| Endless Ocean, LLC v Twomey, Latham, Shea, Kelley, Dubin &Quartararo |
| 2014 NY Slip Op 00087 [113 AD3d 587] |
| January 8, 2014 |
| Appellate Division, Second Department |
| Endless Ocean, LLC, Appellant, v Twomey,Latham, Shea, Kelley, Dubin & Quartararo et al.,Respondents. |
—[*1] Rivkin Radler LLP, Uniondale, N.Y. (Evan H. Krinick, Cheryl F. Korman, Stuart M.Bodoff, and Todd Belous of counsel), for respondents.
In an action to recover damages for legal malpractice, the plaintiff appeals from (1)an order of the Supreme Court, Westchester County (O. Bellantoni, J.), dated June 4,2012, which granted the defendants' motion to dismiss the complaint pursuant to CPLR3211 (a), and (2) a judgment of the same court dated July 5, 2012, which, upon the order,is in favor of the defendants and against the plaintiff dismissing the complaint.
Ordered that the appeal from the order is dismissed; and it is further,
Ordered that the judgment is reversed, on the law, the defendants' motion to dismissthe complaint pursuant to CPLR 3211 (a) is denied, and the order dated June 4, 2012, ismodified accordingly; and it is further,
Ordered that one bill of costs is awarded to the plaintiff.
The appeal from the intermediate order must be dismissed because the right of directappeal therefrom terminated with the entry of judgment in the action (see Matter ofAho, 39 NY2d 241 [1976]). The issues raised on the appeal from the order arebrought up for review and have been considered on the appeal from the judgment(see CPLR 5501 [a] [1]).
The plaintiff commenced this action to recover damages allegedly sustained as aresult of the defendants' legal malpractice. As alleged in the complaint, the plaintiffretained the defendants to represent it in connection with the sale of certain real propertyand a related exchange of "like-kind property" pursuant to the Internal Revenue Code(see 26 USC § 1031). According to the allegations in the complaint, theplaintiff, based upon the defendants' advice, selected LandAmerica 1031 ExchangeServices, Inc. (hereinafter LandAmerica), as the qualified intermediary to hold a portionof the sale proceeds, totaling $5.5 million, for the exchange of like-kind propertypursuant to 26 USC § 1031. The complaint alleged, inter alia, that the defendantsnegligently represented the plaintiff inasmuch as they reviewed, and advised the plaintiffto execute, an agreement with LandAmerica, under which the exchange funds were to beheld in a commingled [*2]account and not a qualifiedescrow account or trust. Soon after the sale proceeds were transferred to LandAmerica,its parent corporation, LandAmerica Financial Group, Inc., declared bankruptcy.According to the complaint, the plaintiff's funds were frozen for several years during thebankruptcy proceedings, and the plaintiff lost a portion of the funds because they werenot held in a qualified escrow account or trust. The complaint further alleged that theplaintiff could not defer the taxes on the capital gains from the initial sale, as it did nothave access to its funds to purchase a replacement property within the required 180-dayperiod.
Prior to answering, the defendants moved to dismiss the complaint pursuant to CPLR3211 (a) (1) based on documentary evidence, and pursuant to CPLR 3211 (a) (7) forfailure to state a cause of action. The Supreme Court granted the defendants' motion todismiss the complaint on both grounds.
The Supreme Court improperly granted the defendants' motion to dismiss thecomplaint based on documentary evidence. A motion to dismiss a complaint pursuant toCPLR 3211 (a) (1) may be granted only if the documentary evidence submitted by themoving party utterly refutes the factual allegations of the complaint, "conclusivelyestablishing a defense as a matter of law" (Goshen v Mutual Life Ins. Co. ofN.Y., 98 NY2d 314, 326 [2002]). Here, the retainer agreement submitted by thedefendants did not conclusively establish a defense as a matter of law (see Harris v Barbera, 96 AD3d904, 905-906 [2012]; Rietschel v Maimonides Med. Ctr., 83 AD3d 810, 811[2011]; Shaya B. Pac., LLC vWilson, Elser, Moskowitz, Edelman & Dicker, LLP, 38 AD3d 34, 38-39[2006]).
"On a motion to dismiss the complaint pursuant to CPLR 3211 (a) (7) for failure tostate a cause of action, the court must afford the pleading a liberal construction, accept allfacts as alleged in the pleading to be true, accord the plaintiff the benefit of everypossible inference, and determine only whether the facts as alleged fit within anycognizable legal theory" (Breytman v Olinville Realty, LLC, 54 AD3d 703, 703-704[2008]; see Leon v Martinez, 84 NY2d 83, 87 [1994]). "Whether the complaintwill later survive a motion for summary judgment, or whether the plaintiff will ultimatelybe able to prove its claims, of course, plays no part in the determination of a prediscoveryCPLR 3211 motion to dismiss" (Shaya B. Pac., LLC v Wilson, Elser, Moskowitz,Edelman & Dicker, LLP, 38 AD3d at 38; see EBC I, Inc. v Goldman, Sachs & Co., 5 NY3d 11, 19[2005]).
To succeed in a legal malpractice action, "a plaintiff must show that the defendantattorney failed to exercise the ordinary reasonable skill and knowledge commonlypossessed by a member of the legal profession and that the attorney's breach of thisprofessional duty caused the plaintiff's actual damages" (Stuart v Robert L. Folks & Assoc.,LLP, 106 AD3d 808, 808-809 [2013] [internal quotation marks omitted]; see Conklin v Owen, 72 AD3d1006, 1007 [2010]; Lamanna v Pearson & Shapiro, 43 AD3d 1111, 1112[2007]).
Here, construing the complaint liberally, accepting the facts alleged in the complaintas true, and according the plaintiff the benefit of every possible inference, as we arerequired to do, the plaintiff stated a cause of action to recover damages for legalmalpractice (see Palmieri vBiggiani, 108 AD3d 604, 608 [2013]; Kempf v Magida, 37 AD3d 763, 764 [2007]). The plaintiffalleged in the complaint that the defendants were negligent in failing, inter alia, to adviseit to keep its exchange funds in a qualified escrow account or trust, and that thisnegligence was a proximate cause of its damages. The defendants' contentions that it wasthe conduct of the plaintiff's manager and unforeseeable events that were the proximatecauses of the plaintiff's damages, and that the defendants did not depart from the standardof care, concern disputed factual issues that are not properly raised and resolved on amotion to dismiss a complaint pursuant to CPLR 3211 (a) (7).
The documents submitted by the defendants on appeal, which were annexed to theirbrief, are not properly before this Court, as they were not submitted to the Supreme Court(see CPLR 5526; Constantine v Premier Cab Corp., 295 AD2d 303, 304[2002]). Moreover, the defendants' arguments that relied upon these documents wereimproperly raised for the first time on appeal (see Salierno v City of Mount Vernon, 107 AD3d 971, 972[2013]).
Accordingly, the defendants' motion to dismiss the complaint should have been [*3]denied. Mastro, J.P., Roman, Miller and Hinds-Radix, JJ.,concur.