| DeStaso v Condon Resnick, LLP |
| 2011 NY Slip Op 09259 [90 AD3d 809] |
| December 20, 2011 |
| Appellate Division, Second Department |
| Vincent DeStaso, Appellant, v Condon Resnick, LLP, etal., Respondents. |
—[*1] Wilson Elser Moskowitz Edelman & Dicker LLP, New York, N.Y. (Thomas W. Hyland,Richard E. Lerner, and Leanne Carvino of counsel), for respondents.
In an action, inter alia, to recover damages for legal malpractice, the plaintiff appeals, aslimited by his brief, from so much of an order of the Supreme Court, Rockland County(Jamieson, J.), dated July 19, 2010, as granted those branches of the defendants' motion whichwere pursuant to CPLR 3211 (a) (1) and (7) and, in effect, pursuant to CPLR 3211 (a) (5), todismiss the complaint insofar as asserted against the defendant Condon Resnick, LLP.
Ordered that the order is modified, on the law, (1) by deleting the provisions thereof grantingthose branches of the defendants' motion which were, in effect, pursuant to CPLR 3211 (a) (5) todismiss the first and second causes of action insofar as asserted against the defendant CondonResnick, LLP, and substituting therefor provisions denying those branches of the defendants'motion, (2) by deleting the provisions thereof granting those branches of the defendants' motionwhich were pursuant to CPLR 3211 (a) (7) to dismiss the fourth, fifth, and ninth causes of actioninsofar as asserted against the defendant Condon Resnick, LLP, and substituting thereforprovisions denying those branches of the defendants' motion, and (3) by deleting the provisionsthereof granting those branches of the defendants' motion which were pursuant to CPLR 3211 (a)(1) to dismiss the sixth and seventh causes of action, and so much of the third cause of action asalleged legal malpractice, insofar as asserted against the defendant Condon Resnick, LLP, andsubstituting therefor provisions denying those branches of the defendants' motion; as somodified, the order is affirmed insofar as appealed from, without costs or disbursements.
In 2004, the defendant Condon Resnick, LLP (hereinafter Condon Resnick), prepared notesin connection with loans made by the plaintiff to a nonparty, Peter A. Bottiglieri. The first loan,in the sum of $137,000 at a rate of 18% annual interest, closed on January 29, 2004. A secondloan, in the sum of $210,000 at a rate of 22% annual interest, closed on March 22, 2004. Eachloan required Bottiglieri to make monthly payments for two years, followed by a balloonpayment at the end of that period.
The loans were purportedly secured by mortgages on real property located in Dobbs [*2]Ferry (hereinafter the Dobbs Ferry property). At the time thesemortgages were recorded, Bottiglieri did not have title to the Dobbs Ferry property.
Bottiglieri failed to make any payments on either loan. In an effort to recoup the fundsextended by the plaintiff through the unsecured and unenforceable loans, Condon Resnickprepared a contract (hereinafter the contract of sale), pursuant to which the plaintiff wouldpurchase the Dobbs Ferry property at the below-market cost of $570,000, and Bottiglieri wouldtransfer title to plaintiff in exchange for satisfaction of the loans. Although the purported closingoccurred in December 2004, title was rejected by the title insurance company since Bottiglieristill did not have title to the Dobbs Ferry property. The plaintiff nevertheless entered into thecontract of sale, allegedly on the advice of Condon Resnick. The deed to the real propertynaming the plaintiff as the owner was not filed in the County Clerk's office until sometime inJuly 2005. During the intervening period between December 2004 and July 2005, the plaintiffwas compelled to expend sums to maintain the Dobbs Ferry property and safeguard his interest init.
In February 2006, the plaintiff, allegedly on the advice of Condon Resnick, commenced anaction against Bottiglieri to recover unpaid interest on the loans which accrued between theclosings on the loans and the actual transfer of the title to the Dobbs Ferry property, and for otherdamages (hereinafter the underlying action). Bottiglieri initially defaulted in the action, but hisdefault was later vacated by an order of this Court (see DeStaso v Bottiglieri, 52 AD3d 453 [2008]). Thereafter, in anorder dated August 31, 2009, the Supreme Court awarded Bottiglieri summary judgmentdismissing the complaint insofar as asserted against him, canceled the mortgages and voided theloans as unenforceable due to their usurious rate of interest, and directed an inquest on damages.The plaintiff discharged Condon Resnick in December 2009. The inquest eventually resulted inan award in favor of Bottiglieri and against the plaintiff in the sum of $600,000.
