Pillard v Goodman

[*1] Pillard v Goodman 2009 NY Slip Op 52354(U) [25 Misc 3d 1230(A)] Decided on November 4, 2009 Supreme Court, New York County Lehner, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 November 4, 2009
Supreme Court, New York County

Monique Pillard, Plaintiff,

against

Robert Goodman, Edward Curtin, and Janet Neschis, Defendants.



109317/08



Kennedy Johnson Gallagher LLC, attorneys for plaintiff

99 Wall St., 15th Floor, New York, NY 10005, (212) 248-2220

Wilson Elser Moskowitz Edelman & Dicker, attorneys for defendant

150 East 42nd St., 23rd Floor, New York, NY 10017, (212) 490-3000

Lewis Brisbois Bisgaard/Smith, attorneys for defendant

199 Water St., 25th Floor, New York, NY 10038, (212) 232-1300

Edward H. Lehner, J.

In this action for legal malpractice, defendant Janet Neschis (Neschis) moves, pursuant to CPLR 3211 (a) 1, 5 and 7, for an order dismissing the first amended complaint of plaintiff Monique Pillard (Pillard) as against her, and defendants Robert Goodman (Goodman) and Edward Curtin (Curtin) move, pursuant to CPLR 3211 (a) 7, for an order dismissing the complaint as against them.

By letter dated October 9, 2009, counsel for Neschis advised the court that because Neschis reached a "settlement in principle" with Pillard, her motion is withdrawn.

DISCUSSION

In the 1970's, Pillard and a non-party, John Casablancas (Casablancas), established a modeling agency, named Elite Model Management Corporation (Elite). Originally, Pillard was a 10% shareholder of the company and a director. She had also been Elite's president, but in May 1998 she was allegedly removed as president and replaced by Casablancas. Pillard was reassigned as the president of Elite Celebrities, a division of Elite, which Pillard allegedly ran single-handedly, focusing on finding endorsements for celebrities. Casablancas became Elite's interim president and chairman. Casablancas and his successor, non-party Gerald Marie (Marie), were allegedly responsible for all major decision at Elite.

Curtin is asserted to be Elite's outside general counsel and Pillard's individual attorney, as well as a member of Elite's board of directors. [*2]

In September 1999, a non-party, Victoria Gallegos (Gallegos), allegedly hired by Casablancas, commenced her employment at Elite as a liaison between it and its clients. She had asthma and complained about employees smoking in the firm's offices. Allegedly, Pillard, unlike some other Elite's employees, was sympathetic to Gallegos's situation and advocated on her behalf, including offering to allow her to share Pillard's office, which was a smoke-free environment.

On November 5, 1999, in response to Gallegos's complaints about exposure to second-hand smoke, Curtin sent her a letter (the November 5, 1999 Letter), on behalf of Casablancas and a non-party Mary Ann D'Angelico (D'Angelico), in which he advised Gallegos to remain at home until she had a meeting with management regarding her employment status. A week later, Casablancas, in a letter allegedly prepared by Curtin (the November 8, 1999 Letter), formally terminated Gallegos. Pillard allegedly was not consulted regarding either of the letters.

In October 2000, Gallegos commenced an action in this court (the Gallegos Action) against Elite, Casablancas, Marie, D'Angelico and Pillard (collectively, the Elite Defendants). Goodman, Curtin, and Neschis allegedly took on the joint representation of all of the Elite Defendants. Defendants allegedly had a conflict of interest as between Pillard and the other Elite Defendants, of which Pillard allegedly was not advised.

In April 2003, the jury returned a verdict of approximately $2.6 million in compensatory damages against all of the Elite Defendants, jointly and severally, and an additional $2.6 million against Elite for punitive damages. After a motion directed to the compensatory damages award, the verdict against all the Elite Defendants was reduced to approximately $1.9 million in compensatory damages (the Judgment).

In February 4, 2004, as a result of the Judgment, Pillard filed a voluntary petition for bankruptcy under chapter 11. Gallegos allegedly filed a proof of claim in the proceeding, seeking approximately $1.9 million, predicated on the Judgment, and at least $1.8 million on her claim for legal fees.

On appeal, the First Department vacated the damages portion of the Judgment, finding that the substitution of two alternate jurors after deliberations commenced was improper (Gallegos v Elite Model Management Corp., 28 AD3d 50 [2005]).

In this action, Pillard alleges two causes of action. The first one is for legal malpractice, based on defendants' alleged failure to exercise the degree of care, skill and diligence commonly employed by a member of a legal community. She claims that but for defendants' negligent and conflicted conduct, she would not have been subjected to the Gallegos Action and would not have had the Judgment entered against her. The second cause of action is for a breach of fiduciary duties that defendants allegedly owed Pillard as her attorneys and, in case of Curtin, also as a director of Elite.

