November 16, 2010.
LAW OFFICES OF JOEL J. ZIEGLER, PC, Attorneys for Plaintiff, Smithtown, New York.
STEINBERG CAVALIERE, LLP, Attorneys for Defendant/Third-Party Plaintiff, White Plains, New York.
KAUFMAN, BORGEEST RYAN, LLP, Attorneys for Third-Party Defendant, New York, New York.
Upon the following papers numbered 1 to 23 read on this motion and cross-motion for summary judgment; Notice of Motion/ Order to Show Cause and supporting papers 1 — 12; Notice of Cross Motion and supporting papers 13 — 19; Answering Affidavits and supporting papers ___; Replying Affidavits and supporting papers 20 — 21; 22 — 23; Other ___; (
and after hearing counsel in support and opposed to the motion) it is,
ORDERED that this motion (#005) by the plaintiff, Louise Ann Orosz, for an order pursuant to CPLR 3212 granting summary judgment in her favor on the complaint is denied; and it is further
ORDERED that this cross-motion (#006) by the defendant/third-party plaintiff, William J. Eppig, for an order pursuant to CPLR 3212 granting summary judgment dismissing the complaint is denied.
The plaintiff, Louise Ann Orosz (Orosz), the Executrix of the Estate of Alice Gast, her deceased mother, commenced the underlying action against William J. Eppig (Eppig) for alleged legal malpractice in negligently and prematurely advising Orosz in September 2008 to distribute the Estate's assets. Orosz alleges that after the distribution of assets, she received notice in October 2008 of a claim against the Estate from the Suffolk County Department of Social Services (DSS) in the sum of $36,326.43 for medical assistance provided to Alice Gast, for which Orosz is now personally liable. The defendant Eppig subsequently commenced a third-party action for contribution and indemnification against the attorney, Rinaldo A. Pace (Pace), who referred Orosz to him in early 2008 for probate of Alice Gast's will. Eppig alleges that Pace continued to represent Orosz and the Estate on various matters after said referral, including the sale of Alice Gast's premises which was the primary asset of the Estate, and knew of DSS' claim but never advised Orosz to resolve said claim prior to the distribution of the Estate's assets.
In September 2007, Alice Gast had retained Pace to draft her will and on September 28, 2007 she had executed her will. Then, on October 29, 2007, Alice Gast died following complications from surgery. Pursuant to the will, Orosz was nominated and appointed Executrix of her mother's Estate. In early 2008, Pace referred Orosz to Eppig for the purpose of probating the will to obtain Letters Testamentary from Surrogate's Court. On May 23, 2008, Orosz retained Pace with respect to the sale of Alice Gast's premises located at 17 Long Street in Lake Grove, New York. Pace ordered a title search of said property in November 2007 and May 2008 and both title reports indicated the sole lien on the property to be a bank mortgage in the sum of $6,650.00. Letters Testamentary were issued to Orosz on June 18, 2008. The closing on the property occurred on August 12, 2008, Pace prepared the closing statement, and after the closing Orosz left with the checks and deposited them in the Estate's account.
In early September, Eppig sent letters to Alice Gast's four other children informing them that the Estate was now in a position to pay the beneficiaries the specific bequests contained in the will. The Estate's proceeds were thereafter distributed pursuant to the terms of the will to Alice Gast's children. Subsequently, Orosz received a letter dated October 17, 2008 from DSS informing that a Bond and Mortgage that Alice Gast had executed in July 1965 was due in the sum of $81,426.91 and that DSS was a preferred creditor of the Estate for Medicaid granted to Alice Gast and that the claim was $36,326.43. Eppig faxed said letter to Pace. In or about October 2008, DSS filed a claim with the Suffolk County Surrogate's Court against the Estate in the amount of $36,326.43 for medical assistance granted to Alice Gast. Thereafter, by letter dated November 5, 2008, DSS notified Orosz that its Bond and Mortgage had not been properly indexed at the Suffolk County Clerk's Office and that DSS would not be enforcing the mortgage. The Court's computer records indicate that the note of issue in this action was filed on April 22, 2010 following the completion of depositions of the parties.
Eppig's deposition testimony from March 23, 2010 revealed that Eppig's involvement in this matter began when Pace requested that Eppig call Orosz concerning obtaining Letters Testamentary when there is a missing distributee and that although Eppig was hired by Orosz, Eppig never entered into a retainer agreement with Orosz. Eppig testified that his initial understanding was that he was retained solely for the purpose of obtaining Letters Testamentary for Orosz, which was fulfilled in June 2008. According to Eppig, when Orosz called him at the end of August 2008 and informed him that the closing on her mother's home had just occurred and asked Eppig what she should do now, Eppig guessed that Pace was now passing the task of distribution of the proceeds from the sale of the house to Eppig.
