Opinion
Index No: 511918/2018
11-23-2020
VICTORIA STENNETT, f/k/a VICTORIA STENNETT-BAILEY, Plaintiff, v. GOLDBERG & COHN, LLP, RICHARD GOLDBERG, ESQ., STEVEN COHN, ESQ., and WALTER ROESCH, IV., ESQ., Defendants.
NYSCEF DOC. NO. 119 At an IAS Term, Part 94 of the Supreme Court of the State of New York, held in and for the County of Kings, at the Courthouse thereof at 360 Adams St., Brooklyn, New York on the 23rd day of November 2020. PRESENT: HON. PAMELA L. FISHER, J.S.C. DECISION/ORDER Recitation, as required by CPLR §2219(a), of the papers considered in the review of this motion:
| Papers Numbered | |
|---|---|
| Notice of Motion/Cross Motion/Order to Show Cause andAffidavits (Affirmations) Annexed | 1-3, 4-6 |
| Opposing Affidavits (Affirmations) | 5-6, 7 |
| Reply Affidavits (Affirmations) | 8 |
Upon the foregoing papers, defendants move in motion sequence 4, for an order, pursuant to CPLR §§ 3211(a)(1) and 3211(a)(7), dismissing plaintiff's amended complaint, on the basis of documentary evidence, and for failure to state a cause of action. Defendants also move, pursuant to CPLR § 3126, to dismiss plaintiff's amended complaint for failure to comply with discovery obligations, or in the alternative, to impose sanctions against plaintiff in the form of an adverse presumption at trial, based upon her failure to respond to interrogatories seeking an explanation of the nature and extent of her alleged damages. Defendants are also seeking sanctions against plaintiff and her counsel, pursuant to 22 NYCRR §§ 130-1.1(a)(2) and (a)(3), for filing a frivolous lawsuit. Plaintiff cross-moves in motion sequence 5, pursuant to 22 NYCRR § 1200.29, to disqualify Elliot Martin, Esq., as counsel for defendants.
Background/Procedural History
On May 25, 2018, plaintiff, a real estate broker, commenced this action against defendants, a law firm and three of its partners, who represented her in a matrimonial action seeking a divorce from her husband (Summons & Complaint, Exhibit A to defendants' motion papers). In her original complaint, plaintiff alleges that defendants breached their contract, and committed legal malpractice, causing her to incur damages (Complaint ¶¶ 36-58). On July 16, 2018, defendants filed a motion to dismiss plaintiff's original complaint, pursuant to CPLR §§ 3211(a)(1) and 3211(a)(7) (NYSCEF #2). On October 10, 2018, plaintiff filed a cross motion for leave to file an amended verified complaint, pursuant to CPLR § 3025 (NYSCEF #14). On June 10, 2019, this court denied defendants' motion to dismiss, and granted plaintiff leave to file an amended verified complaint (June 2019 Order, annexed as Exhibit E to defendants' motion papers). On July 8, 2019, plaintiff filed an amended verified complaint, alleging that defendants breached their contract and committed legal malpractice by failing to order title reports of certain properties that were "provided to plaintiff as part of [her divorce] settlement," that the title reports would have revealed that the properties at issue were "encumbered with lis pendens," and that these encumbrances "decimated the value of the properties that were provided to plaintiff as part of the settlement" (Amended Complaint ¶¶ 43, 44, 45, 49, annexed as Exhibit D to defendants' motion papers). Defendants filed an answer on July 25, 2019, including the affirmative defenses of unclean hands, failure to state a cause of action, statute of limitations, laches, waiver, estoppel, ratification, acquiescence, and lack of personal jurisdiction (Verified Answer with Affirmative Defenses ¶¶ 87-95, annexed as Exhibit E to defendants' motion papers). Defendants served plaintiff with two sets of interrogatories on August 16, 2019 and May 22, 2020, respectively (Defendants' Good Faith Affirmation ¶¶ 5, 7). Plaintiff, in response to defendants' first set of interrogatories, revealed that "[t]he marital property that is the gravamen of plaintiff's claim is 2408 Clarendon Road, Brooklyn, NY" (Response to Defendants' First Set of Interrogatories at 5, annexed as Exhibit O to defendants' motion papers). Plaintiff is claiming that defendants' failure to obtain a title report, which would have revealed the notice of pendency several months earlier, resulted in "protracted litigation," causing the "value of the property [to decrease] tremendously while the debt on the property has accumulated to astronomical heights" (Id.) In response to the second set of interrogatories, plaintiff objects to most of defendants' demands regarding plaintiff's damages, on the grounds that they are "evidentiary in nature and [call] for conclusions of law" (Response to Defendants' Second Set of Interrogatories at 3-6, annexed as Exhibit M to defendants' motion papers).