On a motion to dismiss, pursuant to CPLR 3211 (a) 7, the court "assumes the truth of the complaint's material allegations and whatever can be reasonably inferred therefrom. ... The motion should be denied if from [the pleading's] four corners factual allegations are discerned which taken together manifest any cause of action cognizable at law'" (McGill v Parker, 179 AD2d 98, 105 [1st Dept 1992], quoting Guggenheimer v Ginzburg, 43 NY2d 268, 275 [1977]). "In assessing a motion under CPLR 3211 (a) (7), ... the criterion is whether the proponent of the pleading has a cause of action, not whether he has stated one" (Leon v Martinez, 84 NY2d 83, 88 [1994] [citations and internal quotation marks omitted]). [*3]

I.Legal Malpractice

To establish a cause of action for legal malpractice, the plaintiff must show that the attorneys were negligent, that their negligence was the proximate cause of the plaintiff's damages, and that the plaintiff suffered actual damages as a direct result of the attorneys' actions (Franklin v Winard, 199 AD2d 220, 221 [1st Dept 1993].

"To sustain a cause of action for legal malpractice, ... a party must show that an attorney failed to exercise the reasonable skill and knowledge commonly possessed by a member of the legal profession" (Arnav Indus., Inc. Retirement Trust v Brown, Raysman, Millstein, Felder & Steiner, 96 NY2d 300, 303-304 [2001]. See also, Marshall v Nacht, 172 AD2d 727 [2d Dept 1991]); Leder v. Spiegel, 31 AD3d 266, 267 (1st Dept. 2006), aff'd. 9 NY3d 836 (2007).

"In order to establish proximate cause, plaintiff must demonstrate that but for' the attorney's negligence, plaintiff would either have prevailed in the matter at issue, or would not have sustained any ascertainable damages'" (Leder v. Spiegel, supra, at 267-268). In other words, in an action to recover damages for legal malpractice, a client must prove three essential elements: "(1) a duty, (2) a breach of the duty, and (3) proof that actual damages were proximately caused by the breach of the duty" (Marshall v Nacht, supra, at 728).

Pillard alleges that Curtin was both her private attorney as well as attorney for Elite (Complaint, ¶ 26). As such, he was allegedly negligent when he (1) failed to advise Pillard that Gallegos's asthma was considered a disability under the Human Rights Laws, requiring Elite to make accommodations for Gallegos (id., ¶ 27); (2) without consulting with Pillard, wrote the November 5, 1999 letter, advising Gallegos to seek employment elsewhere and instructing her to remain at home until the final determination by Elite management of her status (id., ¶ 28); (3) without consulting with Pillard, allegedly prepared the November 8, 1999 letter, terminating Gallegos's employment at Elite, in violation of the Human Rights Laws, which led to the Gallegos Action (id., ¶¶ 31, 33); (4) when asked by Pillard, he allegedly informed her that there was no potential conflict of interest among the Elite Defendants and, hence, no need for her to have her own attorney, which was allegedly a violation of the disciplinary rule 5-105 (id., ¶ 36); (5) assumed representation of the Elite Defendants, even though he allegedly had a duty not to, because he drafted two letters to Gallegos and, therefore, could have been called to testify as a witness, which is allegedly a violation of the disciplinary rule 5-102, and he could have been impleaded as a third-party defendant (id., ¶ 37).

Plaintiff further alleges that both defendants were negligent when they (1) assumed the joint representation of all of the Elite Defendants, even though there was allegedly a conflict of interest between Pillard and the other Elite Defendants (id., ¶ 36); (2) failed to disclose to Pillard the potential for conflict or to ask her to provide a waiver (id.); (3) allegedly failed to communicate to Pillard a settlement offer from Gallegos, ranging from $50,000 to $60,000, which was allegedly made by Gallegos's counsel at the beginning of her case and which Pillard allegedly would have insisted that it be accepted (id., ¶¶ 40-42); (4) in July 2001, both Curtin and Goodman allegedly allowed Pillard to testify at her deposition, even though she had recently suffered a stroke and was hospitalized for approximately two months, and, as a result, made confusing and inaccurate statements, which Gallegos used against Pillard at trial (id., ¶¶ 43-44).

