Mid-Hudson Valley Federal Credit Union, Appellant,v.Quartararo & Lois, PLLC et al., Respondents.BriefN.Y.June 5, 2018To be Argued by: HILLARY J. RAIMONDI (Time Requested: 15 Minutes) NEW fork Supreme (tart Appellate dimstmt— (Ehtrii department MID-HUDSON VALLEY FEDERAL CREDIT UNION, Plaintiff-Respondent, -against- QUARTARARO & LOIS, PLLC and PAUL QUARTARARO, Defendants-Appellants. REPLY BRIEF FOR DEFENDANTS-APPELLANTS TRAUB LIEBERMAN STRAUS & SHREWSBERRY LLP Attorneys for Defendants-Appellants Mid-Westchester Executive Park Seven Skyline Drive Hawthorne, New York 10532 (914) 347-2600 Ulster County Clerk’s Index No. 1738/16 . ' — YT-urz-r TABLE OF CONTENTS PRELIMINARY STATEMENT 1 ARGUMENT 2 POINT I- PLAINTIFF’S CONCLUSORY ALLEGATIONS ARE INSUFFICIENT TO OVERCOME THE LAW FIRM’S ENTITLEMENT TO DISMISSAL OF THE INSTANT ACTION 2 POINT II-THE AMENDED COMPLAINT FAILS TO STATE A CAUSE OF ACTION FOR FRAUD 6 CONCLUSION 10 i TABLE OF AUTHORITIES i.... CASES Country Club Partners, LLC v. Goldman, 36 Misc. 3d 1205A, 954 N.Y.S. 2d 758 (Sup. Ct. Albany Cty. 2009), affdl9 A.D. 3d 1389, 913 N.Y.S. 2d 803 (3d Dep’t 2010) 6, 7,8 Goldman v. Metro Life Ins. Co., 5 N.Y.3d 561 (2005) .4 Hyman v. Burgess, 125 A.D. 3d 1213 (3d Dep’t 2015) ■3,4 Johnson v. Proskauer Rose, 129 A.D.3d 59 (1st Dep’t 2015) .7,8 Leder v. Spiegel, 9 N.Y.3d 836 . .4 Mecca v. Shang, 258 A.D. 2d 569, 685 N.Y.S. 2d 458 (2d Dep’t 1999) .6 Sage Realty Corp. v. Proskauer Rose LLP, 251 A.D.2d 35, 675 N.Y.S.2d 14 (1st Dep’t 1998) : .6 Stuart v. Robert Folks & Associates, 106 A.D.3d 808 (2d Dep’t 2013)... .4,51 White of Lake George, Inc. v. Bell, 251 A.D.2d 777 (3d Dep’t 1998). STATUTES .8 .6CPLR 3016(b) CPLR 3211(a) .5 CPLR 3211(a)(7). 1 ii PRELIMINARY STATEMENT -i :: This brief is respectfully submitted in further support of the appeal by defendants-appellants Quartararo & Lois, PLLC and Paul Quartararo (collectively, “defendants” or “the law firm”) from the Decision and Order dated November 28, 2016, of the Supreme Court, Ulster County (Cahill, C., J.S.C), which denied defendants’ motion to dismiss the amended complaint for failure to state a cause of action pursuant to CPLR § 3211(a)(7) (R. 9-12), and in reply to the arguments raised by plaintiff herein. As discussed below, where, as here, a pleading is entirely devoid of factual allegations, such that it is impossible to ascertain whether the facts, if alleged, would fit into plaintiffs legal theory that the defendants engaged in legal malpractice, dismissal is warranted. This is especially so where, as here, plaintiff has already amended the complaint in response to a motion to dismiss, adding no allegations regarding the alleged malpractice or how such malpractice caused plaintiff herein any damages. Thus, for the reasons set forth herein and in the law firm’s appeal brief, the decision of the motion court should be reversed and the instant action dismissed with prejudice. 1 ARGUMENT S POINT I PLAINTIFF’S CONCLUSORY ALLEGATIONS ARE INSUFFICIENT TO OVERCOME THE LAW FIRM’S ENTITLEMENT TO DISMISSAL OF THE INSTANT ACTION All parties appear to be in agreement as to the elements of a cause of action for legal malpractice. Citing to such elements, and the general standard that allegations in complaint must be liberally construed, plaintiff insists that its conclusory recitation of such elements is sufficient to sustain a claim, despite the absence of any facts as to the manner in which the law firm committed alleged malpractice, when such malpractice occurred, under what circumstances and in what legal matters. However, the law is clear, the facts alleged must fit within the applicable legal theory in order to be sustained. A recitation of the legal elements without facts is not sufficient, and deprives a defendant from asserting any threshold defenses such as statue of limitations, defenses addressed to purported documentary evidence or defenses on the merits such as the successor counsel doctrine or failure to state a cause of action for reasons such as non-actionable strategy determinations. Again, plaintiff herein alleges that the law firm was retained to represent it but51 it does not claim what that representation entailed. It claims that the law firm committed alleged “failures” in such representation, but does not even intimate what those failures could have been, in what particular legal matters, or when they 2 occurred. The amended complaint is devoid of allegations concerning how plaintiff =would have prevailed (or whether it ultimately prevailed). It is impossible to ascertain the basis for plaintiffs claims of damages, or from where such damages are derived. Other than reciting the elements of a cause of action for legal malpractice, the complaint, and the amended complaint, say