Flaherty v Attie

[*1] Flaherty v Attie 2009 NY Slip Op 51296(U) [24 Misc 3d 1207(A)] Decided on June 26, 2009 Supreme Court, Queens County Markey, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 26, 2009
Supreme Court, Queens County

John J. Flaherty, et al.

against

Murray S. Attie



30241 2008



For the Plaintiff: Law offices of Stanley E. Orzechowski, by Stanley E. Orzechowski, Esq., 38 Southern Boulevard [suite 3], Nesconset, NY 11767

For the Defendant: Wilson, Elser, Moscowitz, Edelman & Dicker LLP, by Timothy P. Coon, Esq., 3 Gannett Drive, White Plains, NY 110604

Charles J. Markey, J.

This case offers a revealing look at the closing statement filed at the conclusion of a personal injury case with the Office of Court Administration by a plaintiff's lawyer. Commonly, a plaintiff's attorney must obtain pre-settlement consent, approval, or clearance from the New York State Insurance Fund or the Workmen's Compensation carrier or the employer before accepting a settlement or condition the settlement's acceptance upon promptly receiving such consent. Specifically, this case addresses the issue of whether a false statement in the closing statement regarding the existence of any liens can be actionable by the client against the attorney many years later beyond the limitations period and whether a defendant-attorney should be prevented from asserting those defenses.

Upon the foregoing papers, defendant moves to dismiss the complaint pursuant to CPLR 3211, and the plaintiffs cross move for a default judgment against the defendant.

Initially, this Court will consider the portion of plaintiffs' cross motion for a default judgment against defendant. Plaintiffs filed their summons and verified complaint on December 18, 2008 and attempted service by mail pursuant to CPLR 312-a on January 19, 2009. When no answer was received, plaintiffs, by their attorney, personally served defendant at his law office on February 2, 2009. (Plaintiffs submit their affirmation of service to that effect.) Therefore, pursuant to said service, defendant's time to answer expired on Feb. 22, 2009 (CPLR 320[a]). Plaintiffs now assert that defendant's Feb. 27, 2009 pre-answer motion to dismiss plaintiffs' complaint is untimely and should not be considered by this Court, and that this Court should, instead, enter a default judgment in their favor. Defendant asserts that he was [*2]personally served on February 9, 2009, and that, therefore, his motion to dismiss was timely.

Plaintiffs are not entitled to a default judgment in the case sub judice. The case of Lolly v Brookdale Hosp. Med. Ctr. (37 AD3d 428 [2d Dept. 2007]) is analogous to the case herein, wherein the plaintiff in Lolly appealed an order which granted the defendant's motion to dismiss and denied her cross motion for leave to enter a judgment upon the defendant's default in answering. The Appellate Division, Second Department affirmed, holding that "[e]ven assuming that the defendant's motion to dismiss was filed five days late, the Supreme Court providently exercised its discretion is [sic] denying the plaintiff's cross motion for leave to enter a default judgment and in considering the defendant's motion on its merits" (id. [internal citations omitted]). On the rejection of a motion in discovery-related matters predicated on a few days lateness, see Bansi v Flushing Hosp. Med. Ctr., 15 Misc 3d 215, 222 [Sup Ct Queens County 2007] [Ritholtz, J.] [12-day delay in serving bill of particulars did not warrant action's dismissal] and the decision by the undersigned in Garcia v Munnerlyn, 191 Misc 2d 689 [NYC Civ Ct Queens County 2002] [undersigned excused defense's late request for an independent medical examination, since it was tardy by only 10 days].

