Opinion
INDEX No.: 451533/2019
01-29-2021
THE PEOPLE OF THE STATE OF NEW YORK, by LETITIA JAMES, ATTORNEY GENERAL OF THE STATE OF NEW YORK, Plaintiff, v. DANIEL C. AUSTIN, SR., DANIEL C. AUSTIN, JR., DONALD M. PFAIL, JOSEPH LODATO, MICHAEL W. MICHEL, ANTHONY R. MORDENTE, and VERA PRINCIOTTA, Defendants.
NYSCEF DOC. NO. 209 PRESENT: HON. O. PETER SHERWOOD Justice MOT. DATE: 9/9/2020 MOT. SEQ. No.: 005
DECISION + ORDER ON MOTION
The following e-filed documents, listed by NYSCEF document number (Motion 005) 105, 106, 107, 108, 109, 110, 111, 112, 113, 114, 115, 116, 117, 118, 119, 120, 121, 122, 124, 125 were read on this motion to/for MOTION TO DISMISS
Defendant Anthony R. Mordente ("Mordente") moves to dismiss with prejudice cross-claims asserted against him by defendant Joseph Lodato ("Lodato") in his Amended Answer pursuant to CPLR 3211(a)(1), (a)(5), and (a)(7). For the following reasons, the motion shall be granted as to cross-claims one and four and denied as to cross-claims two and three.
I. BACKGROUND
In 2014, the Attorney General's office ("AG") began an investigation of the Lutheran All Faiths Cemetery (the "Cemetery"). As a result of the investigation, the AG commenced this action seeking remedial and injunctive relief against the member of Cemetery's Board of Directors for breach of fiduciary duty to the Cemetery (Nunberg Aff. ¶ 5 [Doc. No. 106]).
Mordente is a director of the Cemetery and his law firm, Mordente Law Firm LLC, has been General Counsel to the Cemetery since 1990 (id. ¶ 6). Defendant Lodato joined the Cemetery's Board in 2004 (id. ¶ 8). In an Amended Answer. Lodato also alleged cross-claims against Mordente sounding in legal malpractice, contribution, and subrogation (Mordente Aff. ¶ 6 [Doc. No. 107]). He alleges that Mordente committed legal malpractice arising from his role in drafting defendant Daniel Austin, Sr.'s ("Austin, Sr.") employment contract with the Cemetery, distributing assets of a Non-Qualified Deferred Compensation Fund (the "Rabbi Trust"), and understating the Cemetery's contribution to the Rabbi Trust (id. ¶ 19; Amended Answer ¶ 19 [Doc. No. 109]). Mordente responds that he has never been retained, performed work for, or represented Lodato in an individual capacity or in his capacity as a director of the Cemetery (Mordente Aff. ¶¶ 8-12). Defendant Lodato did not submit opposition to this motion.
II. ARGUMENTS
A. Defendant Mordente's Memorandum in Support
Defendant Mordente begins by arguing that Lodato's claim for legal malpractice must be dismissed because there is no privity between them, nor do they have a relationship near privity (Def. Br. at 5). A legal malpractice claim can only exist if there is an attorney-client relationship between the parties (Fed. Ins. Co. v N. Am. Speciality Ins. Co., 47 AD3d 52, 59 [1st Dept 2007]; Baystone Equities, Inc. v Handel-Harbour, 27 AD3d 231, 231 [1st Dept 2006]; Fleissler v Bayroff, 266 AD3d 34, 34 [1st Dept 1999]). A unilateral belief of an individual is not sufficient to create such a relationship (Wei Cheng Chang v Pi, 288 AD2d 378, 380-381 [2d Dept 2001]; Lombardi v Lombardi, 127 AD3d 1038, 1042 [1st Dept 2015]). Instead, an attorney-client relationship may only be established where there is a mutual understanding that an attorney explicitly undertook to perform a specific task (Pellegrino v Oppenheimer & Co. 49 AD3d 94, 99 [1st Dept 2008]).
