The Appellate Division, in Kleinman v Weisman Law Group, P.C., 176 AD3d 1046 [2d Dept 2019], dismissed a former client’s legal malpractice action based upon the doctrines of res judicata and collateral estoppel. The court stated as follows:
In 2013, the defendant Weisman Law Group, P.C. (hereinafter the defendant firm), commenced an action against the plaintiff to recover unpaid legal fees in the Nassau County District Court. The plaintiff asserted a counterclaim, alleging that he was overbilled by the defendant firm. A judgment was entered in favor of the defendant firm and against the plaintiff. The plaintiff appealed the judgment of the Nassau County District Court to the Appellate Term of the Supreme Court for the Ninth and Tenth Judicial Districts, which affirmed the judgment (seeWeisman Law Group, P.C. v. Kleinman, 60 Misc.3d 133[A], 2018 N.Y. Slip Op. 51042[U], 2018 WL 3309514 [App Term, 2d Dept, 9th & 10th Jud Dists 2018] ). In 2016, the plaintiff commenced the instant action against the defendants asserting causes of action alleging, inter alia, breach of contract and legal malpractice.
The plaintiff contends that the doctrines of res judicata and collateral estoppel do not apply in the instant case, as the Nassau County District Court lacked subject matter jurisdiction over his counterclaim in the prior action. Contrary to the plaintiff’s contention, the Nassau County District Court did have jurisdiction over his counterclaim pursuant to Uniform District Court Act Section 208(b), as the counterclaim was for money only. The doctrine of res judicata precludes the plaintiff from litigating the claims set forth in his complaint, as a judgment on the merits exists in the prior action between the same parties involving the same subject matter (see Matter ofJosey v. Goord, 9 N.Y.3d 386, 389, 849 N.Y.S.2d 497, 880 N.E.2d 18; Matter of Hunter, 4 N.Y.3d 260, 269, 794 N.Y.S.2d 286, 827 N.E.2d 269). New York has adopted the transactional analysis approach to res judicata, so that once a claim is brought to a final conclusion, all other claims between the same parties or those in privity with them arising out of the same transaction or series of transactions are barred, even if based upon different theories or if seeking a different remedy (see Matter ofJosey v. Goord, 9 N.Y.3d at 389–390, 849 N.Y.S.2d 497, 880 N.E.2d 18; Matter of Hunter, 4 N.Y.3d at 269, 794 N.Y.S.2d 286, 827 N.E.2d 269; *124 O’Brien v. City of Syracuse, 54 N.Y.2d 353, 357, 445 N.Y.S.2d 687, 429 N.E.2d 1158; Greenstone/Fontana Corp. v. Feldstein, 72 A.D.3d 890, 893, 901 N.Y.S.2d 643).
Furthermore, the plaintiff’s causes of action are barred by the doctrine of collateral estoppel, which precludes a party from relitigating in a subsequent action or proceeding an issue clearly raised in a prior action or proceeding and decided against that party or those in privity, whether or not the tribunals or causes of action are the same (seeRyan v. New York Tel. Co., 62 N.Y.2d 494, 500, 478 N.Y.S.2d 823, 467 N.E.2d 487; Williams v. New York City Tr. Auth., 171 A.D.3d 990, 97 N.Y.S.3d 692). The doctrine of collateral estoppel applies here, as the issues in both actions are identical, the issue in the prior action was actually litigated and decided, there was a full and fair opportunity to litigate the action, the issue previously litigated was necessary to support a valid and final judgment on the merits, and the defendant Rachel J. Weisman was in privity with the defendant firm (seeConason v. Megan Holding, LLC, 25 N.Y.3d 1, 17, 6 N.Y.S.3d 206, 29 N.E.3d 215; Williams v. New York City Tr. Auth., 171 A.D.3d at 991–992, 97 N.Y.S.3d 692; Karimian v. Time Equities, Inc., 164 A.D.3d 486, 83 N.Y.S.3d 227).
