Ambra v Awad

[*1] Ambra v Awad 2007 NY Slip Op 51625(U) [16 Misc 3d 1128(A)] Decided on August 6, 2007 Supreme Court, Nassau County Winslow, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 August 6, 2007
Supreme Court, Nassau County

John Ambra, Plaintiff,

against

Joseph P. Awad, Individually and as Corporate Officer of Silberstein, Awad & Miklos, A Professional Corporation, and Gregory D. Bellatone, Defendant(s). Joseph P. Awad, Individually and as Corporate Officer of Silberstein, Awad & Miklos, A Professional Corporation, and Gregory D. Bellatone, Third-party Plaintiffs, -Against- James Feretic, Esq. and Hawkins, Feretic, Daly, Maroney & Hayes, P.C. Third-Party Defendants.



487/05



Plaintiff is represented by Ressler & Ressler/Bruce Ressler, Esq., Defendants/3rd Pty Plaintiffs are represented by Clausen MIller, P.C./James Brownell, Esq. and 3rd Pty Defendants by L'Abbate Balkin Colavita & Contini, LLP/Marian C. Rice, Esq.

F. Dana Winslow, J.

This is an action for legal malpractice in which the following motions are pending before the Court: (1) Motion by defendants JOSEPH P. AWAD, SILBERSTEIN, AWAD & MIKLOS, P.C. and GREGORY D. BELLANTONE pursuant to CPLR §2221 to modify or clarify the September 9, 2005 order of the Court regarding non-party participation at depositions [Motion Sequence 003]; (2) Motion by defendants JOSEPH P. AWAD, SILBERSTEIN, AWAD & MIKLOS, P.C. and GREGORY D. BELLANTONE pursuant to CPLR §§3211(a)(1) and (7) to dismiss the Second and Third causes of action of plaintiff's Amended Complaint [Motion Sequence 004]; (3) Motion by third-party defendants JAMES FERETIC, ESQ. and HAWKINS, FERETIC, DALY, MARONEY & HAYES, P.C. pursuant to CPLR §§ 3211(a)(1), (5) and (7) [*2]and CPLR §3212 to dismiss the Third-Party Complaint [Motion Sequence 005] and (4) Motion by the firm of WILKOFSKY, FRIEDMAN, KAREL & CUMMINS pursuant to CPLR §321 for leave to withdraw as counsel for plaintiff JOHN AMBRA [Motion Sequence 006].

The Court notes that issues raised in Motion Sequence 003 have been resolved in the course of discovery and conferences held subsequent to the filing of that motion. In addition, Motion Sequence 006 has been rendered moot by the substitution of Ressler & Ressler as counsel for plaintiff. Accordingly, this decision addresses only Motion Sequence 004 and Motion Sequence 005, which seek dismissal of the causes of action against defendants and third-party defendants, respectively. The Court has reviewed the application of Ressler & Ressler to submit additional papers in opposition to the outstanding motions, and the objection to such submission by third-party defendants. The Court finds that the additional submission is superfluous.

Facts and Procedural History

Plaintiff JOHN AMBRA ("AMBRA") brings this action against his former attorneys, defendants JOSEPH P. AWAD, SILBERSTEIN, AWAD & MIKLOS, P.C. and GREGORY D. BELLANTONE ("BELLANTONE") (collectively, the "SILBERSTEIN, AWAD defendants" or "SILBERSTEIN, AWAD"), for losses allegedly incurred as a result of their legal malpractice in a personal injury action entitled John Ambra v. Makko of Brooklyn, Ltd., Index No. 27901/98, Supreme Court, Kings County (the "Personal Injury Action").

The Personal Injury Action arose out of an accident which occurred on May 30, 1998, in which AMBRA's stationary vehicle was struck by a vehicle owned and operated by Makko of Brooklyn, Ltd. ("Makko"). The action was commenced on August 11, 1998 with the filing of a Verified Complaint containing an ad damnum clause in the amount of $1,000,000. On or about April 9, 2002, at the conclusion of the trial, BELLANTONE, on behalf of plaintiff, orally moved to conform the pleadings to the proof and increase the ad damnum clause to $5,000,000, based upon the medical and economic evidence. The Hon. Joseph S. Levine orally ruled: "The motion to conform the pleadings to the proof is granted. And the motion to amend the ad damnum clause is denied." Thereafter, a jury verdict was rendered in plaintiff's favor in the sum of $2,020,000.

