Opinion
INDEX NO. 154224/2018
02-28-2020
RICKY ZEGELSTEIN, CUSTOM ANESTHESIA SERVICES PC, INNOVATIVE ANESTHESIA SOLUTIONS PC Plaintiff, v. THE ROTH LAW FIRM PLLC, RICHARD ROTH, Defendant.
NYSCEF DOC. NO. 49 PRESENT: HON. W. FRANC PERRY Justice MOTION DATE 11/01/2018 MOTION SEQ. NO. 001 002
DECISION + ORDER ON MOTION
The following e-filed documents, listed by NYSCEF document number (Motion 001) 4, 5, 6, 7, 8, 9, 10, 11, 12, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 41, 42, 43, 44, 45, 46, 47 were read on this motion to/for DISMISS. The following e-filed documents, listed by NYSCEF document number (Motion 002) 13, 14, 15, 16, 17, 35, 36, 37, 38, 39, 40 were read on this motion to/for ATTORNEY.
In this action for legal malpractice, defendants The Roth Firm, PLLC (Roth Firm) and Richard A. Roth, Esq. (Roth) (collectively defendants) move, pursuant to CPLR 3211 (a) (7), to dismiss plaintiffs' complaint on the ground that it is frivolous (motion sequence no. 001). Plaintiffs Ricky Zegelstein, M.D. (Zegelstein), Custom Anesthesia Services, P.C. and Innovative Anesthesia Solutions, P.C. oppose the motion. In addition, plaintiffs' former counsel in this action, moves for an order granting him a charging lien pursuant to Judiciary Law § 475 (motion sequence no. 002). The motions are consolidated for disposition.
In the same order to show cause, Bluestone also moved to withdraw as counsel for plaintiffs herein. However, the motion to withdraw was rendered moot because in August 2018, Bluestone, Ricky Zegelstein (Zegelstein), and her new attorney, Tamara Harris Esq. (Harris), signed a consent to change attorney from Bluestone to Harris.
Background
The original complaint in an underlying action alleged that plaintiff Zegelstein is an anesthesiologist and owner of plaintiffs Custom Anesthesia Services, PC and Innovative Anesthesia Solutions, P.C. The defendants in that action are alleged to be doctors with practices in Manhattan, Haroon Chaudry, M.D. (Chaudry), Michael J. Faust (Faust), M.D., Jed Kaminetsky, M.D.(Kaminetsky), Michael P. Krumholz, M.D. (Krumholz) and Alan Raymond M.D. (Raymond), who entered, beginning in 2002, into separate agreements with Zegelstein for her to provide in-office anesthesia services to their patients, as well as to VCare LLC. The agreements "provided for Zegelstein's billing health insurance companies (the 'insurers') and/or patients (if uninsured or for balances owed after insurance payments were made) separately from the defendant physicians. Billing for services were allegedly rendered to the patients from June 2007 through 2011" (Zegelstein v Faust, Slip Op 31257(U), *2 [Sup Ct, NY County 2017]). Zegelstein alleged that insurer/patient funds intended as payment for her services were deposited into accounts of the defendant physicians and converted by them. She alleged that she did not begin to learn of the theft until mid-2012.
The complaint in that action alleges, for example, that defendant Chaudry had, without plaintiffs' permission or knowledge, identified himself to some or all the insurers as being affiliated with one or more of the plaintiffs. He was allegedly able to redirect payments to himself and had access to payments made to plaintiffs. The complaint alleges that as early as 2002, the insurers issued payments rightfully belonging to plaintiffs to others, including the patients, to the practices and to Chaudry. That complaint contained eight causes of action, including fraud, breach of contract, conversion, negligence in billing practices, and moneys had and received.
Plaintiffs commenced that action by filing a summons with notice on April 17, 2014. On or about August 8, 2014, plaintiffs retained defendants to take over the representation of the case. At that time, when Roth provided a substitution of counsel, no summons or summons with notice had yet been served upon the defendants in that action. On August 13, 2014, Roth filed a verified complaint, and served that complaint upon the defendants in that action, but did not serve the summons or summons with notice upon the defendants. Between August 13, 2014 and October 17, 2014, Roth was advised by counsel for the defendants in that action that they were never served with a summons. Yet, Roth did not serve the summons.
