Opinion
No. 109484/2010.
2011-11-28
William MCGIVNEY and JANICE McGIVNEY, Plaintiffs v. SOBEL, ROSS, FLIEGEL & SUSS, LLP, and Sherwin A. Suss, Defendants.
Bryan P. Kujawski Esq., Kujawski & Dellicarpini, for Plaintiffs. Peter T. Shapiro Esq. Lewis Brisbois Bisgaard & Smith LLP for Defendants.
Bryan P. Kujawski Esq., Kujawski & Dellicarpini, for Plaintiffs. Peter T. Shapiro Esq. Lewis Brisbois Bisgaard & Smith LLP for Defendants.
LUCY BILLINGS, J.
I. BACKGROUND
Plaintiffs sue to recover damages for defendants' legal malpractice while representing plaintiffs in an action for plaintiff William McGivney's injury July 1, 1997, and his wife's loss of his services. The injury occurred when a chair manufactured by Compex International Company Ltd. and installed in Kmart Corporation's retail premises by Huffy Service First, Inc., collapsed as he sat in it. Defendants move to dismiss the complaint on the grounds of documentary evidence and failure to state a claim, C.P.L.R. § 3211(a)(1) and (7), and for an award of costs. Plaintiffs cross-move for summary judgment on defendants' liability for the malpractice claim, C.P.L.R. § 3212(b) and (e), or for an immediate trial on that issue. C.P.L.R. § 3211(c). For the reasons explained below, the court grants defendants' motion in part, but otherwise denies their motion, and denies plaintiffs' cross-motion.
In sum, plaintiffs allege that defendants failed to sue the chair's manufacturer and assembler; allowed plaintiffs' action against the retailer to stagnate when it filed a bankruptcy petition triggering a stay of the action; and never sought to preserve plaintiffs' claim in the bankruptcy proceeding, lift the stay, or recover from responsible parties' insurers. Defendants' omissions deprived plaintiffs of any recovery from the manufacturer or assembler and from the retailer once its debts were discharged or, at minimum, an earlier recovery, from them or their insurers. These allegations of negligence, causation, and damages sustain plaintiffs' legal malpractice claim.
Defendants, in seeking dismissal, do not establish that plaintiffs still may recover from the retailer or from the manufacturer's insurer based simply on a letter from the retailer's former attorney regarding the insurer's indemnification of the retailer, which did not bind the manufacturer or its insurer. Nor do defendants explain why, upon receiving this letter in June 2001, they did not seek to recover then from the insurer, before the retailer's bankruptcy petition, and before the statute of limitations expired.
The absence of damages specifically from defendant's violation of New York Judiciary Law § 487, however, is fatal to this claim. Although plaintiffs establish the requisite pervasive delinquency and deceit by defendants to sustain this claim, plaintiffs fail to allege that defendants' deceit, distinct from their malpractice, caused an adverse result in their litigation.
