Opinion
No. 2946/1995.
2012-04-25
In the Matter of the Application of Miguelina BORGES and Eric Shay, as Residual Beneficiaries of the Estate of Marton Gross, Deceased.
Lauterbach, Garfinkel Damast & Hollander, LLP, for Miguelina Borges and Erik Shay. Jaspan Schlesinger LLP, for Neil Parsoff, Esq.
Lauterbach, Garfinkel Damast & Hollander, LLP, for Miguelina Borges and Erik Shay. Jaspan Schlesinger LLP, for Neil Parsoff, Esq.
McCoyd, Parkas & Ronan LLP, for Lawrence Siegel, Esq.
French & Casey, LLP, for Donald M. Spanton, Esq., Audra E. Dehan, Esq. and Spanton & Dehan LLP.
MARGARITA LOPEZ TORRES, J.
Petitioners, Miguelina Borges and Erik Shay, residual beneficiaries of the estate, have petitioned for a determination of legal fees pursuant to SCPA § 2110, as against Donald M. Spanton (“Spanton”), Neil M. Parsoff (“Parsoff”), Lawrence A. Siegel (“Siegel”) and Audra E. Dehan (“Dehan”), individually and as partners of Spanton, Parsoff & Siegel, P.C., Spanton, Parsoff & Siegel, LLP, Spanton & Parsoff, LLP (“Spanton & Parsoff”) and Spanton & Dehan, LLP (Spanton & Dehan”) (all named parties and law firms collectively “respondent attorneys”), as applicable, for their prior representation of Mordechai Gross, the executor of the estate.
Petitioners seek from respondent attorneys the refund to the estate of any fees and disbursements received in excess of the amount to be determined by the court to be reasonable for services rendered to the estate by said respondent attorneys. Petitioners further seek an assessment of damages as against the respondent attorneys for injuries asserted to have been suffered as a result of their deceit and collusion, or as the result of their consent to the deceit and collusion committed by the executor, including an award of treble damages pursuant to Judiciary Law § 487.
A verified petition seeking relief only as against Spanton and Dehan, individually, and Spanton & Dehan was filed. Spanton, Dehan and Spanton & Dehan sought to dismiss the petition because it did not include as necessary parties Parsoff and Siegel. The motion was withdrawn pursuant to a stipulation dated March 25, 2010, and filed with the court, wherein petitioners agreed to amend their petition to include those persons as parties. Now before the court is an amended petition which seeks relief against all these respondents.
Respondents Spanton and Dehan, individually, and Spanton & Dehan filed objections to the amended petition, and assert as affirmative defenses that i) the petition fails to state a cause of action, and ii) while probate of the estate has been on-going since 1995, they represented the executor of the estate only during the period from June 1, 2007 to April 29, 2009, consequently earning only a nominal fee. They further argue that a proceeding pursuant to SCPA § 2110 is “inappropriate” since, with the exception of $9,259.77 currently being held in the estate escrow account of Spanton & Dehan, there are no estate assets remaining undistributed. Dehan further argues that she was not a partner of the firm of Spanton & Parsoff, her former employer, that she did not have an interest in the fees generated by the firm and that she should not be held accountable for any legal fees earned by the firm.
Siegel filed a verified answer denying knowledge or information sufficient to answer most of the amended petition. He only admits to being a member of the firm of Spanton, Parsoff & Siegel, LLP, for the period from 1992 to May 1997.
Parsoff filed a verified answer to the amended petition. Therein he asserts that i) petitioners do not have standing to assert the claimed relief, ii) the petition should be dismissed pursuant to CPLR § 3211(a) on the grounds that another proceeding seeking the same relief is pending, and iii) the petition is barred by the statute of limitations and laches.
Parsoff now moves to dismiss the SCPA § 2110 proceeding. Siegel has submitted an affirmation by his counsel in support of the motion. Spanton and Dehan, individually, and Spanton & Dehan, now cross-move for the same relief.