During October 2014, defendants filed multiple motions to dismiss. On November 26, 2014, Roth, plaintiffs' counsel at the time, cross-moved to extend the time to file the verified complaint. On April 25, 2015, Justice Singh rendered a decision dismissing the complaint. In that decision, the court found that it lacked personal jurisdiction over the defendants due to "the failure to serve a summons with the complaint," and therefore did not consider plaintiffs' motion to extend the time to file the complaint. Plaintiffs allege in their complaint herein that at this point in the underlying litigation that "even though the claim was doomed by the lack of service of a summons, Defendants continued to litigate the action, charge fees and fail to remedy the situation" (complaint, ¶ 83). This, however, is contradicted by the testimony in her own affidavit in support of her opposition to defendants' motion to dismiss, in which Zegelstein avers that she "informed Roth [she] wanted to appeal the decision and he misadvised [her] that [she] should refrain from appealing the decision, because an appeal would have no merit" (Zegelstein aff, ¶ 38).
An appeal was taken from that decision to the Appellate Division, First Department. On August 14, 2015, a new summons and verified complaint was served upon Faust under the same index number, 651198/2014.
On or about the same day, August 14, 2015, a new summons and complaint was filed against multiple defendants, including Faust, Chaudhry, Kaminetsky, Krumholz, Raymond, and additionally included Aetna, Inc., and Cigna Healthcare Inc. and other insurance companies, under index number 653683/2015 in Supreme Court, New York County. On November 19, 2015, a consent to change plaintiffs' attorney was signed and filed changing representation from Roth, defendant herein, to Chris Cardillo, Esq. On April 26, 2016, the complaint filed under index number 653683/2015 was removed to the United States District Court, Southern District of New York and on October 18, 2017, District Judge Kathryn Forrest dismissed all claims in the removed action and granted defendants' motions to dismiss. The court determined that the complaint failed to state a cause of action.
On January 13, 2017, the Appellate Division, First Department, unanimously modified the decision of Justice Singh and remanded the case for consideration of plaintiffs' cross motion to extend the time to serve the verified complaint. On June 9, 2017, Justice Singh rendered a Decision and Order on plaintiffs' requests to restore the matter to the calendar and to be permitted an extension of time to serve the summons upon good cause shown and for leave to amend the complaint pursuant to CPLR 3025. However, plaintiffs argue herein, that the defendants failed to annex that amended complaint to their motion seeking leave, and, therefore, the court denied this motion. That portion of the proposed amended complaint is nearly identical to the complaint in the action that was pending before District Judge Katherine B. Forrest. They both contain the same named defendants. The proposed amended complaint contained causes of action for: an accounting, fraud, unjust enrichment, conversion, identity theft, negligence, breach of the covenant of good faith and fair dealing, breach of contract, and tortious interference with business relations. The complaint filed in the District Court action contains the same causes of action, except for the accounting cause of action.
In the June 9, 2017 decision, Justice Singh found that Roth displayed a lack of diligence, and held that there was no "good cause" shown for the extension. The court noted that it was only after three of the defendants filed motions to dismiss that the plaintiffs finally acted to seek an extension to serve the summons. The court determined that "it would not be in the interests of justice to grant the extension because the underlying statutes of limitations for the claims against the practices and the other defendants had already expired on the date of the complaint" (complaint, ¶ 61). The court determined that some of the claims were time-barred and others were partially time-barred. The court then addressed the merits of the claims therein. Specifically, the court addressed the breach of contract claim and found that the allegations therein were akin to a cause of action for tortious interference, which had not been plead. The court concluded that even if such a claim had been plead it would be time-barred.
In the decision, the court addressed the allegations of injury as vague and found that although plaintiffs alleged that the five defendant physicians diverted funds from insurance companies and patients over several years, the complaint did not include the names of any patients, the precise dates when services were rendered by plaintiffs, or exact billing dates. Finally, the court found that the delay in waiting two years to commence this action in 2014 had resulted in prejudice. In a January 21, 2020 decision, the First Department affirmed this decision of Justice Singh.
