Mid-Hudson Valley Federal Credit Union, Appellant,v.Quartararo & Lois, PLLC et al., Respondents.BriefN.Y.June 5, 2018Time requested: 10 Minutes Argued by: Kevin A. Luibrand Ulster County Index No.: 1783/16 — #524562 Supreme Court State of New York Appellate Division-Third Department MID-HUDSON VALLEY FEDERAL CREDIT UNION, Plaintiff-Respondent, -against- QUARTARARO & LOIS, PLLC and PAUL QUARTARARO, Defendant-Appellant. j RESPONDENT’S BRIEF Kevin A. Luibrand, Esq. Luibrand Law Firm, PLLC Attorney for Plaintiff-Respondent 950 New Loudon Road Suite 270 Latham, New York 12110 Telephone: (518)783-1100 Facsimile: (518)783-1901 Email: kluibrand@luibrandlaw.com TABLE OF CONTENTS Preliminary Statement Questions Presented... .... Factual and Procedural Background. Argument .. Point I ............ . 1 1 1 3 3 The Lower Court Correctly Held That the Amended Complaint Adequately Pled the Elements of a Claim For Legal Malpractice, 3 Point II 6 The Trial Court Correctly Held That the Amended Complaint Adequately Pled All Elements of a Claim For Fraud That is Not Duplicative of the Legal Malpractice Claim.............. Conclusion..................... ........ ...... . . 6 9 i TABLE OF AUTHORITIES s Cases p Arias v. Arbelaez, 42 Misc. 3d 1238(A) (Queens Cnty. 2014) .. Assured Guar. Mun. Corn, v. DB Structured Prods.. Inc., 33 Misc. 3d 720 (New York Cnty. 2011)........ Benishai v. Epstein. 116 A.D.3d 726 (2d Dep’t 2014) ..............i . Burke. Albright, Harter & Rzepka, LLP v. Sills, 83 A.D.3d 1413 (4thDep’t 2011) 7 Ferdinand v. Crecca & Blair. No. 02-12234, 2002 N.Y. Misc. LEXIS 2070, at *7 (Suffolk Cnty. Sup. Ct., Oct. 1, 2002). 5 4 3 9 Goldman v. Metro. Life Ins. Co.. 5 N.Y.3d 561 (2005) 4 Hahn v. Dewey & Leboeuf Liquidation Trust, No. 650817/2014, 2015 N.Y. Misc. LEXIS 2888, at *18-19 (N.Y. Cnty. Sup. Ct, Aug. 3, 2015).... .. 8 Hvman v. Burgess, 125 A.D.3d 1213 (3d Dep’t 2015) Johnson v. Proskauer Rose LLP, 129 A.D.3d 59 (1st Dep’t 2015) Kallista, S.A., and Linda Gillette Parodi, v. White & Williams LLP, Randv Friedberg, and Does 1 Through 10. 51 Misc. 3d 401 (West. Cnty. Sup. Ct. 2016) 3 7 8 Leder v. Spiegel, 9 N.Y.3d 836 (2007). Leon y. Martinez, 84 N.Y.2d 83 (1994) 3 5 Marone v. Marone. 50 N.Y.2d 481 (1990), 5 Oikonomos, Inc, v. Bahrenberg, 38 Misc. 3d 1207(A) (Suffolk Cnty. 2013) 3 Stuart v. Robert L. Folks & Assoc., LLP, 106 A.D.3d 808 (2d Dep’t 2013) 5 ii PRELIMINARY STATEMENT E This present appeal is based upon the sufficiency of allegations of legal malpractice and fraud alleged in Plaintiffs amended complaint. This appeal stems from a decision by the Ulster County Supreme Court (Cahill, J.) issued on November 28, 2016, holding that the amended complaint adequately pled separate causes of action for legal malpractice and fraud. QUESTIONS PRESENTED Whether the lower court erred in finding that the amended complaint1. adequately pled a cause of action for legal malpractice. Whether the lower court erred in finding that the amended complaint2. adequately pled a cause of action for fraud. FACTUAL and PROCEDURAL BACKGROUND As set forth in the amended complaint, plaintiff Mid-Hudson Valley Federal Credit Union (MHVFCU) retained defendant law firm to perform legal work on behalf of the plaintiff relating to debt collection owed to MHVFCU and the foreclosure of specific mortgages that listed MHVFCU as the mortgagee. R. 36. In their capacity as MHVFCU’s attorney, defendant law firm had a duty to competently, properly, and timely represent MHVFCU in all its legal endeavors. Id. Additionally, defendants agreed to perform these legal services in a timely and competent manner, submitting invoices to MHVFCU that reflected services actually 1 performed and the time actually expended in performing the aforementioned legal E work. Id. In return, MHVFCU agreed to compensate defendant law firm for the legal Work performed in contemplation of their agreement. Id Defendant law firm failed to honor these obligations, thereby breaching their duty as attorney for MHVFCU, and the aforementioned legal malpractice resulted in damages. Id. Further, defendants falsified their invoices submitted to plaintiff for payments regarding the amount of time spent on the requisite legal services and the legal services actually done. R. 38. Fhese false representations caused substantial damages to MHFCVU. R. 39. MHVFCU commenced suit on July 1, 2016 through the filing of a summons with notice dated June 27, 2016 with the Ulster County Clerk. Defendant appeared in the action on August 15, 2016, and a verified complaint was thereafter filed and served on August 30, 2016. A motion to dismiss by defendants was then filed and served. Simultaneously, and prior to defendants’ answer to the original complaint, plaintiff served an amended verified complaint, as of right, pursuant to CPLR 3025 (a), curing the claimed defective pleading. On November 28, 2016, the Ulster County Supreme Court (Cahill, J.) issued a Decision and Order denying defendants’ motion, holding that separate causes of action for legal malpractice and fraud had been adequately pled. R.11. Fhis pending appeal ensued. 