Motion,Ex Parte: Eric Sorenson v. Winston & Strawn, Llp

On August 06, 2015 a Motion,Ex Parte was filed involving a dispute between Eric Sorenson, and Winston & Strawn, Llp, for Tort in the District Court of New York County.

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FILED: NEW YORK COUNTY CLERK 07/13/2016 05:21 PM INDEX NO. 158124/2015
NYSCEF DOC. NO. 23 RECEIVED NYSCEF: 07/13/2016

SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK

ERIC SORENSON,

Plaintiff-Petitioner Index No: 158124/2015

WINSTON & STRAWN, LLP

Defendant-Respondent

MEMORANDUM OF LAW IN SUPPORT OF ERIC SORENSON’S
MOTION TO REARGUE DEFENDANT’S MOTION TO DISMISS

Lorna B. Goodman
Attorney for Plaintiff
551 Madison Avenue
New York, NY 10022
(212) 223-7400
glornab@gmail.com

Dated: July 13, 2016

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Plaintiff brings this motion pursuant to New York C.P.L.R. 2221 for leave to reargue

defendant’s motion to dismiss which was decided on June 9th 2016 by the Honorable Robert R.

Reed, Justice of the Supreme Court of the State of New York. Justice Reed, in his decision

(“Reed Decision”) granted defendant’s motion to dismiss the Amended Verified Complaint

(“Complaint”).

FACTS

As more fully set forth in the Complaint and Plaintiff-Petitioner’s Memorandum in

Response to Defendant- Respondent’s Motion to Dismiss, dated April 20, 2016, (“Pl’s. Mem.

In Response”) Plaintiff Eric Sorenson is seeking a portion of the fee recovered by Defendant

Winston & Strawn resulting from its representation of Sandra Simpson, a victim of Libyan

terrorism, before the Federal Claims Settlement Commission (“FCSC”). Although Sorenson

represented Simpson before the Commission for over two and a half years, Winston & Strawn

appropriated virtually all of Sorenson’s factual and legal work product, and pocketed the entire

$100,000 attorney’s fee due on Simpson’s FCSC award. In this case, plaintiff seeks only a

share of the $100,000 fee representing less than 10% of the FCSC award to Simpson of $1

million.

ARGUMENT

A- Plaintiff has Pled a Valid Cause of Action for Unjust Enrichment

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Justice Reed dismissed plaintif’s claim for unjust enrichment on the grounds that Sorenson

had unclean hands and that Winston & Strawn did not “induce" Sorenson to do the legal work

on Simpson's claim. Plaintiff believes that this reading of the law governing unjust enrichment

and unclean hands is incorrect and plaintiff’s claim for unjust enrichment should be reinstated.

1- Unclean Hands

The Second Cause of Action in the Complaint involves the relationship between Eric

Sorenson and Mark Bravin ("Bravin"), a partner at Winston & Strawn. Unlike the first cause of

action based on a retainer between Sorenson and Simpson, this cause of action does not

depend on any formal writing at all but only on a relationship consisting of non-binding emails

between Sorenson and Bravin and the facts involving Bravin's use of Sorenson's work product in

his representation of Simpson. (Winston & Strawn did not even attempt to rebut the fact that

Sorenson contributed virtually all the documents and created all the arguments which enabled

Simpson's success before the FCSC). Yet this Court found that the contingency clause in the

retainer agreement between Sorenson and Simpson, which had nothing to do with Winston &

Strawn and did not injure the law firm in any way, precluded relief for Sorenson against Bravin

based on the doctrine of unclean hands.

The Court of Appeals has ruled on many occasions that the act or acts forming the basis for

the accusation of unclean hands must cause real injury to the party claiming unclean hands.

Weiss v. Mayflower Doughnut, 1 N.Y. 2d 310 (1956), National Distillers and Chemical Corp. v.

Seyopp Corp., 17 N.Y. 2d 12 (1966), Agati v. Agati, 59 N.Y. 2d 830 (1983). Sorenson not only

did nothing to hurt Winston & Strawn, but in fact, attempted to helpr Mark Bravin by supplying

him with his legal and factual work product. Clearly, the doctrine of unclean hands does not

apply in this case.

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The Appellate Division First Department has held that "the doctrine of unclean hands is

only available “when the conduct relied upon is directly related to the subject matter in litigation,

and the party seeking to invoke the doctrine was injured by such conduct." Dinnerstein v.

Dinnerstein, 32 A.D. 2d 750,751, (1st Dep't. 1969) (emphasis supplied). The Court also held

that "Incidental or collateral illegality . . . will not preclude...” judgment for the party accused of

unclean hands. Dinnerstein at 750. Here Bravin was in no way injured by the contingency fee

clause of the retainer agreement. That alleged illegality was incidental or collateral and is not

directly related to Sorenson’s claim against Bravin.

