Arias v Arbelaez

[*1] Arias v Arbelaez 2014 NY Slip Op 50428(U) Decided on March 17, 2014 Supreme Court, Queens County McDonald, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 March 17, 2014
Supreme Court, Queens County

Amparo Arias, Plaintiff,

against

Jorge E. Arbelaez, THREE A'S 250-02 LLC, WELLS FARGO BANK N.A., HECTOR ATILIO MARICHAL, P.C., HECTOR ATILIO MARICHAL, JAIME RAMIREZ, JOHN DOE, JANE DOE (said names being fictitious, it being the intention of the plaintiff to designate all parties or entities if any, having or claiming an interest or lien upon the mortgaged premises, Defendants.



16889/2013

Robert J. McDonald, J.

The following papers numbered 1 to 19 were read on this motion by defendant HECTOR ATILIO MARICHAL, P.C. also sued as HECTOR ATILIO MARICHAL, for an order pursuant to CPLR 3211(a)(7) dismissing the plaintiff's amended complaint against said defendant for failure to state a cause of action:

Papers Numbered

Notice of Motion-Affidavits-Exhibits-Memo of Law.....1 - 8

Affirmation in Opposition-Affidavits-Exhibits........9 - 15

Reply affirmation...................................16 - 19

_________________________________________________________________

In this action for breach of fiduciary duty, legal malpractice, fraud in the factum, fraud in the inducement, breach of contract, imposition of a constructive trust, unjust enrichment, and action to quiet title pursuant to RPAPL Article [*2]15, defendant HECTOR ATILIO MARICHAL, P.C., also sued as HECTOR ATILIO MARICHAL moves, prior to filing an answer, for an order pursuant to CPLR 3211(a)(7); dismissing the plaintiffs' complaint on the ground that the complaint fails to state a cause of action against him upon which relief may be granted.

According to the supplemental summons and amended verified complaint, filed on October 3, 2013, the plaintiff, Amparo Arias, was approached by defendant, Jorge E. Arbelaez, with respect to purchasing the subject premises, a residential property located at 250-02, 87th Avenue, Bellerose, New York. Plaintiff alleges that on December 17, 2011, she entered into a written "Acquisition Agreement" with Arbelaez whereby plaintiff would provide the necessary funds to acquire the property, and Arbelaez would handle the administrative process. The agreement stated that each party would be a 50% owner of a corporation known as "THREE A'S 250-02 LLC" formed to hold title of the premises and the corporation would hold the title in trust for the benefit of the plaintiff with title to ultimately pass to the plaintiff as the equitable owner on a future date. In order to acquire the premises, the buyer, THREE A'S 250-02 LLC, was to assume four separate mortgages totaling $550,000 and plaintiff would put up $50,000 for the acquisition of the property. The complaint states that defendant Hector Marichal represented the plaintiff, defendant Arbelaez, and the corporation in the acquisition of the premises.

Plaintiff alleges that she paid $50,000, a portion of which went to Arbelaez and a portion to Hector Marichal, as attorney, to cover the costs of acquiring the premises. On March 2, 2012 the corporation was taking title to the property subject to the four mortgages. Plaintiff claims that subsequent to the purchase she expended an additional $60,000 to settle and satisfy three existing mortgages on the property. Plaintiff claims that in March 2013 defendants Arbelaez and Marichal did not remit any of the monies she paid towards the first mortgage and as a result the property is in foreclosure. In addition, plaintiff contends that she did not receive marketable title in her name nor has she received any of the corporate documents for Three A's 25-02 LLC after repeated requests.

Plaintiff asserts causes of action for a constructive trust asserting that the plaintiff is the equitable owner of the property and that nominal title was taken in the name of the corporation on behalf of the plaintiff and that despite her investment of $110,000 defendants have refused to reconvey title to the plaintiff. Plaintiff alleges that as a result, the defendants will be unjustly enriched if the premises are [*3]permitted to remain as presently titled.

With respect to defendant Hector Marichal, the complaint alleges that he was part of a conspiracy with the other defendants in which they had a preconceived intention not to honor their obligations to plaintiff but rather to secure their business interests for their own benefit. Therefore, plaintiff asserts causes of action against Hector Marichal for fraud, breach of fiduciary duty, breach of contract and legal malpractice. Plaintiff asserts in this regard that Marichal had no intention of fully representing plaintiff in the transaction and induced the plaintiff to transfer at least $110,000 to defendant as legal fees and acquisition costs. Counsel alleges that Marichal breached his legal and contractual duties to the plaintiff by engaging in fraudulent and deceitful conduct, failing to deliver marketable title, failing to inform plaintiff that the premises was in foreclosure prior to the purchase, and failing to disclose his conflict of interest with the seller, Ramirez.

