In a multi-million dollar apartment building sale at 108 W. 76th Street, NYC. Defendant attorney Marmon drafts and negotiates the contract of sale, which was executed by the sellers. Contract says that sellers have full power and authority to sell and they expressly represented to buyers that Sharmon Marcus and Stephen Marcus held all of the shares of the corporate owner. But did they? Apparently Stephen Marcus’ kids say no.
Kids start an action in US District Court saying that they own the building, and what’s going on? That case is ongoing, and buyers now sue Marmon. Some documents reveal that Mamon knew of the kids claim yet went ahead.
In Gorton v Marmon 2012 NY Slip Op 31073(U) April 16, 2012 Supreme Court, New York County
Docket Number: 108094/11 Judge: Joan M. Kenney the question is whether this is a negligence and fraud case, or merely a legal malpractice case in disguise?
Justice Kenny recites the various standards for decisions in this area and eventually holds that this is a negligence and fraud case which can proceed.
"In reference to plaintiffs’ negligence cause of action, moving defendant fails to refute plaintiffs’ claim on negligence, and instead argues that the negligence claim is really one for legal malpractice. I-Having failed to address the negligence claim at all, defendant is not entitled to its
dismissal. Moreover, plaintiffs deny that they are alleging any legal malpractice claims against
defendant and admit that he was not their attorney at the closing of the sale of this property in
question. Plaintiffs specified the elements of a claim of fraud in the pleadings and therefore the claim cannot be dismissed pursuant to CPLR 3211 (a)(7). Specifically, plaintiffs allege that Mr. Marmon misrepresented the fact that the sellers had the legal right to transfer the property; he knowingly did so, due to his access to all of the Reyrnar records; plaintiffs relied on this representation, made the purchase and are now claiming damages as a result of Mr. Marmon’s purported fraud. The fraud claim is also not barred by the statute of limitations. While the interposition date of July 14, 201 1 is beyond 6 years from the June 30, 2005 sale of the property, plaintiffs assert that they did not discover the fraud until September 2009 when they were served with the pleadings in the Federal Court action and therefore the 2-years-from-discovery rule is applicable, arid the claim of fraud, timely.
Plaintiffs’ contribution claim is not premature. Plaintiffs have a possibility of losing the
property in the Federal Court Action, having the sale of the property rescinded and losing the $4.8
million apartment. As per* the “critical requirement” of CPLR Article 14, such a claim may be
made before the potential judgment in the Federal Court Action. Moreover, plaintiff‘s have stated a
cause or action for indemnification and at this juncture it is premature to dismiss this cause of
action altogether.