They argue that pursuant to CPLR § 3211(a)(4), the SCPA § 2110 proceeding should be dismissed because there is another proceeding for the same relief between the same parties pending in this court. Specifically, they argue that the present proceeding under SCPA § 2110 duplicates and seeks identical relief to that requested by the objections to the attorneys' fees set forth in the executor's accounting, which proceeding is already pending before this court.
The motion and cross-motion are virtually identical; as such, they will be decided together in this decision.
Respondent attorneys also argue that the petition should be dismissed pursuant to CPLR § 3211(a)(3), asserting that petitioners lack standing to bring the instant proceeding. They argue that petitioners' allegations, although they are couched in terms of being supportive of the claim for “deceit or collusion,” in reality constitute a claim for attorney malpractice for which they, as attorneys retained by the executor, would not be liable to petitioners, as beneficiaries of decedent's estate.
Respondent attorneys also seek dismissal of the amended petition pursuant to CPLR § 3211(a)(7), on the ground that the pleadings fail to state a cause of action for a claim for deceit or collusion under the Judiciary Law § 487, being devoid of any factual allegations of wrongful conduct. They assert that petitioners' claim of deceit or collusion stems from three factual situations. First, respondent attorneys filed, on behalf of the executor, an accounting in 2001 which listed commissions taken in the amount of $32,969.95. Subsequently the respondent attorneys then filed an accounting in 2002 which stated that no commissions had been taken but added new expenses of administration which totaled the identical amount of $32,969.95. Second, respondent attorneys counseled the executor to withdraw a petition to distribute Lottery payments directly to the beneficiaries. Third, respondent attorneys counseled the executor to seek a protective order rather than to comply and produce documents requested by petitioners in the accounting proceeding. Respondent attorneys argue in opposition that these enumerated situations are devoid of any factual allegations that might support a finding that the respondent attorneys colluded with the executor with the intent to deceive. Further, the respondent attorneys assert the petition lacks specificity with regard to any alleged act of deception or collusion, but merely contains conclusory allegations. They assert that the petitioners have failed to allege the type of conduct envisioned under Judiciary Law § 487, necessary to survive a motion to dismiss, which conduct is intentional deceptive behavior that must be of a “chronic, extreme pattern.” Gonzalez v. Gordon, 233 A.D.2d 191 (1st Dep't 1996). They explain that any differences between the 2001 and 2002 accounting are merely an “error in accounting” or a “typographical error in the initial accounting which was then corrected and re-filed.” Respondent attorneys argue that, whereas the initial act complained of, the filing of the accounting in 2001, took place nine years ago, the claims against them are barred by laches. Parsoff argues that while representing the executor or in dealing with this estate, he had no personal knowledge of the facts complained of and is no longer affiliated with the lawyers who may have such knowledge. His partnership with Spanton dissolved in 2007, and asserts that he has no access to and no control of Spanton & Dehan's files.
In their reply in support of the cross-motion, Spanton and Dehan, individually, and Spanton & Dehan, argue that pursuant to CPLR § 3211they are entitled to have the petition dismissed due to the failure to include a necessary party, namely, the executor. Additionally, they assert that the claims should be barred by laches, as they lacked knowledge or notice that petitioners would assert these claims and they would be injured and prejudiced if petitioners are permitted to recover fees from them when a necessary party, the executor, has not been named in the proceedings. Spanton further argues that he has not represented the executor in more than three years.
Petitioners oppose the motion and cross-motion, arguing that the petition seeking a determination of legal fees pursuant to SCPA § 2110 is not duplicative of the accounting proceeding and thus should not be dismissed pursuant to CPLR § 3211(4). They argue that these proceeding are not duplicative given that none of the respondent attorneys are parties to the accounting proceeding and in that proceeding the court does not have jurisdiction over them. Petitioners further argue that, even if this court were to determine in the accounting proceeding that the respondent attorneys' fees were excessive, such a finding would have no impact on respondent attorneys. They assert that such a finding would not result in a determination against the respondent attorneys because they would not be on notice of the accounting proceeding, they would not be parties to that proceeding, and they would not have defended themselves against allegations of excessive fees.