Another controlling First Department case is Frymer v. Bell, 99 A.D.2d 91 (1984). In this

case the Court held that a defendant who was not a party to a collateral transaction was

In no position to raise a question of unclean hands. The doctrine of unclean hands
is only available where plaintiff is guilty of immoral or unconscionable conduct
directly related to the subject matter, and the party seeking to invoke the doctrine
is injured by such conduct (Weiss v Mayflower Doughnut Corp., 1 NY2d 310,
316). In other words, relief to the plaintiff cannot be denied unless the immoral or
unconscionable act alleged by the defendant was done to the defendant himself.
"If a plaintiff is not guilty of inequitable conduct toward the defendant in the
transaction, his hands are as clean as the law requires" ( Brown v Lockwood, 76
AD2d 721, 729).
Frymer at 96.

2- Inducement and Reliance

Justice Reed found that there was no "inducement” or “reliance” by Winston & Strawn

which precipitated Sorenson's work. But recent case law on unjust enrichment reduces reliance

and inducement to just one indicia of the "closeness" between plaintiff and defendant which

might be pled to survive a motion to dismiss. In a trio of Court of Appeals cases, Sperry v.

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Crompton Corp., 8 N.Y.3d 204,(2007 ), Mandarin Trading Ltd. v. Wildenstein, 16 N.Y. 3d 173

(2011), and Georgia Malone & Co.,Inc. v. 19 N.Y. 3d 511, (2012), all involving unjust

enrichment claims, the Court does not actually apply the concepts of inducement or

reliance in its analysis .

The main test in these three Court of Appeals cases, aside from the equity of the claim,

is the closeness or lack thereof in the relationship between the plaintiffs and the defendants.

Mandarin Trading dismissed the unjust enrichment claim because of the “lack of allegations

that would indicate a relationship between the parties, or at least an awareness of (defendant)

of (plaintiff's) existence. Mandarin Trading at 182. Sperry too relied on the non-existence of

“awareness.” Sperry at 215. Georgia Malone held that unjust enrichment will not lie when the

relationship between the parties is "too attenuated,” and like the other two cases, focused on

whether retention of the benefits was unjust. Georgia Malone at 517-18. Thus, the seeming

requirement of behest is little more than dicta.

And that is what Chief Judge Lippman points out in his dissent in Georgia Malone.

Lippman says that the language in Mandarin Trading requiring a relationship causing

“reliance” or “inducement” was “merely for illustrative purposes and was dicta alluding back

to how Mandarin also failed to meet the standard for negligent misrepresentation (id.) It was

not a statement of the standard for unjust enrichment actions.” He further explains that, “Only

plaintiffs pleading a quantum meruit theory of unjust enrichment are required to show that

they performed services for the defendants or at the defendant’s behest”. Finally he says that to

limit unjust enrichment claims to those where services were performed at the “behest” of the

defendant collapses the difference between unjust enrichment and quantum meruit. Georgia

Malone at 520.Thus the deciding factor in unjust enrichment cases is the closeness of the

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relationship between plaintiff and defendant. Inducement or reliance is just one test for

closeness, but not the sine qua non of the cause of action

Recent cases interpreting this trio of Court of Appeals cases confirm this analysis. In

Phillips Int’ l. Invs., LLC v. Pektor, 117 A.D.3d 1, (1st Dep't. 2014) the Appellate Division

First Department, citing Sperry, Mandarin and Georgia Malone stated that these cases were

“merely restating that a plaintiff must plead some relationship between the parties that could

have caused reliance or inducement and that the relationship cannot be too

attenuated.” (Emphasis supplied). Pektor at 4.

The Court went on to hold that

A plaintiff is not required to allege privity. It must, however, "assert a
connection between the parties that (is) not too attenuated" (Georgia
Malone, 19 NY3d at 517). Thus, although a plaintiff could satisfy this
requirement by alleging that the benefit was conferred at the behest of
the defendant (see e.g. Kagan v. K-Tel Entertainment, 172 AD2d 375, . .
. (1st Dep't. 1991) the Court of Appeals has never required such
relationship. Rather, the pleadings merely have to "indicate a
relationship between the parties that could have caused reliance or
inducement". (Georgia Malone, 19 NY3d at 517). (Emphasis supplied).
Pektor at 10-11.

In Pektor, the First Department reversed the granting of the motion to dismiss and

allowed the unjust enrichment claim to go forward against un-named partnership defendants

with whom plaintiffs had no connection.

