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A suit filed by Kasowitz, Benson, Torres & Friedman seeking more than $600,000 in unpaid legal fees may turn on whether firing a firm constitutes a form of objecting to its bill. The firm’s case against real estate magnate Richard Kramer will go forward following a Manhattan judge’s dismissal of the firm’s motion for summary judgment. In the underlying case, Kasowitz Benson represented Kramer against the managers and developers of 515 Park Avenue, one of New York City’s priciest addresses. Kramer alleged that his new $10 million condominium at 515 Park contained a “killer fungus” that rendered the apartment uninhabitable and made his wife and 3-year-old daughter seriously ill. Kramer, through a trust that held title to the condo for the benefit of his family, hired Kasowitz Benson in December 2002. According to various reports, the firm sought between $400 million and $2 billion in damages on behalf of the trust. In August 2003, Kramer severed his relationship with the law firm, leaving an outstanding balance of $610,000. Kasowitz Benson initiated the present action against the trustee of Kramer’s trust on several grounds, including account stated. In her decision, Supreme Court Justice Judith J. Gische summarized the key elements of a lawsuit based on the account-stated theory. “To establish an account stated, the plaintiff law firm must prove it sent bills to the defendant, and defendant did not object to them within a reasonable period of time,” she wrote in Kasowitz, Benson, Torres & Friedman LLP v. Siegel, 603282/03, citing Herrick Feinstein LLP v. Stamm, 297 AD 2d 477. The firm established that it had sent bills for services rendered in August and September 2003, both shortly before and shortly after Kramer fired the firm. At issue in the present case is whether Kramer’s actions during that period constituted objecting to the bills, as required by cases such as Herrick Feinstein. Gische cited two potential objections sufficient to establish a factual dispute and thus necessitate dismissal of the firm’s motion for summary judgment. First, she quoted the e-mail in which the trustee of Kramer’s trust, Gary Siegel, notified the firm that it was being replaced. “[B]ecause of the extraordinary out-of-pocket costs of funding this litigation, including your fees and the fees and expenses incurred in connection with the prosecution of the claim … we have decided to engage another law firm who is willing to share a greater portion of the risk of the litigation,” Siegel wrote. In the parties’ most recent retainer, the trust agreed to pay Kasowitz Benson $1 million per year and 15 percent of any recovery. While noting that the e-mail was “worded in a very genteel manner” and lacked an explicit objection to the firm’s fees, Gische added that Siegel appeared to evince concern regarding the size of the bills. Furthermore, the judge added that releasing the firm could constitute an implicit objection, thus defeating an account stated claim. “While [the firm] speculates about the ‘real’ reason why they were discharged, they have failed to prove their case such that would entitle them to summary judgment,” Gische concluded.

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