An attorney and village justice who was sanctioned for filing a frivolous suit against a law firm has been ordered to repay the $30,000 that was spent defending the action.
Orange County Supreme Court Justice Paul Marx (See Profile) found the attorney, Joseph Suarez, who is also a judge in the Chestnut Ridge Village Court in Rockland County, must reimburse 15-attorney Blustein, Shapiro, Rich & Barone in Goshen for its defense. The $30,000 includes $9,000 to the firm’s outside counsel that was covered by insurance.
“The risks and consequences of Mr. Suarez’s frivolous claim against [Blustein] go far beyond the amount of attorney’s fees required to defend it. The fact that [Blustein] was represented, in part, by counsel obtained and paid for by its malpractice carrier should not inure to Mr. Suarez’s benefit,” Marx said in Board of Managers of Foundry at Washington Park Condo. v. Foundry Development Co., 4484/2010.
Suarez, who is a part-owner and president of Paul & Joseph Management Co. Inc., represented himself.
The litigation stems from a suit brought by a condominium management board in Newburgh in 2012 to recover unpaid common charges. The management board of a partly built condo, the Foundry at Washington Park Condominium, alleged that former members of the board—Suarez and others—used their control of the board to avoid paying common charges for the units their company owned.
The lawsuit spawned multiple complaints.
In one derivative suit, Suarez and his company, Paul & Joseph Management, sued members of the condo board, its former law firm, Smith, Buss & Jacobs, and the board’s current counsel, Blustein, in 2013 (See Complaint).
Smith Buss guided the board in filing liens against condo owners. Blustein counseled the board in prosecuting the case to foreclose on the liens and to recover other damages. Suarez alleged breached of fiduciary duty against both firms.
Marx, in a decision last August that granted Blustein’s dismissal motion, said it was obvious Suarez and his company were using the lawsuits “to launch a collateral attack on counsel for the Foundry in an effort to hobble their legal representation” in the underlying litigation.
The judge found Suarez’s claim against Blustein to be frivolous and “part of a disturbing pattern” in which Suarez and other defendants attack counsel rather than address the merits of the underlying claims.
“What makes this matter even more egregious,” Marx said in August, “is the fact that Joseph Suarez is not only an attorney, but a judge in a lower court. As such, he should know how taxing baseless actions are on the court’s already strained resources.”
Marx imposed a $10,000 sanction on Suarez, to be paid to the client security fund, and awarded Blustein legal fees.
About a month later, the board and Suarez settled the dispute, according to Blustein partner Gardiner Barone.
Blustein submitted a request to recover nearly $30,000 in fees and expenses, including costs incurred by McDonough Law, a firm hired by its malpractice carrier. Blustein sought $20,625 for 69 hours of work by Barone at $300 an hour, and sought $8,915 for McDonough Law’s time, in addition to expenses.
Suarez argued he should not have to pay for the McDonough portion of fee because it was paid by the insurance carrier. But Marx said the purpose of the fee award was to compensate Blustein for costs associated with defending against a frivolous action, and the nature of the fee arrangement between Blustein and McDonough did not provide a basis for Suarez to escape the fee award.
Marx noted a lack of reported decisions addressing the effect of counsel retained by a party’s malpractice insurer on the imposition of sanctions, but found Mackler Productions, Inc. v Turtle Bay Apparel Corp., 153 F.Supp.2d 504, 510 [SDNY 2001], which involved a contingency fee, to be persuasive.
Marx said the sanctions in both Mackler and the case before him case were compensatory and “based upon attorney’s fees that in some sense were not actually incurred by the aggrieved party.”
The court in Mackler found, in some cases, the aggrieved party is not always required to show “actual pecuniary loss,” and that sanctions address systemic concerns such as the smooth functioning of the courts, Marx noted.
Applying the same reasoning, Marx said Blustein was not required to show actual pecuniary loss from Suarez’s frivolous claim.
Notwithstanding that McDonough’s fees were covered by insurance, Blustein “was harmed by the filing of the claim against it and should be compensated for same,” the judge said.
Blustein was required to report the claim to its insurer, Marx said, and it was put at risk of increased premiums or having its coverage dropped. Also, the firm’s ability to vigorously defend the Foundry, was impaired. The time Barone could have devoted to other business was diverted, “resulting in a loss of profits to the firm,” Marx said.
Additionally, he said Suarez “flouted” disciplinary rules.
Marx awarded Blustein the full amount of McDonough’s fees and costs, more than $9,000 but ordered Blustein to reimburse Traveler’s Insurance Co., the same amount.
Suarez also argued that Blustein should not recover for Barone’s services because McDonough Law was the attorney of record and Barone was the client and thus could not be both client and lawyer.
But Marx said an attorney who represents himself may recover fees for the time, knowledge and experience he would otherwise have to pay another lawyer, and noted the firms jointly defended the claim. “Accordingly, [Blustein] is entitled to recover those fees and costs,” Marx said, awarding the firm $20,930.
“This is a very unique decision and I felt Judge Marx dealt with it in the most judicious way he could. Anything less than what Judge Marx did would have set the wrong policy” for future litigation, Barone said in an interview. “How can the rule of law function if lawyers can be sued just at the whim of a pro se litigant?”
Suarez said he disagreed with the decision and intended to appeal. He said he has already appealed Marx’s August decision imposing the $10,000 sanction.