Pillard further claims that at trial, defendants were negligent in that they (1) "failed to minimize the negative effect of the deposition by telling the jury that [Pillard] had been suffering the [*4]aftereffects of the stroke when she gave the deposition" (id., ¶ 44); (2) allegedly failed to show that Pillard was not the president of Elite during Gallegos's employ, even though Curtin had allegedly prepared the paperwork removing Pillard from that position (id., ¶¶ 45-46); (3) "failed to introduce several crucial documents that would likely have exonerated" Pillard, such as (a) a memorandum, dated March 15, 1998, from Casablancas to Pillard, allegedly showing that Pillard was not Elite's president (id., ¶ 47), (b) an Elite shareholder meeting agenda, dated March 30, 1998, showing same (Complaint, exhibit F), (c) a memorandum, dated April 27, 1998, from Curtin regarding the resignation of Pillard as Elite's president (id., ¶ 48), (d) an entry in Gallegos's diary, made a week before her termination, stating that Pillard inquired and was concerned about Gallegos's health (id., ¶¶ 51-52), (e) a transcript of a tape recording of a conversation between Gallegos and Marie, in which Gallegos allegedly said that Pillard was supportive of enforcing the anti-smoking policy at Elite (id., ¶ 53); (4) failed to "present the jury with an accurate picture of just how physically infirm Ms. Pillard was while Ms. Gallegos was employed at Elite" (id., ¶ 49); (5) failed to show to the jury that Pillard attempted to investigate when someone placed matches and a lighter on Gallegos's desk (id., ¶ 50); (6) failed to ask "the jury to apportion liability among the Elite defendants and to assign only a small portion of liability, if any, to Ms. Pillard" (id., ¶ 60); (7) failed to object to the jury instruction that Pillard was an "employer" within the meaning of the Human Rights Laws, thus failing to preserve this issue for appeal (id., ¶¶ 63-66); (8) failed to object to the jury instruction that imposed strict liability on Pillard by virtue of being an "employer," thus failing to preserve this issue for appeal (id., ¶¶ 64-66); (9) failed to object to, and research the issue of, retaining of the alternate jurors after the jury began deliberating, in violation of CPLR 4106 (id., ¶ 69-71); and (10) failed to object to the substitution of the alternate jurors and to insist that a mistrial be declared (id., ¶¶ 69-70, 74).

Plaintiff asserts that, while the First Department vacated the damages portion of the Judgment and remanded the case for a new damages trial (which apparently has not taken place yet), she has incurred costs and legal fees in pursuing her appeal and in connection with her bankruptcy proceeding (id.,¶ 80). Finally, Pillard alleges that but for the defendants' negligence, she would not have been subjected to the Gallegos Action, would not have had the Judgment entered against her and that she would have been exonerated from liability (id., ¶ 87).

Conflict of Interest

Goodman and Curtin argue that allegations of a conflict of interest or a violation of the Code of Professional Responsibility, by themselves, cannot support a cause of action for damages. Although this proposition is correct (see e.g. Sumo Container Station, Inc. v Evans, Orr, Pacelli, Norton & Laffan, P.C., 278 AD2d 169, 171 [1st Dept 2000]), "liability can follow where the client can show that he or she suffered actual damage as a result of the conflict" (Tabner v Drake, 9 AD3d 606, 610 [3d Dept 2004]). Here such damages are alleged and thus the claim is viable.

Pillard's Status as an "Employer"

Goodman and Curtin argue that the First Department already held that Pillard was an "employer" within the meaning of the Human Rights Laws and that the trial record showed that she condoned and approved of the other Elite Defendants' failure to accommodate Gallegos (see Gallegos, 28 AD3d at 60, 62). However, Pillard maintains that if her individual defenses had been properly developed, the jury would not have found that she was the "employer," nor that she [*5]condoned or approved of the discriminatory conduct against Gallegos.

Gallegos proceeded under the New York State and New York City Human Rights Laws. Under the State law (Executive Law, article 15, § 296 [1] [a]), one can be considered an "employer" based on one's ownership interest in a company (see Patrowich v Chemical Bank,63 NY2d 541, 543-544 [1984]). Here, since Pillard was still a 10% shareholder of Elite, under the economic reality test set forth in Patrowich, she properly could be considered an "employer" (id.). Therefore, Pillard's claim that, but for defendants' negligence, the jury would not have found that she is an "employer" under the New York State Human Rights Law is dismissed.

The "employer's" liability, however, arises only where the "employer" engaged in a discriminatory practice or encouraged, condoned, or approved of an employee's discriminatory act (see Executive Law, article 15, § 296 [1] [a]; see also Matter of State Div. of Human Rights v St. Elizabeth's Hosp., 66 NY2d 684, 687 [1985]; Pepler v Coyne,33 AD3d 434, 435 [1st Dept 2006]). Similarly, although the New York City Human Rights Law explicitly provides that even an employee may be held liable, the liability attaches only if the employee engages in a discriminatory practice (Administrative Code of City of NY § 8-107 [1] [a]). Pillard claims that if defendants had properly developed her individual defenses, introduced specific documents, and elicited certain statements, the jury would not have found that she discriminated against, or encouraged, condoned, or approved of Elite's discrimination against Gallegos, which would have exonerated Pillard. Accordingly, this claim survives.

