| MacDonald v Guttman |
| 2010 NY Slip Op 03519 [72 AD3d 1452] |
| April 29, 2010 |
| Appellate Division, Third Department |
| Loretta M. MacDonald, Formerly Known as Loretta M. Lucenti,Appellant, v Charles Guttman et al., Respondents. |
—[*1] Paduano & Weintraub, L.L.P., New York City (Anthony Paduano of counsel), forrespondents.
Egan Jr., J. Appeal from an order of the Supreme Court (Garry, J.), entered February 2, 2009in Tompkins County, which granted defendants' motion to dismiss the complaint.
Plaintiff commenced this action alleging damages as a result of defendants' allegedmalpractice in representing plaintiff in post-divorce matters. As background, in June 1996,plaintiff, while represented by prior counsel, commenced an action for divorce against herformer husband, Donald Lucenti. In December 1996, plaintiff and Lucenti entered into astipulation and opting out agreement (hereinafter stipulation), which was incorporated into, butnot merged with, their judgment of divorce.[FN*]The stipulation, among other things, provided for the distribution of their real estate and jointlyand individually held securities and mutual funds (hereinafter collectively referred to assecurities). The stipulation specified that the jointly held securities [*2]would continue to be jointly held with the right of survivorship,with any future dividends to be reinvested, and that plaintiff would retain those individually heldsecurities listed on an attached schedule as "Loretta's stocks." The stipulation provided thatattorney David Tyler would represent both of them in liquidating real estate holdings and alsocontained a declaration that each party had made "full and complete disclosure of all income,assets and indebtedness."
Thereafter, in conjunction with Tyler's motion in Supreme Court for guidance,Lucenti—then also individually represented by an attorney—responded allegingthat plaintiff was harboring ownership of certain securities not disclosed in the stipulation.Lucenti requested an accounting and that the court dispose of unreported assets without aseparate action. Without denying Lucenti's non-disclosure allegation, plaintiff, through priorcounsel, responded and asserted that Lucenti was violating the stipulation by cashing, rather thanreinvesting, dividend checks from the jointly held securities. Plaintiff requested that the courtappoint a receiver to marshal the securities and "divide and distribute them to avoid continualconfusion, recriminations and litigation." Lucenti consented and, in November 2000, SupremeCourt (Relihan, Jr., J.) appointed a referee to conduct an accounting of all of plaintiff's andLucenti's securities and to make a report and recommendation to the court (see CPLR4403). In its order, the court reserved the authority to determine "the ultimate disposition of saidsecurities," and no appeal was taken from that order.
In June 2001, the referee submitted his report concluding, among other things, that the extentof the securities had not been fully disclosed at the time of the stipulation and, in particular, thatplaintiff's holdings were much greater than originally reported. The referee recommended that alljointly held securities be divided and reissued to plaintiff and Lucenti equally. Plaintiff thenretained defendant Charles Guttman (hereinafter defendant) as her attorney. Based on thereferee's report and recommendation, Supreme Court (Relihan, Jr., J.), in a July 2001 order,directed that transaction histories of all individually and jointly held securities, together with theparties' tax returns, be provided to the referee. The court further directed that the referee'saccounting report be provided to plaintiff's and Lucenti's attorneys, and that counsel meet todetermine if an agreement could be reached regarding the distribution of all the securities. Thecourt reserved the authority to ratify any agreement regarding the disposition of the securitiesand, if no agreement could be reached, reserved the authority to determine "the fair and equitabledistribution [of those securities] and any other issues the [c]ourt deems relevant and material to afinal disposition of this matter." No appeal was taken from that order.
In September 2003, the referee completed his investigation and found, in part, that at thetime of the stipulation, the value of all securities held individually and jointly by theparties—including those not disclosed in the stipulation—was $412,804, brokendown as follows: the value of all jointly held securities totaled $201,330, the value of allsecurities held individually by Lucenti totaled $3,606, and the value of all securities heldindividually by plaintiff totaled $207,868. The referee's investigation revealed that after thedivorce was granted, Lucenti received $89,323 in dividends from the jointly held securities andplaintiff received $5,176.
When plaintiff and Lucenti could not reach an agreement regarding the distribution of thesecurities, and after hearing arguments of counsel, Supreme Court (Relihan, Jr., J.), in aNovember 2003 order, determined that all the securities listed in the referee's report were maritalproperty, and redistributed them almost evenly between plaintiff and Lucenti based on theirvalue at the time of the 1996 stipulation. A notice of appeal was filed by plaintiff, but defendantfailed to timely perfect the appeal. In December 2005, this Court denied defendant's motionseeking an [*3]extension of time to perfect the appeal. Plaintiffthen commenced this legal malpractice action against defendant and his law firm, claiming that,but for defendant's failure to perfect the appeal, she would have been successful on the appeal onthe ground that, in its November 2003 order, Supreme Court improperly set aside the provisionsof the stipulation in redistributing the parties' securities. Supreme Court (Garry, J.) granteddefendants' motion to dismiss the complaint for failure to state a cause of action. Plaintiffappeals, and we now affirm.
