Opinion
INDEX NO. 51203/14 INDEX NO. 20456/10 INDEX NO. 51195/2014
06-17-2015
ALBERT JACOBS LLP, Plaintiff-Counterclaim Defendant, v. DIANA PARKER, as Executrix of the Estate of GERTRUDE NEUMARK ROTHSCHILD, Defendant-Counterclaim Plaintiff. TROUTMAN SANDERS LLP, Plaintiff-Counterclaim Defendant, v. DIANA PARKER, as Executrix of the Estate of GERTRUDE NEUMARK ROTHSCHILD, Defendant-Counterclaim Plaintiff. DIANA PARKER, as Executor of the Estate of GERTRUDE NEUMARK ROTHSCHILD, Plaintiff, v. TROUTMAN SANDERS LLP, ALBERT JACOBS LLP, and ALBERT JACOBS, Defendants.
NYSCEF DOC. NO. 111 To commence the statutory time period of appeals as of right (CPLR 5513[a]), you are advised to serve a copy of this order, with notice of entry, upon all parties. DECISION AND ORDER
Motion Seq. No. 010
Motion Seq. No. 001
DIBELLA, J.
The following papers have been read and considered on this motion by defendants Albert Jacobs LLP and Albert Jacobs (collectively, "Jacobs") for partial summary judgment, pursuant to CPLR 3212, against Diana Parker, as Executor of the Estate of Gertrude Neumark Rothschild (the "Estate"): (1) dismissing the third, fourth, fifth, ninth and tenth causes of action in the Estate's complaint under Index No. 51195/14; and (2) dismissing the third, fourth, fifth, eighth and ninth counterclaims and related third, fourth, fifth and seventh defenses in the Estate's Answer under Index No. 51203/14: 1) Notice of Motion; Affidavit of Albert L. Jacobs, Jr.; Exhibits 1-8; Affirmation in Support of David S. Greenberg, Esq.;Exhibits 9-22; Memorandum of Law; 2) Affidavit of Diana Parker; Exhibits 1-38; Affidavit of Alan D. Halperin; Exhibit 1; Affirmation of Bruce A. Green, Esq.; Exhibits A-B; Affidavit of Richard J. Barbash; Exhibits 1-17; Memorandum of Law in Opposition; and 3) Reply Affirmation in Further Support of David S. Greenberg, Esq.; Exhibits 23-26; Reply Memorandum of Law in Further Support.
These related actions concern claims of Jacobs for unpaid legal fees owed by the Estate and claims of the Estate challenging Jacobs' legal representation of Dr. Rothschild in connection with the enforcement and licensing of her patent rights. Dr. Rothschild was a world renowned inventor who owned two United States patents and several foreign patents relating to light emitting diodes (LEDs). With regard to enforcing her patent rights, Dr. Rothschild was represented by three law firms where Albert Jacobs was a partner: first, by Drier LLP; next, by Albert Jacobs LLP; and finally, with Troutman Sanders LLP.
The actions have been joined for discovery and trial.
Jacobs now moves for partial summary judgment, pursuant to CPLR 3212, dismissing the third, fourth, fifth, ninth and tenth causes of action in the Estate's complaint under Index No. 51195/14 and dismissing the third, fourth, fifth, eighth and ninth counterclaims and related third, fourth, fifth and seventh defenses in the Estate's Answer under Index No. 51203/14. The Estate opposes the motion. For the reasons set forth below, the motion is denied.
Summary judgment is a drastic remedy and should only be granted if the moving party has sufficiently established that it is warranted as a matter of law. Alvarez v. Prospect Hosp., 68 NY2d 320, 324 (1986). However, it should be denied if the opposing party presents admissible evidence establishing that there is a genuine issue of fact remaining. Zuckerman v. City of New York, 49 NY2d 557, 560 (1980). "Moreover, the motion court should draw all reasonable inferences in favor of the nonmoving party in determining whether to grant summary judgment." F. Garofalo Elec. Co. v. New York Univ., 300 AD2d 186, 188 (1st Dep't 2002). In deciding such a motion, the court's role is "issue-finding, rather than issue-determination." Sillman v. Twentieth Century-Fox Film Corp., 3 NY2d 395, 404 (1957) (internal quotations omitted).
