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May 28, 2003


The opinion of the court was delivered by: Robert W. Sweet, Senior District Judge


The plaintiff Angelo Nobile ("Nobile") has renewed his motion for partial summary judgment with respect to his malpractice claims against individual defendants Milton Schwartz ("Schwartz") and Paul E. Kerson ("Kerson"), and law firm defendants Grant, Hermann, Schwartz & Klinger ("Grant Hermann") and Leavitt, Kerson & Leffler ("Leavitt Kerson") (collectively, the "Defendants"). For the reasons set forth below, the motion is denied, factual issues having been presented.

Prior Proceedings

This action was filed on April 2, 1998 by Nobile against Schwartz and his firm, Grant Hermann; and Kerson, and his firm, Leavitt Kerson, arising out of their representation of Nobile in his claims against Elba Lo Buono Mangiaregna ("Elba Mangiaregna"), NOL Realty Corp. ("NOL"), the Estate of Joseph Testani ("Testani Estate"), Diego Mangiaregna ("Diego Mangiaregna") and Victor Buglione ("Buglione") for five causes of action. The complaint alleged: (1) negligence by the Defendants in their representation of Nobile's claims with respect to actions on his behalf in the Supreme Court of the State of New York, County of Queens (the "State Court Action"), in the Surrogate's Court, County of Queens (the "Surrogate's Court Action"); (2) negligence with respect to a mortgage note in the amount of $100,000 of July 3, 1987 (the "Mortgage Note"); (3) a breach of the Defendants' implied obligation to provide competent representation; (4) a violation of New York Judiciary Law § 487; and (5) an accounting for legal fees.

The Defendants moved for summary judgment, and Nobile cross-moved for partial summary judgment. The motion of the Defendants was granted on grounds of statute of limitations by an order and opinion of November 29, 2000.

On January 23, 2003, the Second Circuit vacated the order of dismissal, finding that the statute of limitations issue presented an issue of fact with respect to continuing representation precluding summary judgment, and remanded for further proceedings. Nobile v. Schwartz, 56 Fed. Appx. 525, 2003 U.S. App. LEXIS 1019 (Jan. 23, 2003).

Nobile renewed his motion for partial summary judgment seeking a determination that the Defendants committed malpractice in connection with the Surrogate's Court Action and the State Court Action, and to dismiss the Defendants' evidentiary defenses involving the Federal Bureau of Investigation ("FBI") and the proof of the payment of funds by Nobile.

The motion was heard and marked fully submitted on April 30, 2003.

The Facts

The facts are set forth in the Local Rule 56.1 Statements of the parties and in affidavits subsequently submitted.

Nobile is a successful real estate developer and businessman in Argentina. In 1984, he became interested in investing money in real estate in the United States and met Elba Mangiaregna, a real estate developer and investor in New York, and invested $634,000 in a venture formed with Elba Mangiaregna, NOL, and received fifty-five percent of its shares. In 1988, Nobile concluded that Elba Mangiaregna was cheating him and sought to end his relationship with NOL, recoup his investment, and take his profits.

Unbeknownst to Nobile, Elba Mangiaregna had caused valuable parcels of NOL real property to be transferred to Joseph Testani ("Testani") without proper or fair compensation being paid to NOL. Nobile believed that Elba Mangiaregna had an arrangement with Testani to share the proceeds of any property looted from NOL.

Nobile retained Schwartz and his firm Grant Hermann to advise him and to take the appropriate steps with respect to NOL and Elba Mangiaregna. Schwartz arranged for Kerson and his firm Leavitt Kerson to serve as litigation counsel.

A retainer agreement was prepared which provided for a fee of fifteen percent for any recovery pretrial and twenty-five percent for any recovery following commencement of trial preparation, and requiring that Nobile pay $15,000 up front against such contingency fees, plus disbursements. The retainer further provided that Schwartz and his firm would "supervise" the case, and that the case would be "managed" by Kerson.

Thereafter, Kerson commenced a proceeding on Nobile's behalf entitled Matter of NOL Realty Corporation, Supreme Court, Queens County, Index Number 11025/88, which sought and obtained the judicial dissolution of NOL (the "Dissolution Proceeding"). The Court's decision in the NOL dissolution proceeding provided that any other remedies would have to be raised in another proceeding.

Meanwhile, Testani died on February 23, 1987.

Kerson then commenced a second action on Nobile's behalf in 1989, entitled Angelo Nobile v. Estate of Joseph Testani, Elba Lobuono Mangiaregna, Diego Mangiaregna and Victor A. Buglione, Esq., Supreme Court, Queens County, Index Number 16267/89.

The complaint in the State Court Action asserted three causes of action. The first cause of action sought damages for the looting of NOL. The second cause of action sought damages against Buglione, who was an attorney representing NOL who had assisted and participated in the looting of NOL, particularly by preparing the paperwork and (allegedly) authenticating forgeries of Nobile's signature. The third cause of action sought damages against Diego, Elba Mangiaregna's brother, for assault relating to his having threatened Nobile with a gun in an effort to induce Nobile to settle his claims against Elba Mangiaregna.

Simultaneously, in November 1989, Kerson appeared on behalf of Nobile in Surrogate's Court, Queens County and made a claim on Nobile's behalf against the estate of Testani with respect to the moneys looted from NOL by Elba Mangiaregna with the assistance of the decedent Testani.

The defendants in the State Court Action then moved to dismiss Nobile's claims. The Supreme Court (Graci, J.) issued an order dated February 21, 1990, which held as follows:

a. Nobile's claims regarding the looting of NOL were dismissed without prejudice to the commencement of a shareholder's derivative action, since they were essentially shareholder's derivative claims rather than individual claims.
b. Nobile's legal malpractice claims against Buglione were dismissed both because they should have been brought as shareholder's derivative claims and because the court concluded that the actions against Buglione would have been time-barred by the three-year statute of limitations for negligence actions.
c. Nobile's claims for assault against Diego Mangiaregna were not dismissed.
Neither Schwartz nor Kerson ever commenced a shareholder's derivative suit for Nobile, and the ...

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