Wednesday, May 4, 2011

Client May Be Liable To Court Reporter

The New York Appellate Division for the Second Judicial Department held that a client may be responsible for paying a court reporter after the law firm that contracted for the services (Dreier LLP) declared bankruptcy.

The court sets out the issue:

On this appeal, we are asked to determine whether a court reporting agency may recover payment for services rendered directly from the client instead of being limited to pursuing the attorney who, as the client's agent, engaged the agency. For the reasons set forth below, we hold that although a court reporting agency may obtain payment for services rendered directly from the attorney who engaged it, a court reporting agency is not precluded from recovering those fees directly from the client.


Here, the plaintiff contended that it was not a party to the defendants' engagement letter with Dreier, LLP, and should not be bound thereby. The plaintiff maintained that the defendants are responsible for paying its fees related to services obtained by Dreier, LLP, on their behalf, inasmuch as General Business Law § 399-cc was never intended to allow a client, such as the defendants, to evade responsibility for paying the reporter and that the ultimate responsibility for the reporting fees lies with the client.

The defendants, in response, relied upon the Dreier, LLP, engagement letter and the payments they made thereunder. Thus, they contended that any payments owed to the plaintiff were or should have been paid from the monthly payments received by Dreier, LLP, from the defendants.

Given that the plaintiff sufficiently stated a cause of action to recover damages for breach of contract by alleging all of the essential elements; to wit, the existence of a contract, the plaintiff's performance pursuant to that contract, the defendants' breach of their obligations pursuant to the contract, and damages resulting from that breach (see JP Morgan Chase v J.H. Elec. of N.Y., Inc., 69 AD3d 802; Furia v Furia, 116 AD2d 694), and General Business Law § 399-cc does not prohibit the plaintiff from seeking its fee directly from the defendants as the clients, it was improper for the Supreme Court to have, in effect, granted that branch of the defendants' motion which was to dismiss the complaint...

(Mike Frisch)

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