II. APPLICABLE STANDARDS
The court may dismiss a complaint where admissible documentary evidence utterly refutes plaintiffs' allegations and conclusively establishes a defense as a matter of law. C.P.L.R. § 3211(a)(1); Goldman v. Metropolitan Life Ins. Co., 5 NY3d 561, 571 (2005); Goshen v. Mutual Life Ins. Co. of NY, 98 N.Y.2d 314, 326 (2002); 511 West 232nd Owners Corp. v. Jennifer Realty Co., 98 N.Y.2d 144, 152 (2002); McCully v. Jersey Partners, Inc., 60 AD3d 562 (1st Dep't 2009). Upon defendants' motion to dismiss claims pursuant to C.P.L.R. § 3211(a)(1) or (7), the court may not rely on facts alleged by defendants to defeat the claims unless the evidence is in admissible form, demonstrates the absence of any significant dispute regarding those facts, and completely negates the allegations against defendants. Lawrence v. Graubard Miller, 11 NY3d 588, 595 (2008); Goshen v. Mutual Life Ins. Co. of NY, 98 N.Y.2d at 326;Leon v. Martinez, 84 N.Y.2d 83, 87–88 (1994); Yoshiharu Igarashi v. Shohaku Higashi, 289 A.D.2d 128 (1st Dep't 2001). The court must accept the complaint's allegations as true, liberally construe them, and draw all reasonable inferences in plaintiffs' favor. Nonnon v. City of New York, 9 NY3d 825, 827 (2007); Goshen v. Mutual Life Ins. Co. of NY, 98 N.Y.2d at 326;Harris v.. IG Greenpoint Corp., 72 AD3d 608, 609 (1st Dep't 2010); Vig v. New York Hairspray Co., L.P., 67 AD3d 140, 144–45 (1st Dep't 2009). The court may dismiss a claim based on C.P.L.R. § 3211(a)(7) only if the allegations completely fail to state a claim. Leon v. Martinez, 84 N.Y.2d at 88;Harris v. IG Greenpoint Corp., 72 AD3d at 609;Frank v. DaimlerChrysler Corp., 292 A.D.2d 118, 121 (1st Dep't 2002); Scott v. Bell Atl. Corp., 282 A.D.2d 180, 183 (1st Dep't 2001).
III. DEFENDANTS' MOTION TO DISMISS PLAINTIFFS' CLAIMS
In May 1998, defendants commenced a personal injury action on plaintiffs' behalf against only Kmart. Kmart filed a bankruptcy petition in January 2002, which automatically stayed that action. 11 U.S.C. § 362(a)(1). Defendants never moved to lift the stay or filed a claim on plaintiffs' behalf in the bankruptcy proceeding. In 2009, plaintiffs retained a new attorney to represent them in their action against Kmart. Kmart was discharged in bankruptcy and the proceeding terminated March 3, 2010. 11 U.S.C. § 524(a)(1). A. Legal Malpractice Claim
To establish legal malpractice, plaintiffs must plead and ultimately prove that defendant attorneys' professional negligence proximately caused plaintiffs actual damages. Rudolf v. Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442 (2007); Russo v. Feder, Kaszovitz, Isaacson, Weber, Skala & Bass, 301 A.D.2d 63, 67 (1st Dep't 2002); Between The Bread Realty Corp. v. Salans Hertzfeld Heilbronn Christy & Viener, 290 A.D.2d 380 (1st Dep't 2002). Defendant attorneys must have failed to use reasonable skill and knowledge that members of the legal profession ordinarily possess. Rudolf v. Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d at 442;McCoy v. Feinman, 99 N.Y.2d 295, 301 (2002); Arnav Indus., Inc. Retirement Trust v. Brown, Raysman, Millstein, Felder & Steiner, 96 N.Y.2d 300, 303–304 (2001). To establish causation, plaintiffs must show that they would have prevailed in their action but for defendants' negligence. Rudolf v. Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d at 442;Between The Bread Realty Corp. v. Salans Hertzfeld Heilbronn Christy & Viener, 290 A.D.2d 380;Dweck Law Firm v. Mann, 283 A.D.2d 292, 293 (1st Dep't 2001); Zarin v. Reid & Priest, 184 A.D.2d 385, 386 (1st Dep't 1992).
The complaint alleges that defendants were negligent in that they failed to commence a negligence and product liability action against the chair's manufacturer Compex and a negligence action against the chair's assembler Huffy Service First and neglected plaintiffs' action for over a decade. Plaintiffs claim damages from defendants' negligence because it deprived plaintiffs of any recovery from Compex or Huffy Service First, unimpeded by the stay or Kmart's discharge due to its bankruptcy, and from an earlier recovery, even if plaintiffs were to recover fully for their damages from Kmart.
