Washington had full power and authority to act for the Partnership, and that the sale was a binding obligation on the Partnership. See McElroy Aff. Dated Oct. 17, 1996 Ex. E. It is not alleged that Glimcher had any "superior knowledge" which Washington did not possess--indeed, plaintiffs' case is based on the assertion that Washington had full knowledge of the terms of the sale but did not disclose such to Ginor.
Second, even if we were to assume that Ginor or his estate was a party to the transaction, there is no evidence that Glimcher had knowledge of the facts which allegedly were not disclosed to Ginor, and no evidence that Glimcher was aware of Washington's alleged failure to keep Ginor informed. Plaintiffs' principal evidence is the May 11 letter of intent. For the reasons discussed above, that letter provides no basis to infer that Glimcher, or anyone else, was aware of any failure on Washington's part to give information to Ginor. Plaintiffs' other evidence is mere speculation. Plaintiffs point out that Glimcher utilized a team of accountants to conduct a financial review of the Properties, and state without foundation that such a review must have revealed that the sale was not advantageous to the limited partner. Plaintiffs also assert that Glimcher had engaged in prior transactions with Concord in the 1970's or early 1980's, and that this somehow shows that Glimcher was aware of improper conduct by Washington and Concord in connection with the sale of the Properties. Such speculation is insufficient to create a material issue of fact.
By contrast, the testimony of David Glimcher, Robert Mandor, and Ginor's associate, Eldad Ben-Yosef, reveal that the sale negotiations included no reference to Ginor, that Glimcher had no knowledge of Ginor's attempts to buy out or remove Washington, that Glimcher had no knowledge that Ginor was unaware of the terms of the sale, that Glimcher never had any communications with Ginor or his representatives during the negotiations, that Glimcher had no indication that the sale may have been detrimental to any limited partner, and that Glimcher believed the negotiations to be a fair, arm's-length transaction in which "they [the Partnership] tried to get as much as they could for the properties and we [Glimcher] tried to pay as little as we could." See Glimcher Dep. at 119-20, 125, 139; R. Mandor Dep. at 240, 242; Ben-Yosef Dep. Dated Oct. 20, 1995 at 110-15.
Glimcher's motion for summary judgment on the fraud claims is therefore granted.
Landsberg asserts that he had no interest in or position with Washington, Concord, Plaza Inc., or the Partnership from 1992 through the closing of the sale, and thus was not in a fiduciary relationship with Ginor at the time of the events in question and was not in a position to learn any facts about the sale or its surrounding circumstances. We agree.
At the time of the Partnership's formation in 1983, Landsberg was the general partner, as well as a shareholder and vice-president of Concord. Landsberg Dep. Dated Aug. 2, 1996 at 10, 29; Am. Compl. P 3. Landsberg testified that he relinquished his shares in Concord, and ceased his employment there, in 1988. Landsberg Dep. at 39, 44, 58-59. Under the November, 1991 Rabin settlement, Landsberg was to be replaced by Washington as general partner, effective December 31, 1991. Id. at 6; Am. Compl. PP 3-4, 31a. Hence, Landsberg had no business ties to Concord, Washington, or the Partnership from 1992 to 1994, and thus could not have owed any fiduciary obligation to Ginor at the time of the negotiation and closing of the sale of the Properties.
Plaintiffs nevertheless assert that Landsberg remained in the position of a fiduciary after 1991, but plaintiffs present no evidence to support this. Plaintiffs present a phone message slip apparently generated by a Concord employee in response to a call by Adam Cohen on January 28, 1994, which has the names "Bobby" & "Dennis" written at the top. See Cohen Affirm. Dated Nov. 6, 1996 Ex. 3. Plaintiffs argue that this indicates that Landsberg retained some ties to Concord in 1994. Plaintiffs also present a document dated June 13, 1993 entitled "CONCORD ASSETS GROUP, INC. OWNERSHIP SUMMARY CHECKLIST," which lists Landsberg and Washington as general partners.
See id. Ex. 2. Plaintiffs also cite Landsberg's testimony that Leonard Mandor had told him about the Glimcher sale some time in 1994. See Landsberg Dep. at 103.
