Faden v Satterlee Stephens Burke & Burke, LLP

[*1] Faden v Satterlee Stephens Burke & Burke, LLP 2007 NY Slip Op 52590(U) [24 Misc 3d 1205(A)] Decided on May 22, 2007 Supreme Court, Nassau County Palmieri, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 May 22, 2007
Supreme Court, Nassau County

Brad Faden, Plaintiff,

against

Satterlee Stephens Burke & Burke, LLP and DANIEL G. GURFEIN, Defendants.



008804/00



TO: Brian C. Rappaport, P.C.

Attorneys for Plaintiff

330 Old Country Road, Ste. 103

Mineola, NY 11501

Satterlee Stephens Burke & Burke, LLP By: Alun W. Griffiths, Esq.

Attorneys for Defendants

230 Park Avenue

New York, NY 10169

Daniel Palmieri, J.

It is ordered that this motion by the defendants to dismiss the complaint prior to answer pursuant to CPLR 3211(a) is granted and the complaint is dismissed.

In this legal malpractice action, the plaintiff alleges that the defendant law firm, and one of its attorneys, were negligent in the discharge of their professional duties. He claims that a shareholder and employment contract they negotiated on plaintiff's behalf regarding an investment in a Florida company, which he signed, contained a provision that later worked to his disadvantage, causing him a financial loss.

More specifically, he asserts that he had been assured by the defendants that should the agreement come to an end, and/or his employment thereunder be terminated, that he would be able to recover his $500,000 investment, or have the corporation repurchase his shares. He was later terminated, but the corporation refused to return his investment or repurchase his shares. It took this position because it alleged a breach of the shareholder agreement by the plaintiff, and under the relevant provision (4.3[d]), a buyback by the corporation was permissive and not mandatory (in that it utilized the word "may" and not "must"). Because of this language, the plaintiff contends that he was forced to sue the corporation in which he had invested and what appears to be its main shareholder in a separate Florida action. After some six years of litigation, that action was settled for $100,000. The complaint thus states two causes of action, the first sounding in legal malpractice, the second in damages flowing from the need to retain separate counsel to prosecute the action leading to the stated settlement.

On this present motion the defendants move, in effect, under both CPLR 3211(a)(1) [documentary evidence] and CPLR 3211(a)(7) [failure to state a cause of action] to dismiss the [*2]complaint. They argue that the shareholder agreement itself and the law of legal malpractice in New York are absolute bars to this action. The Court agrees.

In order to establish a cause of action in legal malpractice, the plaintiff must allege facts demonstrating that the attorney failed to exercise that degree of care, skill and diligence commonly possessed and exercised by a member of the legal community, that the plaintiff incurred actual damages as a result, and that the negligence was the proximate cause of the loss sustained — that is, but for such negligence the plaintiff would have been successful in the underlying action, or would not have sustained any damages. Bauza v Livington, 40 AD3d 791 (2d Dept. 2007); Cannistra v O'Connor, McGuinness, Conte, Doyle, Oleson & Collins, 286 AD2d 314, 315-316 (2d Dept. 2001); Ashton v Scotman, 260 AD2d 332 (2d Dept. 1999).

Under this well-established standard, it has been held that a client cannot premise a claim of malpractice on a claim that he was misadvised about the content of an agreement, or that his attorney "missed something" in that agreement to the client's detriment, where the agreement itself recites that the client had been apprised of his rights and had been given the opportunity to weigh all the facts likely to influence his decision. Lunney & Crocco v Wolfe, 243 AD2d 348 (1st Dept. 1997); see also, Wexler v Shea & Gould, 211 AD2d 450 (1st Dept. 1995). Therefore, submission of a writing that contains such provisions contradicts a claim of legal malpractice, and can lead to dismissal pursuant to CPLR 3211(a)(1) and (a)(7). See, Malarkey v Piel, 7 AD3d 681 (2d Dept. 2004); Laruccia v Forcelli, Curto, Schwartz, Mineo, Carlino & Cohn, 295 AD2d 321 (2d Dept. 2002).

