Fed. Ins. Co. v. Lester Schwab Katz & Dwyer, LLP
| Decision Date | 15 November 2021 |
| Docket Number | INDEX 151093/2021 |
| Citation | 2021 NY Slip Op 32305 (U) |
| Court | New York Supreme Court |
| Parties | FEDERAL INSURANCE COMPANY, Plaintiff, v. LESTER SCHWAB KATZ & DWYER, LLP, PAUL KASSIRER Defendant. MOTION SEQ. NO. 001 |
DECISION + ORDER ON MOTION
HON SHAWN KELLY:
The following e-filed documents, listed by NYSCEF document number (Motion 001) 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31 32 were read on this motion to/for DISMISS
Defendants Lester Schwab Katz & Dwyer, LLP and Paul L. Kassirer, Esq. ("Kassirer") (collectively, "LSKD") move to dismiss Plaintiff Federal Insurance Company's ("Chubb") Complaint pursuant to CPLR §3211(a)(1) based upon documentary evidence and pursuant to CPLR §3211(a)(7) for failure to state a cause of action.
In opposition, Plaintiffs maintain that they have sufficiently pled factual allegations to support the causes of action for legal malpractice, breach of duty, fraud, and negligent misrepresentation. The allegations arise from Defendants' representation of Alan and Nancy Manocherian (the "Insured") in a personal injury action filed by Richard Willgerodt ("Willgerodt") against the Insured, the City of New York ("City"), and Stribling & Associates, Ltd (herein "the underlying action"). Specifically, Plaintiff contends that Defendants failed to protect the Insured's interests (and Chubb's) by, (i) accepting and proceeding with the representation despite a conflict of interest with a co-defendant; (ii) failing to investigate, put forth, or pursue viable liability arguments and defenses; (iii) failing to protect, pursue, or file appropriate claims, motions, and opposition papers against alternate tortfeasors; and (iv) failing to investigate, put forth, or preserve viable causation and damages defenses.
In the underlying action, LSKD was retained by the primary insurer, non-party Fireman's Fund Insurance Company (FFIC), to represent the Insured. Willgerodt alleged that on December 8, 2012, he tripped and fell on a sidewalk that straddled the neighboring properties of the Insured and Stribling, causing serious injuries including a left ankle fracture which lead to nine surgeries and accompanying neurological issues. Willgerodt claimed over $2.2 million in medical expenses and lost earnings. FFIC's primary policy limits were $1 million and Chubb provided $25 million in excess coverage.
Plaintiff contends that Defendants improperly accepted and proceeded with the representation despite a conflict of interest with co-defendant City. Defendants contend that the conflict of interest was disclosed to the carrier and was further disclosed in the Initial Litigation Report.
Plaintiff argues that LSKD neglected to take basic and critical investigatory steps related to obvious defenses to liability. For instance, Plaintiff alleges that Defendants did not timely investigate the site, did not hire a site expert to inspect the alleged sidewalk defects, waited at least two years to photograph the scene (by which time the alleged defects were gone), made no attempt to locate, interview, depose, or otherwise question any potential witnesses, never investigated evidence of comparative negligence, and never sought discovery of SPRINT/FDNY 911 reports or pertinent phone records.
Additionally, Plaintiff contends that when Stribling and the City moved for summary judgment on all claims against them, including the cross-claims asserted by the Insured against Stribling, Defendants did not oppose those motions. Plaintiff also takes issue with Defendants' alleged failure to investigate the responsibilities of Insured's then-tenant and failure to support the expert witnesses with medical records.
Plaintiff argues that trial counsel, Ahmuty, Demers & McManus ("Ahmuty"), took over a mere two months before trial and did not have the time to correct the deficiencies in the case that were caused by LSKD, and therefore the Insured were forced to settle the case for $4 million -of which Chubb paid $3 million.
In opposition, LSKD contends that Chubb, evidently aware of the substantial exposure of the underlying premises liability action from the outset, retained Ahmuty as monitoring counsel. LSKD further maintains that Ahmuty was copied on all reports and communications from LSKD to FFIC and Chubb relating to liability and damages in the underlying case. In view of the liability prospects and the substantial damages presented, LSKD alleges that FFIC attempted for months to offer its policy and tender the defense to the excess carrier, Chubb.
