Reches v Sack & Sack, LLP

[*1] Reches v Sack & Sack, LLP 2018 NY Slip Op 51152(U) Decided on February 23, 2018 Supreme Court, Kings County Jimenez-Salta, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 February 23, 2018
Supreme Court, Kings County

Benjamin Reches, Plaintiff,

against

Sack & Sack, LLP, Defendant.



511057/17



Plaintiff's Counsel: Benjamin Reches, Pro Se

Defendant's Counsel: Lewis, Brisbois, Bisgaard & Smith
Dawn M. Jimenez-Salta, J.

Recitation, as required by CPLR 2219 (a), of the papers considered in the review of:

1) Motion, Dated August 4, 2017, of Defendant Sack & Sack, LLP ("Defendant") to Dismiss the Complaint of Plaintiff Benjamin Reches ("Plaintiff"), Dated June 5, 2017 (the "Complaint"), for Failure to State a Claim Pursuant to CPLR 3211 (a) (7) and as Barred by Documentary Evidence Pursuant to CPLR 3211 (a) (1), together with the accompanying Memorandum of Law.

2) Plaintiff's Memorandum of Law in Opposition, Dated October 24, 2017 (the "Memorandum in Opposition").

3) Defendant's Reply Affidavit, Dated November 10, 2017.[FN1]

Papers Considered: Numbered:

Notice of Motion, Affidavits/Affirmations, Memorandum of Law, and Exhibits Annexed-Defendant 5-10, 11

Memorandum of Law in Opposition and Exhibits Annexed-Plaintiff 15-19

Reply Affidavit and Exhibit Annexed-Defendant 20-21

Facts and Allegations[FN2]

In February 2014, Plaintiff, an observant Orthodox Jew in his late 50s, filed a complaint of discrimination with the U.S. Equal Employment Opportunity Commission ("EEOC") against his then-employer Morgan Stanley & Co. LLC ("Morgan Stanley"). Plaintiff was then [*2]represented by a law firm of Gorlick Kravitz & Listhaus ("GKL"). At Morgan Stanley's invitation, Plaintiff consented to participate in a private mediation under the auspices of JAMS. The mediation was scheduled for June 18, 2014. Sixteen days prior, on June 2, 2014, Plaintiff discharged GKL for reasons not appearing in the record and retained Defendant. Attorney Jonathan S. Sacks ("Jonathan") was the lead partner in Defendant's representation of Plaintiff in the mediation. Two days before the mediation, Jonathan emailed a four-page mediation statement to the mediator. That was when, according to Plaintiff, Jonathan's preparation for the mediation ended. He did not meet with Plaintiff in advance to go over the mediation. He did not contact GKL for background information on Plaintiff's claims. He failed to appreciate Plaintiff's expressed concern that an HR manager, rather than an IT manager, would appear for Morgan Stanley at the mediation.[FN3]

The mediation was held, as scheduled, on June 18, 2014, and took the entire business day. At the mediation, Jonathan dispensed with his opening statement and instead invited Plaintiff to state his position. Plaintiff spoke to the audience for an hour without interruption but, because of a lack of attorney preparation, was unable to cogently state his position. Jonathan, in full view of the audience, passed Plaintiff a note, asking, "[w]here was the fire and the brimstone?" (Complaint, at 4). Plaintiff, so discourteously prompted, had to rush through "the [acts of alleged] discrimination from 2010 up until the mediation date, very quickly, in a matter of minutes" (Complaint, at 4). After a lunch break, Jonathan and the mediator met with Plaintiff in a private session, at which they asked him to come up with a settlement amount. They told him at that time that the settlement could only be reached on the condition that he would leave Morgan Stanley's employ immediately after the settlement. The new condition surprised and confused Plaintiff who "had expected to remain employed until he reached the age of 70" (Complaint, at 5). Pressed for time, Plaintiff came up with a proposed settlement amount of $1,250,000. When they heard that amount, however, Jonathan and the mediator "laughed at and ridiculed" Plaintiff, explaining that "they would not dare to make such an offer to [Morgan Stanley]." Jonathan then invited Morgan Stanley back into the mediation room for the remainder of Plaintiff's opening statement. Then, after another private session with Plaintiff, Jonathan and the mediator made an initial settlement offer of $650,000, or about one-half of what Plaintiff proposed. A counteroffer of $100,000 came back. Hectic settlement negotiations over Morgan Stanley's payout to Plaintiff consumed the next 30 minutes, culminating in the gross settlement amount of $267,934, consisting of the sum of $250,000 as the principal settlement amount and $17,934 representing the six-months' cost of Plaintiff's post-termination health insurance. As a gesture of goodwill, Jonathan discounted Plaintiff's attorney's fees to Defendant to $50,000 (or $32,000 less than what he would otherwise have been required to pay Defendant under his retainer agreement). Jonathan orally assured Plaintiff that he would "see to it that [Plaintiff's predecessor counsel GKL] . . . be compensated fairly" (Complaint, at 8).

