Opinion
Index No. 155690/2022 MOTION SEQ. No. 002
04-19-2023
DONALD CREADORE, Plaintiff, v. ROSENBERG & ESTIS, P.O., WARREN ESTIS, RICHARD CORDE, GARY ROSENBERG, AS ADMINISTRATOR FOR THE ESTATE OF WARREN A. ESTIS Defendant.
Unpublished Opinion
MOTION DATE 01/05/2023
PRESENT: HON. LYLE E. FRANK, Justice
DECISION + ORDER ON MOTION
LYLE E. FRANK, J.S.C.
The following e-filed documents, listed by NYSCEF document number (Motion 002) 16, 17, 18, 19, 20, 21,22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41,42, 43, 44, 45, 46, 47, 48, 49, 50, 51, 52, 53, 54, 55, 56, 57, 58, 59, 61,62, 63, 64, 65, 66, 67, 68, 69, 70, 71,72, 73, 74, 75, 76, 77, 78, 79, 80, 84, 85, 86 were read on this motion to/for DISMISS. Upon the foregoing documents, the motion to dismiss filed by defendants is granted in its entirety.
Facts
Plaintiff hired defendant lawyers to represent him in a real estate sales deposit dispute in New York. Plaintiff as the seller believed that the purchasers violated the "best efforts" provision in the sales contract, and he had reason to keep the entire deposit. Defendants did not raise the "best efforts" standard in their answer to the action commenced by purchasers in federal court and only recouped half of the deposit. Plaintiff believed the omission is a legal malpractice and filed the suit in this court, alleging twelve causes of action, including malpractice, defamation, accounting, conversion, and violation of Judiciary Law § 487, etc. Defendants filed the motion to dismiss all the claims pursuant to CPLR § 3211 (a)(1), (a)(7) and the doctrine of "duplicative claims".
Motion to dismiss general standard
On a motion to dismiss the court "merely examines the adequacy of the pleadings", the court "accept as true each and every allegation made by plaintiff and limit our inquiry to the legal sufficiency of plaintiff s claim." Davis vBoeheim, 24 N.Y.3d 262, 268 (internal citations omitted).
CPLR § 3211(a)(1)
Under CPLR 3211 (a) (1), a dismissal is warranted only if the documentary evidence submitted conclusively establishes a defense to the asserted claims as a matter of law. Leon v. Martinez, 84 N.Y.2d 83, 88 (emphasis added). "[S]uch motion may be appropriately granted only where the documentary evidence utterly refutes plaintiffs factual allegations." Goshen v. Miit. Life Ins. Co., 98 N.Y.2d 314, 326 (emphasis added). A paper will qualify as "documentary evidence" only if it satisfies the following criteria: (1) it is "unambiguous"; (2) it is of "undisputed authenticity"; and (3) its contents are "essentially undeniable". VXI Lux Holdco S.A.R.L. v SIC Holdings, LLC, 171 A.D.3d 189, 193 [1st Dept. 2019]. "[T]he documentary evidence, i.e., the affidavits and emails of North Shore and Inter-Reco personnel, do not qualify as 'documentary evidence" for purposes of CPLR 3211 (a) (1)." United States Fire Ins. Co. v. North Shore Risk Mgt., 114 A.D.3d 408, 409 [1st Dept. 2014]
CPLR § 3211(a)(7)
"In assessing a motion under CPLR 3211 (a) (7), however, a court may freely consider affidavits submitted by the plaintiff to remedy any defects in the complaint and "the criterion is whether the proponent of the pleading has a cause of action, not whether he has stated one" Leon v. Martinez, 84 N.Y.2d 83, 88. "What the Court of Appeals has consistently said is that evidence in an affidavit used by a defendant to attack the sufficiency of a pleading "will seldom if ever warrant the relief [the defendant] seeks unless [such evidence] establishes] conclusively that plaintiff has no cause of action". Basis Yield Alpha Fund (Master) v Goldman Sachs Group, Inc., 115 A.D.3d 128, 134 [1st Dept. 2014] (emphasis added). "[T]he Court of Appeals has made clear that a defendant can submit evidence in support of the motion attacking a well-pleaded cognizable claim." Id.
