Opinion
01 Civ. 7288 (DAB) (THK)
March 29, 2004
PARTIAL ADOPTION OF REPORT AND RECOMMENDATION
On October 8, 2002, Magistrate Judge Theodore H. Katz issued a Report and Recommendation (the "Report") recommending that the Defendant's motion to dismiss the Complaint be granted. See 28 U.S.C. § 636(b)(1)(C); Local Civil Rule 72.1(d). Plaintiff filed timely written Objections ("Objections"), to which Defendant has responded.
28 U.S.C. § 636 (b)(1)(C) requires the Court to make a "de novo determination of those portions of the report or specified proposed findings or recommendations to which objection is made." However, where no timely objection has been made, "a district court need only satisfy itself that there is no clear error on the face of the record." Nelson v. Smith, 618 F. Supp. 1186, 1189 (S.D.N.Y. 1985). After conducting a de novo review, the Court may accept, reject, or modify, in whole or in part, the findings or recommendations made by the Magistrate. 28 U.S.C. § 636 (b)(1)(C); see also Local Civil Rule 72.1(d).
The Report contained findings of fact by the Magistrate Judge and also laid out the procedural background of the case. The Court does not adopt the Report's factual recitation in toto. Indeed, the Plaintiff in her Objections takes issue with a number of the Report's factual determinations. As addressed below, the Court adopts the facts as set forth by the Magistrate Judge in the Report except those few instances, which upon examination by this Court were made erroneously. Any of the Report's factual findings, therefore, not specifically contradicted in the ensuing discussion, should be construed as the findings of this Court.
Lastly, while pro se are normally accorded more leniency in the drafting of their papers, see Tapia-Ortiz v. Doe, 171 F.3d 150, 151 (2d Cir. 1999) (citations omitted), the Court need not do so when the pro se plaintiff is a licensed attorney. See Harbulak v. Suffolk County, 654 F.2d 194, 198 (2d Cir. 1981) (holding that plaintiff "is a practicing attorney and, therefore, cannot claim the special consideration which courts customarily grant to pro se parties"). I. Plaintiff's Factual Objections
Salichs raises numerous objections to the facts as found by the Magistrate Judge in the Report.
Many of the objections are meritless and amount to little more than semantic quibbling. For instance, Plaintiff objects to the finding that during the divorce proceedings, "[P]laintiff discussed with her attorney her concern about her possible relocation to Puerto Rico. in the future." Report at 2. Salichs claims at that exact time, she had no plans to relocate but rather wanted the option to do so left open. (Pl. Obj at 5.) Plaintiff also takes issue with the Report's statement that Defendant "explained" prevailing case law, while the Complaint avers that Defendant "informed" Plaintiff of such law. Report at 2; Pl. Obj at 5. Another objection seems to be that the Report neglects to specify that the psychologist appointed by the judge in her divorce proceeding was a "forensic" psychologist, and that the evaluative report was not limited to the issue of custody. (Pl. Obj at 5.) These differences are trivial. Short of reproducing the Complaint verbatim, such departures in expression are unavoidable. Plaintiff's Objections make no argument as to any impact these had on the legal substance of the Report, and the Court finds none.
Plaintiff additionally objects to the sentence, "Plaintiff settled her divorce action on those terms." (Id. at 6.) Plaintiff contends that the Magistrate Judge's use of "those terms" is inaccurate because it does not distinguish between the recommendations of the forensic psychologist's report as purportedly represented by the Defendant and the alleged true contents of the report. The fact is that Plaintiff "settled her divorce action" on precisely "those terms" that had allegedly been related by Defendant. The Report simply relates the facts chronologically and makes clear Plaintiff's discovery of the allegedly bad acts of Defendant in the next paragraph. Report at 3. The Court finds no fault in this presentation of the facts. However, the Court does acknowledge Plaintiff is right that the Settlement Agreement was entered into on April 15, 1998, that it was the judgment of divorce that was entered on August 15th of that year. (Pl. Obj at 6.)
