| Sitar v Sitar |
| 2008 NY Slip Op 02990 [50 AD3d 667] |
| April 1, 2008 |
| Appellate Division, Second Department |
| John F. Sitar et al., Appellants, v Steven Sitar et al.,Defendants, and Kevin J. McGraw et al., Respondents. |
—[*1] Snow Becker Krauss, P.C., New York, N.Y. (Ronald S. Herzog of counsel), for respondentKevin J. McGraw.
In an action, inter alia, to recover damages for legal malpractice and fraud, the plaintiffsappeal from an order of the Supreme Court, Westchester County (Murphy, J.), entered December1, 2006, which granted the motion of the defendant Kevin J. McGraw pursuant to CPLR 3211 (a)(7) to dismiss the complaint insofar as asserted against him and, sua sponte, directed thedismissal of the complaint insofar as asserted against the defendant Mintz & Fraade, P.C.
Ordered that on the Court's own motion, the notice of appeal is deemed an application forleave to appeal from so much of the order as, sua sponte, directed the dismissal of the complaintinsofar as asserted against the defendant Mintz & Fraade, P.C., and leave to appeal is granted(see CPLR 5701 [c]); and it is further,
Ordered that the order is modified, on the law, (1) by deleting the provisions thereof grantingthose branches of the motion which were to dismiss the third cause of action alleging legalmalpractice against the defendant Kevin J. McGraw, the eighth cause of action alleging breach ofduty of loyalty against the defendant Kevin J. McGraw, and the ninth cause of action allegingbreach of duty of care against the defendant Kevin J. McGraw, and substituting thereforprovisions denying those branches of the motion, and (2) by deleting the provision thereof, suasponte, directing the dismissal of the cause of action alleging legal malpractice insofar as assertedagainst the defendant [*2]Mintz & Fraade, P.C.; as so modified,the order is affirmed insofar as appealed from, with costs to the appellants.
This action arose from a dispute over the sale of the assets and operations of a closely heldcorporation, the plaintiff Corstar Business Computing Co., Inc. (hereinafter BusinessComputing). The plaintiff John F. Sitar, the owner of Business Computing, agreed to sell itsassets and operations to Corstar Communications, Inc. (hereinafter Communications), a businessentity owned or controlled by John F. Sitar's son, the defendant Steven Sitar, anddaughter-in-law, the defendant Kristen Sitar. According to the agreement, the purchase pricewould be determined according to the profits of Business Computing while Steven and Kristenwere running its operations. The defendant Kevin J. McGraw, who was a member of BusinessComputing's board of directors, acted as attorney for both John F. Sitar and Steven Sitar in thetransaction. As alleged in the complaint, John repeatedly requested the books and records ofBusiness Computing, but they were never delivered to him. Nevertheless, in January 2004 thesale took place. According to the complaint, McGraw was aware that Steven and Kristen hadengaged in "intentional and unauthorized behavior" that had caused the value of BusinessComputing to be diminished, but McGraw did not disclose that information to John.
John and Business Computing instituted this action against Steven, Kristen,Communications, various other corporations, McGraw, and McGraw's law firm, the defendantMintz & Fraade, P.C. The complaint set forth causes of action against McGraw alleging legalmalpractice, fraud, fraudulent misrepresentation, breach of duty of care, breach of duty of loyalty,and negligent misrepresentation, and sought an accounting.
In a pre-answer motion, McGraw asked the court to dismiss the complaint insofar as assertedagainst him. The court granted the motion, and sua sponte, directed dismissal of the complaintinsofar as asserted against the defendant Mintz & Fraade, P.C. We modify.
In considering a motion to dismiss pursuant to CPLR 3211 (a) (7), the facts pleaded arepresumed to be true, and the court must afford those allegations every favorable inference anddetermine only whether the facts as alleged fit within any cognizable legal theory (see Leon vMartinez, 84 NY2d 83, 87-88 [1994]; Shaya B. Pac., LLC v Wilson, Elser, Moskowitz, Edelman & Dicker,LLP, 38 AD3d 34, 38 [2006]; Gershon v Goldberg, 30 AD3d 372, 373 [2006]; Goldfarb v Schwartz, 26 AD3d462, 463 [2006]; Fast TrackFunding Corp. v Perrone, 19 AD3d 362, 362-363 [2005]).
Applying those principles, the complaint adequately pleaded a cause of action alleging legalmalpractice against McGraw and Mintz & Fraade, P.C. A prima facie case of legal malpracticerequires proof that the attorney failed to exercise the ordinary and reasonable skill and knowledgecommonly possessed by a member of the legal profession, and that the attorney's breach of thatduty proximately caused the plaintiff to sustain actual and ascertainable damages (see Rudolf v Shayne, Dachs, Stanisci,Corker & Sauer, 8 NY3d 438, 442 [2007]; Bauza v Livington, 40 AD3d 791, 792-793 [2007];Magnacoustics, Inc. v Ostrolenk, Faber, Gerb & Soffen, 303 AD2d 561, 562 [2003]).Here, the plaintiffs alleged that McGraw represented both sides of the transaction, and wasthereby burdened by a conflict of interest, and that he was aware of information critical to thepurchase price of Business Computing but withheld that information from the plaintiff JohnSitar, who was his client. These allegations were sufficient to state a cause of action to recoverdamages for legal malpractice (seeTabner v Drake, 9 AD3d 606, 610 [2004]). Additionally, the complaint adequatelypleaded a cause of action alleging breach of duty of loyalty and breach of duty of care against[*3]McGraw.
The Supreme Court, however, properly dismissed the fourth cause of action alleging fraud,the seventh cause of action alleging fraudulent misrepresentation, and the tenth cause of actionalleging negligent misrepresentation, insofar as asserted against McGraw, inasmuch as thosecauses of action arise from the same facts as the cause of action alleging legal malpractice and donot allege distinct damages (see Iannucciv Kucker & Bruh, LLP, 42 AD3d 436, 437 [2007]; Daniels v Lebit, 299 AD2d310 [2002]; Mecca v Shang, 258 AD2d 569, 570 [1999]). Contrary to McGraw'scontention, the eighth and ninth causes of action seeking to recover damages against McGraw inhis capacity as a member of Business Computing's board of directors for breach of duty of loyaltyand breach of duty of care are not duplicative of the legal malpractice action, as they rely ondifferent facts.
Finally, the court properly dismissed the sixth cause of action seeking an accounting becausethe plaintiffs fail to allege that they entrusted money or property to McGraw with respect towhich they have an interest or which, in equity, ought to be divided (see Schantz vOakman, 163 NY 148, 156-157 [1900]; Bouley v Bouley, 19 AD3d 1049, 1051 [2005]). Fisher, J.P.,Dillon, McCarthy and Belen, JJ., concur.