United States District Court, S.D. New York
April 4, 2005.
HARLEYSVILLE WORCESTER INSURANCE COMPANY, Plaintiff,
ADAM M. HURWITZ and SILVERSTEIN & HURWITZ, P.C., Defendants.
The opinion of the court was delivered by: ROBERT CARTER, Senior District Judge
In the current matter before the court, plaintiff, Harleysville
Worcester Insurance Company, alleges that defendants, Adam M.
Hurwitz in his individual capacity and his firm Silverstein &
Hurwitz, P.C., committed legal malpractice in the representation
of plaintiff's insured, Intedge Industries, Inc., and asks the
court to enter partial summary judgment as to defendants'
liability. Defendants counter by cross-moving for summary
judgment and, additionally, dismissal of plaintiff's subrogation
claim as duplicative of its legal malpractice claim. Defendants
also seek leave pursuant to Rule 14(a), F.R.Civ.P., to serve a
summons and third-party complaint on proposed third-party
defendants, Joseph Redd in his individual capacity and his firm
O'Connor, Redd, Gollihue & Sklarin, LLP.
This legal malpractice action stems from defendants'
representation of plaintiff's insured. Intedge Industries, Inc.
("Intedge"), in a product liability action brought in 1999 by
Lidia Sokal in the United States District Court for the Eastern
District of New York. In connection with this underlying action,
(hereinafter "Sokal Action"), Sokal sought money damages for
injuries she sustained when her right hand and arm were pulled
into the chopping head attachment to a meat grinding machine.
Sokal alleged causes of action against Hobart Manufacturing
Company, the alleged manufacturer of the mixer, and Intedge, the
alleged manufacturer of the component chopping head attachment,
for negligence, strict products liability and breach of warranty.
Pursuant to a policy of insurance issued to Intedge, Harleysville
Worcester Insurance Company the current plaintiff retained
defendants, Adam M. Hurwitz and his law firm Silverstein &
Hurwitz, P.C. (collectively "S&H"), to serve as Intedge's defense
counsel in the Sokal action.
Defendants' actions as counsel for plaintiff's insured,
Intedge, are the focus of the current litigation. On April 18,
2000, counsel for Sokal served defendants with a notice to admit
in the underlying action which required defendants, among other
things, to admit or deny whether Intedge manufactured the subject
chopping head attachment. Defendants, however, failed to serve a
response to Sokal's notice to admit within the allotted time
period. As a result of defendants' failure to timely respond, the
trial court sanctioned Intedge by entering an order barring it
from introducing any evidence, in the trial of the action,
regarding any other specific manufacturers of the subject
chopping head attachment, though Intedge could still deny its own
involvement as the manufacturer. Though the foregoing is
undisputed and defendants recognize that S&H's failure to
respond was a departure from the applicable standard of care
plaintiff and defendants disagree as to what repercussions, if
any, this order of preclusion had on plaintiff's insured's
In addition to defendants' failure to respond to the notice to
admit, plaintiff alleges that S&H committed a number of other
negligent acts in their representation of Intedge, all of which
defendants dispute. The most contentious of these is defendants'
decision to agree to the entry of a summary judgment motion in
favor of Intedge's co-defendant, Hobart, the alleged manufacturer
of the mixer.*fn1 Plaintiff claims that by releasing Hobart
from the action, Intedge's ability to shift responsibility to a
co-defendant was precluded and that, at the very least,
defendants should have consulted with Intedge before agreeing to
Hobart's dismissal. Furthermore, plaintiff alleges that
defendants' failure to object to the entry of summary judgment
resulted from counsel's failure to conduct adequate research and
discovery, all of which left defendants, according to plaintiff,
unprepared to contest the motion. Defendants' for their part,
defend the decision as a proper exercise of their discretion as
counsel in shaping a litigation strategy and note that counsel
for Sokal also did not oppose the entry of summary judgment.
In addition, plaintiff offers as further evidence of
defendants' negligence, counsel's failure to: designate an expert
or rebuttal expert witness in support of plaintiff's insured's
defenses; serve written discovery requests on co-defendant Hobart
and make initial disclosures pursuant to Rule 26(a), F.R.Civ.P;
and, communicate with plaintiff and Intedge regarding allegedly
crucial aspects of the litigation. As previously stated,
defendants deny any negligence regarding these decisions and
offer exculpatory evidence for their (in) actions, including that
they attempted to find an expert but were unsuccessful in doing
so and that the discovery requests served by co-defendant Hobart
upon Sokal were sufficient.
