PHILADELPHIA – An action between a plaintiff local law firm looking to recover more than $229,000 in allegedly unpaid legal fees and costs that it incurred performing representation duties for a defendant New Jersey couple in a federal bankruptcy action has been stayed.
Spector Gadon Rosen Vinci P.C. of Philadelphia first filed suit in the U.S. District Court for the Eastern District of Pennsylvania on March 9, 2022 versus Louie Aquilino and Robin Aquilino of Blackwood, N.J.
“In or around March 2020, SGRV was engaged by defendants to represent them in connection with their personal Chapter 7 bankruptcy. Throughout their representation of defendants, SGRV performed services including, but not limited to, the following: Preparing the bankruptcy petition and all other required legal documents, reviewing relevant financial documents, making necessary Court appearances and communicating with the Court, Chapter 7 trustee, US trustee, creditors and counsel for all parties, and representing them in related adversary proceedings. SGRV billed defendants on an hourly basis for the legal services it performed. The basis for SGRV’s hourly rates was set forth in its invoices, which were sent to defendants on a monthly basis,” the suit said.
“Throughout defendants’ representation, defendants never protested or objected to SGRV’s invoices or the accuracy of any of the time entries or work descriptions contained therein. In fact, they constantly praised and showed appreciation to SGRV lead bankruptcy counsel, Leslie Beth Baskin, Esq., during the entire course of the representation until the time surrounding the probable sale of defendants’ residence, in November 2021. As of August 2021, defendants had an outstanding balance of $151,507.19 in attorney’s fees and litigation costs.”
In order to aid in payment of the balance, the parties entered into a letter agreement on Aug. 23, 2021, in which SGRV agreed to reduce the then-outstanding balance of attorney’s fees of about $151,000 to $113,000 and defendants agreed to pay SGRV the sum of $100,000 at closing of their residence located at 2 Lamson Lane, Sewell, N.J., whose closing was then not scheduled. The agreement further stipulated that payment of the additional $13,000 balance, along with other accruing costs and fees would be paid after payment to SGRV of $100,000.
“Subsequently, SGRV learned that defendants closed on the sale of their residence, but to its dismay, SGRV had not been paid the $100,000 agreed upon in the letter agreement. SGRV has requested from defendants a copy of the settlement sheet for the closing of their residence, but defendants have refused this request. SGRV believes that the residence sold for approximately $745,000, which left defendants with hundreds of thousands of dollars in net proceeds,” the suit stated.
“SGRV believes that defendants used some of the net proceeds to purchase a new residence at 2306 Doral Drive, Blackwood, N.J. 08012 on Nov. 22, 2021 for $223,000 in cash, and also used some of the net proceeds to repay a debt to Robin Aquilino’s parents. Not only did SGRV not receive any payment of the legal fees and costs as agreed to by the parties on Aug. 23, 2021, but since the letter agreement, defendants have accrued an additional $77,835.44 in attorney’s fees and costs.”
The plaintiff followed up with a motion for summary judgment on March 11, 2022.
“SGRV and defendants entered into an agreement for the SGRV to provide legal services in exchange for defendant’s payment of those fees. SGRV performed legal services pursuant to that agreement, but defendants breached the agreement by failing to pay SGRV for its legal services,” according to the motion.
“The services provided by SGRV included preparing a bankruptcy petition and all other required legal documents in defendants’ personal bankruptcy; reviewing relevant financial documents; making necessary court appearances; and communicating with the Court, Chapter 7 Trustee, US Trustee, creditors, and counsel for all parties; and representing them in related adversary proceedings. After incurring $229,342.63 in attorney fees and costs, defendant failed to pay for SGRV’s services, thereby damaging SGRV.”
According to the plaintiff, “the undisputed facts in this case are that SGRV regularly sent invoices to defendants identifying the amounts due for legal services and after paying some of the invoices, defendants stopped paying, continued to receive the invoices, and never disputed them.”
The defendants filed a motion to transfer the case for reasons of alleged improper venue on April 11, 2022, wanting the case to either be dismissed outright or instead be heard in a New Jersey federal court, and for the summary judgment motion to be stayed.
The defendants said their businesses were operated in New Jersey and do not own any property located in Pennsylvania – and that the plaintiff’s attorneys provided inadequate representation, both prior to and after recommending that the defendants file for bankruptcy in the U.S. Bankruptcy Court for the District of New Jersey.
“As a result of the errors and omissions made by the plaintiff’s attorneys and contrary to the assurances of the plaintiff’s attorneys, defendants were forced to sell their residences in New Jersey and Florida, Sons of Steel, LLC was put out of business and defendants were deprived of future income,” the motion stated.
The defendants filed a follow-up response to the summary judgment motion on April 25, 2022, asking it to be stayed.
“There are clear questions of material fact which preclude the entry of summary judgment including but not limited to (1) Whether the plaintiff lawyers’ advice to file for personal and business bankruptcy was proper; and (2) Whether the fees were reasonable. Moreover, plaintiff has provided only summary invoices for its claim and failed to provide any backup itemization for the hours and tasks which allegedly comprise the legal fees and costs incurred. In addition, since the filing of defendants’ motion to dismiss, the trustee has filed an adversary complaint against the plaintiff law firm seeking to recover payment of legal fees paid by defendants to plaintiff during the course of the bankruptcy case. Clearly, the factual issues surrounding the fees and costs sought by plaintiff are disputed,” the response said.
