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Mia Feroleto v. Michael Jude O'connor

May 6, 2011


The opinion of the court was delivered by: Gary L. Sharpe District Court Judge


I. Introduction

Plaintiff Mia Feroleto commenced this action against defendant Michael Jude O'Connor, asserting claims for legal malpractice and breach of contract. (See Compl., Dkt. No. 1.) Pending is O'Connor's motion for summary judgment. (Dkt. No. 35.) For the reasons that follow, O'Connor's motion is granted and Feroleto's complaint is dismissed.

II. Background

A. Factual History*fn1

Defendant Michael Jude O'Connor is an attorney licensed to practice law in New York State, is admitted to practice in the state and federal courts of New York, and is a board certified commercial and consumer bankruptcy specialist. (See Def. SMF ¶¶ 1-3, Dkt. No. 35:1.) Plaintiff Mia Feroleto first met with O'Connor in June 2005 regarding her unpaid real property taxes and mortgage arrears, among other debts. (See id. at ¶ 5; see also Feroleto Dep. at 23, Dkt. No. 35:5.) After being informed by Feroleto that the Deutsche Bank, as mortgagee of her house, had scheduled a July 2005 foreclosure sale of her house, O'Connor advised Feroleto that she may be able to prevent the foreclosure for a certain period of time by filing for bankruptcy and making monthly post-petition mortgage payments and chapter 13 plan payments beginning in August 2005. (See Def. SMF ¶¶ 6-10, Dkt. No. 35:1.) Feroleto assured O'Connor that she could obtain a monthly income of $6,000 by selling her valuable art antiques and collectibles, and thereby meet the post-petition mortgage payments and Chapter 13 plan payments. (See id. at ¶ 11.) Based on these assurances, O'Connor agreed to represent Feroleto in bankruptcy, with an agreed upon fee of $1,990.*fn2 (See id. at ¶¶ 12-13.)

On July 7, 2005, O'Connor filed Feroleto's bankruptcy petition with the United States Bankruptcy Court of the Northern District of New York. (See Hulslander Aff., Ex. J, Dkt. No. 35:12.) Included in her petition was Feroleto's estimated income of $6,000 per month. (See id. at 22.) Pursuant to Feroleto's chapter 13 filing, the foreclosure sale was stayed. (See Def. SMF ¶ 18, Dkt. No. 35:1.) On July 25, 2005, Deutsche filed a proof of claim for $550,624.27. (See id. at ¶¶ 19-21.) The proof of claim showed mortgage arrears of $80,491.04, with payment defaults dating back eighteen months to January 2004. (See id. at ¶ 22.) In addition, as a result of Feroleto's failure to pay real property taxes since January 2003, Columbia County filed a proof of claim showing property tax arrears of $22,958.85. (See id. at ¶¶ 23-25.)

Pursuant to Feroleto's petition and the Bankruptcy Court's confirmation order, Feroleto was obligated to make thirty-six monthly payments of $250.00 to Andrea Celli, Esq., the assigned Trustee. (See Hulslander Aff., Ex. J, Dkt. No. 35:12.) Feroleto made one monthly payment to the Trustee on August 10, 2005, but failed to make any subsequent payments. (See O'Connor Aff. ¶ 14, Dkt. No. 35:20.) Feroleto further failed to make any post-petition mortgage payments to Deutsche, which from July 2005 to October 2005 amounted to $16,663.31. (See id. at ¶ 11.)

On October 3, 2005, Feroleto filed a motion with the Bankruptcy Court, seeking approval to sell a 7.943 acre parcel of her mortgaged property. (See O'Connor Aff., Ex. I, Dkt. No. 35:29.) In response to Feroleto's motion, and due to Feroleto's failure to make her mortgage payments, Deutsche filed a motion for relief from the automatic stay of foreclosure on October 4, 2005. (See O'Connor Aff., Ex. F, Dkt. No. 35:26.) Then, on November 4, 2005, the Trustee moved to dismiss Feroleto's bankruptcy case due to her material default on her chapter 13 plan payments. (See O'Connor Aff., Ex. H, Dkt. No. 35:28.) O'Connor, as Feroleto's counsel, managed to reach a stipulation with Deutsche, whereby Feroleto was given until December 15, 2005, to bring her loan current. (See O'Connor Aff., Ex. G, Dkt. No. 35:27.) In addition, O'Connor worked with the Trustee to forestall dismissal of Feroleto's case. (See Celli Aff. ¶¶ 26-27, Dkt. No. 35:9.)

