Luden v Nieroda
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Luden v Nieroda 2011 NY Slip Op 33537(U) December 9, 2011 Sup Ct, Nassau County Docket Number: 022441-10 Judge: Vito M. DeStefano 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 - STATE OF NEW YORK Present: HON. VITO M. DESTEFANO, Justice TRIAL/IAS , PART 19 NASSAU COUNTY NEIL LUDEN, ARLENE LUDEN alka ARLENE ZVIA LUDEN Decision and Order MOTION SUBMITTED: Plaintiffs, September 1, 2011 -against- MOTION SEQUENCE:Ol INnEX NO. 022441- DANIEL W. NIERODA, JR., ESQ. and NIERODA & NIERODA, PC, Defendants. The following papers and the attachments and exhibits thereto have been read on this motion: Notice of Motion Notice of Cross Motion Affirmation in Opposition to Cross Motion Memorandum of Law in Support of Motion Plaintiffs ' Reply Affirmation Defendants ' Reply Affirmation In an action inter alia to recover damages for legal malpractice , fraud , and breach of contract , Daniel W. Nieroda, Jr. , Esq. and Nieroda & Nieroda, PC (" Defendants ) move for an order pursuant to CPLR 3211(a)(1) and 3211(a)(7) dismissing the second through tenth causes of action in Plaintiffs ' second amended verified complaint. The cour notes that the Defendants had sought dismissal of the amended verified complaint , however , in response to a cross motion by the Plaintiffs pursuant to CPLR 3025(b) for leave to serve and fie a second amended verified complaint , the paries stipulated to accept filing and service of the second amended verified complaint. Consequently, the paries have , in effect, agreed that the cour should consider the [* 2] motion as seeking dismissal of the second amended verified complaint and also that it should consider the opposition papers to the (now moot) cross motion in rendering its decision on the motion to dismiss (Stipulation dated August 15, 2011; Letter dated August 24 2011). For the reasons that follow , the Defendants ' motion is granted in par and denied in par. Background On May 18, 2005, the Plaintiffs herein were served with a sumons and complaint in a foreclosure action commenced against them by Deutsche Ban National Trust Company, as Trustee for Long Beach Mortgage Loan Trust 2003- 1 ("the ban") (Ex. " c" to Cross Motion). On June 10 2005 , the Plaintiffs verified the answers which they sought to have fied in the foreclosure action (Ex. " B" to Cross Motion). The Defendants , who were legal counsel for the Plaintiffs in the foreclosure action , served the Plaintiffs ' answers in the foreclosure action on August 17, 2005 and fied the answers with the cour on August 19 , 2005 (Ex. " B" to Cross Motion). The answers were rejected by the ban on August 17 , 2005 (Ex. " D" to Cross Motion). The ban thereafter obtained a default judgment against the Plaintiffs and , according to the Plaintiffs , the Defendats failed to do anything to remedy the default (Second Amended 33- 36). On the day before the foreclosure sale , Plaintiff Arlene Luden Verified Complaint at a/a Arlene Zvia Luden ("Zvia Luden ) filed for banptcy in the United States Banptcy Cour for the Eastern District of New York (" banptcy cour"), upon the purorted advice 42- 44). The Defendants (the " first bankptcy ) (Second Amended Verified Complaint at first banptcy petition was dismissed (Second Amended Verified Complaint at 53). 2006, Zvia Luden fied a second banptcy petition along with a Chapter 13 Plan (Ex. " B" to Motion) (" second banptcy ). The Chapter 13 Plan was confirmed by the banptcy court on March 29, 2006 (Ex. " c" to Motion). In September 2006 , the trustee for the second banptcy moved for dismissal on the ground that Zvia Luden had " failed to offer a feasible plan , in that the total amount of claims filed in the case exceed the total amount of payments to be made to the Trustee " (Ex. " D" to Motion). In an order dated December 12 2006 the banptcy cour dismissed the Chapter 13 banptcy petition (Ex. "E" to Motion). The following month , the December 12 2006 order of dismissal was vacated and the case was reopened (Ex. " F" to Motion). On Januar 12 Deutsche Bank National Trust Company, as Trustee for Long 1 v Neil Luden, Arlene Luden a/kla Arlene Zvia Luden, and "John Doe Beach Mortgage Loan Trust 2003#1" through "John Doe #10" Index No. 6637/05 (Ex. "C" to Cross Motion). 