Opinion
00 Civ. 9419 (NRB)
August 20, 2001
OPINION AND ORDER
Plaintiff Littman Krooks Roth Ball, P.C. ("Littman Krooks", or "plaintiff"), a law firm, brings this action against two former clients, New Jersey Sports Productions, Inc. ("NJSP") and Square Ring Productions, Inc. ("Square Ring") (collectively, "defendants"), for payment of fees allegedly owed. Defendants have brought counterclaims alleging attorney malpractice. Now pending is Littman Krooks' motion pursuant to Fed.R.Civ.P. 12(b)(6) to dismiss the defendants' counterclaims. For the following reasons, the plaintiff's motion is granted.
BACKGROUND
The instant litigation grows out of a prior dispute between professional boxer Ike Quartey and a French boxing promotion organization, AB Stars Productions, S.A. ("AB Stars"), regarding the terms of the contract engaging AB Stars as Quartey's promoters. That matter was litigated to conclusion over approximately three years in the New York State courts. We review the details of that case, which are considerable, only so far as they are relevant to the pending matter.
Unless otherwise indicated, we draw on the factual account contained in the Appellate Division's opinion in the state court matter, Quartey v. AB Stars Productions, S.A., 260 A.D.2d 39, 40-42 (1st Dept. 1999). Additionally, because this is a motion to dismiss under Fed.R.Civ.P. 12(b)(6), we assume all allegations in the defendants' counterclaim to be true. See Gant v. Wallingford Bd. of Educ., 69 F.3d 669, 672-73 (2d Cir. 1995).
Quartey, who is Ghanian, was discovered by AB Stars in 1992 and signed a promotion agreement with them in October of that year. In 1994, he captured the welterweight title of the world, and subsequently re-negotiated his promotion contract with AB Stars in September, 1996 ("the 1996 agreement"). The 1996 agreement included defendants NJSP and Square Ring as co-promoters along with AB Stars. In February, 1998, Quartey brought a declaratory judgment action in New York State Supreme Court, New York County, seeking to invalidate the 1996 agreement on the grounds that: (1) the 1996 agreement was made under threats by AB Stars, and (2) AB Stars was not licensed as a promoter in New York State, as required by state law. See 19 N.Y. Comp. Codes R. Regs. § 208.14.
Justice Charles Edward Ramos of the Supreme Court eventually granted partial summary judgment to defendants AB Stars, primarily because an earlier Appellate Division opinion in the case found the 1996 agreement to be "valid on its face". Quartey at al v. AB Stars Promotions, S.A., et al, Index No. 600554/98, slip op., at 3 (Aug. 28, 2000) (herinafter "Recon. Op.") Thus, Justice Ramos ruled that AB Stars was entitled to its contractually-stipulated 30% share of the revenue from a February, 1999, bout between Quartey and subsequent welterweight champion Oscar de la Hoya. Accordingly, partial summary judgment was entered on April 14, 2000, for $450,000 plus interest.
Justice Ramos had previously found the agreement to be unenforceable because AB Stars had not secured the proper licenses from the New York State Athletic Commission. That decision was reversed by the Appellate Division, which held that "[t]he regulations requiring a boxing promoter to be locally licensed are merely malum prohibitum." Quartey v. AB Stars Promotions, S.A., 697 N.Y.S.2d 280, 282 (1st Dept. 1999).
Defendants allege — and we therefore assume to be true — that the Littman Krooks partner assigned to this matter, Richard A. Roth, was out of town when the time came to respond to AB Stars' motion. See Counterclaim, ¶ 14. Thus, Littman Krooks associate Gary Heller was assigned the preparation of the opposition papers. Id., ¶ 15. Patrick English, who functions as general counsel to NJSP, had previously engaged in extensive discussions with Roth concerning English's expectation that defendants' opposition papers would emphasize both the legal and factual reasons to defeat AB Stars' motion. Id., ¶ 10-11. However, Heller was apparently not privy to these instructions and consequently the opposition papers included legal — but not factual — arguments, in contravention of defendants' expressed wishes. English was unaware both: (1) that Heller, not Roth, was preparing the response, and (2) that the papers contained only the legal, and not the factual, arguments. Id., ¶ 16-17.
In brief, the "legal arguments" referred to above are those supporting a reading that the 1996 agreement was enforceable on its face. The "factual arguments" are those in support of Quartey's and defendants' theory that AB had not entered the 1996 agreement in good faith, that AB was guilty of fraudulent inducement, and that AB's principal actually sought to "destroy" Quartey, not promote him. See counterclaim, ¶ 7-8.
