Opinion
004182/05.
Decided September 28, 2007.
Motion by defendants for summary judgment dismissing the complaint is granted. Cross-motion by plaintiffs for leave to serve an amended complaint is denied.
This is an action for legal malpractice.
Plaintiff, Breslin Realty Development Corporation, is engaged in the business of real estate development. Plaintiff Wilbur F. Breslin is an officer, director, and shareholder of the corporation. Breslin also held 50% interests in a group of limited partnerships which owned fee or leasehold interests in five commercial properties. The limited partnerships were plaintiffs Bay Harbour Associates, L.P., Huntington Square Associates, L.P., Busy Bee Associates, L.P., Rochester Associates, L.P., and Verleye Jericho Associates, L.P. Plaintiff Easa Easa owned a 50% interest in Busy Bee and a 40% interest in Bay Harbour. Plaintiff Jack Easa held the remaining 10% interest in Bay Harbour.
Bay Harbour Associates was the owner of Bay Harbour Mall in Lawrence.Huntington Square Associates owned Huntington Square Mall in East Northport.Busy Bee Associates owned commercial property located in Massapequa. Rochester Associates owned J. Scutti Plaza located near Rochester. Verleye Jericho Associates owned a retail shopping center located in Elwood, New York. See Defendants' Ex. U.
Between December 1993 and February 1995, Cargill Financial Services Corporation made a series of mortgage loans to the limited partnerships in the aggregate amount of 58 million dollars. Mortgage promissory notes secured by the mortgages were originally issued without recourse. However, pursuant to a series of modification agreements which occurred between 1997 and 1999, the partnerships guaranteed each other's notes, and the loans were cross-collateralized. As part of the modification, plaintiff Riverwood LaPlace Associates, LLC, a Breslin affiliate which held property in Louisiana, guaranteed the loans which had been made to the five limited partnerships. On February 29, 1996, Cargill assigned to CFSC Capital Corp. its rights under the various loans and mortgages.
See plaintiffs' Ex. 3.
See plaintiffs' Ex. 3, particularly ¶ `s 27, 49, 71, 93, and 112 of the complaint in the foreclosure action.
At a time when limited partnerships began to experience financial difficulty, Wilbur Breslin consulted defendant J. Stanley Shaw, an attorney with whom he had been involved in other matters. In March 1996, CFSC commenced an action to foreclose the various mortgages, asserting claims for deficiency judgments against all of the mortgagors.In the foreclosure action, the partnerships were represented by Shaw's firm, defendant Shaw, Licitra, Gulotta, Esernio Schwartz, P.C. The firm claims to have expertise in bankruptcy and debt restructuring and continued to represent plaintiffs in the ensuing bankruptcy proceedings. In the course of the representation, the firm negotiated certain agreements on behalf of the limited partnerships.
On September 3, 1996, after a foreclosure action had been commenced against Riverwood LaPlace Associates in Louisiana, Riverwood filed a voluntary Chapter 11 petition for reorganization in the Eastern District of New York. The petition lists Shaw, Licitra as the attorney for the debtor. On February 12, 1999, a "settlement agreement" was reached before Bankruptcy Judge Conrad, involving not only Riverwood but also the five plaintiff limited partnerships. According to the agreement, plaintiffs had the right to purchase CFSC's interest in the loans for $49 million if payment was made on or before July 16, 1999. In the event that payment was not made by that date, the properties of the limited partnerships would be transferred to CFSC in accordance with "pre-packaged" plans of reorganization to be confirmed by the Bankruptcy Court. On June 24, 1999, pursuant to the settlement agreement, voluntary Chapter 11 petitions were filed by all of the limited partnerships. Shaw, Licitra was listed as the attorney for the debtor on all of the petitions.
The petition appears as Defendants' Ex. A. The date of filing is shown in Defendants' Ex. C.
On July 2, 1999, with the deadline fast approaching, plaintiffs entered into the agreement with Leucadia, Inc. which forms the basis of the present malpractice action. According to the agreement, Leucadia agreed to purchase the outstanding mortgages for $49 million, the price set by the CFSC agreement, to "allow for a restructuring and refinancing of the properties." Following acquisition of the loans, plaintiffs and Leucadia were to enter into a series of new limited partnerships — or ventures-, and plaintiffs were to contribute 100% of their interests in the properties in exchange for a 50% interest in "the Venture(s)."
