April 5, 2013
ALMA GARNETT, As Liquidating Trustee Of Boylan International, Inc., Plaintiff,
FOX, HORAN & CAMERINI, LLP, Defendant. Index No. 114079/2008
HON. CYNTHIA KERN, J.S.C.
Recitation, as required by CPLR 2219(a), of the papers considered in the review of this motion for:__
Notice of Motion and Affidavits Annexed........1
Notice of Cross-Motion and Affidavits Annexed ......................
Plaintiff commenced the instant action asserting, among other things, a claim for legal malpractice against defendant in relation to defendant's representation of Boylan International, Inc. ("Boylan International") in an underlying rent non-payment action. Defendant now moves for an order granting it summary judgment and dismissing plaintiffs complaint. For the reasons set forth below, defendant's motion is granted.
The relevant facts are as follows. This action is brought by Alma Garnett who is acting as the liquidating trustee for Boylan International. Third Party defendant Nuala Boylan ("Ms. Boylan") is the sole shareholder and Chief Executive Officer of Boylan International. In the instant action, Boylan International seeks damages from defendant Fox Horan & Camerini ("Fox Horan") based on Fox Horan's alleged negligent representation of Boylan International in an underlying action brought in the commercial part of the housing court based on Boylan International's non-payment of rent and additional rent to its former landlord (the "Underlying Action").
On or about May 14, 1997, Boylan International entered into a lease (the "Lease") for office space located at 601 West 26th Street (the "Premises"). Pursuant to the Lease, Boylan International was obligated to pay as rent or additional rent: (1) monthly base rent; (2) .94% of the building's real estate taxes; and (3) electrical charges, which varied with usage. The Lease also provided that in the event that the owner prevailed in a non-payment proceeding under the Lease, Boyland International would be obligated to pay the owner's attorneys' fees for said proceeding.
Over the years, Boyland International failed to make payments required by the Lease and subsequent non-payment proceedings were initiated, including the Underlying Action herein at issue. The Underlying Action was brought on or about August 2003. On or about April 21, 2004, Boylan International retained Fox Horan to represent it in the Underlying Action pursuant to a written retainer (the "Retainer Agreement"). At that time, Boylan International was already in default and facing eviction. However, after retaining Fox Horan, a stipulation was entered into which, among other things, allowed Boylan International to Answer and assert an affirmative defense. During the course of the litigation, the landlord's attorney became ill and the case was marked off the calendar for approximately two years. During this period, Boylan International did not pay rent or additional rent and the arrears grew to approximately $675, 000.
In 2006, the landlord moved for partial summary judgment and was granted judgment in the amount of $73, 174 with leave to amend the petition to seek additional arrears. Thereafter, the landlord again moved for partial summary judgment and was awarded additional rent due and use and occupancy. The order set out a payment schedule and ordered Boylan International to pay the use and occupancy fees to the landlord on the fifth of each month. If Boylan International defaulted on the payments, it was ordered that a "warrant will issue and execute." In the second order, the Honorable Judge Jaffe ordered that the case be restored to the trial calendar to resolve all remaining issues, which included the outstanding real estate taxes, electricity payments and attorneys' fees. By August 17, 2006, Boylan International had not paid the amount required by the first order, and the parties entered into a stipulation which provided for a payment plan. The Stipulation also provided that the action be restored to the trial calendar for November 6, 2006. However, for some unknown reason the case was subsequently adjourned to January 10, 2007 and, thereafter, adjourned to January 30, 2007. The final date was marked as "FINAL - do not adjourn." Nonetheless, Fox Horan alleges that it requested another adjournment as Ms. Boylan had notified it that she was sick and may not be able to make the trial. That request was denied and trial began on January 31, 2007. Ms. Boylan appeared in court and announced that she was seriously ill, but the proceedings nonetheless went forward.
Directly prior to trial, the parties reached an agreement as to the past due electrical charges. Specifically, Boylan International agreed to pay $92, 000 in two equal installments with the first due on or before February 15, 2007. The trial then proceeded on the issues of: (1) the unpaid real estate taxes; and (2) the attorneys' fees that landlord was claiming pursuant to the terms of the lease for the previous nearly four years of litigation. The landlord claimed that $276, 000 was due and owing pursuant to the real estate tax clause in the lease.
