A to Z Associates v. Cooper

• Decision Date: 24 September 1993
• Citation: 613 N.Y.S.2d 512,161 Misc.2d 283
• Parties: A TO Z ASSOCIATES, Thomas A. Andrews, and Christ L. Zois, Plaintiffs, v. Gloria V. COOPER, Seligco, Inc., MBI, Inc., Margo Feiden Galleries, Zyloware Corp., Henry Rosenfeld, Inc., Alfred A. Knopf, Inc., Glen Birnbaum, Random House, Inc., Ellen M. Violett, Harry Benson and Ben Brantly, Defendants.
• Court: New York Supreme Court

Page 512

613 N.Y.S.2d 512

161 Misc.2d 283

A TO Z ASSOCIATES, Thomas A. Andrews, and Christ L. Zois, Plaintiffs, v. Gloria V. COOPER, Seligco, Inc., MBI, Inc., Margo Feiden Galleries, Zyloware Corp., Henry Rosenfeld, Inc., Alfred A Knopf, Inc., Glen Birnbaum, Random House, Inc., Ellen M Violett, Harry Benson and Ben Brantly, Defendants.

Supreme Court, New York County IAS Part 4.

Sept. 24, 1993.

J. Edward Meyer III, New York City, for plaintiffs A to Z and Zois.

Lane & Mittendorf, New York City, for defendant and counterclaimant Gloria V. Cooper.

Gold & Wachtel, New York City, for plaintiff Thomas A. Andrews by William F. Dowling and Elliot Silverman.

EDWARD J. GREENFIELD, Justice:

This is an action against the well-known artist and designer, Gloria Vanderbilt Cooper ("Vanderbilt"), for breach of contract and fraud. Plaintiff Thomas A. Andrews ("Andrews") who was Vanderbilt's attorney and business advisor from 1980 through 1986 and plaintiff Christ L. Zois ("Dr. Zois") who had been Vanderbilt's psychiatrist from approximately 1973 to at least 1976, formed the partnership A to Z Associates ("Associates") to exploit and market the Vanderbilt name and designs. Plaintiffs allege in their complaint that Vanderbilt breached various agreements to pay them a fixed percentage of her gross income in exchange for legal, business and advisory services.

Vanderbilt, on the other hand, contends that she was defrauded by the plaintiffs and has asserted counterclaims for breach of fiduciary duty, fraud, and rescission of various agreements she entered into with the plaintiffs. On this motion, Vanderbilt moves pursuant to CPLR 3212 for summary judgment dismissing the plaintiffs' Amended Verified Complaint in its entirety and further granting defendant summary judgment on her first, third, fourth, fifth and sixth counterclaims. The motion for summary judgment by Vanderbilt is premised on the findings and conclusions in a disciplinary proceeding brought against Andrews that ultimately ended, in December of 1992, with his disbarment. Vanderbilt contends that the December 13, 1991 report of a hearing panel of the Disciplinary Committee for the First Judicial Department ("Hearing Panel"), as confirmed by the Appellate Division of the First Department, is dispositive of all of the issues in this action and must be given collateral estoppel effect against the plaintiffs herein.

* * * * * *

Collateral Estoppel Effect of Disciplinary Proceedings

Against An Attorney

The doctrine of collateral estoppel precludes a party from relitigating an issue which has been previously, actually and necessarily decided against him or her in a prior proceeding in which there was a full and fair opportunity to litigate the point. (Kaufman v. Eli Lilly & Co., 65 N.Y.2d 449, 455, 492 N.Y.S.2d 584, 482 N.E.2d 63). The doctrine is applicable not only to court decisions, but to prior determinations made in administrative forums that are "quasi-judicial" in nature and governed by "procedures substantially similar to those used in a court of law." (Ryan v. New York Telephone Co., 62 N.Y.2d 494, 499, 478 N.Y.S.2d 823, 467 N.E.2d 487; see also Johnson v. Penn Mutual Life Insurance Co., 184 A.D.2d 230, 231, 584 N.Y.S.2d 556, lv. app. den., 80 N.Y.2d 757, 589 N.Y.S.2d 308, 602 N.E.2d 1124).

"[T]he burden rests upon the proponent of collateral estoppel to demonstrate the identicality and decisiveness of the issue" (Ryan, supra 62 N.Y.2d at p. 501, 478 N.Y.S.2d 823, 467 N.E.2d 487; Capital Telephone Co., Inc. v. Pattersonville Telephone Co., Inc., 56 N.Y.2d 11, 18, 451 N.Y.S.2d 11, 436 N.E.2d 461; Schwartz v. Public Administrator, 24 N.Y.2d 65, 73, 298 N.Y.S.2d 955 246 N.E.2d 725). The opponent, on the other hand, has the burden of establishing the absence of a full and fair opportunity to litigate the issue in the administrative hearing. (Ryan, supra 62 N.Y.2d at p. 501, 478 N.Y.S.2d 823, 467 N.E.2d 487; Capital Telephone, supra 56 N.Y.2d at p. 18, 451 N.Y.S.2d 11, 436 N.E.2d 461).