As a result of plaintiff's dissatisfaction with defendants'
performance, S&H was dismissed as counsel in September 2001,
whereupon plaintiff retained Joseph Redd and his firm O'Connor &
O'Connor, LLP (now O'Connor, Redd, Gollihue & Sklarin, LLP) as
new counsel. Citing the adverse impact of defendants' errors and
omissions upon Intedge's available defenses, Intedge's new
counsel suggested that plaintiff settle the Sokal matter. In June
2002, plaintiff settled with Sokal, on behalf of Intedge, for a
lump sum payment of $900,000.
Plaintiff claims that as a result of defendants' negligence,
Intedge's defenses in the Sokal action were severely compromised
and that plaintiff, as Intedge's insurer, was forced to pay Sokal
an amount substantially higher than it would have otherwise paid
had defendants properly discharged their duties. In order to
recoup the losses allegedly caused by defendants' negligence,
plaintiff filed the legal malpractice and subrogation claims
currently before the court.
JURISDICTION AND VENUE
This court has jurisdiction over the subject matter of this
action pursuant to 28 U.S.C. § 1332 because plaintiff,
Harleysville Worcester Insurance Company, is a citizen of
Massachusetts and defendants, S&H, are citizens of New York, and
the amount in controversy exceeds the sum of $75,000, exclusive
of costs and interests. Venue is proper in the Southern District
of New York pursuant to 28 U.S.C. § 1391.
Summary Judgment Motions Standard for Summary Judgment
A moving party is entitled to summary judgment if the court
determines that there exists no genuine issue of material fact to
be tried and the party is entitled to judgment as a matter of
law. See Rule 56, F.R.Civ.P; see also Holt v. KMI-Continental,
Inc., 95 F.3d 123, 128 (2d Cir. 1996); Celotex Corp. v.
Catrett, 477 U.S. 317, 322-323, 106 S.Ct. 2548, 91 L.Ed.2d 265
(1986). The moving party bears the burden of showing that no
genuine issue of material fact exists. See Adickes v. S.H. Kress
& Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970).
The court's function in adjudicating a summary judgment motion
is not to try issues of fact, but instead to determine whether
such issues are present. See Sutera v. Schering Corp.,
73 F.3d 13, 15-16 (2d Cir. 1995). In determining whether genuine issues
of material fact exist, the court must resolve all ambiguities
and draw all justifiable inferences in favor of the non-moving
party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255,
106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); see also Holt,
95 F.3d at 129.
Defendants' Motion for Summary Judgment
Under New York law,*fn2 to prevail on a claim for legal
malpractice, a plaintiff must prove that his attorney failed to
exercise "that degree of care, skill and diligence commonly
possessed and exercised by an ordinary member of the legal
community, that such negligence was the proximate cause of the
actual damages sustained by plaintiff, and that but for the
attorney's negligence, plaintiff would have been successful in
the underlying action." Carney v. Philippone, 332 F.3d 163, 167
(2d Cir. 2003) (citation omitted); see also Pistilli v. Gandin,
780 N.Y.S.2d 293, 293 (2d Dep't 2004); Reibman v. Senie,
756 N.Y.S.2d 164, 164 (1st Dep't 2003). Defendants cross-claim for
summary judgment claiming that plaintiff is unable to prove the
elements of its legal malpractice claim. See Ehlinger v.
Ruberti, Girvin & Ferlazzo, P.C., 758 N.Y.S.2d 195, 196 (3d
Dep't 2003) (to succeed on a summary judgment motion in a legal
malpractice claim, a defendant is required to "present evidence
in admissible form establishing that plaintiff is unable to prove
at least one of these elements.") (citation omitted).
Thus, defendants bear the burden of showing that plaintiff is
unable to prove that (1) S&H "failed to exercise the skill
commonly exercised by an ordinary member of the legal community"
in their representation of Intedge; (2) that such negligence
proximately caused Intedge's legal options to be significantly
foreclosed and forced a settlement at an amount higher than
otherwise would have been the case; and (3) but for that
negligence, Intedge would have been successful in the underlying
action or been able to settle for a lower amount.
