Claims Against Referring Firm Reinstated
A law firm that had represented a client sued the client for unpaid fees. The plaintiff firm also sued the law firm that had referred the client, claiming that the defendant law firm had represented that their clients (the Nassers) guaranteed payment of their fees. Plaintiff appealed the dismissal of claims against the referring law firm.
The New York Appellate Division for the First Judicial Department held that the claims were viable:
The complaint alleges that defendants-respondents represented toplaintiff law firm that they had authority from the Nassers to promisepayment of $75,000 of the legal fees incurred by plaintiff’s clientwhen, in fact, they lacked the authority to bind the Nassers. Thus, thecomplaint alleges a viable claim for breach of the implied warranty ofauthority. The complaint also alleges that defendants-respondentsfalsely represented to plaintiff law firm that they specificallydiscussed the subject matter of their authority and representationswith the Nassers. Thus, the complaint alleges a viable clam fortortious misrepresentation of authority and assurances of payment.
To the extent the motion court relied on the principle ofapparent authority, lack of consideration and the statute of frauds todismiss these causes of action, such was error. The doctrine ofapparent authority is irrelevant because the fourth and fifth causes ofaction are not seeking to hold the principals (the Nassers) liable onthe ground that defendants-respondents had apparent authority from theNassers to make promises of payment. Rather, these causes of action areseeking to hold the agents, defendants-respondents, liable forcontracts or representations they purported to make on behalf of theprincipal (the Nassers) while acting without authority from theprincipal. Therefore, the fact that the Nassers never manifested toplaintiff law firm that defendants-respondents were authorized to acton the Nassers’ behalf has no bearing on the viability of the fourthand fifth causes of action. Moreover, regardless of whether or notthere was consideration running to the Nassers, defendants-respondentscan still be held liable for their own tortious conduct in makingdeliberate misrepresentations of fact that they had authority to makethe promises that the Nassers would pay $75,000 of the legal feesincurred by plaintiff’s client (see Restatement (Third) ofAgency §§ 6.10, 7.01 [2006]). In addition, the statute of frauds doesnot come into play since the fourth and fifth causes of action are notseeking to enforce the unwritten agreement by the Nassers to payplaintiff’s client’s legal fees against the Nassers. These causes ofaction state a claim against the defendants-respondents regardless ofwhether there is an enforceable contract with the Nassers.
The sixth cause of action against defendants-respondents fortortious interference with defendant Jacques Nasser’s contract withplaintiff law firm to pay $37,500 of the legal fees incurred byplaintiff’s client was also improperly dismissed by the motion court.In order for there to be a viable claim there must be a valid contractbetween Jacques Nasser and plaintiff law firm. Pursuant to GeneralObligations Law § 5-701(a)(2), every agreement, promise or undertakingwhich is a special promise to answer for the debt of another is voidunless it is in writing. Under a long-standing exception to the statuteof frauds, however, the promise need not be in writing if it issupported by new consideration moving to the promisor and beneficial tohim, and the promisor has become in the intention of the parties aprincipal debtor primarily [*3]liable (see Martin Roofing v Goldstein, 60 NY2d 262, 264 [1983], cert denied 466 US 905 [1984]; Carey & Assoc. v Ernst, 27 AD3d 261[2006]). At the very least, the allegations in the complaint raise anissue of fact concerning whether Jacques Nasser agreed to act as aguarantor in the event plaintiff’s client did not pay her legal fees,in which case there was no enforceable contract, or whether in seekingto secure the benefit of the cooperation of plaintiff’s client inconnection with the lawsuit against him by her employer, Jacques Nasseroffered to lift the burden of the obligation to pay legal fees fromplaintiff’s client and pay the law firm directly, in which case thecontract would not be barred by the statute of frauds (see Rowan v Brady, 98 AD2d 638, 639 [1983]). Therefore, the sixth cause of action for tortious interference with contract is reinstated.
Finally, the motion court erroneously dismissed the seventhcause of action against defendants-respondents which alleges tortiousinterference by defendants-respondents with the attorney-clientrelationship between plaintiff law firm and its client, defendantSrour. Insofar as the complaint alleges that defendants-respondents,knowing that Srour was represented by plaintiff law firm, met withSrour alone, without informing plaintiff law firm of the meeting, andapproximately three days later, Srour discharged plaintiff law firm, itis sufficient at this stage of the proceedings, to state a viableclaim, and therefore the seventh cause of action is reinstated.
(Mike Frisch)