At the time of the verdict, plaintiff had knowledge of a primary insurance policy insuring Makko in the sum of $1,000,000. After the verdict, plaintiff was informed that Makko had a policy of excess insurance in the additional sum of $5,000,000, but that the insurance company had disclaimed coverage on the basis of late notice. On or about May 17, 2002, the SILBERSTEIN, AWAD defendants, on behalf of AMBRA, filed a written motion to increase the ad damnum. In June of 2002, AMBRA agreed to a settlement of the Personal Injury Action for $1,000,000, resulting in a net recovery to him, after attorneys fees, of $658,917.37.

AMBRA brought the instant action against the SILBERSTEIN, AWAD defendants, alleging, in sum and substance, that as a result of their negligence or malpractice, AMBRA was [*3]deprived of full recovery of the damages awarded to him by the jury. The SILBERSTEIN, AWAD defendants, in turn, brought a third-party action against Makko's trial counsel, JAMES FERETIC, ESQ. ("FERETIC") and his firm HAWKINS, FERETIC, DALY, MARONEY & HAYES, P.C. (collectively, the "FERETIC defendants"), stating a claim for common law indemnity and contribution, and also alleging that FERETIC's failure to disclose excess insurance information constituted fraud and violation of the Judiciary Law.

SILBERSTEIN, AWAD's Motion to Dismiss

The Amended Complaint in the main action contains four causes of action against the SILBERSTEIN, AWAD defendants, the substance of which are as follows: (1) that the SILBERSTEIN, AWAD defendants negligently and incorrectly advised AMBRA that Makko's resources were insufficient to cover the jury verdict; (2) that the SILBERSTEIN, AWAD defendants negligently failed to upwardly amend the ad damnum clause prior to the trial of the Personal Injury Action; (3) that said failure to amend the ad damnum clause resulted in (i) a $1,000,000 cap on AMBRA's recovery and (ii) the loss of excess insurance coverage; and (4) that the SILBERSTEIN, AWAD defendants inadequately advised AMBRA of his options, and pressured him to accept a deficient settlement.

The SILBERSTEIN, AWAD defendants' motion to dismiss concerns only the Second and Third causes of action. Essentially, these defendants assert that there is no causal relationship, as a matter of law, between the omission to amend the ad damnum clause prior to trial, and either the limitation of AMBRA's recovery or the absence of excess insurance coverage. Parenthetically, the SILBERSTEIN, AWAD defendants argue that the omission to amend the ad damnum clause was not negligence at all, but rather, was a strategic decision, protected by the professional judgment rule. See Affirmation of Richard J. Brownell, dated May 4, 2007, citing Rosner v. Payley, 65 NY2d 736; Parksville Mobile Modular, Inc. v. Fabricant, 73 AD2d 595.

The Court shall first address the insurance question. AMBRA claims that excess carrier's disclaimer of coverage was causally related to the failure of the SILBERSTEIN, AWAD defendants to timely increase the ad damnum clause. According to AMBRA, the maintenance of a claim for damages within the limits of the primary policy caused Makko to forego timely notice to the excess insurer which, in turn, resulted in the denial of coverage pursuant to the terms of the policy.

The SILBERSTEIN, AWAD defendants argue that their inaction did not cause the disclaimer of excess coverage, insofar as the notice to the excess carrier was already fatally late, as a matter of law, by the time the SILBERSTEIN, AWAD defendants were retained by AMBRA. In other words, the excess insurer already had a legal right to disclaim before any action was possible on the part of the SILBERSTEIN, AWAD defendants. The SILBERSTEIN, AWAD defendants also dispute, as a factual matter, that an amendment of the ad damnum clause would have resulted in prompt notice to the excess insurer. [*4]

It is well settled that the notice provision in a policy of insurance operates as a condition precedent to coverage, and that the insurer need not show prejudice to disclaim on the basis of late notice. Grand Canal Realty Corp. v. Seneca Ins. Co., 5 NY3d 742, 743; Argo Corp. v. Greater NY Mut. Ins. Co., 4 NY3d 332, 339. This rule applies to excess carriers as well as primary carriers. American Home Assurance Co. v. International Ins. Co., 90 NY2d 433, 437. In determining whether or not notice is timely, the Court must consider when the obligation accrued and whether the insured provided notice within a reasonable time thereafter. Federal Ins. Co. v. Quantachrome Corp.,1994 WL 240552 (S.D.NY).

The first point of inquiry is the express language of the policy itself. See Paramount Communications, Inc. v. Gibraltar Cas. Co., 204 AD2d 241. In the case at bar, the applicable policy of excess insurance states:

"You MUST see to it that we and your Scheduled Underlying Insurers:

a.are notified as soon as possible of any occurrence which may result in a claim if the claim may involve this policy or any Scheduled Underlying Policy,

b.receive notice of the claim or suit as soon as possible . . ."