History of the Underlying Divorce Action/ Properties At Issue
On October 7, 2013, plaintiff retained the law firm of Goldberg & Cohn, LLP to represent her in a divorce action "brought by her husband Cosmos Bailey" (Affidavit of Walter Roesch, Esq. ¶ 5, annexed as Exhibit U to defendants' motion papers; Martin Affirmation in Support ¶ 11). Trial of the divorce action commenced on May 31, 2015, and the court heard testimony from both parties on May 31 and June 1, 2015 (Affidavit of Walter Roesch ¶ 2). On the evening of June 1, 2015, Walter Roesch, Esq., a partner of Goldberg & Cohn sent plaintiff an email advising her to settle (Id.; Exhibit V to defendants' motion papers). In the email, defendant Roesch analyzes several pieces of property, indicating that the Judge would likely order the parties to sell the properties, and the proceeds would be divided equally (Id.). Specifically, as to the properties located at 109 Amersfort Place and 2408 Clarendon Road, Mr. Roesch wrote that the "Judge will likely apportion this debt 50/50, which with the current penalties, would mean that if the bank collects, you walk away with nothing, as you are personally liable on the note" (Id.). On June 2, 2015, plaintiff and her husband entered into a settlement agreement, and plaintiff testified under oath before Judge Genovesi that she understood the agreement, her attorney had answered all of her questions, and that she was "satisfied with the services provided to [her] by [her] attorney" (Martin Affirmation in Support ¶ 11; settlement agreement, annexed as Exhibit R to defendants' motion papers; matrimonial hearing tr. 4, lines 21-25; at 5, lines 22-24, annexed as Exhibit S to defendants' motion papers). At some point after the settlement agreement was approved by the court, plaintiff discovered that there was a lis pendens on the property located at 2408 Clarendon Road, as a result of an action commenced by Mindy Weinberger in August 2014 against Kensington Realty Group Corporation, a corporation owned by the plaintiff. (Stennett Affidavit in Opposition ¶ 7, NYSCEF #97). Plaintiff did not receive process in the Weinberger litigation due to her failure to update the corporation's address (Stennett Affidavit in Support ¶ 3, annexed as Exhibit BB to defendants' motion papers). The action commenced by Weinberger arose out a contract, executed in November 2012, to sell the property located at 2408 Clarendon Road to Sivan 34th Ave Realty LLC that was contingent on plaintiff and her corporation "obtaining approval from [the mortgagee of the property, Emigrant Funding Corporation] to forgo default interest in their payoff" (Martin Affirmation ¶ 21; Letter from Tarik Davis, Esq., annexed as Exhibit Q to defendants' motion papers). At some point prior to August 2014, Sivan 34th Ave Realty LLC had assigned the contract to Mindy Weinberger (Martin Affirmation in Support ¶ 10; Stennett Affidavit in Support ¶ 5).
