Summary
affirming dismissal of legal malpractice claim, premised on attorney's failure to investigate and discover fraud and collusion by borrower and senior lienor bank in representing plaintiff as subordinate lienor, where defendant attorney had no reason to believe that investigation was necessary and no duty to anticipate various possible misuses of client's funds
Summary of this case from Grubbs v. KnollOpinion
October 27, 1994
Appeal from the Supreme Court, New York County (Beatrice Shainswit, J.).
This action for legal malpractice based upon defendant's alleged failure, in representing plaintiff as a subordinate lienor in several mortgage foreclosure proceedings, to investigate and discover claimed fraud and collusion by the borrower and the senior lienor bank, was properly dismissed on the ground that defendant had no reason to believe, at any relevant time, that such an investigation was necessary, and no duty, as the IAS Court aptly explained, "to draw up a list of possible misuses of plaintiff's money, and then unleash a team of investigators, lawyers, and accountants to see if any misuse theory held water".
And, even if, arguendo, defendant did have such a duty, the malpractice claim would still not be viable absent any showing that "but for" the breach thereof, plaintiff would have prevailed in his fraud defense in the foreclosure proceedings (see, Grace Co. v. Tunstead, Schechter Torre, 186 A.D.2d 15, 19). The affidavits of the borrower's former architect, stating that the funds purportedly advanced by the bank exceeded the estimated cost of the actual improvements made on the lots, did not show the requisite element of a present intent to defraud (cf., e.g., Graubard Mollen Dannett Horowitz v. Moskovitz, 204 A.D.2d 218; Wiscovitch Assocs. v. Philip Morris Cos., 193 A.D.2d 542, 543).
While an action for breach of contract may be based upon the breach of an implied duty of due care, even in the absence of an express promise by the attorney to obtain a specific result (Santulli v. Englert, Reilly McHugh, 78 N.Y.2d 700, 706), here the facts adduced support neither the contract claim nor the claim for breach of fiduciary obligation.
Defendant's acts, even if assumed to be improper, which they were not, did not constitute "deceptive acts" within the meaning of General Business Law § 349, which contemplates a recurring, consumer type of transaction affecting the public interest (see, Genesco Entertainment v. Koch, 593 F. Supp. 743, 751-752; see also, Varela v. Investors Ins. Holding Corp., 81 N.Y.2d 958, 961), rather than a solitary private commercial transaction.
We have considered plaintiff's other contentions and find them to be without merit.
Concur — Carro, J.P., Rosenberger, Ellerin, Nardelli and Tom, JJ.