Plaintiff objects to the Report's finding that there are currently pending custody appeals in Puerto Rico. or New York, claiming that the Complaint "does not present this allegation." (Id. at 9.) Paragraph 38 of the Complaint, however, states in pertinent part that "Since June 27, 2000, custody over Alexandra has been at issue before the Courts of New York and Puerto Rico." (Compl. ¶ 38.) This objection is meritless.
Plaintiff argues that the Report improperly relied on and considered various documents in his factual recitation. Rule 12(b)(6) of the Federal Rules of Civil Procedure requires that where "matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56." Generally, mere attachment of affidavits or exhibits to a defendant's papers is not sufficient to require conversion to a motion for summary judgment. Amaker v. Weiner, 179 F.3d 48, 50 (2d Cir. 1999) ("[R]eversal for lack of conversion is not required unless there is reason to believe that the extrinsic evidence actually affected the district court's decision and thus was not at least implicitly excluded.").
Plaintiff claims that the Magistrate Judge examined and utilized documents extrinsic to her Complaint, thereby converting Defendant's motion into one for summary judgment without providing Plaintiff notice or a reasonable opportunity to present pertinent evidence, as required by Rule 12(b)(6). (Pl. Obj. at 10.) Specifically, Plaintiff points to 1) a copy of the signed Settlement Agreement between Plaintiff and her ex-husband submitted in Defendant's moving papers; 2) Defendant's Affidavit, also attached thereto; and 3) decisions of the First Department in subsequent proceedings between Plaintiff and her ex-husband in state court. (Id. at 11.)
Plaintiff alleges that the Report relied on two decisions, only one of which was presented to the Court by Defendant. Additionally, among the exhibits she requested the Court consider, Defendant included a transcript of a proceeding in which Defendant represented Plaintiff before the presiding judge in Plaintiff's divorce action. Judge Katz expressly denied Defendant's request to consider this document. Report at 6.
The Second Circuit, however, has allowed courts to review documents extraneous to the complaint on a motion to dismiss. Chambers v. Time Warner, 282 F.3d 147 (2d Cir. 2002). Courts should look to "a plaintiff's reliance on the terms and effect of a document in drafting the complaint" as "a necessary prerequisite to the court's consideration of the document on a dismissal motion." Id. at 153. Where a plaintiff relies upon a document of undisputed authenticity, "a court may consider 'documents attached to the complaint as an exhibit or incorporated in it by reference . . . matters of which judicial notice may be taken, or . . . documents either in plaintiffs' possession or of which plaintiff's had knowledge and relied on in bringing suit.'" Id. (quoting Brass v. American Film Technologies, Inc., 987 F.2d 142, 150 (2d Cir. 1993)). "To be incorporated by reference, the Complaint must make a clear, definite and substantial reference to the documents." Thomas v. Westchester County Health Care Corp., 232 F. Supp.2d 273, 275 (S.D.N.Y. 2002). Even where documents are not explicitly incorporated, a court may consider them if they are integral to the complaint. Id.; Int'l Audiotext Network, Inc. v. American Tel, and Tel. Co. 62 F.3d 69, 72 (2d Cir. 1995) (Court may consider commercial agreement not incorporated by reference because it is "integral" to complaint relying on its terms and effect); Cortec Industries, Inc. v. Sum Holding L.P., 949 F.2d 42, 47 (2d Cir. 1991) (holding that a plaintiff may not avoid consideration of document integral to his complaint by failing to attach or incorporate it by reference and that a defendant may produce the document when moving to dismiss).
In his Report, Judge Katz concluded that the Settlement Agreement is appropriate for consideration in rendering his recommendation to this Court. Plaintiff objects to any consideration of the Settlement Agreement. She urges that review of the Settlement Agreement is unnecessary because its terms are not in dispute. (Pl. Obj. at 12-13.) The argument misses the mark. That the terms of the Agreement are not in dispute is simply not material to whether this Court may consider a document when ruling on a motion to dismiss.
