Opinion
00 CV 1361
July 31, 2001
MEMORANDUM ORDER
Plaintiff Gabriel D'Jamoos brings this action for legal malpractice against defendant Michael Griffith arising from defendant's alleged mishandling of a commercial dispute in New York Supreme Court, Richmond County. Now before the court is defendant's motion to dismiss pursuant to Rule 12(b)(6), Fed.R.Civ.P., and, in the alternative, for summary judgment under Rule 56, Fed.R.Civ.P. Plaintiff has cross-moved for partial summary judgment. For the following reasons, defendant's motion is denied as premature, and plaintiff's cross-motion is denied.
Background
The factual background relied upon in deciding this motion is supplied by the Amended Complaint and, because this is a motion to dismiss and in the alternative for summary judgment, affidavits, depositions, and court orders issued in the underlying proceeding may be considered. Plaintiff retained defendant in the summer of 1986 to represent him in a commercial dispute between plaintiff and his then brother-in-law, John Lucchese. In March 1988, defendant commenced a commercial action on plaintiff's behalf in New York Supreme Court, Richmond County. (Griffith Aff., Ex. B) The Verified Complaint in that action (the "Lucchese action") alleged that plaintiff was John Lucchese's partner and was entitled to a fifty percent interest in the stock of Belmont Realty Corp. ("Belmont") and Park Terrace Corp. ("Park Terrace"). Also named as a defendant was Georgette Lucchese, who was married to John Lucchese and is plaintiff's sister. The Verified Complaint further alleged that plaintiff had made a capital contribution of $150,000 for his half-interest in these corporations. (Griffith Aff., Ex. B. Ver. Comp. ¶ 11) The Verified Complaint sought a judgment declaring plaintiff to be the owner of half of the stock, an accounting by the corporations, and payment of plaintiff's share of rents, profit and income. A bench trial was held and on February 19, 1997, in mid-trial, the parties reached an oral stipulation ("1997 stipulation"), which was read into the record in open court. The 1997 stipulation contemplated that John Lucchese was to pay plaintiff $450,000 and that plaintiff was to receive a parcel of land in Staten Island by September 1, 1997. While questioning the parties about the terms of the proposed settlement, the Richmond County Supreme Court Judge made the following inquiry concerning plaintiff's representation:
At the time the Verified Complaint was filed, Belmont owned the St. George Theater. an adjoining office building and a small parking lot in Staten Island, New York. Park Terrace owned a parking lot next to the Staten Island Ferry.
Although this is the amount plaintiff is alleged to have contributed in the Verified Complaint, plaintiff subsequently alleged in the Lucchese action, and John Lucchese apparently acknowledged, that the amount plaintiff contributed was $175,000. However, plaintiff and John Lucchese continued to disagree as to whether that amount represented, as plaintiff alleged in the Verified Complaint, a capital contribution, or, as John Lucchese alleged in his deposition. a loan at 10% interest. (D'Jamoos Aff. Ex. E, John Lucchese Dep., 19)
Georgette Lucchese was dismissed as a defendant because she had no ownership interest in either Belmont or Park Terrace. Georgette Lucchese had commenced a divorce action against her husband in Kings County Supreme Court in 1986, however, and because these companies were acquired during the Lucchese marriage, they were subject to equitable distribution in that divorce action, which was still pending in February 1997.
The Court: And Mr. Griffith has been your attorney throughout these proceedings
D'Jamoos: Yes, he has.
The Court: And you're satisfied with his representation?
D'Jamoos: I am.
(Griffith Aff., Ex. C, 14) After the oral stipulation, Georgette Lucchese never submitted the waiver papers necessary to effect the stock transfer and her attorney advised the court that any diminution in her husband's stock would be considered marital waste for which her husband would be liable in the divorce action. While plaintiff avers that Georgette Lucchese's consent was not necessary for the enforcement of the stipulation, the parties agree that the stipulation was never implemented.
