Failure To Pay

The New York Appellate Division for the Second Judicial Department affirmed an order declining to dismiss an action brought by a former law firm attorney

The plaintiff, an attorney, was employed by the defendant Curan & Ahlers, LLP (hereinafter the firm), for approximately 18 years. On June 30, 2021, the plaintiff commenced this action against the firm and its managing partner, the defendant Keith J. Ahlers, asserting causes of action sounding in breach of contract and violation of Labor Law § 193 based on allegations that the defendants failed to pay him certain amounts constituting salary and nondiscretionary bonuses for work that he performed. As alleged in the complaint, pursuant to an agreement negotiated between the plaintiff and Ahlers in 2004, the plaintiff would be paid an annual salary of $70,000 and an
incentive bonus of 5% of any attorneys’ fees recovered on cases that he litigated. Prior to January 2008, the plaintiff was paid pursuant to this arrangement.

However, as alleged in the complaint, in 2008, Ahlers began withholding the plaintiff’s biweekly paychecks and some of his bonus checks, advising that the firm had insufficient funds to pay him. Throughout this time, the plaintiff kept a spreadsheet of the bonus money that he was owed and periodically showed the spreadsheet to Ahlers, who repeatedlyacknowledged that the plaintiff would “eventually be paid the full 5% bonus on each case that he litigated.” On July 17, 2015, the plaintiff received his last bonus payment from the firm, but Ahlers continued to make assurances that the plaintiff would be paid the outstanding bonus money that he was owed. In August 2020, Ahlers changed course and informed the plaintiff that he would not receive any of the outstanding bonus money. At this point, the plaintiff resigned.

No dismissal

Here, contrary to the defendants’ contention, the plaintiff stated a cause of action to recover damages for violations of Labor Law § 193 based on the allegations that the firm failed to pay a portion of his salary and nondiscretionary bonuses (see Gertler v Davidoff Hutcher & Citron LLP, 186 AD3d 801, 808; Ackerman v New York Hosp. Med. Ctr. of Queens, 127 AD3d at 795). Further, as alleged, Ahlers and the firm are each “employers” that may be held liable for violations of Labor Law § 193 (see id. § 190[3]; Lomeli v Falkirk Mgt. Corp., 179 AD3d 660, 663; Cohen v Finz & Finz, P.C., 131 AD3d 666, 667).

Contrary to the defendants’ contention, the plaintiff can maintain a cause of action alleging breach of contract against Ahlers individually. Although the Partnership Law provides Ahlers, a partner in a limited liability partnership, with certain protections from liability (see id. § 26; Salazar v Sacco & Fillas, LLP, 114 AD3d 745, 747), there is an exception in the event that the partnership becomes insolvent

A related order is linked here.

Here, the plaintiff alleged that, over a course of years, the defendants made repeated assurances that they would pay him salary and bonus money that he was owed pursuant to his employment arrangement. Further, he alleged that the defendants made a partial payment of outstanding bonus money to the plaintiff on July 17, 2015, within the statute of limitations. Under these circumstances, the plaintiff raised a question of fact as to whether the statute of limitations was tolled or revived (see Lew Morris Demolition Co. v Board of Educ. of City of N.Y., 40 NY2d at 521; RTT Holdings, LLC v Nacht, 206 AD3d at 836; Matter of McDonald, 79 AD2d 754, 755).

The Supreme Court erroneously concluded that the plaintiff was required to show a writing in order to meet his burden of raising a question of fact as to whether the statute of limitations was tolled or revived by virtue of partial payment. Unlike General Obligations Law § 17-101, which is applicable when a party seeks to show that a statute of limitations is tolled by a written acknowledgment, there need not be a writing in order for a plaintiff to demonstrate that the statute of limitations is tolled or revived by reason of partial payment (see generally Lew Morris Demolition Co. v Board of Educ. of City of N.Y., 40 NY2d at 521).

(Mike Frisch)