Mordente maintains that he had an attorney-client relationship with the Cemetery entity only, not its officers or directors, as is made clear in the retainer agreement between Mordente's firm and the Cemetery (Def. Br. at 6-7; Mordente Aff., Ex. C [Doc. No. 110]; see e.g. Campbell v McKeon, 75 AD3d 479, 480-481 [1st Dept 2010]; Griffin v Anslow, 17 AD3d 889, 893 [3d Dept 2005]; Kushner v Herman, 215 AD2d 633, 633-634 [2d Dept 1995]; Veritas Cap. Mgmt. LLC v Campbell, 22 Misc3d 1107(A), at *6 [Sup Ct New York County 2008]; Breslin Realty Dev. Corp. v Shaw, 17 Misc3d 1110(A) [Sup Ct Nassau County 2007]; Stratton Grp., Ltd. v Sprayregen, 466 FSupp 1180, 1185 [SD NY 1979]). Further, he was never retained by or represented Lodato for any of the matters alleged in the complaint (Def. Br. at 7; Mordente Aff., ¶ 8). Regarding Lodato's allegation that Mordente acted as an attorney for "the Lodato family" by helping his brother, Vincent Lodato, with a mortgage, Mordente argues that this is insufficient to establish privity, even if Lodato paid Mordente's attorneys' fees (Def. Br. at 7-8; Priest v Hennessy, 51 NY2d 62, 70-71 [1980]; Moran v Hurst, 32 AD3d 909 [2d Dept 2006]). He did not represent Vincent in connection with the mortgage. Vincent had his own counsel (Def. Br. at 8; Mordente Aff., Exs. G, H [Doc. Nos. 114, 115]).
Mordente also argues that he and Lodato did not have a relationship near privity (Def. Br. at 8). To establish a "near privity" claim, a plaintiff must allege: (i) an awareness by the maker of the statement that is to be used for a particular purpose; (ii) reliance by a known party on the statement in furtherance of that purpose; and (iii) some conduct by the maker of the statement linking it to the relying party and evincing its understanding of that reliance (id.; Prudential Ins. Co. v Dewey, Ballantine, Bushby, Palmer & Wood, 80 NY2d 377, 384 [1992] [Court allowed a negligent misrepresentation claim to be brought by a non-client against an attorney who issued an opinion letter to the non-client in connection with a debt restructuring]). Mordente argues, the documentary evidence demonstrates that the Prudential standard, to the extent it is applicable here, cannot be met (Def. Br. at 9). The Minutes of the Special Committee of the Executive Committee held on April 22, 2014 involve Austin, Sr. being told by Wells Fargo, in the presence of other Board Members including Mordente but not including Lodato, that he could take the Rabbi trust as a lump sum distribution (id. at 9-10; Mordente Aff., Ex. J [Doc. No. 117]). Mordente argues that this meeting is insufficient to establish near privity. Mordente only prepared a letter authorizing the Rabbi Trust's distribution to Austin, Sr. at the direction and with the assistance of Wells Fargo (Mordente Aff., Ex. J). Mordente argues the entire Board, including Lodato, then approved the payment with the Cemetery's Treasurer, Donald Pfail, advising the Board Members that the distribution was lawful (Def. Br. at 10-11; Mordente Aff., Ex. H [Doc. No. 115]).
Mordente next asserts that Lodato's legal malpractice cross-claim is time-barred as such a claim must be brought within three years (Def. Br. at 11; McCoy v Feinman, 99 NY2d 295, 301 [2002]; see Duane Morris LLP v Astor Holdings Inc, 61 AD3d 418 [1st Dept 2009]; NY Civ Prac L&R § 214(6) [McKinney 2010]). Accrual of an action against an attorney for negligence "is measured from the day an actionable injury occurs, even if the aggrieved party is then ignorant of the wrong or the injury" (Duane Morris, LLP, 61 AD3d at 418; Ackerman v Price Waterhouse, 84 NY2d 535, 541 [1994]; see also McCoy v Feinman, 99 NY2d 295, 301 [2002]; Hahn v Dewey & LeBoeuf Liquidation Tr., 143 AD3d 547, 547 [1st Dept 2016]; Cabrera v Collazo, 115 AD3d 147, 150 [1st Dept 2014]; Troll v Glantz, 57 Misc2d 572, 574 [1st Dept 1968]). Mordente argues the crux of the claim against him is that he was negligent in allowing the Rabbi Trust lump sum to be paid to Austin, Sr. on May 1, 2014, by authorizing such in a letter to the Burke Group on the Cemetery's behalf (Def. Br. at 12; Mordente Aff., Ex. A ¶ 46; Amended Answer at ¶ 12). Because the basis of the purported claims against him accrued on May 4, 2014 when the lump sum payment was made, a claim must have been asserted by May 4, 2017 (Def. Br. at 13). This action was not filed until September 3, 2019, and the cross-claims were filed at a later date. Accordingly, the cross-claim of legal malpractice must be dismissed as time-barred (id.).
