R.S.B. Ventures, Inc. v. Berlowitz

• Decision Date: 25 January 2017
• Docket Number: No. 4D15–372,4D15–372
• Citation: 211 So.3d 259
• Parties: R.S.B. VENTURES, INC., a Florida corporation, Nasser Mizrahi, individually, and Dr. Veronica R. Motiram–Mizrahi a/k/a Dr. Veronica R. Motiram, individually, Appellants, v. Jeffrey S. BERLOWITZ, esq., individually, Siegfried, Rivera, Hyman, Lerner, De La Torre, Mars & Sobel, P.A., a Florida professional association, Robert P. Lithman, esq., individually, Robert P. Lithman, P.A., a Florida professional association, Orshan, Lithman, Seiden, Ramos, Hatton, Huesmann & Fajardo, LLP, a Florida limited liability partnership, Ramiro C. Areces, esq., individually, and Ramiro C. Areces, P.A., a Florida professional association, Appellees.
• Court: Florida District Court of Appeals

211 So.3d 259

R.S.B. VENTURES, INC., a Florida corporation, Nasser Mizrahi, individually, and Dr. Veronica R. Motiram–Mizrahi a/k/a Dr. Veronica R. Motiram, individually, Appellants,

v.Jeffrey S. BERLOWITZ, esq., individually, Siegfried, Rivera, Hyman, Lerner, De La Torre, Mars & Sobel, P.A., a Florida professional association, Robert P. Lithman, esq., individually, Robert P. Lithman, P.A., a Florida professional association, Orshan, Lithman, Seiden, Ramos, Hatton, Huesmann & Fajardo, LLP, a Florida limited liability partnership, Ramiro C. Areces, esq., individually, and Ramiro C. Areces, P.A., a Florida professional association, Appellees.

No. 4D15–372

District Court of Appeal of Florida, Fourth District.

January 25, 2017

Anna B. Middleton and Stephen Rakusin of Litigation Lawyers, Fort Lauderdale, for appellants.

Diran V. Seropian and Kenneth S. Pollack of Shendell & Pollock, P.L., Boca Raton, for Appellees Robert P. Lithman and Robert P. Lithman, P.A.

Robert P. Lithman of Robert P. Lithman, P.A., Palmetto Bay, for Appellee Orshan, Lithman, Seiden, Ramos, Hatton, Huesmann & Fajardo, LLP.

Taylor, J.

The appellants and plaintiffs below, R.S.B. Ventures, Inc. ("RSB"), Nasser "Isaac" Mizrahi, and Dr. Veronica Motiram–Mizrahi, appeal the dismissal of their legal malpractice action against Robert P. Lithman and his associated law firms. The trial court dismissed the action on the ground that it was premature. We find that the trial court correctly ruled that the Mizrahis' legal malpractice claim was premature, but erred in ruling that RSB's legal malpractice claim was premature. Accordingly, we reverse the dismissal as to RSB only.

This legal malpractice action has its genesis in underlying litigation between appellants and the FDIC. For purposes of this opinion, we accept the allegations of the complaint as true.

In 2008, RSB received a loan of about $9.7 million from a bank. The co-owners of RSB, Mr. Mizrahi and Dr. Motiram–Mizrahi, personally guaranteed the loan. After a regulatory agency closed the bank, the Federal Deposit Insurance Corporation ("FDIC") was approved as the receiver. The FDIC called the loan due.

In March 2010, the Mizrahis retained Jeffrey Berlowitz, Esq., and the law firm of Siegried, Rivera, Hyman, Lerner, De La Torre, Mars & Sobel, P.A., (collectively the "Berlowitz Defendants") for representation in connection with litigation against the FDIC.

In April 2010, RSB filed a complaint in Florida state court against the FDIC and several other defendants, seeking rescission of the loan and asserting claims for (among other things) fraud, conspiracy, breach of fiduciary duty, and unjust enrichment. The FDIC removed the case to federal court.

The FDIC filed a counterclaim against RSB and a crossclaim against the Mizrahis, seeking to foreclose on the mortgage, recover on the promissory note, and recover from the Mizrahis as guarantors. RSB answered the counterclaim, and the Mizrahis answered the crossclaim. RSB later amended its complaint against the FDIC. The FDIC filed a motion to dismiss the amended complaint or, alternatively, for summary judgment. Berlowitz allegedly realized that he had erred in suing the FDIC in the first place, as it led to the FDIC filing the counterclaim for foreclosure.

