Opinion
Index No.: 161428/2014
06-24-2016
STEVEN L. MARTIN and JODEE MARTIN, Plaintiffs, v. CLAUDE CASTRO & ASSOCIATES PLLC, CLAUDE CASTRO and DANIEL PAUL MARTIN, Defendants.
Muchnick, Golieb & Golieb, P.C. (Remko De Jong of counsel), for plaintiffs. Lewis, Brisbois, Bisgaard & Smith, LLP (Mark K. Anesh of counsel), for defendants.
DECISION/ORDER
Motion Seq. No. 001 Recitation, as required by CPLR 2219 (a), of the papers considered in reviewing defendants' motion to dismiss under CPLR 3211.
| Papers | Numbered |
|---|---|
| Defendants' Notice of Motion | 1 |
| Defendants' Memorandum of Law In Support of Pre-Answer Motion to Dismiss | 2 |
| Plaintiffs' Affirmation in Opposition to Defendants' Motion to Dismiss | 3 |
| Plaintiffs' Memorandum of Law in Opposition of Defendants' Motion to Dismiss | 4 |
| Defendants' Attorney Reply Affidavits | 5 |
| Defendants' Reply Memorandum of Law In Further Support of Pre-Answer Motion toDismiss | 6 |
Lewis, Brisbois, Bisgaard & Smith, LLP (Mark K. Anesh of counsel), for defendants. Gerald Lebovits, J.
Plaintiffs brought this action asserting seven causes of action — legal malpractice, breach of fiduciary duty, breach of written contract, negligence, breach of oral escrow agreement, conversion, and disgorgement of legal fees. Plaintiffs hired defendants to represent them in two summary nonpayment proceedings plaintiffs' landlord brought against plaintiffs in 2010 in Housing Court (the L&T Matters). Defendants then advised plaintiffs to bring an action in Supreme Court, New York County, against plaintiffs' landlord (the Supreme Court Action). Plaintiffs now claim that defendants failed adequately to defend plaintiffs' cases in Housing and Supreme Court.
Plaintiffs assert that defendants owed a fiduciary duty to act in plaintiffs' best interests and not to expose plaintiffs to any unnecessary risk. Plaintiffs maintain that defendants materially breached the written terms of the retainer agreement. Plaintiffs argue that defendants failed to exercise reasonable care in advising and representing plaintiffs. Plaintiffs state that defendants breached their obligation under the oral escrow agreement created by defendants to hold $93,040.00 paid by plaintiffs in the L&T Matters. Last, plaintiffs assert that defendants failed to perform the work for which they were paid.
Defendants now move pre-answer to dismiss under CPLR 3211 (a) (1), (5), and (7). Defendants argue that documentary evidence belies plaintiffs' claims that defendants failed to return all the escrow money. Defendants also assert that cause of actions II, III, IV, and VII should be dismissed as duplicative of the legal-malpractice claim. Defendants further argue that plaintiffs are unable to satisfy the pleading requirements to sustain their legal malpractice and breach of fiduciary duty claims. According to defendants, plaintiffs fail to show that "but for" defendants' alleged negligence, they would have had a better result in the underlying proceedings and action. Defendants further argue that plaintiffs' conversion claim is time barred.
I. Motion to Dismiss CPLR 3211 (a) (1)
A motion to dismiss under CPLR 3211 (a) (1) on the basis of documentary evidence is appropriate "only where the documentary evidence utterly refutes plaintiff's factual allegations, conclusively establishing a defense as a matter of law." (Goshen v Mutual Life Ins. Co. of N.Y., 98 NY2d 314, 326 [2002].) Affidavits and letters are not acceptable documentary evidence under CPLR 3211 (a) (1). (Brown v Solomon & Solomon, P.C., 181 Misc 2d 461, 462-463 [Albany City Ct, 1999], citing David D. Seigel, Practice Commentaries, McKinney's Cons Law of NY, Book 7B, CPLR C3211:10, at 21.)
Defendants contend that the documentary evidence they submit proves that the entire action, and in particular plaintiffs' claim about the escrow account, should be dismissed. (Defendants' Notice of motion, Attorney Affidavit ¶¶ 21-23, 30.)
