Buckskin Realty Inc. v. Greenberg (In re Buckskin Realty Inc.), Case No. 1-13-40083-nhl
| Decision Date | 11 January 2018 |
| Docket Number | Adv. Pro. No. 1-15-01203-nhl,Case No. 1-13-40083-nhl |
| Parties | In re: Buckskin Realty Inc., Debtor. Buckskin Realty Inc., Plaintiff, v. Mark D. Greenberg, an individual and Greenberg and Greenberg, a partnership, Defendants. |
| Court | U.S. Bankruptcy Court — Eastern District of New York |
Appearances:
Frederick Cains, Esq.
430 East 86th Street
New York, New York 10028
Izabell Lemkhen
Furman Kornfeld & Brennan LLP
61 Broadway
26th Floor
New York, NY 10006
Rey Olsen
41-26 27th Street
Long Island City, New York 11101
Before the Court is the Motion for Reconsideration (the "Motion") filed by plaintiff Buckskin Realty, Inc. ("Buckskin"). Mot., ECF No. 53-1. The Motion seeks an order, pursuant to Federal Rule of Civil Procedure 59(e), altering the order (the "Order"), ECF No. 52, and underlying decision (the "Decision"), ECF No. 50, that dismissed Buckskin's complaint (the "Complaint") in this adversary pursuant to Federal Rule of Civil Procedure 12(b)(6). The Motion asserts that the Decision misconstrued or otherwise overlooked certain legal arguments that Buckskin alleges defendants Greenberg & Greenberg and Mark D. Greenberg (together, "Greenberg") should have raised before the State Court,1 and, as a result, erroneously found that Buckskin failed to state a claim for legal malpractice.
The Court agrees with Buckskin that those arguments were not, and should have been, considered. Nevertheless, upon full consideration and analysis, they do not rescue Buckskin's malpractice claim, and thus the Court declines to disturb the Decision.
This Court has jurisdiction of this proceeding pursuant to 28 U.S.C. § 1334(b), and the Eastern District of New York standing order of reference dated August 28, 1986, as amended by order dated December 5, 2012. This decision constitutes the Court's findings of fact and conclusions of law to the extent required by Federal Rule of Bankruptcy Procedure 7052.
A familiarity with the underlying facts alleged in Buckskin's Complaint is assumed.2 On those facts, the Complaint pleads five causes of action against Greenberg, four of which allege that Greenberg committed legal malpractice by failing to raise certain legal arguments in theMotion to Vacate that, if raised, would have necessarily led to vacatur of the foreclosure judgment. See Compl. 5-10, ECF No. 1. Relevant here is the first: that Greenberg committed malpractice by failing to raise that the State Court lacked subject matter jurisdiction because the named plaintiff in the foreclosure action, "the Board of Directors of Windmont Homeowners' Association" (the "Board"), is a non-existent entity, and not the real party in interest, the Windmont Homeowners' Association ("Windmont"). Id. at 5-6.
Greenberg filed a motion to dismiss Buckskin's Complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure ("Dismissal Motion"), ECF No. 16, which this Court granted in full. The Decision dismissed Buckskin's four malpractice causes of action on the ground that a failure to raise the particular arguments in question was not negligent, but rather a selection of "one among several reasonable courses of action," and therefore could not constitute a basis for malpractice. Decision 7, ECF No. 50 (citing Zarin v. Reid & Priest, 585 N.Y.S.2d 379, 381 (App. Div. 1st Dep't 1992)). With respect to the first cause of action, the Court noted that arguing that the Board was a non-existent entity might have been a less desirable course of action, as it "would have required Buckskin to show that it did not waive its right to seek dismissal pursuant to [N.Y. C.P.L.R.] 3211(a)(3)." Decision 8, ECF No. 50. The Court also found that a failure to raise the argument could not have been the proximate cause of Buckskin's failure to vacate the foreclosure judgment because it ignored the fact that Buckskin would still have to "show a reasonable excuse for the default" under N.Y. C.P.L.R. ("CPLR") 5015(a)(1). Id. at 12.
On April 25, 2017, exactly fourteen days after the entry of the Order granting the Dismissal Motion, Buckskin filed the instant Motion. The Court held a hearing (the "Hearing") on the Motion, see ECF No. 61, after Greenberg had an opportunity to file opposition, ECF No.54, and Buckskin an opportunity to reply, ECF No. 56. After the Hearing, Buckskin was permitted to file supplemental papers directing the Court to where in the record it had raised certain arguments addressed in the Motion. See ECF Nos. 58, 59, 60.