In the decision dismissing the action, District Judge Forrest described the action as:
"Plaintiffs' core assertion is that the defendants—who include a diverse group of physicians, the professional practices with which those physicians are associated, a billing company, and numerous insurance companies—engaged in a long-term and sprawling false billing scheme. In this regard, plaintiffs allege that the defendant physicians and their associated processional entities submitted numerous false claims to the defendant insurance companies for services plaintiffs had already provided; when plaintiffs notified the insurance companies of the falsity of these claims, they were apparently ignored. According to plaintiffs, the scheme was designed to enrich the defendant physicians and their professional entities and to punish plaintiffs for being out-of-network. Plaintiffs further allege that this false billing scheme interfered with patient relationships and deprived plaintiffs of payments to which they were entitled"(Zegelstein v Chaudry, 2017 WL 4737263, *1 [SD NY, October 18, 2017 No. 16-CV-3090 (KBF)]).
In this action, plaintiffs allege that but for Roth's "egregious lack of diligence", plaintiffs' case would have survived dismissal and had a favorable outcome. Plaintiffs list several failures by Roth, including his failure to serve the summons in the state case within the 120 days as mandated by the CPLR, and his failure to attach the proposed amended complaint to his cross motion to amend the complaint, resulting in the denial of that motion. Plaintiffs allege three causes of action: malpractice, breach of contract and breach of fiduciary duty.
Defendants move to dismiss on the ground that plaintiffs cannot maintain a cause of action for malpractice in light of the decisions issued by Justice Singh and District Judge Forrest dismissing the underlying actions. Further, defendants argue that plaintiffs' causes of action for breach of contract and breach of fiduciary duty are duplicative of plaintiffs' malpractice claim and, therefore, should be dismissed.
Discussion
"A plaintiff's burden of proof in a legal malpractice action is a heavy one'.' (Lindenman v. Kreitzer, 7 AD3d 30, 34 [1st Dept 2004]). In order to recover for professional malpractice against an attorney, a client must establish three elements: "(1) the negligence of the attorney; (2) that the negligence was the proximate cause of the loss sustained; and (3) proof of actual damages" (Kaminsky v Herrick, Feinstein LLP, 59 AD3d 1, 9 [1st Dept 2008]). "The cause of action requires the plaintiff to establish that counsel 'failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession' and to meet the exacting standard that 'but for' the attorney's negligence the outcome of the matter would have been substantially different" (id. [internal citations omitted]).
It is "[o]nly after the plaintiff establishes that he [or she] would have recovered a favorable judgment in the underlying action can he [or she] proceed with proof that the attorney engaged to represent him [or her] in the underlying action was negligent in handling that action and that the attorney's negligence was the proximate cause of the plaintiff's loss . . ." (Lindeman, 7 AD3d at 34). "To establish causation 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" (Rudolf v Shayne, Dachs, Stanisci Corker & Sauer, 8 NY3d 438, 442 [2007]).
The court finds that plaintiffs here are unable to meet their burden to prove that "but for" the alleged negligence of defendant, they would have prevailed in the underlying matter. Plaintiff alleges that defendant's failure to serve the summons timely, and consequent failure to obtain jurisdiction over the defendants in the underlying action, or to commence a new action, doomed her claim. However, the decisions of both Justice Singh and District Judge Forrest undermine these allegations.
The First Department affirmed Justice Singh's decision dismissing plaintiffs' underlying lawsuit:
"In addition to plaintiffs' extreme lack of diligence, the statute of limitations on the majority of plaintiffs' claims appears to have expired prior to the initiation of this action, although it is difficult to say with certainty due to the lack of specificity in the complaint.
This lack of specificity also weighs against allowing an extension, as does the prejudice suffered by defendants, who were unable to timely investigate plaintiffs' claims"(Zegelstein v Faust, ___AD3d___, 2020 NY Slip Op 00390, at *1-*2 [1st Dept 2020] [internal citations omitted]).
Further, employing the doctrine of collateral estoppel, this court finds that these two previous decisions bar the claims in this malpractice suit. Collateral estoppel "precludes a party from relitigating in a subsequent action or proceeding an issue clearly raised in a prior action or proceeding and decided against that party or those in privity, whether or not the tribunals or causes of action are the same" (Ryan v New York Telephone Co., 62 NY2d 494, 500 [1984]. "Collateral estoppel . . . is but a component of the broader doctrine of res judicata which holds that, as to the parties in a litigation and those in privity with them, a judgment on the merits by a court of competent jurisdiction is conclusive of the issues of fact and questions of law necessarily decided therein in any subsequent action (Gramatan Home Invs. Corp. v Lopez, 46 NY2d 481, 485 [1979]).
