Opinion
INDEX NO. 155100/2017 Third-Party Index No. 595654/2017
04-07-2020
ALEXANDER KOMOLOV, ALSKOM REALTY, LLC, HIGH VALUE TRADING, LLC, Plaintiffs, v. ROMAN POPIK, LAW OFFICE OF ROMAN POPIK, P.C., Defendants. ROMAN POPIK, Third-Party Plaintiff, v. PHILIP C. CHRONAKIS, ESQ., BUDD LARNER, P.C. Third-Party Defendants.
NYSCEF DOC. NO. 179 PRESENT: HON. BARBARA JAFFE Justice MOTION DATE __________ MOTION SEQ. NO. 004
DECISION + ORDER ON MOTION
The following e-filed documents, listed by NYSCEF document number (Motion 004) 93-128, 130-158, 160, 163, 165-168, 170-173 were read on this motion to dismiss.
By notice of motion, defendants move pursuant to CPLR 3211(a)(1), (3), (5), and (7) for an order dismissing the complaint. Plaintiffs oppose.
I. PERTINENT BACKGROUND
A. 2010 action
In 2010, plaintiffs commenced an action against David Segal, David Segal Antiques LLC, Mohamed Serry, Artique International Ltd., Artique Multinational LLC, Pacific Platinum, LLC, and Segal & Segal Holdings, LLC (collectively, underlying defendants), alleging that they had purchased artwork from Segal and Serry which they subsequently learned was fake, that underlying defendants refused to refund them for the fake art, and that underlying defendants had stolen other artwork, including paintings, and jewelry from plaintiffs' office. They additionally alleged that plaintiff Alskom had owned a particular condominium unit which it had agreed to sell to Artique Multinational and/or International, of which Segal and Serry were principals, and that although Alskom had transferred title to the condominium to Artique, Artique did not pay the purchase price. Claiming that Segal and Serry had completely dominated Artique, plaintiffs argued that they should be held personally liable for Artique's breach of contract. Based on the foregoing, plaintiffs advanced causes of action for breach of contract, breach of warranty, unjust enrichment, conversion, and fraud related to the art, conversion of and a constructive trust for the stolen items, and breach of contract, a declaratory judgment, a permanent injunction, and a constructive trust and conversion related to the condominium. (NYSCEF 96). Defendants represented plaintiffs in that action; they drafted and filed the summons and complaint and performed other litigation tasks.
By decision and order dated May 12, 2011, the justice presiding in that action dismissed the complaint as follows:
(1) the breach of contract claim related to the artwork was held barred by the statute of frauds, and even if not, the complaint was conclusory and speculative as it lacked a factual basis for the allegations;
(2) the breach of warranty claim was held barred by the statute of frauds, and in any event, Komolov had identified himself as a knowledgeable expert on art and antiques and thus could have made himself aware of the provenance of the artwork before buying it;
(3) given Komolov's expertise, there was no factual basis for the fraud claim;
(4) the unjust enrichment claim was fatally conclusory;
(5) the conversion claim was dismissed as a matter of law, as improperly based on a breach of contract;
(6) claims relating to the allegedly stolen artwork and jewelry were fatally conclusory and speculative, absent facts to substantiate the allegation that defendants had stolen them; the description of the stolen artwork and jewelry was insufficiently specific; and a constructive trust could not be imposed absent a fiduciary relationship between the parties;
(7) the cause of action for breach of contract relating to the condominium failed as Alskom provided no documentation evidencing the alleged transfer and could not identify the entity to which the condominium had been transferred; the alleged agreement was held barred by the statute of frauds;
(8) as the allegations relating to the condominium were fatally conclusory, there was no factual basis for a declaratory judgment; and
(9) as the breach of contract and declaratory judgment claims lacked merit, there was no basis for an injunction or a constructive trust. (NYSCEF 102).
The dismissal of the complaint was neither renewed nor reargued before that justice, or appealed, and a final judgment of dismissal was entered.
B. 2011 action
In 2011, plaintiffs commenced another action against underlying defendants, and were again represented by defendants. In that action, plaintiffs advanced the claims and allegations advanced in the first action, adding factual detail to the complaint. (NYSCEF 106).
By decision and order dated November 3, 2011, underlying defendants' motion to dismiss was granted as the justice presiding in that action had found that the complaint constituted an improper "repeat" of the 2010 action. (NYSCEF 109). The justice also denied underlying plaintiffs' leave to reargue, except as to the cause of action for conversion, which she dismissed for failure to state a cause of action. (NYSCEF 111).