Two other very recent cases in Supreme Court New York confirm that unjust

enrichment does not require the plaintiff to plead inducement or reliance. In Fischer v.

Belmonte, 2013, N.Y. Misc LEXIS 4669, Justice Carol R. Edmead upheld a claim of unjust

enrichment on a motion to dismiss holding that “the absence of a direct relationship (between

plaintiffs and defendants) . . . does not defeat the unjust enrichment claim.“ Fischer at

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40. Logically, without a direct relationship or interaction between the parties there could be

no inducement. The Court also said

Plaintiffs have also pleaded enough facts to show that they might be
entitled to a return of the money; under principles of equity, and - it is
not for the Court to find on a motion to dismiss that plaintiffs are not
entitled to such a benefit in equity, since the court’s role on a CPLR
3211 motion is to determine whether the complaint adequately states
that defendants have been unjustly enriched, not whether plaintiff will
ultimately be able to prove it.
Fischer at 39.

Since Bravin failed to notify Sorenson that he had been discharged, used his work

product, and failed and refused to supply information about the state of the claim and the

award in violation of the Code of Professional Responsibility (Disciplinary Rule 1.15 (c) (1))

it is hard to understand Justice Reed’s holding with regard to plaintiff’s plight that there is

“no sense of an equity.” Reed Decision, at 19.

In New Thinking Fashion USA, Inc. v. ZG Apparel Group, LLC, 2016 N.Y. Misc

LEXIS 1045, plaintiff fabric supplier sued the ultimate user of its product, an apparel

manufacturer with whom it was not in privity. Without mentioning inducement or reliance,

Justice Ellen M. Coin held that the allegations of the complaint stated a cause of action for

unjust enrichment.

NTF (the plaintiff) provided the Fabric, defendants knew about it and
knew NTF was not paid, and in fact, discussed the matter Then
defendants accepted delivery of the garments knowing that the Fabric
was not paid for and sold the garments to customers of FYC thereby
directly and knowingly benefitting from the Fabric without paying for it.
Under these circumstances, it cannot be said that the pleading fails to
state a claim. or that the claim is conclusively refuted by the
documentary evidence.
New Thinking Fashion at 7-8.

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Here, the relationship between Sorenson and Bravin was far more than the

"awareness" lacking in Mandarin Trading and more fulsome than the relations between the

plaintiff and defendant in Gorlick, Kravitz & Listhaus, P.C. v. Reches, 2015 WL

4197871(Sup.Ct.N.Y. 2015) which is heavily relied upon by the defendants. In the instant

case the Complaint cites communications sent by Sorenson to Bravin informing him of the

details of his representation, the retainer agreement, and the uncompensated expenses. He also

sent “a summary of arguments that he had planned to make at the hearing and offered Bravin

all case-related materials he though would be helpful.” Complaint paragraph 22. Sorenson’s

first long communication was sent on September 27th 2012 and is appended as Exhibit 7 to

plaintiff’s initial response to the motion to dismiss. Pl’s Mem. In Response. Notably

Sorenson points out a relevant FCSC decision and pertinent passages therein. The next day,

Bravin writes back thanking him for his comments on the noted decision. This email is also

contained in Exhibit 7 to plaintiff’s initial response. Exhibit 7 contains six other emails

Sorenson wrote s to Bravin. Some of these are sent before the Commission reaches its

decision thus distinguishing it from the communications in Gorlick where the plaintiff had no

communication whatsoever with the defendant until the case had been concluded. In

addition, there is no indication that the defendant in Gorlick relied upon any materials prepared

or submitted by the plaintiff ; where in this case, virtually all of the documents noted in the

final decision were relied upon by Bravin in his submission, and were created by Sorenson.

Bravin also knew that Sorenson had not been paid and was not asking for more than 10% of

the fee.

It cannot be said in this case that Bravin did not “rely “ on the work of

Sorenson. Therefore plaintiff’s pleading is adequate and he is entitled to discovery to

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determine the precise contours of the relationship between Bravin and Sorenson and to prove

that it was not “too attenuated”. Plaintiff need not remind the Court that on a motion to dismiss

all inferences in the complaint must be read in favor of plaintiff.

3. Existence of a Contract

Justice Reed stated that there can be no cause of action for unjust enrichment because

there was “an applicable contract.” Reed Decision, p.19. But as noted above there was no

applicable contract between Sorenson and Winston & Strawn. The only written contract was

the retainer between Sorenson and Sandra Simpson which Reed declared was void. The

relationship between Sorenson and Winston & Strawn, as pled in the Complaint consisted of

multiple emails, indicating a relatively close relationship but not one memorialized by a

contract. Thus, the requirements for pleading a cause of action in unjust enrichment were met

in the instant case.