By the end of business on the mediation day, the parties' oral settlement was [*3]memorialized in a two-page typewritten "Settlement Term Sheet," dated June 18, 2014 (the "Term Sheet"), which both Plaintiff and Morgan Stanley's representative signed. The Term Sheet outlined the terms by which the parties agreed to settle their dispute in a written settlement agreement to be executed at a later date. The Term Sheet (1) specified the aforementioned dollar amounts which Morgan Stanley was to pay Plaintiff, (2) stated that Morgan Stanley would "pay [him] the value of his unused accrued vacation days," albeit without elaborating the number of those days, (3) provided that Plaintiff's "employment with Morgan Stanley terminate[d] immediately upon the execution of the . . . Term Sheet," and (4) further stated that "[Plaintiff] agree[d] to sign a written settlement agreement and general release addressing all material and standard terms." According to Plaintiff, he signed the Term Sheet "under heavy duress" because "he could not see any other way out, at the time" (Complaint, at 8). "[He] left the mediation in a state of shock and disarray" (Complaint, at 8). Over the next few days, Plaintiff tried, without success, to have Jonathan renegotiate or at least amend the settlement.

When the proposed Settlement Agreement and General Release (the "Settlement Agreement") arrived from Morgan Stanley about a week later, Plaintiff learned from reading it that a release of an age-discrimination claim by an employee against an employer must contain, in order to be valid under federal law, a 21-day think-over period and a 7-day back-out period.[FN4] Unlike the Settlement Agreement, the Term Sheet did not release any claims and, therefore, omitted the think-over and back-out periods.

According to Plaintiff, he "did not want to sign the [Settlement] Agreement" and "wanted to go back to the bargaining table" (Complaint, at 9). He received no help from Jonathan, however. Jonathan warned Plaintiff that since Morgan Stanley had already retired him, then if he refused to sign the Settlement Agreement, he "would be left without a job and [with] $0 in compensation" (id.). "Adding more pressure to [Plaintiff] was that from the day that [he] was retired from [Morgan Stanley], he had only about 60 days [in which] to repay his personal loan from his IRA" to avoid the imposition of taxes and penalties by the Internal Revenue Service (the "IRS"). He concluded, therefore, that "[he] had no option but to sign the [Settlement] Agreement" (Complaint, at 9). Plaintiff signed the Settlement Agreement on June 30, 2014, twelve days after the mediation. By its terms, the Settlement Agreement superseded the Term Sheet.[FN5] Plaintiff did not take advantage either of the 21-day think-over period or the 7-day back-[*4]out period set forth in the Settlement Agreement.

Plaintiff experienced two negative outcomes after the Settlement Agreement became final. First, Jonathan refused to communicate with Plaintiff's predecessor counsel GKL about its attorney's fees. Despite his earlier oral promise to Plaintiff, Jonathan refused to share with GKL any portion of the $50,000 in attorney's fees. As a result, GKL instituted an action for attorney's fees against Plaintiff and Defendant in Supreme Court, New York County, under index No. 162842/14 (the "Collection Action").[FN6] Defendant was dismissed from the Collection Action by order, dated July 8, 2015 (see Gorlick, Kravitz & Listhaus, P.C. v Reches, 2015 NY Slip Op 31204[U] [Sup Ct, NY County 2015]). Plaintiff interposed a pro se answer in the Collection Action. The remainder of the Collection Action which is solely against him has been administratively marked "disposed" on account of its prolonged inactivity (Order, dated September 13, 2017, Schecter, J.).

Second, Morgan Stanley breached the Settlement Agreement by refusing to pay Plaintiff for any of his unused vacation days. The Settlement Agreement stated, without elaboration, that Plaintiff would be paid for all of his accrued and unused vacation days (¶ 1). As a result, on March 8, 2016, Plaintiff commenced a pro se action against Morgan Stanley to recover payment for, inter alia, his accrued and unpaid vacation days.[FN7] That action is pending before Justice Carl J. Landicino of this Court under index No. 503351/16.[FN8]

On June 5, 2017, Plaintiff commenced the instant action against Defendant for legal malpractice and intentional infliction of emotional distress, seeking compensatory and punitive damages. Preanswer, Defendant moved to dismiss the Complaint for failure to state a claim pursuant to CPLR 3211 (a) (7) and as barred by documentary evidence pursuant to CPLR 3211 (a) (1).