Defendants' Ex. M.
The agreement provided that Leucadia and plaintiffs would obtain a new cross-collateralized first mortgage loan in the approximate aggregate sum of 34 million dollars. Only the properties owned by Bay Harbour, Huntington, Rochester, and possibly Riverwood were to be encumbered by the mortgage. Additionally, Leucadia was to retain a second mortgage in the amount of $11 million, if the partnerships were unable to sell assets to reduce the secured debt. The remaining $4 million of the purchase price for the mortgages was to be "Leucadia's equity contribution for 50% of the Venture(s)."In order to acquire the loans, Leucadia agreed to take an assignment of plaintiffs' rights to purchase the mortgages pursuant to the settlement with CFSC.
Defendants' Ex. U at 8.
Under Section 1.4 of the agreement, Leucadia promised not to foreclose the mortgages, provided that "restructuring" occurred by December 15, 1999. Leucadia was free to exercise any of its rights with respect to the loans if restructuring had not occurred by that date. After the "Closing Date," i.e. the date when Leucadia purchased the loans, plaintiffs had no right to acquire the loans for any amount less than the total amount outstanding. However, the agreement further provided that "notwithstanding the foregoing," prior to December 15, 1999, plaintiffs could request Leucadia to foreclose the mortgages in a "consensual foreclosure" and then convey the properties to the "appropriate Venture."
The Leucadia agreement further provided that it was not a joint venture agreement and no "similar relationship" would exist between the parties "until the Ventures are formed." Finally, the agreement provided that it represented the "entire agreement" between the parties and superceded all prior oral or written agreements.
On July 7, 1999, the Bankruptcy Court approved the Leucadia agreement. Pursuant to the agreement, plaintiffs assigned their interests in the loans to Leucadia, and Leucadia purchased the loans from CFSC. However, plaintiffs and Leucadia were not able to obtain the required financing. On December 14, 1999 Wilbur Breslin sent Leucadia a letter purporting to exercise plaintiffs' rights to request consensual foreclosure. In response, Leucadia asserted that because the financing had not been obtained, it had the right to foreclose for its sole benefit and acquire a 100% equity interest in the properties.
Because of the intervening sale of Busy Bee's property, the required funding was reduced to $34 million. See Defendants' Ex. U at 9.
On March 20, 2000, Leucadia filed four liquidating plans of reorganization with the Bankruptcy Court. The plans called for a forfeiture of all of plaintiffs' assets in order to satisfy the loans. On April 14, 2000, plaintiffs submitted their own plans of reorganization, in an effort to retain equity interests in the properties. In May 2000, defendants filed on behalf of plaintiffs an adversary complaint in the Bankruptcy Court, seeking, among other relief, a judgment declaring the rights of the parties to the Leucadia agreement.
Plaintiffs' proposed alternative plans of reorganization depending upon the outcome of the adversary proceeding in the Bankruptcy Court. In essence, the alternatives were either 1) proceeding with "the Venture" by obtaining new financing or consensual foreclosure, or 2) selling the properties. See Defendants' Ex. V.
In the Bankruptcy Court, plaintiffs asserted that the agreement gave rise to a joint venture, despite its language to the contrary. Plaintiffs argued that because a joint venture had been formed, Leucadia was under a fiduciary obligation to pursue consensual foreclosure and convey the properties to the new partnerships. Plaintiffs further argued that Leucadia had not made a good faith effort to obtain the financing necessary to effectuate the joint venture agreement.
On August 4, 2000, the Bankruptcy Court, Hon. Melanie Cyganowski, issued a 67-page decision ruling in favor of defendants. As a preliminary matter, Judge Cyganowksi held that because the Leucadia agreement was complete and unambiguous, the parole evidence rule precluded extrinsic evidence tending to show that the parties had formed a joint venture. The court further held that the agreement did not give rise to a joint venture. The court held that December 15, 1999 was a firm "deadline," and Leucadia was free to foreclose the mortgages after that date. Furthermore, Leucadia was entitled to foreclose on its own behalf, and plaintiffs could not request "consensual foreclosure," unless the financing were first obtained. Finally, Judge Cyganowski held that Leucadia did not breach its obligation to make a good faith effort to obtain the financing needed to effectuate a joint venture agreement. As a consequence of the Bankruptcy Court decision, all of plaintiffs' properties were forfeited to Leucadia. The Bankruptcy Court decision was affirmed by the U.S. District Court on March 20, 2002, and the District Court judgment was affirmed by the U.S. Court of Appeals for the Second Circuit on January 23, 2003.In the opinion of the Court of Appeals, the case involved a "contract interpretation dispute" which was resolved correctly by the District Court.
