Margery Rubin as Trustee of the Rubin Family Realty Trust, et al., Plaintiffs-Respondents,
Duncan, Fish & Vogel, L.L.P., et al., Defendants-Appellants.
Brisbois Bisgaard & Smith LLP, New York (Jordan A.
Ehrlich of counsel), for appellants.
Offices of Edward C. Kramer, P.C., New York (Edward C. Kramer
of counsel), for respondents.
Sweeny, J.P., Renwick, Andrias, Kahn, Gesmer, JJ.
Supreme Court, New York County (Geoffrey D. Wright, J.),
entered October 19, 2015, which, to the extent appealed from,
denied defendants' motion to dismiss the claims asserted
by the individual plaintiffs, Margery Rubin and Robert Rubin,
unanimously reversed, on the law, with costs, and the motion
granted. Order, same court and Justice, entered March 20,
2016, which, upon reargument, conditionally granted
defendants' motion to dismiss the individual
plaintiffs' claims, unanimously modified, on the law, to
grant the motion unconditionally, and, as so modified,
affirmed, without costs. Order, same court and Justice,
entered March 20, 2016, which, upon reargument, denied
defendants' motion to dismiss the claims asserted by
plaintiff Rubin Family Irrevocable Marital Trust (the Marital
Trust), unanimously modified, on the law, to grant the motion
as to the claims of legal malpractice in connection with the
settlement of the America's Cutting Edge Holdings, Inc.
(ACE) litigation, except for the claim that defendants failed
to obtain credit for plaintiffs of some $200, 000 paid
against the note and the claim based on deposition advice
given to Margery Rubin, and to grant the motion as to the
claim for punitive damages, and otherwise affirmed, without
failure of the individual plaintiffs to schedule the instant
claims as assets in their Chapter 11 bankruptcies bars their
pursuit of those claims (Dynamics Corp. of Am. v Marine
Midland Bank-N.Y., 69 N.Y.2d 191');">69 N.Y.2d 191 ). It is
immaterial that the bankruptcy court had actual knowledge of
the existence of the claims (s ee Donaldson, Lufkin &
Jenrette Sec. Corp. v Mathiasen, 207 A.D.2d 280, 282
[1st Dept 1994]).
because the Marital Trust never filed for bankruptcy, it did
not lose its claims. Further, contrary to defendants'
contention, cognizable damages are pleaded by the Marital
Trust's allegations that it incurred legal fees and that
it lost any source of repayment for its loans to the other
plaintiffs by virtue of defendants' malpractice. Thus,
the Marital Trust alone has standing to assert the claims in
regard to the merits, the complaint fails to state a cause of
action for malpractice based on the settlement in the ACE
litigation, with one exception. Plaintiffs do not allege that
they received insufficient advice as to the potential risks
of a settlement that did not release all plaintiffs. Even if
the advice they received was insufficient, ACE had, on its
own, declared that it would not accept such a release, and
plaintiffs do not argue that the Rubin Family Irrevocable
Stock Trust (the Stock Trust) would not have lost the
underlying action in any event, which would have placed them
in the same position, regardless of any action by defendants
(see Lindenman v Kreitzer, 7 A.D.3d 30, 34 [1st Dept
2004]). The exception is plaintiffs' allegation that
defendants failed to obtain credit in the settlement for
$200, 000 that the Stock Trust paid on the note.
complaint fails to state a cause of action for malpractice
based on the "recap" of accounts and balances
provided in the Utah action. While defendants arguably should
have found the error in the recap, the error did not cause
plaintiffs any harm. It was irrelevant to the Utah
proceeding. In the judgment enforcement action in the U.S.
District Court for the Southern District of New York, in
which the transaction was expressly litigated, plaintiffs
were represented by new counsel, and neither they nor counsel
corrected the error.
complaint states a cause of action for malpractice based on
the deposition advice given to Margery Rubin. The doctrine of
judicial estoppel does not preclude plaintiffs from arguing
against counsel that counsel's alleged advice as to
giving perjurious testimony caused injury (see D & L
Holdings v Goldman Co., 287 A.D.2d 65, 71 [1st Dept
2001], lv denied 97 N.Y.2d 611');">97 N.Y.2d 611 ). Margery
Rubin did not prevail in the Utah action by virtue of her
testimony. Moreover, the District Court for the Southern
District of New York expressly relied on that testimony in
finding certain transfers void and entering the turnover
claim for punitive damages must be dismissed because the acts
alleged by plaintiffs as a basis therefor are not part of any
cause of action and because plaintiffs ...