History of the Clarendon Road Property
In July 2006, Emigrant Funding Corporation loaned Kensington Realty Group Corporation $950,000 secured by a mortgage on the properties located at 2408 Clarendon Road and 109 Amersfort Place, Brooklyn, NY (Mortgage and Security Agreement, annexed as Exhibit AA to defendants' motion papers). In June 2008, plaintiff stopped paying for fire insurance coverage for the Amersfort Place property, and in October 2008, "a fire destroyed the Amersfort property" (Emigrant Funding Corp. v. Kensington Realty Group Corp., No. 15896/2011 [Sup Ct, Kings County June 11, 2014], annexed as Exhibit Y to defendants' motion papers; aff'd 178 A.D.3d 1020, 1021 [2d. Dept. 2019]; annexed as Exhibit Z to defendants' motion papers). Emigrant Funding Corporation, who had "procured forced place insurance for the Amersfort property received the sum of $193,569.52 from its insurer" (Id.). In November 2010, plaintiff stopped paying the mortgage, resulting in a default interest rate of 24% (Id.). On July 14, 2011, Emigrant filed a foreclosure action against Kensington Realty Group Corp., and in 2012, plaintiff filed an order to show cause against Emigrant to "compel [them] to release [their] fire insurance money for repairs," and to "contest imposition of default interest" (Id.; Martin Affirmation in Support ¶ 10). On June 11, 2014, Judge Joseph denied plaintiff's order to show cause, ruling that Emigrant was entitled to procure their own fire insurance coverage, "accelerate payment of the note, and apply the default interest rate of 24% to the unpaid principal balance of the note" (Emigrant Funding Corp., No. 15896/2011, slip op. at 3). Judge Joseph also granted Emigrant Funding Corporation summary judgment in their foreclosure action (Emigrant Funding Corp., 178 A.D.3d at 1021). As a result of Judge Joseph's decision, plaintiff cancelled her contract with Sivan in October 2014, and returned the deposit of $64,000, but the buyer refused to accept the deposit (Martin Affirmation in Support ¶ 21; Letter from Tarik Davis, Esq.). Since she was not served with process, plaintiff defaulted in the Weinberger litigation, but the court vacated her default in September 2016, allowing her to file an answer (Martin Affirmation in Support ¶¶ 10, 22, 24). The Weinberger litigation was settled on July 17, 2019, and the settlement required Kensington Realty to transfer the contract deposit that was held in escrow by its attorney to Weinberger (Stipulation of Settlement, annexed as Exhibit H to plaintiff's motion papers).
Parties' Contentions
Motion Sequence 4: 3211(a) motion to dismiss
In support of their motion to dismiss, defendants maintain that plaintiff has failed to establish that defendants proximately caused any of her damages (Martin Affirmation in Support ¶¶ 4, 10). Defendants contend that ordering title reports on properties that were owned by plaintiff's corporation was not necessary to adequately represent her interests in the matrimonial action, that a title report does not assess value, and that they are not responsible for the decrease in value of the Clarendon Road property, as Ms. Stennett's own actions resulted in the loss of value (Id. at ¶¶ 4, 6, 7-10). Defendants allege that plaintiff's lawsuit should be dismissed pursuant to CPLR § 3211(a)(1), since the transcript of the matrimonial proceeding, in which plaintiff testified under oath that she was satisfied with defendants' representation, "directly contradict[s]" her claim that "her attorneys were unprepared for trial" (Id. at ¶ 13). In support of their claims, defendants attach a transcript from the matrimonial proceeding on June 2, 2015, the settlement agreement, emails documenting the correspondence between their firm and the plaintiff, court decisions relating to the mortgage foreclosure action, and a copy of the mortgage agreement for the Clarendon Road property.
In opposition to defendants' motion to dismiss, plaintiff argues that her complaint states all of the elements "comprising plaintiff's causes of action for legal malpractice and breach of contract," including damages (Polycarpe Affirmation in Opposition ¶ 30). Plaintiff alleges that she discovered that there was a lis pendens on the Clarendon Road property after the settlement agreement had been finalized, when she was negotiating to sell the property to a buyer for $3.5 million, and the buyer ordered a title report that revealed the existence of the lis pendens (Id. at ¶ 34; Stennett Affidavit ¶¶ 7-8, NYSCEF #97). Plaintiff further maintains that she incurred damages, because the buyer refused to sign the contract after the discovery of the lis pendens, resulting in her being unable to "redeem the Emigrant mortgage and end the foreclosure action" (Polycarpe Affirmation ¶ 34). She also contends that she incurred damages as a result of the default interest on the "Emigrant mortgage" continuing to accrue during this time period, and had defendants ordered a title report, she would have become aware of the lis pendens earlier, and the lis pendens would have been cancelled sooner (Id. at ¶¶ 35-36). Plaintiff also states that her allocution in open court on the record that she was satisfied with defendants' representation, does not require the court to dismiss her complaint, when she was unaware of the lis pendens at the time she testified (Id. at ¶¶ 25-28).