In Gobindram v Ruskin Moscou Faltischek, P.C., 175 AD3d 586, 589-91 [2d Dept 2019], the state court considered the issue of collateral estoppel concerning a matter previously litigated in the federal bankruptcy court. The court held:
“The doctrine of in pari delicto mandates that the courts will not intercede to resolve a dispute between two wrongdoers” (Kirschner v. KPMG LLP, 15 N.Y.3d 446, 464, 912 N.Y.S.2d 508, 938 N.E.2d 941). “[T]he principle that a wrongdoer should not profit from his own misconduct is so strong in New York that … the defense applies even in difficult cases and should not be weakened by exceptions” (id. at 464, 912 N.Y.S.2d 508, 938 N.E.2d 941 [internal quotation marks omitted] ). “The defense requires intentional conduct on the part of the plaintiff” (Sacher v. Beacon Assoc. Mgt. Corp., 114 A.D.3d 655, 657, 980 N.Y.S.2d 121; see Kirschner v. KPMG LLP, 15 N.Y.3d at 474, 912 N.Y.S.2d 508, 938 N.E.2d 941).
Collateral estoppel precludes a party from relitigating in a subsequent action or proceeding an issue raised in a prior action or proceeding and decided against that party, whether or not the tribunals or causes of action are the same (seeBuechel v. Bain, 97 N.Y.2d 295, 303, 740 N.Y.S.2d 252, 766 N.E.2d 914; Shifer v. Shifer, 165 A.D.3d 721, 723, 85 N.Y.S.3d 92). There must be an identity of issue which has necessarily been decided in the prior action and is decisive of the present action, and there must have been a full and fair opportunity to contest the decision now said to be controlling (seeBuechel v. Bain, 97 N.Y.2d at 303–304, 740 N.Y.S.2d 252, 766 N.E.2d 914; Shifer v. Shifer, 165 A.D.3d at 723, 85 N.Y.S.3d 92).
Here, the federal courts in the plaintiff’s bankruptcy proceeding finally adjudicated a mixed issue of law and fact identical to that raised by the in pari delicto defense asserted by the defendants in the current legal malpractice action, i.e., the plaintiff’s culpability in connection with the filing of the inaccurate bankruptcy petition. Those courts found that the plaintiff knowingly and intentionally made a false and fraudulent statement under oath by swearing that he had read the SOFA and that it was true and correct, and that the plaintiff’s alleged reliance on the defendants to accurately prepare the bankruptcy submissions did not negate his fraudulent intent. These findings established that the plaintiff was in pari delicto with the defendants to the extent that he alleges they acted negligently in preparing and filing the inaccurate bankruptcy petition. Accordingly, we agree with the Supreme Court’s determination granting that branch of the defendants’ motion which was to dismiss so much of the legal malpractice cause of action as sought to recover damages for the defendants’ preparation and filing of the inaccurate bankruptcy petition based on the doctrines of collateral estoppel and in pari delicto.
However, we disagree with the Supreme Court’s determination granting that branch of the defendants’ motion which was to dismiss so much of the legal malpractice cause of action as sought to recover damages for the defendants’ failure to amend the bankruptcy petition. The findings of the federal courts regarding the knowing and fraudulent conduct on the plaintiff’s part related solely to the initial filing; they made no determination that the plaintiff acted knowingly and fraudulently in failing to file an amended petition. Accordingly, that part of the plaintiff’s legal malpractice cause of action is not subject to dismissal on the grounds of collateral estoppel and in pari delicto.
As an alternative ground for affirmance (seeParochial Bus Sys. v. Board of Educ. of City of N.Y., 60 N.Y.2d 539, 545–546, 470 N.Y.S.2d 564, 458 N.E.2d 1241), the defendants contend that the legal malpractice cause of action should have been dismissed in its entirety pursuant to CPLR 3211(a)(7), since the parties’ evidentiary submissions on the motion established that the plaintiff hired subsequent counsel who had ample opportunity to rectify their alleged error in this regard (see e.g.Perks v. Lauto & Garabedian, 306 A.D.2d 261, 262, 760 N.Y.S.2d 231). This contention lacks merit.