Defendants have failed to meet this burden. Indeed, plaintiff
has submitted sufficient evidence to overcome S&H's motion for
summary judgment. Plaintiff alleges that defendants committed
several acts of negligence in their representation of Intedge in
the Sokal action, including, the failure to propound written
discovery or make Rule 26. F.R.Civ.P. disclosures, the failure to designate any experts, the
failure to communicate with plaintiff or Intedge regarding
crucial litigation decisions, the failure to oppose Hobart's
motion for summary judgment, and perhaps most importantly, the
failure to respond to Sokal's notice to admit. Plaintiff has
submitted declarations from both its and defendants' legal expert
opining that at least one of these failures constituted a
departure from the ordinary duty of care, and that other such
infractions may have been committed as well.*fn3 See
Hatfield v. Herz, 109 F.Supp.2d 174, 179 (S.D.N.Y. 2000)
(Leisure, J.) ("The courts generally require malpractice
plaintiffs to proffer expert opinion evidence on the duty of care
to meet their burden of proof in opposition to a properly
supported summary judgment motion.") (citation omitted). Whether
these failures ultimately amount to negligence on the defendants'
part is a question of fact for the jury to determine. See Polin
v. Wisehart & Koch, 2004 WL 1944721, *5 (S.D.N.Y.) (Cote, J.).
Moreover, plaintiff has presented evidence sufficient that a
jury could rationally decide that defendants' alleged negligence
in their representation of Intedge was the proximate cause of
plaintiff's damages and that, but for these failures, a
settlement in a lower amount could have been obtained. Plaintiff
submitted the declaration of Joseph T. Redd, counsel retained by
Harleysville to replace S&H, stating that due to defendants'
prior negligent handling of the Sokal action, counsel's ability
to mount a proper defense on Intedge's behalf was severely
impaired. Redd Decl. ¶ 9. Plaintiff's expert, J. Nicholas Suhr,
also asserts in his declaration that but for defendants' "acts,
errors and omissions . . . Harleysville would have paid an amount
at least fifty (50) percent less than the amount ultimately paid
by Harleysville to settle the Sokal action on behalf of Intedge."
Suhr Decl. ¶ 9. In addition, plaintiff have put forward the
transcript of proceedings in an action in Mississippi federal
court the Nichols action involving similar claims, similar
defenses, and the same two defendants as in the Sokal action
Intedge and Hobart, in which the court permitted Intedge to
introduce evidence regarding other potential manufacturers of the
subject chopping head attachment and in which Intedge was
eventually acquitted of all liability.*fn4 Plaintiff claims
that were it not for defendants' failure to respond to the notice
to admit, a similar result would have been possible in the Sokal
action. Resolving all ambiguities and drawing all justifiable
inferences in favor of the non-moving party as required, the
court believes that, taken as a whole, plaintiff's proffered
evidence is sufficient to overcome defendants' summary judgment
motion. As such defendants' motion for summary judgment is
Plaintiff's Motion for Partial Summary Judgment
Plaintiff asks the court to enter partial summary judgment as
to defendants' liability, leaving the amount and extent of
plaintiff's damages as the only issue in dispute for trial. Such
a grant would be inappropriate. As previously stated, whether
defendants' failures amount to negligence is ultimately a
question of fact for the jury to determine. See Polin, 2004 WL
1944721, *5. All but one of the alleged breaches are vigorously contested by defendants and even as to the one departure which is
not contested the failure to respond timely to the notice to
submit the issue of "but for" causation needs to be established
at trial. Defendants' liability hinges in large part on
plaintiff's ability to prove the proximate cause element of the
legal malpractice claim and the court refuses to relieve
plaintiff from its burden through an entry of partial summary
judgment. Plaintiff's motion is therefore denied.
While defendants concede that plaintiff may maintain an action
for legal malpractice, defendants seek dismissal of plaintiff's
subrogation claim arguing that the doctrine of subrogation has no
application in the case at bar and that it is duplicative of
plaintiff's claim for legal malpractice. Both of these
contentions are addressed in turn.
It is well established that an insurer has a right of
subrogation, or, in other words, that it can "stand in the shoes"
of its insured to seek repayment from a third party whose
wrongdoing caused the loss to the insured which the insurer was
obligated to cover. Federal Ins. Co. v. Andersen & Co.,
75 NY2d 366, 373-374. Under New York law, the doctrine of subrogation is
to be "liberally applied for the protection of those who are its
natural beneficiaries insurers that have been compelled by
contract to pay for the loss caused by the negligence of
another." Winkelmann v. Excelsior Ins. Co., 85 N.Y.2d 577, 581.
