Lacher v Engel

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Lacher v Engel 2005 NY Slip Op 30507(U) April 28, 2005 Supreme Court, New York County Docket Number: 109525/04 Judge: Shirley Werner Kornreich Republished from New York State Unified Court System's E-Courts Service. Search E-Courts (http://www.nycourts.gov/ecourts) for any additional information on this case. This opinion is uncorrected and not selected for official publication. [* 1] SUPREME COURT OF THE STATE OF NEW YORK 7 NEW YORK COUNTY PART 5% 0109525/2004 LACHER, MICHAEL A. l D E X NO. V6 ENGEL, THOMAS E. SEQ 1 DISMISS ACTION i Ndce of Mgtfon/ Q r d m o w Cause L - --cccc - Exhlbh8 ... AWdavItu Answering Affldavhm - Ewhlbits __c_ 5,6 Ruplylng Affidavltr _c_ Cross-Motion: R Yes )&I No h Upon the foregoing prpers, it 1% orderod that this motion 1s &dQd Q wJ& e '6 ( ,-.- [* 2] Plaintiff, Index No.; 109525f04 -against- DECISION, and ORDER THOMAS E. ENGEL, This is a defamahn action by plaintiff Michael A. Lacher. The complaint alleges defamation arising h m statements made in: (1) the complaint i the action Puramstrir Cupitnl n Manugemenl, U C v. Lacher (Index No. 603889i03) (the **Malpractice Action ); (2) mil l article in the July 3,2003, New York Law Jownaf C NYLX ), entitled Malpractice Suit Claims Attorney Padded Bills (the Article ); and (3) the course of the arbitration proceeding a t t e Ricizurd 0. nild Berner Y Erik PostnieRc (AAA No,13-Y-169-02230-01) Bmer Arbitratim )). Dcfendant (the Thomas E.Engel now moves to dismiss the complaint, pursuant to CPLR 321 l(a)(l) and (a)(7), and for sanctions. In support of hiis motion, defendant submits copies of:CBSC law; a transcript from the Arbitration, dated July 17,2003; and correspondonceto plaintiffs counsel, dated August 13,2004. Plaintiff has opposed, submitting the a h a d o n of counsel mid a copy of thc complaint with its exhibits, uiz., t h e Malpractice Action s mmmons and complaint, the Aiticlc, and the Court s Decisiun, Order and Judgment, dated November 21,2003; defendant has replied. I. Siatemert o F a t s f Plaintiff alleges the followhg in his complaint. InDecember 2001, Erik Postnicks, 1 [* 3] Paramehic Capital Mmagement, LLC and Diversified Capital managmcnt, Ud. (collatively, tbe PCM clients ), pursuant to a written agreement, retained plaintiffs law finn to rcprcsctrt them as defendants i an Arbitration, as well as in a Suprme Court: action. Compl.,para. 3. Mr. n Lacher and his firm (the Lachor firm > represented the PCM clicnts for approximately eightecii months in the Bemer arbitration, an arbitration seeking to collect keU over $300 Milliou from the PCM clients. Id., paras, 3,4. Themafter, 011or about June 5,2003, h b e r Wns requircd Mr. resign by reason ofirro-ncilablo & i d co&dsmhns which arose during tagtjlllony of Erik Pastnicks i the arbitdon, as well as Postnicks breacb ofthe retainer agreement. Id,, n para. 5 . Defendant Engel and his law finn were then substituted i as the PCM client# counsel in n the Berries Arbitration, and also provided legal counsel to them regardhg rn investigation by Ilw New York Attorney General and other regulatory agencies. Compl., para. 6. Plaintiff claims that defendant, i an attempt to divert attention away from possible exposure of the ethical issues n which prompted the Lacher firm to withdraw and to divert his clients attention from h i g own incapacityE,] filed the complaint in the Malpractice Action. Id, para 7. A. n Malpractice Action e On July 2,2003,defendant filed tbe complaint in the Malpractice Action (the "Underlying Complaint ), on behalf of the PCM clients. Compl., para. 8. The Underlying Coniptaiut alleged eight causes of action against plahmmd his fim, v h . , (1) dcccit and collusion under Judiciary Law Section 487; (2) fraud; (3) lepl malprxtica; (4) breach of implied contract; (5) breach of fiduciary duty; (6)d u s t dchmmt; (7) rescission; and (8) injunction--all arising from plaintiff s legal regresentation of the PCM clients. See id.,Ex. A. The Underlying 2 [* 4] Complaint also contained v ~ o u allegations regarding Mr. Lacher s representation of the PCM s clients. Specifically, it stated that Mr. Lacher, inter alia, &tmdpaymmts from the PCM clients (para. 1) secretly planned to bilk [the PCM clients] of millions of dollars under the 2; guise of rendaing legal semices which [the Lacher hnever intmcbd