(Emphasis in original).

This language is unambiguous. It requires the insured to give notice "as soon as possible" after each of two distinct events the occurrence and the claim. New York courts uniformly interpret such language and similar formulations ("as soon as practicable" or "as soon as practical") to require notice "within a reasonable time under all the circumstances" after the notice obligation accrues. Olin Corp. v. Ins. Co. Of North America, 743 F. Supp. 1044, 1053. Accord, Mighty Midgets, Inc. v. Centennial Ins. Co., 47 NY2d 12. See Quantachrome Corp.,1994 WL 240552 (excess policy: "as soon as possible"); Steinberg v. Hermitage Ins. Co., 26 AD3d 426 ("as soon as practicable"); Travelers Property Cas. Corp. v. Fusilli, 266 AD2d 48 ("as soon as possible"). See also Reina v. U.S. Cas. Co., 228 AD 108, 109 ("immediate notice" defined as "notice within a reasonable time under all the circumstances").

In this case, the notice obligation accrued, at the earliest, on May 30, 1998, the date of the accident. At the latest, the obligation accrued upon Makko's receipt of the summons and complaint in the Personal Injury Action, on or about August 11, 1998, when the action was commenced.The SILBERSTEIN, AWAD defendants were retained by AMBRA on or about January 12, 1999, which was approximately seven and one-half (7-1/2) months after the accident, and five (5) months after the commencement of the Personal Injury Action. The question is whether or not, by the time of SILBERSTEIN, AWAD's retention, the notice requirement was already fatally breached, as these defendants claim. If so, then any attempt on the part of the SILBERSTEIN, AWAD defendants to increase the ad damnum clause would be ineffectual. A ruling in favor of the SILBERSTEIN, AWAD defendants would require a finding that notice delivered five months after receipt of the summons and complaint, under the given circumstances, would have been untimely as a matter of law, and that any Court determining the matter lacked discretion to refer it to a jury or to otherwise find in favor of coverage. [*5]

It is well settled that an unjustified delay of relatively short duration may vitiate a contract of insurance. Where there are mitigating circumstances, or a valid explanation or excuse for the delay, the reasonableness of the delay or sufficiency of the excuse is generally a question for the jury. Where the record shows no excuse or mitigating factor, however, nor raises a genuine issue of material fact, a relatively short delay is unreasonable as a matter of law. Deso v. Lancashire Indemnity Co. of America, 3 NY2d 127 (51 days); Steinberg, 26 AD3d 426 (57 days); Travelers Ins. Co. v. Volmar, 300 AD2d 40 (19 months); Sayed v. Macari, 296 AD2d 396 (3 months); Safer v. GEICO, 254 AD2d 344 (1 month); Power Authority of the State of NY v. Westinghouse Electric Corp., 117 AD2d 336 (53 days); Reina, 228 AD 108 (22 days). The Court has found no case law recognizing judicial discretion in the matter.

In this case, there was no valid excuse for Makko's delay in notifying the excess carrier of the claim. No one has argued that Makko was unaware of the claim, or had a good faith belief in its non-liability. See Grand Canal, 5 NY3d at 743-744; Volmar, 300 AD2d at 43. No one disputes that Makko received the summons and complaint on or about the time that the action was commenced.

AMBRA attributes the failure of notification to the influence of the ad damnum clause, arguing that the limited amount of damages demanded in the Complaint led Makko, its primary insurer, and its counsel to believe that the excess policy would not be reached. That belief, however, whether or not reasonable under the circumstances, does not constitute a valid excuse for the delay in notifying the excess carrier under the terms of the excess policy. The policy expressly required notice to the excess carrier whenever the claim involved the excess policy or any Scheduled Underlying Policy. The emphasized language distinguishes this case from those cited by AMBRA. In those cases, where such policy language was absent, the Courts have held that the notice requirement accrued only when the claim appeared likely to reach the excess policy. In determining the reasonableness of the delay, the Court's inquiry focused on when the insured had reason to believe that the underlying policy limits would be exceeded. Compare Olin Corp. v. American Re-Insurance Co., 74 Fed.Appx. 105 (C.A.2 NY); Morris Park Contracting Corp. v. National Union Fire Ins. Co. of Pittsburgh, Pa., 33 AD3d 763. In the case at bar, such consideration is irrelevant. The excess policy required notice of any claim, regardless of whether or not the excess policy could be reached. The level of the ad damnum simply had no bearing on the notice requirement. To the extent that Makko, its agents, or others misapprehended that fact, their conduct is responsible for the disclaimer of excess coverage, and not that of the SILBERSTEIN, AWAD defendants or their predecessors. In any event, the misapprehension would not constitute a valid excuse for the five-month delay, at minimum, in giving notice of the claim to the excess carrier.