A year later, in February 1998, the parties agreed to have the commercial action and the Lucchese matrimonial action jointly tried, and what was described as the "oldest matrimonial action in Brooklyn" was transferred from Kings County to the Richmond County court. (Griffith Aff., Ex. D, 3) On March 27, 1998, the parties advised the court that a settlement ("1998 settlement") had been reached between plaintiff and John Lucchese, in which plaintiff had the option of exercising one of two alternatives. (Griffith Aff, Ex. E) Under the first option, plaintiff and John Lucchese would jointly own Belmont in proportion to their capital contributions. (Id. at 4) Under the second option, plaintiff would have a 49% shareholder's interest in Belmont without regard to the amounts each had contributed, but to the extent John Lucchese's capital contribution was greater than plaintiff's, that amount would be characterized as a priority loan. (Id. at 5) On the record, plaintiff indicated that he understood that Belmont owned only the office building and was a single asset corporation. (Id. at 3) Plaintiff also stated, in response to the court's inquiry, that he understood the proposed settlement and was in agreement with its basic structure. However, plaintiff now argues that defendant never advised him of the risks of such a global settlement. Plaintiff chose the second option and, accordingly, was to receive a 49% ownership interest in Belmont, which was encumbered by a mortgage of approximately $2.5 million, with the recognition that any capital contribution by John Lucchese which was in excess of plaintiff's capital contribution was to be repaid. On April 30, 1998. this settlement was reflected in a "Shareholders' Agreement" between Belmont, John Lucchese and plaintiff. (Griffith Aff., Ex. F)
In May 1998, the matrimonial action was tried but before the trial ended, on June 4. 1998, the Luccheses reached a settlement. While plaintiff was present, a stipulation was read into the record which provided that Georgette Lucchese would receive 51% of Belmont, which would own the office only. (Griffith Aff., Ex. G) This settlement required Belmont's mortgage lender's approval and a partition of the theater and parking lot, which were to become separate corporations under the control of John Lucchese. Plaintiff was to receive 49% of Belmont along with another parcel of property on Staten Island. Belmont was to be indebted to John Lucchese in the amount of $953,322 as a priority loan. Georgette Lucchese stated in court that she had consulted with plaintiff concerning the fairness of the settlement. (Id. at 30) Four months later, on September 27, 1998, this settlement was reduced to an "Amended and Restated Shareholders' Agreement" between Belmont, Georgette Lucchese and plaintiff.
One year later, plaintiff had not received the shares he was to receive as part of the 1998 agreement. On December 1, 1999, plaintiff sent a letter to defendant terminating his authority to act on plaintiff's behalf in any respect. (Griffith Aff., Ex. I) Plaintiff then retained his present counsel to commence this malpractice action.
In May 2000, plaintiff moved the Richmond County Supreme Court by order to show cause for an order rescinding the 1998 settlement in view of John Lucchese's failure to tender the 49% of the stock to plaintiff and reinstating the 1997 stipulation for $450,000. The court denied this application in an Order entered June 16, 2000, finding that John Lucchese's failure to comply with the settlement in a timely manner did not furnish a basis for vacating the 1998 settlement and reinstating the 1997 stipulation. (Griffith Aff., Ex. D) In so holding, the court noted that "this is not a case of an unrepresented person without counsel who naively entered into a settlement" and that plaintiff's argument that the 1997 stipulation should be put into effect was "disingenuous, especially in view of the specific language nullifying the prior agreements." (Id. at 7-8)
Georgette Lucchese had previously, but unsuccessfully, sought to have the court rescind the 1998 agreement.
