Opinion
Index No. 153477/2016
08-17-2018
BILLIARD BALLS MANAGEMENT LLC d/b/a SLATE, Plaintiff, v. MINTZER SAROWITZ ZERIS LEDVA & MEYERS, LLP, Defendants. MINTZER SAROWITZ ZERIS LEDVA & MEYERS, LLP, Third-party Plaintiffs, v. PILLINGER MILLER TARALLO, LLP, Third-party Defendant.
NYSCEF DOC. NO. 94 Motion Seq. No. 002 DECISION AND ORDER CAROL R. EDMEAD, J.S.C. :
In a legal malpractice action, third-party defendant Pillinger Miller Tarallo, LLP (Pillinger) moves, pursuant to CPLR 3211, to dismiss the third-party complaint.
BACKGROUND
This is a legal malpractice action arising out of an automobile accident. Defendant Mintzer, Sarowitz, Zeris, Ledva & Meyers, LLP (Mintzer) briefly represented the plaintiff Billiard Balls Management (Billiard Balls) in an underlying action in Kings County, Gershman v Ahmad (index No. 18893/12) (the Gershman matter, or the underlying action), where the plaintiff Lizaveta Gershman (Gershman) alleged that Billiard Balls was liable under the Dram Shop Act.
Billiard Balls was insured at the time of the underlying accident by nonparty Capital Indemnity Corporation (Capital). Capital engaged Mintzer to represent Billiard Balls in the Gershman matter. Mintzer entered into two stipulations with counsel for Gershman, both of which extended Billiard Balls' time to answer the complaint. However, Capital by letter dated December 28, 2012, denied coverage to Billiard Balls and informed Mintzer that it would not be paying Billiard Balls' legal bills. Mintzer, by letter dated January 25, 2013, informed Gershman's counsel that "we have been directed by the carrier not to interpose an Answer on behalf of Billiard Balls Management, LLC" (NYSCEF doc No. 62, ¶ 2).
Billiard Balls brought two separate action Kings County contesting Capital's disclaimer of coverage (index Nos. 505916/15 and 153477/16). Billiard Balls' efforts to obtain coverage for Capital were ultimately successful.
On January 11, 2013, Billiard Balls' time to answer Gershman's complaint expired. However, according to Aristotle Hatzigcorgiou (Hatzigcorgiou), a principal of Billiard Balls, Mintzer did not inform Billiard Balls about this deadline (Hatzigcorgiou aff, ¶ 9, NYSCEF doc No. 87). Nor did Mintzer move to be relieved as counsel. According to Billiard Balls, it did not learn of the deadline to answer until counsel for Gershman served a notice of motion, dated September 30, 2013, for a default judgment against Billiard Balls pursuant to CPLR 3215 (a) (b).
Only after it received the motion for a default against it did Billiard Balls retain third-party defendant Pillinger to defend against the motion (id., ¶ 10; see also NYSCEF doc Nos. 88 and 89 [emails between Billiard Balls and Pillinger exchanged in October 2013]). Pillinger opposed Gershmn's motion and cross-moved to compel Gershman to accept Billiard Balls' proposed answer. By an order dated May 7, 2014 (the May 2014 Order), the trial court in the underlying matter denied Gershman's motion for a default and granted Billiard Balls' motion to compel Gershman to accept its proposed answer. More than a year later, the Appellate Division, Second Department, reversed the May 2014 Order (Gershman v Ahmad, 131 AD3d 1104 [2d Dept 2015]).
In arriving at this conclusion, the Second Department cited the well-established principle that "[a] defendant who has failed to timely appear or answer the complaint must provide a reasonable excuse for the default and demonstrate the existence of a potentially meritorious defense to the action in order to avoid the entry of a default judgment" (id. at 1105). After acknowledging the trial court's discretion in determining a default motion and New York's strong public policy in favor of determining cases on the merits, the Court nevertheless determined that the trial court improvidently used its discretion to deny Gershman's motion for a default judgment because Billiard Balls did not have a reasonable excuse for its nearly 10-month delay in answering:
"Here, Billiard failed to provide a reasonable excuse for its approximately 10-month delay in answering. While Billiard's general manager, Jimmy Fok, averred in an affidavit that he forwarded a copy of the complaint to Billiard's insurance carrier, he also acknowledged that he was aware that coverage was disclaimed and that the disclaimer came 'after the assignment of counsel but before an answer was interposed,' during which time 'efforts were made to have the disclaimer withdrawn.' The disclaimer was issued on December 28, 2012, and the time within which Billiard was required to answer had been extended [by stipulation] until January 11, 2013. While Fok averred that Billiard did not attempt 'to avoid interposing an Answer,' he acknowledged that he did nothing with regard to interposing an answer until after the motion for leave to enter judgment had been served by the plaintiff, at which time there was still an approximately 30-day delay between the service of the motion and the date of the verified answer. Thus, the delay was not attributable to insurance carrier delay, but rather, resulted from Billiard's attempts and negotiations to alter the outcome of its insurance carrier's disclaimer. Under these circumstances, we find the excuse for Billiard's default unreasonable"(id. at 1105-1106).
