| Barbara King Family Trust v Voluto Ventures LLC |
| 2007 NY Slip Op 10072 [46 AD3d 423] |
| December 20, 2007 |
| Appellate Division, First Department |
| Barbara King Family Trust et al.,Respondents-Appellants, v Voluto Ventures LLC et al., Defendants, and KurzmanEisenberg Corbin Lever & Goodman LLP et al., Appellants-Respondents. (And a Third-PartyAction.) |
—[*1] Frankfurt Kurnit Klein & Selz, P.C., New York City (Brian E. Maas of counsel), forrespondents-appellants.
Order, Supreme Court, New York County (Herman Cahn, J.), entered August 22, 2006,which granted the motion by defendants Kurzman Eisenberg Corbin Lever & Goodman andAndrew W. Goodman for summary judgment to the extent of dismissing the eighth cause ofaction (breach of fiduciary duty) but denied dismissal of the ninth cause of action (legalmalpractice), unanimously modified, on the law, the motion granted dismissing the ninth causeof action, and otherwise affirmed, without costs.
Plaintiff Barbara King retained defendant Kotowski as her financial consultant, and, upon hisrecommendation, invested a substantial sum in defendant Voluto Ventures and loaned anadditional amount to an affiliate of that entity. At about the same time, King looking to buy anew residence, became interested in a Manhattan brownstone. Undertaking to negotiate thistransaction on King's behalf, Kotowski contacted his attorney, a partner at defendant KurzmanEisenberg, to ask the firm to represent King in the anticipated purchase. Kotowski thennegotiated with the owner of the property, but the parties were never able to reach an agreementon the price.
When Kurzman Eisenberg learned that the mortgages on the property were in foreclosure, itsuggested that King buy the mortgages herself, in part to strengthen her negotiating position.King thereupon purchased the mortgages, but several days after Kurzman Eisenberg submitted tothe court a proposed judgment of foreclosure, the owner entered into a contract of sale with athird party. Thereafter, the owner redeemed the mortgages held by King, resulting in a profit toher of $150,000.
Kotowski then urged King to invest the proceeds from the satisfaction of [*2]the mortgages in Voluto, which she did. Nevertheless, shesubsequently developed doubts as to this venture, and ended up losing most of the funds she hadinvested in or loaned to Voluto. This action ensued against, among others, Voluto, Kotowski andKurzman Eisenberg.
The eighth and ninth causes of action respectively allege breach of fiduciary duty and legalmalpractice by Kurzman Eisenberg and the individual defendant attorney. Following discovery,these defendants moved for summary judgment dismissing these causes of action. The courtcorrectly dismissed the eighth cause of action but erred in not dismissing the ninth cause ofaction as well.
In order to prevail on a claim for legal malpractice, a party must establish that the attorneyfailed to exercise that degree of care, skill and diligence commonly possessed and exercised by amember of the legal community, that such negligence was a proximate cause of the loss inquestion, and that actual damages were sustained (AmBase Corp. v Davis Polk & Wardwell, 8 NY3d 428, 434[2007]; Brooks v Lewin, 21 AD3d731, 734 [2005], lv denied 6 NY3d 713 [2006]). Proximate cause requires a showingthat "but for" the attorney's negligence, the plaintiff would either have been successful in theunderlying matter or would not have sustained any ascertainable damages (AmBaseCorp., 8 NY3d at 434; Brooks, 21 AD3d at 734).
The moving defendants made a prima facie showing of entitlement to judgment as a matterof law dismissing the legal malpractice claim on the ground that their alleged negligence inrecommending the parallel strategy of purchasing the mortgages was not a proximate cause ofplaintiffs' damages, i.e., the recommendation did not prevent King from acquiring the property.In opposition, plaintiffs failed to raise a triable issue of fact. Specifically, plaintiffs failed todemonstrate the existence of a triable issue of fact regarding whether but for the movingdefendants' advice to purchase the mortgages, King would have successfully negotiated with theseller and acquired the property. At bottom, plaintiffs offer nothing but mere speculation in thisregard.
The motion court properly granted defendants' motion for summary judgment dismissingplaintiffs' claim for breach of fiduciary duty, which is predicated upon the alleged failure ofKurzman Eisenberg to inform King of the conflict of interest created by its dual representation ofherself and Voluto/Kotowski, and its subsequent furthering of the interest of Voluto/Kotowski.However, King has acknowledged that she invested the proceeds from the satisfaction of themortgages in Voluto at the recommendation of Kotowski, not Kurzman Eisenberg.Consequently, plaintiffs' contention that had Kurzman Eisenberg advised King to seek other legalopinion, she would have been protected from her ill-considered investment in Voluto, is entirelyspeculative, particularly in view of her history of investing in Voluto strictly upon the [*3]recommendation of Kotowski and without seeking any otheropinion.
Plaintiffs' remaining contentions are without merit. Concur—Andrias, J.P., Marlow,Nardelli, Sweeny and McGuire, JJ.