Kaye Scholer Llp v Estate of Moe Ginsburg
Annotate this CaseDecided on June 30, 2004
Supreme Court, New York County
KAYE SCHOLER LLP, Plaintiff,
against
ESTATE OF MOE GINSBURG, by and through Its executors PAUL GINSBURG, ALICE FELTHEIMER, and PHYLLIS HOROWITZ, Defendant.
601381/02
Edward H. Lehner, J.
Before the court is a motion by plaintiff for summary judgment i) dismissing defendants' counterclaim, and ii) granting it judgment on its third cause of action based on an account stated.
The essential facts in this matter were stated in the court's decision dated July 30, 2003 on plaintiff's prior motion to dismiss pursuant to CPLR 3211(a). The basic issue presented is whether plaintiff committed malpractice in failing to make annual supplemental filings pursuant to the Internal Revenue Code §6166 election (the "Election") prior to the filing it made in 2001. Said section permits an estate tax to be paid over a 15 year period and authorizes amended returns to be filed with deductions allowed for interest paid during the period. The asserted benefit is a lowering of the amount of taxes to be paid during the early years after the death of a deceased due to the interest deduction.
Both parties agree that plaintiff would only be liable if the manner in which it proceeded with respect to the Election was not one that would be followed by a reasonably prudent attorney under the circumstances (Tr. pp. 19-21, 36). Thus, if the steps plaintiff took with respect to the Election were not those that would have been taken by a reasonably prudent attorney under similar circumstances, plaintiff would then have committed malpractice. But, if the manner in which the Election was handled by plaintiff was one of several alternative ways in which a reasonably prudent attorney would proceed, then plaintiff would not be liable as an attorney is not liable for an honest mistake of judgment where the appropriate steps to be taken are open to reasonable doubt. See, Rosner v. Paley, 65 NY2d 736 (1985); Rubinberg v. Walker, 252 AD2d 466 (1st Dept. 1998); Iannocone v. Weidman, 273 AD2d 275 (2d Dept. 2000); Ferlisi v. Jackrel, Kopelman & Raskin, 167 AD2d 502 (2d Dept. 1990); Geller v. Harris, 258 AD2d 421 (1st Dept. 1999).
In summarizing the rules applicable to a motion for summary judgment in a legal malpractice case in New York, the court in Hatfield v. Herz, 109 F. Supp. 2d 174 (S.D.N.Y. 2000), wrote: [*2] "To survive summary judgment, the plaintiff in a malpractice case cannot rest on his allegations of what he views as deficiencies in defendant's conduct as his attorney, but must offer evidence to establish the standard of professional care and skill that defendant allegedly failed to meet.... The courts generally require malpractice plaintiffs to proffer expert opinion evidence on the duty of care to meet their burden of proof in opposition to a properly supported summary judgment motion....It is not without significance that no expert affidavit was submitted on the motion by plaintiff attesting to the standard of professional care and skill that defendant allegedly failed to meet, a showing which is necessary to the demonstration of merit in a legal malpractice case...." (pp. 179 - 180).
In its papers plaintiff shows that the manner in which it handled the Election saved defendants money, whereas defendants maintain that plaintiff's advice deprived the major asset of the Estate, the business operated by Moe Ginsburg, Inc. ("MGI"), of cash at a time it was commencing to have financial difficulties.
Plaintiff has made a prima facie showing in its papers that the manner in which it handled the Election was a reasonable alternative to that urged by defendants in that it lowered the amount of taxes and legal fees paid. In response, defendants failed to submit any expert affidavit. Rather, they submitted the deposition testimony of James L. Arata taken by plaintiff's counsel. Mr. Arata is not an attorney, but is an accountant who had handled the affairs of the family of one of the daughters of the deceased. Plaintiff's counsel did not argue that it was improper for an accountant to express an opinion as to whether plaintiff acted in an unreasonable manner in handling the Election, but maintained that no such opinion was expressed in the deposition (Tr. pp. 20-21, 30-33).
At the deposition, Mr. Arata testified that prior to being involved in the Ginsburg estate, he had not previously prepared or assisted in the preparation of a 6166 election (p. 21), but that he did prepare or assist others to prepare one prior return involving such an election (p. 22). The only testimony he gave regarding a "mistake" by plaintiff was when he answered "yes" to plaintiff's counsel's inquiry as to whether plaintiff "made a mistake by not filing a supplemental return for the estate prior to 2001". Regarding that answer, Arata went on to say, as quoted in part at p. 23 of defendants' memorandum of law: "And primarily when you say mistake do I feel that Kaye Scholer made a mistake by not doing it, I mean as much not discussing it with the executors of the estate in detail each year so that they're aware of the alternatives and potential impact of those alternatives. Because ultimately it's the executors' decision. But I think given everything I've seen, that had we as a firm been involved in administering to the estate and advising the estate, that we likely would have made a strong recommendation to file a supplemental 706 at an earlier date than 2001 (pp. 82-84).
Thus, Mr. Arata has opined that if his firm were handling the estate he believes it "likely" that it would have counseled the defendants to make annual supplemental filings, and thus he [*3]disagrees with plaintiff as to the appropriate advice to have been given regarding the Election. Hence, there is a difference of opinion among attorneys. However, significantly, contrary to the representation made by defendants' counsel at oral argument (Tr. pp. 20-21), Mr. Arata has not opined that the manner in which plaintiff handled the Election was not based on a judgment that a reasonable prudent attorney would have made under similar circumstances or that plaintiff deviated from any professional standard of care, and defendants have offered no other expert testimony to that effect. Consequently, the only conclusion the court can arrive at is that defendants have failed to raise a triable issue of fact on their claim that plaintiff committed malpractice.
Moreover, even if defendants had raised a triable issue, the major claim put forward, to wit; that they may recover for the loss sustained by them as a consequence of the bankruptcy of MGI, is far too speculative to be recoverable herein as any number of factors may well have played a role in the failure of its men's clothing business and the resulting liquidation of the corporation. To conclude that MGI would have survived, due to the additional cash that allegedly would have been available if annual supplemental filings had been made prior to 2001, clearly would only be guesswork on the part of the finder of fact. Hence, any malpractice could not properly be considered a proximate cause of the bankruptcy of MGI, and damages would be incapable of being proven with any reasonable degree of certainty. See, Reid v. Priest, 184 AD2d 385 (1st Dept. 1992); Oot v. Arno, 275 AD2d 1023 (4th Dept. 2000); Brown v. Samalin & Bock, P.C., 168 AD2d 531 (2d Dept. 1990); DePinto v. Rosenthal & Curry, 237 AD2d 482 (2d Dept. 1997) ("In a legal malpractice action, the damages resulting from an attorney's negligence must be actual and ascertainable.")
Accordingly, the motion to dismiss defendants' counterclaim is granted. Since defendants have not raised a triable issue on plaintiff's cause of action for an account stated, plaintiff's motion for summary judgment on that cause of action is granted and the Clerk shall enter judgment against defendants for $36,385.64, plus interest from November 16, 2001.
June 30, 2004_________________
J.S.C.
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