Thus, even assuming that the SILBERSTEIN, AWAD defendants could have immediately increased the ad damnum clause on January 12, 1999, the day they were formally retained, and the amended complaint would have been immediately forwarded to the excess carrier, such notice would have been untimely as a matter of law, given the absence of mitigating circumstances or a reasonable excuse for the delay in notification of the occurrence and the [*6]original claim.

That is not to say, however, that the excess insurance was ineluctably lost, or that there was no sliver of possibility that a Court would require the excess carrier to provide coverage. Makko's sales manager testified at his examination before trial that he forwarded the summons and complaint to his insurance broker, and assumed that the broker notified both carriers. To the extent that this is true or raises an issue of fact, then it is possible, as AMBRA asserts, that the excess carrier would have been required to provide coverage, on the grounds that the excess carrier did, in fact, receive timely notice, or that the failure of communication between the broker and the excess carrier constituted a valid excuse for the delay under the circumstances. See Mighty Midgets, 47 NY2d 12; Universal Underwriters Ins. Co. v. Patriot Ambulette, 149 AD2d 500. But see Gershow Recycling Corp. v. Transcontinental Ins. Co., 22 AD3d 460. In any event, however, the availability or non-availability of coverage would have nothing to do with the amount of the ad damnum clause, or any action or omission on the part of the SILBERSTEIN, AWAD defendants.

Notably, the parties have not addressed the possibility that AMBRA, as the injured claimant, might have notified the excess carrier, and that such notice might have been deemed "as soon as possible" with respect to AMBRA, depending upon when AMBRA discovered or should have discovered, with diligent investigation, the existence of excess coverage. See Allstate Insurance Co. v. Marcone, 29 AD3d 715; Lauritano v. American Fidelity Fire Ins. Co., 3 AD2d 564, aff'd, 4 NY2d 1028. Again, however, any omission on the part of the SILBERSTEIN, AWAD defendants in this regard is wholly unrelated to the ad damnum clause. AMBRA's lack of knowledge of excess coverage cannot be blamed on the ad damnum. Although FERETIC claims that the limited ad damnum led him to forego inquiry into excess insurance, it did not negate the court orders explicitly directing him to disclose that information. See Preliminary Conference Order dated August 11, 2000 (requiring Makko to provide "Insurance Coverage (including excess and/or umbrella coverage)" or, if not furnished, to so advise plaintiff in writing within 45 days of the order); Compliance Conference Order dated April 4, 2001 (requiring response to plaintiff's combined demands, including excess insurance information, within 10 days). To the extent that the SILBERSTEIN, AWAD defendants neglected an opportunity to compel such disclosure and to notify the excess carrier on AMBRA's behalf, that omission has no bearing on the motion to dismiss the Second and Third causes of action. If anything, it may be a factor in support of one of the remaining causes of action.

The Court thus determines that Makko's obligation to give notice under the contract of excess insurance was breached, as a matter of law, by the time the SILBERSTEIN, AWAD defendants assumed the prosecution of the Personal Injury Action. To the extent that there existed a possibility of coverage at that time, that possibility was wholly unrelated to, and was not foreclosed by reason of, the omission of the SILBERSTEIN, AWAD defendants to increase the ad damnum clause. Accordingly, to the extent that the Second and Third causes of action attribute the loss of excess coverage to said omission, they must be dismissed. In light of the foregoing, the Court need not address the factual question of whether or not an increase in the ad [*7]damnum clause would have caused prompt notice to the excess carrier.

The Court turns to the question of the $1,000,000 cap on recovery. AMBRA argues that he was precluded from entering a monetary judgment in excess of the amount sought in his complaint because his counsel's pre-verdict oral application to amend the ad damnum clause was denied. It was denied, according to AMBRA, because there was no explanation or excuse for his counsel to have delayed such motion until the time of trial. See Miller v. United Rentals Aerial Equipment, 303 AD2d 471. AMBRA's argument rests on the proposition that an earlier motion on the part of the SILBERSTEIN, AWAD defendants would have been granted.

SILBERSTEIN, AWAD argues, in essence, that the application was granted (by implication, as described below), or ultimately would have been granted, either on reargument or appeal. In any event, its strategy of delay made no difference. Motions to increase the ad damnum are, and generally should be, granted in the absence of prejudice, whether made before or after trial. Loomis v. Civetta Corinno Construction Corp., 54 NY2d 18.