Legal Malpractice (The First Cause of Action)
"An action for legal malpractice requires proof of the attorney's negligence, a showing that the negligence was the proximate cause of the injury, and evidence of actual damages. In order to survive dismissal, the complaint must show that but for counsel's alleged malpractice, the plaintiff would not have sustained some ascertainable damages. A failure to establish proximate cause requires dismissal regardless of whether negligence is established. Notwithstanding counsel's purported negligence, the client must demonstrate his or her own likelihood of success; absent such a showing, counsel's conduct is not the proximate cause of the injury. Nor may speculative.. .or conclusory claims of damage be a basis for legal malpractice. The remedy relies on prima facie proof that the client would have succeeded." Russo v. Feder, Kaszovitz, Isaacson. Weber, Skala & Bass, LLP, 301 A.D.2d 63, 64 [1st Dept. 2002] (internal citations omitted). "A plaintiff must demonstrate that the attorney failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession." Rudolf v. Shayne, Dachs, Stanisci, Corker & Sauer, 8 N.Y.3d 438, 440.
Here, plaintiff failed to plead a cognizable legal malpractice claim. First, failure to raise the "best efforts" standard to which agreed by purchasers in the sales contract could be deemed as a professional negligence by defendants. A party's promise to use best efforts is valid consideration, and, where it is clear from the language of an agreement that the parties intended to be bound, and there exists an objective method for supplying a missing term, the parties should be held to their bargain. Maestro W. Chelsea SPE LLC v. Pradera Realty Inc., 38 Misc.3d 522, 525. Here, in the rider to the sales contract, purchasers promised to use best efforts to "comply promptly with reasonable requests made by the Board." See NYSCEF Doc. No. 18, page 10. An interview request from the Board is a reasonable one and failure to comply with it is a breach of the promise, thus making it the basis for plaintiff to object to refund of the deposit and frustrating purchasers' declaratory judgment motion. See NYSCEF Doc. No. 81, ¶ 38. Therefore, failure to raise the "best efforts" standard in the answer to the declaratory judgement motion could be deemed as a professional negligence by defendants, the more so because they are self-proclaimed "premier real estate" lawyers in New York City. Id. at ¶ 20.
The problem is negligence alone is far from enough to build a case for legal malpractice. Plaintiff also needs to plead the actual damages and the proximate cause prongs of the test. Here, plaintiff did not elaborate on the basis for the damages sought in the complaint. The deposit amounts to $190,000 in total and plaintiff did get a portion of it in return pursuant to the final settlement agreement with the purchasers. See NYSCEF Doc. No. 52. The court couldn't figure out why plaintiff demanded at least $350,000 for actual damages associated with the legal malpractice claim. Again, "the damages claimed in a legal malpractice action must be ''actual and ascertainable' resulting from the proximate cause of the attorney's negligence. The damages claimed cannot be too speculative and incapable of being proven with any reasonable certainty." Zarin v. Reid & Priest, 184 A.D.2d 385, 385 [1st Dept. 1992], Plaintiff also failed to allege that any legal malpractice by defendants proximately caused the actual damages incurred by him. The Court of Appeals stressed that "to establish causation, a plaintiff must show that he or she would have prevailed in the underlying action or would not have incurred any damages, but for the lawyer's negligence." Rudolf at 442 (emphasis added). After relieving defendants as counsel in the underlying case, plaintiff litigated the case pro se and settled with purchasers with a number less than the full deposit. If the "best efforts" provision is the linchpin to his case, as claimed by plaintiff in the complaint, then why did he still incur certain damages in the settlement or why didn't he press on with the legal theory and prevail in the underlying action, given that he had full control of the proceedings then? See NYSCEF Doc. No. 49. The First Department has emphasized the burden time and again: "[a] plaintiffs burden of proof in a legal malpractice action is a heavy one. The plaintiff must prove first the hypothetical outcome of the underlying litigation and, then, the attorney's liability for malpractice in connection with that litigation. The requirement of proving a case within a case is a distinctive feature of legal malpractice actions arising from an attorney's alleged negligence in preparing or conducting litigation. It adds an additional layer to the element of proximate cause..." Lindenman v. Kreitzer, 7 A.D.3d 30, 31 (emphasis added).
The same rationale goes to the breach of fiduciary duties aspect of the legal malpractice claim. See NYSCEF Doc. No. 81 ¶ 111. Even if the court agrees with plaintiff that allegations of breach of duties to communicate with the client and loyalty are negligence by defendants, plaintiff still failed to prove with certainty the basis for the damages sought and how defendants' negligence proximately caused the damages. Without these essential building blocks, the court has no choice but to dismiss the claim.
