Empire Purveyors, Inc. v Brief Justice Carmen & Kleiman, LLP

[*1] Empire Purveyors, Inc. v Brief Justice Carmen & Kleiman, LLP 2008 NY Slip Op 52408(U) [21 Misc 3d 1137(A)] Decided on November 25, 2008 Supreme Court, New York County Solomon, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. As corrected in part through December 4, 2008; it will not be published in the printed Official Reports.

Decided on November 25, 2008
Supreme Court, New York County

Empire Purveyors, Inc., Plaintiff,

against

Brief Justice Carmen & Kleiman, LLP, ROY JUSTICE, ESQ., and WAYNE S. COOK, JR., ESQ., Defendants.



114499/07



Plaintiff was represented by David J. Fischman, Esq. of David J. Fischman, P.C., 200 Park Avenue South, New York, NY 10003, tel no. (212) 260-3520. Defendants were represented by Richard J. Brownell, Esq. of Zaremba, Brownell & Brown, PLLC, 40 Wall Street, New York, NY 10005, tel no. (212) 400-7223.

Jane S. Solomon, J.


INTRODUCTION

In this legal malpractice action, defendants moved to dismiss plaintiff's amended complaint pursuant to CPLR 3211(a) (1) and (7). Plaintiff opposed the motion and cross-moved for leave to serve a second amended complaint (the "Complaint"). In an Interim Order dated September 29, 2008, this Court granted the cross-motion, deemed the Complaint served, and reserved decision on the portion of the motion to dismiss which remained applicable to the Complaint.

FACTUAL BACKGROUND

Plaintiff Empire Purveyors, Inc. ("Empire" or "Plaintiff") leased a store located at 901 First Avenue New York, New York. Complaint at ¶9. Empire's landlord commenced a commercial landlord-tenant action against Empire in New York City Civil Court. Complaint at ¶12. Empire retained defendant Brief Justice Carmen & Kleiman LLP ("Brief Justice") to represent it in connection with the dispute. Complaint at ¶13. Defendants Roy Justice, Esq. ("Justice"), as the responsible attorney, and Wayne S. Cook, Esq. ("Cook"), as an associate, are the employees of Brief Justice who worked on the Empire matter.[FN1] Complaint at ¶¶ 4, 5, 13; Affidavit of Toni Pinto ("Pinto Affidavit") at ¶16. [*2]

Empire alleges that on or about November 2, 2004, unbeknownst to Plaintiff, Cook executed a Stipulation of Settlement (the "Stipulation") on behalf of Plaintiff which obligated Empire to pay $17,230.48 to settle the dispute. Complaint at ¶¶14, 15. Empire claims that Cook did not inform Empire of the terms of the Stipulation or obtain Empire's consent prior to Cook's execution of the Stipulation.[FN2] Complaint at ¶29; Pinto Affidavit at ¶¶20, 29. The Stipulation was "so ordered" by the Court. Affirmation of David J. Fischman at ¶28. According to Plaintiff, Cook represented to Empire that "the judge ruled that we had lost the case and that the landlord had prevailed in its claim for additional rent and other monies" and that Empire "had to give him a bank check, the next day, payable to the landlord in the amount of $17,230.48." Pinto Affidavit at ¶19. Empire asserts that it "never agreed to settle the case, especially for an amount which far exceeded any imaginable amount that could possibly be owed to the landlord." Pinto Affidavit at ¶20. Nevertheless, Empire provided a bank check dated November 3, 2004 to Cook based on Cook's representation that a judge had heard the case and ruled against Empire out of "fear of violating a court order." Pinto Affidavit at ¶21.

Empire alleges that the Stipulation "obligated the plaintiff to pay monies to the landlord in an inappropriate amount." Complaint at ¶29. Empire contends that the landlord was not entitled to receive the $17,230.48 payment from Empire as that payment included rent which was already paid, a payment for real estate taxes that were not due, and $3,000 for the landlord's attorney's fees when Empire was not required to pay the landlord's legal fees. Pinto Affidavit at ¶¶35-37. Empire contends that it informed Cook that no rent was due for the period of December of 2003 to March of 2004 and that a credit was due to Empire for tax payments that were made to the landlord because of a tax abatement that the landlord had received. Pinto Affidavit at ¶17.

Empire further contends that the Stipulation improperly did not provide for the return of Empire's security deposit. Complaint at ¶29; Pinto Affidavit at ¶38. Additionally, Plaintiff claims that Brief Justice waived Empire's right to pursue a refund of real estate taxes which had been overpaid and waived Empire's right to vacate any portion of the judgment. Pinto Affidavit at ¶39.

Empire further alleges that Brief Justice misappropriated monies that were paid by the landlord to Empire for Empire's security deposit. After the Stipulation was signed, Empire asked Cook about the return of Empire's security deposit. Complaint at ¶24. In July of 2005, Cook provided Empire with a check from the landlord in the amount of $3,153.58 (only part of the amount that Empire claims it was owed by the landlord). Complaint at ¶21. Allegedly, the cover letter addressed to Cook from the landlord's attorney was dated February 25, 2005. Pinto Affidavit at ¶26.

After Empire "continued to press" Cook for the return of the balance of Empire's security deposit, Cook sent Empire a personal check payable by Cook to Empire in the amount of $3,710. Pinto Affidavit at ¶¶30,31. When the check bounced, Cook delivered the same amount in cash to Empire. Pinto Affidavit at ¶32. Empire contends that the landlord had returned the full amount of Empire's security deposit to Cook, but that Cook withheld a portion of the full amount and [*3]"converted the same for his own use" and then later made the cash payment. Pinto Affidavit at ¶33; Complaint at ¶28. Empire alleges that even with the cash payment ($3,710) and the landlord's check ($3,153.58), the full amount of the security deposit has not been returned to it. Pinto Affidavit at ¶34.

