SCANNED ON 31912010 9 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK... X KASOWITZ, BENSON, TORRES & FRIEDMAN, LLP, -against- Plaintiff, DUANE READE AND DUANE READE INC., Defendants. IAS Part Hon. Index No. 10101547 ANSWER WITH AFFIRMATIVE DEFENSES Defendants, Duane Reade and Duane Reade Inc. (together Defendants or Duane Reade ), by its attorneys, McKenna Long & Aldridge LLP, for its Answer to the Complaint ( Complaint ) of Plaintiff, Kasowitz, Benson, Torres & Friedman, LLP, ( Kasowitz or Plaintiff ), 1. Deny knowledge or information sufficient to form a belief as to the truth of the allegations in paragraph 1. 2. Admit the allegations in paragraph 2. 3. 4. Admit the allegations in paragraph 3. Admit the allegations in paragraph 4. 5. Admit the allegations in paragraph 5. 6. Deny the allegations in paragraph 6, except admit that Duane Reade operates over 250 stores in commercial and residential neighborhoods in the metropolitan New York City area and deny knowledge or information concerning the value of in-store placement rights to operators of automated teller machines ( ATM ). 7. Deny the allegations in paragraph 7, except admit that a dispute arose between Duane Reade Inc. and Cardtronics, LLP, concerning the Second Amendment to the ATM Supreme Court Records OnLine Library - page 1 of 10
Placement Agreement, dated December 2003, and that the scope of that dispute is set forth in the complaint purportedly drafted by Kasowitz filed in the action Duane Reade, Inc. v. Cavdtronics LLP, 061603545 (Sup Ct, New York County) on October 10, 2006, and that more details about the issues in that case are set forth in the decisions on the parties cross-motions for summary judgment reported at 17 Misc 3d llol(a), 2007 WL 2756961 (Fried, J.), and at 54 AD3d 137 (1 st Dept 2008). 8. Deny the allegations in paragraph 8, except admit that Duane Reade, Inc. engaged Kasowitz to pursue a breach of contract action against Cardtronics, as described in the Complaint filed by Kasowitz on October 10, 2006, and that Kasowitz rendered invoices and was paid for those legal services, and that Kasowitz purports to base its claim to a success fee on a series of emails as follows: September 8,2006 email from Daniel P. Goldberg to Michelle Bergman: I sent it again before. Very frustrating. Well, the upshot is that I came up with something that I believe will be very attractive. We can do that Cardtronics case for a flat $1 million, payable over 10 months as you suggested (exclusive of disbursements), plus 20% of amounts recovered above some number, as opposed to a percentage payable from dollar one. Based on the numbers we have, which obviously are approximations, we actually think the damages could be between $10 and $1 1 million over the life of the contract. So, I m thinking of 20% of everything above $4 million as the success fee portion. Thus, if we get $10 million, the total feel would be $2.2 million (with you keeping $7.8 million obviously). That s $1 million in a flat fee, plus $1.2 million in success fee That s actually a bit lower than what I had previously suggested of a discount off of time plus 20%. That is, if we did 60% of time plus 20% contingency from dollar one, and we recover $10 million, our total feel would be $2.9 million (assuming our actual hourly would come to $1.5 million, 60% of which is $900,000; leaving $900,000 in time charges, plus $2 million in success fee). Even if the recovery is $5 million (settlement or what have you), the total fee would be $1.2 million which still is a discount of a Supreme Court Records OnLine Library - page 2 of 10-2-
few hundred thousand based on splitting the baby. What do I need to do to put you in a new lawsuit today? By the way, as to our discussion about it being a binary case of either we win it all or lose it all, though in large part that s true, the damage question is not entirely irrelevant. We re saying that we should get paid based on the actual amount of transactions; figuring that out likely will be disputed before we re done. Lastly, my other email was that I called Paradise, he s on vacation until next week, and this morning his associate Michael Davi called me, and I m going to call him now (I was on a conference call). Please confirm when you receive this one. September 19,2006 email