During trial, Fox Horan presented expert testimony of Gary Goldman in order to establish that Boylan International should not be liable for $243, 897 of the $276, 000 in real estate tax arrears based on the New York Supreme Court's holding in Blackstar Publishing Company v. 460 Park Associates, 137 Misc.2d 414 (N.Y. Sup. Ct. 1987) (the “Blackstar defense”). In Blackstar, the court found that a tax escalation clause in a commercial lease requiring the tenant to pay as additional rent a percentage of real estate taxes for every year during the lease did not necessarily require the tenant to pay for any increased tax assessments which resulted from extraordinary improvements to the premises that were not contemplated by the parties at the time the lease was executed. See id. Thus, both parties agree that the testimony of Mr. Goldman was crucial as this was its only viable defense to the non-payment of the real estate taxes. Fox Horan tried to offer various exhibits to corroborate the testimony of Mr. Goldman but the Court refused to admit these exhibits based on objections by opposing counsel. Both parties herein agree that these exhibits were "improperly precluded." After Mr. Goldman finished his testimony, Fox Horan called Ms. Boylan to testify. While on the stand, after having been sworn in, Ms. Boylan addressed the Judge directly before counsel from Fox Horan had an opportunity to ask any questions. The Judge then went off the record and a settlement was reached (the "Stipulation of Settlement").
Pursuant to the Stipulation of Settlement, Boylan International was to pay a total of $292, 000.00 in 5 different installments. The payment schedule required five monthly payments starting on February 15, 2007 and continuing through June 15, 2007. The first two payments would be $56, 000 and the remaining three would be for $60, 000 for a total of $292, 000, which represents $200, 000 in back real estate taxes and $92, 000 for the electric charges. The Stipulation of Settlement also notes that the landlord waived $76, 000 in real estate taxes and that upon default it could restore the matter for a hearing on the remaining $76, 000 and attorneys' fees. The Stipulation of Settlement also made explicit that upon default of the terms, a money judgment of $292, 000 against Boylan International and a warrant of eviction would be issued immediately. Finally, the Stipulation of Settlement stated:
"Both parties execute this settlement after having benefit of counsel and the opportunity to pursue their claims and defenses at trial. Both sides waive further trial in this matter and execute this settlement agreement willingly."
None of the conversations regarding settlement were on the record. However, Ms. Boylan claims that she announced in open court that she would not be able to make payments and by signing the stipulation she was signing her own "death warrant." Nonetheless, Ms. Boylan signed the Stipulation of Settlement as President for Boylan International.
Boylan International made an initial payment of $22, 477 towards satisfaction of the Stipulation of Settlement but failed to make any subsequent payments. About five months after the trial, Boylan International hired a different attorney, James Moriarty, to seek to have the Stipulation of Settlement vacated. That action was eventually withdrawn. Due to Boylan International's failure to pay the amounts specified in the Stipulation of Settlement, a money judgement and warrant of eviction were issued. Thereafter, Boylan International's bank accounts were frozen in order for the landlord to recover under the judgment. Boylan International eventually filed for bankruptcy.
On or about October 22, 2008, plaintiff commenced the instant action. Plaintiffs initial complaint contained five causes of action: (1) legal malpractice in failing to properly prepare for trial; (2) legal malpractice in failing to properly conduct the trial; (3) legal malpractice in negotiating and coercing the settlement; (4) legal malpractice in acting under a clear conflict of interest in coercing the settlement; and (5) fraud in attempting to dissuade Boylan International from taking action to vitiate the settlement. Fox Horan moved to dismiss the initial complaint and the court granted its motion. However, it also granted leave to amend the first three causes of action for legal malpractice. Boylan International then submitted its Amended Complaint and Fox Horan again moved to dismiss. The court granted Fox Horan's motion and Boylan International appealed. On appeal, the Appellate Division First Department reversed the lower court's dismissal, reinstated the malpractice claims and remanded the case for response, discovery and trial. Fox Horan has now made the instant motion for summary judgment.
