Elmakies v Sunshine
Annotate this CaseDecided on September 24, 2012
Supreme Court, Nassau County
Nissim Elmakies, DOWNSTATE ELMIRA AQUISITION CORP., ELMEN INTERNATIONAL CORP., Plaintiffs,
against
Jeffrey Sunshine, Esq., JEFFREY SUNSHINE P.C., MOORE & WOODHOUSE LLP, RICHARD WOODHOUSE, ESQ., and JOHN V. MOORE, ESQ., Defendants.
16965-11
Attorney for Plaintiff:
Nesenoff & Miltenberg, LLP
363 7th Ave., 5th floor
New York, NY 10001
(212) 736-4500
By: Andrew T. Miltenberg, Esq.
Attorney for Defendant:
L'Abbate, Balkin, Colavita & Contini, LLP
1001 Franklin Ave., 3rd Floor
Garden City, NY 11530
(516)294-8844
By: Richard Woodhouse, Esq.
Kaufman, Dolowich, Voluck & Gonzo, LLP 135 Crossways Park Drive, Suite 201
Woodbury, NY 11797
(516)681-1100
By: Brett A. Scher, Esq.
Vito M. DeStefano, J.
The following papers and the attachments and exhibits thereto have been read on the motions:
Notice of Motion (Seq. 1)1
Notice of Motion (Seq. 2)2
Memorandum of Law (Seq. 1)3
Memorandum of Law (Seq. 2)4
Affidavit of Elmakies5
Plaintiffs' Memorandum of Law6
Reply Affidavit (Seq. 1)7
Reply Memorandum of Law (Seq. 1)8
Reply Affirmation (Seq. 2)9
Background
In this action to recover damages for legal malpractice and breach of fiduciary duty, defendants Jeffrey Sunshine, Esq. and Jeffrey Sunshine P.C. (collectively "Sunshine defendants") move for an order pursuant to CPLR 3211(a)(1), (5) and (7), to dismiss the complaint insofar as asserted against them. Defendants Moore & Woodhouse LLP, Richard Woodhouse, Esq. and John Moore, Esq. (collectively "Moore & Woodhouse defendants") separately move for an order pursuant to CPLR 3211 (a)(1), (5) and (7), to dismiss the complaint insofar as asserted against them.
According to the complaint, plaintiff Elmakies and his related enterprises (the other plaintiffs) were induced by several individuals and entities identified therein as "business partners", to invest $1.4 million, which was used to acquire real and personal property. Plaintiffs allege that the Sunshine defendants and Moore & Woodhouse defendants were engaged by them to act as counsel on Elmakies' investments with the business partners and that they relied on defendants for such counsel. The complaint further alleges that: Elmakies delivered funds to the defendants, who were authorized to apply the funds for investment in his related enterprises; the defendants were not authorized to represent the business partners; that the defendants rendered advice to the business partners and others relating to the subject investments without disclosing the conflict of interest; the defendants performed a wide array of legal services, acting on plaintiffs' behalf and on behalf of the business partners, without disclosure, and enabling, assisting and permitting the business partners to benefit from the funds (which were provided for the investments); "the defendants made determinations as to which individuals were authorized [*2]signatories * * * and directed and/or allowed them to sign documents and possess and control funds" (Exhibit "A" to Motion: Complaint at pp.6-7).
The first cause of action in the complaint alleges legal malpractice as follows: the defendants owed a duty of care to the plaintiffs; failed to exercise care in their professional relationship with the plaintiffs; such failure was the legal and proximate cause of injuries to plaintiffs and "but for" such failure and negligence, plaintiffs would have suffered no damages" (Id. at p.7). In paragraph 54 of the complaint, the plaintiffs allege, inter alia, that the defendants: mishandled funds, misapplied funds and used such funds for unauthorized purposes; allowed the business partners to dominate and control the real estate acquired for investment and the funds for their sole benefit; permitted only a portion of the funds to be used for real estate transactions, with the remainder being dissipated or lost, and; permitted individuals to sign legal and other documents without proper authority and approval (Id. at p.8). The complaint seeks $1.4 million in damages based on legal malpractice.
In the second cause of action for breach of fiduciary duty, plaintiffs allege that the defendants intentionally breached their fiduciary duty to them in that they were obligated to: proceed in a manner reasonably calculated to advance Elmakies' and his entities' interests; act with reasonable competence; comply with duties concerning plaintiffs' confidences and property, avoid impermissible conflicting interests, deal honestly with the plaintiffs, not employ advantages arising from the lawyer client relationship in a manner adverse to the plaintiffs, and; fulfill valid contractual obligations to the plaintiffs (Id. at p.9). The complaint seeks restitution of fees paid to the defendants based on breach of fiduciary duty.