Plaintiff also argues that her references to the Settlement Agreement constitute "mere discussion," and do not rise to the level of incorporation by reference. (Id.) In her Complaint, after asserting that Defendant recommended she settle the divorce action (Compl. ¶ 23), Plaintiff states that she "decided to follow her advice and reach an agreement" with her husband based on Defendant's then-unknown purported misrepresentations. (Id. ¶ 25.) The Complaint then specifies the relevant provisions of the Agreement:
On or about April 15, 1998 plaintiff and Mr. James entered into a settlement agreement which provided, among other things, that plaintiff would have physical custody of their child Alexandra and that plaintiff and Mr. James would share legal custody of Alexandra with respect to education, religion, and medical treatment. Mr. James would have visitation every other weekend, one afternoon a week and certain holidays.
(Id. ¶ 26.)
In the Court's view, Plaintiff's averments constitute a clear, definite and substantial reference to the Agreement.
More importantly, Plaintiff's allegations rely on the "terms and effects" of the Settlement Agreement in framing the Complaint. Plaintiff is, after all, alleging that Defendant's misrepresentations caused her to enter into a Settlement Agreement, which awarded her less than sole physical and legal custody of her daughter, thereby injuring her by requiring subsequent litigation with her ex-husband. Accordingly, this Court finds the Settlement Agreement may be examined and utilized in deciding a motion to dismiss under Rule 12(b)(6).
Even if the Settlement Agreement is not incorporated by reference, it is an document integral to the Complaint. Plaintiff asserts that "[a]s a result of the settlement agreement recommended by the defendant, which the plaintiff agreed to enter into based upon the [defendant's] misrepresentations . . . plaintiff lost the full custody rights. . . ." (Compl. ¶ 27.) She then relies on this conclusory statement for her three causes of action, all alleging injury from the Settlement Agreement. (Id. ¶¶ 41, 46, 49.) Plaintiff must rely on the Settlement Agreement's contents to explain the significance of Defendant's alleged misrepresentation.
As to Defendant's Affidavit, the Report does not expressly address the propriety of considering such a document. On a Rule 12(b)(6) motion to dismiss, a defendant's affidavit cannot be considered, and the Court specifically excludes it. Kopec v. Coughlin, 922 F.2d 152, 155 (2d Cir. 1991). The Court has thoroughly scrutinized the Report and finds the only one passing reference to Defendant's Affidavit on page 3 of the Report. Nevertheless, the Court does not adopt the Report's allusion to Defendant's Affidavit and has examined the Report, the Complaint, and other documents without relying on the Affidavit.
Lastly, Plaintiff suggests that the Report also improperly considered two opinions of the First Department. (Pl. Obj. at 8.) Because it is a public record, Judge Katz implicitly granted Defendant's request that he take judicial notice of the decision in Salichs v. James, 708 N.Y.S.2d 385 (N.Y. A.D. 1st Dep't 2000), which ordered a stay of relocation of Plaintiff's daughter. See Report at 3, 11-13 (discussing Salichs). The Magistrate Judge did not expressly address the propriety of considering a later 2002 state court opinion.
A court may not take factual findings in state court proceedings for the truth of the matter asserted; instead, the scope of judicial notice of New York proceedings is limited to the fact of such litigation, related filings, and any act of the court. See LaFleur v. Whitman, 300 F.3d 256, 267 n. 1 (2d Cir. 2002) (holding that an Article 78 proceeding and the state court record of such a proceeding could be judicially noticed) (citation omitted).
