U.S. Bank N.A. v Stein
Annotate this CaseDecided on May 13, 2011
Supreme Court, Nassau County
U.S. Bank N.A., AS TRUSTEE FOR ASSET BACKED PASS THROUGH CERTIFICATES, SERIES 2006-HE1, Plaintiffs,
against
Alan C. Stein, Esq., GASTWIRTH, MIRSKY & STEIN, L.L.P., LAW OFFICE OF ALAN C. STEIN, P.C., ROBERT M. STEINERT and CHICAGO TITLE INSURANCE COMPANY, , Defendants.
016919/08
Counsel for Plaintiff and Third-Party Defendants:
Miller, Rosado & Algios, LLP
Neil A. Miller, Esq.
200 Old Country Road
Suite 590
Mineola, NY 11501
(516) 512-0200
Counsel for the Defendant Chicago Title Insurance Company
Farrell Fritz, P.C.
Bruce N. Roberts, Esq.
1320 RXR Plaza
Uniondale, NY 11556
(516) 227-0700
Counsel for the Defendants/Third-Party Plaintiffs Alan C. Stein, Esq. and Gastwirth, Mirsky & Stein, LLP
Babchik & Young, LLP
200 East Post Road
White Plains, New York 10601
(914) 470-0001
Randy Sue Marber, J.
Upon the foregoing papers, the motion (Mot. Seq. 02) by the Third-Party Defendant, STEVEN J. BAUM, P.C. ("Baum Firm"), seeking an order pursuant to CPLR § 3212, granting it summary judgment against the Defendants/Third-Party Plaintiffs, ALAN C. STEIN, ESQ., GASTWIRTH, MIRSKY & STEIN, L.L.P. and LAW OFFICE OF ALAN C. STEIN, P.C. ("Stein"), and Stein's cross-motion (Mot. Seq. 03), seeking an order pursuant to CPLR § 3212, granting them summary judgment on all claims contained in the Third-Party Complaint, are decided as hereinafter provided.[FN1]
As an initial matter, this Court must decide whether or not to deny the motion and cross-motion as untimely. The Court's Certification Order dated May 10, 2010 specified, inter alia, that all motions for summary judgement must be filed within 60 days of the filing of the Note of Issue. Thereafter, by stipulation between the parties, the Plaintiff's time to file a Note of Issue was extended until September 30, 2010. The Note of Issue in this matter was originally filed on September 29, 2010. Sixty (60) days from that date is November 28, 2010, a Sunday. Since, of course, no papers can be filed on a weekend, the next business day when filing would be possible was November 29, 2010. See General Construction Law § 25-a(1). [*2]A printout from the County Clerk's office shows that the motion was recorded, and the motion fee was paid, on November 30, 2010.
The Certification Order unequivocally states that the motion for summary judgment must be filed, not served, within sixty (60) days of the filing of the Note of Issue. No objection was raised by the Third-Party Plaintiffs, Stein, regarding the timeliness of the Third-Party Defendant's motion. Accordingly, the Court, in its sound discretion, will consider the merits of the motion.
This case has an extensive history, the details of which are relevant to the determination of the instant motion and cross-motion for summary judgment. On or about September 11, 2008, the Plaintiff, U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE FOR ASSET BACKED PASS THROUGH CERTIFICATES SERIES 2006 HE1 ("US Bank"), commenced an action for legal malpractice against the Defendants, Stein, for negligently failing to properly record a mortgage executed in favor of US Bank on a property located at 112 Irving Avenue, Deer Park, New York (the "Premises"), which allegedly caused it damages. The Defendants, Stein, were the attorneys that represented the Plaintiff lender, US Bank, in the mortgage loan transaction, on September 16, 2005, after which the mortgage was recorded against the incorrect lot number. The Defendants/Third-Party Plaintiffs, Stein, subsequently commenced a Third-Party action against the Third-Party Defendant, Baum Firm, for contribution alleging that the Baum Firm failed to timely intervene in an action that could have secured US Bank an equitable lien on its incorrectly recorded mortgage. For a comprehensive understanding of the relevant events leading up to the dueling allegations of legal malpractice, the Court finds a time line of the events most useful. The relevant factual events are as follows:
November 19, 2003Mortgage note in favor of T & V Construction executed by owner of the Premises, Mario Pratti, on three parcels of land including the subject Premises, ("T & V Mortgage").