On a motion to dismiss a complaint pursuant to CPLR 3211(a)(7), 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” (Leon v. Martinez, 84 N.Y.2d 83, 87–88, 614 N.Y.S.2d 972, 638 N.E.2d 511; seeNonnon v. City of New York, 9 N.Y.3d 825, 827, 842 N.Y.S.2d 756, 874 N.E.2d 720). “When evidentiary material is considered, the criterion is whether the proponent of the pleading has a cause of action, not whether [she or] he has stated one, and, unless it has been shown that a material fact as claimed by the pleader to be one is not a fact at all and unless it can be said that no significant dispute exists regarding it, … dismissal should not eventuate” (Guggenheimer v. Ginzburg, 43 N.Y.2d 268, 275, 401 N.Y.S.2d 182, 372 N.E.2d 17).
Here, the record reveals that the plaintiff did not retain the services of new counsel until December 2011. By that time, the bankruptcy trustee had already noted inconsistencies in the petition and requested an accounting relating to the omitted tax refund transfers, and the plaintiff’s creditors had commenced the adversary proceeding. Giving the plaintiff the benefit of every favorable inference (seeLeon v. Martinez, 84 N.Y.2d at 87–88, 614 N.Y.S.2d 972, 638 N.E.2d 511), this time line suggests that the defendants, not the subsequent attorney, represented the plaintiff at the time when a voluntary amendment to the petition could have significantly reduced the prospect of a finding that the plaintiff made a false and fraudulent statement in the bankruptcy petition (seeIn re Tully, 818 F.2d 106, 111 [1st Cir.]; Matter of Kilson, 83 B.R. 198, 203 [D. Conn.]). Accordingly, at this preliminary stage of the litigation, the defendants have failed to conclusively demonstrate that the plaintiff’s subsequent attorney had a sufficient opportunity to correct their alleged error in failing to amend the petition, such that they did not proximately cause any damages flowing from that error (see generallyTooma v. Grossbarth, 121 A.D.3d 1093, 1096, 995 N.Y.S.2d 593; Grant v. LaTrace, 119 A.D.3d 646, 647, 990 N.Y.S.2d 227).
We find unpersuasive the defendants’ additional alternative contention that the legal malpractice cause of action was properly dismissed pursuant to CPLR 3211(a)(3) because that cause of action belongs to the bankruptcy estate and the plaintiff lacked standing to assert it. “On a defendant’s motion to dismiss the complaint based upon the plaintiff’s alleged lack of standing, the burden is on the moving defendant to establish, prima facie, the plaintiff’s lack of standing” (BAC Home Loans Servicing, LP v. Rychik, 161 A.D.3d 924, 925, 77 N.Y.S.3d 522; see CPLR 3211[a][3]; MLB Sub I, LLC v. Bains, 148 A.D.3d 881, 881–882). “[T]he motion will be defeated if the plaintiff’s submissions raise a question of fact as to its standing” (U.S. Bank N.A. v. Clement, 163 A.D.3d 742, 743, 81 N.Y.S.3d 116 [internal quotation marks omitted]; seeMLB Sub I, LLC v. Bains, 148 A.D.3d at 882, 50 N.Y.S.3d 410).
Here, in response to the defendants’ prima facie showing that the plaintiff’s legal malpractice cause of action was the property of the bankruptcy estate (seeWright v. Meyers & Spencer, LLP, 46 A.D.3d 805, 849 N.Y.S.2d 274; Williams v. Stein, 6 A.D.3d 197, 198, 775 N.Y.S.2d 255; In re Strada Design Assoc., Inc., 326 B.R. 229, 237–240 [S.D. N.Y.]), the plaintiff raised a question of fact as to whether the bankruptcy trustee had abandoned the cause of action in accordance with Bankruptcy Code (11 USC) § 554(a) and had authorized the plaintiff to pursue it. Accordingly, dismissal of the legal malpractice cause of action for lack of standing is not available at this juncture.
