Garfield v. Greenbaum, Wolff & Ernst

— Judgment, Supreme Court, New York County (Edward Greenfield, J.), entered on November 10, 1983, modified, on the law, to grant summary judgment to plaintiff for the sum of $17,500 as the balance of compensation due for the year 1982 and otherwise affirmed, without costs and without disbursements. Bloom, J., concurs in a memorandum in which Kassal, J., concurs; Asch, J., dissents in a memorandum in which Alexander, J., concurs; and Carro, J. P., concurs in part and dissents in part in a memorandum, all as follows: Bloom, J. (concurring). Plaintiff, an attorney, became counsel to the law firm of Greenbaum, Wolff & Ernst in April, 1971. Under the agreement between the two, the first $150,000 in fees received from clients brought to the firm by Garfield was to be split equally. Fees in excess of that amount were to be divided 30% to Garfield and 70% to Greenbaum, Wolff. The agreement further provided that, in the event of Garfield’s retirement, the agreement would be renegotiated. In 1975 Garfield decided to partially retire. He moved to Florida. However, he remained available for consultation on matters affecting his principal client, Fiat Motor Company, Inc. Additionally, it was contemplated that he would make trips to Fiat headquarters in New Jersey approximately once every three weeks. The day-to-day legal business of Fiat was left in the hands of Robert Fisher, a partner in Greenbaum, Wolff. A new agreement was negotiated between plaintiff and Greenbaum, Wolff which provided that he was to continue to serve as counsel to the firm, but that consultative services need be rendered in Florida and New Jersey only, and only if his health permitted. In return therefor Garfield was to be paid $52,000 a year for the years 1976,1977 and 1978. Thereafter, and until the end of the year 1987 or to the date of his death, whichever came sooner, he was to be paid $35,000 710 annually. In the event that he died prior to the end of 1980, plaintiff’s wife was to receive the stipulated compensation until that date. Finally, the agreement provided that if the fees generated by Garfield’s clients fell below $175,000, his compensation would be diminished. While the diminution would not be proportionate to the diminution in fees, it was expressly provided that if the fees should diminish to zero, plaintiff would not be entitled to any compensation, tin May, 1977, Garfield suffered a stroke and retired from any active participation in the practice of law. Nevertheless, and in accordance with the agreement, Greenbaum, Wolff paid him $52,000 in 1977 and 1978 and $35,000 in 1979. In 1980, despite the fact that he was no longer rendering services to the firm, his remuneration was increased to $45,000 annually, by a letter agreement, in recognition of the financial toll exacted by inflation and in an acknowledgment of the fact that, by reason of inflation, the fees received from Fiat had increased substantially. 11 In March, 1982, the partners of Greenbaum, Wolff adopted a voluntary plan of liquidation to become effective on June 30, 1982. Garfield was notified that, in light of the liquidation, his compensation would terminate on that date. As of June 30, 1982, he had received from Greenbaum, Wolff the sum of $27,500 in compensation for that year. Garfield demanded that the agreed compensation be continued for the period specified in the agreement or that he be given the actuarial value of an annuity for the time involved. That demand was rejected. 11 Fisher, the Greenbaum, Wolff partner who had handled Garfield’s clients, became a partner in Rosenman, Colin, Freund, Lewis and Cohen. As a result, Fiat became a client of Rosenman, Colin. Fisher, acting on behalf of Garfield, negotiated an agreement with Rosenman, Colin in which Rosenman, Colin, “assumed the obligations” of Greenbaum, Wolff. However, the compensation to be paid to Garfield was modified to a sliding scale much less favorable to Garfield financially than was the agreement with Greenbaum, Wolff. Most notably, the agreement provided that any recovery by Garfield under the Greenbaum, Wolff agreement would result in an “equitable” reduction of the obligation of Rosenman, Colin to Garfield. 11 Garfield then commenced this action against Greenbaum, Wolff as a partnership in liquidation and its former partners to recover the balance claimed to be due under the agreement with Greenbaum, Wolff for the period July 1, 1982 to and including December 1, 1987. Greenbaum, Wolff moved to dismiss the complaint and Garfield cross-moved for summary judgment. Special Term granted the motion to dismiss and denied the cross motion for summary judgment. $ We agree for the most part with the reasoning of Special Term. With the dissolution of Greenbaum, Wolff effective June 30, 1982, Garfield no longer generated any fees for that firm. Under the express provisions of the agreement, if the fees generated were reduced to zero, as in fact they were, Garfield was not entitled to any compensation. In one respect, however, we disagree with the conclusion reached by that court. The agreement provided that Garfield’s compensation would not be reduced unless the fees generated by him in any year fell below $175,000. It is undisputed that, during the six-month period in 1982 which preceded the effective date of the Greenbaum, Wolff dissolution, the fees generated by Garfield exceeded that amount. Therefore, he became entitled to receive the full year’s compensation, $45,000. In fact, he received only $27,500 for that year because of the method of payment. However, that does not detract from his right to receive the balance. We modify only to award him the balance due for that year.