In the opposition papers, Elmakies alleges that he discovered the defendants acted at the direction of the business partners instead of acting at his direction in purchasing, selling and financing real estate in New York. They allowed the business partners to determine the structure of these transactions and to execute the documents that effected them, at his expense, without authorization and without informing Elmakies that they were doing so. Elmakies also asserts that the defendants failed to provide him with proper documentation that would have kept him informed of the fate of his investment or to provide engagement letters setting forth their responsibilities. As a result, the business partners were able to form entities purportedly owned by him but controlled by them; the entities were governed by bylaws drafted by defendants and approved by business partners. "With the aid of the Defendants, the Business Partners used these entities to further a fraudulent scheme to defraud me of my investment. In the name of these entities and at the direction of the Business Partners, they purchased, sold, repurchased, resold pieces of real estate in the Elmira area between each of these entities, mortgaged them to the hilt, remortgaged them and used each as collateral for the other until the mortgages were all foreclosed upon and the properties lost. Defendants saw this was occurring, aided the Business Partners in furthering it, and never informed me or any other authorized representative of the business" (Elmakies Affidavit in Opposition to the Motion at ¶¶ 14 - 15).
The Court's Determination
It is hereby ordered that the motion of the Sunshine defendants is granted inasmuch as the plaintiffs' claims insofar as asserted against them are time-barred, the record establishing that any cause of action against them alleging legal malpractice or breach of fiduciary duty should have been asserted, if at all, no later than October 4, 2010.[FN1] No argument or factual allegation in the plaintiffs' opposition papers controverted the movants' assertions and showing in this regard. For example, Elmakies' statements that "I assumed that he was taking the necessary steps to protect my interests", that he never received any communication "which gave me any reason to think they had stopped protecting my interests, or that their representation of me and my entities ever terminated", and that Sunshine never "alerted me to any particular development that might have terminated their representation of me" (Affidavit of Elmakies in Opposition to the Motion at ¶¶ 12 - 15), do not rebut the movants' specific showing that the last date of representation was October 5, 2007. Moreover, the complaint is devoid of any reference to dates on which the defendants performed services for the plaintiffs. Accordingly, the motion of the Sunshine defendants must be granted pursuant to CPLR 3211(a)(5).
It is further ordered that the branch of the motion by the Moore and Woodhouse defendants for dismissal pursuant to CPLR 3211[a][1] & [5] shall be considered as a motion pursuant to CPLR 3212, in light of the parties' submissions on the motion (CPLR 3211[c]). In this regard, the court notes, inter alia, Elmakies' contentions (and defendants' denial thereof) that the Moore & Woodhouse defendants "managed my real estate investment on an ongoing and continuous basis well through 2008 and into 2009" (Affidavit of Elmakies in Opposition to the Motion at ¶ 9). In response, the defendants assert that their representation was limited to separate real estate closings and that Elmakies' contentions are "inherently incredible", unsupported, unrealistic and absurd (Reply Memorandum of Law at pp.4-6).
The court, shall, therefore, consider the aforementioned branch of the motion as one for summary judgment and permit the Moore & Woodhouse defendants to submit additional papers in support of the "converted" motion within 20 days of the date hereof; the plaintiffs shall have an additional 10 days from the date thereof to submit additional papers in opposition thereto. No further papers shall be permitted.
Decision on the remaining branch of the Moore and Woodhouse motion, seeking dismissal of the breach of fiduciary duty claim, is held in abeyance pending receipt of the additional submissions. [*3]
This constitutes the decision and order of the court.
Dated: September 24, 2012
_____________________________
Hon. Vito M. DeStefano, J.S.C.
Footnotes
Footnote 1:The last services rendered by the Sunshine defendants appears to have been on October 5, 2007. The action was commenced on December 5, 2011. Even assuming that the fax coversheet dated December 7, 2007 annexed as Exhibit "1" to Elmakies' affidavit in opposition which is addressed to "Mr. Zeoki — Attorney for Nissim Elmakies"could be considered the last date of services rendered, the plaintiffs' claims would still be untimely. As indicated, neither the complaint nor the plaintiffs' opposition papers specifically controvert the Sunshine defendants' assertions.
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