On December 16, 2005, the Bankruptcy Court granted Feroleto's motion and issued a sale order allowing Feroleto to sell the parcel. (See Dec. 16, 2005 Bankr. Order, Dkt. No. 35:29.) Under the sale order, Feroleto was ordered to turn over all sale proceeds-minus unpaid real property taxes and any reasonable and necessary closing costs-to Deutsche. (See id. at 2.) Scott Longstreet, Esq.-who had been representing Feroleto during the foreclosure proceedings, and who recommended O'Connor to Feroleto-represented Feroleto in the parcel sale. (See Feroleto Dep. at 23-25, Dkt. No. 35:5.) On January 3, 2006, Longstreet closed on the sale of the parcel. Feroleto informed O'Connor and Longstreet that she wished to divert the parcel sale funds to pay her unsecured creditors and keep any remaining surplus for her own use. (See Hulslander Aff., Ex. L, Feroleto Emails, Dkt. No. 35:14.) However, based on prior conversations with O'Connor-who advised Longstreet to turn over the proceeds to the Trustee in accordance with the Bankruptcy Court's sale order, (see O'Connor Aff., Ex. J, O'Connor Dec. 21, 2005 Email, Dkt. No. 35:30)-Longstreet delivered to the Trustee $74,553.06, which represented the net proceeds of the parcel sale after payment of back and current taxes, closing costs, and other related fees. (See Hulslander Aff., Ex. K, Longstreet Jan. 6, 2006 Letter, Dkt. No. 35:13.)

On February 3, 2006, Deutsche issued a notice of default based on Feroleto's continued failure to make her mortgage payments and her failure to meet her obligations under the stipulation. (See Hulslander Aff., Ex. M, Dkt. No. 35:15.) Consequently, the Bankruptcy Court lifted the stay, which opened the door for Deutsche to commence foreclosure. (See Hulslander Aff., Ex. N, Dkt. No. 35:16.) And on August 30, 2006, Feroleto's house was sold at foreclosure for $400,000, which was $118,546.14 less than the actual value of the mortgage lien. (See Def. SMF ¶¶ 58-59, Dkt. No. 35:1.)

According to a letter sent by Deutsche's counsel to Feroleto, O'Connor, and Longstreet on February 20, 2007, the Trustee, despite having received the proceeds of the parcel sale, failed to turn over the proceeds to Deutsche pursuant to the Bankruptcy Court's sale order. (See id.) Shortly before receiving this letter, O'Connor notified the Trustee that Deutsche had not received the sale proceeds as required by the sale order. (See Celli Aff. ¶ 16, Dkt. No. 35:9.) Longstreet likewise contacted the Trustee regarding the distribution of the parcel sale proceeds. (See id. at ¶ 18.) Accordingly, the Trustee filed a motion with the Bankruptcy Court for an order directing how the proceeds should be disbursed. (See O'Connor Aff., Ex. M, Dkt. No. 35:33.) On June 18, 2007, the Bankruptcy Court ordered that the parcel sale proceeds be disbursed to Deutsche in accordance with the sale order's terms, and rejected Longstreet's contention that the funds should be distributed to Feroleto's unsecured creditors. (See id.)

On September 17, 2007, upon a motion filed by O'Connor, (see O'Connor Aff., Ex. N, Dkt. No. 35:34), the Bankruptcy Court permitted Feroleto to modify her chapter 13 plan by, inter alia, altering her payment amounts and schedule and by waiving all post-petition, pre-modification plan payment default. (See O'Connor Aff., Ex. O, Dkt. No. 35:35). Feroleto never made any payments on the modified plan. (See O'Connor Aff. ¶ 28, Dkt. No. 35:20.)

At some point after commencing her bankruptcy case, Feroleto engaged the services of a storage company in order to remove her possessions from her house prior to the foreclosure. (See Feroleto Dep. at 139-42, Dkt. No. 35:5.) However, Feroleto did not notify O'Connor that she had entered into a storage agreement until after the foreclosure sale occurred. (See id.) Specifically, in October 2007, Feroleto advised O'Connor that all her possessions were in storage, that she had defaulted on her storage payments, and that she was in danger of losing her possessions to a sale if she could not make the storage payments. (See id.; see also O'Connor Aff. ΒΆΒΆ 28-29, Dkt. No. 35:20.) Notwithstanding the fact that Feroleto violated the chapter 13 plan by incurring additional debt, O'Connor filed a motion with the Bankruptcy Court to temporarily waive her plan payments, which was granted to allow Feroleto to pay her ...

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