Petitioners also argue that they have set forth in their pleadings sufficient allegations to sustain a claim sounding in deceit and collusion, and that they, as residual beneficiaries, have standing to bring such a claim pursuant to Judiciary Law § 487. Further, they argue that they are not asserting a claim for attorney malpractice or negligence. Rather, they argue that they are seeking redress for intentional acts of the respondent attorneys. Petitioners further argue that they have stated a claim under Judiciary Law § 487, so that dismissal for failure under CPLR 3211(a)(7) is not warranted. They assert that their allegations that respondent attorneys engaged in deceit or collusion in preparing the 2002 accounting, wherein any reference to the payment of commissions to the executor was deleted and included additional expenses, which totaled the same amount as the unapproved advanced payment of commissions previously reported in the 2001 accounting, clearly states a claim. Furthermore, they plead that Spanton counseled the executor to withdraw his previously filed petition to distribute to petitioners remaining Lotto payments that were due, and instead to seek a protective order rather than comply with routine document discovery requests from the petitioners. This conduct is asserted to have resulted in an additional three years delay in the accounting proceeding, causing petitioners to incur higher taxes. They argue that the attempt to submit a second accounting which included deceptive reckoning of expenses is a by-product of collusion and an intent to deceive, and that the respondent attorneys' alleged involvement in the attempt to cover up the unapproved advanced payment of the executor's commissions in the 2001 accounting states a claim pursuant to Judiciary Law § 487. Petitioners argue that these allegations and the inferences to be drawn therefrom suggest the type of underlying wrongful conduct which is at the heart of a claim pursuant to Judiciary Law § 487.
Petitioners also argue that their claims are not barred by laches. They argue that Spanton & Dehan were discharged as the executor's counsel in April 2009, and this proceeding was initially commenced in August 2009, followed by an amended petition dated April 14, 2010, which added necessary parties. As such, they assert there has been no delay in commencing this proceeding. They further argue that there is no allegation that any claimed delay has resulted in any prejudice to respondent attorneys. To the contrary, petitioners assert that the issues related to the excessive attorneys fees have been the subject of the accounting in which respondent attorneys represented the executor. Moreover, given that the doctrine of laches is equitable in nature, the petitioners assert that respondent attorneys themselves are responsible for the delay in the prosecution of the accounting proceeding. Petitioners note that there is no allegation of lost or destroyed documents. Moreover, they assert that the passage of time has no impact on Parsoff's ability to defend against this claim, as he claims that he never had any personal knowledge in representing the executor and nothing suggests that the traditional forms of discovery would not enable him to prepare for litigation.
The standard on a motion to dismiss a pleading for failure to state a cause of action is not whether the party has artfully drafted the pleading, but whether deeming the pleading to allege whatever can be reasonably implied from its statements, a cause of action can be sustained. See, Stendig, Inc.v. Thom Rock Realty Co ., 163 A.D.2d 46 (1st Dep't 1990); V Leviton Mfgr. Co., Inc. v. Blumberg, 242 A.D.2d 205 (1st Dep't 1997). The material allegations must be deemed true, and the proper inquiry is whether a cause of action exists, not whether is has been properly stated. Ippolito v. Lennon, 150 A.D.2d 300 (1st Dep't 1989). The court must accept as true the facts “alleged in the complaint and submissions in opposition to the motion, and accord the plaintiffs the benefit of every possible inference,” thus determining only “whether the facts as alleged fit within any cognizable legal theory.” Durell– Harding v. State, 15 NY3d 8, 20 (2010). “A complaint should not be dismissed on a pleading motion so long as, when the allegations are given the benefit of every possible inference, a cause of action exists. Rovello v. Orofino Realy Co., 40 N.Y.2d 633, 634 (1976). However, “bare legal conclusions with no factual specificity” and incredible allegations are not entitled to such favorable consideration. Godfrey v. Span, 13 NY3d 358, 373 (2009).