B- Plaintiff’s Pleadings are Sufficient to state a Cause of Action based on a Charging
Lien

Justice Reed held that there is no basis in law for a charging lien pursuant to the

retainer agreement in this case. He held that the presence of a contingency clause in the

revised retainer agreement between Sorenson and Simpson rendered that contract void. He

further stated that “the retainer agreement was intended to recover the entirety of the

transaction.” (Emphasis supplied). Reed Decision, at 19. But the context of the creation of

the agreement - - the lawsuit against Libya in Federal Court, the passage of the Libyan Claims

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Recovery Act, the establishment of the FCSC, the 10 percent attorney’s fee clause, and most

importantly the relationship and understanding between Sandra Simpson and her brother-in-

law Eric Sorenson - - leave the “intention” of the transaction and the application of the

contingency clause open to more than one interpretation.

Sandra Simpson was only one of eight parties who brought claims against Libya in

federal court and later became eligible for an award at the FCSC. See Exhibit A annexed

hereto. Those eight had to dismiss their federal claims to become eligible.. Plaintiff is

prepared to prove that at least the attorney of one claimant, Gargi Dave, who had a

contingency agreement during the federal court phase of her claim, kept 25 % of her $3

million award. On information and belief the lawyers of many other claimants on the list in

Exhibit A, having done substantial work in federal court, like Sorenson, were able to collect

their contingent fees. The dilemma posed by the 10% rule was not faced by Sorenson

alone. Discovery is needed to unlock this complicated circumstance and understand how an

attorney could preserve his right, after many years of legal work, to more than a 10%

attorney’s fee.

At the time Sorenson first presented Simpson with a revised retainer, (at her request),

Simpson’s federal court case had not been dismissed. It is important to remember that the

revised retainer signed in 2008, did not specify the proceeding or forum the work was to be

done in. Sorenson was simply retained to “represent (Simpson’s) interests for the purpose of

recovery of damages arising out of the abduction and confinement of myself and my late

husband.” See Exhibit 2 appended to Pl’s Mem. In Response. And the 10 % rule only applies

to “any claim filed with the Commission” See 22 U.S.C. 1623(f). If it could be established

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that the contingency clause in the revised agreement was only meant to apply to the federal

court proceeding there would be no illegality. After all, Sorenson never demanded that

Simpson pay him a third of her award, nor did he ask Winston & Strawn to share more than a

fraction of the 10% they received.

When this revised retainer was finally signed two years later, we do not know what the

parties intentions were with regard to this contingency. Possibly Ms. Simpson knew of the

10% rule and yet felt it was unfair to deprive Sorenson of the fruits of his nine years of labor.

At this time she was still presumably a member in good standing of his family. And possibly

Sorenson did not intend to charge anything for his work before the FCSC to which the 10%

rule applied. Once the funds were in Ms. Simpson’s hands, his legal fees in federal court might

be satisfied. In Pan Am Flight 73 Liaison Group v. Dave, 711 F. Supp 2d 13 , (D.D.C. 2010)

one of the only cases interpreting the 10% rule , the Court makes clear that once the funds are

in the hands of the claimant, their so called “immunity” (and the 10% cap) no longer exists.

The Court held that

. . . if the immunity provision is perpetual, individuals who have obtained claims
settlement funds would forever have a cache of money untouchable in any court
proceeding for any purpose. For example , a creditor in a bankruptcy proceeding –a
third party- would be unable to access any funds traceable to a Foreign Claims
Settlement Commission award.
Dave at 29

In short, there are a number of legal ways the intention behind the contingency clause

might be interpreted . Plaintiff should not be denied the opportunity offered by discovery to

explore the intentions of the parties in entering into the revised retainer.

C- Plaintiff was Not Discharged for Cause

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It is clear that the motivating force behind Sorenson’s discharge was Simpson’s

estrangement from his brother. And although Winston & Strawn now aver that Sorenson’s

discharge was because of the alleged “illegal” clause in the revised retainer agreement, ,

without knowing the intention of the parties at the time the contingency clause was inserted

into the revised retainer agreement, we cannot know that itwas illegal and therefore a basis

for a finding of discharge for cause. At the very least, a hearing is required for a finding on

this issue.

D-Conclusion

For all of the above reasons, plaintiff requests permission from this Court to

reargue defendant’s motion to dismiss.

Respectfully submitted,

/s/

Lorna B. Goodman
Attorney for Plaintiff Eric Sorenson

Dated: July 13, 2016

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Robert R Reed Track Judge’s New Case

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Motion,Ex Parte: Eric Sorenson v. Winston & Strawn, Llp

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