Defendants attach documents about the L&T Matters and the Supreme Court Action as well as letters to plaintiffs. To the extent that defendants submit documentary evidence to support its argument that defendants did not engage in legal malpractice, these documents do not utterly refute plaintiffs' allegations of legal malpractice. Defendants' claim that the documentary evidence covers plaintiffs' allegations about escrow is discussed below.
II. Motion to Dismiss CPLR 3211 (a) (5)
Cause of Action VI: Conversion
Defendants move to dismiss on the basis that plaintiffs' claim for conversion is time-barred. The statute of limitations for conversion is three years from the date of the conversion. (CPLR 214 [3].) "The limitations period on conversion begins to run from the date the conversion takes place and not from discovery or the exercise of diligence to discover." (Regency Found v Robson, 14 Misc 3d 1209 [A], at *9 [Sup Ct, NY County 2006].) Conversion is "'the unauthorized assumption and exercise of the right of ownership over goods belonging to another to the exclusion of the owner's rights.'" (Vigilant Ins. Co of Am. v Hous Auth of the City of El Paso, Texas, 87 NY2d 36, 45 [1995], quoting Employers' Fire Ins Co v Cotten, 245 NY 102, 105 [1927].)
The conversion started when defendants allegedly took control of the escrow money without plaintiffs' permission. Defendants wrote checks to plaintiffs' landlord, Claridge House, dated April 1, 2010, May 7, 2010, and June 9, 2010, representing a total of three months' rent for the time plaintiffs physically occupied the premises. Plaintiffs were reimbursed the remainder of escrow money in December 3, 2014. Therefore, plaintiffs had until 2013 to bring their conversion claim. This cause of action is dismissed.
III. Motion to Dismiss CPLRA 3211 (a) (7)
A. Cause of Action I: Professional Legal Malpractice
On a CPLR 3211 (a) (7) motion to dismiss a complaint, the court must accept as true the facts alleged in plaintiff's complaint, give plaintiff the benefit of every possible favorable inference, and determine only whether the facts as plaintiff alleges fit within any cognizable legal theory. (See Nonnon v City of New York, 9 NY3d 825, 827 [2007].) Dismissal is not warranted unless a defendant conclusively establishes that the plaintiff has no cause of action. (Basis Yield Alpha Fund (Master) v Goldman Sachs Group, Inc, 115 AD3d 128, 134 [1st Dept 2014].)
Plaintiffs' landlord brought two nonpayment proceedings in Housing Court, New York County, stemming from unpaid rent for two apartments that plaintiffs had occupied. Plaintiffs retained defendants to defend them in the L&T Matters. At about the same time the L&T Matters were pending, defendants, on plaintiffs' behalf, commenced an action in Supreme Court, New York County, Index No. 102197/10, against plaintiffs' landlord asserting, among other things, breach of the warranty of habitability, constructive eviction, and damage to plaintiffs' property because of an alleged bedbug infestation in plaintiffs' apartments causing plaintiffs to vacate the premises. Plaintiffs' alleged damages exceed $100,000.
In the current action, plaintiffs allege that defendants failed to assert affirmative defenses — constructive eviction and warranty of habitability — in the L&T Matters resulting in plaintiffs' landlord's obtaining two judgments against plaintiffs: (1) $46,520 representing unpaid rent and (2) $37,253.03 representing the landlords' attorney fees. By way of background, plaintiffs raised in their L&T answer affirmative defenses relating to defects in the rent demand and the petition as well as the defense of lack of personal jurisdiction. After plaintiffs' landlord moved for summary judgment and plaintiffs cross-moved for summary judgment, Housing Court, the Hon. Brenda Spears, granted the landlord's motion for summary judgment and dismissed plaintiffs' affirmative defenses. When plaintiffs' landlord obtained summary judgment in the L&T Matters, plaintiffs moved in Supreme Court to stay the Housing Court Matters and to consolidate the Housing Court Matters with the Supreme Court Action. Hon. Louis York denied plaintiffs' motion. Judge York found that different legal issues were before the court in the various cases and therefore that consolidation was inappropriate.