Negligence, Breach of Contract, Breach of Fiduciary Duty, Fraud and Deceit (The Second, Third, Fourth, Sixth and Seventh Claim)
The key to determining whether a claim is duplicative of one for malpractice is discerning the essence of each claim. Johnson v Proskauer Rose LLP, 129 A.D.3d 59, 62 [1st Dept. 2015], "The allegations pled in support of the negligence claim are, for the most part, identical to those found under the legal malpractice claim, namely, that Defendants' negligence is rooted in their failure to exercise due care and advise Resmac of the Mortgage's susceptibility to a preference claim." Resmac 2 LLC v Backenroth, Frankel, & Krinsky, LLP, 2012 N.Y. Mise. LEXIS 6536, *10. Here, the negligence claim, and the malpractice claim are based on the same allegations, i.e., defendants breached their duty of care when the subpar legal research caused the answer to miss the "best efforts" claim. See NYSCEF Doc. No. 81 ¶ 116, 118 & 119. Therefore, the negligence claim should be dismissed as duplicative of the malpractice claim.
"Unless a plaintiff alleges that an attorney defendant breached a promise to achieve a specific result, a claim for breach of contract is insufficient and duplicative of the malpractice claim." Mamoon v Dot Net Inc., 135 A.D.3d 656, 658 [1st Dept 2016]. All the allegations under the breach of contract claim mentioned nothing about defendants' failure to achieve a specific result for plaintiff. They just recited the breach of duties of care and communication with client found in the malpractice and negligence claims. See NYSCEF Doc. No. 81 at ¶ 125, 126. Therefore, this claim should be gone as duplicative of the malpractice claim.
"The breach of contract and breach of fiduciary duty claims were properly dismissed as duplicative, since they arose from the same facts as the legal malpractice claim and allege similar damages." InKine Pharm. Co. v Coleman, 305 A.D.2d 151, 152 [1st Dept 2003], Here, the breach of fiduciary claim simply arises out of the same facts as the malpractice claim, as admitted by plaintiff. See NYSCEF Doc. No. 81 at ¶ 142-144. Plaintiff missed the point when he emphasized that "the breach of fiduciary duty claim rightfully focuses the loyalty Defendants owed to Plaintiff': it is the underlying facts, not the name of claim, that controls the court's judgment of duplicative claims. See NYSCEF Doc. No. 62, page 16. Also see Estate of Nevelson v Cairo, Spanbock, Kaster & Cuiffo, 290 A.D.2d 399, 400 [1st Dept 2002] ["It is not the theory behind a claim that determines whether it is duplicative"] Therefore, this claim should be dismissed as duplicative of the malpractice claim.
"Parties may not assert fraud claims seeking damages that are duplicative of those recoverable on a cause of action for breach of contract. Where all of the damages are remedied through the contract claim, the fraud claim is duplicative and must be dismissed." MBIA Ins. Corp, v Credit Suisse Sec. (USA) LLC, 165 A.D.3d 108, 110 [1st Dept. 2018]. "Supreme Court should have dismissed the deceit claim and the 'fraud and deceit' claim, because the claims rest solely on the alleged breach of the Participation Agreements." ABL Advisor LLC v Peck, 147 A.D.3d 689, 691 [1st Dept 2017], Here, all four claims fraud, negligence, breach of contract and breach of fiduciary duty are seeking the same damages: $500,000 for actual damages and $5,000,000 for punitive damages. See NYSCEF Doc. No. 81. ¶ 121-122, 134-135, 148-149 and 169-170. Both claims of fraud and deceit are based on the same allegations of misrepresentations by defendants when representing plaintiff, which can be characterized as a breach of duties of loyalty and communication to client, thus duplicative of the dismissed breach of fiduciary duty claim. Therefore, both claims should also be dismissed.
Excessive Fees & Overbilling and Unjust Enrichment (The Ninth and Tenth Claim)
In New York, where there is both a claim for unjust enrichment and a contract claim, and there is no disagreement about the existence of terms of the contract, the unjust enrichment claim can be dismissed as duplicative of the contract claim. See, e.g., Panwest NCA2 Holdings LLC v. Rockland NCA2 Holdings, LLC, 205 A.D.3d 551, 552 [1st Dept 2022] (unjust enrichment claim should have been dismissed as duplicative of the breach of contract claim. The parties do not dispute the existence of a valid written agreement) Freedom Holding, Inc. v. Haart, 76 Misc.3d 746, 764.