Once someone has sued another and the case is dismissed, the plaintiff’s claim is barred or precluded. In Manko v Gabay, 175 AD3d 484 [2d Dept 2019], the court held:
The plaintiff subsequently commenced the instant action against, among others, the Gabay defendants, asserting causes of action against them, inter alia, to recover damages for legal malpractice and breach of fiduciary duty. The Gabay defendants moved, inter alia, pursuant to CPLR 3211(a)(5) to dismiss the complaint insofar as asserted against them. The Supreme Court granted that branch of the motion, and the plaintiff appeals.
We agree with the Supreme Court’s determination to grant that branch of the Gabay defendants’ motion which was pursuant to CPLR 3211(a)(5) to dismiss the complaint insofar as asserted against them as barred by the doctrine of res judicata, based upon the dismissal, on the merits, of the complaints insofar as asserted against them in the four prior actions. Under the doctrine of res judicata, or claim preclusion, “a valid final judgment bars future actions between the same parties on the same cause of action” (Parker v. Blauvelt Volunteer Fire Co., 93 N.Y.2d 343, 347, 690 N.Y.S.2d 478, 712 N.E.2d 647). “[O]nce a claim is brought to a final conclusion, all other claims arising out of the same transaction or series of transactions are barred, even if based upon different theories or if seeking a different remedy” (O’Brien v. City of Syracuse, 54 N.Y.2d 353, 357, 445 N.Y.S.2d 687, 429 N.E.2d 1158).
This Court takes a “pragmatic approach” to determining what constitutes a single transaction or series of transactions for the purposes of res judicata (Coliseum Towers Assoc. v. County of Nassau, 217 A.D.2d 387, 390, 637 N.Y.S.2d 972). Thus, events are part of the same transaction or series of transactions where their “foundational facts” are related in “time, space, origin, or motivation,” where they “form a convenient trial unit,” and where “treatment [of the foundational facts] as a unit conforms to the parties’ expectations” (id. at 390–391, 637 N.Y.S.2d 972 [internal quotation marks omitted] ).
The doctrine of collateral estoppel, or issue preclusion, is “a component of the broader doctrine of res judicata which holds that, as to the parties in a litigation and those in privity with them, a judgment on the merits by a court of competent jurisdiction is conclusive of the issues of fact and questions of law necessarily decided therein in any subsequent action” ( *133 Gramatan Home Invs. Corp. v. Lopez, 46 N.Y.2d 481, 485, 414 N.Y.S.2d 308, 386 N.E.2d 1328). Collateral estoppel will bar relitigation of an issue where “the issue in the second action is identical to an issue which was raised, necessarily decided and material in the first action, and the plaintiff had a full and fair opportunity to litigate the issue in the earlier action” (Parker v. Blauvelt Volunteer Fire Co., 93 N.Y.2d at 349, 690 N.Y.S.2d 478, 712 N.E.2d 647; see Jeffreys v. Griffin, 1 N.Y.3d 34, 39, 769 N.Y.S.2d 184, 801 N.E.2d 404; Pinnacle Consultants v. Leucadia Natl. Corp., 94 N.Y.2d 426, 432, 706 N.Y.S.2d 46, 727 N.E.2d 543).
Here, the complaints in the four prior actions commenced by the plaintiff against the Gabay defendants were all dismissed insofar as asserted against them on the merits pursuant to the order dated May 7, 2012. The claims asserted in the instant action arise from the same transaction or series of transactions that gave rise to the four prior actions, i.e., the legal assistance provided by Gabay to the plaintiff from November 2007 to December 2007. The majority of the facts alleged in the five complaints are nearly identical, with the only differences being additional causes of action asserted in this action and different entities named as defendants of which Gabay is a principal, differences which nonetheless relate “in time, space, origin [and] motivation” to the claims adjudicated in the four prior actions (Xiao Yang Chen v. Fischer, 6 N.Y.3d 94, 100, 810 N.Y.S.2d 96, 843 N.E.2d 723 [internal quotation marks omitted]; see Smith v. Russell Sage Coll., 54 N.Y.2d 185, 192–193, 445 N.Y.S.2d 68, 429 N.E.2d 746). Inasmuch as all issues related to the plaintiff’s claims sounding in simple legal malpractice were fully and finally decided in the four prior actions, they are barred by principles of res judicata and collateral estoppel (see Kret v. Brookdale Hosp. Med. Ctr., 61 N.Y.2d 861, 863, 473 N.Y.S.2d 970, 462 N.E.2d 147; see also Altamore v. Friedman, 193 A.D.2d 240, 244–245, 602 N.Y.S.2d 894). The plaintiff’s additional causes of action alleging, among other things, deprivation of constitutional rights and conspiracy “could have been raised in the prior litigation” and, consequently, are precluded by the doctrine of res judicata (Matter of Hunter, 4 N.Y.3d 260, 269, 794 N.Y.S.2d 286, 827 N.E.2d 269; see Rowley, Forrest, O’Donnell & Beaumont, P.C. v. Beechnut Nutrition Corp., 55 A.D.3d 982, 984, 865 N.Y.S.2d 390).