In the instant case, the agreement concerning which the plaintiff allegedly was misadvised recites, at paragraph 1.5, as follows: a. FADEN acknowledges that with the assistance of his professional advisors (including accountants and attorneys) he is capable of evaluating the merits and risks of the investment in the Corporation.b. FADEN has examined or has had an opportunity to examine before the date hereof all applicable documents and such applicable information as are relevant to this transaction....d.FADEN has had an opportunity to ask questions of and receive answers from the Corporation or a person or persons authorized to act on its behalf concerning the terms and conditions of this investment, and all such questions have been answered to the full satisfaction of the undersigned....g. FADEN is acquiring his Shares for his own account, for investment purposes only, and not with a view to the sale or other distribution thereof, in whole or in part, and is aware of the following:

i. His investment in the Shares involves a high degree of risk, which may result in the loss of his entire investment in the Corporation.

Given the foregoing, the claim of malpractice cannot stand. Lunney & Crocco v Wolfe, supra; Malarkey v Piel, supra. Plaintiff's reliance of the Court of Appeals decision in Arnav Indus., Inc. Retirement Trust v Brown, Raysman, Millstein, Felder & Steiner (96 NY2d 300 [2001]) is misplaced. As noted by the Appellate Division, First Department, the case is unique and limited to its facts. Bishop v Maurer, 33 AD3d 497 (1st Dept. 2006). In Arnav, the attorney sent a revised [*3]version of a settlement agreement to the client for signature, and advised the client that a typographical error had been identified and corrected in the first paragraph of the original agreement. The attorney further advised that the agreement was otherwise identical. Based on this advice, the client did not review the revised version beyond the first paragraph and signed it. However, the revised version contained another typographical error in another portion of the document, one which represented a $4,000,000 detriment to the client. The Court found that the asserted reliance on the attorney's assurance that except for the error in the first paragraph the document was identical to the original — in effect, advising the client that no further review was necessary — was enough to preserve the claim of legal malpractice.

Nothing akin to that situation is present here. In his affidavit in opposition to this motion, which the Court may consider even in the context of a pre-answer motion to dismiss pursuant to CPLR 3211(a)(7), [FN1] the plaintiff avers that the agreement did not reflect the right to recover at least 75% of his investment under any and all circumstances, which his lawyer knew was of paramount importance to him. He also presents a draft copy indicating that in the section covering the rights of the parties in the event of stockholder death, disability, or termination or breach (including 4.3[d]), that all references to "may" regarding a repurchase of shares were crossed out by his attorney and were replaced with "must", indicating the attorney's understanding of the client's desires.

He also states that he signed the final version "for no other reason than Daniel Gurfein said I was protected" and that "If I believed that I could lose the entire $500,000 I would never have signed the Shareholder's Agreement." Conspicuously absent, however, is any claim that the defendants advised him to sign without reading the agreement. Nor is there any claim that his attorney assured him that all the language changes reflected in the draft copy would be acceptable to the other party to the contract and would be made in the final version that the parties would sign. Finally, there is nothing explaining away the provision warning him that it was possible that his entire investment could be lost. Accordingly, the general law cited above requires dismissal of this action. Bishop v Maurer, supra.

This shall constitute the Decision and Order of this Court

E N T E R

DATED: May 22, 2007

_____________________________

HON. DANIEL PALMIERI

Acting Supreme Court Justice

TO:Brian C. Rappaport, P.C.

Attorneys for Plaintiff

330 Old Country Road, Ste. 103

Mineola, NY 11501

Satterlee Stephens Burke & Burke, LLP

By: Alun W. Griffiths, Esq. [*4]

Attorneys for Defendants

230 Park Avenue

New York, NY 10169 Footnotes

Footnote 1: See, e.g., Guggenheimer v Ginzburg, 43 NY2d 268 (1977)