DISCUSSION

Plaintiff's Legal Malpractice Claims

"To state a cause of action to recover damages for legal malpractice, a plaintiff must allege: (1) that the attorney failed to exercise the ordinary reasonable skill and knowledge [*5]commonly possessed by a member of the legal profession; and (2) that the attorney's breach of the duty proximately caused the plaintiff actual and ascertainable damages" (Dempster v Liotti, 86 AD3d 169, 176 [2d Dept 2011] [internal quotation marks omitted]). "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 438, 442 [2007]). "A claim for legal malpractice is viable, despite settlement of the underlying action, if it is alleged that settlement of the action was effectively compelled by the mistakes of counsel" (Bernstein v Oppenheim & Co., P.C., 160 AD2d 428, 430 [2d Dept 1990]). "[T]he plaintiff must plead and prove actual, ascertainable damages as a result of an attorney's negligence" (Dempster, 86 AD3d at 177). "Conclusory allegations of damages or injuries predicated on speculation cannot suffice for a malpractice action, and dismissal is warranted where the allegations in the complaint are merely conclusory and speculative" (Bua v Purcell & Ingrao, P.C., 99 AD3d 843, 848 [2d Dept 2012] [internal citations omitted], lv denied 20 NY3d 857 [2013]).

Here, the Complaint fails to adequately plead specific factual allegations showing that, but for Defendant's alleged negligence, Plaintiff would have obtained a more favorable outcome either in the underlying action or in the mediation. The allegation that, but for Defendant's alleged negligence, Plaintiff would not have received "a greatly diminished compensation agreement" (Complaint at 17) is conclusory and speculative (see Janker v Silver, Forrester & Lesser, P.C., 135 AD3d 908, 910 [2d Dept 2016]; Leiner v Hauser, 120 AD3d 1310, 1311 [2d Dept 2014]; Tortura v Sullivan Papain Block McGrath & Cannavo, P.C., 21 AD3d 1082, 1083 [2d Dept 2005], lv denied 6 NY3d 701 [2005]; Ferdinand v Crecca & Blair, 5 AD3d 538, 539-540 [2d Dept 2004], lv denied 3 NY3d 609 [2004]).

Contrary to Plaintiff's contention (on page 22 of his Memorandum of Law), Defendant could not have "destroyed [Plaintiff's] chances to obtain compensation for his EEOC claim and . . . [his] chances to obtain the severance package which he was seeking." Plaintiff knew well before he signed the Term Sheet that he had to resign from Morgan Stanley as a condition of the settlement. His signing of the Term Sheet did not release any of his claims against Morgan Stanley because, as he himself notes in his Memorandum of Law, the Term Sheet was not binding. After resigning from Morgan Stanley and before he signed the Settlement Agreement, he retained all of his claims against his former employer. Even after he signed the Settlement Agreement, he still had 7 days in which to back out of the settlement.

Plaintiff was not under economic duress when, by signing the Term Sheet, he agreed to the immediate termination of his employment with Morgan Stanley. The mediation was voluntary, and he could have stopped it at any time. Even if his working conditions were so difficult or unpleasant that a reasonable person in his shoes would have felt compelled to resign had he remained working at Morgan Stanley, he could have simply resigned without accepting the settlement and then pursued the constructive discharge claim along with his discrimination claims before the EEOC. Instead, by executing the Settlement Agreement and by allowing the back-out period thereunder to expire, Plaintiff released his constructive discharge claim along with others in return for the settlement payments. "The fact that [a litigant] had this choice rules out a claim of duress which necessarily depends on the absence of choice" (Joseph v Chase Manhattan Bank, N.A., 751 F Supp 31, 35 [ED NY 1990]). The fact that termination of [*6]Plaintiff's employment triggered his obligation to repay his IRA loan within 60 days so as to avoid the imposition of penalties and interest that would otherwise have resulted, does not establish economic duress. Defendant cannot be held responsible for economic pressure put on Plaintiff by a third party (here, the IRS) (see Short v Keyspan Corporate Servs., LLC., 11 Misc 3d 1076[A], 2006 NY Slip Op 50574[U], *6 [Sup Ct, Kings County 2006, Partnow, J.]; LaBeach v Beatrice Foods Co., 461 F Supp 152, 158 [SD NY 1978]).

