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granting motion to dismiss after considering letter submitted by defendant in support of its motion to dismiss, which notified the court of a prior proceeding that involved the same parties and had preclusive effect, and taking judicial notice of a finding from that prior proceeding
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No. 04 Civ. 7607 (DC).
July 28, 2005
LAW OFFICE OF DANIEL L. ABRAMS, PLLC, Daniel L. Abrams, Esq., New York, NY, Attorneys for Plaintiff.
ARTHUR J. GROSSHANDLER, ESQ., New York, NY, Attorney for Defendants.
MEMORANDUM DECISION
In this diversity case, plaintiff Lisa Jacobs alleges that she retained defendants Law Offices of Leonard N. Flamm (the "Firm"), Leonard N. Flamm, and Eden M. Mauro to represent her in certain legal matters. She further alleges that she thereafter entered into a romantic relationship with Flamm and that defendants then committed legal malpractice and breach of fiduciary duty when they disclosed confidential information to the Massachusetts Department of Social Services ("DSS") and others. She seeks damages in excess of $75,000. Defendants move to dismiss the complaint for failure to state a claim upon which relief can be granted. For the reasons that follow, defendants' motion is granted and the complaint is dismissed.
STATEMENT OF THE CASE
A. The Facts 1. The Complaint
The facts alleged by Jacobs in her complaint are as follows:
On March 8, 2005, as part of her opposition to defendants' motion to dismiss, Jacobs submitted an affirmation and exhibits consisting of correspondence between Jacobs and Flamm. These materials — matters outside the pleadings — were not considered in deciding this motion to dismiss.
Flamm is an attorney and the principal of the Firm. (Compl. ¶ 3). Mauro is an attorney associated with the Firm, and worked on matters for Jacobs at the direction of the other defendants. (Compl. ¶ 4).
Jacobs claims that she hired defendants in March 2001 to represent her in litigation against her former employers, St. Vincent's Catholic Medical Center of New York and Dr. William Kritzberg. In September 2001, Jacobs claims that defendants agreed to serve as special counsel to Jacobs in a separate medical malpractice case against her former therapist, Dr. Louis Vachon. (Compl. ¶ 7). Jacobs claims that defendants' representation of her in these cases required her to provide defendants with highly sensitive and confidential information regarding Jacobs's psychiatric, medical, employment, and educational history. (Id. ¶ 8).
Shortly after she hired him, Jacobs contends, Flamm seduced her. They began a romantic relationship, and soon were engaged to be married. In late 2001, Jacobs became pregnant with Flamm's baby. (Id. ¶¶ 9, 10).
Jacobs alleges that when Flamm learned of the pregnancy, he insisted that Jacobs have an abortion. (Id. ¶ 11). She refused, and Flamm subsequently called off the engagement. Flamm allegedly then refused to do any more legal work for Jacobs. (Id. ¶¶ 12, 13). Jacobs continued her refusal to have an abortion, and Flamm purportedly threatened to hire a hit man to beat her up. (Id. ¶ 14). Flamm also told Jacobs that he would sue for custody of their child if Jacobs did not have an abortion. Flamm specifically threatened to reveal to the appropriate authorities allegedly confidential information about Jacobs, including but not limited to her psychiatric history, that he had allegedly learned in his capacity as her attorney, to deny Jacobs custody of their child. (Id. ¶¶ 14, 15).
On August 1, 2002, Jacobs's and Flamm's son was born in Massachusetts. (Id. ¶ 16).
Around the same time, Jacobs alleges, Flamm provided "numerous embarrassing and damaging materials," including allegedly "privileged information and client secrets," regarding Jacobs to the DSS. (Id. ¶ 17). The DSS took custody of the child on August 7, 2002, while Jacobs and the child were still in the hospital. Jacobs has been denied custody of the child since that time. (Id. ¶ 18).