On appeal, most of plaintiffs' causes of action were reinstated on the ground that the dismissal of the 2011 action was erroneous, based as it was solely on the dismissal of the 2010 action, and that the dismissal of the 2010 action should have been without prejudice it was "dismissed for pleading deficiencies and not on the merits." The dismissal of plaintiffs' breach of contract claim relating to the condominium was, however, affirmed as the earlier dismissal had been on the merits, based as it was on the statute of frauds. (96 AD3d 513, 513 [1st Dept 2012]).
On appeal of the motion court's decision on plaintiffs' motion to reargue, the dismissal of the causes of action for conversion relating to two of the allegedly stolen pieces of artwork was reversed; the dismissal of the cause of action for conversion relating to allegedly stolen jewelry was affirmed. (101 AD3d 639 [1st Dept 2012]).
On April 4, 2013, the justice granted underlying defendants a dismissal of the fourteenth cause of action for conversion of the condominium and for converting it as against Artique Multinational, and denied dismissal of the fifteenth cause of action for a declaratory judgment against it relating to the condominium. (NYSCEF 286). On May 30, 2013, plaintiffs filed an amended complaint. (NYSCEF 297).
By decision and order dated August 14, 2013, the justice dismissed plaintiffs' cause of action for unjust enrichment relating to the condominium. In discussing the dismissal of the 2010 action, the justice observed as follows:
In the First Action, [Alskom] alleged that it sold the condominium to the Artique defendants and that they failed to pay the full $4.1 million sale price. However, at the
time the First Action was commenced, plaintiffs' counsel did not have a copy of the sale contract because he was not involved in the underlying transaction and was having difficulty obtaining it from Alskom's prior counsel, who was convicted, disbarred, and incarcerated for committing bank fraud. In fact, when the motion to dismiss the complaint in the [2010] Action was briefed, it was undisputed that a sale contract existed, that the condominium had been transferred, and that there had been partial payment of the sale price.(NYSCEF 114).
The justice also noted that the cause of action for breach of contract relating to the condominium had been nonetheless dismissed due to Alskom's inability to provide a written agreement or identify the entity to which the condominium had been transferred, thereby rendering the agreement unenforceable as it violated the statute of frauds. (Id.). And in the 2011 action, plaintiffs produced a copy of the contract of sale, but the dismissal of that claim was upheld on appeal as barred by the statute of frauds. Thus, the issue before the justice was whether the unjust enrichment claim relating to the condominium agreement could be maintained where there existed a written contract but the breach of contract claim had been dismissed on the merits based on plaintiffs' earlier failure to produce it. The justice held that the unjust enrichment claim had to be dismissed as
[h]ere, there happens to be a written contract for the sale of the subject condominium. Unfortunately for plaintiffs, due to the holdings of the Appellate Division, this does not matter. As far as the law is concerned, there may as well be no contract. That a prior judgment may have been in error is insufficient to overcome the doctrine of collateral estoppel.(Id.).
The justice's decision was affirmed on appeal, on the ground that the unjust enrichment claim was precluded because it sought the same relief that was barred by the statute of frauds. (117 AD3d 557 [1st Dept 2014]).
Plaintiffs subsequently retained new counsel. (NYSCEF 518).
By decision and order dated July 1, 2015, underlying defendants' motion for summary judgment was granted, and plaintiffs' motion for partial summary judgment on their twelfth cause of action, for a declaratory judgment that the conveyance of the condominium to Artique is null and void and that Alskom is entitled to the $4.2 million then currently being held in escrow, was denied. In discussing the procedural history of the two actions, the justice stated that
[w]hen they were first before [the justice presiding in the 2010 action], plaintiffs did not have a copy of the contract because their former attorney, who was disbarred and incarcerated, had not given it to them. It was only shortly after [the 2010 lawsuit was dismissed] on statute of frauds grounds that plaintiffs obtained a copy of the contract. Plaintiffs, however, did not move to vacate the judgment or renew the motion to dismiss. Nor did plaintiffs appeal. Instead, they filed the instant action.In a footnote, the justice observed that plaintiffs' counsel had explained that he had obtained a copy of the contract from the title company, and that plaintiffs' former attorney had told him that the FBI had confiscated his records before his incarceration. (NYSCEF 116).