In reply, defendants reiterate that plaintiff is bound by her allocution under oath, that they were not negligent for failing to order title reports, since the properties were owned by plaintiff's corporation, and that they are not responsible for any decrease in value of the premises (Martin Reply Affirmation ¶¶ 2, 4, 20-21).
Motion Sequence 4: CPLR 3126 Motion
In support of their motion to dismiss the complaint for failure to comply with discovery demands, or in the alternative, to apply an adverse inference against plaintiff, defendants have submitted an affirmation of good faith, alleging that plaintiff has failed to comply with a discovery order issued by the court on December 11, 2019, and has submitted late responses to defendants' interrogatories (Defendants' Good Faith Affirmation ¶¶ 6-7, 10-11). Defendants also contend that plaintiff's responses to defendants' second set of interrogatories are inadequate, as "plaintiff has failed to quantify the damages alleged and explain how these damages were calculated," evidencing plaintiff's "bad faith" (Id. at ¶ 13). In opposition, plaintiff maintains that she has adequately responded to defendants' discovery demands (Polycarpe Affirmation ¶ 38).
Motion Sequence 4: Sanctions for Filing a Frivolous Lawsuit
In support of their motion for sanctions against plaintiff and her attorney, defendants argue that sanctions are appropriate, since plaintiff testified under oath that she was satisfied with defendants' services, indicating that this malpractice action is without merit (Martin Affirmation in Support ¶¶ 36, 46). Defendants also reiterate that plaintiff cannot establish the proximate causation element required to state a cause of action for legal malpractice (Id. at ¶ 48). In opposition, plaintiff maintains that sanctions are inappropriate, because plaintiff has a valid basis for believing that defendants were negligent in failing to obtain a title report, and that their negligence contributed to a loss of value in the Clarendon Road property (Polycarpe Affirmation ¶¶ 48-49).
Motion Sequence 5
In support of her cross motion to disqualify Elliot Martin, Esq. as counsel for defendants, plaintiff alleges that "Mr. Martin is uniquely knowledgeable about the assets of the marital estate in the underlying matrimonial action, about the value of each asset, and more importantly, about the circumstances that led the defendants to their faulty valuation of the marital estate properties" (Polycarpe Affirmation ¶ 52). Further, plaintiff claims that Mr. Martin, as counsel of the firm, is "a necessary witness and will be called to testify at trial" (Id. at ¶ 50). In opposition, Mr. Martin, Esq. as counsel for the defendants in this matter maintains that he is not an associate attorney or partner of Goldberg & Cohn, that he did not represent plaintiff in the matrimonial action, and that he is unlikely to be called as a witness at trial, as he has no personal knowledge regarding the assets of the marital estate (Affirmation in Opposition to Cross-Motion ¶¶ 4, 6-7).
Law
Motion to Dismiss
Pursuant to CPLR § 3211(a), on a motion to dismiss a complaint, "the court must liberally construe the complaint, accept all facts as alleged in the pleading to be true, accord the plaintiff the benefit of every favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory" (Minovici, v. Belkin BV, 109 A.D.3d 520, 521 [2d. Dept 2013]; Qureshi v. Vital Transp. Inc., 173 A.D.3d 1076, 1077 [2d. Dept. 2019]). Pursuant to CPLR § 3211(a)(1), a motion to dismiss based on documentary evidence may be granted only if "the documentary evidence utterly refutes the plaintiff's factual allegations, conclusively establishing a defense as a matter of law" (Id.). Evidence is documentary if it is "unambiguous and of undisputed authenticity" (Id.).
"[W]here evidentiary material is submitted and considered on a motion to dismiss a complaint pursuant to CPLR § 3211(a)(7), and the motion is not converted into one for summary judgment, the question becomes whether the plaintiff has a cause of action, not whether the plaintiff has stated one" (Minovici, 109 A.D.3d at 521). However, "bare legal conclusions and factual claims which are flatly contradicted by the record are not presumed to be true," and a court may dismiss a complaint if the facts alleged by the plaintiff are "contradicted by the record" (Id.).