After the child's birth, Flamm continued to provide allegedly confidential information regarding Jacobs to DSS and other third parties, including attorneys and the court-appointed guardian ad litem. (Id. ¶ 19). On or around October 7, 2002, Mauro was interviewed by the guardian ad litem and revealed allegedly confidential information regarding Jacobs. (Id. ¶ 20).
In addition to these repeated disclosures of allegedly confidential information, Jacobs claims that Flamm committed "other ethical breaches" in representing Jacobs, including "using the parties' th[e]n-existing personal relationship to coerce Ms. Jacobs into making legal decisions that benefitted Flamm, but acted to the detriment of Ms. Jacobs." (Id. ¶ 23).
Jacobs alleges that, as a result of defendants' disclosures, she has suffered damages of at least $75,001, exclusive of interest and costs. (Id. ¶¶ 27, 31).
2. The Custody Case
On September 3, 2002, Flamm filed a "Complaint to Establish Paternity" against Jacobs in the Suffolk Division of the Probate and Family Court in Massachusetts. The complaint requested that Flamm be adjudicated father of the child and that he be granted custody. In re Jacobs, No. 02W1441-PA1 at 66 (Prob. Fam. Ct. Dep't Suffolk Div. July 7, 2005). The case culminated in 17 days of trial before Justice Nancy M. Gould between June 2004 and November 2004. Sixteen witnesses, including Jacobs and Flamm, testified at the trial. Id. at 1. On July 7, 2005, the Massachusetts court issued a final judgment, awarding sole custody of the child to Flamm. That court also made several findings of fact that contradict Jacobs's allegations. The Court takes judicial notice of the Massachusetts court's decision and its findings. See Vagaszki v. Consolidation Coal Co., 225 F. 913, 915 (2d Cir. 1915) (holding that federal courts can take judicial notice of the judicial opinions of any state).
The Massachusetts court found, by a "fair preponderance of the evidence," that Flamm and Jacobs first met when she contacted him in January 2001 to discuss the possibility of his taking her case against St. Vincent's Medical Center. Id. at 97, 66. The court found that Flamm did not take Jacobs's case due to evidence of "fraud, incompetence, and staff complaints about [Jacobs]," and that an attorney-client relationship was never created between Flamm and Jacobs. Id. at 66. According to the court, "[Flamm] did not have an attorney-client relationship with [Jacobs]; therefore, he did not breach any such relationship when he provided information to the Guardian ad Litem or the Court."Id. at 90.
The court made a specific finding that "[Jacobs] was not credible on the stand in a number of situation[s], including . . . the alleged breach of confidentiality and attorney-client privilege by [Flamm]." Id. The court found Flamm's testimony to be credible. Id.
Finally, the Court found that Jacobs was "represented by competent counsel for all substantive matters relating to the [custody] case." Id. at 88.
B. Procedural History
Plaintiff filed this action on September 27, 2004, more than two years after Flamm had filed the custody case. In the complaint, plaintiff asserts claims for legal malpractice and breach of fiduciary duty against defendants. On February 28, 2005, defendants moved to dismiss the complaint. On March 8, 2004, plaintiff filed opposition papers. On March 25, 2005, defendants filed papers in further support of the motion to dismiss. On July 12, 2005, defendants submitted letters notifying the Court of the Massachusetts court's decision in the custody case and arguing that plaintiff's claims should be dismissed on the basis of collateral estoppel. On July 13, 2005, plaintiff submitted a response, arguing that collateral estoppel does not apply.
DISCUSSION
A threshold requirement for actionable claims of legal malpractice and breach of fiduciary duty by an attorney is an attorney-client relationship between the plaintiff and the defendant. While a plaintiff's factual allegations in support of such a relationship is typically assumed to be true for the purposes of a motion to dismiss, in this case a Massachusetts court found in the custody case that no such relationship existed between Jacobs and Flamm. The parties agree that if I give that court's findings preclusive effect, I must dismiss this case. (Letter from Arthur J. Grosshandler to Hon. Denny Chin, July 12, 2005; Letter from Daniel L. Abrams to Hon. Denny Chin, July 13, 2005). For reasons discussed below, I do find that preclusion applies. Furthermore, as discussed below, there are grounds for dismissal of the claims independent of the effects of collateral estoppel. Accordingly, defendants' motion to dismiss is granted and plaintiff's claims are dismissed.
