Hattem v. Smith

• Decision Date: 13 April 2017
• Citation: 149 A.D.3d 1339,52 N.Y.S.3d 172
• Parties: Peter HATTEM, Appellant, v. Robert J. SMITH, et al., Respondents.
• Court: New York Supreme Court — Appellate Division

149 A.D.3d 1339

52 N.Y.S.3d 172

Peter HATTEM, Appellant,

v.Robert J. SMITH, et al., Respondents.

Supreme Court, Appellate Division, Third Department, New York.

April 13, 2017.

Gozigian, Washburn & Clinton, Cooperstown (Edward Gozigian of counsel), for appellant.

Smith, Sovik, Kendrick & Sugnet, PC, Syracuse (Brady J. O'Malley of counsel), for respondents.

Before: PETERS, P.J., LYNCH, ROSE, DEVINE and MULVEY, JJ.

DEVINE, J.

Appeals (1) from an order of the Supreme Court (Dowd, J.), entered November 2, 2015 in Otsego County, which granted defendants' motion for an order directing that judgment be entered for a certain amount, (2) from a judgment of said court, entered November 6, 2015 in Otsego County, following a verdict in favor of plaintiff, and (3) from an order of said court, entered January 8, 2016 in Otsego County, which denied plaintiff's motion to set aside the verdict.

Plaintiff was the sole shareholder of JMF Associates of Oneonta, Inc., a corporation engaged in construction and excavation work. He retained defendant Robert J. Smith, an attorney with defendant Coughlin & Gerhart, LLP, to represent him in the sale of those shares to O'Connor and Shew Construction, Inc. (hereinafter OSC). OSC agreed to pay $450,000 for the shares via a $25,000 down payment and a promissory note for the remainder. The note was to be secured by a lien on all of JMF's assets. The transaction was consummated in September 2004 at a branch of NBT Bank where, unbeknownst to Smith, OSC obtained a loan and line of credit from NBT that were secured by the assets of JMF. NBT perfected its security interest by filing a UCC–1 financing statement (hereinafter UCC–1) shortly thereafter. Smith then received the executed documents and, while he prepared a UCC–1 on plaintiff's behalf, he failed to file it. Smith further failed to prepare or file the liens necessary to perfect the security interest in motor vehicles owned by JMF. The failure to perfect proved costly to plaintiff after the Internal Revenue Service filed federal tax liens against JMF and OSC defaulted in its obligations to plaintiff and NBT.

Plaintiff commenced this legal malpractice action in 2007 and, following a jury trial, defendants were found liable and directed to pay damages. This Court upheld the verdict as to liability but, pointing to questions regarding plaintiff's comparative fault that had not been submitted to the jury, remitted for a new trial on the issue of damages (111 A.D.3d 1107, 1109–1110, 977 N.Y.S.2d 411 [2013] ). The subsequent jury trial resulted in a verdict finding that plaintiff had sustained $318,000 in damages. The jury found that 35% of the damages had flowed from plaintiff's negligence, however, and reduced the award by $90,000 due to his unreasonable failure to mitigate them after the fact. Plaintiff appeals from the judgment entered thereon, as well as orders by Supreme Court that denied his motion to set aside the verdict and granted defendants' motion to direct entry of judgment.

We affirm. Plaintiff asserts that the verdict should have been set aside with regard to the finding of comparative fault and the reduction in damages for his failure to mitigate.¹ In reviewing a verdict, we "may examine the facts to determine whether the weight of the evidence comports with the verdict, or [we] may determine [whether] the evidence presented was insufficient as a matter of law" (Killon v. Parrotta, 28 N.Y.3d 101, 107, 42 N.Y.S.3d 70, 65 N.E.3d 41 [2016] ). A verdict is against the weight of the evidence "where ‘the evidence so preponderate[d] in favor of the [moving party] that [the verdict] could not have been reached on any fair interpretation of the evidence’ " (Johnstone v. First Class Mgt. of N.Y., LLC, 138 A.D.3d 1222, 1223, 30 N.Y.S.3d 358 [2016], quoting Grassi v. Ulrich, 87 N.Y.2d 954, 956, 641 N.Y.S.2d 588, 664 N.E.2d 499 [1996] [internal quotation marks and citations omitted]; see Killon v. Parrotta, 28 N.Y.3d at 107, 42 N.Y.S.3d 70, 65 N.E.3d 41 ). In contrast, the evidence is legally insufficient to support a verdict "[w]here ‘there is simply no valid line of reasoning and permissible inferences which could possibly lead rational [people] to the conclusion reached by the jury on the basis of the evidence presented at trial’ " (Longtin v. Miller, 133 A.D.3d 939, 940, 19 N.Y.S.3d 137 [2015], quoting Cohen v. Hallmark Cards, 45 N.Y.2d 493, 499, 410 N.Y.S.2d 282, 382 N.E.2d 1145 [1978] ; see Killon v. Parrotta, 28 N.Y.3d at 108, 42 N.Y.S.3d 70, 65 N.E.3d 41 ).

Here, Smith sent the sale documents to counsel for OSC in the expectation that they would be executed by OSC's principals and returned to him for plaintiff to sign. Plaintiff was aware of the need for a UCC–1 and was counting on Smith to file one in order to perfect his security interest in JMF's equipment. Plaintiff and OSC's principals nevertheless traveled to an NBT branch at plaintiff's suggestion and executed the documents together, at which time OSC's principals borrowed the funds for the down payment from NBT and opened a line of credit that was secured by the assets of JMF. Plaintiff made no effort to consult with Smith as to the import of this state of affairs, and Smith, who remained ignorant of it, did not obtain the executed sale documents until after NBT had filed a UCC–1. Plaintiff, in other words, created a situation where NBT would have had a superior security interest on JMF's equipment even if Smith had filed a UCC–1 in a timely manner (see U.C.C. 9–317, 9–324 ). The jury was by no means irrational in finding from the foregoing that plaintiff's actions were negligent and contributed to his losses. Moreover, deferring to the jury's interpretation of the trial evidence and noting that a "determination of comparative negligence is wholly within [its] province," we cannot say that the apportionment of 35% fault to plaintiff...