First Mercury Ins. Co. v. D'Amato & Lynch, LLP

• Decision Date: 11 September 2020
• Docket Number: Index No. 159185/2019
• Citation: 2020 NY Slip Op 33020 (U)
• Court: New York Supreme Court
• Parties: FIRST MERCURY INSURANCE COMPANY, acting through its agent, RIVERSTONE CLAIMS MANAGEMENT, LLC, Plaintiff v. D'AMATO & LYNCH, LLP, LUKE LYNCH JR., ESQ., ARTURO BOUTIN, ESQ., MICHAEL HAIG, DAVID BOYAR, ROBERT LANG, John Does 1-20, and Jane Does 1-10, Defendants

2020 NY Slip Op 33020(U)

FIRST MERCURY INSURANCE COMPANY, acting through its agent,RIVERSTONE CLAIMS MANAGEMENT, LLC, Plaintiff v. D'AMATO & LYNCH, LLP, LUKE LYNCH JR.,ESQ., ARTURO BOUTIN, ESQ., MICHAEL HAIG, DAVID BOYAR,ROBERT LANG, John Does 1-20, and Jane Does 1-10, Defendants

Index No. 159185/2019

SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK: PART 46

RECEIVED: September 14, 2020

September 11, 2020

NYSCEF DOC. NO. 169

DECISION AND ORDER

LUCY BILLINGS, J.S.C.:

Defendant Boyar moves to dismiss the complaint against him pursuant to C.P.L.R. §§ 3016(b)and3211(a)(1) and (7).

I.THE COMPLAINT

The complaint alleges that defendant D'Amato & Lynch, LLP, a law firm, entered an Engagement Agreement with plaintiff's agent Riverstone Claims Management, LLC, to represent plaintiff's insurance policyholders in defending litigation against them.In one action that D'Amato & Lynch handled, Cox v. Linco Restoration Corp., defendant Boutin, a partner of D'Amato & Lynch, advised plaintiff that the action was settled for $1,000,000 to be paid by plaintiff.On October 15, 2018, plaintiff issued a check for that amount to "D'Amato & Lynch LLP Trust Account," Aff. of David A. Boyar Ex.A (V. Compl.)¶ 20, to be held pending disbursement to the settling plaintiff, but on October 17, 2018, D'Amato & Lynch deposited the check in the firm's operating account, where the firm used the funds for purposes other than to pay the plaintiff in settlement of the Cox action.Plaintiff in this action claims defendants' professional negligence, breach of fiduciary duty, conversion, unjust enrichment, fraudulent conveyance, violation of New York Judiciary Law § 487, and violation of the Rules of Professional Conduct.

II.BOYAR'S STATUS

The complaint's only allegation that mentions Boyar is that he"was a partner or limited partner of D & L."Id.¶ 7.Upon his motion to dismiss pursuant to C.P.L.R. § 3211(a)(1) or (7), the court may not consider the facts alleged by his affidavits or his witness defendant Lynch's affidavit, Serao v. Bench-Serao, 149 A.D.3d 645, 646(1st Dep't2017);Calpo-Rivera v. Siroka, 144 A.D.3d 568, 568(1st Dep't2016);Asmar v. 20th & Seventh Assoc., LLC, 125 A.D.3d 563, 564(1st Dep't2015);City of New York v. VJHC Dev. Corp., 125 A.D.3d 425, 426(1st Dep't2015), but under § 3211(a)(1)the court may consider any admissible documents that these affidavits authenticate.Nomura Home Equity Loan, Inc., Series 2006-FM2 v. Nomura Credit & Capital, Inc., 30 N.Y.3d 572, 601(2017);Goshen v. Mutual Life Ins. Co. of N.Y., 98 N.Y.2d 314, 326(2002);Calpo-Rivera v. Siroka, 144 A.D.3d at 568.Lynch authenticates a Memorandum of Partnership Agreement as thepartnership agreement in effect on the date of his affidavit, February 14, 2018.This agreement designates George D'Amato and defendant Lynch as the only equity and general partners of D'Amato & Lynch and confers all authority over the firm's accounts with the general partners only.Although Boyar presents the same document, curiously he never authenticates it as in effect through his tenure at the firm ending in May 2019.Nor does the decision in Barrison v. D'Amato & Lynch, LLP, IndexNo. 653530/2011, 2019 WL 1502924(Sup. Ct. N.Y. Co.Apr. 2, 2019), that Boyar also presents determine that the agreement remained in effect after February 14, 2018, or determine who were the general or limited partners or their respective responsibilities and authority after that date.

Nevertheless, the complaint itself alleges that, at the time of the transactions complained of, D'Amato & Lynch was a limited liability partnership; that Lynch was its sole general partner; that, as the general partner, he was responsible for the control and handling of trust account funds; and that he was the sole signatory on the trust account.New York Partnership Law § 26(b) provides that:

Except as provided by subdivisions (c) and (d) of this section, no partner of a partnership which is a registered limited liability partnership is liable or accountable, directly or indirectly . . . for any debts, obligations or liabilities of, or chargeable to, the registered limited liability partnership or each other, whether arising in tort, contract or otherwise, which are incurred, created or assumed by such partnership while such partnership is aregistered limited liability partnership, solely by reason of being such a partner or acting (or omitting to act) in such capacity or rendering professional services or otherwise participating (as an employee, consultant, contractor or otherwise) in the conduct of the other business or activities of the registered limited liability partnership.