However, the court allowed evidence as to conduct of the parties which occurred subsequent to the agreement. See Ex. C to affirmation of Barry Jacobs at 35-36.
Defendants' Ex. Y.
See Plaintiffs' Ex. 1, Summary Order of the U. S. Court of Appeals at 4.
Meanwhile, in December 2000, Shaw, Licitra submitted a final fee application to the Bankruptcy Court. The firm requested fees in the amount of $1,080,101.25 and expenses in the amount of $31,888.29 for the period June 24, 1999 to November 29, 2000. Leucadia filed an objection to the fee application on the theory that because the legal services were primarily intended to enable the equity holders to retain control of the properties, the services were not necessary to the administration of the estate (See 11 U.S.C. § 330[a]). The Office of the United States Trustee for the Eastern District of New York also filed an objection to the fee application. However, the Trustee withdrew the objection when Shaw, Licitra voluntarily reduced its request for certain overhead expenses. Additionally, plaintiffs filed an objection, reserving all rights against the law firm, albeit after the fee application had been submitted to the court.
The fee application concerned services provided to Bay Harbour, Huntington, Rochester and Verleye. See plaintiff's Ex. 36. A fee application with respect to Busy Bee had previously been considered by the court.
Leucadia further argued that Shaw, Licitra had "over-lawyered" the case in that more than one attorney was present during the adversary proceeding trial and the confirmation hearing. Because Shaw, Licitra consented to a $5,000 reduction in their fee, no further reduction for unnecessary services was ordered by the Bankruptcy Court. Judge Cyganowski held that because "the estate as a whole" included the debtor's equity interests, Shaw, Licitra's legal services were reasonably calculated to benefit the estate until August 25, 2000, the date the debtors' request for a stay was denied by the district court. However, the court disallowed compensation for services related to prosecution of the appeals after that date. In conclusion, Judge Cyganowski awarded Shaw, Licitra a total of $910,793.75 in legal fees and $25,515.84 in expenses.
This action for legal malpractice was commenced on March 18, 2005. Plaintiffs allege that had they been given the "correct advice," they would not have entered into the Leucadia agreement. Complaint ¶ 87. They allege that defendants were negligent in not realizing that the Leucadia agreement did not protect plaintiffs if restructuring or refinancing was not effected by December 15, 1999. Complaint ¶ 86. While plaintiffs allege that they would have been able to "protect and preserve" their interests in the properties, they do not specify the manner in which they would have done so. As a second cause of action for malpractice, plaintiffs allege that defendants failed to assert a "non-recourse" defense under the Cargill loans to Leucadia's plan of reorganization at the confirmation hearing. Complaint ¶ 97. Plaintiffs allege that as a result of defendants' negligence, they have been damaged in the amount of 10 million dollars.
Defendants move for summary judgment dismissing the complaint on the ground that plaintiffs lack standing to bring a malpractice action. They argue that because the Bankruptcy Court issued orders authorizing Shaw, Licitra to be retained by the debtors, no attorney-client relationship attached to Breslin Realty or the individual plaintiffs, Breslin, Easa Easa and Jack Easa. Further, they claim that the limited partnerships do not have standing because their malpractice claims were the property of the several bankruptcy estates.
Alternatively, defendants argue that confirmation of a plan of reorganization binds the debtor with respect to any malpractice claim arising from the bankruptcy proceeding. While defendants characterize their argument based on confirmation of the plan as divesting plaintiffs of standing to bring a malpractice action, in the court's view, this argument is more in the nature of issue preclusion. In any event, the argument is without merit.
Defendants also argue that under the doctrines of res judicata and collateral estoppel, plaintiffs are barred from suing for legal malpractice by reason of the Bankruptcy Court order approving defendants' fee applications. Finally, defendants argue that plaintiffs have not sustained any damages because they did not have any equity in the properties which were sold in the bankruptcy proceeding.
Plaintiffs argue that summary judgment cannot be granted because there are genuine issues of fact. Plaintiffs cross move for leave to serve an amended complaint asserting a cause of action for attorney misconduct pursuant to Judiciary Law § 487.
