Elmowitz v McCormick Dunne & Foley

[*1] Elmowitz v McCormick Dunne & Foley 2010 NY Slip Op 52334(U) [30 Misc 3d 1209(A)] Decided on November 22, 2010 Supreme Court, New York County Madden, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 22, 2010
Supreme Court, New York County

Dennis Elmowitz, Plaintiff,

against

McCormick Dunne & Foley, PATRICK F. FOLEY, Esq., CHRISTOPHER P. FOLEY, Esq., "JOHN DOE as EXECUTOR or ADMINISTRATOR of the Estate of JOSEPH P. ALTMAN, Jr., and The ESTATE OF JOSEPH P. ALTMAN, Jr., The identity of the administrator or executor being presently unknown, Defendants.



112593/2008

Joan A. Madden, J.

Defendants McCormick, Dunne & Foley Patrick F. Foley Esq, and Christopher P. Foley, Esq. (together "MDF"), move pursuant to CPLR 3211(a)(7) to dismiss the complaint for failure to state a cause of action. Plaintiff, Dennis Elmowitz ("Elmowitz"), opposes the motion, which is granted for the reasons below.

Background

This action arises out of legal services provided by MDF and its partner, Joseph P. Altman, Esq. ("Altman") to Elmowitz from 2001 through 2008 in connection with Elmowitz's efforts to recover disability benefits. At the time, Elmowitz was the owner of three disability [*2]insurance policies issued by Berkshire Life Insurance Company of America, which became Guardian Insurance Company of America ("Guardian").

In this action, Elmowitz seeks to recover against MDF for legal malpractice, recovery of premiums, breach of contract and pursuant to Judiciary Law § 487. The complaint alleges that on December 14, 2001, MDF was retained by Elmowitz to represent him in seeking to recover disability claim benefits under the Guardian disability policies.[FN1] On December 7, 2001, prior to retaining MDF as counsel, Elmowitz verbally notified Guardian that he was totally disabled. Following its retention, MDF filed a claim for benefits on January 4, 2002 with Guardian which was denied by letter on three occasions: March 2002, October 2002, October 2003.

Elmowitz alleges that throughout the representation, he was advised by Altman that MDF had commenced litigation on Elmowitz's behalf when, in fact, no such litigation had been commenced. The complaint alleges that MDF was negligent in failing to commence litigation in a timely matter against Guardian, and that this negligence was the proximate cause of Elmowitz's loss of disability benefits.

Further, the complaint alleges that MDF negligently advised Elmowitz to continue to pay disability premiums during the period from Guardian's denial of the claim through MDF's representation. In addition, the complaint alleges breach of MDF's contractual obligation to provide competent and professional legal services. Lastly, the complaint alleges that Altman's representation that an action had been commenced constitutes deceit under the Judiciary Law §487.

In December 2008, Elmowitz, under different counsel, commenced an action against the Guardian to recover disability benefits. In that case, Justice Walter Talub issued a decision, dated November 11, 2009 (Tolub Decision), granting summery judgment dismissing the action. The court found that even if Elmowitz had been disabled in January 2000, as claimed on his disability statement, Elmowitz's submission of a claim for disability in December 2001, which was 23 months after the onset of the disability, was untimely since the policy required notice to be provided "within 30 days of any loss which is covered by [the] policy occurs or starts or as soon as after that is reasonably possible [and that] compliance with a notice of claim provision in an insurance policy is a foundational condition precedent to maintaining an insured's action on a policy against an insur[er]." Moreover, the court rejected Elmowitz's argument that his notice 23 months after the outset of disability constituted notice "as soon as reasonably possible."

Discussion

On a motion to dismiss pursuant to CPLR 3211 (a)(7), the court must "accept the facts as alleged in the complaint as true, accord [plaintiff] the benefits of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory" Leon v Martinez, 84 NY2d 83, 87-88 (1994). However, "bare legal conclusions, as well as factual claims either inherently incredible or flatly contradicted by documentary evidence, are not presumed to be true and accorded every favorable inference.'" M & B Joint Venture, Inc. v. Laurus Master Fund, Ltd., 49 AD3d 258, 260 (1st Dept 2008), aff'd as modified 12 NY3d 798 (2009) (citation omitted). Under this standard, the court finds that the motion to dismiss must be granted.