In December 2010, appellants contacted appellee Robert Lithman, Esq., and they began discussions about Lithman representing appellants in the FDIC litigation. Thereafter, appellants retained Robert Lithman, Esq., and his associated law firms, Robert P. Lithman, P.A., and Orshan, Lithman, Seiden, Ramons, Hatton, Huesmann & Fajardo, LLP (collectively the "Lithman Defendants").

In April 2011, the federal district court allowed Berlowitz and his law firm to withdraw from the underlying case. Subsequently, the Lithman Defendants failed to timely file a notice of appearance in the underlying litigation and failed to timely respond to FDIC's motion to dismiss.

The FDIC transferred the loan to RADC/CADC Venture 2010–2, LLC ("RADC"), which was substituted as the counter-plaintiff and cross-plaintiff in the underlying litigation. However, the FDIC remained a defendant with respect to RSB's amended complaint.

In July 2011, after repeatedly ordering appellants to obtain legal representation and to have counsel file a Notice of Appearance in the action, the federal district court: (1) dismissed RSB's amended complaint; (2) struck RSB's amended answer and affirmative defenses to the counterclaim; (3) entered a default against RSB; and (4) directed RADC to submit a motion for default final judgment as to RSB.

In October 2011, the federal district court entered a default final judgment of foreclosure against RSB. Lithman later entered a notice of appearance in the case and filed a notice of appeal on behalf of appellants. However, in February 2012, the Eleventh Circuit dismissed the appeal for lack of prosecution. Lithman was allegedly negligent in failing to prosecute the appeal.

The federal district court awarded attorney's fees to RADC. The attorney's fees award was later reversed for the limited purpose of adding the award to the foreclosure judgment. See R.S.B. Ventures, Inc. v. F.D.I.C. , 514 Fed.Appx. 853, 858–59 (11th Cir. 2013).

In September 2014, the Clerk of Court filed a Certificate of Sale reflecting that the foreclosed property was sold to RADC at a public sale for $4.8 million. Later that month, the underlying lawsuit was administratively closed.

No deficiency judgment was entered against any of the appellants, nor was any judgment entered against the Mizrahis individually in the crossclaim against them.

Meanwhile, in October 2013, appellants filed a two-count complaint for legal malpractice arising out of the underlying lawsuit. Count I was a legal malpractice claim against the Berlowitz Defendants. The trial court dismissed the claim against the Berlowitz Defendants for improper venue, but granted appellants the option to re-file the claim in Miami–Dade County.¹

Count II was a legal malpractice claim against the Lithman Defendants. Appellants sought damages for the following: (1) the default final judgment of foreclosure; (2) an attorney's fees award in excess of $144,964; (3) the loss of any rights to the foreclosed property; (4) a potential deficiency judgment against appellants individually; and (5) additional attorney's fees.

The Lithman Defendants moved to dismiss or, in the alternative, moved to abate or stay the case. They argued that the malpractice action was premature because the underlying suit was still pending.

The trial court granted the motion to dismiss. The court found that the administrative closing of the case did not affect "the substantive and/or procedural rights of the parties in interest," noting that an administratively closed case can be easily reopened through a simple order without the necessity of paying a filing fee. The court also stated that the underlying suit remained pending as to the following matters: (1) appellants' claims against certain other defendants; and (2) RADC's claims against the Mizrahis. The court reasoned: "Consequently, until the Court receives confirmation that the Underlying Suit is concluded with an adverse outcome to all of the Plaintiffs, the instant action against the Lithman Defendants should be dismissed without prejudice because the Complaint is untimely and premature." The court later entered a final order dismissing the action as "premature and not ripe for adjudication."

The standard of review applicable to an order granting a motion to dismiss is de novo. Kohl v. Blue Cross & Blue Shield of Fla., Inc. , 988 So.2d 654, 658 (Fla. 4th DCA 2008). A cause of action for legal malpractice has three elements: (1) the attorney's employment; (2) the attorney's neglect of a reasonable duty; and (3) the attorney's negligence was the proximate cause of loss to the client. Kates v. Robinson , 786 So.2d 61, 64 (Fla. 4th DCA 2001). A cause of action for legal malpractice in the litigation context does not accrue until "the litigation is concluded by final judgment" and "the final judgment becomes final," meaning that the time for filing an appeal or postjudgment motions has expired or, if an appeal was taken, the underlying legal...