In the justice's opinion, the filing of the second action constituted "procedural gamesmanship," with the goal of bringing the case before a different judge, and that she had previously dismissed the 2011 case as plaintiffs should have made the appropriate motion before the justice in the 2010 action. She analyzed the appellate decisions on the two actions as follows, as pertinent here:
To summarize, the Appellate Division held that (1) the artwork and antiques claims should have been permitted to be repleaded; but (2) the condominium claim could not be revived because dismissal on statute of frauds grounds is substantive. In so holding, the Appellate Division overlooked the fact that the [justice presiding in the 2010 action] had dismiss[ed] all of plaintiffs' claims on statute of frauds grounds. Yet, when the Appellate Division was confronted with [the 2010] case for the first time - on appeal in this action, since plaintiffs did not appeal [the] dismissal of the first action - they permitted plaintiffs to revive the artwork and antiques claims, even though no contract existed, but refused to revive the condominium claim, even though a contract indisputably existed.(Id. [citations and emphasis omitted]). The justice dismissed plaintiffs' condominium claims on the grounds that
[i]f a cause of action for breach of the condominium contract was before the court, the court would hold that questions of fact exist as to whether the supposed payment-in-goods satisfied defendants' condominium payment obligation, and, therefore, the condominium claim would go to trial. However, because of the Appellate Division's decision, there cannot be a contract claim on the condominium transaction. Consequently, plaintiffs' condominium claims must be dismissed.
That being said, on appeal of this decision, the Appellate Division, perhaps, might consider reinstating the condominium contract claim because that is the one claim where it appears plaintiffs may well be in the right . . . Yet, only the Appellate Division has the power to permit a trial on that claim. This court is bound to follow the Appellate Division's ruling, which dismissed the condominium contract claim on collateral estoppel grounds.
The court also dismissed plaintiffs' quasi-contract and fraud claims as they concerned the sale of real estate and were thus barred by the statute of frauds, the cause of action for a declaratory judgment as duplicative of the dismissed breach of contract claim, and the rescission and fraudulent inducement claims as not viable. (Id.).
The court observed that it was "undisputed that the parties never executed written agreements governing the sale of the [artwork]" and that, therefore, the unjust enrichment, conversion, and fraud causes of action as they related to the artwork were dismissed by the justice as they were based on the facts supporting the dismissed breach of contract claims. She she held that "claims for damages that arise from contracts rendered unenforceable by the statute of frauds may not be maintained." (Id.). Also dismissed were plaintiffs' causes of action for conversion of two paintings as they lacked proof of ownership or right to possession superior to defendants. Thus, defendants were granted summary dismissal of the complaint. (Id.).
The decision and order was affirmed on appeal as plaintiffs' quasi-contractual and tort claims related to the artwork were duplicative of unenforceable contractual claims and thus impermissible. The causes of action for conversion for two of the artworks, supported by evidence that was insufficient to raise a triable issue as to plaintiffs' dominion over or possessory right to or interest in them, were also dismissed. The Court also "decline[d]"
[p]laintiffs' suggestion, at the motion court's invitation, [to] reconsider [its] prior order finding that plaintiffs were precluded from relitigating their breach of contract claim in connection with the purchase of the condominium (citation omitted). In a prior action, that claim was dismissed on the merits for noncompliance with the statute of frauds and plaintiffs allowed that determination to become final without taking an appeal. Although the written purchase agreement was subsequently discovered, plaintiffs did not move to renew in the prior action (CPLR 2221) and have never sought to be relieved from the judgment in the prior action based on newly discovered evidence (CPLR 5015[a] [2]), and [it] decline[s] to revisit the prior order in this new action.(144 AD3d 487 [1st Dept 2016]).
C. Motion to renew in the 2010 action (NYSCEF 117)
In 2017, plaintiffs' new counsel moved to stay enforcement of the decision and order dismissing the 2010 action and/or for leave to renew the dismissal of the 2010 action. As the justice presiding in that action had retired, the action was assigned to the justice who presided over the 2011 action.
On April 20, 2017, the motion was denied. The court observed at oral argument that plaintiffs had waited six years to move for leave to renew, even though the contract had been discovered by 2011, during which time there had been years of litigation in the 2011 action and appeals of the 2010 action. She also opined that the former justice had erred in dismissing the breach of contract claim, and that the error was affirmed on appeal. Rather than moving for leave to renew the dismissal of the 2010 action, plaintiffs chose to commence the 2011 action and appeal the dismissal, and even after she had suggested that they move for leave to renew when she dismissed the 2011 action, plaintiffs failed to do so until 2017.
While plaintiffs' current counsel suggested to the justice that it was prior counsel's fault in not moving earlier for leave to renew, underlying defendants' counsel stated that current counsel had been retained since 2013 and that plaintiffs had been aware since then that the justice and the appellate division had suggested that they move for leave to renew before the prior justice, but had nonetheless failed to act. The justice denied the motion to renew, finding no reasonable justification for the delay. (NYSCEF 117).
D. Accounting action
In 2014, plaintiffs commenced an action against their former accountants, alleging that they had committed accounting malpractice, among other claims. (Alskom Realty, LLC, et al. v Roman Baranik, et al., Index No. 511287/2014 [Sup Ct, Kings County]). In the complaint, plaintiffs claimed that the accountants had committed malpractice by indicating on Alskom's 2007 tax return that it had received the full purchase price for the condominium from Artique, when it had not. Plaintiffs sought as damages at least $250,000. (NYSCEF 118).
