Gall v Colon-Sylvain  2017 NY Slip Op 04424  Decided on June 7, 2017  Appellate Division, Second Department is the story of a real estate case gone bad, a non-jury trial ending in success for plaintiff and a complete reversal at trial.  How can Supreme Court and the Appellate Division differ so, on the same set of facts?

“The plaintiff commenced this action against, among others, the defendant attorneys Anthony Michael Camisa and David M. Fish (hereinafter together the defendants), alleging that the defendants breached a duty to the plaintiff by failing to ascertain whether the signator on a deed of transfer had the authority to transfer on behalf of a corporation. The property at issue was a residential parcel owned by JJRG Enterprises, Inc. (hereinafter JJRG). The plaintiff was a 50% shareholder of JJRG and the other 50% was held by the defendant Joseph Grant. During the sales transaction, Grant represented himself to be the sole shareholder of JJRG. Camisa represented the purchaser-borrower and the lender on the transaction. Fish represented the seller, JJRG.

At the conclusion of a nonjury trial, the Supreme Court found in favor of the plaintiff. The court concluded that Fish, as attorney for JJRG, had an obligation to ascertain who had the authority to act on JJRG’s behalf. Fish failed to exercise due care in the discharge of that obligation by relying on, inter alia, Camisa’s determinations regarding Grant’s purported authority to bind JJRG to the transaction. As to Camisa, the court held that a fiduciary relationship was created between [*2]Camisa and the plaintiff because the evidence demonstrated that Camisa had de facto control and dominance over the real estate transaction due to, among other things, Fish’s reliance on Camisa’s expertise. In a judgment entered November 14, 2014, the Supreme Court awarded the plaintiff the principal sum of $100,000 against the defendants, jointly and severally. The defendants separately appeal from that judgment.”

“Here, the Supreme Court erred in concluding that the plaintiff satisfied his burden of proof with respect to the elements necessary to prove legal malpractice against Fish. Namely, the plaintiff failed to present evidence to establish that he would not have incurred any damages but for Fish’s negligence (see Nomura Asset Capital Corp. v Caldwalader, Wickersham & Taft LLP, 26 NY3d at 50; Rudolf v Shayne, Dachs, Stanisci, Corker & Sauer, 8 NY3d at 442). Although the plaintiff argues that but for Fish’s misconduct the plaintiff would not have lost his equity interest in the property, the plaintiff failed to present evidence as to the value of that interest. Contrary to the court’s conclusion, the plaintiff’s expectation that he would receive $100,000 through an agreement with Grant does not establish the fair market value of the plaintiff’s equity interest in the property.

To recover damages for a breach of a fiduciary duty, a plaintiff must establish (1) the existence of a fiduciary relationship, (2) misconduct by the defendant, and (3) damages directly caused by the defendant’s misconduct (see Baumann v Hanover Community Bank, 100 AD3d 814, 817; Rut v Young Adult Inst., Inc., 74 AD3d 776, 777). “A fiduciary relationship exists between two persons when one of them is under a duty to act for or give advice for the benefit of another upon matters within the scope of the relation'” (Faith Assembly v Titledge of N.Y. Abstract, LLC, 106 AD3d 47, 62, quoting EBC I, Inc. v Goldman, Sachs & Co., 5 NY3d 11, 19; see AG Capital Funding Partners, L.P. v State St. Bank & Trust Co., 11 NY3d 146, 158). “Such a relationship may exist where one party reposes confidence in another and reasonably relies on the other’s superior expertise or knowledge, but an arms-length business relationship does not give rise to a fiduciary obligation'” (Faith Assembly v Titledge of N.Y. Abstract, LLC, 106 AD3d at 62, quoting WIT Holding Corp. v Klein, 282 AD2d 527, 529). “The core of a fiduciary relationship is a higher level of trust than normally present in the marketplace between those involved in arm’s length business transactions'” (Faith Assembly v Titledge of N.Y. Abstract, LLC, 106 AD3d at 62, quoting EBC I, Inc. v Goldman, Sachs & Co., 5 NY3d at 19). Determining whether a fiduciary relationship exists is a fact-specific inquiry and the essential elements are reliance by one party, and de facto control and dominance by the other (see AG Capital Funding Partners, L.P. v State St. Bank & Trust Co., 11 NY3d at 158).

Here, the Supreme Court erred in concluding that the plaintiff satisfied his burden of proof with respect to the elements necessary to prove a breach of fiduciary duty against Camisa. The evidence did not establish that Camisa, who was the attorney for the purchaser and the lender, had any duty to act or give advice for the benefit of the plaintiff (see AG Capital Funding Partners, L.P. v State St. Bank & Trust Co., 11 NY3d at 158; EBC I, Inc. v Goldman, Sachs & Co., 5 NY3d at 19; Faith Assembly v Titledge of N.Y. Abstract, LLC, 106 AD3d at 61).”