As discussed further below, plaintiffs also show that recovery from any of these parties, including Kmart, or their insurers is unlikely, because defendants failed to monitor Kmart's bankruptcy proceeding and file plaintiffs' claim, shifting that responsibility to the unknowledgeable clients; lift the stay to pursue Kmart or its insurer; or proceed directly against any insurers. Now, Kmart is discharged, and the statute of limitations for claims against other parties has expired,
Plaintiffs' specific factual allegations of negligence, causation, and damages sustain their legal malpractice claim. LaRusso v. Katz, 30 AD3d 240, 244 (1st Dep't 2006); Pyne v. Block & Assoc., 305 A.D.2d 213 (1st Dep't 2003). See Between The Bread Realty Corp. v. Salans Hertzfeld Heilbronn Christy & Viener, 290 A.D.2d at 381;Dweck Law Firm v. Mann, 283 A.D.2d at 293. While plaintiffs also allege that defendants concealed their failure to commence an action against the additional parties, concealment of malpractice is not a separate legal claim for personal injury, and plaintiffs do not plead concealment as a separate personal injury claim. Zarin v. Reid & Priest, 184 A.D.2d at 387.
Defendants, on the other hand, do not conclusively demonstrate that suing Compex and Huffy Service First would have been futile or unnecessary: that suing them would not have produced a recovery above what plaintiffs will recover from Kmart. Schorsch v. Moses & Singer LLP, 60 AD3d 557, 558 (1st Dep't 2009); Conti v. Frank, 22 AD3d 342 (1st Dep't 2005). In this regard, defendants claim plaintiffs' malpractice action is premature, because plaintiffs still may recover from Kmart or from Compex's insurer. Defendants rely on a letter dated June 13, 2001, from Kmart's attorney to defendants, reporting that at a pretrial conference “the Court was advised that the defense and indemnification of defendant Kmart Corporation had been tendered to Fireman's Fund, the carrier for the manufacturer” of the chair. Aff. of Peter T. Shapiro Ex. C. The letter's statement regarding the manufacturer Compex's indemnification of Kmart not only is inadmissible double hearsay, but, as a statement by Kmart's attorney, does not bind Compex's insurer. DeBellis v. Property Clerk of City of NY, 79 N.Y.2d 49, 59 (1992). See Weil, Gotshal & Manges LLP v. Fashion Boutique of Short Hills, 56 AD3d 334, 335 (1st Dep't 2008). Nor does the letter state, as defendants contend, that the insurer, Fireman's Fund Insurance Company, accepted responsibility for the loss.
This statement regarding Compex's insurer potentially defending and indemnifying Kmart, moreover, is from Kmart's former attorney. A letter to defendants dated November 7, 2002, advised them that a new law firm would be representing Kmart “pursuant to a policy of insurance issued by Fireman's Fund Insurance Company to COMPEX International Company, Ltd.” in defending against Kmart's liability for plaintiffs' injury. Shapiro Aff. Ex.H.
Turning nonetheless to the contents of the letter dated June 13, 2001, on which defendants rely, it is inexplicable why they did not seek to recover then from Fireman's Fund on plaintiffs' behalf, several months before Kmart's bankruptcy petition imposed a stay, instead of calling upon plaintiffs to do so now. Even after Kmart commenced its bankruptcy proceeding, and even if lifting the stay of the action against Kmart to proceed directly against the bankrupt party was unlikely, lifting the stay of that action to proceed directly against the bankrupt party's insurer was a remedy available to defendants on plaintiffs' behalf. The automatic stay does not extend to prohibit claims against non-bankrupt parties, as long as those claims do not affect the bankrupt defendant's property. 11 U.S.C. § 362(a)(1); Winters v. Dowdall, 63 AD3d 650, 652 (1st Dep't 2009); Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Oxford Venture Partners, LLC, 13 AD3d 89 (1st Dep't 2004); CenTrust Servs. v. Guterman, 160 A.D.2d 416, 418 (1st Dep't 1990); Rosenbaum v. Dane & Murphy, 189 A.D.2d 760, 761 (2d Dep't 1993). Yet defendants merely fault plaintiffs for failing to seek a lifting of the stay, without explaining defendants' own failure to do so. Nor did Kmart's bankruptcy proceeding bar an action directly against its insurer. NY Ins. Law § 3420(a)(1); Roman v. Hudson Tel. Assoc., 11 AD3d 346, 347 (1st Dep't 2004); Lumbermens Mut. Cas. Co. v. Morse Shoe Co., 218 A.D.2d 624, 625 (1st Dep't 1995). See11 U.S.C. § 524(a)(1).