A. Motions to Dismiss and Collateral Estoppel 1. Applicable Law
In deciding a motion to dismiss, the court must accept the factual allegations of the complaint as true and draw all reasonable inferences in favor of the plaintiff. Bernheim v. Litt, 79 F.3d 318, 321 (2d Cir. 1996). In cases where some of those factual allegations have been decided otherwise in previous litigation, however, a court may take judicial notice of those proceedings and find that plaintiffs are estopped from re-alleging those facts. See Thompson v. County of Franklin, 15 F.3d 245, 253 (2d Cir. 1994) ("Res judicata challenges may properly be raised via a motion to dismiss for failure to state a claim under Rule 12(b)(6)."); Houbigant, Inc. v. Dev. Specialists, Inc., 229 F. Supp. 2d 208, 220 (S.D.N.Y. 2002) ("Though res judicata is usually [pled] in an answer, Rule 12(b)(6) dismissal on the basis of the doctrine is appropriate when it is clear, from the complaint and from matters of which the court takes judicial notice, that plaintiff's claims are barred as a matter of law."). The preclusive effect of res judicata does not apply just to prior federal court decisions. "The federal courts generally have . . . consistently accorded preclusive effect to issues decided by state courts." Allen v. McCurry, 449 U.S. 90, 95 (1980). In fact,
though the federal courts may look to the common law or to the policies supporting res judicata and collateral estoppel in assessing the preclusive effect of decisions of other federal courts, Congress has specifically required all federal courts to give preclusive effect to state-court judgments whenever the courts of the State from which the judgments emerged would do so: `[J]udicial proceedings [of any court of any State] shall have the same full faith and credit in every court within the United States and its Territories and Possessions as they have by law or usage in the courts of such State. . . .'Id. at 96 (quoting 28 U.S.C. § 1738) (internal paragraphs omitted). Thus, the question of whether to apply collateral estoppel here turns on the question of whether a Massachusetts state court would do so.
The Supreme Judicial Court of Massachusetts has held that defensive collateral estoppel by issue preclusion is allowable if
(1) there was a final judgment on the merits in the prior adjudication; (2) the party against whom estoppel is asserted was a party (or in privity with a party) to the prior adjudication; and (3) the issue in the prior adjudication is identical to the issue in the current adjudication. . . . Additionally, the issue decided in the prior adjudication must have been essential to the earlier judgment.Comm'r of Dep't of Employment Training v. Dugan, 428 Mass. 138, 142 (1998). "Essential" issues may include
findings not strictly essential to the final judgment in the prior action . . . if it is clear that the issues underlying them were treated as essential to the prior case by the court and the party to be bound. Stated another way, it is necessary that such findings be the product of full litigation and careful decision.Home Owners Fed. Sav. Loan Ass'n v. Northwestern Fire Marine Ins. Co., 354 Mass. 448, 455 (1968).
2. Application
Here, in the custody case, a Massachusetts probate and family court judge found by a "fair preponderance of the evidence" that "[Flamm] did not have an attorney-client relationship with [Jacobs]; therefore, he did not breach any such relationship when he provided information to the Guardian ad Litem or the Court."In re Jacobs, No. 02W1441-PA1 at 97, 90.
Jacobs is precluded from re-litigating these issues because defendants have established the four elements required by Massachusetts law for the application of the doctrine of issue preclusion. First, the final judgment in the custody dispute is clearly a final judgment on the merits for the purposes of collateral estoppel analysis. The Massachusetts probate and family court's findings that Flamm did not take Jacobs's case and did not have an attorney-client relationship with Jacobs were included in its "Findings of Fact, Conclusions of Law, and Rationale on Petition for Care and Protection. . . ." Id. at 1. These findings were issued on July 7, 2005, along with a "Judgment," following 17 days of trial held between June and November 2004. The judgment terminated the parental rights of Jacobs and awarded sole physical and legal custody of the child to Flamm. Id. at 2.
