Schweizer v. Mulvehill

• Decision Date: 31 March 2000
• Docket Number: No. 95 CIV. 10743 MGCMHD.,95 CIV. 10743 MGCMHD.
• Citation: 93 F.Supp.2d 376
• Parties: Richard T. SCHWEIZER and Richard T. Schweizer as Parent and Natural Guardian of Scott Schweizer, Plaintiffs, v. John H. MULVEHILL, Esq. and Urban S. Mulvehill, Esq., Defendants.
• Court: U.S. District Court — Southern District of New York

93 F.Supp.2d 376

Richard T. SCHWEIZER and Richard T. Schweizer as Parent and Natural Guardian of Scott Schweizer, Plaintiffs, v. John H. MULVEHILL, Esq. and Urban S. Mulvehill, Esq., Defendants.

No. 95 CIV. 10743 MGCMHD.

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

March 31, 2000.

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W. Robert Curtis, Curtis & Riess-Curtis, P.C., New York City, for Plaintiffs.

Geoffrey W. Heineman, Ohrenstein & Brown, LLP, John A. McManus, Conway Farrell Curtin & Kelly, New York City, for Defendants.

MEMORANDUM ORDER

CEDARBAUM, District Judge.

In a thorough and thoughtful Report and Recommendation, Magistrate Judge Dolinger has recommended that defendants' motion for summary judgment be granted as to all claims against John Mulvehill. He has recommended that the motion be granted as to all claims against Urban Mulvehill except the portion of plaintiffs' breach of fiduciary duty claim which alleges that Urban Mulvehill failed to disclose to plaintiff that he was receiving a portion of John Mulvehill's fee. Finally, he has recommended that John Mulvehill's motion for sanctions and preclusion of the use of certain evidence be denied. No objections have been filed within the ten days provided by 28 U.S.C. § 636(b)(1).

After carefully reviewing the attached Report and Recommendation, I accept it in its entirety.

SO ORDERED.

REPORT & RECOMMENDATION

DOLINGER, United States Magistrate Judge.

To The Honorable Miriam Golden Cedarbaum, District Judge:

Following a car accident in which his wife was killed and his son injured, Richard Schweizer retained attorney John Mulvehill to pursue a wrongful-death and personal-injury lawsuit against the driver of the other vehicle involved in the collision and the driver's employer. After a suit was filed in federal court, the parties reached a settlement by which the plaintiff was to receive approximately $1 million.

On behalf of his son and himself, Schweizer now sues his attorney in that previous action and the attorney's cousin, Urban Mulvehill, Esq., with whom John Mulvehill was to share fees on the wrongful-death claim. Following completion of discovery, defendants have moved for summary judgment on all of plaintiff's claims. In addition, John Mulvehill seeks an order (1) precluding plaintiff from using certain salary information obtained in response to a non-party subpoena and (2) imposing sanctions on plaintiff in connection with the subpoena.

A. Plaintiff's Claims

Plaintiff filed this lawsuit in December 1995, asserting five claims against John and Urban Mulvehill, all related to their representation of him in Schweizer v. Skyway Transportation, 90 Civ. 0979 (S.D.N.Y.) (JFK) ("the underlying action"). First, Schweizer alleges that both attorneys committed legal malpractice and "gross legal malpractice" (1) by negligently preparing and prosecuting the underlying action, (2) by failing to inform him that he might compensate John Mulvehill other than through a one-third contingency arrangement, and (3) by failing to disclose conflicts of interest, presumably including the fact that Urban Mulvehill would share a part of the contingency fee recovered and that John Mulvehill was employed by an insurance company. (See Compl. ¶¶ 59, 74-78).

Plaintiff's second claim is for breach of contract. He asserts principally that John Mulvehill breached the terms of the retainer agreement by settling the underlying action for $1 million when he had promised to prosecute the case for more than that. (Id. at ¶ 80). He also asserts that the retainer agreement was breached for the reasons stated in his malpractice claim. (Id. at ¶¶ 81-84).

Third, plaintiff asserts a claim for fraud, alleging that the defendants made misrepresentations to him, that he relied upon those misrepresentations, and that he was thereby damaged. (Id. at ¶¶ 86-88). Specifically, he alleges that defendants either misstated or withheld the following information: (1) they did not disclose that there were fee arrangements besides a contingency by which plaintiff could have agreed to pay John Mulvehill; (2) John Mulvehill falsely stated that he would prosecute the underlying action for more than the $1 million limit of the insurance policy; (3) defendants concealed conflicts of interest in handling his case; (4) defendants misled plaintiff into believing that the underlying action was a more complex case than it was; (5) defendants misrepresented that it would be impossible to recover more than $1 million from the defendants in the underlying action; (6) defendants falsely asserted that plaintiff had made statements that he had not; and (7) defendants failed to disclose that Urban Mulvehill would receive a fee for referring the underlying action to John Mulvehill. (Id. at ¶ 86(A-G)).

