A prolific, best-selling author who writes under the pen name Fern Michaels must pay more than $700,000 to her ex-attorney and onetime business partner, a federal judge in Manhattan has ruled.
U.S. District Judge John Koeltl of the Southern District of New York threw out malpractice claims against the attorney, Martin Friedman, and his former firm, McLaughlin & Stern. But the judge ruled that Friedman violated disciplinary rules in entering into a commission agreement with his best-selling client.
The Aug. 9 decision came after a bench trial this year between Friedman and his ex-client, Mary Kuczkir, a successful author who writes under the Fern Michaels name. Kuczkir is responsible for 165 romance and thriller novels, nearly all of which have ended up on a best-seller list.
According to the ruling, Friedman and McLaughlin & Stern began representing Kuczkir, her family and her various corporate entities in the early 1980s in general corporate work, intellectual property and trusts and estates.
Beginning in 2004 Friedman also began acting as Kuczkir’s literary agent, and in 2007 Friedman began receiving an 11 percent commission for each publishing contract he secured on Kuczkir’s behalf.
Friedman and his firm continued to bill Kuczkir by the hour for all work performed on her behalf, including for the literary agency work. “Friedman also sought payments and producer credits for himself in order to establish name recognition in anticipation of a potential career in Hollywood,” Koeltl wrote.
But over time the relationship deteriorated. Kuczkir, just before she signed another publishing contract with the terms negotiated by Friedman, fired him in October 2013.
In his 2014 lawsuit, Friedman sought payment of an 11 percent commission on the royalties from the publishing contract before his termination, as well as commission payments from other past publishing contracts.
Kuczkir claimed Friedman was not entitled to any commission on the contract. In claims against Friedman and McLaughlin & Stern, she alleged malpractice and sought disgorgement of all past fees she has paid.
In a 45-page ruling, Koeltl found Kuczkir breached the agreement and Friedman is entitled to “all the direct and proximate damages which resulted” from that breach, plus 9 percent interest.
Those damages cover the entire amount of the funds being held in escrow, totaling over $700,000, that represent the commissions for all contracts procured by Friedman as Kuczkir’s literary agent.
“The fact that Friedman had been terminated by the time the [contract] was actually signed is irrelevant because it is plain that Friedman was the ‘procuring cause’ of that contract,” the judge wrote. “That Kuczkir went to such lengths to avoid signing the [contract] only to enter into a nearly identical deal evidences her understanding that Friedman had procured the new contract.”
Koeltl found Friedman violated disciplinary rules by failing to advise Kuczkir to seek the advice of independent counsel before entering into the commission agreement and failing to specify that Kuczkir would continue to be billed hourly.
But the judge said Friedman’s failure to do so “does not automatically render the agreement unenforceable,” and in this case, there was no exploitation of the client’s confidence.
“Even combined with the hourly rate charged, the 11 percent commission represented less than the market literary agency rate of 15 percent,” he said. “Kuczkir was a savvy business person who—at the time that she negotiated a below-market rate for Friedman’s work as a literary agent—had significant experience dealing with lawyers and literary agents.”
The judge rejected Kuczkir’s breach of fiduciary duty and malpractice claims, partly because she didn’t prove that she suffered any damages.
Between 2007 and 2013, Friedman had received just over $1.5 million in commission payments on contracts procured on Kuczkir’s behalf, while Kuczkir and her corporate entities received over $12.2 million under those same contracts.
Friedman’s lawyers are expected to file later this month a proposed judgment of the total amount, including interest, that he is due.
Friedman, who is now retired, is represented by Sharon Sash at Lane Sash & Larrabee and John Somoza at Melito & Adolfsen. “We’re very pleased with the outcome,” Sash said. Somoza added that they are “pleased that justice is served.”
Kuczkir’s attorney, Edward Blodnick at Blodnick, Fazio & Associates in Garden City, did not respond to a request for comment.