Here, even disregarding defendant's allegation that he was personally served on Feb. 9 and, instead, on Feb. 2, the five-day delay is de minimis. Default is further unwarranted in light of the lack of prejudice to plaintiffs (in that they were advised that defendant was planning to file a pre-answer motion), the existence of a potentially meritorious defense, and the strong public policy in favor of deciding cases on the merits (see, Nickell v Pathmark Stores, Inc., 44 AD3d 631 [2d Dept. 2007]; D'Aquila v Marchena, 37 AD3d 398 [2d Dept. 2007]; Jolkovsky v Legeman, 32 AD3d 418 [2006]; Schonfeld v Blue & White Food Prods. Corp., 29 AD3d 673 [2d 2006]).

Turning to the substantive claims of this suit, plaintiffs commenced their action against defendant to recover damages for, inter alia, legal malpractice and fraudulent concealment. Plaintiffs allege that, in 1998, they retained the legal services of defendant to represent them in an underlying personal injury suit. The injury allegedly sustained by plaintiff John J. Flaherty (Flaherty) occurred during the course of his employment. On December 24, 1998, a retainer agreement was signed, and defendant filed a summons and complaint on March 26, 1999 in connection with the underlying accident. During the pendency of that action, Flaherty was receiving workers' compensation benefits, said benefits creating a lien against plaintiffs and their potential recovery.

It is alleged that in June 2001, defendant Murray S. Attie ("Attie"), acting then as plaintiffs' attorney in a case filed against National Envelope Corp.-East and Nicholas Iodice, filed under index number 6633/99 in this Court (commenced on or about March 26, 1999), presented an offer of settlement to plaintiffs and encouraged plaintiffs to accept it. Plaintiffs, in the present action, further allege that: the settlement was completed and funds were disbursed on July 2, 2001; prior to that date, defendant Attie had failed to obtain pre-settlement consent from the workers' compensation carrier and/or the New York State Insurance Fund and/or plaintiff's [*3]employer, which ultimately negatively affected plaintiffs' right to future workers' compensation benefits; and failure to obtain such clearance, approval, or consent constituted legal malpractice. Plaintiffs, furthermore, allege that defendant's failure to disclose this to plaintiffs was an attempt by defendant to fraudulently conceal any alleged malpractice.

In or about 2006, plaintiffs contacted defendant Attie with regard to the above circumstances. Plaintiffs allege that from 2006 until May of 2008, a new attorney-client relationship was formed by defendant Attie undertaking the responsibility to seek nunc pro tunc consent and approval of the settlement. Plaintiffs contend that, in so doing, defendant Attie made affirmative representations to plaintiffs that he would and could secure such consent and approval and, that, in May 2008, defendant Attie acknowledged to plaintiffs that he failed to seek nunc pro tunc consent to the settlement during this time. Plaintiffs claim that the above constituted a second instance of legal malpractice, as well as fraudulent concealment, by making affirmative representations that defendant Attie could do that which he could not, and by, again, failing to disclose to plaintiffs the malpractice which he had allegedly committed in 2001. Plaintiffs then filed the subject suit on December 18, 2008.

The first cause of action in plaintiffs' complaint refers to the legal malpractice which occurred on July 2, 2001 when defendant failed to secure a consent to settlement form prior to that date. The attorney-client relationship ended with the closing statement, filed with the Office of Court Administration on October 18, 2001. Defendant asserts the statute of limitations defense. Under CPLR 214(6), a legal malpractice action must be commenced within three years, and accrual occurs upon the commission of the malpractice, not upon its discovery (see, Hasty Hills Stables, Inc. v Dorfman, Lynch, Knoebel & Conway, LLP, 52 AD3d 566 [2d Dept. 2008], lv. to appeal denied, 12 NY3d 704 [2009]; Town of Wallkill v Rosenstein, 40 AD3d 972 [2d Dept. 2007]; Iser v Kerrigan, 37 AD3d 662 [2d Dept. 2007]).

Plaintiffs argue that (1) defendant is estopped from asserting a timeliness defense due to defendant's "affirmative representations" that he had fully performed his duties as plaintiffs' attorney; to wit: to obtain pre-settlement consent from the necessary parties; and (2) defendant had a continuing obligation to plaintiffs to seek nunc pro tunc consent to the settlement, thereby making plaintiffs' action timely.