On July 19, 2000, plaintiff filed the Amended Complaint, which alleges that defendant was negligent in his representation of plaintiff in connection with the Lucchese action and that defendant's negligence "was the proximate cause of the substantial monetary damages which plaintiff has sustained, in an amount to be proven at trial." (Am. Compl. ¶ 10) Defendant's negligence is alleged to have included:"(a) errors and omissions in pleading plaintiff's claims in the complaint in the Lucchese Action, including but not limited to, the failure to plead alternative claims, including demand for repayment of a loan, which, with interest, at present amounts to more than $900,000; (b) the excessive delay of more than a decade in bringing the Lucchese Action to trial, (c) the failure to collect and preserve documentary and testimonial evidence in a reasonable fashion through discovery and other methods; (d) the failure to properly evaluate. appraise and prove plaintiff's damages, including, but not limited to, defendant's failure to secure accurate appraisals of plaintiff's interest and the assets owned by Belmont Realty Corp. and Park Terrace Corp.;(e) the failure to depose, and/or move to disqualify John Lucchese's attorney in the Lucchese Action, who had served as counsel to plaintiff and/or Belmont Realty Corp., and/or was a material witness to the transactions underlying the Lucchese Action; (h) the failure to consummate the settlements of the Lucchese Action, or to seek to reinstate the Lucchese Action within a reasonable period of time, after the settlements aborted; (i) the failure to notice any appeals from rulings by the Court which were adverse to plaintiff in the Lucchese Action; and (j) defendant was otherwise negligent." (Id. at ¶ 9)
Because plaintiff has received "no satisfaction whatsoever" as a result of defendant's malpractice, he seeks to be made whole here through one of three forms of compensation. First, plaintiff seeks damages for his $5,000,000 equity interest in Belmont. In the alternative, he seeks principal, plus 10% interest on his $175,000 loan. As a third alternative, he seeks the proceeds of the $450,000 settlement, with interest, which defendant failed to enforce. (P1.'s Opp'n, 1-2)
On July 27, 2000, plaintiff's present counsel stated in a letter to defendant's counsel that plaintiff had no intention of accepting the Belmont stock because of the tax burdens he has since learned it would create. (Griffith Aff., Ex. M) Specifically, if plaintiff were to take the 49% ownership interest in Belmont with the loan to John Lucchese, $490,000 of income would be attributable when the loan is repaid.
Defendant now moves to dismiss the Amended Complaint for failure to state a cause of action under Rule 12(b)(6), Fed.R.Civ.P., and, in the alternative, for summary judgment under Rule 56, Fed.R.Civ.P., relying on his own affidavit and on affidavits, depositions and court orders from the underlying Lucchese action. Plaintiff has cross-moved for partial summary judgment on his claim that defendant failed to pursue a cause of action for repayment of a $175,000 loan made by plaintiff to John Lucchese, relying on his own affidavit and on an affirmation by Fredrick Biehl, a purported expert in legal malpractice.
Discussion
I. Standard Governing Motion to Dismiss and in the Alternative for Summary Judgment
On a Rule 12(b)(6) motion, the court must accept as true the factual allegations in the Amended Complaint and view the Amended Complaint in the light most favorable to the non-moving party. Bolt Elec., Inc. v. City of New York, 53 F.3d 465, 469 (2d Cir. 1995). Dismissal under Rule 12(b)(6) motion may only be granted if "it appears beyond doubt that the Plaintiff can prove no set of facts in support of her claim which entitle her to relief." Walker v. City of New York, 974 F.2d 293, 298 (2d Cir. 1992) (internal quotations omitted). Where materials outside the pleadings are offered in support of a motion to dismiss, a district court has two options: "the court may exclude the additional material and decide the motion on the complaint alone or it may convert the motion to one for summary judgment under Fed.R.Civ.P. 56 and afford all parties the opportunity to present supporting material." See Fonte v. Board of Managers of Continental Towers Condominium, 848 F.2d 24, 25 (2d Cir. 1988) (citing Fed.R.Civ.P. 12(b); 5 C. Wright A. Miller, Federal Practice and Procedure § 1366 (1969 Supp. 1986); see also Carter v. Stanton, 405 U.S. 669, 671 (1972) (per curiam) (where "matters outside the pleadings were presented and not excluded by the court[,] the court was . . . required by Rule 12(b) of the Federal Rules of Civil Procedure to treat the motion to dismiss as one for summary judgment and to dispose of it as provided in Rule 56."); Kopec v. Coughlin, 922 F.2d 152, 155-56 (2d Cir. 1991).