The plaintiff commenced this action against Condon Resnick and other related defendants inFebruary 2010. The plaintiff alleged, inter alia, that Condon Resnick committed legal malpracticeby, among other things, its preparation of the 2004 loans and the contract of sale, as well as thecommencement and handling of the February 2006 action to recover unpaid interest on the 2004loans. The defendants moved pursuant to CPLR 3211 (a) (1) and (7) and, in effect, pursuant toCPLR 3211 (a) (5), to dismiss the complaint. The Supreme Court granted the defendants' motion.On appeal, the plaintiff contends that the Supreme Court erred in granting dismissal of thecomplaint insofar as asserted against Condon Resnick. We modify.
The first cause of action alleged that Condon Resnick was liable for legal malpractice bypreparing the unenforceable and unsecured loans in 2004. The second cause of action alleged thatCondon Resnick was liable for legal malpractice in connection with the contract of sale. TheSupreme Court improperly granted those branches of the defendants' motion which were, ineffect, pursuant to CPLR 3211 (a) (5) to dismiss these causes of action insofar as asserted againstCondon Resnick as time-barred.
In an action to recover damages for legal malpractice, a plaintiff must demonstrate that theattorney failed to exercise the ordinary reasonable skill and knowledge commonly possessed by amember of the legal profession, and that the breach of this duty was a proximate cause of actualdamages sustained by the plaintiff (seeRudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442 [2007]; Snolis v Clare, 81 AD3d 923[2011]; Greene v Sager, 78 AD3d777 [2010]; Boglia vGreenberg, 63 AD3d 973, 975 [2009]; Gumbs v Friedman & Simon, 35 AD3d 362 [2006]; Blank v Harry Katz, P.C., 3 AD3d512 [2004]; Aversa v Safran, 303 AD2d 700, 701 [2003]; Cannistra v O'Connor,McGuinness, Conte, Doyle, Oleson & Collins, 286 AD2d 314 [2001]). A cause of actionalleging legal malpractice may be based upon the creation of a loan document which is usuriousand does not fall under any exceptions to the law of usury (see Theresa Striano Revocable Trust v Blancato, 71 AD3d 1122[2010]).
An action to recover damages arising from legal malpractice must be commenced withinthree years after accrual (see CPLR 214 [6]; 203 [a]; McCoy v Feinman, 99NY2d 295, 301 [2002]; Rakusin vMiano, 84 AD3d 1051, 1051-1052 [2011]; Goldman v Akin Gump Strauss Hauer & Feld LLP, 46 AD3d 481[2007]; Carnevali v Herman, 293 AD2d 698 [2002]). The action accrues when themalpractice is [*3]committed (see McCoy v Feinman, 99NY2d at 301; Shumsky v Eisenstein, 96 NY2d 164, 166 [2001]; Carnevali vHerman, 293 AD2d at 698-699).
Causes of action alleging legal malpractice which would otherwise be time-barred are timelyif the doctrine of continuous representation applies (see Glamm v Allen, 57 NY2d 87, 94[1982]; Tsafatinos v Wilson ElserMoskowitz Edelman & Dicker, LLP, 75 AD3d 546 [2010]; Minsky v Haber, 74 AD3d 763[2010]). In the legal malpractice context, the continuous representation doctrine tolls the statuteof limitations where there is a mutual understanding of the need for further representation on thespecific subject matter underlying the malpractice claim (see Zorn v Gilbert, 8 NY3d 933, 934 [2007]; McCoy vFeinman, 99 NY2d at 306; Siegel v Kranis, 29 AD2d 477, 480 [1968]).
To dismiss a cause of action pursuant to CPLR 3211 (a) (5) on the ground that it is barred bythe applicable statute of limitations, a defendant bears the initial burden of establishing, primafacie, that the time in which to sue has expired (see Kennedy v H. Bruce Fischer, Esq., P.C., 78 AD3d 1016, 1017[2010]). Here, the defendants established that the first and second causes of action accrued morethan three years prior to the commencement of this action. Accordingly, the burden then shiftedto the plaintiff to raise a question of fact as to whether the statute of limitations was tolled or wasotherwise inapplicable, or whether he actually commenced this action within the applicablelimitations period (see Williams v NewYork City Health & Hosps. Corp., 84 AD3d 1358, 1359 [2011]; Symbol Tech., Inc. v Deloitte & Touche,LLP, 69 AD3d 191, 195 [2009]; Gravel v Cicola, 297 AD2d 620, 621 [2002]).