The Court finds that neither party's position is capable of proof. The question of whether, or when, a Court would have granted a motion to increase the ad damnum is, in these circumstances, impossible to determine as a matter of fact or law. That is because amendments pursuant to CPLR §3025(b) or §3025(c) are essentially discretionary. See Siegel, New York Practice 4th Ed. §237, p.399; §404, p.684. That discretion is not lightly disturbed. AFBT-II, LLC v. Country Village on Mooney Pond, Inc., 21 AD3d 972 (Second Department upheld grant of amendment, notwithstanding un-excused delay in seeking leave); Sewkarran v. DeBellis, 11 AD3d 445; (Second Department upheld denial of amendment on grounds of un-excused delay). The chronicle of case law in this area reflects an "institutional ambivalence." Siegel, New York Practice 4th Ed. §237, p.399 Courts, in different judicial departments or within the same department at different times, apply more or less rigorous standards. Often, the difference stems more from a change in the Courts' judicial personnel than from a change in ideology. Id.

Consequently, this Court simply cannot determine what another Court would do at any particular time. The Court cannot determine whether the written motion to increase the ad damnum, pending at the time of settlement, would have been granted or denied. The Court cannot determine whether an earlier motion to increase the ad damnum, would have been granted or denied. The Court can identify no point in time at which the motion's success was either inevitable or impossible. Therefore, AMBRA cannot prove, and the Court cannot attribute, any consequence to the delay on the part of the SILBERSTEIN, AWAD defendants in moving to increase the ad damnum. To the extent that the Second and Third cause of action purport to do so, they cannot stand.

Based upon the foregoing, the Court need not address the proposition posed by the SILBERSTEIN, AWAD defendants that the oral application to increase the ad damnum was actually granted by implication (i.e., that the Court's oral decision granting the motion to conform [*8]the pleadings to the proof effectively granted the motion to increase the ad damnum to the amount proved at trial, notwithstanding that the Court denied the increase to $5 million.) Nor need the Court consider whether the conduct of the SILBERSTEIN, AWAD defendants is protected by the professional judgment rule.

For purposes of the above determination, the Court has, at it must, presumed the facts asserted by AMBRA to be true, and accorded AMBRA every favorable inference. See Leon v. Martinez, 84 NY2d 83. Nonetheless the Court finds, pursuant to CPLR §3211(a)(7), that the Second and Third causes of action based upon the failure to amend the ad damnum clause are not viable. This determination does not affect the First and Fourth causes of action, upon which AMBRA's case may proceed.

The FERETIC defendants' Motion to Dismiss

The Third Party Complaint states two causes of action: (1) fraud and violation of Judiciary Law §487 and (2) common law indemnity and contribution. These causes of action are based upon allegations that the FERETIC defendants failed to investigate and disclose information regarding Makko's excess insurance, and that they knowingly and intentionally concealed such information from AMBRA and his attorneys. The FERETIC defendants move to dismiss both causes of action pursuant to CPLR §§ 3211(a)(1), (5) and (7) and CPLR §3212, arguing that there is no basis for any of the claims asserted.

To the extent that the First cause of action purports to assert a simple claim of fraud or violation of Judiciary Law §487 against the FERETIC defendants, it must be dismissed. Any direct claim under Judiciary Law §487 is time-barred pursuant to the applicable three-year Statute of Limitations. See Lefkowitz v. Applebaum, 258 AD2d 563; Cresswell v. Sullivan & Cromwell, 771 F. Supp. 580; Kuske v. Gellert & Cutler, P.C. 247 AD2d 448. The Third-Party complaint was filed on February 27, 2006. Insofar as the Judiciary Law cause of action could not have accrued any later than April 10, 2002, the date the FERETIC defendants' representation of Makko terminated, the limitations period expired no later than April 10, 2005. Thus, the claim was time-barred when filed.

A fraud cause of action requires proof of some injury or loss suffered as a result of the defendant's conduct. Willberry Corp. v. Schwartz, 29 AD3d 899. SILBERSTEIN, AWAD alleges no loss or injury to itself or its partners. Rather, it alleges contingent loss deriving only from its potential liability to AMBRA. This is in the nature of a cause of action for indemnification or contribution, and shall be considered in that context. Insofar as it does not support a basic fraud claim, that cause of action must be dismissed.