III. DISCUSSION
To succeed on a motion to dismiss pursuant to CPLR § 3211 (a) (1), the documentary evidence submitted that forms the basis of a defense must resolve all factual issues and definitively dispose of the plaintiff's claims (see 511 W. 232nd Owners Corp. v Jennifer Realty Co., 98 NY2d 144, 152 [2002]; Blonder & Co., Inc. v Citibank, N.A., 28 AD3d 180, 182 [1st Dept 2006]). A motion to dismiss pursuant to CPLR § 3211 (a) (1) "may be appropriately granted only where the documentary evidence utterly refutes plaintiff's factual allegations, conclusively establishing a defense as a matter of law" (McCully v. Jersey Partners, Inc., 60 AD3d 562, 562 [1st Dept. 2009]). The facts as alleged in the complaint are regarded as true, and the plaintiff is afforded the benefit of every favorable inference (see Leon v Martinez, 84 NY2d 83, 87-88 [1994]). Allegations consisting of bare legal conclusions as well as factual claims flatly contradicted by documentary evidence are not entitled to any such consideration (see e.g. Nisari v Ramjohn, 85 AD3d 987, 989 [2nd Dept 2011]).
CPLR § 3211 (a) (1) does not explicitly define "documentary evidence." As used in this statutory provision, "'documentary evidence' is a 'fuzzy term', and what is documentary evidence for one purpose, might not be documentary evidence for another" (Fontanetta v John Doe 1, 73 AD3d 78, 84 [2nd Dept 2010]). "[T]o be considered 'documentary,' evidence must be unambiguous and of undisputed authenticity" (id. at 86, citing Siegcl, Practice Commentaries, McKinney's Cons. Laws of N.Y., Book 7B, CPLR 3211:10, at 21-22). Typically that means "judicial records, as well as documents reflecting out-of-court transactions such as mortgages, deeds, contracts, and any other papers, the contents of which are 'essentially undeniable,' " (id. at 84-85).
On a motion to dismiss a plaintiff's claim pursuant to CPLR § 3211 (a) (7) for failure to state a cause of action, the court is not called upon to determine the truth of the allegations (see, Campaign for Fiscal Equity v State, 86 NY2d 307, 317 [1995]; 219 Broadway Corp. v Alexander's, Inc., 46 NY2d 506, 509 [1979]). Rather, the court is required to "afford the pleadings a liberal construction, take the allegations of the complaint as true and provide plaintiff the benefit of every possible inference [citation omitted]. Whether a plaintiff can ultimately establish its allegations is not part of the calculus in determining a motion to dismiss" (EBC I v Goldman, Sachs & Co., 5 NY3d 11, 19 [2005]). The court's role is limited to determining whether the pleading states a cause of action, not whether there is evidentiary support to establish a meritorious cause of action (see Guggenheimer v Ginzburg, 43 NY2d 268, 275 [1977]; Sokol v Leader, 74 AD3d 1180 [2d Dept 2010]).
An action for legal malpractice requires the plaintiff prove the attorney's negligence, which was the proximate cause of the loss sustained, and actual damages (Reibman v Senie, 302 AD2d 290, 290 [1st Dept 2003], Between the Bread Rlty. Corp. v Salans Hertzfeld Heilbronn Christy & Viener, 290 AD2d 380 [1st Dept 2002], lv denied 98 NY2d 603 [2002], Prudential Ins. Co. of Am. v Dewey, Ballantine, Bushby, Palmer & Wood, 170 AD2d 108, 114 [1st Dept 1991] affd, 80 NY2d 377 [1992]). To show proximate cause, a plaintiff must demonstrate that but for the attorney's negligence, the plaintiff would cither have prevailed in the underlying matter or would not have sustained damages (Reibman, 302 AD2d at 290, Senise v Mackasek, 227 AD2d 184 [1st Dept 1996]; Stroock Stroock & Lavan v Beltramini, 157 AD2d 590, 591 [1st Dept 1990]).
