In Eiseman Levine Lehrhaupt & Kakoyiannis, P.C. v. Torino Jewelers, Ltd , a jewelry company retained the law firm of Eiseman, Levine Lehrhaupt, & Kakoyiannis (ELLK) to represent it, as counsel, in a federal lawsuit.
To that end, Torino signed a retainer agreement which provided for an initial payment of $25,000 and monthly payments which were not "anticipated" to exceed a total of $60,000 for the preliminary representation and the preparation and filing of a motion to dismiss a case which had been filed against the jeweler.
The parties' retainer agreement provided, in pertinent part, as follows:
Should a fee or cost dispute arise between us concerning an amount between $1,000 and $50,000, you may select to resolve the dispute through arbitration proceedings in New York City in accordance with 22 NYCRR 137.
Torino signed the agreement and, on March 22, 2006, the underlying federal court case was dismissed. On that day, ELLK met with the jeweler and agreed that, as of that date, Torino owed ELLK some $49,424.80 in fees. (While Torino asserted that it had instructed the firm to stop all work, ELLK contended to the contrary.)
On March 31, 2006, ELLK faxed Torino an invoice for $60,404.60. The additional $10,979.80 was incurred from March 22 to March 29, 2006, and the charges were itemized in a three-page breakdown which Torino refused to pay. When ELLK filed a lawsuit in the New York County Supreme Court to recover those monies, Torino moved for an order compelling the parties to arbitrate the dispute.
The Supreme Court granted Torino's motion, finding that arbitration is strongly favored and the parties had agreed to resolve any billing dispute in that manner.
On appeal, the Appellate Division, First Department, was of the opinion that since $60,404.60 was the total in dispute, and that sum exceeded the $50,000 cap contained in the parties' retainer agreement, arbitration was unavailable.
The AD1, relying on Primavera Labs. v. Avod Prods., 297 AD2d 505, 505 [2002], would not order ELLK to submit to arbitration without evidence of some prior agreement, or an unequivocal intent, to do so. Since no such understanding existed, the AD1 reversed the lower court and remanded the matter to the New York County Supreme Court for further proceedings.
We're guessing this was one gem Torino didn't treasure.
To view a copy of the Appellate Division's decision, please us this link: Eiseman Levine Lehrhaupt & Kakoyiannis, P.C. v. Torino Jewelers, Ltd
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