Plaintiff objects that Judge Katz improperly took judicial notice of findings of fact set forth in the opinions of these New York proceedings. (Pl. Obj at 8-9, 12.) Plaintiff is correct in that the Report should only have taken the fact of the litigation into account and any acts of the state court. Accordingly, the Court takes judicial notice of the First Department's 2000 order in Salichs v. James, so far as it denied Plaintiff's permission to relocate and granted her ex-husband's motion to stay relocation. 708 N.Y.S.2d at 385. Those parts in the Report that specifically reference facts contained in the decision are not adopted by this Court and have not been considered in the determination of this Motion.
II. Plaintiff's Legal Objections
A. Legal Malpractice Claim
1. Defendant's Alleged Misrepresentations
In her Objections, Plaintiff takes issue with the Magistrate Judge's conclusion that her legal malpractice claim should be dismissed. As already noted, the Magistrate Judge should not have included the substance and factual findings of Salichs v. James in his discussion of this claim. The Court accordingly does not adopt the portion of the Report analyzing the malpractice claim and conducts its own analysis.
Under New York law, the elements of a legal malpractice claim are: "(1) a duty, (2) a breach of the duty, and (3) proof that the actual damages were proximately caused by the breach of the duty." Ocean Ships, Inc. v. Sfiles, 315 F.3d 111, 117 (2d Cir. 2002) (citations omitted). To plead negligence, a plaintiff must allege that the attorney failed to exercise the degree of care, skill and knowledge commonly exercised by members of the profession. See McCoy v. Feinman, 99 N.Y.2d 295, 302 (2002). Furthermore,
[i]n order to survive dismissal, the complaint must show that but for the counsel's alleged malpractice, the plaintiff would not have sustained some actual, ascertainable damages, so that a failure to establish proximate cause requires dismissal, regardless of whether negligence is established.Pellegrino v. File, 738 N.Y.S.2d 320, 323 (N.Y. 1st Dep't) (citations omitted), lv denied, 98 N.Y.2d 606 (2002). The Court agrees with Plaintiff that the Complaint satisfies the first two elements.
Plaintiff's view of her precise injuries and damages, however, is not always clear. For instance, in her Complaint, Plaintiff first alleges that because she "agreed to enter into [the Settlement Agreement] based upon the misrepresentations . . . fraudulently made by the defendant, plaintiff lost the full custody rights over her daughter" (Compl. ¶ 27), suggesting that she seeks redress for having to share custody over her daughter's "education, religion, and medical treatment." (Id. ¶ 26). Later in the Complaint she alleges that "(a)s a result of defendant's conduct and misrepresentations, plaintiff has lost custody over her daughter and has incurred in [sic] substantial sums of money as a result of the unnecessary litigation." (Compl. at ¶ 39.) From the Complaint, it appears that the injury is either lost custody or the endless litigation.
Her Objections only muddle her position. At one point, she claims that the Settlement Agreement "deprived her of full legal custody of her daughter," (Pl. Obj. at 14), but then later states the Settlement Agreement required her to engage in mediation and litigation. (Id.) Then, she goes on to state that her "injury is clear: Defendant's actions clearly interfered with Plaintiff'sright to seek full custody of her daughter." (Id. at 15 (emphasis added).) From her Objections, it appears that the injury is either lost custody, the endless litigation, or the right to seek full custody.
New York law requires not only that a complaint plead actual, ascertainable damages, but also that those damages be monetary. Galu v. Attias, 923 F. Supp. 590, 597 (S.D.N.Y. 1996) ("A plaintiff suing in malpractice [under New York law] can recover only pecuniary loss but not for mental or psychological suffering.") (citations omitted); Wilson v. City of New York, 743 N.Y.S.2d 30, 32 (2002) (holding that a claim for legal malpractice does not afford recovery for items of damages other than pecuniary loss). That Plaintiff was not awarded full legal custody and was required to "share decision making with respect to major decisions with respect to [her daughter's] education, medical and therapeutic treatment, and religion" does not represent pecuniary loss. (Settlement Agreement at 14.) Accordingly, lost custody cannot be an adequate basis for a malpractice claim.