2 ARGUMENT £ POINT I THE LOWER COURT CORRECTLY HELD THAT THE AMENDED COMPLAINT ADEQUATELY PLED THE ELEMENTS OF A CLAIM FOR LEGAL MALPRACTICE It is well-established that “‘[i]n order to sustain a claim for legal malpractice, a plaintiff must establish both that the defendant attorney failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession which results in actual damages to a plaintiff, and that the plaintiff would have succeeded on the merits of the underlying action but for the attorney’s negligence.’” Hyman v. Burgess, 125 A.D.3d 1213, 1215 (3dDep’t 2015) (quoting Leder v. Spiegel 9 N.Y.3d 836, 837 (2007)) (emphasis added). Plaintiff must also have ascertainable damages. Hyman, 125 A.D.3d at 1215. In order to establish the “but for” element, Plaintiff may demonstrate that he or she would not have sustained any damages but for the negligence of the attorney. Benishai v. Epstein, 116 A.D.3d 726, 727 (2d Dep’t 2014). “The ‘but for’ standard does not require a showing that the defendant’s malpractice was the sole proximate cause, rather than a substantial cause, of the plaintiffs loss.” Oikonomos, Inc, v. Bahrenberg, 38 Misc. 3d 1207(A), 1207(A) (Suffolk Cnty. 2013). 3 Pursuant to CPLR 3026, pleadings should be liberally construed. CPLR 3026. Moreover, “[o]n a motion to dismiss, the court must accept the facts as alleged in the complaint as true, accord plaintiff the benefit of every favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory.” Assured Guar. Mun. Corp. v. DB Structured Prods., Inc.. 33 Misc. 3d 720, 733 (New York Cnty. 2011); see Goldman v. Metro. Life Ins. Co.. 5 N.Y.3d 561, 570-571 (2005) (“When determining a motion to dismiss, the court must accept the facts as alleged in the complaint as true, accord plaintiffs the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory.”) (internal quotations omitted). Defendants continue to allege that the amended complaint fails to state a cause of action for legal malpractice, arguing that the amended complaint “is a series of conclusory statements regarding the legal elements of a legal malpractice cause of action.” Appellant’s Brief at p. 7. As argued below and accepted by the trial court judge, the amended complaint alleges specifically that while acting as attorney for MHVPCU, defendants contracted to perform legal services to MHVFCU that included submitting invoices and timesheets for work that defendants completed. R. 36. Defendants would be compensated for the work detailed on those invoices. Id Defendants’ failure to perform the obligatory legal work in a timely manner constituted legal malpractice. R. 36, 37. But for defendants’ failure to conduct such 4 legal services in a timely and competent manner, MHVFCU would have succeeded on their foreclosure actions and, thereby, would not have suffered substantial damages. R. 36. The failures committed by defendants fell well below the appropriate standard of care, as they failed to “exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession.” Stuart v. Robert L. Folks & Assoc.. LLP, 106 A.D.3d 808, 808-809 (2d Dep’t 2013); Arias v. Arbelaez, 42 Misc. 3d 1238(A), 1238(A) (Queens Cnty. 2014) (upholding a cause of action for legal malpractice where plaintiff alleged that defendant’s actions regarding a real estate transaction deprived him of funds contractually promised). Further, the lower court in its determination, relied upon a liberal construction of the pleadings, stressing the court’s role in assessing a motion to dismiss is “to determine whether the facts fit within any cognizable legal theory upon accepting the facts, as alleged, as true.” R. 10 (citing Leon v. Martinez. 84 N.Y.2d' 83, 87-88 [1994]; Marone v. Marone, 50 N.Y.2d 481, 484 [1990]). Accordingly, the lower court’s ruling should be affirmed and defendants’ motion to dismiss the cause of action should be denied. 5 POINT n z THE TRIAL COURT CORRECTLY HELD THAT THE AMENDED COMPLAINT ADEQUATELY PLED ALL ELEMENTS OF A CLAIM FOR FRAUD THAT IS NOT DUPLICATIVE OF THE LEGAL MALPRACTICE CLAIM “Where a cause of action or defense is based upon misrepresentation, fraud, mistake, wilful [sic] default, breach of trust or undue influence, the circumstances constituting the wrong shall be stated in detail.” CPLR 3016 (b). Appellants’ argument is twofold: (1) the cause of action of fraud is duplicative of the cause of action for legal malpractice; and (2) in the alternative, the complaint fails to state a cause of action. See Appellant’s Brief at p. 9-10. As argued below and found by the lower court, the cause of action for fraud is not redundant of the legal malpractice action. Where ... a fraud claim is asserted in connection with charges of professional malpractice, it is sustainable only to the extent that it is premised upon one or more affirmative, intentional misrepresentations — that is, something more egregious than mere concealment or failure to disclose one's own malpractice — which have caused additional damages, separate and distinct from those generated by the alleged malpractice. White of Lake George v. Bell. 251 A.D.2d 777, 778 (3d 1998k see Carl v. Cohen, 55 A.D.3d 478, 478-479 (1st Dep’t 2008) (“The fraud claim was duplicative of the legal malpractice claim since it was not based on an allegation of independent, intentionally tortious conduct and failed to allege separate and distinct damages.”). 