Mizrahi v Adler 2014 NY Slip Op 31701(U) June 30, 2014 Sup Ct, NY County Docket Number: 650802/2010 Judge: O. Peter Sherwood is the rather sad story of a man and his attorney, who both took a Las Vegas detour into Trump real estate hell. Whether the attorney was a fellow traveler, or was leading the expedition is the question in this case. Plaintiff says that he was simply defrauded by the estate planning attorney he approached, and the attorney says that Plaintiff is a sophisticated investor in sheep’s clothing.
"It is uncontested that, in 2006, plaintiff Eitan Mizrahi (plaintiff) entered into a written retainer agreement with Adler and his law firm, non-party, Stem, Adler & Associates, LLP, for the firm to
act as plaintiffs attorneys, to provide advice and services specifically with regard to estate planning
issues (Retainer Letter, attached to Adler Aff. as Exhibit C). At a meeting in February 2007,
plaintiff and Adler discussed a possible real estate opportunity, found by Adler, to purchase
residential units then under construction in Las Vegas, Nevada, called the Trump International Hotel and Tower (Trump Towers). Trump Towers was to be comprised of two towers, Tower I and Tower II. Apparently, Adler had marketing materials on hand at the meeting which described the investment, and plaintiff allegedly expressed interest in investing in the project. Adler claims that he explained to plaintiff that Saw was in a "unique position" to offer prospective investors the opportunity to purchase units in the Towers before they were offered to the general public (Adler Aff.,14), and that plaintiff could take advantage of Saw’s contacts to purchase units by entering a finder’s agreement with Saw, and paying Saw a fee. Plaintiff claims that he was told that Saw was owned by an individual named Jack Wishna (Wishna), and that Adler would be working Wishna.
Adler contends that plaintiff knew Saw was Adler’s company. Adler adds that he told plaintiff that his "contacts" with Wishna would aid in the process of purchasing property in Trump Towers, as Wishna was alleged to have a relationship with the developer (id.). Plaintiff maintains that Adler told him an investment in Trump Towers would be entirely risk-free, and that by investing through the intervention of Saw (and hence, Wishna), plaintiff would obtain certain benefits, "including, but not limited to, the ability to sell or swap units prior to closing, and postpone the contracted closing date" (Complaint, attached to Adler Aff. as Exhibit A, ~ 15). Plaintiff calls these alleged rights the "Wishna Umbrella."
The complaint alleges that defendant lost his down payment due to wrongdoing by Adler in representing to plaintiff that the investment was risk-free and that the plaintiff would have rights in
the purchase of units in Trump Towers that he did not actually have under the Purchase Agreement. Plaintiff argues that he labored under the reasonable misconception that Adler was acting as his attorney at all times during the transactions at issue. Plaintiff claims to have only a fragmentary education and a slim grasp of the English language, and that he relied entirely on Adler, as his attorney, in making the investment. Plaintiff never read any document he was asked to sign, under the assumption, that Adler, as plaintiffs attorney, was looking out for plaintiffs interests.
Plaintiff’s claims for legal malpractice, negligent misrepresentation and breach of fiduciary duty are premised on the existence of an attorney-client relationship between plaintiff and Adler. Therefore, this court must consider whether triable issues of fact exist as to the existence of an , attorney-client relationship between plaintiff and Adler.
Plaintiffs action fails on the question of proximate cause. While the issue of proximate
cause can often be a jury question (see Bradley v Soundview Healthcenter, 4 AD3d 194 [1st Dept 2004 ]), the court may always determine whether there are questions of fact (see Laub v Faessel, 97 AD2d 28 [1st Dept 2002]). In Laub v Faessel, dealing with claims for fraud, negligent misrepresentation and breach of fiduciary duty, the court, discussing proximate cause, distinguished between a misrepresentation which induces a plaintiff to engage in a transaction ("transaction causation"), and misrepresentations which directly cause the loss to plaintiff ("loss causation") (id. at 31 ). "Loss causation is the fundamental core of the common-law concept of proximate cause: ‘An essential element of the plaintiffs cause of action for negligence, or for … any … tort, is that there be some reasonable connection between the act or omission of the defendant and the damage which the plaintiff has suffered [citation omitted]’" (id.). "Transaction causation is often synonymous with ‘but for’ causation" (Amusement Industry, Inc. v Stern, 786 F Supp 2d 758, 776 [SDNY 2011 ]). "