that SSM had shown a possible breach-of-contract claim based on Gleizer’s alleged efforts to avoid the fee obligations, including allegedly preventing SSM from receiving updates about enforcement efforts abroad, attempting to divide SSM’s fee with foreign counsel, and terminating SSM.

Although SSM had not yet filed a pleading, the court found that its affidavits and other papers adequately described a claim that could result in a money judgment. The court ordered SSM to file a pleading stating its breach-of-contract cause of action within 30 days.

The court also found that SSM showed a likelihood of success. It concluded that Gleizer’s alleged statement that “SSM will never see a penny of the funds flowing from the Judgment,” his rejection of the 25% fee, his effort to divide the fee with foreign counsel, and the alleged loss of SSM’s access to enforcement information likely amounted to a total breach of the engagement agreement.

The court found an attachment ground under New York law because Gleizer was a nondomiciliary residing outside New York. It relied on his statements that he was no longer in New York, had not been there for several years, needed to spend time in Italy, and used addresses in Florida and Italy. The court did not decide whether another attachment ground—an alleged effort to frustrate enforcement of a future judgment—also applied.

The court further found that SSM’s claimed damages exceeded any counterclaims it conceded as valid and that attachment was necessary because without it there was a real risk that a future judgment would not be enforceable. The court therefore granted SSM’s motion to attach the $38,208.63. SSM was required to post a $1,500 undertaking, which serves as security for costs or damages if the attachment is later found to have been wrongfully granted.

Preliminary Injunction

SSM asked for a preliminary injunction preventing transfer of the $38,208.63. The court found it unclear whether the parties disputed who held the money in escrow or whether the money should remain in escrow at all. The court therefore held SSM’s request for preliminary injunctive relief in abeyance and ordered both sides to provide their positions by letter within 30 days. The court did not grant or deny that request in the order.

Quasi-in-Rem Jurisdiction

SSM also sought to attach the $38,208.63 as the jurisdictional basis for a separate action seeking $12,634.32 allegedly owed for services in another case. The court found it unclear whether SSM intended to commence that action in state court, federal court, or this court. It also found that SSM had not shown that the escrowed money was sufficiently related to the separate fee dispute to support jurisdiction based only on that property.

Because SSM did not assert another jurisdictional basis, such as minimum contacts with New York, the court denied SSM’s motion to attach the money as a quasi-in-rem jurisdictional basis for a separate action.

Removal of Counsel

The court held that a client has an absolute right to terminate the attorney-client relationship with or without cause. It found there was no question that Gleizer had terminated SSM as counsel. The court therefore granted Gleizer’s request to remove SSM as counsel and directed SSM to file, within 15 days, a motion to withdraw stating the reasons for withdrawal, the case’s posture, and that SSM was asserting a charging lien.

Recusal

Gleizer, who was proceeding without a lawyer and whom the court described as an experienced attorney, sought recusal based on alleged bias and partiality. The court found his affidavit under 28 U.S.C. § 144 legally deficient because it lacked the required certificate from counsel of record.

The court nevertheless considered recusal under 28 U.S.C. § 455. It concluded that Gleizer’s complaints about case-management decisions, including the delay in ruling on the pending motions, did not establish a legally sufficient basis for recusal. The court therefore denied Gleizer’s motion for recusal.

Disposition

Judge Loretta A. Preska granted SSM’s motion to attach the Remaining Fee; held SSM’s motion for preliminary injunctive relief in abeyance; denied SSM’s motion to attach the Remaining Fee as a quasi-in-rem jurisdictional basis for a separate action; granted Gleizer’s request to remove SSM as counsel; and denied Gleizer’s motion for recusal. The parties were also ordered to update the court every 60 days about efforts to enforce the earlier judgment abroad.