Judiciary Law § 487, provides in relevant part that an attorney who is “guilty of any deceit or collusion, with intent to deceive the court or any party” is guilty of a misdemeanor, and “forfeits to the party injured treble damages, to be recovered in a civil action.” The alleged deceit must have been directed at the court or must have occurred during the course of a pending judicial proceeding. Costalas v. Amalfitano, 305 A.D.2d 202 (1st Dep't 2003). The alleged deceit must have caused actual damages, i.e. “pecuniary harm.” NYCTA v. Morris J. Eisen, P.C., 276 A.D.2d 78, 86 (1st Dep't 2000). “A violation of Judiciary Law § 487(1) may be established either by the defendant's alleged deceit or by his alleged chronic, extreme pattern of delinquency. Wiggins v. Gordon, 115 Misc.2d 1071, 1077 (N.Y. City Civ Ct 1982); Rock City Sound, Inc. v. Bashian & Farber, LLP, 74 AD3d 1168 (2nd Dep't 2010). Notably, “an injury to the plaintiff resulting from the alleged deceitful conduct of the defendant attorney is an essential element of a cause of action based on a violation of Judicary Law § 487. Rozen v. Russ & Russ, P.C., 76 AD3d 965 (2nd Dep't 2010). It is not necessary to establish that the deceitful statement was literally credited or relied on by the court in order to state a claim under Judiciary Law § 487, so long as the statement was “material” and actually caused the injuries or legal expenses sustained. Amalfitano v. Rosenberg, 12 NY3d 8, 14 (2009). A complaint setting forth only one “arguable misrepresentation” does not allege a cognizable claim under Judiciary Law § 487. Wiggins v.. Gordon, supra. Finally, a claim brought under Judiciary law § 487 due to delays in the proceeding, requires that the attorney wilfully delayed his client's suit with a view to his own gain.
With these principles in mind, and even upon favorably construing the petition, the Judiciary Law § 487 claim in the petition fails to state a claim upon which relief can be granted. The claim of deceit is predicated on the deletion in the 2002 accounting of the payment of commissions previously reported in the 2001 accounting, as well as the inclusion in the 2002 accounting of expenses that total the same amount as those of the unapproved commissions. The petition sets forth no factual statements, other than wholly conclusory allegations, from which it can be reasonably inferred that the respondent attorneys acted with an intent to deceive, or that they colluded with the executor with the intent to deceive, in preparation of the accountings. The petition merely offers a conclusory statement that there was collusion. The petition lacks factual averments adequately alleging that the submission of the 2001 and 2002 accountings resulted in damages. Moreover, even if, with a liberal reading of the allegations, this conduct were found to be deceitful it still cannot be inferred that this allegedly deceitful conduct was the proximate cause of injuries sustained. See, Rozen v. Russ & Russ, P.C., supra. The petition also alleges that Spanton counseled the executor to withdraw his previously filed petition to distribute to petitioners remaining Lotto payments that were due, and to seek a protective order rather than comply with routine document discovery requests from the petitioners. These actions are alleged to have caused an additional three years delay in the accounting proceeding and caused petitioners to incur higher taxes. These allegations, even when coupled with allegations that the respondent attorneys' attempt to submit an accounting which includes deceptive reckoning of expenses in an attempt to cover up the unapproved advanced payment of the executor's commissions, do not state a cause of action pursuant to Judiciary Law § 487. The petition also fails to set forth a pattern of delinquent, wrongful or deceitful behavior by respondent attorneys, or of pecuniary damages resulting from the alleged wrong. Judiciary Law § 487(2) provides, in pertinent part, that an attorney who “willfully delays his client's suit with view to his own gain” is in violation of the statute. Finally, while the petition states that because of respondent attorneys' actions the proceeding were delayed three years, the petition fails to allege that respondent attorneys delayed the lawsuit for their own personal gain. Petitioners' cause of action alleging that respondent attorneys violated Judiciary Law § 487 is dismissed, as the petition lacks the requisite allegations of a “chronic and extreme pattern of legal delinquency.” See, Nason v. Fisher, 36 AD3d 486 (1st Dep't 2007).
Whereas the attorney misconduct claim is being dismissed, the court need not address respondent attorneys' argument that petitioners lack standing to bring this claim which they argue is really a claim for attorney malpractice for which they, as attorneys retained by the executor, would not be liable to petitioners, as beneficiaries of decedent's estate.