Turning to the Second cause of action, the Court finds that SILBERSTEIN, AWAD has no valid claim for common law indemnification. "Indemnification is a cause of action which allows the party who is held legally liable to shift the entire loss to another." American Transtech Inc. v. U.S. Trust Corp., 933 F. Supp. 1193, 1202. The common law right of [*9]indemnification arises "in favor of one who is compelled to pay for another's wrong," as in the case of vicarious liability under the doctrine of respondeat superior. Taft v. Shaffer Trucking, Inc., 52 AD2d 255, 258. By contrast, a claim for contribution arises when two or more tort-feasors share varying degrees of responsibility for the same injury. Id. In the instant case, if SILBERSTEIN, AWAD is found liable to AMBRA, its liability would be based, at least in part, on its own tortious conduct. Accordingly, an indemnification claim is not available. Id.; American Transtech Inc. v. U.S. Trust Corp., 933 F. Supp. 1193, 1202.

The viability of the Third-Party action thus turns on whether or not SILBERSTEIN, AWAD has a valid claim for contribution against the FERETIC defendants. The Court notes, at the outset, that a cause of action for contribution does not accrue for purposes of the Statute of Limitations until the party seeking contribution has made payment on the underlying claim. Tedesco v. A.P. Green Industries, Inc., 8 NY3d 243; Sprague v. Marshall, 15 AD3d 853. Because the contribution claim is an independent substantive cause of action, the accrual rule remains the same, regardless of the alleged wrongdoing upon which the cause of action is predicated. Cf., McDermott v. City of New York, 50 NY2d 211. Thus, even if a direct cause of action under Judiciary Law §487 is time-barred, a cause of action for contribution based upon the same allegations is not.

The applicable rules governing contribution have been summarized by the Court of Appeals in Nassau Roofing & Sheet Metal Co., Inc., 71 NY2d 599. The basic requirement is that the culpable parties must be subject to liability for the same injury, whether or not they are allegedly liable under the same or different theories, and whether or not the party from whom contribution is sought is allegedly responsible as a concurrent, successive, independent, alternative or even intentional tort-feasor. "While the culpable party from whom contribution is sought will ordinarily have breached a duty owed directly to the injured party, this is not invariably so. In the unusual case the right to apportionment may arise from the duty owed from the contributing party to the party seeking contribution. The critical requirement for apportionment . . . is that the breach of duty by the contributing party must have had a part in causing or augmenting the injury for which contribution is sought." Id., at 602. See also Schauer v. Joyce, 54 NY2d 1; Williams v. Brentwood Farmers Market, Inc., 256 AD2d 613; Taft, 52 AD2d 255.

In this case, SILBERSTEIN, AWAD asserts that throughout the Personal Injury Action, the FERETIC defendants refused to investigate, failed to disclose and knowingly concealed information regarding Makko's excess coverage, and that, to the extent that SILBERSTEIN, AWAD is found to be responsible for injury to AMBRA, that injury was caused or augmented by the conduct of the FERETIC defendants.

SILBERSTEIN, AWAD refers to four specific instances: (1) the FERETIC defendants failed to comply with a Preliminary Conference Order dated August 11, 2000, in which the Court directed Makko, through its counsel, to provide "Insurance Coverage (including excess and/or umbrella coverage)" or, if not furnished, to so advise plaintiff in writing within 45 days of the [*10]order; (2) the FERETIC defendants failed to comply with a Compliance Conference Order dated April 4, 2001, in which the Court directed Makko, through its counsel, to respond to plaintiff's combined demands, including insurance information, within 10 days (plaintiff's combined demands dated October 30, 1998 specifically requested information regarding any and all excess insurance policies in force on the date of the accident); (3) the FERETIC defendants advised SILBERSTEIN, AWAD by letter dated July 9, 2001 that Makko was insured by Empire Insurance Company for up to $1 million, but omitted any excess insurance information; and (4) on April 9, 2002, at the trial in the Personal Injury Action, FERETIC remained silent in the face of the judge's statement that: "I have had some conversations with the attorneys during the course of this trial, as late as just a few moments ago, and I made a recommendation to the attorneys before lunch that the plaintiff accept and the defendant offer the sum of $750,000 in settlement of this matter, with the understanding that the sole policy of coverage of the defendant was $1 million, and there was no excess policy." [Tr. P.10-11]

In response to the above, FERETIC states, essentially, that he had no knowledge of excess insurance. The FERETIC defendants argue that there can be no fraudulent concealment without knowledge, and that FERETIC owed no duty to the plaintiff to investigate all applicable insurance. Further, they argue, there is no cause of action for non-compliance with discovery. The sole remedy is a motion to compel pursuant to CPLR §3124 or for sanctions pursuant to CPLR §3126. Not only did plaintiff fail to bring such motion, he certified the case for trial and filed a Note of Issue signifying that discovery was complete.