In the Complaint, Plaintiff asserts the following three causes of action: (a) legal malpractice; (b) fraudulent concealment/breach of fiduciary duty; (c) violation of Judiciary Law Sec. 487. The crux of the legal malpractice cause of action is that Brief Justice, Cook, and Justice were negligent in: (a) executing the Stipulation without Empire's consent; (b) obligating Empire to pay more than what was owed to the landlord; (c) not providing for the return of Empire's security deposit and other monies owed to Empire by the landlord; and (d) by converting monies belonging to Empire. Complaint at ¶29. Plaintiff also claims that Brief Justice is liable for not properly hiring, monitoring, and/or supervising its attorneys. Id. As a result, Plaintiff claims that it has been damaged in an amount in excess of $17,895.86. Complaint at ¶30.

In the second cause of action, Empire asserts that Defendants fraudulently concealed the fact that Defendants had received, but misappropriated monies due to Empire from the landlord. Complaint at ¶¶36-40. Empire claims that it was damaged in an amount in excess of $25,000 on the second cause of action. Complaint at ¶41. In the third cause of action, Empire asserts that Defendants violated Judiciary Law Sec. 487 "by engaging in a course of conduct to deceive and to defraud plaintiffs of their rightful monies and in being untruthful and fraudulent in accomplishing its own ends to the detriment of plaintiffs." Complaint at ¶44. Plaintiff seeks $150,000 on the third cause of action for treble and punitive damages. Complaint at ¶46.

DISCUSSION

Defendants move to dismiss pursuant to CPLR 3211(a)(1) and (a)(7). "In order to prevail on a motion to dismiss based on documentary evidence pursuant to CPLR 3211(a)(1), the documents relied upon must definitively dispose of plaintiff's claim." Bronxville Knolls, Inc. v. Webster Town Center Partnership, 221 AD2d 248, 248 (1st Dept. 1995). None of the documents relied upon are in and of themselves sufficient to warrant dismissal. The copy of the lease submitted by Defendants does not conclusively dispose of Empire's claims and portions of it are unreadable.

Defendants contend that Empire fails to state a cause of action for legal malpractice because it cannot allege actual damages incurred as a result of malpractice. Defendants argue that dismissal is warranted because Plaintiff cannot show that "but for" counsel's alleged malpractice, Plaintiff would not have had to pay the same amount or more than the amount set forth in the Stipulation under the terms of Empire's lease with the landlord. However, as noted above, Empire contends that it had good defenses to the rent claim including payment, tax overpayments, and security deposit offsets, so that no attorney's fees were due. Accordingly, Empire has shown that it legally will be entitled to ascertainable actual damages if it prevails on this claim.

With respect to the second cause of action, Defendants contend that it should be [*4]dismissed as redundant because it is based on the same alleged facts that underlie Plaintiff's legal malpractice cause of action. However, Empire correctly argues that this claim is based on different facts. While the first cause of action addresses the adequacy of Brief Justice's representation of Empire in the underlying action, the second cause of action is based on the subsequent fraudulent concealment of Cook's misappropriation of monies belonging to Empire. The intentional tort of fraudulent concealment is separate and independent from the legal malpractice cause of action.

With respect to the third cause of action, Defendants argue that Judiciary Law Sec. 487 is inapplicable because the alleged fraud was not committed during a legal proceeding. According to Defendants, this cause of action must be dismissed because Cook's alleged conversion of payments made to Empire occurred after the landlord-tenant proceeding had ended. It is true that a Judiciary Law 487(1) claim must fail if the alleged "deceit or collusion" is not directed at a Court and did not take place during the course of a pending judicial proceeding. Costalas v. Amalfitano, 305 AD2d 202, 204 (1st Dept. 2003). However, Empire contends that Cook deceived the Court in a proceeding when he represented in paragraph 11 of the Stipulation that he was "fully authorized" to "draft, negotiate and execute" the Stipulation on behalf of Empire when he in fact was not.

Furthermore, Judiciary Law Sec. 487(2) applies where an attorney "willfully receives any money or allowance for or on account of any money which he has not laid out, or becomes answerable for." Empire alleges that Cook received monies sent by the landlord in connection with the landlord-tenant proceeding for Empire's security deposit and converted and withheld them from Plaintiff. Based on the foregoing, Empire has stated a valid cause of action pursuant to Judiciary Law Sec. 487.

Defendants argue that Cook's alleged conduct is not serious enough to trigger Judiciary Law Sec. 487 and cite Gonzalez v. Gordon, 233 AD2d 191 (1st Dept. 1996) in support of their argument. However, that case is distinguishable because, as the Court noted, there was "no evidence that defendant defrauded plaintiff or engaged in conduct intended to deceive." Id. at 191. This case involves allegations of fraud and deceit which must be taken as true on this motion. Contrary to Defendants' argument, the allegations that Cook essentially settled a case without even informing his client, deceived the Court by representing that he had the requisite authorization, and then misappropriated monies that were paid to his client are serious enough to invoke Judiciary Law Sec. 487.

CONCLUSION

Accordingly, it hereby is

ORDERED that Defendants' motion is denied in its entirety; and it is further

ORDERED that the Clerk shall enter judgment accordingly with costs and disbursements as taxed. [*5]

Dated:November,2008

ENTER:

J.S.C. Footnotes

Footnote 1: Brief Justice, Cook, and Justice will be collectively referred to as "Defendants".

Footnote 2: Paragraph 11 of the Stipulation provides, "Counsel for the parties hereby represent that they have been fully authorized by their respective clients to draft, negotiate and execute this Stipulation on behalf of their respective clients."