However, such evidence does not create a genuine issue as to whether Landsberg owed any fiduciary obligations to Ginor during the time period at issue in this litigation. The Partnership's certificate was amended in April, 1992 to state that Landsberg had withdrawn as general partner effective January 1, 1992, as the Rabin settlement had dictated. See Wolff Aff. Dated Oct. 1, 1996 Ex. E. Indeed, plaintiffs' complaint concedes that Landsberg ceased to act as general partner in late 1991. See Am. Compl. PP 3-4, 31a. Plaintiffs' evidence raises an inference of nothing more than continuing social ties between Landsberg and employees of Concord after 1991. Landsberg testified that he continued to visit Concord's offices "on occasion . . . just for social purposes," and that his conversation with Leonard Mandor about the sale was "just talking one day." Landsberg Dep. at 92, 103. In short, it is clear that Landsberg occupied no position during 1992 to 1994 which would have entailed any duties to Ginor.
Even if we were to assume that Landsberg owed a fiduciary duty to Ginor after 1991, there is insufficient evidence to support a finding that Landsberg had any knowledge of the terms of the sale, or knowledge of the alleged fact that the sale was detrimental to Ginor, or knowledge of the alleged fact that Washington did not keep Ginor fully informed. Plaintiffs' sole evidence is Landsberg's testimony that Leonard Mandor told him about the sale sometime in 1994. Landsberg could not remember whether this conversation occurred before or after the closing of the sale, and he did not remember Mandor mentioning anything about the pricing of the sale. Id. at 103-04. This is not sufficient to defeat Landsberg's motion. Furthermore, though some of the calls and letters sent by Ginor and his representative attempting to remove Washington as general partner were addressed to Landsberg, these communications were sent to Concord's offices, and there is no evidence that Landsberg received them.
See Cohen Aff. Ex. 4.
Landsberg's motion for summary judgment is therefore granted as to the fraud claims.
C. The Breach Of Fiduciary Duty Claims
Plaintiffs assert that all defendants knowingly participated in Washington's alleged breach of fiduciary duty by becoming involved in the sale despite knowing that Washington had failed to inform Ginor of the sale and its terms, that the Properties were sold below market value, and that there was an "inherent conflict of interest" between Washington and plaintiffs. Am. Compl. P 92. The elements of a claim of knowing participation in a breach of fiduciary duty are: 1) a breach by a fiduciary of obligations owed to another; 2) that the defendant knowingly induced or participated in the breach; and 3) that the plaintiff suffered damages as a result. Diduck v. Kaszycki & Sons Contractors, Inc., 974 F.2d 270, 281-82 (2d Cir. 1992). The second element requires knowledge of the primary violator's status as a fiduciary, knowledge that the primary violator's conduct contravenes his fiduciary duty, and "participation" in the primary violator's breach. Id. at 282-84. A defendant may be charged with constructive knowledge of the primary violator's breach if he is on notice of conduct which may constitute a breach and fails to undertake a reasonable investigation. Id. at 283. A defendant "participates" in the primary violator's breach if he affirmatively assists in it, or helps to conceal it, or enables it to occur by failing to act when required. Id. at 284.
We conclude that there is insufficient evidence to support a finding that these elements are satisfied as against Rosenman, Glimcher, or Landsberg. Our discussion of the fraud claims reveals that there is insufficient evidence to support a finding that these defendants had any indication of Washington's alleged failure to inform Ginor of the sale or its terms. Similarly, there is insufficient evidence to support a finding that these defendants had any reason to believe that the sale price was below market value, or that the sale was detrimental to the limited partner. By contrast, all credible evidence indicates that none of these defendants had any indication that Washington was acting in violation of its fiduciary duties.
We therefore grant summary judgment to defendants Rosenman, Glimcher, and Landsberg on the breach of fiduciary duty claims.
D. The Malpractice Claim
Plaintiffs allege that the Rosenman firm engaged in professional malpractice in several respects: by failing to disclose the sale and its terms to Ginor; by acting under a "conflict of interest" in representing the general partner and all the various Concord-created limited partnerships in connection with the sale; by issuing the opinion letter to Glimcher when Rosenman allegedly knew or should have known that the sale was in violation of Washington's fiduciary duties; and by allowing the Partnership to receive an allegedly unsatisfactory distribution of proceeds from the sale. Am. Compl. P 98.
