| M & R Ginsburg, LLC v Segal, Goldman, Mazzotta & Siegel,P.C. |
| 2011 NY Slip Op 08877 [90 AD3d 1208] |
| December 8, 2011 |
| Appellate Division, Third Department |
| M & R Ginsburg, LLC, Appellant, v Segal, Goldman, Mazzotta &Siegel, P.C., et al., Respondents. |
—[*1] Smith, Sovik, Kendrick & Sugnet, P.C., Syracuse (Laurence F. Sovik of counsel), forrespondents.
Rose, J. Appeal from an order of the Supreme Court (Nolan Jr., J.), entered December 13,2010 in Saratoga County, which granted defendants' motion for summary judgment dismissingthe complaint.
Plaintiff and its members own a number of parcels of commercial real property, one of whichis leased to a Rite Aid pharmacy with a restriction precluding plaintiff's members from directly orindirectly permitting the operation of any other pharmacy within one mile of the Rite Aid parcel.Defendants, with knowledge of that restriction as well as plaintiff's desire to account for it in thesale of its other property, represented plaintiff in connection with the sale of a parcel within onemile of the Rite Aid. Negotiations to sell the parcel in 2005 to a developer interested in buildinga pharmacy on it fell through after defendants raised the issue of the lease restriction andplaintiff's desire to be indemnified for any expenses or damages arising from Rite Aid's claim ofa breach. In 2006, a new contract with what purported to be a different developer was executedwithout any reference to a pharmacy restriction or assurance as to the new developer's plans forthe parcel. When it became apparent that the new developer was related to the earlier developerand intended to build a pharmacy, plaintiff refused to close the transaction and commenced anaction against the developer and others to, among other things, rescind the contract based onfraud (M & R Ginsburg, LLC v OrangeCanyon Dev. Co., LLC, 84 AD3d 1470[*2][2011]; M & R Ginsburg, LLC v Orange CanyonDev. Co., LLC, 69 AD3d 1181 [2010]). Plaintiff also commenced this action againstdefendants for legal malpractice due to their failure to include a pharmacy restriction in thecontract of sale or otherwise protect plaintiff from the potential for litigation with Rite Aid if apharmacy were to be developed on the parcel. After joinder of issue, defendants moved forsummary judgment. Supreme Court, concluding that any damages incurred by plaintiff werespeculative, granted the motion and dismissed the complaint. Plaintiff appeals.
An action to recover damages for legal malpractice requires a showing that the attorney wasnegligent in handling the plaintiff's matter, that such negligence proximately caused a loss andthat the plaintiff sustained actual and ascertainable damages (see AmBase Corp. v Davis Polk & Wardwell, 8 NY3d 428, 434[2007]; Rudolf v Shayne, Dachs,Stanisci, Corker & Sauer, 8 NY3d 438, 442 [2007]; Brodeur v Hayes, 18 AD3d 979, 980 [2005], lv dismissed anddenied 5 NY3d 871 [2005]). An attorney's negligence is defined as the failure "to exercisethe ordinary reasonable skill and knowledge commonly possessed by a member of the legalprofession" (McCoy v Feinman, 99 NY2d 295, 301 [2002], quoting Darby & Darby vVSI Intl., 95 NY2d 308, 313 [2000]; see Benaquista v Burke, 74 AD3d 1514, 1515 [2010]). To establishproximate cause in the factual situation here, a plaintiff must show that, but for the attorney'snegligence, he or she would not have incurred damages (see Rudolf v Shayne, Dachs,Stanisci, Corker & Sauer, 8 NY3d at 442; Barnett v Schwartz, 47 AD3d 197, 203-205 [2007]).