[*3]Legal Malpractice

The first cause of action for legal malpractice, alleges that Altman and MDF failed to timely commence the action against Guardian resulting in the loss of Elmowitz's disability benefits.

MDF argues that this claim must be dismissed as any alleged malpractice was not a proximate cause of Elmowitz's loss of disability benefits as MDF was retained almost two years after the date of Elmowitz' alleged disability and that, as found by Justice Tolub, Elmowitz's delay in notifying Guardian of his disability and not any negligence by MDF resulted in the denial of disability benefits.

Elmowitz counters that he has a cause of action for legal malpractice, based on allegations that there was a failure "to exercise the ordinary skill and knowledge commonly possessed by a member of the legal profession," and that MDF's breach of that duty proximately caused Elmowitz's damages, i.e. loss in disability benefits.

It is well established that "[a] prima facie case of legal malpractice requires proof of Defendant's negligence, and that such negligence was a proximate cause of plaintiff's loss and actual damages." Rau v. Borenkoff, 262 AD2d 388, 388-389 (2d Dept 1999). To establish proximate cause it must be alleged that "but for the alleged malpractice plaintiff would have prevailed..." Sonnenschine v. Giacomo, 295 AD2d 287, 287 (1st Dept 2002).

Under this standard, the complaint fails to state a claim for legal malpractice, since, as found by Justice Tolub, Elmowitz's failure to notify Guardian of his disability until 23 months after the outset of his illness, precluded his recovery under the disability policies at issue. Moreover, as MDF was not retained until December, 2001, which is well after the thirty-day notice requirement had expired in February, 2000, the failure to timely notify Guardian cannot be attributed to any negligence by MDF. Accordingly, the first cause of action for legal malpractice must be dismissed.

Payment of Premiums

The second cause of action alleges that MDF negligently advised Elmowitz to continue to pay disability insurance premiums from the date of the Guardian's denial of his claim through MDF's representation and that as a result of this negligence, he continues to pay approximately $50,000 a year on "worthless" policies for which he cannot recover benefits.

MDF argues that this claim must be dismissed as the advice given to the Elmowitz was prudent and reasonable as in the event Elmowitz condition worsened or he became disabled he would have had coverage. Moreover, MDF argues that in the event Guardian had been required to pay the benefits, the premiums paid would have been recovered. In opposition, Elmowitz argues that MDF's advice constituted a breach of its fiduciary duty.

The opposition is unavailing. As a preliminary matter, the second cause of action is not pleaded as a breach of fiduciary duty claim but instead alleges MDF negligently advised Elmowitz to pay premiums for "worthless insurance." These allegations fail to state a claim as the payment of premiums provided Elmowitz with continued disability coverage to the extent that those would be recoverable in the event of disability.

Next, even if the second cause of action could be construed as a breach of fiduciary duty claim it would fail. "In order to establish a breach of fiduciary duty, a plaintiff must prove the existence of a fiduciary relationship, misconduct by the defendant and damages directly caused by the defendants misconduct." Kurtzman v. Bergstol, 40 AD3d 588, 590 (2nd Dept. 2007).

Here, while MDF, as counsel for Elmowitz and owed him a fiduciary duty (Graubard, [*4]Mollen, Dannett & Horowitz v. Moskovitz, 86 NY2d 112 (1995)), allegations that MDF engaged in misconduct by advising him to continue to pay insurance premiums so he would retain coverage under his disability policies are inherently incredible and do not provide a basis for fiduciary duty claim See M & B Joint Venture, Inc. v. Laurus Master Fund, Ltd., 49 AD3d at 260 (noting that "factual claims that [are] ... inherently incredible ...are not presumed to be true..."). Accordingly, the motion to dismiss the second cause of action must be granted.

Breach of Contract

The third cause of action alleges that MDF breached its contractual obligation to provide competent and prudent legal services.

MDF argues that the breach of contract claim must be dismissed as duplicative of the professional malpractice claims. The court agrees.

