Genesis Merch. Partners v. Gilbride

Full title: GENESIS MERCHANT PARTNERS, LP, GENESIS MERCHANT PARTNERS II, LP…

Court: Supreme Court, New York County

Date published: Sep 6, 2023

2023 N.Y. Slip Op. 33130 (N.Y. Sup. Ct. 2023)

Opinion

Index No. 653145/2014 MOTION SEQ. No. 016

09-06-2023

GENESIS MERCHANT PARTNERS, LP, GENESIS MERCHANT PARTNERS II, LP, Plaintiffs, v. GILBRIDE, TUSA, LAST & SPELLANE LLC, JONATHAN M WELLS, KENNETH M. GAMMILL, CHARLES S. TUSA, Defendants.

Nancy M. Bannon Judge

Unpublished Opinion

MOTION DATE 12/25/2022

PRESENT: HON. NANCY M. BANNON Justice

DECISION + ORDER ON MOTION

Nancy M. Bannon Judge

The following e-filed documents, listed by NYSCEF document number (Motion 016) 351,352, 353, 355, 356, 357, 358, 359, 360, 361,362, 363, 364, 365, 366, 367, 368, 369, 370, 371,372, 373, 374, 376, 377, 378, 379, 380, 381,382, 383, 384, 385, 387, 388, 389, 390, 391,392, 393, 394, 395, 396, 399, 401,402, 403, 404, 405, 406, 407, 408, 409, 410, 411,412, 413, 414, 415, 416,417, 418, 419, 421,422,428, 429, 431,434 were read on this motion to/for SUMMARY JUDGMENT (AFTER JOINDER)

In this action to recover damages, inter alia, for legal malpractice, plaintiffs, two related venture capital firms, move pursuant to CPLR 3212 for summary judgment (1) on the issue of liability on so much of the first cause of action as alleges that defendants, plaintiffs' former counsel, committed legal malpractice in failing to perfect security interests in certain life insurance policies that were pledged as collateral for a series of loans made by plaintiffs to non-party Progressive Capital Solutions, LLC ("Progressive"); and (2) dismissing defendants' counterclaims seeking unpaid legal fees upon theories of quantum meruit and account stated (MOT SEQ 016).¹ Defendants oppose the motion. By order dated October 31, 2022, defendants' motion for summary judgment dismissing the complaint as against defendant Kenneth M. Gammill, Jr. was granted (MOT SEQ 017), and the instant motion was deemed amended to remove defendant Kenneth M. Gammill, Jr. The motion as amended is denied as barred by the principle of law of the case and the prohibition against successive summary judgment motions.

1 Plaintiffs' Notice of Motion purports to also seek dismissal of all of defendants' affirmative defenses, but that branch of the motion is not addressed anywhere in plaintiffs' supporting papers. Therefore, the court deems plaintiffs to have abandoned that branch of their motion.

This is plaintiffs' second motion for summary judgment. On December 31,2015, plaintiffs filed their first summary judgment motion seeking the same relief - a determination of defendants' liability on the first cause of action for legal malpractice, and dismissal of defendants' counterclaims - based on substantially the same arguments as their present motion - that defendants committed legal malpractice which proximately caused plaintiffs' damages. By an order dated February 27, 2017, this court granted plaintiffs' prior motion, holding that defendants negligently discharged their duty to perfect plaintiffs' security interests, and that defendants' counterclaims were subject to dismissal because they sought payment for the very work that constituted the alleged malpractice.

Upon the defendants' appeal, the Appellate Division, First Department, by order dated January 11, 2018, reversed, denied summary judgment to plaintiffs, and reinstated defendants' counterclaims. Genesis Merchant Partners, L.P, v Gilbride, Tusa, Last & Spellane, LLC, 157 A.D.3d 479 (1^st Dept. 2018). The Court held that the parties' competing affidavits, the Collateral Assignment of Contracts (one of the loan documents drafted by defendants), and emails between the parties raised triable issues of fact as to the scope of defendants' representation of plaintiffs. Specifically, the Court found issues of fact as to whether defendants' role was limited, at plaintiffs' express instruction, to exclude a duty to perfect plaintiffs' security interests in the subject insurance policies, and if so limited, whether defendants ensured that plaintiffs, their clients, understood that defendants were not responsible for perfecting the subject security interests. The Court further noted that discovery was not completed at the time of the first motion, that defendants had outstanding discovery requests "relating to issues of proximate cause", and that by granting summary judgment while discovery was ongoing, this court had "foreclosed defendants'] attempt to obtain material and necessary discovery to [their] defenses." As to defendants' counterclaims, the Court held that their dismissal was improper given the reversal and denial of summary judgment on the issue of liability for legal malpractice.