After Justice Ramos issued the decision adverse to defendants, Roth admitted to English that Littman Krooks had made a significant error by not including the factual arguments. Id., ¶ 22. Accordingly, Quartey, NJSP, and Sports Ring moved for reconsideration and reargument. In that motion, Littman Krooks included a number of affidavits and factual allegations to support its position. See supra, n. 3. Roughly contemporaneously with the filing of this second motion, Roth raised the issue of unpaid legal fees with English. Id., ¶ 24. English informed Roth that "in view of the substantial liability which NJSP faced as a consequence of Littman Krooks' negligence . . . payment of the outstanding invoices should await" the decision on the reconsideration motion. Id., ¶ 13.
Defendants NJSP and Square Ring were necessary party defendants in the state court action, but their interests were clearly aligned with those of the plaintiff in that action, Ike Quartey.
Justice Ramos denied the reconsideration motion in a detailed opinion dated August 28, 2000. In it, he noted the "bedrock legal principle " that a party cannot submit evidence in connection with a motion for reconsideration that was available to it when the underlying motion was made. Recon. Op., at 7. He then went on to observe, in reference to the factual arguments not made in the initial opposition to AB Stars' motion, that:
In any event, even if the Court were to consider the moving parties' arguments, the April 5 decision would remain unchanged. As the Appellate Dvision clearly stated: "There is nothing illegal per se about this contract.'
Recon. Op., at 8 (citation omitted).
Defendants subsequently did not pay Littman Krooks for plaintiff's legal services in opposing the AB Stars motion for summary judgment. When Littman Krooks brought the instant litigation for non-payment of fees, defendants filed a counterclaim alleging that the failure to make the factual arguments in the opposition papers was attorney malpractice justifying the nonpayment.
DISCUSSION
A. Motion to Dismiss Standard
When deciding a motion to dismiss pursuant to Fed R. Civ. P. 12(b) (6), we are required to assume as true all allegations stated in the complaint, see Zinermon v. Burch, 494 U.S. 113, 118 (1990); Charles W. v. Maul, 214 F.3d 350, 356 (2d Cir. 2000), and to read the complaint liberally, drawing all reasonable inferences in favor of the non-moving party, see PaineWebber Inc. v. Bvbyk, 81 F.3d 1193, 1197-98 (2d Cir. 1996). In this context, our function is "merely to assess the legal feasibility of the complaint, not to assay the legal feasibility of the evidence which might be offered in support thereof." Geisler v. Petrocelli, 616 F.2d 636, 639 (2d Cir. 1980). We may look outside the contours of the complaint, however, to take notice of documents incorporated in the complaint by reference. See Brass v. Am. Film Techn., Inc., 987 F.2d 142, 150 (2d Cir. 1993); Cortec Indus., Inc. v. Sum Holding L.P., 949 F.2d 42, 47-48 (2d Cir. 1991). Thus, in deciding this motion we may draw on the various state court decisions in the dispute between defendants and Quartey.
B. Attorney Malpractice Under New York Law
To successfully state a claim for attorney malpractice in New York State, a party must plead four elements:
(1) [T]he existence of an attorney-client relationship; (2) negligence on the part of the attorney or some other conduct in breach of that relationship; (3) that the attorney's conduct was the proximate cause of injury to the plaintiff; and (4) that but for the alleged malpractice the plaintiff would have been successful in the underlying action.Sloane v. Reich, No. 90 Civ. 8187, 1994 WL 88008, at *3 (S.D.N Y Mar. 11, 1994) (Sotomayor, J.) (citing Hanlin v. Mitchelson, 794 F.2d 834, 838 (2d Cir. 1986)).
Of particular note is the fourth element, which includes "but for" causation of injury. A high bar to attorney malpractice liability, the fourth element "seeks to insure a tight causal relationship exists between the claimed injuries and the alleged malpractice, and demands a nexus between loss and injury even closer than that required by the proximate cause prong." Sloane, 1994 WL 88008, at *3; see also Nevelson v. Carro, Spanbock, Kaster Cuiffo, 686 N.Y.S.2d 404, 406 (1st Dep't 1999) (same). As New York courts have observed, the "but for" prong requires the trier of fact "in effect [to] decide a lawsuit within a lawsuit," because it demands a hypothetical re-examination of the events at issue absent the alleged malpractice. N.A. Kerson Co. v. Shayne, Dachs, Weiss, Kolbrenner, Levy et al, 397 N.Y.S.2d 142, 143 (2d Dep't 1977) (Suozzi, J., concurring), aff'd., 45 N.Y.2d 730 (1978) (affirming for the reasons in the concurring opinion).
