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After one law firm substituted for another in a personal injury case and then disappeared with the check for the entirety of the fees, the insurance company that issued the single check is liable for the original firm’s lost fees, a Manhattan judge has ruled. Civil Court Judge Ellen Gesmer ruled that Sherman & Basichas established that Geico General Insurance failed to protect the law firm’s statutory lien and granted the firm’s motion for summary judgment in Sherman & Basichas LLP v. GEICO General Insurance Co.. In the underlying case, Sherman & Basichas’ client, Kseniya Golovina, initiated a personal injury action against Geico for injuries she suffered in an August 1999 car accident. In May 2000, Golovina replaced her original attorneys with Shakhanov & Associates, a Brooklyn-based firm. At the time of substitution, the firms agreed that each side’s share of the fees would be determined at the conclusion of the case. In February 2002, Golovina’s new attorney, Simon Shakhanov, settled the case with Geico for $80,000, and Brooklyn Civil Court Judge Alice Fisher Rubin awarded attorney fees of $26,640 to be evenly split between the firms. Geico issued a check payable to both firms and mailed it to Shakhanov. Shakhanov cashed the check and then disappeared, according to the decision. His law license was suspended in August 2004. Sherman & Basichas initiated an action against Geico and moved for summary judgment, claiming the insurer violated its duty to protect the law firm’s lien and was therefore liable for its fees. Gesmer held that, as required in a summary judgment motion, the plaintiff law firm established a prima facie case. “[U]nder Judiciary Law �475, the plaintiff law firm must prove that it has a charging lien on the proceeds of a lawsuit; that the lawsuit was resolved favorably, leading to the creation of a fund; that a determination has been made as to the portion of the fund due to the plaintiff law firm; that defendant is on notice of the lien; and that the amount due to the plaintiff law firm has not been paid,” she wrote. “In this case, Sherman adequately stated each of these elements in its complaint.” Geico, which also moved for summary judgment, set forth a number of defenses. It argued among other things that because it could not have foreseen Shakhanov’s actions, it could not be held liable for them. “That is not correct,” Gesmer ruled. If Sherman & Basichas had agreed that Geico could discharge the lien by sending a check to Shakhanov, Geico could proffer a consent defense. However, the firm had not agreed to the mailing of the single check to Shakhanov, the court said. Geico also claimed that Sherman & Basichas technically “received payment,” but that the name of Scott Sherman of Sherman & Basichas was forged. “This is a remarkable argument,” the judge wrote. “If one of Geico’s customers claimed that it had properly mailed a check to Geico but the check was intercepted in the mail and illegally forged, would Geico agree that it had ‘received payment’ since the check was properly made out to it?” Gesmer ruled that Geico neither established its own right to summary judgment nor rebutted Sherman & Basichas’ prima facie case. She therefore granted the Sherman firm’s motion for summary judgment. Gesmer awarded Sherman & Basichas $13,120, with 9 percent interest dating to March 6, 2003, the date of an earlier unsatisfied order for Shakhanov to pay Sherman & Basichas its share of the fees. Alisa R. Lebensohn and Sherman represented Sherman & Basichas. Lebensohn said the firm has already received Geico’s replacement check. Amelia Dweck of Morris, Duffy Alonso & Faley represented Geico and could not be reached for comment.

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