Fourth, plaintiff asserts that defendants violated section 487 of the New York Judiciary Law by misleading the Surrogate's Court through the presentation of false information and the omission of material information. (Id. at ¶¶ 90-92). These alleged misrepresentations and omissions are the same as those alleged in connection with the fraud claim. (Id. at ¶ 90(A-G)).

Finally, plaintiff makes a claim for breach of fiduciary duty. He alleges that defendants were in a fiduciary relationship with him and that by acting in their own interests in settling the case for the policy limit, and by withholding information, including the existence of a referral fee and John Mulvehill's employment, the attorneys breached that duty. (Id. at ¶¶ 94-100).

Plaintiff demands $1 million in compensatory damages for each of his claims and $3 million in punitive damages for each claim except the one for breach of contract. (Id. at 27-28 (¶¶ 1-5)).

B. Defendants' Summary Judgment Motion

Defendants have filed a motion seeking summary judgment on all of plaintiff's claims. First, defendants assert that the claims of legal malpractice, breach of contract and breach of fiduciary duty are barred, under the doctrine of collateral estoppel, because the fairness of the attorney's fee has already been determined by the Surrogate's Court of Orange County when it approved the settlement in the underlying action. (Def.'s Mem. at 17-19).

Second, defendants also assert that the plaintiff cannot establish his claim of legal malpractice. Insofar as the malpractice claim relates to John Mulvehill's failure to suggest alternatives to the agreed-upon contingency fee, defendants contend that prior to signing the retainer agreement no attorney-client relationship existed, and hence Mulvehill was under no obligation to suggest other fee arrangements. (Id. at 21). As for the balance of the malpractice claim, defendants contend that they should prevail because, in light of the favorable settlement obtained in the underlying action, plaintiff cannot establish that defendants breached any duty to him or that any alleged breach proximately caused actual damages, that is, that, but for negligence on the part of the attorneys, plaintiff would have received a more favorable result. (Id. 25-29).

Third, defendants contend that because the results obtained in the underlying action were in the client's best interest, plaintiff has failed to establish a breach of fiduciary duty. (Id. at 25).

Fourth, defendants contend that insofar as plaintiff's allegations of fraud and breach of contract are indistinguishable from the malpractice claim, they are barred under New York law. (Id. at 30-31). Alternatively, they argue that, in any event, the fraud claim cannot be sustained because plaintiff is unable to show injury from any alleged misrepresentations or omissions. (Id. at 26-29).

Fifth, defendants contend that plaintiff cannot establish that they violated New York's Judiciary Law (id. at 32-33), and that, in any event, this claim is barred by the statute of limitations. (Id. at 34-35). Finally, defendants contend that plaintiff's claim for punitive damages should be dismissed.

We conclude that plaintiff has failed to demonstrate a triable issue of material fact with respect to any of his claims, except the claim that Urban Mulvehill breached his fiduciary duty in failing to disclose that he would share in the contingency fee payable to John Mulvehill.

C. Facts and Prior Proceedings

On May 16, 1989, plaintiff's wife, Karen Schweizer, was killed when a tractor-trailer crossed the center line of a two-lane roadway and hit her vehicle head-on. (Compl. at ¶ 11; Decl. of Cheryl Riess Curtis, Esq., dated April 6, 1999 ("Pl. Decl.1"), Ex. 1 (police accident report) at second page). Mrs. Schweizer was 35 at the time and a homemaker, although she had apparently planned to go back to work when her son started school. (See Dep. of Richard T. Schweizer at 5-6, 11-12). Plaintiff's son, Scott Schweizer, then five years old, was a passenger in his mother's car when the accident occurred. (See Compl. at ¶ 12). He suffered a broken arm and other minor injuries, as well as some degree of psychological trauma. (See Pl. Decl. 1, Ex. 4 (hospital report) & Ex. 7 (January 5, 1999 psychiatric evaluation by Dr. Lawrence Scheff); Decl. of Geoffrey W. Heineman, Esq., dated April 27, 1999 ("Def.Decl.2"), Ex. E (October 6, 1990 evaluation by Dr. Scheff)).

The tractor-trailer that was involved in the accident was owned by Skyway Transportation Incorporated ("Skyway"). (See Dep. of James J. Lenihan, President of Skyway, Jan. 6, 1998, at 42-43). It was insured for $1 million by American Reliance Insurance Companies ("Reliance"). (See id. at 43, 47; see also Pl. Decl. 1, Ex. 14 (Oct. 19, 1989 letter to J. Mulvehill from Lesley Klotz, Assistant Casualty Claims Supervisor for Reliance)).

Shortly following the accident, in June 1989, plaintiff contacted Urban Mulvehill in order to have a will drafted. (See Compl. at ¶ 16; Dep. of Urban S. Mulvehill, Esq. ("USM Dep."), at 143). During the course of their initial meeting, they discussed the circumstances...