Elements of a Legal Malpractice Claim
To prevail on a cause of action for legal malpractice, a plaintiff must establish 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 the duty proximately caused the plaintiff actual and ascertainable damages" (Katsoris v. Bodnar & Milone, 186 A.D.3d 1504, 1505 [2d. Dept. 2020]). "To establish causation in a legal malpractice action, a plaintiff must show that he or she would have prevailed in the underlying action or would not have incurred any damages, but for the lawyer's negligence" (Id.). A plaintiff who settles a lawsuit may sue the attorney who represented him or her in that lawsuit if plaintiff "allege[s] that settlement of the action was effectively compelled by the mistakes of counsel" (Id.). To succeed on a legal malpractice cause of action, a "plaintiff must plead and prove actual, ascertainable damages as a result of an attorney's negligence" (Id. at 1506). "Conclusory allegations of damages or injuries predicated on speculation cannot suffice for a malpractice action, and dismissal is warranted where the allegations in the complaint are merely conclusory or speculative" (Id.).
Elements of Breach of Contract
To prevail on a cause of action for breach of contract, plaintiff must plead four elements: (1) the existence of a contract, (2) the plaintiff's performance pursuant to the contract, (3) the defendant's breach of his or her contractual obligations, and (4) damages resulting from the breach (Dee v. Rakower, 112 A.D.3d 204, 208-09 [2d. Dept. 2013]). New York Courts have dismissed breach of contract causes of action where they were duplicative of legal malpractice causes of action (See Palmieri v. Biggiani, 108 A.D.3d 604, 608 [2d. Dept. 2013]; Tortura v. Sullivan Papain Block McGrath & Cannavo, P.C., 21 A.D.3d 1082, 1083 [2d. Dept. 2005]).
Notice of Pendency
CPLR § 6501 states that a lis pendens or "notice of pendency may be filed in any action in a court of the state or of the United States in which the judgment demanded would affect the title to, or the possession, use or enjoyment of, real property" (CPLR § 6501). A notice of pendency "afford[s] constructive notice from the time of filing so that any person who records a conveyance or encumbrance after that time becomes bound by all of the proceedings taken in the action" (Mallick v. Farfan, 66 A.D.3d 649, 649-50 [2d. Dept. 2009]). The filing of a lis pendens or notice of pendency "does not create an encumbrance" (Schoepp v. State, 69 A.D.2d 917, 917 [3d. Dept. 1979]).
Discovery Sanctions
Pursuant to CPLR § 3126, a party who "refuses to obey an order for disclosure or willfully fails to disclose information which the court finds ought to have been disclosed" may be subject to penalties including dismissal of the action (CPLR § 3126(3)). The court may also issue an order "that the issues to which the information is relevant shall be deemed resolved for purposes of the action in accordance with the claims of the party obtaining the order," or the court may prohibit the party who failed to comply with their discovery obligations from "supporting or opposing designated claims or defenses, from producing in evidence designated things or items of testimony, or from introducing any evidence of the physical, mental, or blood condition sought to be determined, or from using certain witnesses" (CPLR §§ 3126(1), 3126(2)).
Sanctions for Frivolous Conduct
Pursuant to 22 NYCRR § 130-1.1, a court has the power to sanction a party or an attorney for "frivolous conduct" by requiring the attorney or party to reimburse the other party for costs it incurred and "reasonable attorney's fees" (22 NYCRR § 130-1.1(a)). "[C]onduct is frivolous if: (1) it is completely without merit in law and cannot be supported by a reasonable argument for an extension, modification or reversal of existing law; (2) it is undertaken primarily to delay or prolong the resolution of the litigation, or to harass or maliciously injure another; or (3) it asserts material factual statements that are false" (22 NYCRR § 130-1.1(c)). "In determining whether the conduct undertaken was frivolous, the court shall consider, among other issues the circumstances under which the conduct took place, including the time available for investigating the legal or factual basis of the conduct, and whether or not the conduct was continued when its lack of legal or factual basis was apparent, should have been apparent, or was brought to the attention of counsel or the party" (22 NYCRR § 130-1.1(3)).
