Shaya B. Pac. LLC v. Wilson

• Decision Date: 19 December 2006
• Docket Number: (Index No. 8097/04).,2005-00280.
• Citation: 2006 NY Slip Op 9598,827 N.Y.S.2d 231,38 A.D.3d 34
• Parties: SHAYA B. PACIFIC, LLC, Appellant, v. WILSON, ELSER, MOSKOWITZ, EDELMAN & DICKER, LLP, Respondent.
• Court: New York Supreme Court — Appellate Division

38 A.D.3d 34

827 N.Y.S.2d 231

2006 NY Slip Op 9598

SHAYA B. PACIFIC, LLC, Appellant, v. WILSON, ELSER, MOSKOWITZ, EDELMAN & DICKER, LLP, Respondent.

2005-00280.

(Index No. 8097/04).

Appellate Division of the Supreme Court of the State of New York, Second Department.

December 19, 2006.

Dinkes & Schwitzer, New York City (William Dinkes of counsel), for appellant.

Wilson, Elser, Moskowitz, Edelman & Dicker, LLP, New York City (Thomas W. Hyland, Richard E. Lerner and Brett Scher of counsel), respondent pro se.

OPINION OF THE COURT

FISHER, J.

The principal issue presented on this appeal concerns whether a law firm, retained by a primary carrier to defend its insured in a pending action, has any obligation to investigate whether the insured has excess coverage available and, if so, to file a timely notice of excess claim on the insured's behalf.

I

On April 1, 2000, Kazimierz Golebiewski was seriously injured while performing demolition work at the premises of the plaintiff, Shaya B. Pacific, LLC. As a result, Golebiewski and his wife commenced a personal injury action against the plaintiff and others. In July 2000 the plaintiff's primary carrier, Certain Underwriters at Lloyd's of London (hereinafter Lloyd's), retained the defendant, Wilson, Elser, Moskowitz, Edelman and Dicker, LLP to defend the plaintiff in the personal injury action.

The policy limit of Lloyd's' primary policy was $1,000,000. Golebiewski was seeking damages of $52,500,000. Consequently, on January 25, 2001, a representative of Lloyd's wrote to the plaintiff, stating in relevant part:

"As you know suit has been filed in this matter. We must advise you that the demand in the suit papers of $52,500,000 is in excess of your policy limits of $1,000,000 per occurrence. As such you may wish to engage counsel of your own choice at your own expense to act on your behalf in regards to any potential excess judgments. We can advise that we are continuing the defense of this matter on your behalf through the Law Offices of Wilson, Elser, Moskowitz, Edelman & Dicker.

"Furthermore you may wish to check with your insurance agent to determine if any excess insurance coverage is in force. If so we would urge you to quickly notify any excess insurance carrier of this suit situation."

In February 2003 Golebiewski was awarded summary judgment against the plaintiff on the issue of liability under Labor Law § 240 (1). On or about April 24, 2003, before the commencement of the trial on the issue of damages, the defendant law firm, on the plaintiff's behalf, tendered the case to National Union Fire Insurance Company (hereinafter National Union) for further defense and for indemnification with respect to the excess claim. National Union had issued a commercial umbrella policy to Greendel Developers, Ltd. (hereinafter Greendel). Greendel was not a party to Golebiewski's action against the plaintiff, and its relationship to the plaintiff, if any, was not revealed in the record before us.

In any event, by letter dated May 14, 2003, and addressed, inter alia, to both Greendel and the plaintiff, National Union declined the tender and disclaimed coverage on the ground that it had not received timely notice of Golebiewski's action. Additionally, National Union claimed it had no information to confirm that the plaintiff was an insured under the excess policy.

On or about October 22, 2003, Golebiewski obtained a judgment against the plaintiff on his Labor Law claim in the principal sum of $5,694,320, and his wife obtained a judgment against the plaintiff on her derivative claim in the principal sum of $795,000. On March 8, 2004, the plaintiff commenced the instant action against the defendant law firm, asserting causes of action sounding in legal malpractice and breach of contract. In its complaint, the plaintiff claimed that the defendant had been negligent in failing to advise National Union of the underlying action or, alternatively, that its failure to do so constituted a breach of contract.

The defendant law firm thereafter moved to dismiss the complaint pursuant to CPLR 3211 (a) (1) and (7), arguing that (1) the plaintiff failed to establish its status as an insured under the National Union policy, and therefore could not establish causation, (2) any negligence on the defendant's part was not a proximate cause of the loss of excess coverage because the firm was retained more than three months after the plaintiff first became aware of the need to notify any excess carrier, and approximately two months after the plaintiff became aware of the Golebiewski action, and (3) in any event, as the defense counsel provided by the plaintiff's primary carrier, the defendant law firm had no duty to advise the plaintiff concerning coverage issues. The Supreme Court granted the motion and dismissed the complaint. This appeal followed.