Defendant moves to dismiss the Amended Complaint and, in the alternative, for summary judgment. With its motion, defendant has submitted documents and trial transcripts that were not referred to in the Amended Complaint. Because the court considers this additional material in deciding this motion, it must treat the motion as one for summary judgment. All of the parties have had an opportunity to present supporting material. Plaintiff opposes this motion on the ground that it is both procedurally defective and premature, and has also cross-moved for partial summary judgment.
Plaintiff argues in its opposition that defendant's motion is procedurally defective insofar as it was not submitted with a Statement pursuant to Local Civil Rule 56.1 and that, in any event, the motion for summary judgment is premature because discovery has not yet taken place. Plaintiff has provided no authority, however, for the requirement that a Rule 56.1 Statement be filed when a 12(b)(6) motion is converted to a motion for summary judgment. In any event, defendant states in its Reply that its failure to submit a Rule 56.1 Statement was inadvertent. Defendant filed a Rule 56.1 statement on November 22, 2000, with his Reply Affirmation, to which plaintiff has responded in its Reply Memorandum. Although plaintiff did not have the benefit of defendant's Rule 56.1 Statement when he was preparing his papers in opposition, the court notes that he was put on notice that defendant was moving for summary judgment by the very first sentence of defendant's Memorandum of Law in support of his motion, which states that the motion is made pursuant to Rules 12(b)(6) and 56, Fed.R.Civ.P. Moreover, the facts contained in defendant's untimely Rule 56.1 Statement are supported by the September 11, 2000 affidavit of Michael J. Griffith and accompanying exhibits, some of which plaintiff himself refers to in his opposition. Thus, it may be assumed that plaintiff was on notice that defendant was moving for summary judgment in the alternative, even though defendant initially did not provide a Rule 56.1 Statement.
II. Legal Malpractice
This court's jurisdiction to hear plaintiff's state law claims is based on diversity of citizenship. Because New York is the forum state, New York's choice of law rules determine which state's substantive law should apply. Machleder v. Diaz, 801 F.2d 46, 51 (2d Cir. 1986), cert. denied, 479 U.S. 1088 (1987) (citing Klaxon v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496-97 (1941)).
New York's current choice-of-law rules require the court to consider the following three elements: the domicile of the plaintiff, the domicile of the defendant, and the place where the injury occurred. Bonerb v. Richard J. Caron Foundation, 159 F.R.D. 16, 18 (W.D.N.Y. 1994); Datskow v. Teledyne Continental Motors, 807 F. Supp. 941, 943 (W.D.N.Y. 1992). "When more than one of these is located in the same state, that state's law should ordinarily control." Datskow, supra. Plaintiff is a domiciliary of New Jersey. In this case, defendant Griffith does not dispute that the law of New York — i.e., the state in which Griffith resides and is admitted to practice law, as well as the situs of the litigation commenced by defendant on plaintiff's behalf-applies to plaintiff's claims.
To state a claim for legal malpractice under New York law, a plaintiff must allege that: (1) the defendant attorney failed to exercise that degree of care, skill, and diligence commonly exercised by an ordinary member of the legal community, and (2) "but for" the attorney's negligence, the plaintiff would have prevailed in the underlying action.Gaddy v. Eisenpress, No. 99 Civ. 3781, 1999 U.S. Dist. LEXIS 19710, at *9 (S.D.N.Y. Dec. 27, 1999) (citing Kozmol v. Law Firm of Allen L. Rothenberg, 241 A.D.2d 484, 660 N.Y.S.2d 63, 64 (2d Dep't 1997)). In an action for damages for legal malpractice, the plaintiff must also allege actual loss or damages that were proximately caused by the attorney's negligence. Gillaizeau v. Mitchelson, No. 83 Civ. 4367, 1985 U.S. Dist. LEXIS 23166, at *8 (S.D.N.Y. Jan. 24, 1985) (citing Freschi v. Grand Coal Venture, 564 F. Supp. 414, 415 (S.D.N.Y. 1983); Newman v. Silver, 553 F. Supp. 485, 495 (S.D.N.Y. 1982), modified on other grounds, 713 F.2d 14 (2d Cir. 1983); Mendoza v. Schlossman, 448 N.Y.S.2d 45, 46 (2d Dep't 1982); Wade, The Attorney's Liability for Negligence, printed in Roady Anderson, eds., Professional Negligence 217, 219-34 (1960)).