Equitable estoppel is an "extraordinary remedy" (Garcia v Peterson, 32 AD3d 992 [2d Dept. 2006]) which will "bar the assertion of the affirmative defense of the Statute of Limitations where it is the defendant's affirmative wrongdoing . . . which produced the long delay between the accrual of the cause of action and the institution of the legal proceeding" (General Stencils v Chiappa, 18 NY2d 125, 128 [1966]). A plaintiff seeking to invoke this doctrine must demonstrate subsequent, specific actions by defendant which kept plaintiff from timely bringing suit (see, Zumpano v Quinn, 6 NY3d 666, 674 [2006]; Bevinetto v Steven Plotnick, M.D., P.C., 51 AD3d 612 [2d Dept. 2008]; Reiner v Jaeger, 50 AD3d 761 [2d Dept. 2008]; Owen v Mackinnon, 6 AD3d 684 [2d Dept. 2004]). Plaintiffs must show the element of justifiable reliance on defendant's deception, fraud, or misrepresentations that effectively prevented the [*4]former from bringing suit in a timely fashion (see, Putter v North Shore Univ. Hosp., 7 NY3d 548 [2006]; Bevinetto, 51 AD3d at 615).

Recently, in Mayayev v Metropolitan Transportation Authority Bus, 2009 WL 1619913, 2009 NY Slip Op 51660 [U] [Sup Ct Queens County 2009], the undersigned held that the defendant authority was equitably estopped from asserting a limitations defense because one of the attorneys from the authority's similarly named entities manipulatively lulled the plaintiff's counsel into inaction at a time when plaintiff's counsel could have cured any perceived defect in filing. The undersigned, in Mayayev, stated:

[D]efendant MTABC unfairly led plaintiff to believe that he had sued the correct entity. Specifically, the letter by MTABC attorney Marlo A. Polese, Esq., . . . is most damning of the defendant's misconduct. It amply reveals that an attorney representing the defendant advised counsel that a hearing date would be provided and urged counsel to provide records in order to get a "prompt disposition" of the claim. Under these circumstances, for the defendant to move to dismiss, after it lulled plaintiff to believe that the claim would be processed in the ordinary course of business and then to pull a surprise of a dismissal after the expiration of the Statute of Limitations should offend the basic sensibilities of any fair-minded person. For a governmental agency to behave in such a duplicitous manner, premised on the writing of one of its attorneys, makes the misconduct all the more unfathomable and reprehensible.

In the case at bar, however, contrary to plaintiffs' contention, defendant Attie is not estopped from asserting the statute of limitations defense. First, the alleged misrepresentation or concealment of defendant Attie's purported wrongdoing forms the basis of both plaintiffs' invocation of the equitable estoppel argument and the underlying legal malpractice claim; plaintiffs cannot rely on the same facts to avail themselves of the doctrine (see, Ross v Louise Wise Servs., Inc., 8 NY3d 478, 491 [2007]; Bobash, Inc. v Festinger, 57 AD3d 464 [2d Dept. 2008]). Second, there is no indication that defendant induced plaintiffs by fraud, misrepresentation, or some other affirmative act, which would have prevented plaintiffs from filing an otherwise timely action (see, Jones v Safi, 58 AD3d 603 [2d Dept. 2009]; Keselman v Webber, 56 AD3d 728 [2d Dept. 2008]; Stubbs v Pirzada, 55 AD3d 597 [2d Dept. 2008]). Equitable estoppel requires plaintiffs to demonstrate that defendant engaged in any such affirmative wrongdoing subsequent to the alleged legal malpractice (see, e.g., Ross, 8 NY3d at 491; Putter, 7 NY3d at 552; Santo B. v Roman Catholic Archdiocese of NY, 51 AD3d 956 [2d Dept. 2008]).

