| Roche v Claverack Coop. Ins. Co. |
| 2009 NY Slip Op 01390 [59 AD3d 914] |
| February 26, 2009 |
| Appellate Division, Third Department |
| Francis J. Roche, Appellant, v Claverack Cooperative InsuranceCompany et al., Respondents. |
—[*1] Knych & Whritenour, L.L.C., Syracuse (Matthew E. Whritenour of counsel), forrespondents.
Kane, J. Appeal from an order of the Supreme Court (Donohue, J.), entered September 10,2008 in Columbia County, which, among other things, granted defendants' motion for summaryjudgment dismissing the complaint.
For approximately 25 years, defendant Claverack Cooperative Insurance Company retainedplaintiff as an attorney to represent its insureds. In one such wrongful death matter, a juryrendered a verdict finding Claverack's insureds 75% liable on a $4,206,780 judgment. Claverackretained counsel, who wrote to Zurich Insurance Company—plaintiff's professionalliability insurance carrier—regarding a potential claim due to plaintiff's alleged failure tokeep Claverack apprised of the progression of the wrongful death matter and failure to settle thematter within Claverack's policy limits. The letter sought Zurich's contribution to a postjudgmentsettlement in the wrongful death matter. Counsel attached to the letter six memoranda thatdefendants allege were contemporaneous memorializations of telephone conversations betweenplaintiff and defendants Maureen Hess and Katherine Buckley, who are officers and directors ofClaverack. Plaintiff contends that the memoranda were fabricated to compel Zurich to contributeto the settlement, which Zurich offered to do.
After Zurich declined to renew plaintiff's policy, plaintiff commenced this action seekingdamages for defamation, defamation per se, injurious falsehood, prima facie tort, [*2]intentional infliction of emotional distress, fraud andconspiracy.[FN*] Defendants moved for summary judgment dismissing the complaint. Plaintiff cross-moved todisqualify defendants' counsel and opposed defendants' motion on the merits and as prematurebecause no answer had been served. Defendants cross-moved seeking an order nunc pro tunccuring their failure to serve an answer. Supreme Court determined that no nunc pro tunc orderwas necessary, granted defendants' motion dismissing the complaint and denied plaintiff's crossmotion as moot. On plaintiff's appeal, we modify and reinstate certain causes of action.
Initially, Supreme Court did not err in considering the motion for summary judgment despitedefendants' failure to first serve an answer. While a motion for summary judgment is notauthorized by statute until issue has been joined (see CPLR 3212 [a]; Berle v Buckley, 57 AD3d 1276,1277 [2008]), the court could consider the motion because "the parties charted their ownprocedural course and treated defendants' summary judgment motion as if issue had indeed beenjoined" (Ryan v Bettiol, 211 AD2d 844, 845 [1995]; see Kline v Town ofGuilderland, 289 AD2d 741, 741 n [2001]; cf. Yule v New York Chiropractic Coll., 43 AD3d 540, 541-542[2007]).
Supreme Court erred in granting defendants summary judgment dismissing the defamationcauses of action. To constitute defamation, plaintiff must prove that defendants made a falsestatement, published that statement to a third party without privilege, with fault measured by atleast a negligence standard, and the statement caused special damages or constituted defamationper se (see Dillon v City of New York, 261 AD2d 34, 38 [1999]). Plaintiff contends thatdefendants intentionally fabricated the memoranda to contain numerous false statements. Thememoranda purportedly describe conversations concerning the trial in the wrongful death matter,implying that plaintiff did not convey settlement offers or attempt to settle within the policylimits. These statements were published to Zurich suggesting that plaintiff committedmalpractice, thus implicating his business reputation. If the memoranda were fabricated, theywere not conveyed with good faith as required for the common interest privilege to apply (cf. Lerwick v Krna, 29 AD3d1206, 1208 [2006], lv denied 7 NY3d 712 [2006]; Demas v Levitsky, 291AD2d 653, 661 [2002], lv dismissed 98 NY2d 728 [2002]). Plaintiff sufficiently assertedspecial damages, including that he was required to pay a deductible under his malpracticeinsurance policy and pay a higher premium to a new company when Zurich declined to renewhis policy due to this claim (compareStanton v Carrara, 28 AD3d 642, 642 [2006]). Any dispute concerning the causalrelationship between the claim and these damages is a factual question. Because questions of factexist concerning the elements of defamation, the court improperly dismissed plaintiff's twodefamation causes of action.