The Court finds that the record presents an issue of fact regarding FERETIC's knowledge of excess insurance on the date of trial. Makko's sales manager testified at his examination before trial: "Q: did you discern from your conversations with Mr. Feretic whether he knew or not that there was excess coverage of whatever amount above the Empire coverage?

A:He was aware of our insurance coverage.

Q:He was?

A:Yes.

Q:From the first time you met him?

A:Yes.

Q:And that was prior to the trial starting?

A:The day of.

Q:The day of the trial?

A:I believe it was the day of the trial, if I recall.

Q:How did it come up that you became aware that he was aware of this?

A:It just came up in our discussions.

Q:Did he bring it up to you?

A:I really don't recall.

Q:At that point did you know you had an excess policy?

A:I know we had an excess. I didn't know it was five million." [Examination before trial of Ronald Orfinger, September 27, 2005, P.36, L.14 - P.37, L.14.] [*11]

In his supporting affidavit, FERETIC admits that on April 4, 2002, "I met with Mr. Orfinger before trial started. During the course of that meeting, I had a discussion with Mr. Orfinger about the exposure in the case and about excess insurance. On April 4, 2002, I provided Mr. Orfinger with my advice on the issue of excess insurance and I called Empire and relayed the information imparted by Mr. Orfinger and my response to him regarding excess insurance." Affidavit of James J. Feretic, sworn to the 17th day of July, 2006, ¶8. FERETIC declined to elaborate on the substance of his conversations with Mr. Orfinger, based upon an assertion of the attorney-client privilege. Elsewhere in the affidavit, he states: "At no time prior to April 4, 2002 was I aware that Makko potentially had a policy of excess insurance covering the period of time of plaintiff's accident." Affidavit of James J. Feretic, sworn to the 17th day of July, 2006, ¶14. In his Reply, FERETIC states: "On April 9, 2002, I still had no actual knowledge as to whether or not Makko had an excess policy, although the possibility had been raised just prior to that date and was being investigated by Empire [the primary carrier]." Reply Affidavit of James J. Feretic, sworn to the 23rd day of August, 2006, ¶4.

The above testimony supports the inference that, on April 4, 2002, FERETIC had knowledge, to a greater or lesser degree of certainty, that an excess policy existed. At minimum, it raises an issue of material fact requiring a trial. Zuckerman v. City of New York, 49 NY2d 557. A jury could reasonably find that FERETIC had sufficient knowledge concerning excess insurance such that his silence before the Court and his adversary on April 9, 2002, under the circumstances described above, was tantamount to fraudulent concealment. The Court notes that even a single instance of deception, if sufficiently egregious, may be sufficient to support a fraud claim or liability under Judiciary Law §487. See Trepel v. Dippold, 2005 WL 1107010, 4, and cases cited therein; Schindler v. Issler & Schrage, P.C., 262 AD2d 226. A contribution cause of action has been upheld based upon an attorney's breach of the obligation "to conduct settlement negotiations in a fair and equitable manner without recourse to fraud or misrepresentation." Taft, 52 AD2d 255, 257. See also Corva v. United Services Automobile Assn., 108 AD2d 631 (action against automobile insurer and its attorney for misrepresenting policy limits in settlement of personal injury lawsuit).

Citing LoGalbo v. Plishkin, Rubano & Baum [197 AD2d 675], the FERETIC defendants argue that its adversaries were not entitled to rely on its representations with respect to coverage. That case is distinguishable. There, a buyer's attorney relied on the oral assurance of the seller's attorney that oral notice sufficed to cancel the contract. The Second Department held that "an attorney simply cannot justifiably rely upon the representation of his or her adversary which is inconsistent with existing law and the clear provisions of a contract." Id., at 676. The case at bar does not concern an attorney's reliance on the adversary's statement of the law or contract. Rather, it concerns an attorney's reliance on an adversary's statement of fact (the existence or non-existence of insurance), within the singular knowledge of that adversary. It also involves the reliance of the Court, in the context of recommending settlement.

Based upon the foregoing, the Court need not consider whether or not the July 9, 2001 letter regarding primary insurance coverage was intentionally misleading, to the extent that it [*12]implied a prior investigation and determination that there was no excess coverage. The Court also need not belabor the question of whether or not the FERETIC defendant's non-compliance with the Courts' discovery orders is actionable in the context of a third-party action for contribution. The Court believes that a preliminary conference order and compliance conference order, in conjunction with Article 31 of the Civil Practice Law and Rules, give rise to a duty on the part of a defendant to provide complete, accurate and truthful discovery. To the extent that an attorney assumes the responsibility for compliance on behalf of the client, that attorney is answerable for a breach of that duty. The Court, on two occasions, directed defendant, through his counsel, to provide all insurance information, including excess, and to advise plaintiff if such insurance was not furnished. Implicit in such directive is the obligation on the part of the attorney to perform some reasonable investigation to determine the existence of all applicable policies. That obligation is not vitiated by an attorney's custom to forego inquiry into excess coverage if the ad damnum is within primary policy limits, even if based upon a good faith belief that an excess policy would never be reached.