On the contrary, plaintiffs improperly attempt to convert defendant's alleged failure to obtain pre-settlement consent — a negligent act — into an active, ongoing, concealment. However, failure to disclose the wrongdoing is insufficient to invoke this "uncommon remedy," which requires fraudulent behavior (Ross, 8 NY3d at 491; see also, Zumpano, 6 NY3d at 675; Weiss v Manfredi, 83 NY2d 974, 977 [1994]; Ferdinand v Crecca & Blair, 5 AD3d 538, lv. to appeal denied, 5 NY3d 710 [2004]). Based on the above, plaintiffs failed to show that they were prevented from bringing suit due to their justifiable reliance on some intentional [*5]misrepresentation made by defendant after his alleged failure to obtain pre-settlement consent (see, Bevinetto, 51 AD3d at 614). The fact that defendant claimed on the closing statement that there were no "medical liens" does not rise to the level of wrongfully inducing plaintiffs not to file suit; rather, this speaks to the alleged malpractice about which plaintiffs are complaining. By plaintiffs' own admission, they had no contact whatsoever with defendant until sometime in 2006. Notably, then, there is no evidence of any type of ongoing misrepresentation made to plaintiffs for an approximate five-year period (see, e.g., Melnitzky v Hollander, 16 AD3d 192 [1st Dept.], lv. to appeal denied, 5 NY3d 710 [2005]).

To the extent that plaintiffs maintain that there was a continuous representation by, or obligation of, defendant Attie, which extended beyond the 2001 period, so as to obviate the expiration of plaintiffs' claim, this assertion is also unavailing. The continuous representation doctrine tolls the three-year statute of limitations for legal malpractice actions when the attorney continues to represent the client in the same matter after the alleged malpractice has been committed (see, Byron Chem. Co., Inc. v Groman, 61 AD3d 909 [2d Dept. 2009]; Hasty Hills Stables, Inc., 52 AD3d at 567). Both attorney and client must have an understanding that further representation is needed in the underlying matter (see, McCoy v Feinman, 99 NY2d 295, 306 [2002]; Kvetnaya v Tylo, 49 AD3d 608 [2d Dept. 2008]; Town of Wallkill, 40 AD3d at 973-974). Thus, there must be "clear indicia of an ongoing, continuous, developing, and dependent relationship between the client and attorney" (Luk Lamellen U. Kupplungbau GmbH v Lerner, 166 AD2d 505 [2d Dept. 1990]; see also, Guerra Press, Inc. v Campbell & Parlato, LLP, 17 AD3d 1031 [4th Dept 2005]; Frenchman v Queller, Fisher, Dienst, Serrins, Washor & Kool, LLP, ____ Misc 3d ______, 2009 WL 839357, 2009 NY Slip Op 29132 [Sup Ct NY County 2009] [Edmead, J.] [excellent discussion and analysis]).

Amodeo v Kolodny, P.C. (35 AD3d 773 [2nd Dept. 2006]) is nearly identical to the case at bar. The Second Department, in Amodeo, held that the plaintiff's cause of action accrued on the date the "underlying personal injury action was settled without the defendants first obtaining the consent of the plaintiff's workers' compensation carrier to the settlement as required pursuant to Workers' Compensation Law § 29 (5)." The plaintiff's action in Amodeo was not commenced until more than five years after the alleged malpractice, thereby making said action time-barred; the plaintiff could not rely upon the continuous representation doctrine (see also, Ashmead v Groper, 251 AD2d 716 [3rd Dept 1998] [failure to take action necessary to protect a client's interests cannot of itself constitute a course of representation]).

