Opinion
48 CA 21-00526
03-18-2022
NATIONAL AIR CARGO, INC., National Air Cargo Holdings, Chris Alf, Personally, Plaintiffs-Appellants, et al., Plaintiffs, v. JENNER & BLOCK, LLP, Harter, Secrest & Emery, LLP, Defendants-Respondents, et al., Defendant. (Appeal No. 1.)
HANTMAN & ASSOCIATES, NEW YORK CITY (ROBERT J. HANTMAN OF COUNSEL), FOR PLAINTIFFS-APPELLANTS. HODGSON RUSS LLP, BUFFALO (KEVIN M. KEARNEY OF COUNSEL), FOR DEFENDANT-RESPONDENT JENNER & BLOCK, LLP. CONNORS LLP, BUFFALO (VINCENT E. DOYLE, III, OF COUNSEL), FOR DEFENDANT-RESPONDENT HARTER, SECREST & EMERY, LLP.
HANTMAN & ASSOCIATES, NEW YORK CITY (ROBERT J. HANTMAN OF COUNSEL), FOR PLAINTIFFS-APPELLANTS.
HODGSON RUSS LLP, BUFFALO (KEVIN M. KEARNEY OF COUNSEL), FOR DEFENDANT-RESPONDENT JENNER & BLOCK, LLP.
CONNORS LLP, BUFFALO (VINCENT E. DOYLE, III, OF COUNSEL), FOR DEFENDANT-RESPONDENT HARTER, SECREST & EMERY, LLP.
PRESENT: CENTRA, J.P., NEMOYER, CURRAN, AND BANNISTER, JJ.
MEMORANDUM AND ORDER
It is hereby ORDERED that said appeal is unanimously dismissed without costs.
Memorandum: Plaintiff National Air Cargo, Inc. (NAC) is a freight forwarding company, and plaintiff National Air Cargo Holdings (NACH) owns NAC. Plaintiff Chris Alf is the principal shareholder of NAC and NACH and, at all relevant times, was the chair, chief executive officer, and president of NAC. NAC was found liable on a breach of contract claim in an underlying action against it in the United States District Court for the Central District of California. Plaintiffs commenced this action alleging, inter alia, professional negligence/legal malpractice and seeking damages purportedly arising from the representation of NAC by defendant Jenner & Block, LLP (JB) in the underlying action and the representation of NAC by defendant Harter, Secrest & Emery, LLP (HSE) in NAC's subsequent bankruptcy proceeding. Plaintiffs alleged that JB and HSE negligently failed to review whether the judgment rendered against NAC in the underlying action was covered by the directors’ and officers’ liability insurance policies issued to NAC and to advise NAC accordingly. JB and HSE thereafter each moved pursuant to CPLR 3211 to dismiss plaintiffs’ complaint against them. In appeal No. 1, plaintiffs appeal from an order of Supreme Court that granted both motions. In appeal No. 2, plaintiffs appeal from a subsequent order of the same court that granted HSE's motion. In appeal No. 3, plaintiffs appeal from an order and judgment of the same court that granted JB's motion.
Preliminarily, the order in appeal No. 1 is subsumed in the subsequent final order in appeal No. 2 and the subsequent order and judgment in appeal No. 3; we therefore dismiss appeal No. 1 (see Matter of Tehan [Tehan's Catalog Showrooms, Inc.] [appeal No. 2], 144 A.D.3d 1530, 1531, 40 N.Y.S.3d 342 [4th Dept. 2016] ; Hughes v. Nussbaumer, Clarke & Velzy , 140 A.D.2d 988, 988, 529 N.Y.S.2d 658 [4th Dept. 1988] ; see also CPLR 5501 [a] [1] ). We also note at the outset that plaintiffs do not challenge on appeal the court's grant of those parts of the motions seeking dismissal of their causes of action for breach of fiduciary duty, breach of contract, and unjust enrichment, nor do they challenge on appeal the court's grant of that part of HSE's motion seeking dismissal of the professional negligence/legal malpractice cause of action against it insofar as asserted by NACH and Alf. We therefore conclude that any challenges to those parts of the orders are deemed abandoned (see Armstrong v. United Frontier Mut. Ins. Co. , 181 A.D.3d 1332, 1333, 121 N.Y.S.3d 488 [4th Dept. 2020] ; Ciesinski v. Town of Aurora , 202 A.D.2d 984, 984, 609 N.Y.S.2d 745 [4th Dept. 1994] ). We affirm in appeal Nos. 2 and 3.