August 12, 2004Pratti, executed a mortgage in favor of Fremont Investment & Loan ("Fremont Mortgage").
September 20, 2004Fremont Mortgage was recorded.
September 16, 2005Pratti transferred his interest in the Premises by deed to Karen Ciccarelli ("Cicarelli Deed").
September 16, 2005Cicarelli executed a mortgage in favor of MortgageIt, Inc., secured by the Premises, which mortgage was subsequently transferred to the above named Plaintiff, US Bank ("US Bank Mortgage"). A large portion of the proceeds from the principal amount of the US Bank Mortgage was used to pay off the previously recorded Fremont Mortgage. [*3]
October 27, 2005The Cicarelli Deed and US Bank Mortgage was recorded against the incorrect lot number due to the alleged negligence of the Defendants/Third-Party Plaintiffs, Stein.
November 16, 2005Satisfaction of the Fremont Mortgage was recorded.
December 23, 2005Pratti executed a correction deed in favor of Cicarelli.
January 18, 2006Correction Cicarelli Deed (with correct lot number) was recorded by Third-Party Plaintiff, Stein.
March 14, 2006T & V Mortgage was recorded.
September 6, 2006T & V commenced a foreclosure action on T & V Mortgage and filed a Notice of Pendency regarding the Premises.
February 21, 2007Third-Party Defendant, Baum Firm, commenced a foreclosure action to foreclose on the US Bank Mortgage.
January 17, 2008Judgment of Foreclosure and Sale entered in T & V Foreclosure Action.
April 8, 2008Judgment of Foreclosure and Sale entered in US Bank foreclosure action.
April 8, 2008US Bank Mortgage effectively recorded.
April 16, 2008Premises sold pursuant to T & V's Judgment of Foreclosure and Sale
July 10, 2008Attempted sale of the Premises pursuant to US Bank's Judgment of Foreclosure and Sale.
August, 2008Third-Party Defendant, Baum Firm, moves by Order to Show Cause to intervene in T & V foreclosure action.[FN2]
As indicated in the above referenced time line, the T & V Mortgage was properly [*4]recorded before the US Bank Mortgage was effectively recorded by the judgment of foreclosure and sale. Further, the Baum Firm commenced its foreclosure action to foreclose on the US Bank Mortgage five months after the T & V foreclosure action had already commenced and the lis pendens was filed.
Stein's alleged failure resulted in a subordination of the lien of the US Bank Mortgage which Stein claims could have been rectified but for the Baum Firm's failures. Specifically, Stein alleges that, even in the event it failed to properly record the US Bank Mortgage, the Baum Firm knew or should have been aware of the T & V foreclosure action and the lis pendens filed against the Premises. Further, Stein alleges that the Baum Firm knew that the US Bank Mortgage would have priority over the T & V Mortgage pursuant to the doctrine of equitable subrogation, and, as such, its failure was the sole proximate cause of any damages sustained by the Plaintiff.
The Baum Firm, in its motion for summary judgment, posits that it is not liable for contribution for any alleged malpractice as a successor attorney to Stein because it represented the Plaintiff in a separate matter, before a separate tribunal and for a different purpose than Stein's representation of the Plaintiff. In sum, the Baum Firm argues that summary judgment is warranted in its favor based upon two reasons: (1) that the Baum Firm was not specifically retained to intervene in the T & V foreclosure action and was solely retained to foreclose on the US Bank Mortgage; and (2) the decision by the Baum Firm to commence a separate foreclosure action naming T & V as a party defendant and including an equitable subrogation claim, as opposed to intervening in the T & V foreclosure action, was merely an error of judgment which does not rise to the level of legal malpractice.