To recover for legal malpractice, plaintiff must prove the existence of an attorney-client relationship. Wei Cheng Chang v. Katy Pi, 288 AD2d 378, 380 (2nd Dep't 2001). In determining the existence of such a relationship, the court must look to the actions of the parties. A plaintiff's subjective belief that defendant is his attorney will not make plaintiff a client. However, an attorney-client relationship is established where there is an explicit undertaking by the attorney to perform a specific task on behalf of the plaintiff. Id. In view of the longstanding relationship between Shaw and Wilbur Breslin, it is clear that Shaw, Licitra explicitly undertook the specific task of attempting to salvage Breslin's equity interest in the properties. The court concludes that Wilbur Breslin was a client of Shaw, Licitra in the course of the limited partnerships' bankruptcy proceedings.
It is less clear whether Shaw, Licitra explicitly undertook to preserve the interests of Easa and Jack Easa or whether Breslin Realty had any interests to preserve. Under the Code of Professional Responsibility, if a lawyer is retained by "a corporation or similar entity," the lawyer owes allegiance to the entity and not to a shareholder, director or other person connected with it (EC 5-18). Thus, if a lawyer is retained by a corporation, the corporation rather than the shareholder is the client.
On the other hand, because a partner is jointly liable for the partnership's debts and obligations, a partner's interests are closely related to those of the partnership (Partnership Law § 26). Thus, a partnership is not a "similar entity" to a corporation, and a lawyer who represents the partnership owes allegiance to a partner, at least when dealing with creditors of the partnership. Because a limited partner is not personally liable for the partnership's debts, his interests are somewhat different from those of the limited partnership. Partnership Law § 96. Nonetheless, the limited nature of his participation would not seem to diminish the allegiance which is owed to a limited partner by an attorney for the partnership.
Moreover, the existence of a conflict of interest does not prevent an attorney-client relationship from arising and may itself form the basis of a malpractice action. See Carmel v. Lunney, 70 NY2d 169 (1987). Thus, even if Shaw owed greater allegiance to Breslin than to Easa or Jack Easa, defendants have not established that they were not serving as the attorneys for all of the plaintiffs.
The filing of a voluntary bankruptcy petition creates an estate generally consisting of the "legal or equitable interests of the debtor in property as of the commencement of the case." 11 U.S.C. § 541(a)[1]. Although the bankruptcy estate is construed broadly, the Bankruptcy Code is not intended to expand the debtor's rights against others more than they exist at the commencement of the case. United States v. Whiting Pools, Inc., 462 U.S. 198, 205 (1983). Federal law determines whether an interest is property of the bankruptcy estate, Segal v. Rochelle, 382 U.S. 375, 379 (1966), but property interests are created by the state, so the definition of the property interest is provided by state law. Witko v. Menotte, 374 F.3d 1040, 1043 (11th Cir. 2004). Thus, federal law provides the rule that "pre-petition causes of action are part of the bankruptcy estate and post-petition cause of action are not." Id. at 1042. On the other hand, state law determines whether the cause of action accrued, or "existed," at the time that the bankruptcy petition was filed. Id. at 1043.
In New York, an action for legal malpractice requires proof of three essential elements:
1) the negligence of the attorney, 2) that the negligence was the proximate cause of the loss sustained, and 3) proof of actual damages. Prudential Ins. v. Dewey, Ballantine, Bushby, Palmer Wood, 170 AD2d 108, 114 (1st Dep't 1991). The complaint alleges two acts of negligence, or breaches of professional duty, on the part of defendants: 1) faulty advice with respect to the Leucadia agreement, and 2) failure to assert a "non-recourse" defense. Thus, plaintiffs' claims of malpractice accrued after June 24, 1999, the date that plaintiffs' Chapter 11 petitions were filed. The court concludes that neither of plaintiffs' causes of action for legal malpractice were part of the bankruptcy estate.
Section 1141(a) of the Bankruptcy Code in pertinent part provides:
[T]he provisions of a confirmed plan bind the debtor . . . any entity acquiring property under the plan, and any creditor, equity security holder, or general partner in the debtor, whether or not the claim or interest of such creditor, equity security holder, or general partner is impaired under the plan and whether or not such creditor, equity security holder or general partner has accepted the plan.