The parties attended a mediation at JAMS on December 12, 2014. Although the mediator recommended a settlement of $2.5 million, LSKD contends that Chubb refused to provide authority, and urged FFIC not to offer the $1 million primary policy. The case did not settle, and following the mediation, Willgerodt's counsel forwarded a "bad faith" letter to FFIC, noting that FFIC only offered $250, 000, thereby precluding Willgerodt from negotiating with Chubb as the excess carrier. Ahmuty was present for key events in the litigation, including Willgerodt's continued deposition on March 21, 2017 and two settlement conferences. Upon Chubb's request, LSKD contends that it provided an electronic copy of its litigation file to Ahmuty on June 2, 2017. On June 27, 2017, Ahmuty appeared on behalf of Chubb for a pre-trial settlement conference. LSKD maintains that it attended with the understanding that LSKD would offer FFIC's primary policy limit of $1 million, and Ahmuty would take over negotiations on behalf of Chubb. However, Chubb failed to offer any money at the conference and the case did not settle.
In July 2017, Chubb accepted FFIC's $1 million policy tender and directed that Ahmuty, be formally substituted as defense counsel in place of LSKD. On September 25, 2017, Chubb and Ahmuty settled the case for $4, 000, 000 in lieu of proceeding to trial.
On a CPLR §3211(a)(7) motion to dismiss for failure to state a cause of action, the complaint must be construed in the light most favorable to the plaintiff and all factual allegations must be accepted as true" (Alden Global Value Recovery Master Fund, L.P. v KeyBank National Association, 159 A.D.3d 618, 621-22 [2018]). In addition, "on such a motion, the complaint is to be construed liberally and all reasonable inferences must be drawn in favor of the plaintiff (Id. at 622). However, vague and conclusory allegations cannot survive a motion to dismiss (see, Kaplan v Conway and Conway, 173 A.D.3d 452, 452-53 [2019]; D. Penguin Brothers Ltd. v City National Bank, 270 N.Y.S.3d 192, 192 [ 2018] []; R&R Capital LLC, et al, v Linda Merritt, 68 A.D.3d 436, 437 [2010]).
The criterion for establishing whether a Complaint should be dismissed pursuant to §3211(a)(7) is "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" (Guggenheimer v Ginzburg, 43 N.Y.2d 268, 275 [1977]; see also Foley v D'Agostino, 21 A.D.2d 60, 64-65 [1964]). Whether the pleader will ultimately be able to establish the allegations in the pleading is irrelevant to the determination of a motion to dismiss pursuant to CPLR §3211(a)(7) ().
Dismissal under CPLR §3211(a)(1) is warranted where the documentary evidence submitted "resolves all factual issues as a matter of law, and conclusively disposes of the plaintiffs claim." (Fortis Financial Services, LLC v Fimat Futures USA, 290 A.D.2d 383, 383 [1st Dept 2002]; see Amsterdam Hospitality Group, LLC v Marshall-Alan Assoc, Inc., 120 A.D.3d 431 [1st Dept. 2014]).
It is settled that an action for legal malpractice requires proof of three elements: the negligence of the attorney; that the negligence was the proximate cause of the loss sustained; and actual damages (Between The Bread Realty Corp. v Salans Hertzfeld Heilbronn Christy & Viener, 290 A.D.2d 380 [2002], Iv denied 98 N.Y.2d 603; Prudential Ins Co. of Am. v Dewey, Ballantine, Bushby, Palmer & Wood, 170 A.D.2d 108, 114 [1991], affd 80 N.Y.2d 377). "To prove malpractice, a client must establish, among other things, that the attorney failed to exercise that degree of care, skill and diligence commonly possessed by a member of the legal profession" (Schafrann v N.V. Famka, Inc., 14 A.D.3d 363, 364 [1st Dept 2005]; TNJ Holdings, Inc. v Rubenstein, No. 654120/2020, 2021 WL 4148809, at *3 [2021]).
In order to establish proximate cause, plaintiff must demonstrate that "but for" the attorney's negligence, plaintiff would have prevailed in the matter in question or would not have sustained any ascertainable damages (Senise v Mackasek, 227 A.D.2d 184, 185 [1996]; Stroock & Stroock & Lavan v Beltramini, 157 A.D.2d 590, 591 [1990]). The failure to establish proximate cause mandates the dismissal of a legal malpractice action, regardless of the negligence of the attorney (Tanel v Kreitzer & Vogelman, 293 A.D.2d 420, 421 [2002]; Pellegrino v File, 291 A.D.2d 60, 63, [2002], Iv denied 98 N.Y.2d 606; Reibman v Senie, 302 A.D.2d 290, 290-91, 756 N.Y.S.2d 164 [2003]).
While proximate cause is generally a question for the factfinder (see e.g. Hain v Jamison, 28 N.Y.3d 524 529, 46 N.Y.S.3d 502 [2016]), it can, in appropriate circumstances,...
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