absolutely nothing. Plaintiff does not deny absence of facts. Instead plaintiff simply claims stating them is not required, cloaking in secrecy the most basic foundation for the claim of legal malpractice herein. The cases cited by plaintiff support the law firm’s position. In Hyman v. Burgess, 125 A.D. 3d 1213 (3d Dep’t 2015), this Court held that while a law firm’s counterclaims seeking attorney’s fees stated a cause of action, the plaintiffs claims for legal malpractice were deficient and did not meet even the most liberal pleading standards. The Court held that plaintiff failed to “allege, to any degree, that defendant’s purported shortcomings precluded her success in the litigation at issue or caused her to sustain ascertainable damages.” Hyman, 125 A.D. 3d at 1215. Here, the amended complaint does not even identify the “litigation at issue,” let alone how the law firm purportedly deviated from the standard of care or how those unidentified deviations affected the merits. Plaintiff does not state what “obligatory work” was not performed or how the failure to perform such unidentified work was the “but for” cause of any damages it sustained (or, for that matter, what its damages 3 were). Plaintiffs failure to plead facts that fit within the legal theory advanced is E fatal to its claim. Other cases cited by plaintiff further illustrate why dismissal is warranted for failure to state facts at the pleading stage. In Leder v. Spiegel, 9 N.Y.3d 836, the lower court awarded the law firm therein legal fees and, like the court in Hyman, supra, dismissed the cause of action for legal malpractice. In that case, the client had accused the law firm of negligence by its failure to anticipate that the court in the underlying matter would not admit certain evidence. The Court of Appeals affirmed the dismissal of the legal malpractice cause of action, holding that plaintiff had not alleged a prima facie case because, even if the factual allegations were true, failure to anticipate evidentiary rulings is not legal malpractice. Of course, the law firm in the instant matter is unaware of what conduct is being alleged, and thus, cannot assert any such threshold defense, if applicable. In Goldman v. Metro Life Ins. Co., 5 N.Y.3d 561 (2005), the Court of Appeals also articulated the general standard applicable to motions to dismiss, and then affirmed dismissal of the legal malpractice complaints at issue therein, applying such standards. The decision in Stuart v. Robert Folks & Associates,106 A.D.3d 808 (2d Dep’t 2013), also cited by plaintiff herein, likewise illustrates why a plaintiff is required to plead actual facts. In that case, the Second Department affirmed dismissal of a legal malpractice complaint wherein plaintiff had pled that the alleged 4 malpractice involved negligent advice to prosecute a time-barred action. Stuart, 106 ■A.D. 3d at 809. Because the law firm was able to present documentary evidence to refute such allegations, dismissal was warranted. Here, as noted above, the law firm is unable to refute the allegations and establish a defense, as it is entitled to do under CPLR 3211(a), because no specific acts of malpractice are alleged. As noted above, it cannot be disputed that permitting such a bare pleading, containing only a recitation of the legal elements of a cause of action, deprives a defendant from being able to assert any threshold legal defenses, and forces the expenditure of time and the devotion of legal resources to causes of action that may not be viable at the pleading stage. The failures in the instant action are even more telling because, after the law firm moved for dismissal, plaintiff amended the complaint, adding no factual allegations. The lack of any factual foundation for the claim of legal malpractice herein renders the pleading deficient. Accordingly, the decision of the motion court denying the law firm’s motion to dismiss should be reversed, and the matter dismissed for failure to state a cause of action for legal malpractice against the law firm. : . 5 POINT II s THE AMENDED COMPLAINT FAILS TO STATE A CAUSE OF ACTION FOR FRAUD In its brief, plaintiff fails to address the lack of particularity in its cause of action for fraud and the law firm’s argument with respect to such pleading failure, effectively conceding that such particularity is lacking. As discussed in the law firm’s appeal brief, because the amended complaint fails to specify, in detail, the facts constituting the alleged fraud, and only generally states that the law firm billed for work that was not performed in unidentified matters and at unspecified times, the cause of action for fraud must be dismissed for failure to comply with CPLR 3016(b). Plaintiff also fails to overcome the law firm’s