Opinion
10-27-2016
WACHTELL, LIPTON, ROSEN & KATZ, Plaintiff–Respondent, v. CVR ENERGY, INC., Defendant–Appellant, Icahn Enterprises, L.P., et al., Defendants.
Law Offices of Herbert Beigel, New York (Herbert Beigel of counsel) and Law Office of Robert R. Viducich, New York (Robert R. Viducich of counsel), for appellant. Debevoise & Plimpton LLP, New York (John Gleeson of counsel), for respondent.
Law Offices of Herbert Beigel, New York (Herbert Beigel of counsel) and Law Office of Robert R. Viducich, New York (Robert R. Viducich of counsel), for appellant.
Debevoise & Plimpton LLP, New York (John Gleeson of counsel), for respondent.
Order, Supreme Court, New York County (O. Peter Sherwood, J.), entered October 2, 2014, which, to the extent appealed from, denied defendants' motion to dismiss the claim for a declaratory judgment on the ground of another action pending, unanimously reversed, on the facts, with costs, and the motion granted. Order, same court and Justice, entered February 24, 2015, which granted plaintiff's motion to dismiss defendant CVR Energy, Inc.'s counterclaim for legal malpractice, unanimously reversed, on the law, with costs, and the motion denied.
The court improvidently exercised its discretion in declining to dismiss the claim for a declaratory judgment against defendant CVR Energy, Inc., since there is another action pending between the parties for the same cause of action (CPLR 3211[a][4] ; see Syncora Guar. Inc. v. J.P. Morgan Sec. LLC, 110 A.D.3d 87, 95, 970 N.Y.S.2d 526 [1st Dept.2013] ). CVR's choice of a federal forum for its earlier filed legal malpractice action against plaintiff (Wachtell) (see 28 U.S.C. § 1332 [diversity of citizenship] ) is entitled to comity. Wachtell's “use of a declaratory judgment action to determine the viability of [its] defense, or the existence of merit, to [CVR's] legal malpractice claim” is an “unusual” practice (White & Case, LLP v. Suez, SA, 12 A.D.3d 267, 268, 785 N.Y.S.2d 55 [1st Dept.2004] ), strongly suggestive of forum shopping, and does not warrant a deviation from the first-to-file rule (cf. National Union Fire Ins. Co. of Pittsburgh, Pa. v. Jordache Enters., 205 A.D.2d 341, 344, 613 N.Y.S.2d 161 [1st Dept.1994] ).
The finding, made in related actions brought by CVR's financial advisers, that CVR ratified the engagement letters with respect to which CVR alleges that Wachtell failed to represent it competently does not collaterally estop a legal malpractice claim against Wachtell for conduct that allegedly caused and/or contributed to CVR's ratification and kept CVR from taking appropriate action to negate the effects of the ratification (see e.g. Bishop v. Maurer, 9 N.Y.3d 910, 844 N.Y.S.2d 165, 875 N.E.2d 883 [2007] ). The identical issue was not decided in the aforementioned related actions (see D'Arata v. New York Cent. Mut. Fire Ins. Co., 76 N.Y.2d 659, 664, 563 N.Y.S.2d 24, 564 N.E.2d 634 [1990] ). Schwarz v. Shapiro, 202 A.D.2d 187, 608 N.Y.S.2d 210 (1st Dept.1994), lv. denied 83 N.Y.2d 760, 616 N.Y.S.2d 15, 639 N.E.2d 755 (1994) is inapposite, since the attorney's conduct in that case was not alleged to have contributed to the client's ratification.
FRIEDMAN, J.P., ANDRIAS, MOSKOWITZ, GISCHE, GESMER, JJ., concur.