Jacobs moves to dismiss the Estate's cause of action and counterclaim for fraud arguing that the Estate will be unable to prove the required elements of fraud because its only witness, Dr. Rothschild, died shortly after this litigation began. This Court disagrees that the death of Dr. Rothschild, in and of itself, necessary prevents the Estate from being able to prove its claim of fraud. Fraud upon a party who subsequently passes away may be demonstrated by circumstantial evidence. See Matter of Brandon, 79 AD2d 246 (2d Dep't 1981); see also Matter of Posnansky, 234 AD 881 (2d Dep't 1931). While Dr. Rothschild certainly would have been a significant witness, the Estate relies on and presents additional evidence, which is sufficient to raise an issue of fact and withstand Jacobs' summary judgment motion on this claim. "The issues of material misrepresentation and reasonable reliance, essential elements of a fraud claim, are not subject to summary disposition." Brunetti v. Musallam, 11 AD3d 280 (1st Dep't 2004).
For the same reasons, Jacobs also argues that the Estate cannot prove its claim under section 487 of the Judiciary Law. However, as indicated above, the death of Dr. Rothschild does not necessarily require the dismissal of the Estate's claims. Jacobs also contends that a claim under Judiciary Law § 487 cannot stand because this section only applies to an attorney's conduct in a pending action in a New York state court, and the wrongful conduct alleged by the Estate did not occur in any pending state court action.
Section 487 of the Judiciary Law provides that:
An attorney or counselor who:While the alleged deceit or wrongful conduct must occur during a pending judicial proceeding in which the claimant was a party (see Bankers Trust Co. v. Cerrato, Sweeney, Cohn, Stahl & Vaccaro, 187 AD2d 384 [1st Dep't 1992]), the statute does not specifically limit the pending judicial proceeding to New York state court actions (see Cinao v. Reers, 27 Misc 3d 195 [Sup Ct, Kings Co 2010]). As the Estate has alleged that the attorney misconduct occurred during the pending patent infringement action commenced in the U.S. District Court for the Southern District of New York against Cree, Inc. (after approximately five years, this action was transferred to a federal court in Massachusetts), Jacobs has not conclusively demonstrated that the claims brought pursuant to section 487 of the Judiciary Law should be dismissed.
1. Is guilty of any deceit or collusion, or consents to any deceit or collusion, with intent to deceive the court or any party; or,
2. Wilfully delays his client's suit with a view to his own gain; or, wilfully receives any money or allowance for or on account of any money which he has not laid out, or becomes answerable for,
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.
The Estate also contends that it sufficiently stated a claim under Judiciary Law § 487 because Dr. Rothschild, a New York resident, was allegedly the victim of deceit and collusion committed in the state of New York by attorneys admitted to practice in New York, arising from their misuse of a New York attorney escrow account funded by their representation of Dr. Rothschild as a party.
As for the Estate's breach of fiduciary duty claim, which is based on alleged improper billing practices by Jacobs such as billing contract personnel at marked-up rates and an improper division of fees and charges for costs, Jacobs contends that it was not improper for an attorney to bill out contract personnel at rates higher than their actual cost to the attorney and it was also acceptable for Jacobs to include a two percent administrative fee to cover certain costs. However, issues of fact exist precluding dismissal of this claim. The precedent relied upon by Jacobs (ABA's Formal Op. 08-451) specifically applies to attorney personnel, and not non-attorney personnel such as the expert engineers who were hired herein. Thus, Jacobs has not conclusively established its entitlement to judgment as a matter of law dismissing these claims. Issues of fact also exist regarding the administrative fees and its disclosure and/or appropriateness.
Lastly, as to the Estate's claim of fee forfeiture, Jacobs claims that the Estate cannot establish that it terminated Jacobs LLP for cause, in that Jacobs LLP ceased operations months prior to the alleged termination. The Estate argues that Dr. Rothschild terminated Jacobs for cause, citing numerous infractions in its termination letter, that Jacobs continued to deposit Dr. Rothschild's money into its escrow account and continues to be an active corporation, and that Dr. Rothschild was never given any notice that Jacobs ceased operations and her representation was taken over by Troutman. Thus, the Estate has raised issues of fact, which warrants denial of the motion for summary judgment dismissing this claim.
The Court has considered Jacobs' remaining arguments and finds them also to be without merit and insufficient to warrant dismissal of the Estate's claims at this time.
Accordingly, it is
ORDERED that Jacobs' motion for partial summary judgment is denied in its entirety; and it is further
ORDERED that counsel are directed to appear for a settlement conference on July 7, 2015 at 9:15 AM in Courtroom 1600 of the Westchester County Courthouse; and it is further
ORDERED that the Estate shall serve a copy of this decision and order with notice of entry upon all parties within 20 days.
This is the Decision and Order of the Court. Dated: June 17, 2015
White Plains, New York
/s/_________
Hon Robert DiBella, JSC To: Davis & Gilbert LLP
Via e-filing
DelBello Donnellan Weingarten Wise & Wiederkehr LLP
Via e-filing
Denlea & Carton LLP
Via e-filing