Lodato's legal malpractice claim against Mordente must be dismissed. First, an attorney-client relationship did not exist between Mordente and Lodato. The only retainer agreement on record here is one between Mordente's law firm and the Cemetery. That agreement makes clear that the only client taken on was the Cemetery itself (Mordente Aff., Ex. C at 1). Further, New York courts have held that a corporation's attorney represents only the corporate entity, not its officers or directors (Campbell v McKeon, 75 AD3d 479, 480-481 [1st Dept 2010]). Lodato, having failed to oppose Mordente's motion, also fails to provide any evidence that an attorney-client relationship existed between him and the Mordente firm. Lodato's Amended Answer alleges that Mordente represented the Lodato family in connection with a mortgage transaction between the family and the Cemetery (Amended Answer ¶¶ 4-7). Mordente rebuts these allegations, demonstrating that the Closing Statement and Closing Attendance Sheets for the mortgage transaction list Vincent Lodato as having his own counsel whereas the Mordente firm represented the Cemetery (Mordente Aff., Exs. G, H [Doc. Nos. 114-115]). Lodato also cannot establish a "near privity" relationship with the Mordente firm as his Answer merely pleads such a relationship exists without offering any specific examples of Lodato's reliance on Mordente's conduct or statements. Moreover, Mordente has met his burden under CPLR 3211(a)(5) to show that the time in which to sue has expired (see Island ADC, Inc. v Baldassano Architectural Group, P.C. 49 AD3d 815, 816 [2008]). Consequently, the cross-claim for legal malpractice against Mordente must be dismissed for failure to state a claim and for failure to assert the claim within the applicable statute of limitations.
CPLR Section 1401 states that:
"two or more persons who are subject to liability for damages for the same personal injury, injury to property or wrongful death, may claim contribution among them whether or not an action has been brought or a judgment has been rendered against the person from whom contribution is sought."Accordingly, contribution is a claim sounding in tort, allowing one tortfeasor to collect from a co-tortfeasor (see AG Capital Funding Partners, L.P. v State Street Bank & Trust Co., 5 NY3d 582, 594 [2005]). Here, Mordente's motion to dismiss Lodato's contribution cross-claim fails. Although Mordente has established that there was no attorney-client relationship between him and Lodato, "this misses the point" (Schauer v Joyce, 54 NY2d 1, 5 [1981]). The relevant question under CPLR 1401 is not whether Mordente owed a duty to Lodato, but whether they each owed a duty to the Cemetery and, by breaching their respective duties contributed to the Cemetery's ultimate injuries (see id.; Smith v Sapienza, 52 NY2d 82, 87; Barry v Niagara Frontier Tr. System, 35 NY2d 629, 633; Rogers v Dorchester Assoc., 32 NY2d 553, 564). The Attorney General's complaint makes multiple allegations that both Mordente and Lodato breached their duties to the Cemetery (Compl. ¶¶ 7, 14, 17, 36-37, 41-42, 46-47, 49-54, 59, 62, 64, 67, 69, 71, 75, 77, 92, 105, 108, 112-114 [Doc. No. 108]). Consequently, Lodato has successfully stated a cross-claim for contribution against Mordente.
"Subrogation, an equitable doctrine, allows an insurer to stand in the shoes of its insured and seek indemnification from third parties whose wrongdoing has caused a loss for which the insurer is bound to reimburse" (Nationwide Mut. Ins. Co. v U.S. Underwriters Ins. Co., 151 AD3d 504, 505 [1st Dept 2017] [quoting Kaf-Kaf, Inc. v Rodless Decorations, 90 NY2d 654, 660 [1997]). Here, Lodato's subrogation cross-claim shall be dismissed as nothing in the record suggests Lodato is an insurer to any party in this action.
Accordingly, it is hereby
ORDERED that the motion of defendant Anthony Mordente to dismiss the cross-claims of defendant Joseph Lodato (Motion Sequence Number 005) is GRANTED to the extent that the first (legal malpractice) and fourth (subrogation) claims are DISMISSED and the motion is otherwise DENIED. 1/29/2021
DATE
/s/ _________
O. PETER SHERWOOD, J.S.C.