Opinion
Index No. 654062/2016
08-06-2018
FTI CONSULTING, INC., Plaintiff, v. CT MIAMI, LLC, Defendant. CT MIAMI, LLC, Third Party Plaintiff, v. AKERMAN LLP, f/k/a AKERMAN SENTERFITT, LLP Third Party Defendant.
NYSCEF DOC. NO. 74 Mot. Seq. No. 002 MELISSA A. CRANE, J. :
Third-party defendant Akerman LLP (Akerman) moves to dismiss, pursuant to CPLR 3211(a) (1), (a) (5) and (a) (7), the third-party complaint defendant/third-party plaintiff CT Miami, LLC (CT Miami) asserts against it.
Background
The following facts are from the third-party complaint (TPC). Akerman, a law firm, represented CT Miami in connection with a certain Florida litigation (the Florida litigation) (TPC, ¶¶ 2-3, 5). While that matter was ongoing, Akerman recommended that CT Miami hire an e-discovery company, plaintiff FTI Consulting, Inc. (FTI) to provide support services (TPC, ¶¶ 8-9). CT Miami hired FTI in September 2013 (id., ¶7). CT Miami claims at that time the estimated cost of FTI's services the parties agreed to was $4,900 (id., ¶¶ 8-10). CT Miami also claims that "Akerman explicitly confirmed" that it was only obligated to pay the $4,900 estimate amount (id., ¶ 15).
Nevertheless, "[i]n late 2013 and early 2014, CT Miami began to receive outrageous bills from plaintiff, in amounts in excess of $100,000" (id., ¶ 21). CT Miami claims it was unaware that FTI had undertaken further work beyond the $4,900 estimate and expected to be compensated for this work (id., ¶ 22). CT Miami also claims that, "[t]he Florida litigation did not require e-discovery in the scope billed by plaintiff" (id., ¶ 23). When it raised the issue with its counsel, Akerman urged CT Miami to just pay FTI's bill (id., ¶¶ 25-28). CT Miami claims that Akerman had a preexisting relationship with FTI and was interested in maintaining that relationship to the detriment of CT Miami (id., ¶¶ 32-33). When CT Miami refused, FTI commenced an action against it (the main action) (id., ¶ 29). CT Miami now brings this third party action against Akerman for: (1) breach of contract; (2) declaratory judgment; (3) breach of fiduciary duty; (4) contribution/indemnification; and (5) negligence.
The FTI Engagement Letter
The engagement letter dated September 12, 2013 pursuant to which FTI was retained (the FTI engagement letter) provides that, "charges for this assignment will be rendered monthly and will be billed at established hourly and unit rates" (Silverman affirmation, exhibit 19; NYSCEF Doc. No. 53). It further states that, "FTI understands that Client [i.e., CT Miami] will be solely responsible for payment of its fees and expenses" (id.). Counsel for Akerman and Antonio Contarini, CT Miami's general counsel, signed the engagement letter (id.). Next to Contarini's signature, underlined in parentheses, is written, "see attached estimate." The attached "proposal" contains a "One Time Estimated Fees" of $4,900 that Contarini initialed. The engagement letter also states that, "FTI's Standard Terms and Conditions (collectively, with this letter, the 'Engagement Contract'), which [FTI] accepts and hereby agrees to, is attached" (id.). However, no such terms and conditions are included in the exhibit submitted to the Court and it is unclear if this document was actually included with the engagement letter CT Miami and Akerman signed.
The Retainer Agreement
The Florida litigation involved a dispute between two sets of CT Miami shareholders and the facts of that case are not relevant to this dispute. Akerman was engaged to represent CT Miami two years after that action commenced. Akerman's retainer agreement dated August 7, 2013 (the retainer agreement) states that the client, i.e., CT Miami, would be responsible for costs incurred in the course of Akerman's representation and that, "certain cost bills may be forwarded to Clients for payment directly to the vendor" (NYSCEF Doc. No. 36, p. 2).
Discussion
Statute of Limitations
Akerman first argues that Florida's two-year statute of limitations for legal malpractice (Fla. Stat. Ann. § 95.11[4]) bars all five causes of action applicable in this matter pursuant to New York's "borrowing statute" (CPLR § 202). This argument relies upon plaintiff's claims as all sounding in legal malpractice. However, CT Miami asserts no claim for malpractice and takes no issue with the legal services Akerman rendered in the Florida litigation. Instead, CT Miami alleges a claim for simple negligence, separate and apart from Akerman's legal services.