Defendants' argument that plaintiff was not obligated to cover
losses occasioned by defendants' alleged legal malpractice is
unavailing. Plaintiff, as Intedge's insurer, could not have
denied coverage for Intedge's indemnity obligations arising out
of the Sokal action. Were it to be established that defendants'
negligence created or contributed to these indemnity obligations,
the doctrine of subrogation would permit plaintiff to recover the
losses occasioned by defendants' malpractice. Moreover, since
federal courts applying New York law have held that excess
insurers may bring legal malpractice claims against an insured's
counsel based on the doctrine of equitable subrogation, Allstate
Ins. Co. v. American Transit Ins. Co., 977 F.Supp. 197, 201
(E.D.N.Y., 1997), the court believes that an insurer may allege a
claim for subrogation based on counsel's negligent representation
of its insured.
The court nonetheless agrees with defendants that, even if a
claim for subrogation is possible under New York law, plaintiff's
claim for subrogation is duplicative of its legal malpractice
claim and must be dismissed. Plaintiff attempts to differentiate
the two claims by contrasting the duty of care owed directly to
plaintiff, which gives rise to the legal malpractice claim, and
the duty of care owed to Intedge, which gives rise to the
subrogation claim. However, "[c]ontrary to plaintiffs'
assumption, it is not the theory behind a claim that determines
whether [the claims are] duplicative. Nevelson v. Carro,
Spanbock, Kaster & Cuiffo, 290 A.D.2d 399, 400,
736 N.Y.S.2d 668, 670 (N.Y.A.D. 1 Dept., 2002). In truth, the two claims are
redundant. The claims arise from the same conduct defendants'
alleged acts of negligence and involve no distinct damages.
Cf. Mecca v. Shang, 258 A.D.2d 569, 570, 685 N.Y.S.2d 458 (2d
Dep't 1999) (dismissing breach of fiduciary duty, negligent
misrepresentation, gross negligence, and fraud claims "since
these claims . . . arise from the same facts as [plaintiff's]
legal malpractice claim and do not allege distinct damages");
see also Nevelson, 736 N.Y.S.2d 670 (dismissing breach of contract and breach of fiduciary duty claims as
duplicative since they were "predicated on the same allegations
and seek relief identical to that sought in the malpractice cause
of action."). Thus, plaintiff's claim for subrogation must be
dismissed as duplicative.
Defendants' Request to Serve Third-Party Complaint
Defendants seek leave pursuant to Rule 14(a), F.R.Civ.P., to
serve a third-party complaint upon Joseph Redd, in his individual
capacity, and O'Connor, Redd, Gollihue & Sklarin, LLP. Rule
14(a), F.R.Civ.P. "permits a defending party to implead another
who is or may be liable to the third-party plaintiff for all or
part of the plaintiff's claim against the third-party plaintiff."
Bank of India v. Trendi Sportswear, Inc., 239 F.3d 428, 437 (2d
Cir. 2000) (quoting Rule 14(a), F.R.Civ.P.). Under New York law,
"[a]n attorney sued for malpractice is entitled to commence a
third-party claim for contribution against a subsequent attorney
whose negligence has contributed to or aggravated the plaintiff's
damages. Hansen v. Brognano, 137 A.D.2d 880, 881,
524 N.Y.S.2d 862, 863 (N.Y.A.D. 3 Dept., 1988) (citing Schauer v. Joyce,
54 N.Y.2d 1, 5, 444 N.Y.S.2d 564, 429 N.E.2d 83 and Catania v.
Lippman, 98 A.D.2d 826, 827, 470 N.Y.S.2d 487).
In the case a bar, plaintiff is claiming that it was forced to
pay more to settle the underlying products liability action
because of the negligence of defendants. Defendants, in turn, are
claiming that if plaintiff did indeed pay too much to settle the
underlying case, then such damages were caused by the negligence
of Joseph Redd and his firm once they assumed Intedge's
representation. Specifically, defendants claim that Joseph Redd
and his firm were negligent in their advice that the order of
preclusion adversely impacted plaintiff's insured defense. In the
wake of Hansen and Schauer, there is little doubt that such a
claim is cognizable under New York law and that defendants may
implead proposed third-party defendants Joseph Redd and O'Connor,
Redd, Gollihue & Sklarin, LLP.
Defendants' motion for summary judgment is denied. Plaintiff's
motion for partial summary judgment is denied. Plaintiff's claim
for subrogation is dismissed as duplicative of its legal
malpractice claim. Defendants have thirty days within which to
serve proposed third-party defendants Joseph Redd and O'Connor,
Redd, Gollihue & Sklarin, LLP.
IT IS SO ORDERED.