Citing Aglira v. Julien & Schlesinger, P.C. [214 AD2d 178], the FERETIC defendants argue that an attorney owes no duty of reasonable care to its adversary. The Court finds this case inapposite. There, a law firm was sued for legal malpractice based upon its failure to purchase an appropriate annuity for its infant client from the settlement proceeds of an underlying medical malpractice action. The law firm tried to implead counsel for the medical malpractice defendants, whom the Court held had no duty with respect to the purchase of the annuity. Here, the duty at issue is not some generic duty of reasonable care. The FERETIC defendants had an express duty to provide information, imposed upon them by two Court orders and the law and rules pertaining to discovery.

As discussed above, a cause of action for contribution requires only that the person from whom contribution is sought has breached a duty to plaintiff, which contributed to the injury caused by the original defendant. The fact that other remedies were available pursuant to CPLR §§ 3124 and 3126, and that SILBERSTEIN, AWAD failed to pursue them, does not relieve FERETIC of responsibility for his share of any resulting loss. There were two independent duties owed to AMBRA: one on the part of SILBERSTEIN, AWAD to vigorously pursue discovery, and one on the part of the FERETIC defendants to completely and accurately provide it. To the extent that either party breached its duty, it may be required to share in the loss.

This provokes the question of whether, and to what extent, the FERETIC defendants' breach of duty caused or augmented an injury to AMBRA; namely the loss of excess insurance. The FERETIC defendants argue that the loss of excess insurance could not have been caused by any action or inaction on its part, because notice to the excess carrier was already fatally late by the time it assumed the defense of Makko on January 18, 2000. Further, the FERETIC defendants argue that SILBERSTEIN, AWAD is estopped from contending otherwise, insofar as they argued in the context of their own motion to dismiss, that notice was fatally late as of their own retainer one year earlier. The Court reiterates its finding that notice by Makko would have been fatally late on January 12, 1999, as a matter of law. The Court left open the possibility, [*13]however, that excess insurance might have been available to AMBRA if he had notified the carrier on his own behalf. To the extent that the actions or inactions of SILBERSTEIN, AWAD and/or the FERETIC defendants deprived him of that opportunity, they may be found at least partially responsible for the loss.

The Court does not decide the causation issue, but merely holds that it is sufficient to proceed to trial. Accordingly, the Court finds that the FERETIC defendants are not entitled to summary judgment dismissing the action pursuant to CPLR §3212. It follows that dismissal is unwarranted under the more liberal standards of CPLR §3211.

* * *

Based upon the foregoing, it is

ORDERED that the motion by defendants JOSEPH P. AWAD, SILBERSTEIN, AWAD & MIKLOS, P.C. and GREGORY D. BELLANTONE pursuant to CPLR §2221 to modify or clarify the September 9, 2005 order of the Court regarding non-party participation at depositions [Motion Sequence 003] is disposed as moot. It is further

ORDERED, that the motion by defendants JOSEPH P. AWAD, SILBERSTEIN, AWAD & MIKLOS, P.C. and GREGORY D. BELLANTONE pursuant to CPLR §§3211(a)(1) and (7) to dismiss the Second and Third causes of action of plaintiff's Amended Complaint [Motion Sequence 004] is granted. The First and Fourth causes of action shall proceed to trial. It is further

ORDERED, that the motion by third-party defendants JAMES FERETIC, ESQ. and HAWKINS, FERETIC, DALY, MARONEY & HAYES, P.C. pursuant to CPLR §§ 3211(a)(1), (5) and (7) and CPLR §3212 to dismiss the Third-Party Complaint [Motion Sequence 005] is granted in part and denied in part, as follows: (i) it is granted with respect to the First cause of action, which is dismissed; (ii) it is granted with respect to that portion of the Second cause of action as asserts a claim for indemnification, which is dismissed; (iii) it is denied with respect to the contribution claim, which shall proceed to trial. It is further

ORDERED, that the motion by the firm of WILKOFSKY, FRIEDMAN, KAREL & CUMMINS pursuant to CPLR §321 for leave to withdraw as counsel for plaintiff JOHN AMBRA [Motion Sequence 006] is disposed as moot.

This constitutes the Order of the Court.

ENTER: [*14]

Dated: __August 6, 2007_______________________________________________

J.S.C.