| Ginsburg Dev. Cos., LLC v Carbone |
| 2015 NY Slip Op 09250 [134 AD3d 890] |
| December 16, 2015 |
| Appellate Division, Second Department |
[*1]
| Ginsburg Development Companies, LLC,Respondent-Appellant, v Donald J. Carbone et al., Appellants-Respondents.(And a Third-Party Action.) |
Wilson Elser Moskowitz Edelman & Dicker, LLP, New York, NY (Robert A.Spolzino, Thomas A. Leghorn, and Steven Kent of counsel), forappellants-respondents.
Riker Danzig Scherer Hyland & Perretti, LLP, New York, NY (Jonathan P.Vuotto of counsel), for respondent-appellant.
In an action to recover damages for fraud, violation of Judiciary Law§ 487, legal malpractice, aiding and abetting the breach of a fiduciary duty,aiding and abetting fraud, and negligent misrepresentation, (1) the defendants appealfrom so much of an order of the Supreme Court, Westchester County (Lefkowitz, J.),dated July 8, 2013, as denied those branches of their motion which were for summaryjudgment dismissing the second, third, and fourth causes of action, and the plaintiffcross-appeals from so much of the same order as granted those branches of thedefendants' motion which were for summary judgment dismissing the first, fifth, andsixth causes of action, (2) the plaintiff appeals, as limited by its brief, from so much of anorder of the same court, also dated July 8, 2013, as denied those branches of its motionwhich were for summary judgment on the issue of liability on the fourth and sixth causesof action, and (3) the plaintiff appeals, as limited by its brief, from so much of an order ofthe same court dated November 27, 2013, as denied its motion for leave to renew itsopposition to those branches of the defendants' motion which were for summaryjudgment dismissing the first, fifth, and sixth causes of action, and those branches of itsprior motion which were for summary judgment on the issue of liability on the fourth andsixth causes of action.
Ordered that the first order dated July 8, 2013, is affirmed insofar as appealed andcross-appealed from, without costs or disbursements; and it is further,
Ordered that the second order dated July 8, 2013, and the order dated November 27,2013, are affirmed insofar as appealed from, without costs or disbursements.
An operating agreement of The Pinnacle-Westchester, LLC (hereinafter Pinnacle),dated December 17, 2003, was entered into by, among others, Ridgemour MeyerProperties, LLC (hereinafter RMP), and the plaintiff, Ginsburg Development Companies,LLC (hereinafter GDC). Essentially, Pinnacle was formed for the purpose of building aresidential apartment complex with commercial/retail space and a parking garage onproperty located in White Plains. Pinnacle's members were RMP andGDC.
[*2] Eventually, RMP and GDC,which were deadlocked over whether to proceed or to dissolve Pinnacle, engaged inarbitration. The defendant Donald J. Carbone, an attorney and member of the defendantGoetz Fitzpatrick, LLP (hereinafter GF), and GF represented RMP in the arbitration. Thearbitration included more than one year of discovery and motion practice, and eight daysof hearings. On June 18, 2008, the arbitrator decided that Pinnacle should be dissolved.The arbitrator decided, in effect, that certain parcels of real property would be transferredfrom Pinnacle to RMP so that RMP could develop the property. The arbitrator renderedan oral decision at a hearing on June 19, 2008, that a mortgage would be placed on theparcels, with RMP as mortgagor and GDC as mortgagee, to secure repayment of moneyGDC invested or expended on Pinnacle's behalf. The mortgage would secure a note, andthe mortgage and the note might be increased or decreased by an amount the arbitratordetermined in an award relating to the damages claims in the arbitration.
GDC asserts that, as directed by the arbitrator, the parties negotiated the terms of themortgage and related protections. According to GDC, on June 30, 2008, a partyconnected to RMP executed draft deeds to the properties, those draft deeds having beensent to the offices of Carbone and GF by GDC's attorney, thereby transferring Pinnacle'sinterest in the properties to RMP. GDC alleges that this execution of the deeds was doneon the advice of Carbone and GF. GDC claims that between June 30, 2008, and July 31,2008, neither Carbone nor anyone else at GF disclosed to GDC or to the arbitrator thatthe draft deeds had been executed. GDC asserts that Carbone and GF misrepresented toGDC and the arbitrator that Carbone and GF were negotiating the terms of the mortgageand related documents in good faith in preparing for the conveyance of the propertiesfrom Pinnacle to RMP, when, in fact, Carbone and GF knew that title to the propertieshad been transferred. On July 31, 2008, GDC discovered that the deeds had beenexecuted and delivered to the Westchester County Clerk to be recorded. GDC soughtrelief from the arbitrator.
On August 4, 2008, the arbitrator wrote, inter alia, that RMP was required to providepersonal guarantees for the full amount of the mortgage, that RMP was to secure a letterof credit in a certain amount, and that RMP had until August 12, 2008, to return signeddocuments and produce a letter of credit. On August 8, 2008, GDC commenced thisaction. On August 11, 2008, RMP, allegedly acting on the advice of Carbone and GF,filed a voluntary petition for relief in the United States Bankruptcy Court. Ultimately,GDC agreed, in exchange for a payment in a stated amount, to release any and all claimsrelating to Pinnacle that GDC had against RMP. However, GDC specifically reserved allrights to claims that it had against Carbone and GF.
A second and a third amended complaint were filed in this action naming Carboneand GF as the only defendants. GDC moved for summary judgment on the issue ofliability on certain causes of action. Carbone and GF moved for summary judgmentdismissing the third amended complaint. By order dated July 8, 2013, the Supreme Courtdenied GDC's motion. By another order dated July 8, 2013, the court granted thosebranches of the motion of Carbone and GF which were for summary judgmentdismissing the first, fifth, and sixth causes of action, and denied those branches of themotion of Carbone and GF which were for summary judgment dismissing the second,third, and fourth causes of action. By order dated November 27, 2013, the court deniedGDC's motion for leave to renew.