An issue of first impression is presented. Plaintiffs point out that no New York court has ever held that issues determined in an attorney disciplinary proceeding would result in collateral estoppel of the attorney with respect to those issues in a subsequent civil action. They argue that the disciplinary committee sits not to resolve private rights, but to decide whether an attorney has the necessary integrity and probity to be an officer of the court. However, it is equally true that no court has ever declined to apply the doctrine of collateral estoppel to issues determined in attorney disciplinary proceedings.

The doctrine of collateral estoppel can be used whether or not the causes of action (or charges) are the same, as long as the underlying issue of fact or law as to which collateral estoppel is sought to be applied in the subsequent civil action was material to the administrative proceeding and essential to the decision rendered therein. (Ryan, 62 N.Y.2d at 500, 478 N.Y.S.2d 823, 467 N.E.2d 487). While the ultimate issue before the Hearing Panel was Andrews' fitness to practice law, as discussed below, the Hearing Panel made specific findings of fact regarding his dealings with Vanderbilt, which findings are identical to issues presented in this civil action.

Stevenson v. Goodmar, 148 A.D.2d 217, 544 N.Y.S.2d 690, upon which plaintiffs rely to negate the use of disciplinary proceedings as a basis for collateral estoppel, is distinguishable. In that case, the Third Department recognized that disciplinary proceedings against a doctor for sexually assaulting a patient could be, in appropriate circumstances, collateral estoppel in a subsequent tort action by the patient against the doctor. However, it was inappropriate there because

"[a] ruling in favor of plaintiff herein would effectively make the administrative agency in a disciplinary proceeding the ultimate fact finder, with only limited judicial review, in any tort action arising out of the alleged misconduct, thereby depriving a defendant of a number of valuable rights traditionally associated with civil actions, including the constitutional right to a trial by jury."

(148 A.D.2d at 221, 544 N.Y.S.2d 217). Sanchez v. Orozco, 178 A.D.2d 391, 578 N.Y.S.2d 145, also involved discipline of a doctor for sexual abuse of a patient and the subsequent action for personal injuries where the scope of appellate review of the prior determination was limited by Article 78. Here, in contrast, the parties have previously waived a jury trial of the issues in this case, and the Appellate Division's review and confirmation of the findings of the Hearing Panel's report was not limited by the restraints applicable to an Article 78 review of determinations of a State Board for Professional Medical Conduct. To the contrary, the Appellate Division makes all determinations de novo and may substitute its findings and judgment for that of the hearing panel. (In re Kahn, 38 A.D.2d 115, 123, 328 N.Y.S.2d 87, aff'd, 31 N.Y.2d 752, 338 N.Y.S.2d 434, 290 N.E.2d 435).

Plaintiffs argue further that attempts to invoke "offensive" collateral estoppel, based on the findings of a non-judicial body or agency have uniformly been rejected. They contend that the disciplinary proceeding was initiated by Vanderbilt's new lawyer shortly after this action was commenced, the strategy being to move the scope of this litigation from this Court to another forum at which Andrews would be at a disadvantage.

There is no absolute bar to the "offensive" use of collateral estoppel with respect to administrative findings. (See, e.g., Ward v. Harte, 794 F.Supp. 109 [SDNY 1992]. However, as noted by the Court of Appeals in Halyalkar v. Board of Regents, 72 N.Y.2d 261, 269-270, 532 N.Y.S.2d 85, 527 N.E.2d 1222, the use of offensive collateral estoppel by non-parties may, in some situations, violate the concept of fairness underlying the doctrine. In Halyalkar, the Board of Regents was not permitted to base a finding of professional misconduct by a doctor on a guilty plea in a consent order entered before the New Jersey Board of Medical Examiners. By signing the consent order, the doctor indicated that he did not wish to contest the charges stated and that he wanted to accept the minimal sanction. Thus the court reasoned that the pertinent issue--the doctor's submission of false insurance forms--had not been actually litigated or resolved in New Jersey (72 N.Y.2d at 268, 532 N.Y.S.2d 85, 527 N.E.2d 1222), and that its application of collateral estoppel under these circumstances would be unfair. As discussed below, neither of those concerns are present in this case.

Here, collateral estoppel is sought to be applied to the specific findings by a unanimous hearing panel of the Disciplinary Committee, made after a hearing lasting 31 days, at which the attorney had the right to present documentary and testimonial evidence in his defense and cross-examine the client whose complaint initiated the disciplinary proceeding. The panel findings were then unanimously affirmed by the Appellate Division, which found that the conduct of the attorney warranted disbarment. This court therefore concludes that as a matter of law administrative disciplinary findings against an attorney can be used, to the extent the findings are applicable, as dispositive of those issues in a civil action. Is such estoppel equally applicable to the attorney's non-lawyer partner and their commercial partnership?

Collateral Estoppel Against Dr. Zois and A to Z Associates

The doctrine of collateral estoppel has been used where an issue has previously been decided against a party or those in "privity" with that party. (Gilberg v. Barbieri, 53 N.Y.2d 285, 291, 441 N.Y.S.2d 49, 423 N.E.2d 807; Gramatan Home Investors Corp. v. Lopez, 46 N.Y.2d 481, 486, 414 N.Y.S.2d 308, 386 N.E.2d 1328; Geraci v. Bauman, Greene & Kunkis, P.C., 171 A.D.2d 454, 455, 567 N.Y.S.2d 36; Baldwin v. Brooks, 83 A.D.2d 85,...