The opinion of the court was delivered by: David N. Hurd United States District Judge
MEMORANDUM-DECISION and ORDER
Plaintiff Thomas Droz ("plaintiff" or "Droz") brought a legal malpractice action against defendants Peter A. Karl, III, Esq. ("Karl"); Paravati, Karl, Green & DeBella (the "Firm") (collectively "defendants"); Patrick J. Hart, CPA; and Moore & Hart, CPA ("co-defendants"). Plaintiff specifically alleges defendants Karl and the Firm were negligent in representing him, in drafting the Good News Foundation Trust (the "Trust") for settlor, Leroy A. Scheidelman ("Scheidelman"), that defendants should have prepared the Trust as a charitable trust, and that defendants negligently advised plaintiff how to calculate distributions and Trustee commissions. Defendants filed an answer and amended answer to plaintiff's complaint with a cross-claim against the co-defendants. The co-defendants also filed an answer to the complaint with a cross-claim against the defendants.
Defendants Karl and the Firm moved for summary judgment pursuant to Rule 56(b) of the Federal Rules of Civil Procedure to dismiss the complaint. Plaintiff opposed and cross-moved to dismiss defendants' affirmative defenses. The co-defendants did not respond nor have they filed a motion. Both motions were considered on their submissions without oral argument.
The following facts are undisputed unless otherwise noted. In June1992 Scheidelman, with the help of Karl, created the Good News Foundation (the "Foundation"), an organization devoted to encouraging others to enter into the Roman Catholic Church. Scheidelman initially funded the charity with a direct gift. In 1994, he approached Karl with respect to making a further donation to the Foundation. After lengthy discussions, Karl drafted the Trust at issue to carry out Scheidelman's funding objectives. Pursuant to his wishes, Scheidelman's grandson, Droz, was appointed Trustee. Based on Karl's recommendations, Scheidelman adopted the formula for Trustee commissions pursuant to the Surrogate's Court Procedure Act § 2309(2) (statutory schedule for Trusts with a Private Beneficiary).
The extent of Droz's involvement in negotiating the terms of the Trust, and the scope of discussions between him and Karl regarding the formation of the Trust and his subsequent duties as Trustee, are disputed by the parties. Plaintiff maintains in addition to discussions between Karl, himself, and Scheidelman, he and Karl had private telephone conversations regarding the Trust and proposed commission rates. Plaintiff contends during this time, he considered Karl and the Firm to be his attorneys. Droz Aff. ¶ 18, Dkt. No. 24-3. According to plaintiff, after the Trust was established, and based upon his understanding that Karl was still his attorney, plaintiff requested Karl prepare an actual calculation showing the Trustee commissions at the agreed rate. Id. at ¶ 24. Plaintiff continued to regularly contact Karl regarding the Trust, Trust filings, payment of funds to the Foundation, and Trustee commissions. Id. at ¶ 25.
In December 2007 a dispute arose between the Foundation and Droz, based in part, on the calculation of Trustee commissions and distributions to the Foundation. The issues relating to whether commissions should be calculated pursuant to the Surrogate's Court Procedure Act § 2309(3) or § 2309(5), and whether the Trust provided for a sufficient annual distribution to the Foundation to qualify for favorable tax treatment, first came to light in 2007, thirteen years after the drafting and execution of the Trust in 1994. The Foundation ultimately commenced an action in March 2008 in the Oneida County Surrogate's Court against plaintiff. The petition sought, in part, to compel him to provide an accounting, to surcharge him, and to remove him as a fiduciary.
The Foundation alleged numerous acts of misconduct on the part of Droz, including the failure to distribute annual income to the Foundation as required by the Trust, the failure to prepare annual accountings, gross misconduct regarding tax compliance, and improper investment strategy and self-dealing, among other allegations of misfeasance. The Foundation alleged his "gross negligence, purposeful wrongdoing and flagrant refusal to carry out the terms of the Trust and to make petitioner whole mandate the removal of [Droz]." Defs.' Statement of Material Facts, Ex. D ¶ 40, Dkt. No. 23-5.
The underlying Surrogate Court's action was resolved by Decision and Order and Settlement Stipulation dated December 24, 2008. As part of the Settlement Agreement, Droz resigned as Trustee and paid the Trust $300,000. The Settlement Agreement did not identify a specific basis for his resignation. In August 2009 plaintiff commenced this legal malpractice action against defendants.
A. Summary Judgment Standard
Summary judgment is warranted when the pleadings, depositions, answers to interrogatories, admissions, and affidavits reveal no genuine issue as to any material fact. FED. R. CIV. P. 56; Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 106 S.Ct. 2505, 2509-10 (1986). All facts, inferences, and ambiguities must be viewed in a light most favorable to the non-moving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356 (1986). Initially, the burden is on the moving party to demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2553 (1986).
After the moving party has satisfied its burden, the non-moving party must assert specific facts demonstrating there is a genuine issue to be decided at trial. FED. R. CIV. P. 56; Liberty Lobby, Inc., 477 U.S. at 250, 106 S.Ct. at 2511. The non-moving party "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co., 475 U.S. at 586, 106 S.Ct. at 1356. There must be sufficient evidence upon which a reasonable fact finder could return a verdict for the ...