In July 2017, plaintiffs' motion for summary judgment on their accounting malpractice claim was granted. An appeal of that decision pends.
E. Instant action
On June 2, 2017, plaintiffs commenced the instant action for legal malpractice against defendants. In the complaint, they partly allege that defendants failed to exercise the degree of care, skill, and diligence commonly possessed and exercised by a member of the legal community by:
(1) filing the 2010 action without having written contracts to support the causes of action relating to the artwork and condominium;
(2) deciding to advance their claims relating to the artwork with causes of action governed by the statute of frauds, rather than by common law causes of action that require no written agreements;
(3) failing to move for leave to renew or reargue the 2010 dismissal order upon obtaining the condominium contract of sale;
(4) failing to appeal the 2010 dismissal order;
(5) filing the 2011 action against the same defendants and asserting the claims dismissed in the 2010 action; and
(6) failing to advise plaintiffs that the 2011 action had been dismissed. (NYSCEF 1).
Plaintiffs contend that but for defendants' negligence, plaintiffs would have been permitted to proceed to trial, would have prevailed at trial, and/or would have accepted the $6 million settlement offer tendered by underlying defendants after the 2010 and 2011 actions were dismissed. (Id.). They thus allege that defendants' negligence proximately caused the loss of their right to trial, the dismissal of meritorious claims valued in 2010 at approximately $35 million, the rejection of the proposed settlement offer, and the payment of defendants' legal fees of nearly $2 million, and that they have been damaged in the amount of either the value of the claims or the value of the rejected settlement offer as well as the legal fees paid to defendants. (Id.).
Plaintiffs also assert a cause of action for breach of fiduciary duty on the grounds that defendants' actions in drafting, commencing, and litigating the 2010 and 2011 actions were contrary to their interests, that defendants' concealment of the litigation decisions and failures constitute self-dealing and a conflict of interest as a disclosure of the facts would have exposed them to professional and legal consequences and would have ended plaintiffs' payment of fees to them. They claim that defendants' failure to advise them to accept the $6 million settlement offer reflects a conflict of interest as acceptance of the offer would have ended their payment of legal fees to defendants and would have exposed their misconduct leading to a $35 million claim being possibly settled for $6 million. They assert the same damages as those sought for legal malpractice. (Id.).
Defendants filed an answer and counterclaim for tortious interference of contract based on an unrelated contract between defendants and a non-party. (NYSCEF 7).
In August 2017, defendants commenced a third-party action against the two attorneys who had been retained by plaintiffs to represent them in the 2011 action (2011 counsel), asserting a claim for contribution on the grounds that 2011 counsel was also negligent and/or committed malpractice, or had the ability to stop or correct defendants' alleged malpractice and breach and failed to do so, therefore rendering them liable to defendants for contribution in the event of a finding of liability against them. (NYSCEF 12).
On March 16, 2018, third-party defendants' motion to change venue was denied (NYSCEF 82), and by decision and order dated August 22, 2018, plaintiffs' motion for an order dismissing the counterclaim was denied (NYSCEF 85), as was 2011 counsel's motion for an order dismissing the third-party complaint (NYSCEF 86).
II. APPLICABLE LAW
In considering a motion to dismiss pursuant to CPLR 3211(a)(7) for a failure to state a cause of action, the court must construe the pleading liberally, accept the facts alleged to be true, and afford the plaintiff "the benefit of every possible favorable inference." (JP Morgan Sec. Inc. v Vigilant Ins. Co., 21 NY3d 324, 334 [2013] [citation omitted]; AG Cap. Funding Partners, LP v State St. Bank & Trust Co., 5 NY3d 582, 591 [2005]; Leon v Martinez, 84 NY2d 83, 87 [1994]). "The motion must be denied if from the four corners of the pleadings 'factual allegations are discerned which taken together manifest any cause of action cognizable at law.'" (511 W. 232nd Owners Corp. v Jennifer Realty Co., 98 NY2d 144, 152 [2002], quoting Polonetsky v Better Homes Depot, Inc., 97 NY2d 46, 54 [2001]; Guggenheimer v Ginzburg, 43 NY2d 268, 275 [1977]).