Second, Jacobs, against whom estoppel is asserted, was a party — the defendant — in the custody case.
Third, the issue in the prior adjudication is identical to the issue here. The issue in the custody case was whether there was ever an attorney-client relationship between Flamm and Jacobs. The court found that there was no such relationship.
Fourth, the issue of whether there was an attorney-client relationship between Flamm and Jacobs was "essential to the earlier judgment." While not strictly essential to the determination of custodial and parental rights, the issue of whether there was an attorney-client relationship and therefore a breach of that relationship was clearly "treated as essential to the prior case by the court and the party to be bound." Home Owners Fed. Sav. Loan Ass'n, 354 Mass. at 455. The Massachusetts probate and family court issued a number of fact findings along with its judgment, all of which were presumably material to that court's decision. The finding that there was no attorney-client relationship between Flamm and Jacobs was important, however, for specific and apparent reasons. The court saw Jacobs's allegations as an example of her lack of credibility: "[Jacobs] was not credible on the stand in a number of situation[s], including . . . the alleged breach of confidentiality and attorney-client privilege by [Flamm]." In re Jacobs, No. 02W1441-PA1 at 90. This and other examples of Jacobs's dishonesty directly impacted the court's determination that she was an unfit parent. Id. at 91. Moreover, the genesis of the relationship between Jacobs and Flamm was certainly important background information, and clearly Jacobs had alleged in the Massachusetts proceedings that Flamm had been her lawyer. The court rejected the allegation.
These findings were also essential to the case because in effect this was the court's final answer to Jacobs's motions to prevent the DSS and the court from using allegedly privileged information from Flamm. Some of these motions were never decided, but the court, in admitting allegedly privileged information and permitting Flamm to testify, effectively denied them. According to Jacobs's own complaint, the information provided by Flamm directly resulted in plaintiff losing custody of her son, so the issue of whether to admit such information was clearly essential to the outcome of the custody case. The fact finding in the July 2005 opinion was simply a memorialization of the court's earlier decision on the issue.
On August 23, 2002, Jacobs filed an emergency motion to removed all privileged and confidential records obtained without her consent from the DSS's files; on August 28, the motion was denied for lack of ripeness. In re Jacobs, No. 02W1441-PA1 at 3.
On June 24, 2004, Jacobs filed a consolidated motion seeking protective orders to prevent Flamm and the DSS from: testifying regarding Jacobs and submitting any exhibits regarding Jacobs; and, in the alternative, to prevent Flamm, the DSS, and the child from submitting any evidence from plaintiff's legal files. Id. at 27-28.
Both sides were represented by counsel in the custody case and both sides had a full and fair opportunity to be heard; indeed, there was a 17-day trial. The Massachusetts judge, who had the opportunity to hear the testimony and evaluate the witnesses, made careful findings of fact. Jacobs argues that she had inadequate counsel on this issue, but the court made a specific finding that she was "represented by competent counsel for all substantive matters relating to the case." Id. at 88. I have no reason to doubt that finding. Although the Massachusetts court's findings are subject to appeal, for now they have preclusive effect. See O'Brien v. Hanover Ins. Co., 427 Mass. 194, 201 (1998) (holding that a trial court judgment is final and has preclusive effect even if it is on appeal).
Jacobs concedes that if I accord this finding collateral estoppel effect, then I should dismiss this case. (Letter from Daniel L. Abrams to Hon. Denny Chin, July 13, 2005). I do find that the Massachusetts probate and family court's decision estops Jacobs from alleging that she ever had an attorney-client relationship with defendants. As both of Jacob's claims require an attorney-client relationship to have existed, both claims are dismissed. B. Other Grounds for Dismissal
Jacobs alleged that Eden M. Mauro worked on matters for Jacobs at the direction of Flamm and his offices. She alleged no independent attorney-client relationship with Mauro or anyone else associated with the Firm. Therefore, the finding that there was no attorney-client relationship between Jacobs and Flamm estops her claims against the other defendants as well.