Mr. Marichal submits an affirmation in support of the motion to dismiss the plaintiff's complaint against him. He states that in early 2013, defendant Jaime Ramirez, the seller of the property, and defendant Arbelaez, came to his office to retain him for the sale of Ramirez's property to Three A's. He states he was not made aware of the Acquisition Agreement with the plaintiff. His claims that his retainer, which was not produced, states that he was only representing the interests of the LLC and that Ramirez was advised to retain his own attorney. On March 1, 2012, the deed was transferred and the LLC assumed the various mortgages. Subsequent to the transfer of the deed, Marichal paid Ramirez $22,500 from his escrow account which monies had been given to him by plaintiff Arias. Marichal states that the complaint fails to state a cause of action against him because it was his client, defendant Arbelaez, who breached the agreement with the plaintiff. Marichal contends that the plaintiff has presented no evidence that he was part of a conspiracy to defraud her. In addition, he claims that any damages sustained by the plaintiff were the result of Arbelaez's breach of contract rather than fraud or malpractice that was committed by him.

Marichal's attorney, Charles Zolot, Esq., submits an affirmation stating that other than preparing the transfer documents from Ramirez to Three A's and remitting plaintiff's funds to Mr. Ramirez, Marichal had nothing to do with any agreement between the plaintiff and defendant Arbelaez. Mr. Zolot contends that the causes of action for fraud must be dismissed pursuant to CPLR 3211(a)(7) for failure to state a cause of [*4]action because they were not pled with particularity. Counsel states there is no statement in the pleading that alleges that Marichal misrepresented a material fact which was known to be false by the defendant and which induced the plaintiff to unjustifiably rely on such misrepresentation to her detriment. Counsel claims that the complaint only states conclusory allegations of fraud and contains no facts as to how Marichal induced plaintiff to enter into an agreement or in what respect he participated in an elaborate scheme to defraud her of her investment. In addition, counsel asserts that the complaint fails to state a cause of action against Marichal for legal malpractice and breach of contract. Counsel asserts that any damages sustained by the plaintiff were the result of Arbelaez's failure to honor his agreement to deliver marketable title to the plaintiff and not the result of any misconduct by Marichal.

In opposition, Carolyn S. Clyne, Esq., counsel for plaintiff states that because Mr. Arbelaez had not remitted any of the over $50,000 paid by the plaintiff to satisfy the first mortgage with Wells Fargo that the property is now in foreclosure.

Plaintiff asserts that the with the respect to the second and third causes of action alleging fraud against the defendants that the pleadings sufficiently set forth factual allegations that all of the defendants, including Hector Marichal, engaged in a fraudulent scheme at the behest of Arbelaez to defraud the plaintiff. Plaintiff contends that both Arbelaez and Marichal, who represented the plaintiff's LLC, accepted monies from the plaintiff as part of the scheme but failed to appropriately represent or advise the plaintiff regarding the transaction vis a vis the assumption of the mortgages and the Wells Fargo mortgage that was in foreclosure.

With respect to the fifth, sixth, and seventh causes of action for breach of contract, legal malpractice, and breach of fiduciary duty, counsel alleges that Marichal's conduct in the real estate transaction fell below the standard of care and diligence commonly possessed by other members of the bar. Counsel claims that the evidence submitted demonstrates that Ms. Arias brought checks to Marichal's office which were remitted to him as her attorney and deposited in his attorney escrow account. Plaintiff claims that Marichal failed to retain the services of a title company, failed to notify Wells Fargo, who holds a mortgage and, as to the transaction, represented all parties including the seller and buyer. Further, the plaintiff claims that Marichal failed to advise her that the property was already in foreclosure when the deed was transferred to her corporation Plaintiff claims that fraud and malpractice was perpetrated by Marichal in [*5]that plaintiff was deprived of the funds which she contributed to the purchase of the subject premises and Marichal and the other defendants misappropriated the funds provided by the plaintiff and failed to convey marketable title to the premises to her as promised.

