The opinion of the court was delivered by: Leisure, District Judge.
Most of the facts in this action are in dispute. The Court
will, however, provide a brief background of those facts that
appear to be undisputed. Plaintiff Milton Schonberger
("Schonberger") established an attorney-client relationship in
the mid-1970s with the defendant law firm, now known as Serchuk
& Zelermyer. At that time, Schonberger, apparently an inventor
by trade, had recently developed the idea of, and process for,
a disposable clinical thermometer for hospital use. Defendants
agreed to represent Schonberger in his early contract and
corporate work related to this invention.*fn1 While some of
this work was done without a request for or expectation of a
fee, at some point during the early years of the relationship,
Schonberger agreed to assign a small percentage of his
royalties from the patents resulting from his invention to the
law firm as compensation for work performed.
The instant action arises out of defendants' representation
of Schonberger in litigation resulting from the effort to
produce and market the invention. In 1977, Schonberger licensed
Gambro, A.B., a Swedish manufacturing company, to produce
products under his patent. A year later, Gambro cancelled the
agreement. In 1980, Schonberger entered a new licensing
agreement with Fairleigh S. Dickinson, Jr. ("Dickinson").
Dickinson, who had paid Schonberger $500,000 in advance
royalties, in turn assigned his license to Science Development
Corporation ("SDC"), an entity Dickinson had organized to
produce and market products arising from Schonberger's patent.
Schonberger agreed to work for SDC in order for the company to
benefit from his knowledge and understanding of the technology.
Just before Schonberger entered into the agreement with
Dickinson, Gambro began to manufacture a product which appeared
to be based on Schonberger's technology. Defendants, at the
instruction of Schonberger, filed suit against Gambro. That
suit was apparently settled for $650,000. Schonberger does not
allege any malpractice in relation to the Gambro suit.
In 1982, Schonberger identified a potential customer for
SDC's product. That customer, a Swedish company called Tempro,
S.A., was owned by Jacques Piquerez ("Piquerez"), who was
introduced to Schonberger by a mutual acquaintance. At some
point after Tempro came into contact with SDC, defendant Ivan
Serchuk ("Serchuk") began representing Piquerez and Tempro in
their legal affairs. The parties disagree about the origin and
purpose of this representation. Later in 1982, Schonberger, who
had become president of SDC, resigned that position, as well as
his position on the Board of Directors of the company, because
he felt there was a conflict between his role as a manager and
as a licensor. The presidency of SDC was turned over to Edwin
In 1983, SDC was finally ready to begin production of
products based on Schonberger's patent. The company, however,
needed financing before production could begin. Piquerez,
Schonberger and Serchuk arranged for financing for Tempro
which, in turn, ordered a substantial quantity of goods from
SDC. It took approximately a year before SDC began to ship
goods to Tempro. When it did, Tempro found the goods to be
unsatisfactory. Evidently, Tempro contacted Schonberger
regarding its dissatisfaction with SDC's product. Schonberger
wrote to May and Dickinson in the spring of 1984 complaining
about the lack of quality of the product. The dispute was not
resolved on an amicable basis. In June 1984, Tempro filed suit
against SDC and Dickinson, attacking the quality of SDC's
product. SDC and Dickinson in turn filed a third-party
complaint against Schonberger, alleging that Schonberger, as
the licensor and former president of SDC, was responsible for
SDC's failure to produce a sufficient product. Schonberger
alleging that SDC and Dickinson had breached the licensing
agreement by, in essence, failing to produce an acceptable
product. Schonberger also cancelled his licensing agreement
with Dickinson and SDC. Defendants represented Schonberger in
In March 1985, the Tempro action was settled amongst all the
parties, and the claims and counterclaims arising out of the
third-party complaint were dismissed without prejudice.
Schonberger now alleges that he never approved the settlement
of that action. Shortly after the conclusion of the Tempro
action, Dickinson and SDC initiated arbitration proceedings
against Schonberger due to Schonberger's cancellation of the
licensing agreement. Schonberger again turned to defendants for
representation. Over the next two and a half years, defendants
represented Schonberger in what turned out to be extensive
arbitration proceedings. On October 5, 1987, the arbitrators
ruled in favor of Schonberger, dismissing all of SDC's and
Dickinson's claims. The arbitrators also awarded Schonberger
$750,000, although this was only a small percentage of the
actual damages Schonberger had originally sought.
While plaintiff claims that the relationship between the
parties to the case at bar had deteriorated before the
beginning of the arbitration proceedings, it is clear that
whatever relationship remained was destroyed by the battle over
the compensation of defendants for their work on the
arbitration. The parties disagree about what payment mechanism
was agreed to for the representation. Regardless of what form
it took, the record indicates that Schonberger had great
difficulty making any payments. At least one check to
defendants for $19,000 was returned for insufficient funds, and
Schonberger defaulted on a loan he had received from a bank
represented by defendants. Part of the proceeds from that loan
went to pay defendants for their work on the arbitration
proceedings. The loan was secured by a mortgage on
Schonberger's son's house, and Schonberger's subsequent default
resulted in the imposition of foreclosure proceedings against
his son's house.
Meanwhile the arbitration proceedings continued. Defendants,
on behalf of Schonberger, moved to confirm the arbitrator's
award. That confirmation was rendered by Justice David Saxe of
the New York State Supreme Court, New York County, in January
1988, and judgment was entered in April 1988. SDC and Dickinson
appealed that award to the New York State Supreme Court,
Appellate Division. At this point, Schonberger dismissed
defendants and hired new counsel. Defendants in turn petitioned
to have Justice Saxe determine and enforce a statutory lien
that they had filed against plaintiff's arbitration award. That
action is still pending. Meanwhile, SDC and Dickinson refiled
their motion to dismiss the arbitrator's award, which was
granted in November 1988.