To establish a claim for legal malpractice, a party must show that the attorney failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession, and that the attorney's breach of this duty proximately caused the party to sustain actual and ascertainable damages. (Rudolph v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438 [2007]). In other words, a plaintiff must show that the attorney was negligent and that the negligence was a proximate cause of the plaintiff's losses, and proof of actual damages. (Excelsior Cap. LLC v K&L Gates LLP, 138 AD3d 492 [1st Dept 2016], lv denied 28 NY3d 906). To establish proximate cause, a plaintiff must demonstrate that but for the attorney's negligence, the plaintiff would have prevailed in the underlying matter or would not have sustained ascertainable damages. (Nomura Asset Cap. Corp. v Cadwalader, Wickersham & Taft LLP, 26 NY3d 40 [2015]).
Dissatisfaction with an attorney's reasonable strategic choices and tactics does not constitute a basis for stating a cause of action for attorney negligence. (Kassel v Donohue, 127 AD3d 674 [1st Dept 2015], lv dismissed 26 NY3d 940 [2015]). Speculation as to what might have occurred had the attorney acted differently under the circumstances does not establish "but for" causation. (Wexler v Shea & Gould, 211 AD2d 450, 451 [1st Dept 1995]). Likewise, speculation as to damages does not constitute a basis for malpractice. (Pellegrino v File, 291 AD2d 60, 63 [1st Dept 2002], lv denied 98 NY2d 606 [2002]).
III. ARTWORK CLAIMS
A. Contentions
1. Defendants (NYSCEF 128)
Defendants allege that the causes of action relating to the artwork were litigated on their merits in the prior actions, and the misrepresentations held to have been barred by the statute of frauds. Thus, they argue that plaintiffs are estopped from arguing that defendants' negligence proximately caused the dismissal of those claims. They observe that the causes of action relating to the stolen paintings were dismissed absent evidence that plaintiffs ever owned and/or possessed them. Moreover, to the extent that plaintiffs allege that defendants should not have advanced contractual causes of action relating to the artwork as they were ultimately barred by the statute of frauds, defendants point out that the 2011 motion court determined that the artwork claims were barred regardless of the underlying theory. And, the dismissal of those claims on the merits was upheld on appeal.
2. Plaintiffs' opposition (NYSCEF 171)
Plaintiffs deny that they are estopped from arguing that their causes of action relating to the artwork were dismissed due to defendants' negligence, absent an identity of issues or parties among the 2010, 2011, and instant actions. They also deny that those causes of action were dismissed on the merits and contend that defendants' pleading deficiencies constitute a substantial factor leading to the dismissals. Moreover, they claim, defendants did not diligently litigate those claims as their failure to explain discrepancies in the evidence led to the dismissal. To the extent that plaintiffs were unable to prove their entitlement to judgment on those causes of action, and if defendants were aware of the lack of merit of those causes of action, then they improperly continued to litigate them in order to bill plaintiffs.
2. Defendants' reply (NYSCEF 170)
Defendants maintain that plaintiffs misapprehend collateral estoppel in the context of an attorney malpractice action, and that such a cause of action must be dismissed if the plaintiff had a full and fair opportunity to litigate the issues in the underlying action. In such circumstances, they argue, the plaintiff is unable to demonstrate that but for the attorney's malpractice, it would have prevailed on the underlying claim. Moreover, they contend, it was plaintiffs' inability to satisfy the statute of frauds that led to the dismissals, not pleading deficiencies, and that the claims were properly dismissed whether pleaded as a breach of contract or quasi-contract. That plaintiffs were unable to explain discrepancies in the evidence resulted from the lack of evidence to support the claims.
Defendants also observe that no evidence is offered that they litigated the claims knowing they were meritless.
B. Analysis
The record indisputably reflects that plaintiffs' causes of action related to the artwork were summarily dismissed in the 2011 action on the ground that they had failed to provide evidence sufficient to support the claim that there were written purchase agreements for the artwork or that specific artwork had been stolen from them. The dismissal was therefore on the merits. (See Ladera Partners, LLC, v Goldberg, Scudieri & Lindenberg, P.C., 157 AD3d 467 [1st Dept 2018] [plaintiff did not show that it would have successfully opposed summary judgment motion in underlying action as evidence revealed that it had no viable defense]; Kinberg v Schwartzapfel, Novick, Truhowsky, Marcus, PC, 136 AD3d 431 [1st Dept 2016] [as plaintiff's underlying personal injury claim dismissed due to failure to prove merits, she was collaterally estopped from re-litigating claim in attorney malpractice action, and malpractice claim properly dismissed as she could not demonstrate that but for malpractice, she would have prevailed on personal injury claim]).