According to plaintiffs, defendants' behavior had negative consequences for plaintiffs in the L&T Matters and in the Supreme Court Action. Plaintiffs allege that defendants failed to inform plaintiffs about the outstanding judgments against plaintiffs in the L&T Matters. Plaintiffs allege that defendants failed to return their phone calls and respond to correspondence. Plaintiffs allege that defendants failed to prosecute the Supreme Court Action. Plaintiffs assert that defendants failed to respond to disclosure in the Supreme Court Action and to obey court orders for disclosure. Plaintiffs also allege that, without their authority and knowledge, defendants discontinued the Supreme Court Action. According to plaintiffs, but for defendants' behavior, plaintiffs would not have two outstanding judgments against them. Plaintiffs assert that because of the passage of time from 2011 — when the Supreme Court Action was discontinued — until now, plaintiffs no longer have access to witnesses and documents to assert a successful claim against their former landlord. Plaintiffs also contend that defendants paid money to plaintiffs' landlord from an escrow account without plaintiffs' knowledge and authority.
At this preliminary pre-answer motion to dismiss phase, plaintiffs have asserted a cause of action for legal malpractice. A legal-malpractice claim calls for three elements: negligence of the attorney, that the negligence was the proximate cause of the damages sustained, and proof of actual damages. (Bishop v Maurer, 33 AD3d 497, 498 (1st Dept 2006).) Plaintiffs assert that but for defendants' conduct, plaintiffs would not have lost the ability to assert warranty of habitability claim in the Supreme Court Action. Defendants argue that this was a trial-strategy choice and that trial strategies are not actionable. (Dweck Law Firm, LLP v Mann, 283 AD2d 292, 292 [1st Dept 2001].) However, it is unclear whether defendants' failure to assert the affirmative defenses of breach of warranty of habitability and constructive eviction in the L&T Matters was litigation strategy — and therefore unactionable — or whether defendants were negligent in asserting the defenses in the L&T Matters, such that but for defendants' negligence plaintiffs would not have incurred damages — therefore actionable. This court cannot tell at this phase whether defendants intended to litigate plaintiffs' landlord unpaid-rent claim separately from plaintiffs' breach of warranty-of-habitability and constructive-eviction claims and whether plaintiffs understood the ramifications of that litigation decision. Also, this court cannot tell at this phase whether defendants intended to litigate all issues — unpaid rent, constructive eviction, breach of warranty of habitability, and damage to personal property — in the Supreme Court Action. Plaintiffs also assert that defendants have caused damages, namely the two judgments plaintiffs' landlord obtained in the L&T Matters. Plaintiffs have asserted facts sufficient to allege a cause of action for legal malpractice.
Although plaintiffs do not specifically use the "but for" language, the complaint alleges that defendants' negligence resulted in plaintiffs' damages.
As for any alleged legal malpractice stemming from defendants' negligence in the Supreme Court Action, plaintiffs complain that defendants discontinued the Supreme Court Action without plaintiffs' authority and knowledge. But defendants discontinued the Supreme Court Action without prejudice. Because defendants discontinued the action in 2011, it is unclear why plaintiffs have not commenced an action in Supreme Court against their landlord, insofar as this court can determine from the papers. In any event, plaintiffs may still bring an action against their former landlord in Supreme Court. As to any disclosure violation, according to defendants, plaintiffs failed to turn over responsive documents to defendants. According to plaintiffs, defendants failed to comply with the court's disclosure orders. This court cannot tell whether plaintiffs' behavior, defendants' behavior, or both contributed to any disclosure violation and what, if any, disclosure violation contributed to defendants' discontinuance of the Supreme Court Action. The court cannot tell whether defendants' behavior has impacted plaintiffs from bringing another Supreme Court Action against plaintiffs' landlord. Defendants' motion to dismiss plaintiffs' legal-malpractice claim is denied. B. Cause of Action II: Breach of Fiduciary Duty
Plaintiffs' breach of fiduciary duty is based on defendants' alleged failure to advise plaintiffs of developments and judgments in the L&T Matters and the Supreme Court Action. Defendant argues that this claim is duplicative of cause of action I. Duplicative claims must be dismissed when they arise from the same set of facts and seek similar damages. (Genesis Merchant Partners, LP v Gilbride, Tusa, Last & Spellane LLP, 2015 NY Slip Op 31080 [U], *1 [Sup Ct, NY County 2015]; Candela Entertainment, Inc v David & Gilbert, LLP, 2014 NY Misc LEXIS 1775, 2014 NY Misc LEXIS 1775, [Sup Ct, NY County 2014].) The facts plaintiffs allege in this cause of action are similar to the facts alleged in cause of action I. Plaintiffs seek similar damages in causes of action I through VII. When a plaintiff does not allege damages different from those alleged in a legal-malpractice claim, a different claim will not withstand a motion to dismiss. (Genesis, 2015 NY Slip Op 31080 [U], *5.) This cause of action is dismissed. C. Cause of Action III: Breach of Written Contract