from Daniel P. Goldberg to Michelle Bergman: Made the settlement proposal to Paradise. He s going baclk [sic] to his clients, but he says no chance and they re not moving, at least not materially. By the way, our research confirms that their other deals won t be admissible, unless they communicated them to us before we did our deal. Lastly, we have our court conference this Friday to set the case schedule. I would love to have our fee arrangement in place by then so I can just tear into these guys. September 19,2006 email from Michelle Bergman to Daniel P. Goldberg: Go; And further that Kasowitz s understanding of what was agreed was set forth in an internal Kasowitz email, dated September 2 1, 2006, from David P. Goldberg to Lisa Jicha: Lisa: We have a change in billing arrangement for on Duane Reade matter (Cardtronics, 07436007). We are going to receive a flat fee of $1 million, plus disbursements, plus 20% of any amount was recover above $4 million. This is on top of all amounts billed to date, including the September bills for August time. The $1 million is to be paid in 10 monthly installments of $100,000, starting with our October bill. Supreme Court Records OnLine Library - page 3 of 10-3-
So, starting with our October bills, we ll bill on this one matter $100,000 per month, plus disbursements, regardless of what hours actually are billed. All other Duane Reade matters remain at our standard billing rates. Marc already has approved this arrangement. 9. Deny the allegations in paragraph 9, except admit that there were written communications between Kasowitz and Duane Reade dealing with issues concerning payment of legal services as set forth in paragraph 8 above, that Duane Reade Inc. paid properly submitted invoices for legitimate legal work performed by Daniel Goldberg s various firms and deny information and knowledge about how longstanding or how close the relationship was between Michelle Bergman and Daniel Goldberg, nor the business relationship between Ms. Bergman and Daniel Goldberg and Kasowitz after Ms. Bergman left Duane Reade Inc. 10. Deny the allegations in paragraph 10, except admit that Kasowitz provided legal representation to Duane Reade Inc. in connection with the Cardtronics breach of contract lawsuit and was paid an amount at least commensurate to, if not more than, the reasonable value of legal services rendered by Kasowitz. 1 I. Deny the allegations in paragraph 1 1 12. Deny the allegations in paragraph 12, except admit that Duane Reade Inc. paid for legal services performed by Kasowitz, in the Cardtronics breach of contract lawsuit. 13. Deny the allegations in paragraph 13. 14. Deny the allegations in paragraph 14. 15. Deny the allegations in paragraph 15, except admit that Kasowitz performed certain legal services for Duane Reade Inc. in connection with the Cardtronics lawsuit. 16. Deny the allegations in paragraph 16, except admit that Michelle Bergman left Duane Reade in November 2008, and that since November 2008 there has been a different lawyer serving as Duane Reade s General Counsel, and that subsequent to November 2008, Supreme Court Records OnLine Library - page 4 of 10-4-
Kasowitz failed to perform necessary legal work in the Cardtronics breach of contract action, and that in early 2009 a resolution was reached with Cardtronics that resulted in the dismissal of the Cardtronics lawsuit. 17. 18. 19. 20. Deny the allegations in paragraph 17. Deny the allegations in paragraph 18. Deny the allegations in paragraph 19. Deny knowledge or information about Ms. Bergman s sworn attestation, as Kasowitz has refused to reveal the contents of such attestation to Duane Reade despite repeated requests from Duane Reade. FIRST CAUSE OF ACTION FOR BREACH OF CONTRACT 2 1. Defendants incorporate herein by reference each and every response contained in the preceding paragraphs of this Answer as if fully set forth herein. 22. 23. 24. 25. 26. Deny the allegations in paragraph 22. Deny the allegations in paragraph 23. Deny the allegations in paragraph 24. Deny the allegations in paragraph 25. Deny the allegations in paragraph 26. SECOND CAUSE OF ACTION FOR QUANTUM MERUIT 27. Defendants incorporate herein by reference each and every response contalliec in the preceding paragraphs of this Answer as if fully set forth herein. 28. 29. Deny the allegations in paragraph 28. Deny the allegations in paragraph 29. 30. Deny knowledge or information relating to Kasowitz s expectation of compensation for services that it allegedly provided. -5- Supreme Court Records OnLine Library - page 5 of 10