New York courts have previously recognized the distinction between professional malpractice and ordinary negligence in the medical malpractice context (e.g., Yaniv v Taub, 256 AD2d 273, 274 [1st Dept 1998] ["failure to communicate significant medical findings to a patient or his treating physician is not malpractice but ordinary negligence"]; McKinney v Bellevue Hosp., 183 AD2d 563, 565 [1st Dept 1992] [permitting claim of simple negligence where a malpractice action barred]). "The critical question in determining whether an action sounds in medical malpractice or simple negligence is the nature of the duty to the plaintiff which the defendant is alleged to have breached" (Stanley v Lebetkin, 123 AD2d 854, 854 [2d Dept 1986] [citations omitted]). A claim for simple negligence is "restricted to those cases where the alleged negligent act is readily determinable by the trier of the facts on common knowledge," whereas a claim for malpractice is one that typically requires expert testimony or other specialized knowledge (Hale v State of New York, 53 AD2d 1025, 1025 [4th Dept 1976]). In other words, "[t]he distinction between ordinary negligence and malpractice turns on whether the acts or omissions complained of involve a matter or medical science or art requiring special skills not ordinarily possessed by lay persons or whether the conduct complained of can instead be assessed on the basis of the common everyday experience of the trier of the facts" (Papa v Brunswick Gen. Hosp., 132 AD2d 601, 603 [internal quotation marks and citation omitted]).
Although this may be an issue of first impression for New York courts in the context of legal malpractice, the same logic applies to the distinction between simple negligence and legal malpractice as with respect to medical malpractice. An example typically used to demonstrate the distinction in the medical context is that of a nurse spilling hot water on a patient. The fact that a medical professional causes the injury does not turn this act of simple negligence into a medical malpractice. Similarly, the mere fact that a negligence claim is asserted against an attorney, without more, does not render it a claim for legal malpractice. Here, the act complained off - the hiring of a company that allegedly overcharged for unauthorized work - does not require any special legal skill and can be "assessed on the basis of the common everyday experience of the trier of the facts" (id. at 603).
The cases cited by Akerman in support of its legal malpractice argument are distinguishable. Calcutti v SBU, Inc., a Southern District of New York case cited by Akerman for the principle that, "[l]egal malpractice, as opposed to ordinary negligence, is the appropriate cause of action to bring against an attorney who allegedly performed his/her professional duties negligently," involved a complaint that asserted both a malpractice and a negligence claim against an attorney (224 F Supp 2d 691, 700 [SD NY 2002]). Notably, Calcutti permitted both claims to go forward (id. at 701). Santiago v 1370 Broadway Assoc., which Akerman cites for the general proposition that, "[m]alpractice is the negligence of a professional toward a person for whom a service is rendered" actually holds only that, "an insurance broker is not capable of committing 'professional malpractice'" (264 AD2d 624, 624-25 [1st Dept 1999], affd as modified, 96 NY2d 765 [2001]). The general proposition cited in that decision does not turn every claim against an attorney into legal malpractice any more than it would turn every claim against a doctor into medical malpractice.
That CT Miami is bringing this action against its former law firm is insufficient, on its own, to turn this action into one for legal malpractice. Accordingly, Akerman does not get the benefit of the shorter statute of limitations period applicable to malpractice claims and Florida's longer four year statute of limitations applies to the claims (Fla. Stat. § 95.11 et seq.). Thus, the action is timely.
Breach of Contract
Every contract contains an implied covenant of good faith and fair dealing (Rowe v Great Atl. & Pac. Tea Co., 46 NY2d 62, 68 [1978]; Zuckerwise v Sorceron Inc., 289 AD2d 114, 114 [1st Dept 2001]). "This covenant is breached when a party to a contract acts in a manner that, although not expressly forbidden by any contractual provision, would deprive the other party of the right to receive the benefits" of that bargain (Avertine Inv. Mgt. v Canadian Imperial Bank of Commerce, 265 AD2d 513, 514 [2d Dept 1999]). To state a cause of action for breach of the implied covenant of good faith and fair dealing, "the plaintiff must allege facts which tend to show that the defendant sought to prevent performance of the contract or to withhold its benefits from the plaintiff" (id. [citation omitted]). Here, CT Miami claims that Akerman breached the covenant implicit in its legal services contract by "promoting its relationship with [FTI] over its relationship with CT Miami" (TPD, ¶¶ 35-37). Even the most generous reading of the complaint, however, cannot make out a claim for breach of this covenant. CT Miami does not allege that Akerman in any way sought to prevent performance of the parties' agreement or to withhold its benefits from plaintiff. All CT Miami alleges is that Akerman prioritizes its relationship with FTI over CT Miami. This is plainly insufficient and this claim is accordingly dismissed.
Declaratory Judgment
This cause of action seeks a declaration that Akerman - and not plaintiff - is responsible for paying FTI's invoices (TPD, ¶¶ 42-45). Generally, on a motion to dismiss a declaratory judgment claim for failure to state a cause of action, "the only question is whether a proper case is presented for invoking the jurisdiction of the court to make a declaratory judgment, and not whether the plaintiff is entitled to a declaration favorable to him" (Fillman v Axel, 63 AD2d 876, 876 [1st Dept 1978] [internal quotation marks and citation omitted]; Matter of Tilcon N.Y., Inc. v Town of Poughkeepsie, 87 AD3d 1148, 1150 [2d Dept 2011]). The Court may reach the merits of a declaratory judgment on a motion to dismiss only if no issue of fact is raised by the pleadings or if the facts are conceded (id.; Hoffman v City of Syracuse, 2 NY2d 484, 487 [1957]). In those "circumstances, the motion [to dismiss for failure to state a cause of action] should be taken as a motion for a declaration in the defendant's favor and treated accordingly" (Matter of Tilcon, 87 AD3d at 1150 [internal quotation marks and citations omitted]).