Plaintiff makes a number of malpractice allegations in his
twenty-four count amended complaint. Defendants have moved for
dismissal of, or summary judgment on, most of plaintiff's
claims. Defendants have also moved for a stay of this action,
should their instant motion to dismiss be denied, pending
resolution of the state action on their statutory lien.
Plaintiff has cross-moved for permission to amend his complaint
to add two new causes of action. Finally, both parties have
moved for the imposition of sanctions.
Most of defendants' motion is presented as a motion to
dismiss pursuant to Rule 12(b). A motion to dismiss under
Fed.R.Civ.P. 12 must be denied "unless it appears beyond a
doubt that the plaintiff can prove no set of facts in support
of his claim which would entitle him to relief." Scheuer v.
Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90
(1974), citing Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct.
99, 102, 2 L.Ed.2d 80 (1957); Morales v. New York State Dep't
of Corrections, 842 F.2d 27, 30 (2d Cir. 1988). The Court must
allegations of facts as true, together with such reasonable
inferences as may be drawn in its favor. See Murray v. Milford,
380 F.2d 468, 470 (2d Cir. 1967). See also Scheuer, supra, 416
U.S. at 236, 94 S.Ct. at 1686. Fed.R.Civ.P. 8(a) requires only
a "`short and plain statement of the claim' that will give the
defendant fair notice of what plaintiff's claim is and the
ground upon which it rests." Conley, supra, 355 U.S. at 47, 78
S.Ct. at 103, quoting Fed.R.Civ.P. 8(a)(2), cited in Hishon v.
King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 2232, 81
L.Ed.2d 59 (1984).
"The function of a motion to dismiss `is merely to assess the
legal feasibility of the complaint, not to assay the weight of
the evidence which might be offered in support thereof.'"
Ryder Energy Distribution Corp. v. Merrill Lynch Commodities,
Inc., 748 F.2d 774, 779 (2d Cir. 1984) (citation omitted).
"Dismissal of a complaint for failure to state a claim is a
`drastic step.'" Meyer v. Oppenheimer Management Corp.,
764 F.2d 76, 80 (2d Cir. 1985) (citation omitted).
2) Motion for Summary Judgment
Rule 56(c) provides that summary judgment "shall be rendered
forthwith if the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to
any material fact and that the moving party is entitled to
judgment as a matter of law." "`Summary judgment is appropriate
when, after drawing all reasonable inferences in favor of the
party against whom summary judgment is sought, no reasonable
trier of fact could find in favor of the non-moving party.'"
Horn & Hardart Co. v. Pillsbury Co., 888 F.2d 8, 10 (2d Cir.
1989), quoting Murray v. National Broadcasting Co.,
844 F.2d 988, 992 (2d Cir.), cert. denied, 488 U.S. 955, 109 S.Ct. 391,
102 L.Ed.2d 380 (1988).
The substantive law governing the case will identify those
facts which are material, and "[o]nly disputes over facts that
might affect the outcome of the suit under the governing law
will probably preclude the entry of summary judgment. . . .
While the materiality determination rests on the substantive
law, it is the substantive law's identification of which facts
are crucial and which facts are irrelevant that governs."
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct.
2505, 2510, 91 L.Ed.2d 202 (1986). "[T]he judge's function is
not himself to weigh the evidence and determine the truth of
the matter but to determine whether there does indeed exist a
genuine issue for trial." Id. at 249, 106 S.Ct. at 2511; see
also R.C. Bigelow, Inc. v. Unilever N.V., 867 F.2d 102, 107 (2d
Cir.), cert. denied sub nom. Thomas J. Lipton, Inc. v. R.C.
Bigelow, Inc., ___ U.S. ___, 110 S.Ct. 64, 107 L.Ed.2d 31
(1989). The party seeking summary judgment "always bears the
initial responsibility of informing the district court of the
basis for its motion" and identifying which materials it
believes "demonstrates the absence of a genuine issue of
material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323,
106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986); see also Trebor
Sportswear Co. v. Limited Stores, Inc., 865 F.2d 506, 511 (2d
Cir. 1989). "[T]he burden on the moving party may be discharged
by `showing' — that is, pointing out to the district court —
that there is an absence of evidence to support the nonmoving
party's case." Celotex, supra, 477 U.S. at 325, 106 S.Ct. at
Indeed, once a motion for summary judgment is properly made,
the burden then shifts to the nonmoving party, which "must set
forth facts showing that there is a genuine issue for trial."
Anderson, supra, 477 U.S. at 250, 106 S.Ct. at 2511. The
nonmoving party "must do more than simply show that there is
some metaphysical doubt as to the material facts." Matsushita
Elec. Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 586,
106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986) (citations
B) Statutes of Limitation
Count 10 of the amended complaint avers that defendants
intentionally interfered with the contractual relations between
Schonberger and Dickinson. There is some disagreement among the
courts as to the appropriate statute of limitation for such a
cause of action. At least one judge in this Court has applied
a one-year limitation period. Rio v. Presbyterian Hospital of
New York, 561 F. Supp. 325, 328 (S.D.N.Y. 1983). More recently,
however, the Second Department has found that N.Y.Civ.Prac.L. &
R. ("CPLR") 214(4) applies to such an action, and thus the
limitation period is three years. Kartiganer Associates, P.C.
v. New Windsor, 108 A.D.2d 898, 899, 485 N.Y.S.2d 782, 784 (2d
Dep't), appeal dismissed, 65 N.Y.2d 925 (1985). Even applying
the three-year limitation period, Count 10 fails. A cause of
action for intentional interference with contract arises ...