United States District Court, S.D. New York
MARIA ARMENDARIZ and LORENZO and MARIA'S 1418 KITCHEN CO., Plaintiffs,
HOROWITZ LAW GROUP, LLC and STEVEN B. HOROWITZ, Defendants.
OPINION & ORDER
LORETTA A. PRESKA, Chief District Judge.
Maria Armendariz ("Armendariz") owns Lorenzo and Maria's 148 Kitchen Co., a restaurant in New York City. (Am. Compl. ¶ 1, ECF No. 27.) Armendariz, on behalf of herself and her restaurant (collectively, "Plaintiffs"), has brought a legal malpractice claim against the Horowitz Law Group, LLC and Steven Horowitz (collectively, "Defendants"), alleging that Defendants negligently represented Plaintiffs in an employment discrimination case (the "Underlying Action"). (Id. ¶¶ 2-3.) Defendants move to dismiss Plaintiffs' Amended Complaint.
A. Underlying Action
On March 8, 2013, two of Plaintiffs' former employees commenced the Underlying Action against Plaintiffs in the United States District Court for the Southern District of New York. (Pls.' Opp'n to Defs.' Mot. to Dismiss the Am. Compl. ("Pls.' Opp'n II") at 1, ECF No. 35.) The former employees alleged that they suffered employment discrimination and sexual harassment, and sought wages for overtime work. (Id.) On June 1, 2013, Plaintiffs retained Defendants as counsel. (Am. Compl. ¶ 9.) Following negotiations, Defendants drafted a settlement agreement, signed by Plaintiffs and their former employees on February 28, 2014. (Pls.' Opp'n II at 2.) On April 1, 2014, the Court entered a Stipulation of Dismissal for the Underlying Action. (Id.)
B. Original Complaint
On May 5, 2014, Plaintiffs commenced the instant action for legal malpractice in New York State Supreme Court, New York County. (Defs.' Mem. of Law in Supp. of Defs.' Mot. to Dismiss the Am. Compl. ("Defs.' Mot. II") at 2, ECF No. 31.) In their Original Complaint, Plaintiffs alleged that Defendants presented incorrect financial, employment, and wage records to Plaintiffs' former employees in the Underlying Action, and that Defendants relied on this improper documentation during the negotiation and drafting stages of the settlement agreement. (Compl. ¶ 12, ECF No. 1.) Plaintiffs also alleged that Defendants failed to negotiate a provision that would remove negative information about Plaintiffs from the internet. (Id. ¶ 14.) Plaintiffs claimed that as a result of Defendants' inadequate representation, Plaintiffs ultimately paid a settlement amount thirty percent higher than if Defendants had relied on correct documentation. (Id. ¶ 15.)
On June 5, 2014, Defendants removed to the United States District Court for the Southern District of New York. (Defs.' Notice of Removal ¶ 6, ECF No. 1.) On June 17, 2014, pursuant to Fed.R.Civ.P. 12(b)(6), Defendants moved to dismiss Plaintiffs' Complaint for failure to state a claim. (Defs.' Mot. II at 2.) On July 1, 2014, Plaintiffs opposed the motion and cross-moved for leave to amend. (Id.) Plaintiffs also moved to seal the settlement agreement in the Underlying Action. (Id.) Defendants replied to Plaintiffs' opposition on July 7, 2014, but did not oppose Plaintiffs' motion to seal. (Defs.' Reply in Supp. of Defs.' Mot. to Dismiss the Compl. ("Defs.' Reply I") at 1, ECF No. 21.)
On November 13, 2014, following oral argument, the Court denied Defendants' motion to dismiss and granted Plaintiffs' motions for leave to amend and to seal the settlement agreement in the Underlying Action. (Tr. of Nov. 13, 2014 Hr'g ("Tr. 11/13/2014") at 12.)
C. Amended Complaint
On December 5, 2014, Plaintiffs filed an Amended Complaint. (Am. Compl. ¶ 1.) The Amended Complaint elaborates on the allegations in the original Complaint, accusing Defendants of failing to "review the employment records and wage records"; serve interrogatories, conduct depositions, or interview witnesses; examine financial records; and recognize that Plaintiffs' loans to their former employees could have offset the final settlement sum. (Id. ¶¶ 13-14, 19.) Plaintiffs seek damages in excess of $300, 000. (Id. ¶ 32.)
On December 11, 2014, Defendants moved to dismiss the Amended Complaint for failure to state a claim, repeating many of the allegations in their first motion to dismiss. (Defs.' Mot. II at 1.) Plaintiffs opposed on January 5, 2015, (Pls.' Opp'n II at 1), and Defendants replied on January 7, 2015, (Defs.' Reply in Supp. of Defs.' Mot. to Dismiss the Am. Compl. ("Defs.' Reply II") at 1, ECF No. 37).
A. Legal ...