argument that the cause of action for fraud is duplicative of its legal malpractice cause of action. Plaintiff concedes that such cause of action is subject to dismissal if duplicative, or if it is, at its essence, a claim that the law firm attempted to conceal malpractice or that it is entitled to disgorgement of fees. Sage Realty Corp. v. Proskauer Rose LLP, 251 A.D.2d 35, 675 N.Y.S.2d 14 (1st Dep’t 1998) (fraud claim dismissed as duplicative of legal malpractice claim); Mecca v. Shang, 258 A.D. 2d 569, 685 N.Y.S. 2d 458 (2d Dep’t 1999)(fraud and disgorgement claims duplicative of legal malpractice); Country Club Partners, LLCv. Goldman, 36 Misc. 3d 1205A, ** 28-29, 954 N.Y.S. 2d 758 (Sup. Ct. Albany Cty. 2009), aff d 79 A.D. 3d 1389, 913 N.Y.S. 2d 803 (3d 6 Dep’t 2010). Citing cases where there are distinct damages sought in connection with the v~'l fraud cause of action, plaintiff unconvincingly and summarily argues that the w damages in the two causes of action herein are distinct, while at the same time failing i to acknowledge that its cause of action for fraud seeks the same vaguely alleged tr] compensatory damages of $375,000.00 as sought in the cause of action for legal malpractice. Plaintiff does not adequately separate the two claims, as it must if it seeks to pursue them separately. By claiming that the law firm failed to perform “obligatory” legal work and then simply did not accurately portray the legal work performed on its bills, plaintiff has rendered the claim for fraud duplicative of the legal malpractice claim, because, as set forth in the law firm’s appeal brief, the allegedly inaccurately portrayed legal fees would be recoverable in connection with such claim. The cases cited by plaintiff hold no differently. For example, while a separate cause of action for fraud was sustained by the First Department in Johnson v. Proskauer Rose,129 A.D.3d 59 (1st ' Dep’t 2015), the two claims were based upon different factual allegations and different damages were sought. In Johnson, although the legal malpractice claims were dismissed as time-barred, the court found that the alleged fraud involved independent tortious conduct, specifically, the law firm’s failure to disclose a relationship with a party regarding tax shelter transactions, and an intentionally false 7 representation as to legality of same. Johnson, supra, 129 A.D. 3d at 66. iWhile it is true that a fraud claim can based upon an independent intent to deceive a client, as in Johnson, above, here, the alleged deception involves the purported obfuscation of legal malpractice, and plaintiff seeks damages that are1 ;j identical to those sought in connection with such claim. As referenced above, courts in the Third Department have dismissed claims of fraud where the allegations, even when characterized as self-dealing and misuse of client information, amount to a failure to disclose malpractice. See Country Club Partners v. Goldman, 954 N.Y.S.2d 758 (sup. Ct. Albany Cty. 2009), aff’d 79 A.D.3d 1389 (3d Dep’t 2010). Similarly, in dismissing the fraud cause of action in White of Lake George, Inc. v. Bell, 251 A.D.2d 777 (3d Dep’t 1998), the Court held that, despite the allegations A regarding affirmative misrepresentations by the law firm, if the plaintiff does noty! % allege “any damages beyond those resulting from the purported malpractice alone, their fraud claim is not maintainable.” White, supra, 79 A.D. 3d at 778. The allegations herein regarding the failure to perform legal services are insufficient to sustain an independent fraud cause of action. This is especially so where, as in the instant case, the plaintiff does not state anywhere in the pleading what work was allegedly not performed and in what matters, or how it suffered damages separate and apart from the legal malpractice alleged herein. Based upon the bare bones pleading in the instant matter, there is no basis to find that there exists 8 ? a fraud cause of action separate from the legal malpractice claim asserted herein. i Thus, the fraud cause of action must be dismissed as duplicative. 9 CONCLUSION ■ Based upon the foregoing, it is respectfully requested that the Decision and Order dated November 28, 2016, filed and entered on November 30, 2016, which denied defendants’ motion to dismiss the amended complaint for failure to state a cause of action, be reversed in its entirety, with prejudice, and that the Court grant ';ÿ! such other and further relief as it deems just and proper. Dated: Hawthorne, New York April 20, 2017 TRAUB LIEBERMAN STRAUS & SHREWSBERRY LLP By: Hillary J. Raimoqcjii/ Attorneys for Defendants Quartararo &Lois, PLLC and Paul Quartararo Mid-Westchester Executive Park : Seven Skyline Drive Hawthorne, New York 10532 (914)347-2600 10