Partnership Law § 26(c) and (d) provide that a limited partner is liable only "for any negligent or wrongful act or misconduct committed by him . . . or by any person under his . . . supervision and control,"N.Y. P'ship Law§ 26(c), or "to the extent at least a majority of the partners shall have agreed."N.Y. P'ship Law§ 26(d).SeeEderer v. Gursky, 9 N.Y.3d 514, 523(2007);La Rock & Perez, LLP v. Song Joon Sim, 118 A.D.3d 473, 474(1st Dep't2014).

Therefore, as a partner other than a general partner and thus a limited partner, Boyar was not vicariously liable for the actions or omissions of D'Amato & Lynch, its general partner defendant Lynch, or its other limited partners or employees.Boyar potentially would be liable only if he was personally involved, or the partners had agreed to liability, which plaintiff does not allege.Ederer v. Gursky, 9 N.Y.3d at 523-24;La Rock & Perez, LLP v. Song Joon Sim, 118 A.D.3d at 474;Cooke-Zwiebach v. Oziel, 103 A.D.3d 558, 559(1st Dep't2013).

III.BOYAR'S CONDUCT

The complaint alleges no personal involvement by Boyar and thus gives no notice of the transactions or occurrences plaintiffintends to prove to hold Boyar liable for any wrongful conduct.C.P.L.R. § 3013;Mid-Hudson Val. Fed. Credit Union v. Quartararo & Lois, PLLC, 31 N.Y.3d 1090, 1091(2018);Herrmann v. CohnReznick LLP, 155 A.D.3d 419, 419(1st Dep't2017);Candelario v. Teperman, 15 A.D.3d 204, 205(1st Dep't2005).The complaint alleges that defendant Boutin handled the Cox action; as set forth above, advised plaintiff that the action was settled for $1,000,000 to be paid by plaintiff; requested the funds from plaintiff; and received its check for that amount.The complaint further alleges that "D & L" deposited the check into the firm's operating account, Boyar Aff. Ex. A (V. Compl.)¶ 21; that defendant Haig, the firm's comptroller "made the actual deposit,"id.¶ 26; and that Boutin also "handled the check, negotiated the Check and handled the funds along with Comptroller Haig."Id.¶ 59.Finally, the complaint alleges that Daniel Lynch, defendant Lynch's brother, later admitted that the check had been deposited into the firm's operating account.The complaint does not allege that Boyar participated in any of this conduct or supervised Boutin, Haig, or anyone else at D'Amato & Lynch who participated.

Yet plaintiff's attorney suggests that Boyar handled and was responsible for the Cox action and participated in requesting, handling, and negotiating the $1,000,000 check.The attorney further suggests that, after plaintiff's $1,000,000 check was diverted and commingled into D'Amato & Lynch's operating account,Boyar received compensation, distributions, or other payments from those funds.None of these suggestions, however, finds a sliver of support in the complaint or in any admissible evidence that plaintiff might offer to supplement the complaint.SeeNonnon v. City of New York, 9 N.Y.3d 825, 827(2007);Cron v. Hargro Fabrics, 91 N.Y.2d 362, 366(1998);US Suite LLC v. Barata, Baratta & Aidala LLP, 171 A.D.3d 551, 551(1st Dep't2019);Ray v. Ray, 108 A.D.3d 449, 452(1st Dep't2013).

Plaintiff nonetheless may rely on the documentary evidence that Boyar presents to support his motion.This evidence includes an email from Haig to Riverstone Claims Management's claims analyst Carmen Place, July 25, 2019; an email from Place to Haig, with a copy to Boyar, July 30, 2019; an email later that day from Place forwarding the earlier email to Boyar at a different email address; and a subsequent email that day from Boyar to Daniel Lynch.No one, not even plaintiff's attorney, indicates why Place sent to Boyar a copy of Place's email to Haig inquiring about the settlement funds more than nine months after the original transaction and two months after Boyar left D'Amato & Lynch.His departure from the firm, however, explains why Place needed to forward the copy, first sent to Boyar at the firm, to him at a different email address after Place contacted Boyar via his cellphone.

Plaintiff claims that, once Boyar learned from Place thatthe plaintiff in the Cox action had not received the settlement funds, Boyer, as an attorney, was obligated to report D'Amato & Lynch's violation of Rule of Professional Conduct1.15(a), 22 N.Y.C.R.R. § 1200.0 Rule 1.15(a), to an "authority empowered to investigate or act upon such violation."22 N.Y.C.R.R. § 1200.0Rule 8.3(a).SeeN.Y. P'ship Law§ 3.Rule 1.15 prohibits an attorney from commingling or misappropriating funds belonging to another person or entity and being held by the attorney.22 N.Y.C.R.R. § 1200.0Rule 1.15(a).First, nothing in Place's email demonstrates that D'Amato & Lynch commingled or misappropriated funds belonging to another person or entity.At most, the email indicates that the plaintiff in the Cox action was claiming she had not received her settlement funds.Nor, as demonstrated below, does the complaint claim Boyar's violation of Rule of Professional Conduct 8.3(a).Under the circumstances, as an attorney who was no longer at D'Amato and Lynch, Boyar's email demonstrates that Boyar responded to and assisted plaintiff as fully as possible: he immediately notified Daniel Lynch at the firm of Place's inquiry, advised Daniel Lynch to respond to Place by the next morning,...