The Supreme Court properly granted that branch of the motion of Carbone and GFwhich was for summary judgment dismissing the first cause of action, which allegedfraud. "In an action to recover damages for fraud, the plaintiff must prove amisrepresentation or a material omission of fact which was false and known to be falseby defendant, made for the purpose of inducing the other party to rely upon it, justifiablereliance of the other party on the misrepresentation or material omission, and injury"(Lama Holding Co. v Smith Barney, 88 NY2d 413, 421 [1996]). To showreliance, a party "must demonstrate that [it] was induced to act or refrain from acting to[its] detriment by virtue of the alleged misrepresentation or omission" (Shea vHambros PLC, 244 AD2d 39, 46 [1998] [internal quotation marks and bracketsomitted]). Here, in opposition to the prima facie showing of Carbone and GF of theirentitlement to judgment as a matter of law, GDC failed to raise a triable issue of fact as towhether it was induced to act or refrain from acting to its detriment due to any allegedmisrepresentation or omission (see JAF Partners, Inc. v Rondout Sav. Bank, 72 AD3d 898,899 [2010]).
[*3] The Supreme Courtproperly denied that branch of the motion of Carbone and GF which was for summaryjudgment dismissing the second cause of action, which alleged violation of JudiciaryLaw § 487. Judiciary Law § 487 provides, in part, that anattorney who "[i]s guilty of any deceit or collusion, or consents to any deceit or collusion,with intent to deceive the court or any party" is guilty of a misdemeanor, and,additionally, "forfeits to the party injured treble damages, to be recovered in a civilaction." Here, in opposition to the prima facie showing of Carbone and GF of theirentitlement to judgment as a matter of law, GDC raised a triable issue of fact as towhether Carbone and GF intentionally deceived GDC (see Moormann v Perini &Hoerger, 65 AD3d 1106, 1108 [2009]).
The Supreme Court properly denied that branch of the motion of Carbone and GFwhich was for summary judgment dismissing the third cause of action, which allegedlegal malpractice. "In an action to recover damages for legal malpractice, a plaintiff mustdemonstrate that the attorney failed to exercise the ordinary reasonable skill andknowledge commonly possessed by a member of the legal profession and that theattorney's breach of this duty proximately caused plaintiff to sustain actual andascertainable damages" (Rudolfv Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d 438, 442 [2007][internal quotation marks omitted]). "To establish causation, a plaintiff must show that heor she would have prevailed in the underlying action or would not have incurred anydamages, but for the lawyer's negligence" (id. at 442). "To succeed on a motionfor summary judgment, the defendant in a legal malpractice action must present evidencein admissible form establishing that the plaintiff is unable to prove at least one of theseessential elements" (Alizio vFeldman, 82 AD3d 804, 804 [2011]). Here, Carbone and GF did not make aprima facie showing of their entitlement to judgment as a matter of law, since they failedto show that GDC was unable to prove at least one of the essential elements of its legalmalpractice cause of action (seeMueller v Fruchter, 71 AD3d 650, 651 [2010]).
The Supreme Court properly denied that branch of the motion of Carbone and GFwhich was for summary judgment dismissing the fourth cause of action, which allegedaiding and abetting breach of fiduciary duty, and properly denied that branch of GDC'smotion which was for summary judgment on the issue of liability on that cause of action."A claim for aiding and abetting a breach of fiduciary duty requires: (1) a breach by afiduciary of obligations to another, (2) that the defendant knowingly induced orparticipated in the breach, and (3) that plaintiff suffered damage as a result of the breach"(AHA Sales, Inc. v CreativeBath Prods., Inc., 58 AD3d 6, 23 [2008] [internal quotation marks and citationomitted]). Here, neither Carbone and GF, nor GDC, demonstrated their prima facieentitlement to judgment as a matter of law.
The Supreme Court properly granted that branch of the motion of Carbone and GFwhich was for summary judgment dismissing the fifth cause of action, which allegedaiding and abetting fraud. The elements of a cause of action alleging aiding and abettingfraud are "an underlying fraud, [the] defendants' knowledge of this fraud, and [the]defendants' substantial assistance in the achievement of the fraud" (High Tides, LLC v DeMichele,88 AD3d 954, 960-961 [2011]). Here, in opposition to the prima facie showing ofCarbone and GF of their entitlement to judgment as a matter of law, GDC failed to raisea triable issue of fact.
The Supreme Court properly granted that branch of the motion of Carbone and GFwhich was for summary judgment dismissing the sixth cause of action, which allegednegligent misrepresentation, and properly denied that branch of GDC's motion whichwas for summary judgment on the issue of liability on that cause of action. On a cause ofaction alleging negligent misrepresentation, the plaintiff is required to demonstrate "(1)the existence of a special or privity-like relationship imposing a duty on the defendant toimpart correct information to the plaintiff; (2) that the information was incorrect; and (3)reasonable reliance on the information" (J.A.O. Acquisition Corp. v Stavitsky, 8 NY3d 144, 148[2007]). In this case, Carbone and GF established their prima facie entitlement tojudgment as a matter of law by showing that Carbone and GF lacked privity of contractwith GDC, and had no special relationship with GDC approaching privity (see Perfetto v CEA Engrs.,P.C., 114 AD3d 835, 836 [2014]). GDC failed to raise a triable issue of fact inopposition.
Finally, because the new evidence GDC relied on in moving for leave to renewwould not have changed the prior determinations, the Supreme Court properly deniedGDC's motion for [*4]leave to renew (see CPLR2221 [e] [2]). Mastro, J.P., Austin, Maltese and Barros, JJ., concur.