Defendants argue that cause of action III is rooted in the retainer agreement and is redundant of cause of action I. Plaintiffs allege that defendants materially breached the terms of the retainer agreement. Cause of action I concerns defendants' duty to perform legal services for which they were hired and retained. The retainer to which plaintiffs refer in cause of action III is the contract hiring defendants. Because the two causes of action are similar and are premised on the same facts, cause of action III is dismissed. D. Cause of Action IV: Negligence
Plaintiffs' negligence claim is based on defendants' alleged failure to exercise reasonable care and skill in advising and representing plaintiffs in the matters for which they were hired. Defendants argue that this cause of action is duplicative of cause of action I. The facts of the negligence claim are based on the same facts as cause of action I for professional legal malpractice. This cause of action is dismissed. E. Cause of Action V: Breach of Oral Escrow Agreement
Defendants argue that plaintiffs' claims are all based on defendants' alleged failure to return plaintiffs' money held in escrow. Defendants also contend that the fifth cause of action is duplicative of causes of actions I and III. Furthermore, defendants argue that documentary evidence refutes plaintiffs' claims of failure to return escrow money. Plaintiffs argue that this claim is rooted in the defendants' agreement to hold the $93,040 paid by plaintiffs. The legal-malpractice claim concerns duties and tasks concerning the L&T Matters and the Supreme Court Action.
The only mention of the escrow agreement is in a letter to plaintiffs' landlord. The escrow agreement was designed to hold plaintiffs' rent money in the L&T Matters. The facts in this cause of action are different from the facts in cause of action I. Cause of action I concerns the way defendants handled the L&T Matters and plaintiffs' alleged damages because of it. The alleged breach of oral escrow agreement is related to the legal-malpractice claim that plaintiffs bring. Plaintiffs assert that defendant should not have assumed authority over the escrow money following the L&T Matters decision. To the extent that plaintiffs assert that the money was put into escrow in the L&T Matters and that the legal-malpractice claim concerns the L&T matter, then the breach of escrow agreement is duplicative of plaintiffs' cause of action for legal malpractice.
Plaintiff alleges that defendants engaged in legal malpractice when Judge Spears ordered that sums from the escrow be turned over to plaintiffs' landlord. That in itself is duplicative of plaintiffs' legal-malpractice claim. The damages arising from Judge Spears' order can be claimed under legal malpractice. This court need not decide whether documentary evidence covers any breach of the parties' escrow agreement. This cause of action is dismissed. F. Cause of Action VII: Disgorgement of Legal Fees
The cause of action asserting that defendants must disgorge of legal fees is based on defendants' alleged failure to carry out the legal work for which they were hired. Defendants argue that this cause of action is duplicative of cause of action I. Cause of action VII concerns plaintiffs' allegations that defendants received $7500 in legal fees to advise and counsel plaintiffs. Plaintiffs argue that defendants unfairly retained the legal fee payment without competently performing the work required. The facts plaintiffs point to are similar to the facts in cause of action I. Cause of Action I includes plaintiffs' allegations that defendants failed to act as fit legal advisors in the matters for which they were hired. This cause of action is dismissed.
Accordingly, it is ORDERED that the motion to dismiss is granted only to the extent that the breach of fiduciary duty, breach of written contract, negligence, breach of oral escrow agreement, conversion, and disgorgement of legal fees causes of action of the complaint are dismissed and that the motion is otherwise denied; and it is further
ORDERED that defendants shall serve a copy of this order with notice of entry on plaintiffs and on the County Clerk, who shall enter judgment accordingly; and it is further
ORDERED that defendants are directed to serve an answer to the complaint within 20 days after service of a copy of this order with notice of entry; and it is further
ORDERED that counsel are directed to appear for a preliminary conference in Part 7, Room 731, 111 Centre Street, on August 17, 2016 at 10 a.m.
This opinion is the court's decision and order. Dated: June 24, 2016
/s/
J.S.C.