Solondz v. Barash
| Citation | 225 A.D.2d 996,639 N.Y.S.2d 561 |
| Parties | Gary A. SOLONDZ, Respondent, v. Gary G. BARASH et al., Appellants. |
| Decision Date | 21 March 1996 |
| Court | New York Supreme Court Appellate Division |
Drake, Sommers, Loeb, Tarshis & Catania P.C. (Stephen J. Gaba, of counsel), Newburgh, for appellants.
Samoff, Kaplan, Benton & Franzman P.C. (Stephen Franzman, of counsel), Kingston, for respondent.
Before CARDONA, P.J., and MERCURE, CREW, WHITE and CASEY, JJ.
Appeal from an order of the Supreme Court (Bradley, J.), entered December 9, 1994 in Ulster County, which, inter alia, denied defendants' motion for summary judgment dismissing the complaint.
In early 1992, plaintiff became interested in an investment plan offered by Dunewood Funding Corporation (hereinafter DFC) after speaking with Robert Shapiro, a principal of DFC. After expressing his desire to pursue the matter, plaintiff received two proposed agreements, one denominated an "escrow agreement" and the other a "business agreement". He thereafter arranged to meet with defendant Gary A. Barash at Barash's law firm, defendant Matays, Barash & Kretschmann. Barash was Shapiro's attorney and served as the escrow agent for DFC's transactions. At the meeting, Barash explained the mechanics of the plan which called for the investor to deposit money into an escrow account which DFC would draw on to purchase mortgages. The mortgages so acquired would be titled to the investor. When a mortgage was sold or redeemed, the investor would release his/her interest in the mortgage and the funds drawn from the escrow account would be replaced. According to plaintiff, a high rate of return was promised. On June 22, 1992, plaintiff, Barash and Shapiro executed the escrow agreement. Plaintiff executed three of the business agreements on various occasions, each time investing certain sums of money which were deposited into the escrow account.
Plaintiff allegedly sustained losses which he attributed to two causes. First, whenever a mortgage titled in his name was sold, the purchaser would make the check payable directly to Shapiro instead of to him or Barash (as the escrow agent). Shapiro would deposit the money into his own account. Second, plaintiff's funds were also supposed to have been protected by the requirement that plaintiff's investment in a mortgage would not exceed 40% of the fair market value of the real property securing the mortgage. This condition was set forth in each business agreement. Plaintiff claims that he suffered further losses because the 40% loan to value ratio was not always met and he acquired mortgages at a price higher than the value of the real property securing such mortgages.
Plaintiff commenced this action against Barash and his law firm asserting causes of action for an accounting, legal malpractice, breach of a confidential relationship, negligent misrepresentation and breach of contract based on the attorney-client relationship. Plaintiff claimed that Barash agreed to represent him as his attorney in certain transactions in which plaintiff acquired mortgages and in all transactions in which plaintiff sold the mortgages acquired through the plan. He also contended that Barash agreed to confirm that the 40% loan to value ratio would be met and that he failed to undertake that responsibility. Plaintiff further alleged that Barash told him that the plan was safe and secure, and that he accepted Barash's representations concerning how the plan worked as well as Barash's assurances that when his mortgages were sold, payments would go directly into the escrow account.
After issue was joined and some discovery completed, defendants moved for summary judgment. Plaintiff opposed the motion and cross-moved to amend his complaint to add a cause of action for fraud. Supreme Court denied defendants' motion and granted plaintiff's cross motion, prompting this appeal by defendants.
We turn first to the causes of action alleging legal malpractice and breach of contract. Defendants contend that these causes of action must fail because there was never an attorney-client relationship. In support of this claim, they rely on the terms of the escrow agreement which provides in part that:
[Plaintiff] understand[s] and acknowledge[s] that [Barash is] not acting in any capacity as either [plaintiff's] attorney or as an investment advisor, and that [Barash is] not evaluating the viability of any investments and that [Barash is] acting solely as an Escrow agent with respect to the funds advanced to [Barash] * * *.
In opposition, plaintiff maintains that the escrow agreement does not define the parties' entire relationship and the quoted language refers only to defendants' escrow duties. He contends that Barash agreed to act as his attorney in connection with the acquisition of mortgage interests in plaintiff's name with the funds deposited with Barash as well as their sale. He points to language in the escrow agreement that:
Notwithstanding the foregoing, in the event that you are the closing attorney for a particular transaction (i.e. purchase of a Note and Mortgage), you agree that Escrow funds shall not be disbursed by you in connection with such transaction to the party designated by Shapiro unless you are in possession of either (a) a Note and Mortgage in which I am named the Mortgagee or (b) an Assignment of Mortgage naming me as the Assignee of the Note and Mortgage * * *.
In our view, however, this clause fails to support plaintiff's claim that Barash was acting as his attorney in such transactions. It simply sets forth Barash's duties as escrow agent in the event he also acted as the closing attorney in a particular transaction. The language is also followed by the caveat that "[Plaintiff] understand[s] and acknowledge[s] that you are legal counsel to * * * Shapiro and * * * that your legal representation of * * * Shapiro may inherently create certain conflicts of interest with respect to me. * * * [Plaintiff] knowingly consent[s] to your representation of * * * Shapiro notwithstanding such potential conflicts of interest."
Plaintiff's proof, apart from the escrow agreement, consisted solely of his allegations that Barash agreed to act as his attorney, which Barash specifically denied. It is true that an attorney-client relationship may arise by words and actions of the parties (see, ...
To continue reading
Request your trial
-
Peter Sabilia & Earth Powered Energy, LLC v. Richmond
...where such defendants allegedly released plaintiff's funds from escrow without authorization); see also Solondz v. Barash, 225 A.D.2d 996, 998-99, 639 N.Y.S.2d 561, 564 (3d Dep't 1996) (concluding fact questions precluded summary judgment with respect to claim of negligent misrepresentation......
-
Lucas v. Lalime, 96-CV-0185A.
...escrow or trust account is not sufficient to establish the requisite attorney-client relationship. Solondz v. Barash, 225 A.D.2d 996, 997-98, 639 N.Y.S.2d 561 (3d Dep't 1996). In holding money in escrow, attorneys act as agents in a capacity which is not within the scope of their profession......
-
H & H Acquisition v. Financial Intranet Holdings
...into an attorney's escrow account is not sufficient to establish an attorney-client relationship. See Solondz v. Barash, 225 A.D.2d 996, 639 N.Y.S.2d 561, 563-64 (N.Y.App.Div.1996). In fact, in holding money in escrow, attorneys act as agents and therefore function in an entirely nonlegal c......
-
Fleet Bank v. Pine Knoll Corp.
...or false, and that defendants reasonably relied upon the information provided (see, Grammer v Turits, 271 A.D.2d 644, 645; Solondz v Barash, 225 A.D.2d 996, 998). As a general rule, a claim for negligent misrepresentation is precluded in a breach of contract action absent a violation of a l......