Even if I were to find that collateral estoppel did not apply to the issue of whether there existed an attorney-client relationship between Jacobs and defendants, there are separate grounds for dismissing the legal malpractice claim. It is well established that "under New York law, a claim for legal malpractice has three elements: `(1) the negligence of the attorney; (2) the negligence was the proximate cause of the loss sustained; and (3) proof of actual damages.'" Rondout Landing at the Strand, Inc. v. Hudson Land Dev. Corp., 361 F. Supp. 2d 218, 223 (S.D.N.Y. 2005) (quoting Davis v. Klein, 637 N.Y.S.2d 137, 139 (1st Dep't 1996)) (citation and internal quotation marks omitted). The facts, as alleged by Jacobs, do not establish the elements of an actionable claim for legal malpractice.
As a threshold matter, it is necessary for a plaintiff to establish the existence of an attorney-client relationship at the time of the alleged malpractice. Tabner v. Drake, 780 N.Y.S.2d 85, 88 (3d Dep't 2004) (citing Hansen v. Caffry, 720 N.Y.S.2d 258 (3d Dep't 2001)). In this case, the basis for Jacobs's claims against defendants — Flamm's disclosures of confidential information to the DSS and others and Mauro's disclosures to the guardian ad litem — occurred (even under Jacobs's version of the events) after defendants discontinued their alleged attorney-client relationship with Jacobs. According to her complaint, Flamm refused to do any more legal work for Jacobs when he first learned of her pregnancy and her refusal to have an abortion. The first disclosures did not occur until months later, around the time their son was born.
Moreover, even if defendants were still Jacobs's attorneys at the time of their disclosures, her complaint would still be insufficient on its face to meet the requirements of a legal malpractice claim. To prevail on a legal malpractice claim, "plaintiff [is] required to demonstrate . . . that defendant's representation of her was negligent, and that such negligence was the proximate cause of the loss sustained by plaintiff." Maddux v. Schur, 791 N.Y.S.2d 704, 705 (3d Dep't 2005) (citations omitted). Jacobs alleges that defendants represented her in litigation against her former employers and agreed to serve as special counsel in a separate medical malpractice case. The misconduct she alleges, however, was not related in any way to defendants' performance in those cases, but rather to disclosures they made in relation to a separate proceeding — the custody case. In those custody proceedings, defendants were not Jacobs's attorneys, but rather — in Flamm's case — her adversary and — in Mauro's case — a witness against her. Jacobs's allegations relating to the disclosure of confidential material have no bearing on defendants' performance on the matters on which they allegedly represented her; therefore, these allegations cannot be grounds for a legal malpractice claim.
Jacobs's complaint does include a bare allegation that Flamm committed "other ethical breaches" while representing her, including using their then-existing personal relationships to coerce her into making legal decisions that benefitted Flamm, but were detrimental to Jacobs. Jacobs does not, however, make any specific factual allegations concerning defendants' representation of her, nor does she identify any injuries suffered due to these breaches. Clearly, the basis for Jacobs's claim is defendants' disclosure of confidential information after the attorney-client relationship was terminated and in relation to an entirely different matter than those in which defendants allegedly represented her. Adding a non-specific claim of "other ethical breaches" to the complaint cannot make an otherwise baseless legal malpractice claim actionable.
As for the breach of fiduciary duty claim, it is difficult to imagine any such claim that is not based on a purported attorney-client relationship. In any event, Jacobs has not articulated any. Accordingly, the breach of fiduciary duty claim is dismissed on this basis as well.
CONCLUSION
For the foregoing reasons, defendants' motion to dismiss the complaint for failing to state a claim is granted. The Clerk of the Court shall enter judgment dismissing all claims. Jacobs may re-file this action if the findings of the Massachusetts court are overturned on appeal, but if she does so her complaint must be amended to address the deficiencies set forth in Part B of the Discussion section of this decision.SO ORDERED.