They May Have Been Wrong, But They Were Not Frivolous

It was not said by Lord Acton that control of the bank account corrupts, and that absolute control of it  corrupts absolutely, but United States Fire Ins. Co. v Raia  2014 NY Slip Op 00987 Decided on February 13, 2014  Appellate Division, Second Department does show that guardians who control their ward's bank accounts can wreak havoc.
 

The surety insurance company came to be plaintiff after "defendant Camille A. Raia was appointed guardian of the property of Andrea S., an incapacitated person (hereinafter the IP). Raia obtained a guardianship bond through the plaintiff, United States Fire Insurance Company (hereinafter US Fire), as surety. During the course of the guardianship, Raia retained the defendant Cavalcante & Company (hereinafter C & C), an accounting firm, to prepare annual tax returns on behalf of the IP. Ultimately, Raia was removed as the guardian of the IP's property as a result of a criminal investigation. The court accepted an account-stated as [*2]Raia's final account for the period she acted as guardian of the IP's property, and surcharged her in a certain amount. US Fire and the IP, through a successor guardian, entered into a stipulation by which the IP released US Fire from further liability under the bond and assigned all rights and causes of action to it in exchange for a payment in the amount of $1,100,000.

US Fire, on its own behalf and as the IP's subrogee/assignee, commenced this action against Raia, Raia & Rondos, P.C. (hereinafter the R & R firm), Steven T. Rondos, C & C, and another defendant. US Fire alleged, with respect to C & C, that it committed professional malpractice by failing to detect unlawful withdrawals made from the IP's investment account and to report the accounting irregularities.

US Fire settled with Raia, Rondos, and the R & R firm, and thereupon executed a release in favor of Raia, and a separate release in favor of Rondos and the R & R firm.

Raia moved, inter alia, for summary judgment dismissing C & C's cross claims insofar as asserted against her and pursuant to 22 NYCRR 130-1.1 for an award of attorney's fees.  The Supreme Court, in effect, granted those branches of the separate motions and denied the cross motion.

Raia, Rondos, and the R & R firm demonstrated their prima facie entitlement to judgment as a matter of law dismissing C & C's cross claim for contribution insofar as asserted against them. "A release given in good faith by the injured person to one tortfeasor as provided in [General Obligations Law § 15-108(a)] relieves him [or her] from liability to any other person for contribution as provided in article fourteen of the civil practice law and rules" (General Obligations Law § 15-108[b]). Here, US Fire, upon settling with Raia, Rondos, and the R & R firm, executed a release in favor of Raia, and a separate release in favor of Rondos and the R & R firm, and there is no evidence in the record indicating that the releases were not given in good faith. Thus, Raia, Rondos, and the R & R firm are relieved from liability to C & C for contribution (see Balkheimer v Spanton, 103 AD3d 603; Ziviello v O'Boyle, 90 AD3d 916, 917; Boeke v Our Lady of Pompei School, 73 AD3d 825, 826-827; Kagan v Jacobs, 260 AD2d 442, 442-443; Brown v Singh, 222 AD2d 392). In opposition, C & C failed to raise a triable issue of fact.

However, because C & C did not engage in frivolous conduct within the meaning of 22 NYCRR 130-1.1, the Supreme Court improvidently exercised its discretion in awarding attorney's fees pursuant to 22 NYCRR 130-1.1 (see South Point, Inc. v Redman, 94 AD3d 1086, 1087-1088; Joan 2000, Ltd. v Deco Constr. Corp., 66 AD3d 841, 842). "

 

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