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Oak Forest Products, Inc. v. Hiscock & Barclay, LLP

United States District Court, Western District of New York

March 4, 2015

HISCOCK & BARCLAY, LLP a New York Limited Liability Partnership, Defendant.



This action arises from allegations of legal malpractice against defendant Hiscock & Barclay ("H&B" or the "defendant firm") in connection with its representation of Oak Forest Products, Inc. ("OFP"), its Taiwanese sister corporation Oak Forest Products, Inc. (Taiwan) ("OFP-Taiwan"), OFP President and sole owner Thomas Cartwright ("Cartwright") and OFP- Taiwan President and sole owner Michael Lai ("Lai").

It is undisputed that beginning in or about 2002, Thomas Fitzgerald ("Fitzgerald"), who later joined H&B, represented the plaintiffs relative to a design patent initially owned by Cartwright, and later transferred to OFP-Taiwan and/or Lai, and that Fitzgerald continued to provide services to the plaintiffs relative to the patent, and a copyright on the same product, through and after 2008. On September 18, 2008, OFP retained H&B, via a continent fee agreement, to provide legal services in connection with alleged infringement of the design patent and copyright. It is undisputed that the fee agreement expressly provided that OFP was the sole client, and that H&B did not represent "its shareholders, directors, partners, members, managers, or employees." (Dkt. #108-33 at ¶5).

H&B subsequently filed litigation on behalf of OFP in this Court, Oak Forest Products, Inc. v. Home Depot, USA et al., 08-CV-6531-DGL ("underlying litigation"), alleging causes of action against two defendants for design patent infringement ("Patent Claim") and copyright infringement ("Copyright Claim").

In or about April 2011, H&B informed OFP that it could not continue the underlying litigation without assurances that it would be paid for its efforts, and encouraged OFP to grant it the necessary authority to pursue a settlement. OFP refused, and advised H&B that it was unable to pay for further representation. On June 15, 2011, H&B moved to withdraw as counsel for OFP in the underlying litigation, and that motion was granted on January 12, 2012. Within a few weeks, OFP retained new counsel, settled the underlying litigation in its entirety, and brought this action alleging that H&B had committed malpractice when it failed to provide the defendants in the underlying action with sufficiently timely notice of infringement as required by statute, and thereby prevented plaintiffs from being able to claim or recover the full amount of damages on their Patent Claim. This case was initially commenced in Florida state court and was then removed to the federal district court for the Western District of Florida, on or about March 21, 2012. On August 7, 2012, the Florida district court granted a motion by H&B to transfer venue of the action here, to the Western District of New York.

H&B now moves for summary judgment dismissing the case (Dkt. #108), on the grounds that: (1) OFP's voluntary settlement of the underlying action operates as a waiver which bars it from now asserting that H&B committed malpractice; and (2) the remaining plaintiffs (Cartwright, Lai and OFP-Taiwan) were never clients of H&B, and thus lack "standing" to assert these malpractice claims. H&B has also moved to strike certain deposition transcripts filed by plaintiffs on January 13, 2015, after expiration of the briefing schedule for the instant motion. (Dkt. #134).

For the reasons set forth below, H&B's motion for summary judgment (Dkt. #108) is denied, and H&B's motion to strike (Dkt. #134) is denied as moot.


I. Standard on a Motion for Summary Judgment

Summary judgment will be granted if the record demonstrates that ''there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.'' Fed.R.Civ.P. 56(c); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986). To defeat a motion for summary judgment[, ] a plaintiff cannot rely on mere 'conjecture or surmise.''' Heilweil v. Mount Sinai Hosp., 32 F.3d 718, 723 (2d Cir. 1994).

II. H&B's Motion for Summary Judgment

A. Plaintiffs' Malpractice Claim

Under New York law, which the parties agree governs here, in order to prevail on a claim for malpractice the plaintiffs "must prove that [their] 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 the plaintiff, and that but for the attorney's negligence, plaintiff would have been successful in the underlying action [or would have avoided damages in some other way].'" Harleysville Worcester Ins. Co. v. Hurwitz et al., 2005 U.S. Dist. LEXIS 5721 at *8 (S.D.N.Y. 2005) (quoting Carney v. Philippone, 332 F.3d 163, 167 (2d Cir. 2003).

Accordingly, H&B bears the burden on its motion for summary judgment to show that the plaintiffs cannot prove one or more of the elements of their malpractice claim.[1] H&B does not dispute that there are questions of fact concerning the negligence element, but argues that plaintiffs cannot demonstrate that the alleged negligence proximately caused any damages to the plaintiffs. See Brill & Meisel v. Brown, 2012 N.Y Misc. LEXIS 3856 at *30-*31 (Sup. Ct. N.Y. County 2012) ("[a]t trial, a former client maintains the burden to prove that he . . . would not have incurred any damages but for the attorney's negligence . . . [i]t follows, that on summary judgment, the movant must demonstrate ...

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