In her Opinion and Order, District Judge Katherine B. Forrest sets forth a detailed chronology of plaintiffs' claims as against the numerous defendants. The court included plaintiffs' allegations of Zegelstein's communications with the defendants therein and defendants' wrongful conduct as it was likewise set forth in the amended complaint in the action before Justice Singh, for example:
"With regard to defendant Physicians, plaintiffs allege as follows: plaintiff provided services to Krumholz's patients under a contractual arrangement for an eight-month period in 2002. Plaintiffs assert that starting in 2012, they began to receive correspondence from UHCNY and Aetna indicating that 'Krumholz was attached to [their] NPI and/or [EIN]." They received documents indicating that this continued to be the case in 2013 and 2014. After receiving documents from UHCNY appearing to indicate the usage of their NPI and EIN, plaintiffs sought any amounts Krumholz had received that had been diverted to him. Plaintiffs allege that in 2012 and 2013, they
learned that Krumholz had billed for procedures that plaintiffs had performed in 2004 and 2005"(Zegelstein v Chaudry, 2017 WL 4737263 at *2 [internal citations omitted]).
These same allegations are set forth in the proposed amended complaint in the action that was pending before Justice Singh. District Judge Forrest dismissed all of plaintiff's claims on their merits. She wrote:
"The allegations in the complaint do not plausibly support any claim—and certainly no claim that is timely.(id. at *5).
Instead, the allegations fail to tell a coherent story. Rather, they appear to suggest a level of paranoia about defendants' action that is concerning for a number of reasons. The complaint is long and tortured—stringing together unrelated Physicians and unrelated Insurers; the only common factor is plaintiffs' view of a connection between them. There is no allegation suggesting one exists. Thus, based upon the group pleading alone, and the joinder of all parties into a single action alone, this case would and must be dismissed. But there are additional reasons. As pertinent here, it is clear that the allegations are not supportive of a live claim under any of the legal theories asserted. At best, they amount to no more than old billing issues plaintiff have had with different Physicians and their practices"
In this action, plaintiffs argue in opposition to defendants' motion that Roth was the proximate cause of their case being dismissed, and he was the cause of plaintiffs "suffering a huge financial lost [sic] related to her having to hire new counsel to fix all the mistakes Roth committed (and billed for)" (plaintiffs' memorandum of law in opposition at 30). Because of Roth, plaintiffs argue, they have had to file a second appeal with new counsel, all because of defendants': (1) failure to follow "the simplest" procedural rules regarding service of the summons; (2) failure to annex a proposed amended complaint to his cross motion for leave to amend the complaint; and (3) drafting of the complaint that failed to plead the injury with specificity and failed to plead the facts with sufficiency and failed to plead proper causes of action" (id.).
These allegations are undermined by the decisions of Justice Singh and District Judge Forrest. Although Justice Singh notes that the timeline of events in that lawsuit, "demonstrates an egregious lack of diligence by the plaintiffs," in his decision, he finds against extending the time to serve the late summons on the defendants as the plaintiffs' claims are barred by the applicable statute of limitations, and those that are not, lack merit or suffer from being vague. Likewise, in her decision, District Judge Forrest dismisses plaintiffs' suit on the grounds that the claims lack merit and are not timely.
In opposition, plaintiffs argue that Roth committed malpractice by failing to include an allegation related to a 2013 statement of account for patient "FW," and instead he focused the pleadings on years outside the statute of limitations. Specifically, plaintiffs argue that the original complaint in the underlying action was "only devoid of merit because Roth omitted all pertinent facts linking defendant doctors' diversion of funds to 2010, 2012, and 2013 and ignored the evidence plaintiff gave him when he was first retained" (plaintiffs' memorandum in opposition at 25). However, in her decision, District Judge Forrest references that instance in February 2013 in which plaintiffs "learned that 'Patient FW' had received a check" from an "insurance provider for services provided by plaintiffs" (Zegelstein, 2017 WL 4737263 at *3). Furthermore, Judge Forrest's decision further references letters and documents from 2010 and 2012 that plaintiffs alleged were the basis for their claims.