In an action to recover damages for legal malpractice, "a plaintiff must demonstrate that the attorney failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession' and that the attorney's breach of this duty proximately caused plaintiff to sustain actual and ascertainable damages". Rudolf v. Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442 (2007), quoting McCoy v. Feinman, 99 NY2d 295, 301-302 (2002). To establish causation, "a plaintiff must show that he or she would have prevailed in the underlying action or would not have incurred any damages, but for the lawyer's negligence". Rudolf v. Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d at 442. Expert testimony is normally needed to establish that the attorney failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession, "unless the ordinary experience of the fact-finder provides sufficient basis for judging the adequacy of the professional service, or the attorney's conduct falls below any standard of due care". Greene v. Payne, Wood & Littlejohn, 197 AD2d 664, 666 (2d Dept. 1993).
An honest error of judgment or the "selection of one among several reasonable courses of action does not constitute malpractice". Rosner v. Paley, 65 NY2d 736, 738 (1985), nor is the attorney "held to the rule of infallibility" or "liable for an honest mistake of judgment where the proper course is open to reasonable doubt". Grago v. Robertson, 49 [*5]AD2d 645, 646 (3d Dept 1975). Absent "reasonable" courses of conduct found as a matter of law, a determination that a course of conduct constitutes malpractice requires findings of fact. Grago v. Robertson, 49 AD2d 645, 646 (3d Dept. 1975).
As a preliminary matter, the "drastic remedy of summary judgment should be granted only if there are no material issues of fact". Dykeman v. Heht, 52 AD3d 767, 769 (2d Dept 2008); see also Andre v. Pomeroy, 35 NY2d 361, 364 (1974).
Addressing first the Baum Firm's argument that they were only retained to commence a foreclosure action, counsel primarily relies upon Northrop v. Thorsen, 46 AD3d 780 (2d Dept. 2007). In Northrop, an attorney was found liable for legal malpractice for failing to comply with a Worker's Compensation rule that required either the carrier's consent or judicial approval to settle a third-party action and continue receiving compensation benefits. The Court found that the attorney's ignorance of the clearly established rule fell below any accepted standard of care. The Court further determined that the attorney's failure constituted negligence and proximately caused the plaintiff's injuries in that she could no longer receive Worker's Compensation benefits.
Counsel for the Baum Firm distinguishes the instant matter from the circumstances in Northrop, arguing that it represented the Plaintiff in a "separate matter, before a separate tribunal, and for a different purpose" than Stein's representation of US Bank, and, thus, cannot be held liable.
Counsel for the Baum Firm also relies on Sucese v. Kirsch, 177 AD2d 890 (3d Dept. 1991). In Sucese, law firm number one represented a client in the purchase of real property and failed to properly record a deed which resulted in various liens, tax warrants and judgments against the property. The client subsequently retained law firm number two to commence a legal malpractice claim against law firm number one. The Court in that case found that the second law firm was retained solely to commence a legal malpractice claim and did not owe plaintiff a duty to commence a proceeding to quiet title.
At the outset, it must be noted that in a previous decision rendered by this Court, former Justice William LaMarca found that the Third-Party Plaintiffs properly stated a cause of action distinguishing the aforementioned cases in that "the time sequences, the lawyer/client relationships and the very nature of the services rendered were all far too attenuated to support a claim for contribution as a matter of law". See Short Form Order (LaMarca, J., 12/04/09). While on a motion to dismiss, the Court need only examine the sufficiency of the pleadings, here, the same analysis is applicable to determine whether there exists an issue of fact to defeat a motion for summary judgment. The Court finds that the Baum Firm's papers raise a myriad of issues that must be determined by a trier of fact.
The Court agrees that the cases of Northrop, supra, and Sucese, supra, are distinguishable from the instant matter. In Northrop, the attorney was negligent in failing to adhere to a clearly established rule of law which has no relevance here. In Sucese, the second firm was retained to commence an action for legal malpractice which has no bearing or relevance to an action to quiet title. Quite to the contrary, in the instant matter, Stein's [*6]alleged failure to properly record the US Bank Mortgage and the Baum Firm's failure to subsequently take action on the same Premises once it knew or should have known of the error are so intertwined that it is reasonable for a jury to find that the Baum Firm's actions contributed to the Plaintiff's injuries.