As the standard for vacating a default is reasonable excuse and a meritorious defense, the finding that Billiard Balls did not have a reasonable excuse for its default was a sufficient basis for reversal. The Court, however, also analyzed the issue of meritorious defense, finding that "[i]n any event, Billiard failed to demonstrate that it had a potentially meritorious defense" (id. at 1106). Specifically, the Court found that the affidavit of Billiard Balls' general manager "did not address the merits of any defense," and that the proposed answer, which presumably did address the merits of the defense, "was verified by counsel, who had no personal knowledge of the facts" (id.). While the Court acknowledged that Pillinger "contended that a triable issue of fact existed as to whether there was violation of the Dram Shop Act," it concluded that "this, without more, does not demonstrate a potentially meritorious defense" (id.).
Billiard Balls filed the Complaint in this action on April 26, 2016, alleging that Mintzer committed legal malpractice by failing to timely answer on its behalf, or withdraw as counsel, or obtain a consent to change attorney (Complaint, ¶ 20). By an order dated November 2, 2016 (the November 2016 Order), this court denied Mintzer's motion to dismiss the Complaint. Mintzer argued, among other things, that the complaint was untimely and barred by the Statute of Limitations. The November 2016 Order held that the 3-year statutory period under CPLR 214 (6) was tolled by the May 2014 Order. That is, applying common-law tolling principles, the November 2016 Order found that the May 2014 Order, which granted Billiard Ball's cross motion to compel Gershman to accept Billiard Balls' proposed answer, prevented Billiard Balls from bringing this action.
More specifically, since a cause of action for legal malpractice requires plaintiffs to make a showing of actual and ascertainable damages, the May 2014 Order prevented Billiard Balls from bringing a legal malpractice action by obviating its damages. The First Department upheld the denial of Mintzer's motion to dismiss, finding that the record "clearly establishes an attorney-client relationship" and that Billiard Balls "was prevented from exercising any legal remedy by virtue of the underlying motion court's order ... until that order was subsequently reversed by the Second Department" (Billiard Balls Mgt., LLC v Mintzer Sarowitz Zeris Ledva & Meyers, LLP, 157 AD3d 419, 419-420 [1st Dept 2018]).
Mintzer's Third-party Complaint alleges three causes of action against Pillinger: legal malpractice, common-law negligence and contribution. Pillinger argues that the Complaint should be dismissed, pursuant to CPLR 3211 (a) (7), as it fails to state a cause of action. Even if it had, Pillinger argues that dismissal is required under CPLR 3211 (a) (1), as documentary submissions, including the various prior court decisions discussed above, as well as the Hatzigcorgiou affidavit, and emails exchanged between Pillinger and Billiard Balls establish that Mintzer has no cause of action against Pillinger for legal malpractice, common-law indemnification or contribution. In opposition, Mintzer argues that it has stated causes of action and that the documentary evidence before the Court creates a question of fact as to whether Pillinger owes Mintzer contribution in the event that Mintzer is found liable to Billiard Balls.
In Pillinger's view, these emails, along with the Hatzicorgiou affidavit, establish that Pillinger's representation of Billiard Balls began in October 2013—after the unreasonable delay that plaintiff and Pillinger contend was caused by Mintzer's conduct.
DISCUSSION
In determining a motion to dismiss a complaint pursuant to CPLR 3211(a)(7), the Court's role is deciding "whether the pleading states a cause of action, and if from its four corners factual allegations are discerned which taken together manifest any cause of action cognizable at law a motion for dismissal will fail" (African Diaspora Maritime Corp. v Golden Gate Yacht Club, 109 AD3d 204, 968 NYS2d 459 [1st Dept 2013]). "When determining a motion to dismiss, the court must accept the facts as alleged in the complaint as true, accord plaintiffs the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory" (Goldman v Metropolitan Life Ins. Co., 5 NY3d 561, 570-571 [2005] [internal quotations and citations omitted]). However, "allegations consisting of bare legal conclusions as well as factual claims flatly contradicted by documentary evidence are not" presumed to be true or accorded every favorable inference (David v Hack, 97 AD3d 437, 948 NYS2d 583 [1st Dept 2012]), and the criterion becomes "whether the proponent of the pleading has a cause of action, not whether he has stated one" (Guggenheimer v Ginzburg, 43 NY2d 268, 275, 401 NYS2d 182, 372 NE2d 17 [1977]).