Disqualification of an Attorney
Pursuant to Rule 3.7(a) of the New York Rules of Professional Conduct (22 NYCRR § 1200.29), an attorney should not represent a client in a matter "in which the [attorney] is likely to be called as a witness on a significant issue of fact unless: (1) the testimony relates solely to an uncontested issue; (2) the testimony relates solely to the nature and value of legal services rendered in the matter; (3) disqualification of the lawyer would work substantial hardship on the client; (4) the testimony will relate solely to a matter of formality, and there is no reason to believe that substantial evidence will be offered in opposition to the testimony; or (5) the testimony is authorized by the tribunal" (NY Rules of Professional Conduct, Rule 3.7(a)). Pursuant to Rule 3.7(b), "[a] lawyer may not act as advocate before a tribunal in a matter if: (1) another lawyer in the lawyer's firm is likely to be called as a witness on a significant issue other than on behalf of the client, and it is apparent that the testimony may be prejudicial to the client; or (2) the lawyer is precluded from doing so by Rule 1.7 or Rule 1.9" (Rule 3.7(b)). Rule 1.9 prohibits a lawyer from representing a client in a matter that is the same or substantially related to his/her representation of a former client, except under certain circumstances. Rule 1.7 prohibits a lawyer from representing a client if the representation would result in a conflict of interest. In determining whether to disqualify an attorney under Rule 3.7 of the Rules of Professional Conduct, a court must consider "whether the subject testimony is necessary, taking into account such factors as the significance of the matter, the availability of other evidence, and the weight of the testimony" (See Brooks v. Lewin, 48 A.D.3d 289, 292 [1st Dept. 2008]; see also Feinstein v. Carl, 2004 Slip Op. 50770(U), at *2 [Sup Ct, Nassau County 2004]). "The party seeking to disqualify an attorney bears the burden of establishing that the attorney will be called as a witness at trial and that the attorney's testimony is necessary" (Id.).
Analysis
Motion Sequence 4: CPLR 3211(a) motion
Plaintiff's complaint must be dismissed, pursuant to CPLR § 3211(a), as plaintiff has failed to state a cause of action for legal malpractice, and for breach of contract. Defendants have moved to dismiss the complaint on two different grounds: (1) that the documentary evidence, including plaintiff's testimony in court on June 2, 2015 that she was satisfied with defendants' representation, "utterly refutes" plaintiff's claims, and (2) for failure to state a cause of action (Qureshi, 173 A.D.3d at 1077; CPLR § 3211(a)(1); CPLR § 3211(a)(7)). The court declines to dismiss plaintiff's cause of action for legal malpractice pursuant to CPLR § 3211(a)(1), on the basis of plaintiff's allocution under oath, because New York State courts have not taken a consistent position on whether an allocution that a client was satisfied with the services of his/her attorney precludes a client from bringing a claim for legal malpractice (See Boone v. Bender, 74 A.D.3d 1111, 1113 [2d. Dept. 2010] (granting defendants' motion for summary judgment on the grounds that the "open-court stipulation of settlement established that the plaintiff was satisfied with the defendants' representation of her"); Harvey v. Greenberg, 2009 NY Slip Op. 32625(U) [Sup Ct, NY County 2009] (granting motion to dismiss); aff'd 82 A.D.3d 683, 683 [1st Dept. 2011]; Katebi v. Fink, 51 A.D.3d 424, 425 [1st Dept. 2008] (granting motion to dismiss); But see Cruciata v. Mainiero, 31 A.D.3d 306, 306 [1st Dept. 2006] (reversing dismissal under CPLR § 3211(a)(1) "[d]espite the detailed on-the-record settlement of plaintiff's matrimonial action," on the grounds that "the former husband's pension and other assets were overlooked in arriving at the stipulation"); Gad v. Sherman, 160 A.D.3d 622, 623 [2d. Dept. 2018] (affirming trial's court's order denying dismissal of complaint pursuant to CPLR § 3211(a)(1) on the grounds that "the documentary evidence submitted by the defendant, consisting of the transcript of the April 2014 court appearance, failed to utterly refute the plaintiff's allegations of malpractice")).
