Rohe v. Bertine, Hufnagel, Headley, Zeltner, Drummon & Dohn, LLP

• Decision Date: 01 February 2016
• Docket Number: 14-cv-9641 (KBF)
• Parties: Edward Rohe and Georgette Rohe, Plaintiffs, v. Bertine, Hufnagel, Headley, Zeltner, Drummon & Dohn, LLP and Peter P. Zeltner, Esq., Defendants.
• Court: U.S. District Court — Southern District of New York

160 F.Supp.3d 542

Edward Rohe and Georgette Rohe, Plaintiffs,

v.Bertine, Hufnagel, Headley, Zeltner, Drummon & Dohn, LLP and Peter P. Zeltner, Esq., Defendants.

14-cv-9641 (KBF)

United States District Court, S.D. New York.

Signed February 1, 2016

Evan S. Schwartz, Quadrino & Schwartz, P.C., Maria Campese, Schwartz Law P.C., Matthew James Conroy, Matthew J. Conroy & Associates, P.C., Garden City, NY, Peter Marshall Feaman, Peter M. Feaman, P.A., Boynton Beach, FL, Harold Joseph Levy, Law Office of Harold J. Levy, P.C., Baldwin, NY, for Plaintiffs.

Evan Asher Richman, White, Fleischner & Fino, LLP, New York, NY, for Defendants.

OPINION & ORDER

KATHERINE B. FORREST

, District Judge:

In this case, plaintiffs Edward and Georgette Rohe seek damages against an attorney, Peter Zeltner, and his law firm, Bertine, Hufnagel, Headley, Zeltner, Drummond & Dohn, LLP. (ECF No. 6.) Plaintiffs allege that defendants committed professional malpractice and breached a fiduciary duty they owed plaintiffs in connection with a number of trusts of which plaintiffs were the beneficiaries and separate entities affiliated with those trusts.

Now before the Court are defendants' motion for summary judgment, either in part or in full, and plaintiffs' motion to amend the complaint to add certain additional plaintiffs. (ECF Nos. 71 & 80.) Defendants raise a number of arguments in support of their motion for summary judgment, the broadest of which is that all of plaintiffs' claims are time-barred by the statute of limitations. (See ECF No. 76, at 18-25.)

The undisputed facts adduced in this matter demonstrate that there is no genuine question of material fact as to whether plaintiffs' claims are barred; they are, and the doctrinal and equitable exceptions to the operation of New York's statute of limitation are not available. For that reason, and for the reasons further established below, the Court GRANTS defendants' motion for summary judgment in its entirety and DENIES plaintiffs' motion to amend.

I. FACTUAL BACKGROUND

A. The Losses

Edward Rohe's father died in 2004, and as a result two trusts were created, the August E. Rohe Generation Skipping Trust (“GS Trust”), and the August Rohe Family Trust (“Family Trust”). (Pl.'s 56.1¹ ¶ 4.) Edward Rohe was the sole beneficiary of both Trusts. (Id. ) Also in 2004, a man named Michael Formanek, employed by Uihlein Financial, began to serve as trustee and investment manager of these Trusts. (Id. ¶ 5.)

Formanek's investments, and defendants' involvement with them, is the basis for plaintiffs' claim to damages in this case. Many of the details of the investments are contested but, as discussed below, the facts of these investments are not material to the resolution of the instant motions because the statute of limitations bars plaintiffs' malpractice and breach of fiduciary duty claims. The Court therefore recounts only a summary of the allegations, as presented by plaintiffs.

Plaintiffs allege that in 2008 and 2009, Formanek invested funds from the GS and Family Trusts in CTG Athletics, a startup. (Id. ¶ 6.) One of the ways he did so was through an entity organized under the New York limited liability law called Milwaukee Famous Ventures LLC (“MFV”). (Id. ¶ 7.) The sole stated purpose of MFV was to invest in CTG Athletics. (Id. ) The GS and Family Trusts were members of MFV, as was an entity called Caught Looking Partners, in which Zeltner and other members of Bertine Hufnagel were members. (Id. ¶ 8.) The MFV operating agreement contained a conflict waiver which acknowledged that Bertine Hufnagel both represented Formanek in connection with the formation of MFV and also represented CTG Athletics, the underlying investment. (Id. ¶ 7.)

Plaintiffs further allege that in addition to his interest in Caught Looking Partners, Zeltner also created another company, named 463 DP, LLC, which had a direct ownership interest in CTG Athletics. (Id. ¶ 10.) The partners of Bertine Hufnagel owned 463 DP, LLC. (Id. ¶ 11.)

Plaintiffs allege that between December 2008 and June 2009 Formanek caused $440,000 in funds from the GS and Family Trusts to be transferred to CTG Athletics. (Id. ¶ 8.) CTG Athletics is now defunct and all investments by the Trusts are total losses. (Id. ¶ 9.)

In addition, plaintiffs allege that Formanek caused Rohe Ventures LLC, an entity solely owned by the Family Trust, to transfer more than $335,000 directly to Bertine Hufnagel between April 2005 and June 2010. (Id. ¶ 15.) The annual account statements for the Rohe Ventures investment account were sent to Zeltner at the Bertine Hufnagel office every year from 2004 through 2014. (Id. ¶ 16.)

