Morgan Art Foundation Limited v. McKenzie d/b/a American Image Art

Background

Goetz Fitzpatrick LLP moved for permission to withdraw as counsel for American Image Art and Michael McKenzie, referred to in the order as the AIA Defendants. The firm relied on a substantial breakdown in communications, irreconcilable differences about case strategy, and the AIA Defendants’ failure to pay recent bills. It also requested a 45-day period for the AIA Defendants to retain new counsel.

The firm stated that it intended to seek a retaining or charging lien. At the June 19 hearing, the firm withdrew its assertion of a retaining lien. The firm and McKenzie confirmed that the court had not been asked to decide whether any charging lien was valid or what it was worth.

Positions of the Parties

Morgan Art Foundation Limited did not oppose the firm’s withdrawal request. It opposed the requested 45-day period, arguing that it would cause unnecessary delay while fact depositions were scheduled to be completed by July 30, 2020. Morgan suggested requiring the AIA Defendants to retain counsel within 10 days after the ruling.

McKenzie told the court that his relationship with the firm had deteriorated to the point that they could no longer work together. The opinion does not state that he took a position on the length of time needed to retain new counsel.

Ruling

Finding good cause, Judge Barbara Moses granted the motion for leave to withdraw as counsel. The order required any new counsel retained by the AIA Defendants to file a notice of appearance no later than July 20, 2020. Until new counsel was retained, McKenzie could enter a self-represented appearance by filing the required notice.

The order also stayed deposition discovery until July 27, 2020. During that pause, the parties could continue scheduling depositions and serving required notices or subpoenas, but no deposition could be scheduled for or begin before July 27. Written discovery could continue. The deadline for completing fact discovery was extended to August 31, 2020, and the deadline for completing expert discovery was extended to October 14, 2020.

American Image Art’s Legal Status

A footnote states that, during the hearing, the withdrawing attorneys and McKenzie informed the court that American Image Art was an unincorporated sole proprietorship wholly owned by McKenzie. The pleadings did not contain that information, and Morgan alleged that American Image Art was a Delaware corporation. The AIA Defendants denied that allegation but did not otherwise describe the business’s legal form.

The court explained that, if American Image Art were an unincorporated sole proprietorship, the caption might need to identify McKenzie individually and doing business as American Image Art, and McKenzie could potentially represent himself and the business. If American Image Art were a corporation or another separate legal entity, it would have to be represented by counsel. The court expressly noted these issues but did not resolve them. McKenzie confirmed that he intended to retain new counsel for himself and his business.

Administrative Directions

The order directed Goetz Fitzpatrick LLP to promptly serve the order on American Image Art and McKenzie and file proof of service. After proof of service was filed, the Clerk was directed to terminate attorneys John B. Simoni, Jr. and Hyun-Jeong (Becky) Baek as counsel in the action.