Initially, we cannot agree with defendants that they are entitled to a determination that theywere not negligent as a matter of law. In support of their contention that they exercised theordinary reasonable skill and knowledge commonly possessed by a member of the legalprofession, defendants submitted an affidavit from defendant Debra Lambek in which sheclaimed that, although the Rite Aid lease restriction was referred to as part of the proposed 2005contract, she did not include any reference to it in the 2006 contract because it was personal toplaintiff and, as such, did not apply to the premises being sold. Further, according to Lambek,plaintiff was aware that no pharmacy restriction was included in the 2006 contract prior toexecuting it. Defendants also submitted an expert affidavit in support of their position. Plaintiffopposed the motion with an affidavit from one of its members, Michael Ginsburg, in which heclaimed that defendants were aware that he did not want the property to be sold for use as apharmacy and that, when he was presented with the 2006 contract of sale, it was hisunderstanding that defendants had accounted for his concerns. Plaintiff also submitted its ownexpert affidavit as well as Lambek's examination before trial testimony from the fraud action.There, Lambek had testified that, as part of the negotiation of the 2005 sale, plaintiff demandedan indemnification clause to protect it against any claim by Rite Aid that plaintiff had violatedthe lease restriction, and that she forgot to include any reference to the restriction in negotiatingthe 2006 contract. Given this conflicting evidence, issues of fact exist as to whether defendantswere negligent (see Wittich v Wallach, 201 AD2d 558, 559 [1994]; Canavan vSteenburg, 170 AD2d 858, 859 [1991]; Bloom v Kernan, 146 AD2d 916, 917[1989]).
As for actual damages, Supreme Court concluded that whether the developer would build apharmacy and whether Rite Aid would sue or withhold rent as a result were speculative.Accordingly, Supreme Court held that plaintiff was incapable of establishing that defendants'negligence was the proximate cause of any damages. We cannot agree. Defendants did notdispute that a pharmacy was planned by the developer. Nor could they, given their involvementin the 2006 contract negotiations and their ensuing knowledge of the basis for the fraud actionagainst the developer. Accordingly, defendants have made no showing to warrant a finding that[*3]development of a pharmacy was speculative as a matter oflaw (see Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853 [1985]; Ashley vManey, McConville & Liccardi, 251 AD2d 862, 864 [1998]).
Further, despite defendants' contention that the Rite Aid lease restriction is personal toplaintiff and does not apply to the premises being sold, a triable issue of fact exists as to whetherthe development of a pharmacy would cause Rite Aid to seek to enforce the lease restrictionagainst plaintiff. Specifically, Ginsburg recounts in his affidavit that he contacted Lambek when,after the 2006 contract was executed, he learned of the developer's intent to build a pharmacy. Hecontends that she told him that the developer could not build a pharmacy, only to lateracknowledge that the pharmacy restriction had not been accounted for in the contract. Ginsburgthen met with Lambek and Jeffrey Siegel, a member of defendant law firm. According toGinsburg, they never told him that Rite Aid would not seek to enforce the restriction, but insteadthat he was facing litigation whether he closed on the contract or not. Defendants concede thatLambek and Siegel advised Ginsburg that Rite Aid may sue plaintiff if a pharmacy were to bedeveloped on the property, but they argue that such a lawsuit would be defensible. Theirargument, however, is irrelevant. Plaintiff does not allege as the basis of its claim of defendants'negligence that Rite Aid will prevail in any such action. Rather, plaintiff's claim is that itemployed defendants to, among other things, protect plaintiff from the risk that Rite Aid wouldsue or withhold rent if a pharmacy were to be developed. Plaintiff also presented expert proofthat withholding of rent or a lawsuit by Rite Aid to enforce the restriction would be reasonableand not frivolous, and that plaintiff faced a risk of significant financial harm if it closed on the2006 contract.
Viewing the evidence in a light most favorable to plaintiff as the nonmoving party (see Sutherland v Thering Sales & Serv.,Inc., 38 AD3d 967, 968 [2007]), there is at least a question of fact as to whether apharmacy would be built and whether Rite Aid would then seek to enforce the restriction againstplaintiff by suing or withholding rent. In the event that the jury resolves those questions inplaintiff's favor, the jury could then reasonably conclude that, but for defendants' allegednegligence, plaintiff would not have incurred the expense of attempting to mitigate damages bypreventing the development of a pharmacy. In that event, actual damages would include "'litigation expenses incurred in an attempt to avoid, minimize or reduce the damage caused by theattorney's wrongful conduct' " (Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8NY3d at 443, quoting DePinto v Rosenthal & Curry, 237 AD2d 482, 482 [1997]). Inview of these issues of fact as to negligence and proximate cause, defendants' motion forsummary judgment should have been denied.
Spain, J.P., Malone Jr., Stein and Egan Jr., JJ., concur. Ordered that the order is reversed, onthe law, with costs, and motion denied.