In order to establish the elements of proximate cause and actual damages in a malpractice case, the plaintiff must show that but for the attorney's negligence, what would have been a favorable outcome was an unfavorable outcome. The test is "whether a proper 'defense would have altered the result of the prior action.`" Zarin v. Reid Priest, 184 A.D.2d 385, 386-87, 585 N.Y.S.2d 379 (1st Dep't 1992) (internal citations omitted). Further, "the `selection of one among several reasonable courses of action does not constitute malpractice[.]'" Id (internal citation omitted). Thus, "[t]he rule in a legal malpractice action is that a plaintiff must demonstrate not only that actual damages have been sustained, but also that counsel's negligence was the proximate cause of the loss." Id. (internal citation omitted). See also Brown v. Samalin Bock, 168 A.D.2d 531, 532 (2d Dep't 1990) (damages claimed by plaintiff's are "too speculative and incapable of being proven with any reasonable certainty").
In order to show negligence in a legal malpractice claim, "unless the ordinary experience of the fact-finder provides sufficient basis for judging the adequacy of the professional service . . ., or the attorney's conduct falls below any standard of due care . . ., expert testimony will be necessary to establish that the attorney breached a standard of professional care and skill . . . Greene v. Payne. Wood Littlejohn, 197 A.D.2d 664, 666, 602 N.Y.S.2d 883, 885 (2d Dep't 1993); see also, LNC Investments, Inc. v. First Fidelity Bank, No. 92 Civ. 7584, 2000 WL 1024717 (S.D.N.Y. July 25, 2000) (same); Clanton v. Vagianellis, 192 A.D.2d 943, 944, 596 N.Y.S.2d 593, 595 (3d Dep't 1993) (plaintiff must submit expert testimony "attesting to the standard of professional care and skill that defendant allegedly failed to meet"). A district court judge has broad discretion to determine whether a proposed witness is qualified to testify as an expert, and its determination is reversible only for "manifest error" See e.g., Nora Beverages, Inc. v. Perrier Group of America. Inc., 164 F.3d 736, 746 (2d Cir. 1998).
As noted previously, plaintiff here has submitted an affirmation by a purported expert of legal malpractice. Such an affirmation would appear to be proper in light of the fact that expert testimony is appropriate in an action of this nature. While reference is made herein to portions of the affirmation, it should be noted at the outset that the affirmation does not conclusively establish the absence of a genuine issue of fact.
III. Defendant's Motion for Summary Judgment
The Amended Complaint alleges that defendant breached the duty of ordinary care he owed to plaintiff, and that defendant's negligence was the proximate cause of damages incurred by plaintiff"in excess of $75,000." (Am. Compl. ¶ 9, 10) As such, plaintiff alleges the elements necessary to state a prima facie case for legal malpractice. Defendant argues that summary judgment is nonetheless appropriate because plaintiff cannot show that he incurred actual damages caused by defendant's negligence. See Luniewski v. Zeitlin, 188 A.D.2d 642, 591 N.Y.S.2d 524 (2d Dep't 1992) ("Mere speculation of a loss resulting from an attorney's alleged omissions is insufficient to sustain a prima facie case sounding in legal malpractice") (internal citations omitted). Defendant notes that plaintiff himself has admitted that his damages are incalculable. First, plaintiff stated in an affidavit submitted in support of his attempt to rescind the 1998 Settlement in the Lucchese action that he would suffer "irreparable and incalculable damages" if John Lucchese were permitted to dispose of Belmont and that "there is no reliable formula for valuing [plaintiff's] minority interest." (Griffith Aff., Ex. ¶ 2, 16) Second, plaintiff's attorney stated in an affirmation also submitted in support of that motion that plaintiff's "damages are not capable of being quantified with any degree of certainty." (Griffith Aff., Ex. J ¶ 12) Thus, to the extent plaintiff wishes to hold defendant accountable for the economic harm he has incurred as a result of the failure to implement the 1998 Settlement, defendant argues that plaintiff has acknowledged that such harm cannot be measured with any degree of precision.
