Opinion
164 CA 18–00986
06-07-2019
John T. DILLON and D. Timothy Dillon, Plaintiffs, v. PEAK ENVIRONMENTAL, LLC, Marcus E. O'Rourke, Jr. and Timothy M. O'Rourke, Defendants–Appellants. Peak Environmental, LLC, Marcus E. O'Rourke, Jr., and Timothy M. O'Rourke, Third-Party Plaintiffs-Appellants, v. Saunders Kahler, LLP, and Camille T. Kahler, Individually, and Doing Business as Saunders Kahler, LLP, Third-Party Defendants-Respondents.
SMITH, SOVIK, KENDRICK & SUGNET, P.C., SYRACUSE (DAVID A. KATZ OF COUNSEL), FOR DEFENDANTS–APPELLANTS AND THIRD–PARTY PLAINTIFFS–APPELLANTS. CABANISS CASEY LLP, ALBANY (DAVID B. CABANISS OF COUNSEL), FOR THIRD–PARTY DEFENDANTS–RESPONDENTS.
SMITH, SOVIK, KENDRICK & SUGNET, P.C., SYRACUSE (DAVID A. KATZ OF COUNSEL), FOR DEFENDANTS–APPELLANTS AND THIRD–PARTY PLAINTIFFS–APPELLANTS.
CABANISS CASEY LLP, ALBANY (DAVID B. CABANISS OF COUNSEL), FOR THIRD–PARTY DEFENDANTS–RESPONDENTS.
PRESENT: WHALEN, P.J., PERADOTTO, LINDLEY, DEJOSEPH, AND NEMOYER, JJ.
MEMORANDUM AND ORDER It is hereby ORDERED that the order so appealed from is unanimously affirmed without costs.
Memorandum: Plaintiffs commenced this action against defendants-third-party plaintiffs (third-party plaintiffs) seeking damages for, inter alia, fraudulent inducement and breach of contract. Third-party plaintiffs subsequently commenced this third-party action against third-party defendants, i.e., the law firm and the individual attorney representing plaintiffs in the main action. Third-party plaintiffs now appeal from an order that, inter alia, granted the motion of third-party defendants to dismiss the third-party complaint for failure to state a cause of action pursuant to CPLR 3211(a)(7) and denied the cross motion of third-party plaintiffs seeking to disqualify third-party defendants from acting as counsel to plaintiffs in the main action. We affirm.
Contrary to third-party plaintiffs' contention, Supreme Court properly dismissed the third-party complaint pursuant to CPLR 3211(a)(7). The sole cause of action alleged in the third-party complaint was for contribution and/or indemnification, and there is no dispute that third-party plaintiffs withdrew the claim for indemnification at oral argument. "Contribution may not be sought where the underlying action is for breach of contract or where the damages sought are purely for economic loss" ( Livingston v. Klein, 256 A.D.2d 1214, 1214, 684 N.Y.S.2d 115 [4th Dept. 1998] ; see Board of Educ. of Hudson City School Dist. v. Sargent, Webster, Crenshaw & Folley, 71 N.Y.2d 21, 24, 523 N.Y.S.2d 475, 517 N.E.2d 1360 [1987] ; Laur & Mack Contr. Co. v. Di Cienzo , 274 A.D.2d 960, 960, 710 N.Y.S.2d 828 [4th Dept. 2000], lv denied in part and dismissed in part 96 N.Y.2d 895, 730 N.Y.S.2d 787, 756 N.E.2d 76 [2001] ). "[T]he touchstone for purposes of whether one can seek contribution is not the nature of the claim in the underlying complaint but the measure of damages sought therein" ( Children's Corner Learning Ctr. v. A. Miranda Contr. Corp., 64 A.D.3d 318, 324, 879 N.Y.S.2d 418 [1st Dept. 2009] ).
Here, although plaintiffs' first cause of action in the underlying complaint against third-party plaintiffs alleges fraudulent inducement, the relief that plaintiffs seek with respect to that cause of action is the "difference between the value of [p]laintiffs' ownership interests as represented by [third-party plaintiffs] at the beginning of liquidation negotiations and the purchase price agreed upon at the closing." In other words, plaintiffs seek the monetary benefit of the contractual bargain that they would have received but for third-party plaintiffs' alleged improper action, and thus "the damages sought are purely for economic loss" ( Livingston, 256 A.D.2d at 1214, 684 N.Y.S.2d 115 ). Inasmuch as there is no dispute that plaintiffs' remaining causes of action in the underlying complaint also allege only economic loss, third-party plaintiffs' contribution claim was properly dismissed (see Children's Corner Learning Ctr., 64 A.D.3d at 324, 879 N.Y.S.2d 418 ).
Further, although the third-party complaint alleges in support of third-party plaintiffs' contribution claim that plaintiffs sustained damages as a result of legal malpractice committed by third-party defendants, the third-party complaint does not allege that third-party plaintiffs sustained damages as a result thereof (cf. Prudential Ins. Co. of Am. v. Dewey, Ballantine, Bushby, Palmer & Wood, 80 N.Y.2d 377, 380–381, 590 N.Y.S.2d 831, 605 N.E.2d 318 [1992], rearg. denied 81 N.Y.2d 955, 597 N.Y.S.2d 940, 613 N.E.2d 972 [1993] ). To the extent that third-party plaintiffs' submission of extrinsic evidence purporting to support a direct claim of legal malpractice could have been construed by the court as a request for leave to amend their third-party complaint, such a request was properly denied because third-party plaintiffs' new claim is patently lacking in merit (see Broyles v. Town of Evans, 147 A.D.3d 1496, 1497, 47 N.Y.S.3d 605 [4th Dept. 2017] ). Third-party plaintiffs' contention that they relied to their detriment on an email from third-party defendant Camille T. Kahler regarding the terms of the agreement between plaintiffs and third-party plaintiffs is belied by third-party plaintiffs' own correspondence.
Finally, the court did not abuse its discretion by denying third-party plaintiffs' cross motion to disqualify third-party defendants from acting as counsel to plaintiffs in the main action (see generally Bison Plumbing City v. Benderson, 281 A.D.2d 955, 955, 722 N.Y.S.2d 660 [4th Dept. 2001] ).