1 The foreclosure action is entitled [* 3] Thee years later , in March 2009, an unopposed motion by the banptcy trustee in the second banptcy proceeding was granted and the petition was dismissed on the ground that Zvia Luden defaulted in making the monthly payments under the Chapter 13 Plan (Exs. " , and " I" to Motion). Discussion the Defendants seek dismissal of the second though tenth causes of action asserted in the second amended verified complaint. 2 When deciding a CPLR 3211(a)(7) motion the cour must determine whether the plaintiff has a legally cognizable cause of action and not whether the action had been properly pled (Well Yeshiva Rambam 300 AD2d 580 (2d Dept 2002)). The complaint must be liberally constred and the plaintiff must be given the benefit of every favorable inference (Tifany General Holding Corp. Speno, Goldberg, Steingart Penn 278 AD2d 306 (2d Dept 2000)). The cour must also accept as tre the facts alleged in the complaint and any factual submissions made in opposition to the motion. If, from the facts alleged in the complaint and the inferences which can be drawn from the submissions in opposition , the court determines that the plaintiff has a cognizable cause of action, the motion to dismiss must be denied. It is noted , however , that legal conclusions and facts contradicted on the record are not entitled to the presumption of truth 285 AD2d 595 (2d Dept (In re Loukoumi, Inc., 2001)). As noted , Legal Malpractice allege that the Defendants depared from accepted stadards of legal representation in their representation of Zia Luden in the first and second banptcy actions (Second Amended Verified Complaint at ~~ 109- , 120-26). In support of their motion, Defendants argue that the Plaintiffs ' legal malpractice causes of action should be dismissed because Plaintiffs failed to demonstrate that " but for" Defendants ' negligence, the banptcy actions would not have been dismissed and, on the additional basis that Plaintiffs have not suffered any damages - a requisite element to sustain a cause of action for legal malpractice (Defendants ' Memorandum of Law at p 18). The fift and seventh causes of action In order the establish legal malpractice , the claimant must show that an attorney " failed to exercise the ordinar reasonable skil and knowledge commonly possessed by a member of the legal profession " and that "the attorney s breach of this professional duty caused the (claimant' 2 The first cause of action asserted in the second amended verified complaint is one for legal malpractice allegedly committed by the Defendants in the foreclosure action. The Defendants do not seek dismissal ofthe first cause of action. [* 4] actual damages (McCoy Feinman 99 NY2d 295 301- 02 (2002)). To surive a motion dismiss , the complaint must allege that , but for counsel' s alleged malpractice , the claimant would have prevailed in the underlying action or not have incured any damages (Rudolf Shayne Dachs, Stanisci, Corker Sauer 8 NY3d 438 (2007)). At bar , the Plaintiffs allege that: Zia Luden was " coerced into filing for banptcy. . . on the eve of the sale " as " the only way to ' save their home ; that the Defendants were retaned by Zia Luden to represent her in the banptcy proceeding; that Zia Luden paid money to Defendants for legal services in connection with the banptcy, and that despite not owing the Defendants any money, the Defendants listed themselves as creditors in the banptcy; that the Defendants failed to appear on at least one occasion for a conference; that the Defendants failed to oppose an application to dismiss the banptcy proceeding made by the trstee; and that the Plaintiffs were "monetarly damaged in excessive payments to the Trustee in banptcy" as well as having paid for legal services in connection with the banptcy actions (Second Amended Complaint at ~~ 4261- 70). In view of the foregoing allegations , the branches of Defendants ' motion seeking dismissal of the fifth and seventh causes of action are denied. Moreover , the Defendants ' contention that the fift and seventh causes of action are refuted by documenta evidence consisting of the cour filings in both banptcy proceedings does not warant dismissal under CPLR 3211(a)(I) as the facts set fort in the second amended verified complaint indicate that banptcy fiings may not have been