Next, Plaintiff has alleged no damages resulting from Jonathan's breach of a promise to "see to it that [Plaintiff's predecessor counsel GKL] . . . be compensated fairly." All that Plaintiff has alleged in that regard is that the "Complaint [in the Collection Action] is still out there today" (Complaint, at 9). As the orders entered in the Collection Action indicate, however, GKL has taken no steps to pursue the Collection Action as against Plaintiff.

Lastly, Defendant is not responsible for Morgan Stanley's failure to pay Plaintiff his accrued vacation days. Plaintiff implicitly so admitted by commencing and pursuing on his own a separate action against Morgan Stanley for, inter alia, accrued and unpaid vacation days.

Plaintiff's Claim of Intentional Infliction of Emotional Distress

"Damages for the intentional infliction of emotional distress are not recoverable in a legal malpractice action" (Epifano v Schwartz, 279 AD2d 501, 503 [2d Dept 2001]; see also Kaiser v Van Houten, 12 AD3d 1012, 1014 [3d Dept 2004]; Wolkstein v Morgenstern, 275 AD2d 635, 637 [1st Dept 2000]; Dirito v Stanley, 203 AD2d 903, 904 [4th Dept 1994], lv denied 1994 WL 370946 [4th Dept 1994]).

CONCLUSION

The branch of Defendant's preanswer motion to dismiss the Complaint for failure to state a claim pursuant to CPLR 3211 (a) (7) is granted. The Complaint is dismissed in its entirety, with costs to be taxed by the Clerk upon presentation of an appropriate bill of costs. The remaining branch of Defendant's motion which is for dismissal of the Complaint as barred by the documentary evidence pursuant to CPLR 3211 (a) (1) is denied as moot.

The Clerk is directed to enter judgment accordingly.

This constitutes the Decision/Order of the Court.

Dated: February 23, 2018

Brooklyn, NY

Dawn Jimenez-Salta, J.S.C. Footnotes

Footnote 1:The Court declines to consider Plaintiff's surreply and exhibits thereto (NYSCEF #22-26) (see CPLR 2214 [b]; Haberman v Meyer, 120 AD3d 1301, 1302 [2d Dept 2014], lv dismissed in part, denied in part 26 NY3d 947 [2015]).

Footnote 2:The background section is based on Plaintiff's allegations in his pro se Complaint, as supplemented by his pro se Memorandum in Opposition.

Footnote 3:As Plaintiff was working in the IT department, he would have preferred the presence of an IT manager at the mediation. An IT manager, if present at the mediation, could conceivably have assisted Plaintiff in relocating to another part of the IT department that was not supervised by the individual with whom he allegedly had friction.

Footnote 4: Both periods are required by the federal Older Workers Benefit Protection Act (the "OWBPA") (29 USC § 626 [f]) as one of, among many, conditions precedent to the validity of a release of an age-discrimination claim. "The Older Workers Benefit Protection Act (OWBPA) imposes specific requirements for releases covering [the age-discrimination] claims" (Oubre v Entergy Operations, Inc., 522 US 422, 424 [1998] [emphasis added]). A noncompliance with the OWBPA merely invalidates a release of an age-discrimination claim; it does not establish an independent cause of action for age discrimination (see e.g. Grays v SDH Education West, LCC, 2017 WL 2240227, *5 [SD NY 2017]).

Footnote 5:See Settlement Agreement § 18 ("The [Settlement] Agreement is the entire agreement and complete settlement between [Plaintiff] and Morgan Stanley and supersedes any and all oral and written agreements between Morgan Stanley and [Plaintiff] on the topics covered herein, except any prior commitments on [Plaintiff's] part concerning confidential information, trade secrets, copyrights, patents or other intellectual property and the like, which shall continue in effect in accordance with their terms. Neither party shall be bound by anything not expressed herein.") (emphasis added).

Footnote 6: Since the Complaint (at page 9) refers to the Collection Action, the Court may take judicial notice of the orders issued therein (see Tirado v Miller, 75 AD3d 153, 160 [2d Dept 2010]).

Footnote 7:Although the Complaint does not refer to this action, it is well established that courts may take judicial notice of a record in the same court of either the pending matter or of some other action (see e.g. Matter of Currier [Woodlawn Cemetery], 300 NY 162, 170 [1949]).

Footnote 8:Also pending before Justice Landicino is yet another (third) action commenced by Plaintiff pro se against Morgan Stanley and its mediation counsel in this Court under index No. 511316/17 on June 8, 2017, to "nullify" the Term Sheet and the Settlement Agreement.