Questions of fact preclude a grant of summary judgment dismissing the injurious falsehoodcause of action. On that cause of action, plaintiff alleges that defendants conveyed falsestatements with an intent to harm plaintiff, and plaintiff was harmed due to those statements (see Gilliam v Richard M. Greenspan,P.C., 17 AD3d 634, 635 [2005]; Hirschhorn v Town of Harrison, 210 AD2d587, 588 [1994]). As previously noted, plaintiff sufficiently asserted special damages. Plaintiffcontends that Hess and Buckley included false statements in the memoranda [*3]concerning phone conversations in which plaintiff was aparticipant, with the intent to force plaintiff or his insurance company to contribute to thesettlement. Hess and Buckley averred that the memoranda accurately memorialized thoseconversations. This conflict creates a credibility question which cannot be resolved on affidavits,making summary judgment inappropriate.
Prima facie tort is established where a defendant intentionally inflicts harm, without excuseor justification, through acts that would otherwise be lawful, and special damages are suffered(see Freihofer v Hearst Corp., 65 NY2d 135, 142-143 [1985]). To establish this cause ofaction, plaintiff contends that defendants fabricated the memoranda to obtain money fromplaintiff and Zurich. If the memoranda are legitimate, defendants are protected by the defense oftruth. If they are false, plaintiff cannot establish the elements of prima facie tort becauseproviding false statements to obtain money is not otherwise lawful. Thus, regardless of anyfactual question concerning the legitimacy of the memoranda, the prima facie tort cause of actionwas properly dismissed.
Fraud is established where a defendant knowingly misrepresents a material fact, someonejustifiably relies upon that misrepresentation and the plaintiff is thereby injured (see Scaturro v Sutera, 57 AD3d1283, 1283 [2008]; Cohen v Colistra, 233 AD2d 542, 542-543 [1996]). Similar tohis other causes of action, plaintiff contends that defendants purposely falsified the memorandato induce plaintiff and Zurich to contribute to the settlement in the wrongful death matter. Thereis a question of fact as to whether, if the memoranda did constitute misrepresentation of materialfacts, Zurich justifiably relied on the memoranda or conducted its own investigation which led itto contribute to the settlement. Due to this factual question, summary judgment wasinappropriate on the fraud cause of action.
Due to plaintiff's failure to present medical evidence of severe emotional distress, defendantswere entitled to dismissal of plaintiff's speculative cause of action for intentional infliction ofemotional distress (see Walentas v Johnes, 257 AD2d 352, 353 [1999], lvdismissed 93 NY2d 958 [1999]; Christenson v Gutman, 249 AD2d 805, 809 [1998];Augat v State of New York, 244 AD2d 835, 837 [1997], lv denied 91 NY2d 814[1998]). As New York does not recognize an independent cause of action for civil conspiracy tocommit a tort, that claim was properly dismissed (see Salvatore v Kumar, 45 AD3d 560, 563-564 [2007], lvdenied 10 NY3d 703 [2008]; Jebranv LaSalle Bus. Credit, LLC, 33 AD3d 424, 425 [2006]).
Hess and Buckley argue that they cannot be individually liable under any cause of action, asthey drafted the memoranda as agents of Claverack. If they fabricated the memoranda, asplaintiff claims, they were presumably acting outside their employment. As officers and directorsof Claverack, they possibly stood to personally benefit from a settlement of the wrongful deathclaim. Thus, we do not grant summary judgment to the individual defendants in their personalcapacities.
We must now address plaintiff's cross motion to disqualify defendants' counsel, as that issueis no longer moot. An attorney shall withdraw from representation if the attorney "ought to becalled as a witness," i.e., if the attorney's testimony is necessary (Code of ProfessionalResponsibility DR 5-102 [a] [22 NYCRR 1200.21 (a)]; see S & S Hotel Ventures Ltd.Partnership v 777 S. H. Corp., 69 NY2d 437, 444 [1987]; Burdett Radiology Consultantsv Samaritan Hosp., 158 AD2d 132, 134 [1990]). In his affidavit, defendants' counsel madehis testimony relevant, and possibly necessary, by stating that the memoranda were inClaverack's file when he first reviewed it, months prior to the time when plaintiff alleges that thememoranda [*4]were fabricated. Thus, as counsel's testimonymay be necessary to address the legitimacy of the memoranda, plaintiff's cross motion should begranted.
Mercure, J.P., Rose, Lahtinen and Malone Jr., JJ., concur. Ordered that the order is modified,on the law, without costs, by reversing so much thereof as granted defendants' motion forsummary judgment on the first, second, third and sixth causes of action and as denied plaintiff'scross motion to disqualify defendants' counsel; defendants' motion denied to said extent,plaintiff's cross motion granted and defendants' counsel disqualified; and, as so modified,affirmed.
Footnote *: While the complaint seems toaddress statements in counsel's letter to Zurich as well as the memoranda written by Hess andBuckley, on appeal plaintiff limits his argument to the memoranda.