Pursuant to CPLR 3211 [a] [1], a party may move for judgment dismissing one or more causes of action asserted against it on the basis that "a defense is founded upon documentary evidence." A motion to dismiss founded upon documentary evidence may be granted "only where the documentary evidence utterly refutes [the complaint's] factual allegations, conclusively establishing a defense as a matter of law" (Goshen v Mutual Life Ins. Co. of N.Y., 98 NY2d 314, 326, 746 NYS2d 858 [2002]).
I. Legal Malpractice
The salient fact related to Mintzer's claim of legal malpractice against Pillinger is that Pillinger never represented Mintzer. Pillinger argues that the legal malpractice claim must be dismissed as it has no duty, except to clients, to practice law reasonably well. Indeed, the Appellate Division has held that "New York courts impose a strict privity requirement to claims of legal malpractice" and that "an attorney is not liable to a third party for negligence in performing services on behalf of his client" (Federal Ins. Co. v North Am. Specialty Ins. Co., 47 AD3d 52, 59 [1st Dept 2007]; but see Kumar v American Tr. Ins. Co. (49 AD3d 1353 [4th Dept 2008] [finding an exception to this strict-privity rule in cases involving equitable subrogation]).
Neither the Third-party Complaint, nor Mintzer's opposition alleges that an exception to the strict privity rule is appropriate because the doctrine of equitable subrogation is applicable. As Mintzer does not allege privity either, it has not stated a cause of action for legal malpractice against Pillinger. Nor does it have a cause of against Pillinger for legal malpractice. It is plain that Mintzer is not in privity with Pillinger and that equitable subrogation is not applicable to the relationship between the two law firms (see Fasso v Doerr, 12 NY3d 80 [2009] [noting that "[i]t is well established that when an insurer pays for losses sustained by its insured that were occasioned by a wrongdoer, the insurer is entitled to seek recovery of the monies it expended under the doctrine of equitable subrogation"]. Accordingly, the branch of Pillinger's motion that seeks dismissal of Mintzer's claim for legal malpractice must be granted.
II. Common-law Indemnification
Pillinger argues that the common-law indemnification claim must be dismissed as Mintzer cannot be indemnified for its own negligence. In opposition, Mintzer argues broadly that it has stated a valid claim for common-law indemnification. It does not, however, make any specific response to Pillinger's argument or defend its common-law indemnification claim with any detail.
Generally, common-law indemnification requires one party that is "actively at fault in bringing about the injury" to indemnify another party that "is held responsible solely by operation of law because of [its] relation to the actual wrongdoer" (McCarthy v Turner Constr., Inc., 17 NY3d 369, 374, 375 [2011] [internal quotation marks and citation omitted]). Here, if Mintzer is found liable to Billiard Balls, it will necessarily be because it has been found liable for its own negligence, not because it was found liable solely by operation of law. Thus, as Mintzer does not state or have a cause of action against Pillinger for common-law indemnification, the branch of the motion that seeks dismissal of that claim must be granted.
III. Contribution
The Third-party Complaint alleges that "if the Plaintiff sustained damages ... and recovers judgment against Mintzer, such damages will have been brought about in whole or in part as a result of the actions and conduct of Pillinger" (Third-party Complaint, ¶ 30, NYSECF doc No. 45). Accordingly, Mintzer alleges that, in the event of a verdict in Billiard Balls' favor, it "shall be entitled to contribution from Pillinger, for an equitable share of any such judgment on the basis of the comparative degree of culpability of [Pillinger]" (id.).
Pillinger contends that the claim for contribution must be dismissed, as it did not cause, contribute to, or share in Mintzer's alleged malpractice. Mintzer mounts a more detailed opposition to this branch of the motion seeking dismissal of the contribution claim than it does for the other causes of action in the Third-party complaint.
Mintzer argues that Pillinger contributed to Billiard Balls' alleged damages. Specifically, Mintzer contends that Pillinger failed to make a showing of a meritorious defense, in their opposition to Gershman's motion for a default judgment, and that failure contributed to Billiard Balls' damages. Mintzer also claims that Pillinger contributed to the delay to answer because the Second Department noted:
"While [Billiard Balls' general manager] averred that Billiard did not attempt to avoid interposing an Answer, he acknowledged that he did nothing with regard to interposing an answer until after the motion for leave to enter judgment had been served by the plaintiff, at which time there was still an approximately 30-day delay between the service of the motion and the date of the verified answer. Thus, the delay was not attributable to insurance carrier delay, but rather, resulted from Billiard's attempts and negotiations to alter the outcome of its insurance carrier's disclaimer. Under these circumstances, we find the excuse for Billiard's default unreasonable"(131 AD3d at 1106).