Indeed, some courts have collapsed the third and fourth elements, because the "but for" causation element is simply a more specific causation requirement for which proximate cause is a necessary condition. See, e.g., Nevelson, 686 N.Y.S.2d at 405-06.
We note additionally that "[i]t is well-settled that an attorney may take chances, and if in such cases a lawyer errs on a question not elementary or conclusively settled by authority, that error is one of judgment for which he is not liable." Parksville Mobile Modular v. Fabricant, 422 N.Y.S.2d 710, 717 (3d Dep't 1979) (quoting Byrnes v. Palmer, 45 N.Y.S. 479, 482 (1897), aff'd., 160 N.Y. 699 (1899)) (internal quotations and alterations omitted). Thus, a strategic decision or tactical judgment, no matter how illfated it may ultimately prove, cannot give rise to malpractice liability if that decision or judgment was not unreasonable at the time it was made. See Rodricruez v. Fredericks, 623 N.Y.S.2d 241, 242 (1st Dep't 1995).
C. Analysis
The first two elements of a malpractice claim are clearly properly pled and survive the motion to dismiss. There is no dispute that Littman Krooks and defendants maintained an attorney-client relationship. Additionally, the facts as stated in the complaint are sufficient to state a claim that plaintiff's failure to include the factual arguments in the opposition to defendants' summary judgment motion was negligence.
We assume the presence of negligence only for the purposes of this motion, since, not surprisingly, the facts underlying this element are disputed. On the one hand, plaintiff insists that defendants reviewed all written work product before it was submitted to the court, and therefore a negligence claim is unsustainable. Defendants counter that plaintiff did not consult them before opposing the motion, and in fact violated prior instructions to emphasize the fact arguments. See Def't Mem, at 9 n. 2.
Therefore, the central question presented by this motion is whether defendants have stated a claim that supports "but for" proximate causation as required by the third and fourth elements. We begin our analysis by examining Justice Ramos's opinion on the reconsideration motion. That opinion is indeed highly critical of Littman Krooks, and chastises plaintiff for not submitting the factual allegations and accompanying affidavits at the appropriate time. See Recon. Op., at 6-8. However, immediately following this highlight of plaintiff's failure to include important arguments, Justice Ramos clearly stated that those omitted arguments were not dispositive. "In any event, even if the Court were to consider the moving parties' arguments, the April 5 decision would remain unchanged." Id., at 8 (emphasis added).
It is apparent from the text and context of this statement that Justice Ramos would have ruled against defendants on the motion regardless of whether plaintiff had included the factual arguments in its opposition papers. Justice Ramos repeated several times throughout his opinion that "the Appellate Division's November 1999 determination that the September 1996 agreement is legal per se" was the guiding principle of his decision. Recon. Op., at 10. No argument that plaintiff could have submitted would have changed the force and effect of that opinion, which bound the trial court judge. Justice Ramos's statement, despite defendant's best efforts to characterize it as such, is entirely unambiguous.
The merits of Justice Ramos's decision are irrelevant to the pending motion. Our only task at this juncture is to determine whether defendants successfully state a claim that "but for" plaintiff's negligence, they would have prevailed on the motion for summary judgment. Taking the Ramos decision on its face, that question is clearly answered in the negative.
Defendants go so far as to argue that the trial court opinion was manifestly wrong and would have been reversed on appeal, had a full factual record been presented to the trial court. See Def't. Mem., at 16 (arguing that it would be "simply inconceivable" that the trial court would not have been reversed). Defendants argue that they were prejudiced by plaintiff's failure to submit the factual allegations because a reviewing court would be precluded from considering them in evaluating the trial court's reasoning. However, this argument requires far too many levels of speculation to be considered anything approaching "but for" causation.
Defendants further contend that the "arguments" referred to by Justice Ramos in the critical passage of his opinion are not the omitted factual ones alleging fraudulent inducement and breach, but some other, unspecified arguments. This assertion has no merit. In the paragraph preceding the one in dispute here, Justice Ramos unambiguously identified the defendants' "fail[ure] to produce evidentiary proof in admissible form" as the omitted material that, if submitted, would not have altered the result.
Thus, under no theory can the Ramos opinion be read to say anything other than that the omission of factual arguments by Littman Krooks (even if negligent) had no impact on AB Stars prevailing on the summary judgment motion.
CONCLUSION
For the foregoing reasons, plaintiff's motion to dismiss defendant's counterclaim is granted. The parties are directed to appear at a pre-trial conference on September 4, 2001, at 3:00 p.m. in Courtroom 21A. Before that time, the parties should confer regarding a discovery plan for the case as well as a potential framework for settlement, if appropriate.
IT IS SO ORDERED.