Gordon Rees Scully Mansukhani New York Partner Marci Mitkoff prevailed on an appeal in the Appellate Division, Third Department, which arose from a dispute concerning the payment of counsel fees, disbursements, and liens from a settlement recovered by the plaintiffs in an underlying personal injury action.
Upon receiving the settlement checks and statement of settlement, the plaintiffs purported to terminate GRSM’s law firm client for cause and demanded that the remaining funds be held in escrow. The plaintiffs claimed that GRSM’s client committed malpractice because it was not prepared for trial and asserted that, as a result, they were forced to settle the case for less than they wanted. Based on those allegations, the plaintiffs sought a determination that GRSM’s client had been discharged for cause, which, if established, could have affected the firm’s entitlement to fees from the settlement proceeds. The plaintiffs therefore requested a hearing on that issue. The judge in the underlying action denied the request.
On appeal, the Appellate Division, Third Department determined that the plaintiffs’ allegations failed to raise a colorable claim of discharge for cause, so the requirement for a formal evidentiary hearing on the plaintiffs’ allegations was not triggered.