Like the plaintiff in Amodeo, the plaintiffs herein also cannot rely upon continuous representation to maintain their claim. Furthermore, examining the record before the court, there is no indicia that there was a mutual understanding that plaintiffs needed further legal assistance relative to the underlying personal injury action (see, e.g., Melendez v Bernstein, 29 AD3d 872 [2d Dept. 2006]); thus, plaintiffs were never faced with the dilemma of having to interrupt representation in order to ensure the timeliness of their action, which is, of course, what continuous representation is trying to prevent (see generally, Young v New York City Health & Hosps. Corp., 91 NY2d 291 [1998]). On the contrary, plaintiffs believed that the matter had [*6]been disposed of upon the disbursement of settlement funds to them on July 2, 2001, and did not have any further contact with defendant as a result. Since plaintiffs were no longer "acutely aware" of any such need from defendant beyond that point, defendant's representation ended at that time (Shumsky v Eisenstein, 96 NY2d 164, 169 [2001]; see, Carnevali v Herman, 293 AD2d 698 [2d Dept. 2002]). It also should be noted that plaintiffs acknowledge in their complaint that a "new attorney-client relationship" was formed in 2006, further evidencing their belief that the subject relationship had ended in 2001.

This Court declines to follow plaintiffs' reasoning that the action is timely since defendant Attie had a continuing obligation to cure his own negligent act by securing a nunc pro tunc settlement. First, such a claim is inconsistent with the case law discussed above. Second, if this reasoning were to be followed, it would completely obviate the existence of the statute of limitations as an available and viable defense, and would thereby allow plaintiffs limitless discretion to bring suit at any time after said negligent act was committed.

The second cause of action in plaintiffs' complaint refers to defendant's actions which occurred between 2006 and May 2008, which they allege constituted a second instance of malpractice. Defendant contends that no attorney-client relationship existed during this period, while plaintiffs assert that such a representation existed based on defendant's assurances that he "could, and would, secure relief . . . relative to nunc pro tunc consent."

In order to sustain an action sounding in legal malpractice, a plaintiff must demonstrate the following three elements: "(1) that the defendant failed to exercise that degree of care, skill, and diligence commonly possessed and exercised by an ordinary member of the legal community, (2) that such negligence was the proximate cause of the actual damages sustained by the plaintiff, and (3) that, but for the defendant's negligence, the plaintiff would have been successful in the underlying action" (Cummings v Donovan, 36 AD3d 648 [2d Dept. 2007]; see also, Malik v Beal, 54 AD3d 910 [2d Dept. 2008], Erdman v Dell, 50 AD3d 627 [2d Dept. 2008]; Simmons v Edelstein, 32 AD3d 464 [2d Dept. 2006]; Hartman v Morganstern, 28 AD3d 423 [2d Dept. 2006]).

Moreover, on a motion to dismiss pursuant to CPLR 3211(a)(7), the pleadings are liberally construed, and the court must accept as true the factual assertions of the plaintiff's complaint and accord the plaintiff every possible favorable inference (see Malik, 54 AD3d at 911; Sitar v Sitar, 50 AD3d 667 [2d Dept. 2008]; Kupersmith v Winged Foot Golf Club, Inc., 38 AD3d 847 [2d Dept. 2007]).

Plaintiffs' complaint does not establish the existence of a second attorney-client relationship spanning from 2006 to 2008 (see, e.g., Baystone Equities, Inc. v Handel-Harbour, 27 AD3d 231 [1st Dept 2006]). First, there is no evidence of a retainer agreement between the parties evidencing an intent to enter into such a relationship. Even considering the words and actions of the parties in the absence of any formal retainer agreement (see, e.g., Nelson v Kalathara, 48 AD3d 528 [2d Dept. 2008]), plaintiffs' complaint lacks the specificity required to [*7]demonstrate that legal representation existed. At best, it is clear from the complaint that plaintiffs were simply inquiring further into defendant's alleged malpractice which occurred in 2001, in that they were attempting to obtain that which defendant failed to obtain five years prior.