Rule 59 permits a party to make a motion "to alter or amend a judgment," Fed. R. Civ. P. 59(e),3 and is properly invoked only where: (1) there is an intervening change of controlling law; (2) new evidence becomes available; or (3) there is a need to correct a clear error or prevent manifest injustice, In re Hassan, 527 B.R. 97, 100 (Bankr. E.D.N.Y. 2015) (quoting Virgin Atl. Airways, Ltd. v. Nat'l Mediation Bd., 956 F.2d 1245, 1255 (2d Cir. 1992), cert. denied, 506 U.S. 820 (1992)); In re CPJFK, LLC, 496 B.R. 65, 67 (Bankr. E.D.N.Y. 2011) (quoting United States v. Sessa, Nos. 92-CR-351(ARR), 97-CV-2079(ARR), 2011 WL 867175, at *1 (E.D.N.Y. Mar. 8, 2011)).
The standard under Rule 59 is strict; under the "clear error" basis, raised here, reconsideration will generally be denied unless a party can show that a court "overlooked controlling decisions or factual matters that were put before [it] on the underlying motion." Lichtenbrg v. Besicorp Gr. Inc., 28 F. App'x 73, 75 (2d Cir. 2002) (quoting Fulani v. Brady, 149 F.R.D. 501, 503 (S.D.N.Y. 1993), aff'd sub nom. Fulani v. Bentsen, 35 F.3d 49 (2d Cir. 1994));Shrader v. CSX Transp., Inc., 70 F.3d 255, 257 (2d Cir. 1995). "In order to have been 'overlooked,' the decisions or data in question must have been 'put before [the court] on the underlying motion . . . and which, had they been considered, might have reasonably altered the result before the court.'" Henderson v. City of New York, No. 05-CV-2588 (FB)(CLP), 2011 WL 5513228, at *1 (E.D.N.Y. Nov. 10, 2011) (quoting Range Rd. Music, Inc. v. Music Sales Corp., 90 F. Supp. 2d 390, 392 (S.D.N.Y. 2000)). This standard prohibits use of the Rule as a means to "repeat[] old arguments previously rejected," or to "mak[e] new arguments that could have been previously advanced." CPJFK, 496 B.R. at 67 (quoting Associated Press v. U.S. Dep't of Def., 395 F. Supp. 2d 17, 19 (S.D.N.Y. 2005)); see also Gem Fin. Serv., Inc. v. City of New York, No. 13-CV-1686(MKB), 2015 WL 1475853, at *2 (E.D.N.Y. Mar. 31, 2015).
Buckskin argues that the Court overlooked the actual factual and legal basis for its first cause of action by construing that basis as an argument about legal capacity that needed to be raised under CPLR 3211(a)(3) and 5015(a)(1). According to Buckskin, the claim it believes Greenberg should have raised was not that the Board lacked capacity to sue, but instead that, because the Board does not exist, and is not among the types of entities that may maintain a cause of action in New York, the State Court lacked subject matter jurisdiction over the foreclosure action. See Mot. 3-10, ECF No. 53-1. Unlike the capacity argument, this subject matter jurisdiction argument could have been raised under CPLR 5015(a)(4) and 3211(a)(7), and therefore, according to Buckskin, would "not require a reasonable excuse for defaulting or a meritorious defense as a predicate to moving for vacatur of a default judgment."4 Id. at 3.
Buckskin also asserts that the same is true of its argument based on CPLR 3215(b), and that this is another legal basis for vacating the foreclosure that the Court overlooked. See id. at 12; Supp. Letter, ECF No. 58. This provision prohibits a default judgment for an amount that exceeds the amount demanded in the complaint and, according to Buckskin, is a jurisdictional impediment that may be raised under CPLR 5015(a)(4). Mot. 12, ECF No. 53-1. Buckskin believes that Greenberg committed malpractice in not raising this dispositive argument after seeing that the foreclosure judgment amount exceeded the demand in the complaint by almost $40,000. Id.
Buckskin's argument regarding the Board's existence would have been more appropriately construed as a challenge to the State Court's subject matter jurisdiction under CPLR 5015(a)(4). Though neither the Complaint nor Buckskin's opposition to the Dismissal Motion mention this provision, that Buckskin was relying on 5015(a)(4) was made apparent in its supplemental brief (the "Supplemental Brief").5 See Supp. Brief, ECF No. 37. Similarly, Buckskin's argument grounded in CPLR 3215(b) was also raised for the first time in itsSupplemental Brief.6 See Supp. Brief 8-9, ECF No. 37. As each of these was put before the Court but not substantively considered, they should be reviewed here to determine if they were "overlooked" in the relevant sense—that is, if they would have "reasonably altered the result before the [C]ourt." Henderson, 2011 WL 5513228, at *1.
As stated in the Decision, a prima facie cause of action for legal malpractice requires allegations showing "that the attorney failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession, and that the attorney's breach of this duty proximately caused the plaintiff to sustain actual or ascertainable damages." Decision 6, ECF No. 50 (quoting Rudolf v. Shayne, Dachs, Stanisci, Corker & Sauer, N.E.2d 385, 387 (N.Y. 2007)). Allegations amounting to an attorney's having chosen "one among several reasonable courses of action does not constitute malpractice." Id. at 7 (quoting Zarin, 585 N.Y.S.2d at 381). In other words, the outcome reached in the Decision would change only if itwere...
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