CPLR 1401, "Claim for contribution," provides, in relevant part, that "two or more persons who are subject to liability for damages for the same personal injury, injury to property or wrongful death, may claim contribution among them whether or not an action has been brought or a judgment has been rendered against the person from whom contribution is sought." Contribution, "is available where two or more tortfeasors combine to cause an injury and is determined in accordance with the relative culpability of each such person" (Godoy v Abamaster of Miami, 302 AD2d 57, 61 [2nd Dept 2003] [internal quotation marks and citation omitted]; see also Crespo v HRH Const. Corp., 24 Misc 3d 1246(A) [Sup Ct, New York County 2009]).
The Court of Appeals has held that the legislative history of this statue makes clear "[t]hat purely economic loss resulting from a breach of contract does not constitute 'injury to property' within the meaning of New York's contribution statute" (Board of Educ. of Hudson City School Dist. v Sargent, Webster, Crenshaw & Folley, 71 NY2d 21, 26 [1987]). No party here argues that economic damages resulting from legal malpractice do not fall within the orbit of CPLR 1401.
In the context of a legal malpractice case where the defendant firm brought a third-party action against another firm that represented the plaintiff subsequently, the Court of Appeals has held that "the critical issue is whether the third-party defendant owed a duty to the plaintiff which was breached and which contributed to or aggravated plaintiff's damages" (Rosner v Paley, 65 NY2d 736, 738 [1985]). The First Department has held, where a firm is hired subsequent to another firm's malpractice, that "[t]he court properly granted [superseding counsel's] motion to dismiss, since there was no evidence that [superseding counsel] either contributed to the loss or could have done anything to correct the errors of predecessor counsel" (Phoenix Erectors, LLC v Fogarty, 90 AD3d 468 [1st Dept 2011]).
The question here, then, is whether Pillinger contributed to Billiard Balls' loss or could have done anything to correct the fatal delay in answering Gershman's complaint. Here, the documentary submissions establish that Pillinger's representation of Billiard Balls began after September 30, 2013 (see Hatzigcorgiou aff, ¶ 10, NYSCEF doc No. 87). Thus, it is indisputable that the overwhelming majority of Billiard Balls' delay in answering occurred before Pillinger was retained as counsel.
The Second Department's reference to "an approximately 30-day delay between the service of the motion and the date of the verified answer" does not create an issue as to whether Pillinger's representation of Billiard Balls was negligent (131 AD3d at 1106). The Second Department attributed this delay to Billiard Balls' "attempts and negotiations to alter the outcome of its insurance carrier's disclaimer" (id.). Mintzer never argues that Pillinger, in the period between Capital's disclaimer of coverage and Gershman's motion for a default, aided Billiard Balls in its attempts and negotiations with Capital. Moreover, there is no allegation or evidence suggesting that the opposition and cross motion to Gershman's motion for a default was untimely. Thus, Pillinger did not contribute to Billiard Balls' delay in answering.
Nor does the Second Department's finding that Billiard Balls' failed to make a showing as to meritorious defense furnish Mintzer with a cause of action for contribution. First, Mintzer never articulates what Pillinger conduct, in preparing the opposition and cross motion, amounted to a failure "to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession" (Pannone v Silberstein, 118 AD3d 413, 414 [1st Dept 2014] [internal quotation marks and citation omitted]). No attorney is exposed to liability for malpractice simply because a branch of a motion was decided against her.
Second, Mintzer cannot allege actual and ascertainable damages by any deficiency in Pillinger's argument as to meritorious defense. The Second Department's initial determination that Billiard Balls lacked a reasonable excuse for delay effectively decided the issue of the default, as the standard is conjunctive rather than disjunctive. That is, once the first requirement, reasonable excuse, is found to be lacking, the issue is effectively decided and any determination as to the second element, meritorious defense, is essentially dicta. Thus, even if Mintzer had alleged some specifically negligent act in arguing the issue of meritorious defense, it would not be able show that such negligence caused any "actual and ascertainable damages" to Billiard Balls. Ultimately, the claim for contribution must be dismissed because documentary evidence fully contradicts the conclusory claim for contribution the Third-party Complaint.
CONCLUSION
Accordingly, it is
ORDERED that Third-party Defendant Pillinger Miller Tarallo, LLP's (Pillinger) motion to dismiss the Third-party Complaint is granted; and it is further
ORDERED that Defendant/Third-party Plaintiff Mintzer, Sarowitz, Zeris, Ledva & Meyers, LLP's Third-party Complaint is dismissed; and it is further
ORDERED that counsel for Pillinger is to serve a copy of this order, along with notice of entry, on all parties within 10 days of entry. Dated: August 17, 2018
ENTER:
/s/_________
Hon. CAROL R. EDMEAD, JSC