The viability of an action commenced against Fireman's Fund now, however, is questionable. Since the claims against Compex as well as Huffy Service First are for personal injury other than malpractice, a statute of limitations of three years applies. C.P.L .R. § 214(5). While the time to commence the action against Kmart would have been be tolled during the bankruptcy stay, C.P.L.R. § 204(a); Zuckerman v. 234–6 W. 22 St. Corp., 267 A.D.2d 130 (1st Dep't 1999); Wilder v. City of New York, 193 A.D.2d 420, 421 (1st Dep't 1993), the time to commence an action against the other entities for plaintiffs' injury July 1, 1997, expired July 1, 2000, before Kmart filed its bankruptcy petition January 28, 2002. Since Kmart filed its bankruptcy petition after the statute of limitations expired, neither C.P.L.R. § 204(a) nor 11 U.S.C. § 108(a)(2), which tolls the limitations period two years when a bankruptcy petition is filed within the period, applied. Kremen v. Benedict P. Morelli & Assoc. PC, 54 AD3d 596, 597 (1st Dep't 2008). B. Judiciary Law § 487 Claim
Plaintiffs claim defendants violated New York Judiciary Law § 487(1), which directs that:
An attorney or counselor who is guilty of any deceit or collusion ... with intent to deceive the court or any party ... is guilty of a misdemeanor, and in addition to the punishment prescribed therefor by the penal law, he forfeits to the party injured treble damages, to be recovered in a civil action.
Even an unsuccessful attempted deceit violates Judiciary Law § 487(1). Amalfitano v. Rosenberg, 12 NY3d 8, 14 (2009); Kurman v. Schnapp, 73 AD3d 435 (1st Dep't 2010).
To sustain a claim for violation of Judiciary Law § 487(1), plaintiffs must show “a chronic and extreme pattern of legal delinquency” along with the statutorily required intent to deceive. Kaminsky v. Herrick, Feinstein LLP, 59 AD3d 1, 13 (1st Dep't 2008); Kinberg v. Opinsky, 51 AD3d 548, 549 (1st Dep't 2008); Nason v. Fisher, 36 AD3d 486, 487 (1st Dep't 2007); Solow Mgt. Corp. v. Seltzer, 18 AD3d 399, 400 (1st Dep't 2005). See Jaroslawicz v. Cohen, 12 AD3d 160, 161 (1st Dep't 2004). They also must allege damages from defendants' conduct. Maksimiak v. Schwartzapfel Novick Truhowsky Marcus, P.C., 82 AD3d 652 (1st Dep't 2011); Kaminsky v. Herrick, Feinstein LLP, 59 AD3d at 13;Nason v. Fisher, 36 AD3d at 487;Jaroslawicz v. Cohen, 12 AD3d at 161.
Defendants' failure to disclose to plaintiffs that defendants never commenced an action against the chair's manufacturer or assembler differs from the legal malpractice claimed against defendants. Sabalza v. Salgado, 85 AD3d 436, 438 (1st Dep't 2011). See Lusk v. Weinstein, 85 AD3d 445, 446 (1st Dep't 2011); Zito v. Fischbein Badillo Wagner Harding, 80 AD3d 520, 521 (1st Dep't 2011). Plaintiffs allege that defendants neglected plaintiffs' personal injury claims for “over a decade as to constitute both a chronic and extreme pattern of legal delinquency,” Shapiro Aff. Ex. A ¶ 18, and, during this longstanding neglect, concealed defendants' inaction against two viable targets and misled plaintiffs regarding the status of their case. While a single failure to report to a client does not establish the required pattern of delinquency, Kaminsky v. Herrick, Feinstein LLP, 59 AD3d at 13, plaintiffs allege much more: specifically and extensively enough to establish pervasive delinquency and the requisite deceit. Sabalza v. Salgado, 85 AD3d at 437;Gotay v. Breitbart, 14 AD3d 452, 453–54 (1st Dep't 2005). Plaintiffs do not specifically allege defendants' intent to deceive, but that intent is inferable from the facts alleged. See Briarpatch Ltd., L.P. v. Frankfurt Garbus Klein & Selz, P.C., 13 AD3d 296, 297 (1st Dep't 2004).