Eppig also testified at his deposition that he had his first meeting with Orosz at the end of January 2008 at Eppig's office at which time Orosz mentioned a letter from DSS, without stating the date of the letter, and asked "what are we going to do about the letter from DSS?" and then Eppig asked "what letter?" to which Orosz responded that she had given the letter to Pace. According to Eppig, after his first meeting with Orosz he inquired of Pace's secretary the purported DSS letter and the secretary responded that she would send the papers but the documents that Pace's office faxed to him and the original documents that Orosz's husband brought shortly thereafter from Pace's office did not include any letter from DSS. Eppig's testimony revealed that he did not follow up with or have any further conversation with anyone about the purported DSS letter until after the Estate's assets were distributed and Eppig received the October and November 2008 letters from DSS. Eppig further testified that he had asked Orosz specifically on or about September 5, 2008 prior to the distribution of the Estate's assets whether there was any other outstanding debt owed by the Estate and that when he questioned Orosz about the August 8, 2007 DSS letter after the Estate's assets had been distributed, Orosz responded to the effect that she had not really known what the letter meant.
At her deposition on March 15, 2010, Orosz denied any prior knowledge of the August 8, 2007 DSS letter, denied that she told Eppig at their first meeting that her mother had received a letter from DSS prior to her death, and denied any knowledge on the date that Eppig advised her to distribute the Estate's assets that her mother had any obligation to the DSS. Orosz also testified that she had no discussions with Pace concerning claims by DSS against the Estate. Pace testified during his deposition on March 26, 2010 that Orosz did not inform him of any DSS correspondence and that he did not see the August 8, 2007 DSS letter nor did he have knowledge of the Medicaid claim prior to receiving Eppig's fax on October 22, 2008.
Orosz now moves for summary judgment in her favor on the complaint on the grounds that it was a departure from the minimum standard of law practice for Eppig to advise her to completely distribute the Estate's modest assets prior to the expiration of the seven month period of Surrogate's Court Procedure Act (SCPA) § 1802 without informing her of the risk of personal liability for claims made against the Estate within said period after the distribution. Orosz argues that accepting Eppig's version of events as true, that Orosz informed Eppig at their initial meeting that there was a letter from DSS, and assuming that Orosz knew that DSS had a claim against the Estate, once Orosz informed Eppig of the DSS letter then Eppig had a duty to find out the contents of said letter and Eppig's failure to investigate the DSS letter is the proximate cause of the damages incurred by Orosz.
In support of her motion, Orosz submits her affidavit stating that she followed Eppig's advice to distribute the Estate's assets approximately three months after the issuance of Letters Testamentary and upon receipt of the DSS claim attempted to recoup the distribution from her siblings without success and that as a result of erroneous legal advice, she is now personally liable for payment of the sum of $36,326.43 to DSS. In addition, Orosz submits the affidavit of an expert witness, Adam Minella, Esq., who represents estates and their fiduciaries opining that where, as in this case, the estate was relatively modest in size there was a departure from the standards of legal practice in advising the distribution of the assets before the seven month period had expired. Orosz also submits the deposition transcripts of all of the parties.
Eppig cross-moves for summary judgment dismissing the complaint on the ground that Orosz knew or should have known of the DSS claim prior to retaining him and distributing the Estate's assets inasmuch as she mentioned a letter from DSS at their first meeting but never revealed its contents such that his failure to advise of a potential DSS claim was not the proximate cause of her personal liability. Eppig contends that inasmuch as Orosz knew or had reason to know of the DSS claim, she would be personally liable regardless of when she disbursed the Estate's assets. In support of his cross-motion, Eppig submits a copy of the letter dated August 8, 2007 from DSS to Alice Gast and a copy of his intake notes from his initial meeting with Orosz.
In her reply, Orosz contends that even accepting the argument that she may have known of the existence of a letter from DSS to her mother at the time of her first meeting with Eppig, Orosz did not understand the letter's importance and emphasizes that she did not know until she received a letter dated October 17, 2008 from DSS that DSS had a bond and a mortgage on her mother's home. Orosz further contends that once she mentioned the existence of a DSS letter, Eppig had a duty to inquire further and obtain a copy of the letter prior to advising her to distribute the Estate's assets.
To establish a prima facie case of legal malpractice, the plaintiff must prove that (1) the attorney departed from the exercise of that degree of care, skill, and diligence commonly possessed and exercised by a member of the legal community, (2) the attorney's departure from the standard of care was the proximate cause of the loss sustained by the plaintiff, and (3) the plaintiff incurred damages as a direct result of the attorney's actions ( Edwards v Haas, Greenstein, Samson, Cohen Gerstein, P.C., 17 AD3d 517, 519). To establish causation, a plaintiff must show that he or she would have prevailed in the underlying action or would not have incurred any damages, but for the attorney's negligence (see, Rudolf v Shayne, Dachs, Stanisci, Corker Sauer, 8 NY3d 438, 442).