Here, the contract is the retainer, which is documentary evidence, and its validity is recognized by both parties. Therefore, the unjust enrichment claim should be dismissed as duplicative of the contract claim. See NYSCEF Doc. No. 19.
"In the context of attorney fees, an excessive fee claim is stated regardless of the quality of the work performed, so long as a plaintiff can reasonably allege that the fee bore no rational relationship to the product delivered" Johnson v Proskauer Rose LLP, 129 A.D.3d 59, 62 (emphasis added). The excessive fee claim can stand on its own if plaintiff can allege that the fee charged by defendants has no relationship to the legal service delivered. But here, the claim is simply based on the subpar quality of the legal service and the two are tightly connected, both alleging defendants had breached duty of care when doing legal research and representing plaintiff. The fee is excessive because it is disproportionate to the quality of the service rendered. See NYSCEF Doc. No. 81 ¶ 192-196. Therefore, the claim should also be dismissed.
Defamation (The Eighth Claim)
Generally, "[i]n determining the sufficiency of a defamation pleading, the court considers whether the contested statements are reasonably susceptible of a defamatory connotation. If, upon any reasonable view of the stated facts, the plaintiff would be entitled to recovery for defamation, the complaint must be deemed to sufficiently state a cause of action." Davis v Boeheim, 24 N.Y.3d 262, 265. But the Court of Appeals also held that "(a) statement, made in open court in the course of a judicial proceeding, is absolutely privileged if, by any view or under any circumstances, it may be considered pertinent to the litigation "Martirano v. Frost, 25 N.Y.2d 505, 507 (emphasis added).
Here, the statements at issue are made in two letters addressed to the presiding judge in the underlying case heard in SDNY. See NYSCEF Doc. No. 81 ¶ 97. Under the general standard, statements like "R&E is not the first attorney that Creadore has failed to pay in connection with this transaction" could be deemed as casting plaintiff in an unfavorable light, thus sufficiently stating a cause of action for defamation. But those statements were made during a judicial proceeding, i.e., filing a charging lien to secure allegedly unpaid legal fees. Therefore, the above exception rule should control here.
The First Department expanded the exception rule and held that "an offending statement pertinent to the proceeding in which it was made is absolutely privileged, regardless of any malice, bad faith, recklessness, or lack of due care with which it was spoken or written, and regardless of its truth or falsity." Sexter & Warmflash, P.C. v. Margrabe, 38 A.D.3d 163, 164 (abrogated in part for a different reason, emphasis added). "Whether a statement is at all pertinent to the litigation is determined by an extremely liberal test. ... The narrow and technical rales normally applied to determine the admissibility of evidence are not used to determine a statement's pertinence for purposes of the privilege analysis." Id. Here, both statements were made in the pending litigation, and they concerned plaintiffs credit history, they are hence pertinent to the charging lien application, absolutely privileged and immune from general defamation suit. The lack of due diligence by defendants is not a valid argument against the exception rale. See NYSCEF Doc. No. 81 ¶ 101. Therefore, the claim should be dismissed pursuant to CPLR § 3211(a)(1) &(a)(7).
Conversion (The Fifth Claim)
"Conversion occurs when someone, intentionally and without authority, assumes or exercises control over personal property belonging to someone else, interfering with that person's right of possession." Family Health Mgt., LLC v. Rohan Devs., LLC, 207 A.D.3d 136, 138 [1st Dept 2022], "It is well settled that an action will lie for the conversion of money where there is a specific, identifiable fund... When the funds at issue in an action for the conversion of money constitute a specific sum, one that is determinate, and reflects an ascertained amount, the money is specifically identifiable." Id.