On a motion for summary judgment, the movant bears the burden of presenting sufficient evidence to demonstrate the absence of any material issues of fact. See Alvarez v. Prospect Hosp., 68 N.Y.2d 320, 324 (1986). Once the movant establishes a
prima facie right to judgment as a matter of law, the burden shifts to the party opposing the motion to "produce evidentiary proof in admissible form sufficient to require a trial of material questions of fact on which he rests his claim." Zuckerman v. City of New York, 49 N.Y.2d 557, 562 (1980). However, "mere conclusions, expressions of hope or unsubstantiated allegations or assertions are insufficient" to defeat summary judgment. Id.
In the instant action, the defendant has presented sufficient evidence demonstrating the absence of any material issues of fact warranting a grant of summary judgment in its favor. A prima facie case for legal malpractice requires a plaintiff to establish "that the defendant attorney failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession which results in actual damages to a plaintiff, and that the plaintiff would have succeeded on the merits of the underlying action 'but for' the attorney's negligence." Leder v. Spigel, 9 N.Y.3d 836 (2007) (quoting Am-Base Corp. V. Davis Polk & Wardwell, 8 N.Y.3d 428, 434 (2007)). Specifically, when the underlying action was settled, a plaintiff must show that but for its attorney's actions it would not have entered into the settlement or it would have been entitled to a more favorable settlement. See Rau v. Borenkoff, 262 A.D.2d 388, 389 (1st Dept 1999); See Rogers v. Ettinger, 163 A.D.2d 257 (1st Dept 1990). Thus, in order to succeed "on a motion for summary judgment to dismiss the action, a defendant must proffer admissible evidence establishing that the plaintiff is unable to prove at least one of the essential elements of his or her case."
E. Suydam v. J. O 'Neill, 276 A.D.2d 549 (2nd Dept 2000).
In the instant action, defendant has presented sufficient evidence establishing that plaintiff cannot prove that defendant acted negligently or that "but for" defendant's actions it would have reached a more beneficial settlement. It is well settled that "[a]ttorneys' may select among reasonable courses of action in prosecuting their clients' cases without thereby committing malpractice, so that a purported malpractice claim that amounts only to a client's criticism of counsel's strategy may be dismissed." Dweck Law Firm v. Mann, 283 A.D.2d 292, 293 (1st Dept 2001) (internal citations omitted). Plaintiff asserts that defendant negligently "(1) prepared for trial; (2) failed to properly advise Boylan in response to her being sued; (3) conducted the trial; and (4) advised Boylan, through Ms. Nuala Boylan, to improvidently settle the matter without advising Boylan of its rights or opportunities half-way though the trial." Specifically, plaintiff asserts that defendant was negligent in its representation by failing to mount a defense to Boylan's real estate tax assessment arrears based on the Blackstar defense and coercing Boylan into executing the settlement although it knew the dire consequences thereof. However, the transcript of the trial presented by defendant in its moving papers refutes these allegations. According to the transcript, defendant had hired and presented Mr. Goldman as an expert witness to testify about the renovations to the building. As plaintiff itself admits "Mr. Goldman had been prepared to testify-and would have testified had he been allowed-that [the landlord] artificially increased the real estate taxes so as to leverage each successive year's tax increases against [Boylan International]." Accordingly, defendant did indeed present the Blackstar defense during trial. It was due to the objections of opposing counsel, not defendant's actions, that defendant was unable to enter certain items into evidence that substantiated Mr. Goldman's testimony. Nothing in the transcript reveals that defendant's conduct was unreasonable and defendant could not have predicted the Judge's evidentiary rulings prior to trial. Additionally, even if defendant could have presented the evidence in a different form and have it admitted at trial, there was no guarantee that the court would have found in accordance with the Blackstar holding and lowered the amount of real estate taxes Boylan International owed to the landlord. The holding in Blackstar was neither binding on the housing court nor dispositive of the issue. Additionally, the trial transcript reveals no signs of coercion, nor does the record contain any evidence that defendant's conduct during the trial forced plaintiff to enter into the Stipulation of Settlement. Indeed, as defendant points out, the Stipulation of Settlement specifically states that all parties entered into it "willingly."
