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June 27, 1994



The opinion of the court was delivered by: PETER K. LEISURE

LEISURE, District Judge:

 This is an action for legal malpractice, with jurisdiction based on diversity of citizenship. This case was originally filed on April 29, 1991, by plaintiffs, Chrisal Investments Ltd. and Georg H.G. Heine (collectively "Heine"), against defendants: Alvin Ashley ("Ashley"); Colton, Hartnick, Yamin & Sheresky ("Colton Hartnick"); and Newman, Tannenbaum, Helpern, Syracuse & Hirschtritt ("Newman Tannenbaum"). On September 24, 1991, defendant Ashley pleaded guilty to five counts of grand larceny in the Supreme Court of the State of New York, New York County ("state court"). On February 6, 1992, Ashley confessed judgment in favor of Heine in the amount of $ 1,539,345. See Affidavit of Confession of Judgment, sworn to on February 6, 1992. On February 20, 1992, judgment was entered against Ashley, see Judgment against Alvin Ashley, dated February 20, 1992, and filed on the same date in state court.

 Plaintiff's Second Amended Complaint ("Complaint") which was filed on September 23, 1992, alleged 13 causes of action against the remaining defendants. Only the thirteenth cause of action named defendants Newman Tannenbaum. On December 28, 1993, a stipulation of discontinuance was entered into by the parties, and "So Ordered" by this Court, discontinuing the action as against defendants Colton Hartnick, thus leaving Newman Tannenbaum as the only remaining defendants, with only one cause of action, that being the thirteenth, asserted against them.

 Now, Defendants Newman Tannenbaum move this Court for an order, pursuant to Fed. R. Civ. P. 12(b)(6), dismissing the remaining cause of action. For the reasons, set forth below, the motion is hereby granted and the action is dismissed.


 For the purposes of this motion to dismiss, the factual allegations in the Complaint are assumed to be true. A Rule 12(b)(6) motion, requires a court to construe any well-pleaded factual allegations in the complaint in favor of the plaintiff. Gagliardi v. Village of Pawling, 18 F.3d 188, 191 (2d Cir. 1994); See Allen v. Westpoint-Pepperell, Inc., 945 F.2d 40, 44 (2d Cir. 1991). However, the Court need not defer to legal conclusions asserted in the Complaint. See United States v. Bonanno Organized Crime Family, 879 F.2d 20, 27 (2d Cir. 1989) ("the district court was constrained to accept the complaint's allegations as true but only to the extent that they were factual"); McCoy v. Goldberg, 748 F. Supp. 146, 153 (S.D.N.Y. 1990) ("while the court [must] accept as true the allegations of the complaint . . . such deference must only be paid to factual allegations and not to legal conclusions") (citing O'Brien v. National Property Analysts Partners, 719 F. Supp. 222, 229 (S.D.N.Y. 1989) (Leisure, J.)).

 A more complete discussion of the facts was previously set forth by this Court in Heine v. Colton, Hartnick, Yamin & Sheresky, 786 F. Supp. 360 (S.D.N.Y. 1992). Accordingly, the facts will not be repeated at length herein, other than those necessary for discussion of the instant motion.

 This action has its roots in the activities of Alvin Ashley, a former partner in the Colton Hartnick law firm. Between 1986 and 1990, Ashley allegedly induced Heine to make payments to him aggregating approximately $ 2,322,309.20. These payments were purportedly for investments in real estate and fast food ventures. In April 1991, Heine commenced the instant action, seeking recovery for over $ 1.5 million in losses allegedly suffered through Ashley's fraudulent deals, including alleged improprieties in the purchase and sale of a condominium in the Cityspire Building, located at 150 West 56th Street, New York, New York ("Cityspire condominium"). The sole remaining cause of action is brought against Newman Tannenbaum for their role in the sale of the Cityspire condominium.

 I. The Cityspire Real Estate Transaction

 In December 1988, Heine engaged Colton Hartnick to represent him in the purchase of the Cityspire condominium, the closing of which was held in February 1989. At the beginning of 1990, Heine decided to sell the Cityspire condominium, and turned to Ashley, a partner at Colton Hartnick, for assistance. Complaint at P 139. On March 2, 1990, Ashley informed Heine that a purchaser had been located. On or about March 19, 1990, Heine executed a power of attorney, giving Ashley the power to "take all steps" necessary to execute the sale of the condominium. Id. at P 139, 148-149. Pursuant to this power of attorney, Ashley retained Newman Tannenbaum to represent Heine and to handle the closing. Id. at 155-156. At the closing, Ashley served as Heine's attorney-in-fact, and Newman Tannenbaum acted as Heine's attorney in connection with the sale of the condominium. Id. at P 173. *fn1" Id. The closing on the sale took place on July 12, 1990. After expenses, the proceeds of the sale were $ 181,248.89. In accordance with the specific instructions given to Newman Tannenbaum by Ashley, id. at P 254, the funds were disbursed in five checks, one check payable to Heine in the amount of $ 9,702.62, and four checks payable to Ashley for the remainder of the proceeds. Id. at P 173. Thereafter, Ashley misappropriated the proceeds of the sale, including the check issued to Heine, and failed to turn over these funds to Heine.

 The cause of action alleged against Newman Tannenbaum is based on plaintiffs' assertion that despite Heine's execution of the power of attorney, Newman Tannenbaum breached their duty of care and thus committed malpractice by complying with Ashley's instructions and by permitting the checks to be drawn payable to and delivered to Ashley without first communicating with Heine, and by not determining whether Heine received the proceeds or a closing binder from the sale. Id. at 253-55. Additionally, the complaint alleges that because a partner at Newman Tannenbaum was Ashley's brother-in-law, a special duty was owed to Heine. Id.

 II. Prior Opinion in this Action on a Motion to Dismiss Pursuant to Federal Rule 12(b)(6)

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