The losses associated with CTG Athletics and direct transfers to Bertine Hufnagel are not the full extent of plaintiffs' claimed damages. Plaintiffs further allege that defendants' malpractice and breach of fiduciary duty allowed Formanek to engage in “persistent gouging of the price assets,” (ECF No. 80, at 13) resulting in a multitude of losses from a number of different investments. According to plaintiffs, this continued until Formanek's death in April 2013, the first time plaintiffs learned of the diminution of the Trusts' funds. (ECF No. 6 ¶ 25.) In total, plaintiffs' amended complaint seeks $3,699,143.47 in damages. (Id. ¶¶ 44 & 50.)

B. Zeltner's Representation of Edward Rohe

As discussed both above and below, the facts that are material to resolution of the instant motion are those related to Zeltner's representation of Edward Rohe.

Defendant Peter Zeltner first represented plaintiff Edward Rohe in the early 1970s in connection with a traffic violation. (Pl.'s 56.1 ¶ 1; Rohe Dep.² 44:13-20.) Bertine Hufnagel, Zeltner's employer, had previously represented other members of the Rohe family. (Rohe Dep. 44:21-45:3.) In the decades that followed, Zeltner represented Edward Rohe in a number of matters. (Id. 45:19-49:21; Pl.'s 56.1 ¶ 2.) For example, Edward Rohe testified that Zeltner assisted him in connection with structuring loans for real estate purchases. (Rohe Dep. 64:6-8.)

Many, but not all, of the instances in which Zeltner represented Rohe related to trusts and estates legal work. (Pl.'s 56.1 ¶ 2; Zeltner Aff.³ ¶ 4.) This work began in association with wills Zeltner prepared for both plaintiffs in 1983. (Rohe Dep. 52:19-53:23.) Zeltner represented the plaintiffs during the 2004 preparation of the Trust agreements. (Id. 66:7-11.) He also assisted in both drafting Edward Rohe's revocable trust (which was separate from the GS and Family Trusts) in 2004 and revising it in July 2006 and September 2008. (Id. 61:17-21; 67:12-21; 76:13-77:8.) In 2008 Zeltner worked to revise plaintiffs' wills, and at some point after 2008 he drafted a trust agreement for a trust that benefited plaintiffs' daughter. (Id. 80:11-81:25; 86:11-24.)

Plaintiffs have produced a number of documents relevant to the existence and scope, if any, of the professional legal relationship between plaintiffs and defendants after 2008. On August 5, 2008 and March 5, 2009, Formanek sent Edward Rohe letters regarding Trust assets and distributions that were copied to Zeltner. (Pl.'s 56.1 ¶ 14.) On February 20, 2009, Formanek faxed Zeltner twice, both times enclosing copies of email discussions between Formanek and Edward Rohe regarding the Trusts. (Id. ) On July 20, 2009, Formanek copied Zeltner into an email discussion between Formanek and Edward Rohe regarding the trust for plaintiffs' daughter, and on July 28, 2009, Formanek and Zeltner exchanged emails about whether the trustees of that trust could delegate management of its assets to third parties. (Id. ) On August 24, 2009, Formanek faxed Zeltner a document entitled “Third Party Authorization and Indemnity” for plaintiffs' daughters' trust, and Zeltner wrote a letter to a non-party stating that he “represents the [plaintiffs' daughter's] Trust” and that the trust agreement authorized delegation of management to third parties. (Id. ) Finally, on March 9, 2010, July 29, 2010, and March 1, 2011, Formanek sent Edward Rohe letters regarding Trust assets and distributions that were copied to Zeltner. (Id. )

As discussed above, annual account statements for the Rohe Ventures investment account were sent to Zeltner at the Bertine Hufnagel office every year from 2004 through 2014. (Id. ¶ 16.) Additionally, Edward Rohe testified during his deposition that he occasionally called Zeltner when he encountered problems communicating with Formanek. (Rohe Dep. 117:11-21.) Edward Rohe testified that these calls occurred between 2007 and 2013, including “a few” between 2009 and 2013. (Id. 118:8-13; 121:9-12.)

According to Edward Rohe's deposition testimony, plaintiffs never entered into a retainer agreement with Zeltner or Bertine Hufnagel. (Rohe Dep. 158:14-19.) During the many years between the early 1970s and 2013, defendants invoiced plaintiffs for discrete legal tasks. (See id. 51:3-9 (bridge loan for purchasing real estate); 56:7-12 (1983 wills); 63:4-15 (2004 trust agreements); 70:16-22 (2006 revision to revocable trust agreements).) Nonetheless, plaintiffs allege that “Zeltner and Plaintiffs maintained a professional attorney client relationship by various means of communication until August 28, 2013.” (Pl.'s 56.1 ¶ 13.)

As discussed above, Formanek died in April 2013. According to Edward Rohe's deposition testimony, he received a call from Uihlein Financial in July 2013 that disclosed the current assets of the GS and Family Trusts as well as Zeltner's involvement in some of the companies in which Formanek had invested. (Rohe Dep. 226:25-227:5.) After learning that information, Rohe called Zeltner as his office and home and left a message. (Id. 227:6-16.) Zeltner returned Rohe's call the next day and, according to Rohe, told him that he had represented Formanek, that he had known funds were coming out of the Trusts, and that Rohe was “going to have to get [himself] another attorney.” (Id. 228:4-229:6.) This was apparently the last conversation between Zeltner and Edward...