Plaintiffs offer no evidence that defendants were in any way responsible for the lack of evidence, and their argument that the claims were dismissed due to evidentiary discrepancies has no basis absent an allegation or proof that they gave defendants evidence that would have resolved the discrepancies and which defendants failed to present in opposition to the underlying summary judgment motion. Nor do they identify evidence that would have resolved the alleged discrepancies or which should have been submitted to the court. (See e.g., Russo v Feder, Kaszovitz et al., 301 AD2d 63 [1st Dept 2007] [attorney did not commit malpractice in unsuccessfully opposing summary judgment motion in underlying action; counsel's performance was dictated by available evidence, and he could not be faulted for failing to produce evidence that may have never existed]). Indeed, the motion court observed that it was undisputed that there were no written agreements for the purchase of the artwork at issue.
Moreover, even if the causes of action relating to the artwork had been dismissed in the 2010 action due to pleading deficiencies, they were reinstated in the 2011 action and adjudicated based on the evidence presented on summary judgment. Plaintiffs offer no evidence that defendants litigated the claims notwithstanding the lack of sufficient evidence to support them.
Defendants therefore establish that as the causes of action relating to the artwork were dismissed on the merits, plaintiffs are, and will be, unable to prove that but for defendants' malpractice, they would have prevailed on those claims. (See Rosenkrantz v Harriet M. Steinberg, P.C., 13 AD3d 88 [1st Dept 2004], lv denied in part, dismissed in part 5 NY3d 729 [2005] [dismissal of underlying claim for lack of merit established that plaintiff could not show that she would have prevailed on underlying claim but for attorney's malpractice]).
IV. CONDOMINIUM CLAIMS
A. Contentions
1. Defendants (NYSCEF 128)
Defendants argue that the dismissal of plaintiffs' causes of action relating to the condominium resulted not from negligence on their part, but from the contradictory and erroneous decisions of the motion and appellate courts in the underlying actions. They observe that the justice presiding in the 2011 action admitted that as plaintiffs had provided the contract of sale in support of that cause of action, she should not have dismissed it but claimed to have been bound by the mistaken appellate affirmance of the dismissal. And, despite defendants' effort to restore the condominium-related causes of action by commencing the 2011 action, both the motion court and the appellate division refused to permit it.
As the dismissal of the causes of action advanced in the 2010 action was not on the merits, but on a motion to dismiss, defendants contend that their decision to replead them in the 2011 action was strategically appropriate, and that the causes of action were wrongly dismissed in the 2011 action. They thus assert that there was nothing more that could have been done to restore the claims, and that as their dismissal was due to judicial error, plaintiffs cannot establish that but for defendants' negligence, the causes of action would not have been dismissed.
In any event, the decision to file the 2011 action following discovery of the condominium contract constituted a reasonable litigation strategy, which is not actionable as malpractice. After consultation with Komolov, plaintiffs filed the 2011 complaint in order to add additional facts in support of the causes of action relating to the artwork, and there was no legal basis for appealing the 2010 dismissal order, as it did not permit plaintiffs to replead them. Had plaintiffs chosen to move for leave to renew their cause of action relating to the condominium upon discovery of the contract of sale, defendants maintain that they would have had to abandon their causes of action relating to the artwork.
Defendants also deny that plaintiffs suffered damages resulting from the dismissal of the causes of action related to the condominium, as Alskom's 2007 tax return, prepared and filed under penalty of perjury, proves that it received the full price for it.
Alternatively, defendants claim that plaintiffs are estopped from arguing that defendants are responsible for the dismissal of the causes of action relating to the condominium as plaintiffs had argued in the accounting action that the loss of the value of the condominium was due to the accountants' negligence. And, having won a judgment in their action against the accountants, along with an adjudication that the accountants had committed malpractice, and as they seek the same damages won in that action, they have been or will be made whole.
2. Plaintiffs' opposition (NYSCEF 171)
According to plaintiffs, defendants' negligence in filing the 2011 action rather than appealing or seeking renewal of the 2010 dismissal order was the proximate cause of the dismissal of the causes of action relating to the condominium. They rely on comments and statements made by the justice presiding in the 2011 action and by the appellate division as establishing that defendants' malpractice led to the dismissal of the claims. They also argue that defendants' decision to advance a cause of action for breach of contract in 2010 without a copy of the contract was inexcusable and negligent, and that defendants' assertion that the dismissal was caused by the courts' erroneous decisions, rather than their own negligence, is unsupported by the record.
According to plaintiffs, the judgment they won against their accountants is not dispositive here, and it does not prevent them from proving that they never received payment for the condominium. Moreover, they have not yet been awarded monetary damages in that action.
3. Defendants' reply (NYSCEF 170)
Defendants reiterate that the courts' various errors in the 2011 action led to the dismissal of the condominium claims, as evidenced by the motion court's statements. They deny that they committed malpractice in failing to file the 2010 action without a copy of the contract, as they were unable to produce it and were unsure if they would ever be able to obtain it and thus decided to file the action without it.