Thus, as these claims were considered by a court of competent jurisdiction and determined to be insufficient as a matter of law, plaintiffs are unable to establish the "but for" requirement of a malpractice claim. Based upon these decisions, plaintiffs are no longer able to make a prevailing argument that "but for these departures from good practice, Plaintiffs would have been able to litigate the claims, obtain recovery for the claim and obtain compensation for the claims" (complaint, ¶ 87). The court, therefore, grants defendants' motion to dismiss plaintiffs' claim for malpractice.
Additionally, plaintiffs' breach of contract claim, and breach of fiduciary duty claims are dismissed as duplicative of her claim for malpractice. In support of the breach of contract claim, plaintiffs allege that "Plaintiffs and Defendants entered into a contract in which Defendants agreed to represent Plaintiffs according to the standards of good and adequate representation by an attorney, to bill appropriately for these services and Plaintiffs agree to pay legal fees" (complaint, ¶ 93). They paid fees to defendants, but defendants "breached the contract by the nature of improper handling of the cases and files . . ." (complaint, ¶ 94). Further, plaintiffs allege in support of their breach of contract claim that "[p]laintiffs were damaged by Defendants' fees, in view of the negligence and malpractice which attended the fees billed by Defendants" (id. ¶ 95).
As in Boslow Family Ltd. Partnership v Kaplan & Kaplan, PLLC, 52 AD3d 417 [1st Dept 2008], where "plaintiffs' claim, while cast in contract, is essentially that defendants failed to perform services in a professional, nonnegligent manner" (id.), plaintiffs' breach of contract claim is duplicative of the malpractice claim. Plaintiffs have not identified any particular provision of a written retainer agreement in which defendants agreed to provide a certain result above and beyond "what they might be expected to accomplish using due care" (id.).
Because the breach of contract claim alleges essentially a malpractice claim, and does not address any particular provision of the agreement between plaintiffs and defendants that defendants allegedly breached, the court dismisses this cause of action as duplicative of the malpractice cause of action.
Likewise, a breach of fiduciary duty cause of action will be dismissed where the claim is simply redundant of a malpractice claim (See Nevelson v Carro, Spanbock, Kaster & Cuiffo, 290 AD2d 399, 400 [1st Dept 2002] ["[w]e modify solely to dismiss the redundant claims for breach of contract and breach of fiduciary duty, which are predicated on the same allegations and seek relief identical to that sought in the malpractice cause of action"]). In support of the cause of action for breach of fiduciary duty, plaintiffs essentially allege a malpractice claim. The court dismisses this cause of action as duplicative.
Motion Sequence Number 002
On November 13, 2017, Zegelstein entered into a retainer agreement with Bluestone for this malpractice action. According to the agreement, Zegelstein paid Blustone a $50,000 retainer fee up front with a 30 percent contingency fee for any recovery. Bluestone filed a complaint in this action, alleging malpractice, breach of contract and breach of fiduciary duty against the defendants, The Roth Law Firm, PLLC and Richard A. Roth, Esq. According to Zegelstein's opposition, Bluestone did no further work on this matter.
Under Judiciary Law § 475,
"From the commencement of an action, special or other proceeding, in any court or before any state . . . or the service of an answer . . . the attorney who appears for a party has a lien upon his or her client's cause of action, claim or counterclaim which attaches to a verdict, report, determination, decision, award, settlement, judgment or final order in his or her client's favor. . ."(Judiciary Law § 475).
Because the court has granted defendants' motion to dismiss, thereby dismissing all causes of action on behalf of plaintiff, there is not a decision or award in Zegelstein's favor. Consequently, there are no grounds for any charging lien. Accordingly, Bluestone's motion is denied.
CONCLUSION
In accordance with the foregoing, it is
ORDERED that motion sequence number 001 filed by defendants The Roth Law Firm, PLLC and Richard A. Roth, Esq. to dismiss the complaint, pursuant to CPLR 3211 (a) (7), is granted and the complaint is dismissed in its entirety as against defendants, with costs and disbursements to said defendants as taxed by the Clerk of the Court, and the Clerk is directed to enter judgment accordingly in favor of said defendants; and it is further
ORDERED that motion sequence number 002 is denied in light of the court's decision dismissing the complaint.
Any requested relief not expressly addressed by the court has nonetheless been considered and is hereby denied and this constitutes the decisions and order of the court. 2/28/2020
DATE
/s/ _________
W. FRANC PERRY, J.S.C.