II

To begin with, it is important to emphasize that this appeal comes to us from an order granting a prediscovery motion to dismiss, not an order granting summary judgment. The standards governing such prediscovery motions are familiar. A motion to dismiss made pursuant to CPLR 3211 (a) (1) will fail unless the documentary evidence that forms the basis of the defense resolves all factual issues as a matter of law, and conclusively disposes of the plaintiff's claim (see McCue v County of Westchester, 18 AD3d 830, 831 [2005]; see also Held v Kaufman, 91 NY2d 425, 430-431 [1998]; Leon v Martinez, 84 NY2d 83, 88 [1994]; Trade Source v Westchester Wood Works, 290 AD2d 437, 438 [2002]; Teitler v Pollack & Sons, 288 AD2d 302 [2001]). Moreover, a motion to dismiss made pursuant to CPLR 3211 (a) (7) will fail if, taking all facts alleged as true and according them every possible inference favorable to the plaintiff, the complaint states in some recognizable form any cause of action known to our law (see e.g. AG Capital Funding Partners, L.P. v State St. Bank & Trust Co., 5 NY3d 582, 590-591 [2005]; Leon v Martinez, supra at 87-88; Hayes v Wilson, 25 AD3d 586 [2006]; Marchionni v Drexler, 22 AD3d 814 [2005]; Rinaldi v Casale, 13 AD3d 603, 604-605 [2004]). Whether the complaint will later survive a motion for summary judgment, or whether the plaintiff will ultimately be able to prove its claims, of course, plays no part in the determination of a prediscovery CPLR 3211 motion to dismiss (see EBC I, Inc. v Goldman, Sachs & Co., 5 NY3d 11, 19 [2005]).

In light of these standards, and considering the circumstances of the case and the arguments advanced by the parties, the defendant law firm would be entitled to dismissal pursuant to CPLR 3211 (a) (1) if it could establish either that the letter dated January 25, 2001, conclusively proved that the scope of its representation never encompassed any responsibility with respect to possible excess coverage or, alternatively, that the disclaimer letter of May 14, 2003, conclusively established that the plaintiff was not an insured under the excess policy. To succeed on its motion to dismiss pursuant to CPLR 3211 (a) (7), the defendant would have to establish either that, as a matter of law, it owed the plaintiff no duty to identify and notify potential excess carriers or, alternatively, that any negligence on the defendant's part in failing to do so, as a matter of law, did not proximately cause the loss of excess coverage.

III

The defendant failed to show that the January 25, 2001, letter from Lloyd's to the plaintiff conclusively established that the scope of the firm's representation was limited. The letter stated only that the plaintiff "may wish to engage" separate counsel to act on its behalf with respect to any "potential excess judgments" beyond the $1,000,000 primary policy limits, and invited the plaintiff to investigate any possible excess coverage. The letter also confirmed that Lloyd's was "continuing the defense of this matter on [the plaintiff's] behalf through the Law Offices of [Wilson Elser]."¹ Thus, the letter, standing alone, failed to resolve conclusively all material issues of fact regarding the scope of the defendant's representation.

The dissent would place on the plaintiff the initial burden of pleading sufficient evidentiary facts to establish that the scope of the defendant's representation specifically included the duty to investigate excess coverage. Legal malpractice actions, however, are not subject to special pleading requirements (compare CPLR 3014 with CPLR 3016). Thus, a legal malpractice plaintiff need not, in order to assert a viable cause of action, specifically plead that the alleged malpractice fell within the agreed scope of the defendant's representation. Rather, a legal malpractice defendant seeking dismissal pursuant to CPLR 3211 (a) (1) must tender documentary evidence conclusively establishing that the scope of its representation did not include matters relating to the alleged malpractice. The defendant here has failed to do so.

Likewise without merit is the defendant's contention that any negligence on its part could not have been a proximate cause of the plaintiff's loss of excess coverage because the disclaimer letter of May 14, 2003, conclusively established that the plaintiff was not an insured under the National Union policy. Contrary to the view expressed by our dissenting colleague, we find that the disclaimer letter itself is, at best, inconclusive, stating only that the plaintiff "[is] not listed as [a] named insured[] on the Policy" and that National Union had "no information to confirm [that the plaintiff is an insured] as defined in Section IV (E) [of the Policy]." Having failed to tender a copy of the underlying policy, the defendant cannot conclusively establish that such policy afforded the plaintiff no coverage. Thus, that branch of the defendant's motion which was to dismiss the complaint pursuant to CPLR 3211 (a) (1) should have been denied.

Nor did the defendant establish that the plaintiff's claim for excess coverage was already stale by ...