| Theresa Striano Revocable Trust v Blancato |
| 2010 NY Slip Op 02773 [71 AD3d 1122] |
| March 30, 2010 |
| Appellate Division, Second Department |
| Theresa Striano Revocable Trust et al.,Appellants, v Richard T. Blancato, Respondent. |
—[*1] Richard T. Blancato, Tarrytown, N.Y., respondent pro se.
In an action to recover damages for legal malpractice, the plaintiffs appeal from an order ofthe Supreme Court, Westchester County (DiBella, J.), entered July 7, 2009, which denied theirmotion for summary judgment on the issue of liability.
Ordered that the order is affirmed, with costs.
The plaintiff Theresa Striano Revocable Trust (hereinafter the Trust), whose sole trustee isthe plaintiff Theresa Striano, provided two $100,000 mortgage loans to a borrower seeking toavoid foreclosure on two apartment buildings in the Bronx. The borrower is not a party to thisaction. Before the closing documents were finalized, the defendant Richard T. Blancato, whowas the plaintiffs' attorney, observed that the 17% annual interest rate on the loans might beusurious under General Obligations Law § 5-501 and Banking Law § 14-a, whichgenerally fix the maximum annual interest rate which may be charged for these types oftransactions at 16%. He shared his concern with the borrower's counsel, who assured him thatthe rate was not usurious because the loans were commercial in nature. Based on thisexplanation, the defendant was persuaded that no usury issue existed, and never notified Strianoabout the potential problem.
The borrower defaulted on both loans, prompting the defendant to file two foreclosureactions against him on the plaintiffs' behalf in 2005. In 2008 the borrower raised a usury defense,and his counsel has now correctly conceded that he misspoke when he advised the defendant thatthe 17% interest rate fell within a statutory exception to usury. Striano avers that she hasincurred more than $40,000 in legal fees responding to this defense. She contends that thedefendant caused her to incur those fees by failing to research the usury issue and, instead,relying on the advice of the borrower's counsel.
"In order to prevail in an action to recover damages for legal malpractice, a plaintiff mustestablish that the defendant attorney failed to exercise the ordinary reasonable skill andknowledge commonly possessed by a member of the legal profession, and that the breach of thisduty proximately caused the plaintiff to sustain actual and ascertainable damages. To establishthe element of causation, a plaintiff must show that he or she would have prevailed in theunderlying action or would not have incurred any damages but for the attorney's negligence. Thefailure to demonstrate proximate cause requires dismissal of a legal malpractice action regardlessof whether the attorney was negligent" (Kluczka v Lecci, 63 AD3d 796, 797 [2009][citations omitted]).[*2]
Here, the defendant's reliance upon the advice of theborrower's attorney reflects a failure to exercise ordinary reasonable skill (see Shopsin vSiben & Siben, 268 AD2d 578 [2000]; McCoy v Tepper, 261 AD2d 592, 593[1999]; Logalbo v Plishkin, Rubano & Baum, 163 AD2d 511, 514 [1990]). As theplaintiffs' current counsel correctly notes, even a cursory review of the relevant statutes wouldhave revealed that the proposed loans did not fall under any usury exceptions. Additionally, thedefendant's efforts to paint his actions in a favorable light are unavailing, as his recent avermentsdirectly contradict both his 2008 affirmation and the averments of Thomas Fatato, Striano'sbrother, who submitted an affidavit on the defendant's behalf (see Denicola v Costello,44 AD3d 990 [2007]; Telfeyan v City of New York, 40 AD3d 372, 373 [2007]).
The defendant contends that Fatato ultimately was responsible for the decision to provide theloans despite the potential usury problem. Assuming, however, that Fatato acted as Striano'sagent and was aware of the borrower's counsel's advice (such that Fatato's knowledge can beimputed to Striano), the defendant "may not shift to the client the legal responsibility [he] wasspecifically hired to undertake because of [his] superior knowledge" (Hart v Carro,Spanbock, Kaster & Cuiffo, 211 AD2d 617, 619 [1995]).
Accordingly, the plaintiffs established, prima facie, that the defendant acted negligently withrespect to the usury issue. Issues of fact exist, however, as to whether Striano was involved incertain decisions regarding the handling of the mortgage foreclosure actions filed against theborrower and, if so, whether those decisions constituted an intervening cause of the plaintiffs'injuries (see Eisenberger v Septimus, 44 AD3d 994, 995 [2007]; Brooks vLewin, 21 AD3d 731, 734 [2005]; Selletti v Liotti, 22 AD3d 739, 740 [2005];Blank v Harry Katz, P.C., 3 AD3d 512, 513 [2004]). The Supreme Court's denial of theplaintiffs' motion was, therefore, proper. Mastro, J.P., Dickerson, Belen and Roman, JJ., concur.