Here, CT Miami concedes that, "[t]he underlying facts are not generally in dispute" (opp. memo of law, p. 2). Because "the material facts are undisputed and only legal issues are presented," the Court may enter a judgment in favor of Akerman (Frank v Shaw, 125 Misc 2d 627, 633 [Sup Ct, NY County1984] citing Fillman, supra). Whatever Akerman's obligations may be to CT Miami, the FTI engagement letter makes plain that CT Miami "will be solely responsible for payment of its fees and expenses" (Silverman affirmation, exhibit 19, p. 1). FTI has not named Akerman as a defendant nor brought any claim against it under an unjust enrichment theory of liability.
Breach of Fiduciary Duty
"It is well settled that the relationship of client and counsel is one of 'unique fiduciary reliance'" (Ulico Cas. Co. v Wilson, Elser, Moskowitz, Edelman & Dicker, 56 AD3d 1, 9 [1st Dept 2008] [citing Matter of Cooperman, 83 NY2d 465, 472 [1994]). CT Miami claims that it hired FTI based solely on Akerman's recommendation and trusted Akerman to oversee that relationship. Akerman, in turn, claims that the plain language of FTI's engagement letter makes clear that CT Miami obligated itself to pay all of FTI's bills. A client may reasonably rely on their counsel's advice in choosing vendors and outside contractors. The court cannot determine on this motion what representations Akerman may have made to CT Miami with respect to the services that FTI would provide or how much they would cost. On this record, it is clear that CT Miami, at minimum, inquired and was concerned about the costs involved. Moreover, Akerman was aware of these concerns. On a motion to dismiss, the Court must credit CT Miami's allegations that, among other things: (1) FTI was not authorized to undertake additional work, (2) that Akerman never discussed the charges this work would involve, (3) that Akerman prioritized its relationship with FT Miami over its fiduciary obligations to its client, and (4) that CT Miami had no knowledge of the e-discovery process and relied on Akerman to oversee that process (TPC, ¶¶ 22, 24, 26-28, 48-52). The claim for breach of fiduciary duty is, thus, sufficient.
Contribution/Indemnification
CPLR 1401 governs claims for contribution and applies to damages for personal injury, injury to property or wrongful death (Structure Tone, Inc. v Universal Servs. Group, Ltd., 87 AD3d 909, 911 [1st Dept 2011]). "[S]ome form of tort liability is a prerequisite to application of the [ contribution] statute" (Board of Ed. of Hudson City Sch. Dist. v Sargent, Webster, Crenshaw & Folley, 71 NY2d 21, 28 [1987]). A party may not seek contribution for purely economic losses as this does not constitute, "injury to property" (id.). In arguing that it may maintain its contribution claim because they include torts, CT Miami mistakenly looks at its own tort claims against Akerman instead of the claims by FTI against it. The claims FTI asserts are based on contract and are economic in nature only. CT Miami is not entitled to contribution or indemnification under these circumstances. Accordingly, the court dismisses this cause of action.
Negligence
To state a claim for negligence, CT Miami needs to allege: (1) a duty to it by Akerman, (2) Akerman breach of that duty, and (3) injury proximately resulting from that breach (CB by Suarez v Howard Sec., 158 AD3d 157, 164 [1st Dept 2018]). In its complaint, CT Miami alleges that Akerman owed it a duty as its counsel, "including in dealing with [FTI] and the work [FTI] was undertaking," that CT Miami relied on Akerman to carry out that duty and that by failing to properly oversee FTI in its efforts, CT Miami incurred excessive charges and was sued in this lawsuit (TPC, ¶¶ 59-62). That the allegations in support of this claim overlap with that of the breach of fiduciary duty claim does not require dismissal of this claim at this juncture. Parties may plead alternative and even contradictory theories of liability (Raglan Realty Corp. v Tudor Hotel Corp., 149 AD2d 373, 375 [1st Dept 1999]; CPLR 3014).
Accordingly, it is
ORDERED that the motion to dismiss is granted in part and the breach of contract, contribution and declaratory judgment causes of action in the third party complaint are dismissed against Ackerman LLP; and it is further
ADJUDGED and DECLARED that third party defendant Akerman LLP is not obligated to plaintiff FTI Miami for payment of the fees incurred pursuant to the FTI engagement letter; and it is further
ORDERED that balance of this action is severed and continued; and it is further
ORDERED that third party defendant Akerman LLP is directed to serve an answer to the third party complaint within 20 days after service of a copy of this order with notice of entry; and it is further
ORDERED that counsel are directed to appear for a status conference in Room 304, 71 Thomas Street, New York, New York on October 30, 2019 at 10:30 AM; and it is further
ORDERED that should the parties in this case encounter discovery disputes, they are to meet and confer and, if necessary, contact the court via email, cc's to all sides, for further direction. Dated: 8/6/2018
ENTER:
/s/_________
J.S.C.