In light of the Appellate Division's decision, plaintiffs' present motion is barred by the doctrine of law of the case because they again seek summary judgment on their legal malpractice claim and dismissal of defendants' counterclaims, asserting that there are no triable issues of fact. "The doctrine of law of the case is a rule of practice, an articulation of sound policy that, when an issue is once judicially determined that should be the end of the matter as far as Judges and courts of co-ordinate jurisdiction are concerned." Martin v City of Cohoes, 37 N.Y.2d 162, 165 (1975). The doctrine applies to "legal determinations that were necessarily resolved on the merits in [a] prior decision" (Baldasano v Bank of N.Y., 199 A.D.2d 184, 185 [1^stDept. 1993]; see Gay v Farella, 5 A.D.3d 540, 541 [2^nd Dept. 2004]), and, as relevant here, "to the same questions presented in the same case" (RPG Consulting, Inc. v Zormati, 82 A.D.3d 739, 740 [2^nd Dept. 2011], citing People v Evans, 94 N.Y.2d 499, 502 [2000]; see Matter of McGrath v Gold, 36 N.Y.2d 406, 413 [1975]).

Even were the present motion not barred by the principle of law of the case, it is barred by the prohibition against successive summary judgment motions. It is well-settled that "[s]uccessive motions for summary judgment should not be entertained without a showing of newly discovered evidence or other sufficient justification." Jones v 636 Holding Corp., 73 A.D.3d 409, 409 (1^st Dept. 2010); see Landis v 383 Realty Corp., 175 A.D.3d 1207, 1207 (1^st Dept. 2019). To justify a successive summary judgment motion, purportedly "new" evidence must have been "unavailable to [the movant] before the prior motion[.]" Lorne v 50 Madison Ave LLC, 198 A.D.3d 483, 483 (1^st Dept. 2021); see Landis v 383 Realty Corp., supra; Maggio v 24 West 57 APF, LLC, 134 A.D.3d 621, 625-26 (1^st Dept. 2015). An intervening appellate decision in the same case may also constitute "sufficient justification" for a successive summary judgment motion if the decision clarifies or changes the controlling law. See Amill v Lawrence Ruben Co., 117 A.D.3d 433, 433-34 (1^st Dept. 2014). It has also been held that a court may entertain a successive summary judgment motion that is '"substantively valid'" and '"will further the ends of justice and eliminate an unnecessary burden on the resources of the courts.'" Wells Fargo Bank, N.A., v Osias, 205 A.D.3d 979, 982 (2^nd Dept. 2022), quoting Aurora Loan Servs., LLC v Yogev, 194 A.D.3d 996, 997 (2^nd Dept. 2021). That is, entertaining the motion would '"enhance[] judicial efficiency.'" MTGLQ Investors, LP v Collado, 183 A.D.3d 414, 414 (1^st Dept. 2020), quoting Landmark Capital Invs., Inc, v Li-Shan Wang, 94 A.D.3d 418, 419 (1^st Dept. 2012). However, this is a "narrow exception to the successive summary judgment rule." Wells Fargo Bank, N.A, v Osias, supra at 981 (internal quotation marks omitted). '"Successive motions for the same relief burden the courts and contribute to the delay and cost of litigation. A party seeking summary judgment should anticipate having to lay bare its proof and should not expect that it will readily be granted a second or third chance.'" Id. at 982, quoting Deutsche Bank Natl. Trust Co. v Elshiekh, 179 A.D.3d 1017, 1020 (2^nd Dept. 2020).

Plaintiffs fail to demonstrate, or even allege, a sufficient justification for entertaining a successive summary judgment motion. Remarkably, plaintiffs' initial moving papers do not even acknowledge that they previously moved for the same relief, let alone attempt to justify a successive motion on substantially the same grounds already found wanting by the Appellate Division. Moreover, their present motion is not based upon new, previously unavailable evidence, nor do plaintiffs show some other justification sufficient to warrant consideration of their second motion as an exception to the rule.