The petition seeking a determination of legal fees pursuant to SCPA § 2110 is not duplicative of the accounting proceeding and should not be dismissed pursuant to CPLR § 3211(a)(4). Given that none of the respondent attorneys are parties to the accounting proceeding this proceeding is not duplicative of it. In the accounting proceeding, the court does not have jurisdiction over respondent attorneys. Whereas respondent attorneys are not parties to the accounting proceeding and would not have the opportunity to defend against the allegation of excessive fees, any determination in that proceeding would have no impact on them and could not result in a judgment against them. The motion to dismiss the cause of action as against respondent attorneys pursuant to SCPA § 2110 is denied.
In order to establish laches, it must be shown that 1) the conduct of an offending party giving rise to the situation complained of, 2) delay by the complainant in asserting hers or his claim for relief despite the opportunity to do so, 3) lack of knowledge or notice on the part of the offending party that the complainant would assert her or his claim for relief, and 4) injury or prejudice to the offending party in the event that relief is accorded the complainant. Cohen v. Krantz 227 A.D.2d 581 (2nd Dep't 1996). Additionally, the defense of laches is unavailable in an action at law commenced within the period of limitations. Caderlock, L.L.C. v. Renner, 73 AD3d 454 (1st Dep't 2010).
The respondent attorneys who are seeking to dismiss this petition on the ground of laches have the burden of coming forward with some showing of actual prejudice. Yet they have made no showing of actual prejudice. They have not shown that the petitioners have inexcusably delayed the institution of this proceeding, nor have they shown any change in their position in reliance on the inaction of the petitioners. Respondent attorneys have failed to show the existence of any intervening circumstances that are prejudicial to their position in this proceeding, such as the death of a witness or the unavailability of other evidence, or that they acted differently than they would have done during the course of the accounting proceeding sufficient to invoke the doctrine of laches against petitioners. See, Estate of Adamo, 16 Misc.3d 800 (Sur. Ct. Bronx County 2007); see also, Estate of Carter, 69 Misc.2d 630 (Sur. Ct. New York County 1972). Lastly, in these motion papers respondent attorneys have not alleged that the statute of limitations has run.
For the first time Spanton and Dehan, individually, and Spanton & Dehan, in their reply papers argue that the petition must be dismissed for failure to join the executor
as a necessary party. Notably, Spanton and Dehan, individually, and Spanton & Dehan moved to dismiss the petition as originally filed because they argued that Parsoff and Siegel were not named as parties. At no time in that motion did they assert that the executor was a necessary party, nor in their response to the amended petition did they raise the issue that the court could not proceed in the absence of a necessary party. Under New York law, “[t]he function of reply papers is to address arguments made in opposition to the position taken by the movant and not to permit the movant to introduce new arguments in support of, or new grounds for the motion.” Dannasch v. Bifulco, 184 A.D.2d 415, 417 (1st Dep't 1992). As a result courts have refused to consider arguments asserted for the first time in a movant's reply papers. Lumbermens Mut. Cas. Co. v. Morse Shoe Co., 218 A.D.2d 624 (1st Dep't 1995). A court in its discretion, may consider a claim or evidence offered for the first time in reply where the opposing party had the opportunity to respond to the newly presented evidence or claim in their surreply. Fiore v. Oakland Plaza Shopping Center, Inc., 164 A.D.2d 737 (1st Dep't 1991). However, the movant does not shift the burden to the opposing party, by way of a reply affidavit, to respond to a new claim when the opposing party has neither the obligation or opportunity to respond absent express leave of the court. Lazar v. Nico Indus., 228 A.D.2d 408 (First Dep't 1987). In view of the fact that this claim was only raised for the first time in a reply affidavit to which petitioners have no right to reply without court permission, that argument may not be considered. Notwithstanding, if this new claim were to have been considered, it does not appear that the executor would be a necessary party in a proceeding which seeks the return of excess fees from the respondent attorneys to whom they were paid.
While the executor was not named as a party in the amended petition, he was served with a citation in the proceeding.
Accordingly, the claim alleging violation of Judiciary Law § 487 is dismissed and the balance of the relief sought in the motion is denied.
This constitutes the decision and order of this Court.