Even assuming that an attorney-client relationship was formed between 2006 and 2008, plaintiffs' complaint still fails with respect to the second and third essential elements of a legal malpractice action, as outlined above. Plaintiffs fail to allege facts sufficient to establish that defendant's actions proximately caused plaintiffs to sustain actual damages (see, e.g., Wald v Berwitz, 62 AD3d 786 [2d Dept. 2009]; Parola, Gross & Marino, P.C. v Susskind, 43 AD3d 1020 [2d Dept. 2007]). Based on the comprehensive discussion above with respect to plaintiffs' first cause of action for legal malpractice, and viewing the plaintiffs' complaint as true, defendant's actions in 2001 proximately caused any damages sustained by plaintiffs, and not anything that defendant allegedly could have done or failed to do between 2006 and 2008. In sum, the crux of plaintiffs' complaint is that the failure to secure pre-settlement consent caused plaintiffs' damages; damages were incurred at the moment that defendant Attie failed to seek pre-settlement consent, and no later.

Even if this Court were to further assume that defendant's 2006 to 2008 actions proximately caused plaintiffs' damages, plaintiffs still did not set forth facts sufficient to show that, "but for" said actions, plaintiffs would have been successful in the underlying action (see, e.g., Cummings, 36 AD3d at 648; Tortura v Sullivan Papain Block McGrath & Cannavo, P.C., 21 AD3d 1082 [2d Dept.], lv. to appeal denied, 6 NY3d 701 [2005]).

Plaintiffs' reliance on Northrop v Thorsen (46 AD3d 780 [2d Dept. 2007]) is inapposite. Preliminarily, the Northrop court was operating under a summary judgment standard in which defendant was claiming that there was no departure from the standard of care, which is clearly different from (1) the standard with which the court is dealing at bar; and (2) the substantive issues presented herein. Furthermore, upon reviewing Northrop, same would have been a case appropriate for demonstrating that defendant's 2001 acts were negligent as a matter of law, and is inappropriate to prove the existence of an alleged, second legal representation (occurring some five years later, with not a scintilla of evidence demonstrating that there was contact between the parties during said five-year period).

As such, while this court is certainly persuaded that plaintiffs may have shown the "but for" element in their first cause of action — were it not for the statute of limitations and failure to allege continuous representation — there are no facts which indicate that, "but for" defendant's failure to seek nunc pro tunc consent between 2006 and 2008, plaintiffs would have been successful in obtaining same, at most, seven years after their settlement. Plaintiffs are simply rehashing the facts surrounding defendant's initial malpractice and are attempting to impute said facts onto the second, more recent, time period, so as to create a new instance of malpractice, which plaintiffs cannot do.

Finally, any claim for fraud, fraudulent concealment, or breach of fiduciary duty must [*8]also be dismissed as duplicative: the gravamen of plaintiffs' suit is that of legal malpractice and plaintiffs have failed to allege distinct damages from that claim (see, Turner v Irving Finkelstein & Meirowitz, LLP, 61 AD3d 849 [2d Dept. 2009]; Kvetnaya, 49 AD3d at 609; Iannucci v Kucker & Bruh, LLP, 42 AD3d 436 [2d Dept. 2007]; Town of Wallkill, 40 AD3d at 974). Plaintiffs, moreover, as discussed above, cannot demonstrate active concealment based on defendant's alleged continuing failure to disclose his own malpractice, as failure to disclose any such malpractice is insufficient to demonstrate, inter alia, fraud.

Defendant Attie's motion to dismiss the complaint is, accordingly, hereby granted; plaintiffs' cross motion is denied.

______________________________

Hon. Charles J. MarkeyJustice, Supreme Court, Queens County

Dated: Long Island City, New York

June 26, 2009



Appearances:

For the Plaintiff: Law offices of Stanley E. Orzechowski, by Stanley E. Orzechowski, Esq., 38 Southern Boulevard [suite 3], Nesconset, NY 11767

For the Defendant: Wilson, Elser, Moscowitz, Edelman & Dicker LLP, by Timothy P. Coon, Esq., 3 Gannett Drive, White Plains, NY 110604