First Capital Real Estate Investments, L.L.C. v. SDDCO Brokerage Advisors, LLC

Background

Brinen & Associates, LLC moved for a second time under Local Civil Rule 1.4 to withdraw as counsel of record for First Capital Estate Investments, LLC. The motion was unopposed and asked that First Capital receive 30 days to retain new counsel. Brinen & Associates asserted that First Capital had failed to pay legal fees and costs, that withdrawal would not unduly disrupt the existing schedule, and that managing member Suneet Singal had indicated an intention to retain alternate counsel.

The firm submitted an affidavit from attorney Joshua D. Brinen, along with an April 20, 2017 retainer agreement, related exhibits, and a September 24, 2019 termination letter. Brinen stated that the firm had represented First Capital in this case beginning on or about August 14, 2017, including work before the Financial Industry Regulatory Authority and preparation of the petition seeking to vacate its arbitration award. He asserted that First Capital owed $163,780.17 for work in this action and that the firm intended to assert a lien on files and work product pending payment.

Legal standard

Under Local Civil Rule 1.4, counsel of record may withdraw only by court order. The attorney must show satisfactory reasons for withdrawal and provide information about the case’s posture and any retaining or charging lien. The court also cited New York professional-conduct rules allowing withdrawal when a client deliberately disregards an agreement or obligation concerning fees, while requiring court permission when the matter is pending before a tribunal.

The court recognized that nonpayment of legal fees can be a satisfactory reason for withdrawal, but explained that nonpayment alone may be insufficient without proof addressing the client’s ability to pay. A retaining lien is a lawyer’s right to hold a client’s papers, securities, or money in the lawyer’s possession as security for unpaid fees.

Court’s analysis

The court first found that no proof showed the motion had been served on First Capital, as Local Civil Rule 1.4 required. It stated that denial on that ground was warranted, but nevertheless considered the motion.

The court noted that Brinen had stated in the September 24, 2019 letter that he had elected to withdraw effective September 30, 2019, but had not sought permission to withdraw as counsel of record until December 30, 2019. The affidavit did not explain that delay.

The court also concluded that the April 20, 2017 retainer agreement did not govern the firm’s representation in this case. Brinen stated that the firm was hired for this action on or about August 14, 2017, and that the earlier agreement had not been modified or amended. The court therefore determined that the terms of the August 14 agreement governed this representation, but Brinen did not submit that agreement or a provision showing First Capital’s promise to pay the fees and expenses invoiced for this case.

The firm also did not submit the final statement that Brinen had said would be sent on October 1, 2019, any invoices detailing fees and expenses for this action, or evidence that First Capital received such invoices. The court further noted the absence of evidence that First Capital could not pay the fees allegedly owed or that it had deliberately disregarded its financial obligations under the August 14 agreement.

The court rejected the firm’s assertion that replacement counsel was being retained because Brinen did not submit the November 13, 2019 email allegedly sent by Singal. The court also found that withdrawal at that stage could prejudice SDDCO and delay the case. Pending motions concerned contempt and sanctions and attorney’s fees based on First Capital’s alleged failure to comply with post-judgment discovery requests. The court found that First Capital’s dilatory conduct, together with Brinen’s conduct during the post-judgment proceedings, had already disrupted and delayed SDDCO’s prosecution of those matters.

Disposition

Judge Kevin Nathaniel Fox denied the motion to withdraw as counsel of record, without prejudice to a future application based on a significant change in circumstances supported by competent evidence. The court identified possible supporting materials, including the August 14, 2017 agreement, invoices for services in this action, proof that First Capital received the invoices, and corroborated evidence of First Capital’s deliberate disregard of its financial obligations under that agreement.