to provide (para. 13); ] engaged in a chronic and extreme pattern of legal delinquency, defrau&d [the PCM clicnls]. and engaged in conduct intended to deceive [the PCM clients], on a daily basia, over an 1 8month peiiod (para 35) (emphasis supplid). On November 21,2003, the Court granted the di&ssal motion of Mr. k h c r and other defendants, to the extent that the fist, second, fourth, sixth, seventh and eighth causes of action [were] dismissed with prejudice and tho third [legal malpractice] and fifth [breach of fiduciary duty] causes of action [were] dismissed with leave to replead when these olaims bcconm [sic.] ripe. See Compl. at Ex.C Decision, Order and Judgment dated November 21,2003, 13. p. B. The M Z J ArctcZe I a New York Law Journal Article Written by Anthony Lin, entitled MalpracticeSuit n Claims Attorney Padded BiUs, Mr. Engel made the following statement: Myclient [the PCM clients] was very poorly served by a member of my profession to whom duty wit well after otkcr aims and intcrcsts. Compl., Ex.E,7/3/2003 NYW 1, (col. 3). Plaintiff alleges that, at the time this statement was made to the NYU, the Underlying Complaint had not yet been fiilcd. See Aff. of Edward B. C. Safran, p m . 8. The Statemen& made during the Berner Arbitratiun The Appellate Division afbned the decision. Parametric Capital Mgml.. LLC: Lacher, -A.J).3d 791 N.YS2d 10 (1st Dept. 2005). 3 I). [* 5] At a hearing for the Bmer Arbitration, held on the record on July 17, 2003 (the Subjcct Hearing ), and in the presence of various parties: M i Engci made, inter alia, fie following statemaits: Mr. hcher was committing afralld o emmousproportions ; It was clear, for f exmple, that the lawyers [i.c. Lacher and his firm] never really did the work that should havc been done. It was clear they never did the work that they were asked to be paid for. And it was clear that they never worked anytbmg close to the hours that they claim ; it became utterly clear to me also that i addjtion t being a thief, MY. n o Lachar w m a liar ; and MF. Laclaor wup sorf OJ a ptrthalogkal character (emphasis supplied). U. Conclusions o Law f A party may move to dismiss a cause of action asserted where a defense is founded upm documentary evidence; or. (a)(7). ~ . the pl- fails to state a cause of action[.] CPLR 321 L) (( a I), When addressing such a motion to dismiss, h e Cuurt must accept as tru~ facts as the alleged i the complaint as well as submissions in opposition to the motion, according plaintiff n the benefit of every possible favorable infierence. Sokoloflv. Hurriman Estates Dcv. Corp.,36 N.Y.2d 409,414 (2001). However, allegations that consist only of bare legal conclusior~s not are entitled to such consideration. 1Yliebert v. McKoan, 228 A.D.2d 232 (1st Dept. 1936) (citations omitted). Dismissal obligates a defendant to demonstrate that the facts 8s alleged by plahtiff fit within no cognizable legal theory. CBS COT. v. Dumsday, 2i AD-2d 350,352 (1st Dept. 6i ZOOO), citing Leon v. Martinez, 84 N.Y.2d83,8748 (1994). The CPLR 321 1 viability of The trans~pt fiom July 17,2003 of the Berner Arbitration indicates that John H. Wilkkon, Hon. Walter M. Shackman, Richard L. Mattiaccio, Annclitsc R. Tursi, Roger E. P o d a h , Maura Kathleen Monaghan, Steve Vaccaro, Jessica Reilly, Richard 0. Berner, Erik Postnieks, Jan Grcer and Ani Setrakian were present a the subject hearing. See Horn11 AAE, Ex. t B, p ~2338-39. . 4 [* 6] plaintiffs claims is assessed below. The elements [of defamation] are a falee statement, published without privilege or authorization to a .third party, constituting fault FGjudgeti by, at a minimum, a negligence stmdard, and it must either cause special ham or constitute defamation per se. Dillotz Y. ~ i t c!f y Nau YWk,261 A.D.2d 34,38 (1st Dept. 1999). Plaintiff i not required to plead special damages s where the alfeged slander, inter aZia, either charges plaintiff with a serious crime or tends to im*jUrsplaint;Hiii hi= *de. biicinecc or profession. 549 H a 6 u Hii-sh, 228 A.D.2d 206.206 . (1st Dept. 1496); see also Chiuvarelli v. VilZium,256 A-D.2d 111, 113 (1st Dept. 1998). To constitute libel per se, %e challenged statments mmt be moE than a genml reflection upon the plaintiffs character or qualities, and must suggtxt improper performance of his duties or unprofessional conduct[.] Chiavurelli at 113 (intend citations omitted) citing Gold v. Enqlcirer/Stur Group, Inc., 89 N.Y.2d 1074, 1076 ( 9 7 . 