It is well settled that a cause of action for breach of contract that is redundant of a legal malpractice cause of action must be dismissed unless it is predicated on a separate, specific promise that was breached. See Garten v. Shearman & Sterling LLP, 52 AD3d 207, 208 (1st Dept. 2008), Magnacoustics, Inc. v. Ostrolenk, Faber, Gerb & Soffen, 303 AD2d 561 (2nd Dept), lv denied, 100 NY2d 511 (2003). Here, there is no separate and specific promise alleged by the Elmowitz distinct from the claim asserted in the first cause of action. See Goldberg v Moskowitz 262 AD2d 56 (1st Dept 1999) citing Sage Reality Corp. v. Proskauer Rose LLP, 251 A.D2d 35 (1st Dept 1998). Therefore, the motion to dismiss the claim for breach of contract must be granted.

Judiciary Law § 487

The fourth cause of action seeks to recover based on an alleged violation of Judiciary Law § 487. Specifically, it is alleged that MDF engaged in deceitful practices as Altman deceived Elmowitz by informing Elmowitz that a lawsuit had been commenced to recover disability benefits when no such lawsuit have been commenced. This deceit purportedly included "a series of communications, sending [Elmowitz] to be examined by physicians and Altman on behalf of [MDF] repeatedly informing Elmowitz that a case was ongoing." Complaint ¶ 105.

MDF argues that the claim under Judiciary Law § 487 must be dismissed as the record established the absence of damages flowing from the alleged conduct since Elmowitz's own late notice to the insurance company of his disability undermined his claim. Furthermore, MDF argues that Elmowitz has not articulated a claim under Judiciary Law § 487 since such claim cannot be found where "the wrongful conduct asserted by plaintiffs occurred either when there was no longer a pending judicial proceeding or before such a proceeding commenced." Stanski v. Ezersky, 228 AD2d 311, 313 (1st Dept), lv denied 89 NY2d 805 (1996), see also, Mahler v. Campagna, 60 AD3d 1009 (2nd Dept 2009)(stating that the statute only applies to wrongful conduct by an attorney in an action that is actually pending.) Lastly, MDF argues that the purported misconduct does not rise to the level of chronic and extreme pattern of delinquency but rather, at most, constituted a single misrepresentation to a single client.

Elmowitz counters that a violation of Judiciary Law § 487 may be established either by the defendant's alleged deceit or by an alleged chronic, extreme pattern of legal delinquency, and that Altman violated the statute by continuously representing to Elmowitz that a case had been commenced and deceitfully withholding the truth that no such case had been filed.

Judiciary Law §487(1) permits injured third parties to recover treble damages when an attorney engages in "any deceit or collusion, or consents to any deceit or collusion, with intent to [*5]deceive the court or any party." The plaintiff must show a "chronic and extreme pattern of legal delinquency" (Kaminsky v. Herrick, Feinstein LLP, 59 AD3d 1, 13 (1st Dept. 2008), lv denied 12 NY3d 715 (2009)(internal quotation marks and citation omitted)), and that the actions of the attorney proximately cause its damages. Nason v. Fisher, 36 AD3d 486, 487 (1st Dept 2007), Jaroslawicz v. Cohen, 12 AD3d 160, 161 (1st Dept. 2004). Moreover, the alleged deceit, when not directed at a court, must occur during a pending judicial proceeding. Jacobs v. Kay, 50 AD3d 526, 527 (1st Dept. 2008), Costalas v. Amalfitano, 305 AD2d 202, 203-204 (1st Dept 2003).

Under this standard, the fourth cause of action fails to state a claim under Judiciary Law §487. First, as MDF argues, Elmowitz cannot show damages as a result of the alleged deceit since the loss was occasioned by Elmowitz' failure to provide timely notice of his disability to Guardian. In addition, the alleged deceit did not occur during a judicial proceeding and cannot be fairly characterized as "chronic or extreme pattern of legal delinquency."

Accordingly, the fourth cause of action must be dismissed.

Conclusion

In view of the above, it is

ORDERED that the motion to dismiss is granted, and it is further

ORDERED that the Clerk is directed to enter judgment to dismissing the complaint in its entirety.

DATED: November 22 , 2010

J.S.C. Footnotes

Footnote 1:. MDF was also retained to file for social security disability claim on behalf of Elmowitz, and Elmowitz was found to be disabled by the Social Security Administration.