Having claimed in the accounting action that it was the accountants' malpractice that led to their loss of the balance of the condominium contract, defendants argue that plaintiffs are estopped from arguing here that defendants' malpractice caused the loss. Moreover, plaintiffs prevailed on their claim that the accountants' malpractice caused the loss, even if they have not yet been awarded damages.
B. Analysis
It is undisputed that before the 2010 action was dismissed, defendants had been unable to obtain the condominium contract of sale from plaintiffs or their prior counsel, and it is consistently observed in the pertinent judicial decisions that defendants' failure to obtain the contract was not their fault. Plaintiffs do not demonstrate otherwise. Therefore, defendants establish that the dismissal in the 2010 action of the cause of action relating to the sale of the condominium did not result from their negligence.
Moreover, as the motion to dismiss was addressed to the sufficiency of the pleadings, the motion court's decision to dismiss the condominium contract claim based not on a deficiency in pleading but on plaintiffs' failure to produce the contract as evidence is inexplicable and unsupported by the law.
Nor is there merit to plaintiffs' claim that defendants should have advanced quasi-contractual causes of action in the 2010 action as a cause of action for breach of contract is barred by the statute of frauds absent the contract, and may not be revived or contravened by the assertion of quasi-contractual claims based on the same contract.
Although defendants thereafter obtained the contract and submitted it in support of their claims in the 2011 action, the motion court apparently overlooked it in dismissing the contract claim in that action. That dismissal was upheld on appeal even though the appellate court had been aware that the contract had been produced in the 2010 action. Although the appellate court agreed that the motion to dismiss was addressed to the pleadings only and not to the merits of the claims, and for that reason reinstated plaintiffs' causes of action related to the artwork and paintings, it inconsistently determined that the dismissal of the breach of contract claim related to the condominium had been on the merits.
Defendants' subsequent motion to renew based on the newly discovered contract was denied, the justice deeming herself bound by the appellate decision, even though she believed it was erroneous. Consequently, defendants demonstrate that the courts, not them, caused the dismissal of the causes of action relating to the condominium sale.
Even had defendants moved for leave to renew earlier or appealed the 2010 dismissal, plaintiffs offer no evidence that the dismissal would have been vacated or reversed and/or that they would have then prevailed. Their assertion to the contrary is conclusory and fatally speculative. (See e.g., Brooks v Lewin, 21 AD3d 731 [1st Dept 2005], lv denied 6 NY3d 713 [2006] [speculation on future events insufficient to establish causation in malpractice action]; John P. Tilden, Ltd. v Profeta & Eisenstein, 236 AD3d 292 [1st Dept 1997] [contention that had attorneys filed timely motion for leave to appeal, court would have granted leave and reversed decision, and retrial would have resulted in more favorable outcome, too speculative to support causation]). Indeed, the motion court in the 2011 action denied plaintiffs summary judgment and found that, had there been an existing breach of contract claim, there were issues of fact as to their entitlement to the balance of the condominium payment.
In any event, plaintiffs ultimately moved, years later, for leave to renew the 2010 decision dismissing their claim and, while the motion court observed that their delay in moving was a factor in her decision to deny leave, she also ruled that she was bound by the appellate affirmance of the dismissal of the claim.
Moreover, defendants' decision to file the 2011 action rather than move for leave to renew or appeal the 2010 dismissal constitutes a strategic determination, as the dismissal of most of the causes of action was based on the insufficiency of allegations pleaded in the complaint, and plaintiffs offer no evidence, expert or otherwise, showing that the strategy is improper or unreasonable. And, as the motion court in the 2011 action suggested that were it not for the erroneous dismissal on appeal of plaintiffs' breach of contract cause of action, she would have considered it on its merits in that action, plaintiffs' conclusory allegation that the strategy was incorrect does not constitute actionable malpractice. (M&R Ginsburg, LLC v Segel, Goldman et al., 121 AD3d 1354 [3d Dept 2014] [defendants established that legal course they chose was among several reasonable ones, which did not constitute malpractice; plaintiffs' speculation that different strategy would have led to better outcome fatally speculative]).
Defendants therefore demonstrate that their strategy in commencing the 2011 action in lieu of moving to renew or appealing the 2010 dismissal was not the proximate cause of plaintiffs' litigation loss of the condominium causes of action, and plaintiffs fail to raise a triable issue in opposition. In light of this result, the parties' arguments regarding the estoppel effect of the accounting action and judgment need not be considered.
V. OTHER ALLEGED MALPRACTICE AND ISSUES
A. Contentions
1. Defendants
Defendants submit documentary evidence showing that plaintiffs were aware of the dismissal of the 2010 action within days of its issuance, hired appellate counsel to appeal it, met with defendants numerous times to discuss drafting the 2011 complaint, and reviewed it before it was filed. They observe that plaintiffs do not allege a failure to relay the alleged settlement offer to them, but only that they failed to advise them to accept it. As it may not be assumed that plaintiffs would have accepted the offer, even on defendants' advice, plaintiffs' unsupported and conclusory assertions are insufficient to establish malpractice.