Damages

Curtin and Goodman further argue that Pillard did not sustain any ascertainable damages, because the First Department vacated the jury's award of damages (see, Gallegos, 28 AD3d at 51, 53). However, as Pillard contends, legal fees to avoid or minimize damage caused by an attorney's conduct are considered damages for the purpose of a claim for attorney malpractice (see e.g. Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 443 [2007]). Pillard contends that she incurred legal fees in filing a motion to set aside the verdict and pursuing an appeal to overturn the Judgment, and that but for defendants' wrongful conduct, she would not have had to incur these expenses.

Curtin's Duty to Pillard

Curtin argues that, during Gallegos's employment at Elite, he owed no duty of care to Pillard, because he did not represent her individually until the Gallegos Action. However, Pillard alleges that Curtin was her personal attorney and a member of Elite's board of directors and, as such, owed her a duty of care. Pillard alleges that Curtin breached this duty when he (1) failed to advise her that Gallegos's asthma was a disability within the meaning of the Human Rights Law, (2) without consulting with Pillard, wrote the November 5, 1999 letter to Gallegos, (3) and drafted the November 8, 1999 letter, terminating her employment. All of these actions allegedly led to the Gallegos Action, in which Pillard was a named defendant. Accordingly, this claim survives as well.

Alternate Juror Substitution

Goodman and Curtin further contend that Pillard's allegation that they failed to object to the substitution of the alternate jurors was rejected by the First Department. In fact, the First Department held that defendants did raise the objection (see Gallegos,28 AD3d at 56-58). Accordingly, Pillard's claim of defendants' failure to object to the substitution of the alternate jurors is dismissed.Pillard's Health [*6]

Goodman and Curtin argue that Pillard's allegation that they allowed her to testify at her deposition after she suffered a stroke is contradicted by Pillard's allegation that they were unaware of her medical condition. Whether or not they were aware of Pillard's condition is a discoverable matter, which does not defeat Pillard's claim at this juncture.

Failure to Communicate a Settlement Offer

Goodman and Curtin finally contend that Pillard's claim of their failure to communicate to her the existence of a settlement offer is undermined by a requirement to allege that the offer would have been accepted by all defendants. They argue that since Pillard aims to portray herself as a powerless member of Elite, she cannot show that she would have convinced the other Elite Defendants to accept Gallegos's alleged settlement offer.

"[T]he client must show damage from the omission which would result only in the event that the offer would have been accepted" (Rubenstein & Rubenstein v Papadakos, 31 AD2d 615, 615 [1st Dept 1968], affd 25 NY2d 751 [1969]; see also Masterson v Clark, 243 AD2d 411, 412 [1st Dept 1997]). At this juncture, before discovery, it is impossible to determine whether Pillard and the other Elite Defendants would have accepted Gallegos's settlement offer. Accordingly, this claim survives as well. Therefore, Pillard's cause of action for legal malpractice against Curtin and Goodman survives.

II.Fiduciary Duty

Pillard alleges that defendants owed her fiduciary duties because of their attorney-client relationship, and Curtin also owed her fiduciary duties as one of Elite's directors (Complaint, ¶ 91)

A claim of breach of an attorney's fiduciary duty, "premised on the same facts and seeking the identical relief sought in the legal malpractice cause of action, is redundant and should be dismissed" (Weil, Gotshal & Manges, LLP v Fashion Boutique of Short Hills, Inc., 10 AD3d 267, 271 [1st Dept 2004]). It appears that Pillard's claim is based on the same facts as her claim for legal malpractice, with the exception of her claim against Curtin, which is predicated on his owing her a fiduciary duty as one of Elite's directors. Accordingly, this claim is dismissed in its entirety against Goodman. Pillard's claim against Curtin survives only to the extent that it alleges a breach of his fiduciary duty as an Elite director.

CONCLUSION

For the foregoing reasons, it is hereby

ORDERED that the motion of defendants Robert Goodman and Edward Curtin for an order dismissing the complaint is granted only to the extent that:

(1) with respect to the first cause of action for legal malpractice, to the extent that it alleges defendants' negligence in (a) failing to advance plaintiff's individual defenses that she is not an "employer" within the meaning of the New York State Human Rights Law and (b) failing to object to the substitution of the alternate jurors, is dismissed;

(2) with respect to the second cause of action, to the extent that it alleges breach of fiduciary duty by (a) defendant Robert Goodman and (b) defendant Edward Curtin in his capacity as plaintiff's and Elite's attorney, is dismissed,

and the motion is otherwise denied; and it is further

ORDERED that defendants Robert Goodman and Edward Curtin are directed to serve an [*7]answer to the complaint within 20 days after service of a copy of this order with notice of entry.

Dated: November ___, 2009_______________

J.S.C.