Halevi v Fisher

[*1] Halevi v Fisher 2009 NY Slip Op 51292(U) [24 Misc 3d 1207(A)] Decided on June 11, 2009 Supreme Court, New York County Solomon, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on June 11, 2009
Supreme Court, New York County

Judith Halevi and STEVEN COHEN, Plaintiff,

against

Bartley Fisher, Defendant.



BARTLEY FISHER Counterclaim-Plaintiff,

against

JUDITH HALEVI and STEVEN COHEN, Counterclaim-Defendants, -and-

WAGNER DAVIS P.C.; STEVEN R. WAGNER; J-BAR ASSOCIATES, LLC; C-SQUARE ASSOCIATES, LLC; SOFI-V COOPER FUNDING, LLC; SOFI-V COOPER, L.L.C. and STARWOOD CAPITAL GROUP, LLC, Additional Counterclaim-Defendants.

JUDITH HALEVI, Plaintiff,

against

BARTLEY FISHER, Defendant.



BARTLEY FISHER, Counterclaim-Plaintiff,

against

JUDITH HALEVI, Counterclaim-Defendant, -and-

WAGNER DAVIS P.C.; STEVEN R. WAGNER; J-BAR ASSOCIATES, LLC and 444 BROADWAY ASSOCIATES, LLC, Additional-Counterclaim-Defendants.

604456/06



Plaintiffs/Counterclaim Defendants Judith Halevi and Steven Cohen were represented by Stuart A. Klein, Esq., 99 Madison Avenue, 11th Floor, New York, New York 10016, tel no. (212) 564-7560. Defendant/Counterclaim Plaintiff Bartley Fisher was represented by Anthony L. Tersigni, Esq. of Meyers Tersigni Feldman & Gray, LLP, 14 Wall Street, 19th Floor, New York, New York 10005, tel no. (212) 422-1500. Additional Counterclaim Defendants Wagner Davis P.C. and Steven R. Wagner were represented by Frank T. Cara, Esq. of The McDonough Law Firm, L.L.P., 145 Huguenot Street, New Rochelle, New York 10801, tel no. (914) 632-4700.

Jane S. Solomon, J.

INTRODUCTION

While Plaintiff Judith Halevi ("Halevi"), a real estate

investor, was dating defendant Bartley Fisher ("Fisher"), a tax lawyer, their financial affairs became entangled. After their breakup, a bitter dispute arose over their financial interests, and these two lawsuits against Fisher then followed. In response to the complaints, Fisher asserted counterclaims for breach of fiduciary duty and tortious interference and added Steven R. Wagner ("Wagner") and Wagner Davis P.C. (the "Wagner Firm"),[FN1] Wagner's firm, as counterclaim defendants. Except for the counterclaims against the Wagner Defendants, all claims in these lawsuits have been settled. The Wagner Defendants now move for summary judgment in both actions. The motions should be granted for the reasons stated below.

[*2]FACTS

While in a relationship with Fisher, Halevi formed two entities, J-Bar Associates, LLC ("J-Bar")[FN2] and C-Square Associates, LLC ("C-Square"). J-Bar's Operating Agreement lists Halevi as the sole member, and Halevi's address is the only address listed in the Articles of Organization for service of process. J-Bar obtained a membership interest in 444 Broadway Associates, LLC ("444") and 444 executed a long term lease for space in the Manhattan building referenced by its name. In May 2000, Halevi purportedly transferred J-Bar's interest in 444 to herself by signing a document entitled "Assignment of Membership Interest."

J-Bar also acquired a 70% membership interest in C-Square,[FN3] which entered into a contract of sale for the acquisition of a property located at 52-62 Cooper Square, New York, New York. C-Square then entered into a joint venture with Starwood Capital Group ("Starwood") for the development of the property into condominiums.

A dispute arose between C-Square and Starwood regarding delays and cost overruns experienced on the project, and the parties attempted to resolve the matter in settlement negotiations. C-Square retained the law firm of Solomon & Weinberg to represent it in these discussions.

In or about March 2003, Fisher and Halevi broke off their personal relationship. Halevi then retained the Wagner Firm to represent her in what the parties have referred to as a "commercial divorce" with Fisher. Wagner handled the matter on behalf of the firm. During the discussions with Starwood, Halevi became displeased with Solomon and Weinberg's representation and asked Wagner to take over.

Wagner understood that his representation of C-Square in the Starwood negotiations posed ethical issues given his representation of Halevi in the dispute with Fisher. He recognized that, although the parties had a mutual interest in obtaining the most favorable result for C-Square, a conflict between the interests of Halevi and Fisher could emerge. Therefore, he drafted a letter agreement (the "Agreement"), which was signed by Fisher. The Agreement disclosed that potential conflicts could arise and advised Fisher that, in the event of a conflict, Wagner "anticipates that it would elect to withdraw from negotiations on behalf of C-Square, and would continue to represent and protect the interests of [Halevi]." (Letter from Wagner Davis P.C. to Ms. Judith Halevi, Bartley Fisher, Esq., and Mr. Steven Cohen (dated January 28, 2005), attached as Exh. I to Affidavit of Steven R. Wagner.)

Wagner's discussions with Starwood resulted in Starwood agreeing to pay $3,100,000 to resolve the matter, an amount that was acceptable to Halevi, Fisher, and Cohen. Around this time, a dispute surfaced about Fisher's interest in J-Bar, and he retained the law firm of Meyers Tersigni Feldman & Gray LLP to represent him. Halevi took the position, after consultation with Wagner, that Fisher was not a member of J-Bar.