In appeal No. 2, we conclude that the court properly dismissed on the ground of documentary evidence the professional negligence/legal malpractice cause of action against HSE insofar as asserted by NAC (see CPLR 3211 [a] [1] ). A motion to dismiss a complaint based on documentary evidence "may be appropriately granted only where the documentary evidence utterly refutes [the] plaintiff's factual allegations, conclusively establishing a defense as a matter of law" ( Goshen v. Mutual Life Ins. Co. of N.Y. , 98 N.Y.2d 314, 326, 746 N.Y.S.2d 858, 774 N.E.2d 1190 [2002] ). In support of its motion, HSE submitted the engagement letter between HSE and NAC. "An attorney may not be held liable for failing to act outside the scope of a retainer" ( Attallah v. Milbank, Tweed, Hadley & McCloy, LLP , 168 A.D.3d 1026, 1028, 93 N.Y.S.3d 353 [2d Dept. 2019] ; see AmBase Corp. v. Davis Polk & Wardwell , 8 N.Y.3d 428, 435, 834 N.Y.S.2d 705, 866 N.E.2d 1033 [2007] ). Here, HSE met its burden of establishing by documentary evidence that the scope of its legal representation did not include a review of the insurance policies for possible coverage of the judgment in the underlying action. The engagement letter stated that HSE's engagement did "not include responsibility either for review of [NAC's] insurance policies to determine the possibility of coverage for any ... claims that have [been] or may be asserted against [NAC] or for notification of [NAC's] insurance carriers concerning the matter." Because review of NAC's liability insurance policies to determine their potential applicability to the judgment in the underlying action fell outside the scope of HSE's engagement, the court properly granted HSE's motion with respect to the professional negligence/legal malpractice cause of action against HSE insofar as asserted by NAC (see Turner v. Irving Finkelstein & Meirowitz, LLP , 61 A.D.3d 849, 850, 879 N.Y.S.2d 145 [2d Dept. 2009] ).
In appeal No. 3, we conclude that the court properly dismissed the professional negligence/legal malpractice cause of action against JB, insofar as asserted by NAC, on the ground of judicial estoppel. The "doctrine of judicial estoppel may bar a party from pursuing claims which were not listed in a previous bankruptcy proceeding" ( Moran Enters., Inc. v. Hurst , 160 A.D.3d 638, 640, 75 N.Y.S.3d 195 [2d Dept. 2018], lv denied 32 N.Y.3d 908, 2018 WL 5259934 [2018], rearg denied 32 N.Y.3d 1195, 95 N.Y.S.3d 149, 119 N.E.3d 789 [2019] ; see Popadyn v. Clark Constr. & Prop. Maintenance Servs., Inc. , 49 A.D.3d 1335, 1336, 854 N.Y.S.2d 626 [4th Dept. 2008] ). Here, at the time NAC filed for bankruptcy, it failed to list a potential legal malpractice claim against JB as an asset and obtained a bankruptcy discharge. We conclude that "[t]he failure of ... [NAC] to disclose a cause of action as an asset in a prior bankruptcy proceeding, the existence of which [NAC] knew or should have known existed at the time, deprive[s] [NAC] of the legal capacity to sue subsequently on that cause of action" ( Green v. Associated Med. Professionals of NY, PLLC , 111 A.D.3d 1430, 1432, 975 N.Y.S.2d 319 [4th Dept. 2013] [internal quotation marks omitted]). Contrary to the court's determination, however, JB failed to establish that the doctrine of judicial estoppel applies with respect to NACH or Alf, because JB failed to establish as a matter of law that NACH or Alf, as non-debtors, were in privity with NAC (see In re Avaya Inc. , 573 B.R. 93, 103-104 [S.D. N.Y. 2017] ).
Nonetheless, with respect to appeal No. 3, we conclude that JB is entitled to dismissal of the professional negligence/legal malpractice cause of action against it, insofar as asserted by NACH and Alf, for failure to state a cause of action (see CPLR 3211 [a] [7] ). Plaintiffs’ complaint does not allege the existence of an attorney-client relationship between JB and NACH or Alf (see Keness v. Feldman, Kramer & Monaco, P.C. , 105 A.D.3d 812, 813, 963 N.Y.S.2d 313 [2d Dept. 2013] ) and, instead, alleges only that JB gave negligent advice to NAC. While NACH and Alf submitted an affidavit of Alf attempting to remedy that deficiency, the affidavit does not specifically address JB's representation of NACH or Alf in the matter giving rise to this lawsuit (cf. Leon v. Martinez , 84 N.Y.2d 83, 87-88, 614 N.Y.S.2d 972, 638 N.E.2d 511 [1994] ). In light of our determination, we do not reach the issue whether JB provided documentary evidence that " ‘utterly refute[d] [NACH's and Alf's] factual allegations, conclusively establishing a defense as a matter of law’ " ( Matter of Mixon v. Wickett , 196 A.D.3d 1094, 1095, 147 N.Y.S.3d 907 [4th Dept. 2021], quoting Goshen , 98 N.Y.2d at 326, 746 N.Y.S.2d 858, 774 N.E.2d 1190 ).