In addition, defendant argues that plaintiff has failed to show that any damages he incurred were the result of defendant's negligence rather than plaintiff's own refusal to "take what is his" under the 1998 Settlement Agreement in the Lucchese action. Stated otherwise. defendant argues that plaintiff cannot show that "but for" defendant's negligence, plaintiff's claim could have or would have been successful. Defendant first notes that he did negotiate a successful resolution of the Lucchese dispute on two separate occasions — once by an oral stipulation in 1997 and once again by a written settlement agreement in 1998 — and that the fact that neither resolution has been implemented is not due to defendant's negligence. Instead, defendant argues that with respect to the 1997 oral stipulation, which provided that plaintiff would receive $450,000 and a parcel of property, that stipulation was never implemented because plaintiff's sister's purportedly refused to sign the waiver papers necessary to transfer the stock.
Plaintiff and his expert submit that Georgette Lucchese's refusal to sign the waiver cannot be considered an excuse for defendant's acquiescence to John Lucchese's failure to pay because her consent to transfer the stock was not a condition to the settlement, but rather the stock was to be used as collateral if payment were not made by September 1997. (D'Jamoos Aff. ¶¶ 16, 17; Biehl Aff. ¶ 8) However, the fact that defendant proceeded to trial on plaintiff's claims against the Luccheses belies the notion that defendant simply acquiesced in the nonpayment.
The terms of that oral stipulation having not been met, defendant proceeded to trial in which the matrimonial and commercial disputes were consolidated, and went on to negotiate a second agreement for plaintiff in 1998. The 1998 agreement was reduced to writing in a Shareholder's Agreement in April 1998 and a subsequent Amended and Restated Shareholder's Agreement in September 1998, and contemplated that plaintiff would receive 49% and Georgette Lucchese would receive 51% of shares of Belmont stock. The 1998 agreement specifically provides that it is "intended to constitute the complete, entire and final agreement of the parties regarding the subject matter hereof." (Griffith Aff., Ex. H, 26) Moreover, defendant argues that, in view of the state court's June 16, 2000 decision holding that the settlement is in full force, the only thing currently preventing plaintiff from enjoying the proceeds of that resolution is his argument that those proceeds would bring about undesirable tax consequences of which defendant purportedly failed to advise him. In addition, defendant avers that the state court's denial on June 16, 2000 of plaintiff's attempt to vacate the 1998 agreement confirms that plaintiff had ample time (four months) to review the written Settlement Agreement after it was orally stipulated to in court; that plaintiff was a sophisticated individual who had specific knowledge of the Belmont corporation's financial books and records prior to his falling out with John Lucchese; and that no basis existed for vacating the settlement such as fraud in the inducement or mutual mistake.
In opposing summary judgment, plaintiff avers that he can show actual damages. Plaintiff argues that defendant has taken the acknowledgments by plaintiff and his lawyer concerning the calculation of damages out of context and that defendant should not be able to rely on them because they are no longer true. Although plaintiff's damages were not readily ascertainable in May 2000 — when John Lucchese had control over Belmont's three assets and had the exclusive ability to determine how they would be divided and when plaintiff's minority interest in the office building alone was difficult to evaluate — plaintiff avers that those damages are now provable with a high degree of certainty on three alternative theories, two of which plaintiff claims he can presently prove and one of which he claims he will be able to prove after discovery. (D'Jamoos Aff. ¶ 27; P1.'s Mem. in Opp'n, 2, 9) Plaintiff claims that he can presently prove his damages, first, for the loss of the $175,000 loan — which, with 10% interest, would amount to $933,901 as of October 31, 2000 — and, second, for the loss of the $450,000 cash settlement reflected in the 1997 oral stipulation. Third, plaintiff claims that, with discovery, he could prove to a "reasonable" degree of certainty the loss of the full amount of equity interest he alleged in the Summons and Complaint in the Lucchese action, or $5,000,000. (Id.)
