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Leon v. Martinez

Court of Appeals of New York

May 3, 1994, Argued ; July 7, 1994, Decided

No. 103

Opinion

 [***973]  [*86]  [**512]    Levine, J.

Plaintiffs brought this action against defendant Wilfredo Martinez and his attorneys to enforce plaintiffs' claim of entitlement to a portion of the proceeds of the settlement of a personal injury action by Martinez against the Hertz Corporation. The complaint alleges that, before the settlement of Martinez v Hertz Corp., at the request of plaintiffs and in consideration for plaintiffs' care of Martinez following his accident, defendant attorney Ira Futterman drafted an agreement between plaintiffs and Martinez which Martinez executed. The agreement, annexed to the complaint, provided as follows:

"(1) I give to Gina Leon 5% of any recovery that I may get after deducting all disbursements, expensesand attorney's fees from the case of WILFREDO MARTINEZ V. HERTZ CORPORATION.

 [*87]  "(2) I give to Xavier Leon 5% of any recovery that I may get after deducting all disbursements, expenses and attorney's fees from the case of WILFREDO MARTINEZ V. HERTZ CORPORATION.

"(3) I give to Maria Macia 15% of any recovery that I may get after deducting all disbursements, expenses and attorney's fees [****6]  from the case of WILFREDO MARTINEZ V. HERTZ CORPORATION."

Plaintiffs alleged that the agreement constituted a "lien" upon the proceeds of the settlement. The complaint further alleged that, contrary to the agreement, when the personal injury action was settled, defendant Futterman disbursed the entire net proceeds to Martinez and in doing so had a conflict of interest and was guilty of professional misconduct.

Defendants Futterman and the law firm Pearlman, Apat & Futterman moved to dismiss the complaint as against them pursuant to CPLR 3211 (a) (1) as barred by documentary evidence (i.e., the agreement between plaintiffs and Martinez) and CPLR 3211 (a) (7) for failure to state a cause of action. Plaintiffs submitted an affidavit in opposition describing in greater detail the services rendered by them to Martinez, the circumstances [**513]   [***974]  under which Futterman was requested to prepare the agreement, and their ongoing professional relationship with Futterman and his firm.

Supreme Court granted defendants' motion under CPLR 3211 (a) (1), concluding that Futterman's preparation of the agreement did not create liability on the part of him and his law firm for Martinez's [****7]  failure to honor it. Plaintiffs appealed and the Appellate Division reversed, with one Justice dissenting (193 AD2d 788). The Court held that where attorneys have notice of an assignment of a portion of their client's recovery, they may be held liable to the assignees for paying out that recovery in disregard of the assignment. The Appellate Division granted the defendants' motion for leave to appeal to this Court and certified the following question: "Was the decision and order of this court dated May 24, 1993, properly made?" We now affirm.

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84 N.Y.2d 83 *; 638 N.E.2d 511 **; 614 N.Y.S.2d 972 ***; 1994 N.Y. LEXIS 1437 ****

Xavier Leon et. al., Respondents, v. Wilfredo Martinez, Defendant, and Pearlman, Apat & Futterman et al., Appellants.

Prior History:  [****1]  Appeal, by permission of the Appellate Division of the Supreme Court in the Second Judicial Department, from an order of that Court, entered May 24, 1993, which (1) reversed, on the law, an order of the Supreme Court (Joseph J. Dowd, J.), entered in Kings County, insofar as it granted a motion by defendants Pearlman, Apat & Futterman and Ira A. Futterman to dismiss the complaint insofar as it is asserted against them, and (2) denied the motion. The following question was certified by the Appellate Division: "Was the decision and order of this court dated May 24, 1993, properly made?"

Leon v Martinez, 193 AD2d 788, affirmed.

Disposition: Order affirmed, etc.

CORE TERMS

funds, settlement, defendants', drafted, parties, words

Civil Procedure, Defenses, Demurrers & Objections, Motions to Dismiss, Failure to State Claim, Contracts Law, Standards of Performance, Assignments, General Overview