Plaintiff contends that Defendant's alleged "interference" with her right to seek full custody is a compensable injury. She bases her argument on a single case. Pickle v. Page, 252 N.Y. 474, 482-483 (1930), in which the Court of Appeals allowed a parent to seek monetary recovery for "wounded feelings" from one who participates in physically abducting a child. However, Pickle v. Page is clearly inapposite as Plaintiff's daughter was not physically abducted. In fact, the Settlement Agreement provided that Plaintiff retain physical custody, (Settlement Agreement at 9), and she has nowhere alleged that but for Defendant's misconduct the girl's father would have been denied visitation. The right to seek full custody is therefore not a cognizable injury under state law.
The remaining possibility for a claim of legal malpractice is the "endless litigation" in which Plaintiff was allegedly forced to engage after having agreed to the Settlement Agreement. Such litigation, according to Plaintiff's papers, included "the reversal on appeal of the order allowing the relocation [of Plaintiff and her daughter to Puerto Rico], the custody issues that have been before the Courts of the State of New York . . . and having to face her ex-husband in two forums in New York and Puerto Rico." (Pl. Memo, of Law in Oppos. at 14.) She claims that the Court should not look to the viability of whether she would have prevailed on her relocation or custody issues, but that she had to litigate them.
The viability of Plaintiff's claims regarding relocation and custody are not at issue, and the Court recognizes that she did in fact have to litigate various issues, including relocation and custody, after entering the Settlement Agreement. However, even had she prevailed at trial and gained full custody of her minor daughter, the "endless litigation" of which she speaks would still have transpired. Indeed, Plaintiff herself acknowledges in her moving papers that "[n]owhere does the Complaint state that Plaintiff should have relocated without the Court's permission or her ex-husband's consent if she had sole physical and legal custody. . . ." (Id. at 14.) This realization by Plaintiff, a New York attorney, may stem from the fact that any motion to stay relocation would be based on her ex-husband's visitation rights, which New York Courts strongly protect. Weiss v. Weiss, 52 N.Y.2d 170, 175 (N.Y. 1981) (affirming injunction preventing relocation of child);Matter of Ervin R. v. Phina R., 717 N.Y.S. 849, 856 (N.Y. Fam. Ct. 2000) (absent exceptional circumstances, non-custodial parent must have reasonable visitation privileges). Indeed, the Court of Appeals has stated that in evaluating a relocation request, "the impact of the move on the relationship between the child and the noncustodial parent will remain a central concern." Tropea v. Tropea, 642 N.Y.S.2d 575, 580 (1996) (emphasis added). Furthermore, denial of visitation to a non-custodial parent is considered a drastic remedy, "ordered only in the presence of compelling reasons and substantial evidence that such visitations are detrimental to the child's welfare." Sheavlier v. Melendrez, 744 N.Y.S.2d 264, 266 (3d Dep't 2002). Plaintiff has not alleged that her ex-husband would have been denied visitation or that his parental rights would have been terminated at trial. Irrespective of Defendant's conduct, he therefore would have been able to move in state court to prevent the relocation of their daughter and Plaintiff would have incurred the expense of litigating the matter.
Additionally, custody decrees are not accorded the full res judicata effect given to other judgments under New York law, but are subject to modification. N.Y. Dom. Rel. Law §§ 70, 240 (2003) (both statutes provide that "[i]n all cases there shall be no prima facie right to the custody of the child in either parent"); Friederwitzer v. Friederwitzer, 55 N.Y.2d 89, 93 (1982) (legislature intended § 70 and § 240 to apply to both initial custody decrees and modifications); Thomas v. New York City, 814 F. Supp. 1139, 1148 (E.D.N.Y. 1993) (custody decisions not accordedres judicata because circumstances change with time) (citations omitted). Had Plaintiff been awarded sole custody, the court's initial decree would not have represented an irrevocable determination of custody of her daughter, and she would not have been protected from the prospect of future litigation with her ex-husband.