With respect to "newly discovered evidence," the only substantial difference between the first and second motions is plaintiffs' reliance in the present motion on deposition and expert testimony obtained subsequent to the First Department's January 11, 2018, decision. Specifically, in support of the present motion, plaintiffs rely upon (1) the transcripts of defendant Jonathan M. Wells' depositions, dated October 16, 2018, October 17, 2018, and June 24, 2021, (2) the affidavit, dated April 11, 2022, of Gary Green, Esq., a retired transactional attorney hired by plaintiffs as an expert in the field of legal malpractice, along with Green's undated expert report and a transcript of his October 22, 2021 deposition, (3) the affidavit, also dated April 11, 2022, of Stephen Shapiro, a consultant hired by the plaintiffs as an expert in the valuation of life insurance policies, together with Shapiro's "forensic consulting" report dated July 16, 2021, and (4) the reports and deposition testimony of defendants' own experts.²

2 The defense expert materials submitted by plaintiffs include: the report, dated September 15, 2021, of J. Richard Supple Jr., retained by defendants as a legal ethics expert; the report and amended report, dated September 15, 2021 and February 2. 2022, of Espen Robak, hired by defendants as a life insurance valuation expert; the transcript of Supple's deposition, dated December 15. 2021; the transcripts of Robak's depositions, dated February 24. 2022 and March 7. 2022; and tire deposition transcript, also dated December 15. 2021, of Kenneth Chin, defendants' expert in the field of legal malpractice.

However, neither Wells' deposition testimony nor the various expert materials submitted constitute "new" evidence sufficient to justify a successive summary judgment motion. In Jones v 636 Holding Corp., supra, the Court held that an expert affidavit was not "new" evidence warranting consideration of a successive summary judgment motion because the affidavit was available to the movants earlier, and thus "should be rejected for failure to show due diligence in attempting to obtain the statement before the submission of the prior motion" (internal quotation marks omitted). So too here, as plaintiffs made a strategic decision to move for summary judgment while discovery was ongoing and before any expert testimony was obtained, though that testimony was clearly available had plaintiffs deigned to obtain it before moving. Similarly, in Vinar v Litman, 110 A.D.3d 867, 867-68 (2^nd Dept. 2013), the Court held that deposition testimony elicited after the denial of a first summary judgment motion cannot be considered "new" evidence to establish facts that could have been established at the time of the initial motion through alternative evidentiary means.

Here, plaintiffs cite to defendant Wells' deposition transcripts to establish that he failed to confirm that plaintiffs' security interests were properly perfected and failed to obtain plaintiffs' informed consent to the purported limited representation of plaintiffs by confirming the scope of the limitation and advising plaintiffs as to the importance of confirming that their security interests were properly perfected. However, plaintiffs sought to establish substantially the same facts at the time of the initial motion based on Wells' email correspondence and billing records, as well as defendants' responses to plaintiffs' requests for admission. See NYSCEF Doc. No. 51 (Plaintiffs' Memorandum of Law in Support of First Summary Judgment Motion) at 2-3, 7, 9-12, 15-22. Indeed, the First Department touches on each of these points in its discussion of the factual dispute regarding the scope of defendants' representation of plaintiffs. See Genesis Merchant Partners, L.P, v Gilbride, Tusa, Last & Spellane, LLC, supra. Consequently, neither Wells' deposition testimony nor the expert materials submitted by plaintiffs constitute "newly discovered evidence" sufficient to warrant a successive summary judgment motion.

Nor does plaintiffs' motion fit within the "narrow exception" permitting successive summary judgment motions that are "substantively valid" (Wells Fargo Bank, N.A., v Osias, supra at 982) and "enhance[] judicial efficiency" (MTGLQ Investors, LP v Collado, supra at 414). Rather, this motion is better described as one of those that, in seeking the same relief as a prior motion, "burden the courts and contribute to the delay and cost of litigation." Wells Fargo Bank, N.A, v Osias, supra at 982. In this regard, plaintiffs principally argue that their proffered experts -who plaintiffs curiously describe as "best-in-breed" - have opined on the applicable standards of care and defendants' malpractice in failing to adhere to those standards, and that summary judgment is warranted because defendants' experts have failed to rebut those opinions. However, neither the expert testimony on which plaintiffs rely nor Wells' deposition testimony eliminates the triable issues of fact identified by the First Department as to the scope of defendants' representation of plaintiffs. Rather, they present issues of fact and credibility that are best left for the trier of fact. Indeed, the First Department observed that Wells' "factual averments" themselves "raise[] an issue of credibility that [are] not appropriately resolved on a motion for summary judgment." Genesis Merchant Partners, L.P, v Gilbride, Tusa, Last & Spellane, LLC, supra at 485.