19) It is well settled, hawevex, that oral or written statements are absolutely privileged and protected from defamation claims, when such statements are m d e i the course of a judicial n proceeding, [and] are material or pertinent to the litigation[,1 Burattu Y. Hubbud, I36 A.D.2d 467,468 (1st Dept. 1988). The Court, in determiningwhether the statements are pertinent to thc underlying action, must comtnrc f m liberalIy. Id. at 469 ( [ilt is enough if the offending h statement maypossibly bear on the issues in Iftigotion. . .strict legal materiality or relcvmcy is not required to confer the privilege ) (emphasis supplied) (internal citations onlittd); see also Seldon v. Rabinowik, 706 Fm Supp. 13,14 (S.D.N.Y.1939)( *couTts have construed pertinency or relevancy liberally, resolving my doubts in favor of upholding the privilegc ). Stalements contained in the Mulpraclice Acti~ii Cumplalrrt s 5 [* 7] It is apparent that various statements made i the Underlying Complaint would ordi~~urily n be libelousper ~ e Defendant argues that hc is entitIed t dismissal because the Underlying . ~ o Complaint is absolutely privileged and, therefore is protected h m liability herein. The Court agrees with defendant. Many of the statements contained in the Underlying Complaint were pertinent to the legul issues set forth by the PCM clients in their various causes of action. Although the Court d i s m i s d d l of b s a causm of action. the Court gramtad PCM leave to r e p l d the legal malpractice and breach of fiduciary duty claim. I light of the liberal standard with which this n privilege is applied and the arguable relevance of many of the allegations in the Underlying Complaint, defendant may not be found liable for those statements contained i the Coniplaint. n On tho othar hand, the statemants that Lacher used [the retainer s] provision as a club with which to extort immediate payments of their fees (para 12) and defiauded [the PCM clients] (para. 35) a superfluous and incmdiary allegations of criminal conduct, w i h are riot e hc protected. When according plaintBtvery hvorable inference, they have stated a cause of action for defamation arising from these statements. Statements made drrring the Arbitration Similarly, Mr. Engel s statements during the Subject Hearing are to mint degree privileged a they were statemcnts made itl the course of a quasi-judicial pmcteding to explain s Specifically, the Underlying Complaint contained allegationsthat Mr.Lacher, mter d u extorted payments from the PCM clients (para. 12); secretly planned to bilk [the PCM i, chants] of millions of dollars under the guise of rendering legal aervices which [the Lacher firm] ncwr intcndcd to provide ( para, 13); engaged i a dmnic and extreme pattcrn of legal n delinquency, defrauded [the PCM clients], and mgagd i conduct intended to deceive [the PCM n clients], on a daily basis, over an 18-month period (pant- 35). 6 [* 8] the Lacher fum s sudden d8pattu-afrom the case, the prejudice to the PCM clicnta and the need for a rehasring. See Hmfeiii & Stem v. Beck; 175 kD.2d 689,691 (1st Dqt. 1991) (atatemmt~ made in come of quasi-judicial procedding are absolutely privileged EO long BS they are m a t d and pertinent to the questions invohed notwith&mdingthe motive with wbich they arc made ) (intmd citatiom omitted). Indeed, a number of the statements were pertineat to quastions asked of Mi. Engal by the Arbitration s panel. Since absolute privilege appliw to those s t a f e m o n ~plaintifPa oloim ofdofundon may nat ntPnd , nu ng&d &. - &a p w r pa Weimaub, 22 N.Y.2d 330,332 (1960). Nonetbe1ess, defendant s statements accusing MI-. Lachar of b u d and calling bim a thief, a Liar, and a pathological cham&, had no place 31the legal prwedhga. Thus, . defendant s motion to dismiss muat be denied as to these statemenb. Statenten& irz The h%!J Article Similarly, defcndat2t has not shown that his statements t the NYLJ warrant protaction, as o they were nat made inthe course'^ of L judicial proceeding. P4iniiffoonttnde that the statemmts to the ? %LJ wmu madu prior t the filing of tha complrrint, and the documentary 4 . o evidence submitted by defendant does not demonstrat0 otharwisc. New York Civil Rights Law provides that [a] civil action cannot be maintained again&. any person, firm or corporation, for the publication of a fair and true mport of any judicial proceeding, legislative pmecding or other official p r o c e d q [ , ~ Civ R fi 74. The prhdege NY of Section 74 applim 50 long a8 the statement is a substmhlly m u a t e description of the allegation [ nthe judicial procaeding.J FMofu. Ab&, i 280 A.D.2d 457,418 (1st Dept, 2001). Here, the question ofwhether Mr. Engel s statampats were a fair and true r the wof 7 [* 9] Mnlpractica Action remains at kma. Further, th8 wnq&.int c b thatw.