An attorney may not shift to the client the legal responsibility the attorney was specifically hired to undertake because of the attorney's superior knowledge (see, Hart v Carro, Spanbock, Kaster Cuiffo, 211 AD2d 617, 619; Cicorelli v Capobianco, 90 AD2d 524, 525, affd 59 NY2d 626). An attorney may be liable for ignorance of the rules of practice, for failure to comply with conditions precedent to suit, for neglect to prosecute or defend an action, or for failure to conduct adequate legal research (see, Conklin v Owen, 72 AD3d 1006; McCoy v Tepper, 261 AD2d 592; Gardner v Jacon, 148 AD2d 794, 796; Grago v Robertson, 49 AD2d 645, 646). While an attorney has a responsibility to investigate and prepare every phase of a client's case, an attorney should not be held liable for ignorance of facts which the client neglected to tell him or her (see, Green v Conciatori, 26 AD3d 410, 411; Parksville Mobile Modular v Fabricant, 73 AD2d 595, 598).
To succeed on a motion for summary judgment dismissing a cause of action alleging legal malpractice, the attorney must establish, through the submission of evidentiary proof in admissible form, that the plaintiff is unable to prove at least one of the essential elements of the cause of action (see, Fireman's Fund Ins. Co. v Farrell, 57 AD3d 721, 722; see also, Conklin v Owen, 72 AD3d 1006; Allen v Potruch, 282 AD2d 484; Shopsin v Siben Siben, 268 AD2d 578).
An executor is a fiduciary who owes a duty of undivided loyalty to the decedent and has a duty to preserve the assets of the estate entrusted to the executor ( Matter of Estate of Donner, 82 NY2d 574, 584; In re Estate of Skelly, 284 AD2d 336, 336). An executor has a duty to ensure that all administrative expenses, funeral costs, and other debts are paid ( In re Estate of Skelly, 284 AD2d at 337). An executor's duties are derived from the will itself, not from the letters issued by the Surrogate (see, Hartnett v Wandell, 60 NY 346; Matter of Yarm, 119 AD2d 754, 754; see also, In re Estate of Skelly, 284 AD2d at 336).
DSS has a right of recovery for medical assistance against the home of a Medicaid recipient if the home is part of the recipient's estate (see, Crabb v Mager, 66 AD2d 20; see also, 42 USC § 1396p[b][B][i]; Social Services Law § 369[b][i][B]). An executor or executrix is protected from personal liability in making lawful payment or distribution of the funds of the estate after waiting seven months from the date of issuance of his or her letters testamentary (see, SCPA § 1802, EPTL § 11-1.5; Matter of Gill, 199 NY 155; Matter of Huscher's Estate, 251 App Div 156; see also, In re Segall's Will, 287 NY 52). However, said protection does not go so far as to shield an executor or executrix if he or she has made payment or distribution in bad faith and it has always been held that good faith requires the executor or executrix to recognize claims of which he or she has knowledge, at least to the extent of citing the claimants upon his final accounting (see, id).
The letter dated August 8, 2007 addressed to Alice Gast from DSS expressly states, "On July 06, 1965 you signed a Bond Mortgage with the Suffolk County Department of Social Services as a requirement for receiving public assistance. According to the terms of this mortgage, it becomes due and payable when you no longer own your home or cease to reside there. If neither of these two events has occurred, please consider this letter a reminder of your outstanding lien." The proffered deposition testimony of the parties raise issues of fact as to whether Orosz knew of the existence of a letter from DSS to her mother at her first meeting with Eppig and if the letter was the August 8, 2007 letter, whether Orosz as a lay person should have been able to understand its contents and appreciate it as indicating the existence of an outstanding lien on her mother's home so as to specifically inform Eppig in her capacity as Executrix of the Estate of a possible debt in favor of DSS when Eppig questioned her prior to the distribution of the Estate's assets (see generally, In re Leland's Will, 219 NY 387; In re Estate of Skelly, 284 AD2d at 337; SCPA § 707 [e]). The deposition testimony of the parties also raises an issue of fact as to whether Eppig exercised the appropriate degree of care in performing his duty when he undertook to prepare an informal accounting of the Estate's assets and advised Orosz to distribute the Estate's assets (see, Thompson v Seligman, 53 AD3d 1019, 1020). Inasmuch as the proffered deposition testimony of the parties raises questions of fact regarding the credibility of the parties, neither Orosz nor Eppig are entitled to summary judgment (see, S.J. Capelin Assocs., Inc. v Globe Mfg. Corp., 34 NY2d 338).
Finally, the request by Eppig for a determination of the appropriate amount of damages and whether Orosz would be entitled to prejudgment interest in the event that Orosz is granted judgment in this action is premature at this juncture (see generally, Greenberg v Sutter, 257 AD2d 646).