Piccarreto v. Mura

• Decision Date: 03 February 2017
• Docket Number: No. 12/11476.,12/11476.
• Citation: 54 N.Y.S.3d 612 (Table)
• Parties: Carla L. PICCARRETO, Plaintiff, v. David J. MURA and Ann Marie Mura, Defendants.
• Court: New York Supreme Court

54 N.Y.S.3d 612 (Table)

Carla L. PICCARRETO, Plaintiff,

v.David J. MURA and Ann Marie Mura, Defendants.

No. 12/11476.

Supreme Court, Monroe County, New York.

Feb. 3, 2017.

Maureen A. Pineau, Esq., Rochester, for Plaintiff.

Philip B. Abramowitz, Esq., Williamsville, for Defendant David J. Mura.

Frank A. Aloi, Esq. Robert J. Lunn, Esq. Rochester, for Defendant Ann Marie Mura.

RICHARD A. DOLLINGER, J.

In this case, an often-litigated action reaches its final terminal. But, before the battered parties arrive at their final destination, the court must resolve whether the results a collateral legal malpractice action in which the plaintiff was paid a settlement can offset a former spouse's liability for a fraudulent conveyance of real property.

The facts in this case have been often stated. The court has written on this controversy on several occasions. In short hand, a former wife, mother of two, was awarded a judgment for approximately $500,000 in child support against her former husband. When she served notice of legal proceedings to collect this judgment, her former husband became aware of her intention and transferred his marital residence, which he alone owned, to himself and his then current wife as tenants by the entirety. After the transaction was complete but before the judgment was entered, the husband and his second wife sold the property and the second wife received half of the net proceeds. When the former wife found out about the transfer, she commenced a fraudulent conveyance action against the second wife, seeking to recoup the second wife's share of the sale proceeds. The first wife claimed that the transfer from her former husband to the second wife was fraudulent because of the impending judgment against her former husband. The claim for fraudulent conveyance was ultimately granted by this court and the court further ordered that the second wife's share of the proceeds be returned to the former wife. The Court issued a judgment for an amount in excess of $100,000, representing the second wife's share of the proceeds from the sale.

Meanwhile, further developments occurred in the legal landscape for the former spouse. When she was unable to enforce the judgment against her former husband's entire property, she commenced a malpractice action against her—then attorney. She claimed that the attorney had failed to exercise reasonable care in securing the judgment for the child support and preventing her former husband from transferring the half of the property—and the proceeds from the sale—to his second wife. After this malpractice action was commenced, the lawyer eventually settled the case and paid the former wife $25,000 as a settlement.

When the second wife learned of the former wife's settlement with her attorney, she moved for a declaratory judgment from this court to have the $25,000 malpractice settlement offset the amount of the former wife's recovery on the fraudulent conveyance section. In sum, the second wife seeks to reduce the amount of the fraudulent conveyance judgment, granted in favor of the first wife against the second wife, by the $25,000 paid to the first wife from her attorney.

First, this Court cannot find any common law right to offset in these circumstances. The second wife cannot point to such a rule in New York and this Court, despite ample research, cannot find such a rule either. There is a common-law collateral source rule but it runs contrary to the entire theory of the second wife's claim. The common-law collateral source rule held that "a personal injury award may not be reduced or offset by the amount of compensation that the injured person may receive from a source other than the tortfeasor." Oden v. Chemung County Indus. Dev. Agency, 87 N.Y.2d 81, 85, (1995) ; 515 Ave. I Corp. v. 515 Ave. I Tenants Corp., 29 Misc.3d 1228(A)(Sup. Ct. Kings Cty 2010).

Searching for a legal justification to implement an offset under these facts, the second wife turns to a statute. To deal with the notion that no one should benefit twice from certain types of lawsuits, the Legislature enacted CPLR 4545(c) which contains an exception to the common law ban on collateral source offsets. However, in examining the question before this Court, it is readily apparent that the statute, by its exact terms, it does not apply to fraud actions, such as the underlying action in this matter. The statute only applies to "personal injury, injury to property or wrongful death, where the plaintiff seeks to recover for the cost of medical care, dental care, custodial care or rehabilitation services, loss of earnings or other economic loss." CPLR 4545(c). The statute also provides that any offset will only apply to "past or future costs or expenses." Under these circumstances, CPLR 4545(c) does not expressly support offsetting the fraudulent conveyance against the second wife by the amount of the malpractice settlement paid by the attorneys to the first wife.

To avoid what she argues is a harsh result, the second wife in this instance argues that the Court of Appeals in Oden v. Chemung County Industrial Dev. Agency gave a broad reading to the CPLR provision, arguing that the following specific comment in that decision suggests the principles in the statute extend to this case:

The statute's dual reference to "any" cost or expense and "any" collateral source was evidently a legislative effort to establish that, apart from the express statutory reservations, there are to be no limitations on the types of economic losses or the types of collateral benefits that the offset is intended to reach (cf., CPLR 4545[b] ).

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