A claim of legal malpractice will be sustained if the plaintiff establishes "both that thedefendant attorney failed to exercise the ordinary reasonable skill and knowledge commonlypossessed by a member of the legal profession which results in actual damages to a plaintiff, andthat the plaintiff would have succeeded on the merits of the underlying action but for theattorney's negligence" (Alaimo vMcGeorge, 69 AD3d 1032, 1034 [2010] [internal quotation marks and citationsomitted]). Here, while there is no dispute that defendant failed to act with the ordinary skillsrequired of an attorney, plaintiff must also demonstrate that defendant's negligence was aproximate cause of her loss sustained and that she suffered actual and ascertainable damages (see Bixby v Somerville, 62 AD3d1137, 1139 [2009]; Antokol &Coffin v Myers, 30 AD3d 843, 845 [2006]). "Mere speculation about a loss resultingfrom an attorney's poor performance is insufficient to sustain a prima facie case of legalmalpractice [and] it is incumbent upon the aggrieved party to show that [he or she] would havebeen successful in the underlying action" (Antokol & Coffin v Myers, 30 AD3d at 845[internal quotation marks and citations omitted]).
Initially, we reject plaintiff's argument that the November 2003 order would have been"automatically reversed" because the stipulation was modified on a motion, without thecommencement of a separate action. Although it is well established that because a stipulationthat is not merged into a judgment of divorce survives the judgment as an independentcontractual obligation (see Rainbow v Swisher, 72 NY2d 106, 109 [1988]; Hendrix v Hendrix, 2 AD3d 1257,1258 [2003]) and should be modified by commencing a separate plenary action (see Banker v Banker, 56 AD3d1105, 1107 n 2 [2008]; Hoyt v Hoyt, 307 AD2d 621, 622 [2003]; Grieco vGrieco, 307 AD2d 488, 488 [2003]), this Court has held that a court's alteration of astipulation absent a plenary action is not fatal (see e.g. Banker v Banker, 56 AD3d at1107 n 2; Brender v Brender, 199 AD2d 665, 666 n 2 [1993]; compare Lambert vLambert, 142 AD2d 557 [1988]).
Here, both parties requested that Supreme Court intervene at a time when plaintiff wasrepresented by prior counsel, and the court clearly reserved the authority to distribute and titlethe securities should plaintiff and Lucenti fail to come to an agreement. No appeal was takenfrom the order appointing the referee, nor was there any challenge to the referee's finding that allsecurities had not been disclosed. Likewise, there was no appeal from the order that reappointedthe referee to complete his inquiry and report to the court and reserved the authority to distributethe investments in question should the parties be unable to come to an agreement on their own.Even if plaintiff did not specifically agree to the referee's findings, she did agree to have thereferee facilitate the titling of the assets in question, and she did not object to the possibility ofthe modification of the stipulation as reserved by Supreme Court. Thus, it does not follow that aprocedural defect in the modification of the stipulation warrants automatic reversal of the ordermodifying the stipulation. Moreover, as "Supreme Court may, under appropriate circumstances,reform the parties' agreement to conform to their actual intent" (Brender v Brender, 199AD2d at 666), plaintiff was not guaranteed a successful appeal under the theory that the courtimproperly modified the stipulation in accordance with the referee's report and recommendation(see [*4]generally Murphy v Murphy, 263 AD2d 737[1999]). While plaintiff claims that her appeal of the November 2003 order would have beensuccessful because she was entitled to an evidentiary hearing regarding the referee's report,Supreme Court was under no obligation to hold an evidentiary hearing and was entitled toconfirm or reject the referee's report "on [its] own initiative" and make new findings "with orwithout taking additional testimony" (CPLR 4403; but see Banker v Banker, 56 AD3d at1108; Brender v Brender, 199 AD2d at 666).
Finally, plaintiff argues that if she had been able to perfect her appeal from the November2003 order and it were remitted for further proceedings, she could have sought enforcement ofthe stipulation or commenced an action against Lucenti for breach of contract, and any attemptsto vacate the stipulation by Lucenti would have been unsuccessful. This assertion is whollywithout merit as the stipulation was entered into under such questionable circumstances and thereferee found that plaintiff had not fully disclosed the extent of her security holdings.Accordingly, as plaintiff cannot show that she would have been successful in her appeal or infurther proceedings, her claim for legal malpractice was properly dismissed (see Bixby vSomerville, 62 AD3d at 1140; Leach v Bailly, 57 AD3d 1286, 1288 [2008]; Amodeo v Gellert & Quartararo, P.C.,26 AD3d 705, 707 [2006]).
Spain, J.P., Rose, Kavanagh and Stein, JJ., concur. Ordered that the order is affirmed, withcosts.
Footnote *: According to the complaint,Lucenti suffered from mental illness that occasionally required hospitalization, and he wasalleged to have been institutionalized at a mental health facility at the time that plaintiffcommenced the divorce action. Seven months later, Lucenti executed the stipulation pro se.