On a motion to dismiss a complaint pursuant to CPLR 3211(a)(7) for failure to state a cause of action, the court must accept the facts alleged in the complaint as true, accord the plaintiff the benefit of every possible inference, and determine only whether the facts as alleged fit within any cognizable legal theory (see Nonnon v City of New York, 9 NY3d 825[2007]; Leon v Martinez, 84 NY2d 83 [1994]).

Here, accepting the allegations in the complaint as true, according the plaintiff the benefit of every favorable inference, and determining only whether the allegations fit within any cognizable legal theory (see DeSandolo v United Airlines Inc., 71 AD3d 1073 [2d Dept.2010]; AG Capital Funding Partners, L.P. v State St. Bank & Trust Co., 5 NY3d 58 [2005]), this Court finds that the plaintiff has sufficiently stated a cause of action for fraud, legal malpractice and breach of fiduciary duty against Marichal. In the early stages of litigation such as the pre-discovery stage, "plaintiffs are entitled to the most favorable inferences, including inferences arising from the positions and responsibilities of defendants," and "plaintiffs need only set forth sufficient information to apprise defendants of the alleged wrongs" (DDJ Mgt., LLC v Rhone Group L.L.C., 78 AD3d 442 [1st Dept. 2010]; also see Selechnik v Law Off. of Howard R. Birnbach, 82 AD3d 1077 [2d Dept. 2011).

The complaint sufficiently alleges that the moving defendant was involved as an attorney in what is alleged to be a scheme in which Arbelaez formed a corporation with the plaintiff to purchase the subject property under then name of Three A's 25-02 LLC the terms of which required the plaintiff to provide all the financing whereas Arbelaez provided the administrative work. The complaint asserts that Marichal represented the plaintiff's corporation and had an attorney-client and fiduciary relationship with Arias as he accepted funds from the plaintiff and transferred a deed on behalf of her corporation but failed to properly advise the plaintiff that the premises were already in foreclosure and as such the complaint sufficiently alleges that he failed to properly represent the plaintiff's interests. Such failure to disclose, it is alleged, was designed to deceive plaintiff and to misappropriate her funds. As such, the allegations of failure to disclose material facts regarding the sale as set forth in the complaint are pleaded with sufficient [*6]detail as to clearly inform defendant Marichal with respect to the allegedly fraudulent real estate transactions complained of and the role of the moving defendant therein (see Lanzi v Brooks, 43 NY2d 778 [1977]; RBE N. Funding, Inc. v Stone Mtn. Holdings, LLC, 78 AD3d 807 [2d Dept. 2010]).

In a legal malpractice action, a plaintiff must show that the defendant 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 professional duty caused the plaintiff's actual damages (see Stuart v Robert L. Folks & Assoc., LLP, 106 AD3d 808 [2d Dept. 2013]). To establish a breach of fiduciary duty, a party must prove the existence of a fiduciary relationship, misconduct by the defendant, and damages that were directly caused by the misconduct(see Kurtzman v Bergstol, 40 AD3d 588 [2d Dept 2007]).

Here, construing the amended complaint liberally, accepting the facts alleged in the amended complaint as true, and according the plaintiff the benefit of every possible inference, the complaint sufficiently pleads a cause of action for legal malpractice in that Marichal's conduct in the real estate transaction with respect to Ms. Arias fell below the appropriate standard of care, in that he breached his legal and fiduciary duty, accepted funds from the plaintiff for the real estate transaction, and failed to apprise the plaintiff of the ramifications of the sale to her corporation allegedly resulting in her losing her investment of $110,000. In addition, the defendant failed to present documentary evidence conclusively establishing a defense as a matter of law (see Almieri v Biggiani, 108 AD3d 604 [2d Dept. 2013]). However, the cause of action alleging breach of contract is dismissed as duplicative of the cause of action alleging legal malpractice as it arose from the same facts as the legal malpractice cause of action (see Gaskin v Harris, 98 AD3d 941 [2d Dept. 2012).]

Accordingly, for all of the above stated reasons, it is hereby,

ORDERED, that the motion of Hector Atilio Marichal to dismiss the complaint against him is denied, and it is further,

ORDERED that defendant shall serve an answer if he has not already done so within 20 days of service of a copy of this order with notice of entry thereof. [*7]

Dated: Long Island City, NY

March 17, 2014

______________________________

ROBERT J. MCDONALD

J.S.C.