A lawsuit arising from the 2008 stock market decline, involving whether there was downside protection, and what the attorney who was hired to pursue the brokerage did or did not do proceeds. Finkel v Wedeen 2019 NY Slip Op 31395(U) May 9, 2019 Supreme Court, New York County Docket Number: 161019/2015 Judge: Paul A. Goetz survives summary judgment in this opinion.
“In 2005, Norman Finkel (Finkel) and I. Finkel Electrical Contractor, Inc. (together plaintiffs) opened three brokerage accounts with Bank of America/Merrill Lynch (BOA/ML). (Marchetti EBT Transcript at 38-39, NYSCEF Doc. No. 62; Affirmation of Plaintiffs’ Counsel in Opposition to Motion at~ 8, NYSCEF Doc. No. 73 [referring to Statement of Claim for recitation of facts]; Statement of Claim,~~ 6,7,4, NYSCEF Doc. No. 60). According to plaintiffs, all three accounts were opened by broker Philip Marchetti (Marchetti), who advised them that the accounts would be protected by a so-called “5% stop loss order” that would trigger an automatic liquidation of the accounts in the event of a 5% or greater depreciation in any asset (Finkel EBT Transcript at 37·38, 50·5 l, NYSCEF Doc. No. 56; Marchetti EBT Transcript at 40· 41, 48, NYSCEF Doc. No. 62; Affirmation of Plaintiffs’ Counsel in Opposition at ii 8, NYSCEF Doc. No. 73 [referring to Statement of Claim for recitation of facts]; Statement of Claim at if 7, NYSCEF Doc. No. 60). ”
Marchetti left BOA/ML in 2007, at which point Robert Schiano (Schiano) became the account executive on plaintiffs’ accounts (Schiano EBT Transcript at 22·23, NYSCEF Doc. No. 63; Affirmation of Plaintiffs’ Counsel in Opposition to Motion at if 8, NYSCEF Doc. No. 73 [referring to Statement of Claim for recitation of facts]; Statement of Claim at if 9, NYSCEF Doc. No. 60). Plaintiffs claim that between August 2008 and April 2009, their accounts incurred losses of $727,831 (dropping in value from roughly $2.303 million to $1.575 million) because BOA/ML and Schiano failed to execute the 5% stop loss order (Affirmation of Plaintiffs’ Counsel in Opposition to Motion at if 8, NYSCEF Doc. No. 73 [referring to Statement of Claim for recitation of facts]; Statement of Claim at ifif 15, 18, NYSCEF Doc. No. 60).”
“According to plaintiffs, on or about August 10, 2010, they retained Timothy Wedeen (Wedeen)
and his law firm, Wedeen & Kavanagh, to initiate a FINRA arbitration proceeding against BOA/ML and Schiano, based upon their alleged mismanagement of plaintiffs’ investment portfolio from August 2008 through April 2009 (Complaint at if 4, NYSCEF Doc. No. I). ”
“In October 2015, plaintiffs commenced the instant action against Wedeen and Wedeen & Kavanagh seeking to recover damages for legal malpractice and fraud (Complaint, NYSCEF Doc. No. 1). In the first cause of action for legal malpractice, plaintiffs allege that Wedeen failed to timely commence the FINRA arbitration proceeding. Plaintiffs assert in this regard that Wedeen told them that he would timely submit their claim for FINRA arbitration. However, in May 2015, when plaintiffs called to inquire about the status of their claim, Wedeen informed them for the first time that he never submitted the claim (id at ii 7). At that point, the six-year statute of limitations for submitting the claim to arbitration had already elapsed. Plaintiffs allege that they had a meritorious and valuable claim against BOA/ML and that but for Wedeen’s misrepresentation and negligence, they would have prevailed and recovered on their claim (id. at 12)”
“Here, defendants seek to dismiss the cause of action to recover damages for legal malpractice on the ground that plaintiffs cannot establish that they would have succeeded on their claim against BOA/ML but for defendants’ failure to timely submit the claim to FINRA arbitration. This is not an issue involving subject matter within the ken of an ordinary person and cannot be adequately judged based on the ordinary experience of the fact finder without expert testimony (cf Boye v Rubin & Bailin, LLP, 152 AD3d 1, 9 [1st Dept 2017]). Although in support of their motion, defendants submit DeMarco’s expert report, it is unsworn and therefore not in admissible form (see Accardo v Metro-North R.R., 103 AD3d 589, 589 [1st Dept 2013]; 221 E. 50th St. Owners, Inc. v Efficient Combustion & Cooling Corp., 2018 NY Slip Op 33160[U][Sup Ct, NY County 2018]). This error “could not be cured by submitting a sworn affidavit by this expert in reply papers” (Accardo v Metro-North R.R., 103 AD3d at 589; see Henry v Peguero, 72 AD3d 600, 602 [1st Dept 2010][“a deficiency of proof in moving papers cannot be cured by submitting evidentiary material in reply”]). As such, defendants’ expert report may not be considered (see Accardo v Metro-North R.R., 103 AD3d at 589). Since, without the expert affidavit, defendants failed to meet their prima facie burden, their motion must be denied without regard to the sufficiency of plaintiffs’ opposition papers (see Suppiah v Kalish,76 AD3d 829, 832 [1st Dept 2010][“By failing to submit the affidavit of an expert, defendant never shifted the burden to plaintiff’]; see generally Winegrad v New York Univ. Med Ctr., 64 NY2d 851, 853 ).
Furthermore, even if defendants’ expert report had been in admissible form, it was insufficient to establish their prima facie entitlement to judgment as a matter of law because it does not address whether plaintiffs had a viable claim against BOA/ML based upon Marchetti’s representation to Finkel that plaintiffs’ accounts were protected by a stop loss order. Assuming defendants’ expert correctly opined that it was impossible to place a stop loss order on the type of accounts opened by plaintiffs, this does not establish that Marchetti never promised Finkel that the accounts were protected by such a trigger. Although the expert’s opinion may cast doubt on the truth ofMarchetti’s and Finkel’s testimony in this regard, “[i]t is not the function of a court deciding a summary judgment motion to make credibility determinations or findings of fact” (Vega v Restani Constr. Corp., 18 NY3d 499, 505 ). “