waranted under the circumstaces and , fuer , that Zia Luden s "precarious financial state " which led to dismissal of the bankrptcy actions may have argubly been attibuted , in some respect , to Defendants representation in the banptcy actions. Breach of Contract The second , sixth and eighth causes of action asserted in the second amended verified complaint allege breach of contract. Each of those causes of action assert that the Defendants failed to properly and adequately represent the Plaintiffs in connection with the foreclosure and banptcy actions and that the Defendants breached the terms of the retainer agreement to properly represent Plaintiffs (Second Amended Verified Complaint at ~~ 90- , 116- , 127- 30). The Plaintiffs ' opposition to Defendants ' motion fails to address Defendants ' arguent with respect to dismissal of the breach of contract causes of action. The second , sixth, and eighth causes of action are dismissed , in any event, as such claims arise from the same set of facts as the legal malpractice causes of action and , thus , are duplicative of the legal malpractice claims (Shivers Siegel 11 AD3d 447 (2d Dept 2004); Malarkey Piel 7 AD3d 681 (2d Dept 2004); Laruccia Forchell, Curto, Schwartz, Mineo, Carlino Cohn LLP , 295 AD2d 321 (2d Dept '" [* 5] 2002)). Fraud The Defendants argue that the Plaintiffs ' claims for fraud alleged in the third , fourh, and ninth causes of action should be dismissed. In order to maintain a cause of action for fraud , a plaintiff must allege that the defendant made a misrepresentation of a material existing fact, or a material omission of fact , which was false and known to be false when made , for the purose inducing plaintiffs reliance , justifiable reliance on the alleged misrepresentation or omission and injur (Lama Holding Co. Smith Barney Inc. 88 NY2d 413 421 (1996)). CPLR 3016(b) requires that claims for fraud set fort , in detail , the circumstances constituting the wrong (CPLR 3016(b); Euryclei Partners, L.P. Seward Kissel, L.P. 12 NY3d 553 559 (2009) (complaint must allege basic facts to establish the elements of the cause of action)). In the third cause of action , the Plaintiffs allege that while the Defendants knew of the default obtaned against Plaintiffs in the foreclosure action , and not having advised the Plaintiffs of the default , Defendants continued to represent that they would "take care " of the situation and that they continued demanding payment in cash from the Plaintiffs for legal fees associated with the foreclosure action (Second Amended Verified Complaint at ~~ 94- 102). 3 According to the Defendants , this cause of action fails to plead any facts tending to show that Defendants ' failure to advise the Plaintiffs of the default was " done with the intent to somehow defraud the plaintiffs " or how Plaintiffs were damaged as a result of the fraud (Memorandum of Law at pp 15- 16). Contrar to the Defendants ' contention , the Plaintiffs have suffciently pled a cause of action for fraud considering Defendants ' failure to advise the Plaintiffs of the fact that a default had been entered against them in the foreclosure action yet Defendants continued to represent them and accept legal fees. The fraud alleged in the fourh cause of action concerns the Defendants intent from the inception " not to defend the foreclosure action but to collect legal feesin connection with the banptcy (Second Amended Verified Complaint at ~~ 103-08). Specifically, the Plaintiffs alleged that " from the inception of the defendants ' retention, defendants attempted to convince the plaintiffs to declare banptcy" and that the " failure of the defendants to properly and adequately represent the plaintiffs in connection with the foreclosure action ultimately led to the defendants convincing the plaintiffs to file for banptcy protection " (Second Amended 3 When Plaintiffs first learned of the impending foreclosure sale , which was not by the Defendants but a third par, the Defendants " assured the plaintiffs that the impending foreclosure sale must be a mistake ' and they would ' take care ' of the situation " (Second Amended Verified Complaint at " 37- 38). ," '' [* 6] Verified Complaint at ~~ 104- 05). The Plaintiffs , however, have failed to set fort any misrepresentation , other than Defendants advice ' to fie for banptcy and , thus, have failed to paricularly set fort a claim for fraud in the fourh cause of action in the second amended complaint. The Plaintiffs allege in the ninth cause of action that Defendant Daniel W. Nieroda, Jr. Nieroda ), who was not a creditor , improperly represented himself to be a creditor in connection with the banptcy action " for the purose of improperly obtaining additional monies " (Second Amended Verified Complaint ~~ 131- 37). This fraud cause of action must dismissed , according to Defendants, because the Plaintiffs have " failed to plead with paricularity that Nieroda made a misrepresentation of a material fact to plaintiffs pertining to Nieroda listing of itself as one of plaintiff s creditors ; nor have the Plaintiffs explained how Nieroda listing of itself as a creditor was somehow a false representation and that Nieroda knew it to be false " or how Zia Luden "was injured as a result of the misrepresentation" (Memorandum of Law at pp 21- 22) (emphasis in original). Contrar to the Defendants ' contentions , the allegation that Nieroda listed himself as a creditor when Zia Luden did not owe any money is a misrepresentation. Moreover , the damages allegedly resulting from the fraud , namely, the paying of excessive and unnecessar monies under the banptcy plan , were sufficiently pled. Judiciary Law S 487 Defendants argue that the second amended verified complaint fails to set forth factu allegations that demonstrate that "Nieroda s purortedly intentional deceitful conduct , i.e. representing that it was taing care of the foreclosure action at a time whep a default judgment had already been rendered against the plaintiffs , proximately caused the plaintiffs to sustan damages, or that they were actually damaged" (Memorandum of Law at p 23). 487 , an attorney who is " guilty of any deceit or collusion. . . Pursuant to Judiciar Law with intent to deceive the court or any pary; or . . . (w)ilfully delays his client' s suit with a view to his own gain; or wilfully receives any money or allowance for or on account of any money which he has not laid out. .. is guilty of a misdemeanor and ... forfeits to the par injured treble damages, to be recovered in a civil action . The underlying purose and intent of Judiciar 487 warants a denial of this branch ofthe Defendants ' motion. The " evident intent" of Law Judiciar Law 487 is to " enforce an attorney s special obligation to protect the integrty of the Rosenberg, 12 NY3d 8, 14 (2009)). courts and foster their trth-seeking fuction (Amalftano Furhermore ( s )ection 487 is not a codification of a common- law cause of action for fraud. . . . The operative language at issue - ' guilty of any deceit' - focuses on the attorney s intent to deceive , not the deceit's success (Id. Here , the factual allegations in the complaint , including the allegation that Defendants [* 7] , r listed themselves as creditors in the banptcy when , in fact , no money was owed to them suffciently pleads a cause of action for violation of Judiciar Law 487 (see Ginsberg Development Companies, LLC Carbone 85 AD3d 1110 (2d Dept 2011)). In this regard , the cour notes Defendants ' statement in its papers that " ( w )hile terribly confusing, it appears that plaintiffs are alleging that (Defendants) made a misrepresentation to the banptcy cour by identifying itself as a creditor in the filings it submitted on behalf of plaintiff Arlene Luden (Memorandum of Law at pp 21- 22). This court views any alleged misrepresentation made to the banptcy cour as an affront to the integrity of the cour and , thus, Plaintiffs have sufficiently pled a cause of action for violation of Judiciar Law 487. Based on the foregoing, it is hereby ordered that: the Defendants ' motion seeking: dismissal of the second , fourh , sixth , and eighth causes of action is granted; and, in all other respects , the motion is denied. The Plaintiffs ' cross motion is resolved as per stipulation between the paries. A Preliminar Conference has been scheduled for January 17 2012 , at 9:30 A.M. in the Preliminar Conference Par. This constitutes the decision and order of the cour. Dated: December 9, 2011 vkA jv Hon. Vito M. DeStefano, J. ENTERED DEe NAiSAU 2 9 2011 COUNTY OONTY CLERK' S OFFICE
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