&gel wiciously filed a bogus . . laws& against lac^.]" Compl., para A; me WilZiwnsY, WiZZkm, 23 N.Y.2d 592,599 (1969) (section 74 not meant to allow any person k malici~usly institute a judicial p m d g alleging false and defamatory charges, and bo that circulate a prtss lrelaafle or other communication based thureon and mcapc liability by invoking th4 &tatUte ?; see &a Branca Y. Mayesh, 101 A.D.2d 872,873 (2d Dept. 1984)). Taking pldnWe conhtiom as an this motion, Soction 74 may not apply, Ad&~onally, defendant s c o m l argues that Mr. Ena;el s statemmts to the NYLJ ware mmly opinion and, therefore, constitutionally privileged The Court should amploy thrac facton in dotermining whetbar aUegedly defamatory statcmentb:~ i f opinions: ( 1) whdor the specific b language i isme hae a precise meaning which is readily understood; (2) whether the stamnmts n am capable of being proven true or fake; and (3) whether either the fl context of the ul communication in which the statement appears or the broader social context and m u n r i i n g circumstances are such as to aignd . - . readms or iistcners that what is bang d or hemi is likaIy to be opinion, not fact[.) Brim Y. Richurdsun, 87 N,Y.2d46.5 1 { 1 5 . W) In the b t m t action, when eccording plaintiff the h e f i t of every possibIc favorable h f m w , thm d n s a question as to whather the context of Mr.Engel s otatoment to the Nyw, a. &, a Articlu, would signal readers that the inf omation therein is opinion rather than 0 fact. &e SokoZoflaf 414. The cases cited by defmdant i support of his atgumaats me n *site 011 either the facts andlor the law and, thus,are unavailing. N . Y a 46 (statemcllta&e OR OpEdpage of N SS~, &tan, 87 ag., m York Timae);Imrnum AG v. Mmr-JanRowski, 77 N.Y.2d 235 (1992) (st.a.tmmts contained in &er to edrwpublishad i n 8 [* 10] ~ I T Iof~Medical h*matology); Stdnhjlber v. Alphome, 68 N,Y.2d 283 (1986) (statamante made via tqe-recorded telephone message on t u t h S PriVarS telephom nu+); ~ucwary v. LiHell, 539 F.2d 882 (26 Cir. 1976) (appcd &om jdgmmt after Mal); Rmd v. N m York llm &., 75 AD.2d 417 (1st Dtpt. 1980) (opinion mdered on motionfor stctllmwyj d j p w n t , not motion fm dismissal). On the facta before it and pursuant t tha standards of a motion to o d i e a s , the Court cannot detarmJlla that, 8s a mattar of law, the &t.tummta i the Articlo a ~ e n p t e G t o d upinion. Sancrions P l M s motion far sanctions is W e d . Deferndant s conduct does not rise t thc level o ofmnctionabk behavior- Accordingly, it is ORDERED h t the motion to dismissi granted to the extent that only the portions of the s instaat complaint that arise from the following statemantg shall contime: 1. Statement that M .Isher and hiis h r wed [the retainer s] provision 8~ B club w t which to extort immediate paymen@o f their fka @am 13([3)); ih 2. Statunmts that Lachar defraudd [the PCM clirmts] @ata 3. Statement t r ~ NYZJ that [the P W clims w m ] very poorly m a d by a the membas of 1(); 3R) w.Engel s] profasion to whom duty came well after 0 t h aims and interests (para 15); 4. Statements made during the Arbitrations, referring to MI. -her **Iim, a l>atboIogiCalcharacter @and &e d d m EL W a f , a 2 ( 3 @I); 1C, m ofthe complaint shall be stticken; and it is furthtr OWEMD fi& defendant i directed to serve 8II 8XIBweT t0 tbe C O m P b t B d v i n g s 9 [* 11] claims within ten (1 0 days after service of a copy ofthis order with notice of mtrv;and it is ) further ORDERED that the Clerk is dircctcd to mtarjudgment accordingly; and it is W r c ORDERED that all ptdes are to appaar for a conf''mce before the Court at 9:30 am.on May 19,2005 at 111 Centre Street, Room 1227, Naw York, NY 10013. The foregoing ccmstituta the decision and o Dated: April 28,2005 New York, New York -- FILED 10

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