A unanimous state appeals panel has rejected a developer’s attempt to reclaim $5 million in fees from Boies Schiller & Flexner on the grounds that the firm breached an oral agreement to have name partner David Boies serve as lead trial counsel for G.K. Las Vegas Limited Partnership in a commercial lawsuit.
In G.K. Las Vegas Limited Partnership v. Boies Schiller & Flexner, 652486/11, the Appellate Division, First Department, on June 14 affirmed a decision by Manhattan Supreme Court Justice Bernard Fried (See Profile), who refused to vacate an arbitral award in favor of the law firm in November 2011.
The panel, which consisted of Justices Richard Andrias (See Profile), David Friedman (See Profile), John Sweeny (See Profile), Sallie Manzanet-Daniels (See Profile) and Nelson Roman (See Profile), heard oral argument on May 24.
The dispute stems from Boies Schiller’s representation, beginning in 2004, of G.K. Las Vegas in a lawsuit in Nevada federal court over the developer’s sale of its share in a Las Vegas shopping center to Simon Property Group.
According to G.K. Las Vegas, David Boies promised orally to be lead trial counsel, and said that the case was worth $275 million if it went to trial. However, Boies ended up not taking a lead role, in part because he was heavily involved in defending Barclays against a lawsuit filed by Lehman Brothers Holdings in the course of its bankruptcy. Boies was also working on the appeal of the suit he filed with Theodore Olson of Gibson Dunn & Crutcher challenging the constitutionality of California’s Proposition 8 banning gay marriage.
G.K. Las Vegas ended up settling its suit. It then accused Boies and his firm of neglecting the case, and sought to reclaim more than $5 million in fees. Boies Schiller, on the other hand, claimed that G.K. Las Vegas had overstated Boies’ obligation in the Nevada lawsuit. The firm said that Boies had only agreed to become lead trial counsel late in the case, and only if his schedule permitted.
Both sides agreed that the dispute should be arbitrated, but could not agree on a venue. G.K. Las Vegas filed suit in Nevada to compel arbitration there, and the law firm filed suit in Manhattan Supreme Court to compel arbitration in New York.
The Nevada court ceded jurisdiction over the issue of where the case should be arbitrated, and in December 2010, Fried appointed former Court of Appeals Judge George Bundy Smith as arbitrator (NYLJ, Dec. 7, 2010).
Smith found for Boies Schiller, and G.K. Las Vegas asked Fried to vacate the arbitral award, arguing that it had not been given a chance to present evidence about an oral agreement between the firm and the company. Fried refused, and the developer appealed.
On appeal, G.K. Las Vegas argued that the arbitrator’s decision undercuts the public policy goal of making sure that attorneys’ clients fully understand the retainer agreements they sign.
The First Department panel said that it did not have to consider the public policy argument because it had not been made explicitly to the arbitrator.
“Were we to reach the merits of the client’s public policy argument, we would find it unavailing,” the panel wrote. “The parties agreed to arbitrate any disputes arising from their retainer agreement, and there is no basis to conclude that the asserted public policy ground (requiring a client’s full knowledge and understanding of an attorney-client retainer agreement) was violated.”
The panel also said the arbitrator was right not to hear evidence about the alleged oral agreement, since the written agreement between the firm and G.K. Las Vegas was complete.
“Since the terms of the fully integrated retainer agreement were unambiguous, there was no basis to consider parol evidence,” it said.
“Moreover, the client’s argument that the arbitrator, in deciding the dismissal motion, denied it ‘fundamental fairness’ by refusing to accept the truth of its allegations regarding the oral promise, including that the parties intended this oral promise to be a component of the parties’ retainer agreement, thereby precluding it from offering evidence to demonstrate the parties’ understanding in regard to the alleged oral promise, is unavailing,” the panel wrote. “It was within the province of the arbitrator to find, as a matter of law, that the retainer agreement was not ambiguous…notwithstanding the client’s claims that alleged oral promises were intended to be added as components of the written retainer agreement.”
James Kennedy of Kennedy Berg, who represented G.K. Las Vegas, said his client “is disappointed . . . We view the decision as contrary to our public policy regarding attorney obligations relating to retainer agreements. We will seek leave to appeal to the Court of Appeals.”.
Richard Weill of Boies, Schiller & Flexner represented the firm. A spokeswoman for the firm declined to comment.
@|Brendan Pierson can be contacted at email@example.com.