6 :Here, MHVFCU’s claim of legal malpractice alleges defendant law firm’s failure to provide “timely, professional and competent legal representation,” focusing specifically on the actions and omissions of defendants in advancing plaintiffs interests in the underlying action. R. 37. The cause of action for fraud, however, is grounded in the falsification of invoices submitted by the defendants to Plaintiff, which detailed legal time and work defendants claimed to have performed, but not yet performed. R. 38. Plaintiff then paid for legal services not performed. Id. A cause of action for fraud is not duplicative of a cause of action for legal malpractice where the fraud claim centers on allegations that the opposing party intended to deceive the plaintiff, while the legal malpractice claim is based on negligent conduct. Burke, Albright, Harter & Rzepka, LLP v. Sills. 83 A.D.3d 1413, 1414 (4th Dep’t 2011) (“[T]he proposed counterclaims for fraud and breach of fiduciary duty are not duplicative of the legal malpractice counterclaim. The proposed counterclaims are based on allegations that plaintiffs intended to deceive decedent, whereas the legal malpractice counterclaim is based on negligent conduct.”) (internal quotations omitted); see Johnson v. Proskauer Rose LLP. 129 A.D.3d 59, 66 (1st Dep’t 2015) (“The court declined to dismiss plaintiffs' fraud claim as duplicative of the legal malpractice claim, since the former claim was founded upon allegations indicating something more than mere concealment of malpractice. The court found the fraud claim alleged independent, intentionally tortious conduct, 7 particularly concerning Proskauer's failure to disclose its true relationship with TDG, I and that such conduct allegedly gave rise to separate and distinct damages from the malpractice claim. The court noted that plaintiffs alleged that Proskauer intentionally made false representations as to the legality of the shelter transaction, as well as to the nature of itsrelationship with TDG regarding the tax shelter transactions.”). Contrary to appellants’ allegations, the damages suffered by MHVFCU pursuant to the fraud claim are separate damages than those alleged in the legal malpractice cause of action. See Appellants’ Brief at p. 9. Damages in the fraud cause of action center on the falsification of invoices, meaning Plaintiff paid for false invoices, whereas the damages sustained in the cause of action for legal malpractice focus on the actions and omissions of defendants and the resulting losses. R. 37; see Kallista, S.A., and Linda Gillette Parodi. v. White & Williams LLP. Randy Friedberg, and Does 1 Through 10. 51 Misc. 3d 401, 416 (West. Cnty. Sup; Ct. 2016) (supporting the proposition that additional damages alleged in the fraud cause of action gives credence to a separate and distinct cause of action). Hahn v. Dewey & Leboeuf Liquidation Trust. No. 650817/2014, 2015 N.Y. Misc. LEXIS 2888, at *18- 19 (N.Y. Cnty. Sup. Ct., Aug. 3, 2015) (“Moreover, the damages allegedly sustained by plaintiffs as a result of the alleged fraud flow from the same facts as does the legal malpractice claim and therefore are not separate and distinct from the legal malpractice damages.”); Ferdinand v. Crecca & Blair. No. 02-12234, 2002 N.Y. 8 Misc. LEXIS 2070, at *7 (Suffolk Cnty. Sup. Ct, Oct. 1, 2002) (“Plaintiff has not z set forth separate damages relative to the claim of fraud distinct from the claim of the alleged malpractice, and damages are limited to actual pecuniary loss sustained as the direct result of the wrong.”) (internal citations and quotations omitted). The cause of action for fraud is different from the cause of action for legal malpractice; regardless of whether defendants committed malpractice, the complaint alleges that they maliciously and intentionally submitted false invoices to plaintiff for legal work paid by plaintiff. R. 37-38. CONCLUSION Based upon the foregoing, it is respectfully requested that the Decision and Order dated November 28, 2016 be affirmed, and that the Court grant such other and further relief as it deems just and proper. Dated: April 12, 2017 Yours, etc., LAW FIRM, PLLCLUIB: Kevin A. Luibrand, Esq. Attorney for Claimant-Respondent Office and P.O. Address: 950 New Loudon Road Suite 270 Latham, New York 12110 Telephone: (518)783-1100 Facsimile: (518)783-1901 E-mail: kluibrand@luibrandlaw.com 9