Plaintiff argues that his damages would have been subject to ready calculation if defendant "had not permitted Mr. Lucchese to strip Belmont of two-thirds of its assets." (P1.'s Mem. in Opp'n, 9) Specifically, he would have been entitled to 49% of the gross sales price of Belmont's original three assets. The $5,000,000 figure appears to be based on plaintiff's original ownership interest in Belmont and Park Terrace and on the fact that defendant alleged in the Lucchese action that plaintiff was owed $5,000,000. Thus, even though the 1998 agreement purports to make plaintiff whole for his loss, plaintiff would still hold defendant accountable for the entire amount sought in the Lucchese action.
Even assuming that plaintiff could prove these damages to a degree of certainty that conforms with the standard governing legal malpractice claims, plaintiff also must present a genuine issue of material fact as to causation in order to defeat summary judgment. Plaintiff contends that he can show that defendant's negligence caused plaintiff to incur those damages and that defendant's negotiation of a settlement in the Lucchese action does not preclude him from bringing an action for malpractice since the two proceedings concern distinct issues See e.g., Weiss v. Manfredi, 83 N.Y.2d 974, 976-77, 616 N.Y.S.2d 325 (1994) (reversing lower court's dismissal of complaint on the basis of collateral estoppel: "as neither the adequacy of the settlement nor plaintiff's role in prosecuting the action was in issue in the first action, the findings that the previous court was "satisfied with the amount of the settlement' and that "[p]laintiff, herself, created the situation which caused the misunderstanding in relation to her ability to settle the action for her children' are not entitled to preclusive effect."); Rapp v. Lauer, 607 N.Y.S.2d 104, 106, 200 A.D.2d 726 (2d Dep't 1994) ("[T]he only issue decided in [prior case] was that the stipulation was valid and enforceable by the construction company against the Rapps. It did not decide that the stipulation remedied all of the damage to the house. Nor did it decide that Lauer had performed his legal duties properly. It merely settled the action between the Rapps and the construction company, and foreclosed any further action by the Rapps against the construction company").
As an initial matter, plaintiff is correct that he is not precluded from bringing a malpractice action against defendant simply because the 1998 agreement in the underlying action in which defendant represented him was found to be final and enforceable. However, that is not the issue presented by this case. Instead, the issue presented here is whether plaintiff can prove the "but for" causation essential to his claim where, according to defendant, the only obstacle remaining to the implementation of that Agreement is plaintiff's own refusal to accept a 49% share of Belmont stock because he has since learned that it is no longer advantageous to do so. On the thin record in this case, plaintiff has not yet proven that defendant's negligence, assuming that defendant was indeed negligent, caused plaintiff to incur the loss alleged. Specifically, he has not shown that "but for" defendant's negligence, "what would have been a favorable outcome" in the Lucchese action was a negative one. See Zarin 184 A.D.2d at 386-87. However, as plaintiff correctly notes, discovery in this case has not begun, and defendant has not even answered the Complaint.
As the Second Circuit Court of Appeals has recently cautioned, "[o]nly in the rarest of cases may summary judgment be granted against a plaintiff who has not been afforded an opportunity to conduct discovery."Hellstrom v. United States Dep't of Veteran Affairs, 201 F.3d 94, 97-98 (2d Cir. 2000) (vacating summary judgment where plaintiff "was denied the opportunity to conduct discovery of any sort" and thus "did not have a chance to adduce evidence to support his claim."). See also Sutera v. Schering Corp., 73 F.3d 13, 18 (2d Cir. 1995) ("A party opposing a motion for summary judgment `must have "had the opportunity to discover information that is essential to his opposition" to the motion.'") (internal citations omitted); Jones v. Coughlin, 45 F.3d 677, 680 (2d Cir. 1995) ("the district court's conclusion that Jones had no factual basis for the retaliation claim seems (a) premature, and (b) on a record such as this, an inappropriate determination for a court to make on a motion for summary judgment. Jones apparently has obtained no discovery from defendants, who indeed have not even answered the complaint.");Anderson v. Liberty Lobby. Inc., 477 U.S. 242, 250 n. 5 (1986) (noting "Rule 56(f)'s provision that summary judgment be refused where the nonmoving party has not had the opportunity to discover information that is essential to his opposition.").