In Miami Capital, LLC v Hurwitz, 101 NYS3d 598 [1st Dept 2019], the court determined that the client’s legal malpractice case could not proceed since the damages claim was speculative, holding:
Defendant’s motion was properly granted because while plaintiff anticipates that it could be subject to a rescission claim at some point in the future, such alleged damages are purely speculative and not yet ripe. Since damages in a legal malpractice case are designed “ to make the injured client whole ” (Campagnola v. Mulholland, Minion & Roe, 76 N.Y.2d 38, 42, 556 N.Y.S.2d 239, 555 N.E.2d 611 [1990] ), having failed to plead actual damages, plaintiff’s complaint fails to state a claim (seeHeritage Partners, LLC v. Stroock & Stroock & Lavan LLP, 133 A.D.3d 428, 19 N.Y.S.3d 511 [1st Dept. 2015], lv denied 27 N.Y.3d 904, 2016 WL 1692057 [2016]; Lavanant v. General Acc. Ins. Co. of Am., 212 A.D.2d 450, 622 N.Y.S.2d 726 [1st Dept. 1995] ).
When a client alleges duplicative causes of action against an attorney based upon different theories of liability, the court can dismiss those duplicative causes of action.
“ To state a claim for breach of fiduciary duty, a plaintiff must allege the existence of a fiduciary relationship, misconduct by the other party, and damages directly caused by that party’s misconduct ” (Castellotti v Free, 138 AD3d 198, 209 [1st Dept 2016]). “ [A] fiduciary relationship arises between two persons when one of them is under a duty to act or give advice for the benefit of another upon matters within the scope of the relation ” (Oddo Asset Mgt. v Barclays Bank PLC, 19 NY3d 584, 593-594 [2012], rearg denied 19 NY3d 1065 [2012] [internal quotation marks and citation omitted]). The existence of a duty is essential and may not be imposed unilaterally (seeMarmelstein v Kehillat New Hempstead: The Rav Aron Jofen Community Synagogue, 45 AD3d 33, 36-37 [1st Dept 2008], affd 11 NY3d 15 [2008]). Whether a fiduciary relationship exists involves a fact-specific inquiry (seeEBC I, Inc. v Goldman Sachs & Co., 5 NY3d 11, 19 [2005]). A claim for breach of fiduciary duty also requires “ the violation of some duty due to an individual, which duty is a thing different from a mere contractual obligation ” (seeBatas v Prudential Ins. Co. of Am., 281 AD2d 260, 264 [1st Dept 2001] [internal quotation marks and citation omitted]).
A breach of fiduciary duty claim is duplicative of a legal malpractice claim when both are based upon the same facts and seek the same damages (see Barrett v Goldstein, 161 AD3d 472, 473 [1st Dept 2018]; accordCohen, 115 AD3d at 513). As applied herein, plaintiff has established that the fiduciary duty counterclaim is grounded upon the same facts as the legal malpractice counterclaim. Defendant has neither attempted to distinguish the two counterclaims nor addressed why the second counterclaim should not be dismissed.
Adam Leitman Bailey, P.C. v Pollack, 63 Misc 3d 1229(A) [Sup Ct 2019]
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