Defendants' motion to dismiss plaintiff's cause of action for legal malpractice, pursuant to CPLR § 3211(a)(7), is granted, as plaintiff has failed to sufficiently plead all of the required elements. In her amended complaint, plaintiff alleges that defendants were negligent in failing to order title reports of certain properties that were distributed to her as part of her divorce settlement, that the title reports would have revealed that certain properties were encumbered with lis pendens, and that as a result of defendants' negligence, plaintiff received "properties under the terms of the settlement agreement that had very little value at the time of the settlement" (Amended Complaint ¶¶ 43, 44, 45, 49). In her discovery responses and in her opposition to this motion, plaintiff is also claiming that defendants are responsible for damages resulting from her default in another lawsuit for specific performance of a contract, on the grounds that had she known about the lis pendens on the Clarendon Road property earlier, the lis pendens would have been cancelled sooner, and she would have been able to sell the Clarendon Road property, allowing her to pay off the mortgage (Response to Defendants' First Set of Interrogatories at 5; Polycarpe Affirmation ¶¶ 34-36). To prevail on a cause of action for legal malpractice, plaintiff is required to establish that the attorney or firm was negligent, that the attorney or firm's negligence proximately cause plaintiff's damages, and that plaintiff has sustained actual damages (Katsoris, 186 A.D.3d at 1505). To establish causation, plaintiff must allege that he/she would not have sustained damages but for the attorney's negligence (Id.). Plaintiff cannot prevail on her cause of action for legal malpractice, as she has not adequately pleaded any of the required elements.
Plaintiff's complaint does not support her contention that defendants were negligent, as most of her factual allegations are contradicted by the record. In her complaint, plaintiff alleges that the failure to order the title report resulted in defendants providing an incorrect analysis regarding the value of the properties at issue (Amended Complaint ¶¶ 37, 43, 44). Further, in her discovery responses, plaintiff specifically refers to the decrease in value of the Clarendon Road property, as a result of the lis pendens that was filed against it in August 2014 (Response to Defendants' First Set of Interrogatories at 5). However, defendants have provided evidence in opposition, including an email from Walter Roesch, Esq. to Ms. Stennett, dated the night before she agreed to the settlement, indicating that defendants correctly assessed the value of that property, and informed plaintiff that "if the bank collects, [she would] walk away with nothing, as [she is] personally liable on the note" (Exhibit V). Moreover, the fact that there was a lis pendens on the property did not affect the value of the property, as a lis pendens "does not create an encumbrance;" it merely puts a purchaser on notice that a lawsuit has been filed that may affect title to the property (Schoepp, 69 A.D.2d at 917). Plaintiff provides no other reason why a title report would have been necessary, given that the property that plaintiff is claiming was "encumbered with a lis pendens" was owned by plaintiff's corporation, and therefore, plaintiff should have been aware of any encumbrance on the property, without the need for a title report. Therefore, plaintiff's claim that a title report would have revealed the value of the property is flatly contradicted by the record, and plaintiff cannot substantiate her claim that defendants were negligent for not ordering title reports.
Taking all of plaintiff's allegations in the complaint as true, plaintiff has failed to sufficiently plead that defendants proximately caused her damages. In order to adequately plead this element, plaintiff was required to establish that but for defendants' negligence, she would have incurred no damages, or that she would have prevailed in the underlying action (Katsoris, 186 A.D.3d at 1505). As stated above, the court does not believe that defendants were negligent in failing to order a title report for the Clarendon Road property, but even if they were, this omission did not proximately cause plaintiff's damages. Plaintiff's allegations that defendants' failure to discover the notice of pendency resulted in her being unable to sell the Clarendon Road property at a profit, culminating in her inability to pay off the mortgage, does not negate the fact that her own actions contributed to her lack of awareness of the notice of pendency. In an affidavit, plaintiff acknowledges that she neglected to update the corporation's address, which is the reason she never received process in the Weinberger litigation (Stennett Affidavit ¶ 3, annexed as Exhibit BB to defendants' motion papers). Plaintiff also overlooks that another attorney handled the negotiation of the contract between her corporation and Sivan 34th Ave Realty, the corporation that assigned the contract to Weinberger, and that this attorney was aware that the corporation did not cash the check for the return of the contract deposit, indicating that litigation might result (Letter from Tarik Davis, Esq., annexed as Exhibit Q to defendants' motion papers; Martin Affirmation in Support ¶¶ 29-30). Defendants also cannot be held liable for plaintiff's damages, since her alleged damages relate to her failure to pay the mortgage on the Clarendon Road property since 2010, resulting in the Bank applying a default interest rate of 24% (Exhibits Y, Z to defendants' motion papers). Plaintiff's cause of action for legal malpractice must be dismissed, since she cannot demonstrate that she would have received a more favorable disposition had she not settled (Katsoris, 186 A.D.3d at 1506).