Notably, counsel for Stein is correct in that the Court is not making any determinations on the main claim on this motion for summary judgment. Any issues with respect to whether Stein was negligent in his representation of the Plaintiff, US Bank, are not properly before the Court at this juncture. Rather, the Court must determine whether there exist any issues of fact with respect to the Baum Firm's representation of the Plaintiff, US Bank, and whether Stein may seek contribution from the Baum Firm if it is liable to the Plaintiff for legal malpractice.
The Baum Firm's two arguments, examined together, in and of themselves raise issues of fact. On the one hand, counsel argues that it was only retained to commence a foreclosure action and not to intervene. On the other hand, counsel contends that commencing a foreclosure action was one of many reasonable courses of action and its failure to timely intervene, at most, amounts to an error of judgment. The Court cannot reconcile the two. If intervention in the T & V action was one of the reasonable courses of action that was considered by the Baum Firm, then it must have been encompassed within services it was retained to perform.
Moreover, it appears from the documentation presented by the Baum Firm, in support of its motion, that intervention in the T & V foreclosure action was in fact investigated and considered. The Baum Firm's intentional decision not to intervene despite there being a lis pendens filed against the Premises, must be examined by a trier of fact to determine whether that was an exercise of sound judgment.
The affidavit of Adam Gross, submitted in support of the motion, states that the Baum Firm chose to commence a foreclosure action so that all parties, including any competing mortgages were before the Court in one action and would avoid the needless expense of having to hire counsel to appear and litigate in two different actions. See Gross Affidavit, dated November, 2010, attached to the Baum Firm's Notice of Motion. At the very least, there is a question of fact as to whether all the courses of action considered by the Baum Firm were intended to produce the same result, to wit, obtaining a lien on a secured interest. That being the desired result, it is difficult for the Court to determine, as a matter of law, that choosing a course of action other than timely intervention in the T & V foreclosure action, was an exercise of sound judgment. Accordingly, the question of whether the Baum Firm's failure to timely intervene in the T & V foreclosure action was conduct that fell below accepted standards of care within the legal profession, is an inquiry to be determined by the trier of fact. In the event the trier of fact finds that the Baum Firm owed a duty to the Plaintiff and that the duty was breached, then it necessarily follows that the apportionment of liability between Stein and the Baum Firm must be determined.
As succinctly stated by the Court of Appeals, the relevant question on the viability of [*7]the contribution claim asserted herein is not whether the Baum Firm owed a duty to Stein, "but whether each owed a duty to plaintiff and whether, by breaching their respective duties, they contributed to her ultimate injuries..." Schauer v. Joyce, 54 NY2d 1, 6 (1981). There are potentially two tortfeasors here. Stein may be found negligent in failing to have properly recorded the US Bank Mortgage and the Baum Firm may likewise be found negligent in failing to have secured an equitable lien which would have minimized US Bank's damages. Accordingly, there are issues of fact with respect to whether Stein and the Baum Firm will be liable for legal malpractice. Under the circumstances of this case, neither party is entitled to summary judgment.
Accordingly, it is hereby
ORDERED, that the motion (Mot. Seq. 02) by the Third-Party Defendant, the Baum Firm, seeking an order pursuant to CPLR § 3212, granting it summary judgment against the Defendants/Third-Party Plaintiffs, Stein, is DENIED; and it is further
ORDERED, that the cross-motion (Mot. Seq. 03) by the Third-Party Plaintiffs, Stein, seeking an order pursuant to CPLR § 3212, granting them summary judgment on all claims contained in the Third-Party Complaint, is DENIED.
This constitutes the decision and order of the Court.
Any applications not specifically addressed herein are DENIED.
Dated: Mineola, NY
May 13, 2011
___________________________
Hon. Randy Sue Marber, J.S.C. Footnotes
Footnote 1: The portion of the Baum Firm's motion, pursuant to CPLR § 3124 and 3126, seeking to strike the pleadings of the Third-Party Plaintiffs, Stein, has been withdrawn without prejudice by the Baum Firm as the discovery issues regarding scheduling of depositions have been resolved.
Footnote 2: See Decision and Order of the Supreme Court, Suffolk County (Sgroi, J., 03/13/09) denying the Baum Firm's Order to Show Cause to intervene.
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