To establish a malpractice claim, a plaintiff must present evidence that his attorney failed to exercise such degree of care, skill, and diligence commonly possessed and exercised by a member of the legal community. Greene v. Payne, Wood & Littlejohn, 197 A.D.2d 664, 602 N.Y.S.2d 883, 885 (App. Div. 1993). We conclude that plaintiffs have failed to present sufficient evidence to permit a finding that Rosenman fell below the requisite standard of care.
As an initial matter, it is clear that Rosenman owed no duty of care to Ginor or his estate, because there was no privity between Rosenman and Ginor. As discussed above, a lawyer owes no fiduciary duties to one with whom he is not in privity. See Quintel Corp., 589 F. Supp. at 1239-41. Hence, a lawyer generally cannot be liable in negligence to a non-client. See Ahmed v. Trupin, 809 F. Supp. 1100, 1106 (S.D.N.Y. 1993); Calamari v. Grace, 98 A.D.2d 74, 469 N.Y.S.2d 942, 945 (App. Div. 1983). Rosenman represented only the general partner and the Partnership, not Ginor or his estate. Hence, a malpractice claim may be asserted against Rosenman only by or on behalf of the general partner or the Partnership. We must therefore dismiss the malpractice claim insofar as it alleges a failure to disclose information to Ginor.
The allegation that Rosenman was under a conflict of interest in representing the general partner and all the Concord-created limited partnerships in connection with the sale must also fail. It is not self-evident that Rosenman breached the applicable standard of care in the legal profession by engaging in such representation. Plaintiffs have presented no expert affidavits or testimony to indicate whether such a representation is considered improper in the legal profession.
Under New York law, "unless the ordinary experience of the fact-finder provides sufficient basis for judging the adequacy of the professional service, or the attorney's conduct falls below any standard of due care, expert testimony will be necessary to establish that the attorney breached a standard of professional care and skill." Greene, 602 N.Y.S.2d at 885; see also O'Brien v. Spuck, 99 A.D.2d 910, 472 N.Y.S.2d 514, 516-17 (App. Div. 1984) (affirming dismissal of legal malpractice claim where plaintiff failed to produce expert evidence to establish applicable standard of care in the field). Accordingly, there is no basis in the record for a factfinder to conclude that Rosenman's representation was improper.
Plaintiffs' allegation that Rosenman improperly issued the opinion letter to Glimcher must also fail. As discussed in the context of the fraud claims, there is no evidence that Rosenman believed the sale to be in violation of the limited partner's rights. Yunis' testimony reveals that a high level of care was taken before issuing the letter--Rosenman solicited the opinion of local counsel in Pennsylvania (where the Partnership was formed), reviewed the Rabin settlement and Washington's corporate documents, and concluded that the sale was within the powers of Washington as general partner. See Yunis Dep. at 44-45, 62. In light of plaintiffs' failure to produce expert evidence as to Rosenman's role in the transaction, there is no basis for a finding of malpractice here.
Finally, there is no evidence that Rosenman acted negligently in reference to the allegedly unsatisfactory allocation of sale proceeds. There is no evidence that Rosenman was involved in the allocation of the sale proceeds, and plaintiffs have not presented any expert evidence indicating that Rosenman should have played a greater role in such allocation.
We therefore grant Rosenman's motion for summary judgment as to the malpractice claim.
E. The Breach Of Contract Claims
Finally, plaintiffs assert that Landsberg, Concord, Plaza Inc., and Robert and Leonard Mandor breached the Rabin settlement by "causing Washington to act in a manner not in the best interest of the Partnership and Ginor and failing to notify Ginor of the sale of the Properties prior to their sale." Am. Compl. 102.
This claim has no merit as against Landsberg. As discussed above, there is no evidence that Landsberg played any role whatsoever in the sale of the Properties to Glimcher; indeed, there is no evidence that Landsberg had any business connection to any of the parties after 1991. The Rabin settlement itself provided that Landsberg would step down as an active player in the Partnership.
Landsberg's motion for summary judgment as to the breach of contract claim is therefore granted.
For the reasons set forth above, the motions for summary judgment by Rosenman, Glimcher, and Landsberg are granted. Glimcher's motion for sanctions is denied.
Dated: December 10, 1996
New York, New York
Leonard B. Sand