Contrary to the Supreme Court's determination, the plaintiff raised an issue of fact as towhether Condon Resnick's representation of the plaintiff until December 2009 reflected a courseof continuous representation intended to rectify or mitigate the initial act of alleged malpracticewhich occurred in connection with the preparation of the two loans in 2004 (see Weiss vManfredi, 83 NY2d 974, 977 [1994]; Kennedy v H. Bruce Fischer, Esq., P.C., 78AD3d at 1017-1018; Gravel v Cicola, 297 AD2d at 621; Pellati v Lite & Lite,290 AD2d 544, 545-546 [2002]; Kuritzky v Sirlin & Sirlin, 231 AD2d 607, 608[1996]; Luk Lamellen U. Kupplungbau GmbH v Lerner, 166 AD2d 505, 505-506 [1990];Stampfel v Eckhardt, 143 AD2d 184, 185 [1988]; Siegel v Kranis, 29 AD2d at480; cf. Maurice W. Pomfrey & Assoc.,Ltd. v Hancock & Estabrook, LLP, 50 AD3d 1531 [2008]). Accordingly, the SupremeCourt erred in granting that branch of the defendants' motion which was to dismiss the first andsecond causes of action insofar as asserted against Condon Resnick as time-barred.
The fourth, sixth, and seventh causes of action, and portions of the third cause of action,allege various instances of legal malpractice which allegedly occurred during Condon Resnick'srepresentation of the plaintiff during the underlying action, commenced in February 2006, torecover unpaid interest on the loans. The Supreme Court did not grant dismissal of these causesof action as time-barred. Rather, it did so pursuant to either CPLR 3211 (a) (1) based ondocumentary evidence, or pursuant to CPLR 3211 (a) (7) for failure to state a cause of action.
The fourth cause of action alleges Condon Resnick's failure to assert a statute of limitationsdefense to bar any recovery by Bottiglieri based on the usurious nature of the two 2004 loans.Contrary to the Supreme Court's conclusion, although the statute of limitations may not havebarred Bottiglieri from asserting usury as a defense to the plaintiff's claims for unpaid interest onthe 2004 loans, it nevertheless may have been utilized to prevent Bottiglieri from gainingaffirmative relief on the ground of usury (see CPLR 203 [d]; Davis v Davis, 95AD2d 674, 675 [1983]; see also 1-203 Weinstein-Korn-Miller, NY Civ Prac CPLR¶ 203.25). Accordingly, the Supreme Court improperly granted that branch of thedefendants' motion which was pursuant to CPLR 3211 (a) (7) to dismiss the fourth cause ofaction insofar as asserted against Condon Resnick for failure to state a cause of action.
The Supreme Court granted that branch of the defendants' motion which was to dismiss thesixth and seventh causes of action, and those portions of the third cause of action alleging legalmalpractice, insofar as asserted against Condon Resnick pursuant to CPLR 3211 (a) (1), on theground that a defense was founded upon documentary evidence. Contrary to the Supreme Court'sconclusion, the evidentiary materials submitted by the defendants did not conclusively establishthat [*4]the plaintiff had no cause of action; rather, they merelydisputed certain factual allegations contained in the complaint (see Rovello v Orofino RealtyCo., 40 NY2d 633, 636 [1976]; Simpson v Alter, 78 AD3d 813, 815 [2010]; Kempf v Magida, 37 AD3d 763,764 [2007]; Quesada v Global Land,Inc., 35 AD3d 575, 576 [2006]; Skillgames, LLC v Brody, 1 AD3d 247, 251 [2003]). Accordingly,the Supreme Court should not have granted those branches of the defendants' motion which werepursuant to CPLR 3211 (a) (1) to dismiss the sixth and seventh causes of action, and so much ofthe third cause of action as alleged legal malpractice, insofar as asserted against Condon Resnick.
However, the Supreme Court properly granted that branch of the defendant's motion whichwas to dismiss those portions of the third cause of action which alleged a violation of JudiciaryLaw § 487 insofar as asserted against Condon Resnick, since the complaint did not containallegations of fraud or deceit sufficient to state a cause of action under that section (seeMecca v Shang, 258 AD2d 569, 570 [1999]; Zambito v Ryan, 125 AD2d 462, 463[1986]). Moreover, the court properly granted that branch of the defendants' motion which was todismiss the eighth cause of action which alleged violations of the Code of ProfessionalResponsibility, insofar as it was asserted against Condon Resnick, since it failed to state a causeof action (see Kantor v Bernstein, 225 AD2d 500, 501-502 [1996]; Weintraub vPhillips, Nizer, Benjamin, Krim, & Ballon, 172 AD2d 254, 254 [1991]; Brainard vBrown, 91 AD2d 287, 289 [1983]).
In light of the foregoing, the Supreme Court improperly granted those branches of thedefendants' motion which were to dismiss the fifth cause of action, which sought to recover anattorney's fee paid to Condon Resnick, insofar as asserted against Condon Resnick, and the ninthcause of action, which sought to recover consequential damages, insofar as asserted againstCondon Resnick (see generally DePinto v Rosenthal & Curry, 237 AD2d 482, 482-483[1997]).
The defendants' alternative grounds for affirmance of the dismissal of the causes of actionalleging legal malpractice are without merit. Dillon, J.P., Dickerson, Chambers and Miller, JJ.,concur.