Additionally, the defendants filed a motion opposing the transfer of the case to a New Jersey federal court for improper venue on that same day.
On May 2, 2022, the plaintiff followed up with their own reply memorandum in further support of its motion for summary judgment.
“Defendants now make the argument that these services were not proper or were otherwise unreasonable, and thus, defendants should not have to pay plaintiff for the fees it is rightfully owed Tellingly, defendants have not raised such a defense in any formal way, nor have they even attempted to provide any facts by way of affidavit or otherwise to show there is any genuine dispute of a material fact sufficient to defeat plaintiff’s motion. That is reason alone to grant the motion,” per the plaintiff’s reply brief.
“Moreover, defendants simply cannot sustain (and made no effort to provide any support for) the suggestion that the difficult nature of defendants’ bankruptcy somehow resulted in plaintiff’s services being improper. Indeed, defendants themselves repeatedly caused the problems that plagued their bankruptcy by their repeated lies, misrepresentations and hiding of their assets. This forced plaintiff to conduct its own extensive and time-consuming analyses of defendants’ assets without their cooperation, correct defendants’ bankruptcy schedules several times and defend defendants against litigation caused entirely by defendants’ failure to adequately disclose their finances. From the beginning, plaintiff’s attorneys looked out for defendants’ best interests and have sought to secure the best possible result for them. These efforts were appreciated by defendants, as seen by their repeated praise for plaintiff’s work. Accordingly, there is no issue of material fact as to the appropriateness of the services provided by plaintiff and its motion for summary judgment should be granted.”
UPDATE
On July 25, 2022, U.S. District Court for the Eastern District of Pennsylvania Judge Juan R. Sanchez denied the motion for summary judgment, and on Aug. 19, 2022, the defendants answered the complaint.
“Plaintiff’s entitlement to legal fees arising from the bankruptcy case is currently under review in the Bankruptcy Court. Plaintiff’s exorbitant bill to defendants includes $39,812.20 for the needless litigation of a pro hac vice motion, and the trustee’s proposed resolution of the bankruptcy expressly contemplates that defendants may bring a legal malpractice claim against plaintiff and that half of the proceeds of any such action should be paid into the bankrupt estate,” per the answer.
“Moreover, the trustee has filed an adversary complaint against plaintiff seeking the disgorgement of a $140,000 legal fee paid by defendant Louie Aquilino in March of 2019. Any judgment obtained by plaintiff in this matter must be discounted in accordance with the Bankruptcy Court’s rulings on the motion for review of attorney compensation and the adversary complaint against plaintiff.”
The defendants also proffered 10 separate affirmative defenses.
“Plaintiffs have failed to state a claim upon which relief can be granted. Plaintiffs’ claims are barred by the doctrine of equitable estoppel. Plaintiffs’ claim for unjust enrichment must be dismissed because the relationship between the parties is governed by a written contract. Plaintiffs’ claims are barred by the doctrine of unclean hands. This Court lacks jurisdiction to determine the fees payable to plaintiffs because this matter is properly before the U.S. Bankruptcy Court for the District of New Jersey,” the defenses stated.
“Plaintiffs are barred from collecting the fees claimed because they failed to perform under their contract with defendants. Plaintiffs have failed to mitigate their damages. Plaintiffs’ claims are barred by the doctrine of unconscionability. Plaintiffs’ prayer for attorneys’ fees is not authorized by rule or statute. Plaintiffs’ claims are barred by a failure of consideration.”
The defendants followed up with their own motion for summary judgment on Feb. 17. However, that motion was denied without prejudice on March 24, along with the entire action being stayed.
Sanchez further conditioned that the motion may be refiled after a decision is made on the bankruptcy appeal.
“Upon consideration of defendants Louie and Robin Aquilinos’ motion for summary judgment, plaintiff Spector Gadon Rosen Vinci, P.C.’s response in opposition, and defendants’ reply, and following a teleconference with the parties, it is hereby ordered all proceedings in this matter are stayed until the U.S. District Court for the District of New Jersey issues a decision adjudicating SGRV’s appeal from the Feb. 23, 2023 decision of U.S. Bankruptcy Judge Jerrold N. Poslusny in Case No. 20-15628,” Sanchez said.
“It is further ordered defendants’ motion for summary judgment is denied without prejudice to reassertion, following a decision on the bankruptcy appeal. The parties shall notify this Court in writing within 30 days of entry of the decision in New Jersey District Court.”
For counts of breach of contract, unjust enrichment and account stated, the plaintiff is seeking $229,342.63, plus its costs, together with lawful interest, attorney’s fees, costs of suit and such further relief as this Court deems appropriate.
The plaintiff is represented by Adam Filbert and Daniel J. Dugan of Spector Gadon Rosen Vinci, in Philadelphia.
The defendants are represented by Jack Meyerson and Matthew L. Miller of Meyerson & O’Neill, also in Philadelphia.
U.S. District Court for the Eastern District of Pennsylvania case 2:22-cv-00905
From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nick.malfitano@therecordinc.com