( 11 U.S.C. § 1141[a]). The effect of this provision is to make the confirmed plan a "new contract between the debtor and its creditors" ( Committee of Unsecured Creditors v. Dow Corning Corp., 456 F.3d 668, 676 [6th Cir. 2006]). However, because the plan does not become a contract between the debtor and its debtors, it does not bind the debtor as to the quality of legal services provided in the bankruptcy proceeding. Thus, it is not surprising that there is no reference to the reservation, or extinguishing, of the debtor's claim for legal malpractice in the plan of reorganization which was confirmed by the Bankruptcy Court. Interestingly, the plan did provide that administrative claims, including professional fees, would be paid "in full in cash." However, as Judge Cyganowski did not consider that provision binding on the debtors, neither does this court. Accordingly, defendants' motion for summary judgment on the grounds that plaintiffs lack standing to bring a malpractice action is denied.
Plaintiffs' Ex. 36 at 8.
The equitable doctrine of collateral estoppel precludes a party from relitigating in a subsequent action or proceeding an issue raised in a prior action or proceeding and decided against that party or those in privity. Buechel v. Bain, 97 NY2d 295, 303 (2001). The policies underlying the doctrine are avoiding relitigation of a decided issue and the possibility of an inconsistent result. Id. Application of the doctrine is based upon "the facts and realities of a particular litigation," rather than rigid rules. Id.
Two requirements must be met before collateral estoppel can be invoked. There must be an identity of issue which has necessarily been decided in the prior action and is decisive of the present action, and there must have been a full and fair opportunity to contest the decision now said to be controlling. Id. at 303-04. The litigant seeking the benefit of collateral estoppel must demonstrate that the decisive issue was necessarily decided in the prior action against a party, or one in privity. Id. at 304. The party to be precluded from relitigating the issue bears the burden of demonstrating the absence of a full and fair opportunity to contest the determination. Id.
The doctrine, however, is a flexible one which must be applied on a "case-by-case" basis. The fundamental inquiry is whether relitigation should be permitted in a particular case in light of fairness to the parties, conservation of the resources of the court and litigants, and the societal interests in consistent and accurate results(Id).
In seeking preclusion on the issue of malpractice, defendants rely heavily upon Itzko Sportwear Co. v. Flaum, 20 AD3d 392 [2nd Dep't 2005]. In that case, plaintiff asserted a legal malpractice claim based on its bankruptcy attorney's having previously represented the creditor and thus being subject to a conflict of interest. The Appellate Division held that the Bankruptcy Court had necessarily determined that the fee was appropriate and that there was no malpractice. For this court to apply Itzko mechanically would be to ignore its responsibility to conduct a "case-by-case" analysis under Buechel. Moreover, while the issue of conflict of interest was likely resolved by the Bankruptcy Court in Itzko, an analysis of Judge Cyganowski's decision reveals that she did not necessarily consider plaintiffs' claims of malpractice.
In ruling upon Shaw, Licitra's application for fees, Judge Cyganowski saw the issue as "whether the services at issue were reasonably likely to benefit the debtors' estate." In making this determination, the court looked to "what services a reasonable lawyer or legal firm would have performed in the same circumstances." Judge Cyganowski found that a reasonable attorney for the debtor would have pursued the debtors' rights to restructure the loans through the time that the debtors' request to stay the Bankruptcy Court decision was denied by the District court. However, Judge Cyganowski determined that once the final stay application had been denied, it should have been apparent to Shaw, Licitra that the debtors' right to restructure the debt had expired. Thus, the court reasoned, there was no equity in the debtors' and further legal proceedings would not benefit the estates.
Plaintiffs' Ex. 36 at 20.
In adopting this objective standard, Judge Cyganowski relied upon In re Ames Department Stores, 76 F.3d 66 [2d Cir. 1996], overruled on other grounds Lamie v. U.S. Trustee, 540 U.S. 526 [2004]).
Plaintiffs' Ex. 36 at 25.
While the Bankruptcy Court found that pursuing restructuring of the debt was, at least until denial of the stay, reasonably likely to benefit the estate, the court did not necessarily determine that a reasonable attorney would have counseled the client to enter into the Leucadia agreement. Furthermore, while Judge Cyganowski found that a "reasonable attorney" would have brought the adversary proceeding, the court did not necessarily consider whether a reasonable attorney would have asserted a "non-recourse" defense. The court concludes that defendants have not carried their burden of establishing that the acts of malpractice asserted by plaintiffs were necessarily considered by Judge Cyganowski. Defendants' motion for summary judgment based on res judicata or collateral estoppel is denied.