The only possible justification for a departure from the general principle that summary judgment should not be granted before the plaintiff has had a chance to conduct discovery is that this case concerns a prior state court proceeding, the record of which is in large part before the court already. However, plaintiff has not yet had to opportunity to take defendant's deposition, during which he would presumably inquire into the rationale behind defendant's tactical decisions in the underlying litigation, his perceptions of the various courses of action then available to plaintiff, and his recollection or notes concerning the advisability of entering into a global settlement agreement and any adverse tax implications attendant upon such an agreement. Moreover, although defendant has sent plaintiff "the important correspondence, pleadings, and other materials" in the underlying case, those materials are admittedly incomplete. At a minimum, plaintiff should be permitted to review the entire file in the underlying case, not merely those materials which defendant has categorized as "important," and also to conduct discovery.
Accordingly, defendant's motion, which is considered one for summary judgment, is dismissed as premature, and defendant should be permitted to review his motion after plaintiff has had an opportunity to support his claims through discovery.
IV. Plaintiff's Cross-Motion for Partial Summary Judgment
Having concluded that summary judgment against plaintiff is premature, the court next turns to plaintiff's cross-motion for partial summary judgment on the theory that defendant was negligent in failing to pursue a claim for repayment of the loan in the Lucchese action. Plaintiff alleges in his cross-motion that partial summary judgment against defendant is appropriate with respect to his claim that defendant failed to advise him of all possible causes of action, specifically a cause of action for the repayment of a $175,000 loan made by him to John Lucchese, which resulted in damages of $933,901 (the amount of the loan plus 10% interest as of October 31, 2000). Defendant argues that plaintiff insisted throughout the Lucchese action that his initial contribution to the corporation was a capital contribution, not a loan. In any event. defendant argues that he orally amended the Lucchese complaint in that action by asserting a claim against John Lucchese for failure to repay the loan. Although defendant offers no amended pleading reflecting his addition of such a cause of action, he cites the state court's decision of June 16, 2000, in which Judge Maltese observed that: (1) defendant "had asserted an oral claim that the monies tendered by Mr. D'Jamoos to Belmont Corporation was a loan which was never pleaded in the complaint[,]" and (2) after a decision on a motion to dismiss that cause of action and the entire Complaint was reserved by the court, the parties reached a settlement. (Griffith Aff, Ex. D, 2) For the same reasons that compel the court to deny summary judgment as against plaintiff — namely that plaintiff's failure to demonstrate that his injuries were proximately caused by defendant's negligence cannot be the basis for a grant of summary judgment against him where he has not yet had the opportunity to conduct discovery — the court finds that plaintiff has not demonstrated the absence of a material issue of fact as to defendant's liability for the alleged loan to Belmont. Thus, plaintiff's cross-motion for partial summary judgment is denied.
With a letter from its counsel dated March 20, 2001, plaintiff provided the court with a copy of a letter dated January 9, 1997 which purportedly reflects that "although Mr. D'Jamoos indeed preferred to recover his $5 million ownership interest, at minimum, he expected the return of his loan, with 10% interest, which he then calculated was worth $664,562.21." (Letter dated March 20, 2001 from Todd J. Krouner, Ex. B) Rather than provide definitive proof as to plaintiff's intentions, this letter simply constitutes additional evidence of a genuine issue of fact as to whether or not defendant indeed failed to follow through on plaintiff's expressed directives during the course of the representation. Beyond failing to establish the absence of a factual issue as to plaintiff's intent, neither this letter nor the Biehl affirmation nor anything else previously submitted by plaintiff establishes that Griffith was under a duty to plead in the alternative that D'Jamoos' interest was in the nature of a loan, not an equity interest. Obviously, such a duty would be a prerequisite to any finding that Griffith was negligent in failing to pursue the loan theory in the alternative.
Conclusion
For the foregoing reasons, defendant's motion to dismiss is denied as premature, and plaintiff's cross-motion is denied.
SO ORDERED.