Defendants also submit evidence showing that the allegedly fake artwork was not purchased by plaintiffs, and argue that, therefore, plaintiffs lack standing to assert claims related to it. As plaintiffs did not pay for the artwork, they cannot have suffered an injury related thereto. Moreover, as plaintiff High Value was dissolved on January 8, 2010, before plaintiffs retained Popik, it has no standing to sue here.
2. Plaintiffs' opposition
Plaintiffs deny having been told of the status or dismissal of the underlying litigation and contend that they would have proceeded differently had they been informed. Despite not having purchased the artwork directly, plaintiffs maintain that they have standing to sue as they were engaged in a joint venture to purchase it, and even though High Value had been dissolved before defendants were retained, the underlying actions resulted from the winding up of its affairs, which is permissible. They argue that had they been advised by defendants to accept the settlement offer, they would have done so.
3. Defendants' reply
Defendants again assert that plaintiffs knew of the dismissal of the actions, that High Value has no standing to sue for malpractice, and that plaintiffs' assertion that they would have accepted the settlement offer is unsupported.
B. Analysis
Given the insufficient proof of the merits of plaintiffs' underlying claims, both here and in the underlying actions, they do not demonstrate that defendants' alleged failure to inform them of the dismissals was the proximate cause of the loss of their claims. (See Pellegrino v File, 291 AD2d 60 [1st Dept 2002], lv denied 98 NY2d 606 [2002] [attorneys' alleged failure to keep plaintiff notified of status and dismissal of underlying actions not proximate cause of plaintiff's loss absent evidence that action was meritorious and that motion to vacate dismissal would have been successful]). In any event, plaintiffs do not indicate how they would have otherwise proceeded, nor do they establish that they would have succeeded with a different strategy.
Although plaintiffs allege that defendants did not advise them to accept the settlement offer, their conclusory assertion that they would have accepted it does not establish malpractice absent any allegation as to the advice defendants should have given them. (See Leder v Spiegel, 31 AD3d 266 [1st Dept 2006], aff'd 9 NY3d 836 [2007], cert denied 552 US 1257 [2008] [plaintiff's legal malpractice claim dismissed as based on "unsupported, conclusory assertion that (plaintiff) would have accepted the settlement offer but for (the attorney defendant's) erroneous advice concerning his prospect of success at trial"]). Plaintiffs offer no reason to believe that they would have accepted the offer, given the allegations in their complaint that their claims were worth at least $35 million and that if they accepted the offer, it was defendants' misconduct that would have caused them to settle for "only" $6 million.
Plaintiffs also do not address defendants' allegation that High Value was dissolved by the time that plaintiffs retained defendants. Thus, they do not establish its standing to sue for malpractice. (See Moran Enters., Inc. v Hurst, 66 AD3d 972 [2d Dept 2009] [dismissing legal malpractice claim brought by dissolved corporation as it had been dissolved prior to retaining attorney defendant]). Whether plaintiffs have standing to sue for the artwork need not be resolved given the dismissal of the malpractice claims related to the artwork.
VI. CAUSE OF ACTION FOR BREACH OF FIDUCIARY DUTY
When damages resulting from an alleged breach of a fiduciary duty duplicate the damages resulting from alleged legal malpractice, the cause of action fails. (Cosmetics Plus Grp., Ltd. v Traub, 105 AD3d 134, 143 [1st Dept 2013], lv denied 22 NY3d 855 [2013]).
Here, as plaintiffs not only assert the same facts underlying their causes of action for malpractice and breach of fiduciary duty, but seek identical damages for them, the breach of fiduciary duty claim is fatally duplicative of the malpractice claim. (Eurotech Constr. Corp. v Fischetti & Pesce, LLP, 155 AD3d 437 [1st Dept 2017] [breach of fiduciary duty correctly dismissed as duplicative of legal malpractice as based on same facts and seeking same relief]; Raghavendra v Brill, 128 AD3d 414 [1st Dept 2015] [breach of fiduciary duty claim duplicative of malpractice claim]).
VII. CONCLUSION
Accordingly, it is hereby
ORDERED, that defendants' motion to dismiss is granted, and the complaint is dismissed in its entirety; it is further
ORDERED, that defendants' third-party complaint is dismissed as academic; and it is further
ORDERED, that the clerk is directed to enter judgment accordingly. 4/7/2020
DATE
/s/ _________
BARBARA JAFFE, J.S.C.