Here, the money allegedly converted by defendants connects with the charging lien in the amount of $34,014.10 filed in the underlying case heard in SDNY. See NYSCEF Doc. No. 81 ¶ 95. In the complaint, Plaintiff keeps saying the lien was inflated and defendants had received more money than allowed by the retainer. Id. at ¶ 153-155. But plaintiff couldn't give a specific, determinate, and ascertained amount that is allegedly converted by defendants. Id. at ¶ 157. Without a specific number, the money sought is not identifiable, thus an action for conversion of money does not exist. Besides, in the proceeding of charging lien, the attorney does have the authority to exercise control over the disputed property to collect unpaid legal fees. See Chadbourne & Parke. LLP v. AB Recur Finans, 18 A.D.3d 222, 223 [1st Dept 2005] [A charging lien is a security interest in the favorable result of litigation, giving the attorney equitable ownership interest in the client's cause of action and ensuring that the attorney can collect his fee from the fund he has created for that purpose on behalf of the client]. Therefore, this claim should be dismissed for failure to plead an adequate cause of action.
Accounting (The Eleventh Claim)
"The right to an accounting is premised upon the existence of a confidential or fiduciary relationship and a breach of the duty imposed by that relationship respecting property in which the party seeking the accounting has an interest." Adam v. Cutner & Rathkopf, 238 A.D.2d 234, 234 [1st Dept 1997]. "Plaintiff failed to state a cause of action for an accounting, given the lack of any allegations that a demand for an accounting was refused" NWM Capital LLC v Scharfman, 144 A.D.3d 414, 415 [1st Dept 2016], Here, a fiduciary relationship does exist between the parties and a breach of fiduciary duty was alleged by plaintiff. Plaintiff did seek accounting of the settlement proceeds and the legal fees during the last week of October 2020, both of which concern plaintiff's property interest. See NYSCEF Doc. No. 81 ¶ 83 &86. But the problem is that request was met by defendants, as admitted by plaintiff: "on November 3, 2020, Corde sent Creadore R&E's invoice". Id. at ¶ 87. Since there is no refusal of the demand, plaintiff failed to plead a cognizable claim, thus the accounting claim must be dismissed pursuant to CPLR § 3211(a)(7).
Judiciary Law § 487 (The Twelfth Claim)
Under Judiciary Law § 487(1), an attorney who is guilty of any deceit or collusion, or consents to any deceit or collusion, with intent to deceive the court or any party is guilty of a misdemeanor and may be liable to the injured party for treble damages in a civil action. Bill Birds, Inc. v Stein Law Firm, P.C., 35 N.Y.3d 173, 176 (2020).
The First Department has held that "(r)elief under a cause of action based upon Judiciary Law § 487 is not lightly given and requires a showing of egregious conduct or a chronic and extreme pattern of behavior on the part of the defendant attorneys that caused damages. Allegations regarding an act of deceit or intent to deceive must be stated with particularity. The claim will be dismissed if the allegations as to scienter are conclusory and factually insufficient P Facebook, Inc. v DLA Piper LLP (US), 134 A.D.3d 610, 610 (2015).
Here, plaintiff failed to plead a sufficient § 487(1) claim. The entire complaint only contains one sentence alleging the scienter element of the crime: "Estis and Corde's actions were intentional and directed to harm Creadore." See NYSCEF Doc. No. 81 ¶ 222. The conclusory statement is factually insufficient, non-specific, and falls short of the required pleading standard set forth by the First Department. The deficiency alone is enough to dismiss the claim for failure to state a cause of action.
Besides, all the allegations about deceit and collusion by defendants were made without any support from the record and were purely "upon information and belief'. See NYSCEF Doc. No. 81 ¶ 216-221. The First Department has clearly settled the pleading standard when it comes to allegations of fraud: "statements made in pleadings upon information and belief are not sufficient to establish the necessary quantum of proof to sustain allegations of fraud." Facebook at 615 (emphasis added). Therefore, this claim could also be dismissed for insufficient pleading.
Finally, the Court of Appeals had ascertained the scope of application of § 487(1), and "the statute applied only to conduct that occurs in the context of 'an action pending in a court'-not misleading advice preceding an action, ... because the purported deceit occurred before the judicial action was commenced, there was no court or party to be deceived within the meaning of the statute." Bill Birds at 178 (internal citations omitted, emphasis added). Accordingly, allegations about defendants' deceitful behavior before the commencement of purchasers' action in SDNY do not fall within the ambit of § 487(1) because back then, there was no court or party to be deceived. NYSCEF Doc. No. 81 ¶ 212.
Based on the foregoing, it is hereby
ADJUDGED that defendants' motion to dismiss pursuant to CPLR § 3211(a)(1) &(a)(7) is granted in its entirety and the Clerk is directed to enter judgment accordingly.