The opinion of the court was delivered by: David N. Hurd United States District Judge
MEMORANDUM-DECISION and ORDER
Plaintiffs Karen E.S. Meador, M.D. ("Dr. Meador") and Robert J. Meador, Jr. ("Mr. Meador") (collectively "plaintiffs" or "Meadors") brought suit against the Albanese Law Office (the "Office") and Jonathan O. Albanese, Esq. ("Albanese") (collectively "defendants") alleging legal malpractice, breach of fiduciary duty, negligent representation, and negligence.
Defendants moved for summary judgment to dismiss the complaint pursuant to Rule 56(b) of the Federal Rules of Civil Procedure. Plaintiffs opposed and cross-moved for summary judgment on liability. Oral argument was heard in Utica, New York on June 2, 2010. Decision was reserved.
The following facts are undisputed unless otherwise noted. In 2000 non-parties Joan and Stuart Anderson (the "Andersons") retained Albanese to represent them in the purchase of real property located on the western shore of Cayuga Lake at 9818 Watermark Road, in Trumansburg, New York (the "lakefront property"). In 2003 the Andersons brought suit against Albanese for legal malpractice. The Andersons alleged Albanese was negligent for failing to advise them regarding a right-of-way encumbering their property*fn1 and failing to determine the deed granted 75.9 feet of waterfront instead of the 117 feet stated in the contract. See Pls'. Statement of Material Facts ("SMF"), Ex. A, Dkt. No. 37-1. The complaint also alleged against other defendants structural defects in the house on the lakefront property. The claims against Albanese were settled by payment of an agreed sum to the Andersons in return for a release.
In June 2005 plaintiffs, residents of Texas, entered into a contract (the "Purchase Agreement")*fn2 with the Andersons to purchase the lakefront property. The Purchase Agreement included an attorney approval cause that permitted either party to cancel the contract within three business days of acceptance of the offer. The contract also contained a provision which provided:
Buyer's attorney shall have abstract and legal papers for examination at least twelve (12) days before closing. If defects are found in the title as shown by abstract, a written statement of objections shall be furnished, and Seller shall have a reasonable time, not exceeding thirty (30) days, to make said title marketable.
Pinnisi Decl., Ex. C, Dkt. No. 34-11 ("Notice to Cure" provision).
The Meadors put down a $25,000 deposit toward the $720,000 purchase price. After the contract was signed, the Meadors retained defendants on June 6, 2005, to represent them in the transaction. The parties dispute whether prior to plaintiffs retaining Albanese, he informed them he had previously represented the Andersons in any capacity and that he had been sued by the Andersons. Defs'. Response to Pls'. SMF ¶ 20, Dkt. No. 40-3. It is undisputed defendants at that time did not inform the Meadors that the detached garage on the property encroached upon a right-of-way and violated setback requirements, nor did they advise plaintiffs the house was alleged to have structural defects. After engaging defendants, Dr. Meador requested she be kept informed of the progress and be given copies of any correspondence related to the transaction.
On June 23, 2005, the attorney for the Andersons delivered a letter to defendants which disclosed some but not of all the encumbrances and defects to the title. It is disputed whether a telephone call between Albanese and Dr. Meador took place on June 24, 2005. Defendants did not investigate the disclosed defects in the title at that time, opting to wait for voluntary disclosure by the Andersons' attorney. Albanese did not disclose the encumbrances to plaintiffs, nor did he inform them he was expecting further information regarding the same from the Andersons' attorney. On July 11, 2005, defendants received additional information regarding the defects. Albanese again failed to inform the Meadors of these disclosures. The parties dispute whether Albanese or the Office informed Dr. Meador the closing would occur on or about July 20, 2005.
Plaintiffs contend that in reliance upon this communication, they liquidated assets, transferred funds, alerted their lender and secured insurance in anticipation of the closing. Dr. Meador then traveled to Ithaca, New York on or about July 19, 2005, to attend the closing. Pls'. SMF ¶¶ 37-39, Dkt. No. 37. On July 20, 2005, she attended a pre-closing inspection of the property, during which time she discovered several title encumbrances from the Andersons' realtor as well as the encroachments on the neighboring properties. Id. ¶ 41.
The Meadors contacted defendants and requested they terminate the contract and return plaintiffs' $25,000 deposit. Albanese then communicated with the Andersons' attorney and requested the contract be dissolved and the deposit returned. On July 28, 2005, defendants forwarded a list of objections regarding the property prepared by Dr. Meador to the Andersons' attorney. The Meadors allege they made several attempts to contact Albanese between July 28, 2005, and August 15, 2005, to determine the status of the matter, but were told by staff of the Office that Albanese was "unavailable," and he did not return any of the calls. Pls'. SMF ¶ 46. On August 10, 2005, Dr. Meador faxed the Andersons' attorney, demanding dissolution of the contract and return of escrow. On August 15, 2005, plaintiffs retained their current attorney, Michael D. Pinnisi, Sr., ("Pinnisi") as litigation counsel.
On or about August 17, 2005, the Andersons commenced a lawsuit against plaintiffs seeking to enforce the contract. On September 6, 2005, the Andersons' attorney submitted an offer to cure to the Meadors, which they rejected on September 9, 2005. On November 20, 2008, the Appellate Division Third Department found that questions of fact as to material misrepresentations made by the Andersons existed so that it could not be determined as a matter of law if the contract was void as of its inception. The court let the Meadors' cross-claim for fraud stand, and reversed the lower court's order directing the $25,000 escrow funds payment to the Andersons. Anderson v. Meador, 56 A.D.3d 1030 (N.Y. App. Div. 3d Dep't 2008). Thereafter the Andersons and Meadors settled the action with the return of the $25,000 to the Meadors, the dismissal of all remaining claims, and the exchange of releases.
The Meadors filed the instant action on May 27, 2008, to obtain reimbursement of their expenses, attorney's fees, compensation for defendants' alleged misconduct, and to deter repetition of the conduct engaged in by 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 ...