With respect to the issue of proximate cause, New York has traditionally applied a "but for" approach in legal malpractice actions. Carmel v. Lunney, 70 NY2d 169, 173 (1987). Where the malpractice plaintiff was the defendant in the prior proceeding, the test is whether a proper defense would have altered the result of the prior action. Id. Defendants argue that a "proper defense" would not have altered the result of the bankruptcy damages because plaintiffs did not have any equity in the properties.
On a motion for summary judgment, it is the proponent's burden to make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to demonstrate the absence of any material issues of fact. JMD Holding Corp. v. Congress Financial Corp ., 4 NY3d 373 , 384 (2005). Failure to make such a prima facie showing requires denial of the motion, regardless of the sufficiency of the opposing papers. Id. However, if this showing is made, the burden shifts to the party opposing the summary judgment motion to produce evidentiary proof in admissible form sufficient to establish the existence of material issues of fact which require a trial. Alvarez v. Prospect Hospital, 68 NY2d 320, 324 (1986).
While the Bankruptcy Court decision awarding substantial fees is not collateral estoppel on the issue of defendants' negligence, it establishes prima facie that defendants exercised the degree of skill and knowledge commonly possessed by members of the legal profession. Arnav Industries, Inc. v. Brown, Raysman, 96 NY2d 300, 303 (2001). Furthermore, the confirmed liquidation plans of reorganization establish prima facie that plaintiffs had no equity in the properties and sustained no damages which were proximately caused by defendants' negligence. Thus, the burden shifts to plaintiffs to offer proof that the result of the reorganization proceedings would have been more favorable but for defendants' negligence.
In response, plaintiffs offer Wilbur Breslin's expert opinion that the total value of the properties was just under 106 million dollars, based upon the capitalized value of the projected operating incomes of the properties. While this optimistic appraisal might be sufficient to establish a triable issue as to damages, plaintiffs make no showing as to how defendants' supposed negligence caused the loss of their equity in the property. Plaintiffs offer no evidence as to alternatives to entering into the Leucadia agreement, or how different advice from defendants would have allowed them to "protect and preserve" their assets. Furthermore, plaintiffs do not explain how the Leucadia agreement, as interpreted by the Bankruptcy Court, effected the valuation of the properties. As the limited partnerships clearly guaranteed each other's loans pursuant to the amended loan agreement, plaintiffs purported non-recourse defense was clearly without merit. The loans were at that time no longer non-recourse loans. Since plaintiffs have not carried their burden of establishing a genuine issue as to negligence and proximate cause, defendants' motion for summary judgment dismissing the complaint is granted.Judiciary Law § 487 provides in pertinent part that, "An attorney or counselor who is guilty of any deceit or collusion, or consents to any deceit or collusion, with intent to deceive the court or any party . . . forfeits to the party injured treble damages, to be recovered in a civil action." he wrongful conduct by the attorney must occur in a suit actually pending. Tawil v. Wasser , 21 AD3d 948 , 949 (2nd Dep't 2005). A violation of the statute requires that the attorney be guilty of deceit or a "chronic, extreme pattern of legal delinquency." Izko Sportswear Co. v. Flaum , 25 AD3d 534 , 537 (2nd Dep't 2006).
See affidavit of Wibur Breslin at ¶ 54-55 and plaintiffs' Ex. 92.
In the proposed amended complaint, plaintiffs allege that defendants violated Judiciary Law § 487 by failing to disclose to the Bankruptcy Court that Stanley Shaw and Breslin had a longstanding business relationship and Shaw and his wife had loaned a significant amount of money to Breslin. Assuming that these allegations are true, it certainly would have been more ethical practice for Shaw to disclose these matter to the Bankruptcy Court. However, it is clear that Breslin was well aware of these matters and may indeed have acquiesced in the non-disclosure in order for Shaw's firm to continue with their representation. Thus, Breslin was not injured by Shaw's failure to disclose their prior relationship to the Bankruptcy Court. While leave to amend is freely granted, it may be denied where the proposed pleading is plainly without merit. Thomas Crimmins Contracting Co. v. Cayuga Construction Co., 74 NY2d 166 (1989). Plaintiffs' motion for leave to serve an amended complaint is denied.
This shall constitute the decision and order of the court.