Plaintiffs attempt to elide the existence of these factual disputes by focusing on a single line in the First Department's January 11, 2018, decision, wherein the Court found that a provision in the Collateral Assignment of Contracts suggests that plaintiffs, rather than defendants, were responsible for taking the mechanical steps necessary to perfect their security interests. Plaintiffs contend that, even if there is an issue of fact regarding the scope of defendants' representation - i.e., whether it included a duty to take the mechanical and ministerial steps necessary to perfect the subject security interests - the testimony of the parties' experts establishes that defendants breached separate, non-mechanical and non-ministerial duties to confirm that plaintiffs' security interests were properly perfected and to advise plaintiffs regarding the importance of the same. This argument is specious. Plaintiffs already raised in their prior motion essentially the same arguments concerning defendants' duties to confirm the perfection of the subject security interests and to advise plaintiffs regarding the importance of the same, to no avail. See NYSCEF Doc. No. 51 (Plaintiffs' Memorandum of Law in Support of First Summary Judgment Motion) at 2-3, 7, 9-12, 15-22.

Moreover, plaintiffs' attempt to cabin the issues of fact identified by the First Department regarding the scope of defendants' representation - i.e., whether it included a duty to take the mechanical and ministerial steps necessary to perfect the subject security interests - rests on a selective and overly narrow framing of the Court's decision. Indeed, the Court expressly found that the same provision in the Collateral Assignment of Contracts that suggests plaintiffs were responsible for taking the mechanical steps necessary to perfect their security interests also "unambiguously require[d] Progressive to deliver to [plaintiffs] documents evidencing perfection of [plaintiffs'] security interests]'. See Genesis Merchant Partners, L.P, v Gilbride, Tusa, Last & Spellane, LLC, supra at 482-483. And the Court further found that the same contractual provision also arguably supported] defendants' position that plaintiffs "understood that the security interests in the insurance policies could only be perfected by [plaintiffs] obtaining a collateral assignment of the policies[,]" and thus that no additional advice was necessary concerning the importance of confirming that said assignments were properly obtained. Id. at 483. That is, the factual disputes identified by the First Department encompassed the very issues that plaintiffs now rely upon in their attempt to circumvent the import of the Court's decision. Additionally, plaintiffs' contention that defendants' experts have conceded that these additional duties were indisputably within the scope of defendants' representation is belied by a review of the relevant testimony, which makes clear that there is, in fact, conflicting expert opinions on this issue.

Finally, the court notes that plaintiffs were less than diligent in completing discovery, which was commenced in 2015 and addressed at numerous conferences and in numerous orders over the ensuing years. The court ultimately set a final Note of Issue filing deadline of February 10, 2022, and plaintiffs filed the Note of Issue on that date, with counsel affirming in the Certificate of Readiness that all discovery was complete. Nonetheless, and notwithstanding that post-note discovery is not permitted absent "unusual or unanticipated circumstances" (22 NYCRR 202.21 [d]), discovery continued unabated. Indeed, it continued into 2023, more than a year after the Note of Issue was filed and more than five years after the Appellate Division's January 11, 2018, order. Notably, the additional, delayed, discovery did not present any basis for a second summary judgment motion.

For the reasons set forth herein, the branch of plaintiffs' motion seeking summary judgment on liability as to the first cause of action for legal malpractice is denied as barred by law of the case and the prohibition against successive summary judgment motions. The branch of plaintiffs' motion seeking to dismiss defendants' counterclaims for payment of legal fees allegedly owed is denied for the same reasons. That is, the counterclaims seek payment for the very work that constitutes the alleged malpractice and thus must await a determination of plaintiffs' claims for resolution.

Accordingly, upon the foregoing papers, it is

ORDERED that plaintiffs' motion for summary judgment is denied.

This constitutes the Decision and Order of the court.