Plaintiffs nevertheless fail to allege that defendants' deceit, distinct from their professional negligence, caused an adverse result in their litigation. Mars v. Grant, 36 AD3d 561, 562 (1st Dep't 2007). Plaintiffs never so much as hint that, for example, had they known of defendants' failures to sue the manufacturer or assembler, pursue insurers, or seek to lift the stay imposed by Kmart's bankruptcy petition, plaintiffs would have substituted another attorney, who would have timely pursued all potential defendants, their insurers, and remedies. The absence of damages specifically flowing from a violation of Judiciary Law § 487 is fatal to their claim. Maksimiak v. Schwartzapfel Novick Truhowsky Marcus, P.C., 82 AD3d 652;Kaminsky v. Herrick, Feinstein LLP, 59 AD3d at 13;Nason v. Fisher, 36 AD3d at 487;Jaroslawicz v. Cohen, 12 AD3d at 161.See Kurman v. Schnapp, 73 AD3d 435.
IV. PLAINTIFFS' CROSS–MOTION FOR SUMMARY JUDGMENT ON LIABILITY
Plaintiffs cross-move for summary judgment on defendants' liability for plaintiffs' legal malpractice claim. Upon a motion to dismiss claims, C.P.L.R. § 3211(c) does not afford the court the discretion to look behind the complaint and treat the motion as one for summary judgment, unless the court first gives notice to the parties, or defendants and plaintiffs both so treat the motion. E .g., Nonnon v. City of New York, 9 NY3d at 827;Frydman v. Fidelity Nat. Title Ins. Co., 68 AD3d 622, 623–24 (1st Dep't 2009); Chuqui v. Church of St. Margaret Mary, 39 AD3d 397 (1st Dep't 2007); Wiesen v. New York Univ., 304 A.D.2d 459, 460 (1st Dep't 2003). The court may treat a motion to dismiss as one for summary judgment when both parties request such treatment, deliberately chart a course for summary judgment, or indicate that only issues of law remain. Mihlovan v. Grozavu, 72 N.Y.2d 506, 508 (1988); Wiesen v. New York Univ., 304 A.D.2d at 460. Here, only plaintiffs request that defendants' liability for malpractice be resolved by summary judgment.
Even had the parties agreed that the court treat the motion to dismiss as one for summary judgment, plaintiffs fail to make prima facie showing of entitlement to judgment on defendants' liability for legal malpractice. Plaintiffs present no evidence supporting their motion and, instead, rely on defendants' evidence, which is not in admissible form and thus is insufficient to support a summary judgment motion. C.P.L.R. § 3212(b); Smalls v. AJI Indus., Inc., 10 NY3d 733, 735 (2008); JMD Holding Corp. v. Congress Fin. Corp., 4 NY3d 373, 384 (2005); Coleman v. Maclas, 61 AD3d 569 (1st Dep't 2009).
V. CONCLUSION
For the reasons explained above, the court grants defendants' motion to the extent of dismissing plaintiffs' second claim, for violation of New York Judiciary Law § 487(1), but otherwise denies defendants' motion to dismiss the complaint, and denies plaintiffs' cross-motion for summary judgment. C.P.L.R. §§ 3211(a)(1) and (7) and (c), 3212(b) and (e). This decision constitutes the court's order.