Plaintiff's claim for legal malpractice should also be dismissed on the grounds that she has failed to sufficiently plead actual damages. Plaintiff's alleged damages regarding a contract that fell through due to the lis pendens on the Clarendon Road property are too speculative to consider, given that the only evidence plaintiff provides to support this claim is an unsigned contract (Exhibit H to plaintiff's motion papers; Katsoris, 186 A.D.3d at 1506). Also, there is no guarantee that the notice of pendency would have been cancelled any earlier if plaintiff had discovered it sooner, as it took plaintiff's attorney over three years to settle the Weinberger litigation (Exhibit L to plaintiff's motion papers; Martin Affirmation in Reply ¶ 2). Therefore, plaintiff's cause of action for legal malpractice should be dismissed pursuant to CPLR § 3211(a)(7) for failure to state a cause of action. Plaintiff's cause of action for breach of contract should also be dismissed, since it is duplicative of plaintiff's legal malpractice claim, as it is based on the same facts (Tortura, 21 A.D.3d at 1083; Palmieri, 108 A.D.3d at 608).
Since the court is granting defendants' motion to dismiss pursuant to CPLR § 3211(a)(7), it is unnecessary for the court to consider defendants' motion to dismiss pursuant to CPLR § 3126. Defendants' motion for sanctions against plaintiff pursuant to CPLR § 3126 is denied as moot. The court declines to sanction plaintiff and her attorney under 22 NYCRR § 130-1.1.
Motion Sequence 5
Plaintiff's motion to disqualify Elliot Martin, Esq. as counsel for defendants pursuant to Rule 3.7 of the New York Rules of Professional Conduct is denied, as plaintiff has not met her burden to establish that Mr. Martin's testimony is necessary (See Brooks, 48 A.D.3d at 292; Feinstein, 2004 Slip Op. 50770(U), at *2). Although plaintiff claims that Mr. Martin has personal knowledge regarding defendants' analysis of the properties at issue in this case, plaintiff fails to provide credible evidence to support this contention (Polycarpe Affirmation ¶ 52). Plaintiff's affidavit does not indicate that she has ever met with Mr. Martin, and Mr. Martin's affirmation in opposition states that he is the principal attorney of his own law firm, despite the fact that he shares office space with Goldberg & Cohn (Martin Affirmation in Opposition ¶ 3). Plaintiff maintains that Mr. Martin is listed on the firm's liability insurance policy, but this is explained by Mr. Martin's acknowledgment that he acts "on an of counsel basis" to the firm (Polycarpe Affirmation ¶ 52; Martin Affirmation in Opposition ¶ 3). Even if the court were to credit plaintiff's statements that Mr. Martin participated in this matter, plaintiff has failed to allege that Mr. Martin's testimony is necessary, since three partners of the firm have been personally sued in this case, and their testimony would reveal the pertinent facts. Therefore, since Mr. Martin is not likely to be called as a witness on a significant issue of fact in this matter, disqualification is not warranted, and plaintiff's motion to disqualify must be dismissed.
Conclusion
Defendants' motion to dismiss the complaint, pursuant to CPLR § 3211(a)(7) is granted. All other relief requested by defendants is denied. Plaintiff's cross motion to disqualify Elliot Martin, Esq. as counsel for the defendants is denied.
This constitutes the decision and order of the Court.
ENTER:
/s/_________
Hon. Pamela L. Fisher
J.S.C.