In response, plaintiff has failed to present evidence demonstrating a material issue of fact in dispute. While plaintiff raises a host of issues regarding defendant's conduct prior to and during trial, she presents no evidence to support these contentions other than the self-serving affidavit of Ms. Boylan. This is insufficient to defeat a motion for summary judgment. Especially where, as here, the other evidence in the record tends to refute instead of support the statements made by Ms. Boylan in her affidavit. For example, the Stipulation of Settlement was not, contrary to plaintiffs contention, for more than was demanded in the complaint. Pursuant to the Stipulation of Settlement, the landlord actually waived $76, 000 in real estate tax arrears and all attorneys' fees. Thus, Boylan International faced liability far exceeding the amount settled for.
Additionally, even assuming, arguendo, that defendant could have taken different actions leading up to and during trial, it is well settled that "selection of one among several reasonable courses of action does not constitute malpractice." Rosner v. Paley, 65 N.Y.2d 736 (1985); see also Iocovello v. Weingrad & Weingrad, 4 A.D.3d 208 (1st Dept 2004) (finding that failure to present evidence on one form over another was insufficient to sustain legal malpractice claim). Thus, while plaintiff asserts that defendant's failure to present evidence in a different form during trial demonstrates negligence, this contention is without merit. Simply put, the evidence presented by plaintiff demonstrates only "speculation whether a different handling of the case by defendant's attorneys, or participation by particular member of defendants's firm, would have resulted more favorably to plaintiff than the settlement that was actually made." See Becker v. Mien, Blitz & Schlesinger, 66 A.D.2d 674 (1st Dept 1978). This is insufficient to defeat a motion for summary judgment.
Additionally, Ms. Boylan's contention that she was forced and coerced into entering into the Stipulation of Settlement is unavailing. In the affidavit attached to plaintiffs opposition papers, Ms. Boylan attests that defendant placed the Stipulation of Settlement in front of her and told her that "she was required to sign it and that she had only a minute to do so... [and] insisted that [she] sign the Stipulation stating -inaccurately-that it had no choice, without even discussing any alternatives." This conclusory self serving statement is insufficient to raise a triable issue of fact as to whether defendant "coerced" plaintiff into settling. Plaintiff signed the agreement which states that she entered into it "willing." Moreover, in her affidavit attached to plaintiffs opposition papers, Ms. Boylan admits that when presented with the Stipulation of Settlement she "knew [Boylan International] could not afford to comply with such arrangement." Clearly this demonstrates that plaintiff had read and understood the terms of the Stipulation of Settlement prior to signing it. Thus, there is no dispute that Boylan International understood the terms of the t Stipulation of Settlement and entered into it "willing" as a matter of law.
Plaintiffs contention that defendant's motion should be denied as it failed to present an expert affidavit attesting that defendant's conduct was reasonable as required by Suppiah v. Kalish, 76 A.D.3d 829 (1st Dept 2010) is also unavailing. In the subsequent case of Wo Yee Hing Realty, Corp. v. Stern, 99 A.D.3d 58 (1st Dept 2012), the First Department distinguished its holding in Suppiah to instances when the claim for malpractice involves suits pertaining to immigration matters or other issues that are so "byzantine" that the issue of reasonable conduct or proximate cause could not be resolved without expert testimony. Wo Yee Hing Realty, 99 A.D.3d at 63. Here, like the issues involved in Wo Yee Hing Realty, the governing legal framework is undisputed and there is no need for expert testimony on this point.
Finally, plaintiffs contention that summary judgment should be denied pursuant to CPLR § 3212(f) because discovery is outstanding is without merit. "A determination of summary judgment cannot be avoided by a claimed need for discovery unless some evidentiary basis is offered to suggest that discovery may lead to relevant evidence." Rutture & Sons Constr. Co. v. Petrocelli Constr., 257 A.D.2d 614 (2d Dept 1999). While plaintiff argues that defendant is in the sole and exclusive procession of the case file in the Underlying Action, the New York City Department of Buildings records, and the Retainer Agreement, none of these documents are relevant to the instant action for malpractice.
Based on the foregoing, defendant's motion for summary judgment dismissing plaintiffs complaint is granted. The Clerk is directed to enter accordingly. This constitutes the decision and order of the court.