The costs resulting from the "endless litigation" over relocation or custody, then, while compensable, were not proximately caused by the Defendant's alleged malpractice. Accordingly, Plaintiff cannot prevail on the "endless litigation" injury either.
Based on the allegations Plaintiff has set forth, no set of facts would survive a motion to dismiss because either the injuries alleged are not compensible under New York law or proximate cause is lacking. The legal malpractice claim stemming from Defendant's alleged misrepresentations should be dismissed.
2. The confession of judgment.
Plaintiff objects to the Report's recommendation of dismissal concerning the legal malpractice claim, resulting from her signing of a confession of judgment. She points out that the Complaint does, in fact, allege that she made payments pursuant to the confession of judgment and has as a result suffered economic damages. The Report, however, explicitly notes that she "made payments on her outstanding legal bills." Report at 19.
Reviewing this section of the Report de novo, the Court agrees with Magistrate Katz' recommendation. Even if Defendant disregarded the rule of the court and in doing so breached a duty towards Plaintiff, there is no set of facts under which Plaintiff suffered damages proximately caused by that breach. Plaintiff as much as concedes that the confession of judgment was for the amount she then owed to Defendant. (Compl. ¶¶ 14, 19-21.) The Complaint does not allege any dispute over the veracity of the amount billed, nor does it allege, as Judge Katz noted, that defendant attempted to enforce the judgment. Plaintiff fails to allege damages other than having to pay monies she owed. Accordingly, Plaintiff here fails to state a claim upon which relief can be granted.
Lastly, when 22 NYCRR § 1400.5 has been violated. New York law does not require an attorney to return properly earned fees already paid.Behrins Behrins v. Sammarco, 2003 WL 21011392, at *1, *2 (2d Dep't 2003) (where court found vacatur of wrongly obtained confession of judgment was warranted, violation precluded attorney's further recovery of unpaid fees but did not require return of fees already paid).
B. Plaintiff's Breach of Contract Claim
Plaintiff objects to the dismissal of her breach of contract claim, arguing that it is not merely duplicative of the malpractice claim. However, she merely repeats accusations set forth in the claim of legal malpractice and does not explain how her claim is not duplicative. After a de novo review of the facts and law, the Court agrees the claim should be dismissed for the reasons stated in the Report.
C. Plaintiff's Fraud Claim
Plaintiff has objected to the Report's recommendation that the fraud claim be dismissed as duplicative of the legal malpractice claim, merely pointing out the "egregious conduct" of the Defendant. (Pl. Obj. at 16.) Without any much-needed elaboration, the Objection appears meritless since the fraud claim like her breach of contract claim is duplicative of the legal malpractice cause of action. After a de novo review and for the reasons set forth in the Report, this claim should be dismissed.
Furthermore, New York law requires that fraudulent conduct proximately cause economic damages. Kaye v. Grossman, 202 F.3d 611, 614 (2d Cir. 2000) (judgment as a matter of law for defendant appropriate because plaintiff failed to show economic damages resulting from alleged misrepresentation); see also Lama Holding Co. v. Smith Barney Inc., 88 N.Y.2d 413, 422 (N.Y. 1996) (actual pecuniary loss sustained as a direct result of the wrong is appropriate measure of damages). As already noted in Part II.A.1., supra, the loss of custody is simply not economic, and Plaintiff's subsequent litigation costs were not proximately caused by the fraudulent misrepresentations by Defendant.
III. Conclusion
Accordingly, having disposed of Plaintiff's Objections to the Magistrate's Report and Recommendation of October 8, 2002, and it is hereby ORDERED AND ADJUDGED as follows:
1. The Court adopts the facts of the Report not inconsistent with this Order.
2. The Court GRANTS Defendant's Motion to Dismiss the Complaint in its entirety for failure to state a claim upon which relief can be granted.
3. The Court DIRECTS the Clerk of Court to close the Docket in this case.
SO ORDERED.