31. Deny the allegations in paragraph 31, except admit that Kasowitz has refused to provide Duane Reade with time and disbursement records despite repeated requests for such records by Duane Reade. THIRD CAUSE OF ACTION FOR UNJUST ENRICHMENT 32. Defendants incorporate herein by reference each and every response contained in the preceding paragraphs of this Answer as if fully set forth herein. 3 3. 34. Deny the allegations in paragraph 33. Deny the allegations in paragraph 34, except admit that Kasowitz has refused to provide Defendants with time and disbursement records despite repeated requests for such records by Duane Reade. 35. Deny the allegations in paragraph 35. AFFIRMATIVE DEFENSES FIRST AFFIRMATIVE DEFENSE The Complaint fails to state a claim upon which relief can be granted. SECOND AFFIRMATIVE DEFENSE Without admitting the allegations in the Complaint, any claim against Defendants is barred, in whole or in part, by the doctrines of waiver, estoppel and/or laches. THIRD AFFIRMATIVE DEFENSE Without admitting the allegations in the Complaint, any claim against Defendants is barred, in whole or in part, by Plaintiffs unclean hands. FOURTH AFFIRMATIVE DEFENSE Without admitting the allegations in the Complaint, Plaintiff is equitably estopped from recovery. FIFTH AFFIRMATIVE DEFENSE -6- Supreme Court Records OnLine Library - page 6 of 10
Without admitting the allegations in the Complaint, Plaintiffs alleged fee agreement does not satisfy the standards governing contingency fee agreements under New York State law. SIXTH AFFIRMATIVE DEFENSE Without admitting the allegations in the Complaint, Plaintiffs alleged damages disregard the terms of the purported contract under which Plaintiff seeks relief and such claims are based upon business activities wholly unrelated to any legal service allegedly provided by Plaintiff. SEVENTH AFFIRMATIVE DEFENSE Without admitting the allegations in the Complaint, Plaintiffs damages are speculative. EIGHTH AFFIRMATIVE DEFENSE Without admitting the allegations in the Complaint, the purported contract between Plaintiff and Defendants lacks consideration. NINTH AFFIRMATIVE DEFENSE Without admitting the allegations in the Complaint, Plaintiffs claims for damages are based on a failure of a condition precedent. -7- Supreme Court Records OnLine Library - page 7 of 10
PRAYER FOR RELIEF WHEREFORE, Defendants requests that the Court dismiss the Complaint with prejudice, award Defendants their fees and costs, and grant such other and further relief as is just and proper. Dated: New York, New York February 25,20 10 Respectfully submitted, c/-="---- McKENNA LONG & ALDRIDGE LLP.- *-- - BY. Charles E. Dorkey I11 Timothy J. Plunkett "---I 230 Park Avenue Suite 1700 New York, New York 10 169 (212) 905-8330 (telephone) (212) 922-1819 (facsimile) Attorneys for Defendants Duane Reade and Duane Reade Inc. -8- Supreme Court Records OnLine Library - page 8 of 10
SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK... X KASOWITZ, BENSON, TORRES & FRIEDMAN, LLP, -against- Plaintiff, DUANE READE AND DUANE READE INC., IAS Part Hon. Index No. 10 101547 AFFIDAVIT OF SERVICE IRMA DIAZ, being duly sworn, deposes and says that deponent is not a party to the action, is over 18 years of age and is employed by McKenna Long & Aldridge LLP. That on the 25th day of February, 2010, deponent served, by mail, a true and correct copy of Defendants ANSWER TO PLAINTIFF'S COMPLAINT, NOTICE OF DEPOSITION FOR KASOWITZ, BENSON, TORRES & FRIEDMAN, AND NOTICE OF DEPOSITION FOR DANIEL P. GOLDBERG, upon: Kasowitz, Benson, Torres & Friedman LLP Mitchell R. Schrage Michael E. Hagenson 1633 Broadway New York. NY 10019 the addresses designated by said persons for that purpose, by depositing the same enclosed in a postage pre-paid envelope in a post office official depository under the exclusive case and custody of the United States Postal service within the State of New York. 4 Irma Diaz Supreme Court Records OnLine Library - page 9 of 10
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