At his deposition, Fisher admitted that he was not a record owner, but stated that he and Halevi had always understood that he held a beneficial interest in J-Bar. He claimed that this was not recorded due to issues concerning his divorce from his ex-wife. In previous motions, he [*3]argued that Halevi had repeatedly acknowledged that he was a member and cited tax returns, which were signed by Halevi and listed him as an equal member, in support of his position. In response, Halevi claimed that she only signed the returns because she was instructed to do so by Fisher and that he misrepresented to her that he was a member when, in fact, he was not. She also pointed out that, as a member of J-Bar, she executed guaranties while Fisher had not done so.

Due to this dispute, Fisher refused to approve the Starwood settlement unless Halevi acknowledged his interest in J-Bar, while Halevi sought to complete the settlement without him. In the end, the settlement was finalized, and the disputed funds were held in escrow.

In December 2006, Halevi sued Fisher under Index No. 604456/06 (the "2006 Action"), with Cohen as a co-plaintiff, for interference with prospective advantage and breach of fiduciary duty. In April 2007, she commenced another lawsuit against him under Index No. 105349/2007 (the "2007 Action") for professional malpractice and breach of fiduciary duty.

In the 2006 and 2007 actions, Fisher asserted counterclaims for breach of fiduciary duty and tortious interference and added the Wagner Defendants as additional counterclaim defendants. In the 2006 Action, he alleged that Wagner aided and abetted Halevi in a scheme to convert Fisher's interest in J-Bar by representing to Starwood that he was not a member. He claimed that Wagner violated the Agreement by failing to withdraw from representing C-Square when a conflict arose. Fisher also alleged that Halevi, Cohen, and Wagner tortiously interfered with C-Square's interests in the Starwood transaction by allowing Wagner to represent C-Square and by denying his membership interest in J-Bar.

In the 2007 Action, Fisher asserted that the Wagner Defendants aided Halevi in breaching her fiduciary duty to 444 by attempting to transfer J-Bar's interest in 444 to herself. He also alleged that Wagner, with Halevi, tortiously interfered with a proposed assignment of 444's leasehold interest. He sought a declaratory judgment that he held a 50% interest in J-Bar and that J-Bar owned a 40% interest in 444.

DISCUSSION

In support of their motion for summary judgment, the Wagner Defendants argue that there can be no liability for the Wagner Firm's representation of Halevi in connection with the Halevi/Fisher dispute. They assert that Wagner was merely providing zealous representation to Halevi when he advanced her position that Fisher was not an actual member of J-Bar.

As for the Wagner Firm's representation of C-Square, the Wagner Defendants claim that the representation was limited to negotiating the settlement with Starwood, and any conflict that emerged was waived by Fisher in the Agreement. Moreover, the Wagner Defendants point out that the interests of Halevi and Fisher were aligned because they both sought the greatest potential recovery from Starwood, that Fisher has not shown how he was damaged by any fiduciary breach, and that Fisher retained another lawyer solely to represent his interests.

In opposition, Fisher contends that Wagner breached the Agreement by failing to withdraw from representing C-Square when the conflict over J-Bar arose. He also argues that Wagner assisted Halevi in breaching her fiduciary duty to Fisher when she denied his membership interest in J-Bar.

The Wagner Defendants have made a prima facie showing of entitlement to summary judgment, and Fisher has not raised a genuine issue of material fact in opposition. Significantly, [*4]Fisher does not show how he was damaged by Wagner's representation of C-Square. Both parties stood to gain from a higher settlement, and, at his deposition, Fisher acknowledged that the agreed upon settlement amount was acceptable to him. Any prejudice to Fisher's position in the dispute over his interest in J-Bar was avoided by the escrow of funds. Moreover, Fisher expressly consented to Wagner's representation of C-Square at the outset after being fully informed of the ethical issues involved and the potential for conflicts. It also is clear that he retained separate counsel thereafter.

Fisher cannot recover from the Wagner Defendants for aiding a breach of fiduciary duty by Halevi because Fisher has not explained how he was damaged. Moreover, a party must knowingly induce or participate in a breach in order to be liable. Kaufman v. Cohen, 307 AD2d 113 (1st Dept. 2003). The evidence shows that there was a genuine dispute over Fisher's interest in J-Bar. Accordingly, even if Halevi did breach her fiduciary duty to Fisher, the Wagner Defendants did not knowingly participate therein.

The tortious interference claims against the Wagner Defendants are without merit because Wagner is "immunized from liability under the shield afforded attorneys in advising their clients, even when such advice is erroneous, in the absence of fraud, collusion, malice or bad faith." Beatie v. DeLong, 164 AD2d 104, 109 (1st Dept. 1990). Despite Fisher's claims to the contrary, there is no support for the proposition that Wagner was fraudulent or acted in bad faith.

CONCLUSION

Accordingly, it hereby is

ORDERED that the Wagner Defendants' motions for summary judgment are granted and defendant Bartley Fisher's counterclaims against Wagner Davis P.C. and Steven R. Wagner in Index No. 604456/06 and Index No. 105349/07 are dismissed; and it further is

ORDERED that the Clerk shall enter judgment accordingly with costs and disbursements as taxed.

Dated:June 11, 2009

ENTER:

__________________

J.S.C. Footnotes

Footnote 1: Wagner and the Wagner Firm will be collectively referred to as the "Wagner Defendants."

Footnote 2: J-Bar apparently stood for "Judith-Bart".

Footnote 3: The remaining 30% was owned by an investor named Steven Cohen ("Cohen").